inside this issue · 2017-12-07 · 27 letter from london while tony blair sticks to his...
TRANSCRIPT
24 After Iraq Is Sovereignty DeadThe thorny question of sovereignty is probably the strongestargument against the current war in Iraq John Roskam
26 Letter from AmericaThe likely fortunes of the Democrats are of concern toeveryonemdashRepublicans and Democrats alike Nigel Ashford
27 Letter from LondonWhile Tony Blair sticks to his (unpopular) guns the economyand the public service are bedevilled by serious problemsJohn Nurick
28 Education AgendaThe suggestion that government schools are better thanprivate schools at promoting social cohesion and lsquothe bondsof civic friendshiprsquo is a furphy Kevin Donnelly
29 The lsquoRrsquo FilesThe conflicting demands of irrigators and environmentalistsand the salinity of some of our major waterways will force usto re-examine property rights in water Alan Moran
32 Free_EnterprisecomThe current conflict in Iraq gives cause to ponder the role ofthe UN and other international foramdashwith a word from theircritics Stephen Dawson
34 Strange TimesThe weird the wacky and the wonderful from around theworld Compiled by IPA staff and columnists
35 Whatrsquos A JobThe commercial building sector and the domestic housingsector are like chalk and cheese And the reasons for thedifferences run deep within them Ken Phillips
36 Further AfieldAbusing the US Alien Torts Act single-parent homes and healththe consequences of banning the fur trade US trade policyand Islam demographics and development
38 hellip By Their Fruits Ye Shall Know ThemFor a university that prides itself on being lsquoethically sustain-ablersquo the ongoing saga at RMIT makes for very curiousreading Andrew McIntyre
39 Stephen Dawson reviews The Blank Slate by StevenPinker
40 Gary Johns reviews The Elusive Quest for Growthby William Easterly
2 EditorialThe new Luddites are winning the debate on issues suchas GM food through a combination of money fear andspecial privileges Mike Nahan
4 Why Did We Allow Australia to BurnInsufficient attention to preventive burning and thewoeful consequences of Green activism were therecurring themes from the IPArsquos recent national confer-ence Graham White
7 Deceit in the Name of ConservationlsquoDeceptionrsquo is the only fitting word for the treatment ofsome of the evidence used in the most recent campaignabout the Barrier Reef Jennifer Marohasy
9 The Past is the Key to the PresentThe history of Planet Earth viewed on a time-scale of100s of millions of years makes one think twice aboutthe significance of climate change in the last 100Ian Plimer
13 BPmdashBack to PetroleumBPrsquos re-badging to lsquoBeyond Petroleumrsquo is a charadePaul K Driessen
15 The Good Reputation Index 2002Yet again the Good Reputation Index has proved itself tobe deeply flawed Perhaps itrsquos time for those whoparticipate in it to call it a day Gary Johns
16 Tomorrowrsquos ReformWhen reasoned defence of our successful institutionsgives way to Chauvinism and vested interests theprospects for continuing reform are bleak John Hyde
18 Petroleum Refining Rationalization or AtrophyConsumers and the media focus on prices at the pumpBut the real problems with the refining industry are muchmore complex and much more urgent Jim Hoggett
21 Aid Detox for PNGOnly withdrawal of Australian aid will kick-start thereform process that PNG so desperately needsPeter Urban
22 Irreconcilable DifferencesNGOs who do not share the values of Australiarsquos foreignaid policy should simply not be supported by thetaxpayer Don DrsquoCruz
ARTICLES amp REGULAR FEATURES
Inside This IssueVolume 55 bull Number 1 bull March 2003
Editor Mike Nahan Publisher amp Executive Director Mike Nahan Production Chris Ulyatt Consulting Services Pty LtdDesigned by Colin Norris Kingdom Artroom Printed by Print Hotline 47 Milligan Street Perth WA 6000
Published by The Institute of Public Affairs Ltd (Incorporated in the ACT) ACN 008 627 727Level 2 410 Collins Street Melbourne Victoria 3000 Phone (03) 9600 4744 Fax (03) 9602 4989 E-mail ipaipaorgau Website wwwipaorgau
Cover photograph by John Gollings Photography Inside cartoons by Peter Foster [(03) 9813 3160]
Unsolicited manuscripts welcomed However potential contributors are advised to discuss proposals for articles with the Editor
Views expressed in this publication are those of the authors and do not necessarily reflect the views of the IPA
Reproduction The IPA welcomes reproduction of written material from the Reviewbut for copyright reasons the Editorrsquos permission must first be sought
E V I E WR
BOOK REVIEWS
2 MARCH 2003
E V I E WR
lsquoThe most important challenge toindividual freedom today is notthe ideology of egalitarianism butthe ideology of stasis the notionthat the good society is one ofstability predictability andcontrol The role of the state inthis view is not so much toreallocate wealth as it is to curbdirect or end unpredictableeconomic and social evolutionrsquo
mdashVirginia Postrel
Virginia Postrelrsquos argument that thecentral tension in society lies not in thebattle between socialism and capitalismbut rather between peoplersquosperceptions about the future andtechnology is being borne out
Moreover in Australia the newLuddites are gaining the upper hand
Few issues show this more clearlythan the debate on agriculturalbiotechnology
Despite a steady stream of positiveresearch the rapid uptake of thetechnology abroad and stringent testingState governments around Australia areincreasingly banning the technology
During the recent State electioncampaign all political parties in NSWmdashwith the support of the NSW FarmersAssociationmdashpromised to ban new GMcrops Indeed the National Partymdashhistorically the party of the farmersmdashproposed the most stringent ban Thisfollowed decisions in Tasmania andWestern Australia to imposemoratoriums on commercial use of GMcrops And South Australia is currentlyconsidering legislation to implement asimilar moratorium
The bans are certainly not beingdriven by the evidence lack ofsafeguards or grower demands
The only GM crop currently growncommercially in Australia is Bt-cotton Ithas been embraced by cotton growerswith plantings consistently at themaximum allowed by the regulators Its
From the EditorMIKE NAHAN
popularity is due to its lower costs andreduced environmental impact Bt-cotton allows a 50 per cent reduction inpesticide use which not only saves onsprays but also on fuel time andapplication costs Growers are nowdemanding that regulators reducerestrictions on the use of Bt-cottonThey are also looking forward to a newvariety of Bt-cotton which is currentlyundergoing field trials and producing aneven larger reductionmdasharound 90 percent in trialsmdashin pesticide use andassociated costs Despite these demandsand benefits the new variety of Bt-cotton will be banned in the maincotton growing StatemdashNSW
The bans were brought on by theimminent introduction of GM canolaTwo companies Bayer and Monsantohave spent six years and millions ofdollars developing local varieties of GMcanola Since they have now passed allthe tests and agreed to all safeguardsthe regulators will have no real choicebut give them the go-ahead Fearful thatif the matter were left up to individualsand rational debate the technologymight spread the new Luddites havelobbied successfully for an outright ban
That lsquofearrsquo is warrantedmdashGM canolahas also been a roaring success abroadand would have been so here In Canadaaround 70 per cent of farmers haveadopted GM varieties since theirintroduction in 1996 They have done so
because it provides on average 30 percent higher net returns than non-GMvarieties through lower costs as well asincreased yields
The latest research strongly suggestsa similar outcome if the GM varietieswere allowed to be grown locallyNorton1 forecasts widespread adoptionof the GM varieties driven by higher netreturns (around 34 per cent) and higheryield flows on wheat crops It also foundthat GM varieties have a range ofconservation values including 30 percent less pesticide use a markedincrease in the use of minimal tillage andother soil preservation techniqueslower fuel use and less soil compactionIn total growers stand to gain around$135 million per annum from theintroduction of GM canola
One of the main concerns ofgrowers is whether the introduction ofGM canola will undermine theirmarkets While there have been manyclaims of a lsquonon-GM premiumrsquo itappears to be a chimera
A recent WA Governmentinvestigation found minimal risk tomarkets from the introduction of GMcanola 997 of Australian canolaexports go to four countries JapanMalaysia Pakistan and China All thesecountries are investing heavily in GMcrop technology import GM canola andimport unsegregated canola
While much has been made ofJapanrsquos alleged biotech fears the realty isstarkly different Japan has licensed theimportation of 57 types of GM cropsincluding canola Some 70 per cent of itscanola imports are from Canada whichnot only uses GM varieties but does notsegregate GM from non-GM varietiesAlthough Japan does require many GMproducts to be labelled canola oil isexempt as it is in Australia In fact Japanis the worldrsquos largest importer of GMcrops and foods
Only the Europeans have beenwilling to pay a premium for non-GM
3MARCH 2003
E V I E WR
API
canola and then only rarely and at asmall level The research found thatsome European importers have paid avery small premium of around $10 pertonne Not only is this premium afraction of the gains flowing to growersfrom the use of GM canola but Europeis not nor is it likely to become asignificant importer of Australian canolaFrance and Germany are majorproducers and exporters of canola andthey use their non-GM laws to protecttheir highly subsidized production andexport markets in Europe Europe hasonly imported canola in times ofdrought when local production hasfallen short of domestic demand
How will Australian canolaproducers who receive the same FOBprices as the Canadians compete withthe Canadiansrsquo lower-cost GM varietiesThe answer is simple they will not beable to compete and farm incomes andthe environment will suffer
Why is Australia with its largelightly-subsidized export-oriented andinnovative rural sector deciding to banthe most promising advance inagricultural technology in a generation
The explanation for the collectiveflight from technology lies with theinfluence and success of a new class ofLuddites Like their nineteenth-centuryforebears the modern-day Ludditesmaintain the faccedilade of acting in thepublic interest Unlike theirpredecessors however the neo-Ludditesare well-funded well-organized and havespecial privilegesFunding has been crucial to the neo-Ludditesrsquo success According to The WallStreet Journal the European Union hasover the last five years giveninternational NGOs $300 million todemonize GM food The EUrsquos motivationis to create a non-tariff barrier toprotect its inefficient farmers withoutbeing seen to do so Aside from thecash the NGOs are motivated by thedesire to stop modernitymdashat least forothers Australian companies are alsoplying the Luddites with cash in a similareffort to inhibit competition orpromote their niche in the market Mostanti-biotech spokesmen also have adirect commercial interest indemonizing modern agriculture as theyoften make their livelihood from the
organic industry On top of this mostanti-biotech organizations aresubsidized by government The result isthat there is more money to be madefrom demonizing than from promotingag-biotech
Fear and uncertainty have alsoplayed an important role Thetechnology is novel and complex Whilethe regulators and proponents ofbiotech have concentrated on dealingwith these complexities the Ludditeshave focused on seeding fear with anendless series of scare campaigns Theyhave also been successful in demandingthe impossiblemdashthat is certainty in aninherently uncertain world
The key to their success howeverhas been their ability to masquerade asangels The Luddites have captured thedo-good institutions representing theenvironment consumers and thepoormdashand with this the communityrsquosrespect They have been able to distortand falsify without being held toaccount And they have been awardedwith status and influence
A prime example is Ms LouiseSylvan head of the AustralianConsumers Association (ACA) andpresident of Consumers International(CI)
Ms Sylvan and the ACA are givenstar billing in the media and have beeninvited and paid to represent lsquoAustralianconsumersrsquo on 125 committees Inreality ACArsquos links with consumer arethin it has about 400 real members(who are mostly anti-consumeractivists) and very limited links withordinary consumers
With her ACA hat on Ms Sylvan hasled the push for stringent labelling lawswhile with her CI hat she has pushedfor an outright ban
In the introduction to the CIrsquos latestscreed on GM food2 Ms Sylvan claimedthat lsquoGM crops hellip currently beinggrown offer no benefits to consumersand nothing to most farmers Even theintended lsquoindirectrsquo advantages of thereduced pesticide and herbicide use arenot being achievedrsquo In short she liedwith impunity
She also claims that lsquoGM is a newtechnology that poses many ethicalenvironmental and biological questionswhich can not fully be answered even by
a well-designed safety testing regimeConsumers have a right to question whythis technology should be used at allwhen it produces no benefits to societybut has the potential for causing greatdamagersquo
Not only has Ms Sylvan not beenforced to justify her claims but she issoon to become Deputy Director of theACCCmdashin short the nationrsquos secondmost influential business and technologyregulator
Given the success money fear andspecial treatment of the Ludditespoliticians and farmers are starting tooffer them support
What is the future Well look atEurope It has shown the way withsimilar bans and as a result investmentin biotechnology research of all typeshas declined by 60 per cent its researchindustry is fleeing to North America andit agricultural sector is going backwardseconomically and in terms of it impacton the environment and peoplersquos health
Forests have also long been a focusof the Luddites They have pushed for acessation of logging and othercommercial uses for a hands-offapproach to forest managementincluding a reduction of preventiveburning for increasing the number andsize of national parks for the closing ofaccess roads and locking people out ofthe forest As discussed at a recent IPAconference and summarized by GrahamWhite (on pages 4ndash7 below) the newLudditesrsquo success has been a nationalcatastrophe Some 16 million hectareshave been burnt with over $200 millionin damage to homes business and farmsIt has also done great damage to floraand fauna
Now they have water in their sights(see The lsquoRrsquo Files pages 29ndash31 below)
NOTES1 Robert Norton lsquoConservation Farming
System and Canolarsquo AVCARE March 20032 Consumer International (2003) lsquoCorporate
control of the food chain the GM linkrsquohttpwwwconsumersinternationalorgNews_Even t s wor ld a sp ca t=22ampregionid=135
4 MARCH 2003
E V I E WR
TRIO of experts has toldthe recent IPA conferencethat prescribed burning isthe most effective tool for
containing major bushfires in Aus-tralia Properly conductedmdashand thatmeans using a random rather than aprogrammed pattern of burningmdashitis also environmentally beneficialbecause it replicates the conditionsunder which Australiarsquos forests andscrublands evolved
Alas the devastation that has oc-curred in the forests parks and farmsof eastern Australia during the firstquarter of 2003mdashand which in-truded deeply into the suburbs ofCanberra causing the loss of hun-dreds of homesmdashwas cruelly exacer-bated by the failure to conduct ad-equate prescribed burning Examin-ing the scientific evidence presentedby experts at the conference it is dif-ficult not to conclude that much ofthe 16 million hectares of parks andforests destroyed this year could havebeen saved had proper prescribedburning been carried out over thepast few years So too could farmsand houses
THE SCIENTISTSWhy were these programmes not car-ried out The three expertsmdashDr PhilCheney of CSIRO Dr Syd SheaProfessor of Environmental Manage-ment at the University of NotreDame and a former head of WArsquos
A
Why Did We AllowAustralia to Burn
GRAHAM WHITE
Department of Conservation andLand Management and Dr KevinTolhurst of the Forest Science Cen-tre at the University of Melbournemdashall declined to speculate other thannoting that there were limitations onthe skills and resources available toconduct them and that there wereelements of lsquocommunity oppositionrsquoto such burning
There was no such reluctancehowever from the many delegatesfrom fire-affected regions whocrammed the auditorium Many ofthem had made a ten-hour round tripby bus to present their views andseveral were unhesitating in namingthe influence of vocal but ill-in-formed green groups as the likely cul-prit
These key messagesmdashthe failureof land managers to follow estab-lished scientific principles and thecontribution of green policies to thatfailuremdashwere two of three themesthat dominated the conference Thethird was property rightsmdashthe ex-pectations of private landholdersthat adjoining public lands should beproperly managed and the legal re-dress they have when that manage-ment fails
While the text of the talks con-centrated on these scientific and le-gal issues the pictures used to illus-trate the intensity of the fires raisedmore emotional responses If thescale of human sufferingmdashthe burnt-
out homes and scorched farmsmdashwasterrible the damage to the naturalenvironment was awesome Picturesof National Parks and State forestsreduced to blackened stick-like rem-nants of trees poking from a carpetof smouldering ash the devastationstretching seemingly to the horizonbrought cruel reminders of the mil-lions of small marsupials and othernative animals that died in this in-ferno
Any committed conservationistcould only ask what did we do tounleash such devastation The an-swer provided forcefully by all threeexperts was that it was not what wedid but what we didnrsquot do that al-lowed the fires to reach such horrificproportions
Dr Cheney produced studies toshow that under any given climaticconditions the intensity of a forestfire is essentially dependent on thevolume of fuel build-up on the for-est floor This volume of fuel is inturn largely a factor of how long ithas been since fire of some sortpassed through the area The longerthe period since it was last burnedthe greater the volume of fuel avail-able
When build-up reaches a certainlevel the intensity of the blaze pro-duced under typical bushfire condi-tions puts it beyond the capacity offire-fighters to contain With veryhigh levels of fuel the fire will be
On 11 March 2003 the IPA held a conference about the lessons to be learnt from the bushfires whichswept Eastern Australia in the first quarter of 2003 This article presents a synopsis of the major themesand findings from that conference Copies of papers delivered at the forummdashlsquoBushfire Prevention Are
we doing enoughrsquomdashare available on the IPA Website at wwwipaorgau
5MARCH 2003
E V I E WR
beyond the capacity of fire-fighterseven under less extreme conditions
This message was reinforced byboth Professor Shea and Dr Tol-hurst although an environmentallybenign programme of prescribedburning will not prevent bush firesaltogethermdashfor under extreme con-ditions fires will always spreadmdashitwill allow them to be containedonce conditions begin to ease evena little
This would seem to have been animportant factor in the Victorianfires while they began under ex-treme conditions they continuedburning through more than a millionhectares for a period of months in-cluding periods when conditionswere far less extreme High fuelbuild-upmdashthe result of inadequateprescribed burning programmes overseveral yearsmdashwould seem on thebasis of this evidence to have beena major factor in that
Professor Shea said that WArsquosgood record of bushfire managementin recent decadesmdashdespite the ex-treme conditions regularly created bythe regionrsquos long hot and dry sum-mersmdashhad been largely due to ac-ceptance of this principle He fearedhowever that even in WA the ex-ecution of prescribed burning pro-grammes was becoming less rigorous
Why Much of the blame he saidlay in attitudes imported from Brit-ain and Europe which saw burningas ugly and destructive to the envi-ronment These views did not takeinto account the very different ecol-ogy of Australia which had beenfashioned by fire long before whitesettlement
Foresters have discovered hesaid that the long-living grass-treesso common in southern WA containin their trunks a record of the firehistory they have endured This re-veals an irregular but by no meansinfrequent pattern of fire whichstretches back before white settle-ment of these areas
Dr Tolhurst said that studies ofthe fire-frequency patterns in whichAustraliarsquos ecology had evolved pro-
vided important lessons for pre-scribed burning programmes Thestudies show that in the past firesappeared to follow a random pat-ternmdashsome areas burning severaltimes within a five- or ten-year pe-riod while other pockets appearedto have escaped burning for long pe-riods This had ensured biodiversity
A similar approach was neededwith prescribed burning he saidRather than merely gridding a parkto be systematically burned over saya ten- or 15-year cycle it was betterto replicate the natural order with amore varied approach with some ar-eas being burned more frequentlythan others This would ensure thatfuel build-up over large areas of for-ests and parks was kept to a levelwhich prevented fires of the destruc-tive scale and intensity of 2003 butwhich also ensured biodiversity
This would not only have eco-logical benefits but would reducethe occurrence and impact of largeintense fires reduce the cost of emer-gency operations and disaster reliefand create better land-managementoutcomes The tragedy is that muchof this thinking is already enshrinedin forest management philosophiesin Victoria but has not been ad-
equately resourced or implementedBurning is possible only on a limitednumber of days each year and re-quires skilled personnel if it is to becarried out in an effective and envi-ronmentally beneficial way Consid-erably greater resources were thusneeded
THE PROPERTY OWNERSThe three scientific experts were fol-lowed by presentations of case stud-ies from individuals The speakerswere Ian Mott a third-generationforester and self-confessed lsquobush law-yerrsquo with experience of land manage-ment issues in NSW and Queens-land David Coonan who presentedthe views of the ACT SustainableRural Lands Group (a group of ACTlandholders members of which havebeen affected by two large fires inrecent years) and Russell Smith re-tired Army major and a resident ofBundarrah Valley about 40kmNNW of Omeo in North-East Vic-toria an area which was swept by therecent bushfires
While each took a distinctive ap-proach the issue of the obligationsof public land managersmdashand thelimitations even on the rights of pri-vate landholders to manage theirland adequatelymdashtended to intrudeinto all three presentations
For Ian Mott the issues were fun-damentally legal The obligations onprivate landholders are extensiveare public land managers similarlyobliged to keep the properties undertheir control equally safe This is notthe first time he has raised these is-sues but the questions had an addedrelevance in the light of evidencefrom David Coonanrsquos group and fromRussell Smith that failure to preventfuel build-up on neighbouring pub-lic lands was a significant factor inthe intensity of the fires that strucktheir own areas
Russell Smith noted that AlpinePark and State Forests in his area hadnot apparently been given any pre-scribed burning in living memoryHe has been on his property almost20 years but believes that the pe-
The failure of landmanagers to followestablished scientificprinciples and the
contribution ofgreen policies tothat failure were
two of three themesthat dominatedthe conference
s
6 MARCH 2003
E V I E WR
riod without burning is far farlonger The area is choked with nox-ious weeds and provides sanctuaryfor feral cats dogs and goats whichinvade private property
More relevant in the context ofthis forum was the fact that he esti-mated forest floor litter to have beenin the order of lsquohundredsrsquo of tonnesper hectare rather than the 4 tonnesconsidered optimal for ecologicalbalance It was so thick and densethat it was impossible to ride a horsein parts and difficult to penetrateeven on foot
Similarly despite repeated re-quests from Major Smith the Vic-torian Department of Natural Re-sources and Environment (nowSustainability and Environment)had not forced a neighbouring ab-sentee landowner to clear hugethickets of fire-hazardous blackberryand briar
When the bushfires came theseunburnt public and private landserupted into an inferno and al-though a combination of rigorousfire-prevention measures (which in-cluded conducting his own fuel-re-duction burning to create a fire breakthat extended well into the park adecision he took unilaterally whenthe park managers declined) and awell-rehearsed action plan saved hisown property the fire swept thoughthe rest of the valley
Russell Smith now believes thatthere are vital lessons to be learnedif this sort of disaster is not to be re-peated Fuel reduction is one impor-tant priority but there is also a hugeamount that can be done to improveplanning coordination and re-sponse He has a dosier of planningand communications failings manyof which could have been avoidedwith greater training and prepara-tion
(For David Coonan there is acruel irony in the fact that his grouphas presented extensive evidence tothe ACT coroner investigatingdeaths that occurred during the 1991Canberra fires The coronerrsquos find-ings are not yet public but Coonan
is saddened that he and his col-leagues may yet find themselves pre-senting similar evidence to any in-quiry into the 2003 fires)
One theme that emerged repeat-edly in the Conference from all quar-ters (scientists the case studies anddelegates from the floor) is that StateGovernments are far more enthusi-astic about creating electorally-
popular National Parks than they areabout funding the management ofthe parks they have created Timeand again reference was made to thelack of management of these parkswhich are progressively degradedthrough infestations of weeds andferal animals and which become in-creasing fire hazards
This is environmentally as wellas economically and politically dan-gerous the habitatsmdashand perhapseven entire populationsmdashof somethreatened species were engulfed inthe huge fires that spread throughthe parks of north-eastern Victoriain January February and March
One delegate asked whether thecause of environmentalism wouldnot be better served if there weregreater commercial exploitation ofNational Parks to generate fundingfor their upkeep It would at least
ensure their management was givena secure funding base he said
The continued creation and ex-tension of National Parks whenthere was not sufficient funding tomanage even existing parks was seenas evidence of State Governmentsurrender to uninformed urban-based green populists who were inturn swayed more by emotion andsymbolism than by any real under-standing of environmental manage-ment
The passion generated by thesefires was evident in the packed au-ditorium (every seat was taken andmany who tried to book late had tobe refused) Scores of residents andfirefighters from hard-hit areas ofVictoria made the journey to Mel-bourne to hear the experts and tohave their say Several busloads camefrom north-east Victoria the epi-centre of the fire disasters For themit was a 16-hour day
Other individuals made a similarjourney from Victoriarsquos north-westwhere more than 200000 hectaresof National Park along with exten-sive farmlands were also destroyed
GREEN GODSMany people expressed their con-cerns at the possible influence ofgreen activists on forest manage-ment policy These concerns wereonly confirmed by Andrew Bolt As-sociate Editor of Melbournersquos Herald-Sun newspaper who gave a talk dur-ing post-conference refreshmentsHis theme was Green Religion thetriumph of a set of mystical valuesover science
The thesis he advanced was thatwith the decline of traditional reli-gions and belief in God many mod-ern individuals were left with thechoice of either believing that hu-man beings were in charge of theirown destiny or believing that theyshouldnrsquot be and subsume humanfate to omniscient Nature Giventheir lack of faith in fellow manmany had chosen the latter courseThe result was a value-system inwhich scientific principles of sound
Governments are formore enthusiastic
about creatingelectorally-popular
National Parksthan they are
about funding themanagement of the
parks they havecreated
7MARCH 2003
E V I E WR
ON 28 January the Queens-land Government re-leased Report on the studyof land-sourced pollutants
and their impacts on water quality inand adjacent to the Great Barrier ReefIn the associated media release theQueensland Premier Peter Beattiesaid lsquoNow the report is in work onthe Great Barrier Reef Water Qual-ity Protection Plan will continuewithout arguments about whetherland activities harm the Reef Thereport is the adjudicatorrsquos decisionand is based on the best available sci-encersquo
The report written by a panelof scientists chaired by Queens-landrsquos Chief Scientist Dr Joe Bakermakes several key findings regard-ing impacts of land-based pollutionon the reef A key allegation in thereportrsquos summary highlighted in thePremierrsquos media release is that el-evated concentrations of pesticideresidue have been found in dugongs
Since publication of the book Si-lent Spring by Rachel Carson in1962 there has been concern thatpesticides can bio-accumulate inthe fat tissue of animals Prior to1987 organochlorine pesticides (forexample DDT) were used in GreatBarrier Reef catchments includingfor sugarcane production Thesechemicals have since been banneddue to global concerns about theirpersistence in the environment andtheir capacity to bio-accumulate
I first became aware of the spe-cific issue of pesticide in dugongs inAugust 1998 A senior officer withthe Great Barrier Reef Marine ParkAuthority (GBRMPA) phoned mewith the news that a soon-to-be-
Deceit in the Nameof Conservation
JENNIFER MAROHASY
published research study had foundthat elevated levels of pesticide resi-due most likely from cane farmingwere accumulating in the fat tissueof dugongs Media headlines fol-lowed including Pesticide in reefcreatures and Cane burning link withdioxin in dugong
I obtained a copy of the studyand found it was primarily an analy-sis of the type and quantity of diox-ins found in the fat tissue of dug-ong carcasses that had been killedin fishing nets1 Dioxins are a groupof organochlorine compounds com-monly associated with industrialwaste incineration The researchpaper made reference to a differentstudy that had analyzed the dioxinsfound in soils under sugarcane cul-tivation and commented that thecane-land soils and dugong fatsamples both had elevated levels ofthe same type of dioxins
Concerned by this news I con-tacted a dioxin expert at the Uni-versity of Queensland Dr BrianStanmore informed me that thetype of dioxin considered by theGBRMPA to be elevated in thedugongs was common and the leasttoxic of all dioxins Furthermore DrStanmore indicated that the levelof dioxins found in the dugongs wasless than the national average inpeople in the United States Hecommented that lsquoit looks like thedugong is better off than we arersquo
The GBRMPA study clearlystated lsquoAll (dugong) carcasses werein good condition at the time ofsampling All animal deaths wereconfirmed or suspected (fishing) netdrowningrsquo However instead of fo-cusing on net fishing practices the
environmental management were oflittle significance compared with theneed for a re-creation of a mythicalpristine Nature
Elements of this attitude he sug-gested might underlie some of thepressures which discourage the pre-scribed burning of National Parksand State Forests
Whether this hypothesis provesvalid or not there is little doubt thatthe management of Australiarsquos parksforests and other public lands willcome under greater scrutiny as a re-sult of the horrific fires of 2003 Thescale of damagemdashhuman economicand environmentalmdashis such that atleast three separate inquiries Fed-eral Victorian and from the ACThave already been proposed
The overwhelming view of del-egates at the IPA forummdashas re-flected in questions from the floorand in post-conference discussionsmdashwas that only a Federal inquiry islikely to achieve an adequate resultThis is because State and TerritoryGovernments in their role as landmanagers must share direct respon-sibility for any lack of prescribedburning and other forms of hazard re-duction that might have contributedto these fires This means that theycould potentially face hugely expen-sive legal claims and that as a re-sult there could be pressure on themto manipulate terms of reference andother criteria to diminish scrutiny ofthese important issues
Even if this concern proves ut-terly unfounded the public percep-tion could still linger that any suchinvestigation was a State Govern-ment inquiry into a matter in whichthe State had a very real vested in-terest For these reasons a Federalinquiry would have greater credibil-ity and is in fact essential if we areto come to a comprehensive under-standing of the causes of last sum-merrsquos catastrophic bushfires
Graham White is an issues management consultantwho chaired a session of the IPA bushfires forum
API s
8 MARCH 2003
E V I E WR
GBRMPA subsequently providedfunding for a full investigation bythe National Research Centre forEnvironmental Toxicology(NRCET) into the likely origin ofthe dioxin considered to be at el-evated levels in the dugong car-casses including possible links withsugarcane production
Two years later the NRCET in-vestigation concluded that the di-oxin of concern to the GBRMPAwas common in soils along the en-tire Queensland coastline includ-ing in regions beyond sugarcane cul-tivation2 Analyses of dated marinesediment cores indicated that thechemical was present prior to Eu-ropean settlement in QueenslandIn other words the dioxin is a natu-rally occurring organochlorine andnot a pesticide residue There areapparently many naturally occur-ring non-toxic dioxins
But what of the organochlorineinsecticides used in the sugar indus-try from the late 1940s until theywere banned in 1987 Have thesepesticides been found in dugongs
The GBRMPA and the Austra-lian Institute of Marine Science(AIMS) have undertaken extensivesurveys for traces of organochlorineinsecticides including an Australia-wide programme for collecting andtesting samples from stranded or re-cently killed dugongsmdashfrom whichthe dioxins were isolated While itwas expected that these program-mes would find persistent orga-nochlorine pesticide this has notbeen the case
Estuarine and near-shore marinesediments have been extensivelysampled on the basis that these ar-eas are likely to contain the high-est concentrations of contaminantsfrom human activity in adjacentcatchments Trace amounts of someorganochlorine insecticides havebeen found in sediment from a smallnumber of river mouths3 No orga-nochlorine insecticides howeverhave been found in near-shore ma-rine sediments of the Great BarrierReef4 This finding has surprised
many researchers some of whomhave postulated that the absence oforganochlorine contamination inthe inner shelf is a consequence ofenhanced degradation of the orga-nochlorines in the aquatic system
In late November 2002 I re-ceived a copy of the draft summaryof the Baker reportmdashthe report sub-sequently described by the Premieras the best available science I no-ticed the allegation of elevated con-centrations of fat-soluble pesticide
in dugongs I emailed Dr Baker que-rying this and other allegations inthe draft summary Dr Baker repliedthat he would consult with the Sci-ence Panel and get back to me Thereport was published two monthslatter without any changes to thesummary
The reef pesticide research iswell-documented and should be un-derstood by members of the SciencePanel In fact a member of the Sci-ence Panel communicated the find-ings from the NRCET investigationto me in September 2001 Whythen was the allegation of pesticidein dugongs included in the originalsummary report Why was the alle-gation not corrected after I brought API
the error to Dr Bakerrsquos attention inDecember 2002
Two years earlier following pres-sure from the World Wide Fund forNature (WWF) and as part of theQueensland governmentrsquos reelec-tion campaign the QueenslandPremier committed his governmentto saving the reef Since this timeit has been Queensland governmentpolicy that the reef is in troubleThe on-going deception is perhapsnecessary to maintain the percep-tion that the reef is in trouble
NOTES1 Haynes D Muller J F amp
McLachlan MS (1999) lsquoPoly-cholorinated dibenzo-p-dioxinsand dibenzofurans in Great Bar-rier Reef (Australia) Dugongs(Dugong dugon)rsquo Chemosphere38 pages 255ndash262
2 Prange JA Gaus C PapkeO amp Muller JF (2002) lsquoInves-tigations into the PCDD con-tamination of topsoil river sedi-ments and kaolinite clay inQueensland Australiarsquo Chemo-sphere 46 pages 1335ndash1342
3 Haynes D Muller J amp CarterS (2000) lsquoPesticide and Herbi-cide Residue in Sediments andSeagrasses from the Great Bar-rier Reef World Heritage Areaand Queensland Coastrsquo MarinePollution Bulletin 41 pages279ndash287
4 Cavanagh JE Burns K ABrunskill GJ amp Coventry RJ(1999) lsquoOrganochlorine pesti-cide residues in soils and sedi-ments of the Herbert and Bur-dekin River regions northQueenslandmdashimplications forcontamination of the GreatBarrier Reefrsquo Marine PollutionBulletin 39 pages 367ndash375
Dr Jennifer Marohasy is Environment Managerwith Queensland Canegrowers Organisation Ltd
Why was theallegation of pesticidein dugongs included inthe original summary
report Why wasthe allegation notcorrected after I
brought the error toDr Bakerrsquos attentionin December 2002
9MARCH 2003
E V I E WR
IN THE LONG AGOPlanet Earth condensed 4550million years ago (Ma) from re-cycled stardust Since that timethe continents have been enlarg-ing Earth materials have beenconstantly recycled and the Earthand all associated systems havebeen dynamically evolving TheEarth has not stopped being anevolving dynamic system just be-cause humans now live on thecontinents
As soon as there was liquid wa-ter on Earth there was life Bac-teria slowly diversified and by thetime the Earth was middle agedone group of bacteria had emit-ted such large quantities of oxy-gen (O2) that the atmospherecontained minor O2 Some of thisexcess O2 was trapped in rocks byweathering most dissolved in theoceans resulting in the precipita-tion of iron oxides It is these ironoxides that form the great iron orefields of planet Earth (for ex-ample in the Hamersley Basin)Life the atmosphere the oceansand the rocks interacted a pro-cess that has been occurring forat least 2500 million years on ourdynamic evolving planet
For at least the last 2500 mil-lion years the continents havebeen pulled apart and stitchedback together Every time thecontinents are pulled apart hugequantities of volcanic water car-bon dioxide (CO2) and methane(CH4) are released into the atmo-sphere and greenhouse conditionsprevail When continents stitchtogether mountain ranges formMountains are stripped of soilsnew soils form and remove CO2
The Past is the Key to the PresentGreenhouse and Icehouse over Time
IAN PLIMER
from the atmosphere these soilsare stripped from the land and theCO2 becomes locked in sedimentson the ocean floor When atmo-spheric CO2 is low glaciation oc-curs Large climate cycles can berelated to plate tectonics
The origin of the greatest cli-mate change on Earth is anenigma Between 750 and 600Ma there were two major glacialevents and numerous smallerevents Sea level changed by upto 400 metres and interglacial seatemperatures were 40˚C Afterglaciation the atmosphere hadsome 20 per cent CO2 and bacte-ria thrived and diversified in thewarm oceans Multicellular lifeappeared diversified and used theCO2 to make shells and skeletonsThis explosion of life from 580 to520 Ma gave us all of the majorlife forms currently present onEarth
Plants appeared at 470 Ma andthere was a major mass extinctionof multicellular life at 430 MaThe origin of this mass extinctionis not known Vacated ecologieswere quickly filled and life con-tinued diversifying Between 368and 248 Ma massive coal depos-its formed there was a major 50million-year period of glaciationand the atmosphere was blessedwith a very high CO2 and O2 con-tent Life continued to diversifyMinor mass extinctions continuedand at 248 Ma the biggest majormass extinction on Earth tookplace Some 96 per cent of spe-cies became extinct Life diversi-fied quickly to fill the vacatedecologies The record written instone by fossils in the period520Ma to the present shows thatthe planet is a warm wet green-house volcanic planet with thenormal cycles of rising and fall-
Sea Levels
Greenhouse Greenhouse GreenhouseIcehouse Icehouse
Tem
pera
ture
Tem
pera
ture
Millions of years ago1000 900 800 700 500 400 300 200 100600
There are 400 million year supercycles of greenhouseicehouse related to the pulling apart and
stitching together of continents
Icehouse
s
s
10 MARCH 2003
E V I E WR
ing sea levels rising and fallingland levels and changing climates
THE DAY BEFORE YESTER-DAYSome 120 million years ago Aus-tralia was at the South Pole en-joying a temperate climate Glo-bal sea level was more than 100metres higher than at present thesea surface temperature was 10ndash15˚ C higher than now and manycontinents were covered by shal-low tropical seas Planet Earthwas a warm wet greenhouseparadise and thick vegetationcovered the land masses Atmo-spheric CO2 was about 1 per centwhen the worldrsquos major coal de-posits formed 368 to 248 Ma
From 250 to 120 Ma the glo-bal CO2 content varied greatlyand increased to a peak 6 per centCO2 120 Ma This derived fromintense volcanic activity associ-ated with continental fragmenta-tion Thick vegetation coveredthe land masses
Australia started to pull awayfrom Antarctica at about 100 MaIt drifted northwards the TasmanSea opened and the IndianOcean opened with India start-ing to drift away from WesternAustralia The opening of theTasman Sea produced the rise ofthe Great Dividing Range thediversion of the major river sys-tems and changes to the climateof eastern Australia
A minor mass extinction oflife 90 million years ago was theresult of volcanoes in the Indianand Pacific Oceans belching outCO2 and other gases into theoceans and atmosphere Therewas a runaway greenhouse untilvolcanism waned But volcanicemissions of CO2 are common In1984 and 1986 burps of CO2 fromthe volcanic crater lakes ofMonoun and Nyos respectivelykilled thousands and added CO2to the atmosphere Near MtGambier volcanic CO2 is com-mercially extracted from rocks
one small hot spring on Miloscontributes 1 per cent of theplanetrsquos volcanic CO2 and hugequantities of CO2 the planetrsquossecond most common volcanicgas constantly leak from unseensubmarine volcanoes
Another minor mass extinc-tion at 55 Ma was caused by aCaribbean volcano There was arise in sea temperatures by up to8˚C for 100000 years and atmo-spheric CO2 was 10 times that oftoday During this greenhouseplankton sucked up the atmo-spheric CO2 mammals thrivedand life filled the vacated ecolo-gies Atmospheric CO2 decreasedfrom 3500 to 700 ppm within amillion years stayed low until 47Ma and went up and down toabout the present level (365ppm) at 40 Ma
India collided with Asia at 50Ma Uplift produced the TibetanPlateau which started to scrubCO2 out of the atmosphere TheTibetan plateau is still rising andCO2 is still being scrubbed out ofthe atmosphere The Drake Pas-sage opened as South Americadrifted from Antarctica a cir-cumpolar current developed andAntarctica refrigerated SouthernAustralia from 17 to 145 Mawas again tropical with mid-lati-tude temperatures 6˚C warmerthan today Atmospheric CO2was 180ndash290 ppm This green-house occurred when atmos-pheric CO2 was 30ndash50 per centlower than today
By 5 Ma Earth cooled andwas so cool that very slight orbitalwobbles now had a bearing on cli-mate and every 100000 yearswas characterized by 90000 yearsof glaciation and 10000 years ofinterglacial We are currently inone of those interglacial periods
The penultimate interglacialwas 120000 years ago Homoerectus Homo neanderthalensisand Homo sapiens coexisted sealevel was 6 metres higher than atpresent the planet was far
Millions of Years Ago
400 200600 0
2
4
6
8
10
12
14
16
18
20
0
Perc
enta
ge o
f CO
2
PrecambrianIce Age
s
Permian-CarboniferousIce Age
s
LastIce Age
s
There have been enormous changes incarbon dioxide (CO2) over time related to
volcanism sedimentation mountain-building and life on Earth
11MARCH 2003
E V I E WR
warmer and wetter than now andatmospheric CO2 was 78 per centof that today After warming theatmospheric CO2 and CH4 con-tent increased suggesting that at-mospheric temperature rise drivesan increase in atmospheric car-bon dioxide and methane con-tents During the history of thelatest glaciation armadas of icewere released into the sea every7000 years resulting from thephysical failure of thick icesheets These had a profound ef-fect on climate Small cool peri-ods occurred every 1100 to 1300years
The zenith of the last glacia-tion was 18000 years ago Sealevel was 130 metres lower thantoday temperature was 10ndash15˚Clower than today and the north-ern hemisphere was covered byice to 38˚N up to 3 kilometresthick
YESTERDAYThe northern polar ice sheetstarted to melt 14700 years agoThere were very rapid and majortemperature fluctuations sea lev-els rose and fell and the total sealevel rise over the last 14700years has been at least 130metres Sea level rise resulted inthe breaching of the Mediterra-nean into the Black Sea Basinsome 7600 years ago and is prob-ably the origin of the SumarianBabylonian and biblical stories ofa great flood
One of the consequences of amassive sea level rise over the last14700 years is that the WestAntarctic Ice Sheet was nolonger underpinned by the landTwo thirds of the West Antarc-tic Ice Sheet collapsed into theoceans and sea level rose 12metres The final third of theWest Antarctic Ice Sheet has yetto collapse to produce a 6 metresea level rise as part of the dy-namic post-glacial climate onEarth Climate changes inducedby changes in ocean currents
cooled North Africa grasslandschanged to a desert humans mi-grated and the great Mesopo-tamian cities were established
Sea levels were 1ndash3 metreshigher in a greenhouse 6000years ago There was 20 per centmore rainfall Cold dry periodsglacier expansion and crop fail-ures between 5800 and 4900years ago resulted in deforesta-tion flooding silting of irrigationchannels salinization and thecollapse of the Sumerian citystates Long periods of El Nintildeo-induced drought resulted in theabandonment of Middle EasternIndian and North Americantowns In 1470 BC () Thira ex-ploded weakened the dominantMinoans and changed the courseof western history
Global cooling from 1300 to500 BC gave rise to the advanceof glaciers migration invasionand famine Global warmingcommenced again at 500 BCthere was an excess of food andgreat empires such as the AshokaChrsquohin and the Romans grewContemporary records and Ro-man clothing shows that condi-tions were some 5˚C warmer thantoday
In 535 AD Krakatoa explodedas did Rabaul in 536 AD TheEarth passed through cometarydust in 536 AD The dusty atmo-sphere reflected heat and dark-ness prevailed As a result theclimate cooled and there wasfamine and warfare Changes inocean currents resulted in theMedieval Warm Period from 900to 1300 AD The first to feel thechange were the Vikings whowere able to navigate the north-ern waters colonized Newfound-land colonized Greenland andestablished extensive trade routesas far south as the modern GulfStates On Greenland crops weregrown and there were cattle Thiswould not be possible today Thewarmer wetter climate of Europeproduced excess crops and wealthwhich resulted in the building ofcastles cathedrals and monas-tries As with previous green-house events there was greatprosperity
In 1280 AD volcanic erup-tions on Iceland and a change inocean currents started the LittleIce Age which finished in 1920The North Sea froze in 1303 and1306ndash1307 there was massivefamine in 1315 and the plague
Sea
Surf
ace
Tem
pera
ture
degC
21
22
23
24
25
26
Years Ago
Large temperature changes over the last 200years have been recorded in history and fromthe oxygen isotopes of floating marine animals
Dark Agescold period
Medievalwarm period
LittleIce Age
2000 1500 1000 500 Now
s
12 MARCH 2003
E V I E WR
pandemic attacked the weakenedpopulation in 1347ndash1349 Therewas massive depopulation and ittook Europe 250 years to reachthe population of 1280 AD Dur-ing the Little Ice Age there werewarmer periods associated withsunspot activity During mini-mum sunspot activity (1440ndash1460 1687ndash1703 and 1808ndash1821) the intensely cold condi-tions were recorded by the Dutchmasters and King Henry VIII wasable to roast oxen on the frozenThames There were food short-ages Short cold periods occurredafter the eruptions of Tambora(1815) and Krakatoa (1883) re-spectively In fact 1816 wasknown as the lsquoyear without asummerrsquo This was the time whenTurner painted stormy oceansand skies full of volcanic dustMary Shelley wrote Frankensteinand Byron wrote Darkness
TODAYThe twentieth century and earlytwenty-first century AD are timesof natural post-glacial reboundIce sheets a rare phenomenon inthe history of time still exist Sealevel is relatively low as are glo-bal temperatures and atmos-pheric CO2 Between 1920 and1945 there was a period of warm-ing (037˚C) and another thatcommenced in 1976 (032˚C) In1976ndash1977 global temperaturesin the lower atmosphere jumped03˚C sea surface temperature inthe equatorial Pacific jumped06˚C sea surface temperatureduring upwelling increased 15 to3˚C but there was reduced up-welling the heat content of theupper 300 metres of the worldrsquosoceans increased there was in-creased wave activity in theNorth Sea and the length of theday changed The stepwise in-crease in temperature in 1976ndash1977 shows that there was a ma-jor re-ordering of the ocean heattransport coinciding with anorbital change expressed as a
change in the length of the dayMaybe the global warming of thetwentieth century is just a mea-sure of the variability on a dy-namic evolving planet
To put such measurementsinto perspective over the historyof time changes in atmospherictemperature in the twentieth
century can only be consideredsmall and slow A 24-year globalcoverage of satellite atmospheretemperatures shows only modestwarming in the Northern Hemi-sphere and a slight cooling in theSouthern Hemisphere Tempera-ture measurements from balloonsagree with the satellite measure-ments for the period of overlapBecause greenhouse warming is aphenomenon of the atmospheresignificant changes should havebeen recorded They have not
CONCLUSIONSUnderpinning the global warm-ing and climate change mantra isthe imputation that humans liveon a non-dynamic planet On allscales of observation and mea-surement sea level and climateare not constant Change is nor-mal and is driven by a large num- API
ber of natural forces Change canbe slow or very fast However wesee political slogans such as StopClimate Change or governmentpublications such as Living withClimate Change demonstratingthat both the community andgovernment believe that climatevariability and change are notnormal By using the past as thekey to the present we are facingthe next inevitable glaciationyet the climate economic politi-cal and social models of todayassess the impact of a very slightwarming and do not evaluate thehigher risk of yet another glacia-tion Geology archaeology andhistory show that during glacia-tion famine war depopulationand extinction are the norm
In 1831 Admiral Sir JamesRobert George Graham had theUnion Jack hoisted on a volca-nic land mass that suddenly ap-peared near Sicily It was calledGraham Bank and was claimed byEngland It was also claimed bythe Kingdom of the Two Sicilieswho called it Isola Ferdinandeathe French (LrsquoIsle Julia) andother powers In the subsequentdispute over ownership Franceand the Kingdom of the TwoSicilies almost came to war andEngland and the Two Kingdomsof Sicily had a diplomatic rowDuring the intense diplomaticdispute the island quietly slippedback underwater Graham Banksserves to show that whateverpolitical decisions we humansmake the land rises and falls sealevels rise and fall and climateschange as they have done sincethe dawn of time
Ian Plimer is the Professor of Geology in the Schoolof Earth Sciences at The University of MelbourneThis article is an edited version of his recent paperto the IPArsquos Climate Conference delivered on 28
February 2003 a full version of which can befound on the IPArsquos Website
On all scales of
observation and
measurement sea
level and climate
are not constant
Change is normal
and is driven by a
large number of
natural forces
13MARCH 2003
E V I E WR
FOR two years the worldrsquossecond largest hydrocarbonsproducer spent beaucoupdollars on a clever public re-
lations and advertising campaign toconvince consumers that BP no longerstands for British Petroleum but for Be-yond Petroleum
One advert proclaimed lsquoWersquore oneof the largest producers of natural gashellip and are investing in the new energysources of the futuremdashhydrogen andwind Itrsquos a startrsquo Another tried to getthis line past the guffaw test lsquoWe be-lieve in alternative energy Like solarcappuccinorsquo
Many people expressed surprise thata huge oil company was so committedto alternative energy technologiesThey neednrsquot have
BPrsquos total six-year investment in re-newable technologies was $200 mil-lionmdashthe same amount it spent on thelsquoBeyond Petroleumrsquo advertising cam-paign Thatrsquos certainly an impressivetab for image enhancement But itrsquos adrop in the barrel for futuristic tech-nologies that were the centrepiece forthe slick marketing effort
Indeed all its preening and pufferynotwithstanding BPrsquos actual invest-ment in renewable energy was a whop-ping 005 per cent of the $91 billion itspent to buy oil giants Arco and Amocoback in the 1990s Moreover just as theadvertising campaign was windingdown BP announced it was spending$675 billion for a 50 per cent control-ling interest in a rich Russian oil pros-pectmdashand will be spending another$20 billion over the next five years ex-ploring this and other newer fieldsaround the world
In other words the advertising cam-paign was little more than lsquogreen-washingrsquomdashdisinformation intended topresent an environmentally responsiblepublic image BP wanted people to per-
BPmdashBack to PetroleumPAUL K DRIESSEN
theoretically harmless puffery It also re-flects the desire of many multinationalcompanies to appease critics and gaina public relations advantage over com-petitors by adopting the language ofideological environmentalism
This radical school of thought in-creasingly uses ethical buzz-words anddogmas to justify its demands Chiefamong them are sustainable develop-ment and the precautionary principlethe foundations of so-called lsquocorporatesocial responsibilityrsquo (CSR) and lsquoso-cially responsible investingrsquo (SRI) doc-trines
Eco-activists from affluent Westerncountries developed the doctrines topromote their agendas and oppose en-ergy and economic development BPhas long been at the forefront of theseefforts as a charter member of theWorld Business Council for SustainableDevelopment through frequent meet-ings with activist groups and by fund-ing many radical groups
The activists define what is lsquorespon-siblersquo focusing debate on conjecturalproblems and theoretical needs of fu-ture generations of wealthy elitesmdashandignoring real immediate life-and-death needs of people who struggledaily just to survive The stakes arehuge
More than 15 billion people in de-veloping countries still do not have ac-cess to electricity Half a billion womenand children spend their days collect-ing firewood or squatting in mud andanimal faeces to collect and dry ma-nure for fuel Millions die every yearfrom lung diseases caused by indoor airpollution from cooking fires and dys-entery due to contaminated drinkingwater
Hydroelectric or fossil fuel projectscould provide electricity for familieswater purification plants and economicdevelopment But radical activists op-
ceive it as a lsquosocially responsiblersquo leaderand reward it accordingly Few did
Green activists denounced BP forlsquohypocrisyrsquo and blasted the company forcontinuing to lsquoexploit some of theworldrsquos most sensitive ecological areasrsquoA major business magazine said sim-ply lsquoWell please If the worldrsquos secondlargest oil company is beyond petro-leum Fortune is beyond wordsrsquo
Meanwhile BPrsquos total wind and so-lar electrical output last year was barelyenough to keep the lights burning inRegina Saskatchewanmdashand thought-ful observers are beginning to realizethat wind and solar arenrsquot quite as eco-friendly as activists claim
A single new 555-MW gas-firedgenerating plant in California producesmore electricity than do all the statersquos13000 wind turbines The gas-firedplant occupies about ten acres the gi-ant 200-foot-tall windmills dominatethousands of once-scenic acres and killthousands of raptors and other birdsevery year Current photovoltaic tech-nology is just as habitat-hungry
Worse chief executive Lord JohnBrowne was forced to lower BPrsquos pro-duction estimates three times last yearand the companyrsquos 11 per cent returnon average capital was well below thatof arch-rivals ExxonMobil (137 percent) and Royal DutchShell (148 percent) BP share prices reflected inves-torsrsquo displeasure with its poor perfor-mance and the fact that the companyrsquosprofit margins would not improve for adecade or more if the company re-mained focused on renewable energyand old oil fields
Thus if BP ever really was BeyondPetroleum going Back to Petroleum(and Bigger Profits) was a sound busi-ness decision
However the lsquoGreat Beyondorsquo adcampaign involves more than meregreenwashing and disingenuous but s
14 MARCH 2003
E V I E WR
API
pose these projects and say that theworldrsquos rural poor should be contentwith solar panels on huts
Investors are also at risk particu-larly retirees whose futures depend onpension and mutual funds that ownnearly $8 trillion in market sharemdash50per cent of the total stock marketMany of these funds are managed lessto safeguard or benefit the investor thanto promote radical principles under thedisguise of so-called ethical funds
These funds claim to provide pro-fessional unbiased analytical and ad-visory services But in reality they sup-port political agendas based on often-questionable analyses and on lsquostake-holderrsquo (activist) input to justify howthey grade companies in client portfo-lios They regularly excoriate compa-nies such as ExxonMobil claiming itsrefusal to back the Kyoto climate treatywill destroy shareholder value Mean-while they praise companies such asBP and promote global governanceand solar panels on huts
Australiarsquos energy consumers willbecome yet another example of lsquocol-lateral damagersquo if the radicals havetheir way over global warming Onceagain some of the culprits are right inthe BP boardroom
In 1997 BP chief Browne endorsedthe global warming theory and saidtough measures should be imposedquickly even in the absence of scien-tific proof A Clinton-era Energy In-formation Administration report con-cluded that the climate treaty woulddrain $340 billion a year from the USeconomy The Australian economywould also get hammered And all thispain even assuming perfect compli-ance with the treaty would reduce av-erage global temperatures in 2050 byonly 02˚C below what they would bewithout the treaty according to theUSArsquos National Center for Atmo-spheric Research
But BP Australasia President GregBourne is undaunted Hersquos stumping thecountry from Melbourne to Brisbaneand Darwin to Perth importuning busi-nesses to pressure the PM to ratifyKyoto Could it be pure altruism Ormight the old profit motive be at work
A 1997 memo to Enron presidentKen Lay described BP as Enronrsquos lsquoin-ternational equivalentrsquo Indeed BP isstriving mightily to replace Enron asthe worldrsquos premier broker in the newbusiness of buying and selling permitsto emit greenhouse gases The expec-tation is that playing the climatechange game could earn BP billions ofdollars via traditional petroleum opera-tionsmdashand billions more via emissiontrading schemes The company is al-ready trading credits among its unitsas part of a training regimen for theanticipated emission Olympics
One cannot help but suspect thatthis huge EU oil giant might also bemotivated by Europersquos obvious desireto protect its industries from US and
other foreign competition They clearlysee the Kyoto Protocol not merely asan environmental programme but alsoas a way to pressure the United StatesAustralia and other countries to reduceenergy use and economic productivity
EU Environment CommissionerMargot Wallstrom put it bluntly whenPresident Bush abandoned the Kyotoclimate treaty lsquoThis is not a simple en-vironmental issuersquo she railed lsquoThis isabout international relations this isabout economy about trying to createa level playing field for big businessesthroughout the worldrsquo Several EU of-ficials echoed her sentiments suggest-ing that Americarsquos lower energy taxesconstitute an unfair trade advantagethat could justify trade sanctionsagainst the US
In short what we are witnessing isa profound and disturbing convergenceof ideology activism marketing poli-tics and financial gainmdashall in the ser-vice of radical policy agendas and allbeautifully attired in the lavish raimentof corporate ethics and responsibilityThis is proof positive that social respon-sibility can be a wondrous thing in thedexterous hands of craftsmen who re-ally know how to display and utilize it
How can we stop the charade Forstarters demand that corporate socialresponsibility puts people first puts de-velopment back into sustainable devel-opment and ensures that precaution-ary guidelines safeguard people andcommunities from the havoc wreakedby radical green policies Insist that alldecisions be based on sound peer-re-viewed science and solid evidencemdashnot on hysterical claims and shrillrhetoric by activists regulators andjournalists who reward pseudo-scien-tific soul-mates and pillory any scien-tists who dare disagree with them
Next urge principled regulators andjournalists to investigate these compa-nies and investor firms for self-servingarrangements and breech of fiduciaryduty Demand that the companiesfirms and activist groups open theirbooks and provide full disclosure oftheir meetings contacts and monetaryand other relationships
Last in this era of high-minded re-form prevail upon legislators to changethe law to make these groups subjectto the same false advertising laws andthe same standards of transparency andaccountability that activists insistshould govern for-profit corporationsUnbelievably right now these ideo-logues are mostly exempt
The world will thank you For it willbe a better safer more ethical placemdashespecially for energy consumers retir-ees and the worldrsquos poor
Paul Driessen is a senior fellow for the AtlasEconomic Research Foundation in Fairfax VA This
article is based on his recent white paper lsquoBeyondPetroleummdashor Beyond Probityrsquo which can be read
in its entirety at wwwcdfeorgdriessenhtm
BPrsquos total six-year
investment in renewable
technologies was $200
millionmdashthe same
amount it spent on the
lsquoBeyond Petroleumrsquo
advertising campaign
15MARCH 2003
E V I E WR
FOR three years Reputa-tion Measurement Ltd andThe Age and The SydneyMorning Herald have been
trying to impose their political agen-das on Australiarsquos top 100 corpora-tions They think that Australiarsquos cor-porations should be good citizens andthat by measuring what they think itmeans to be a good citizen they canchange corporate behaviour
Westpac ranked number one on the2002 Index and rated well in everycategory Flight Centre ranked num-ber one on financial performance but47 overall It was in the doldrums inevery other category including beingranked 99 on environment On thesurface this seems very strangemdashFlightCentre manages shopfront travel agen-cies The reason for this bizarre resultwas not hard to find
Reputation Measurement sug-gested that lsquocompanies seeking to dem-onstrate their worthiness as sociallyresponsible organizations are most suc-cessful when they widen their tradi-tional business stakeholder base to in-clude community stakeholdersrsquo Fur-ther lsquo[i]nvestors and consumers are in-creasingly making decisions based onlonger-term issues linked to a com-panyrsquos capacity to contribute to a sus-tainable futurersquo In other words theReputation Index is an instrument foradvancing a number of political agen-das corporate social responsibilitystakeholder capitalism and sustain-ability
For example corporate social re-sponsibility suggests a common agree-ment about what is good Whose defi-nition of good is to be believedmdashtheelectoratersquos or the activistsrsquo In a lib-eral democracy the rules are set by aconsensus that determines not so muchwhat is good corporate behaviour but
The Good Reputation Index 2002A Tale of Two Strategies
GARY JOHNS
what is and what is not acceptablebehaviour The Index is an exercise incapturing the reputation agenda andusing it to regulate corporate beha-viour
Stakeholder theory suggests that allinterests in an enterprise compete toobtain benefits from the enterprise butthat none has priority It is in effectasking lsquoin whose interests should theenterprise be runrsquo It assumes that so-ciety grants an enterprise the right toexist The community through its law-makers may grant licences and certainprivileges in return for the enterprisecomplying with the law It does notlicense stakeholders at large to imposetheir views on the corporation
Sustainability refers to ecologicalsustainability and ecological sustaina-bility is premised on the notion of lim-its to growth based on limits to resour-ces It argues that natural resources arebecoming scarcer It ignores the his-tory of technological innovation of-ten promoted by competition betweencorporations and the fact that such in-novation has extended physical re-sources in ways untold
An analysis of the 2002 Index re-veals that those corporations whosescore improved massively between2001 and 2002 did so because they didnot participate in 2001mdashthey wererated anywaymdashbut did so in 2002Conversely those whose score plum-meted in 2002 did so because they par-ticipated in 2001 but not in 2002Moreover the corporations who rosemassively in the ranks did not changetheir behaviour they just filled out theforms better
Greenpeace were very aggressive intheir attitude to corporations lsquoTo en-able us to verify your responses pleaseprovide us with further supportingdocumentation If hellip we are unable
to verify your response we will defaultyour response answer to a ldquodonrsquot knowrdquowhich will be marked and downgradedaccordinglyrsquo Unfortunately those ofwhom we would expect bettermdashforexample The Brotherhood of St Laur-encemdashalso penalized non-respon-dents As the technique was used byalmost all of the research groups thiswas presumably a deliberate strategy ofReputation Measurement Ltd
More disconcerting were reportsfrom corporations of the researchgroups touting for business by ringingfirms and offering their services to helpfill out the questionnaire Althoughthe level of disclosure has increasedsince the 2001 survey the touting con-tinued
The Index was published in Octo-ber 2002 obviously to coincide withthe reporting season and in the hopethat shareholders would use the Indexto seek changes to corporate behav-iour A sample of the major gainers andlosers on the Index reported no men-tion of the Index More importantlythere was no discernible impact onshare prices
The good news is that the Indexfailed miserably to achieve its objec-tives The bad news is that enough cor-porations played along to keep it alivein certain media and academic circlesIt was a chance for self-appointedNGOsmdashwho provided the ques-tionsmdashto regulate corporations bypublishing a list of good capitalists andbad capitalists Every corporation thatparticipated in the Index should thinkcarefully about whether it can justifythe agenda to its shareholders
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
16 MARCH 2003
E V I E WR
Tomorrowrsquos Reform
RALPH Waldo Emersontold us that lsquoa foolish con-sistency is the hobgoblinof little minds adored by
little statesmen philosophers and di-vinesrsquo and enjoined us lsquoto speak whatwe think today in words as hard ascanon balls and tomorrow speak whattomorrow thinksrsquo While statesmenshould not persist with known errortheir wanton inconsistency makespolicy formulation confoundedly dif-ficult
When he asserted that lsquoWhat de-termines the course of a nationrsquos eco-nomic policies is always the eco-nomic ideas held by public opinionrsquoLudwig von Mises must have hadeven less confidence in little states-men His pupil Friedrich von Hayekurged Antony Fisher not to enterpolitics but instead to found think-tanks which with fact and argumentwould change public opinion
Even among liberalismrsquos oppo-nents few today argue that Misesrsquoand Hayekrsquos ideas and Fisherrsquos liberalthink-tanks did not lead the 1980sand 90s almost world-wide liberal re-vival Why would they when bymuch the same means Fabian So-cialism had brought the welfare stateto Western nations In neither trendhowever were politicians the mereagents of popular opinion Especiallyin democracies political leadersrsquo ca-pacities to ignore it are indeed mod-est but their abilities to influence itare very much less so Even SaddamHussein works hard at influencingIraqi opinion Can we hypothesizethat the ways that leaders use theirinfluence distinguish tyrants fromdemocrats and the purposes forwhich they use it distinguish politi-cians from statesmen
Liberalismrsquos headlong chargethrough the corridors of power could
JOHN HYDE
arguments could have been em-ployed are nonetheless being de-fended by appeal to popular miscon-ceptions of the sort that PaulineHanson the Democrats and Greensactually believe Unless the majorparties have had a radical change ofheart they believe differently
Take the proposed Free TradeAgreement (FTA) with the UnitedStates Trade experts are not of onemind about its net worth My quar-rel is therefore not with the FTAitself but with the Governmentrsquos de-fence of it If the FTA will bring netbenefits then these will come mostlyfrom improved access to Americangoods and capital our own reductionof anti-competitive regulation ofdrugs medical insurance performingarts professional services textilesrural commodities etc and the dy-namic advantages of mixing it withthe Yanks But the government ispromoting the FTA almost solely inmercantilist (exports goodimportsbad) terms
To treat foreign goods servicesinvestment and ideas as an invasionparodies voluntary exchange whichdoes not happen unless both partiesbenefit The Government trumpetsa fact that nobody disputes namelythat it pays to sell into the best pay-ing markets but says nothing to edu-cate us in the advantages of buyingwell from foreigners as well asneighbours Once long ago Howardcriticized Pauline Hanson for her xe-nophobia That day he seemed to un-derstand the benefits of exchangewith foreigners
Until recently Australia hadbeen insisting that the only way toworld trade reform was via the mul-tilateral processes of the World TradeOrganisation and currently theDoha round A bilateral FTA with
not have proceeded without leaderssuch as Margaret Thatcher and ZhouEnlai who changed public opinionas did Bob Hawke in Australia Nowhowever liberalismrsquos charge hasslowed even in some places beensomewhat reversed Canberra hasnot been immune from trends thatsee politicians no longer so firmly re-sisting demands for economic privi-leges or as others see the same phe-nomenon no longer so blindly fol-lowing economic rationalism
Very poor economic decisionsaboundmdashrejection of the Trebeck re-port on petrol pricing preference forethanol production extending mo-tor and textile protection rural sub-sidies taxpayer contribution to theDarwin-to-Alice Springs railwayetc etc But there is also progressThe pride that John Howard takesin the fact that Australians are lessdivided against each other is surelyjustified The hugely importantlabour welfare and arguably also thehealth-care markets have been im-proved Budget balance has beenachieved albeit with high taxes Al-though net legislative and adminis-trative progress toward a more lib-eral more open more efficienteconomy has dwindled it would stillbe fair to say it has not been reversed
Our statesmenrsquos words as hard ascannon balls however that is thoseintended to enlighten rather thanappeal to public opinion are beingreserved for the Iraqi conflict In con-trast in the economic arena we areno longer encouraged to accept anyunwelcome truths Even when de-fending measures that I am morethan content to accept as beneficialthe government seems to select itsargument at best randomly ignoringprinciples of economic efficiency andequity Policies for which textbook
17MARCH 2003
E V I E WR
the US may or may not result in anet increase in trade flows but if itis not a meaningless piece of paperdelivering only political benefits tothe Government it will certainlydivert trade from our other tradingpartners How will China KoreaJapan etc react to losing their lsquomostfavoured nationrsquo status Such ques-tions should be addressed in termsthat do better than reinforce our xe-nophobic prejudices
By appealing to Hansonite mis-conceptions the Government mayand probably will improve itschances of bringing forward a policythat I am more than willing to ac-cept it believes is a good one It isafter all the recommendation of theDepartment of Foreign Affairs andTrade However by so doing it is re-inforcing delusions it must overcomefor further economic reform Whatis more I am reminded of a quip thatI am sure the PM has also heard lsquoNoGovernment is really dangerous un-til it believes its own bullshitrsquo Poli-ticians and I suspect bureaucratsalso are all too prone to believingtheir own utterances Unwilling toadmit their deceptions even whenspeaking in house they quickly con-vince themselves of the truth of theirown and colleaguesrsquo loose rhetoricand worse These are the people whomust negotiate the Agreement whilelooking over their shoulders at anAustralian electorate whose alreadystrong mercantilist tendencies havebeen reinforced by the people bestplaced to disabuse them The poten-tial cost is obvious
The US Free Trade Agreement isbut an example of a tendency thatought to be worrying In debateabout refugee policy motor fuel sup-ply single-desk wheat sales the sup-ply of medical practitioners and pres-ervation of the environment has notthe Government employed argu-ments that are not compatible withits professed liberal philosophy Hasit not seemed that it does not knowthe standard liberal responses to theself-serving demands of vested inter-ests and bigots With due respect to
Emerson consistency allows deci-sions to be made without the neces-sity of thinking every one throughfrom fundamental principles whichnobody in authority has the time orthe mental agility to do
Politically disinterested educa-tors such as the IPA can often callsome pretty good minds to their aidEven so when the Government it-self fosters public misconceptionthey cannot be expected to undo theerror The single greatest sin of thecurrent government is that it is notbuilding opinion for tomorrowrsquos re-form Why not
I suggest because it is politicallydifficult Whereas calls to resist out-siders appeal to deeply ingrainedtribal instincts calls to uphold thecivilizing and wealth-building insti-tutions that afford protection tostrangers and admit their goods ser-vices persons and ideas make nosuch visceral appeal These codes aremuch later developments in themarch of mankind and to manypeople they remain counter-intui-tive They must therefore be de-fended by sustained argumentHayek knew that politicians whosetime horizons in the absence ofknown crises tend to be the nextelection would (to use Howardrsquosown expression) seldom have the
tickers He turned therefore to theless articulate but far more resolutethink-tanks
It is relatively easy to appeal tothe sort of Chauvinism that sur-rounds sporting activity and argu-ments about refugees and meat quo-tas When a Prime Minister talks ofsovereignty guaranteeing our bor-ders or the interests of our exportersor domestic manufacturers he is notnecessarily wrong but his task iseasier than that of defending rulesthat permit voluntary co-operationamong strangers The principle thatdefends the non-unionistrsquos right towork the consumerrsquos right to buy for-eign goods and everyonersquos right tohear alien ideas and which shouldprotect racial and religious minori-ties from exclusion still needs hisleadership
Unless statesmen recognize theinconsistencies that arise not fromthe changed opinions that con-cerned Emerson but from trying tobe all things to all men they arelikely to govern in ways that are un-fair and inefficient If the public doesnot recognize consistency then thelsquolittle statesmenrsquo may find them-selves compelled to yield to the de-mands of the more articulate vestedinterests In such a case Heaven helpthe inarticulate who will be effec-tively disenfranchised But the insti-tutions which when consistentlyapplied give us liberty equity andprosperity are not strongly intuitive
They nevertheless distinguishAustralian society from say Iraqi so-ciety They give us the economicstrength to defy tyrants and they giveus a land worth defending They arecertainly not in danger of disappear-ing but they are in danger of beingeroded Lead us Mr Howard
While statesmen
should not persist
with known error
their wanton
inconsistency makes
policy formulation
confoundedly
difficult
API
John Hyde is a Senior Fellow with the Institute ofPublic Affairs His book Dry In Defence of
Economic Freedom was published by the IPA in November 2002
18 MARCH 2003
E V I E WR
DESPITE the obsessivepublic attention to pricesat the petrol pump thepetroleum-refining sector
rarely registers on the media radarscreen This is unfortunate as the sec-tor fuels most movement of peopleand goods in our economy and soci-ety And it is in trouble
It is fragmented stunted and sur-vives by abjuring profit and mortgag-ing its future Without radical reshap-ing it is likely to wither leaving usexposed to the vagaries of the inter-national refined-products market
FEATURES OF THE AUSTRA-LIAN REFINING SECTORThe first thing to note is that by in-ternational standards Australia is arelatively small player The most re-cent international figures show thatour total output of refined productsin the third quarter of 2002 was 89million tonnes This compared withOECD production of 486 milliontonnes including US production of202 million tonnes Total Australianrefinery capacity of 870000 thousandbarrels per day (bpd) compares withthe figures for China (53 million)South Korea (26 million) and Singa-pore (11 million) Total regional re-fining capacity and production con-tinues to grow as Australiarsquos stagnatesIn the five years to 2000 regional out-put grew by 22 per cent
Second the structure of the indus-try is weak The dispersed geographi-cal distribution of our refining sectorreflects its historical developmentwith each State capital city support-ing one or more refineries Over thelast two decades the number of ma-jor oil companies operating in Aus-
Petroleum RefiningRationalization or Atrophy
JIM HOGGETT
tralia has shrunk from nine to fourAlthough the number of players hasmore than halved the number of re-fineries has reduced by only two fromten to eight The average capacity ofAustralian refineries is around100000 bpd New refineries in theregion are generally significantlylarger Singaporersquos largest has a capac-ity of 375000 bpd
Given the open Australian mar-ket our ex-refinery prices are virtu-ally set by the major exporters in theregion who are also operating on tightmargins Moreover the proportion-ately heavy demand for diesel in SEAsia tends to generate a persistentsurplus of gasoline which is availablefor export to Australia at discountedprices
The pattern of relatively smallscattered refineries is no longer opti-mal in an open market in which weare a price-taker
Third despite its sub-optimalstructure the Australian refining in-dustry is not grossly inefficient Oneindicator is the value added per em-ployee which is in the top five per-formers in the Australian manufac-turing sector
The cost competitiveness of Aus-tralian products is indicated by thefact that we have the cheapest ex-taxprice of petrol in the OECD Perfor-mance comparisons with the rest ofthe AsiandashPacific however suggestthat we lag the average efficiency inthe region And the best performersin the region are superior to our best
Finally the financial performanceof the industry is poor gross annualrevenues for the whole industry in-cluding marketing were $32 billionin calendar year 2001 For the five
years to 2001 the return on assets forrefining and marketing averaged 38per cent and was negative in the lasttwo years The indications are that2002 may have been a better year forthe industry but that the return onassets remains well below the cost ofcapital Over the four years to 2001the fixed asset base of the industrydeclined by almost 6 per cent to $12billion even after $24 billion of newinvestment in the period
This is clearly unsustainable andit raises the question Why is no-oneleaving the game
There are perhaps four main rea-sonsbull First the industry has engaged in
continual productivity improve-ment allowing it to keep withinrange of ruling prices
bull Second each refiner hopes thatsomeone else will blink first sothat the waiting will pay off
bull Third the costs of leaving thetable the exit costs are very highbecause of the nature of the prod-uct and the long occupancy ofmost sites
bull Fourth even while profitability islow the industry has generallybeen marginally cash positive
These add up to a big lsquofirst mover dis-advantagersquo
FUTURE TRENDSClearly petroleum will remain ourmost important energy source Petro-leum products constitute 52 per centof Australiarsquos final consumption ofenergy Liquid petroleum fuels pro-vide more than 95 per cent of Aus-traliarsquos transport needs There are nomajor foreseeable influences that willaffect this pattern dramatically There
19MARCH 2003
E V I E WR
have been major advances in fueleconomy and these will no doubtcontinue But more than counterbal-ancing this is the inexorable growthin demand for personal mobility andfor goods from distant parts Althoughgrowth in energy consumption mayslow down in Australia we will notbe reducing our consumption to anysignificant degree
Our export role will also be lim-ited Australian export volumes havetended to be steady over recent yearsand future new export potential forpetroleum products seems likely to beminimal China and India have re-cently become major exporters par-ticularly of gasoline Refinery capac-ity is planned to continue to growstrongly in the region even thoughthere is already significant excessThe decline in capacity utilization inmajor exporters such as Singaporewill make exporting difficult Further-more it is expected that productspecifications in Asia the US andEurope will converge in the comingyears thereby eliminating niche ex-port opportunities
The choice we face is what to doabout our essentially import-compet-ing industry
INCENTIVES NOT STRONGWhile there are strong pressures forthe industry to restructure there islittle incentive to invest for this pur-pose Investments in the Australianrefining industry have to competewith many alternatives across theglobe
Lack of sufficient return is thesingle biggest deterrent to investmentin the industry at present But thereare othersbull There is no prospect of strong growth
in demand to offset the substantialrisks associated with large new in-vestments
bull The persistent refinery capacity over-hang in our region will keep sus-tained pressure on our margins
bull The corporate taxation regime is nowless favourable than hitherto after thesubstitution of effective-life foraccelerated depreciation The
competing Singapore option offersa three-year write-off
bull The regulatory cost burden is grow-ing This applies to all Australianindustry but is potent in overseascomparisons Tighter fuel stan-dards environmental restrictionsintervention in prices and indus-trial law are some of the factors
bull There is increased sovereign riskstemming from inconsistent regula-tions We have eight parliamentswhich enact inconsistent laws Acurrent example is the higher fuelstandards applied in Western Aus-tralia
bull The sovereign risk also arises fromuncertainty in the regulatory processThere are unpredictable changesof direction (the deferral of thediesel sulphur excise differential[DSED]) and uncertainty in theface of conflicting interests (willthe Government act on ethanolcontent)
All these factors enter into the riskreward calculation When the re-wards are minimal the risks take onan extra dimension
WHAT INDUSTRY STRUC-TURE DO WE NEEDThe short answer is we cannot knowin detail
In the Downstream Petroleum In-dustry Framework 2002 the Depart-ment of Industry Tourism and Re-sources set out a broad vision
bull A preference for market-based so-lutions
bull A strong efficient environmen-tally responsible industry supply-ing most of the nationrsquos needs forproducts
bull Regulation only for market failureor national interest objectives
bull Regulation to be transparent andconsistent
bull Reform and regulation to maxi-mize long-term community ben-efitThis vision has some prescriptive
elements but the Government hasmade it clear that it will not nomi-nate an optimal number of refineriesor a pattern of production
The general public would probablyopt for a structure that guaranteedlower more stable automotive fuelprices Unfortunately they cannothave both in the short term
In fairness the investors in the in-dustry are the ones entitled and bestfitted to determine its future In theextreme they will do it anyway bypersisting or walking away Generallyspeaking they will seek to maximizetheir returns and thus promote themost efficient use of resources
Australian refineries are not inef-ficient but that is not the point Ourmarket is open so the competitionwe face is the best of the overseas per-formers often with more favourabletax and subsidy regimes
Nor is this simply a question ofclosing the smallest refineries A bet-ter approach might well be to allowrefining companies to concentrate onwhat they do bestmdashperhaps throughrefinery alliances Caltex and Shellhave co-operated in this way in Thai-land
The fact is that the detail of thedecisions can only be made by theindustry relatively free of governmentdirection The series of detailed de-cisions entailed will determine theoverall structure of the industry
COMPETITION REGULATIONCAN IMPEDE RESTRUCTURINGThe relevant provision of Section 50of the Trade Practices Act (TPA) pro
While there are
strong pressures for
the industry to
restructure there is
little incentive to
invest for this
purpose
s
20 MARCH 2003
E V I E WR
hibits mergers or asset acquisitionsthat would have the effect or belikely to have the effect ofsubstantially lessening compe-tition in a marketIt is both potentially and in prac-
tice an extremely restrictive provi-sion The Australian Consumer andCompetition Commission (ACCC)has expressed concern at concentra-tion in the sector in applying the pro-vision
The ACCCrsquos concerns seem ex-aggerated in the light of history Butthey are complemented by a persis-tent public misapprehension thatlarge petrol price swings equal profi-teering This perception has been soexploited for political advantage andmedia excitement that it is now al-most impossible for the truth toemerge
The future intensity of competi-tion in this industrymdashif it is allowedto restructuremdashshould not be indoubt Any rationalization would inall likelihood still leave strong do-mestic competition in each majorproduct category perhaps with fewermore efficient production units
The market is also contestableThere would be numerous potentialimporters and many independent re-tailers High margins would be rap-idly eroded by competition As re-cently ruled in the Boral case mar-ket reality is more conclusive than aperception of anti-competitiveness
Proposed mergers have been per-mitted in the past but the process isslow and permission is generally onlygranted with severe conditionsNonetheless there is a strong case forallowing restructuring within theterms of the merger provisions
AUTHORIZATION COULD BETHE KEYIf Section 50 of the TPA is an im-passable barrier then the authoriza-tion provisions of the Act could bethe way to greater efficiency The testsunder these provisions require a pub-lic benefit which outweighs the com-petition detriment The ACCC listsfostering business efficiency industry
rationalization and import-competi-tiveness as important public benefits
There is a strong prima facie casethat rationalization of the industrycould satisfy these tests It wouldallow greater scale of productioneconomies in distribution and closureof the least efficient production units
But the authorization process isslow and the onus for demonstratingthe public benefits rests on the appli-cant Slow process can amount to ef-fective rejection
POLICY OPTIONS AND REC-OMMENDATIONSIf government cannot help the indus-try to adjust it should allow it to ad-just by supporting sensible changeThis would involve both improving
the operating environment throughregulatory reform and altering thebalance of competition regulation sothat the industry could restructurevoluntarily The CommonwealthGovernment has already indicated awillingness to support both but hasnot yet delivered
The ball would then be in theindustryrsquos court to bring forward newproposals if a new policy environmentcould be created This could all hap-pen within a very broad strategicframework agreed with the industrywhereby Australia continued to besure of sufficient refining capacity tomeet a severe international fuel short-age
We therefore recommend thatbull The Commonwealth Govern-
ment provide explicit indicationto the ACCC of the public ben-efits it sees from the rationaliza-tion of the refining sector In par-ticular joint ventures should becontemplated
bull The ACCC give sufficient weightto the public interest benefits ofrestructuring to allow rationaliza-tion of production facilities
bull All governments reduce distortingfuel subsidies and taxes that favourparticular sectors or fuels
bull The State Governments act im-mediately to harmonize their regu-lation of the industry and agreenot to issue any new inconsistentregulation
bull More specifically the States havea single set of fuel standards withwhich refiners can reasonablycomply withdraw from all formsof price regulation and refrainfrom thwarting or distorting therationalization process
bull Governments generally not intro-duce new regulations mandatingthe use of alternative fuels
CONCLUSIONThe choice for the industry appearsto be between accelerated rational-ization and atrophy The process ofchange is something which the indus-try must plan and effect The task isnot impossible but it will require theactive support of government at alllevels For the time being there is anexpressed willingness at the Com-monwealth level but no real solu-tions
If nothing is done the refiners willcontinue to stumble along in a regu-latory fog and will invest only whenobliged to do so by changing fuel stan-dards They will become increasinglyvulnerable to low-priced imports andeventual closure
Jim Hoggett is a Senior Fellow at theInstitute of Public Affairs
If Section 50 of the
TPA is an impassable
barrier then the
authorization
provisions of the Act
could be the way to
greater efficiency
API
Last week the Government tabled 22 volumes of theCole Royal Commission into the Building andConstruction Industry Former Court of Appeal judgeTerence Cole made 392 specific findings of unlawfulconduct and in the confidential final volumerecommended that 31 individuals be referred for possiblecriminal prosecution As was to be expected theconstruction unions claimed that the report was a witch-hunt and people who should have known better claimedthat Cole was biased
The anti-union allegations were never very plausiblegiven that most unions had refused to cooperate withthe Commission and had even boycotted theCommissionrsquos special conference on occupational healthand safety As things have turned out one of their ownhas fatally undermined the unionsrsquo case No less anauthority than the National Secretary of the ConstructionDivision of the CFMEU has unwittingly confirmed thatCole is right In what was no doubt an unguardedmoment John Sutton admitted to a Melbournenewspaper that ldquovirtually everything we do breaches partof this Actrdquo Suttonrsquos admission means that Colersquosdescription of a largely lawless industry can be disputedat the margins but not credibly denied The problemsof the industry have been established beyond credibledoubt and the question now is what needs to be doneabout it
Nothing says the CFMEU because itrsquos alright tobreak the law in the best interests of the working classLeading union officials take the view that in a toughindustry only wimps take the law seriously The newsthat ldquoonlyrdquo 31 individuals had been recommended toface criminal charges was greeted with somethingapproaching jubilation as if the industryrsquos code of silencebased on fear had largely kept the Royal Commission atbay
As the Australian Financial Review commented in aneditorial the unionrsquos dismissive reaction to Colersquos report
ldquospeaks as loudly as his damning findings of entrenchedlawlessnessrdquo Imagine the reaction if a royalcommissioner had identified 31 people in the financeindustry or the steel industry for possible criminalcharges This would rightly be regarded as the sign ofan industry in crisis demanding urgent governmentintervention
Change wonrsquot be easy in an industry conditioned tothink that might is right Change which shifts powerfrom one unscrupulous group to another will not bereform As Grocon has discovered the first company toldquobuck the systemrdquo is liable to heavy-duty industrialpayback No one wants to be the first to change butchange is necessary in the national interest
In 2002 the Victorian construction industry aloneaccounted for 17 per cent of all days lost through strikesThe West Australian construction industry accountedfor another 8 per cent of the national strike tallyConstruction is a $40 billion a year industry comprisingnearly six per cent of GDP and employing nearly500000 Australians Due to over-manning demarcationdisputes and chronic stoppages labour productivity incommercial construction averages 13 per cent less thanin home building Plastering the same wall in the sameway costs 40 per cent more in a high rise building thanin a standard house Just raising labour productivity incommercial construction to the home building standard(let alone the 50 per cent increase needed to match NorthAmerican levels) would mean according to Econtech aone per cent drop in the cost of living a one per centincrease in GDP and $23 billion in benefits toconsumers workers and taxpayers every year
Still change is about decent Australian values notjust a more efficient industry Workers donrsquot like latenight house calls compulsory attendance at demos anddays spent sitting in the shed to make an industrial pointany more than bosses Threats of violence contempt forcourt and commission orders mob rampages when one
Restoring the Rule of Law in theConstruction Industry
Tony Abbott MHR
s
As this issue of the IPA Review was at the press we were alerted to the delivery of the following speechby the Minister for Employment and Workplace Relations The paper marks a seminal change in the
governmentrsquos approach to systemic corruption in the construction industry and isanother major step in the reform of workplace relations in Australia
SI-1MARCH 2003
IPA REVIEW SPECIAL INSERT
side doesnrsquot get its way habitual failure to honouragreements and routine harassment of people exercisingtheir legal rights are not acceptable in modern Australiaand cannot be excused even in a good cause
Breaching ldquobourgeois lawrdquo may not matter tomilitant activists but few others take such a self-indulgent view Itrsquos said that ldquooppositions can afford tobe irresponsiblerdquo but no government or alternativegovernment can accept the principle of optionalobedience to the law of the land No less than the HowardGovernment the federal Labor Opposition and the stateLabor Governments understand the dangers of playingpolitics with the rule of lawmdasheven theauthority of laws they might preferto change such as the federal WorkplaceRelations Act
The rule of law is not asmorgasbord from which a fewfavoured items can be chosen and therest ignored Freedom under the lawrequires respect for the law generallynot just the laws individualspersonally support Obedience to thelaw is not a question of choice It is arequirement of civilisation because thelaw is our guarantee of equaltreatment after a fair hearing ldquoBe youever so high the law is above yourdquoThis reproach hurled at the Stuartkings has rightly echoed through thecenturies as a warning against theconceits of office and the arrogance ofpower regardless of the cause in whichitrsquos exercised
After last weekrsquos meeting of theWorkplace Relations MinisterialCouncil of the Council of Australian Governments stateand territory ministers were keen to declare in acommuniqueacute ldquothere was unanimous agreement thatunlawful behaviour in the building and constructionindustry is not acceptablerdquo This was an importantaffirmation of the rule of law in circumstances wheresome Labor ministers might have been tempted to putpolitics ahead of principle
Unfortunately the state and territory ministerssupported more powers for the Australian IndustrialRelations Commission to settle construction industrydisputes In fact the Commission already has power tosettle disputes Whatrsquos missing is effective power toenforce agreements The issue is not settling disputesThe issue is enforcing the law
The construction industry typically conducts itselflike this A certified agreement is in place including anagreed dispute resolution procedure Unions identify agrievance often a spurious safety issue Agreed disputeprocedures are not followed and a strike ensues eventhough strikes outside ldquobargaining periodsrdquo areldquounprotectedrdquo and theoretically subject to damagesorders At that point employers often ask theCommission to end industrial action but instead ofordering an immediate return to work because anagreement has been breached the Commission willtypically seek to conciliate on the basis of the ldquomeritsrdquo
of the issue After a couple of dayswith costs escalating and liquidateddamages looming the employerinvariably agrees to rectify the matteralleged and to pay increasedallowances (including pay for days onstrike) At this point the Commissionorders a return to work on the basisof the agreed settlementmdashwhich lastsonly until the union decides on itsnext move
The union has ignored the law andbroken its original agreement buttypically suffers no adverseconsequences whatsoever Theemployer has been manoeuvred intoconceding most of a demand thatshould never have been made Afaccedilade of legality conceals a travestyof unionism and a travesty of justiceNearly all construction industrystrikes are unprotected and potentiallyunlawful under section 170MN of theWorkplace Relations Act Even so
employers nearly always opt to pass the costs ontoconsumers while existing arrangements for gatheringinformation launching prosecutions and imposing finesdonrsquot work well anywhere but hardly work at all in anindustry where giving evidence against the unions isthought to mean commercial suicide
The construction industry is a classic case not ofmarket failure but of regulatory failure The fact thatthe construction industry does not face potential importcompetition limits its exposure to market discipline Stillthe main reason why unions can get what they want frombusiness and business can get what it needs from haplessconsumers is the absence of independent policing andenforcement of the industrial equivalent of fair tradinglaws To an extraordinary degree in this industry the
SI-2 MARCH 2003
IPA REVIEW SPECIAL INSERT
The rule of law is nota smorgasbord from
which a few favoureditems can be chosenand the rest ignoredFreedom under thelaw requires respectfor the law generally
not just thelaws individuals
personally support
request documents but they canrsquot compel witnesses toanswer or demand that material be produced Althoughit is a criminal offence under the Workplace Relations Actto hinder workplace inspectors the Cole report notedthat no prosecutions have yet been launched despiteevidence that Office of the Employment Advocateinspectors have been abused had objects thrown at themand their property damaged It has been commonpractice for the arrival of OEA inspectors to lead to workstoppages and even site invasions in a bid to thwart anddemoralise an independent investigator not susceptibleto the unionrsquos usual weapon of commercial retaliation
One of the problems with theworkplace relations system is theassumption that parties will enforcethe law against each other This worksup to a point in industries whereworkplace parties are more-or-lessevenly matched and the issues are theworkplace equivalent of an argumentbetween neighbours over the heightof a fence It completely breaks downwhen one side has an effectivemonopoly over the supply of labourand disputes resemble a more-or-lessnormal family telling the house fullof footballers next door that the partyrsquosover Expecting contractors to enforcethe law against the CFMEU is likeexpecting people in the street to makecitizenrsquos arrests hence Colersquos principalrecommendations are an AustralianBuilding and ConstructionCommission to investigate prosecuteand enforce the provisions of a beefed-up industry specific workplace
relations actYesterday Cabinet decided to support Colersquos key
recommendations First the Government will seek aseparate act governing workplace relations in theconstruction industry providing for secret ballots beforestrikes compulsory cooling off periods after extendedstrikes and damages awards in the event of unprotectedindustrial action Second the Government will establisha new law enforcement agency for the industry withpowers to compel witnesses to testify bring prosecutionsand enforce judgments and with sufficient on-the-ground presence to police CBD building sites Thirdthe Government will establish a Safety Commissionerto monitor federally-funded construction sites to try toensure that these become industry models Fourth the
s
commissions lack sufficient power the courts lacksufficient speed the employment advocate lacks sufficientauthority and the police lack sufficient interest
Not before time the Cole Commission has acted as agiant searchlight probing the dark underside of thispotentially great Australian industry It confirmed whatpolicy makers had long suspected and what influentialinsiders knew but had always tried to deny or explainaway that the industry operates under the rule of thejungle and that there will be no improvement until thepeople who work in it understand that the law has to betaken seriously Legislative institutional and structuralchange will start to mean somethingwhen law breakers in this industry arecharged convicted and punished likelaw breakers everywhere else A fewsalutary bars of that old song need towaft over construction sites ldquoI foughtthe law and the law wonrdquo
Late last year in response to theRoyal Commissionrsquos first report thefederal Government set up theBuilding and Construction IndustryInterim Task Force The Governmentrsquosbrief to the Task Force is to ensure zerotolerance of industrial law-breakingThe Task Force is not primarily toenforce the tax laws or the safety rulesbecause other bodies exist for this(although the Task Force will certainlyshare information with them) TheTask Force is to investigate and enforceWorkplace Relations Act prohibitions oncoercion unprotected strikes strikepay and breach of industrialagreements So far the Task Force hasvisited nearly 300 sites launched more than 50investigations brought three prosecutions and referrednine other matters to state police the Australian FederalPolice or the Australian Competition and ConsumerCommission for further action
These are the first public prosecutions arising out ofindustrial action in the construction industry at leastsince the 1980s and are the result of a public policycommitment to law enforcement not seen since thehumiliating Clarrie OrsquoShea case in 1969 and the end ofldquopenal sanctionsrdquo Yesterday Cabinet decided to extendthe interim Task Forcersquos operations until more permanentarrangements to secure the rule of law can be established
Task Force agents have the powers of inspectors underthe Workplace Relations Act They can enter premises and
SI-3MARCH 2003
IPA REVIEW SPECIAL INSERT
The main reason whyunions can get what
they want frombusiness and businesscan get what it needs
from haplessconsumers is theabsence of inde-
pendent policing andenforcement of the
industrial equivalent offair trading laws
API
Government will insist on the application of theNational Construction Code and implementationguidelines to all significant new projects which are fullyor partly federally funded
Directly or indirectly the federal Government fundsabout $5 billion worth of construction projects everyyear and is determined to use its role as client to drivechange in the industry In essence the NationalConstruction Code stipulates that construction projectsmust take place in conformity with the WorkplaceRelations Act Under the Code and implementationguidelines the federal Governmentwill not engage tenderers whoseworkplace agreements and practicesensure a closed shop on site The TaskForce (and any replacement body) willhave full access to federally fundedsites to ensure that the law is beingobserved and workplace agreementscomplied with
For the federal Government theissue is upholding the law and tryingto tackle the ldquounion rulesrdquo culturewhich is at the heart of lawlessness inthe industry For the states the issueis whether they are prepared to refusefederal money in order to protect theclosed shop However much theymight prefer different federal laws thestates ought to accept thatconstruction projects have to complywith the law as it stands includingthe law mandating compliance withcertified agreements
State Labor governments whichhave made a point of their middle-ground credentials risk losing some$4 billion a year in federal building and constructiongrants if they side with the union movementrsquos mostmilitant minority There are likely to be limits to Laborrsquosdefence of a union whose stock-in-trade (at least in somestates) is the site invasion and the demand for paymentand which quietly reinstates organisers sacked for assaultor perjury Opposition senators will find it hard to brandas ldquoideologicalrdquo the recommendations of a royalcommission which spent 171 days in public hearingsand which pursued 11 shop stewards and 97 unionofficials to obtain their side of the argument
As Justice Cole pointed out in his report previousattempts to reform the industry have proven ineffectivedespite two earlier royal commissions and numerous
SI-4 MARCH 2003
IPA REVIEW SPECIAL INSERT
enquiries Although this Royal Commissionrsquosinvestigations seem to have temporarily checkedlawlessness in the industry a campaign is now emergingto extend the anarchic culture of CBD construction intoregional centres and the domestic housing industryThings will certainly be different this time if parliamentapproves a permanent well resourced watchdog withnew powers new personnel and new attitudes Unlikeprevious arrangements a new statutory watchdog withthe powers of a law enforcement agency should beeffective and permanent
Hundreds of people took big riskswith their commercial future and eventheir personal security to testify to theRoyal Commission It should neveragain be so hard for people in thisindustry to exercise their ordinaryrights and responsibilities asAustralian citizens They expected theGovernment to take the Commissionrsquosreport seriously and the Governmentfor its part is determined not to letthem down The Governmentunderstands that joining fights yoursquorenot prepared to win only makes badsituations worse Establishing the ruleof law in the construction industry isa challenge Australia canrsquot afford tofailSome of the worldrsquos best workersshould no longer have to put up withsome of the worldrsquos worst industrialpractices They have a right to anhonest industry where they can earna fair dayrsquos pay for a fair dayrsquos workand expect to come home uninjuredThe enduring image of this industry
should not be noisy marchers replaying the ideologicalstruggles of the 1970s and raising clenched fists againstauthorities they donrsquot like At its best the Australianindustry is capable of work which is stunningly beautifulyet intensely practical and it now needs to performconsistently on time on budget and in accordance withlaw
Hundreds of peopletook big risks withtheir commercial
future and even theirpersonal security totestify to the Royal
Commission It shouldnever again be so
hard for people in thisindustry to exercisetheir ordinary rights
and responsibilities asAustralian citizens
NOTE
The foregoing speech was first delivered as an Addressto the National Press Club on 2 April 2003
21MARCH 2003
E V I E WR
IN psychology behaviouris defined as irrational ifan action continues to berepeated despite its re-
peated failure to achieve the desiredoutcome On this definition our aidpolicy towards Papua New Guineahas been irrational
Despite over twelve billion dol-lars in Australian aid to PNG sincethat countryrsquos independence in 1975key development indicators such asliteracy rates infant mortality lifeexpectancy and real income percapita are either stagnating or dete-riorating Worse wersquove known forover a decade1
Today acknowledgement of thefailure of our aid policy in PNG hasgone well beyond the writings of in-dividual international policy analystssuch as myself to institution-spon-sored reports such as Beyond Baliwhich was released by the AustralianStrategic Policy Institute (the Aus-tralian Governmentrsquos own strategicpolicy adviser) and Papua NewGuinea on the Brink which was writ-ten by Susan Windybank and MikeManning for the Centre for Indepen-dent Studies Both reports confirmthe gross failure of Australian aidpolicy in PNG
Yet still our aid policy irrational-ity towards Papua New Guinea con-tinues While the ASPI and CIS re-ports acknowledge the gross failureof our aid policy in PNG they alsoargue that we need to continue ouraid to that country Indeed the ASPIreport argues that we should increaseour aid to Papua New Guinea Thepolicy saviour The ASPI report ar-gues that we should exert greater con-trol over our aid Not just over theform of our aid but direct interven-tion in policy and implementation inPNGmdashin essence for a return to pre-
Aid Detox for PNGPETER URBAN
independence days in PNG whereas UN-sanctioned administrator weran government in that country
Despite the mind-frame of secu-rity-focused strategists such as thoseat ASPI and the CIS (which en-dorses the aid approach advocated byASPI) the reality is that we canrsquotPNG is now independent and to ig-nore this reality would simply com-pound the problems of our past aidpolicy irrationality with irrationalityabout our political relationship withour nearest neighbour
A more interventionist aid policytowards PNG on our part as advo-cated in Beyond Bali and by HughWhite (the executive director ofASPSI) in the media might havepopulist appeal but it would haveserious adverse implications for ourrelationship with other Pacific islandcountries and even IndonesiaWorse it would give succour to theviews of our east Asian critics (suchas Malaysian PM Dr Mahathir) whoclaim that Australia continues toharbour colonial aspirations
We have to accept that to be suc-cessful aid policy must not just helpreduce mass poverty it also has to doso as a guest in the aid recipientcountry To do otherwise is not aidbut imperialismmdashwhether inten-tional or not
A more interventionist approachto aid policy in PNG would also givethe current corrupt political elite inPort Moresby a rallying point againstus and an excuse to delay changingtheir own policies Neither Austra-lia nor PNG can afford any furtherdelays to policy reform For us to givePNG politicians yet another excuseto delay reform would be not onlyirrational it would be inexcusableWhile our aid continues so will thecorrupt elite that is at the heart ofPNGrsquos problems Until we send themessage to the PNG political elitethat we are prepared to stop ouraidmdashto put them on aid detoxmdashwewill continue to waste our aid in thecorruption that is PNG politics Itmay be hard to accept but the sadreality we face in PNG is that no aidmay prove to be good aid at least inthe short to medium-term2
NOTES
1 Peter Urban lsquoOne Clear ObjectiveNo Clear Approachrsquo IPA Review1997 Vol 50 No 1
2 With Iraq also likely to require verysignificant Australian aid fundingover the next few years the Gov-ernment will need to review our aidprogram as part of the 2003-04 fed-eral Budget A decision to suspendaid to PNG could be taken as partof that review
Peter Urban is former chief economist with theDepartment of Foreign Affairs and Trade
We have to accept
that to be successful
aid policy must not
just help reduce
mass poverty it also
has to do so as a
guest in the aid
recipient country
API
22 MARCH 2003
E V I E WR
IN his speech to the Na-tional Press Club on theprospect of war with Iraqand the case for disarma-
ment Prime Minister Howard statedthat Australia will play a significant hu-manitarian role in Iraq
If so the Howard Government needsto evaluate carefully the foreign-aid non-government organizations (FANGOs)which it funds to carry-out this humani-tarian programme Many FANGOshave made it clear that they do not sharethe Australian Governmentrsquos objectivesand values in Iraq Moreover some donot agree with the Governmentrsquos over-all aid policies in general
THE COALITION OF THEUNWILLINGIn the lead-up to latest Gulf War some30 Australian aid agencies put theirnames to an Open Letter to the PrimeMinister organized by the AustralianCouncil of Foreign and Overseas Aid(ACFOA) The aim of the letter was tolsquospeak out against war in Iraqrsquo and it ex-pressed grave concerns about the hu-manitarian consequences of the war andthe effects of the existing sanctions1 TheFANGOs that signed the letter wereOxfam Community Aid Abroad WorldVision Australia TEAR AustraliaUnion Aid Australia - APHEDACaritas Australia National Council ofChurches Australian Council for For-eign and Overseas Aid Save the Chil-dren Australia CARE Australia OzGreen United Nations Association ofAustralia Family Planning AustraliaMercy Works Marist Mission CentreAustralia Every Home for Christ Bap-tist World Aid for Christ CCF Austra-lia Quaker Service Australia Austra-lian Lutheran World Service AustralianRelief and Mercy Services AnglicanBoard of Mission AUSTCARE Com-munity Development and Health
Irreconcilable DifferencesDON DrsquoCRUZ
Hussein have been virtually ignored isa searing indictment of the warped ide-ology feeble analysis and moral blind-ness of the sector For them now to re-discover the plight of the Iraqi peopleand to invoke their name in the mediais beyond contempt
THE OXFAM COMMUNITYAID ABROAD POSITIONOf the 30 FANGO signatories to theopen letter Oxfam Community AidAbroad (OCAA) has been perhaps themost outspoken It opposed military ac-tionmdasheven with UN Security Councilapproval4 In spite of all the evidence tothe contrary OCAA was comfortablewith Saddam Husseinrsquos assurances thathe did not have weapons of mass destruc-tion5 Adopting the common policyagreed to by the other Oxfam affiliatesOCAA stated that it will not take anymoney from the lsquobelligerentsrsquomdasha quaintterm used to the describe democraticnations planning to disarm a dictatorguilty of countless human rights abuses
OCAArsquos outrage against the so-called lsquobelligerentsrsquo appears to be geo-graphically confined to Iraq OCAAappears happy to take governmentmoney from the belligerents elsewherearound the world
According to OCAArsquos ExecutiveDirector Andrew Hewitt refusing totake money from the belligerents wasdone to lsquoprotect its impartialityrsquo6 Thisis a very curious position from Australiarsquosarguably most political FANGOOCAA has a long track-record of beinganything but impartial or reluctant totake sides in miliary action It wasnrsquotimpartial in East Timor where it sidedwith Fretlin in its quest for indepen-dence According to its own testimonyto a Senate committee OCAA wasgiven the choice by the IndonesianGovernment between lsquoplaying politicsrsquoor delivering aid projects in Indonesia7
Group Amnesty International Austra-lia AngliCORD Australian Aid forCambodia Fund Burnet InstituteRedR Friends of the Earth PLAN Aus-tralia and Australian Volunteers Inter-national2
This open letter highlighted a num-ber of problems with the FANGOs sec-tor First it highlighted the weak logicthat passes for advocacy in the sectorThe letter argued against military actionwas critical of sanctions and suggestedthat nations should settle issues only bydiplomatic means It is a viewpointwhich totally ignores the fact that theGovernment had to deal with SaddamHussein
The shallowness of their logic wasbest exposed by the Prime Minister inhis response to the open letter in whichhe stated that the humanitarian situa-tion in Iraq is best addressed by SaddamHusseinrsquos removal and perhaps morepointedly that Saddamrsquos manipulationof foreign aid had allowed him to main-tain and pursue his weapons of mass de-struction capability and human rightsabuses3
Second it also highlighted the factthat the so-called lsquohuman rights-basedapproachrsquo to development (embraced byseveral of the signatories) is not so muchabout realizing human rights (as its pro-ponents argue) but is more about pro-viding them with an excuse to lsquoplay poli-ticsrsquo According to the theory the hu-man rights-based approach to develop-ment allows FANGOs to tackle the rootcauses of poverty and injustice
Yet the root cause of the Iraqipeoplersquos suffering can be summed up intwo simple wordsmdashSaddam HusseinThe fact that the FANGOs who sub-scribe to this particular approach havebeen obsessed with imaginary humanrights abuses committed by Shell NikeRio Tinto BHP-Billiton and AuroraGold while the activities of Saddam
23MARCH 2003
E V I E WR
It chose the former thus making it per-sona non grata in Indonesia for almost adecade8 It wasnrsquot impartial inMozambique when it sided with Frelimoin the countryrsquos civil war9 It wasnrsquot im-partial in Ethiopia when it developedlinks to the Eritrean Peoplersquos LiberationFront during its war against the thengovernment10 It was not impartial oranti-war when it sided with the TigrayPeoplersquos Liberation Front in the neigh-bouring province to Eritrea when thatgroup was waging a guerrilla war againstthe government11 And recently therehave been claims that in the Middle Eastit was little more than an lsquoeager propa-gandistrsquo for the Palestinians12
In East Timor Ethiopia and Mozam-bique OCAA was linked with organi-zations which supported direct militaryaction that led to the deaths of thou-sands of civilians In none of these loca-tions were the enemies of their friendany worse than Saddam Hussein In-deed in many cases OCAArsquos friendswere arguably no better than their en-emies in terms of human rights
OCAArsquos decision not to accept Aus-tralian Government funding is the cor-rect one in the sense that it clearly doesnot share the Governmentrsquos values onthe question of Iraq and thereforeshouldnrsquot receive any governmentmoney
Hewitt went on to state in a pressrelease that lsquoWe will not take funds thatmight allow a government to use hu-manitarian efforts as an instrument offoreign policyhelliprsquo13
This is finemdashexcept the AustralianGovernmentrsquos foreign aid is an instru-ment of foreign policy And it always hasbeen This is spelt out quite clearly inthe Australian Governmentrsquos latest for-eign and trade policy White Paper Ad-vancing the National Interest14
FANGOs that cannot accept thisrather basic proposition should not begetting taxpayersrsquo money They areclearly unsuitable for the task at hand
The consequences of Australian tax-payersrsquo money falling into the wronghands were brought home to Prime Min-ister Howard when he met IndonesianPresident Megawati Sukarnoputri to dis-cuss the war against terrorism and
Australiarsquos involvement against Iraq Atthe top of the Indonesian agenda wasthe issue of Australian funding toFANGOs being used to support sepa-ratist movements in Indonesia15
Post-war Iraq will be a better placewithout Saddam Hussein and his thugsThis does not mean that it will be a safeplace or necessarily a stable place Afterall one of the reasons for Western tol-eration of Saddam Hussein for manyyears was his ability to hold the various
ethnic minorities in Iraq together albeitrather brutally thereby maintaining abalance of power in the Middle East Hisdeparture would see strains on Iraq fromthe various ethnic minorities that makeup Iraq There is a strong chance thatIraq will fragment
The last thing the Australian Gov-ernment or any of the so-called belli-gerents needs in a post-war Iraq is west-ern NGOs running around and becom-ing self-styled advocates for national self-determination for Iraqrsquos ethnic minori-ties and injecting themselves into Iraqrsquosinternal politics This is a real risk Thebehaviour of Australian foreign aidNGOs in Indonesia should make Aus-tralian decision-makers extremely waryof funding any NGOs with Australiantaxpayersrsquo money so that they can oper-ate in Iraq
As things stand now FANGOs facevery few restrictions on their actionsfrom government If they undertake ac-tivity that is inconsistent with being anagent of government they may losefunding for specific projects or in moredramatic circumstances lose funding ina country Nonetheless they are gener-
ally able to access Australian Govern-ment funding for other projects andcountries In other words the penaltiesfor becoming caught up in political ac-tivities are very light for NGOs and posethem no serious problems
Foreign aid NGOs that lsquoplay politicsrsquoare unsuitable contractors for the deliv-ery of aid That these overtly politicalorganizations have been allowed to gaingovernment accreditation and receivegovernment funding points to some se-rious problems at AusAID Australiarsquosofficial aid agency The time has comefor this to change
NOTES1 httpwwwacfoaasnaumedia_releases
2003_releases26_3_03PDF2 httpwwwacfoaasnauemergencies
openletterPDF3 httpwwwacfoaasnauemergencies
iraq_responsehtm4 Oxfam Horizons Vol 3 No 1 (Febru-
ary 2003) page 25 Oxfam Community Aid Abroad lsquoIraq
Overviewrsquo February 20036 Hewitt quoted in Liz Gooch lsquoOxfam
wersquoll say no cashrsquo The Age 16 March2003
7 Community Aid Abroad Submission tothe Senate Foreign Affairs Defence andTrade References Committee Inquiryinto East Timor Downloaded at httpwwwcaaorg aucampaignssubmissionstimorhtml
8 Ibid9 Susan Blackburn Practical Visionaries A
Study of Community Aid Abroad (Mel-bourne Melbourne University Press1993) page 313
10 Ibid pages 325-333 passim11 Ibid12 Gerald Steinberg lsquoPropaganda vs Hu-
manitarianismrsquo Australian Financial Re-view 7 June 2002 Downloaded at httpfacultybiuacil~steingconflictopedpropvshumanitarianismhtm
13 ht tp wwwcaa o rg au p r 2003 iraqfundshtml
14 httpwwwdfatgovauani15 Dennis Shanahan lsquoJakarta fears aid funds
for rebellionrsquo The Australian 17 Febru-ary 2003 page 2
Don DrsquoCruz is Research Fellow at the IPAand Director of IPArsquos NGOWatch
OCAA has a longtrack-record of
being anything butimpartial or
reluctant to takesides in miliary
action
API
24 MARCH 2003
E V I E WR
GEORGE Bush Tony Blairand John Howard haveprovided many reasons forsupporting military action
against Iraq One of those reasons hasbecome known as the lsquohumanitarianrsquojustification Put simply the lsquohu-manitarianrsquo justification for the US-led invasion of Iraq is that such ac-tion is necessary to free the Iraqipeople from their totalitariandictator
Such an argument is attractive tothose who believe that there aresome fundamental human rights thatall individuals possess regardless ofwhere and how they live Whatserves as the source of those rightshas been the subject of debate forcenturies One of the pre-eminentstatements on the subject was madeby John Locke who in The SecondTreatise of Government wrote thatmankind was lsquoequal and indepen-dentrsquo and that lsquono-one ought to harmanother in his life health liberty orpossessionsrsquo
Saddam Husseinrsquos mass murdertorture and terror are reasonablyclear breaches of human rightsTherefore some would ask why thereshould be opposition to the UnitedStates and its allies taking whatevermeasures might be necessary totopple the Iraqi regime Surely thesame standard of behaviour that ap-plies to individuals applies also tonation states If an individual walk-ing in the street witnessed a rapeoccurring wouldnrsquot that individualbe entitled to do everything in hispower to stop the crime and assistthe victim
The point is of course that in-ternational law and convention do
After IraqIs Sovereignty Dead
JOHN ROSKAM
not allow nation states to act in thesame way as individuals Countriescannot simply lsquotake the law into theirown handsrsquo To restrain lsquovigilantestatesrsquo (who might be acting fromeither lsquogoodrsquo or lsquobadrsquo motives) a num-ber of legal and political theorieshave been developed One of theseis the doctrine of lsquosovereigntyrsquo whichprovides that states should not inter-vene in the domestic affairs of otherstates
In relation to Iraq the lsquosover-eigntyrsquo question is perhaps the stron-gest argument against the US-ledCoalition Most of the other criti-cisms of lsquohumanitarianrsquo interventionin Iraq are either grounded in simpleanti-Americanism or are fallaciousFor example there is the claim thatbecause some of the countries in theCoalition have previously ignoredHusseinrsquos cruelties therefore it is il-legitimate to take action now Sucha view has been expressed by aMelbourne international relationsacademic
While there is no disputing thebrutal nature of Saddam Hus-seinrsquos regime the case for inter-vention made by those in Can-berra London and Washingtonis weakened by the fact that atthe peak of Saddamrsquos crimes inthe late 1980s they were eitherdirectly supporting him withweapons technology and intelli-gence or were entirely indifferentto his behaviour Even if theyhave belatedly recognised theerror of their ways how seriouslycan we take their concerns aboutweapons of mass destruction nowgiven they were his suppliersthen1
On the basis of this argument itcould be said that Britainrsquos (andAustraliarsquos) case for intervening toassist Poland upon the German in-vasion in 1939 was lsquoweakenedrsquo be-cause Britain had previously acqui-esced to Germanyrsquos rearmament theremilitarization of the Rhinelandand the annexation of both Austriaand parts of Czechoslovakia Fewpeople who chanted lsquoFreedom forEast Timorrsquo said that the HowardGovernment should not act becausea quarter of a century before theWhitlam Government had been lsquoin-differentrsquo to Indonesiarsquos occupationof the island
There is also the claim that al-though Hussein is bad he is not theworst dictator in the world and thatit is hypocritical for the Americansto attack only Iraq This is an as-tounding proposition It attempts toapply to the United States a standardof behaviour that is impossible to sat-isfy Should the police not attemptto solve any crimes because theycanrsquot solve all crimes If a crime iscommitted by two people and thepolice arrest one perpetrator unlessthe other is also caught must the firstperpetrator be released When indi-viduals donate money for famine re-lief in Africa very few believe thattheir donation is pointless becauseit might prevent the starvation ofonly one person rather than thou-sands Christian ethics sets down norequirement that we should help no-one unless we can help everyone
The issue about state sovereigntyhowever is one that deserves to betaken seriously Regardless of onersquosopinions on the extent and limits ofstate sovereignty it is true that our
25MARCH 2003
E V I E WR
international relations system is builtupon the principle and to modify oroverturn it is a matter of some con-sequence
Even those who are generally sup-portive of the United States andtheir allies see the problem As it wasput by a leading commentator whenanalysing the Australian PrimeMinisterrsquos lsquohumanitarianrsquo justifica-tion for war
Finally Howardrsquos argumentagainst Hussein on human rightsis correct So is his moral case forwanting to liberate the Iraqipeople from their torment Theproblem however is that youcanrsquot trip around the worldwanting to overthrow regimesbecause of human rights2
Some would askmdashlsquowhy notrsquo Be-cause to do so would overthrow theUnited Nations Charter comes therejoinder And in turn the responseto that might bemdashlsquogoodrsquo
If itrsquos a choice between the main-tenance of the UN Charter and free-dom from tyranny freedom wins ev-ery time (although an internationallawyer sitting in Sydney might havea different view on this question fromthat of a political prisoner manacledin a Baghdad jail cell)
When the interests of lsquointerna-tional lawrsquo are more important thanthe life and liberty of individuals itcould be concluded that lsquothe Em-peror has no clothesrsquo Would inter-national law have sanctioned inter-vention to stop the Holocaust hadHitler not waged war and proceededwith his methods entirely within theconfines of the German territorialstate
Many who argue that lsquohumanitar-ianrsquo intervention in Iraq is not justi-fied because it infringes on thatcountryrsquos lsquosovereigntyrsquo would happilyhave other countries cede their po-litical sovereignty to supra-nationalbodies Certain features of the Inter-national Criminal Court overridethe principles of sovereignty but thatdid not stop a phalanx of interna-tional law experts urging sovereigngovernments to join it so as to en-
able the prosecution of war criminalsBut when it comes to actually stop-ping war crimes not simply prosecut-ing them that phalanx is largely si-lent
Without the doctrine of state sov-ereignty and without an arbiter fordetermining when interference withthe principle is justified (the roleclaimed by the United Nations andits Security Council) it is said thatstates would be free to impose theirown will and intervene in other
countries whose standards did notmeet their own (In The Second Trea-tise of Government Locke argued thata characteristic of a lsquostate of warrsquo be-tween individuals was the absence ofa superior authority to adjudicatedisputes and prevent individualsfrom administering justice them-selves)
Iraq might be claimed as a rea-sonably clear-cut case for interven-tion but other situations are notlikely to be as simple In Culture andEquality first published in 2001Brian Barry explored a lsquoliberalrsquo per-spective on this question
The liberal position is clearNobody anywhere in the worldshould be denied liberal pro-tections against injustice andoppression However in exactlythe same way as liberals arepragmatic about what liberalismmeans in terms of boundaries sohere the move from principle tointervention has to be mediated bypractical considerationshellip
[L]iberals are not so simple-mindedas to imagine that the answer toall violations of liberal rights is tosend in the Marines or even aUnited Nations force As in anyjust war theory there must be somedoctrine of lsquoproportionalityrsquohellip[S]carcely anybody would be infavour of the western powersinvading Saudi Arabia so at to sortout the way in which it lsquounjustlydenies political rights to women ornon-Muslimsrsquomdashaccording to theirliberal idea of justicersquo3
The question remainsmdashafterIraq what remains of lsquostate sover-eigntyrsquo Should the doctrine applyonly to lsquoliberal democraticrsquo statesSuch a solution might be attractiveto some lsquoliberalsrsquo but it doesnrsquot avoidthe problem of what exactly a lsquolib-eral democraticrsquo state is
One irony arising from the argu-ments about the war in Iraq is thatmany of those who have urged astrict application of lsquostate sover-eigntyrsquo principles in the past havegenerally supported the US-led in-tervention while those who havebeen willing to abridge or even aban-don the doctrine have had to rely onit to counter the lsquohumanitarianrsquo jus-tification for war
There are not many certaintiesabout the nature of the world afterthe war in Iraq but it can be saidwith some assurance that one defi-nite outcome is going to be a morevigorous debate about state sover-eignty
NOTES1 Scott Burchill lsquoThe humanitar-
ian arguments for this war are spu-riousrsquo The Age 21 March 2003
2 Paul Kelly lsquoThe hapless per-suaderrsquo The Australian 15ndash16March 2003
3 Brian Barry Culture and Equal-ity An egalitarian critique ofmulticulturalism Harvard Uni-versity Press page 138
John Roskam is a Research Fellow with the IPA
The lsquosovereigntyrsquo
question is perhaps
the strongest
argument against
the US-led
Coalition
API
26 MARCH 2003
E V I E WR
Which Way for theDemocrats
The 2002 mid-term elections were adramatic victory for President GeorgeW Bush and the Republicans Insteadof the historical norm of the partycontrolling the White House losingBushrsquos party gained seats in the Sen-ate House Governorsrsquo races andState legislatures The result was abitter disappointment for the Demo-crats and has led to a fierce debatebetween the Left and Centrists aboutthe future policy direction of the partytowards the 2004 elections
The Leftrsquos analysis is that the ma-jority of Americans are natural Demo-crats Electoral defeat was due to thefailure to energize that base of Demo-crats The party failed to distinguishitself sufficiently from Bush and thusgive their voters a reason to turn outWhile the majority of Democrats op-posed Bush on tax cuts and the warwith Iraq a significant minority sup-ported him and campaigned on thatsupport The result the Left claimwas that the Democrats lacked a con-sistent message in contrast to Bush
Support for this argument can befound in the higher turnout amongstRepublicans than Democrats in 2002while in 2000 the combined vote forGore and Nader was 51 per cent Aninfluential book by John Judis andRuy Texeira identified lsquoThe Emerg-ing Democrat Majorityrsquo Theyclaimed that growing demographicgroups trended Democrat includingthe young socially liberal profession-als minorities and women
What policies would motivate thisnatural Democrat base The Left callfor rescinding the Bush tax cut a classwar against the corporate world amajor increase in lsquopublic investmentrsquoin schools childcare health care and
Letter from AmericaNIGEL ASHFORD
public transport and strong opposi-tion to the war
Centrists however have a verydifferent analysis of the Democratsrsquoproblems the public did not trustthem to pursue the war against ter-rorism vigorously to keep down taxesto spend their tax dollars wisely or toreflect their cultural values
A Gallup opinion poll found that57 per cent of Americans askedthought that the Democrats were nottough enough on the war on terror-ism while 64 per cent thought theRepublicans were There was the per-ception that the Democrats were notserious on the issue and just playingpolitics Evidence for this was the de-bate over the new Department ofHomeland Security blocked becausethe Democrats wanted to protectunion rights while the President de-manded more flexibility to deploy theworkforce Many voters saw the issueas the national interest versus a spe-cial interestmdashin this case that of theunions The Democrats were seen asputting the interests of one of theirmajor constituencies before nationalsecurity
The Democratic LeadershipCouncil in lsquoThe Road Aheadrsquo by AlFrom and Bruce Reed presented theCentrist case lsquoStop pretending wecan win a majority simply by energiz-ing our basersquo The Democrats were
not trusted on the war against terror-ism were hostile to the cultural con-cerns of many working-class Demo-crats on abortion and guns and stillseen as the tax-and-spend party lsquoToomany Americans donrsquot trust us tokeep their taxes down or to spendtheir money wellrsquo
The Centrist agenda is to stronglyprosecute the war against terrorismwhether against al-Qarsquoeda Saddam orothers and to abandon knee-jerk iso-lationism arising from the experienceof the Vietnam War to defend capi-talism and support small investorsagainst irresponsible managers to cutpayroll taxes and to downplay thecultural issues that divide Democrats
Which path will the Democratstake The Left is in the ascendancyMost of the remaining Democrats inoffice come from left-wing districtsNancy Pelosi a left-liberal from SanFrancisco was easily elected the newleader of the House Democrats over-whelming her Centrist opponent andrising star African-American HaroldFord The early field of presidentialcandidates for 2004 is dominated bythe Left tendency including SenatorJohn Kerry Representative DickGephardt Governor Howard DeanRev Al Sharpton former SenatorCarol Moseley-Braun and Represen-tative Dennis Kucinich Only Sena-tor Joe Lieberman and Senator JohnEdwards represent the Centrist wing
The future of US politics may de-pend on which road the Democratsdecide to take The US is currently alsquo50ndash50rsquo nation evenly balanced be-tween the parties A left turn couldlead to Republican dominance farinto the future
Dr Nigel Ashford is at the Institute of Humane Studiesat George Mason University and is co-author of US
Politics Today (Manchester University Press)
API
27MARCH 2003
E V I E WR
Trusting TonyFrankly itrsquos all just too depressing Theeconomyrsquos heading for trouble Busi-ness confidence is low investment in2002 was 92 per cent lower than theprevious year and manufacturing in-vestment was nearly 18 per cent downThe budget deficit is spiralling becauseour once lsquoprudentrsquo Chancellor (trea-surer) Gordon Brown made over-opti-mistic growth projections and startedthrowing money at problems
Therersquos a load of health-and-safetyand anti-discrimination measuresthatmdashto put it most politelymdashare ex-amples of letting the best be the en-emy of the good Every school tripneeds a formal risk assessment withthe result that many trips are simplynot taking place New trains orderedfor London commuter routes wonrsquothave toilets because the rules say thatat least one toilet in each four-car unitmust be wheelchair-accessible whichwould have cost ten or a dozen seatson every overcrowded train
Some of this is just insane Somelocal authorities say that safety at workrules mean that home-care workersmustnrsquot lift the disabled people theyare looking after Or therersquos rail safetyUntil recently we were seriously pro-posing to spend $10 billion on a bet-ter system to stop trains going throughred signals On average this would havesaved the lives of about three passen-gers every four years which is a lousybargain compared with other safety in-vestments Worse it would also havereduced the capacity of the networkby up to 15 per cent and forced morepeople onto the roads which are muchmore dangerous than even ourclapped-out railways The result was aprojected net increase of 13 to 21 deathsper year
Meanwhile in London the Cen-tral line of the Underground has been
Letter from LondonJOHN NURICK
API
closed for weeks after a train derailedwhen one of its motors fell off Therewere no deaths or major injuries in theaccidentmdashbut itrsquos a safe bet that someof the people who havenrsquot been ableto use the Central line have been in-jured or killed on the roads
What can one say If the authori-ties took the same attitude to the riskof fatal accidents in the health serviceevery hospital in the country wouldhave been closed for years
Despite all this the Conservativesare still hopeless Their leader IanDuncan Smith has a new wheezewhen a journalist asks him anythingdifficult he chortles merrily and saysitrsquos the most uninteresting questionimaginable and hersquos not going to wasteanyonersquos time by answering it His col-leagues have their knives out for him
Meanwhile in spite of the govern-mentrsquos problems with the economy andthe public services Tony Blair is grow-ing in stature having his waymdashandantagonising large sections of his ownparty in the process On several recentissues he has faced down the formi-dable Gordon Brown in a way that notlong ago was hard to imagine
Then he shocked everyone by com-ing out against having elected mem-bers in the reformed House of Lordswhen most voters want an all-elected
chamber and most MPs want a partly-elected one In the event Parliamentcouldnrsquot agree on any of the optionsfor reform so wersquore stuck with the sta-tus quomdashwhich is fine by Mr Blair
Then therersquos the war By the timeyou read this it may be over or we maystill be waiting or our lads may befighting Mr Blairrsquos strong line againstIraq has made him very unpopular Theanti-war march on 15 February was thebiggest demonstration London hasever seen A few days later 122 Labourbackbenchers voted against the gov-ernment and many more abstained
Mr Blair didnrsquot budge War is a se-rious thing he says lsquoBut in a situationsuch as this you have to do what youbelieve to be right because thatrsquos theprice of having responsibilityrsquo1
He has often been accused of gov-erning by focus group Certainly he hasseemed reluctant to antagonise anypowerful group That has clearlychanged In a sense his stand on Iraqmerely follows his action in sendingtroops to Sierra Leone and Kosovomdashbut it has stirred up far stronger domes-tic and international opposition
The irony is that now when he re-ally needs people to trust him wedonrsquot Even in the desperately seriousbusiness of justifying an unpopular warDowning Street canrsquot play it straightremember the dossier from lsquointelli-gence sourcesrsquo that turned out to belargely cribbed from a PhD thesis onthe Internet
NOTE1 The Guardian 1 March 2003
John Nurick is a management consultant based in theSouth of England From 1985 to 1990 he was
editorial director of the Australian Institute for PublicPolicy and later edited newsletters reporting on theUK Parliament and European Union institutions
28 MARCH 2003
E V I E WR
KEVIN DONNELLY
Private EducationEquals Public Good
When it comes to choosing be-tween government and non-gov-ernment schools Australian par-ents are lsquovoting with their feetrsquo Asshown by recent ABS figures(Schools Australia 2002) over thelast decade there has been a dra-matic increase in non-governmentschool enrolments
Approximately 30 per cent ofstudents now attend non-govern-ment schools compared with 22per cent in 1980 and 28 per centin 1990 Over the last decadewhile the number of governmentschools has fallen by 64 per centnon-government schools havegrown by 61 per cent
Of course not everybody valuesparentsrsquo right to choose and theAustralian Education Union(AEU) Labor governments andlsquoleft-wingrsquo academics in particularconsistently argue against non-government schools
One of the arguments put for-ward by those opposed to givingparents greater freedom of choiceis that government schools are bet-ter at promoting social cohesionand a strong sense of what KenBoston the ex-head of the NSWEducation Department terms lsquothebonds of civic friendshiprsquo
The assumption is that becausestudents attend non-governmentschools there will be greater socialdivisiveness and a breakdown inthe civic values needed to hold so-ciety together But there is no cred-ible evidence offered to support theclaim that government schools arebetter at promoting the commongood
In fact there is much to provethe opposite
First as anyone familiar withthe lsquoculture warsrsquo and politicallycorrect curricula will know insteadof government-controlled educa-tion promoting unity and cohe-sion it has led to public angst andparental complaints
Witness the very bitter debatein Queensland a year or two agowhen the government-mandatedStudies of Society and Environ-ment (SOSE) curriculum was in-troduced into schools Such was
the lsquoleft-wingrsquo bias in the curricu-lum in particular in the areas ofmulticulturalism and the environ-ment that many parents felt be-trayed
The Queensland debate is mir-rored by what is happening in theUnited States As noted by Ste-phen Arons in his book Short Routeto Chaos instead of promotingunity government control of thecurriculum leads to the opposite
What the school wars tell us isthat somehow we have been
Education Agenda
transforming a vital instrumentfor creating social cohesioninto a source of division andhostility that there is some-thing built into the structure ofpublic schooling that under-mines one of its most importantfunctionsAronrsquos argument that govern-
ment schools no longer transmit aviable sense of a common cultureor agreed civic values is reinforcedby another noted United Stateseducationalist Diane Ravitch
In a recent article in the jour-nal Education Next Ravitch be-moans the impact of cultural rela-tivism and the post-modern on theschool curriculum (where there areno commonly agreed values) andeven goes so far as to argue thatparents should be free to choosenon-government schools becausesuch schools have a better chanceof reflecting their values
In the current education sys-tem with the public schoolscommitted to multiculturalismbilingualism and other forms ofparticularism it is difficult toargue that parents should notbe able to choose schools thatmeet their cultural needsSecond if one accepts that lsquoso-
cial capitalrsquomdashthe networks volun-tary associations and civic bondsthat hold a community togethermdashis important for the health of ademocratic society then non-gov-ernment schools clearly have theadvantage
Unlike the government schoolsystem characterized by a heavy-handed centralized bureaucracyand teacher union control non-government schools are closer tothe communities they serve Bytheir very nature non-government
There is no credible
evidence offered to
support the claim
that government
schools are better
at promoting the
common good
29MARCH 2003
E V I E WR
ALAN MORAN
The lsquoRrsquo Files
Private propertyrights the key toachieving efficiency inrural water use
WATER IN AUSTRALIAWater has always been a definingissue in Australiarsquos prosperityAnd in recent decades irrigationhas grown rapidly Even so theproportion of Australia that is ir-rigated at two per cent of theland comprises a share that isamongst the lowest among OECDcountries Only Canada and therainiest countries New Zealandand the UK have lower sharesthat of the US is 11 per cent andin Japan it reaches 60 per cent
Modern agriculture is only 200years old in Australia and thoughin the first 100 years agriculturalproductivity was increased toequal that of anywhere in theworld gains continue to bemademdashoutput has doubled overthe past 50 years a growth thatcould not have taken place with-out a similar expansion of irriga-tion Irrigation in the MurrayndashDarling agricultural provincealone contributes $5 billion toAustralian agricultural outputand non-irrigated agriculture inthe region contributes a further $5billion This makes the areawhich comprises 14 per cent ofAustraliarsquos land mass responsiblefor a third of the nationrsquos $35 bil-lion agricultural output
Applying Property Rights to WaterMost of the uses of water involvechoices or compromisesmdashdrink-ing water versus irrigation versus
industrial and so on Some how-ever involve complementaritiesparticularly certain recreationaluses such as water sports that arefacilitated by storage and consis-tent availability
In many cases water will per-form sequential functionsmdashthesame water can be used and re-used for irrigation used for indus-trial cooling and finish as drink-ing water Water with differentsometimes competing productiveuses will be optimally used as longas two conditions are in placeThe first is that its ownership isclearly specified and the ownersrsquoobligations to other users (orclaims from other beneficiaries)are well understood The secondrequires each property right to betradable to enable acquisition bythose who value it most therebymaximizing its value
The rights specification andtherefore property ownership canrarely commence with a cleansheet of paper People acquire in-dividual rights to property ini-tially through a variety of routesOne of these is seizure of some-thing that was originally of littlevalue until it was acquired and im-proved Squatters assume rights inthis way However they are firstacquired they need to be tradableAPI
schools establish strong commu-nity networks and have a greaterreliance on the voluntary work ofparents
That non-government schoolsare more effective in this regard issupported by research into lsquoChar-ter schoolsrsquo in the United StatesAs noted by Chester Finn at theFordham Foundation giving localcommunities lsquoownershiprsquo overtheir school builds networks oftrust and reciprocity so vital forsocial cohesion
Social capital also relies on citi-zens being disciplined and orderedin their behaviour Selfishness vio-lent behaviour and rudeness act tofragment the community instead ofpromoting cohesion According toa number of Australian surveys itis here once again that non-gov-ernment schools are seen to bemore effective
As noted by the Centre for In-dependent Studies researcher Jen-nifer Buckingham in The Truthabout Private Schools in Australiawhen analysing why so many par-ents forsake the government schoolsystem
When comparing independentprivate schools with publicschools the major theme thatemerged was not differences inacademic standards and curri-culum but issues of disciplineand order The surveyed par-ents felt that the behaviour andattitudes of students in publicschools was unacceptablehellipAll accept that non-govern-
ment schools achieve better aca-demic results provide greater cur-riculum flexibility and save Aus-tralian taxpayers millions of dol-lars Equally as important is theargument that such schools streng-then Australiarsquos civic health andstock of lsquosocial capitalrsquo
Dr Kevin Donnelly is Director of EducationStrategies a Melbourne-based consulting group
E-mailkevindnetspacenetau
s
30 MARCH 2003
E V I E WR
and relatively inviolable Thisprovides the incentive for them tobe improved and for their ownersand others to search out ways inwhich the assets they representcan be used to provide increasedvalue or other benefits
If confidence in the exclusiv-ity an owner has over the prop-erty right is lost or was neverpresent the asset will be used lessproductively For example own-ers will milk them for their cur-rent-use value rather than trade-off present value for a future valuethat is less certain
Even without a total emascu-lation of individual rights (for ex-ample when title to the propertydepends on continuing govern-mental assent) lack of certaintybrings lower incomes and dimin-ished asset protection One out-come of this can be observed inthe MurrayndashDarling system Wa-ter rights on the Victorian side ofthe Murray are secure while thoseon the NSW side have been over-allocated and are subject to ad-ministrative discretion includinghaving a firm duration of only tenyears In Victoria high securitywater (available 95 per cent of thetime) comprises the great bulk ofentitlements In contrast in
NSW high security water is avail-able only 60-80 per cent of thetime The result is that farmers onthe Victorian side plant perennialcrops while those in NSW tendto focus on annual crops espe-cially rice
There are claims that Victoriarsquosmore robust property rights meanthat the State Government haslost lsquocapabilityrsquo to manage com-pared with NSW The flip side ofthis is the increased risk and as-sociated lower value of productionnorth of the Murray where prop-erty rights are attenuated Gov-ernments that give themselves in-creased capacity to direct produc-tion or to take individualrsquos prop-erty will need to accept lower lev-els of income and output
IRRIGATION ENVIRON-MENTAL BENEFITS AND SA-LINITY
The Types of IssuesIssues stemming from irrigationcomprise two types those impact-ing on the environment and thoseimpacting on private uses Theformer includes issues such as pre-venting loss of species ensuringthat certain sorts of species flourishand avoiding unattractive growths
such as blue-green algae which re-sult from fertilizer build-up
The second involves economicimpacts on different users
While environmental flows toensure species flourish are oftenhighlighted salinity is the mainfocus And while salinity has animpact on the environment itsimportance is in the conflict of in-terest between productive usersmdashthe complaint of lsquodamaged goodsrsquoby downstream users against thoseupstream
The MurrayndashDarling Basin Sa-linity Strategy 2001ndash2015 has es-timated that increased salinitybrings costs of $294 million perannum to the basin
Yet data on the salinity of theMurray Darling shows levels up-stream of South Australia arelower than they were in the early1980s and are only seriously abovethese levels as the river ap-proaches its mouth at the GoolwaBarrage
The Basin Salinity Manage-ment Strategy argues that progressachieved over the past decade willlsquobe cancelled within 20-50 yearsand median salinity levels wouldexceed the Australian DrinkingWater Guidelines for good waterquality within 50-100 yearsrsquo Thecause of this is said to be risinggroundwater tables due to land usechanges across the Basin
The disputes over salinizationare largely disputes between com-mercial parties Full specificationof rights and obligations will al-low these to be resolved as longas the impacts are measurabletheir causes identifiable and thevarious rights and obligations areknown and stable In this respecttechnology to measure salt in wa-ter and to trace increases to par-ticular locations is readily avail-able
Agreements about the alloca-tion of water rights between ju-risdictions and to the main irri-gation provinces have been inplace for over a century In the
Average Salinity in the River Murray (EC Units)1
3500
3000
2500
2000
1500
1000
500
0
January 2003
July 2002ndashJanuary 2003
July 1982ndashJanuary 2003
Hume D
am
Swan
Hill
Merbein
Morgan
Milang
Mening
ie
Goolw
a
Barra
ge
31MARCH 2003
E V I E WR
I
API
Musinghellipcase of the Murray the lsquocaprsquo onwater abstractions agreed betweenthe various jurisdictions in 1995largely validated agreements madeearly in the last century and be-fore Disturbing these agreementswould greatly undermine the trustin the sanctity of property rightsand seriously reduce agriculturalproductivity Hence increased al-locations for certain parties or forcertain uses (including environ-mental flows) would need to bepurchased at market prices
Developments in Australiaover recent decades have con-spired to make irrigation water farmore valuable This is exacer-bated by1 Activation of NSW lsquosleeperrsquo
and lsquodozerrsquo water rights as a re-sult of the increased scarcityvalue a change that bringseven greater pressure on theavailable supply
2 Increased scarcity leading tomeasures that more carefullyhusband the water Whilesome of these prevent evapo-ration loss and have thereforebrought a net increase in effec-tive availability others havereduced availability (these in-clude a more careful wateringwhich results in reduced run-off and re-use)
3 Increased capture of waterwithin the land on which itfalls once water is recognizedas scarce landowners will seekto ensure it does not leave theirland NSW and Victoria haveplaced limits (a strict 10 percent in NSW) of water fallingon property as entitlements ofthe owner Queensland has notyet enacted an equivalent tothis Such adaptations of thecommon law are essentialhowever if downstream usersare not to be expropriatedThere is likely to be constant
bickering over water rights espe-cially if State Governments seek toelevate sharing issues and to sanc-tify them with claims about promot-
Daniel Pipes in The New York Posthas a very cogent explanation forwhy the Left appears to be so happywith the likes of Osama bin Ladenand Saddam Hussein
To be clear about their attitudeshe quotes the renowned Germanelectronic music composer KarlHeinz Stockhausen who saidstraight after the attack on NewYork that it was lsquothe greatest workof art for the whole cosmosrsquo
As Pipes and many of us observedaily there is barely a bad word tosay about Saddam Hussein nor aniota of sympathy for thoseoppressed tortured and murderedby his reacutegime Instead they venttheir fury against the AmericanPresident and British Prime Minister
Why the nonchalancePipes draws our attention to Lee
Harris writing in a recent issue ofthe Hoover Institutionrsquos journalPolicy Review According to KarlMarxrsquos central thesis the demise ofcapitalism hangs on workersgrowing poorer over timemdashwhichof course did not happen Sorather than give up on cherishedexpectations of socialist revolutionHarris notes Marxists tweaked theirtheory and looked instead to theentire populations of poor countriesto carry out the revolution Classanalysis went out the windowreplaced by geography
The trouble is they have tooverlook militant Islamrsquos slightly un-socialist practicesmdashsuch as itsimposing religious law excludingwomen from the workplace andpersecuting atheists
As Pipes sums up September 11and the prospect of war againstSaddam Hussein have exposed theLeftrsquos political self-delusionintellectual bankruptcy and moralturpitude
The Loopy Leftby Andrew McIntyre
ing an improved environment Realsolutions require the issue be placedwithin a normal commercial frame-work which involves1 Clarifying the property rights2 Allowing water rights to be
fully detachable from propertyand able to be used howeverthe holder wishes subject toany damage this might imposeon others
3 Ensuring full rights to buy andsell the water
4 Defining rights so as not to re-duce the quality of other usersThis means ensuring that farm-ing practices that do not bringgreater salination than somestandard
5 Allowing rights holders tobank their water and ensureeven greater certaintyAllocating specific individual
ownership rights to water and al-lowing its trade is a well-foundedmeans of maximizing the usevalue It would also be likely tohave the beneficial side-effects ofreducing salinity and farm-basedpollutants caused by intensiveuse We should grasp such oppor-tunities But if the impending sa-linity problem is as great as someclaim other solutions might wellinclude buying out some allocatedirrigatorsrsquo rights However alter-natives may be to remove saltfrom the water by engineering so-lutions or simply to live withhigher salt
NOTE1 Human drinking water should
be less than 800 ECs (electri-cal conductivity one ECequals about 06 mglitre)while higher levels are accept-able for much farming activity
Dr Alan Moran is Director Deregulation Unitat the Institute of Public Affairs
32 MARCH 2003
E V I E WR
Reading FileDone
eral political systems worldwidehave consistently accretedpower to the centre often in theface of clear constitutional im-peratives to the contrary) Ifeared instead that a UN thathad been patently successful insomethingmdashanythingmdashmightbe granted greater powers to thepoint where it would kill truediversity and individualism (ortry to anyway) through inevi-table bureaucratic practices
Is such a fear unfounded Ap-parently not if many peopleshare the moral touchstone ofthe Opposition Leader SimonCrean He believes according tohis own words in Parliamentthat what the UN SecurityCouncil declares is moral whatit refuses is immoral
The latest manoeuvrings overIraq have therefore been heart-
ening It seems that the desiresof the powers small and largeto promote their own interestswill continue to hobble the UN
The problem with a unitedworld is that as the threateningimpasse over Iraq suggestedthere are very divergent viewsabout how that world ought tobe run on an international leveljust as there are at national and
sub-national levels The virtueof multi-layered levels of gov-ernments is that competing ju-risdictions give the individual adegree of choice
The greatest sin of totalitar-ian governments past and pres-ent is to deny their citizens theright to leave The greatest dan-ger that the United Nationsposes as far off as it now (hap-pily) seems is that leaving its ju-risdiction is for all practical pur-poses impossible
THE IMPASSE JUST PASSEDI listened to Prime MinisterHoward speaking to the motionbefore Parliament in relation tothe war It was a good speechbut neither he nor PresidentBush seems able to structure andlay out an argument with thestyle and content of BritishPrime Minister Blair His equi-valent speech before the BritishCommons provides a masterfulsummary of the reasons for thiswar and includes an immenselyreadable time-line of the utterineffectiveness of the UN pro-cesses in dealing with Iraq Henicely deals with allegations ofthe lsquorushrsquo to war lsquoOur fault hasnot been impatience The truth
UNITED OR DIVIDEDI write just hours after US Presi-dent George W Bush has deliv-ered his ultimatum to Iraqi Presi-dent Saddam Hussein leave Iraqwithin 48 hours or be removedBy the time this appears beforeyour eyes you will knowwhether Hussein has decided hischances of survival will be sig-nificantly greater by choosingexile or by remaining in IraqThe recent creation of the In-ternational Criminal Court ofcourse makes war more likelysince Hussein can have no guar-antee of a peaceful lsquoretirementrsquo
In the event that Hussein re-mains in Iraq you will also knowwhether Bush has kept his wordand most likely the outcome ofthis military venture
This matter is immensely im-portant for the people of Iraqand for the military personnelinvolved (including our ownAustralian soldiers sailors andaviators) But then so was theprevious Gulf War the US in-vasion of Grenada the Austra-lian intervention in East Timorand so on But a difference be-tween the current conflict andthose others could be the impactit has upon international insti-tutions Actually just one inter-national institution the UnitedNations
Prior to the first Gulf War Ifeared the coalitionrsquos success forthe reason that some of it mighthave rubbed off onto the UnitedNations I hasten to deny that Ifear the UN as some vast con-spiracy for world domination Ifeared instead that it couldstumble into a piecemeal cen-tralization of power (just as Fed-
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
E V I E WRs
33MARCH 2003
E V I E WR
Reading FileDone
ATTACKING THE GLOBALGOVERNORSThe Cato Institute is a whole-some body as demonstrated byits opposition to such interna-tional organizations as the Inter-national Criminal Court and forthat matter the United Nationsitself Ted Galen Carpenter forexample argues in lsquoPutting theUnited Nations on Noticersquo thatthe UN can and has done somemodest good occasionally It ishe says lsquoa good idea to have aplace where governments cangather to air grievancesrsquo But headds if it lsquoattempts to acquire ataxing authority [or] raise astanding armyrsquo then the USshould withdraw (as indeedshould Australia) Because thatwould turn it into an lsquoembryonicsuperstate that would menacelibertyrsquo
Go to
wwwcatoorgforeignpolicyunhtml
THE INTERNATIONALORGANIZATIONS THEM-SELVESThe United Nations has beenaccused of being often ineffec-tive and always slow Well ev-ery time Irsquove hit the UNrsquos Web-site even with my nifty broad-band Internet connection slow-ness rules Perhaps the site isbeing continually accessed bythe teeming masses Anyway goto
wwwunorg
With 15 members alreadyand 13 more on the way thereremain hopes that the EuropeanUnion will be a force for a stable
twenty-first century Equallywith 15 members already exhib-iting rather divergent views overthe issue of Iraq and most of theforthcoming members sidingwith the United States perhapsthis is overly hopeful Go to
europaeuintindex_enhtm
Then there is the WorldTrade Organization the organi-zation behind which protection-ist nations can hide from unilat-eral trade liberalization by pre-tending to support multilateraltrade liberalization Go to
wwwwtoorg
And we mustnrsquot forget the In-ternational Criminal Court fearof which was no doubt a featureof Saddam Husseinrsquos rejection ofexile as an option and the furyof which is promised by a num-ber of prominent lawyers to bevisited upon our very own PrimeMinister Go to
wwwicc-cpiint
FEEDBACKI would welcome advice fromreaders on any other sites of inter-est to IPA Review readers E-mailme on scdawsonbigpondnetau
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
is our patience should have beenexhausted weeks and monthsand years agorsquo
Go to
wwwnumber10govukoutputPage3294asp
THE STRUGGLE BETWEENTHE CONTINENTSIf you are patient you can readthat wonderful British rag TheSpectator for free Last weekrsquoscopy is available on-line One ofits regular columnists is MarkSteyn an Americo-phile Cana-dian who has a robust turn ofphrase and an abiding disdain formuch modern music (whichseems to place him very comfort-ably into The Spectatorrsquos culturalmatrix)
His piece on the future de-cline of Europe vis-agrave-vis Ame-rica makes for fascinating read-ing Go to
wwwspectatorcouk
then click on the lsquoBack Issuesrsquobutton and choose the edition of15 March 2003
E V I E WR
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
2 MARCH 2003
E V I E WR
lsquoThe most important challenge toindividual freedom today is notthe ideology of egalitarianism butthe ideology of stasis the notionthat the good society is one ofstability predictability andcontrol The role of the state inthis view is not so much toreallocate wealth as it is to curbdirect or end unpredictableeconomic and social evolutionrsquo
mdashVirginia Postrel
Virginia Postrelrsquos argument that thecentral tension in society lies not in thebattle between socialism and capitalismbut rather between peoplersquosperceptions about the future andtechnology is being borne out
Moreover in Australia the newLuddites are gaining the upper hand
Few issues show this more clearlythan the debate on agriculturalbiotechnology
Despite a steady stream of positiveresearch the rapid uptake of thetechnology abroad and stringent testingState governments around Australia areincreasingly banning the technology
During the recent State electioncampaign all political parties in NSWmdashwith the support of the NSW FarmersAssociationmdashpromised to ban new GMcrops Indeed the National Partymdashhistorically the party of the farmersmdashproposed the most stringent ban Thisfollowed decisions in Tasmania andWestern Australia to imposemoratoriums on commercial use of GMcrops And South Australia is currentlyconsidering legislation to implement asimilar moratorium
The bans are certainly not beingdriven by the evidence lack ofsafeguards or grower demands
The only GM crop currently growncommercially in Australia is Bt-cotton Ithas been embraced by cotton growerswith plantings consistently at themaximum allowed by the regulators Its
From the EditorMIKE NAHAN
popularity is due to its lower costs andreduced environmental impact Bt-cotton allows a 50 per cent reduction inpesticide use which not only saves onsprays but also on fuel time andapplication costs Growers are nowdemanding that regulators reducerestrictions on the use of Bt-cottonThey are also looking forward to a newvariety of Bt-cotton which is currentlyundergoing field trials and producing aneven larger reductionmdasharound 90 percent in trialsmdashin pesticide use andassociated costs Despite these demandsand benefits the new variety of Bt-cotton will be banned in the maincotton growing StatemdashNSW
The bans were brought on by theimminent introduction of GM canolaTwo companies Bayer and Monsantohave spent six years and millions ofdollars developing local varieties of GMcanola Since they have now passed allthe tests and agreed to all safeguardsthe regulators will have no real choicebut give them the go-ahead Fearful thatif the matter were left up to individualsand rational debate the technologymight spread the new Luddites havelobbied successfully for an outright ban
That lsquofearrsquo is warrantedmdashGM canolahas also been a roaring success abroadand would have been so here In Canadaaround 70 per cent of farmers haveadopted GM varieties since theirintroduction in 1996 They have done so
because it provides on average 30 percent higher net returns than non-GMvarieties through lower costs as well asincreased yields
The latest research strongly suggestsa similar outcome if the GM varietieswere allowed to be grown locallyNorton1 forecasts widespread adoptionof the GM varieties driven by higher netreturns (around 34 per cent) and higheryield flows on wheat crops It also foundthat GM varieties have a range ofconservation values including 30 percent less pesticide use a markedincrease in the use of minimal tillage andother soil preservation techniqueslower fuel use and less soil compactionIn total growers stand to gain around$135 million per annum from theintroduction of GM canola
One of the main concerns ofgrowers is whether the introduction ofGM canola will undermine theirmarkets While there have been manyclaims of a lsquonon-GM premiumrsquo itappears to be a chimera
A recent WA Governmentinvestigation found minimal risk tomarkets from the introduction of GMcanola 997 of Australian canolaexports go to four countries JapanMalaysia Pakistan and China All thesecountries are investing heavily in GMcrop technology import GM canola andimport unsegregated canola
While much has been made ofJapanrsquos alleged biotech fears the realty isstarkly different Japan has licensed theimportation of 57 types of GM cropsincluding canola Some 70 per cent of itscanola imports are from Canada whichnot only uses GM varieties but does notsegregate GM from non-GM varietiesAlthough Japan does require many GMproducts to be labelled canola oil isexempt as it is in Australia In fact Japanis the worldrsquos largest importer of GMcrops and foods
Only the Europeans have beenwilling to pay a premium for non-GM
3MARCH 2003
E V I E WR
API
canola and then only rarely and at asmall level The research found thatsome European importers have paid avery small premium of around $10 pertonne Not only is this premium afraction of the gains flowing to growersfrom the use of GM canola but Europeis not nor is it likely to become asignificant importer of Australian canolaFrance and Germany are majorproducers and exporters of canola andthey use their non-GM laws to protecttheir highly subsidized production andexport markets in Europe Europe hasonly imported canola in times ofdrought when local production hasfallen short of domestic demand
How will Australian canolaproducers who receive the same FOBprices as the Canadians compete withthe Canadiansrsquo lower-cost GM varietiesThe answer is simple they will not beable to compete and farm incomes andthe environment will suffer
Why is Australia with its largelightly-subsidized export-oriented andinnovative rural sector deciding to banthe most promising advance inagricultural technology in a generation
The explanation for the collectiveflight from technology lies with theinfluence and success of a new class ofLuddites Like their nineteenth-centuryforebears the modern-day Ludditesmaintain the faccedilade of acting in thepublic interest Unlike theirpredecessors however the neo-Ludditesare well-funded well-organized and havespecial privilegesFunding has been crucial to the neo-Ludditesrsquo success According to The WallStreet Journal the European Union hasover the last five years giveninternational NGOs $300 million todemonize GM food The EUrsquos motivationis to create a non-tariff barrier toprotect its inefficient farmers withoutbeing seen to do so Aside from thecash the NGOs are motivated by thedesire to stop modernitymdashat least forothers Australian companies are alsoplying the Luddites with cash in a similareffort to inhibit competition orpromote their niche in the market Mostanti-biotech spokesmen also have adirect commercial interest indemonizing modern agriculture as theyoften make their livelihood from the
organic industry On top of this mostanti-biotech organizations aresubsidized by government The result isthat there is more money to be madefrom demonizing than from promotingag-biotech
Fear and uncertainty have alsoplayed an important role Thetechnology is novel and complex Whilethe regulators and proponents ofbiotech have concentrated on dealingwith these complexities the Ludditeshave focused on seeding fear with anendless series of scare campaigns Theyhave also been successful in demandingthe impossiblemdashthat is certainty in aninherently uncertain world
The key to their success howeverhas been their ability to masquerade asangels The Luddites have captured thedo-good institutions representing theenvironment consumers and thepoormdashand with this the communityrsquosrespect They have been able to distortand falsify without being held toaccount And they have been awardedwith status and influence
A prime example is Ms LouiseSylvan head of the AustralianConsumers Association (ACA) andpresident of Consumers International(CI)
Ms Sylvan and the ACA are givenstar billing in the media and have beeninvited and paid to represent lsquoAustralianconsumersrsquo on 125 committees Inreality ACArsquos links with consumer arethin it has about 400 real members(who are mostly anti-consumeractivists) and very limited links withordinary consumers
With her ACA hat on Ms Sylvan hasled the push for stringent labelling lawswhile with her CI hat she has pushedfor an outright ban
In the introduction to the CIrsquos latestscreed on GM food2 Ms Sylvan claimedthat lsquoGM crops hellip currently beinggrown offer no benefits to consumersand nothing to most farmers Even theintended lsquoindirectrsquo advantages of thereduced pesticide and herbicide use arenot being achievedrsquo In short she liedwith impunity
She also claims that lsquoGM is a newtechnology that poses many ethicalenvironmental and biological questionswhich can not fully be answered even by
a well-designed safety testing regimeConsumers have a right to question whythis technology should be used at allwhen it produces no benefits to societybut has the potential for causing greatdamagersquo
Not only has Ms Sylvan not beenforced to justify her claims but she issoon to become Deputy Director of theACCCmdashin short the nationrsquos secondmost influential business and technologyregulator
Given the success money fear andspecial treatment of the Ludditespoliticians and farmers are starting tooffer them support
What is the future Well look atEurope It has shown the way withsimilar bans and as a result investmentin biotechnology research of all typeshas declined by 60 per cent its researchindustry is fleeing to North America andit agricultural sector is going backwardseconomically and in terms of it impacton the environment and peoplersquos health
Forests have also long been a focusof the Luddites They have pushed for acessation of logging and othercommercial uses for a hands-offapproach to forest managementincluding a reduction of preventiveburning for increasing the number andsize of national parks for the closing ofaccess roads and locking people out ofthe forest As discussed at a recent IPAconference and summarized by GrahamWhite (on pages 4ndash7 below) the newLudditesrsquo success has been a nationalcatastrophe Some 16 million hectareshave been burnt with over $200 millionin damage to homes business and farmsIt has also done great damage to floraand fauna
Now they have water in their sights(see The lsquoRrsquo Files pages 29ndash31 below)
NOTES1 Robert Norton lsquoConservation Farming
System and Canolarsquo AVCARE March 20032 Consumer International (2003) lsquoCorporate
control of the food chain the GM linkrsquohttpwwwconsumersinternationalorgNews_Even t s wor ld a sp ca t=22ampregionid=135
4 MARCH 2003
E V I E WR
TRIO of experts has toldthe recent IPA conferencethat prescribed burning isthe most effective tool for
containing major bushfires in Aus-tralia Properly conductedmdashand thatmeans using a random rather than aprogrammed pattern of burningmdashitis also environmentally beneficialbecause it replicates the conditionsunder which Australiarsquos forests andscrublands evolved
Alas the devastation that has oc-curred in the forests parks and farmsof eastern Australia during the firstquarter of 2003mdashand which in-truded deeply into the suburbs ofCanberra causing the loss of hun-dreds of homesmdashwas cruelly exacer-bated by the failure to conduct ad-equate prescribed burning Examin-ing the scientific evidence presentedby experts at the conference it is dif-ficult not to conclude that much ofthe 16 million hectares of parks andforests destroyed this year could havebeen saved had proper prescribedburning been carried out over thepast few years So too could farmsand houses
THE SCIENTISTSWhy were these programmes not car-ried out The three expertsmdashDr PhilCheney of CSIRO Dr Syd SheaProfessor of Environmental Manage-ment at the University of NotreDame and a former head of WArsquos
A
Why Did We AllowAustralia to Burn
GRAHAM WHITE
Department of Conservation andLand Management and Dr KevinTolhurst of the Forest Science Cen-tre at the University of Melbournemdashall declined to speculate other thannoting that there were limitations onthe skills and resources available toconduct them and that there wereelements of lsquocommunity oppositionrsquoto such burning
There was no such reluctancehowever from the many delegatesfrom fire-affected regions whocrammed the auditorium Many ofthem had made a ten-hour round tripby bus to present their views andseveral were unhesitating in namingthe influence of vocal but ill-in-formed green groups as the likely cul-prit
These key messagesmdashthe failureof land managers to follow estab-lished scientific principles and thecontribution of green policies to thatfailuremdashwere two of three themesthat dominated the conference Thethird was property rightsmdashthe ex-pectations of private landholdersthat adjoining public lands should beproperly managed and the legal re-dress they have when that manage-ment fails
While the text of the talks con-centrated on these scientific and le-gal issues the pictures used to illus-trate the intensity of the fires raisedmore emotional responses If thescale of human sufferingmdashthe burnt-
out homes and scorched farmsmdashwasterrible the damage to the naturalenvironment was awesome Picturesof National Parks and State forestsreduced to blackened stick-like rem-nants of trees poking from a carpetof smouldering ash the devastationstretching seemingly to the horizonbrought cruel reminders of the mil-lions of small marsupials and othernative animals that died in this in-ferno
Any committed conservationistcould only ask what did we do tounleash such devastation The an-swer provided forcefully by all threeexperts was that it was not what wedid but what we didnrsquot do that al-lowed the fires to reach such horrificproportions
Dr Cheney produced studies toshow that under any given climaticconditions the intensity of a forestfire is essentially dependent on thevolume of fuel build-up on the for-est floor This volume of fuel is inturn largely a factor of how long ithas been since fire of some sortpassed through the area The longerthe period since it was last burnedthe greater the volume of fuel avail-able
When build-up reaches a certainlevel the intensity of the blaze pro-duced under typical bushfire condi-tions puts it beyond the capacity offire-fighters to contain With veryhigh levels of fuel the fire will be
On 11 March 2003 the IPA held a conference about the lessons to be learnt from the bushfires whichswept Eastern Australia in the first quarter of 2003 This article presents a synopsis of the major themesand findings from that conference Copies of papers delivered at the forummdashlsquoBushfire Prevention Are
we doing enoughrsquomdashare available on the IPA Website at wwwipaorgau
5MARCH 2003
E V I E WR
beyond the capacity of fire-fighterseven under less extreme conditions
This message was reinforced byboth Professor Shea and Dr Tol-hurst although an environmentallybenign programme of prescribedburning will not prevent bush firesaltogethermdashfor under extreme con-ditions fires will always spreadmdashitwill allow them to be containedonce conditions begin to ease evena little
This would seem to have been animportant factor in the Victorianfires while they began under ex-treme conditions they continuedburning through more than a millionhectares for a period of months in-cluding periods when conditionswere far less extreme High fuelbuild-upmdashthe result of inadequateprescribed burning programmes overseveral yearsmdashwould seem on thebasis of this evidence to have beena major factor in that
Professor Shea said that WArsquosgood record of bushfire managementin recent decadesmdashdespite the ex-treme conditions regularly created bythe regionrsquos long hot and dry sum-mersmdashhad been largely due to ac-ceptance of this principle He fearedhowever that even in WA the ex-ecution of prescribed burning pro-grammes was becoming less rigorous
Why Much of the blame he saidlay in attitudes imported from Brit-ain and Europe which saw burningas ugly and destructive to the envi-ronment These views did not takeinto account the very different ecol-ogy of Australia which had beenfashioned by fire long before whitesettlement
Foresters have discovered hesaid that the long-living grass-treesso common in southern WA containin their trunks a record of the firehistory they have endured This re-veals an irregular but by no meansinfrequent pattern of fire whichstretches back before white settle-ment of these areas
Dr Tolhurst said that studies ofthe fire-frequency patterns in whichAustraliarsquos ecology had evolved pro-
vided important lessons for pre-scribed burning programmes Thestudies show that in the past firesappeared to follow a random pat-ternmdashsome areas burning severaltimes within a five- or ten-year pe-riod while other pockets appearedto have escaped burning for long pe-riods This had ensured biodiversity
A similar approach was neededwith prescribed burning he saidRather than merely gridding a parkto be systematically burned over saya ten- or 15-year cycle it was betterto replicate the natural order with amore varied approach with some ar-eas being burned more frequentlythan others This would ensure thatfuel build-up over large areas of for-ests and parks was kept to a levelwhich prevented fires of the destruc-tive scale and intensity of 2003 butwhich also ensured biodiversity
This would not only have eco-logical benefits but would reducethe occurrence and impact of largeintense fires reduce the cost of emer-gency operations and disaster reliefand create better land-managementoutcomes The tragedy is that muchof this thinking is already enshrinedin forest management philosophiesin Victoria but has not been ad-
equately resourced or implementedBurning is possible only on a limitednumber of days each year and re-quires skilled personnel if it is to becarried out in an effective and envi-ronmentally beneficial way Consid-erably greater resources were thusneeded
THE PROPERTY OWNERSThe three scientific experts were fol-lowed by presentations of case stud-ies from individuals The speakerswere Ian Mott a third-generationforester and self-confessed lsquobush law-yerrsquo with experience of land manage-ment issues in NSW and Queens-land David Coonan who presentedthe views of the ACT SustainableRural Lands Group (a group of ACTlandholders members of which havebeen affected by two large fires inrecent years) and Russell Smith re-tired Army major and a resident ofBundarrah Valley about 40kmNNW of Omeo in North-East Vic-toria an area which was swept by therecent bushfires
While each took a distinctive ap-proach the issue of the obligationsof public land managersmdashand thelimitations even on the rights of pri-vate landholders to manage theirland adequatelymdashtended to intrudeinto all three presentations
For Ian Mott the issues were fun-damentally legal The obligations onprivate landholders are extensiveare public land managers similarlyobliged to keep the properties undertheir control equally safe This is notthe first time he has raised these is-sues but the questions had an addedrelevance in the light of evidencefrom David Coonanrsquos group and fromRussell Smith that failure to preventfuel build-up on neighbouring pub-lic lands was a significant factor inthe intensity of the fires that strucktheir own areas
Russell Smith noted that AlpinePark and State Forests in his area hadnot apparently been given any pre-scribed burning in living memoryHe has been on his property almost20 years but believes that the pe-
The failure of landmanagers to followestablished scientificprinciples and the
contribution ofgreen policies tothat failure were
two of three themesthat dominatedthe conference
s
6 MARCH 2003
E V I E WR
riod without burning is far farlonger The area is choked with nox-ious weeds and provides sanctuaryfor feral cats dogs and goats whichinvade private property
More relevant in the context ofthis forum was the fact that he esti-mated forest floor litter to have beenin the order of lsquohundredsrsquo of tonnesper hectare rather than the 4 tonnesconsidered optimal for ecologicalbalance It was so thick and densethat it was impossible to ride a horsein parts and difficult to penetrateeven on foot
Similarly despite repeated re-quests from Major Smith the Vic-torian Department of Natural Re-sources and Environment (nowSustainability and Environment)had not forced a neighbouring ab-sentee landowner to clear hugethickets of fire-hazardous blackberryand briar
When the bushfires came theseunburnt public and private landserupted into an inferno and al-though a combination of rigorousfire-prevention measures (which in-cluded conducting his own fuel-re-duction burning to create a fire breakthat extended well into the park adecision he took unilaterally whenthe park managers declined) and awell-rehearsed action plan saved hisown property the fire swept thoughthe rest of the valley
Russell Smith now believes thatthere are vital lessons to be learnedif this sort of disaster is not to be re-peated Fuel reduction is one impor-tant priority but there is also a hugeamount that can be done to improveplanning coordination and re-sponse He has a dosier of planningand communications failings manyof which could have been avoidedwith greater training and prepara-tion
(For David Coonan there is acruel irony in the fact that his grouphas presented extensive evidence tothe ACT coroner investigatingdeaths that occurred during the 1991Canberra fires The coronerrsquos find-ings are not yet public but Coonan
is saddened that he and his col-leagues may yet find themselves pre-senting similar evidence to any in-quiry into the 2003 fires)
One theme that emerged repeat-edly in the Conference from all quar-ters (scientists the case studies anddelegates from the floor) is that StateGovernments are far more enthusi-astic about creating electorally-
popular National Parks than they areabout funding the management ofthe parks they have created Timeand again reference was made to thelack of management of these parkswhich are progressively degradedthrough infestations of weeds andferal animals and which become in-creasing fire hazards
This is environmentally as wellas economically and politically dan-gerous the habitatsmdashand perhapseven entire populationsmdashof somethreatened species were engulfed inthe huge fires that spread throughthe parks of north-eastern Victoriain January February and March
One delegate asked whether thecause of environmentalism wouldnot be better served if there weregreater commercial exploitation ofNational Parks to generate fundingfor their upkeep It would at least
ensure their management was givena secure funding base he said
The continued creation and ex-tension of National Parks whenthere was not sufficient funding tomanage even existing parks was seenas evidence of State Governmentsurrender to uninformed urban-based green populists who were inturn swayed more by emotion andsymbolism than by any real under-standing of environmental manage-ment
The passion generated by thesefires was evident in the packed au-ditorium (every seat was taken andmany who tried to book late had tobe refused) Scores of residents andfirefighters from hard-hit areas ofVictoria made the journey to Mel-bourne to hear the experts and tohave their say Several busloads camefrom north-east Victoria the epi-centre of the fire disasters For themit was a 16-hour day
Other individuals made a similarjourney from Victoriarsquos north-westwhere more than 200000 hectaresof National Park along with exten-sive farmlands were also destroyed
GREEN GODSMany people expressed their con-cerns at the possible influence ofgreen activists on forest manage-ment policy These concerns wereonly confirmed by Andrew Bolt As-sociate Editor of Melbournersquos Herald-Sun newspaper who gave a talk dur-ing post-conference refreshmentsHis theme was Green Religion thetriumph of a set of mystical valuesover science
The thesis he advanced was thatwith the decline of traditional reli-gions and belief in God many mod-ern individuals were left with thechoice of either believing that hu-man beings were in charge of theirown destiny or believing that theyshouldnrsquot be and subsume humanfate to omniscient Nature Giventheir lack of faith in fellow manmany had chosen the latter courseThe result was a value-system inwhich scientific principles of sound
Governments are formore enthusiastic
about creatingelectorally-popular
National Parksthan they are
about funding themanagement of the
parks they havecreated
7MARCH 2003
E V I E WR
ON 28 January the Queens-land Government re-leased Report on the studyof land-sourced pollutants
and their impacts on water quality inand adjacent to the Great Barrier ReefIn the associated media release theQueensland Premier Peter Beattiesaid lsquoNow the report is in work onthe Great Barrier Reef Water Qual-ity Protection Plan will continuewithout arguments about whetherland activities harm the Reef Thereport is the adjudicatorrsquos decisionand is based on the best available sci-encersquo
The report written by a panelof scientists chaired by Queens-landrsquos Chief Scientist Dr Joe Bakermakes several key findings regard-ing impacts of land-based pollutionon the reef A key allegation in thereportrsquos summary highlighted in thePremierrsquos media release is that el-evated concentrations of pesticideresidue have been found in dugongs
Since publication of the book Si-lent Spring by Rachel Carson in1962 there has been concern thatpesticides can bio-accumulate inthe fat tissue of animals Prior to1987 organochlorine pesticides (forexample DDT) were used in GreatBarrier Reef catchments includingfor sugarcane production Thesechemicals have since been banneddue to global concerns about theirpersistence in the environment andtheir capacity to bio-accumulate
I first became aware of the spe-cific issue of pesticide in dugongs inAugust 1998 A senior officer withthe Great Barrier Reef Marine ParkAuthority (GBRMPA) phoned mewith the news that a soon-to-be-
Deceit in the Nameof Conservation
JENNIFER MAROHASY
published research study had foundthat elevated levels of pesticide resi-due most likely from cane farmingwere accumulating in the fat tissueof dugongs Media headlines fol-lowed including Pesticide in reefcreatures and Cane burning link withdioxin in dugong
I obtained a copy of the studyand found it was primarily an analy-sis of the type and quantity of diox-ins found in the fat tissue of dug-ong carcasses that had been killedin fishing nets1 Dioxins are a groupof organochlorine compounds com-monly associated with industrialwaste incineration The researchpaper made reference to a differentstudy that had analyzed the dioxinsfound in soils under sugarcane cul-tivation and commented that thecane-land soils and dugong fatsamples both had elevated levels ofthe same type of dioxins
Concerned by this news I con-tacted a dioxin expert at the Uni-versity of Queensland Dr BrianStanmore informed me that thetype of dioxin considered by theGBRMPA to be elevated in thedugongs was common and the leasttoxic of all dioxins Furthermore DrStanmore indicated that the levelof dioxins found in the dugongs wasless than the national average inpeople in the United States Hecommented that lsquoit looks like thedugong is better off than we arersquo
The GBRMPA study clearlystated lsquoAll (dugong) carcasses werein good condition at the time ofsampling All animal deaths wereconfirmed or suspected (fishing) netdrowningrsquo However instead of fo-cusing on net fishing practices the
environmental management were oflittle significance compared with theneed for a re-creation of a mythicalpristine Nature
Elements of this attitude he sug-gested might underlie some of thepressures which discourage the pre-scribed burning of National Parksand State Forests
Whether this hypothesis provesvalid or not there is little doubt thatthe management of Australiarsquos parksforests and other public lands willcome under greater scrutiny as a re-sult of the horrific fires of 2003 Thescale of damagemdashhuman economicand environmentalmdashis such that atleast three separate inquiries Fed-eral Victorian and from the ACThave already been proposed
The overwhelming view of del-egates at the IPA forummdashas re-flected in questions from the floorand in post-conference discussionsmdashwas that only a Federal inquiry islikely to achieve an adequate resultThis is because State and TerritoryGovernments in their role as landmanagers must share direct respon-sibility for any lack of prescribedburning and other forms of hazard re-duction that might have contributedto these fires This means that theycould potentially face hugely expen-sive legal claims and that as a re-sult there could be pressure on themto manipulate terms of reference andother criteria to diminish scrutiny ofthese important issues
Even if this concern proves ut-terly unfounded the public percep-tion could still linger that any suchinvestigation was a State Govern-ment inquiry into a matter in whichthe State had a very real vested in-terest For these reasons a Federalinquiry would have greater credibil-ity and is in fact essential if we areto come to a comprehensive under-standing of the causes of last sum-merrsquos catastrophic bushfires
Graham White is an issues management consultantwho chaired a session of the IPA bushfires forum
API s
8 MARCH 2003
E V I E WR
GBRMPA subsequently providedfunding for a full investigation bythe National Research Centre forEnvironmental Toxicology(NRCET) into the likely origin ofthe dioxin considered to be at el-evated levels in the dugong car-casses including possible links withsugarcane production
Two years later the NRCET in-vestigation concluded that the di-oxin of concern to the GBRMPAwas common in soils along the en-tire Queensland coastline includ-ing in regions beyond sugarcane cul-tivation2 Analyses of dated marinesediment cores indicated that thechemical was present prior to Eu-ropean settlement in QueenslandIn other words the dioxin is a natu-rally occurring organochlorine andnot a pesticide residue There areapparently many naturally occur-ring non-toxic dioxins
But what of the organochlorineinsecticides used in the sugar indus-try from the late 1940s until theywere banned in 1987 Have thesepesticides been found in dugongs
The GBRMPA and the Austra-lian Institute of Marine Science(AIMS) have undertaken extensivesurveys for traces of organochlorineinsecticides including an Australia-wide programme for collecting andtesting samples from stranded or re-cently killed dugongsmdashfrom whichthe dioxins were isolated While itwas expected that these program-mes would find persistent orga-nochlorine pesticide this has notbeen the case
Estuarine and near-shore marinesediments have been extensivelysampled on the basis that these ar-eas are likely to contain the high-est concentrations of contaminantsfrom human activity in adjacentcatchments Trace amounts of someorganochlorine insecticides havebeen found in sediment from a smallnumber of river mouths3 No orga-nochlorine insecticides howeverhave been found in near-shore ma-rine sediments of the Great BarrierReef4 This finding has surprised
many researchers some of whomhave postulated that the absence oforganochlorine contamination inthe inner shelf is a consequence ofenhanced degradation of the orga-nochlorines in the aquatic system
In late November 2002 I re-ceived a copy of the draft summaryof the Baker reportmdashthe report sub-sequently described by the Premieras the best available science I no-ticed the allegation of elevated con-centrations of fat-soluble pesticide
in dugongs I emailed Dr Baker que-rying this and other allegations inthe draft summary Dr Baker repliedthat he would consult with the Sci-ence Panel and get back to me Thereport was published two monthslatter without any changes to thesummary
The reef pesticide research iswell-documented and should be un-derstood by members of the SciencePanel In fact a member of the Sci-ence Panel communicated the find-ings from the NRCET investigationto me in September 2001 Whythen was the allegation of pesticidein dugongs included in the originalsummary report Why was the alle-gation not corrected after I brought API
the error to Dr Bakerrsquos attention inDecember 2002
Two years earlier following pres-sure from the World Wide Fund forNature (WWF) and as part of theQueensland governmentrsquos reelec-tion campaign the QueenslandPremier committed his governmentto saving the reef Since this timeit has been Queensland governmentpolicy that the reef is in troubleThe on-going deception is perhapsnecessary to maintain the percep-tion that the reef is in trouble
NOTES1 Haynes D Muller J F amp
McLachlan MS (1999) lsquoPoly-cholorinated dibenzo-p-dioxinsand dibenzofurans in Great Bar-rier Reef (Australia) Dugongs(Dugong dugon)rsquo Chemosphere38 pages 255ndash262
2 Prange JA Gaus C PapkeO amp Muller JF (2002) lsquoInves-tigations into the PCDD con-tamination of topsoil river sedi-ments and kaolinite clay inQueensland Australiarsquo Chemo-sphere 46 pages 1335ndash1342
3 Haynes D Muller J amp CarterS (2000) lsquoPesticide and Herbi-cide Residue in Sediments andSeagrasses from the Great Bar-rier Reef World Heritage Areaand Queensland Coastrsquo MarinePollution Bulletin 41 pages279ndash287
4 Cavanagh JE Burns K ABrunskill GJ amp Coventry RJ(1999) lsquoOrganochlorine pesti-cide residues in soils and sedi-ments of the Herbert and Bur-dekin River regions northQueenslandmdashimplications forcontamination of the GreatBarrier Reefrsquo Marine PollutionBulletin 39 pages 367ndash375
Dr Jennifer Marohasy is Environment Managerwith Queensland Canegrowers Organisation Ltd
Why was theallegation of pesticidein dugongs included inthe original summary
report Why wasthe allegation notcorrected after I
brought the error toDr Bakerrsquos attentionin December 2002
9MARCH 2003
E V I E WR
IN THE LONG AGOPlanet Earth condensed 4550million years ago (Ma) from re-cycled stardust Since that timethe continents have been enlarg-ing Earth materials have beenconstantly recycled and the Earthand all associated systems havebeen dynamically evolving TheEarth has not stopped being anevolving dynamic system just be-cause humans now live on thecontinents
As soon as there was liquid wa-ter on Earth there was life Bac-teria slowly diversified and by thetime the Earth was middle agedone group of bacteria had emit-ted such large quantities of oxy-gen (O2) that the atmospherecontained minor O2 Some of thisexcess O2 was trapped in rocks byweathering most dissolved in theoceans resulting in the precipita-tion of iron oxides It is these ironoxides that form the great iron orefields of planet Earth (for ex-ample in the Hamersley Basin)Life the atmosphere the oceansand the rocks interacted a pro-cess that has been occurring forat least 2500 million years on ourdynamic evolving planet
For at least the last 2500 mil-lion years the continents havebeen pulled apart and stitchedback together Every time thecontinents are pulled apart hugequantities of volcanic water car-bon dioxide (CO2) and methane(CH4) are released into the atmo-sphere and greenhouse conditionsprevail When continents stitchtogether mountain ranges formMountains are stripped of soilsnew soils form and remove CO2
The Past is the Key to the PresentGreenhouse and Icehouse over Time
IAN PLIMER
from the atmosphere these soilsare stripped from the land and theCO2 becomes locked in sedimentson the ocean floor When atmo-spheric CO2 is low glaciation oc-curs Large climate cycles can berelated to plate tectonics
The origin of the greatest cli-mate change on Earth is anenigma Between 750 and 600Ma there were two major glacialevents and numerous smallerevents Sea level changed by upto 400 metres and interglacial seatemperatures were 40˚C Afterglaciation the atmosphere hadsome 20 per cent CO2 and bacte-ria thrived and diversified in thewarm oceans Multicellular lifeappeared diversified and used theCO2 to make shells and skeletonsThis explosion of life from 580 to520 Ma gave us all of the majorlife forms currently present onEarth
Plants appeared at 470 Ma andthere was a major mass extinctionof multicellular life at 430 MaThe origin of this mass extinctionis not known Vacated ecologieswere quickly filled and life con-tinued diversifying Between 368and 248 Ma massive coal depos-its formed there was a major 50million-year period of glaciationand the atmosphere was blessedwith a very high CO2 and O2 con-tent Life continued to diversifyMinor mass extinctions continuedand at 248 Ma the biggest majormass extinction on Earth tookplace Some 96 per cent of spe-cies became extinct Life diversi-fied quickly to fill the vacatedecologies The record written instone by fossils in the period520Ma to the present shows thatthe planet is a warm wet green-house volcanic planet with thenormal cycles of rising and fall-
Sea Levels
Greenhouse Greenhouse GreenhouseIcehouse Icehouse
Tem
pera
ture
Tem
pera
ture
Millions of years ago1000 900 800 700 500 400 300 200 100600
There are 400 million year supercycles of greenhouseicehouse related to the pulling apart and
stitching together of continents
Icehouse
s
s
10 MARCH 2003
E V I E WR
ing sea levels rising and fallingland levels and changing climates
THE DAY BEFORE YESTER-DAYSome 120 million years ago Aus-tralia was at the South Pole en-joying a temperate climate Glo-bal sea level was more than 100metres higher than at present thesea surface temperature was 10ndash15˚ C higher than now and manycontinents were covered by shal-low tropical seas Planet Earthwas a warm wet greenhouseparadise and thick vegetationcovered the land masses Atmo-spheric CO2 was about 1 per centwhen the worldrsquos major coal de-posits formed 368 to 248 Ma
From 250 to 120 Ma the glo-bal CO2 content varied greatlyand increased to a peak 6 per centCO2 120 Ma This derived fromintense volcanic activity associ-ated with continental fragmenta-tion Thick vegetation coveredthe land masses
Australia started to pull awayfrom Antarctica at about 100 MaIt drifted northwards the TasmanSea opened and the IndianOcean opened with India start-ing to drift away from WesternAustralia The opening of theTasman Sea produced the rise ofthe Great Dividing Range thediversion of the major river sys-tems and changes to the climateof eastern Australia
A minor mass extinction oflife 90 million years ago was theresult of volcanoes in the Indianand Pacific Oceans belching outCO2 and other gases into theoceans and atmosphere Therewas a runaway greenhouse untilvolcanism waned But volcanicemissions of CO2 are common In1984 and 1986 burps of CO2 fromthe volcanic crater lakes ofMonoun and Nyos respectivelykilled thousands and added CO2to the atmosphere Near MtGambier volcanic CO2 is com-mercially extracted from rocks
one small hot spring on Miloscontributes 1 per cent of theplanetrsquos volcanic CO2 and hugequantities of CO2 the planetrsquossecond most common volcanicgas constantly leak from unseensubmarine volcanoes
Another minor mass extinc-tion at 55 Ma was caused by aCaribbean volcano There was arise in sea temperatures by up to8˚C for 100000 years and atmo-spheric CO2 was 10 times that oftoday During this greenhouseplankton sucked up the atmo-spheric CO2 mammals thrivedand life filled the vacated ecolo-gies Atmospheric CO2 decreasedfrom 3500 to 700 ppm within amillion years stayed low until 47Ma and went up and down toabout the present level (365ppm) at 40 Ma
India collided with Asia at 50Ma Uplift produced the TibetanPlateau which started to scrubCO2 out of the atmosphere TheTibetan plateau is still rising andCO2 is still being scrubbed out ofthe atmosphere The Drake Pas-sage opened as South Americadrifted from Antarctica a cir-cumpolar current developed andAntarctica refrigerated SouthernAustralia from 17 to 145 Mawas again tropical with mid-lati-tude temperatures 6˚C warmerthan today Atmospheric CO2was 180ndash290 ppm This green-house occurred when atmos-pheric CO2 was 30ndash50 per centlower than today
By 5 Ma Earth cooled andwas so cool that very slight orbitalwobbles now had a bearing on cli-mate and every 100000 yearswas characterized by 90000 yearsof glaciation and 10000 years ofinterglacial We are currently inone of those interglacial periods
The penultimate interglacialwas 120000 years ago Homoerectus Homo neanderthalensisand Homo sapiens coexisted sealevel was 6 metres higher than atpresent the planet was far
Millions of Years Ago
400 200600 0
2
4
6
8
10
12
14
16
18
20
0
Perc
enta
ge o
f CO
2
PrecambrianIce Age
s
Permian-CarboniferousIce Age
s
LastIce Age
s
There have been enormous changes incarbon dioxide (CO2) over time related to
volcanism sedimentation mountain-building and life on Earth
11MARCH 2003
E V I E WR
warmer and wetter than now andatmospheric CO2 was 78 per centof that today After warming theatmospheric CO2 and CH4 con-tent increased suggesting that at-mospheric temperature rise drivesan increase in atmospheric car-bon dioxide and methane con-tents During the history of thelatest glaciation armadas of icewere released into the sea every7000 years resulting from thephysical failure of thick icesheets These had a profound ef-fect on climate Small cool peri-ods occurred every 1100 to 1300years
The zenith of the last glacia-tion was 18000 years ago Sealevel was 130 metres lower thantoday temperature was 10ndash15˚Clower than today and the north-ern hemisphere was covered byice to 38˚N up to 3 kilometresthick
YESTERDAYThe northern polar ice sheetstarted to melt 14700 years agoThere were very rapid and majortemperature fluctuations sea lev-els rose and fell and the total sealevel rise over the last 14700years has been at least 130metres Sea level rise resulted inthe breaching of the Mediterra-nean into the Black Sea Basinsome 7600 years ago and is prob-ably the origin of the SumarianBabylonian and biblical stories ofa great flood
One of the consequences of amassive sea level rise over the last14700 years is that the WestAntarctic Ice Sheet was nolonger underpinned by the landTwo thirds of the West Antarc-tic Ice Sheet collapsed into theoceans and sea level rose 12metres The final third of theWest Antarctic Ice Sheet has yetto collapse to produce a 6 metresea level rise as part of the dy-namic post-glacial climate onEarth Climate changes inducedby changes in ocean currents
cooled North Africa grasslandschanged to a desert humans mi-grated and the great Mesopo-tamian cities were established
Sea levels were 1ndash3 metreshigher in a greenhouse 6000years ago There was 20 per centmore rainfall Cold dry periodsglacier expansion and crop fail-ures between 5800 and 4900years ago resulted in deforesta-tion flooding silting of irrigationchannels salinization and thecollapse of the Sumerian citystates Long periods of El Nintildeo-induced drought resulted in theabandonment of Middle EasternIndian and North Americantowns In 1470 BC () Thira ex-ploded weakened the dominantMinoans and changed the courseof western history
Global cooling from 1300 to500 BC gave rise to the advanceof glaciers migration invasionand famine Global warmingcommenced again at 500 BCthere was an excess of food andgreat empires such as the AshokaChrsquohin and the Romans grewContemporary records and Ro-man clothing shows that condi-tions were some 5˚C warmer thantoday
In 535 AD Krakatoa explodedas did Rabaul in 536 AD TheEarth passed through cometarydust in 536 AD The dusty atmo-sphere reflected heat and dark-ness prevailed As a result theclimate cooled and there wasfamine and warfare Changes inocean currents resulted in theMedieval Warm Period from 900to 1300 AD The first to feel thechange were the Vikings whowere able to navigate the north-ern waters colonized Newfound-land colonized Greenland andestablished extensive trade routesas far south as the modern GulfStates On Greenland crops weregrown and there were cattle Thiswould not be possible today Thewarmer wetter climate of Europeproduced excess crops and wealthwhich resulted in the building ofcastles cathedrals and monas-tries As with previous green-house events there was greatprosperity
In 1280 AD volcanic erup-tions on Iceland and a change inocean currents started the LittleIce Age which finished in 1920The North Sea froze in 1303 and1306ndash1307 there was massivefamine in 1315 and the plague
Sea
Surf
ace
Tem
pera
ture
degC
21
22
23
24
25
26
Years Ago
Large temperature changes over the last 200years have been recorded in history and fromthe oxygen isotopes of floating marine animals
Dark Agescold period
Medievalwarm period
LittleIce Age
2000 1500 1000 500 Now
s
12 MARCH 2003
E V I E WR
pandemic attacked the weakenedpopulation in 1347ndash1349 Therewas massive depopulation and ittook Europe 250 years to reachthe population of 1280 AD Dur-ing the Little Ice Age there werewarmer periods associated withsunspot activity During mini-mum sunspot activity (1440ndash1460 1687ndash1703 and 1808ndash1821) the intensely cold condi-tions were recorded by the Dutchmasters and King Henry VIII wasable to roast oxen on the frozenThames There were food short-ages Short cold periods occurredafter the eruptions of Tambora(1815) and Krakatoa (1883) re-spectively In fact 1816 wasknown as the lsquoyear without asummerrsquo This was the time whenTurner painted stormy oceansand skies full of volcanic dustMary Shelley wrote Frankensteinand Byron wrote Darkness
TODAYThe twentieth century and earlytwenty-first century AD are timesof natural post-glacial reboundIce sheets a rare phenomenon inthe history of time still exist Sealevel is relatively low as are glo-bal temperatures and atmos-pheric CO2 Between 1920 and1945 there was a period of warm-ing (037˚C) and another thatcommenced in 1976 (032˚C) In1976ndash1977 global temperaturesin the lower atmosphere jumped03˚C sea surface temperature inthe equatorial Pacific jumped06˚C sea surface temperatureduring upwelling increased 15 to3˚C but there was reduced up-welling the heat content of theupper 300 metres of the worldrsquosoceans increased there was in-creased wave activity in theNorth Sea and the length of theday changed The stepwise in-crease in temperature in 1976ndash1977 shows that there was a ma-jor re-ordering of the ocean heattransport coinciding with anorbital change expressed as a
change in the length of the dayMaybe the global warming of thetwentieth century is just a mea-sure of the variability on a dy-namic evolving planet
To put such measurementsinto perspective over the historyof time changes in atmospherictemperature in the twentieth
century can only be consideredsmall and slow A 24-year globalcoverage of satellite atmospheretemperatures shows only modestwarming in the Northern Hemi-sphere and a slight cooling in theSouthern Hemisphere Tempera-ture measurements from balloonsagree with the satellite measure-ments for the period of overlapBecause greenhouse warming is aphenomenon of the atmospheresignificant changes should havebeen recorded They have not
CONCLUSIONSUnderpinning the global warm-ing and climate change mantra isthe imputation that humans liveon a non-dynamic planet On allscales of observation and mea-surement sea level and climateare not constant Change is nor-mal and is driven by a large num- API
ber of natural forces Change canbe slow or very fast However wesee political slogans such as StopClimate Change or governmentpublications such as Living withClimate Change demonstratingthat both the community andgovernment believe that climatevariability and change are notnormal By using the past as thekey to the present we are facingthe next inevitable glaciationyet the climate economic politi-cal and social models of todayassess the impact of a very slightwarming and do not evaluate thehigher risk of yet another glacia-tion Geology archaeology andhistory show that during glacia-tion famine war depopulationand extinction are the norm
In 1831 Admiral Sir JamesRobert George Graham had theUnion Jack hoisted on a volca-nic land mass that suddenly ap-peared near Sicily It was calledGraham Bank and was claimed byEngland It was also claimed bythe Kingdom of the Two Sicilieswho called it Isola Ferdinandeathe French (LrsquoIsle Julia) andother powers In the subsequentdispute over ownership Franceand the Kingdom of the TwoSicilies almost came to war andEngland and the Two Kingdomsof Sicily had a diplomatic rowDuring the intense diplomaticdispute the island quietly slippedback underwater Graham Banksserves to show that whateverpolitical decisions we humansmake the land rises and falls sealevels rise and fall and climateschange as they have done sincethe dawn of time
Ian Plimer is the Professor of Geology in the Schoolof Earth Sciences at The University of MelbourneThis article is an edited version of his recent paperto the IPArsquos Climate Conference delivered on 28
February 2003 a full version of which can befound on the IPArsquos Website
On all scales of
observation and
measurement sea
level and climate
are not constant
Change is normal
and is driven by a
large number of
natural forces
13MARCH 2003
E V I E WR
FOR two years the worldrsquossecond largest hydrocarbonsproducer spent beaucoupdollars on a clever public re-
lations and advertising campaign toconvince consumers that BP no longerstands for British Petroleum but for Be-yond Petroleum
One advert proclaimed lsquoWersquore oneof the largest producers of natural gashellip and are investing in the new energysources of the futuremdashhydrogen andwind Itrsquos a startrsquo Another tried to getthis line past the guffaw test lsquoWe be-lieve in alternative energy Like solarcappuccinorsquo
Many people expressed surprise thata huge oil company was so committedto alternative energy technologiesThey neednrsquot have
BPrsquos total six-year investment in re-newable technologies was $200 mil-lionmdashthe same amount it spent on thelsquoBeyond Petroleumrsquo advertising cam-paign Thatrsquos certainly an impressivetab for image enhancement But itrsquos adrop in the barrel for futuristic tech-nologies that were the centrepiece forthe slick marketing effort
Indeed all its preening and pufferynotwithstanding BPrsquos actual invest-ment in renewable energy was a whop-ping 005 per cent of the $91 billion itspent to buy oil giants Arco and Amocoback in the 1990s Moreover just as theadvertising campaign was windingdown BP announced it was spending$675 billion for a 50 per cent control-ling interest in a rich Russian oil pros-pectmdashand will be spending another$20 billion over the next five years ex-ploring this and other newer fieldsaround the world
In other words the advertising cam-paign was little more than lsquogreen-washingrsquomdashdisinformation intended topresent an environmentally responsiblepublic image BP wanted people to per-
BPmdashBack to PetroleumPAUL K DRIESSEN
theoretically harmless puffery It also re-flects the desire of many multinationalcompanies to appease critics and gaina public relations advantage over com-petitors by adopting the language ofideological environmentalism
This radical school of thought in-creasingly uses ethical buzz-words anddogmas to justify its demands Chiefamong them are sustainable develop-ment and the precautionary principlethe foundations of so-called lsquocorporatesocial responsibilityrsquo (CSR) and lsquoso-cially responsible investingrsquo (SRI) doc-trines
Eco-activists from affluent Westerncountries developed the doctrines topromote their agendas and oppose en-ergy and economic development BPhas long been at the forefront of theseefforts as a charter member of theWorld Business Council for SustainableDevelopment through frequent meet-ings with activist groups and by fund-ing many radical groups
The activists define what is lsquorespon-siblersquo focusing debate on conjecturalproblems and theoretical needs of fu-ture generations of wealthy elitesmdashandignoring real immediate life-and-death needs of people who struggledaily just to survive The stakes arehuge
More than 15 billion people in de-veloping countries still do not have ac-cess to electricity Half a billion womenand children spend their days collect-ing firewood or squatting in mud andanimal faeces to collect and dry ma-nure for fuel Millions die every yearfrom lung diseases caused by indoor airpollution from cooking fires and dys-entery due to contaminated drinkingwater
Hydroelectric or fossil fuel projectscould provide electricity for familieswater purification plants and economicdevelopment But radical activists op-
ceive it as a lsquosocially responsiblersquo leaderand reward it accordingly Few did
Green activists denounced BP forlsquohypocrisyrsquo and blasted the company forcontinuing to lsquoexploit some of theworldrsquos most sensitive ecological areasrsquoA major business magazine said sim-ply lsquoWell please If the worldrsquos secondlargest oil company is beyond petro-leum Fortune is beyond wordsrsquo
Meanwhile BPrsquos total wind and so-lar electrical output last year was barelyenough to keep the lights burning inRegina Saskatchewanmdashand thought-ful observers are beginning to realizethat wind and solar arenrsquot quite as eco-friendly as activists claim
A single new 555-MW gas-firedgenerating plant in California producesmore electricity than do all the statersquos13000 wind turbines The gas-firedplant occupies about ten acres the gi-ant 200-foot-tall windmills dominatethousands of once-scenic acres and killthousands of raptors and other birdsevery year Current photovoltaic tech-nology is just as habitat-hungry
Worse chief executive Lord JohnBrowne was forced to lower BPrsquos pro-duction estimates three times last yearand the companyrsquos 11 per cent returnon average capital was well below thatof arch-rivals ExxonMobil (137 percent) and Royal DutchShell (148 percent) BP share prices reflected inves-torsrsquo displeasure with its poor perfor-mance and the fact that the companyrsquosprofit margins would not improve for adecade or more if the company re-mained focused on renewable energyand old oil fields
Thus if BP ever really was BeyondPetroleum going Back to Petroleum(and Bigger Profits) was a sound busi-ness decision
However the lsquoGreat Beyondorsquo adcampaign involves more than meregreenwashing and disingenuous but s
14 MARCH 2003
E V I E WR
API
pose these projects and say that theworldrsquos rural poor should be contentwith solar panels on huts
Investors are also at risk particu-larly retirees whose futures depend onpension and mutual funds that ownnearly $8 trillion in market sharemdash50per cent of the total stock marketMany of these funds are managed lessto safeguard or benefit the investor thanto promote radical principles under thedisguise of so-called ethical funds
These funds claim to provide pro-fessional unbiased analytical and ad-visory services But in reality they sup-port political agendas based on often-questionable analyses and on lsquostake-holderrsquo (activist) input to justify howthey grade companies in client portfo-lios They regularly excoriate compa-nies such as ExxonMobil claiming itsrefusal to back the Kyoto climate treatywill destroy shareholder value Mean-while they praise companies such asBP and promote global governanceand solar panels on huts
Australiarsquos energy consumers willbecome yet another example of lsquocol-lateral damagersquo if the radicals havetheir way over global warming Onceagain some of the culprits are right inthe BP boardroom
In 1997 BP chief Browne endorsedthe global warming theory and saidtough measures should be imposedquickly even in the absence of scien-tific proof A Clinton-era Energy In-formation Administration report con-cluded that the climate treaty woulddrain $340 billion a year from the USeconomy The Australian economywould also get hammered And all thispain even assuming perfect compli-ance with the treaty would reduce av-erage global temperatures in 2050 byonly 02˚C below what they would bewithout the treaty according to theUSArsquos National Center for Atmo-spheric Research
But BP Australasia President GregBourne is undaunted Hersquos stumping thecountry from Melbourne to Brisbaneand Darwin to Perth importuning busi-nesses to pressure the PM to ratifyKyoto Could it be pure altruism Ormight the old profit motive be at work
A 1997 memo to Enron presidentKen Lay described BP as Enronrsquos lsquoin-ternational equivalentrsquo Indeed BP isstriving mightily to replace Enron asthe worldrsquos premier broker in the newbusiness of buying and selling permitsto emit greenhouse gases The expec-tation is that playing the climatechange game could earn BP billions ofdollars via traditional petroleum opera-tionsmdashand billions more via emissiontrading schemes The company is al-ready trading credits among its unitsas part of a training regimen for theanticipated emission Olympics
One cannot help but suspect thatthis huge EU oil giant might also bemotivated by Europersquos obvious desireto protect its industries from US and
other foreign competition They clearlysee the Kyoto Protocol not merely asan environmental programme but alsoas a way to pressure the United StatesAustralia and other countries to reduceenergy use and economic productivity
EU Environment CommissionerMargot Wallstrom put it bluntly whenPresident Bush abandoned the Kyotoclimate treaty lsquoThis is not a simple en-vironmental issuersquo she railed lsquoThis isabout international relations this isabout economy about trying to createa level playing field for big businessesthroughout the worldrsquo Several EU of-ficials echoed her sentiments suggest-ing that Americarsquos lower energy taxesconstitute an unfair trade advantagethat could justify trade sanctionsagainst the US
In short what we are witnessing isa profound and disturbing convergenceof ideology activism marketing poli-tics and financial gainmdashall in the ser-vice of radical policy agendas and allbeautifully attired in the lavish raimentof corporate ethics and responsibilityThis is proof positive that social respon-sibility can be a wondrous thing in thedexterous hands of craftsmen who re-ally know how to display and utilize it
How can we stop the charade Forstarters demand that corporate socialresponsibility puts people first puts de-velopment back into sustainable devel-opment and ensures that precaution-ary guidelines safeguard people andcommunities from the havoc wreakedby radical green policies Insist that alldecisions be based on sound peer-re-viewed science and solid evidencemdashnot on hysterical claims and shrillrhetoric by activists regulators andjournalists who reward pseudo-scien-tific soul-mates and pillory any scien-tists who dare disagree with them
Next urge principled regulators andjournalists to investigate these compa-nies and investor firms for self-servingarrangements and breech of fiduciaryduty Demand that the companiesfirms and activist groups open theirbooks and provide full disclosure oftheir meetings contacts and monetaryand other relationships
Last in this era of high-minded re-form prevail upon legislators to changethe law to make these groups subjectto the same false advertising laws andthe same standards of transparency andaccountability that activists insistshould govern for-profit corporationsUnbelievably right now these ideo-logues are mostly exempt
The world will thank you For it willbe a better safer more ethical placemdashespecially for energy consumers retir-ees and the worldrsquos poor
Paul Driessen is a senior fellow for the AtlasEconomic Research Foundation in Fairfax VA This
article is based on his recent white paper lsquoBeyondPetroleummdashor Beyond Probityrsquo which can be read
in its entirety at wwwcdfeorgdriessenhtm
BPrsquos total six-year
investment in renewable
technologies was $200
millionmdashthe same
amount it spent on the
lsquoBeyond Petroleumrsquo
advertising campaign
15MARCH 2003
E V I E WR
FOR three years Reputa-tion Measurement Ltd andThe Age and The SydneyMorning Herald have been
trying to impose their political agen-das on Australiarsquos top 100 corpora-tions They think that Australiarsquos cor-porations should be good citizens andthat by measuring what they think itmeans to be a good citizen they canchange corporate behaviour
Westpac ranked number one on the2002 Index and rated well in everycategory Flight Centre ranked num-ber one on financial performance but47 overall It was in the doldrums inevery other category including beingranked 99 on environment On thesurface this seems very strangemdashFlightCentre manages shopfront travel agen-cies The reason for this bizarre resultwas not hard to find
Reputation Measurement sug-gested that lsquocompanies seeking to dem-onstrate their worthiness as sociallyresponsible organizations are most suc-cessful when they widen their tradi-tional business stakeholder base to in-clude community stakeholdersrsquo Fur-ther lsquo[i]nvestors and consumers are in-creasingly making decisions based onlonger-term issues linked to a com-panyrsquos capacity to contribute to a sus-tainable futurersquo In other words theReputation Index is an instrument foradvancing a number of political agen-das corporate social responsibilitystakeholder capitalism and sustain-ability
For example corporate social re-sponsibility suggests a common agree-ment about what is good Whose defi-nition of good is to be believedmdashtheelectoratersquos or the activistsrsquo In a lib-eral democracy the rules are set by aconsensus that determines not so muchwhat is good corporate behaviour but
The Good Reputation Index 2002A Tale of Two Strategies
GARY JOHNS
what is and what is not acceptablebehaviour The Index is an exercise incapturing the reputation agenda andusing it to regulate corporate beha-viour
Stakeholder theory suggests that allinterests in an enterprise compete toobtain benefits from the enterprise butthat none has priority It is in effectasking lsquoin whose interests should theenterprise be runrsquo It assumes that so-ciety grants an enterprise the right toexist The community through its law-makers may grant licences and certainprivileges in return for the enterprisecomplying with the law It does notlicense stakeholders at large to imposetheir views on the corporation
Sustainability refers to ecologicalsustainability and ecological sustaina-bility is premised on the notion of lim-its to growth based on limits to resour-ces It argues that natural resources arebecoming scarcer It ignores the his-tory of technological innovation of-ten promoted by competition betweencorporations and the fact that such in-novation has extended physical re-sources in ways untold
An analysis of the 2002 Index re-veals that those corporations whosescore improved massively between2001 and 2002 did so because they didnot participate in 2001mdashthey wererated anywaymdashbut did so in 2002Conversely those whose score plum-meted in 2002 did so because they par-ticipated in 2001 but not in 2002Moreover the corporations who rosemassively in the ranks did not changetheir behaviour they just filled out theforms better
Greenpeace were very aggressive intheir attitude to corporations lsquoTo en-able us to verify your responses pleaseprovide us with further supportingdocumentation If hellip we are unable
to verify your response we will defaultyour response answer to a ldquodonrsquot knowrdquowhich will be marked and downgradedaccordinglyrsquo Unfortunately those ofwhom we would expect bettermdashforexample The Brotherhood of St Laur-encemdashalso penalized non-respon-dents As the technique was used byalmost all of the research groups thiswas presumably a deliberate strategy ofReputation Measurement Ltd
More disconcerting were reportsfrom corporations of the researchgroups touting for business by ringingfirms and offering their services to helpfill out the questionnaire Althoughthe level of disclosure has increasedsince the 2001 survey the touting con-tinued
The Index was published in Octo-ber 2002 obviously to coincide withthe reporting season and in the hopethat shareholders would use the Indexto seek changes to corporate behav-iour A sample of the major gainers andlosers on the Index reported no men-tion of the Index More importantlythere was no discernible impact onshare prices
The good news is that the Indexfailed miserably to achieve its objec-tives The bad news is that enough cor-porations played along to keep it alivein certain media and academic circlesIt was a chance for self-appointedNGOsmdashwho provided the ques-tionsmdashto regulate corporations bypublishing a list of good capitalists andbad capitalists Every corporation thatparticipated in the Index should thinkcarefully about whether it can justifythe agenda to its shareholders
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
16 MARCH 2003
E V I E WR
Tomorrowrsquos Reform
RALPH Waldo Emersontold us that lsquoa foolish con-sistency is the hobgoblinof little minds adored by
little statesmen philosophers and di-vinesrsquo and enjoined us lsquoto speak whatwe think today in words as hard ascanon balls and tomorrow speak whattomorrow thinksrsquo While statesmenshould not persist with known errortheir wanton inconsistency makespolicy formulation confoundedly dif-ficult
When he asserted that lsquoWhat de-termines the course of a nationrsquos eco-nomic policies is always the eco-nomic ideas held by public opinionrsquoLudwig von Mises must have hadeven less confidence in little states-men His pupil Friedrich von Hayekurged Antony Fisher not to enterpolitics but instead to found think-tanks which with fact and argumentwould change public opinion
Even among liberalismrsquos oppo-nents few today argue that Misesrsquoand Hayekrsquos ideas and Fisherrsquos liberalthink-tanks did not lead the 1980sand 90s almost world-wide liberal re-vival Why would they when bymuch the same means Fabian So-cialism had brought the welfare stateto Western nations In neither trendhowever were politicians the mereagents of popular opinion Especiallyin democracies political leadersrsquo ca-pacities to ignore it are indeed mod-est but their abilities to influence itare very much less so Even SaddamHussein works hard at influencingIraqi opinion Can we hypothesizethat the ways that leaders use theirinfluence distinguish tyrants fromdemocrats and the purposes forwhich they use it distinguish politi-cians from statesmen
Liberalismrsquos headlong chargethrough the corridors of power could
JOHN HYDE
arguments could have been em-ployed are nonetheless being de-fended by appeal to popular miscon-ceptions of the sort that PaulineHanson the Democrats and Greensactually believe Unless the majorparties have had a radical change ofheart they believe differently
Take the proposed Free TradeAgreement (FTA) with the UnitedStates Trade experts are not of onemind about its net worth My quar-rel is therefore not with the FTAitself but with the Governmentrsquos de-fence of it If the FTA will bring netbenefits then these will come mostlyfrom improved access to Americangoods and capital our own reductionof anti-competitive regulation ofdrugs medical insurance performingarts professional services textilesrural commodities etc and the dy-namic advantages of mixing it withthe Yanks But the government ispromoting the FTA almost solely inmercantilist (exports goodimportsbad) terms
To treat foreign goods servicesinvestment and ideas as an invasionparodies voluntary exchange whichdoes not happen unless both partiesbenefit The Government trumpetsa fact that nobody disputes namelythat it pays to sell into the best pay-ing markets but says nothing to edu-cate us in the advantages of buyingwell from foreigners as well asneighbours Once long ago Howardcriticized Pauline Hanson for her xe-nophobia That day he seemed to un-derstand the benefits of exchangewith foreigners
Until recently Australia hadbeen insisting that the only way toworld trade reform was via the mul-tilateral processes of the World TradeOrganisation and currently theDoha round A bilateral FTA with
not have proceeded without leaderssuch as Margaret Thatcher and ZhouEnlai who changed public opinionas did Bob Hawke in Australia Nowhowever liberalismrsquos charge hasslowed even in some places beensomewhat reversed Canberra hasnot been immune from trends thatsee politicians no longer so firmly re-sisting demands for economic privi-leges or as others see the same phe-nomenon no longer so blindly fol-lowing economic rationalism
Very poor economic decisionsaboundmdashrejection of the Trebeck re-port on petrol pricing preference forethanol production extending mo-tor and textile protection rural sub-sidies taxpayer contribution to theDarwin-to-Alice Springs railwayetc etc But there is also progressThe pride that John Howard takesin the fact that Australians are lessdivided against each other is surelyjustified The hugely importantlabour welfare and arguably also thehealth-care markets have been im-proved Budget balance has beenachieved albeit with high taxes Al-though net legislative and adminis-trative progress toward a more lib-eral more open more efficienteconomy has dwindled it would stillbe fair to say it has not been reversed
Our statesmenrsquos words as hard ascannon balls however that is thoseintended to enlighten rather thanappeal to public opinion are beingreserved for the Iraqi conflict In con-trast in the economic arena we areno longer encouraged to accept anyunwelcome truths Even when de-fending measures that I am morethan content to accept as beneficialthe government seems to select itsargument at best randomly ignoringprinciples of economic efficiency andequity Policies for which textbook
17MARCH 2003
E V I E WR
the US may or may not result in anet increase in trade flows but if itis not a meaningless piece of paperdelivering only political benefits tothe Government it will certainlydivert trade from our other tradingpartners How will China KoreaJapan etc react to losing their lsquomostfavoured nationrsquo status Such ques-tions should be addressed in termsthat do better than reinforce our xe-nophobic prejudices
By appealing to Hansonite mis-conceptions the Government mayand probably will improve itschances of bringing forward a policythat I am more than willing to ac-cept it believes is a good one It isafter all the recommendation of theDepartment of Foreign Affairs andTrade However by so doing it is re-inforcing delusions it must overcomefor further economic reform Whatis more I am reminded of a quip thatI am sure the PM has also heard lsquoNoGovernment is really dangerous un-til it believes its own bullshitrsquo Poli-ticians and I suspect bureaucratsalso are all too prone to believingtheir own utterances Unwilling toadmit their deceptions even whenspeaking in house they quickly con-vince themselves of the truth of theirown and colleaguesrsquo loose rhetoricand worse These are the people whomust negotiate the Agreement whilelooking over their shoulders at anAustralian electorate whose alreadystrong mercantilist tendencies havebeen reinforced by the people bestplaced to disabuse them The poten-tial cost is obvious
The US Free Trade Agreement isbut an example of a tendency thatought to be worrying In debateabout refugee policy motor fuel sup-ply single-desk wheat sales the sup-ply of medical practitioners and pres-ervation of the environment has notthe Government employed argu-ments that are not compatible withits professed liberal philosophy Hasit not seemed that it does not knowthe standard liberal responses to theself-serving demands of vested inter-ests and bigots With due respect to
Emerson consistency allows deci-sions to be made without the neces-sity of thinking every one throughfrom fundamental principles whichnobody in authority has the time orthe mental agility to do
Politically disinterested educa-tors such as the IPA can often callsome pretty good minds to their aidEven so when the Government it-self fosters public misconceptionthey cannot be expected to undo theerror The single greatest sin of thecurrent government is that it is notbuilding opinion for tomorrowrsquos re-form Why not
I suggest because it is politicallydifficult Whereas calls to resist out-siders appeal to deeply ingrainedtribal instincts calls to uphold thecivilizing and wealth-building insti-tutions that afford protection tostrangers and admit their goods ser-vices persons and ideas make nosuch visceral appeal These codes aremuch later developments in themarch of mankind and to manypeople they remain counter-intui-tive They must therefore be de-fended by sustained argumentHayek knew that politicians whosetime horizons in the absence ofknown crises tend to be the nextelection would (to use Howardrsquosown expression) seldom have the
tickers He turned therefore to theless articulate but far more resolutethink-tanks
It is relatively easy to appeal tothe sort of Chauvinism that sur-rounds sporting activity and argu-ments about refugees and meat quo-tas When a Prime Minister talks ofsovereignty guaranteeing our bor-ders or the interests of our exportersor domestic manufacturers he is notnecessarily wrong but his task iseasier than that of defending rulesthat permit voluntary co-operationamong strangers The principle thatdefends the non-unionistrsquos right towork the consumerrsquos right to buy for-eign goods and everyonersquos right tohear alien ideas and which shouldprotect racial and religious minori-ties from exclusion still needs hisleadership
Unless statesmen recognize theinconsistencies that arise not fromthe changed opinions that con-cerned Emerson but from trying tobe all things to all men they arelikely to govern in ways that are un-fair and inefficient If the public doesnot recognize consistency then thelsquolittle statesmenrsquo may find them-selves compelled to yield to the de-mands of the more articulate vestedinterests In such a case Heaven helpthe inarticulate who will be effec-tively disenfranchised But the insti-tutions which when consistentlyapplied give us liberty equity andprosperity are not strongly intuitive
They nevertheless distinguishAustralian society from say Iraqi so-ciety They give us the economicstrength to defy tyrants and they giveus a land worth defending They arecertainly not in danger of disappear-ing but they are in danger of beingeroded Lead us Mr Howard
While statesmen
should not persist
with known error
their wanton
inconsistency makes
policy formulation
confoundedly
difficult
API
John Hyde is a Senior Fellow with the Institute ofPublic Affairs His book Dry In Defence of
Economic Freedom was published by the IPA in November 2002
18 MARCH 2003
E V I E WR
DESPITE the obsessivepublic attention to pricesat the petrol pump thepetroleum-refining sector
rarely registers on the media radarscreen This is unfortunate as the sec-tor fuels most movement of peopleand goods in our economy and soci-ety And it is in trouble
It is fragmented stunted and sur-vives by abjuring profit and mortgag-ing its future Without radical reshap-ing it is likely to wither leaving usexposed to the vagaries of the inter-national refined-products market
FEATURES OF THE AUSTRA-LIAN REFINING SECTORThe first thing to note is that by in-ternational standards Australia is arelatively small player The most re-cent international figures show thatour total output of refined productsin the third quarter of 2002 was 89million tonnes This compared withOECD production of 486 milliontonnes including US production of202 million tonnes Total Australianrefinery capacity of 870000 thousandbarrels per day (bpd) compares withthe figures for China (53 million)South Korea (26 million) and Singa-pore (11 million) Total regional re-fining capacity and production con-tinues to grow as Australiarsquos stagnatesIn the five years to 2000 regional out-put grew by 22 per cent
Second the structure of the indus-try is weak The dispersed geographi-cal distribution of our refining sectorreflects its historical developmentwith each State capital city support-ing one or more refineries Over thelast two decades the number of ma-jor oil companies operating in Aus-
Petroleum RefiningRationalization or Atrophy
JIM HOGGETT
tralia has shrunk from nine to fourAlthough the number of players hasmore than halved the number of re-fineries has reduced by only two fromten to eight The average capacity ofAustralian refineries is around100000 bpd New refineries in theregion are generally significantlylarger Singaporersquos largest has a capac-ity of 375000 bpd
Given the open Australian mar-ket our ex-refinery prices are virtu-ally set by the major exporters in theregion who are also operating on tightmargins Moreover the proportion-ately heavy demand for diesel in SEAsia tends to generate a persistentsurplus of gasoline which is availablefor export to Australia at discountedprices
The pattern of relatively smallscattered refineries is no longer opti-mal in an open market in which weare a price-taker
Third despite its sub-optimalstructure the Australian refining in-dustry is not grossly inefficient Oneindicator is the value added per em-ployee which is in the top five per-formers in the Australian manufac-turing sector
The cost competitiveness of Aus-tralian products is indicated by thefact that we have the cheapest ex-taxprice of petrol in the OECD Perfor-mance comparisons with the rest ofthe AsiandashPacific however suggestthat we lag the average efficiency inthe region And the best performersin the region are superior to our best
Finally the financial performanceof the industry is poor gross annualrevenues for the whole industry in-cluding marketing were $32 billionin calendar year 2001 For the five
years to 2001 the return on assets forrefining and marketing averaged 38per cent and was negative in the lasttwo years The indications are that2002 may have been a better year forthe industry but that the return onassets remains well below the cost ofcapital Over the four years to 2001the fixed asset base of the industrydeclined by almost 6 per cent to $12billion even after $24 billion of newinvestment in the period
This is clearly unsustainable andit raises the question Why is no-oneleaving the game
There are perhaps four main rea-sonsbull First the industry has engaged in
continual productivity improve-ment allowing it to keep withinrange of ruling prices
bull Second each refiner hopes thatsomeone else will blink first sothat the waiting will pay off
bull Third the costs of leaving thetable the exit costs are very highbecause of the nature of the prod-uct and the long occupancy ofmost sites
bull Fourth even while profitability islow the industry has generallybeen marginally cash positive
These add up to a big lsquofirst mover dis-advantagersquo
FUTURE TRENDSClearly petroleum will remain ourmost important energy source Petro-leum products constitute 52 per centof Australiarsquos final consumption ofenergy Liquid petroleum fuels pro-vide more than 95 per cent of Aus-traliarsquos transport needs There are nomajor foreseeable influences that willaffect this pattern dramatically There
19MARCH 2003
E V I E WR
have been major advances in fueleconomy and these will no doubtcontinue But more than counterbal-ancing this is the inexorable growthin demand for personal mobility andfor goods from distant parts Althoughgrowth in energy consumption mayslow down in Australia we will notbe reducing our consumption to anysignificant degree
Our export role will also be lim-ited Australian export volumes havetended to be steady over recent yearsand future new export potential forpetroleum products seems likely to beminimal China and India have re-cently become major exporters par-ticularly of gasoline Refinery capac-ity is planned to continue to growstrongly in the region even thoughthere is already significant excessThe decline in capacity utilization inmajor exporters such as Singaporewill make exporting difficult Further-more it is expected that productspecifications in Asia the US andEurope will converge in the comingyears thereby eliminating niche ex-port opportunities
The choice we face is what to doabout our essentially import-compet-ing industry
INCENTIVES NOT STRONGWhile there are strong pressures forthe industry to restructure there islittle incentive to invest for this pur-pose Investments in the Australianrefining industry have to competewith many alternatives across theglobe
Lack of sufficient return is thesingle biggest deterrent to investmentin the industry at present But thereare othersbull There is no prospect of strong growth
in demand to offset the substantialrisks associated with large new in-vestments
bull The persistent refinery capacity over-hang in our region will keep sus-tained pressure on our margins
bull The corporate taxation regime is nowless favourable than hitherto after thesubstitution of effective-life foraccelerated depreciation The
competing Singapore option offersa three-year write-off
bull The regulatory cost burden is grow-ing This applies to all Australianindustry but is potent in overseascomparisons Tighter fuel stan-dards environmental restrictionsintervention in prices and indus-trial law are some of the factors
bull There is increased sovereign riskstemming from inconsistent regula-tions We have eight parliamentswhich enact inconsistent laws Acurrent example is the higher fuelstandards applied in Western Aus-tralia
bull The sovereign risk also arises fromuncertainty in the regulatory processThere are unpredictable changesof direction (the deferral of thediesel sulphur excise differential[DSED]) and uncertainty in theface of conflicting interests (willthe Government act on ethanolcontent)
All these factors enter into the riskreward calculation When the re-wards are minimal the risks take onan extra dimension
WHAT INDUSTRY STRUC-TURE DO WE NEEDThe short answer is we cannot knowin detail
In the Downstream Petroleum In-dustry Framework 2002 the Depart-ment of Industry Tourism and Re-sources set out a broad vision
bull A preference for market-based so-lutions
bull A strong efficient environmen-tally responsible industry supply-ing most of the nationrsquos needs forproducts
bull Regulation only for market failureor national interest objectives
bull Regulation to be transparent andconsistent
bull Reform and regulation to maxi-mize long-term community ben-efitThis vision has some prescriptive
elements but the Government hasmade it clear that it will not nomi-nate an optimal number of refineriesor a pattern of production
The general public would probablyopt for a structure that guaranteedlower more stable automotive fuelprices Unfortunately they cannothave both in the short term
In fairness the investors in the in-dustry are the ones entitled and bestfitted to determine its future In theextreme they will do it anyway bypersisting or walking away Generallyspeaking they will seek to maximizetheir returns and thus promote themost efficient use of resources
Australian refineries are not inef-ficient but that is not the point Ourmarket is open so the competitionwe face is the best of the overseas per-formers often with more favourabletax and subsidy regimes
Nor is this simply a question ofclosing the smallest refineries A bet-ter approach might well be to allowrefining companies to concentrate onwhat they do bestmdashperhaps throughrefinery alliances Caltex and Shellhave co-operated in this way in Thai-land
The fact is that the detail of thedecisions can only be made by theindustry relatively free of governmentdirection The series of detailed de-cisions entailed will determine theoverall structure of the industry
COMPETITION REGULATIONCAN IMPEDE RESTRUCTURINGThe relevant provision of Section 50of the Trade Practices Act (TPA) pro
While there are
strong pressures for
the industry to
restructure there is
little incentive to
invest for this
purpose
s
20 MARCH 2003
E V I E WR
hibits mergers or asset acquisitionsthat would have the effect or belikely to have the effect ofsubstantially lessening compe-tition in a marketIt is both potentially and in prac-
tice an extremely restrictive provi-sion The Australian Consumer andCompetition Commission (ACCC)has expressed concern at concentra-tion in the sector in applying the pro-vision
The ACCCrsquos concerns seem ex-aggerated in the light of history Butthey are complemented by a persis-tent public misapprehension thatlarge petrol price swings equal profi-teering This perception has been soexploited for political advantage andmedia excitement that it is now al-most impossible for the truth toemerge
The future intensity of competi-tion in this industrymdashif it is allowedto restructuremdashshould not be indoubt Any rationalization would inall likelihood still leave strong do-mestic competition in each majorproduct category perhaps with fewermore efficient production units
The market is also contestableThere would be numerous potentialimporters and many independent re-tailers High margins would be rap-idly eroded by competition As re-cently ruled in the Boral case mar-ket reality is more conclusive than aperception of anti-competitiveness
Proposed mergers have been per-mitted in the past but the process isslow and permission is generally onlygranted with severe conditionsNonetheless there is a strong case forallowing restructuring within theterms of the merger provisions
AUTHORIZATION COULD BETHE KEYIf Section 50 of the TPA is an im-passable barrier then the authoriza-tion provisions of the Act could bethe way to greater efficiency The testsunder these provisions require a pub-lic benefit which outweighs the com-petition detriment The ACCC listsfostering business efficiency industry
rationalization and import-competi-tiveness as important public benefits
There is a strong prima facie casethat rationalization of the industrycould satisfy these tests It wouldallow greater scale of productioneconomies in distribution and closureof the least efficient production units
But the authorization process isslow and the onus for demonstratingthe public benefits rests on the appli-cant Slow process can amount to ef-fective rejection
POLICY OPTIONS AND REC-OMMENDATIONSIf government cannot help the indus-try to adjust it should allow it to ad-just by supporting sensible changeThis would involve both improving
the operating environment throughregulatory reform and altering thebalance of competition regulation sothat the industry could restructurevoluntarily The CommonwealthGovernment has already indicated awillingness to support both but hasnot yet delivered
The ball would then be in theindustryrsquos court to bring forward newproposals if a new policy environmentcould be created This could all hap-pen within a very broad strategicframework agreed with the industrywhereby Australia continued to besure of sufficient refining capacity tomeet a severe international fuel short-age
We therefore recommend thatbull The Commonwealth Govern-
ment provide explicit indicationto the ACCC of the public ben-efits it sees from the rationaliza-tion of the refining sector In par-ticular joint ventures should becontemplated
bull The ACCC give sufficient weightto the public interest benefits ofrestructuring to allow rationaliza-tion of production facilities
bull All governments reduce distortingfuel subsidies and taxes that favourparticular sectors or fuels
bull The State Governments act im-mediately to harmonize their regu-lation of the industry and agreenot to issue any new inconsistentregulation
bull More specifically the States havea single set of fuel standards withwhich refiners can reasonablycomply withdraw from all formsof price regulation and refrainfrom thwarting or distorting therationalization process
bull Governments generally not intro-duce new regulations mandatingthe use of alternative fuels
CONCLUSIONThe choice for the industry appearsto be between accelerated rational-ization and atrophy The process ofchange is something which the indus-try must plan and effect The task isnot impossible but it will require theactive support of government at alllevels For the time being there is anexpressed willingness at the Com-monwealth level but no real solu-tions
If nothing is done the refiners willcontinue to stumble along in a regu-latory fog and will invest only whenobliged to do so by changing fuel stan-dards They will become increasinglyvulnerable to low-priced imports andeventual closure
Jim Hoggett is a Senior Fellow at theInstitute of Public Affairs
If Section 50 of the
TPA is an impassable
barrier then the
authorization
provisions of the Act
could be the way to
greater efficiency
API
Last week the Government tabled 22 volumes of theCole Royal Commission into the Building andConstruction Industry Former Court of Appeal judgeTerence Cole made 392 specific findings of unlawfulconduct and in the confidential final volumerecommended that 31 individuals be referred for possiblecriminal prosecution As was to be expected theconstruction unions claimed that the report was a witch-hunt and people who should have known better claimedthat Cole was biased
The anti-union allegations were never very plausiblegiven that most unions had refused to cooperate withthe Commission and had even boycotted theCommissionrsquos special conference on occupational healthand safety As things have turned out one of their ownhas fatally undermined the unionsrsquo case No less anauthority than the National Secretary of the ConstructionDivision of the CFMEU has unwittingly confirmed thatCole is right In what was no doubt an unguardedmoment John Sutton admitted to a Melbournenewspaper that ldquovirtually everything we do breaches partof this Actrdquo Suttonrsquos admission means that Colersquosdescription of a largely lawless industry can be disputedat the margins but not credibly denied The problemsof the industry have been established beyond credibledoubt and the question now is what needs to be doneabout it
Nothing says the CFMEU because itrsquos alright tobreak the law in the best interests of the working classLeading union officials take the view that in a toughindustry only wimps take the law seriously The newsthat ldquoonlyrdquo 31 individuals had been recommended toface criminal charges was greeted with somethingapproaching jubilation as if the industryrsquos code of silencebased on fear had largely kept the Royal Commission atbay
As the Australian Financial Review commented in aneditorial the unionrsquos dismissive reaction to Colersquos report
ldquospeaks as loudly as his damning findings of entrenchedlawlessnessrdquo Imagine the reaction if a royalcommissioner had identified 31 people in the financeindustry or the steel industry for possible criminalcharges This would rightly be regarded as the sign ofan industry in crisis demanding urgent governmentintervention
Change wonrsquot be easy in an industry conditioned tothink that might is right Change which shifts powerfrom one unscrupulous group to another will not bereform As Grocon has discovered the first company toldquobuck the systemrdquo is liable to heavy-duty industrialpayback No one wants to be the first to change butchange is necessary in the national interest
In 2002 the Victorian construction industry aloneaccounted for 17 per cent of all days lost through strikesThe West Australian construction industry accountedfor another 8 per cent of the national strike tallyConstruction is a $40 billion a year industry comprisingnearly six per cent of GDP and employing nearly500000 Australians Due to over-manning demarcationdisputes and chronic stoppages labour productivity incommercial construction averages 13 per cent less thanin home building Plastering the same wall in the sameway costs 40 per cent more in a high rise building thanin a standard house Just raising labour productivity incommercial construction to the home building standard(let alone the 50 per cent increase needed to match NorthAmerican levels) would mean according to Econtech aone per cent drop in the cost of living a one per centincrease in GDP and $23 billion in benefits toconsumers workers and taxpayers every year
Still change is about decent Australian values notjust a more efficient industry Workers donrsquot like latenight house calls compulsory attendance at demos anddays spent sitting in the shed to make an industrial pointany more than bosses Threats of violence contempt forcourt and commission orders mob rampages when one
Restoring the Rule of Law in theConstruction Industry
Tony Abbott MHR
s
As this issue of the IPA Review was at the press we were alerted to the delivery of the following speechby the Minister for Employment and Workplace Relations The paper marks a seminal change in the
governmentrsquos approach to systemic corruption in the construction industry and isanother major step in the reform of workplace relations in Australia
SI-1MARCH 2003
IPA REVIEW SPECIAL INSERT
side doesnrsquot get its way habitual failure to honouragreements and routine harassment of people exercisingtheir legal rights are not acceptable in modern Australiaand cannot be excused even in a good cause
Breaching ldquobourgeois lawrdquo may not matter tomilitant activists but few others take such a self-indulgent view Itrsquos said that ldquooppositions can afford tobe irresponsiblerdquo but no government or alternativegovernment can accept the principle of optionalobedience to the law of the land No less than the HowardGovernment the federal Labor Opposition and the stateLabor Governments understand the dangers of playingpolitics with the rule of lawmdasheven theauthority of laws they might preferto change such as the federal WorkplaceRelations Act
The rule of law is not asmorgasbord from which a fewfavoured items can be chosen and therest ignored Freedom under the lawrequires respect for the law generallynot just the laws individualspersonally support Obedience to thelaw is not a question of choice It is arequirement of civilisation because thelaw is our guarantee of equaltreatment after a fair hearing ldquoBe youever so high the law is above yourdquoThis reproach hurled at the Stuartkings has rightly echoed through thecenturies as a warning against theconceits of office and the arrogance ofpower regardless of the cause in whichitrsquos exercised
After last weekrsquos meeting of theWorkplace Relations MinisterialCouncil of the Council of Australian Governments stateand territory ministers were keen to declare in acommuniqueacute ldquothere was unanimous agreement thatunlawful behaviour in the building and constructionindustry is not acceptablerdquo This was an importantaffirmation of the rule of law in circumstances wheresome Labor ministers might have been tempted to putpolitics ahead of principle
Unfortunately the state and territory ministerssupported more powers for the Australian IndustrialRelations Commission to settle construction industrydisputes In fact the Commission already has power tosettle disputes Whatrsquos missing is effective power toenforce agreements The issue is not settling disputesThe issue is enforcing the law
The construction industry typically conducts itselflike this A certified agreement is in place including anagreed dispute resolution procedure Unions identify agrievance often a spurious safety issue Agreed disputeprocedures are not followed and a strike ensues eventhough strikes outside ldquobargaining periodsrdquo areldquounprotectedrdquo and theoretically subject to damagesorders At that point employers often ask theCommission to end industrial action but instead ofordering an immediate return to work because anagreement has been breached the Commission willtypically seek to conciliate on the basis of the ldquomeritsrdquo
of the issue After a couple of dayswith costs escalating and liquidateddamages looming the employerinvariably agrees to rectify the matteralleged and to pay increasedallowances (including pay for days onstrike) At this point the Commissionorders a return to work on the basisof the agreed settlementmdashwhich lastsonly until the union decides on itsnext move
The union has ignored the law andbroken its original agreement buttypically suffers no adverseconsequences whatsoever Theemployer has been manoeuvred intoconceding most of a demand thatshould never have been made Afaccedilade of legality conceals a travestyof unionism and a travesty of justiceNearly all construction industrystrikes are unprotected and potentiallyunlawful under section 170MN of theWorkplace Relations Act Even so
employers nearly always opt to pass the costs ontoconsumers while existing arrangements for gatheringinformation launching prosecutions and imposing finesdonrsquot work well anywhere but hardly work at all in anindustry where giving evidence against the unions isthought to mean commercial suicide
The construction industry is a classic case not ofmarket failure but of regulatory failure The fact thatthe construction industry does not face potential importcompetition limits its exposure to market discipline Stillthe main reason why unions can get what they want frombusiness and business can get what it needs from haplessconsumers is the absence of independent policing andenforcement of the industrial equivalent of fair tradinglaws To an extraordinary degree in this industry the
SI-2 MARCH 2003
IPA REVIEW SPECIAL INSERT
The rule of law is nota smorgasbord from
which a few favoureditems can be chosenand the rest ignoredFreedom under thelaw requires respectfor the law generally
not just thelaws individuals
personally support
request documents but they canrsquot compel witnesses toanswer or demand that material be produced Althoughit is a criminal offence under the Workplace Relations Actto hinder workplace inspectors the Cole report notedthat no prosecutions have yet been launched despiteevidence that Office of the Employment Advocateinspectors have been abused had objects thrown at themand their property damaged It has been commonpractice for the arrival of OEA inspectors to lead to workstoppages and even site invasions in a bid to thwart anddemoralise an independent investigator not susceptibleto the unionrsquos usual weapon of commercial retaliation
One of the problems with theworkplace relations system is theassumption that parties will enforcethe law against each other This worksup to a point in industries whereworkplace parties are more-or-lessevenly matched and the issues are theworkplace equivalent of an argumentbetween neighbours over the heightof a fence It completely breaks downwhen one side has an effectivemonopoly over the supply of labourand disputes resemble a more-or-lessnormal family telling the house fullof footballers next door that the partyrsquosover Expecting contractors to enforcethe law against the CFMEU is likeexpecting people in the street to makecitizenrsquos arrests hence Colersquos principalrecommendations are an AustralianBuilding and ConstructionCommission to investigate prosecuteand enforce the provisions of a beefed-up industry specific workplace
relations actYesterday Cabinet decided to support Colersquos key
recommendations First the Government will seek aseparate act governing workplace relations in theconstruction industry providing for secret ballots beforestrikes compulsory cooling off periods after extendedstrikes and damages awards in the event of unprotectedindustrial action Second the Government will establisha new law enforcement agency for the industry withpowers to compel witnesses to testify bring prosecutionsand enforce judgments and with sufficient on-the-ground presence to police CBD building sites Thirdthe Government will establish a Safety Commissionerto monitor federally-funded construction sites to try toensure that these become industry models Fourth the
s
commissions lack sufficient power the courts lacksufficient speed the employment advocate lacks sufficientauthority and the police lack sufficient interest
Not before time the Cole Commission has acted as agiant searchlight probing the dark underside of thispotentially great Australian industry It confirmed whatpolicy makers had long suspected and what influentialinsiders knew but had always tried to deny or explainaway that the industry operates under the rule of thejungle and that there will be no improvement until thepeople who work in it understand that the law has to betaken seriously Legislative institutional and structuralchange will start to mean somethingwhen law breakers in this industry arecharged convicted and punished likelaw breakers everywhere else A fewsalutary bars of that old song need towaft over construction sites ldquoI foughtthe law and the law wonrdquo
Late last year in response to theRoyal Commissionrsquos first report thefederal Government set up theBuilding and Construction IndustryInterim Task Force The Governmentrsquosbrief to the Task Force is to ensure zerotolerance of industrial law-breakingThe Task Force is not primarily toenforce the tax laws or the safety rulesbecause other bodies exist for this(although the Task Force will certainlyshare information with them) TheTask Force is to investigate and enforceWorkplace Relations Act prohibitions oncoercion unprotected strikes strikepay and breach of industrialagreements So far the Task Force hasvisited nearly 300 sites launched more than 50investigations brought three prosecutions and referrednine other matters to state police the Australian FederalPolice or the Australian Competition and ConsumerCommission for further action
These are the first public prosecutions arising out ofindustrial action in the construction industry at leastsince the 1980s and are the result of a public policycommitment to law enforcement not seen since thehumiliating Clarrie OrsquoShea case in 1969 and the end ofldquopenal sanctionsrdquo Yesterday Cabinet decided to extendthe interim Task Forcersquos operations until more permanentarrangements to secure the rule of law can be established
Task Force agents have the powers of inspectors underthe Workplace Relations Act They can enter premises and
SI-3MARCH 2003
IPA REVIEW SPECIAL INSERT
The main reason whyunions can get what
they want frombusiness and businesscan get what it needs
from haplessconsumers is theabsence of inde-
pendent policing andenforcement of the
industrial equivalent offair trading laws
API
Government will insist on the application of theNational Construction Code and implementationguidelines to all significant new projects which are fullyor partly federally funded
Directly or indirectly the federal Government fundsabout $5 billion worth of construction projects everyyear and is determined to use its role as client to drivechange in the industry In essence the NationalConstruction Code stipulates that construction projectsmust take place in conformity with the WorkplaceRelations Act Under the Code and implementationguidelines the federal Governmentwill not engage tenderers whoseworkplace agreements and practicesensure a closed shop on site The TaskForce (and any replacement body) willhave full access to federally fundedsites to ensure that the law is beingobserved and workplace agreementscomplied with
For the federal Government theissue is upholding the law and tryingto tackle the ldquounion rulesrdquo culturewhich is at the heart of lawlessness inthe industry For the states the issueis whether they are prepared to refusefederal money in order to protect theclosed shop However much theymight prefer different federal laws thestates ought to accept thatconstruction projects have to complywith the law as it stands includingthe law mandating compliance withcertified agreements
State Labor governments whichhave made a point of their middle-ground credentials risk losing some$4 billion a year in federal building and constructiongrants if they side with the union movementrsquos mostmilitant minority There are likely to be limits to Laborrsquosdefence of a union whose stock-in-trade (at least in somestates) is the site invasion and the demand for paymentand which quietly reinstates organisers sacked for assaultor perjury Opposition senators will find it hard to brandas ldquoideologicalrdquo the recommendations of a royalcommission which spent 171 days in public hearingsand which pursued 11 shop stewards and 97 unionofficials to obtain their side of the argument
As Justice Cole pointed out in his report previousattempts to reform the industry have proven ineffectivedespite two earlier royal commissions and numerous
SI-4 MARCH 2003
IPA REVIEW SPECIAL INSERT
enquiries Although this Royal Commissionrsquosinvestigations seem to have temporarily checkedlawlessness in the industry a campaign is now emergingto extend the anarchic culture of CBD construction intoregional centres and the domestic housing industryThings will certainly be different this time if parliamentapproves a permanent well resourced watchdog withnew powers new personnel and new attitudes Unlikeprevious arrangements a new statutory watchdog withthe powers of a law enforcement agency should beeffective and permanent
Hundreds of people took big riskswith their commercial future and eventheir personal security to testify to theRoyal Commission It should neveragain be so hard for people in thisindustry to exercise their ordinaryrights and responsibilities asAustralian citizens They expected theGovernment to take the Commissionrsquosreport seriously and the Governmentfor its part is determined not to letthem down The Governmentunderstands that joining fights yoursquorenot prepared to win only makes badsituations worse Establishing the ruleof law in the construction industry isa challenge Australia canrsquot afford tofailSome of the worldrsquos best workersshould no longer have to put up withsome of the worldrsquos worst industrialpractices They have a right to anhonest industry where they can earna fair dayrsquos pay for a fair dayrsquos workand expect to come home uninjuredThe enduring image of this industry
should not be noisy marchers replaying the ideologicalstruggles of the 1970s and raising clenched fists againstauthorities they donrsquot like At its best the Australianindustry is capable of work which is stunningly beautifulyet intensely practical and it now needs to performconsistently on time on budget and in accordance withlaw
Hundreds of peopletook big risks withtheir commercial
future and even theirpersonal security totestify to the Royal
Commission It shouldnever again be so
hard for people in thisindustry to exercisetheir ordinary rights
and responsibilities asAustralian citizens
NOTE
The foregoing speech was first delivered as an Addressto the National Press Club on 2 April 2003
21MARCH 2003
E V I E WR
IN psychology behaviouris defined as irrational ifan action continues to berepeated despite its re-
peated failure to achieve the desiredoutcome On this definition our aidpolicy towards Papua New Guineahas been irrational
Despite over twelve billion dol-lars in Australian aid to PNG sincethat countryrsquos independence in 1975key development indicators such asliteracy rates infant mortality lifeexpectancy and real income percapita are either stagnating or dete-riorating Worse wersquove known forover a decade1
Today acknowledgement of thefailure of our aid policy in PNG hasgone well beyond the writings of in-dividual international policy analystssuch as myself to institution-spon-sored reports such as Beyond Baliwhich was released by the AustralianStrategic Policy Institute (the Aus-tralian Governmentrsquos own strategicpolicy adviser) and Papua NewGuinea on the Brink which was writ-ten by Susan Windybank and MikeManning for the Centre for Indepen-dent Studies Both reports confirmthe gross failure of Australian aidpolicy in PNG
Yet still our aid policy irrational-ity towards Papua New Guinea con-tinues While the ASPI and CIS re-ports acknowledge the gross failureof our aid policy in PNG they alsoargue that we need to continue ouraid to that country Indeed the ASPIreport argues that we should increaseour aid to Papua New Guinea Thepolicy saviour The ASPI report ar-gues that we should exert greater con-trol over our aid Not just over theform of our aid but direct interven-tion in policy and implementation inPNGmdashin essence for a return to pre-
Aid Detox for PNGPETER URBAN
independence days in PNG whereas UN-sanctioned administrator weran government in that country
Despite the mind-frame of secu-rity-focused strategists such as thoseat ASPI and the CIS (which en-dorses the aid approach advocated byASPI) the reality is that we canrsquotPNG is now independent and to ig-nore this reality would simply com-pound the problems of our past aidpolicy irrationality with irrationalityabout our political relationship withour nearest neighbour
A more interventionist aid policytowards PNG on our part as advo-cated in Beyond Bali and by HughWhite (the executive director ofASPSI) in the media might havepopulist appeal but it would haveserious adverse implications for ourrelationship with other Pacific islandcountries and even IndonesiaWorse it would give succour to theviews of our east Asian critics (suchas Malaysian PM Dr Mahathir) whoclaim that Australia continues toharbour colonial aspirations
We have to accept that to be suc-cessful aid policy must not just helpreduce mass poverty it also has to doso as a guest in the aid recipientcountry To do otherwise is not aidbut imperialismmdashwhether inten-tional or not
A more interventionist approachto aid policy in PNG would also givethe current corrupt political elite inPort Moresby a rallying point againstus and an excuse to delay changingtheir own policies Neither Austra-lia nor PNG can afford any furtherdelays to policy reform For us to givePNG politicians yet another excuseto delay reform would be not onlyirrational it would be inexcusableWhile our aid continues so will thecorrupt elite that is at the heart ofPNGrsquos problems Until we send themessage to the PNG political elitethat we are prepared to stop ouraidmdashto put them on aid detoxmdashwewill continue to waste our aid in thecorruption that is PNG politics Itmay be hard to accept but the sadreality we face in PNG is that no aidmay prove to be good aid at least inthe short to medium-term2
NOTES
1 Peter Urban lsquoOne Clear ObjectiveNo Clear Approachrsquo IPA Review1997 Vol 50 No 1
2 With Iraq also likely to require verysignificant Australian aid fundingover the next few years the Gov-ernment will need to review our aidprogram as part of the 2003-04 fed-eral Budget A decision to suspendaid to PNG could be taken as partof that review
Peter Urban is former chief economist with theDepartment of Foreign Affairs and Trade
We have to accept
that to be successful
aid policy must not
just help reduce
mass poverty it also
has to do so as a
guest in the aid
recipient country
API
22 MARCH 2003
E V I E WR
IN his speech to the Na-tional Press Club on theprospect of war with Iraqand the case for disarma-
ment Prime Minister Howard statedthat Australia will play a significant hu-manitarian role in Iraq
If so the Howard Government needsto evaluate carefully the foreign-aid non-government organizations (FANGOs)which it funds to carry-out this humani-tarian programme Many FANGOshave made it clear that they do not sharethe Australian Governmentrsquos objectivesand values in Iraq Moreover some donot agree with the Governmentrsquos over-all aid policies in general
THE COALITION OF THEUNWILLINGIn the lead-up to latest Gulf War some30 Australian aid agencies put theirnames to an Open Letter to the PrimeMinister organized by the AustralianCouncil of Foreign and Overseas Aid(ACFOA) The aim of the letter was tolsquospeak out against war in Iraqrsquo and it ex-pressed grave concerns about the hu-manitarian consequences of the war andthe effects of the existing sanctions1 TheFANGOs that signed the letter wereOxfam Community Aid Abroad WorldVision Australia TEAR AustraliaUnion Aid Australia - APHEDACaritas Australia National Council ofChurches Australian Council for For-eign and Overseas Aid Save the Chil-dren Australia CARE Australia OzGreen United Nations Association ofAustralia Family Planning AustraliaMercy Works Marist Mission CentreAustralia Every Home for Christ Bap-tist World Aid for Christ CCF Austra-lia Quaker Service Australia Austra-lian Lutheran World Service AustralianRelief and Mercy Services AnglicanBoard of Mission AUSTCARE Com-munity Development and Health
Irreconcilable DifferencesDON DrsquoCRUZ
Hussein have been virtually ignored isa searing indictment of the warped ide-ology feeble analysis and moral blind-ness of the sector For them now to re-discover the plight of the Iraqi peopleand to invoke their name in the mediais beyond contempt
THE OXFAM COMMUNITYAID ABROAD POSITIONOf the 30 FANGO signatories to theopen letter Oxfam Community AidAbroad (OCAA) has been perhaps themost outspoken It opposed military ac-tionmdasheven with UN Security Councilapproval4 In spite of all the evidence tothe contrary OCAA was comfortablewith Saddam Husseinrsquos assurances thathe did not have weapons of mass destruc-tion5 Adopting the common policyagreed to by the other Oxfam affiliatesOCAA stated that it will not take anymoney from the lsquobelligerentsrsquomdasha quaintterm used to the describe democraticnations planning to disarm a dictatorguilty of countless human rights abuses
OCAArsquos outrage against the so-called lsquobelligerentsrsquo appears to be geo-graphically confined to Iraq OCAAappears happy to take governmentmoney from the belligerents elsewherearound the world
According to OCAArsquos ExecutiveDirector Andrew Hewitt refusing totake money from the belligerents wasdone to lsquoprotect its impartialityrsquo6 Thisis a very curious position from Australiarsquosarguably most political FANGOOCAA has a long track-record of beinganything but impartial or reluctant totake sides in miliary action It wasnrsquotimpartial in East Timor where it sidedwith Fretlin in its quest for indepen-dence According to its own testimonyto a Senate committee OCAA wasgiven the choice by the IndonesianGovernment between lsquoplaying politicsrsquoor delivering aid projects in Indonesia7
Group Amnesty International Austra-lia AngliCORD Australian Aid forCambodia Fund Burnet InstituteRedR Friends of the Earth PLAN Aus-tralia and Australian Volunteers Inter-national2
This open letter highlighted a num-ber of problems with the FANGOs sec-tor First it highlighted the weak logicthat passes for advocacy in the sectorThe letter argued against military actionwas critical of sanctions and suggestedthat nations should settle issues only bydiplomatic means It is a viewpointwhich totally ignores the fact that theGovernment had to deal with SaddamHussein
The shallowness of their logic wasbest exposed by the Prime Minister inhis response to the open letter in whichhe stated that the humanitarian situa-tion in Iraq is best addressed by SaddamHusseinrsquos removal and perhaps morepointedly that Saddamrsquos manipulationof foreign aid had allowed him to main-tain and pursue his weapons of mass de-struction capability and human rightsabuses3
Second it also highlighted the factthat the so-called lsquohuman rights-basedapproachrsquo to development (embraced byseveral of the signatories) is not so muchabout realizing human rights (as its pro-ponents argue) but is more about pro-viding them with an excuse to lsquoplay poli-ticsrsquo According to the theory the hu-man rights-based approach to develop-ment allows FANGOs to tackle the rootcauses of poverty and injustice
Yet the root cause of the Iraqipeoplersquos suffering can be summed up intwo simple wordsmdashSaddam HusseinThe fact that the FANGOs who sub-scribe to this particular approach havebeen obsessed with imaginary humanrights abuses committed by Shell NikeRio Tinto BHP-Billiton and AuroraGold while the activities of Saddam
23MARCH 2003
E V I E WR
It chose the former thus making it per-sona non grata in Indonesia for almost adecade8 It wasnrsquot impartial inMozambique when it sided with Frelimoin the countryrsquos civil war9 It wasnrsquot im-partial in Ethiopia when it developedlinks to the Eritrean Peoplersquos LiberationFront during its war against the thengovernment10 It was not impartial oranti-war when it sided with the TigrayPeoplersquos Liberation Front in the neigh-bouring province to Eritrea when thatgroup was waging a guerrilla war againstthe government11 And recently therehave been claims that in the Middle Eastit was little more than an lsquoeager propa-gandistrsquo for the Palestinians12
In East Timor Ethiopia and Mozam-bique OCAA was linked with organi-zations which supported direct militaryaction that led to the deaths of thou-sands of civilians In none of these loca-tions were the enemies of their friendany worse than Saddam Hussein In-deed in many cases OCAArsquos friendswere arguably no better than their en-emies in terms of human rights
OCAArsquos decision not to accept Aus-tralian Government funding is the cor-rect one in the sense that it clearly doesnot share the Governmentrsquos values onthe question of Iraq and thereforeshouldnrsquot receive any governmentmoney
Hewitt went on to state in a pressrelease that lsquoWe will not take funds thatmight allow a government to use hu-manitarian efforts as an instrument offoreign policyhelliprsquo13
This is finemdashexcept the AustralianGovernmentrsquos foreign aid is an instru-ment of foreign policy And it always hasbeen This is spelt out quite clearly inthe Australian Governmentrsquos latest for-eign and trade policy White Paper Ad-vancing the National Interest14
FANGOs that cannot accept thisrather basic proposition should not begetting taxpayersrsquo money They areclearly unsuitable for the task at hand
The consequences of Australian tax-payersrsquo money falling into the wronghands were brought home to Prime Min-ister Howard when he met IndonesianPresident Megawati Sukarnoputri to dis-cuss the war against terrorism and
Australiarsquos involvement against Iraq Atthe top of the Indonesian agenda wasthe issue of Australian funding toFANGOs being used to support sepa-ratist movements in Indonesia15
Post-war Iraq will be a better placewithout Saddam Hussein and his thugsThis does not mean that it will be a safeplace or necessarily a stable place Afterall one of the reasons for Western tol-eration of Saddam Hussein for manyyears was his ability to hold the various
ethnic minorities in Iraq together albeitrather brutally thereby maintaining abalance of power in the Middle East Hisdeparture would see strains on Iraq fromthe various ethnic minorities that makeup Iraq There is a strong chance thatIraq will fragment
The last thing the Australian Gov-ernment or any of the so-called belli-gerents needs in a post-war Iraq is west-ern NGOs running around and becom-ing self-styled advocates for national self-determination for Iraqrsquos ethnic minori-ties and injecting themselves into Iraqrsquosinternal politics This is a real risk Thebehaviour of Australian foreign aidNGOs in Indonesia should make Aus-tralian decision-makers extremely waryof funding any NGOs with Australiantaxpayersrsquo money so that they can oper-ate in Iraq
As things stand now FANGOs facevery few restrictions on their actionsfrom government If they undertake ac-tivity that is inconsistent with being anagent of government they may losefunding for specific projects or in moredramatic circumstances lose funding ina country Nonetheless they are gener-
ally able to access Australian Govern-ment funding for other projects andcountries In other words the penaltiesfor becoming caught up in political ac-tivities are very light for NGOs and posethem no serious problems
Foreign aid NGOs that lsquoplay politicsrsquoare unsuitable contractors for the deliv-ery of aid That these overtly politicalorganizations have been allowed to gaingovernment accreditation and receivegovernment funding points to some se-rious problems at AusAID Australiarsquosofficial aid agency The time has comefor this to change
NOTES1 httpwwwacfoaasnaumedia_releases
2003_releases26_3_03PDF2 httpwwwacfoaasnauemergencies
openletterPDF3 httpwwwacfoaasnauemergencies
iraq_responsehtm4 Oxfam Horizons Vol 3 No 1 (Febru-
ary 2003) page 25 Oxfam Community Aid Abroad lsquoIraq
Overviewrsquo February 20036 Hewitt quoted in Liz Gooch lsquoOxfam
wersquoll say no cashrsquo The Age 16 March2003
7 Community Aid Abroad Submission tothe Senate Foreign Affairs Defence andTrade References Committee Inquiryinto East Timor Downloaded at httpwwwcaaorg aucampaignssubmissionstimorhtml
8 Ibid9 Susan Blackburn Practical Visionaries A
Study of Community Aid Abroad (Mel-bourne Melbourne University Press1993) page 313
10 Ibid pages 325-333 passim11 Ibid12 Gerald Steinberg lsquoPropaganda vs Hu-
manitarianismrsquo Australian Financial Re-view 7 June 2002 Downloaded at httpfacultybiuacil~steingconflictopedpropvshumanitarianismhtm
13 ht tp wwwcaa o rg au p r 2003 iraqfundshtml
14 httpwwwdfatgovauani15 Dennis Shanahan lsquoJakarta fears aid funds
for rebellionrsquo The Australian 17 Febru-ary 2003 page 2
Don DrsquoCruz is Research Fellow at the IPAand Director of IPArsquos NGOWatch
OCAA has a longtrack-record of
being anything butimpartial or
reluctant to takesides in miliary
action
API
24 MARCH 2003
E V I E WR
GEORGE Bush Tony Blairand John Howard haveprovided many reasons forsupporting military action
against Iraq One of those reasons hasbecome known as the lsquohumanitarianrsquojustification Put simply the lsquohu-manitarianrsquo justification for the US-led invasion of Iraq is that such ac-tion is necessary to free the Iraqipeople from their totalitariandictator
Such an argument is attractive tothose who believe that there aresome fundamental human rights thatall individuals possess regardless ofwhere and how they live Whatserves as the source of those rightshas been the subject of debate forcenturies One of the pre-eminentstatements on the subject was madeby John Locke who in The SecondTreatise of Government wrote thatmankind was lsquoequal and indepen-dentrsquo and that lsquono-one ought to harmanother in his life health liberty orpossessionsrsquo
Saddam Husseinrsquos mass murdertorture and terror are reasonablyclear breaches of human rightsTherefore some would ask why thereshould be opposition to the UnitedStates and its allies taking whatevermeasures might be necessary totopple the Iraqi regime Surely thesame standard of behaviour that ap-plies to individuals applies also tonation states If an individual walk-ing in the street witnessed a rapeoccurring wouldnrsquot that individualbe entitled to do everything in hispower to stop the crime and assistthe victim
The point is of course that in-ternational law and convention do
After IraqIs Sovereignty Dead
JOHN ROSKAM
not allow nation states to act in thesame way as individuals Countriescannot simply lsquotake the law into theirown handsrsquo To restrain lsquovigilantestatesrsquo (who might be acting fromeither lsquogoodrsquo or lsquobadrsquo motives) a num-ber of legal and political theorieshave been developed One of theseis the doctrine of lsquosovereigntyrsquo whichprovides that states should not inter-vene in the domestic affairs of otherstates
In relation to Iraq the lsquosover-eigntyrsquo question is perhaps the stron-gest argument against the US-ledCoalition Most of the other criti-cisms of lsquohumanitarianrsquo interventionin Iraq are either grounded in simpleanti-Americanism or are fallaciousFor example there is the claim thatbecause some of the countries in theCoalition have previously ignoredHusseinrsquos cruelties therefore it is il-legitimate to take action now Sucha view has been expressed by aMelbourne international relationsacademic
While there is no disputing thebrutal nature of Saddam Hus-seinrsquos regime the case for inter-vention made by those in Can-berra London and Washingtonis weakened by the fact that atthe peak of Saddamrsquos crimes inthe late 1980s they were eitherdirectly supporting him withweapons technology and intelli-gence or were entirely indifferentto his behaviour Even if theyhave belatedly recognised theerror of their ways how seriouslycan we take their concerns aboutweapons of mass destruction nowgiven they were his suppliersthen1
On the basis of this argument itcould be said that Britainrsquos (andAustraliarsquos) case for intervening toassist Poland upon the German in-vasion in 1939 was lsquoweakenedrsquo be-cause Britain had previously acqui-esced to Germanyrsquos rearmament theremilitarization of the Rhinelandand the annexation of both Austriaand parts of Czechoslovakia Fewpeople who chanted lsquoFreedom forEast Timorrsquo said that the HowardGovernment should not act becausea quarter of a century before theWhitlam Government had been lsquoin-differentrsquo to Indonesiarsquos occupationof the island
There is also the claim that al-though Hussein is bad he is not theworst dictator in the world and thatit is hypocritical for the Americansto attack only Iraq This is an as-tounding proposition It attempts toapply to the United States a standardof behaviour that is impossible to sat-isfy Should the police not attemptto solve any crimes because theycanrsquot solve all crimes If a crime iscommitted by two people and thepolice arrest one perpetrator unlessthe other is also caught must the firstperpetrator be released When indi-viduals donate money for famine re-lief in Africa very few believe thattheir donation is pointless becauseit might prevent the starvation ofonly one person rather than thou-sands Christian ethics sets down norequirement that we should help no-one unless we can help everyone
The issue about state sovereigntyhowever is one that deserves to betaken seriously Regardless of onersquosopinions on the extent and limits ofstate sovereignty it is true that our
25MARCH 2003
E V I E WR
international relations system is builtupon the principle and to modify oroverturn it is a matter of some con-sequence
Even those who are generally sup-portive of the United States andtheir allies see the problem As it wasput by a leading commentator whenanalysing the Australian PrimeMinisterrsquos lsquohumanitarianrsquo justifica-tion for war
Finally Howardrsquos argumentagainst Hussein on human rightsis correct So is his moral case forwanting to liberate the Iraqipeople from their torment Theproblem however is that youcanrsquot trip around the worldwanting to overthrow regimesbecause of human rights2
Some would askmdashlsquowhy notrsquo Be-cause to do so would overthrow theUnited Nations Charter comes therejoinder And in turn the responseto that might bemdashlsquogoodrsquo
If itrsquos a choice between the main-tenance of the UN Charter and free-dom from tyranny freedom wins ev-ery time (although an internationallawyer sitting in Sydney might havea different view on this question fromthat of a political prisoner manacledin a Baghdad jail cell)
When the interests of lsquointerna-tional lawrsquo are more important thanthe life and liberty of individuals itcould be concluded that lsquothe Em-peror has no clothesrsquo Would inter-national law have sanctioned inter-vention to stop the Holocaust hadHitler not waged war and proceededwith his methods entirely within theconfines of the German territorialstate
Many who argue that lsquohumanitar-ianrsquo intervention in Iraq is not justi-fied because it infringes on thatcountryrsquos lsquosovereigntyrsquo would happilyhave other countries cede their po-litical sovereignty to supra-nationalbodies Certain features of the Inter-national Criminal Court overridethe principles of sovereignty but thatdid not stop a phalanx of interna-tional law experts urging sovereigngovernments to join it so as to en-
able the prosecution of war criminalsBut when it comes to actually stop-ping war crimes not simply prosecut-ing them that phalanx is largely si-lent
Without the doctrine of state sov-ereignty and without an arbiter fordetermining when interference withthe principle is justified (the roleclaimed by the United Nations andits Security Council) it is said thatstates would be free to impose theirown will and intervene in other
countries whose standards did notmeet their own (In The Second Trea-tise of Government Locke argued thata characteristic of a lsquostate of warrsquo be-tween individuals was the absence ofa superior authority to adjudicatedisputes and prevent individualsfrom administering justice them-selves)
Iraq might be claimed as a rea-sonably clear-cut case for interven-tion but other situations are notlikely to be as simple In Culture andEquality first published in 2001Brian Barry explored a lsquoliberalrsquo per-spective on this question
The liberal position is clearNobody anywhere in the worldshould be denied liberal pro-tections against injustice andoppression However in exactlythe same way as liberals arepragmatic about what liberalismmeans in terms of boundaries sohere the move from principle tointervention has to be mediated bypractical considerationshellip
[L]iberals are not so simple-mindedas to imagine that the answer toall violations of liberal rights is tosend in the Marines or even aUnited Nations force As in anyjust war theory there must be somedoctrine of lsquoproportionalityrsquohellip[S]carcely anybody would be infavour of the western powersinvading Saudi Arabia so at to sortout the way in which it lsquounjustlydenies political rights to women ornon-Muslimsrsquomdashaccording to theirliberal idea of justicersquo3
The question remainsmdashafterIraq what remains of lsquostate sover-eigntyrsquo Should the doctrine applyonly to lsquoliberal democraticrsquo statesSuch a solution might be attractiveto some lsquoliberalsrsquo but it doesnrsquot avoidthe problem of what exactly a lsquolib-eral democraticrsquo state is
One irony arising from the argu-ments about the war in Iraq is thatmany of those who have urged astrict application of lsquostate sover-eigntyrsquo principles in the past havegenerally supported the US-led in-tervention while those who havebeen willing to abridge or even aban-don the doctrine have had to rely onit to counter the lsquohumanitarianrsquo jus-tification for war
There are not many certaintiesabout the nature of the world afterthe war in Iraq but it can be saidwith some assurance that one defi-nite outcome is going to be a morevigorous debate about state sover-eignty
NOTES1 Scott Burchill lsquoThe humanitar-
ian arguments for this war are spu-riousrsquo The Age 21 March 2003
2 Paul Kelly lsquoThe hapless per-suaderrsquo The Australian 15ndash16March 2003
3 Brian Barry Culture and Equal-ity An egalitarian critique ofmulticulturalism Harvard Uni-versity Press page 138
John Roskam is a Research Fellow with the IPA
The lsquosovereigntyrsquo
question is perhaps
the strongest
argument against
the US-led
Coalition
API
26 MARCH 2003
E V I E WR
Which Way for theDemocrats
The 2002 mid-term elections were adramatic victory for President GeorgeW Bush and the Republicans Insteadof the historical norm of the partycontrolling the White House losingBushrsquos party gained seats in the Sen-ate House Governorsrsquo races andState legislatures The result was abitter disappointment for the Demo-crats and has led to a fierce debatebetween the Left and Centrists aboutthe future policy direction of the partytowards the 2004 elections
The Leftrsquos analysis is that the ma-jority of Americans are natural Demo-crats Electoral defeat was due to thefailure to energize that base of Demo-crats The party failed to distinguishitself sufficiently from Bush and thusgive their voters a reason to turn outWhile the majority of Democrats op-posed Bush on tax cuts and the warwith Iraq a significant minority sup-ported him and campaigned on thatsupport The result the Left claimwas that the Democrats lacked a con-sistent message in contrast to Bush
Support for this argument can befound in the higher turnout amongstRepublicans than Democrats in 2002while in 2000 the combined vote forGore and Nader was 51 per cent Aninfluential book by John Judis andRuy Texeira identified lsquoThe Emerg-ing Democrat Majorityrsquo Theyclaimed that growing demographicgroups trended Democrat includingthe young socially liberal profession-als minorities and women
What policies would motivate thisnatural Democrat base The Left callfor rescinding the Bush tax cut a classwar against the corporate world amajor increase in lsquopublic investmentrsquoin schools childcare health care and
Letter from AmericaNIGEL ASHFORD
public transport and strong opposi-tion to the war
Centrists however have a verydifferent analysis of the Democratsrsquoproblems the public did not trustthem to pursue the war against ter-rorism vigorously to keep down taxesto spend their tax dollars wisely or toreflect their cultural values
A Gallup opinion poll found that57 per cent of Americans askedthought that the Democrats were nottough enough on the war on terror-ism while 64 per cent thought theRepublicans were There was the per-ception that the Democrats were notserious on the issue and just playingpolitics Evidence for this was the de-bate over the new Department ofHomeland Security blocked becausethe Democrats wanted to protectunion rights while the President de-manded more flexibility to deploy theworkforce Many voters saw the issueas the national interest versus a spe-cial interestmdashin this case that of theunions The Democrats were seen asputting the interests of one of theirmajor constituencies before nationalsecurity
The Democratic LeadershipCouncil in lsquoThe Road Aheadrsquo by AlFrom and Bruce Reed presented theCentrist case lsquoStop pretending wecan win a majority simply by energiz-ing our basersquo The Democrats were
not trusted on the war against terror-ism were hostile to the cultural con-cerns of many working-class Demo-crats on abortion and guns and stillseen as the tax-and-spend party lsquoToomany Americans donrsquot trust us tokeep their taxes down or to spendtheir money wellrsquo
The Centrist agenda is to stronglyprosecute the war against terrorismwhether against al-Qarsquoeda Saddam orothers and to abandon knee-jerk iso-lationism arising from the experienceof the Vietnam War to defend capi-talism and support small investorsagainst irresponsible managers to cutpayroll taxes and to downplay thecultural issues that divide Democrats
Which path will the Democratstake The Left is in the ascendancyMost of the remaining Democrats inoffice come from left-wing districtsNancy Pelosi a left-liberal from SanFrancisco was easily elected the newleader of the House Democrats over-whelming her Centrist opponent andrising star African-American HaroldFord The early field of presidentialcandidates for 2004 is dominated bythe Left tendency including SenatorJohn Kerry Representative DickGephardt Governor Howard DeanRev Al Sharpton former SenatorCarol Moseley-Braun and Represen-tative Dennis Kucinich Only Sena-tor Joe Lieberman and Senator JohnEdwards represent the Centrist wing
The future of US politics may de-pend on which road the Democratsdecide to take The US is currently alsquo50ndash50rsquo nation evenly balanced be-tween the parties A left turn couldlead to Republican dominance farinto the future
Dr Nigel Ashford is at the Institute of Humane Studiesat George Mason University and is co-author of US
Politics Today (Manchester University Press)
API
27MARCH 2003
E V I E WR
Trusting TonyFrankly itrsquos all just too depressing Theeconomyrsquos heading for trouble Busi-ness confidence is low investment in2002 was 92 per cent lower than theprevious year and manufacturing in-vestment was nearly 18 per cent downThe budget deficit is spiralling becauseour once lsquoprudentrsquo Chancellor (trea-surer) Gordon Brown made over-opti-mistic growth projections and startedthrowing money at problems
Therersquos a load of health-and-safetyand anti-discrimination measuresthatmdashto put it most politelymdashare ex-amples of letting the best be the en-emy of the good Every school tripneeds a formal risk assessment withthe result that many trips are simplynot taking place New trains orderedfor London commuter routes wonrsquothave toilets because the rules say thatat least one toilet in each four-car unitmust be wheelchair-accessible whichwould have cost ten or a dozen seatson every overcrowded train
Some of this is just insane Somelocal authorities say that safety at workrules mean that home-care workersmustnrsquot lift the disabled people theyare looking after Or therersquos rail safetyUntil recently we were seriously pro-posing to spend $10 billion on a bet-ter system to stop trains going throughred signals On average this would havesaved the lives of about three passen-gers every four years which is a lousybargain compared with other safety in-vestments Worse it would also havereduced the capacity of the networkby up to 15 per cent and forced morepeople onto the roads which are muchmore dangerous than even ourclapped-out railways The result was aprojected net increase of 13 to 21 deathsper year
Meanwhile in London the Cen-tral line of the Underground has been
Letter from LondonJOHN NURICK
API
closed for weeks after a train derailedwhen one of its motors fell off Therewere no deaths or major injuries in theaccidentmdashbut itrsquos a safe bet that someof the people who havenrsquot been ableto use the Central line have been in-jured or killed on the roads
What can one say If the authori-ties took the same attitude to the riskof fatal accidents in the health serviceevery hospital in the country wouldhave been closed for years
Despite all this the Conservativesare still hopeless Their leader IanDuncan Smith has a new wheezewhen a journalist asks him anythingdifficult he chortles merrily and saysitrsquos the most uninteresting questionimaginable and hersquos not going to wasteanyonersquos time by answering it His col-leagues have their knives out for him
Meanwhile in spite of the govern-mentrsquos problems with the economy andthe public services Tony Blair is grow-ing in stature having his waymdashandantagonising large sections of his ownparty in the process On several recentissues he has faced down the formi-dable Gordon Brown in a way that notlong ago was hard to imagine
Then he shocked everyone by com-ing out against having elected mem-bers in the reformed House of Lordswhen most voters want an all-elected
chamber and most MPs want a partly-elected one In the event Parliamentcouldnrsquot agree on any of the optionsfor reform so wersquore stuck with the sta-tus quomdashwhich is fine by Mr Blair
Then therersquos the war By the timeyou read this it may be over or we maystill be waiting or our lads may befighting Mr Blairrsquos strong line againstIraq has made him very unpopular Theanti-war march on 15 February was thebiggest demonstration London hasever seen A few days later 122 Labourbackbenchers voted against the gov-ernment and many more abstained
Mr Blair didnrsquot budge War is a se-rious thing he says lsquoBut in a situationsuch as this you have to do what youbelieve to be right because thatrsquos theprice of having responsibilityrsquo1
He has often been accused of gov-erning by focus group Certainly he hasseemed reluctant to antagonise anypowerful group That has clearlychanged In a sense his stand on Iraqmerely follows his action in sendingtroops to Sierra Leone and Kosovomdashbut it has stirred up far stronger domes-tic and international opposition
The irony is that now when he re-ally needs people to trust him wedonrsquot Even in the desperately seriousbusiness of justifying an unpopular warDowning Street canrsquot play it straightremember the dossier from lsquointelli-gence sourcesrsquo that turned out to belargely cribbed from a PhD thesis onthe Internet
NOTE1 The Guardian 1 March 2003
John Nurick is a management consultant based in theSouth of England From 1985 to 1990 he was
editorial director of the Australian Institute for PublicPolicy and later edited newsletters reporting on theUK Parliament and European Union institutions
28 MARCH 2003
E V I E WR
KEVIN DONNELLY
Private EducationEquals Public Good
When it comes to choosing be-tween government and non-gov-ernment schools Australian par-ents are lsquovoting with their feetrsquo Asshown by recent ABS figures(Schools Australia 2002) over thelast decade there has been a dra-matic increase in non-governmentschool enrolments
Approximately 30 per cent ofstudents now attend non-govern-ment schools compared with 22per cent in 1980 and 28 per centin 1990 Over the last decadewhile the number of governmentschools has fallen by 64 per centnon-government schools havegrown by 61 per cent
Of course not everybody valuesparentsrsquo right to choose and theAustralian Education Union(AEU) Labor governments andlsquoleft-wingrsquo academics in particularconsistently argue against non-government schools
One of the arguments put for-ward by those opposed to givingparents greater freedom of choiceis that government schools are bet-ter at promoting social cohesionand a strong sense of what KenBoston the ex-head of the NSWEducation Department terms lsquothebonds of civic friendshiprsquo
The assumption is that becausestudents attend non-governmentschools there will be greater socialdivisiveness and a breakdown inthe civic values needed to hold so-ciety together But there is no cred-ible evidence offered to support theclaim that government schools arebetter at promoting the commongood
In fact there is much to provethe opposite
First as anyone familiar withthe lsquoculture warsrsquo and politicallycorrect curricula will know insteadof government-controlled educa-tion promoting unity and cohe-sion it has led to public angst andparental complaints
Witness the very bitter debatein Queensland a year or two agowhen the government-mandatedStudies of Society and Environ-ment (SOSE) curriculum was in-troduced into schools Such was
the lsquoleft-wingrsquo bias in the curricu-lum in particular in the areas ofmulticulturalism and the environ-ment that many parents felt be-trayed
The Queensland debate is mir-rored by what is happening in theUnited States As noted by Ste-phen Arons in his book Short Routeto Chaos instead of promotingunity government control of thecurriculum leads to the opposite
What the school wars tell us isthat somehow we have been
Education Agenda
transforming a vital instrumentfor creating social cohesioninto a source of division andhostility that there is some-thing built into the structure ofpublic schooling that under-mines one of its most importantfunctionsAronrsquos argument that govern-
ment schools no longer transmit aviable sense of a common cultureor agreed civic values is reinforcedby another noted United Stateseducationalist Diane Ravitch
In a recent article in the jour-nal Education Next Ravitch be-moans the impact of cultural rela-tivism and the post-modern on theschool curriculum (where there areno commonly agreed values) andeven goes so far as to argue thatparents should be free to choosenon-government schools becausesuch schools have a better chanceof reflecting their values
In the current education sys-tem with the public schoolscommitted to multiculturalismbilingualism and other forms ofparticularism it is difficult toargue that parents should notbe able to choose schools thatmeet their cultural needsSecond if one accepts that lsquoso-
cial capitalrsquomdashthe networks volun-tary associations and civic bondsthat hold a community togethermdashis important for the health of ademocratic society then non-gov-ernment schools clearly have theadvantage
Unlike the government schoolsystem characterized by a heavy-handed centralized bureaucracyand teacher union control non-government schools are closer tothe communities they serve Bytheir very nature non-government
There is no credible
evidence offered to
support the claim
that government
schools are better
at promoting the
common good
29MARCH 2003
E V I E WR
ALAN MORAN
The lsquoRrsquo Files
Private propertyrights the key toachieving efficiency inrural water use
WATER IN AUSTRALIAWater has always been a definingissue in Australiarsquos prosperityAnd in recent decades irrigationhas grown rapidly Even so theproportion of Australia that is ir-rigated at two per cent of theland comprises a share that isamongst the lowest among OECDcountries Only Canada and therainiest countries New Zealandand the UK have lower sharesthat of the US is 11 per cent andin Japan it reaches 60 per cent
Modern agriculture is only 200years old in Australia and thoughin the first 100 years agriculturalproductivity was increased toequal that of anywhere in theworld gains continue to bemademdashoutput has doubled overthe past 50 years a growth thatcould not have taken place with-out a similar expansion of irriga-tion Irrigation in the MurrayndashDarling agricultural provincealone contributes $5 billion toAustralian agricultural outputand non-irrigated agriculture inthe region contributes a further $5billion This makes the areawhich comprises 14 per cent ofAustraliarsquos land mass responsiblefor a third of the nationrsquos $35 bil-lion agricultural output
Applying Property Rights to WaterMost of the uses of water involvechoices or compromisesmdashdrink-ing water versus irrigation versus
industrial and so on Some how-ever involve complementaritiesparticularly certain recreationaluses such as water sports that arefacilitated by storage and consis-tent availability
In many cases water will per-form sequential functionsmdashthesame water can be used and re-used for irrigation used for indus-trial cooling and finish as drink-ing water Water with differentsometimes competing productiveuses will be optimally used as longas two conditions are in placeThe first is that its ownership isclearly specified and the ownersrsquoobligations to other users (orclaims from other beneficiaries)are well understood The secondrequires each property right to betradable to enable acquisition bythose who value it most therebymaximizing its value
The rights specification andtherefore property ownership canrarely commence with a cleansheet of paper People acquire in-dividual rights to property ini-tially through a variety of routesOne of these is seizure of some-thing that was originally of littlevalue until it was acquired and im-proved Squatters assume rights inthis way However they are firstacquired they need to be tradableAPI
schools establish strong commu-nity networks and have a greaterreliance on the voluntary work ofparents
That non-government schoolsare more effective in this regard issupported by research into lsquoChar-ter schoolsrsquo in the United StatesAs noted by Chester Finn at theFordham Foundation giving localcommunities lsquoownershiprsquo overtheir school builds networks oftrust and reciprocity so vital forsocial cohesion
Social capital also relies on citi-zens being disciplined and orderedin their behaviour Selfishness vio-lent behaviour and rudeness act tofragment the community instead ofpromoting cohesion According toa number of Australian surveys itis here once again that non-gov-ernment schools are seen to bemore effective
As noted by the Centre for In-dependent Studies researcher Jen-nifer Buckingham in The Truthabout Private Schools in Australiawhen analysing why so many par-ents forsake the government schoolsystem
When comparing independentprivate schools with publicschools the major theme thatemerged was not differences inacademic standards and curri-culum but issues of disciplineand order The surveyed par-ents felt that the behaviour andattitudes of students in publicschools was unacceptablehellipAll accept that non-govern-
ment schools achieve better aca-demic results provide greater cur-riculum flexibility and save Aus-tralian taxpayers millions of dol-lars Equally as important is theargument that such schools streng-then Australiarsquos civic health andstock of lsquosocial capitalrsquo
Dr Kevin Donnelly is Director of EducationStrategies a Melbourne-based consulting group
E-mailkevindnetspacenetau
s
30 MARCH 2003
E V I E WR
and relatively inviolable Thisprovides the incentive for them tobe improved and for their ownersand others to search out ways inwhich the assets they representcan be used to provide increasedvalue or other benefits
If confidence in the exclusiv-ity an owner has over the prop-erty right is lost or was neverpresent the asset will be used lessproductively For example own-ers will milk them for their cur-rent-use value rather than trade-off present value for a future valuethat is less certain
Even without a total emascu-lation of individual rights (for ex-ample when title to the propertydepends on continuing govern-mental assent) lack of certaintybrings lower incomes and dimin-ished asset protection One out-come of this can be observed inthe MurrayndashDarling system Wa-ter rights on the Victorian side ofthe Murray are secure while thoseon the NSW side have been over-allocated and are subject to ad-ministrative discretion includinghaving a firm duration of only tenyears In Victoria high securitywater (available 95 per cent of thetime) comprises the great bulk ofentitlements In contrast in
NSW high security water is avail-able only 60-80 per cent of thetime The result is that farmers onthe Victorian side plant perennialcrops while those in NSW tendto focus on annual crops espe-cially rice
There are claims that Victoriarsquosmore robust property rights meanthat the State Government haslost lsquocapabilityrsquo to manage com-pared with NSW The flip side ofthis is the increased risk and as-sociated lower value of productionnorth of the Murray where prop-erty rights are attenuated Gov-ernments that give themselves in-creased capacity to direct produc-tion or to take individualrsquos prop-erty will need to accept lower lev-els of income and output
IRRIGATION ENVIRON-MENTAL BENEFITS AND SA-LINITY
The Types of IssuesIssues stemming from irrigationcomprise two types those impact-ing on the environment and thoseimpacting on private uses Theformer includes issues such as pre-venting loss of species ensuringthat certain sorts of species flourishand avoiding unattractive growths
such as blue-green algae which re-sult from fertilizer build-up
The second involves economicimpacts on different users
While environmental flows toensure species flourish are oftenhighlighted salinity is the mainfocus And while salinity has animpact on the environment itsimportance is in the conflict of in-terest between productive usersmdashthe complaint of lsquodamaged goodsrsquoby downstream users against thoseupstream
The MurrayndashDarling Basin Sa-linity Strategy 2001ndash2015 has es-timated that increased salinitybrings costs of $294 million perannum to the basin
Yet data on the salinity of theMurray Darling shows levels up-stream of South Australia arelower than they were in the early1980s and are only seriously abovethese levels as the river ap-proaches its mouth at the GoolwaBarrage
The Basin Salinity Manage-ment Strategy argues that progressachieved over the past decade willlsquobe cancelled within 20-50 yearsand median salinity levels wouldexceed the Australian DrinkingWater Guidelines for good waterquality within 50-100 yearsrsquo Thecause of this is said to be risinggroundwater tables due to land usechanges across the Basin
The disputes over salinizationare largely disputes between com-mercial parties Full specificationof rights and obligations will al-low these to be resolved as longas the impacts are measurabletheir causes identifiable and thevarious rights and obligations areknown and stable In this respecttechnology to measure salt in wa-ter and to trace increases to par-ticular locations is readily avail-able
Agreements about the alloca-tion of water rights between ju-risdictions and to the main irri-gation provinces have been inplace for over a century In the
Average Salinity in the River Murray (EC Units)1
3500
3000
2500
2000
1500
1000
500
0
January 2003
July 2002ndashJanuary 2003
July 1982ndashJanuary 2003
Hume D
am
Swan
Hill
Merbein
Morgan
Milang
Mening
ie
Goolw
a
Barra
ge
31MARCH 2003
E V I E WR
I
API
Musinghellipcase of the Murray the lsquocaprsquo onwater abstractions agreed betweenthe various jurisdictions in 1995largely validated agreements madeearly in the last century and be-fore Disturbing these agreementswould greatly undermine the trustin the sanctity of property rightsand seriously reduce agriculturalproductivity Hence increased al-locations for certain parties or forcertain uses (including environ-mental flows) would need to bepurchased at market prices
Developments in Australiaover recent decades have con-spired to make irrigation water farmore valuable This is exacer-bated by1 Activation of NSW lsquosleeperrsquo
and lsquodozerrsquo water rights as a re-sult of the increased scarcityvalue a change that bringseven greater pressure on theavailable supply
2 Increased scarcity leading tomeasures that more carefullyhusband the water Whilesome of these prevent evapo-ration loss and have thereforebrought a net increase in effec-tive availability others havereduced availability (these in-clude a more careful wateringwhich results in reduced run-off and re-use)
3 Increased capture of waterwithin the land on which itfalls once water is recognizedas scarce landowners will seekto ensure it does not leave theirland NSW and Victoria haveplaced limits (a strict 10 percent in NSW) of water fallingon property as entitlements ofthe owner Queensland has notyet enacted an equivalent tothis Such adaptations of thecommon law are essentialhowever if downstream usersare not to be expropriatedThere is likely to be constant
bickering over water rights espe-cially if State Governments seek toelevate sharing issues and to sanc-tify them with claims about promot-
Daniel Pipes in The New York Posthas a very cogent explanation forwhy the Left appears to be so happywith the likes of Osama bin Ladenand Saddam Hussein
To be clear about their attitudeshe quotes the renowned Germanelectronic music composer KarlHeinz Stockhausen who saidstraight after the attack on NewYork that it was lsquothe greatest workof art for the whole cosmosrsquo
As Pipes and many of us observedaily there is barely a bad word tosay about Saddam Hussein nor aniota of sympathy for thoseoppressed tortured and murderedby his reacutegime Instead they venttheir fury against the AmericanPresident and British Prime Minister
Why the nonchalancePipes draws our attention to Lee
Harris writing in a recent issue ofthe Hoover Institutionrsquos journalPolicy Review According to KarlMarxrsquos central thesis the demise ofcapitalism hangs on workersgrowing poorer over timemdashwhichof course did not happen Sorather than give up on cherishedexpectations of socialist revolutionHarris notes Marxists tweaked theirtheory and looked instead to theentire populations of poor countriesto carry out the revolution Classanalysis went out the windowreplaced by geography
The trouble is they have tooverlook militant Islamrsquos slightly un-socialist practicesmdashsuch as itsimposing religious law excludingwomen from the workplace andpersecuting atheists
As Pipes sums up September 11and the prospect of war againstSaddam Hussein have exposed theLeftrsquos political self-delusionintellectual bankruptcy and moralturpitude
The Loopy Leftby Andrew McIntyre
ing an improved environment Realsolutions require the issue be placedwithin a normal commercial frame-work which involves1 Clarifying the property rights2 Allowing water rights to be
fully detachable from propertyand able to be used howeverthe holder wishes subject toany damage this might imposeon others
3 Ensuring full rights to buy andsell the water
4 Defining rights so as not to re-duce the quality of other usersThis means ensuring that farm-ing practices that do not bringgreater salination than somestandard
5 Allowing rights holders tobank their water and ensureeven greater certaintyAllocating specific individual
ownership rights to water and al-lowing its trade is a well-foundedmeans of maximizing the usevalue It would also be likely tohave the beneficial side-effects ofreducing salinity and farm-basedpollutants caused by intensiveuse We should grasp such oppor-tunities But if the impending sa-linity problem is as great as someclaim other solutions might wellinclude buying out some allocatedirrigatorsrsquo rights However alter-natives may be to remove saltfrom the water by engineering so-lutions or simply to live withhigher salt
NOTE1 Human drinking water should
be less than 800 ECs (electri-cal conductivity one ECequals about 06 mglitre)while higher levels are accept-able for much farming activity
Dr Alan Moran is Director Deregulation Unitat the Institute of Public Affairs
32 MARCH 2003
E V I E WR
Reading FileDone
eral political systems worldwidehave consistently accretedpower to the centre often in theface of clear constitutional im-peratives to the contrary) Ifeared instead that a UN thathad been patently successful insomethingmdashanythingmdashmightbe granted greater powers to thepoint where it would kill truediversity and individualism (ortry to anyway) through inevi-table bureaucratic practices
Is such a fear unfounded Ap-parently not if many peopleshare the moral touchstone ofthe Opposition Leader SimonCrean He believes according tohis own words in Parliamentthat what the UN SecurityCouncil declares is moral whatit refuses is immoral
The latest manoeuvrings overIraq have therefore been heart-
ening It seems that the desiresof the powers small and largeto promote their own interestswill continue to hobble the UN
The problem with a unitedworld is that as the threateningimpasse over Iraq suggestedthere are very divergent viewsabout how that world ought tobe run on an international leveljust as there are at national and
sub-national levels The virtueof multi-layered levels of gov-ernments is that competing ju-risdictions give the individual adegree of choice
The greatest sin of totalitar-ian governments past and pres-ent is to deny their citizens theright to leave The greatest dan-ger that the United Nationsposes as far off as it now (hap-pily) seems is that leaving its ju-risdiction is for all practical pur-poses impossible
THE IMPASSE JUST PASSEDI listened to Prime MinisterHoward speaking to the motionbefore Parliament in relation tothe war It was a good speechbut neither he nor PresidentBush seems able to structure andlay out an argument with thestyle and content of BritishPrime Minister Blair His equi-valent speech before the BritishCommons provides a masterfulsummary of the reasons for thiswar and includes an immenselyreadable time-line of the utterineffectiveness of the UN pro-cesses in dealing with Iraq Henicely deals with allegations ofthe lsquorushrsquo to war lsquoOur fault hasnot been impatience The truth
UNITED OR DIVIDEDI write just hours after US Presi-dent George W Bush has deliv-ered his ultimatum to Iraqi Presi-dent Saddam Hussein leave Iraqwithin 48 hours or be removedBy the time this appears beforeyour eyes you will knowwhether Hussein has decided hischances of survival will be sig-nificantly greater by choosingexile or by remaining in IraqThe recent creation of the In-ternational Criminal Court ofcourse makes war more likelysince Hussein can have no guar-antee of a peaceful lsquoretirementrsquo
In the event that Hussein re-mains in Iraq you will also knowwhether Bush has kept his wordand most likely the outcome ofthis military venture
This matter is immensely im-portant for the people of Iraqand for the military personnelinvolved (including our ownAustralian soldiers sailors andaviators) But then so was theprevious Gulf War the US in-vasion of Grenada the Austra-lian intervention in East Timorand so on But a difference be-tween the current conflict andthose others could be the impactit has upon international insti-tutions Actually just one inter-national institution the UnitedNations
Prior to the first Gulf War Ifeared the coalitionrsquos success forthe reason that some of it mighthave rubbed off onto the UnitedNations I hasten to deny that Ifear the UN as some vast con-spiracy for world domination Ifeared instead that it couldstumble into a piecemeal cen-tralization of power (just as Fed-
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
E V I E WRs
33MARCH 2003
E V I E WR
Reading FileDone
ATTACKING THE GLOBALGOVERNORSThe Cato Institute is a whole-some body as demonstrated byits opposition to such interna-tional organizations as the Inter-national Criminal Court and forthat matter the United Nationsitself Ted Galen Carpenter forexample argues in lsquoPutting theUnited Nations on Noticersquo thatthe UN can and has done somemodest good occasionally It ishe says lsquoa good idea to have aplace where governments cangather to air grievancesrsquo But headds if it lsquoattempts to acquire ataxing authority [or] raise astanding armyrsquo then the USshould withdraw (as indeedshould Australia) Because thatwould turn it into an lsquoembryonicsuperstate that would menacelibertyrsquo
Go to
wwwcatoorgforeignpolicyunhtml
THE INTERNATIONALORGANIZATIONS THEM-SELVESThe United Nations has beenaccused of being often ineffec-tive and always slow Well ev-ery time Irsquove hit the UNrsquos Web-site even with my nifty broad-band Internet connection slow-ness rules Perhaps the site isbeing continually accessed bythe teeming masses Anyway goto
wwwunorg
With 15 members alreadyand 13 more on the way thereremain hopes that the EuropeanUnion will be a force for a stable
twenty-first century Equallywith 15 members already exhib-iting rather divergent views overthe issue of Iraq and most of theforthcoming members sidingwith the United States perhapsthis is overly hopeful Go to
europaeuintindex_enhtm
Then there is the WorldTrade Organization the organi-zation behind which protection-ist nations can hide from unilat-eral trade liberalization by pre-tending to support multilateraltrade liberalization Go to
wwwwtoorg
And we mustnrsquot forget the In-ternational Criminal Court fearof which was no doubt a featureof Saddam Husseinrsquos rejection ofexile as an option and the furyof which is promised by a num-ber of prominent lawyers to bevisited upon our very own PrimeMinister Go to
wwwicc-cpiint
FEEDBACKI would welcome advice fromreaders on any other sites of inter-est to IPA Review readers E-mailme on scdawsonbigpondnetau
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
is our patience should have beenexhausted weeks and monthsand years agorsquo
Go to
wwwnumber10govukoutputPage3294asp
THE STRUGGLE BETWEENTHE CONTINENTSIf you are patient you can readthat wonderful British rag TheSpectator for free Last weekrsquoscopy is available on-line One ofits regular columnists is MarkSteyn an Americo-phile Cana-dian who has a robust turn ofphrase and an abiding disdain formuch modern music (whichseems to place him very comfort-ably into The Spectatorrsquos culturalmatrix)
His piece on the future de-cline of Europe vis-agrave-vis Ame-rica makes for fascinating read-ing Go to
wwwspectatorcouk
then click on the lsquoBack Issuesrsquobutton and choose the edition of15 March 2003
E V I E WR
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
3MARCH 2003
E V I E WR
API
canola and then only rarely and at asmall level The research found thatsome European importers have paid avery small premium of around $10 pertonne Not only is this premium afraction of the gains flowing to growersfrom the use of GM canola but Europeis not nor is it likely to become asignificant importer of Australian canolaFrance and Germany are majorproducers and exporters of canola andthey use their non-GM laws to protecttheir highly subsidized production andexport markets in Europe Europe hasonly imported canola in times ofdrought when local production hasfallen short of domestic demand
How will Australian canolaproducers who receive the same FOBprices as the Canadians compete withthe Canadiansrsquo lower-cost GM varietiesThe answer is simple they will not beable to compete and farm incomes andthe environment will suffer
Why is Australia with its largelightly-subsidized export-oriented andinnovative rural sector deciding to banthe most promising advance inagricultural technology in a generation
The explanation for the collectiveflight from technology lies with theinfluence and success of a new class ofLuddites Like their nineteenth-centuryforebears the modern-day Ludditesmaintain the faccedilade of acting in thepublic interest Unlike theirpredecessors however the neo-Ludditesare well-funded well-organized and havespecial privilegesFunding has been crucial to the neo-Ludditesrsquo success According to The WallStreet Journal the European Union hasover the last five years giveninternational NGOs $300 million todemonize GM food The EUrsquos motivationis to create a non-tariff barrier toprotect its inefficient farmers withoutbeing seen to do so Aside from thecash the NGOs are motivated by thedesire to stop modernitymdashat least forothers Australian companies are alsoplying the Luddites with cash in a similareffort to inhibit competition orpromote their niche in the market Mostanti-biotech spokesmen also have adirect commercial interest indemonizing modern agriculture as theyoften make their livelihood from the
organic industry On top of this mostanti-biotech organizations aresubsidized by government The result isthat there is more money to be madefrom demonizing than from promotingag-biotech
Fear and uncertainty have alsoplayed an important role Thetechnology is novel and complex Whilethe regulators and proponents ofbiotech have concentrated on dealingwith these complexities the Ludditeshave focused on seeding fear with anendless series of scare campaigns Theyhave also been successful in demandingthe impossiblemdashthat is certainty in aninherently uncertain world
The key to their success howeverhas been their ability to masquerade asangels The Luddites have captured thedo-good institutions representing theenvironment consumers and thepoormdashand with this the communityrsquosrespect They have been able to distortand falsify without being held toaccount And they have been awardedwith status and influence
A prime example is Ms LouiseSylvan head of the AustralianConsumers Association (ACA) andpresident of Consumers International(CI)
Ms Sylvan and the ACA are givenstar billing in the media and have beeninvited and paid to represent lsquoAustralianconsumersrsquo on 125 committees Inreality ACArsquos links with consumer arethin it has about 400 real members(who are mostly anti-consumeractivists) and very limited links withordinary consumers
With her ACA hat on Ms Sylvan hasled the push for stringent labelling lawswhile with her CI hat she has pushedfor an outright ban
In the introduction to the CIrsquos latestscreed on GM food2 Ms Sylvan claimedthat lsquoGM crops hellip currently beinggrown offer no benefits to consumersand nothing to most farmers Even theintended lsquoindirectrsquo advantages of thereduced pesticide and herbicide use arenot being achievedrsquo In short she liedwith impunity
She also claims that lsquoGM is a newtechnology that poses many ethicalenvironmental and biological questionswhich can not fully be answered even by
a well-designed safety testing regimeConsumers have a right to question whythis technology should be used at allwhen it produces no benefits to societybut has the potential for causing greatdamagersquo
Not only has Ms Sylvan not beenforced to justify her claims but she issoon to become Deputy Director of theACCCmdashin short the nationrsquos secondmost influential business and technologyregulator
Given the success money fear andspecial treatment of the Ludditespoliticians and farmers are starting tooffer them support
What is the future Well look atEurope It has shown the way withsimilar bans and as a result investmentin biotechnology research of all typeshas declined by 60 per cent its researchindustry is fleeing to North America andit agricultural sector is going backwardseconomically and in terms of it impacton the environment and peoplersquos health
Forests have also long been a focusof the Luddites They have pushed for acessation of logging and othercommercial uses for a hands-offapproach to forest managementincluding a reduction of preventiveburning for increasing the number andsize of national parks for the closing ofaccess roads and locking people out ofthe forest As discussed at a recent IPAconference and summarized by GrahamWhite (on pages 4ndash7 below) the newLudditesrsquo success has been a nationalcatastrophe Some 16 million hectareshave been burnt with over $200 millionin damage to homes business and farmsIt has also done great damage to floraand fauna
Now they have water in their sights(see The lsquoRrsquo Files pages 29ndash31 below)
NOTES1 Robert Norton lsquoConservation Farming
System and Canolarsquo AVCARE March 20032 Consumer International (2003) lsquoCorporate
control of the food chain the GM linkrsquohttpwwwconsumersinternationalorgNews_Even t s wor ld a sp ca t=22ampregionid=135
4 MARCH 2003
E V I E WR
TRIO of experts has toldthe recent IPA conferencethat prescribed burning isthe most effective tool for
containing major bushfires in Aus-tralia Properly conductedmdashand thatmeans using a random rather than aprogrammed pattern of burningmdashitis also environmentally beneficialbecause it replicates the conditionsunder which Australiarsquos forests andscrublands evolved
Alas the devastation that has oc-curred in the forests parks and farmsof eastern Australia during the firstquarter of 2003mdashand which in-truded deeply into the suburbs ofCanberra causing the loss of hun-dreds of homesmdashwas cruelly exacer-bated by the failure to conduct ad-equate prescribed burning Examin-ing the scientific evidence presentedby experts at the conference it is dif-ficult not to conclude that much ofthe 16 million hectares of parks andforests destroyed this year could havebeen saved had proper prescribedburning been carried out over thepast few years So too could farmsand houses
THE SCIENTISTSWhy were these programmes not car-ried out The three expertsmdashDr PhilCheney of CSIRO Dr Syd SheaProfessor of Environmental Manage-ment at the University of NotreDame and a former head of WArsquos
A
Why Did We AllowAustralia to Burn
GRAHAM WHITE
Department of Conservation andLand Management and Dr KevinTolhurst of the Forest Science Cen-tre at the University of Melbournemdashall declined to speculate other thannoting that there were limitations onthe skills and resources available toconduct them and that there wereelements of lsquocommunity oppositionrsquoto such burning
There was no such reluctancehowever from the many delegatesfrom fire-affected regions whocrammed the auditorium Many ofthem had made a ten-hour round tripby bus to present their views andseveral were unhesitating in namingthe influence of vocal but ill-in-formed green groups as the likely cul-prit
These key messagesmdashthe failureof land managers to follow estab-lished scientific principles and thecontribution of green policies to thatfailuremdashwere two of three themesthat dominated the conference Thethird was property rightsmdashthe ex-pectations of private landholdersthat adjoining public lands should beproperly managed and the legal re-dress they have when that manage-ment fails
While the text of the talks con-centrated on these scientific and le-gal issues the pictures used to illus-trate the intensity of the fires raisedmore emotional responses If thescale of human sufferingmdashthe burnt-
out homes and scorched farmsmdashwasterrible the damage to the naturalenvironment was awesome Picturesof National Parks and State forestsreduced to blackened stick-like rem-nants of trees poking from a carpetof smouldering ash the devastationstretching seemingly to the horizonbrought cruel reminders of the mil-lions of small marsupials and othernative animals that died in this in-ferno
Any committed conservationistcould only ask what did we do tounleash such devastation The an-swer provided forcefully by all threeexperts was that it was not what wedid but what we didnrsquot do that al-lowed the fires to reach such horrificproportions
Dr Cheney produced studies toshow that under any given climaticconditions the intensity of a forestfire is essentially dependent on thevolume of fuel build-up on the for-est floor This volume of fuel is inturn largely a factor of how long ithas been since fire of some sortpassed through the area The longerthe period since it was last burnedthe greater the volume of fuel avail-able
When build-up reaches a certainlevel the intensity of the blaze pro-duced under typical bushfire condi-tions puts it beyond the capacity offire-fighters to contain With veryhigh levels of fuel the fire will be
On 11 March 2003 the IPA held a conference about the lessons to be learnt from the bushfires whichswept Eastern Australia in the first quarter of 2003 This article presents a synopsis of the major themesand findings from that conference Copies of papers delivered at the forummdashlsquoBushfire Prevention Are
we doing enoughrsquomdashare available on the IPA Website at wwwipaorgau
5MARCH 2003
E V I E WR
beyond the capacity of fire-fighterseven under less extreme conditions
This message was reinforced byboth Professor Shea and Dr Tol-hurst although an environmentallybenign programme of prescribedburning will not prevent bush firesaltogethermdashfor under extreme con-ditions fires will always spreadmdashitwill allow them to be containedonce conditions begin to ease evena little
This would seem to have been animportant factor in the Victorianfires while they began under ex-treme conditions they continuedburning through more than a millionhectares for a period of months in-cluding periods when conditionswere far less extreme High fuelbuild-upmdashthe result of inadequateprescribed burning programmes overseveral yearsmdashwould seem on thebasis of this evidence to have beena major factor in that
Professor Shea said that WArsquosgood record of bushfire managementin recent decadesmdashdespite the ex-treme conditions regularly created bythe regionrsquos long hot and dry sum-mersmdashhad been largely due to ac-ceptance of this principle He fearedhowever that even in WA the ex-ecution of prescribed burning pro-grammes was becoming less rigorous
Why Much of the blame he saidlay in attitudes imported from Brit-ain and Europe which saw burningas ugly and destructive to the envi-ronment These views did not takeinto account the very different ecol-ogy of Australia which had beenfashioned by fire long before whitesettlement
Foresters have discovered hesaid that the long-living grass-treesso common in southern WA containin their trunks a record of the firehistory they have endured This re-veals an irregular but by no meansinfrequent pattern of fire whichstretches back before white settle-ment of these areas
Dr Tolhurst said that studies ofthe fire-frequency patterns in whichAustraliarsquos ecology had evolved pro-
vided important lessons for pre-scribed burning programmes Thestudies show that in the past firesappeared to follow a random pat-ternmdashsome areas burning severaltimes within a five- or ten-year pe-riod while other pockets appearedto have escaped burning for long pe-riods This had ensured biodiversity
A similar approach was neededwith prescribed burning he saidRather than merely gridding a parkto be systematically burned over saya ten- or 15-year cycle it was betterto replicate the natural order with amore varied approach with some ar-eas being burned more frequentlythan others This would ensure thatfuel build-up over large areas of for-ests and parks was kept to a levelwhich prevented fires of the destruc-tive scale and intensity of 2003 butwhich also ensured biodiversity
This would not only have eco-logical benefits but would reducethe occurrence and impact of largeintense fires reduce the cost of emer-gency operations and disaster reliefand create better land-managementoutcomes The tragedy is that muchof this thinking is already enshrinedin forest management philosophiesin Victoria but has not been ad-
equately resourced or implementedBurning is possible only on a limitednumber of days each year and re-quires skilled personnel if it is to becarried out in an effective and envi-ronmentally beneficial way Consid-erably greater resources were thusneeded
THE PROPERTY OWNERSThe three scientific experts were fol-lowed by presentations of case stud-ies from individuals The speakerswere Ian Mott a third-generationforester and self-confessed lsquobush law-yerrsquo with experience of land manage-ment issues in NSW and Queens-land David Coonan who presentedthe views of the ACT SustainableRural Lands Group (a group of ACTlandholders members of which havebeen affected by two large fires inrecent years) and Russell Smith re-tired Army major and a resident ofBundarrah Valley about 40kmNNW of Omeo in North-East Vic-toria an area which was swept by therecent bushfires
While each took a distinctive ap-proach the issue of the obligationsof public land managersmdashand thelimitations even on the rights of pri-vate landholders to manage theirland adequatelymdashtended to intrudeinto all three presentations
For Ian Mott the issues were fun-damentally legal The obligations onprivate landholders are extensiveare public land managers similarlyobliged to keep the properties undertheir control equally safe This is notthe first time he has raised these is-sues but the questions had an addedrelevance in the light of evidencefrom David Coonanrsquos group and fromRussell Smith that failure to preventfuel build-up on neighbouring pub-lic lands was a significant factor inthe intensity of the fires that strucktheir own areas
Russell Smith noted that AlpinePark and State Forests in his area hadnot apparently been given any pre-scribed burning in living memoryHe has been on his property almost20 years but believes that the pe-
The failure of landmanagers to followestablished scientificprinciples and the
contribution ofgreen policies tothat failure were
two of three themesthat dominatedthe conference
s
6 MARCH 2003
E V I E WR
riod without burning is far farlonger The area is choked with nox-ious weeds and provides sanctuaryfor feral cats dogs and goats whichinvade private property
More relevant in the context ofthis forum was the fact that he esti-mated forest floor litter to have beenin the order of lsquohundredsrsquo of tonnesper hectare rather than the 4 tonnesconsidered optimal for ecologicalbalance It was so thick and densethat it was impossible to ride a horsein parts and difficult to penetrateeven on foot
Similarly despite repeated re-quests from Major Smith the Vic-torian Department of Natural Re-sources and Environment (nowSustainability and Environment)had not forced a neighbouring ab-sentee landowner to clear hugethickets of fire-hazardous blackberryand briar
When the bushfires came theseunburnt public and private landserupted into an inferno and al-though a combination of rigorousfire-prevention measures (which in-cluded conducting his own fuel-re-duction burning to create a fire breakthat extended well into the park adecision he took unilaterally whenthe park managers declined) and awell-rehearsed action plan saved hisown property the fire swept thoughthe rest of the valley
Russell Smith now believes thatthere are vital lessons to be learnedif this sort of disaster is not to be re-peated Fuel reduction is one impor-tant priority but there is also a hugeamount that can be done to improveplanning coordination and re-sponse He has a dosier of planningand communications failings manyof which could have been avoidedwith greater training and prepara-tion
(For David Coonan there is acruel irony in the fact that his grouphas presented extensive evidence tothe ACT coroner investigatingdeaths that occurred during the 1991Canberra fires The coronerrsquos find-ings are not yet public but Coonan
is saddened that he and his col-leagues may yet find themselves pre-senting similar evidence to any in-quiry into the 2003 fires)
One theme that emerged repeat-edly in the Conference from all quar-ters (scientists the case studies anddelegates from the floor) is that StateGovernments are far more enthusi-astic about creating electorally-
popular National Parks than they areabout funding the management ofthe parks they have created Timeand again reference was made to thelack of management of these parkswhich are progressively degradedthrough infestations of weeds andferal animals and which become in-creasing fire hazards
This is environmentally as wellas economically and politically dan-gerous the habitatsmdashand perhapseven entire populationsmdashof somethreatened species were engulfed inthe huge fires that spread throughthe parks of north-eastern Victoriain January February and March
One delegate asked whether thecause of environmentalism wouldnot be better served if there weregreater commercial exploitation ofNational Parks to generate fundingfor their upkeep It would at least
ensure their management was givena secure funding base he said
The continued creation and ex-tension of National Parks whenthere was not sufficient funding tomanage even existing parks was seenas evidence of State Governmentsurrender to uninformed urban-based green populists who were inturn swayed more by emotion andsymbolism than by any real under-standing of environmental manage-ment
The passion generated by thesefires was evident in the packed au-ditorium (every seat was taken andmany who tried to book late had tobe refused) Scores of residents andfirefighters from hard-hit areas ofVictoria made the journey to Mel-bourne to hear the experts and tohave their say Several busloads camefrom north-east Victoria the epi-centre of the fire disasters For themit was a 16-hour day
Other individuals made a similarjourney from Victoriarsquos north-westwhere more than 200000 hectaresof National Park along with exten-sive farmlands were also destroyed
GREEN GODSMany people expressed their con-cerns at the possible influence ofgreen activists on forest manage-ment policy These concerns wereonly confirmed by Andrew Bolt As-sociate Editor of Melbournersquos Herald-Sun newspaper who gave a talk dur-ing post-conference refreshmentsHis theme was Green Religion thetriumph of a set of mystical valuesover science
The thesis he advanced was thatwith the decline of traditional reli-gions and belief in God many mod-ern individuals were left with thechoice of either believing that hu-man beings were in charge of theirown destiny or believing that theyshouldnrsquot be and subsume humanfate to omniscient Nature Giventheir lack of faith in fellow manmany had chosen the latter courseThe result was a value-system inwhich scientific principles of sound
Governments are formore enthusiastic
about creatingelectorally-popular
National Parksthan they are
about funding themanagement of the
parks they havecreated
7MARCH 2003
E V I E WR
ON 28 January the Queens-land Government re-leased Report on the studyof land-sourced pollutants
and their impacts on water quality inand adjacent to the Great Barrier ReefIn the associated media release theQueensland Premier Peter Beattiesaid lsquoNow the report is in work onthe Great Barrier Reef Water Qual-ity Protection Plan will continuewithout arguments about whetherland activities harm the Reef Thereport is the adjudicatorrsquos decisionand is based on the best available sci-encersquo
The report written by a panelof scientists chaired by Queens-landrsquos Chief Scientist Dr Joe Bakermakes several key findings regard-ing impacts of land-based pollutionon the reef A key allegation in thereportrsquos summary highlighted in thePremierrsquos media release is that el-evated concentrations of pesticideresidue have been found in dugongs
Since publication of the book Si-lent Spring by Rachel Carson in1962 there has been concern thatpesticides can bio-accumulate inthe fat tissue of animals Prior to1987 organochlorine pesticides (forexample DDT) were used in GreatBarrier Reef catchments includingfor sugarcane production Thesechemicals have since been banneddue to global concerns about theirpersistence in the environment andtheir capacity to bio-accumulate
I first became aware of the spe-cific issue of pesticide in dugongs inAugust 1998 A senior officer withthe Great Barrier Reef Marine ParkAuthority (GBRMPA) phoned mewith the news that a soon-to-be-
Deceit in the Nameof Conservation
JENNIFER MAROHASY
published research study had foundthat elevated levels of pesticide resi-due most likely from cane farmingwere accumulating in the fat tissueof dugongs Media headlines fol-lowed including Pesticide in reefcreatures and Cane burning link withdioxin in dugong
I obtained a copy of the studyand found it was primarily an analy-sis of the type and quantity of diox-ins found in the fat tissue of dug-ong carcasses that had been killedin fishing nets1 Dioxins are a groupof organochlorine compounds com-monly associated with industrialwaste incineration The researchpaper made reference to a differentstudy that had analyzed the dioxinsfound in soils under sugarcane cul-tivation and commented that thecane-land soils and dugong fatsamples both had elevated levels ofthe same type of dioxins
Concerned by this news I con-tacted a dioxin expert at the Uni-versity of Queensland Dr BrianStanmore informed me that thetype of dioxin considered by theGBRMPA to be elevated in thedugongs was common and the leasttoxic of all dioxins Furthermore DrStanmore indicated that the levelof dioxins found in the dugongs wasless than the national average inpeople in the United States Hecommented that lsquoit looks like thedugong is better off than we arersquo
The GBRMPA study clearlystated lsquoAll (dugong) carcasses werein good condition at the time ofsampling All animal deaths wereconfirmed or suspected (fishing) netdrowningrsquo However instead of fo-cusing on net fishing practices the
environmental management were oflittle significance compared with theneed for a re-creation of a mythicalpristine Nature
Elements of this attitude he sug-gested might underlie some of thepressures which discourage the pre-scribed burning of National Parksand State Forests
Whether this hypothesis provesvalid or not there is little doubt thatthe management of Australiarsquos parksforests and other public lands willcome under greater scrutiny as a re-sult of the horrific fires of 2003 Thescale of damagemdashhuman economicand environmentalmdashis such that atleast three separate inquiries Fed-eral Victorian and from the ACThave already been proposed
The overwhelming view of del-egates at the IPA forummdashas re-flected in questions from the floorand in post-conference discussionsmdashwas that only a Federal inquiry islikely to achieve an adequate resultThis is because State and TerritoryGovernments in their role as landmanagers must share direct respon-sibility for any lack of prescribedburning and other forms of hazard re-duction that might have contributedto these fires This means that theycould potentially face hugely expen-sive legal claims and that as a re-sult there could be pressure on themto manipulate terms of reference andother criteria to diminish scrutiny ofthese important issues
Even if this concern proves ut-terly unfounded the public percep-tion could still linger that any suchinvestigation was a State Govern-ment inquiry into a matter in whichthe State had a very real vested in-terest For these reasons a Federalinquiry would have greater credibil-ity and is in fact essential if we areto come to a comprehensive under-standing of the causes of last sum-merrsquos catastrophic bushfires
Graham White is an issues management consultantwho chaired a session of the IPA bushfires forum
API s
8 MARCH 2003
E V I E WR
GBRMPA subsequently providedfunding for a full investigation bythe National Research Centre forEnvironmental Toxicology(NRCET) into the likely origin ofthe dioxin considered to be at el-evated levels in the dugong car-casses including possible links withsugarcane production
Two years later the NRCET in-vestigation concluded that the di-oxin of concern to the GBRMPAwas common in soils along the en-tire Queensland coastline includ-ing in regions beyond sugarcane cul-tivation2 Analyses of dated marinesediment cores indicated that thechemical was present prior to Eu-ropean settlement in QueenslandIn other words the dioxin is a natu-rally occurring organochlorine andnot a pesticide residue There areapparently many naturally occur-ring non-toxic dioxins
But what of the organochlorineinsecticides used in the sugar indus-try from the late 1940s until theywere banned in 1987 Have thesepesticides been found in dugongs
The GBRMPA and the Austra-lian Institute of Marine Science(AIMS) have undertaken extensivesurveys for traces of organochlorineinsecticides including an Australia-wide programme for collecting andtesting samples from stranded or re-cently killed dugongsmdashfrom whichthe dioxins were isolated While itwas expected that these program-mes would find persistent orga-nochlorine pesticide this has notbeen the case
Estuarine and near-shore marinesediments have been extensivelysampled on the basis that these ar-eas are likely to contain the high-est concentrations of contaminantsfrom human activity in adjacentcatchments Trace amounts of someorganochlorine insecticides havebeen found in sediment from a smallnumber of river mouths3 No orga-nochlorine insecticides howeverhave been found in near-shore ma-rine sediments of the Great BarrierReef4 This finding has surprised
many researchers some of whomhave postulated that the absence oforganochlorine contamination inthe inner shelf is a consequence ofenhanced degradation of the orga-nochlorines in the aquatic system
In late November 2002 I re-ceived a copy of the draft summaryof the Baker reportmdashthe report sub-sequently described by the Premieras the best available science I no-ticed the allegation of elevated con-centrations of fat-soluble pesticide
in dugongs I emailed Dr Baker que-rying this and other allegations inthe draft summary Dr Baker repliedthat he would consult with the Sci-ence Panel and get back to me Thereport was published two monthslatter without any changes to thesummary
The reef pesticide research iswell-documented and should be un-derstood by members of the SciencePanel In fact a member of the Sci-ence Panel communicated the find-ings from the NRCET investigationto me in September 2001 Whythen was the allegation of pesticidein dugongs included in the originalsummary report Why was the alle-gation not corrected after I brought API
the error to Dr Bakerrsquos attention inDecember 2002
Two years earlier following pres-sure from the World Wide Fund forNature (WWF) and as part of theQueensland governmentrsquos reelec-tion campaign the QueenslandPremier committed his governmentto saving the reef Since this timeit has been Queensland governmentpolicy that the reef is in troubleThe on-going deception is perhapsnecessary to maintain the percep-tion that the reef is in trouble
NOTES1 Haynes D Muller J F amp
McLachlan MS (1999) lsquoPoly-cholorinated dibenzo-p-dioxinsand dibenzofurans in Great Bar-rier Reef (Australia) Dugongs(Dugong dugon)rsquo Chemosphere38 pages 255ndash262
2 Prange JA Gaus C PapkeO amp Muller JF (2002) lsquoInves-tigations into the PCDD con-tamination of topsoil river sedi-ments and kaolinite clay inQueensland Australiarsquo Chemo-sphere 46 pages 1335ndash1342
3 Haynes D Muller J amp CarterS (2000) lsquoPesticide and Herbi-cide Residue in Sediments andSeagrasses from the Great Bar-rier Reef World Heritage Areaand Queensland Coastrsquo MarinePollution Bulletin 41 pages279ndash287
4 Cavanagh JE Burns K ABrunskill GJ amp Coventry RJ(1999) lsquoOrganochlorine pesti-cide residues in soils and sedi-ments of the Herbert and Bur-dekin River regions northQueenslandmdashimplications forcontamination of the GreatBarrier Reefrsquo Marine PollutionBulletin 39 pages 367ndash375
Dr Jennifer Marohasy is Environment Managerwith Queensland Canegrowers Organisation Ltd
Why was theallegation of pesticidein dugongs included inthe original summary
report Why wasthe allegation notcorrected after I
brought the error toDr Bakerrsquos attentionin December 2002
9MARCH 2003
E V I E WR
IN THE LONG AGOPlanet Earth condensed 4550million years ago (Ma) from re-cycled stardust Since that timethe continents have been enlarg-ing Earth materials have beenconstantly recycled and the Earthand all associated systems havebeen dynamically evolving TheEarth has not stopped being anevolving dynamic system just be-cause humans now live on thecontinents
As soon as there was liquid wa-ter on Earth there was life Bac-teria slowly diversified and by thetime the Earth was middle agedone group of bacteria had emit-ted such large quantities of oxy-gen (O2) that the atmospherecontained minor O2 Some of thisexcess O2 was trapped in rocks byweathering most dissolved in theoceans resulting in the precipita-tion of iron oxides It is these ironoxides that form the great iron orefields of planet Earth (for ex-ample in the Hamersley Basin)Life the atmosphere the oceansand the rocks interacted a pro-cess that has been occurring forat least 2500 million years on ourdynamic evolving planet
For at least the last 2500 mil-lion years the continents havebeen pulled apart and stitchedback together Every time thecontinents are pulled apart hugequantities of volcanic water car-bon dioxide (CO2) and methane(CH4) are released into the atmo-sphere and greenhouse conditionsprevail When continents stitchtogether mountain ranges formMountains are stripped of soilsnew soils form and remove CO2
The Past is the Key to the PresentGreenhouse and Icehouse over Time
IAN PLIMER
from the atmosphere these soilsare stripped from the land and theCO2 becomes locked in sedimentson the ocean floor When atmo-spheric CO2 is low glaciation oc-curs Large climate cycles can berelated to plate tectonics
The origin of the greatest cli-mate change on Earth is anenigma Between 750 and 600Ma there were two major glacialevents and numerous smallerevents Sea level changed by upto 400 metres and interglacial seatemperatures were 40˚C Afterglaciation the atmosphere hadsome 20 per cent CO2 and bacte-ria thrived and diversified in thewarm oceans Multicellular lifeappeared diversified and used theCO2 to make shells and skeletonsThis explosion of life from 580 to520 Ma gave us all of the majorlife forms currently present onEarth
Plants appeared at 470 Ma andthere was a major mass extinctionof multicellular life at 430 MaThe origin of this mass extinctionis not known Vacated ecologieswere quickly filled and life con-tinued diversifying Between 368and 248 Ma massive coal depos-its formed there was a major 50million-year period of glaciationand the atmosphere was blessedwith a very high CO2 and O2 con-tent Life continued to diversifyMinor mass extinctions continuedand at 248 Ma the biggest majormass extinction on Earth tookplace Some 96 per cent of spe-cies became extinct Life diversi-fied quickly to fill the vacatedecologies The record written instone by fossils in the period520Ma to the present shows thatthe planet is a warm wet green-house volcanic planet with thenormal cycles of rising and fall-
Sea Levels
Greenhouse Greenhouse GreenhouseIcehouse Icehouse
Tem
pera
ture
Tem
pera
ture
Millions of years ago1000 900 800 700 500 400 300 200 100600
There are 400 million year supercycles of greenhouseicehouse related to the pulling apart and
stitching together of continents
Icehouse
s
s
10 MARCH 2003
E V I E WR
ing sea levels rising and fallingland levels and changing climates
THE DAY BEFORE YESTER-DAYSome 120 million years ago Aus-tralia was at the South Pole en-joying a temperate climate Glo-bal sea level was more than 100metres higher than at present thesea surface temperature was 10ndash15˚ C higher than now and manycontinents were covered by shal-low tropical seas Planet Earthwas a warm wet greenhouseparadise and thick vegetationcovered the land masses Atmo-spheric CO2 was about 1 per centwhen the worldrsquos major coal de-posits formed 368 to 248 Ma
From 250 to 120 Ma the glo-bal CO2 content varied greatlyand increased to a peak 6 per centCO2 120 Ma This derived fromintense volcanic activity associ-ated with continental fragmenta-tion Thick vegetation coveredthe land masses
Australia started to pull awayfrom Antarctica at about 100 MaIt drifted northwards the TasmanSea opened and the IndianOcean opened with India start-ing to drift away from WesternAustralia The opening of theTasman Sea produced the rise ofthe Great Dividing Range thediversion of the major river sys-tems and changes to the climateof eastern Australia
A minor mass extinction oflife 90 million years ago was theresult of volcanoes in the Indianand Pacific Oceans belching outCO2 and other gases into theoceans and atmosphere Therewas a runaway greenhouse untilvolcanism waned But volcanicemissions of CO2 are common In1984 and 1986 burps of CO2 fromthe volcanic crater lakes ofMonoun and Nyos respectivelykilled thousands and added CO2to the atmosphere Near MtGambier volcanic CO2 is com-mercially extracted from rocks
one small hot spring on Miloscontributes 1 per cent of theplanetrsquos volcanic CO2 and hugequantities of CO2 the planetrsquossecond most common volcanicgas constantly leak from unseensubmarine volcanoes
Another minor mass extinc-tion at 55 Ma was caused by aCaribbean volcano There was arise in sea temperatures by up to8˚C for 100000 years and atmo-spheric CO2 was 10 times that oftoday During this greenhouseplankton sucked up the atmo-spheric CO2 mammals thrivedand life filled the vacated ecolo-gies Atmospheric CO2 decreasedfrom 3500 to 700 ppm within amillion years stayed low until 47Ma and went up and down toabout the present level (365ppm) at 40 Ma
India collided with Asia at 50Ma Uplift produced the TibetanPlateau which started to scrubCO2 out of the atmosphere TheTibetan plateau is still rising andCO2 is still being scrubbed out ofthe atmosphere The Drake Pas-sage opened as South Americadrifted from Antarctica a cir-cumpolar current developed andAntarctica refrigerated SouthernAustralia from 17 to 145 Mawas again tropical with mid-lati-tude temperatures 6˚C warmerthan today Atmospheric CO2was 180ndash290 ppm This green-house occurred when atmos-pheric CO2 was 30ndash50 per centlower than today
By 5 Ma Earth cooled andwas so cool that very slight orbitalwobbles now had a bearing on cli-mate and every 100000 yearswas characterized by 90000 yearsof glaciation and 10000 years ofinterglacial We are currently inone of those interglacial periods
The penultimate interglacialwas 120000 years ago Homoerectus Homo neanderthalensisand Homo sapiens coexisted sealevel was 6 metres higher than atpresent the planet was far
Millions of Years Ago
400 200600 0
2
4
6
8
10
12
14
16
18
20
0
Perc
enta
ge o
f CO
2
PrecambrianIce Age
s
Permian-CarboniferousIce Age
s
LastIce Age
s
There have been enormous changes incarbon dioxide (CO2) over time related to
volcanism sedimentation mountain-building and life on Earth
11MARCH 2003
E V I E WR
warmer and wetter than now andatmospheric CO2 was 78 per centof that today After warming theatmospheric CO2 and CH4 con-tent increased suggesting that at-mospheric temperature rise drivesan increase in atmospheric car-bon dioxide and methane con-tents During the history of thelatest glaciation armadas of icewere released into the sea every7000 years resulting from thephysical failure of thick icesheets These had a profound ef-fect on climate Small cool peri-ods occurred every 1100 to 1300years
The zenith of the last glacia-tion was 18000 years ago Sealevel was 130 metres lower thantoday temperature was 10ndash15˚Clower than today and the north-ern hemisphere was covered byice to 38˚N up to 3 kilometresthick
YESTERDAYThe northern polar ice sheetstarted to melt 14700 years agoThere were very rapid and majortemperature fluctuations sea lev-els rose and fell and the total sealevel rise over the last 14700years has been at least 130metres Sea level rise resulted inthe breaching of the Mediterra-nean into the Black Sea Basinsome 7600 years ago and is prob-ably the origin of the SumarianBabylonian and biblical stories ofa great flood
One of the consequences of amassive sea level rise over the last14700 years is that the WestAntarctic Ice Sheet was nolonger underpinned by the landTwo thirds of the West Antarc-tic Ice Sheet collapsed into theoceans and sea level rose 12metres The final third of theWest Antarctic Ice Sheet has yetto collapse to produce a 6 metresea level rise as part of the dy-namic post-glacial climate onEarth Climate changes inducedby changes in ocean currents
cooled North Africa grasslandschanged to a desert humans mi-grated and the great Mesopo-tamian cities were established
Sea levels were 1ndash3 metreshigher in a greenhouse 6000years ago There was 20 per centmore rainfall Cold dry periodsglacier expansion and crop fail-ures between 5800 and 4900years ago resulted in deforesta-tion flooding silting of irrigationchannels salinization and thecollapse of the Sumerian citystates Long periods of El Nintildeo-induced drought resulted in theabandonment of Middle EasternIndian and North Americantowns In 1470 BC () Thira ex-ploded weakened the dominantMinoans and changed the courseof western history
Global cooling from 1300 to500 BC gave rise to the advanceof glaciers migration invasionand famine Global warmingcommenced again at 500 BCthere was an excess of food andgreat empires such as the AshokaChrsquohin and the Romans grewContemporary records and Ro-man clothing shows that condi-tions were some 5˚C warmer thantoday
In 535 AD Krakatoa explodedas did Rabaul in 536 AD TheEarth passed through cometarydust in 536 AD The dusty atmo-sphere reflected heat and dark-ness prevailed As a result theclimate cooled and there wasfamine and warfare Changes inocean currents resulted in theMedieval Warm Period from 900to 1300 AD The first to feel thechange were the Vikings whowere able to navigate the north-ern waters colonized Newfound-land colonized Greenland andestablished extensive trade routesas far south as the modern GulfStates On Greenland crops weregrown and there were cattle Thiswould not be possible today Thewarmer wetter climate of Europeproduced excess crops and wealthwhich resulted in the building ofcastles cathedrals and monas-tries As with previous green-house events there was greatprosperity
In 1280 AD volcanic erup-tions on Iceland and a change inocean currents started the LittleIce Age which finished in 1920The North Sea froze in 1303 and1306ndash1307 there was massivefamine in 1315 and the plague
Sea
Surf
ace
Tem
pera
ture
degC
21
22
23
24
25
26
Years Ago
Large temperature changes over the last 200years have been recorded in history and fromthe oxygen isotopes of floating marine animals
Dark Agescold period
Medievalwarm period
LittleIce Age
2000 1500 1000 500 Now
s
12 MARCH 2003
E V I E WR
pandemic attacked the weakenedpopulation in 1347ndash1349 Therewas massive depopulation and ittook Europe 250 years to reachthe population of 1280 AD Dur-ing the Little Ice Age there werewarmer periods associated withsunspot activity During mini-mum sunspot activity (1440ndash1460 1687ndash1703 and 1808ndash1821) the intensely cold condi-tions were recorded by the Dutchmasters and King Henry VIII wasable to roast oxen on the frozenThames There were food short-ages Short cold periods occurredafter the eruptions of Tambora(1815) and Krakatoa (1883) re-spectively In fact 1816 wasknown as the lsquoyear without asummerrsquo This was the time whenTurner painted stormy oceansand skies full of volcanic dustMary Shelley wrote Frankensteinand Byron wrote Darkness
TODAYThe twentieth century and earlytwenty-first century AD are timesof natural post-glacial reboundIce sheets a rare phenomenon inthe history of time still exist Sealevel is relatively low as are glo-bal temperatures and atmos-pheric CO2 Between 1920 and1945 there was a period of warm-ing (037˚C) and another thatcommenced in 1976 (032˚C) In1976ndash1977 global temperaturesin the lower atmosphere jumped03˚C sea surface temperature inthe equatorial Pacific jumped06˚C sea surface temperatureduring upwelling increased 15 to3˚C but there was reduced up-welling the heat content of theupper 300 metres of the worldrsquosoceans increased there was in-creased wave activity in theNorth Sea and the length of theday changed The stepwise in-crease in temperature in 1976ndash1977 shows that there was a ma-jor re-ordering of the ocean heattransport coinciding with anorbital change expressed as a
change in the length of the dayMaybe the global warming of thetwentieth century is just a mea-sure of the variability on a dy-namic evolving planet
To put such measurementsinto perspective over the historyof time changes in atmospherictemperature in the twentieth
century can only be consideredsmall and slow A 24-year globalcoverage of satellite atmospheretemperatures shows only modestwarming in the Northern Hemi-sphere and a slight cooling in theSouthern Hemisphere Tempera-ture measurements from balloonsagree with the satellite measure-ments for the period of overlapBecause greenhouse warming is aphenomenon of the atmospheresignificant changes should havebeen recorded They have not
CONCLUSIONSUnderpinning the global warm-ing and climate change mantra isthe imputation that humans liveon a non-dynamic planet On allscales of observation and mea-surement sea level and climateare not constant Change is nor-mal and is driven by a large num- API
ber of natural forces Change canbe slow or very fast However wesee political slogans such as StopClimate Change or governmentpublications such as Living withClimate Change demonstratingthat both the community andgovernment believe that climatevariability and change are notnormal By using the past as thekey to the present we are facingthe next inevitable glaciationyet the climate economic politi-cal and social models of todayassess the impact of a very slightwarming and do not evaluate thehigher risk of yet another glacia-tion Geology archaeology andhistory show that during glacia-tion famine war depopulationand extinction are the norm
In 1831 Admiral Sir JamesRobert George Graham had theUnion Jack hoisted on a volca-nic land mass that suddenly ap-peared near Sicily It was calledGraham Bank and was claimed byEngland It was also claimed bythe Kingdom of the Two Sicilieswho called it Isola Ferdinandeathe French (LrsquoIsle Julia) andother powers In the subsequentdispute over ownership Franceand the Kingdom of the TwoSicilies almost came to war andEngland and the Two Kingdomsof Sicily had a diplomatic rowDuring the intense diplomaticdispute the island quietly slippedback underwater Graham Banksserves to show that whateverpolitical decisions we humansmake the land rises and falls sealevels rise and fall and climateschange as they have done sincethe dawn of time
Ian Plimer is the Professor of Geology in the Schoolof Earth Sciences at The University of MelbourneThis article is an edited version of his recent paperto the IPArsquos Climate Conference delivered on 28
February 2003 a full version of which can befound on the IPArsquos Website
On all scales of
observation and
measurement sea
level and climate
are not constant
Change is normal
and is driven by a
large number of
natural forces
13MARCH 2003
E V I E WR
FOR two years the worldrsquossecond largest hydrocarbonsproducer spent beaucoupdollars on a clever public re-
lations and advertising campaign toconvince consumers that BP no longerstands for British Petroleum but for Be-yond Petroleum
One advert proclaimed lsquoWersquore oneof the largest producers of natural gashellip and are investing in the new energysources of the futuremdashhydrogen andwind Itrsquos a startrsquo Another tried to getthis line past the guffaw test lsquoWe be-lieve in alternative energy Like solarcappuccinorsquo
Many people expressed surprise thata huge oil company was so committedto alternative energy technologiesThey neednrsquot have
BPrsquos total six-year investment in re-newable technologies was $200 mil-lionmdashthe same amount it spent on thelsquoBeyond Petroleumrsquo advertising cam-paign Thatrsquos certainly an impressivetab for image enhancement But itrsquos adrop in the barrel for futuristic tech-nologies that were the centrepiece forthe slick marketing effort
Indeed all its preening and pufferynotwithstanding BPrsquos actual invest-ment in renewable energy was a whop-ping 005 per cent of the $91 billion itspent to buy oil giants Arco and Amocoback in the 1990s Moreover just as theadvertising campaign was windingdown BP announced it was spending$675 billion for a 50 per cent control-ling interest in a rich Russian oil pros-pectmdashand will be spending another$20 billion over the next five years ex-ploring this and other newer fieldsaround the world
In other words the advertising cam-paign was little more than lsquogreen-washingrsquomdashdisinformation intended topresent an environmentally responsiblepublic image BP wanted people to per-
BPmdashBack to PetroleumPAUL K DRIESSEN
theoretically harmless puffery It also re-flects the desire of many multinationalcompanies to appease critics and gaina public relations advantage over com-petitors by adopting the language ofideological environmentalism
This radical school of thought in-creasingly uses ethical buzz-words anddogmas to justify its demands Chiefamong them are sustainable develop-ment and the precautionary principlethe foundations of so-called lsquocorporatesocial responsibilityrsquo (CSR) and lsquoso-cially responsible investingrsquo (SRI) doc-trines
Eco-activists from affluent Westerncountries developed the doctrines topromote their agendas and oppose en-ergy and economic development BPhas long been at the forefront of theseefforts as a charter member of theWorld Business Council for SustainableDevelopment through frequent meet-ings with activist groups and by fund-ing many radical groups
The activists define what is lsquorespon-siblersquo focusing debate on conjecturalproblems and theoretical needs of fu-ture generations of wealthy elitesmdashandignoring real immediate life-and-death needs of people who struggledaily just to survive The stakes arehuge
More than 15 billion people in de-veloping countries still do not have ac-cess to electricity Half a billion womenand children spend their days collect-ing firewood or squatting in mud andanimal faeces to collect and dry ma-nure for fuel Millions die every yearfrom lung diseases caused by indoor airpollution from cooking fires and dys-entery due to contaminated drinkingwater
Hydroelectric or fossil fuel projectscould provide electricity for familieswater purification plants and economicdevelopment But radical activists op-
ceive it as a lsquosocially responsiblersquo leaderand reward it accordingly Few did
Green activists denounced BP forlsquohypocrisyrsquo and blasted the company forcontinuing to lsquoexploit some of theworldrsquos most sensitive ecological areasrsquoA major business magazine said sim-ply lsquoWell please If the worldrsquos secondlargest oil company is beyond petro-leum Fortune is beyond wordsrsquo
Meanwhile BPrsquos total wind and so-lar electrical output last year was barelyenough to keep the lights burning inRegina Saskatchewanmdashand thought-ful observers are beginning to realizethat wind and solar arenrsquot quite as eco-friendly as activists claim
A single new 555-MW gas-firedgenerating plant in California producesmore electricity than do all the statersquos13000 wind turbines The gas-firedplant occupies about ten acres the gi-ant 200-foot-tall windmills dominatethousands of once-scenic acres and killthousands of raptors and other birdsevery year Current photovoltaic tech-nology is just as habitat-hungry
Worse chief executive Lord JohnBrowne was forced to lower BPrsquos pro-duction estimates three times last yearand the companyrsquos 11 per cent returnon average capital was well below thatof arch-rivals ExxonMobil (137 percent) and Royal DutchShell (148 percent) BP share prices reflected inves-torsrsquo displeasure with its poor perfor-mance and the fact that the companyrsquosprofit margins would not improve for adecade or more if the company re-mained focused on renewable energyand old oil fields
Thus if BP ever really was BeyondPetroleum going Back to Petroleum(and Bigger Profits) was a sound busi-ness decision
However the lsquoGreat Beyondorsquo adcampaign involves more than meregreenwashing and disingenuous but s
14 MARCH 2003
E V I E WR
API
pose these projects and say that theworldrsquos rural poor should be contentwith solar panels on huts
Investors are also at risk particu-larly retirees whose futures depend onpension and mutual funds that ownnearly $8 trillion in market sharemdash50per cent of the total stock marketMany of these funds are managed lessto safeguard or benefit the investor thanto promote radical principles under thedisguise of so-called ethical funds
These funds claim to provide pro-fessional unbiased analytical and ad-visory services But in reality they sup-port political agendas based on often-questionable analyses and on lsquostake-holderrsquo (activist) input to justify howthey grade companies in client portfo-lios They regularly excoriate compa-nies such as ExxonMobil claiming itsrefusal to back the Kyoto climate treatywill destroy shareholder value Mean-while they praise companies such asBP and promote global governanceand solar panels on huts
Australiarsquos energy consumers willbecome yet another example of lsquocol-lateral damagersquo if the radicals havetheir way over global warming Onceagain some of the culprits are right inthe BP boardroom
In 1997 BP chief Browne endorsedthe global warming theory and saidtough measures should be imposedquickly even in the absence of scien-tific proof A Clinton-era Energy In-formation Administration report con-cluded that the climate treaty woulddrain $340 billion a year from the USeconomy The Australian economywould also get hammered And all thispain even assuming perfect compli-ance with the treaty would reduce av-erage global temperatures in 2050 byonly 02˚C below what they would bewithout the treaty according to theUSArsquos National Center for Atmo-spheric Research
But BP Australasia President GregBourne is undaunted Hersquos stumping thecountry from Melbourne to Brisbaneand Darwin to Perth importuning busi-nesses to pressure the PM to ratifyKyoto Could it be pure altruism Ormight the old profit motive be at work
A 1997 memo to Enron presidentKen Lay described BP as Enronrsquos lsquoin-ternational equivalentrsquo Indeed BP isstriving mightily to replace Enron asthe worldrsquos premier broker in the newbusiness of buying and selling permitsto emit greenhouse gases The expec-tation is that playing the climatechange game could earn BP billions ofdollars via traditional petroleum opera-tionsmdashand billions more via emissiontrading schemes The company is al-ready trading credits among its unitsas part of a training regimen for theanticipated emission Olympics
One cannot help but suspect thatthis huge EU oil giant might also bemotivated by Europersquos obvious desireto protect its industries from US and
other foreign competition They clearlysee the Kyoto Protocol not merely asan environmental programme but alsoas a way to pressure the United StatesAustralia and other countries to reduceenergy use and economic productivity
EU Environment CommissionerMargot Wallstrom put it bluntly whenPresident Bush abandoned the Kyotoclimate treaty lsquoThis is not a simple en-vironmental issuersquo she railed lsquoThis isabout international relations this isabout economy about trying to createa level playing field for big businessesthroughout the worldrsquo Several EU of-ficials echoed her sentiments suggest-ing that Americarsquos lower energy taxesconstitute an unfair trade advantagethat could justify trade sanctionsagainst the US
In short what we are witnessing isa profound and disturbing convergenceof ideology activism marketing poli-tics and financial gainmdashall in the ser-vice of radical policy agendas and allbeautifully attired in the lavish raimentof corporate ethics and responsibilityThis is proof positive that social respon-sibility can be a wondrous thing in thedexterous hands of craftsmen who re-ally know how to display and utilize it
How can we stop the charade Forstarters demand that corporate socialresponsibility puts people first puts de-velopment back into sustainable devel-opment and ensures that precaution-ary guidelines safeguard people andcommunities from the havoc wreakedby radical green policies Insist that alldecisions be based on sound peer-re-viewed science and solid evidencemdashnot on hysterical claims and shrillrhetoric by activists regulators andjournalists who reward pseudo-scien-tific soul-mates and pillory any scien-tists who dare disagree with them
Next urge principled regulators andjournalists to investigate these compa-nies and investor firms for self-servingarrangements and breech of fiduciaryduty Demand that the companiesfirms and activist groups open theirbooks and provide full disclosure oftheir meetings contacts and monetaryand other relationships
Last in this era of high-minded re-form prevail upon legislators to changethe law to make these groups subjectto the same false advertising laws andthe same standards of transparency andaccountability that activists insistshould govern for-profit corporationsUnbelievably right now these ideo-logues are mostly exempt
The world will thank you For it willbe a better safer more ethical placemdashespecially for energy consumers retir-ees and the worldrsquos poor
Paul Driessen is a senior fellow for the AtlasEconomic Research Foundation in Fairfax VA This
article is based on his recent white paper lsquoBeyondPetroleummdashor Beyond Probityrsquo which can be read
in its entirety at wwwcdfeorgdriessenhtm
BPrsquos total six-year
investment in renewable
technologies was $200
millionmdashthe same
amount it spent on the
lsquoBeyond Petroleumrsquo
advertising campaign
15MARCH 2003
E V I E WR
FOR three years Reputa-tion Measurement Ltd andThe Age and The SydneyMorning Herald have been
trying to impose their political agen-das on Australiarsquos top 100 corpora-tions They think that Australiarsquos cor-porations should be good citizens andthat by measuring what they think itmeans to be a good citizen they canchange corporate behaviour
Westpac ranked number one on the2002 Index and rated well in everycategory Flight Centre ranked num-ber one on financial performance but47 overall It was in the doldrums inevery other category including beingranked 99 on environment On thesurface this seems very strangemdashFlightCentre manages shopfront travel agen-cies The reason for this bizarre resultwas not hard to find
Reputation Measurement sug-gested that lsquocompanies seeking to dem-onstrate their worthiness as sociallyresponsible organizations are most suc-cessful when they widen their tradi-tional business stakeholder base to in-clude community stakeholdersrsquo Fur-ther lsquo[i]nvestors and consumers are in-creasingly making decisions based onlonger-term issues linked to a com-panyrsquos capacity to contribute to a sus-tainable futurersquo In other words theReputation Index is an instrument foradvancing a number of political agen-das corporate social responsibilitystakeholder capitalism and sustain-ability
For example corporate social re-sponsibility suggests a common agree-ment about what is good Whose defi-nition of good is to be believedmdashtheelectoratersquos or the activistsrsquo In a lib-eral democracy the rules are set by aconsensus that determines not so muchwhat is good corporate behaviour but
The Good Reputation Index 2002A Tale of Two Strategies
GARY JOHNS
what is and what is not acceptablebehaviour The Index is an exercise incapturing the reputation agenda andusing it to regulate corporate beha-viour
Stakeholder theory suggests that allinterests in an enterprise compete toobtain benefits from the enterprise butthat none has priority It is in effectasking lsquoin whose interests should theenterprise be runrsquo It assumes that so-ciety grants an enterprise the right toexist The community through its law-makers may grant licences and certainprivileges in return for the enterprisecomplying with the law It does notlicense stakeholders at large to imposetheir views on the corporation
Sustainability refers to ecologicalsustainability and ecological sustaina-bility is premised on the notion of lim-its to growth based on limits to resour-ces It argues that natural resources arebecoming scarcer It ignores the his-tory of technological innovation of-ten promoted by competition betweencorporations and the fact that such in-novation has extended physical re-sources in ways untold
An analysis of the 2002 Index re-veals that those corporations whosescore improved massively between2001 and 2002 did so because they didnot participate in 2001mdashthey wererated anywaymdashbut did so in 2002Conversely those whose score plum-meted in 2002 did so because they par-ticipated in 2001 but not in 2002Moreover the corporations who rosemassively in the ranks did not changetheir behaviour they just filled out theforms better
Greenpeace were very aggressive intheir attitude to corporations lsquoTo en-able us to verify your responses pleaseprovide us with further supportingdocumentation If hellip we are unable
to verify your response we will defaultyour response answer to a ldquodonrsquot knowrdquowhich will be marked and downgradedaccordinglyrsquo Unfortunately those ofwhom we would expect bettermdashforexample The Brotherhood of St Laur-encemdashalso penalized non-respon-dents As the technique was used byalmost all of the research groups thiswas presumably a deliberate strategy ofReputation Measurement Ltd
More disconcerting were reportsfrom corporations of the researchgroups touting for business by ringingfirms and offering their services to helpfill out the questionnaire Althoughthe level of disclosure has increasedsince the 2001 survey the touting con-tinued
The Index was published in Octo-ber 2002 obviously to coincide withthe reporting season and in the hopethat shareholders would use the Indexto seek changes to corporate behav-iour A sample of the major gainers andlosers on the Index reported no men-tion of the Index More importantlythere was no discernible impact onshare prices
The good news is that the Indexfailed miserably to achieve its objec-tives The bad news is that enough cor-porations played along to keep it alivein certain media and academic circlesIt was a chance for self-appointedNGOsmdashwho provided the ques-tionsmdashto regulate corporations bypublishing a list of good capitalists andbad capitalists Every corporation thatparticipated in the Index should thinkcarefully about whether it can justifythe agenda to its shareholders
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
16 MARCH 2003
E V I E WR
Tomorrowrsquos Reform
RALPH Waldo Emersontold us that lsquoa foolish con-sistency is the hobgoblinof little minds adored by
little statesmen philosophers and di-vinesrsquo and enjoined us lsquoto speak whatwe think today in words as hard ascanon balls and tomorrow speak whattomorrow thinksrsquo While statesmenshould not persist with known errortheir wanton inconsistency makespolicy formulation confoundedly dif-ficult
When he asserted that lsquoWhat de-termines the course of a nationrsquos eco-nomic policies is always the eco-nomic ideas held by public opinionrsquoLudwig von Mises must have hadeven less confidence in little states-men His pupil Friedrich von Hayekurged Antony Fisher not to enterpolitics but instead to found think-tanks which with fact and argumentwould change public opinion
Even among liberalismrsquos oppo-nents few today argue that Misesrsquoand Hayekrsquos ideas and Fisherrsquos liberalthink-tanks did not lead the 1980sand 90s almost world-wide liberal re-vival Why would they when bymuch the same means Fabian So-cialism had brought the welfare stateto Western nations In neither trendhowever were politicians the mereagents of popular opinion Especiallyin democracies political leadersrsquo ca-pacities to ignore it are indeed mod-est but their abilities to influence itare very much less so Even SaddamHussein works hard at influencingIraqi opinion Can we hypothesizethat the ways that leaders use theirinfluence distinguish tyrants fromdemocrats and the purposes forwhich they use it distinguish politi-cians from statesmen
Liberalismrsquos headlong chargethrough the corridors of power could
JOHN HYDE
arguments could have been em-ployed are nonetheless being de-fended by appeal to popular miscon-ceptions of the sort that PaulineHanson the Democrats and Greensactually believe Unless the majorparties have had a radical change ofheart they believe differently
Take the proposed Free TradeAgreement (FTA) with the UnitedStates Trade experts are not of onemind about its net worth My quar-rel is therefore not with the FTAitself but with the Governmentrsquos de-fence of it If the FTA will bring netbenefits then these will come mostlyfrom improved access to Americangoods and capital our own reductionof anti-competitive regulation ofdrugs medical insurance performingarts professional services textilesrural commodities etc and the dy-namic advantages of mixing it withthe Yanks But the government ispromoting the FTA almost solely inmercantilist (exports goodimportsbad) terms
To treat foreign goods servicesinvestment and ideas as an invasionparodies voluntary exchange whichdoes not happen unless both partiesbenefit The Government trumpetsa fact that nobody disputes namelythat it pays to sell into the best pay-ing markets but says nothing to edu-cate us in the advantages of buyingwell from foreigners as well asneighbours Once long ago Howardcriticized Pauline Hanson for her xe-nophobia That day he seemed to un-derstand the benefits of exchangewith foreigners
Until recently Australia hadbeen insisting that the only way toworld trade reform was via the mul-tilateral processes of the World TradeOrganisation and currently theDoha round A bilateral FTA with
not have proceeded without leaderssuch as Margaret Thatcher and ZhouEnlai who changed public opinionas did Bob Hawke in Australia Nowhowever liberalismrsquos charge hasslowed even in some places beensomewhat reversed Canberra hasnot been immune from trends thatsee politicians no longer so firmly re-sisting demands for economic privi-leges or as others see the same phe-nomenon no longer so blindly fol-lowing economic rationalism
Very poor economic decisionsaboundmdashrejection of the Trebeck re-port on petrol pricing preference forethanol production extending mo-tor and textile protection rural sub-sidies taxpayer contribution to theDarwin-to-Alice Springs railwayetc etc But there is also progressThe pride that John Howard takesin the fact that Australians are lessdivided against each other is surelyjustified The hugely importantlabour welfare and arguably also thehealth-care markets have been im-proved Budget balance has beenachieved albeit with high taxes Al-though net legislative and adminis-trative progress toward a more lib-eral more open more efficienteconomy has dwindled it would stillbe fair to say it has not been reversed
Our statesmenrsquos words as hard ascannon balls however that is thoseintended to enlighten rather thanappeal to public opinion are beingreserved for the Iraqi conflict In con-trast in the economic arena we areno longer encouraged to accept anyunwelcome truths Even when de-fending measures that I am morethan content to accept as beneficialthe government seems to select itsargument at best randomly ignoringprinciples of economic efficiency andequity Policies for which textbook
17MARCH 2003
E V I E WR
the US may or may not result in anet increase in trade flows but if itis not a meaningless piece of paperdelivering only political benefits tothe Government it will certainlydivert trade from our other tradingpartners How will China KoreaJapan etc react to losing their lsquomostfavoured nationrsquo status Such ques-tions should be addressed in termsthat do better than reinforce our xe-nophobic prejudices
By appealing to Hansonite mis-conceptions the Government mayand probably will improve itschances of bringing forward a policythat I am more than willing to ac-cept it believes is a good one It isafter all the recommendation of theDepartment of Foreign Affairs andTrade However by so doing it is re-inforcing delusions it must overcomefor further economic reform Whatis more I am reminded of a quip thatI am sure the PM has also heard lsquoNoGovernment is really dangerous un-til it believes its own bullshitrsquo Poli-ticians and I suspect bureaucratsalso are all too prone to believingtheir own utterances Unwilling toadmit their deceptions even whenspeaking in house they quickly con-vince themselves of the truth of theirown and colleaguesrsquo loose rhetoricand worse These are the people whomust negotiate the Agreement whilelooking over their shoulders at anAustralian electorate whose alreadystrong mercantilist tendencies havebeen reinforced by the people bestplaced to disabuse them The poten-tial cost is obvious
The US Free Trade Agreement isbut an example of a tendency thatought to be worrying In debateabout refugee policy motor fuel sup-ply single-desk wheat sales the sup-ply of medical practitioners and pres-ervation of the environment has notthe Government employed argu-ments that are not compatible withits professed liberal philosophy Hasit not seemed that it does not knowthe standard liberal responses to theself-serving demands of vested inter-ests and bigots With due respect to
Emerson consistency allows deci-sions to be made without the neces-sity of thinking every one throughfrom fundamental principles whichnobody in authority has the time orthe mental agility to do
Politically disinterested educa-tors such as the IPA can often callsome pretty good minds to their aidEven so when the Government it-self fosters public misconceptionthey cannot be expected to undo theerror The single greatest sin of thecurrent government is that it is notbuilding opinion for tomorrowrsquos re-form Why not
I suggest because it is politicallydifficult Whereas calls to resist out-siders appeal to deeply ingrainedtribal instincts calls to uphold thecivilizing and wealth-building insti-tutions that afford protection tostrangers and admit their goods ser-vices persons and ideas make nosuch visceral appeal These codes aremuch later developments in themarch of mankind and to manypeople they remain counter-intui-tive They must therefore be de-fended by sustained argumentHayek knew that politicians whosetime horizons in the absence ofknown crises tend to be the nextelection would (to use Howardrsquosown expression) seldom have the
tickers He turned therefore to theless articulate but far more resolutethink-tanks
It is relatively easy to appeal tothe sort of Chauvinism that sur-rounds sporting activity and argu-ments about refugees and meat quo-tas When a Prime Minister talks ofsovereignty guaranteeing our bor-ders or the interests of our exportersor domestic manufacturers he is notnecessarily wrong but his task iseasier than that of defending rulesthat permit voluntary co-operationamong strangers The principle thatdefends the non-unionistrsquos right towork the consumerrsquos right to buy for-eign goods and everyonersquos right tohear alien ideas and which shouldprotect racial and religious minori-ties from exclusion still needs hisleadership
Unless statesmen recognize theinconsistencies that arise not fromthe changed opinions that con-cerned Emerson but from trying tobe all things to all men they arelikely to govern in ways that are un-fair and inefficient If the public doesnot recognize consistency then thelsquolittle statesmenrsquo may find them-selves compelled to yield to the de-mands of the more articulate vestedinterests In such a case Heaven helpthe inarticulate who will be effec-tively disenfranchised But the insti-tutions which when consistentlyapplied give us liberty equity andprosperity are not strongly intuitive
They nevertheless distinguishAustralian society from say Iraqi so-ciety They give us the economicstrength to defy tyrants and they giveus a land worth defending They arecertainly not in danger of disappear-ing but they are in danger of beingeroded Lead us Mr Howard
While statesmen
should not persist
with known error
their wanton
inconsistency makes
policy formulation
confoundedly
difficult
API
John Hyde is a Senior Fellow with the Institute ofPublic Affairs His book Dry In Defence of
Economic Freedom was published by the IPA in November 2002
18 MARCH 2003
E V I E WR
DESPITE the obsessivepublic attention to pricesat the petrol pump thepetroleum-refining sector
rarely registers on the media radarscreen This is unfortunate as the sec-tor fuels most movement of peopleand goods in our economy and soci-ety And it is in trouble
It is fragmented stunted and sur-vives by abjuring profit and mortgag-ing its future Without radical reshap-ing it is likely to wither leaving usexposed to the vagaries of the inter-national refined-products market
FEATURES OF THE AUSTRA-LIAN REFINING SECTORThe first thing to note is that by in-ternational standards Australia is arelatively small player The most re-cent international figures show thatour total output of refined productsin the third quarter of 2002 was 89million tonnes This compared withOECD production of 486 milliontonnes including US production of202 million tonnes Total Australianrefinery capacity of 870000 thousandbarrels per day (bpd) compares withthe figures for China (53 million)South Korea (26 million) and Singa-pore (11 million) Total regional re-fining capacity and production con-tinues to grow as Australiarsquos stagnatesIn the five years to 2000 regional out-put grew by 22 per cent
Second the structure of the indus-try is weak The dispersed geographi-cal distribution of our refining sectorreflects its historical developmentwith each State capital city support-ing one or more refineries Over thelast two decades the number of ma-jor oil companies operating in Aus-
Petroleum RefiningRationalization or Atrophy
JIM HOGGETT
tralia has shrunk from nine to fourAlthough the number of players hasmore than halved the number of re-fineries has reduced by only two fromten to eight The average capacity ofAustralian refineries is around100000 bpd New refineries in theregion are generally significantlylarger Singaporersquos largest has a capac-ity of 375000 bpd
Given the open Australian mar-ket our ex-refinery prices are virtu-ally set by the major exporters in theregion who are also operating on tightmargins Moreover the proportion-ately heavy demand for diesel in SEAsia tends to generate a persistentsurplus of gasoline which is availablefor export to Australia at discountedprices
The pattern of relatively smallscattered refineries is no longer opti-mal in an open market in which weare a price-taker
Third despite its sub-optimalstructure the Australian refining in-dustry is not grossly inefficient Oneindicator is the value added per em-ployee which is in the top five per-formers in the Australian manufac-turing sector
The cost competitiveness of Aus-tralian products is indicated by thefact that we have the cheapest ex-taxprice of petrol in the OECD Perfor-mance comparisons with the rest ofthe AsiandashPacific however suggestthat we lag the average efficiency inthe region And the best performersin the region are superior to our best
Finally the financial performanceof the industry is poor gross annualrevenues for the whole industry in-cluding marketing were $32 billionin calendar year 2001 For the five
years to 2001 the return on assets forrefining and marketing averaged 38per cent and was negative in the lasttwo years The indications are that2002 may have been a better year forthe industry but that the return onassets remains well below the cost ofcapital Over the four years to 2001the fixed asset base of the industrydeclined by almost 6 per cent to $12billion even after $24 billion of newinvestment in the period
This is clearly unsustainable andit raises the question Why is no-oneleaving the game
There are perhaps four main rea-sonsbull First the industry has engaged in
continual productivity improve-ment allowing it to keep withinrange of ruling prices
bull Second each refiner hopes thatsomeone else will blink first sothat the waiting will pay off
bull Third the costs of leaving thetable the exit costs are very highbecause of the nature of the prod-uct and the long occupancy ofmost sites
bull Fourth even while profitability islow the industry has generallybeen marginally cash positive
These add up to a big lsquofirst mover dis-advantagersquo
FUTURE TRENDSClearly petroleum will remain ourmost important energy source Petro-leum products constitute 52 per centof Australiarsquos final consumption ofenergy Liquid petroleum fuels pro-vide more than 95 per cent of Aus-traliarsquos transport needs There are nomajor foreseeable influences that willaffect this pattern dramatically There
19MARCH 2003
E V I E WR
have been major advances in fueleconomy and these will no doubtcontinue But more than counterbal-ancing this is the inexorable growthin demand for personal mobility andfor goods from distant parts Althoughgrowth in energy consumption mayslow down in Australia we will notbe reducing our consumption to anysignificant degree
Our export role will also be lim-ited Australian export volumes havetended to be steady over recent yearsand future new export potential forpetroleum products seems likely to beminimal China and India have re-cently become major exporters par-ticularly of gasoline Refinery capac-ity is planned to continue to growstrongly in the region even thoughthere is already significant excessThe decline in capacity utilization inmajor exporters such as Singaporewill make exporting difficult Further-more it is expected that productspecifications in Asia the US andEurope will converge in the comingyears thereby eliminating niche ex-port opportunities
The choice we face is what to doabout our essentially import-compet-ing industry
INCENTIVES NOT STRONGWhile there are strong pressures forthe industry to restructure there islittle incentive to invest for this pur-pose Investments in the Australianrefining industry have to competewith many alternatives across theglobe
Lack of sufficient return is thesingle biggest deterrent to investmentin the industry at present But thereare othersbull There is no prospect of strong growth
in demand to offset the substantialrisks associated with large new in-vestments
bull The persistent refinery capacity over-hang in our region will keep sus-tained pressure on our margins
bull The corporate taxation regime is nowless favourable than hitherto after thesubstitution of effective-life foraccelerated depreciation The
competing Singapore option offersa three-year write-off
bull The regulatory cost burden is grow-ing This applies to all Australianindustry but is potent in overseascomparisons Tighter fuel stan-dards environmental restrictionsintervention in prices and indus-trial law are some of the factors
bull There is increased sovereign riskstemming from inconsistent regula-tions We have eight parliamentswhich enact inconsistent laws Acurrent example is the higher fuelstandards applied in Western Aus-tralia
bull The sovereign risk also arises fromuncertainty in the regulatory processThere are unpredictable changesof direction (the deferral of thediesel sulphur excise differential[DSED]) and uncertainty in theface of conflicting interests (willthe Government act on ethanolcontent)
All these factors enter into the riskreward calculation When the re-wards are minimal the risks take onan extra dimension
WHAT INDUSTRY STRUC-TURE DO WE NEEDThe short answer is we cannot knowin detail
In the Downstream Petroleum In-dustry Framework 2002 the Depart-ment of Industry Tourism and Re-sources set out a broad vision
bull A preference for market-based so-lutions
bull A strong efficient environmen-tally responsible industry supply-ing most of the nationrsquos needs forproducts
bull Regulation only for market failureor national interest objectives
bull Regulation to be transparent andconsistent
bull Reform and regulation to maxi-mize long-term community ben-efitThis vision has some prescriptive
elements but the Government hasmade it clear that it will not nomi-nate an optimal number of refineriesor a pattern of production
The general public would probablyopt for a structure that guaranteedlower more stable automotive fuelprices Unfortunately they cannothave both in the short term
In fairness the investors in the in-dustry are the ones entitled and bestfitted to determine its future In theextreme they will do it anyway bypersisting or walking away Generallyspeaking they will seek to maximizetheir returns and thus promote themost efficient use of resources
Australian refineries are not inef-ficient but that is not the point Ourmarket is open so the competitionwe face is the best of the overseas per-formers often with more favourabletax and subsidy regimes
Nor is this simply a question ofclosing the smallest refineries A bet-ter approach might well be to allowrefining companies to concentrate onwhat they do bestmdashperhaps throughrefinery alliances Caltex and Shellhave co-operated in this way in Thai-land
The fact is that the detail of thedecisions can only be made by theindustry relatively free of governmentdirection The series of detailed de-cisions entailed will determine theoverall structure of the industry
COMPETITION REGULATIONCAN IMPEDE RESTRUCTURINGThe relevant provision of Section 50of the Trade Practices Act (TPA) pro
While there are
strong pressures for
the industry to
restructure there is
little incentive to
invest for this
purpose
s
20 MARCH 2003
E V I E WR
hibits mergers or asset acquisitionsthat would have the effect or belikely to have the effect ofsubstantially lessening compe-tition in a marketIt is both potentially and in prac-
tice an extremely restrictive provi-sion The Australian Consumer andCompetition Commission (ACCC)has expressed concern at concentra-tion in the sector in applying the pro-vision
The ACCCrsquos concerns seem ex-aggerated in the light of history Butthey are complemented by a persis-tent public misapprehension thatlarge petrol price swings equal profi-teering This perception has been soexploited for political advantage andmedia excitement that it is now al-most impossible for the truth toemerge
The future intensity of competi-tion in this industrymdashif it is allowedto restructuremdashshould not be indoubt Any rationalization would inall likelihood still leave strong do-mestic competition in each majorproduct category perhaps with fewermore efficient production units
The market is also contestableThere would be numerous potentialimporters and many independent re-tailers High margins would be rap-idly eroded by competition As re-cently ruled in the Boral case mar-ket reality is more conclusive than aperception of anti-competitiveness
Proposed mergers have been per-mitted in the past but the process isslow and permission is generally onlygranted with severe conditionsNonetheless there is a strong case forallowing restructuring within theterms of the merger provisions
AUTHORIZATION COULD BETHE KEYIf Section 50 of the TPA is an im-passable barrier then the authoriza-tion provisions of the Act could bethe way to greater efficiency The testsunder these provisions require a pub-lic benefit which outweighs the com-petition detriment The ACCC listsfostering business efficiency industry
rationalization and import-competi-tiveness as important public benefits
There is a strong prima facie casethat rationalization of the industrycould satisfy these tests It wouldallow greater scale of productioneconomies in distribution and closureof the least efficient production units
But the authorization process isslow and the onus for demonstratingthe public benefits rests on the appli-cant Slow process can amount to ef-fective rejection
POLICY OPTIONS AND REC-OMMENDATIONSIf government cannot help the indus-try to adjust it should allow it to ad-just by supporting sensible changeThis would involve both improving
the operating environment throughregulatory reform and altering thebalance of competition regulation sothat the industry could restructurevoluntarily The CommonwealthGovernment has already indicated awillingness to support both but hasnot yet delivered
The ball would then be in theindustryrsquos court to bring forward newproposals if a new policy environmentcould be created This could all hap-pen within a very broad strategicframework agreed with the industrywhereby Australia continued to besure of sufficient refining capacity tomeet a severe international fuel short-age
We therefore recommend thatbull The Commonwealth Govern-
ment provide explicit indicationto the ACCC of the public ben-efits it sees from the rationaliza-tion of the refining sector In par-ticular joint ventures should becontemplated
bull The ACCC give sufficient weightto the public interest benefits ofrestructuring to allow rationaliza-tion of production facilities
bull All governments reduce distortingfuel subsidies and taxes that favourparticular sectors or fuels
bull The State Governments act im-mediately to harmonize their regu-lation of the industry and agreenot to issue any new inconsistentregulation
bull More specifically the States havea single set of fuel standards withwhich refiners can reasonablycomply withdraw from all formsof price regulation and refrainfrom thwarting or distorting therationalization process
bull Governments generally not intro-duce new regulations mandatingthe use of alternative fuels
CONCLUSIONThe choice for the industry appearsto be between accelerated rational-ization and atrophy The process ofchange is something which the indus-try must plan and effect The task isnot impossible but it will require theactive support of government at alllevels For the time being there is anexpressed willingness at the Com-monwealth level but no real solu-tions
If nothing is done the refiners willcontinue to stumble along in a regu-latory fog and will invest only whenobliged to do so by changing fuel stan-dards They will become increasinglyvulnerable to low-priced imports andeventual closure
Jim Hoggett is a Senior Fellow at theInstitute of Public Affairs
If Section 50 of the
TPA is an impassable
barrier then the
authorization
provisions of the Act
could be the way to
greater efficiency
API
Last week the Government tabled 22 volumes of theCole Royal Commission into the Building andConstruction Industry Former Court of Appeal judgeTerence Cole made 392 specific findings of unlawfulconduct and in the confidential final volumerecommended that 31 individuals be referred for possiblecriminal prosecution As was to be expected theconstruction unions claimed that the report was a witch-hunt and people who should have known better claimedthat Cole was biased
The anti-union allegations were never very plausiblegiven that most unions had refused to cooperate withthe Commission and had even boycotted theCommissionrsquos special conference on occupational healthand safety As things have turned out one of their ownhas fatally undermined the unionsrsquo case No less anauthority than the National Secretary of the ConstructionDivision of the CFMEU has unwittingly confirmed thatCole is right In what was no doubt an unguardedmoment John Sutton admitted to a Melbournenewspaper that ldquovirtually everything we do breaches partof this Actrdquo Suttonrsquos admission means that Colersquosdescription of a largely lawless industry can be disputedat the margins but not credibly denied The problemsof the industry have been established beyond credibledoubt and the question now is what needs to be doneabout it
Nothing says the CFMEU because itrsquos alright tobreak the law in the best interests of the working classLeading union officials take the view that in a toughindustry only wimps take the law seriously The newsthat ldquoonlyrdquo 31 individuals had been recommended toface criminal charges was greeted with somethingapproaching jubilation as if the industryrsquos code of silencebased on fear had largely kept the Royal Commission atbay
As the Australian Financial Review commented in aneditorial the unionrsquos dismissive reaction to Colersquos report
ldquospeaks as loudly as his damning findings of entrenchedlawlessnessrdquo Imagine the reaction if a royalcommissioner had identified 31 people in the financeindustry or the steel industry for possible criminalcharges This would rightly be regarded as the sign ofan industry in crisis demanding urgent governmentintervention
Change wonrsquot be easy in an industry conditioned tothink that might is right Change which shifts powerfrom one unscrupulous group to another will not bereform As Grocon has discovered the first company toldquobuck the systemrdquo is liable to heavy-duty industrialpayback No one wants to be the first to change butchange is necessary in the national interest
In 2002 the Victorian construction industry aloneaccounted for 17 per cent of all days lost through strikesThe West Australian construction industry accountedfor another 8 per cent of the national strike tallyConstruction is a $40 billion a year industry comprisingnearly six per cent of GDP and employing nearly500000 Australians Due to over-manning demarcationdisputes and chronic stoppages labour productivity incommercial construction averages 13 per cent less thanin home building Plastering the same wall in the sameway costs 40 per cent more in a high rise building thanin a standard house Just raising labour productivity incommercial construction to the home building standard(let alone the 50 per cent increase needed to match NorthAmerican levels) would mean according to Econtech aone per cent drop in the cost of living a one per centincrease in GDP and $23 billion in benefits toconsumers workers and taxpayers every year
Still change is about decent Australian values notjust a more efficient industry Workers donrsquot like latenight house calls compulsory attendance at demos anddays spent sitting in the shed to make an industrial pointany more than bosses Threats of violence contempt forcourt and commission orders mob rampages when one
Restoring the Rule of Law in theConstruction Industry
Tony Abbott MHR
s
As this issue of the IPA Review was at the press we were alerted to the delivery of the following speechby the Minister for Employment and Workplace Relations The paper marks a seminal change in the
governmentrsquos approach to systemic corruption in the construction industry and isanother major step in the reform of workplace relations in Australia
SI-1MARCH 2003
IPA REVIEW SPECIAL INSERT
side doesnrsquot get its way habitual failure to honouragreements and routine harassment of people exercisingtheir legal rights are not acceptable in modern Australiaand cannot be excused even in a good cause
Breaching ldquobourgeois lawrdquo may not matter tomilitant activists but few others take such a self-indulgent view Itrsquos said that ldquooppositions can afford tobe irresponsiblerdquo but no government or alternativegovernment can accept the principle of optionalobedience to the law of the land No less than the HowardGovernment the federal Labor Opposition and the stateLabor Governments understand the dangers of playingpolitics with the rule of lawmdasheven theauthority of laws they might preferto change such as the federal WorkplaceRelations Act
The rule of law is not asmorgasbord from which a fewfavoured items can be chosen and therest ignored Freedom under the lawrequires respect for the law generallynot just the laws individualspersonally support Obedience to thelaw is not a question of choice It is arequirement of civilisation because thelaw is our guarantee of equaltreatment after a fair hearing ldquoBe youever so high the law is above yourdquoThis reproach hurled at the Stuartkings has rightly echoed through thecenturies as a warning against theconceits of office and the arrogance ofpower regardless of the cause in whichitrsquos exercised
After last weekrsquos meeting of theWorkplace Relations MinisterialCouncil of the Council of Australian Governments stateand territory ministers were keen to declare in acommuniqueacute ldquothere was unanimous agreement thatunlawful behaviour in the building and constructionindustry is not acceptablerdquo This was an importantaffirmation of the rule of law in circumstances wheresome Labor ministers might have been tempted to putpolitics ahead of principle
Unfortunately the state and territory ministerssupported more powers for the Australian IndustrialRelations Commission to settle construction industrydisputes In fact the Commission already has power tosettle disputes Whatrsquos missing is effective power toenforce agreements The issue is not settling disputesThe issue is enforcing the law
The construction industry typically conducts itselflike this A certified agreement is in place including anagreed dispute resolution procedure Unions identify agrievance often a spurious safety issue Agreed disputeprocedures are not followed and a strike ensues eventhough strikes outside ldquobargaining periodsrdquo areldquounprotectedrdquo and theoretically subject to damagesorders At that point employers often ask theCommission to end industrial action but instead ofordering an immediate return to work because anagreement has been breached the Commission willtypically seek to conciliate on the basis of the ldquomeritsrdquo
of the issue After a couple of dayswith costs escalating and liquidateddamages looming the employerinvariably agrees to rectify the matteralleged and to pay increasedallowances (including pay for days onstrike) At this point the Commissionorders a return to work on the basisof the agreed settlementmdashwhich lastsonly until the union decides on itsnext move
The union has ignored the law andbroken its original agreement buttypically suffers no adverseconsequences whatsoever Theemployer has been manoeuvred intoconceding most of a demand thatshould never have been made Afaccedilade of legality conceals a travestyof unionism and a travesty of justiceNearly all construction industrystrikes are unprotected and potentiallyunlawful under section 170MN of theWorkplace Relations Act Even so
employers nearly always opt to pass the costs ontoconsumers while existing arrangements for gatheringinformation launching prosecutions and imposing finesdonrsquot work well anywhere but hardly work at all in anindustry where giving evidence against the unions isthought to mean commercial suicide
The construction industry is a classic case not ofmarket failure but of regulatory failure The fact thatthe construction industry does not face potential importcompetition limits its exposure to market discipline Stillthe main reason why unions can get what they want frombusiness and business can get what it needs from haplessconsumers is the absence of independent policing andenforcement of the industrial equivalent of fair tradinglaws To an extraordinary degree in this industry the
SI-2 MARCH 2003
IPA REVIEW SPECIAL INSERT
The rule of law is nota smorgasbord from
which a few favoureditems can be chosenand the rest ignoredFreedom under thelaw requires respectfor the law generally
not just thelaws individuals
personally support
request documents but they canrsquot compel witnesses toanswer or demand that material be produced Althoughit is a criminal offence under the Workplace Relations Actto hinder workplace inspectors the Cole report notedthat no prosecutions have yet been launched despiteevidence that Office of the Employment Advocateinspectors have been abused had objects thrown at themand their property damaged It has been commonpractice for the arrival of OEA inspectors to lead to workstoppages and even site invasions in a bid to thwart anddemoralise an independent investigator not susceptibleto the unionrsquos usual weapon of commercial retaliation
One of the problems with theworkplace relations system is theassumption that parties will enforcethe law against each other This worksup to a point in industries whereworkplace parties are more-or-lessevenly matched and the issues are theworkplace equivalent of an argumentbetween neighbours over the heightof a fence It completely breaks downwhen one side has an effectivemonopoly over the supply of labourand disputes resemble a more-or-lessnormal family telling the house fullof footballers next door that the partyrsquosover Expecting contractors to enforcethe law against the CFMEU is likeexpecting people in the street to makecitizenrsquos arrests hence Colersquos principalrecommendations are an AustralianBuilding and ConstructionCommission to investigate prosecuteand enforce the provisions of a beefed-up industry specific workplace
relations actYesterday Cabinet decided to support Colersquos key
recommendations First the Government will seek aseparate act governing workplace relations in theconstruction industry providing for secret ballots beforestrikes compulsory cooling off periods after extendedstrikes and damages awards in the event of unprotectedindustrial action Second the Government will establisha new law enforcement agency for the industry withpowers to compel witnesses to testify bring prosecutionsand enforce judgments and with sufficient on-the-ground presence to police CBD building sites Thirdthe Government will establish a Safety Commissionerto monitor federally-funded construction sites to try toensure that these become industry models Fourth the
s
commissions lack sufficient power the courts lacksufficient speed the employment advocate lacks sufficientauthority and the police lack sufficient interest
Not before time the Cole Commission has acted as agiant searchlight probing the dark underside of thispotentially great Australian industry It confirmed whatpolicy makers had long suspected and what influentialinsiders knew but had always tried to deny or explainaway that the industry operates under the rule of thejungle and that there will be no improvement until thepeople who work in it understand that the law has to betaken seriously Legislative institutional and structuralchange will start to mean somethingwhen law breakers in this industry arecharged convicted and punished likelaw breakers everywhere else A fewsalutary bars of that old song need towaft over construction sites ldquoI foughtthe law and the law wonrdquo
Late last year in response to theRoyal Commissionrsquos first report thefederal Government set up theBuilding and Construction IndustryInterim Task Force The Governmentrsquosbrief to the Task Force is to ensure zerotolerance of industrial law-breakingThe Task Force is not primarily toenforce the tax laws or the safety rulesbecause other bodies exist for this(although the Task Force will certainlyshare information with them) TheTask Force is to investigate and enforceWorkplace Relations Act prohibitions oncoercion unprotected strikes strikepay and breach of industrialagreements So far the Task Force hasvisited nearly 300 sites launched more than 50investigations brought three prosecutions and referrednine other matters to state police the Australian FederalPolice or the Australian Competition and ConsumerCommission for further action
These are the first public prosecutions arising out ofindustrial action in the construction industry at leastsince the 1980s and are the result of a public policycommitment to law enforcement not seen since thehumiliating Clarrie OrsquoShea case in 1969 and the end ofldquopenal sanctionsrdquo Yesterday Cabinet decided to extendthe interim Task Forcersquos operations until more permanentarrangements to secure the rule of law can be established
Task Force agents have the powers of inspectors underthe Workplace Relations Act They can enter premises and
SI-3MARCH 2003
IPA REVIEW SPECIAL INSERT
The main reason whyunions can get what
they want frombusiness and businesscan get what it needs
from haplessconsumers is theabsence of inde-
pendent policing andenforcement of the
industrial equivalent offair trading laws
API
Government will insist on the application of theNational Construction Code and implementationguidelines to all significant new projects which are fullyor partly federally funded
Directly or indirectly the federal Government fundsabout $5 billion worth of construction projects everyyear and is determined to use its role as client to drivechange in the industry In essence the NationalConstruction Code stipulates that construction projectsmust take place in conformity with the WorkplaceRelations Act Under the Code and implementationguidelines the federal Governmentwill not engage tenderers whoseworkplace agreements and practicesensure a closed shop on site The TaskForce (and any replacement body) willhave full access to federally fundedsites to ensure that the law is beingobserved and workplace agreementscomplied with
For the federal Government theissue is upholding the law and tryingto tackle the ldquounion rulesrdquo culturewhich is at the heart of lawlessness inthe industry For the states the issueis whether they are prepared to refusefederal money in order to protect theclosed shop However much theymight prefer different federal laws thestates ought to accept thatconstruction projects have to complywith the law as it stands includingthe law mandating compliance withcertified agreements
State Labor governments whichhave made a point of their middle-ground credentials risk losing some$4 billion a year in federal building and constructiongrants if they side with the union movementrsquos mostmilitant minority There are likely to be limits to Laborrsquosdefence of a union whose stock-in-trade (at least in somestates) is the site invasion and the demand for paymentand which quietly reinstates organisers sacked for assaultor perjury Opposition senators will find it hard to brandas ldquoideologicalrdquo the recommendations of a royalcommission which spent 171 days in public hearingsand which pursued 11 shop stewards and 97 unionofficials to obtain their side of the argument
As Justice Cole pointed out in his report previousattempts to reform the industry have proven ineffectivedespite two earlier royal commissions and numerous
SI-4 MARCH 2003
IPA REVIEW SPECIAL INSERT
enquiries Although this Royal Commissionrsquosinvestigations seem to have temporarily checkedlawlessness in the industry a campaign is now emergingto extend the anarchic culture of CBD construction intoregional centres and the domestic housing industryThings will certainly be different this time if parliamentapproves a permanent well resourced watchdog withnew powers new personnel and new attitudes Unlikeprevious arrangements a new statutory watchdog withthe powers of a law enforcement agency should beeffective and permanent
Hundreds of people took big riskswith their commercial future and eventheir personal security to testify to theRoyal Commission It should neveragain be so hard for people in thisindustry to exercise their ordinaryrights and responsibilities asAustralian citizens They expected theGovernment to take the Commissionrsquosreport seriously and the Governmentfor its part is determined not to letthem down The Governmentunderstands that joining fights yoursquorenot prepared to win only makes badsituations worse Establishing the ruleof law in the construction industry isa challenge Australia canrsquot afford tofailSome of the worldrsquos best workersshould no longer have to put up withsome of the worldrsquos worst industrialpractices They have a right to anhonest industry where they can earna fair dayrsquos pay for a fair dayrsquos workand expect to come home uninjuredThe enduring image of this industry
should not be noisy marchers replaying the ideologicalstruggles of the 1970s and raising clenched fists againstauthorities they donrsquot like At its best the Australianindustry is capable of work which is stunningly beautifulyet intensely practical and it now needs to performconsistently on time on budget and in accordance withlaw
Hundreds of peopletook big risks withtheir commercial
future and even theirpersonal security totestify to the Royal
Commission It shouldnever again be so
hard for people in thisindustry to exercisetheir ordinary rights
and responsibilities asAustralian citizens
NOTE
The foregoing speech was first delivered as an Addressto the National Press Club on 2 April 2003
21MARCH 2003
E V I E WR
IN psychology behaviouris defined as irrational ifan action continues to berepeated despite its re-
peated failure to achieve the desiredoutcome On this definition our aidpolicy towards Papua New Guineahas been irrational
Despite over twelve billion dol-lars in Australian aid to PNG sincethat countryrsquos independence in 1975key development indicators such asliteracy rates infant mortality lifeexpectancy and real income percapita are either stagnating or dete-riorating Worse wersquove known forover a decade1
Today acknowledgement of thefailure of our aid policy in PNG hasgone well beyond the writings of in-dividual international policy analystssuch as myself to institution-spon-sored reports such as Beyond Baliwhich was released by the AustralianStrategic Policy Institute (the Aus-tralian Governmentrsquos own strategicpolicy adviser) and Papua NewGuinea on the Brink which was writ-ten by Susan Windybank and MikeManning for the Centre for Indepen-dent Studies Both reports confirmthe gross failure of Australian aidpolicy in PNG
Yet still our aid policy irrational-ity towards Papua New Guinea con-tinues While the ASPI and CIS re-ports acknowledge the gross failureof our aid policy in PNG they alsoargue that we need to continue ouraid to that country Indeed the ASPIreport argues that we should increaseour aid to Papua New Guinea Thepolicy saviour The ASPI report ar-gues that we should exert greater con-trol over our aid Not just over theform of our aid but direct interven-tion in policy and implementation inPNGmdashin essence for a return to pre-
Aid Detox for PNGPETER URBAN
independence days in PNG whereas UN-sanctioned administrator weran government in that country
Despite the mind-frame of secu-rity-focused strategists such as thoseat ASPI and the CIS (which en-dorses the aid approach advocated byASPI) the reality is that we canrsquotPNG is now independent and to ig-nore this reality would simply com-pound the problems of our past aidpolicy irrationality with irrationalityabout our political relationship withour nearest neighbour
A more interventionist aid policytowards PNG on our part as advo-cated in Beyond Bali and by HughWhite (the executive director ofASPSI) in the media might havepopulist appeal but it would haveserious adverse implications for ourrelationship with other Pacific islandcountries and even IndonesiaWorse it would give succour to theviews of our east Asian critics (suchas Malaysian PM Dr Mahathir) whoclaim that Australia continues toharbour colonial aspirations
We have to accept that to be suc-cessful aid policy must not just helpreduce mass poverty it also has to doso as a guest in the aid recipientcountry To do otherwise is not aidbut imperialismmdashwhether inten-tional or not
A more interventionist approachto aid policy in PNG would also givethe current corrupt political elite inPort Moresby a rallying point againstus and an excuse to delay changingtheir own policies Neither Austra-lia nor PNG can afford any furtherdelays to policy reform For us to givePNG politicians yet another excuseto delay reform would be not onlyirrational it would be inexcusableWhile our aid continues so will thecorrupt elite that is at the heart ofPNGrsquos problems Until we send themessage to the PNG political elitethat we are prepared to stop ouraidmdashto put them on aid detoxmdashwewill continue to waste our aid in thecorruption that is PNG politics Itmay be hard to accept but the sadreality we face in PNG is that no aidmay prove to be good aid at least inthe short to medium-term2
NOTES
1 Peter Urban lsquoOne Clear ObjectiveNo Clear Approachrsquo IPA Review1997 Vol 50 No 1
2 With Iraq also likely to require verysignificant Australian aid fundingover the next few years the Gov-ernment will need to review our aidprogram as part of the 2003-04 fed-eral Budget A decision to suspendaid to PNG could be taken as partof that review
Peter Urban is former chief economist with theDepartment of Foreign Affairs and Trade
We have to accept
that to be successful
aid policy must not
just help reduce
mass poverty it also
has to do so as a
guest in the aid
recipient country
API
22 MARCH 2003
E V I E WR
IN his speech to the Na-tional Press Club on theprospect of war with Iraqand the case for disarma-
ment Prime Minister Howard statedthat Australia will play a significant hu-manitarian role in Iraq
If so the Howard Government needsto evaluate carefully the foreign-aid non-government organizations (FANGOs)which it funds to carry-out this humani-tarian programme Many FANGOshave made it clear that they do not sharethe Australian Governmentrsquos objectivesand values in Iraq Moreover some donot agree with the Governmentrsquos over-all aid policies in general
THE COALITION OF THEUNWILLINGIn the lead-up to latest Gulf War some30 Australian aid agencies put theirnames to an Open Letter to the PrimeMinister organized by the AustralianCouncil of Foreign and Overseas Aid(ACFOA) The aim of the letter was tolsquospeak out against war in Iraqrsquo and it ex-pressed grave concerns about the hu-manitarian consequences of the war andthe effects of the existing sanctions1 TheFANGOs that signed the letter wereOxfam Community Aid Abroad WorldVision Australia TEAR AustraliaUnion Aid Australia - APHEDACaritas Australia National Council ofChurches Australian Council for For-eign and Overseas Aid Save the Chil-dren Australia CARE Australia OzGreen United Nations Association ofAustralia Family Planning AustraliaMercy Works Marist Mission CentreAustralia Every Home for Christ Bap-tist World Aid for Christ CCF Austra-lia Quaker Service Australia Austra-lian Lutheran World Service AustralianRelief and Mercy Services AnglicanBoard of Mission AUSTCARE Com-munity Development and Health
Irreconcilable DifferencesDON DrsquoCRUZ
Hussein have been virtually ignored isa searing indictment of the warped ide-ology feeble analysis and moral blind-ness of the sector For them now to re-discover the plight of the Iraqi peopleand to invoke their name in the mediais beyond contempt
THE OXFAM COMMUNITYAID ABROAD POSITIONOf the 30 FANGO signatories to theopen letter Oxfam Community AidAbroad (OCAA) has been perhaps themost outspoken It opposed military ac-tionmdasheven with UN Security Councilapproval4 In spite of all the evidence tothe contrary OCAA was comfortablewith Saddam Husseinrsquos assurances thathe did not have weapons of mass destruc-tion5 Adopting the common policyagreed to by the other Oxfam affiliatesOCAA stated that it will not take anymoney from the lsquobelligerentsrsquomdasha quaintterm used to the describe democraticnations planning to disarm a dictatorguilty of countless human rights abuses
OCAArsquos outrage against the so-called lsquobelligerentsrsquo appears to be geo-graphically confined to Iraq OCAAappears happy to take governmentmoney from the belligerents elsewherearound the world
According to OCAArsquos ExecutiveDirector Andrew Hewitt refusing totake money from the belligerents wasdone to lsquoprotect its impartialityrsquo6 Thisis a very curious position from Australiarsquosarguably most political FANGOOCAA has a long track-record of beinganything but impartial or reluctant totake sides in miliary action It wasnrsquotimpartial in East Timor where it sidedwith Fretlin in its quest for indepen-dence According to its own testimonyto a Senate committee OCAA wasgiven the choice by the IndonesianGovernment between lsquoplaying politicsrsquoor delivering aid projects in Indonesia7
Group Amnesty International Austra-lia AngliCORD Australian Aid forCambodia Fund Burnet InstituteRedR Friends of the Earth PLAN Aus-tralia and Australian Volunteers Inter-national2
This open letter highlighted a num-ber of problems with the FANGOs sec-tor First it highlighted the weak logicthat passes for advocacy in the sectorThe letter argued against military actionwas critical of sanctions and suggestedthat nations should settle issues only bydiplomatic means It is a viewpointwhich totally ignores the fact that theGovernment had to deal with SaddamHussein
The shallowness of their logic wasbest exposed by the Prime Minister inhis response to the open letter in whichhe stated that the humanitarian situa-tion in Iraq is best addressed by SaddamHusseinrsquos removal and perhaps morepointedly that Saddamrsquos manipulationof foreign aid had allowed him to main-tain and pursue his weapons of mass de-struction capability and human rightsabuses3
Second it also highlighted the factthat the so-called lsquohuman rights-basedapproachrsquo to development (embraced byseveral of the signatories) is not so muchabout realizing human rights (as its pro-ponents argue) but is more about pro-viding them with an excuse to lsquoplay poli-ticsrsquo According to the theory the hu-man rights-based approach to develop-ment allows FANGOs to tackle the rootcauses of poverty and injustice
Yet the root cause of the Iraqipeoplersquos suffering can be summed up intwo simple wordsmdashSaddam HusseinThe fact that the FANGOs who sub-scribe to this particular approach havebeen obsessed with imaginary humanrights abuses committed by Shell NikeRio Tinto BHP-Billiton and AuroraGold while the activities of Saddam
23MARCH 2003
E V I E WR
It chose the former thus making it per-sona non grata in Indonesia for almost adecade8 It wasnrsquot impartial inMozambique when it sided with Frelimoin the countryrsquos civil war9 It wasnrsquot im-partial in Ethiopia when it developedlinks to the Eritrean Peoplersquos LiberationFront during its war against the thengovernment10 It was not impartial oranti-war when it sided with the TigrayPeoplersquos Liberation Front in the neigh-bouring province to Eritrea when thatgroup was waging a guerrilla war againstthe government11 And recently therehave been claims that in the Middle Eastit was little more than an lsquoeager propa-gandistrsquo for the Palestinians12
In East Timor Ethiopia and Mozam-bique OCAA was linked with organi-zations which supported direct militaryaction that led to the deaths of thou-sands of civilians In none of these loca-tions were the enemies of their friendany worse than Saddam Hussein In-deed in many cases OCAArsquos friendswere arguably no better than their en-emies in terms of human rights
OCAArsquos decision not to accept Aus-tralian Government funding is the cor-rect one in the sense that it clearly doesnot share the Governmentrsquos values onthe question of Iraq and thereforeshouldnrsquot receive any governmentmoney
Hewitt went on to state in a pressrelease that lsquoWe will not take funds thatmight allow a government to use hu-manitarian efforts as an instrument offoreign policyhelliprsquo13
This is finemdashexcept the AustralianGovernmentrsquos foreign aid is an instru-ment of foreign policy And it always hasbeen This is spelt out quite clearly inthe Australian Governmentrsquos latest for-eign and trade policy White Paper Ad-vancing the National Interest14
FANGOs that cannot accept thisrather basic proposition should not begetting taxpayersrsquo money They areclearly unsuitable for the task at hand
The consequences of Australian tax-payersrsquo money falling into the wronghands were brought home to Prime Min-ister Howard when he met IndonesianPresident Megawati Sukarnoputri to dis-cuss the war against terrorism and
Australiarsquos involvement against Iraq Atthe top of the Indonesian agenda wasthe issue of Australian funding toFANGOs being used to support sepa-ratist movements in Indonesia15
Post-war Iraq will be a better placewithout Saddam Hussein and his thugsThis does not mean that it will be a safeplace or necessarily a stable place Afterall one of the reasons for Western tol-eration of Saddam Hussein for manyyears was his ability to hold the various
ethnic minorities in Iraq together albeitrather brutally thereby maintaining abalance of power in the Middle East Hisdeparture would see strains on Iraq fromthe various ethnic minorities that makeup Iraq There is a strong chance thatIraq will fragment
The last thing the Australian Gov-ernment or any of the so-called belli-gerents needs in a post-war Iraq is west-ern NGOs running around and becom-ing self-styled advocates for national self-determination for Iraqrsquos ethnic minori-ties and injecting themselves into Iraqrsquosinternal politics This is a real risk Thebehaviour of Australian foreign aidNGOs in Indonesia should make Aus-tralian decision-makers extremely waryof funding any NGOs with Australiantaxpayersrsquo money so that they can oper-ate in Iraq
As things stand now FANGOs facevery few restrictions on their actionsfrom government If they undertake ac-tivity that is inconsistent with being anagent of government they may losefunding for specific projects or in moredramatic circumstances lose funding ina country Nonetheless they are gener-
ally able to access Australian Govern-ment funding for other projects andcountries In other words the penaltiesfor becoming caught up in political ac-tivities are very light for NGOs and posethem no serious problems
Foreign aid NGOs that lsquoplay politicsrsquoare unsuitable contractors for the deliv-ery of aid That these overtly politicalorganizations have been allowed to gaingovernment accreditation and receivegovernment funding points to some se-rious problems at AusAID Australiarsquosofficial aid agency The time has comefor this to change
NOTES1 httpwwwacfoaasnaumedia_releases
2003_releases26_3_03PDF2 httpwwwacfoaasnauemergencies
openletterPDF3 httpwwwacfoaasnauemergencies
iraq_responsehtm4 Oxfam Horizons Vol 3 No 1 (Febru-
ary 2003) page 25 Oxfam Community Aid Abroad lsquoIraq
Overviewrsquo February 20036 Hewitt quoted in Liz Gooch lsquoOxfam
wersquoll say no cashrsquo The Age 16 March2003
7 Community Aid Abroad Submission tothe Senate Foreign Affairs Defence andTrade References Committee Inquiryinto East Timor Downloaded at httpwwwcaaorg aucampaignssubmissionstimorhtml
8 Ibid9 Susan Blackburn Practical Visionaries A
Study of Community Aid Abroad (Mel-bourne Melbourne University Press1993) page 313
10 Ibid pages 325-333 passim11 Ibid12 Gerald Steinberg lsquoPropaganda vs Hu-
manitarianismrsquo Australian Financial Re-view 7 June 2002 Downloaded at httpfacultybiuacil~steingconflictopedpropvshumanitarianismhtm
13 ht tp wwwcaa o rg au p r 2003 iraqfundshtml
14 httpwwwdfatgovauani15 Dennis Shanahan lsquoJakarta fears aid funds
for rebellionrsquo The Australian 17 Febru-ary 2003 page 2
Don DrsquoCruz is Research Fellow at the IPAand Director of IPArsquos NGOWatch
OCAA has a longtrack-record of
being anything butimpartial or
reluctant to takesides in miliary
action
API
24 MARCH 2003
E V I E WR
GEORGE Bush Tony Blairand John Howard haveprovided many reasons forsupporting military action
against Iraq One of those reasons hasbecome known as the lsquohumanitarianrsquojustification Put simply the lsquohu-manitarianrsquo justification for the US-led invasion of Iraq is that such ac-tion is necessary to free the Iraqipeople from their totalitariandictator
Such an argument is attractive tothose who believe that there aresome fundamental human rights thatall individuals possess regardless ofwhere and how they live Whatserves as the source of those rightshas been the subject of debate forcenturies One of the pre-eminentstatements on the subject was madeby John Locke who in The SecondTreatise of Government wrote thatmankind was lsquoequal and indepen-dentrsquo and that lsquono-one ought to harmanother in his life health liberty orpossessionsrsquo
Saddam Husseinrsquos mass murdertorture and terror are reasonablyclear breaches of human rightsTherefore some would ask why thereshould be opposition to the UnitedStates and its allies taking whatevermeasures might be necessary totopple the Iraqi regime Surely thesame standard of behaviour that ap-plies to individuals applies also tonation states If an individual walk-ing in the street witnessed a rapeoccurring wouldnrsquot that individualbe entitled to do everything in hispower to stop the crime and assistthe victim
The point is of course that in-ternational law and convention do
After IraqIs Sovereignty Dead
JOHN ROSKAM
not allow nation states to act in thesame way as individuals Countriescannot simply lsquotake the law into theirown handsrsquo To restrain lsquovigilantestatesrsquo (who might be acting fromeither lsquogoodrsquo or lsquobadrsquo motives) a num-ber of legal and political theorieshave been developed One of theseis the doctrine of lsquosovereigntyrsquo whichprovides that states should not inter-vene in the domestic affairs of otherstates
In relation to Iraq the lsquosover-eigntyrsquo question is perhaps the stron-gest argument against the US-ledCoalition Most of the other criti-cisms of lsquohumanitarianrsquo interventionin Iraq are either grounded in simpleanti-Americanism or are fallaciousFor example there is the claim thatbecause some of the countries in theCoalition have previously ignoredHusseinrsquos cruelties therefore it is il-legitimate to take action now Sucha view has been expressed by aMelbourne international relationsacademic
While there is no disputing thebrutal nature of Saddam Hus-seinrsquos regime the case for inter-vention made by those in Can-berra London and Washingtonis weakened by the fact that atthe peak of Saddamrsquos crimes inthe late 1980s they were eitherdirectly supporting him withweapons technology and intelli-gence or were entirely indifferentto his behaviour Even if theyhave belatedly recognised theerror of their ways how seriouslycan we take their concerns aboutweapons of mass destruction nowgiven they were his suppliersthen1
On the basis of this argument itcould be said that Britainrsquos (andAustraliarsquos) case for intervening toassist Poland upon the German in-vasion in 1939 was lsquoweakenedrsquo be-cause Britain had previously acqui-esced to Germanyrsquos rearmament theremilitarization of the Rhinelandand the annexation of both Austriaand parts of Czechoslovakia Fewpeople who chanted lsquoFreedom forEast Timorrsquo said that the HowardGovernment should not act becausea quarter of a century before theWhitlam Government had been lsquoin-differentrsquo to Indonesiarsquos occupationof the island
There is also the claim that al-though Hussein is bad he is not theworst dictator in the world and thatit is hypocritical for the Americansto attack only Iraq This is an as-tounding proposition It attempts toapply to the United States a standardof behaviour that is impossible to sat-isfy Should the police not attemptto solve any crimes because theycanrsquot solve all crimes If a crime iscommitted by two people and thepolice arrest one perpetrator unlessthe other is also caught must the firstperpetrator be released When indi-viduals donate money for famine re-lief in Africa very few believe thattheir donation is pointless becauseit might prevent the starvation ofonly one person rather than thou-sands Christian ethics sets down norequirement that we should help no-one unless we can help everyone
The issue about state sovereigntyhowever is one that deserves to betaken seriously Regardless of onersquosopinions on the extent and limits ofstate sovereignty it is true that our
25MARCH 2003
E V I E WR
international relations system is builtupon the principle and to modify oroverturn it is a matter of some con-sequence
Even those who are generally sup-portive of the United States andtheir allies see the problem As it wasput by a leading commentator whenanalysing the Australian PrimeMinisterrsquos lsquohumanitarianrsquo justifica-tion for war
Finally Howardrsquos argumentagainst Hussein on human rightsis correct So is his moral case forwanting to liberate the Iraqipeople from their torment Theproblem however is that youcanrsquot trip around the worldwanting to overthrow regimesbecause of human rights2
Some would askmdashlsquowhy notrsquo Be-cause to do so would overthrow theUnited Nations Charter comes therejoinder And in turn the responseto that might bemdashlsquogoodrsquo
If itrsquos a choice between the main-tenance of the UN Charter and free-dom from tyranny freedom wins ev-ery time (although an internationallawyer sitting in Sydney might havea different view on this question fromthat of a political prisoner manacledin a Baghdad jail cell)
When the interests of lsquointerna-tional lawrsquo are more important thanthe life and liberty of individuals itcould be concluded that lsquothe Em-peror has no clothesrsquo Would inter-national law have sanctioned inter-vention to stop the Holocaust hadHitler not waged war and proceededwith his methods entirely within theconfines of the German territorialstate
Many who argue that lsquohumanitar-ianrsquo intervention in Iraq is not justi-fied because it infringes on thatcountryrsquos lsquosovereigntyrsquo would happilyhave other countries cede their po-litical sovereignty to supra-nationalbodies Certain features of the Inter-national Criminal Court overridethe principles of sovereignty but thatdid not stop a phalanx of interna-tional law experts urging sovereigngovernments to join it so as to en-
able the prosecution of war criminalsBut when it comes to actually stop-ping war crimes not simply prosecut-ing them that phalanx is largely si-lent
Without the doctrine of state sov-ereignty and without an arbiter fordetermining when interference withthe principle is justified (the roleclaimed by the United Nations andits Security Council) it is said thatstates would be free to impose theirown will and intervene in other
countries whose standards did notmeet their own (In The Second Trea-tise of Government Locke argued thata characteristic of a lsquostate of warrsquo be-tween individuals was the absence ofa superior authority to adjudicatedisputes and prevent individualsfrom administering justice them-selves)
Iraq might be claimed as a rea-sonably clear-cut case for interven-tion but other situations are notlikely to be as simple In Culture andEquality first published in 2001Brian Barry explored a lsquoliberalrsquo per-spective on this question
The liberal position is clearNobody anywhere in the worldshould be denied liberal pro-tections against injustice andoppression However in exactlythe same way as liberals arepragmatic about what liberalismmeans in terms of boundaries sohere the move from principle tointervention has to be mediated bypractical considerationshellip
[L]iberals are not so simple-mindedas to imagine that the answer toall violations of liberal rights is tosend in the Marines or even aUnited Nations force As in anyjust war theory there must be somedoctrine of lsquoproportionalityrsquohellip[S]carcely anybody would be infavour of the western powersinvading Saudi Arabia so at to sortout the way in which it lsquounjustlydenies political rights to women ornon-Muslimsrsquomdashaccording to theirliberal idea of justicersquo3
The question remainsmdashafterIraq what remains of lsquostate sover-eigntyrsquo Should the doctrine applyonly to lsquoliberal democraticrsquo statesSuch a solution might be attractiveto some lsquoliberalsrsquo but it doesnrsquot avoidthe problem of what exactly a lsquolib-eral democraticrsquo state is
One irony arising from the argu-ments about the war in Iraq is thatmany of those who have urged astrict application of lsquostate sover-eigntyrsquo principles in the past havegenerally supported the US-led in-tervention while those who havebeen willing to abridge or even aban-don the doctrine have had to rely onit to counter the lsquohumanitarianrsquo jus-tification for war
There are not many certaintiesabout the nature of the world afterthe war in Iraq but it can be saidwith some assurance that one defi-nite outcome is going to be a morevigorous debate about state sover-eignty
NOTES1 Scott Burchill lsquoThe humanitar-
ian arguments for this war are spu-riousrsquo The Age 21 March 2003
2 Paul Kelly lsquoThe hapless per-suaderrsquo The Australian 15ndash16March 2003
3 Brian Barry Culture and Equal-ity An egalitarian critique ofmulticulturalism Harvard Uni-versity Press page 138
John Roskam is a Research Fellow with the IPA
The lsquosovereigntyrsquo
question is perhaps
the strongest
argument against
the US-led
Coalition
API
26 MARCH 2003
E V I E WR
Which Way for theDemocrats
The 2002 mid-term elections were adramatic victory for President GeorgeW Bush and the Republicans Insteadof the historical norm of the partycontrolling the White House losingBushrsquos party gained seats in the Sen-ate House Governorsrsquo races andState legislatures The result was abitter disappointment for the Demo-crats and has led to a fierce debatebetween the Left and Centrists aboutthe future policy direction of the partytowards the 2004 elections
The Leftrsquos analysis is that the ma-jority of Americans are natural Demo-crats Electoral defeat was due to thefailure to energize that base of Demo-crats The party failed to distinguishitself sufficiently from Bush and thusgive their voters a reason to turn outWhile the majority of Democrats op-posed Bush on tax cuts and the warwith Iraq a significant minority sup-ported him and campaigned on thatsupport The result the Left claimwas that the Democrats lacked a con-sistent message in contrast to Bush
Support for this argument can befound in the higher turnout amongstRepublicans than Democrats in 2002while in 2000 the combined vote forGore and Nader was 51 per cent Aninfluential book by John Judis andRuy Texeira identified lsquoThe Emerg-ing Democrat Majorityrsquo Theyclaimed that growing demographicgroups trended Democrat includingthe young socially liberal profession-als minorities and women
What policies would motivate thisnatural Democrat base The Left callfor rescinding the Bush tax cut a classwar against the corporate world amajor increase in lsquopublic investmentrsquoin schools childcare health care and
Letter from AmericaNIGEL ASHFORD
public transport and strong opposi-tion to the war
Centrists however have a verydifferent analysis of the Democratsrsquoproblems the public did not trustthem to pursue the war against ter-rorism vigorously to keep down taxesto spend their tax dollars wisely or toreflect their cultural values
A Gallup opinion poll found that57 per cent of Americans askedthought that the Democrats were nottough enough on the war on terror-ism while 64 per cent thought theRepublicans were There was the per-ception that the Democrats were notserious on the issue and just playingpolitics Evidence for this was the de-bate over the new Department ofHomeland Security blocked becausethe Democrats wanted to protectunion rights while the President de-manded more flexibility to deploy theworkforce Many voters saw the issueas the national interest versus a spe-cial interestmdashin this case that of theunions The Democrats were seen asputting the interests of one of theirmajor constituencies before nationalsecurity
The Democratic LeadershipCouncil in lsquoThe Road Aheadrsquo by AlFrom and Bruce Reed presented theCentrist case lsquoStop pretending wecan win a majority simply by energiz-ing our basersquo The Democrats were
not trusted on the war against terror-ism were hostile to the cultural con-cerns of many working-class Demo-crats on abortion and guns and stillseen as the tax-and-spend party lsquoToomany Americans donrsquot trust us tokeep their taxes down or to spendtheir money wellrsquo
The Centrist agenda is to stronglyprosecute the war against terrorismwhether against al-Qarsquoeda Saddam orothers and to abandon knee-jerk iso-lationism arising from the experienceof the Vietnam War to defend capi-talism and support small investorsagainst irresponsible managers to cutpayroll taxes and to downplay thecultural issues that divide Democrats
Which path will the Democratstake The Left is in the ascendancyMost of the remaining Democrats inoffice come from left-wing districtsNancy Pelosi a left-liberal from SanFrancisco was easily elected the newleader of the House Democrats over-whelming her Centrist opponent andrising star African-American HaroldFord The early field of presidentialcandidates for 2004 is dominated bythe Left tendency including SenatorJohn Kerry Representative DickGephardt Governor Howard DeanRev Al Sharpton former SenatorCarol Moseley-Braun and Represen-tative Dennis Kucinich Only Sena-tor Joe Lieberman and Senator JohnEdwards represent the Centrist wing
The future of US politics may de-pend on which road the Democratsdecide to take The US is currently alsquo50ndash50rsquo nation evenly balanced be-tween the parties A left turn couldlead to Republican dominance farinto the future
Dr Nigel Ashford is at the Institute of Humane Studiesat George Mason University and is co-author of US
Politics Today (Manchester University Press)
API
27MARCH 2003
E V I E WR
Trusting TonyFrankly itrsquos all just too depressing Theeconomyrsquos heading for trouble Busi-ness confidence is low investment in2002 was 92 per cent lower than theprevious year and manufacturing in-vestment was nearly 18 per cent downThe budget deficit is spiralling becauseour once lsquoprudentrsquo Chancellor (trea-surer) Gordon Brown made over-opti-mistic growth projections and startedthrowing money at problems
Therersquos a load of health-and-safetyand anti-discrimination measuresthatmdashto put it most politelymdashare ex-amples of letting the best be the en-emy of the good Every school tripneeds a formal risk assessment withthe result that many trips are simplynot taking place New trains orderedfor London commuter routes wonrsquothave toilets because the rules say thatat least one toilet in each four-car unitmust be wheelchair-accessible whichwould have cost ten or a dozen seatson every overcrowded train
Some of this is just insane Somelocal authorities say that safety at workrules mean that home-care workersmustnrsquot lift the disabled people theyare looking after Or therersquos rail safetyUntil recently we were seriously pro-posing to spend $10 billion on a bet-ter system to stop trains going throughred signals On average this would havesaved the lives of about three passen-gers every four years which is a lousybargain compared with other safety in-vestments Worse it would also havereduced the capacity of the networkby up to 15 per cent and forced morepeople onto the roads which are muchmore dangerous than even ourclapped-out railways The result was aprojected net increase of 13 to 21 deathsper year
Meanwhile in London the Cen-tral line of the Underground has been
Letter from LondonJOHN NURICK
API
closed for weeks after a train derailedwhen one of its motors fell off Therewere no deaths or major injuries in theaccidentmdashbut itrsquos a safe bet that someof the people who havenrsquot been ableto use the Central line have been in-jured or killed on the roads
What can one say If the authori-ties took the same attitude to the riskof fatal accidents in the health serviceevery hospital in the country wouldhave been closed for years
Despite all this the Conservativesare still hopeless Their leader IanDuncan Smith has a new wheezewhen a journalist asks him anythingdifficult he chortles merrily and saysitrsquos the most uninteresting questionimaginable and hersquos not going to wasteanyonersquos time by answering it His col-leagues have their knives out for him
Meanwhile in spite of the govern-mentrsquos problems with the economy andthe public services Tony Blair is grow-ing in stature having his waymdashandantagonising large sections of his ownparty in the process On several recentissues he has faced down the formi-dable Gordon Brown in a way that notlong ago was hard to imagine
Then he shocked everyone by com-ing out against having elected mem-bers in the reformed House of Lordswhen most voters want an all-elected
chamber and most MPs want a partly-elected one In the event Parliamentcouldnrsquot agree on any of the optionsfor reform so wersquore stuck with the sta-tus quomdashwhich is fine by Mr Blair
Then therersquos the war By the timeyou read this it may be over or we maystill be waiting or our lads may befighting Mr Blairrsquos strong line againstIraq has made him very unpopular Theanti-war march on 15 February was thebiggest demonstration London hasever seen A few days later 122 Labourbackbenchers voted against the gov-ernment and many more abstained
Mr Blair didnrsquot budge War is a se-rious thing he says lsquoBut in a situationsuch as this you have to do what youbelieve to be right because thatrsquos theprice of having responsibilityrsquo1
He has often been accused of gov-erning by focus group Certainly he hasseemed reluctant to antagonise anypowerful group That has clearlychanged In a sense his stand on Iraqmerely follows his action in sendingtroops to Sierra Leone and Kosovomdashbut it has stirred up far stronger domes-tic and international opposition
The irony is that now when he re-ally needs people to trust him wedonrsquot Even in the desperately seriousbusiness of justifying an unpopular warDowning Street canrsquot play it straightremember the dossier from lsquointelli-gence sourcesrsquo that turned out to belargely cribbed from a PhD thesis onthe Internet
NOTE1 The Guardian 1 March 2003
John Nurick is a management consultant based in theSouth of England From 1985 to 1990 he was
editorial director of the Australian Institute for PublicPolicy and later edited newsletters reporting on theUK Parliament and European Union institutions
28 MARCH 2003
E V I E WR
KEVIN DONNELLY
Private EducationEquals Public Good
When it comes to choosing be-tween government and non-gov-ernment schools Australian par-ents are lsquovoting with their feetrsquo Asshown by recent ABS figures(Schools Australia 2002) over thelast decade there has been a dra-matic increase in non-governmentschool enrolments
Approximately 30 per cent ofstudents now attend non-govern-ment schools compared with 22per cent in 1980 and 28 per centin 1990 Over the last decadewhile the number of governmentschools has fallen by 64 per centnon-government schools havegrown by 61 per cent
Of course not everybody valuesparentsrsquo right to choose and theAustralian Education Union(AEU) Labor governments andlsquoleft-wingrsquo academics in particularconsistently argue against non-government schools
One of the arguments put for-ward by those opposed to givingparents greater freedom of choiceis that government schools are bet-ter at promoting social cohesionand a strong sense of what KenBoston the ex-head of the NSWEducation Department terms lsquothebonds of civic friendshiprsquo
The assumption is that becausestudents attend non-governmentschools there will be greater socialdivisiveness and a breakdown inthe civic values needed to hold so-ciety together But there is no cred-ible evidence offered to support theclaim that government schools arebetter at promoting the commongood
In fact there is much to provethe opposite
First as anyone familiar withthe lsquoculture warsrsquo and politicallycorrect curricula will know insteadof government-controlled educa-tion promoting unity and cohe-sion it has led to public angst andparental complaints
Witness the very bitter debatein Queensland a year or two agowhen the government-mandatedStudies of Society and Environ-ment (SOSE) curriculum was in-troduced into schools Such was
the lsquoleft-wingrsquo bias in the curricu-lum in particular in the areas ofmulticulturalism and the environ-ment that many parents felt be-trayed
The Queensland debate is mir-rored by what is happening in theUnited States As noted by Ste-phen Arons in his book Short Routeto Chaos instead of promotingunity government control of thecurriculum leads to the opposite
What the school wars tell us isthat somehow we have been
Education Agenda
transforming a vital instrumentfor creating social cohesioninto a source of division andhostility that there is some-thing built into the structure ofpublic schooling that under-mines one of its most importantfunctionsAronrsquos argument that govern-
ment schools no longer transmit aviable sense of a common cultureor agreed civic values is reinforcedby another noted United Stateseducationalist Diane Ravitch
In a recent article in the jour-nal Education Next Ravitch be-moans the impact of cultural rela-tivism and the post-modern on theschool curriculum (where there areno commonly agreed values) andeven goes so far as to argue thatparents should be free to choosenon-government schools becausesuch schools have a better chanceof reflecting their values
In the current education sys-tem with the public schoolscommitted to multiculturalismbilingualism and other forms ofparticularism it is difficult toargue that parents should notbe able to choose schools thatmeet their cultural needsSecond if one accepts that lsquoso-
cial capitalrsquomdashthe networks volun-tary associations and civic bondsthat hold a community togethermdashis important for the health of ademocratic society then non-gov-ernment schools clearly have theadvantage
Unlike the government schoolsystem characterized by a heavy-handed centralized bureaucracyand teacher union control non-government schools are closer tothe communities they serve Bytheir very nature non-government
There is no credible
evidence offered to
support the claim
that government
schools are better
at promoting the
common good
29MARCH 2003
E V I E WR
ALAN MORAN
The lsquoRrsquo Files
Private propertyrights the key toachieving efficiency inrural water use
WATER IN AUSTRALIAWater has always been a definingissue in Australiarsquos prosperityAnd in recent decades irrigationhas grown rapidly Even so theproportion of Australia that is ir-rigated at two per cent of theland comprises a share that isamongst the lowest among OECDcountries Only Canada and therainiest countries New Zealandand the UK have lower sharesthat of the US is 11 per cent andin Japan it reaches 60 per cent
Modern agriculture is only 200years old in Australia and thoughin the first 100 years agriculturalproductivity was increased toequal that of anywhere in theworld gains continue to bemademdashoutput has doubled overthe past 50 years a growth thatcould not have taken place with-out a similar expansion of irriga-tion Irrigation in the MurrayndashDarling agricultural provincealone contributes $5 billion toAustralian agricultural outputand non-irrigated agriculture inthe region contributes a further $5billion This makes the areawhich comprises 14 per cent ofAustraliarsquos land mass responsiblefor a third of the nationrsquos $35 bil-lion agricultural output
Applying Property Rights to WaterMost of the uses of water involvechoices or compromisesmdashdrink-ing water versus irrigation versus
industrial and so on Some how-ever involve complementaritiesparticularly certain recreationaluses such as water sports that arefacilitated by storage and consis-tent availability
In many cases water will per-form sequential functionsmdashthesame water can be used and re-used for irrigation used for indus-trial cooling and finish as drink-ing water Water with differentsometimes competing productiveuses will be optimally used as longas two conditions are in placeThe first is that its ownership isclearly specified and the ownersrsquoobligations to other users (orclaims from other beneficiaries)are well understood The secondrequires each property right to betradable to enable acquisition bythose who value it most therebymaximizing its value
The rights specification andtherefore property ownership canrarely commence with a cleansheet of paper People acquire in-dividual rights to property ini-tially through a variety of routesOne of these is seizure of some-thing that was originally of littlevalue until it was acquired and im-proved Squatters assume rights inthis way However they are firstacquired they need to be tradableAPI
schools establish strong commu-nity networks and have a greaterreliance on the voluntary work ofparents
That non-government schoolsare more effective in this regard issupported by research into lsquoChar-ter schoolsrsquo in the United StatesAs noted by Chester Finn at theFordham Foundation giving localcommunities lsquoownershiprsquo overtheir school builds networks oftrust and reciprocity so vital forsocial cohesion
Social capital also relies on citi-zens being disciplined and orderedin their behaviour Selfishness vio-lent behaviour and rudeness act tofragment the community instead ofpromoting cohesion According toa number of Australian surveys itis here once again that non-gov-ernment schools are seen to bemore effective
As noted by the Centre for In-dependent Studies researcher Jen-nifer Buckingham in The Truthabout Private Schools in Australiawhen analysing why so many par-ents forsake the government schoolsystem
When comparing independentprivate schools with publicschools the major theme thatemerged was not differences inacademic standards and curri-culum but issues of disciplineand order The surveyed par-ents felt that the behaviour andattitudes of students in publicschools was unacceptablehellipAll accept that non-govern-
ment schools achieve better aca-demic results provide greater cur-riculum flexibility and save Aus-tralian taxpayers millions of dol-lars Equally as important is theargument that such schools streng-then Australiarsquos civic health andstock of lsquosocial capitalrsquo
Dr Kevin Donnelly is Director of EducationStrategies a Melbourne-based consulting group
E-mailkevindnetspacenetau
s
30 MARCH 2003
E V I E WR
and relatively inviolable Thisprovides the incentive for them tobe improved and for their ownersand others to search out ways inwhich the assets they representcan be used to provide increasedvalue or other benefits
If confidence in the exclusiv-ity an owner has over the prop-erty right is lost or was neverpresent the asset will be used lessproductively For example own-ers will milk them for their cur-rent-use value rather than trade-off present value for a future valuethat is less certain
Even without a total emascu-lation of individual rights (for ex-ample when title to the propertydepends on continuing govern-mental assent) lack of certaintybrings lower incomes and dimin-ished asset protection One out-come of this can be observed inthe MurrayndashDarling system Wa-ter rights on the Victorian side ofthe Murray are secure while thoseon the NSW side have been over-allocated and are subject to ad-ministrative discretion includinghaving a firm duration of only tenyears In Victoria high securitywater (available 95 per cent of thetime) comprises the great bulk ofentitlements In contrast in
NSW high security water is avail-able only 60-80 per cent of thetime The result is that farmers onthe Victorian side plant perennialcrops while those in NSW tendto focus on annual crops espe-cially rice
There are claims that Victoriarsquosmore robust property rights meanthat the State Government haslost lsquocapabilityrsquo to manage com-pared with NSW The flip side ofthis is the increased risk and as-sociated lower value of productionnorth of the Murray where prop-erty rights are attenuated Gov-ernments that give themselves in-creased capacity to direct produc-tion or to take individualrsquos prop-erty will need to accept lower lev-els of income and output
IRRIGATION ENVIRON-MENTAL BENEFITS AND SA-LINITY
The Types of IssuesIssues stemming from irrigationcomprise two types those impact-ing on the environment and thoseimpacting on private uses Theformer includes issues such as pre-venting loss of species ensuringthat certain sorts of species flourishand avoiding unattractive growths
such as blue-green algae which re-sult from fertilizer build-up
The second involves economicimpacts on different users
While environmental flows toensure species flourish are oftenhighlighted salinity is the mainfocus And while salinity has animpact on the environment itsimportance is in the conflict of in-terest between productive usersmdashthe complaint of lsquodamaged goodsrsquoby downstream users against thoseupstream
The MurrayndashDarling Basin Sa-linity Strategy 2001ndash2015 has es-timated that increased salinitybrings costs of $294 million perannum to the basin
Yet data on the salinity of theMurray Darling shows levels up-stream of South Australia arelower than they were in the early1980s and are only seriously abovethese levels as the river ap-proaches its mouth at the GoolwaBarrage
The Basin Salinity Manage-ment Strategy argues that progressachieved over the past decade willlsquobe cancelled within 20-50 yearsand median salinity levels wouldexceed the Australian DrinkingWater Guidelines for good waterquality within 50-100 yearsrsquo Thecause of this is said to be risinggroundwater tables due to land usechanges across the Basin
The disputes over salinizationare largely disputes between com-mercial parties Full specificationof rights and obligations will al-low these to be resolved as longas the impacts are measurabletheir causes identifiable and thevarious rights and obligations areknown and stable In this respecttechnology to measure salt in wa-ter and to trace increases to par-ticular locations is readily avail-able
Agreements about the alloca-tion of water rights between ju-risdictions and to the main irri-gation provinces have been inplace for over a century In the
Average Salinity in the River Murray (EC Units)1
3500
3000
2500
2000
1500
1000
500
0
January 2003
July 2002ndashJanuary 2003
July 1982ndashJanuary 2003
Hume D
am
Swan
Hill
Merbein
Morgan
Milang
Mening
ie
Goolw
a
Barra
ge
31MARCH 2003
E V I E WR
I
API
Musinghellipcase of the Murray the lsquocaprsquo onwater abstractions agreed betweenthe various jurisdictions in 1995largely validated agreements madeearly in the last century and be-fore Disturbing these agreementswould greatly undermine the trustin the sanctity of property rightsand seriously reduce agriculturalproductivity Hence increased al-locations for certain parties or forcertain uses (including environ-mental flows) would need to bepurchased at market prices
Developments in Australiaover recent decades have con-spired to make irrigation water farmore valuable This is exacer-bated by1 Activation of NSW lsquosleeperrsquo
and lsquodozerrsquo water rights as a re-sult of the increased scarcityvalue a change that bringseven greater pressure on theavailable supply
2 Increased scarcity leading tomeasures that more carefullyhusband the water Whilesome of these prevent evapo-ration loss and have thereforebrought a net increase in effec-tive availability others havereduced availability (these in-clude a more careful wateringwhich results in reduced run-off and re-use)
3 Increased capture of waterwithin the land on which itfalls once water is recognizedas scarce landowners will seekto ensure it does not leave theirland NSW and Victoria haveplaced limits (a strict 10 percent in NSW) of water fallingon property as entitlements ofthe owner Queensland has notyet enacted an equivalent tothis Such adaptations of thecommon law are essentialhowever if downstream usersare not to be expropriatedThere is likely to be constant
bickering over water rights espe-cially if State Governments seek toelevate sharing issues and to sanc-tify them with claims about promot-
Daniel Pipes in The New York Posthas a very cogent explanation forwhy the Left appears to be so happywith the likes of Osama bin Ladenand Saddam Hussein
To be clear about their attitudeshe quotes the renowned Germanelectronic music composer KarlHeinz Stockhausen who saidstraight after the attack on NewYork that it was lsquothe greatest workof art for the whole cosmosrsquo
As Pipes and many of us observedaily there is barely a bad word tosay about Saddam Hussein nor aniota of sympathy for thoseoppressed tortured and murderedby his reacutegime Instead they venttheir fury against the AmericanPresident and British Prime Minister
Why the nonchalancePipes draws our attention to Lee
Harris writing in a recent issue ofthe Hoover Institutionrsquos journalPolicy Review According to KarlMarxrsquos central thesis the demise ofcapitalism hangs on workersgrowing poorer over timemdashwhichof course did not happen Sorather than give up on cherishedexpectations of socialist revolutionHarris notes Marxists tweaked theirtheory and looked instead to theentire populations of poor countriesto carry out the revolution Classanalysis went out the windowreplaced by geography
The trouble is they have tooverlook militant Islamrsquos slightly un-socialist practicesmdashsuch as itsimposing religious law excludingwomen from the workplace andpersecuting atheists
As Pipes sums up September 11and the prospect of war againstSaddam Hussein have exposed theLeftrsquos political self-delusionintellectual bankruptcy and moralturpitude
The Loopy Leftby Andrew McIntyre
ing an improved environment Realsolutions require the issue be placedwithin a normal commercial frame-work which involves1 Clarifying the property rights2 Allowing water rights to be
fully detachable from propertyand able to be used howeverthe holder wishes subject toany damage this might imposeon others
3 Ensuring full rights to buy andsell the water
4 Defining rights so as not to re-duce the quality of other usersThis means ensuring that farm-ing practices that do not bringgreater salination than somestandard
5 Allowing rights holders tobank their water and ensureeven greater certaintyAllocating specific individual
ownership rights to water and al-lowing its trade is a well-foundedmeans of maximizing the usevalue It would also be likely tohave the beneficial side-effects ofreducing salinity and farm-basedpollutants caused by intensiveuse We should grasp such oppor-tunities But if the impending sa-linity problem is as great as someclaim other solutions might wellinclude buying out some allocatedirrigatorsrsquo rights However alter-natives may be to remove saltfrom the water by engineering so-lutions or simply to live withhigher salt
NOTE1 Human drinking water should
be less than 800 ECs (electri-cal conductivity one ECequals about 06 mglitre)while higher levels are accept-able for much farming activity
Dr Alan Moran is Director Deregulation Unitat the Institute of Public Affairs
32 MARCH 2003
E V I E WR
Reading FileDone
eral political systems worldwidehave consistently accretedpower to the centre often in theface of clear constitutional im-peratives to the contrary) Ifeared instead that a UN thathad been patently successful insomethingmdashanythingmdashmightbe granted greater powers to thepoint where it would kill truediversity and individualism (ortry to anyway) through inevi-table bureaucratic practices
Is such a fear unfounded Ap-parently not if many peopleshare the moral touchstone ofthe Opposition Leader SimonCrean He believes according tohis own words in Parliamentthat what the UN SecurityCouncil declares is moral whatit refuses is immoral
The latest manoeuvrings overIraq have therefore been heart-
ening It seems that the desiresof the powers small and largeto promote their own interestswill continue to hobble the UN
The problem with a unitedworld is that as the threateningimpasse over Iraq suggestedthere are very divergent viewsabout how that world ought tobe run on an international leveljust as there are at national and
sub-national levels The virtueof multi-layered levels of gov-ernments is that competing ju-risdictions give the individual adegree of choice
The greatest sin of totalitar-ian governments past and pres-ent is to deny their citizens theright to leave The greatest dan-ger that the United Nationsposes as far off as it now (hap-pily) seems is that leaving its ju-risdiction is for all practical pur-poses impossible
THE IMPASSE JUST PASSEDI listened to Prime MinisterHoward speaking to the motionbefore Parliament in relation tothe war It was a good speechbut neither he nor PresidentBush seems able to structure andlay out an argument with thestyle and content of BritishPrime Minister Blair His equi-valent speech before the BritishCommons provides a masterfulsummary of the reasons for thiswar and includes an immenselyreadable time-line of the utterineffectiveness of the UN pro-cesses in dealing with Iraq Henicely deals with allegations ofthe lsquorushrsquo to war lsquoOur fault hasnot been impatience The truth
UNITED OR DIVIDEDI write just hours after US Presi-dent George W Bush has deliv-ered his ultimatum to Iraqi Presi-dent Saddam Hussein leave Iraqwithin 48 hours or be removedBy the time this appears beforeyour eyes you will knowwhether Hussein has decided hischances of survival will be sig-nificantly greater by choosingexile or by remaining in IraqThe recent creation of the In-ternational Criminal Court ofcourse makes war more likelysince Hussein can have no guar-antee of a peaceful lsquoretirementrsquo
In the event that Hussein re-mains in Iraq you will also knowwhether Bush has kept his wordand most likely the outcome ofthis military venture
This matter is immensely im-portant for the people of Iraqand for the military personnelinvolved (including our ownAustralian soldiers sailors andaviators) But then so was theprevious Gulf War the US in-vasion of Grenada the Austra-lian intervention in East Timorand so on But a difference be-tween the current conflict andthose others could be the impactit has upon international insti-tutions Actually just one inter-national institution the UnitedNations
Prior to the first Gulf War Ifeared the coalitionrsquos success forthe reason that some of it mighthave rubbed off onto the UnitedNations I hasten to deny that Ifear the UN as some vast con-spiracy for world domination Ifeared instead that it couldstumble into a piecemeal cen-tralization of power (just as Fed-
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
E V I E WRs
33MARCH 2003
E V I E WR
Reading FileDone
ATTACKING THE GLOBALGOVERNORSThe Cato Institute is a whole-some body as demonstrated byits opposition to such interna-tional organizations as the Inter-national Criminal Court and forthat matter the United Nationsitself Ted Galen Carpenter forexample argues in lsquoPutting theUnited Nations on Noticersquo thatthe UN can and has done somemodest good occasionally It ishe says lsquoa good idea to have aplace where governments cangather to air grievancesrsquo But headds if it lsquoattempts to acquire ataxing authority [or] raise astanding armyrsquo then the USshould withdraw (as indeedshould Australia) Because thatwould turn it into an lsquoembryonicsuperstate that would menacelibertyrsquo
Go to
wwwcatoorgforeignpolicyunhtml
THE INTERNATIONALORGANIZATIONS THEM-SELVESThe United Nations has beenaccused of being often ineffec-tive and always slow Well ev-ery time Irsquove hit the UNrsquos Web-site even with my nifty broad-band Internet connection slow-ness rules Perhaps the site isbeing continually accessed bythe teeming masses Anyway goto
wwwunorg
With 15 members alreadyand 13 more on the way thereremain hopes that the EuropeanUnion will be a force for a stable
twenty-first century Equallywith 15 members already exhib-iting rather divergent views overthe issue of Iraq and most of theforthcoming members sidingwith the United States perhapsthis is overly hopeful Go to
europaeuintindex_enhtm
Then there is the WorldTrade Organization the organi-zation behind which protection-ist nations can hide from unilat-eral trade liberalization by pre-tending to support multilateraltrade liberalization Go to
wwwwtoorg
And we mustnrsquot forget the In-ternational Criminal Court fearof which was no doubt a featureof Saddam Husseinrsquos rejection ofexile as an option and the furyof which is promised by a num-ber of prominent lawyers to bevisited upon our very own PrimeMinister Go to
wwwicc-cpiint
FEEDBACKI would welcome advice fromreaders on any other sites of inter-est to IPA Review readers E-mailme on scdawsonbigpondnetau
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
is our patience should have beenexhausted weeks and monthsand years agorsquo
Go to
wwwnumber10govukoutputPage3294asp
THE STRUGGLE BETWEENTHE CONTINENTSIf you are patient you can readthat wonderful British rag TheSpectator for free Last weekrsquoscopy is available on-line One ofits regular columnists is MarkSteyn an Americo-phile Cana-dian who has a robust turn ofphrase and an abiding disdain formuch modern music (whichseems to place him very comfort-ably into The Spectatorrsquos culturalmatrix)
His piece on the future de-cline of Europe vis-agrave-vis Ame-rica makes for fascinating read-ing Go to
wwwspectatorcouk
then click on the lsquoBack Issuesrsquobutton and choose the edition of15 March 2003
E V I E WR
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
4 MARCH 2003
E V I E WR
TRIO of experts has toldthe recent IPA conferencethat prescribed burning isthe most effective tool for
containing major bushfires in Aus-tralia Properly conductedmdashand thatmeans using a random rather than aprogrammed pattern of burningmdashitis also environmentally beneficialbecause it replicates the conditionsunder which Australiarsquos forests andscrublands evolved
Alas the devastation that has oc-curred in the forests parks and farmsof eastern Australia during the firstquarter of 2003mdashand which in-truded deeply into the suburbs ofCanberra causing the loss of hun-dreds of homesmdashwas cruelly exacer-bated by the failure to conduct ad-equate prescribed burning Examin-ing the scientific evidence presentedby experts at the conference it is dif-ficult not to conclude that much ofthe 16 million hectares of parks andforests destroyed this year could havebeen saved had proper prescribedburning been carried out over thepast few years So too could farmsand houses
THE SCIENTISTSWhy were these programmes not car-ried out The three expertsmdashDr PhilCheney of CSIRO Dr Syd SheaProfessor of Environmental Manage-ment at the University of NotreDame and a former head of WArsquos
A
Why Did We AllowAustralia to Burn
GRAHAM WHITE
Department of Conservation andLand Management and Dr KevinTolhurst of the Forest Science Cen-tre at the University of Melbournemdashall declined to speculate other thannoting that there were limitations onthe skills and resources available toconduct them and that there wereelements of lsquocommunity oppositionrsquoto such burning
There was no such reluctancehowever from the many delegatesfrom fire-affected regions whocrammed the auditorium Many ofthem had made a ten-hour round tripby bus to present their views andseveral were unhesitating in namingthe influence of vocal but ill-in-formed green groups as the likely cul-prit
These key messagesmdashthe failureof land managers to follow estab-lished scientific principles and thecontribution of green policies to thatfailuremdashwere two of three themesthat dominated the conference Thethird was property rightsmdashthe ex-pectations of private landholdersthat adjoining public lands should beproperly managed and the legal re-dress they have when that manage-ment fails
While the text of the talks con-centrated on these scientific and le-gal issues the pictures used to illus-trate the intensity of the fires raisedmore emotional responses If thescale of human sufferingmdashthe burnt-
out homes and scorched farmsmdashwasterrible the damage to the naturalenvironment was awesome Picturesof National Parks and State forestsreduced to blackened stick-like rem-nants of trees poking from a carpetof smouldering ash the devastationstretching seemingly to the horizonbrought cruel reminders of the mil-lions of small marsupials and othernative animals that died in this in-ferno
Any committed conservationistcould only ask what did we do tounleash such devastation The an-swer provided forcefully by all threeexperts was that it was not what wedid but what we didnrsquot do that al-lowed the fires to reach such horrificproportions
Dr Cheney produced studies toshow that under any given climaticconditions the intensity of a forestfire is essentially dependent on thevolume of fuel build-up on the for-est floor This volume of fuel is inturn largely a factor of how long ithas been since fire of some sortpassed through the area The longerthe period since it was last burnedthe greater the volume of fuel avail-able
When build-up reaches a certainlevel the intensity of the blaze pro-duced under typical bushfire condi-tions puts it beyond the capacity offire-fighters to contain With veryhigh levels of fuel the fire will be
On 11 March 2003 the IPA held a conference about the lessons to be learnt from the bushfires whichswept Eastern Australia in the first quarter of 2003 This article presents a synopsis of the major themesand findings from that conference Copies of papers delivered at the forummdashlsquoBushfire Prevention Are
we doing enoughrsquomdashare available on the IPA Website at wwwipaorgau
5MARCH 2003
E V I E WR
beyond the capacity of fire-fighterseven under less extreme conditions
This message was reinforced byboth Professor Shea and Dr Tol-hurst although an environmentallybenign programme of prescribedburning will not prevent bush firesaltogethermdashfor under extreme con-ditions fires will always spreadmdashitwill allow them to be containedonce conditions begin to ease evena little
This would seem to have been animportant factor in the Victorianfires while they began under ex-treme conditions they continuedburning through more than a millionhectares for a period of months in-cluding periods when conditionswere far less extreme High fuelbuild-upmdashthe result of inadequateprescribed burning programmes overseveral yearsmdashwould seem on thebasis of this evidence to have beena major factor in that
Professor Shea said that WArsquosgood record of bushfire managementin recent decadesmdashdespite the ex-treme conditions regularly created bythe regionrsquos long hot and dry sum-mersmdashhad been largely due to ac-ceptance of this principle He fearedhowever that even in WA the ex-ecution of prescribed burning pro-grammes was becoming less rigorous
Why Much of the blame he saidlay in attitudes imported from Brit-ain and Europe which saw burningas ugly and destructive to the envi-ronment These views did not takeinto account the very different ecol-ogy of Australia which had beenfashioned by fire long before whitesettlement
Foresters have discovered hesaid that the long-living grass-treesso common in southern WA containin their trunks a record of the firehistory they have endured This re-veals an irregular but by no meansinfrequent pattern of fire whichstretches back before white settle-ment of these areas
Dr Tolhurst said that studies ofthe fire-frequency patterns in whichAustraliarsquos ecology had evolved pro-
vided important lessons for pre-scribed burning programmes Thestudies show that in the past firesappeared to follow a random pat-ternmdashsome areas burning severaltimes within a five- or ten-year pe-riod while other pockets appearedto have escaped burning for long pe-riods This had ensured biodiversity
A similar approach was neededwith prescribed burning he saidRather than merely gridding a parkto be systematically burned over saya ten- or 15-year cycle it was betterto replicate the natural order with amore varied approach with some ar-eas being burned more frequentlythan others This would ensure thatfuel build-up over large areas of for-ests and parks was kept to a levelwhich prevented fires of the destruc-tive scale and intensity of 2003 butwhich also ensured biodiversity
This would not only have eco-logical benefits but would reducethe occurrence and impact of largeintense fires reduce the cost of emer-gency operations and disaster reliefand create better land-managementoutcomes The tragedy is that muchof this thinking is already enshrinedin forest management philosophiesin Victoria but has not been ad-
equately resourced or implementedBurning is possible only on a limitednumber of days each year and re-quires skilled personnel if it is to becarried out in an effective and envi-ronmentally beneficial way Consid-erably greater resources were thusneeded
THE PROPERTY OWNERSThe three scientific experts were fol-lowed by presentations of case stud-ies from individuals The speakerswere Ian Mott a third-generationforester and self-confessed lsquobush law-yerrsquo with experience of land manage-ment issues in NSW and Queens-land David Coonan who presentedthe views of the ACT SustainableRural Lands Group (a group of ACTlandholders members of which havebeen affected by two large fires inrecent years) and Russell Smith re-tired Army major and a resident ofBundarrah Valley about 40kmNNW of Omeo in North-East Vic-toria an area which was swept by therecent bushfires
While each took a distinctive ap-proach the issue of the obligationsof public land managersmdashand thelimitations even on the rights of pri-vate landholders to manage theirland adequatelymdashtended to intrudeinto all three presentations
For Ian Mott the issues were fun-damentally legal The obligations onprivate landholders are extensiveare public land managers similarlyobliged to keep the properties undertheir control equally safe This is notthe first time he has raised these is-sues but the questions had an addedrelevance in the light of evidencefrom David Coonanrsquos group and fromRussell Smith that failure to preventfuel build-up on neighbouring pub-lic lands was a significant factor inthe intensity of the fires that strucktheir own areas
Russell Smith noted that AlpinePark and State Forests in his area hadnot apparently been given any pre-scribed burning in living memoryHe has been on his property almost20 years but believes that the pe-
The failure of landmanagers to followestablished scientificprinciples and the
contribution ofgreen policies tothat failure were
two of three themesthat dominatedthe conference
s
6 MARCH 2003
E V I E WR
riod without burning is far farlonger The area is choked with nox-ious weeds and provides sanctuaryfor feral cats dogs and goats whichinvade private property
More relevant in the context ofthis forum was the fact that he esti-mated forest floor litter to have beenin the order of lsquohundredsrsquo of tonnesper hectare rather than the 4 tonnesconsidered optimal for ecologicalbalance It was so thick and densethat it was impossible to ride a horsein parts and difficult to penetrateeven on foot
Similarly despite repeated re-quests from Major Smith the Vic-torian Department of Natural Re-sources and Environment (nowSustainability and Environment)had not forced a neighbouring ab-sentee landowner to clear hugethickets of fire-hazardous blackberryand briar
When the bushfires came theseunburnt public and private landserupted into an inferno and al-though a combination of rigorousfire-prevention measures (which in-cluded conducting his own fuel-re-duction burning to create a fire breakthat extended well into the park adecision he took unilaterally whenthe park managers declined) and awell-rehearsed action plan saved hisown property the fire swept thoughthe rest of the valley
Russell Smith now believes thatthere are vital lessons to be learnedif this sort of disaster is not to be re-peated Fuel reduction is one impor-tant priority but there is also a hugeamount that can be done to improveplanning coordination and re-sponse He has a dosier of planningand communications failings manyof which could have been avoidedwith greater training and prepara-tion
(For David Coonan there is acruel irony in the fact that his grouphas presented extensive evidence tothe ACT coroner investigatingdeaths that occurred during the 1991Canberra fires The coronerrsquos find-ings are not yet public but Coonan
is saddened that he and his col-leagues may yet find themselves pre-senting similar evidence to any in-quiry into the 2003 fires)
One theme that emerged repeat-edly in the Conference from all quar-ters (scientists the case studies anddelegates from the floor) is that StateGovernments are far more enthusi-astic about creating electorally-
popular National Parks than they areabout funding the management ofthe parks they have created Timeand again reference was made to thelack of management of these parkswhich are progressively degradedthrough infestations of weeds andferal animals and which become in-creasing fire hazards
This is environmentally as wellas economically and politically dan-gerous the habitatsmdashand perhapseven entire populationsmdashof somethreatened species were engulfed inthe huge fires that spread throughthe parks of north-eastern Victoriain January February and March
One delegate asked whether thecause of environmentalism wouldnot be better served if there weregreater commercial exploitation ofNational Parks to generate fundingfor their upkeep It would at least
ensure their management was givena secure funding base he said
The continued creation and ex-tension of National Parks whenthere was not sufficient funding tomanage even existing parks was seenas evidence of State Governmentsurrender to uninformed urban-based green populists who were inturn swayed more by emotion andsymbolism than by any real under-standing of environmental manage-ment
The passion generated by thesefires was evident in the packed au-ditorium (every seat was taken andmany who tried to book late had tobe refused) Scores of residents andfirefighters from hard-hit areas ofVictoria made the journey to Mel-bourne to hear the experts and tohave their say Several busloads camefrom north-east Victoria the epi-centre of the fire disasters For themit was a 16-hour day
Other individuals made a similarjourney from Victoriarsquos north-westwhere more than 200000 hectaresof National Park along with exten-sive farmlands were also destroyed
GREEN GODSMany people expressed their con-cerns at the possible influence ofgreen activists on forest manage-ment policy These concerns wereonly confirmed by Andrew Bolt As-sociate Editor of Melbournersquos Herald-Sun newspaper who gave a talk dur-ing post-conference refreshmentsHis theme was Green Religion thetriumph of a set of mystical valuesover science
The thesis he advanced was thatwith the decline of traditional reli-gions and belief in God many mod-ern individuals were left with thechoice of either believing that hu-man beings were in charge of theirown destiny or believing that theyshouldnrsquot be and subsume humanfate to omniscient Nature Giventheir lack of faith in fellow manmany had chosen the latter courseThe result was a value-system inwhich scientific principles of sound
Governments are formore enthusiastic
about creatingelectorally-popular
National Parksthan they are
about funding themanagement of the
parks they havecreated
7MARCH 2003
E V I E WR
ON 28 January the Queens-land Government re-leased Report on the studyof land-sourced pollutants
and their impacts on water quality inand adjacent to the Great Barrier ReefIn the associated media release theQueensland Premier Peter Beattiesaid lsquoNow the report is in work onthe Great Barrier Reef Water Qual-ity Protection Plan will continuewithout arguments about whetherland activities harm the Reef Thereport is the adjudicatorrsquos decisionand is based on the best available sci-encersquo
The report written by a panelof scientists chaired by Queens-landrsquos Chief Scientist Dr Joe Bakermakes several key findings regard-ing impacts of land-based pollutionon the reef A key allegation in thereportrsquos summary highlighted in thePremierrsquos media release is that el-evated concentrations of pesticideresidue have been found in dugongs
Since publication of the book Si-lent Spring by Rachel Carson in1962 there has been concern thatpesticides can bio-accumulate inthe fat tissue of animals Prior to1987 organochlorine pesticides (forexample DDT) were used in GreatBarrier Reef catchments includingfor sugarcane production Thesechemicals have since been banneddue to global concerns about theirpersistence in the environment andtheir capacity to bio-accumulate
I first became aware of the spe-cific issue of pesticide in dugongs inAugust 1998 A senior officer withthe Great Barrier Reef Marine ParkAuthority (GBRMPA) phoned mewith the news that a soon-to-be-
Deceit in the Nameof Conservation
JENNIFER MAROHASY
published research study had foundthat elevated levels of pesticide resi-due most likely from cane farmingwere accumulating in the fat tissueof dugongs Media headlines fol-lowed including Pesticide in reefcreatures and Cane burning link withdioxin in dugong
I obtained a copy of the studyand found it was primarily an analy-sis of the type and quantity of diox-ins found in the fat tissue of dug-ong carcasses that had been killedin fishing nets1 Dioxins are a groupof organochlorine compounds com-monly associated with industrialwaste incineration The researchpaper made reference to a differentstudy that had analyzed the dioxinsfound in soils under sugarcane cul-tivation and commented that thecane-land soils and dugong fatsamples both had elevated levels ofthe same type of dioxins
Concerned by this news I con-tacted a dioxin expert at the Uni-versity of Queensland Dr BrianStanmore informed me that thetype of dioxin considered by theGBRMPA to be elevated in thedugongs was common and the leasttoxic of all dioxins Furthermore DrStanmore indicated that the levelof dioxins found in the dugongs wasless than the national average inpeople in the United States Hecommented that lsquoit looks like thedugong is better off than we arersquo
The GBRMPA study clearlystated lsquoAll (dugong) carcasses werein good condition at the time ofsampling All animal deaths wereconfirmed or suspected (fishing) netdrowningrsquo However instead of fo-cusing on net fishing practices the
environmental management were oflittle significance compared with theneed for a re-creation of a mythicalpristine Nature
Elements of this attitude he sug-gested might underlie some of thepressures which discourage the pre-scribed burning of National Parksand State Forests
Whether this hypothesis provesvalid or not there is little doubt thatthe management of Australiarsquos parksforests and other public lands willcome under greater scrutiny as a re-sult of the horrific fires of 2003 Thescale of damagemdashhuman economicand environmentalmdashis such that atleast three separate inquiries Fed-eral Victorian and from the ACThave already been proposed
The overwhelming view of del-egates at the IPA forummdashas re-flected in questions from the floorand in post-conference discussionsmdashwas that only a Federal inquiry islikely to achieve an adequate resultThis is because State and TerritoryGovernments in their role as landmanagers must share direct respon-sibility for any lack of prescribedburning and other forms of hazard re-duction that might have contributedto these fires This means that theycould potentially face hugely expen-sive legal claims and that as a re-sult there could be pressure on themto manipulate terms of reference andother criteria to diminish scrutiny ofthese important issues
Even if this concern proves ut-terly unfounded the public percep-tion could still linger that any suchinvestigation was a State Govern-ment inquiry into a matter in whichthe State had a very real vested in-terest For these reasons a Federalinquiry would have greater credibil-ity and is in fact essential if we areto come to a comprehensive under-standing of the causes of last sum-merrsquos catastrophic bushfires
Graham White is an issues management consultantwho chaired a session of the IPA bushfires forum
API s
8 MARCH 2003
E V I E WR
GBRMPA subsequently providedfunding for a full investigation bythe National Research Centre forEnvironmental Toxicology(NRCET) into the likely origin ofthe dioxin considered to be at el-evated levels in the dugong car-casses including possible links withsugarcane production
Two years later the NRCET in-vestigation concluded that the di-oxin of concern to the GBRMPAwas common in soils along the en-tire Queensland coastline includ-ing in regions beyond sugarcane cul-tivation2 Analyses of dated marinesediment cores indicated that thechemical was present prior to Eu-ropean settlement in QueenslandIn other words the dioxin is a natu-rally occurring organochlorine andnot a pesticide residue There areapparently many naturally occur-ring non-toxic dioxins
But what of the organochlorineinsecticides used in the sugar indus-try from the late 1940s until theywere banned in 1987 Have thesepesticides been found in dugongs
The GBRMPA and the Austra-lian Institute of Marine Science(AIMS) have undertaken extensivesurveys for traces of organochlorineinsecticides including an Australia-wide programme for collecting andtesting samples from stranded or re-cently killed dugongsmdashfrom whichthe dioxins were isolated While itwas expected that these program-mes would find persistent orga-nochlorine pesticide this has notbeen the case
Estuarine and near-shore marinesediments have been extensivelysampled on the basis that these ar-eas are likely to contain the high-est concentrations of contaminantsfrom human activity in adjacentcatchments Trace amounts of someorganochlorine insecticides havebeen found in sediment from a smallnumber of river mouths3 No orga-nochlorine insecticides howeverhave been found in near-shore ma-rine sediments of the Great BarrierReef4 This finding has surprised
many researchers some of whomhave postulated that the absence oforganochlorine contamination inthe inner shelf is a consequence ofenhanced degradation of the orga-nochlorines in the aquatic system
In late November 2002 I re-ceived a copy of the draft summaryof the Baker reportmdashthe report sub-sequently described by the Premieras the best available science I no-ticed the allegation of elevated con-centrations of fat-soluble pesticide
in dugongs I emailed Dr Baker que-rying this and other allegations inthe draft summary Dr Baker repliedthat he would consult with the Sci-ence Panel and get back to me Thereport was published two monthslatter without any changes to thesummary
The reef pesticide research iswell-documented and should be un-derstood by members of the SciencePanel In fact a member of the Sci-ence Panel communicated the find-ings from the NRCET investigationto me in September 2001 Whythen was the allegation of pesticidein dugongs included in the originalsummary report Why was the alle-gation not corrected after I brought API
the error to Dr Bakerrsquos attention inDecember 2002
Two years earlier following pres-sure from the World Wide Fund forNature (WWF) and as part of theQueensland governmentrsquos reelec-tion campaign the QueenslandPremier committed his governmentto saving the reef Since this timeit has been Queensland governmentpolicy that the reef is in troubleThe on-going deception is perhapsnecessary to maintain the percep-tion that the reef is in trouble
NOTES1 Haynes D Muller J F amp
McLachlan MS (1999) lsquoPoly-cholorinated dibenzo-p-dioxinsand dibenzofurans in Great Bar-rier Reef (Australia) Dugongs(Dugong dugon)rsquo Chemosphere38 pages 255ndash262
2 Prange JA Gaus C PapkeO amp Muller JF (2002) lsquoInves-tigations into the PCDD con-tamination of topsoil river sedi-ments and kaolinite clay inQueensland Australiarsquo Chemo-sphere 46 pages 1335ndash1342
3 Haynes D Muller J amp CarterS (2000) lsquoPesticide and Herbi-cide Residue in Sediments andSeagrasses from the Great Bar-rier Reef World Heritage Areaand Queensland Coastrsquo MarinePollution Bulletin 41 pages279ndash287
4 Cavanagh JE Burns K ABrunskill GJ amp Coventry RJ(1999) lsquoOrganochlorine pesti-cide residues in soils and sedi-ments of the Herbert and Bur-dekin River regions northQueenslandmdashimplications forcontamination of the GreatBarrier Reefrsquo Marine PollutionBulletin 39 pages 367ndash375
Dr Jennifer Marohasy is Environment Managerwith Queensland Canegrowers Organisation Ltd
Why was theallegation of pesticidein dugongs included inthe original summary
report Why wasthe allegation notcorrected after I
brought the error toDr Bakerrsquos attentionin December 2002
9MARCH 2003
E V I E WR
IN THE LONG AGOPlanet Earth condensed 4550million years ago (Ma) from re-cycled stardust Since that timethe continents have been enlarg-ing Earth materials have beenconstantly recycled and the Earthand all associated systems havebeen dynamically evolving TheEarth has not stopped being anevolving dynamic system just be-cause humans now live on thecontinents
As soon as there was liquid wa-ter on Earth there was life Bac-teria slowly diversified and by thetime the Earth was middle agedone group of bacteria had emit-ted such large quantities of oxy-gen (O2) that the atmospherecontained minor O2 Some of thisexcess O2 was trapped in rocks byweathering most dissolved in theoceans resulting in the precipita-tion of iron oxides It is these ironoxides that form the great iron orefields of planet Earth (for ex-ample in the Hamersley Basin)Life the atmosphere the oceansand the rocks interacted a pro-cess that has been occurring forat least 2500 million years on ourdynamic evolving planet
For at least the last 2500 mil-lion years the continents havebeen pulled apart and stitchedback together Every time thecontinents are pulled apart hugequantities of volcanic water car-bon dioxide (CO2) and methane(CH4) are released into the atmo-sphere and greenhouse conditionsprevail When continents stitchtogether mountain ranges formMountains are stripped of soilsnew soils form and remove CO2
The Past is the Key to the PresentGreenhouse and Icehouse over Time
IAN PLIMER
from the atmosphere these soilsare stripped from the land and theCO2 becomes locked in sedimentson the ocean floor When atmo-spheric CO2 is low glaciation oc-curs Large climate cycles can berelated to plate tectonics
The origin of the greatest cli-mate change on Earth is anenigma Between 750 and 600Ma there were two major glacialevents and numerous smallerevents Sea level changed by upto 400 metres and interglacial seatemperatures were 40˚C Afterglaciation the atmosphere hadsome 20 per cent CO2 and bacte-ria thrived and diversified in thewarm oceans Multicellular lifeappeared diversified and used theCO2 to make shells and skeletonsThis explosion of life from 580 to520 Ma gave us all of the majorlife forms currently present onEarth
Plants appeared at 470 Ma andthere was a major mass extinctionof multicellular life at 430 MaThe origin of this mass extinctionis not known Vacated ecologieswere quickly filled and life con-tinued diversifying Between 368and 248 Ma massive coal depos-its formed there was a major 50million-year period of glaciationand the atmosphere was blessedwith a very high CO2 and O2 con-tent Life continued to diversifyMinor mass extinctions continuedand at 248 Ma the biggest majormass extinction on Earth tookplace Some 96 per cent of spe-cies became extinct Life diversi-fied quickly to fill the vacatedecologies The record written instone by fossils in the period520Ma to the present shows thatthe planet is a warm wet green-house volcanic planet with thenormal cycles of rising and fall-
Sea Levels
Greenhouse Greenhouse GreenhouseIcehouse Icehouse
Tem
pera
ture
Tem
pera
ture
Millions of years ago1000 900 800 700 500 400 300 200 100600
There are 400 million year supercycles of greenhouseicehouse related to the pulling apart and
stitching together of continents
Icehouse
s
s
10 MARCH 2003
E V I E WR
ing sea levels rising and fallingland levels and changing climates
THE DAY BEFORE YESTER-DAYSome 120 million years ago Aus-tralia was at the South Pole en-joying a temperate climate Glo-bal sea level was more than 100metres higher than at present thesea surface temperature was 10ndash15˚ C higher than now and manycontinents were covered by shal-low tropical seas Planet Earthwas a warm wet greenhouseparadise and thick vegetationcovered the land masses Atmo-spheric CO2 was about 1 per centwhen the worldrsquos major coal de-posits formed 368 to 248 Ma
From 250 to 120 Ma the glo-bal CO2 content varied greatlyand increased to a peak 6 per centCO2 120 Ma This derived fromintense volcanic activity associ-ated with continental fragmenta-tion Thick vegetation coveredthe land masses
Australia started to pull awayfrom Antarctica at about 100 MaIt drifted northwards the TasmanSea opened and the IndianOcean opened with India start-ing to drift away from WesternAustralia The opening of theTasman Sea produced the rise ofthe Great Dividing Range thediversion of the major river sys-tems and changes to the climateof eastern Australia
A minor mass extinction oflife 90 million years ago was theresult of volcanoes in the Indianand Pacific Oceans belching outCO2 and other gases into theoceans and atmosphere Therewas a runaway greenhouse untilvolcanism waned But volcanicemissions of CO2 are common In1984 and 1986 burps of CO2 fromthe volcanic crater lakes ofMonoun and Nyos respectivelykilled thousands and added CO2to the atmosphere Near MtGambier volcanic CO2 is com-mercially extracted from rocks
one small hot spring on Miloscontributes 1 per cent of theplanetrsquos volcanic CO2 and hugequantities of CO2 the planetrsquossecond most common volcanicgas constantly leak from unseensubmarine volcanoes
Another minor mass extinc-tion at 55 Ma was caused by aCaribbean volcano There was arise in sea temperatures by up to8˚C for 100000 years and atmo-spheric CO2 was 10 times that oftoday During this greenhouseplankton sucked up the atmo-spheric CO2 mammals thrivedand life filled the vacated ecolo-gies Atmospheric CO2 decreasedfrom 3500 to 700 ppm within amillion years stayed low until 47Ma and went up and down toabout the present level (365ppm) at 40 Ma
India collided with Asia at 50Ma Uplift produced the TibetanPlateau which started to scrubCO2 out of the atmosphere TheTibetan plateau is still rising andCO2 is still being scrubbed out ofthe atmosphere The Drake Pas-sage opened as South Americadrifted from Antarctica a cir-cumpolar current developed andAntarctica refrigerated SouthernAustralia from 17 to 145 Mawas again tropical with mid-lati-tude temperatures 6˚C warmerthan today Atmospheric CO2was 180ndash290 ppm This green-house occurred when atmos-pheric CO2 was 30ndash50 per centlower than today
By 5 Ma Earth cooled andwas so cool that very slight orbitalwobbles now had a bearing on cli-mate and every 100000 yearswas characterized by 90000 yearsof glaciation and 10000 years ofinterglacial We are currently inone of those interglacial periods
The penultimate interglacialwas 120000 years ago Homoerectus Homo neanderthalensisand Homo sapiens coexisted sealevel was 6 metres higher than atpresent the planet was far
Millions of Years Ago
400 200600 0
2
4
6
8
10
12
14
16
18
20
0
Perc
enta
ge o
f CO
2
PrecambrianIce Age
s
Permian-CarboniferousIce Age
s
LastIce Age
s
There have been enormous changes incarbon dioxide (CO2) over time related to
volcanism sedimentation mountain-building and life on Earth
11MARCH 2003
E V I E WR
warmer and wetter than now andatmospheric CO2 was 78 per centof that today After warming theatmospheric CO2 and CH4 con-tent increased suggesting that at-mospheric temperature rise drivesan increase in atmospheric car-bon dioxide and methane con-tents During the history of thelatest glaciation armadas of icewere released into the sea every7000 years resulting from thephysical failure of thick icesheets These had a profound ef-fect on climate Small cool peri-ods occurred every 1100 to 1300years
The zenith of the last glacia-tion was 18000 years ago Sealevel was 130 metres lower thantoday temperature was 10ndash15˚Clower than today and the north-ern hemisphere was covered byice to 38˚N up to 3 kilometresthick
YESTERDAYThe northern polar ice sheetstarted to melt 14700 years agoThere were very rapid and majortemperature fluctuations sea lev-els rose and fell and the total sealevel rise over the last 14700years has been at least 130metres Sea level rise resulted inthe breaching of the Mediterra-nean into the Black Sea Basinsome 7600 years ago and is prob-ably the origin of the SumarianBabylonian and biblical stories ofa great flood
One of the consequences of amassive sea level rise over the last14700 years is that the WestAntarctic Ice Sheet was nolonger underpinned by the landTwo thirds of the West Antarc-tic Ice Sheet collapsed into theoceans and sea level rose 12metres The final third of theWest Antarctic Ice Sheet has yetto collapse to produce a 6 metresea level rise as part of the dy-namic post-glacial climate onEarth Climate changes inducedby changes in ocean currents
cooled North Africa grasslandschanged to a desert humans mi-grated and the great Mesopo-tamian cities were established
Sea levels were 1ndash3 metreshigher in a greenhouse 6000years ago There was 20 per centmore rainfall Cold dry periodsglacier expansion and crop fail-ures between 5800 and 4900years ago resulted in deforesta-tion flooding silting of irrigationchannels salinization and thecollapse of the Sumerian citystates Long periods of El Nintildeo-induced drought resulted in theabandonment of Middle EasternIndian and North Americantowns In 1470 BC () Thira ex-ploded weakened the dominantMinoans and changed the courseof western history
Global cooling from 1300 to500 BC gave rise to the advanceof glaciers migration invasionand famine Global warmingcommenced again at 500 BCthere was an excess of food andgreat empires such as the AshokaChrsquohin and the Romans grewContemporary records and Ro-man clothing shows that condi-tions were some 5˚C warmer thantoday
In 535 AD Krakatoa explodedas did Rabaul in 536 AD TheEarth passed through cometarydust in 536 AD The dusty atmo-sphere reflected heat and dark-ness prevailed As a result theclimate cooled and there wasfamine and warfare Changes inocean currents resulted in theMedieval Warm Period from 900to 1300 AD The first to feel thechange were the Vikings whowere able to navigate the north-ern waters colonized Newfound-land colonized Greenland andestablished extensive trade routesas far south as the modern GulfStates On Greenland crops weregrown and there were cattle Thiswould not be possible today Thewarmer wetter climate of Europeproduced excess crops and wealthwhich resulted in the building ofcastles cathedrals and monas-tries As with previous green-house events there was greatprosperity
In 1280 AD volcanic erup-tions on Iceland and a change inocean currents started the LittleIce Age which finished in 1920The North Sea froze in 1303 and1306ndash1307 there was massivefamine in 1315 and the plague
Sea
Surf
ace
Tem
pera
ture
degC
21
22
23
24
25
26
Years Ago
Large temperature changes over the last 200years have been recorded in history and fromthe oxygen isotopes of floating marine animals
Dark Agescold period
Medievalwarm period
LittleIce Age
2000 1500 1000 500 Now
s
12 MARCH 2003
E V I E WR
pandemic attacked the weakenedpopulation in 1347ndash1349 Therewas massive depopulation and ittook Europe 250 years to reachthe population of 1280 AD Dur-ing the Little Ice Age there werewarmer periods associated withsunspot activity During mini-mum sunspot activity (1440ndash1460 1687ndash1703 and 1808ndash1821) the intensely cold condi-tions were recorded by the Dutchmasters and King Henry VIII wasable to roast oxen on the frozenThames There were food short-ages Short cold periods occurredafter the eruptions of Tambora(1815) and Krakatoa (1883) re-spectively In fact 1816 wasknown as the lsquoyear without asummerrsquo This was the time whenTurner painted stormy oceansand skies full of volcanic dustMary Shelley wrote Frankensteinand Byron wrote Darkness
TODAYThe twentieth century and earlytwenty-first century AD are timesof natural post-glacial reboundIce sheets a rare phenomenon inthe history of time still exist Sealevel is relatively low as are glo-bal temperatures and atmos-pheric CO2 Between 1920 and1945 there was a period of warm-ing (037˚C) and another thatcommenced in 1976 (032˚C) In1976ndash1977 global temperaturesin the lower atmosphere jumped03˚C sea surface temperature inthe equatorial Pacific jumped06˚C sea surface temperatureduring upwelling increased 15 to3˚C but there was reduced up-welling the heat content of theupper 300 metres of the worldrsquosoceans increased there was in-creased wave activity in theNorth Sea and the length of theday changed The stepwise in-crease in temperature in 1976ndash1977 shows that there was a ma-jor re-ordering of the ocean heattransport coinciding with anorbital change expressed as a
change in the length of the dayMaybe the global warming of thetwentieth century is just a mea-sure of the variability on a dy-namic evolving planet
To put such measurementsinto perspective over the historyof time changes in atmospherictemperature in the twentieth
century can only be consideredsmall and slow A 24-year globalcoverage of satellite atmospheretemperatures shows only modestwarming in the Northern Hemi-sphere and a slight cooling in theSouthern Hemisphere Tempera-ture measurements from balloonsagree with the satellite measure-ments for the period of overlapBecause greenhouse warming is aphenomenon of the atmospheresignificant changes should havebeen recorded They have not
CONCLUSIONSUnderpinning the global warm-ing and climate change mantra isthe imputation that humans liveon a non-dynamic planet On allscales of observation and mea-surement sea level and climateare not constant Change is nor-mal and is driven by a large num- API
ber of natural forces Change canbe slow or very fast However wesee political slogans such as StopClimate Change or governmentpublications such as Living withClimate Change demonstratingthat both the community andgovernment believe that climatevariability and change are notnormal By using the past as thekey to the present we are facingthe next inevitable glaciationyet the climate economic politi-cal and social models of todayassess the impact of a very slightwarming and do not evaluate thehigher risk of yet another glacia-tion Geology archaeology andhistory show that during glacia-tion famine war depopulationand extinction are the norm
In 1831 Admiral Sir JamesRobert George Graham had theUnion Jack hoisted on a volca-nic land mass that suddenly ap-peared near Sicily It was calledGraham Bank and was claimed byEngland It was also claimed bythe Kingdom of the Two Sicilieswho called it Isola Ferdinandeathe French (LrsquoIsle Julia) andother powers In the subsequentdispute over ownership Franceand the Kingdom of the TwoSicilies almost came to war andEngland and the Two Kingdomsof Sicily had a diplomatic rowDuring the intense diplomaticdispute the island quietly slippedback underwater Graham Banksserves to show that whateverpolitical decisions we humansmake the land rises and falls sealevels rise and fall and climateschange as they have done sincethe dawn of time
Ian Plimer is the Professor of Geology in the Schoolof Earth Sciences at The University of MelbourneThis article is an edited version of his recent paperto the IPArsquos Climate Conference delivered on 28
February 2003 a full version of which can befound on the IPArsquos Website
On all scales of
observation and
measurement sea
level and climate
are not constant
Change is normal
and is driven by a
large number of
natural forces
13MARCH 2003
E V I E WR
FOR two years the worldrsquossecond largest hydrocarbonsproducer spent beaucoupdollars on a clever public re-
lations and advertising campaign toconvince consumers that BP no longerstands for British Petroleum but for Be-yond Petroleum
One advert proclaimed lsquoWersquore oneof the largest producers of natural gashellip and are investing in the new energysources of the futuremdashhydrogen andwind Itrsquos a startrsquo Another tried to getthis line past the guffaw test lsquoWe be-lieve in alternative energy Like solarcappuccinorsquo
Many people expressed surprise thata huge oil company was so committedto alternative energy technologiesThey neednrsquot have
BPrsquos total six-year investment in re-newable technologies was $200 mil-lionmdashthe same amount it spent on thelsquoBeyond Petroleumrsquo advertising cam-paign Thatrsquos certainly an impressivetab for image enhancement But itrsquos adrop in the barrel for futuristic tech-nologies that were the centrepiece forthe slick marketing effort
Indeed all its preening and pufferynotwithstanding BPrsquos actual invest-ment in renewable energy was a whop-ping 005 per cent of the $91 billion itspent to buy oil giants Arco and Amocoback in the 1990s Moreover just as theadvertising campaign was windingdown BP announced it was spending$675 billion for a 50 per cent control-ling interest in a rich Russian oil pros-pectmdashand will be spending another$20 billion over the next five years ex-ploring this and other newer fieldsaround the world
In other words the advertising cam-paign was little more than lsquogreen-washingrsquomdashdisinformation intended topresent an environmentally responsiblepublic image BP wanted people to per-
BPmdashBack to PetroleumPAUL K DRIESSEN
theoretically harmless puffery It also re-flects the desire of many multinationalcompanies to appease critics and gaina public relations advantage over com-petitors by adopting the language ofideological environmentalism
This radical school of thought in-creasingly uses ethical buzz-words anddogmas to justify its demands Chiefamong them are sustainable develop-ment and the precautionary principlethe foundations of so-called lsquocorporatesocial responsibilityrsquo (CSR) and lsquoso-cially responsible investingrsquo (SRI) doc-trines
Eco-activists from affluent Westerncountries developed the doctrines topromote their agendas and oppose en-ergy and economic development BPhas long been at the forefront of theseefforts as a charter member of theWorld Business Council for SustainableDevelopment through frequent meet-ings with activist groups and by fund-ing many radical groups
The activists define what is lsquorespon-siblersquo focusing debate on conjecturalproblems and theoretical needs of fu-ture generations of wealthy elitesmdashandignoring real immediate life-and-death needs of people who struggledaily just to survive The stakes arehuge
More than 15 billion people in de-veloping countries still do not have ac-cess to electricity Half a billion womenand children spend their days collect-ing firewood or squatting in mud andanimal faeces to collect and dry ma-nure for fuel Millions die every yearfrom lung diseases caused by indoor airpollution from cooking fires and dys-entery due to contaminated drinkingwater
Hydroelectric or fossil fuel projectscould provide electricity for familieswater purification plants and economicdevelopment But radical activists op-
ceive it as a lsquosocially responsiblersquo leaderand reward it accordingly Few did
Green activists denounced BP forlsquohypocrisyrsquo and blasted the company forcontinuing to lsquoexploit some of theworldrsquos most sensitive ecological areasrsquoA major business magazine said sim-ply lsquoWell please If the worldrsquos secondlargest oil company is beyond petro-leum Fortune is beyond wordsrsquo
Meanwhile BPrsquos total wind and so-lar electrical output last year was barelyenough to keep the lights burning inRegina Saskatchewanmdashand thought-ful observers are beginning to realizethat wind and solar arenrsquot quite as eco-friendly as activists claim
A single new 555-MW gas-firedgenerating plant in California producesmore electricity than do all the statersquos13000 wind turbines The gas-firedplant occupies about ten acres the gi-ant 200-foot-tall windmills dominatethousands of once-scenic acres and killthousands of raptors and other birdsevery year Current photovoltaic tech-nology is just as habitat-hungry
Worse chief executive Lord JohnBrowne was forced to lower BPrsquos pro-duction estimates three times last yearand the companyrsquos 11 per cent returnon average capital was well below thatof arch-rivals ExxonMobil (137 percent) and Royal DutchShell (148 percent) BP share prices reflected inves-torsrsquo displeasure with its poor perfor-mance and the fact that the companyrsquosprofit margins would not improve for adecade or more if the company re-mained focused on renewable energyand old oil fields
Thus if BP ever really was BeyondPetroleum going Back to Petroleum(and Bigger Profits) was a sound busi-ness decision
However the lsquoGreat Beyondorsquo adcampaign involves more than meregreenwashing and disingenuous but s
14 MARCH 2003
E V I E WR
API
pose these projects and say that theworldrsquos rural poor should be contentwith solar panels on huts
Investors are also at risk particu-larly retirees whose futures depend onpension and mutual funds that ownnearly $8 trillion in market sharemdash50per cent of the total stock marketMany of these funds are managed lessto safeguard or benefit the investor thanto promote radical principles under thedisguise of so-called ethical funds
These funds claim to provide pro-fessional unbiased analytical and ad-visory services But in reality they sup-port political agendas based on often-questionable analyses and on lsquostake-holderrsquo (activist) input to justify howthey grade companies in client portfo-lios They regularly excoriate compa-nies such as ExxonMobil claiming itsrefusal to back the Kyoto climate treatywill destroy shareholder value Mean-while they praise companies such asBP and promote global governanceand solar panels on huts
Australiarsquos energy consumers willbecome yet another example of lsquocol-lateral damagersquo if the radicals havetheir way over global warming Onceagain some of the culprits are right inthe BP boardroom
In 1997 BP chief Browne endorsedthe global warming theory and saidtough measures should be imposedquickly even in the absence of scien-tific proof A Clinton-era Energy In-formation Administration report con-cluded that the climate treaty woulddrain $340 billion a year from the USeconomy The Australian economywould also get hammered And all thispain even assuming perfect compli-ance with the treaty would reduce av-erage global temperatures in 2050 byonly 02˚C below what they would bewithout the treaty according to theUSArsquos National Center for Atmo-spheric Research
But BP Australasia President GregBourne is undaunted Hersquos stumping thecountry from Melbourne to Brisbaneand Darwin to Perth importuning busi-nesses to pressure the PM to ratifyKyoto Could it be pure altruism Ormight the old profit motive be at work
A 1997 memo to Enron presidentKen Lay described BP as Enronrsquos lsquoin-ternational equivalentrsquo Indeed BP isstriving mightily to replace Enron asthe worldrsquos premier broker in the newbusiness of buying and selling permitsto emit greenhouse gases The expec-tation is that playing the climatechange game could earn BP billions ofdollars via traditional petroleum opera-tionsmdashand billions more via emissiontrading schemes The company is al-ready trading credits among its unitsas part of a training regimen for theanticipated emission Olympics
One cannot help but suspect thatthis huge EU oil giant might also bemotivated by Europersquos obvious desireto protect its industries from US and
other foreign competition They clearlysee the Kyoto Protocol not merely asan environmental programme but alsoas a way to pressure the United StatesAustralia and other countries to reduceenergy use and economic productivity
EU Environment CommissionerMargot Wallstrom put it bluntly whenPresident Bush abandoned the Kyotoclimate treaty lsquoThis is not a simple en-vironmental issuersquo she railed lsquoThis isabout international relations this isabout economy about trying to createa level playing field for big businessesthroughout the worldrsquo Several EU of-ficials echoed her sentiments suggest-ing that Americarsquos lower energy taxesconstitute an unfair trade advantagethat could justify trade sanctionsagainst the US
In short what we are witnessing isa profound and disturbing convergenceof ideology activism marketing poli-tics and financial gainmdashall in the ser-vice of radical policy agendas and allbeautifully attired in the lavish raimentof corporate ethics and responsibilityThis is proof positive that social respon-sibility can be a wondrous thing in thedexterous hands of craftsmen who re-ally know how to display and utilize it
How can we stop the charade Forstarters demand that corporate socialresponsibility puts people first puts de-velopment back into sustainable devel-opment and ensures that precaution-ary guidelines safeguard people andcommunities from the havoc wreakedby radical green policies Insist that alldecisions be based on sound peer-re-viewed science and solid evidencemdashnot on hysterical claims and shrillrhetoric by activists regulators andjournalists who reward pseudo-scien-tific soul-mates and pillory any scien-tists who dare disagree with them
Next urge principled regulators andjournalists to investigate these compa-nies and investor firms for self-servingarrangements and breech of fiduciaryduty Demand that the companiesfirms and activist groups open theirbooks and provide full disclosure oftheir meetings contacts and monetaryand other relationships
Last in this era of high-minded re-form prevail upon legislators to changethe law to make these groups subjectto the same false advertising laws andthe same standards of transparency andaccountability that activists insistshould govern for-profit corporationsUnbelievably right now these ideo-logues are mostly exempt
The world will thank you For it willbe a better safer more ethical placemdashespecially for energy consumers retir-ees and the worldrsquos poor
Paul Driessen is a senior fellow for the AtlasEconomic Research Foundation in Fairfax VA This
article is based on his recent white paper lsquoBeyondPetroleummdashor Beyond Probityrsquo which can be read
in its entirety at wwwcdfeorgdriessenhtm
BPrsquos total six-year
investment in renewable
technologies was $200
millionmdashthe same
amount it spent on the
lsquoBeyond Petroleumrsquo
advertising campaign
15MARCH 2003
E V I E WR
FOR three years Reputa-tion Measurement Ltd andThe Age and The SydneyMorning Herald have been
trying to impose their political agen-das on Australiarsquos top 100 corpora-tions They think that Australiarsquos cor-porations should be good citizens andthat by measuring what they think itmeans to be a good citizen they canchange corporate behaviour
Westpac ranked number one on the2002 Index and rated well in everycategory Flight Centre ranked num-ber one on financial performance but47 overall It was in the doldrums inevery other category including beingranked 99 on environment On thesurface this seems very strangemdashFlightCentre manages shopfront travel agen-cies The reason for this bizarre resultwas not hard to find
Reputation Measurement sug-gested that lsquocompanies seeking to dem-onstrate their worthiness as sociallyresponsible organizations are most suc-cessful when they widen their tradi-tional business stakeholder base to in-clude community stakeholdersrsquo Fur-ther lsquo[i]nvestors and consumers are in-creasingly making decisions based onlonger-term issues linked to a com-panyrsquos capacity to contribute to a sus-tainable futurersquo In other words theReputation Index is an instrument foradvancing a number of political agen-das corporate social responsibilitystakeholder capitalism and sustain-ability
For example corporate social re-sponsibility suggests a common agree-ment about what is good Whose defi-nition of good is to be believedmdashtheelectoratersquos or the activistsrsquo In a lib-eral democracy the rules are set by aconsensus that determines not so muchwhat is good corporate behaviour but
The Good Reputation Index 2002A Tale of Two Strategies
GARY JOHNS
what is and what is not acceptablebehaviour The Index is an exercise incapturing the reputation agenda andusing it to regulate corporate beha-viour
Stakeholder theory suggests that allinterests in an enterprise compete toobtain benefits from the enterprise butthat none has priority It is in effectasking lsquoin whose interests should theenterprise be runrsquo It assumes that so-ciety grants an enterprise the right toexist The community through its law-makers may grant licences and certainprivileges in return for the enterprisecomplying with the law It does notlicense stakeholders at large to imposetheir views on the corporation
Sustainability refers to ecologicalsustainability and ecological sustaina-bility is premised on the notion of lim-its to growth based on limits to resour-ces It argues that natural resources arebecoming scarcer It ignores the his-tory of technological innovation of-ten promoted by competition betweencorporations and the fact that such in-novation has extended physical re-sources in ways untold
An analysis of the 2002 Index re-veals that those corporations whosescore improved massively between2001 and 2002 did so because they didnot participate in 2001mdashthey wererated anywaymdashbut did so in 2002Conversely those whose score plum-meted in 2002 did so because they par-ticipated in 2001 but not in 2002Moreover the corporations who rosemassively in the ranks did not changetheir behaviour they just filled out theforms better
Greenpeace were very aggressive intheir attitude to corporations lsquoTo en-able us to verify your responses pleaseprovide us with further supportingdocumentation If hellip we are unable
to verify your response we will defaultyour response answer to a ldquodonrsquot knowrdquowhich will be marked and downgradedaccordinglyrsquo Unfortunately those ofwhom we would expect bettermdashforexample The Brotherhood of St Laur-encemdashalso penalized non-respon-dents As the technique was used byalmost all of the research groups thiswas presumably a deliberate strategy ofReputation Measurement Ltd
More disconcerting were reportsfrom corporations of the researchgroups touting for business by ringingfirms and offering their services to helpfill out the questionnaire Althoughthe level of disclosure has increasedsince the 2001 survey the touting con-tinued
The Index was published in Octo-ber 2002 obviously to coincide withthe reporting season and in the hopethat shareholders would use the Indexto seek changes to corporate behav-iour A sample of the major gainers andlosers on the Index reported no men-tion of the Index More importantlythere was no discernible impact onshare prices
The good news is that the Indexfailed miserably to achieve its objec-tives The bad news is that enough cor-porations played along to keep it alivein certain media and academic circlesIt was a chance for self-appointedNGOsmdashwho provided the ques-tionsmdashto regulate corporations bypublishing a list of good capitalists andbad capitalists Every corporation thatparticipated in the Index should thinkcarefully about whether it can justifythe agenda to its shareholders
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
16 MARCH 2003
E V I E WR
Tomorrowrsquos Reform
RALPH Waldo Emersontold us that lsquoa foolish con-sistency is the hobgoblinof little minds adored by
little statesmen philosophers and di-vinesrsquo and enjoined us lsquoto speak whatwe think today in words as hard ascanon balls and tomorrow speak whattomorrow thinksrsquo While statesmenshould not persist with known errortheir wanton inconsistency makespolicy formulation confoundedly dif-ficult
When he asserted that lsquoWhat de-termines the course of a nationrsquos eco-nomic policies is always the eco-nomic ideas held by public opinionrsquoLudwig von Mises must have hadeven less confidence in little states-men His pupil Friedrich von Hayekurged Antony Fisher not to enterpolitics but instead to found think-tanks which with fact and argumentwould change public opinion
Even among liberalismrsquos oppo-nents few today argue that Misesrsquoand Hayekrsquos ideas and Fisherrsquos liberalthink-tanks did not lead the 1980sand 90s almost world-wide liberal re-vival Why would they when bymuch the same means Fabian So-cialism had brought the welfare stateto Western nations In neither trendhowever were politicians the mereagents of popular opinion Especiallyin democracies political leadersrsquo ca-pacities to ignore it are indeed mod-est but their abilities to influence itare very much less so Even SaddamHussein works hard at influencingIraqi opinion Can we hypothesizethat the ways that leaders use theirinfluence distinguish tyrants fromdemocrats and the purposes forwhich they use it distinguish politi-cians from statesmen
Liberalismrsquos headlong chargethrough the corridors of power could
JOHN HYDE
arguments could have been em-ployed are nonetheless being de-fended by appeal to popular miscon-ceptions of the sort that PaulineHanson the Democrats and Greensactually believe Unless the majorparties have had a radical change ofheart they believe differently
Take the proposed Free TradeAgreement (FTA) with the UnitedStates Trade experts are not of onemind about its net worth My quar-rel is therefore not with the FTAitself but with the Governmentrsquos de-fence of it If the FTA will bring netbenefits then these will come mostlyfrom improved access to Americangoods and capital our own reductionof anti-competitive regulation ofdrugs medical insurance performingarts professional services textilesrural commodities etc and the dy-namic advantages of mixing it withthe Yanks But the government ispromoting the FTA almost solely inmercantilist (exports goodimportsbad) terms
To treat foreign goods servicesinvestment and ideas as an invasionparodies voluntary exchange whichdoes not happen unless both partiesbenefit The Government trumpetsa fact that nobody disputes namelythat it pays to sell into the best pay-ing markets but says nothing to edu-cate us in the advantages of buyingwell from foreigners as well asneighbours Once long ago Howardcriticized Pauline Hanson for her xe-nophobia That day he seemed to un-derstand the benefits of exchangewith foreigners
Until recently Australia hadbeen insisting that the only way toworld trade reform was via the mul-tilateral processes of the World TradeOrganisation and currently theDoha round A bilateral FTA with
not have proceeded without leaderssuch as Margaret Thatcher and ZhouEnlai who changed public opinionas did Bob Hawke in Australia Nowhowever liberalismrsquos charge hasslowed even in some places beensomewhat reversed Canberra hasnot been immune from trends thatsee politicians no longer so firmly re-sisting demands for economic privi-leges or as others see the same phe-nomenon no longer so blindly fol-lowing economic rationalism
Very poor economic decisionsaboundmdashrejection of the Trebeck re-port on petrol pricing preference forethanol production extending mo-tor and textile protection rural sub-sidies taxpayer contribution to theDarwin-to-Alice Springs railwayetc etc But there is also progressThe pride that John Howard takesin the fact that Australians are lessdivided against each other is surelyjustified The hugely importantlabour welfare and arguably also thehealth-care markets have been im-proved Budget balance has beenachieved albeit with high taxes Al-though net legislative and adminis-trative progress toward a more lib-eral more open more efficienteconomy has dwindled it would stillbe fair to say it has not been reversed
Our statesmenrsquos words as hard ascannon balls however that is thoseintended to enlighten rather thanappeal to public opinion are beingreserved for the Iraqi conflict In con-trast in the economic arena we areno longer encouraged to accept anyunwelcome truths Even when de-fending measures that I am morethan content to accept as beneficialthe government seems to select itsargument at best randomly ignoringprinciples of economic efficiency andequity Policies for which textbook
17MARCH 2003
E V I E WR
the US may or may not result in anet increase in trade flows but if itis not a meaningless piece of paperdelivering only political benefits tothe Government it will certainlydivert trade from our other tradingpartners How will China KoreaJapan etc react to losing their lsquomostfavoured nationrsquo status Such ques-tions should be addressed in termsthat do better than reinforce our xe-nophobic prejudices
By appealing to Hansonite mis-conceptions the Government mayand probably will improve itschances of bringing forward a policythat I am more than willing to ac-cept it believes is a good one It isafter all the recommendation of theDepartment of Foreign Affairs andTrade However by so doing it is re-inforcing delusions it must overcomefor further economic reform Whatis more I am reminded of a quip thatI am sure the PM has also heard lsquoNoGovernment is really dangerous un-til it believes its own bullshitrsquo Poli-ticians and I suspect bureaucratsalso are all too prone to believingtheir own utterances Unwilling toadmit their deceptions even whenspeaking in house they quickly con-vince themselves of the truth of theirown and colleaguesrsquo loose rhetoricand worse These are the people whomust negotiate the Agreement whilelooking over their shoulders at anAustralian electorate whose alreadystrong mercantilist tendencies havebeen reinforced by the people bestplaced to disabuse them The poten-tial cost is obvious
The US Free Trade Agreement isbut an example of a tendency thatought to be worrying In debateabout refugee policy motor fuel sup-ply single-desk wheat sales the sup-ply of medical practitioners and pres-ervation of the environment has notthe Government employed argu-ments that are not compatible withits professed liberal philosophy Hasit not seemed that it does not knowthe standard liberal responses to theself-serving demands of vested inter-ests and bigots With due respect to
Emerson consistency allows deci-sions to be made without the neces-sity of thinking every one throughfrom fundamental principles whichnobody in authority has the time orthe mental agility to do
Politically disinterested educa-tors such as the IPA can often callsome pretty good minds to their aidEven so when the Government it-self fosters public misconceptionthey cannot be expected to undo theerror The single greatest sin of thecurrent government is that it is notbuilding opinion for tomorrowrsquos re-form Why not
I suggest because it is politicallydifficult Whereas calls to resist out-siders appeal to deeply ingrainedtribal instincts calls to uphold thecivilizing and wealth-building insti-tutions that afford protection tostrangers and admit their goods ser-vices persons and ideas make nosuch visceral appeal These codes aremuch later developments in themarch of mankind and to manypeople they remain counter-intui-tive They must therefore be de-fended by sustained argumentHayek knew that politicians whosetime horizons in the absence ofknown crises tend to be the nextelection would (to use Howardrsquosown expression) seldom have the
tickers He turned therefore to theless articulate but far more resolutethink-tanks
It is relatively easy to appeal tothe sort of Chauvinism that sur-rounds sporting activity and argu-ments about refugees and meat quo-tas When a Prime Minister talks ofsovereignty guaranteeing our bor-ders or the interests of our exportersor domestic manufacturers he is notnecessarily wrong but his task iseasier than that of defending rulesthat permit voluntary co-operationamong strangers The principle thatdefends the non-unionistrsquos right towork the consumerrsquos right to buy for-eign goods and everyonersquos right tohear alien ideas and which shouldprotect racial and religious minori-ties from exclusion still needs hisleadership
Unless statesmen recognize theinconsistencies that arise not fromthe changed opinions that con-cerned Emerson but from trying tobe all things to all men they arelikely to govern in ways that are un-fair and inefficient If the public doesnot recognize consistency then thelsquolittle statesmenrsquo may find them-selves compelled to yield to the de-mands of the more articulate vestedinterests In such a case Heaven helpthe inarticulate who will be effec-tively disenfranchised But the insti-tutions which when consistentlyapplied give us liberty equity andprosperity are not strongly intuitive
They nevertheless distinguishAustralian society from say Iraqi so-ciety They give us the economicstrength to defy tyrants and they giveus a land worth defending They arecertainly not in danger of disappear-ing but they are in danger of beingeroded Lead us Mr Howard
While statesmen
should not persist
with known error
their wanton
inconsistency makes
policy formulation
confoundedly
difficult
API
John Hyde is a Senior Fellow with the Institute ofPublic Affairs His book Dry In Defence of
Economic Freedom was published by the IPA in November 2002
18 MARCH 2003
E V I E WR
DESPITE the obsessivepublic attention to pricesat the petrol pump thepetroleum-refining sector
rarely registers on the media radarscreen This is unfortunate as the sec-tor fuels most movement of peopleand goods in our economy and soci-ety And it is in trouble
It is fragmented stunted and sur-vives by abjuring profit and mortgag-ing its future Without radical reshap-ing it is likely to wither leaving usexposed to the vagaries of the inter-national refined-products market
FEATURES OF THE AUSTRA-LIAN REFINING SECTORThe first thing to note is that by in-ternational standards Australia is arelatively small player The most re-cent international figures show thatour total output of refined productsin the third quarter of 2002 was 89million tonnes This compared withOECD production of 486 milliontonnes including US production of202 million tonnes Total Australianrefinery capacity of 870000 thousandbarrels per day (bpd) compares withthe figures for China (53 million)South Korea (26 million) and Singa-pore (11 million) Total regional re-fining capacity and production con-tinues to grow as Australiarsquos stagnatesIn the five years to 2000 regional out-put grew by 22 per cent
Second the structure of the indus-try is weak The dispersed geographi-cal distribution of our refining sectorreflects its historical developmentwith each State capital city support-ing one or more refineries Over thelast two decades the number of ma-jor oil companies operating in Aus-
Petroleum RefiningRationalization or Atrophy
JIM HOGGETT
tralia has shrunk from nine to fourAlthough the number of players hasmore than halved the number of re-fineries has reduced by only two fromten to eight The average capacity ofAustralian refineries is around100000 bpd New refineries in theregion are generally significantlylarger Singaporersquos largest has a capac-ity of 375000 bpd
Given the open Australian mar-ket our ex-refinery prices are virtu-ally set by the major exporters in theregion who are also operating on tightmargins Moreover the proportion-ately heavy demand for diesel in SEAsia tends to generate a persistentsurplus of gasoline which is availablefor export to Australia at discountedprices
The pattern of relatively smallscattered refineries is no longer opti-mal in an open market in which weare a price-taker
Third despite its sub-optimalstructure the Australian refining in-dustry is not grossly inefficient Oneindicator is the value added per em-ployee which is in the top five per-formers in the Australian manufac-turing sector
The cost competitiveness of Aus-tralian products is indicated by thefact that we have the cheapest ex-taxprice of petrol in the OECD Perfor-mance comparisons with the rest ofthe AsiandashPacific however suggestthat we lag the average efficiency inthe region And the best performersin the region are superior to our best
Finally the financial performanceof the industry is poor gross annualrevenues for the whole industry in-cluding marketing were $32 billionin calendar year 2001 For the five
years to 2001 the return on assets forrefining and marketing averaged 38per cent and was negative in the lasttwo years The indications are that2002 may have been a better year forthe industry but that the return onassets remains well below the cost ofcapital Over the four years to 2001the fixed asset base of the industrydeclined by almost 6 per cent to $12billion even after $24 billion of newinvestment in the period
This is clearly unsustainable andit raises the question Why is no-oneleaving the game
There are perhaps four main rea-sonsbull First the industry has engaged in
continual productivity improve-ment allowing it to keep withinrange of ruling prices
bull Second each refiner hopes thatsomeone else will blink first sothat the waiting will pay off
bull Third the costs of leaving thetable the exit costs are very highbecause of the nature of the prod-uct and the long occupancy ofmost sites
bull Fourth even while profitability islow the industry has generallybeen marginally cash positive
These add up to a big lsquofirst mover dis-advantagersquo
FUTURE TRENDSClearly petroleum will remain ourmost important energy source Petro-leum products constitute 52 per centof Australiarsquos final consumption ofenergy Liquid petroleum fuels pro-vide more than 95 per cent of Aus-traliarsquos transport needs There are nomajor foreseeable influences that willaffect this pattern dramatically There
19MARCH 2003
E V I E WR
have been major advances in fueleconomy and these will no doubtcontinue But more than counterbal-ancing this is the inexorable growthin demand for personal mobility andfor goods from distant parts Althoughgrowth in energy consumption mayslow down in Australia we will notbe reducing our consumption to anysignificant degree
Our export role will also be lim-ited Australian export volumes havetended to be steady over recent yearsand future new export potential forpetroleum products seems likely to beminimal China and India have re-cently become major exporters par-ticularly of gasoline Refinery capac-ity is planned to continue to growstrongly in the region even thoughthere is already significant excessThe decline in capacity utilization inmajor exporters such as Singaporewill make exporting difficult Further-more it is expected that productspecifications in Asia the US andEurope will converge in the comingyears thereby eliminating niche ex-port opportunities
The choice we face is what to doabout our essentially import-compet-ing industry
INCENTIVES NOT STRONGWhile there are strong pressures forthe industry to restructure there islittle incentive to invest for this pur-pose Investments in the Australianrefining industry have to competewith many alternatives across theglobe
Lack of sufficient return is thesingle biggest deterrent to investmentin the industry at present But thereare othersbull There is no prospect of strong growth
in demand to offset the substantialrisks associated with large new in-vestments
bull The persistent refinery capacity over-hang in our region will keep sus-tained pressure on our margins
bull The corporate taxation regime is nowless favourable than hitherto after thesubstitution of effective-life foraccelerated depreciation The
competing Singapore option offersa three-year write-off
bull The regulatory cost burden is grow-ing This applies to all Australianindustry but is potent in overseascomparisons Tighter fuel stan-dards environmental restrictionsintervention in prices and indus-trial law are some of the factors
bull There is increased sovereign riskstemming from inconsistent regula-tions We have eight parliamentswhich enact inconsistent laws Acurrent example is the higher fuelstandards applied in Western Aus-tralia
bull The sovereign risk also arises fromuncertainty in the regulatory processThere are unpredictable changesof direction (the deferral of thediesel sulphur excise differential[DSED]) and uncertainty in theface of conflicting interests (willthe Government act on ethanolcontent)
All these factors enter into the riskreward calculation When the re-wards are minimal the risks take onan extra dimension
WHAT INDUSTRY STRUC-TURE DO WE NEEDThe short answer is we cannot knowin detail
In the Downstream Petroleum In-dustry Framework 2002 the Depart-ment of Industry Tourism and Re-sources set out a broad vision
bull A preference for market-based so-lutions
bull A strong efficient environmen-tally responsible industry supply-ing most of the nationrsquos needs forproducts
bull Regulation only for market failureor national interest objectives
bull Regulation to be transparent andconsistent
bull Reform and regulation to maxi-mize long-term community ben-efitThis vision has some prescriptive
elements but the Government hasmade it clear that it will not nomi-nate an optimal number of refineriesor a pattern of production
The general public would probablyopt for a structure that guaranteedlower more stable automotive fuelprices Unfortunately they cannothave both in the short term
In fairness the investors in the in-dustry are the ones entitled and bestfitted to determine its future In theextreme they will do it anyway bypersisting or walking away Generallyspeaking they will seek to maximizetheir returns and thus promote themost efficient use of resources
Australian refineries are not inef-ficient but that is not the point Ourmarket is open so the competitionwe face is the best of the overseas per-formers often with more favourabletax and subsidy regimes
Nor is this simply a question ofclosing the smallest refineries A bet-ter approach might well be to allowrefining companies to concentrate onwhat they do bestmdashperhaps throughrefinery alliances Caltex and Shellhave co-operated in this way in Thai-land
The fact is that the detail of thedecisions can only be made by theindustry relatively free of governmentdirection The series of detailed de-cisions entailed will determine theoverall structure of the industry
COMPETITION REGULATIONCAN IMPEDE RESTRUCTURINGThe relevant provision of Section 50of the Trade Practices Act (TPA) pro
While there are
strong pressures for
the industry to
restructure there is
little incentive to
invest for this
purpose
s
20 MARCH 2003
E V I E WR
hibits mergers or asset acquisitionsthat would have the effect or belikely to have the effect ofsubstantially lessening compe-tition in a marketIt is both potentially and in prac-
tice an extremely restrictive provi-sion The Australian Consumer andCompetition Commission (ACCC)has expressed concern at concentra-tion in the sector in applying the pro-vision
The ACCCrsquos concerns seem ex-aggerated in the light of history Butthey are complemented by a persis-tent public misapprehension thatlarge petrol price swings equal profi-teering This perception has been soexploited for political advantage andmedia excitement that it is now al-most impossible for the truth toemerge
The future intensity of competi-tion in this industrymdashif it is allowedto restructuremdashshould not be indoubt Any rationalization would inall likelihood still leave strong do-mestic competition in each majorproduct category perhaps with fewermore efficient production units
The market is also contestableThere would be numerous potentialimporters and many independent re-tailers High margins would be rap-idly eroded by competition As re-cently ruled in the Boral case mar-ket reality is more conclusive than aperception of anti-competitiveness
Proposed mergers have been per-mitted in the past but the process isslow and permission is generally onlygranted with severe conditionsNonetheless there is a strong case forallowing restructuring within theterms of the merger provisions
AUTHORIZATION COULD BETHE KEYIf Section 50 of the TPA is an im-passable barrier then the authoriza-tion provisions of the Act could bethe way to greater efficiency The testsunder these provisions require a pub-lic benefit which outweighs the com-petition detriment The ACCC listsfostering business efficiency industry
rationalization and import-competi-tiveness as important public benefits
There is a strong prima facie casethat rationalization of the industrycould satisfy these tests It wouldallow greater scale of productioneconomies in distribution and closureof the least efficient production units
But the authorization process isslow and the onus for demonstratingthe public benefits rests on the appli-cant Slow process can amount to ef-fective rejection
POLICY OPTIONS AND REC-OMMENDATIONSIf government cannot help the indus-try to adjust it should allow it to ad-just by supporting sensible changeThis would involve both improving
the operating environment throughregulatory reform and altering thebalance of competition regulation sothat the industry could restructurevoluntarily The CommonwealthGovernment has already indicated awillingness to support both but hasnot yet delivered
The ball would then be in theindustryrsquos court to bring forward newproposals if a new policy environmentcould be created This could all hap-pen within a very broad strategicframework agreed with the industrywhereby Australia continued to besure of sufficient refining capacity tomeet a severe international fuel short-age
We therefore recommend thatbull The Commonwealth Govern-
ment provide explicit indicationto the ACCC of the public ben-efits it sees from the rationaliza-tion of the refining sector In par-ticular joint ventures should becontemplated
bull The ACCC give sufficient weightto the public interest benefits ofrestructuring to allow rationaliza-tion of production facilities
bull All governments reduce distortingfuel subsidies and taxes that favourparticular sectors or fuels
bull The State Governments act im-mediately to harmonize their regu-lation of the industry and agreenot to issue any new inconsistentregulation
bull More specifically the States havea single set of fuel standards withwhich refiners can reasonablycomply withdraw from all formsof price regulation and refrainfrom thwarting or distorting therationalization process
bull Governments generally not intro-duce new regulations mandatingthe use of alternative fuels
CONCLUSIONThe choice for the industry appearsto be between accelerated rational-ization and atrophy The process ofchange is something which the indus-try must plan and effect The task isnot impossible but it will require theactive support of government at alllevels For the time being there is anexpressed willingness at the Com-monwealth level but no real solu-tions
If nothing is done the refiners willcontinue to stumble along in a regu-latory fog and will invest only whenobliged to do so by changing fuel stan-dards They will become increasinglyvulnerable to low-priced imports andeventual closure
Jim Hoggett is a Senior Fellow at theInstitute of Public Affairs
If Section 50 of the
TPA is an impassable
barrier then the
authorization
provisions of the Act
could be the way to
greater efficiency
API
Last week the Government tabled 22 volumes of theCole Royal Commission into the Building andConstruction Industry Former Court of Appeal judgeTerence Cole made 392 specific findings of unlawfulconduct and in the confidential final volumerecommended that 31 individuals be referred for possiblecriminal prosecution As was to be expected theconstruction unions claimed that the report was a witch-hunt and people who should have known better claimedthat Cole was biased
The anti-union allegations were never very plausiblegiven that most unions had refused to cooperate withthe Commission and had even boycotted theCommissionrsquos special conference on occupational healthand safety As things have turned out one of their ownhas fatally undermined the unionsrsquo case No less anauthority than the National Secretary of the ConstructionDivision of the CFMEU has unwittingly confirmed thatCole is right In what was no doubt an unguardedmoment John Sutton admitted to a Melbournenewspaper that ldquovirtually everything we do breaches partof this Actrdquo Suttonrsquos admission means that Colersquosdescription of a largely lawless industry can be disputedat the margins but not credibly denied The problemsof the industry have been established beyond credibledoubt and the question now is what needs to be doneabout it
Nothing says the CFMEU because itrsquos alright tobreak the law in the best interests of the working classLeading union officials take the view that in a toughindustry only wimps take the law seriously The newsthat ldquoonlyrdquo 31 individuals had been recommended toface criminal charges was greeted with somethingapproaching jubilation as if the industryrsquos code of silencebased on fear had largely kept the Royal Commission atbay
As the Australian Financial Review commented in aneditorial the unionrsquos dismissive reaction to Colersquos report
ldquospeaks as loudly as his damning findings of entrenchedlawlessnessrdquo Imagine the reaction if a royalcommissioner had identified 31 people in the financeindustry or the steel industry for possible criminalcharges This would rightly be regarded as the sign ofan industry in crisis demanding urgent governmentintervention
Change wonrsquot be easy in an industry conditioned tothink that might is right Change which shifts powerfrom one unscrupulous group to another will not bereform As Grocon has discovered the first company toldquobuck the systemrdquo is liable to heavy-duty industrialpayback No one wants to be the first to change butchange is necessary in the national interest
In 2002 the Victorian construction industry aloneaccounted for 17 per cent of all days lost through strikesThe West Australian construction industry accountedfor another 8 per cent of the national strike tallyConstruction is a $40 billion a year industry comprisingnearly six per cent of GDP and employing nearly500000 Australians Due to over-manning demarcationdisputes and chronic stoppages labour productivity incommercial construction averages 13 per cent less thanin home building Plastering the same wall in the sameway costs 40 per cent more in a high rise building thanin a standard house Just raising labour productivity incommercial construction to the home building standard(let alone the 50 per cent increase needed to match NorthAmerican levels) would mean according to Econtech aone per cent drop in the cost of living a one per centincrease in GDP and $23 billion in benefits toconsumers workers and taxpayers every year
Still change is about decent Australian values notjust a more efficient industry Workers donrsquot like latenight house calls compulsory attendance at demos anddays spent sitting in the shed to make an industrial pointany more than bosses Threats of violence contempt forcourt and commission orders mob rampages when one
Restoring the Rule of Law in theConstruction Industry
Tony Abbott MHR
s
As this issue of the IPA Review was at the press we were alerted to the delivery of the following speechby the Minister for Employment and Workplace Relations The paper marks a seminal change in the
governmentrsquos approach to systemic corruption in the construction industry and isanother major step in the reform of workplace relations in Australia
SI-1MARCH 2003
IPA REVIEW SPECIAL INSERT
side doesnrsquot get its way habitual failure to honouragreements and routine harassment of people exercisingtheir legal rights are not acceptable in modern Australiaand cannot be excused even in a good cause
Breaching ldquobourgeois lawrdquo may not matter tomilitant activists but few others take such a self-indulgent view Itrsquos said that ldquooppositions can afford tobe irresponsiblerdquo but no government or alternativegovernment can accept the principle of optionalobedience to the law of the land No less than the HowardGovernment the federal Labor Opposition and the stateLabor Governments understand the dangers of playingpolitics with the rule of lawmdasheven theauthority of laws they might preferto change such as the federal WorkplaceRelations Act
The rule of law is not asmorgasbord from which a fewfavoured items can be chosen and therest ignored Freedom under the lawrequires respect for the law generallynot just the laws individualspersonally support Obedience to thelaw is not a question of choice It is arequirement of civilisation because thelaw is our guarantee of equaltreatment after a fair hearing ldquoBe youever so high the law is above yourdquoThis reproach hurled at the Stuartkings has rightly echoed through thecenturies as a warning against theconceits of office and the arrogance ofpower regardless of the cause in whichitrsquos exercised
After last weekrsquos meeting of theWorkplace Relations MinisterialCouncil of the Council of Australian Governments stateand territory ministers were keen to declare in acommuniqueacute ldquothere was unanimous agreement thatunlawful behaviour in the building and constructionindustry is not acceptablerdquo This was an importantaffirmation of the rule of law in circumstances wheresome Labor ministers might have been tempted to putpolitics ahead of principle
Unfortunately the state and territory ministerssupported more powers for the Australian IndustrialRelations Commission to settle construction industrydisputes In fact the Commission already has power tosettle disputes Whatrsquos missing is effective power toenforce agreements The issue is not settling disputesThe issue is enforcing the law
The construction industry typically conducts itselflike this A certified agreement is in place including anagreed dispute resolution procedure Unions identify agrievance often a spurious safety issue Agreed disputeprocedures are not followed and a strike ensues eventhough strikes outside ldquobargaining periodsrdquo areldquounprotectedrdquo and theoretically subject to damagesorders At that point employers often ask theCommission to end industrial action but instead ofordering an immediate return to work because anagreement has been breached the Commission willtypically seek to conciliate on the basis of the ldquomeritsrdquo
of the issue After a couple of dayswith costs escalating and liquidateddamages looming the employerinvariably agrees to rectify the matteralleged and to pay increasedallowances (including pay for days onstrike) At this point the Commissionorders a return to work on the basisof the agreed settlementmdashwhich lastsonly until the union decides on itsnext move
The union has ignored the law andbroken its original agreement buttypically suffers no adverseconsequences whatsoever Theemployer has been manoeuvred intoconceding most of a demand thatshould never have been made Afaccedilade of legality conceals a travestyof unionism and a travesty of justiceNearly all construction industrystrikes are unprotected and potentiallyunlawful under section 170MN of theWorkplace Relations Act Even so
employers nearly always opt to pass the costs ontoconsumers while existing arrangements for gatheringinformation launching prosecutions and imposing finesdonrsquot work well anywhere but hardly work at all in anindustry where giving evidence against the unions isthought to mean commercial suicide
The construction industry is a classic case not ofmarket failure but of regulatory failure The fact thatthe construction industry does not face potential importcompetition limits its exposure to market discipline Stillthe main reason why unions can get what they want frombusiness and business can get what it needs from haplessconsumers is the absence of independent policing andenforcement of the industrial equivalent of fair tradinglaws To an extraordinary degree in this industry the
SI-2 MARCH 2003
IPA REVIEW SPECIAL INSERT
The rule of law is nota smorgasbord from
which a few favoureditems can be chosenand the rest ignoredFreedom under thelaw requires respectfor the law generally
not just thelaws individuals
personally support
request documents but they canrsquot compel witnesses toanswer or demand that material be produced Althoughit is a criminal offence under the Workplace Relations Actto hinder workplace inspectors the Cole report notedthat no prosecutions have yet been launched despiteevidence that Office of the Employment Advocateinspectors have been abused had objects thrown at themand their property damaged It has been commonpractice for the arrival of OEA inspectors to lead to workstoppages and even site invasions in a bid to thwart anddemoralise an independent investigator not susceptibleto the unionrsquos usual weapon of commercial retaliation
One of the problems with theworkplace relations system is theassumption that parties will enforcethe law against each other This worksup to a point in industries whereworkplace parties are more-or-lessevenly matched and the issues are theworkplace equivalent of an argumentbetween neighbours over the heightof a fence It completely breaks downwhen one side has an effectivemonopoly over the supply of labourand disputes resemble a more-or-lessnormal family telling the house fullof footballers next door that the partyrsquosover Expecting contractors to enforcethe law against the CFMEU is likeexpecting people in the street to makecitizenrsquos arrests hence Colersquos principalrecommendations are an AustralianBuilding and ConstructionCommission to investigate prosecuteand enforce the provisions of a beefed-up industry specific workplace
relations actYesterday Cabinet decided to support Colersquos key
recommendations First the Government will seek aseparate act governing workplace relations in theconstruction industry providing for secret ballots beforestrikes compulsory cooling off periods after extendedstrikes and damages awards in the event of unprotectedindustrial action Second the Government will establisha new law enforcement agency for the industry withpowers to compel witnesses to testify bring prosecutionsand enforce judgments and with sufficient on-the-ground presence to police CBD building sites Thirdthe Government will establish a Safety Commissionerto monitor federally-funded construction sites to try toensure that these become industry models Fourth the
s
commissions lack sufficient power the courts lacksufficient speed the employment advocate lacks sufficientauthority and the police lack sufficient interest
Not before time the Cole Commission has acted as agiant searchlight probing the dark underside of thispotentially great Australian industry It confirmed whatpolicy makers had long suspected and what influentialinsiders knew but had always tried to deny or explainaway that the industry operates under the rule of thejungle and that there will be no improvement until thepeople who work in it understand that the law has to betaken seriously Legislative institutional and structuralchange will start to mean somethingwhen law breakers in this industry arecharged convicted and punished likelaw breakers everywhere else A fewsalutary bars of that old song need towaft over construction sites ldquoI foughtthe law and the law wonrdquo
Late last year in response to theRoyal Commissionrsquos first report thefederal Government set up theBuilding and Construction IndustryInterim Task Force The Governmentrsquosbrief to the Task Force is to ensure zerotolerance of industrial law-breakingThe Task Force is not primarily toenforce the tax laws or the safety rulesbecause other bodies exist for this(although the Task Force will certainlyshare information with them) TheTask Force is to investigate and enforceWorkplace Relations Act prohibitions oncoercion unprotected strikes strikepay and breach of industrialagreements So far the Task Force hasvisited nearly 300 sites launched more than 50investigations brought three prosecutions and referrednine other matters to state police the Australian FederalPolice or the Australian Competition and ConsumerCommission for further action
These are the first public prosecutions arising out ofindustrial action in the construction industry at leastsince the 1980s and are the result of a public policycommitment to law enforcement not seen since thehumiliating Clarrie OrsquoShea case in 1969 and the end ofldquopenal sanctionsrdquo Yesterday Cabinet decided to extendthe interim Task Forcersquos operations until more permanentarrangements to secure the rule of law can be established
Task Force agents have the powers of inspectors underthe Workplace Relations Act They can enter premises and
SI-3MARCH 2003
IPA REVIEW SPECIAL INSERT
The main reason whyunions can get what
they want frombusiness and businesscan get what it needs
from haplessconsumers is theabsence of inde-
pendent policing andenforcement of the
industrial equivalent offair trading laws
API
Government will insist on the application of theNational Construction Code and implementationguidelines to all significant new projects which are fullyor partly federally funded
Directly or indirectly the federal Government fundsabout $5 billion worth of construction projects everyyear and is determined to use its role as client to drivechange in the industry In essence the NationalConstruction Code stipulates that construction projectsmust take place in conformity with the WorkplaceRelations Act Under the Code and implementationguidelines the federal Governmentwill not engage tenderers whoseworkplace agreements and practicesensure a closed shop on site The TaskForce (and any replacement body) willhave full access to federally fundedsites to ensure that the law is beingobserved and workplace agreementscomplied with
For the federal Government theissue is upholding the law and tryingto tackle the ldquounion rulesrdquo culturewhich is at the heart of lawlessness inthe industry For the states the issueis whether they are prepared to refusefederal money in order to protect theclosed shop However much theymight prefer different federal laws thestates ought to accept thatconstruction projects have to complywith the law as it stands includingthe law mandating compliance withcertified agreements
State Labor governments whichhave made a point of their middle-ground credentials risk losing some$4 billion a year in federal building and constructiongrants if they side with the union movementrsquos mostmilitant minority There are likely to be limits to Laborrsquosdefence of a union whose stock-in-trade (at least in somestates) is the site invasion and the demand for paymentand which quietly reinstates organisers sacked for assaultor perjury Opposition senators will find it hard to brandas ldquoideologicalrdquo the recommendations of a royalcommission which spent 171 days in public hearingsand which pursued 11 shop stewards and 97 unionofficials to obtain their side of the argument
As Justice Cole pointed out in his report previousattempts to reform the industry have proven ineffectivedespite two earlier royal commissions and numerous
SI-4 MARCH 2003
IPA REVIEW SPECIAL INSERT
enquiries Although this Royal Commissionrsquosinvestigations seem to have temporarily checkedlawlessness in the industry a campaign is now emergingto extend the anarchic culture of CBD construction intoregional centres and the domestic housing industryThings will certainly be different this time if parliamentapproves a permanent well resourced watchdog withnew powers new personnel and new attitudes Unlikeprevious arrangements a new statutory watchdog withthe powers of a law enforcement agency should beeffective and permanent
Hundreds of people took big riskswith their commercial future and eventheir personal security to testify to theRoyal Commission It should neveragain be so hard for people in thisindustry to exercise their ordinaryrights and responsibilities asAustralian citizens They expected theGovernment to take the Commissionrsquosreport seriously and the Governmentfor its part is determined not to letthem down The Governmentunderstands that joining fights yoursquorenot prepared to win only makes badsituations worse Establishing the ruleof law in the construction industry isa challenge Australia canrsquot afford tofailSome of the worldrsquos best workersshould no longer have to put up withsome of the worldrsquos worst industrialpractices They have a right to anhonest industry where they can earna fair dayrsquos pay for a fair dayrsquos workand expect to come home uninjuredThe enduring image of this industry
should not be noisy marchers replaying the ideologicalstruggles of the 1970s and raising clenched fists againstauthorities they donrsquot like At its best the Australianindustry is capable of work which is stunningly beautifulyet intensely practical and it now needs to performconsistently on time on budget and in accordance withlaw
Hundreds of peopletook big risks withtheir commercial
future and even theirpersonal security totestify to the Royal
Commission It shouldnever again be so
hard for people in thisindustry to exercisetheir ordinary rights
and responsibilities asAustralian citizens
NOTE
The foregoing speech was first delivered as an Addressto the National Press Club on 2 April 2003
21MARCH 2003
E V I E WR
IN psychology behaviouris defined as irrational ifan action continues to berepeated despite its re-
peated failure to achieve the desiredoutcome On this definition our aidpolicy towards Papua New Guineahas been irrational
Despite over twelve billion dol-lars in Australian aid to PNG sincethat countryrsquos independence in 1975key development indicators such asliteracy rates infant mortality lifeexpectancy and real income percapita are either stagnating or dete-riorating Worse wersquove known forover a decade1
Today acknowledgement of thefailure of our aid policy in PNG hasgone well beyond the writings of in-dividual international policy analystssuch as myself to institution-spon-sored reports such as Beyond Baliwhich was released by the AustralianStrategic Policy Institute (the Aus-tralian Governmentrsquos own strategicpolicy adviser) and Papua NewGuinea on the Brink which was writ-ten by Susan Windybank and MikeManning for the Centre for Indepen-dent Studies Both reports confirmthe gross failure of Australian aidpolicy in PNG
Yet still our aid policy irrational-ity towards Papua New Guinea con-tinues While the ASPI and CIS re-ports acknowledge the gross failureof our aid policy in PNG they alsoargue that we need to continue ouraid to that country Indeed the ASPIreport argues that we should increaseour aid to Papua New Guinea Thepolicy saviour The ASPI report ar-gues that we should exert greater con-trol over our aid Not just over theform of our aid but direct interven-tion in policy and implementation inPNGmdashin essence for a return to pre-
Aid Detox for PNGPETER URBAN
independence days in PNG whereas UN-sanctioned administrator weran government in that country
Despite the mind-frame of secu-rity-focused strategists such as thoseat ASPI and the CIS (which en-dorses the aid approach advocated byASPI) the reality is that we canrsquotPNG is now independent and to ig-nore this reality would simply com-pound the problems of our past aidpolicy irrationality with irrationalityabout our political relationship withour nearest neighbour
A more interventionist aid policytowards PNG on our part as advo-cated in Beyond Bali and by HughWhite (the executive director ofASPSI) in the media might havepopulist appeal but it would haveserious adverse implications for ourrelationship with other Pacific islandcountries and even IndonesiaWorse it would give succour to theviews of our east Asian critics (suchas Malaysian PM Dr Mahathir) whoclaim that Australia continues toharbour colonial aspirations
We have to accept that to be suc-cessful aid policy must not just helpreduce mass poverty it also has to doso as a guest in the aid recipientcountry To do otherwise is not aidbut imperialismmdashwhether inten-tional or not
A more interventionist approachto aid policy in PNG would also givethe current corrupt political elite inPort Moresby a rallying point againstus and an excuse to delay changingtheir own policies Neither Austra-lia nor PNG can afford any furtherdelays to policy reform For us to givePNG politicians yet another excuseto delay reform would be not onlyirrational it would be inexcusableWhile our aid continues so will thecorrupt elite that is at the heart ofPNGrsquos problems Until we send themessage to the PNG political elitethat we are prepared to stop ouraidmdashto put them on aid detoxmdashwewill continue to waste our aid in thecorruption that is PNG politics Itmay be hard to accept but the sadreality we face in PNG is that no aidmay prove to be good aid at least inthe short to medium-term2
NOTES
1 Peter Urban lsquoOne Clear ObjectiveNo Clear Approachrsquo IPA Review1997 Vol 50 No 1
2 With Iraq also likely to require verysignificant Australian aid fundingover the next few years the Gov-ernment will need to review our aidprogram as part of the 2003-04 fed-eral Budget A decision to suspendaid to PNG could be taken as partof that review
Peter Urban is former chief economist with theDepartment of Foreign Affairs and Trade
We have to accept
that to be successful
aid policy must not
just help reduce
mass poverty it also
has to do so as a
guest in the aid
recipient country
API
22 MARCH 2003
E V I E WR
IN his speech to the Na-tional Press Club on theprospect of war with Iraqand the case for disarma-
ment Prime Minister Howard statedthat Australia will play a significant hu-manitarian role in Iraq
If so the Howard Government needsto evaluate carefully the foreign-aid non-government organizations (FANGOs)which it funds to carry-out this humani-tarian programme Many FANGOshave made it clear that they do not sharethe Australian Governmentrsquos objectivesand values in Iraq Moreover some donot agree with the Governmentrsquos over-all aid policies in general
THE COALITION OF THEUNWILLINGIn the lead-up to latest Gulf War some30 Australian aid agencies put theirnames to an Open Letter to the PrimeMinister organized by the AustralianCouncil of Foreign and Overseas Aid(ACFOA) The aim of the letter was tolsquospeak out against war in Iraqrsquo and it ex-pressed grave concerns about the hu-manitarian consequences of the war andthe effects of the existing sanctions1 TheFANGOs that signed the letter wereOxfam Community Aid Abroad WorldVision Australia TEAR AustraliaUnion Aid Australia - APHEDACaritas Australia National Council ofChurches Australian Council for For-eign and Overseas Aid Save the Chil-dren Australia CARE Australia OzGreen United Nations Association ofAustralia Family Planning AustraliaMercy Works Marist Mission CentreAustralia Every Home for Christ Bap-tist World Aid for Christ CCF Austra-lia Quaker Service Australia Austra-lian Lutheran World Service AustralianRelief and Mercy Services AnglicanBoard of Mission AUSTCARE Com-munity Development and Health
Irreconcilable DifferencesDON DrsquoCRUZ
Hussein have been virtually ignored isa searing indictment of the warped ide-ology feeble analysis and moral blind-ness of the sector For them now to re-discover the plight of the Iraqi peopleand to invoke their name in the mediais beyond contempt
THE OXFAM COMMUNITYAID ABROAD POSITIONOf the 30 FANGO signatories to theopen letter Oxfam Community AidAbroad (OCAA) has been perhaps themost outspoken It opposed military ac-tionmdasheven with UN Security Councilapproval4 In spite of all the evidence tothe contrary OCAA was comfortablewith Saddam Husseinrsquos assurances thathe did not have weapons of mass destruc-tion5 Adopting the common policyagreed to by the other Oxfam affiliatesOCAA stated that it will not take anymoney from the lsquobelligerentsrsquomdasha quaintterm used to the describe democraticnations planning to disarm a dictatorguilty of countless human rights abuses
OCAArsquos outrage against the so-called lsquobelligerentsrsquo appears to be geo-graphically confined to Iraq OCAAappears happy to take governmentmoney from the belligerents elsewherearound the world
According to OCAArsquos ExecutiveDirector Andrew Hewitt refusing totake money from the belligerents wasdone to lsquoprotect its impartialityrsquo6 Thisis a very curious position from Australiarsquosarguably most political FANGOOCAA has a long track-record of beinganything but impartial or reluctant totake sides in miliary action It wasnrsquotimpartial in East Timor where it sidedwith Fretlin in its quest for indepen-dence According to its own testimonyto a Senate committee OCAA wasgiven the choice by the IndonesianGovernment between lsquoplaying politicsrsquoor delivering aid projects in Indonesia7
Group Amnesty International Austra-lia AngliCORD Australian Aid forCambodia Fund Burnet InstituteRedR Friends of the Earth PLAN Aus-tralia and Australian Volunteers Inter-national2
This open letter highlighted a num-ber of problems with the FANGOs sec-tor First it highlighted the weak logicthat passes for advocacy in the sectorThe letter argued against military actionwas critical of sanctions and suggestedthat nations should settle issues only bydiplomatic means It is a viewpointwhich totally ignores the fact that theGovernment had to deal with SaddamHussein
The shallowness of their logic wasbest exposed by the Prime Minister inhis response to the open letter in whichhe stated that the humanitarian situa-tion in Iraq is best addressed by SaddamHusseinrsquos removal and perhaps morepointedly that Saddamrsquos manipulationof foreign aid had allowed him to main-tain and pursue his weapons of mass de-struction capability and human rightsabuses3
Second it also highlighted the factthat the so-called lsquohuman rights-basedapproachrsquo to development (embraced byseveral of the signatories) is not so muchabout realizing human rights (as its pro-ponents argue) but is more about pro-viding them with an excuse to lsquoplay poli-ticsrsquo According to the theory the hu-man rights-based approach to develop-ment allows FANGOs to tackle the rootcauses of poverty and injustice
Yet the root cause of the Iraqipeoplersquos suffering can be summed up intwo simple wordsmdashSaddam HusseinThe fact that the FANGOs who sub-scribe to this particular approach havebeen obsessed with imaginary humanrights abuses committed by Shell NikeRio Tinto BHP-Billiton and AuroraGold while the activities of Saddam
23MARCH 2003
E V I E WR
It chose the former thus making it per-sona non grata in Indonesia for almost adecade8 It wasnrsquot impartial inMozambique when it sided with Frelimoin the countryrsquos civil war9 It wasnrsquot im-partial in Ethiopia when it developedlinks to the Eritrean Peoplersquos LiberationFront during its war against the thengovernment10 It was not impartial oranti-war when it sided with the TigrayPeoplersquos Liberation Front in the neigh-bouring province to Eritrea when thatgroup was waging a guerrilla war againstthe government11 And recently therehave been claims that in the Middle Eastit was little more than an lsquoeager propa-gandistrsquo for the Palestinians12
In East Timor Ethiopia and Mozam-bique OCAA was linked with organi-zations which supported direct militaryaction that led to the deaths of thou-sands of civilians In none of these loca-tions were the enemies of their friendany worse than Saddam Hussein In-deed in many cases OCAArsquos friendswere arguably no better than their en-emies in terms of human rights
OCAArsquos decision not to accept Aus-tralian Government funding is the cor-rect one in the sense that it clearly doesnot share the Governmentrsquos values onthe question of Iraq and thereforeshouldnrsquot receive any governmentmoney
Hewitt went on to state in a pressrelease that lsquoWe will not take funds thatmight allow a government to use hu-manitarian efforts as an instrument offoreign policyhelliprsquo13
This is finemdashexcept the AustralianGovernmentrsquos foreign aid is an instru-ment of foreign policy And it always hasbeen This is spelt out quite clearly inthe Australian Governmentrsquos latest for-eign and trade policy White Paper Ad-vancing the National Interest14
FANGOs that cannot accept thisrather basic proposition should not begetting taxpayersrsquo money They areclearly unsuitable for the task at hand
The consequences of Australian tax-payersrsquo money falling into the wronghands were brought home to Prime Min-ister Howard when he met IndonesianPresident Megawati Sukarnoputri to dis-cuss the war against terrorism and
Australiarsquos involvement against Iraq Atthe top of the Indonesian agenda wasthe issue of Australian funding toFANGOs being used to support sepa-ratist movements in Indonesia15
Post-war Iraq will be a better placewithout Saddam Hussein and his thugsThis does not mean that it will be a safeplace or necessarily a stable place Afterall one of the reasons for Western tol-eration of Saddam Hussein for manyyears was his ability to hold the various
ethnic minorities in Iraq together albeitrather brutally thereby maintaining abalance of power in the Middle East Hisdeparture would see strains on Iraq fromthe various ethnic minorities that makeup Iraq There is a strong chance thatIraq will fragment
The last thing the Australian Gov-ernment or any of the so-called belli-gerents needs in a post-war Iraq is west-ern NGOs running around and becom-ing self-styled advocates for national self-determination for Iraqrsquos ethnic minori-ties and injecting themselves into Iraqrsquosinternal politics This is a real risk Thebehaviour of Australian foreign aidNGOs in Indonesia should make Aus-tralian decision-makers extremely waryof funding any NGOs with Australiantaxpayersrsquo money so that they can oper-ate in Iraq
As things stand now FANGOs facevery few restrictions on their actionsfrom government If they undertake ac-tivity that is inconsistent with being anagent of government they may losefunding for specific projects or in moredramatic circumstances lose funding ina country Nonetheless they are gener-
ally able to access Australian Govern-ment funding for other projects andcountries In other words the penaltiesfor becoming caught up in political ac-tivities are very light for NGOs and posethem no serious problems
Foreign aid NGOs that lsquoplay politicsrsquoare unsuitable contractors for the deliv-ery of aid That these overtly politicalorganizations have been allowed to gaingovernment accreditation and receivegovernment funding points to some se-rious problems at AusAID Australiarsquosofficial aid agency The time has comefor this to change
NOTES1 httpwwwacfoaasnaumedia_releases
2003_releases26_3_03PDF2 httpwwwacfoaasnauemergencies
openletterPDF3 httpwwwacfoaasnauemergencies
iraq_responsehtm4 Oxfam Horizons Vol 3 No 1 (Febru-
ary 2003) page 25 Oxfam Community Aid Abroad lsquoIraq
Overviewrsquo February 20036 Hewitt quoted in Liz Gooch lsquoOxfam
wersquoll say no cashrsquo The Age 16 March2003
7 Community Aid Abroad Submission tothe Senate Foreign Affairs Defence andTrade References Committee Inquiryinto East Timor Downloaded at httpwwwcaaorg aucampaignssubmissionstimorhtml
8 Ibid9 Susan Blackburn Practical Visionaries A
Study of Community Aid Abroad (Mel-bourne Melbourne University Press1993) page 313
10 Ibid pages 325-333 passim11 Ibid12 Gerald Steinberg lsquoPropaganda vs Hu-
manitarianismrsquo Australian Financial Re-view 7 June 2002 Downloaded at httpfacultybiuacil~steingconflictopedpropvshumanitarianismhtm
13 ht tp wwwcaa o rg au p r 2003 iraqfundshtml
14 httpwwwdfatgovauani15 Dennis Shanahan lsquoJakarta fears aid funds
for rebellionrsquo The Australian 17 Febru-ary 2003 page 2
Don DrsquoCruz is Research Fellow at the IPAand Director of IPArsquos NGOWatch
OCAA has a longtrack-record of
being anything butimpartial or
reluctant to takesides in miliary
action
API
24 MARCH 2003
E V I E WR
GEORGE Bush Tony Blairand John Howard haveprovided many reasons forsupporting military action
against Iraq One of those reasons hasbecome known as the lsquohumanitarianrsquojustification Put simply the lsquohu-manitarianrsquo justification for the US-led invasion of Iraq is that such ac-tion is necessary to free the Iraqipeople from their totalitariandictator
Such an argument is attractive tothose who believe that there aresome fundamental human rights thatall individuals possess regardless ofwhere and how they live Whatserves as the source of those rightshas been the subject of debate forcenturies One of the pre-eminentstatements on the subject was madeby John Locke who in The SecondTreatise of Government wrote thatmankind was lsquoequal and indepen-dentrsquo and that lsquono-one ought to harmanother in his life health liberty orpossessionsrsquo
Saddam Husseinrsquos mass murdertorture and terror are reasonablyclear breaches of human rightsTherefore some would ask why thereshould be opposition to the UnitedStates and its allies taking whatevermeasures might be necessary totopple the Iraqi regime Surely thesame standard of behaviour that ap-plies to individuals applies also tonation states If an individual walk-ing in the street witnessed a rapeoccurring wouldnrsquot that individualbe entitled to do everything in hispower to stop the crime and assistthe victim
The point is of course that in-ternational law and convention do
After IraqIs Sovereignty Dead
JOHN ROSKAM
not allow nation states to act in thesame way as individuals Countriescannot simply lsquotake the law into theirown handsrsquo To restrain lsquovigilantestatesrsquo (who might be acting fromeither lsquogoodrsquo or lsquobadrsquo motives) a num-ber of legal and political theorieshave been developed One of theseis the doctrine of lsquosovereigntyrsquo whichprovides that states should not inter-vene in the domestic affairs of otherstates
In relation to Iraq the lsquosover-eigntyrsquo question is perhaps the stron-gest argument against the US-ledCoalition Most of the other criti-cisms of lsquohumanitarianrsquo interventionin Iraq are either grounded in simpleanti-Americanism or are fallaciousFor example there is the claim thatbecause some of the countries in theCoalition have previously ignoredHusseinrsquos cruelties therefore it is il-legitimate to take action now Sucha view has been expressed by aMelbourne international relationsacademic
While there is no disputing thebrutal nature of Saddam Hus-seinrsquos regime the case for inter-vention made by those in Can-berra London and Washingtonis weakened by the fact that atthe peak of Saddamrsquos crimes inthe late 1980s they were eitherdirectly supporting him withweapons technology and intelli-gence or were entirely indifferentto his behaviour Even if theyhave belatedly recognised theerror of their ways how seriouslycan we take their concerns aboutweapons of mass destruction nowgiven they were his suppliersthen1
On the basis of this argument itcould be said that Britainrsquos (andAustraliarsquos) case for intervening toassist Poland upon the German in-vasion in 1939 was lsquoweakenedrsquo be-cause Britain had previously acqui-esced to Germanyrsquos rearmament theremilitarization of the Rhinelandand the annexation of both Austriaand parts of Czechoslovakia Fewpeople who chanted lsquoFreedom forEast Timorrsquo said that the HowardGovernment should not act becausea quarter of a century before theWhitlam Government had been lsquoin-differentrsquo to Indonesiarsquos occupationof the island
There is also the claim that al-though Hussein is bad he is not theworst dictator in the world and thatit is hypocritical for the Americansto attack only Iraq This is an as-tounding proposition It attempts toapply to the United States a standardof behaviour that is impossible to sat-isfy Should the police not attemptto solve any crimes because theycanrsquot solve all crimes If a crime iscommitted by two people and thepolice arrest one perpetrator unlessthe other is also caught must the firstperpetrator be released When indi-viduals donate money for famine re-lief in Africa very few believe thattheir donation is pointless becauseit might prevent the starvation ofonly one person rather than thou-sands Christian ethics sets down norequirement that we should help no-one unless we can help everyone
The issue about state sovereigntyhowever is one that deserves to betaken seriously Regardless of onersquosopinions on the extent and limits ofstate sovereignty it is true that our
25MARCH 2003
E V I E WR
international relations system is builtupon the principle and to modify oroverturn it is a matter of some con-sequence
Even those who are generally sup-portive of the United States andtheir allies see the problem As it wasput by a leading commentator whenanalysing the Australian PrimeMinisterrsquos lsquohumanitarianrsquo justifica-tion for war
Finally Howardrsquos argumentagainst Hussein on human rightsis correct So is his moral case forwanting to liberate the Iraqipeople from their torment Theproblem however is that youcanrsquot trip around the worldwanting to overthrow regimesbecause of human rights2
Some would askmdashlsquowhy notrsquo Be-cause to do so would overthrow theUnited Nations Charter comes therejoinder And in turn the responseto that might bemdashlsquogoodrsquo
If itrsquos a choice between the main-tenance of the UN Charter and free-dom from tyranny freedom wins ev-ery time (although an internationallawyer sitting in Sydney might havea different view on this question fromthat of a political prisoner manacledin a Baghdad jail cell)
When the interests of lsquointerna-tional lawrsquo are more important thanthe life and liberty of individuals itcould be concluded that lsquothe Em-peror has no clothesrsquo Would inter-national law have sanctioned inter-vention to stop the Holocaust hadHitler not waged war and proceededwith his methods entirely within theconfines of the German territorialstate
Many who argue that lsquohumanitar-ianrsquo intervention in Iraq is not justi-fied because it infringes on thatcountryrsquos lsquosovereigntyrsquo would happilyhave other countries cede their po-litical sovereignty to supra-nationalbodies Certain features of the Inter-national Criminal Court overridethe principles of sovereignty but thatdid not stop a phalanx of interna-tional law experts urging sovereigngovernments to join it so as to en-
able the prosecution of war criminalsBut when it comes to actually stop-ping war crimes not simply prosecut-ing them that phalanx is largely si-lent
Without the doctrine of state sov-ereignty and without an arbiter fordetermining when interference withthe principle is justified (the roleclaimed by the United Nations andits Security Council) it is said thatstates would be free to impose theirown will and intervene in other
countries whose standards did notmeet their own (In The Second Trea-tise of Government Locke argued thata characteristic of a lsquostate of warrsquo be-tween individuals was the absence ofa superior authority to adjudicatedisputes and prevent individualsfrom administering justice them-selves)
Iraq might be claimed as a rea-sonably clear-cut case for interven-tion but other situations are notlikely to be as simple In Culture andEquality first published in 2001Brian Barry explored a lsquoliberalrsquo per-spective on this question
The liberal position is clearNobody anywhere in the worldshould be denied liberal pro-tections against injustice andoppression However in exactlythe same way as liberals arepragmatic about what liberalismmeans in terms of boundaries sohere the move from principle tointervention has to be mediated bypractical considerationshellip
[L]iberals are not so simple-mindedas to imagine that the answer toall violations of liberal rights is tosend in the Marines or even aUnited Nations force As in anyjust war theory there must be somedoctrine of lsquoproportionalityrsquohellip[S]carcely anybody would be infavour of the western powersinvading Saudi Arabia so at to sortout the way in which it lsquounjustlydenies political rights to women ornon-Muslimsrsquomdashaccording to theirliberal idea of justicersquo3
The question remainsmdashafterIraq what remains of lsquostate sover-eigntyrsquo Should the doctrine applyonly to lsquoliberal democraticrsquo statesSuch a solution might be attractiveto some lsquoliberalsrsquo but it doesnrsquot avoidthe problem of what exactly a lsquolib-eral democraticrsquo state is
One irony arising from the argu-ments about the war in Iraq is thatmany of those who have urged astrict application of lsquostate sover-eigntyrsquo principles in the past havegenerally supported the US-led in-tervention while those who havebeen willing to abridge or even aban-don the doctrine have had to rely onit to counter the lsquohumanitarianrsquo jus-tification for war
There are not many certaintiesabout the nature of the world afterthe war in Iraq but it can be saidwith some assurance that one defi-nite outcome is going to be a morevigorous debate about state sover-eignty
NOTES1 Scott Burchill lsquoThe humanitar-
ian arguments for this war are spu-riousrsquo The Age 21 March 2003
2 Paul Kelly lsquoThe hapless per-suaderrsquo The Australian 15ndash16March 2003
3 Brian Barry Culture and Equal-ity An egalitarian critique ofmulticulturalism Harvard Uni-versity Press page 138
John Roskam is a Research Fellow with the IPA
The lsquosovereigntyrsquo
question is perhaps
the strongest
argument against
the US-led
Coalition
API
26 MARCH 2003
E V I E WR
Which Way for theDemocrats
The 2002 mid-term elections were adramatic victory for President GeorgeW Bush and the Republicans Insteadof the historical norm of the partycontrolling the White House losingBushrsquos party gained seats in the Sen-ate House Governorsrsquo races andState legislatures The result was abitter disappointment for the Demo-crats and has led to a fierce debatebetween the Left and Centrists aboutthe future policy direction of the partytowards the 2004 elections
The Leftrsquos analysis is that the ma-jority of Americans are natural Demo-crats Electoral defeat was due to thefailure to energize that base of Demo-crats The party failed to distinguishitself sufficiently from Bush and thusgive their voters a reason to turn outWhile the majority of Democrats op-posed Bush on tax cuts and the warwith Iraq a significant minority sup-ported him and campaigned on thatsupport The result the Left claimwas that the Democrats lacked a con-sistent message in contrast to Bush
Support for this argument can befound in the higher turnout amongstRepublicans than Democrats in 2002while in 2000 the combined vote forGore and Nader was 51 per cent Aninfluential book by John Judis andRuy Texeira identified lsquoThe Emerg-ing Democrat Majorityrsquo Theyclaimed that growing demographicgroups trended Democrat includingthe young socially liberal profession-als minorities and women
What policies would motivate thisnatural Democrat base The Left callfor rescinding the Bush tax cut a classwar against the corporate world amajor increase in lsquopublic investmentrsquoin schools childcare health care and
Letter from AmericaNIGEL ASHFORD
public transport and strong opposi-tion to the war
Centrists however have a verydifferent analysis of the Democratsrsquoproblems the public did not trustthem to pursue the war against ter-rorism vigorously to keep down taxesto spend their tax dollars wisely or toreflect their cultural values
A Gallup opinion poll found that57 per cent of Americans askedthought that the Democrats were nottough enough on the war on terror-ism while 64 per cent thought theRepublicans were There was the per-ception that the Democrats were notserious on the issue and just playingpolitics Evidence for this was the de-bate over the new Department ofHomeland Security blocked becausethe Democrats wanted to protectunion rights while the President de-manded more flexibility to deploy theworkforce Many voters saw the issueas the national interest versus a spe-cial interestmdashin this case that of theunions The Democrats were seen asputting the interests of one of theirmajor constituencies before nationalsecurity
The Democratic LeadershipCouncil in lsquoThe Road Aheadrsquo by AlFrom and Bruce Reed presented theCentrist case lsquoStop pretending wecan win a majority simply by energiz-ing our basersquo The Democrats were
not trusted on the war against terror-ism were hostile to the cultural con-cerns of many working-class Demo-crats on abortion and guns and stillseen as the tax-and-spend party lsquoToomany Americans donrsquot trust us tokeep their taxes down or to spendtheir money wellrsquo
The Centrist agenda is to stronglyprosecute the war against terrorismwhether against al-Qarsquoeda Saddam orothers and to abandon knee-jerk iso-lationism arising from the experienceof the Vietnam War to defend capi-talism and support small investorsagainst irresponsible managers to cutpayroll taxes and to downplay thecultural issues that divide Democrats
Which path will the Democratstake The Left is in the ascendancyMost of the remaining Democrats inoffice come from left-wing districtsNancy Pelosi a left-liberal from SanFrancisco was easily elected the newleader of the House Democrats over-whelming her Centrist opponent andrising star African-American HaroldFord The early field of presidentialcandidates for 2004 is dominated bythe Left tendency including SenatorJohn Kerry Representative DickGephardt Governor Howard DeanRev Al Sharpton former SenatorCarol Moseley-Braun and Represen-tative Dennis Kucinich Only Sena-tor Joe Lieberman and Senator JohnEdwards represent the Centrist wing
The future of US politics may de-pend on which road the Democratsdecide to take The US is currently alsquo50ndash50rsquo nation evenly balanced be-tween the parties A left turn couldlead to Republican dominance farinto the future
Dr Nigel Ashford is at the Institute of Humane Studiesat George Mason University and is co-author of US
Politics Today (Manchester University Press)
API
27MARCH 2003
E V I E WR
Trusting TonyFrankly itrsquos all just too depressing Theeconomyrsquos heading for trouble Busi-ness confidence is low investment in2002 was 92 per cent lower than theprevious year and manufacturing in-vestment was nearly 18 per cent downThe budget deficit is spiralling becauseour once lsquoprudentrsquo Chancellor (trea-surer) Gordon Brown made over-opti-mistic growth projections and startedthrowing money at problems
Therersquos a load of health-and-safetyand anti-discrimination measuresthatmdashto put it most politelymdashare ex-amples of letting the best be the en-emy of the good Every school tripneeds a formal risk assessment withthe result that many trips are simplynot taking place New trains orderedfor London commuter routes wonrsquothave toilets because the rules say thatat least one toilet in each four-car unitmust be wheelchair-accessible whichwould have cost ten or a dozen seatson every overcrowded train
Some of this is just insane Somelocal authorities say that safety at workrules mean that home-care workersmustnrsquot lift the disabled people theyare looking after Or therersquos rail safetyUntil recently we were seriously pro-posing to spend $10 billion on a bet-ter system to stop trains going throughred signals On average this would havesaved the lives of about three passen-gers every four years which is a lousybargain compared with other safety in-vestments Worse it would also havereduced the capacity of the networkby up to 15 per cent and forced morepeople onto the roads which are muchmore dangerous than even ourclapped-out railways The result was aprojected net increase of 13 to 21 deathsper year
Meanwhile in London the Cen-tral line of the Underground has been
Letter from LondonJOHN NURICK
API
closed for weeks after a train derailedwhen one of its motors fell off Therewere no deaths or major injuries in theaccidentmdashbut itrsquos a safe bet that someof the people who havenrsquot been ableto use the Central line have been in-jured or killed on the roads
What can one say If the authori-ties took the same attitude to the riskof fatal accidents in the health serviceevery hospital in the country wouldhave been closed for years
Despite all this the Conservativesare still hopeless Their leader IanDuncan Smith has a new wheezewhen a journalist asks him anythingdifficult he chortles merrily and saysitrsquos the most uninteresting questionimaginable and hersquos not going to wasteanyonersquos time by answering it His col-leagues have their knives out for him
Meanwhile in spite of the govern-mentrsquos problems with the economy andthe public services Tony Blair is grow-ing in stature having his waymdashandantagonising large sections of his ownparty in the process On several recentissues he has faced down the formi-dable Gordon Brown in a way that notlong ago was hard to imagine
Then he shocked everyone by com-ing out against having elected mem-bers in the reformed House of Lordswhen most voters want an all-elected
chamber and most MPs want a partly-elected one In the event Parliamentcouldnrsquot agree on any of the optionsfor reform so wersquore stuck with the sta-tus quomdashwhich is fine by Mr Blair
Then therersquos the war By the timeyou read this it may be over or we maystill be waiting or our lads may befighting Mr Blairrsquos strong line againstIraq has made him very unpopular Theanti-war march on 15 February was thebiggest demonstration London hasever seen A few days later 122 Labourbackbenchers voted against the gov-ernment and many more abstained
Mr Blair didnrsquot budge War is a se-rious thing he says lsquoBut in a situationsuch as this you have to do what youbelieve to be right because thatrsquos theprice of having responsibilityrsquo1
He has often been accused of gov-erning by focus group Certainly he hasseemed reluctant to antagonise anypowerful group That has clearlychanged In a sense his stand on Iraqmerely follows his action in sendingtroops to Sierra Leone and Kosovomdashbut it has stirred up far stronger domes-tic and international opposition
The irony is that now when he re-ally needs people to trust him wedonrsquot Even in the desperately seriousbusiness of justifying an unpopular warDowning Street canrsquot play it straightremember the dossier from lsquointelli-gence sourcesrsquo that turned out to belargely cribbed from a PhD thesis onthe Internet
NOTE1 The Guardian 1 March 2003
John Nurick is a management consultant based in theSouth of England From 1985 to 1990 he was
editorial director of the Australian Institute for PublicPolicy and later edited newsletters reporting on theUK Parliament and European Union institutions
28 MARCH 2003
E V I E WR
KEVIN DONNELLY
Private EducationEquals Public Good
When it comes to choosing be-tween government and non-gov-ernment schools Australian par-ents are lsquovoting with their feetrsquo Asshown by recent ABS figures(Schools Australia 2002) over thelast decade there has been a dra-matic increase in non-governmentschool enrolments
Approximately 30 per cent ofstudents now attend non-govern-ment schools compared with 22per cent in 1980 and 28 per centin 1990 Over the last decadewhile the number of governmentschools has fallen by 64 per centnon-government schools havegrown by 61 per cent
Of course not everybody valuesparentsrsquo right to choose and theAustralian Education Union(AEU) Labor governments andlsquoleft-wingrsquo academics in particularconsistently argue against non-government schools
One of the arguments put for-ward by those opposed to givingparents greater freedom of choiceis that government schools are bet-ter at promoting social cohesionand a strong sense of what KenBoston the ex-head of the NSWEducation Department terms lsquothebonds of civic friendshiprsquo
The assumption is that becausestudents attend non-governmentschools there will be greater socialdivisiveness and a breakdown inthe civic values needed to hold so-ciety together But there is no cred-ible evidence offered to support theclaim that government schools arebetter at promoting the commongood
In fact there is much to provethe opposite
First as anyone familiar withthe lsquoculture warsrsquo and politicallycorrect curricula will know insteadof government-controlled educa-tion promoting unity and cohe-sion it has led to public angst andparental complaints
Witness the very bitter debatein Queensland a year or two agowhen the government-mandatedStudies of Society and Environ-ment (SOSE) curriculum was in-troduced into schools Such was
the lsquoleft-wingrsquo bias in the curricu-lum in particular in the areas ofmulticulturalism and the environ-ment that many parents felt be-trayed
The Queensland debate is mir-rored by what is happening in theUnited States As noted by Ste-phen Arons in his book Short Routeto Chaos instead of promotingunity government control of thecurriculum leads to the opposite
What the school wars tell us isthat somehow we have been
Education Agenda
transforming a vital instrumentfor creating social cohesioninto a source of division andhostility that there is some-thing built into the structure ofpublic schooling that under-mines one of its most importantfunctionsAronrsquos argument that govern-
ment schools no longer transmit aviable sense of a common cultureor agreed civic values is reinforcedby another noted United Stateseducationalist Diane Ravitch
In a recent article in the jour-nal Education Next Ravitch be-moans the impact of cultural rela-tivism and the post-modern on theschool curriculum (where there areno commonly agreed values) andeven goes so far as to argue thatparents should be free to choosenon-government schools becausesuch schools have a better chanceof reflecting their values
In the current education sys-tem with the public schoolscommitted to multiculturalismbilingualism and other forms ofparticularism it is difficult toargue that parents should notbe able to choose schools thatmeet their cultural needsSecond if one accepts that lsquoso-
cial capitalrsquomdashthe networks volun-tary associations and civic bondsthat hold a community togethermdashis important for the health of ademocratic society then non-gov-ernment schools clearly have theadvantage
Unlike the government schoolsystem characterized by a heavy-handed centralized bureaucracyand teacher union control non-government schools are closer tothe communities they serve Bytheir very nature non-government
There is no credible
evidence offered to
support the claim
that government
schools are better
at promoting the
common good
29MARCH 2003
E V I E WR
ALAN MORAN
The lsquoRrsquo Files
Private propertyrights the key toachieving efficiency inrural water use
WATER IN AUSTRALIAWater has always been a definingissue in Australiarsquos prosperityAnd in recent decades irrigationhas grown rapidly Even so theproportion of Australia that is ir-rigated at two per cent of theland comprises a share that isamongst the lowest among OECDcountries Only Canada and therainiest countries New Zealandand the UK have lower sharesthat of the US is 11 per cent andin Japan it reaches 60 per cent
Modern agriculture is only 200years old in Australia and thoughin the first 100 years agriculturalproductivity was increased toequal that of anywhere in theworld gains continue to bemademdashoutput has doubled overthe past 50 years a growth thatcould not have taken place with-out a similar expansion of irriga-tion Irrigation in the MurrayndashDarling agricultural provincealone contributes $5 billion toAustralian agricultural outputand non-irrigated agriculture inthe region contributes a further $5billion This makes the areawhich comprises 14 per cent ofAustraliarsquos land mass responsiblefor a third of the nationrsquos $35 bil-lion agricultural output
Applying Property Rights to WaterMost of the uses of water involvechoices or compromisesmdashdrink-ing water versus irrigation versus
industrial and so on Some how-ever involve complementaritiesparticularly certain recreationaluses such as water sports that arefacilitated by storage and consis-tent availability
In many cases water will per-form sequential functionsmdashthesame water can be used and re-used for irrigation used for indus-trial cooling and finish as drink-ing water Water with differentsometimes competing productiveuses will be optimally used as longas two conditions are in placeThe first is that its ownership isclearly specified and the ownersrsquoobligations to other users (orclaims from other beneficiaries)are well understood The secondrequires each property right to betradable to enable acquisition bythose who value it most therebymaximizing its value
The rights specification andtherefore property ownership canrarely commence with a cleansheet of paper People acquire in-dividual rights to property ini-tially through a variety of routesOne of these is seizure of some-thing that was originally of littlevalue until it was acquired and im-proved Squatters assume rights inthis way However they are firstacquired they need to be tradableAPI
schools establish strong commu-nity networks and have a greaterreliance on the voluntary work ofparents
That non-government schoolsare more effective in this regard issupported by research into lsquoChar-ter schoolsrsquo in the United StatesAs noted by Chester Finn at theFordham Foundation giving localcommunities lsquoownershiprsquo overtheir school builds networks oftrust and reciprocity so vital forsocial cohesion
Social capital also relies on citi-zens being disciplined and orderedin their behaviour Selfishness vio-lent behaviour and rudeness act tofragment the community instead ofpromoting cohesion According toa number of Australian surveys itis here once again that non-gov-ernment schools are seen to bemore effective
As noted by the Centre for In-dependent Studies researcher Jen-nifer Buckingham in The Truthabout Private Schools in Australiawhen analysing why so many par-ents forsake the government schoolsystem
When comparing independentprivate schools with publicschools the major theme thatemerged was not differences inacademic standards and curri-culum but issues of disciplineand order The surveyed par-ents felt that the behaviour andattitudes of students in publicschools was unacceptablehellipAll accept that non-govern-
ment schools achieve better aca-demic results provide greater cur-riculum flexibility and save Aus-tralian taxpayers millions of dol-lars Equally as important is theargument that such schools streng-then Australiarsquos civic health andstock of lsquosocial capitalrsquo
Dr Kevin Donnelly is Director of EducationStrategies a Melbourne-based consulting group
E-mailkevindnetspacenetau
s
30 MARCH 2003
E V I E WR
and relatively inviolable Thisprovides the incentive for them tobe improved and for their ownersand others to search out ways inwhich the assets they representcan be used to provide increasedvalue or other benefits
If confidence in the exclusiv-ity an owner has over the prop-erty right is lost or was neverpresent the asset will be used lessproductively For example own-ers will milk them for their cur-rent-use value rather than trade-off present value for a future valuethat is less certain
Even without a total emascu-lation of individual rights (for ex-ample when title to the propertydepends on continuing govern-mental assent) lack of certaintybrings lower incomes and dimin-ished asset protection One out-come of this can be observed inthe MurrayndashDarling system Wa-ter rights on the Victorian side ofthe Murray are secure while thoseon the NSW side have been over-allocated and are subject to ad-ministrative discretion includinghaving a firm duration of only tenyears In Victoria high securitywater (available 95 per cent of thetime) comprises the great bulk ofentitlements In contrast in
NSW high security water is avail-able only 60-80 per cent of thetime The result is that farmers onthe Victorian side plant perennialcrops while those in NSW tendto focus on annual crops espe-cially rice
There are claims that Victoriarsquosmore robust property rights meanthat the State Government haslost lsquocapabilityrsquo to manage com-pared with NSW The flip side ofthis is the increased risk and as-sociated lower value of productionnorth of the Murray where prop-erty rights are attenuated Gov-ernments that give themselves in-creased capacity to direct produc-tion or to take individualrsquos prop-erty will need to accept lower lev-els of income and output
IRRIGATION ENVIRON-MENTAL BENEFITS AND SA-LINITY
The Types of IssuesIssues stemming from irrigationcomprise two types those impact-ing on the environment and thoseimpacting on private uses Theformer includes issues such as pre-venting loss of species ensuringthat certain sorts of species flourishand avoiding unattractive growths
such as blue-green algae which re-sult from fertilizer build-up
The second involves economicimpacts on different users
While environmental flows toensure species flourish are oftenhighlighted salinity is the mainfocus And while salinity has animpact on the environment itsimportance is in the conflict of in-terest between productive usersmdashthe complaint of lsquodamaged goodsrsquoby downstream users against thoseupstream
The MurrayndashDarling Basin Sa-linity Strategy 2001ndash2015 has es-timated that increased salinitybrings costs of $294 million perannum to the basin
Yet data on the salinity of theMurray Darling shows levels up-stream of South Australia arelower than they were in the early1980s and are only seriously abovethese levels as the river ap-proaches its mouth at the GoolwaBarrage
The Basin Salinity Manage-ment Strategy argues that progressachieved over the past decade willlsquobe cancelled within 20-50 yearsand median salinity levels wouldexceed the Australian DrinkingWater Guidelines for good waterquality within 50-100 yearsrsquo Thecause of this is said to be risinggroundwater tables due to land usechanges across the Basin
The disputes over salinizationare largely disputes between com-mercial parties Full specificationof rights and obligations will al-low these to be resolved as longas the impacts are measurabletheir causes identifiable and thevarious rights and obligations areknown and stable In this respecttechnology to measure salt in wa-ter and to trace increases to par-ticular locations is readily avail-able
Agreements about the alloca-tion of water rights between ju-risdictions and to the main irri-gation provinces have been inplace for over a century In the
Average Salinity in the River Murray (EC Units)1
3500
3000
2500
2000
1500
1000
500
0
January 2003
July 2002ndashJanuary 2003
July 1982ndashJanuary 2003
Hume D
am
Swan
Hill
Merbein
Morgan
Milang
Mening
ie
Goolw
a
Barra
ge
31MARCH 2003
E V I E WR
I
API
Musinghellipcase of the Murray the lsquocaprsquo onwater abstractions agreed betweenthe various jurisdictions in 1995largely validated agreements madeearly in the last century and be-fore Disturbing these agreementswould greatly undermine the trustin the sanctity of property rightsand seriously reduce agriculturalproductivity Hence increased al-locations for certain parties or forcertain uses (including environ-mental flows) would need to bepurchased at market prices
Developments in Australiaover recent decades have con-spired to make irrigation water farmore valuable This is exacer-bated by1 Activation of NSW lsquosleeperrsquo
and lsquodozerrsquo water rights as a re-sult of the increased scarcityvalue a change that bringseven greater pressure on theavailable supply
2 Increased scarcity leading tomeasures that more carefullyhusband the water Whilesome of these prevent evapo-ration loss and have thereforebrought a net increase in effec-tive availability others havereduced availability (these in-clude a more careful wateringwhich results in reduced run-off and re-use)
3 Increased capture of waterwithin the land on which itfalls once water is recognizedas scarce landowners will seekto ensure it does not leave theirland NSW and Victoria haveplaced limits (a strict 10 percent in NSW) of water fallingon property as entitlements ofthe owner Queensland has notyet enacted an equivalent tothis Such adaptations of thecommon law are essentialhowever if downstream usersare not to be expropriatedThere is likely to be constant
bickering over water rights espe-cially if State Governments seek toelevate sharing issues and to sanc-tify them with claims about promot-
Daniel Pipes in The New York Posthas a very cogent explanation forwhy the Left appears to be so happywith the likes of Osama bin Ladenand Saddam Hussein
To be clear about their attitudeshe quotes the renowned Germanelectronic music composer KarlHeinz Stockhausen who saidstraight after the attack on NewYork that it was lsquothe greatest workof art for the whole cosmosrsquo
As Pipes and many of us observedaily there is barely a bad word tosay about Saddam Hussein nor aniota of sympathy for thoseoppressed tortured and murderedby his reacutegime Instead they venttheir fury against the AmericanPresident and British Prime Minister
Why the nonchalancePipes draws our attention to Lee
Harris writing in a recent issue ofthe Hoover Institutionrsquos journalPolicy Review According to KarlMarxrsquos central thesis the demise ofcapitalism hangs on workersgrowing poorer over timemdashwhichof course did not happen Sorather than give up on cherishedexpectations of socialist revolutionHarris notes Marxists tweaked theirtheory and looked instead to theentire populations of poor countriesto carry out the revolution Classanalysis went out the windowreplaced by geography
The trouble is they have tooverlook militant Islamrsquos slightly un-socialist practicesmdashsuch as itsimposing religious law excludingwomen from the workplace andpersecuting atheists
As Pipes sums up September 11and the prospect of war againstSaddam Hussein have exposed theLeftrsquos political self-delusionintellectual bankruptcy and moralturpitude
The Loopy Leftby Andrew McIntyre
ing an improved environment Realsolutions require the issue be placedwithin a normal commercial frame-work which involves1 Clarifying the property rights2 Allowing water rights to be
fully detachable from propertyand able to be used howeverthe holder wishes subject toany damage this might imposeon others
3 Ensuring full rights to buy andsell the water
4 Defining rights so as not to re-duce the quality of other usersThis means ensuring that farm-ing practices that do not bringgreater salination than somestandard
5 Allowing rights holders tobank their water and ensureeven greater certaintyAllocating specific individual
ownership rights to water and al-lowing its trade is a well-foundedmeans of maximizing the usevalue It would also be likely tohave the beneficial side-effects ofreducing salinity and farm-basedpollutants caused by intensiveuse We should grasp such oppor-tunities But if the impending sa-linity problem is as great as someclaim other solutions might wellinclude buying out some allocatedirrigatorsrsquo rights However alter-natives may be to remove saltfrom the water by engineering so-lutions or simply to live withhigher salt
NOTE1 Human drinking water should
be less than 800 ECs (electri-cal conductivity one ECequals about 06 mglitre)while higher levels are accept-able for much farming activity
Dr Alan Moran is Director Deregulation Unitat the Institute of Public Affairs
32 MARCH 2003
E V I E WR
Reading FileDone
eral political systems worldwidehave consistently accretedpower to the centre often in theface of clear constitutional im-peratives to the contrary) Ifeared instead that a UN thathad been patently successful insomethingmdashanythingmdashmightbe granted greater powers to thepoint where it would kill truediversity and individualism (ortry to anyway) through inevi-table bureaucratic practices
Is such a fear unfounded Ap-parently not if many peopleshare the moral touchstone ofthe Opposition Leader SimonCrean He believes according tohis own words in Parliamentthat what the UN SecurityCouncil declares is moral whatit refuses is immoral
The latest manoeuvrings overIraq have therefore been heart-
ening It seems that the desiresof the powers small and largeto promote their own interestswill continue to hobble the UN
The problem with a unitedworld is that as the threateningimpasse over Iraq suggestedthere are very divergent viewsabout how that world ought tobe run on an international leveljust as there are at national and
sub-national levels The virtueof multi-layered levels of gov-ernments is that competing ju-risdictions give the individual adegree of choice
The greatest sin of totalitar-ian governments past and pres-ent is to deny their citizens theright to leave The greatest dan-ger that the United Nationsposes as far off as it now (hap-pily) seems is that leaving its ju-risdiction is for all practical pur-poses impossible
THE IMPASSE JUST PASSEDI listened to Prime MinisterHoward speaking to the motionbefore Parliament in relation tothe war It was a good speechbut neither he nor PresidentBush seems able to structure andlay out an argument with thestyle and content of BritishPrime Minister Blair His equi-valent speech before the BritishCommons provides a masterfulsummary of the reasons for thiswar and includes an immenselyreadable time-line of the utterineffectiveness of the UN pro-cesses in dealing with Iraq Henicely deals with allegations ofthe lsquorushrsquo to war lsquoOur fault hasnot been impatience The truth
UNITED OR DIVIDEDI write just hours after US Presi-dent George W Bush has deliv-ered his ultimatum to Iraqi Presi-dent Saddam Hussein leave Iraqwithin 48 hours or be removedBy the time this appears beforeyour eyes you will knowwhether Hussein has decided hischances of survival will be sig-nificantly greater by choosingexile or by remaining in IraqThe recent creation of the In-ternational Criminal Court ofcourse makes war more likelysince Hussein can have no guar-antee of a peaceful lsquoretirementrsquo
In the event that Hussein re-mains in Iraq you will also knowwhether Bush has kept his wordand most likely the outcome ofthis military venture
This matter is immensely im-portant for the people of Iraqand for the military personnelinvolved (including our ownAustralian soldiers sailors andaviators) But then so was theprevious Gulf War the US in-vasion of Grenada the Austra-lian intervention in East Timorand so on But a difference be-tween the current conflict andthose others could be the impactit has upon international insti-tutions Actually just one inter-national institution the UnitedNations
Prior to the first Gulf War Ifeared the coalitionrsquos success forthe reason that some of it mighthave rubbed off onto the UnitedNations I hasten to deny that Ifear the UN as some vast con-spiracy for world domination Ifeared instead that it couldstumble into a piecemeal cen-tralization of power (just as Fed-
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
E V I E WRs
33MARCH 2003
E V I E WR
Reading FileDone
ATTACKING THE GLOBALGOVERNORSThe Cato Institute is a whole-some body as demonstrated byits opposition to such interna-tional organizations as the Inter-national Criminal Court and forthat matter the United Nationsitself Ted Galen Carpenter forexample argues in lsquoPutting theUnited Nations on Noticersquo thatthe UN can and has done somemodest good occasionally It ishe says lsquoa good idea to have aplace where governments cangather to air grievancesrsquo But headds if it lsquoattempts to acquire ataxing authority [or] raise astanding armyrsquo then the USshould withdraw (as indeedshould Australia) Because thatwould turn it into an lsquoembryonicsuperstate that would menacelibertyrsquo
Go to
wwwcatoorgforeignpolicyunhtml
THE INTERNATIONALORGANIZATIONS THEM-SELVESThe United Nations has beenaccused of being often ineffec-tive and always slow Well ev-ery time Irsquove hit the UNrsquos Web-site even with my nifty broad-band Internet connection slow-ness rules Perhaps the site isbeing continually accessed bythe teeming masses Anyway goto
wwwunorg
With 15 members alreadyand 13 more on the way thereremain hopes that the EuropeanUnion will be a force for a stable
twenty-first century Equallywith 15 members already exhib-iting rather divergent views overthe issue of Iraq and most of theforthcoming members sidingwith the United States perhapsthis is overly hopeful Go to
europaeuintindex_enhtm
Then there is the WorldTrade Organization the organi-zation behind which protection-ist nations can hide from unilat-eral trade liberalization by pre-tending to support multilateraltrade liberalization Go to
wwwwtoorg
And we mustnrsquot forget the In-ternational Criminal Court fearof which was no doubt a featureof Saddam Husseinrsquos rejection ofexile as an option and the furyof which is promised by a num-ber of prominent lawyers to bevisited upon our very own PrimeMinister Go to
wwwicc-cpiint
FEEDBACKI would welcome advice fromreaders on any other sites of inter-est to IPA Review readers E-mailme on scdawsonbigpondnetau
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
is our patience should have beenexhausted weeks and monthsand years agorsquo
Go to
wwwnumber10govukoutputPage3294asp
THE STRUGGLE BETWEENTHE CONTINENTSIf you are patient you can readthat wonderful British rag TheSpectator for free Last weekrsquoscopy is available on-line One ofits regular columnists is MarkSteyn an Americo-phile Cana-dian who has a robust turn ofphrase and an abiding disdain formuch modern music (whichseems to place him very comfort-ably into The Spectatorrsquos culturalmatrix)
His piece on the future de-cline of Europe vis-agrave-vis Ame-rica makes for fascinating read-ing Go to
wwwspectatorcouk
then click on the lsquoBack Issuesrsquobutton and choose the edition of15 March 2003
E V I E WR
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
5MARCH 2003
E V I E WR
beyond the capacity of fire-fighterseven under less extreme conditions
This message was reinforced byboth Professor Shea and Dr Tol-hurst although an environmentallybenign programme of prescribedburning will not prevent bush firesaltogethermdashfor under extreme con-ditions fires will always spreadmdashitwill allow them to be containedonce conditions begin to ease evena little
This would seem to have been animportant factor in the Victorianfires while they began under ex-treme conditions they continuedburning through more than a millionhectares for a period of months in-cluding periods when conditionswere far less extreme High fuelbuild-upmdashthe result of inadequateprescribed burning programmes overseveral yearsmdashwould seem on thebasis of this evidence to have beena major factor in that
Professor Shea said that WArsquosgood record of bushfire managementin recent decadesmdashdespite the ex-treme conditions regularly created bythe regionrsquos long hot and dry sum-mersmdashhad been largely due to ac-ceptance of this principle He fearedhowever that even in WA the ex-ecution of prescribed burning pro-grammes was becoming less rigorous
Why Much of the blame he saidlay in attitudes imported from Brit-ain and Europe which saw burningas ugly and destructive to the envi-ronment These views did not takeinto account the very different ecol-ogy of Australia which had beenfashioned by fire long before whitesettlement
Foresters have discovered hesaid that the long-living grass-treesso common in southern WA containin their trunks a record of the firehistory they have endured This re-veals an irregular but by no meansinfrequent pattern of fire whichstretches back before white settle-ment of these areas
Dr Tolhurst said that studies ofthe fire-frequency patterns in whichAustraliarsquos ecology had evolved pro-
vided important lessons for pre-scribed burning programmes Thestudies show that in the past firesappeared to follow a random pat-ternmdashsome areas burning severaltimes within a five- or ten-year pe-riod while other pockets appearedto have escaped burning for long pe-riods This had ensured biodiversity
A similar approach was neededwith prescribed burning he saidRather than merely gridding a parkto be systematically burned over saya ten- or 15-year cycle it was betterto replicate the natural order with amore varied approach with some ar-eas being burned more frequentlythan others This would ensure thatfuel build-up over large areas of for-ests and parks was kept to a levelwhich prevented fires of the destruc-tive scale and intensity of 2003 butwhich also ensured biodiversity
This would not only have eco-logical benefits but would reducethe occurrence and impact of largeintense fires reduce the cost of emer-gency operations and disaster reliefand create better land-managementoutcomes The tragedy is that muchof this thinking is already enshrinedin forest management philosophiesin Victoria but has not been ad-
equately resourced or implementedBurning is possible only on a limitednumber of days each year and re-quires skilled personnel if it is to becarried out in an effective and envi-ronmentally beneficial way Consid-erably greater resources were thusneeded
THE PROPERTY OWNERSThe three scientific experts were fol-lowed by presentations of case stud-ies from individuals The speakerswere Ian Mott a third-generationforester and self-confessed lsquobush law-yerrsquo with experience of land manage-ment issues in NSW and Queens-land David Coonan who presentedthe views of the ACT SustainableRural Lands Group (a group of ACTlandholders members of which havebeen affected by two large fires inrecent years) and Russell Smith re-tired Army major and a resident ofBundarrah Valley about 40kmNNW of Omeo in North-East Vic-toria an area which was swept by therecent bushfires
While each took a distinctive ap-proach the issue of the obligationsof public land managersmdashand thelimitations even on the rights of pri-vate landholders to manage theirland adequatelymdashtended to intrudeinto all three presentations
For Ian Mott the issues were fun-damentally legal The obligations onprivate landholders are extensiveare public land managers similarlyobliged to keep the properties undertheir control equally safe This is notthe first time he has raised these is-sues but the questions had an addedrelevance in the light of evidencefrom David Coonanrsquos group and fromRussell Smith that failure to preventfuel build-up on neighbouring pub-lic lands was a significant factor inthe intensity of the fires that strucktheir own areas
Russell Smith noted that AlpinePark and State Forests in his area hadnot apparently been given any pre-scribed burning in living memoryHe has been on his property almost20 years but believes that the pe-
The failure of landmanagers to followestablished scientificprinciples and the
contribution ofgreen policies tothat failure were
two of three themesthat dominatedthe conference
s
6 MARCH 2003
E V I E WR
riod without burning is far farlonger The area is choked with nox-ious weeds and provides sanctuaryfor feral cats dogs and goats whichinvade private property
More relevant in the context ofthis forum was the fact that he esti-mated forest floor litter to have beenin the order of lsquohundredsrsquo of tonnesper hectare rather than the 4 tonnesconsidered optimal for ecologicalbalance It was so thick and densethat it was impossible to ride a horsein parts and difficult to penetrateeven on foot
Similarly despite repeated re-quests from Major Smith the Vic-torian Department of Natural Re-sources and Environment (nowSustainability and Environment)had not forced a neighbouring ab-sentee landowner to clear hugethickets of fire-hazardous blackberryand briar
When the bushfires came theseunburnt public and private landserupted into an inferno and al-though a combination of rigorousfire-prevention measures (which in-cluded conducting his own fuel-re-duction burning to create a fire breakthat extended well into the park adecision he took unilaterally whenthe park managers declined) and awell-rehearsed action plan saved hisown property the fire swept thoughthe rest of the valley
Russell Smith now believes thatthere are vital lessons to be learnedif this sort of disaster is not to be re-peated Fuel reduction is one impor-tant priority but there is also a hugeamount that can be done to improveplanning coordination and re-sponse He has a dosier of planningand communications failings manyof which could have been avoidedwith greater training and prepara-tion
(For David Coonan there is acruel irony in the fact that his grouphas presented extensive evidence tothe ACT coroner investigatingdeaths that occurred during the 1991Canberra fires The coronerrsquos find-ings are not yet public but Coonan
is saddened that he and his col-leagues may yet find themselves pre-senting similar evidence to any in-quiry into the 2003 fires)
One theme that emerged repeat-edly in the Conference from all quar-ters (scientists the case studies anddelegates from the floor) is that StateGovernments are far more enthusi-astic about creating electorally-
popular National Parks than they areabout funding the management ofthe parks they have created Timeand again reference was made to thelack of management of these parkswhich are progressively degradedthrough infestations of weeds andferal animals and which become in-creasing fire hazards
This is environmentally as wellas economically and politically dan-gerous the habitatsmdashand perhapseven entire populationsmdashof somethreatened species were engulfed inthe huge fires that spread throughthe parks of north-eastern Victoriain January February and March
One delegate asked whether thecause of environmentalism wouldnot be better served if there weregreater commercial exploitation ofNational Parks to generate fundingfor their upkeep It would at least
ensure their management was givena secure funding base he said
The continued creation and ex-tension of National Parks whenthere was not sufficient funding tomanage even existing parks was seenas evidence of State Governmentsurrender to uninformed urban-based green populists who were inturn swayed more by emotion andsymbolism than by any real under-standing of environmental manage-ment
The passion generated by thesefires was evident in the packed au-ditorium (every seat was taken andmany who tried to book late had tobe refused) Scores of residents andfirefighters from hard-hit areas ofVictoria made the journey to Mel-bourne to hear the experts and tohave their say Several busloads camefrom north-east Victoria the epi-centre of the fire disasters For themit was a 16-hour day
Other individuals made a similarjourney from Victoriarsquos north-westwhere more than 200000 hectaresof National Park along with exten-sive farmlands were also destroyed
GREEN GODSMany people expressed their con-cerns at the possible influence ofgreen activists on forest manage-ment policy These concerns wereonly confirmed by Andrew Bolt As-sociate Editor of Melbournersquos Herald-Sun newspaper who gave a talk dur-ing post-conference refreshmentsHis theme was Green Religion thetriumph of a set of mystical valuesover science
The thesis he advanced was thatwith the decline of traditional reli-gions and belief in God many mod-ern individuals were left with thechoice of either believing that hu-man beings were in charge of theirown destiny or believing that theyshouldnrsquot be and subsume humanfate to omniscient Nature Giventheir lack of faith in fellow manmany had chosen the latter courseThe result was a value-system inwhich scientific principles of sound
Governments are formore enthusiastic
about creatingelectorally-popular
National Parksthan they are
about funding themanagement of the
parks they havecreated
7MARCH 2003
E V I E WR
ON 28 January the Queens-land Government re-leased Report on the studyof land-sourced pollutants
and their impacts on water quality inand adjacent to the Great Barrier ReefIn the associated media release theQueensland Premier Peter Beattiesaid lsquoNow the report is in work onthe Great Barrier Reef Water Qual-ity Protection Plan will continuewithout arguments about whetherland activities harm the Reef Thereport is the adjudicatorrsquos decisionand is based on the best available sci-encersquo
The report written by a panelof scientists chaired by Queens-landrsquos Chief Scientist Dr Joe Bakermakes several key findings regard-ing impacts of land-based pollutionon the reef A key allegation in thereportrsquos summary highlighted in thePremierrsquos media release is that el-evated concentrations of pesticideresidue have been found in dugongs
Since publication of the book Si-lent Spring by Rachel Carson in1962 there has been concern thatpesticides can bio-accumulate inthe fat tissue of animals Prior to1987 organochlorine pesticides (forexample DDT) were used in GreatBarrier Reef catchments includingfor sugarcane production Thesechemicals have since been banneddue to global concerns about theirpersistence in the environment andtheir capacity to bio-accumulate
I first became aware of the spe-cific issue of pesticide in dugongs inAugust 1998 A senior officer withthe Great Barrier Reef Marine ParkAuthority (GBRMPA) phoned mewith the news that a soon-to-be-
Deceit in the Nameof Conservation
JENNIFER MAROHASY
published research study had foundthat elevated levels of pesticide resi-due most likely from cane farmingwere accumulating in the fat tissueof dugongs Media headlines fol-lowed including Pesticide in reefcreatures and Cane burning link withdioxin in dugong
I obtained a copy of the studyand found it was primarily an analy-sis of the type and quantity of diox-ins found in the fat tissue of dug-ong carcasses that had been killedin fishing nets1 Dioxins are a groupof organochlorine compounds com-monly associated with industrialwaste incineration The researchpaper made reference to a differentstudy that had analyzed the dioxinsfound in soils under sugarcane cul-tivation and commented that thecane-land soils and dugong fatsamples both had elevated levels ofthe same type of dioxins
Concerned by this news I con-tacted a dioxin expert at the Uni-versity of Queensland Dr BrianStanmore informed me that thetype of dioxin considered by theGBRMPA to be elevated in thedugongs was common and the leasttoxic of all dioxins Furthermore DrStanmore indicated that the levelof dioxins found in the dugongs wasless than the national average inpeople in the United States Hecommented that lsquoit looks like thedugong is better off than we arersquo
The GBRMPA study clearlystated lsquoAll (dugong) carcasses werein good condition at the time ofsampling All animal deaths wereconfirmed or suspected (fishing) netdrowningrsquo However instead of fo-cusing on net fishing practices the
environmental management were oflittle significance compared with theneed for a re-creation of a mythicalpristine Nature
Elements of this attitude he sug-gested might underlie some of thepressures which discourage the pre-scribed burning of National Parksand State Forests
Whether this hypothesis provesvalid or not there is little doubt thatthe management of Australiarsquos parksforests and other public lands willcome under greater scrutiny as a re-sult of the horrific fires of 2003 Thescale of damagemdashhuman economicand environmentalmdashis such that atleast three separate inquiries Fed-eral Victorian and from the ACThave already been proposed
The overwhelming view of del-egates at the IPA forummdashas re-flected in questions from the floorand in post-conference discussionsmdashwas that only a Federal inquiry islikely to achieve an adequate resultThis is because State and TerritoryGovernments in their role as landmanagers must share direct respon-sibility for any lack of prescribedburning and other forms of hazard re-duction that might have contributedto these fires This means that theycould potentially face hugely expen-sive legal claims and that as a re-sult there could be pressure on themto manipulate terms of reference andother criteria to diminish scrutiny ofthese important issues
Even if this concern proves ut-terly unfounded the public percep-tion could still linger that any suchinvestigation was a State Govern-ment inquiry into a matter in whichthe State had a very real vested in-terest For these reasons a Federalinquiry would have greater credibil-ity and is in fact essential if we areto come to a comprehensive under-standing of the causes of last sum-merrsquos catastrophic bushfires
Graham White is an issues management consultantwho chaired a session of the IPA bushfires forum
API s
8 MARCH 2003
E V I E WR
GBRMPA subsequently providedfunding for a full investigation bythe National Research Centre forEnvironmental Toxicology(NRCET) into the likely origin ofthe dioxin considered to be at el-evated levels in the dugong car-casses including possible links withsugarcane production
Two years later the NRCET in-vestigation concluded that the di-oxin of concern to the GBRMPAwas common in soils along the en-tire Queensland coastline includ-ing in regions beyond sugarcane cul-tivation2 Analyses of dated marinesediment cores indicated that thechemical was present prior to Eu-ropean settlement in QueenslandIn other words the dioxin is a natu-rally occurring organochlorine andnot a pesticide residue There areapparently many naturally occur-ring non-toxic dioxins
But what of the organochlorineinsecticides used in the sugar indus-try from the late 1940s until theywere banned in 1987 Have thesepesticides been found in dugongs
The GBRMPA and the Austra-lian Institute of Marine Science(AIMS) have undertaken extensivesurveys for traces of organochlorineinsecticides including an Australia-wide programme for collecting andtesting samples from stranded or re-cently killed dugongsmdashfrom whichthe dioxins were isolated While itwas expected that these program-mes would find persistent orga-nochlorine pesticide this has notbeen the case
Estuarine and near-shore marinesediments have been extensivelysampled on the basis that these ar-eas are likely to contain the high-est concentrations of contaminantsfrom human activity in adjacentcatchments Trace amounts of someorganochlorine insecticides havebeen found in sediment from a smallnumber of river mouths3 No orga-nochlorine insecticides howeverhave been found in near-shore ma-rine sediments of the Great BarrierReef4 This finding has surprised
many researchers some of whomhave postulated that the absence oforganochlorine contamination inthe inner shelf is a consequence ofenhanced degradation of the orga-nochlorines in the aquatic system
In late November 2002 I re-ceived a copy of the draft summaryof the Baker reportmdashthe report sub-sequently described by the Premieras the best available science I no-ticed the allegation of elevated con-centrations of fat-soluble pesticide
in dugongs I emailed Dr Baker que-rying this and other allegations inthe draft summary Dr Baker repliedthat he would consult with the Sci-ence Panel and get back to me Thereport was published two monthslatter without any changes to thesummary
The reef pesticide research iswell-documented and should be un-derstood by members of the SciencePanel In fact a member of the Sci-ence Panel communicated the find-ings from the NRCET investigationto me in September 2001 Whythen was the allegation of pesticidein dugongs included in the originalsummary report Why was the alle-gation not corrected after I brought API
the error to Dr Bakerrsquos attention inDecember 2002
Two years earlier following pres-sure from the World Wide Fund forNature (WWF) and as part of theQueensland governmentrsquos reelec-tion campaign the QueenslandPremier committed his governmentto saving the reef Since this timeit has been Queensland governmentpolicy that the reef is in troubleThe on-going deception is perhapsnecessary to maintain the percep-tion that the reef is in trouble
NOTES1 Haynes D Muller J F amp
McLachlan MS (1999) lsquoPoly-cholorinated dibenzo-p-dioxinsand dibenzofurans in Great Bar-rier Reef (Australia) Dugongs(Dugong dugon)rsquo Chemosphere38 pages 255ndash262
2 Prange JA Gaus C PapkeO amp Muller JF (2002) lsquoInves-tigations into the PCDD con-tamination of topsoil river sedi-ments and kaolinite clay inQueensland Australiarsquo Chemo-sphere 46 pages 1335ndash1342
3 Haynes D Muller J amp CarterS (2000) lsquoPesticide and Herbi-cide Residue in Sediments andSeagrasses from the Great Bar-rier Reef World Heritage Areaand Queensland Coastrsquo MarinePollution Bulletin 41 pages279ndash287
4 Cavanagh JE Burns K ABrunskill GJ amp Coventry RJ(1999) lsquoOrganochlorine pesti-cide residues in soils and sedi-ments of the Herbert and Bur-dekin River regions northQueenslandmdashimplications forcontamination of the GreatBarrier Reefrsquo Marine PollutionBulletin 39 pages 367ndash375
Dr Jennifer Marohasy is Environment Managerwith Queensland Canegrowers Organisation Ltd
Why was theallegation of pesticidein dugongs included inthe original summary
report Why wasthe allegation notcorrected after I
brought the error toDr Bakerrsquos attentionin December 2002
9MARCH 2003
E V I E WR
IN THE LONG AGOPlanet Earth condensed 4550million years ago (Ma) from re-cycled stardust Since that timethe continents have been enlarg-ing Earth materials have beenconstantly recycled and the Earthand all associated systems havebeen dynamically evolving TheEarth has not stopped being anevolving dynamic system just be-cause humans now live on thecontinents
As soon as there was liquid wa-ter on Earth there was life Bac-teria slowly diversified and by thetime the Earth was middle agedone group of bacteria had emit-ted such large quantities of oxy-gen (O2) that the atmospherecontained minor O2 Some of thisexcess O2 was trapped in rocks byweathering most dissolved in theoceans resulting in the precipita-tion of iron oxides It is these ironoxides that form the great iron orefields of planet Earth (for ex-ample in the Hamersley Basin)Life the atmosphere the oceansand the rocks interacted a pro-cess that has been occurring forat least 2500 million years on ourdynamic evolving planet
For at least the last 2500 mil-lion years the continents havebeen pulled apart and stitchedback together Every time thecontinents are pulled apart hugequantities of volcanic water car-bon dioxide (CO2) and methane(CH4) are released into the atmo-sphere and greenhouse conditionsprevail When continents stitchtogether mountain ranges formMountains are stripped of soilsnew soils form and remove CO2
The Past is the Key to the PresentGreenhouse and Icehouse over Time
IAN PLIMER
from the atmosphere these soilsare stripped from the land and theCO2 becomes locked in sedimentson the ocean floor When atmo-spheric CO2 is low glaciation oc-curs Large climate cycles can berelated to plate tectonics
The origin of the greatest cli-mate change on Earth is anenigma Between 750 and 600Ma there were two major glacialevents and numerous smallerevents Sea level changed by upto 400 metres and interglacial seatemperatures were 40˚C Afterglaciation the atmosphere hadsome 20 per cent CO2 and bacte-ria thrived and diversified in thewarm oceans Multicellular lifeappeared diversified and used theCO2 to make shells and skeletonsThis explosion of life from 580 to520 Ma gave us all of the majorlife forms currently present onEarth
Plants appeared at 470 Ma andthere was a major mass extinctionof multicellular life at 430 MaThe origin of this mass extinctionis not known Vacated ecologieswere quickly filled and life con-tinued diversifying Between 368and 248 Ma massive coal depos-its formed there was a major 50million-year period of glaciationand the atmosphere was blessedwith a very high CO2 and O2 con-tent Life continued to diversifyMinor mass extinctions continuedand at 248 Ma the biggest majormass extinction on Earth tookplace Some 96 per cent of spe-cies became extinct Life diversi-fied quickly to fill the vacatedecologies The record written instone by fossils in the period520Ma to the present shows thatthe planet is a warm wet green-house volcanic planet with thenormal cycles of rising and fall-
Sea Levels
Greenhouse Greenhouse GreenhouseIcehouse Icehouse
Tem
pera
ture
Tem
pera
ture
Millions of years ago1000 900 800 700 500 400 300 200 100600
There are 400 million year supercycles of greenhouseicehouse related to the pulling apart and
stitching together of continents
Icehouse
s
s
10 MARCH 2003
E V I E WR
ing sea levels rising and fallingland levels and changing climates
THE DAY BEFORE YESTER-DAYSome 120 million years ago Aus-tralia was at the South Pole en-joying a temperate climate Glo-bal sea level was more than 100metres higher than at present thesea surface temperature was 10ndash15˚ C higher than now and manycontinents were covered by shal-low tropical seas Planet Earthwas a warm wet greenhouseparadise and thick vegetationcovered the land masses Atmo-spheric CO2 was about 1 per centwhen the worldrsquos major coal de-posits formed 368 to 248 Ma
From 250 to 120 Ma the glo-bal CO2 content varied greatlyand increased to a peak 6 per centCO2 120 Ma This derived fromintense volcanic activity associ-ated with continental fragmenta-tion Thick vegetation coveredthe land masses
Australia started to pull awayfrom Antarctica at about 100 MaIt drifted northwards the TasmanSea opened and the IndianOcean opened with India start-ing to drift away from WesternAustralia The opening of theTasman Sea produced the rise ofthe Great Dividing Range thediversion of the major river sys-tems and changes to the climateof eastern Australia
A minor mass extinction oflife 90 million years ago was theresult of volcanoes in the Indianand Pacific Oceans belching outCO2 and other gases into theoceans and atmosphere Therewas a runaway greenhouse untilvolcanism waned But volcanicemissions of CO2 are common In1984 and 1986 burps of CO2 fromthe volcanic crater lakes ofMonoun and Nyos respectivelykilled thousands and added CO2to the atmosphere Near MtGambier volcanic CO2 is com-mercially extracted from rocks
one small hot spring on Miloscontributes 1 per cent of theplanetrsquos volcanic CO2 and hugequantities of CO2 the planetrsquossecond most common volcanicgas constantly leak from unseensubmarine volcanoes
Another minor mass extinc-tion at 55 Ma was caused by aCaribbean volcano There was arise in sea temperatures by up to8˚C for 100000 years and atmo-spheric CO2 was 10 times that oftoday During this greenhouseplankton sucked up the atmo-spheric CO2 mammals thrivedand life filled the vacated ecolo-gies Atmospheric CO2 decreasedfrom 3500 to 700 ppm within amillion years stayed low until 47Ma and went up and down toabout the present level (365ppm) at 40 Ma
India collided with Asia at 50Ma Uplift produced the TibetanPlateau which started to scrubCO2 out of the atmosphere TheTibetan plateau is still rising andCO2 is still being scrubbed out ofthe atmosphere The Drake Pas-sage opened as South Americadrifted from Antarctica a cir-cumpolar current developed andAntarctica refrigerated SouthernAustralia from 17 to 145 Mawas again tropical with mid-lati-tude temperatures 6˚C warmerthan today Atmospheric CO2was 180ndash290 ppm This green-house occurred when atmos-pheric CO2 was 30ndash50 per centlower than today
By 5 Ma Earth cooled andwas so cool that very slight orbitalwobbles now had a bearing on cli-mate and every 100000 yearswas characterized by 90000 yearsof glaciation and 10000 years ofinterglacial We are currently inone of those interglacial periods
The penultimate interglacialwas 120000 years ago Homoerectus Homo neanderthalensisand Homo sapiens coexisted sealevel was 6 metres higher than atpresent the planet was far
Millions of Years Ago
400 200600 0
2
4
6
8
10
12
14
16
18
20
0
Perc
enta
ge o
f CO
2
PrecambrianIce Age
s
Permian-CarboniferousIce Age
s
LastIce Age
s
There have been enormous changes incarbon dioxide (CO2) over time related to
volcanism sedimentation mountain-building and life on Earth
11MARCH 2003
E V I E WR
warmer and wetter than now andatmospheric CO2 was 78 per centof that today After warming theatmospheric CO2 and CH4 con-tent increased suggesting that at-mospheric temperature rise drivesan increase in atmospheric car-bon dioxide and methane con-tents During the history of thelatest glaciation armadas of icewere released into the sea every7000 years resulting from thephysical failure of thick icesheets These had a profound ef-fect on climate Small cool peri-ods occurred every 1100 to 1300years
The zenith of the last glacia-tion was 18000 years ago Sealevel was 130 metres lower thantoday temperature was 10ndash15˚Clower than today and the north-ern hemisphere was covered byice to 38˚N up to 3 kilometresthick
YESTERDAYThe northern polar ice sheetstarted to melt 14700 years agoThere were very rapid and majortemperature fluctuations sea lev-els rose and fell and the total sealevel rise over the last 14700years has been at least 130metres Sea level rise resulted inthe breaching of the Mediterra-nean into the Black Sea Basinsome 7600 years ago and is prob-ably the origin of the SumarianBabylonian and biblical stories ofa great flood
One of the consequences of amassive sea level rise over the last14700 years is that the WestAntarctic Ice Sheet was nolonger underpinned by the landTwo thirds of the West Antarc-tic Ice Sheet collapsed into theoceans and sea level rose 12metres The final third of theWest Antarctic Ice Sheet has yetto collapse to produce a 6 metresea level rise as part of the dy-namic post-glacial climate onEarth Climate changes inducedby changes in ocean currents
cooled North Africa grasslandschanged to a desert humans mi-grated and the great Mesopo-tamian cities were established
Sea levels were 1ndash3 metreshigher in a greenhouse 6000years ago There was 20 per centmore rainfall Cold dry periodsglacier expansion and crop fail-ures between 5800 and 4900years ago resulted in deforesta-tion flooding silting of irrigationchannels salinization and thecollapse of the Sumerian citystates Long periods of El Nintildeo-induced drought resulted in theabandonment of Middle EasternIndian and North Americantowns In 1470 BC () Thira ex-ploded weakened the dominantMinoans and changed the courseof western history
Global cooling from 1300 to500 BC gave rise to the advanceof glaciers migration invasionand famine Global warmingcommenced again at 500 BCthere was an excess of food andgreat empires such as the AshokaChrsquohin and the Romans grewContemporary records and Ro-man clothing shows that condi-tions were some 5˚C warmer thantoday
In 535 AD Krakatoa explodedas did Rabaul in 536 AD TheEarth passed through cometarydust in 536 AD The dusty atmo-sphere reflected heat and dark-ness prevailed As a result theclimate cooled and there wasfamine and warfare Changes inocean currents resulted in theMedieval Warm Period from 900to 1300 AD The first to feel thechange were the Vikings whowere able to navigate the north-ern waters colonized Newfound-land colonized Greenland andestablished extensive trade routesas far south as the modern GulfStates On Greenland crops weregrown and there were cattle Thiswould not be possible today Thewarmer wetter climate of Europeproduced excess crops and wealthwhich resulted in the building ofcastles cathedrals and monas-tries As with previous green-house events there was greatprosperity
In 1280 AD volcanic erup-tions on Iceland and a change inocean currents started the LittleIce Age which finished in 1920The North Sea froze in 1303 and1306ndash1307 there was massivefamine in 1315 and the plague
Sea
Surf
ace
Tem
pera
ture
degC
21
22
23
24
25
26
Years Ago
Large temperature changes over the last 200years have been recorded in history and fromthe oxygen isotopes of floating marine animals
Dark Agescold period
Medievalwarm period
LittleIce Age
2000 1500 1000 500 Now
s
12 MARCH 2003
E V I E WR
pandemic attacked the weakenedpopulation in 1347ndash1349 Therewas massive depopulation and ittook Europe 250 years to reachthe population of 1280 AD Dur-ing the Little Ice Age there werewarmer periods associated withsunspot activity During mini-mum sunspot activity (1440ndash1460 1687ndash1703 and 1808ndash1821) the intensely cold condi-tions were recorded by the Dutchmasters and King Henry VIII wasable to roast oxen on the frozenThames There were food short-ages Short cold periods occurredafter the eruptions of Tambora(1815) and Krakatoa (1883) re-spectively In fact 1816 wasknown as the lsquoyear without asummerrsquo This was the time whenTurner painted stormy oceansand skies full of volcanic dustMary Shelley wrote Frankensteinand Byron wrote Darkness
TODAYThe twentieth century and earlytwenty-first century AD are timesof natural post-glacial reboundIce sheets a rare phenomenon inthe history of time still exist Sealevel is relatively low as are glo-bal temperatures and atmos-pheric CO2 Between 1920 and1945 there was a period of warm-ing (037˚C) and another thatcommenced in 1976 (032˚C) In1976ndash1977 global temperaturesin the lower atmosphere jumped03˚C sea surface temperature inthe equatorial Pacific jumped06˚C sea surface temperatureduring upwelling increased 15 to3˚C but there was reduced up-welling the heat content of theupper 300 metres of the worldrsquosoceans increased there was in-creased wave activity in theNorth Sea and the length of theday changed The stepwise in-crease in temperature in 1976ndash1977 shows that there was a ma-jor re-ordering of the ocean heattransport coinciding with anorbital change expressed as a
change in the length of the dayMaybe the global warming of thetwentieth century is just a mea-sure of the variability on a dy-namic evolving planet
To put such measurementsinto perspective over the historyof time changes in atmospherictemperature in the twentieth
century can only be consideredsmall and slow A 24-year globalcoverage of satellite atmospheretemperatures shows only modestwarming in the Northern Hemi-sphere and a slight cooling in theSouthern Hemisphere Tempera-ture measurements from balloonsagree with the satellite measure-ments for the period of overlapBecause greenhouse warming is aphenomenon of the atmospheresignificant changes should havebeen recorded They have not
CONCLUSIONSUnderpinning the global warm-ing and climate change mantra isthe imputation that humans liveon a non-dynamic planet On allscales of observation and mea-surement sea level and climateare not constant Change is nor-mal and is driven by a large num- API
ber of natural forces Change canbe slow or very fast However wesee political slogans such as StopClimate Change or governmentpublications such as Living withClimate Change demonstratingthat both the community andgovernment believe that climatevariability and change are notnormal By using the past as thekey to the present we are facingthe next inevitable glaciationyet the climate economic politi-cal and social models of todayassess the impact of a very slightwarming and do not evaluate thehigher risk of yet another glacia-tion Geology archaeology andhistory show that during glacia-tion famine war depopulationand extinction are the norm
In 1831 Admiral Sir JamesRobert George Graham had theUnion Jack hoisted on a volca-nic land mass that suddenly ap-peared near Sicily It was calledGraham Bank and was claimed byEngland It was also claimed bythe Kingdom of the Two Sicilieswho called it Isola Ferdinandeathe French (LrsquoIsle Julia) andother powers In the subsequentdispute over ownership Franceand the Kingdom of the TwoSicilies almost came to war andEngland and the Two Kingdomsof Sicily had a diplomatic rowDuring the intense diplomaticdispute the island quietly slippedback underwater Graham Banksserves to show that whateverpolitical decisions we humansmake the land rises and falls sealevels rise and fall and climateschange as they have done sincethe dawn of time
Ian Plimer is the Professor of Geology in the Schoolof Earth Sciences at The University of MelbourneThis article is an edited version of his recent paperto the IPArsquos Climate Conference delivered on 28
February 2003 a full version of which can befound on the IPArsquos Website
On all scales of
observation and
measurement sea
level and climate
are not constant
Change is normal
and is driven by a
large number of
natural forces
13MARCH 2003
E V I E WR
FOR two years the worldrsquossecond largest hydrocarbonsproducer spent beaucoupdollars on a clever public re-
lations and advertising campaign toconvince consumers that BP no longerstands for British Petroleum but for Be-yond Petroleum
One advert proclaimed lsquoWersquore oneof the largest producers of natural gashellip and are investing in the new energysources of the futuremdashhydrogen andwind Itrsquos a startrsquo Another tried to getthis line past the guffaw test lsquoWe be-lieve in alternative energy Like solarcappuccinorsquo
Many people expressed surprise thata huge oil company was so committedto alternative energy technologiesThey neednrsquot have
BPrsquos total six-year investment in re-newable technologies was $200 mil-lionmdashthe same amount it spent on thelsquoBeyond Petroleumrsquo advertising cam-paign Thatrsquos certainly an impressivetab for image enhancement But itrsquos adrop in the barrel for futuristic tech-nologies that were the centrepiece forthe slick marketing effort
Indeed all its preening and pufferynotwithstanding BPrsquos actual invest-ment in renewable energy was a whop-ping 005 per cent of the $91 billion itspent to buy oil giants Arco and Amocoback in the 1990s Moreover just as theadvertising campaign was windingdown BP announced it was spending$675 billion for a 50 per cent control-ling interest in a rich Russian oil pros-pectmdashand will be spending another$20 billion over the next five years ex-ploring this and other newer fieldsaround the world
In other words the advertising cam-paign was little more than lsquogreen-washingrsquomdashdisinformation intended topresent an environmentally responsiblepublic image BP wanted people to per-
BPmdashBack to PetroleumPAUL K DRIESSEN
theoretically harmless puffery It also re-flects the desire of many multinationalcompanies to appease critics and gaina public relations advantage over com-petitors by adopting the language ofideological environmentalism
This radical school of thought in-creasingly uses ethical buzz-words anddogmas to justify its demands Chiefamong them are sustainable develop-ment and the precautionary principlethe foundations of so-called lsquocorporatesocial responsibilityrsquo (CSR) and lsquoso-cially responsible investingrsquo (SRI) doc-trines
Eco-activists from affluent Westerncountries developed the doctrines topromote their agendas and oppose en-ergy and economic development BPhas long been at the forefront of theseefforts as a charter member of theWorld Business Council for SustainableDevelopment through frequent meet-ings with activist groups and by fund-ing many radical groups
The activists define what is lsquorespon-siblersquo focusing debate on conjecturalproblems and theoretical needs of fu-ture generations of wealthy elitesmdashandignoring real immediate life-and-death needs of people who struggledaily just to survive The stakes arehuge
More than 15 billion people in de-veloping countries still do not have ac-cess to electricity Half a billion womenand children spend their days collect-ing firewood or squatting in mud andanimal faeces to collect and dry ma-nure for fuel Millions die every yearfrom lung diseases caused by indoor airpollution from cooking fires and dys-entery due to contaminated drinkingwater
Hydroelectric or fossil fuel projectscould provide electricity for familieswater purification plants and economicdevelopment But radical activists op-
ceive it as a lsquosocially responsiblersquo leaderand reward it accordingly Few did
Green activists denounced BP forlsquohypocrisyrsquo and blasted the company forcontinuing to lsquoexploit some of theworldrsquos most sensitive ecological areasrsquoA major business magazine said sim-ply lsquoWell please If the worldrsquos secondlargest oil company is beyond petro-leum Fortune is beyond wordsrsquo
Meanwhile BPrsquos total wind and so-lar electrical output last year was barelyenough to keep the lights burning inRegina Saskatchewanmdashand thought-ful observers are beginning to realizethat wind and solar arenrsquot quite as eco-friendly as activists claim
A single new 555-MW gas-firedgenerating plant in California producesmore electricity than do all the statersquos13000 wind turbines The gas-firedplant occupies about ten acres the gi-ant 200-foot-tall windmills dominatethousands of once-scenic acres and killthousands of raptors and other birdsevery year Current photovoltaic tech-nology is just as habitat-hungry
Worse chief executive Lord JohnBrowne was forced to lower BPrsquos pro-duction estimates three times last yearand the companyrsquos 11 per cent returnon average capital was well below thatof arch-rivals ExxonMobil (137 percent) and Royal DutchShell (148 percent) BP share prices reflected inves-torsrsquo displeasure with its poor perfor-mance and the fact that the companyrsquosprofit margins would not improve for adecade or more if the company re-mained focused on renewable energyand old oil fields
Thus if BP ever really was BeyondPetroleum going Back to Petroleum(and Bigger Profits) was a sound busi-ness decision
However the lsquoGreat Beyondorsquo adcampaign involves more than meregreenwashing and disingenuous but s
14 MARCH 2003
E V I E WR
API
pose these projects and say that theworldrsquos rural poor should be contentwith solar panels on huts
Investors are also at risk particu-larly retirees whose futures depend onpension and mutual funds that ownnearly $8 trillion in market sharemdash50per cent of the total stock marketMany of these funds are managed lessto safeguard or benefit the investor thanto promote radical principles under thedisguise of so-called ethical funds
These funds claim to provide pro-fessional unbiased analytical and ad-visory services But in reality they sup-port political agendas based on often-questionable analyses and on lsquostake-holderrsquo (activist) input to justify howthey grade companies in client portfo-lios They regularly excoriate compa-nies such as ExxonMobil claiming itsrefusal to back the Kyoto climate treatywill destroy shareholder value Mean-while they praise companies such asBP and promote global governanceand solar panels on huts
Australiarsquos energy consumers willbecome yet another example of lsquocol-lateral damagersquo if the radicals havetheir way over global warming Onceagain some of the culprits are right inthe BP boardroom
In 1997 BP chief Browne endorsedthe global warming theory and saidtough measures should be imposedquickly even in the absence of scien-tific proof A Clinton-era Energy In-formation Administration report con-cluded that the climate treaty woulddrain $340 billion a year from the USeconomy The Australian economywould also get hammered And all thispain even assuming perfect compli-ance with the treaty would reduce av-erage global temperatures in 2050 byonly 02˚C below what they would bewithout the treaty according to theUSArsquos National Center for Atmo-spheric Research
But BP Australasia President GregBourne is undaunted Hersquos stumping thecountry from Melbourne to Brisbaneand Darwin to Perth importuning busi-nesses to pressure the PM to ratifyKyoto Could it be pure altruism Ormight the old profit motive be at work
A 1997 memo to Enron presidentKen Lay described BP as Enronrsquos lsquoin-ternational equivalentrsquo Indeed BP isstriving mightily to replace Enron asthe worldrsquos premier broker in the newbusiness of buying and selling permitsto emit greenhouse gases The expec-tation is that playing the climatechange game could earn BP billions ofdollars via traditional petroleum opera-tionsmdashand billions more via emissiontrading schemes The company is al-ready trading credits among its unitsas part of a training regimen for theanticipated emission Olympics
One cannot help but suspect thatthis huge EU oil giant might also bemotivated by Europersquos obvious desireto protect its industries from US and
other foreign competition They clearlysee the Kyoto Protocol not merely asan environmental programme but alsoas a way to pressure the United StatesAustralia and other countries to reduceenergy use and economic productivity
EU Environment CommissionerMargot Wallstrom put it bluntly whenPresident Bush abandoned the Kyotoclimate treaty lsquoThis is not a simple en-vironmental issuersquo she railed lsquoThis isabout international relations this isabout economy about trying to createa level playing field for big businessesthroughout the worldrsquo Several EU of-ficials echoed her sentiments suggest-ing that Americarsquos lower energy taxesconstitute an unfair trade advantagethat could justify trade sanctionsagainst the US
In short what we are witnessing isa profound and disturbing convergenceof ideology activism marketing poli-tics and financial gainmdashall in the ser-vice of radical policy agendas and allbeautifully attired in the lavish raimentof corporate ethics and responsibilityThis is proof positive that social respon-sibility can be a wondrous thing in thedexterous hands of craftsmen who re-ally know how to display and utilize it
How can we stop the charade Forstarters demand that corporate socialresponsibility puts people first puts de-velopment back into sustainable devel-opment and ensures that precaution-ary guidelines safeguard people andcommunities from the havoc wreakedby radical green policies Insist that alldecisions be based on sound peer-re-viewed science and solid evidencemdashnot on hysterical claims and shrillrhetoric by activists regulators andjournalists who reward pseudo-scien-tific soul-mates and pillory any scien-tists who dare disagree with them
Next urge principled regulators andjournalists to investigate these compa-nies and investor firms for self-servingarrangements and breech of fiduciaryduty Demand that the companiesfirms and activist groups open theirbooks and provide full disclosure oftheir meetings contacts and monetaryand other relationships
Last in this era of high-minded re-form prevail upon legislators to changethe law to make these groups subjectto the same false advertising laws andthe same standards of transparency andaccountability that activists insistshould govern for-profit corporationsUnbelievably right now these ideo-logues are mostly exempt
The world will thank you For it willbe a better safer more ethical placemdashespecially for energy consumers retir-ees and the worldrsquos poor
Paul Driessen is a senior fellow for the AtlasEconomic Research Foundation in Fairfax VA This
article is based on his recent white paper lsquoBeyondPetroleummdashor Beyond Probityrsquo which can be read
in its entirety at wwwcdfeorgdriessenhtm
BPrsquos total six-year
investment in renewable
technologies was $200
millionmdashthe same
amount it spent on the
lsquoBeyond Petroleumrsquo
advertising campaign
15MARCH 2003
E V I E WR
FOR three years Reputa-tion Measurement Ltd andThe Age and The SydneyMorning Herald have been
trying to impose their political agen-das on Australiarsquos top 100 corpora-tions They think that Australiarsquos cor-porations should be good citizens andthat by measuring what they think itmeans to be a good citizen they canchange corporate behaviour
Westpac ranked number one on the2002 Index and rated well in everycategory Flight Centre ranked num-ber one on financial performance but47 overall It was in the doldrums inevery other category including beingranked 99 on environment On thesurface this seems very strangemdashFlightCentre manages shopfront travel agen-cies The reason for this bizarre resultwas not hard to find
Reputation Measurement sug-gested that lsquocompanies seeking to dem-onstrate their worthiness as sociallyresponsible organizations are most suc-cessful when they widen their tradi-tional business stakeholder base to in-clude community stakeholdersrsquo Fur-ther lsquo[i]nvestors and consumers are in-creasingly making decisions based onlonger-term issues linked to a com-panyrsquos capacity to contribute to a sus-tainable futurersquo In other words theReputation Index is an instrument foradvancing a number of political agen-das corporate social responsibilitystakeholder capitalism and sustain-ability
For example corporate social re-sponsibility suggests a common agree-ment about what is good Whose defi-nition of good is to be believedmdashtheelectoratersquos or the activistsrsquo In a lib-eral democracy the rules are set by aconsensus that determines not so muchwhat is good corporate behaviour but
The Good Reputation Index 2002A Tale of Two Strategies
GARY JOHNS
what is and what is not acceptablebehaviour The Index is an exercise incapturing the reputation agenda andusing it to regulate corporate beha-viour
Stakeholder theory suggests that allinterests in an enterprise compete toobtain benefits from the enterprise butthat none has priority It is in effectasking lsquoin whose interests should theenterprise be runrsquo It assumes that so-ciety grants an enterprise the right toexist The community through its law-makers may grant licences and certainprivileges in return for the enterprisecomplying with the law It does notlicense stakeholders at large to imposetheir views on the corporation
Sustainability refers to ecologicalsustainability and ecological sustaina-bility is premised on the notion of lim-its to growth based on limits to resour-ces It argues that natural resources arebecoming scarcer It ignores the his-tory of technological innovation of-ten promoted by competition betweencorporations and the fact that such in-novation has extended physical re-sources in ways untold
An analysis of the 2002 Index re-veals that those corporations whosescore improved massively between2001 and 2002 did so because they didnot participate in 2001mdashthey wererated anywaymdashbut did so in 2002Conversely those whose score plum-meted in 2002 did so because they par-ticipated in 2001 but not in 2002Moreover the corporations who rosemassively in the ranks did not changetheir behaviour they just filled out theforms better
Greenpeace were very aggressive intheir attitude to corporations lsquoTo en-able us to verify your responses pleaseprovide us with further supportingdocumentation If hellip we are unable
to verify your response we will defaultyour response answer to a ldquodonrsquot knowrdquowhich will be marked and downgradedaccordinglyrsquo Unfortunately those ofwhom we would expect bettermdashforexample The Brotherhood of St Laur-encemdashalso penalized non-respon-dents As the technique was used byalmost all of the research groups thiswas presumably a deliberate strategy ofReputation Measurement Ltd
More disconcerting were reportsfrom corporations of the researchgroups touting for business by ringingfirms and offering their services to helpfill out the questionnaire Althoughthe level of disclosure has increasedsince the 2001 survey the touting con-tinued
The Index was published in Octo-ber 2002 obviously to coincide withthe reporting season and in the hopethat shareholders would use the Indexto seek changes to corporate behav-iour A sample of the major gainers andlosers on the Index reported no men-tion of the Index More importantlythere was no discernible impact onshare prices
The good news is that the Indexfailed miserably to achieve its objec-tives The bad news is that enough cor-porations played along to keep it alivein certain media and academic circlesIt was a chance for self-appointedNGOsmdashwho provided the ques-tionsmdashto regulate corporations bypublishing a list of good capitalists andbad capitalists Every corporation thatparticipated in the Index should thinkcarefully about whether it can justifythe agenda to its shareholders
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
16 MARCH 2003
E V I E WR
Tomorrowrsquos Reform
RALPH Waldo Emersontold us that lsquoa foolish con-sistency is the hobgoblinof little minds adored by
little statesmen philosophers and di-vinesrsquo and enjoined us lsquoto speak whatwe think today in words as hard ascanon balls and tomorrow speak whattomorrow thinksrsquo While statesmenshould not persist with known errortheir wanton inconsistency makespolicy formulation confoundedly dif-ficult
When he asserted that lsquoWhat de-termines the course of a nationrsquos eco-nomic policies is always the eco-nomic ideas held by public opinionrsquoLudwig von Mises must have hadeven less confidence in little states-men His pupil Friedrich von Hayekurged Antony Fisher not to enterpolitics but instead to found think-tanks which with fact and argumentwould change public opinion
Even among liberalismrsquos oppo-nents few today argue that Misesrsquoand Hayekrsquos ideas and Fisherrsquos liberalthink-tanks did not lead the 1980sand 90s almost world-wide liberal re-vival Why would they when bymuch the same means Fabian So-cialism had brought the welfare stateto Western nations In neither trendhowever were politicians the mereagents of popular opinion Especiallyin democracies political leadersrsquo ca-pacities to ignore it are indeed mod-est but their abilities to influence itare very much less so Even SaddamHussein works hard at influencingIraqi opinion Can we hypothesizethat the ways that leaders use theirinfluence distinguish tyrants fromdemocrats and the purposes forwhich they use it distinguish politi-cians from statesmen
Liberalismrsquos headlong chargethrough the corridors of power could
JOHN HYDE
arguments could have been em-ployed are nonetheless being de-fended by appeal to popular miscon-ceptions of the sort that PaulineHanson the Democrats and Greensactually believe Unless the majorparties have had a radical change ofheart they believe differently
Take the proposed Free TradeAgreement (FTA) with the UnitedStates Trade experts are not of onemind about its net worth My quar-rel is therefore not with the FTAitself but with the Governmentrsquos de-fence of it If the FTA will bring netbenefits then these will come mostlyfrom improved access to Americangoods and capital our own reductionof anti-competitive regulation ofdrugs medical insurance performingarts professional services textilesrural commodities etc and the dy-namic advantages of mixing it withthe Yanks But the government ispromoting the FTA almost solely inmercantilist (exports goodimportsbad) terms
To treat foreign goods servicesinvestment and ideas as an invasionparodies voluntary exchange whichdoes not happen unless both partiesbenefit The Government trumpetsa fact that nobody disputes namelythat it pays to sell into the best pay-ing markets but says nothing to edu-cate us in the advantages of buyingwell from foreigners as well asneighbours Once long ago Howardcriticized Pauline Hanson for her xe-nophobia That day he seemed to un-derstand the benefits of exchangewith foreigners
Until recently Australia hadbeen insisting that the only way toworld trade reform was via the mul-tilateral processes of the World TradeOrganisation and currently theDoha round A bilateral FTA with
not have proceeded without leaderssuch as Margaret Thatcher and ZhouEnlai who changed public opinionas did Bob Hawke in Australia Nowhowever liberalismrsquos charge hasslowed even in some places beensomewhat reversed Canberra hasnot been immune from trends thatsee politicians no longer so firmly re-sisting demands for economic privi-leges or as others see the same phe-nomenon no longer so blindly fol-lowing economic rationalism
Very poor economic decisionsaboundmdashrejection of the Trebeck re-port on petrol pricing preference forethanol production extending mo-tor and textile protection rural sub-sidies taxpayer contribution to theDarwin-to-Alice Springs railwayetc etc But there is also progressThe pride that John Howard takesin the fact that Australians are lessdivided against each other is surelyjustified The hugely importantlabour welfare and arguably also thehealth-care markets have been im-proved Budget balance has beenachieved albeit with high taxes Al-though net legislative and adminis-trative progress toward a more lib-eral more open more efficienteconomy has dwindled it would stillbe fair to say it has not been reversed
Our statesmenrsquos words as hard ascannon balls however that is thoseintended to enlighten rather thanappeal to public opinion are beingreserved for the Iraqi conflict In con-trast in the economic arena we areno longer encouraged to accept anyunwelcome truths Even when de-fending measures that I am morethan content to accept as beneficialthe government seems to select itsargument at best randomly ignoringprinciples of economic efficiency andequity Policies for which textbook
17MARCH 2003
E V I E WR
the US may or may not result in anet increase in trade flows but if itis not a meaningless piece of paperdelivering only political benefits tothe Government it will certainlydivert trade from our other tradingpartners How will China KoreaJapan etc react to losing their lsquomostfavoured nationrsquo status Such ques-tions should be addressed in termsthat do better than reinforce our xe-nophobic prejudices
By appealing to Hansonite mis-conceptions the Government mayand probably will improve itschances of bringing forward a policythat I am more than willing to ac-cept it believes is a good one It isafter all the recommendation of theDepartment of Foreign Affairs andTrade However by so doing it is re-inforcing delusions it must overcomefor further economic reform Whatis more I am reminded of a quip thatI am sure the PM has also heard lsquoNoGovernment is really dangerous un-til it believes its own bullshitrsquo Poli-ticians and I suspect bureaucratsalso are all too prone to believingtheir own utterances Unwilling toadmit their deceptions even whenspeaking in house they quickly con-vince themselves of the truth of theirown and colleaguesrsquo loose rhetoricand worse These are the people whomust negotiate the Agreement whilelooking over their shoulders at anAustralian electorate whose alreadystrong mercantilist tendencies havebeen reinforced by the people bestplaced to disabuse them The poten-tial cost is obvious
The US Free Trade Agreement isbut an example of a tendency thatought to be worrying In debateabout refugee policy motor fuel sup-ply single-desk wheat sales the sup-ply of medical practitioners and pres-ervation of the environment has notthe Government employed argu-ments that are not compatible withits professed liberal philosophy Hasit not seemed that it does not knowthe standard liberal responses to theself-serving demands of vested inter-ests and bigots With due respect to
Emerson consistency allows deci-sions to be made without the neces-sity of thinking every one throughfrom fundamental principles whichnobody in authority has the time orthe mental agility to do
Politically disinterested educa-tors such as the IPA can often callsome pretty good minds to their aidEven so when the Government it-self fosters public misconceptionthey cannot be expected to undo theerror The single greatest sin of thecurrent government is that it is notbuilding opinion for tomorrowrsquos re-form Why not
I suggest because it is politicallydifficult Whereas calls to resist out-siders appeal to deeply ingrainedtribal instincts calls to uphold thecivilizing and wealth-building insti-tutions that afford protection tostrangers and admit their goods ser-vices persons and ideas make nosuch visceral appeal These codes aremuch later developments in themarch of mankind and to manypeople they remain counter-intui-tive They must therefore be de-fended by sustained argumentHayek knew that politicians whosetime horizons in the absence ofknown crises tend to be the nextelection would (to use Howardrsquosown expression) seldom have the
tickers He turned therefore to theless articulate but far more resolutethink-tanks
It is relatively easy to appeal tothe sort of Chauvinism that sur-rounds sporting activity and argu-ments about refugees and meat quo-tas When a Prime Minister talks ofsovereignty guaranteeing our bor-ders or the interests of our exportersor domestic manufacturers he is notnecessarily wrong but his task iseasier than that of defending rulesthat permit voluntary co-operationamong strangers The principle thatdefends the non-unionistrsquos right towork the consumerrsquos right to buy for-eign goods and everyonersquos right tohear alien ideas and which shouldprotect racial and religious minori-ties from exclusion still needs hisleadership
Unless statesmen recognize theinconsistencies that arise not fromthe changed opinions that con-cerned Emerson but from trying tobe all things to all men they arelikely to govern in ways that are un-fair and inefficient If the public doesnot recognize consistency then thelsquolittle statesmenrsquo may find them-selves compelled to yield to the de-mands of the more articulate vestedinterests In such a case Heaven helpthe inarticulate who will be effec-tively disenfranchised But the insti-tutions which when consistentlyapplied give us liberty equity andprosperity are not strongly intuitive
They nevertheless distinguishAustralian society from say Iraqi so-ciety They give us the economicstrength to defy tyrants and they giveus a land worth defending They arecertainly not in danger of disappear-ing but they are in danger of beingeroded Lead us Mr Howard
While statesmen
should not persist
with known error
their wanton
inconsistency makes
policy formulation
confoundedly
difficult
API
John Hyde is a Senior Fellow with the Institute ofPublic Affairs His book Dry In Defence of
Economic Freedom was published by the IPA in November 2002
18 MARCH 2003
E V I E WR
DESPITE the obsessivepublic attention to pricesat the petrol pump thepetroleum-refining sector
rarely registers on the media radarscreen This is unfortunate as the sec-tor fuels most movement of peopleand goods in our economy and soci-ety And it is in trouble
It is fragmented stunted and sur-vives by abjuring profit and mortgag-ing its future Without radical reshap-ing it is likely to wither leaving usexposed to the vagaries of the inter-national refined-products market
FEATURES OF THE AUSTRA-LIAN REFINING SECTORThe first thing to note is that by in-ternational standards Australia is arelatively small player The most re-cent international figures show thatour total output of refined productsin the third quarter of 2002 was 89million tonnes This compared withOECD production of 486 milliontonnes including US production of202 million tonnes Total Australianrefinery capacity of 870000 thousandbarrels per day (bpd) compares withthe figures for China (53 million)South Korea (26 million) and Singa-pore (11 million) Total regional re-fining capacity and production con-tinues to grow as Australiarsquos stagnatesIn the five years to 2000 regional out-put grew by 22 per cent
Second the structure of the indus-try is weak The dispersed geographi-cal distribution of our refining sectorreflects its historical developmentwith each State capital city support-ing one or more refineries Over thelast two decades the number of ma-jor oil companies operating in Aus-
Petroleum RefiningRationalization or Atrophy
JIM HOGGETT
tralia has shrunk from nine to fourAlthough the number of players hasmore than halved the number of re-fineries has reduced by only two fromten to eight The average capacity ofAustralian refineries is around100000 bpd New refineries in theregion are generally significantlylarger Singaporersquos largest has a capac-ity of 375000 bpd
Given the open Australian mar-ket our ex-refinery prices are virtu-ally set by the major exporters in theregion who are also operating on tightmargins Moreover the proportion-ately heavy demand for diesel in SEAsia tends to generate a persistentsurplus of gasoline which is availablefor export to Australia at discountedprices
The pattern of relatively smallscattered refineries is no longer opti-mal in an open market in which weare a price-taker
Third despite its sub-optimalstructure the Australian refining in-dustry is not grossly inefficient Oneindicator is the value added per em-ployee which is in the top five per-formers in the Australian manufac-turing sector
The cost competitiveness of Aus-tralian products is indicated by thefact that we have the cheapest ex-taxprice of petrol in the OECD Perfor-mance comparisons with the rest ofthe AsiandashPacific however suggestthat we lag the average efficiency inthe region And the best performersin the region are superior to our best
Finally the financial performanceof the industry is poor gross annualrevenues for the whole industry in-cluding marketing were $32 billionin calendar year 2001 For the five
years to 2001 the return on assets forrefining and marketing averaged 38per cent and was negative in the lasttwo years The indications are that2002 may have been a better year forthe industry but that the return onassets remains well below the cost ofcapital Over the four years to 2001the fixed asset base of the industrydeclined by almost 6 per cent to $12billion even after $24 billion of newinvestment in the period
This is clearly unsustainable andit raises the question Why is no-oneleaving the game
There are perhaps four main rea-sonsbull First the industry has engaged in
continual productivity improve-ment allowing it to keep withinrange of ruling prices
bull Second each refiner hopes thatsomeone else will blink first sothat the waiting will pay off
bull Third the costs of leaving thetable the exit costs are very highbecause of the nature of the prod-uct and the long occupancy ofmost sites
bull Fourth even while profitability islow the industry has generallybeen marginally cash positive
These add up to a big lsquofirst mover dis-advantagersquo
FUTURE TRENDSClearly petroleum will remain ourmost important energy source Petro-leum products constitute 52 per centof Australiarsquos final consumption ofenergy Liquid petroleum fuels pro-vide more than 95 per cent of Aus-traliarsquos transport needs There are nomajor foreseeable influences that willaffect this pattern dramatically There
19MARCH 2003
E V I E WR
have been major advances in fueleconomy and these will no doubtcontinue But more than counterbal-ancing this is the inexorable growthin demand for personal mobility andfor goods from distant parts Althoughgrowth in energy consumption mayslow down in Australia we will notbe reducing our consumption to anysignificant degree
Our export role will also be lim-ited Australian export volumes havetended to be steady over recent yearsand future new export potential forpetroleum products seems likely to beminimal China and India have re-cently become major exporters par-ticularly of gasoline Refinery capac-ity is planned to continue to growstrongly in the region even thoughthere is already significant excessThe decline in capacity utilization inmajor exporters such as Singaporewill make exporting difficult Further-more it is expected that productspecifications in Asia the US andEurope will converge in the comingyears thereby eliminating niche ex-port opportunities
The choice we face is what to doabout our essentially import-compet-ing industry
INCENTIVES NOT STRONGWhile there are strong pressures forthe industry to restructure there islittle incentive to invest for this pur-pose Investments in the Australianrefining industry have to competewith many alternatives across theglobe
Lack of sufficient return is thesingle biggest deterrent to investmentin the industry at present But thereare othersbull There is no prospect of strong growth
in demand to offset the substantialrisks associated with large new in-vestments
bull The persistent refinery capacity over-hang in our region will keep sus-tained pressure on our margins
bull The corporate taxation regime is nowless favourable than hitherto after thesubstitution of effective-life foraccelerated depreciation The
competing Singapore option offersa three-year write-off
bull The regulatory cost burden is grow-ing This applies to all Australianindustry but is potent in overseascomparisons Tighter fuel stan-dards environmental restrictionsintervention in prices and indus-trial law are some of the factors
bull There is increased sovereign riskstemming from inconsistent regula-tions We have eight parliamentswhich enact inconsistent laws Acurrent example is the higher fuelstandards applied in Western Aus-tralia
bull The sovereign risk also arises fromuncertainty in the regulatory processThere are unpredictable changesof direction (the deferral of thediesel sulphur excise differential[DSED]) and uncertainty in theface of conflicting interests (willthe Government act on ethanolcontent)
All these factors enter into the riskreward calculation When the re-wards are minimal the risks take onan extra dimension
WHAT INDUSTRY STRUC-TURE DO WE NEEDThe short answer is we cannot knowin detail
In the Downstream Petroleum In-dustry Framework 2002 the Depart-ment of Industry Tourism and Re-sources set out a broad vision
bull A preference for market-based so-lutions
bull A strong efficient environmen-tally responsible industry supply-ing most of the nationrsquos needs forproducts
bull Regulation only for market failureor national interest objectives
bull Regulation to be transparent andconsistent
bull Reform and regulation to maxi-mize long-term community ben-efitThis vision has some prescriptive
elements but the Government hasmade it clear that it will not nomi-nate an optimal number of refineriesor a pattern of production
The general public would probablyopt for a structure that guaranteedlower more stable automotive fuelprices Unfortunately they cannothave both in the short term
In fairness the investors in the in-dustry are the ones entitled and bestfitted to determine its future In theextreme they will do it anyway bypersisting or walking away Generallyspeaking they will seek to maximizetheir returns and thus promote themost efficient use of resources
Australian refineries are not inef-ficient but that is not the point Ourmarket is open so the competitionwe face is the best of the overseas per-formers often with more favourabletax and subsidy regimes
Nor is this simply a question ofclosing the smallest refineries A bet-ter approach might well be to allowrefining companies to concentrate onwhat they do bestmdashperhaps throughrefinery alliances Caltex and Shellhave co-operated in this way in Thai-land
The fact is that the detail of thedecisions can only be made by theindustry relatively free of governmentdirection The series of detailed de-cisions entailed will determine theoverall structure of the industry
COMPETITION REGULATIONCAN IMPEDE RESTRUCTURINGThe relevant provision of Section 50of the Trade Practices Act (TPA) pro
While there are
strong pressures for
the industry to
restructure there is
little incentive to
invest for this
purpose
s
20 MARCH 2003
E V I E WR
hibits mergers or asset acquisitionsthat would have the effect or belikely to have the effect ofsubstantially lessening compe-tition in a marketIt is both potentially and in prac-
tice an extremely restrictive provi-sion The Australian Consumer andCompetition Commission (ACCC)has expressed concern at concentra-tion in the sector in applying the pro-vision
The ACCCrsquos concerns seem ex-aggerated in the light of history Butthey are complemented by a persis-tent public misapprehension thatlarge petrol price swings equal profi-teering This perception has been soexploited for political advantage andmedia excitement that it is now al-most impossible for the truth toemerge
The future intensity of competi-tion in this industrymdashif it is allowedto restructuremdashshould not be indoubt Any rationalization would inall likelihood still leave strong do-mestic competition in each majorproduct category perhaps with fewermore efficient production units
The market is also contestableThere would be numerous potentialimporters and many independent re-tailers High margins would be rap-idly eroded by competition As re-cently ruled in the Boral case mar-ket reality is more conclusive than aperception of anti-competitiveness
Proposed mergers have been per-mitted in the past but the process isslow and permission is generally onlygranted with severe conditionsNonetheless there is a strong case forallowing restructuring within theterms of the merger provisions
AUTHORIZATION COULD BETHE KEYIf Section 50 of the TPA is an im-passable barrier then the authoriza-tion provisions of the Act could bethe way to greater efficiency The testsunder these provisions require a pub-lic benefit which outweighs the com-petition detriment The ACCC listsfostering business efficiency industry
rationalization and import-competi-tiveness as important public benefits
There is a strong prima facie casethat rationalization of the industrycould satisfy these tests It wouldallow greater scale of productioneconomies in distribution and closureof the least efficient production units
But the authorization process isslow and the onus for demonstratingthe public benefits rests on the appli-cant Slow process can amount to ef-fective rejection
POLICY OPTIONS AND REC-OMMENDATIONSIf government cannot help the indus-try to adjust it should allow it to ad-just by supporting sensible changeThis would involve both improving
the operating environment throughregulatory reform and altering thebalance of competition regulation sothat the industry could restructurevoluntarily The CommonwealthGovernment has already indicated awillingness to support both but hasnot yet delivered
The ball would then be in theindustryrsquos court to bring forward newproposals if a new policy environmentcould be created This could all hap-pen within a very broad strategicframework agreed with the industrywhereby Australia continued to besure of sufficient refining capacity tomeet a severe international fuel short-age
We therefore recommend thatbull The Commonwealth Govern-
ment provide explicit indicationto the ACCC of the public ben-efits it sees from the rationaliza-tion of the refining sector In par-ticular joint ventures should becontemplated
bull The ACCC give sufficient weightto the public interest benefits ofrestructuring to allow rationaliza-tion of production facilities
bull All governments reduce distortingfuel subsidies and taxes that favourparticular sectors or fuels
bull The State Governments act im-mediately to harmonize their regu-lation of the industry and agreenot to issue any new inconsistentregulation
bull More specifically the States havea single set of fuel standards withwhich refiners can reasonablycomply withdraw from all formsof price regulation and refrainfrom thwarting or distorting therationalization process
bull Governments generally not intro-duce new regulations mandatingthe use of alternative fuels
CONCLUSIONThe choice for the industry appearsto be between accelerated rational-ization and atrophy The process ofchange is something which the indus-try must plan and effect The task isnot impossible but it will require theactive support of government at alllevels For the time being there is anexpressed willingness at the Com-monwealth level but no real solu-tions
If nothing is done the refiners willcontinue to stumble along in a regu-latory fog and will invest only whenobliged to do so by changing fuel stan-dards They will become increasinglyvulnerable to low-priced imports andeventual closure
Jim Hoggett is a Senior Fellow at theInstitute of Public Affairs
If Section 50 of the
TPA is an impassable
barrier then the
authorization
provisions of the Act
could be the way to
greater efficiency
API
Last week the Government tabled 22 volumes of theCole Royal Commission into the Building andConstruction Industry Former Court of Appeal judgeTerence Cole made 392 specific findings of unlawfulconduct and in the confidential final volumerecommended that 31 individuals be referred for possiblecriminal prosecution As was to be expected theconstruction unions claimed that the report was a witch-hunt and people who should have known better claimedthat Cole was biased
The anti-union allegations were never very plausiblegiven that most unions had refused to cooperate withthe Commission and had even boycotted theCommissionrsquos special conference on occupational healthand safety As things have turned out one of their ownhas fatally undermined the unionsrsquo case No less anauthority than the National Secretary of the ConstructionDivision of the CFMEU has unwittingly confirmed thatCole is right In what was no doubt an unguardedmoment John Sutton admitted to a Melbournenewspaper that ldquovirtually everything we do breaches partof this Actrdquo Suttonrsquos admission means that Colersquosdescription of a largely lawless industry can be disputedat the margins but not credibly denied The problemsof the industry have been established beyond credibledoubt and the question now is what needs to be doneabout it
Nothing says the CFMEU because itrsquos alright tobreak the law in the best interests of the working classLeading union officials take the view that in a toughindustry only wimps take the law seriously The newsthat ldquoonlyrdquo 31 individuals had been recommended toface criminal charges was greeted with somethingapproaching jubilation as if the industryrsquos code of silencebased on fear had largely kept the Royal Commission atbay
As the Australian Financial Review commented in aneditorial the unionrsquos dismissive reaction to Colersquos report
ldquospeaks as loudly as his damning findings of entrenchedlawlessnessrdquo Imagine the reaction if a royalcommissioner had identified 31 people in the financeindustry or the steel industry for possible criminalcharges This would rightly be regarded as the sign ofan industry in crisis demanding urgent governmentintervention
Change wonrsquot be easy in an industry conditioned tothink that might is right Change which shifts powerfrom one unscrupulous group to another will not bereform As Grocon has discovered the first company toldquobuck the systemrdquo is liable to heavy-duty industrialpayback No one wants to be the first to change butchange is necessary in the national interest
In 2002 the Victorian construction industry aloneaccounted for 17 per cent of all days lost through strikesThe West Australian construction industry accountedfor another 8 per cent of the national strike tallyConstruction is a $40 billion a year industry comprisingnearly six per cent of GDP and employing nearly500000 Australians Due to over-manning demarcationdisputes and chronic stoppages labour productivity incommercial construction averages 13 per cent less thanin home building Plastering the same wall in the sameway costs 40 per cent more in a high rise building thanin a standard house Just raising labour productivity incommercial construction to the home building standard(let alone the 50 per cent increase needed to match NorthAmerican levels) would mean according to Econtech aone per cent drop in the cost of living a one per centincrease in GDP and $23 billion in benefits toconsumers workers and taxpayers every year
Still change is about decent Australian values notjust a more efficient industry Workers donrsquot like latenight house calls compulsory attendance at demos anddays spent sitting in the shed to make an industrial pointany more than bosses Threats of violence contempt forcourt and commission orders mob rampages when one
Restoring the Rule of Law in theConstruction Industry
Tony Abbott MHR
s
As this issue of the IPA Review was at the press we were alerted to the delivery of the following speechby the Minister for Employment and Workplace Relations The paper marks a seminal change in the
governmentrsquos approach to systemic corruption in the construction industry and isanother major step in the reform of workplace relations in Australia
SI-1MARCH 2003
IPA REVIEW SPECIAL INSERT
side doesnrsquot get its way habitual failure to honouragreements and routine harassment of people exercisingtheir legal rights are not acceptable in modern Australiaand cannot be excused even in a good cause
Breaching ldquobourgeois lawrdquo may not matter tomilitant activists but few others take such a self-indulgent view Itrsquos said that ldquooppositions can afford tobe irresponsiblerdquo but no government or alternativegovernment can accept the principle of optionalobedience to the law of the land No less than the HowardGovernment the federal Labor Opposition and the stateLabor Governments understand the dangers of playingpolitics with the rule of lawmdasheven theauthority of laws they might preferto change such as the federal WorkplaceRelations Act
The rule of law is not asmorgasbord from which a fewfavoured items can be chosen and therest ignored Freedom under the lawrequires respect for the law generallynot just the laws individualspersonally support Obedience to thelaw is not a question of choice It is arequirement of civilisation because thelaw is our guarantee of equaltreatment after a fair hearing ldquoBe youever so high the law is above yourdquoThis reproach hurled at the Stuartkings has rightly echoed through thecenturies as a warning against theconceits of office and the arrogance ofpower regardless of the cause in whichitrsquos exercised
After last weekrsquos meeting of theWorkplace Relations MinisterialCouncil of the Council of Australian Governments stateand territory ministers were keen to declare in acommuniqueacute ldquothere was unanimous agreement thatunlawful behaviour in the building and constructionindustry is not acceptablerdquo This was an importantaffirmation of the rule of law in circumstances wheresome Labor ministers might have been tempted to putpolitics ahead of principle
Unfortunately the state and territory ministerssupported more powers for the Australian IndustrialRelations Commission to settle construction industrydisputes In fact the Commission already has power tosettle disputes Whatrsquos missing is effective power toenforce agreements The issue is not settling disputesThe issue is enforcing the law
The construction industry typically conducts itselflike this A certified agreement is in place including anagreed dispute resolution procedure Unions identify agrievance often a spurious safety issue Agreed disputeprocedures are not followed and a strike ensues eventhough strikes outside ldquobargaining periodsrdquo areldquounprotectedrdquo and theoretically subject to damagesorders At that point employers often ask theCommission to end industrial action but instead ofordering an immediate return to work because anagreement has been breached the Commission willtypically seek to conciliate on the basis of the ldquomeritsrdquo
of the issue After a couple of dayswith costs escalating and liquidateddamages looming the employerinvariably agrees to rectify the matteralleged and to pay increasedallowances (including pay for days onstrike) At this point the Commissionorders a return to work on the basisof the agreed settlementmdashwhich lastsonly until the union decides on itsnext move
The union has ignored the law andbroken its original agreement buttypically suffers no adverseconsequences whatsoever Theemployer has been manoeuvred intoconceding most of a demand thatshould never have been made Afaccedilade of legality conceals a travestyof unionism and a travesty of justiceNearly all construction industrystrikes are unprotected and potentiallyunlawful under section 170MN of theWorkplace Relations Act Even so
employers nearly always opt to pass the costs ontoconsumers while existing arrangements for gatheringinformation launching prosecutions and imposing finesdonrsquot work well anywhere but hardly work at all in anindustry where giving evidence against the unions isthought to mean commercial suicide
The construction industry is a classic case not ofmarket failure but of regulatory failure The fact thatthe construction industry does not face potential importcompetition limits its exposure to market discipline Stillthe main reason why unions can get what they want frombusiness and business can get what it needs from haplessconsumers is the absence of independent policing andenforcement of the industrial equivalent of fair tradinglaws To an extraordinary degree in this industry the
SI-2 MARCH 2003
IPA REVIEW SPECIAL INSERT
The rule of law is nota smorgasbord from
which a few favoureditems can be chosenand the rest ignoredFreedom under thelaw requires respectfor the law generally
not just thelaws individuals
personally support
request documents but they canrsquot compel witnesses toanswer or demand that material be produced Althoughit is a criminal offence under the Workplace Relations Actto hinder workplace inspectors the Cole report notedthat no prosecutions have yet been launched despiteevidence that Office of the Employment Advocateinspectors have been abused had objects thrown at themand their property damaged It has been commonpractice for the arrival of OEA inspectors to lead to workstoppages and even site invasions in a bid to thwart anddemoralise an independent investigator not susceptibleto the unionrsquos usual weapon of commercial retaliation
One of the problems with theworkplace relations system is theassumption that parties will enforcethe law against each other This worksup to a point in industries whereworkplace parties are more-or-lessevenly matched and the issues are theworkplace equivalent of an argumentbetween neighbours over the heightof a fence It completely breaks downwhen one side has an effectivemonopoly over the supply of labourand disputes resemble a more-or-lessnormal family telling the house fullof footballers next door that the partyrsquosover Expecting contractors to enforcethe law against the CFMEU is likeexpecting people in the street to makecitizenrsquos arrests hence Colersquos principalrecommendations are an AustralianBuilding and ConstructionCommission to investigate prosecuteand enforce the provisions of a beefed-up industry specific workplace
relations actYesterday Cabinet decided to support Colersquos key
recommendations First the Government will seek aseparate act governing workplace relations in theconstruction industry providing for secret ballots beforestrikes compulsory cooling off periods after extendedstrikes and damages awards in the event of unprotectedindustrial action Second the Government will establisha new law enforcement agency for the industry withpowers to compel witnesses to testify bring prosecutionsand enforce judgments and with sufficient on-the-ground presence to police CBD building sites Thirdthe Government will establish a Safety Commissionerto monitor federally-funded construction sites to try toensure that these become industry models Fourth the
s
commissions lack sufficient power the courts lacksufficient speed the employment advocate lacks sufficientauthority and the police lack sufficient interest
Not before time the Cole Commission has acted as agiant searchlight probing the dark underside of thispotentially great Australian industry It confirmed whatpolicy makers had long suspected and what influentialinsiders knew but had always tried to deny or explainaway that the industry operates under the rule of thejungle and that there will be no improvement until thepeople who work in it understand that the law has to betaken seriously Legislative institutional and structuralchange will start to mean somethingwhen law breakers in this industry arecharged convicted and punished likelaw breakers everywhere else A fewsalutary bars of that old song need towaft over construction sites ldquoI foughtthe law and the law wonrdquo
Late last year in response to theRoyal Commissionrsquos first report thefederal Government set up theBuilding and Construction IndustryInterim Task Force The Governmentrsquosbrief to the Task Force is to ensure zerotolerance of industrial law-breakingThe Task Force is not primarily toenforce the tax laws or the safety rulesbecause other bodies exist for this(although the Task Force will certainlyshare information with them) TheTask Force is to investigate and enforceWorkplace Relations Act prohibitions oncoercion unprotected strikes strikepay and breach of industrialagreements So far the Task Force hasvisited nearly 300 sites launched more than 50investigations brought three prosecutions and referrednine other matters to state police the Australian FederalPolice or the Australian Competition and ConsumerCommission for further action
These are the first public prosecutions arising out ofindustrial action in the construction industry at leastsince the 1980s and are the result of a public policycommitment to law enforcement not seen since thehumiliating Clarrie OrsquoShea case in 1969 and the end ofldquopenal sanctionsrdquo Yesterday Cabinet decided to extendthe interim Task Forcersquos operations until more permanentarrangements to secure the rule of law can be established
Task Force agents have the powers of inspectors underthe Workplace Relations Act They can enter premises and
SI-3MARCH 2003
IPA REVIEW SPECIAL INSERT
The main reason whyunions can get what
they want frombusiness and businesscan get what it needs
from haplessconsumers is theabsence of inde-
pendent policing andenforcement of the
industrial equivalent offair trading laws
API
Government will insist on the application of theNational Construction Code and implementationguidelines to all significant new projects which are fullyor partly federally funded
Directly or indirectly the federal Government fundsabout $5 billion worth of construction projects everyyear and is determined to use its role as client to drivechange in the industry In essence the NationalConstruction Code stipulates that construction projectsmust take place in conformity with the WorkplaceRelations Act Under the Code and implementationguidelines the federal Governmentwill not engage tenderers whoseworkplace agreements and practicesensure a closed shop on site The TaskForce (and any replacement body) willhave full access to federally fundedsites to ensure that the law is beingobserved and workplace agreementscomplied with
For the federal Government theissue is upholding the law and tryingto tackle the ldquounion rulesrdquo culturewhich is at the heart of lawlessness inthe industry For the states the issueis whether they are prepared to refusefederal money in order to protect theclosed shop However much theymight prefer different federal laws thestates ought to accept thatconstruction projects have to complywith the law as it stands includingthe law mandating compliance withcertified agreements
State Labor governments whichhave made a point of their middle-ground credentials risk losing some$4 billion a year in federal building and constructiongrants if they side with the union movementrsquos mostmilitant minority There are likely to be limits to Laborrsquosdefence of a union whose stock-in-trade (at least in somestates) is the site invasion and the demand for paymentand which quietly reinstates organisers sacked for assaultor perjury Opposition senators will find it hard to brandas ldquoideologicalrdquo the recommendations of a royalcommission which spent 171 days in public hearingsand which pursued 11 shop stewards and 97 unionofficials to obtain their side of the argument
As Justice Cole pointed out in his report previousattempts to reform the industry have proven ineffectivedespite two earlier royal commissions and numerous
SI-4 MARCH 2003
IPA REVIEW SPECIAL INSERT
enquiries Although this Royal Commissionrsquosinvestigations seem to have temporarily checkedlawlessness in the industry a campaign is now emergingto extend the anarchic culture of CBD construction intoregional centres and the domestic housing industryThings will certainly be different this time if parliamentapproves a permanent well resourced watchdog withnew powers new personnel and new attitudes Unlikeprevious arrangements a new statutory watchdog withthe powers of a law enforcement agency should beeffective and permanent
Hundreds of people took big riskswith their commercial future and eventheir personal security to testify to theRoyal Commission It should neveragain be so hard for people in thisindustry to exercise their ordinaryrights and responsibilities asAustralian citizens They expected theGovernment to take the Commissionrsquosreport seriously and the Governmentfor its part is determined not to letthem down The Governmentunderstands that joining fights yoursquorenot prepared to win only makes badsituations worse Establishing the ruleof law in the construction industry isa challenge Australia canrsquot afford tofailSome of the worldrsquos best workersshould no longer have to put up withsome of the worldrsquos worst industrialpractices They have a right to anhonest industry where they can earna fair dayrsquos pay for a fair dayrsquos workand expect to come home uninjuredThe enduring image of this industry
should not be noisy marchers replaying the ideologicalstruggles of the 1970s and raising clenched fists againstauthorities they donrsquot like At its best the Australianindustry is capable of work which is stunningly beautifulyet intensely practical and it now needs to performconsistently on time on budget and in accordance withlaw
Hundreds of peopletook big risks withtheir commercial
future and even theirpersonal security totestify to the Royal
Commission It shouldnever again be so
hard for people in thisindustry to exercisetheir ordinary rights
and responsibilities asAustralian citizens
NOTE
The foregoing speech was first delivered as an Addressto the National Press Club on 2 April 2003
21MARCH 2003
E V I E WR
IN psychology behaviouris defined as irrational ifan action continues to berepeated despite its re-
peated failure to achieve the desiredoutcome On this definition our aidpolicy towards Papua New Guineahas been irrational
Despite over twelve billion dol-lars in Australian aid to PNG sincethat countryrsquos independence in 1975key development indicators such asliteracy rates infant mortality lifeexpectancy and real income percapita are either stagnating or dete-riorating Worse wersquove known forover a decade1
Today acknowledgement of thefailure of our aid policy in PNG hasgone well beyond the writings of in-dividual international policy analystssuch as myself to institution-spon-sored reports such as Beyond Baliwhich was released by the AustralianStrategic Policy Institute (the Aus-tralian Governmentrsquos own strategicpolicy adviser) and Papua NewGuinea on the Brink which was writ-ten by Susan Windybank and MikeManning for the Centre for Indepen-dent Studies Both reports confirmthe gross failure of Australian aidpolicy in PNG
Yet still our aid policy irrational-ity towards Papua New Guinea con-tinues While the ASPI and CIS re-ports acknowledge the gross failureof our aid policy in PNG they alsoargue that we need to continue ouraid to that country Indeed the ASPIreport argues that we should increaseour aid to Papua New Guinea Thepolicy saviour The ASPI report ar-gues that we should exert greater con-trol over our aid Not just over theform of our aid but direct interven-tion in policy and implementation inPNGmdashin essence for a return to pre-
Aid Detox for PNGPETER URBAN
independence days in PNG whereas UN-sanctioned administrator weran government in that country
Despite the mind-frame of secu-rity-focused strategists such as thoseat ASPI and the CIS (which en-dorses the aid approach advocated byASPI) the reality is that we canrsquotPNG is now independent and to ig-nore this reality would simply com-pound the problems of our past aidpolicy irrationality with irrationalityabout our political relationship withour nearest neighbour
A more interventionist aid policytowards PNG on our part as advo-cated in Beyond Bali and by HughWhite (the executive director ofASPSI) in the media might havepopulist appeal but it would haveserious adverse implications for ourrelationship with other Pacific islandcountries and even IndonesiaWorse it would give succour to theviews of our east Asian critics (suchas Malaysian PM Dr Mahathir) whoclaim that Australia continues toharbour colonial aspirations
We have to accept that to be suc-cessful aid policy must not just helpreduce mass poverty it also has to doso as a guest in the aid recipientcountry To do otherwise is not aidbut imperialismmdashwhether inten-tional or not
A more interventionist approachto aid policy in PNG would also givethe current corrupt political elite inPort Moresby a rallying point againstus and an excuse to delay changingtheir own policies Neither Austra-lia nor PNG can afford any furtherdelays to policy reform For us to givePNG politicians yet another excuseto delay reform would be not onlyirrational it would be inexcusableWhile our aid continues so will thecorrupt elite that is at the heart ofPNGrsquos problems Until we send themessage to the PNG political elitethat we are prepared to stop ouraidmdashto put them on aid detoxmdashwewill continue to waste our aid in thecorruption that is PNG politics Itmay be hard to accept but the sadreality we face in PNG is that no aidmay prove to be good aid at least inthe short to medium-term2
NOTES
1 Peter Urban lsquoOne Clear ObjectiveNo Clear Approachrsquo IPA Review1997 Vol 50 No 1
2 With Iraq also likely to require verysignificant Australian aid fundingover the next few years the Gov-ernment will need to review our aidprogram as part of the 2003-04 fed-eral Budget A decision to suspendaid to PNG could be taken as partof that review
Peter Urban is former chief economist with theDepartment of Foreign Affairs and Trade
We have to accept
that to be successful
aid policy must not
just help reduce
mass poverty it also
has to do so as a
guest in the aid
recipient country
API
22 MARCH 2003
E V I E WR
IN his speech to the Na-tional Press Club on theprospect of war with Iraqand the case for disarma-
ment Prime Minister Howard statedthat Australia will play a significant hu-manitarian role in Iraq
If so the Howard Government needsto evaluate carefully the foreign-aid non-government organizations (FANGOs)which it funds to carry-out this humani-tarian programme Many FANGOshave made it clear that they do not sharethe Australian Governmentrsquos objectivesand values in Iraq Moreover some donot agree with the Governmentrsquos over-all aid policies in general
THE COALITION OF THEUNWILLINGIn the lead-up to latest Gulf War some30 Australian aid agencies put theirnames to an Open Letter to the PrimeMinister organized by the AustralianCouncil of Foreign and Overseas Aid(ACFOA) The aim of the letter was tolsquospeak out against war in Iraqrsquo and it ex-pressed grave concerns about the hu-manitarian consequences of the war andthe effects of the existing sanctions1 TheFANGOs that signed the letter wereOxfam Community Aid Abroad WorldVision Australia TEAR AustraliaUnion Aid Australia - APHEDACaritas Australia National Council ofChurches Australian Council for For-eign and Overseas Aid Save the Chil-dren Australia CARE Australia OzGreen United Nations Association ofAustralia Family Planning AustraliaMercy Works Marist Mission CentreAustralia Every Home for Christ Bap-tist World Aid for Christ CCF Austra-lia Quaker Service Australia Austra-lian Lutheran World Service AustralianRelief and Mercy Services AnglicanBoard of Mission AUSTCARE Com-munity Development and Health
Irreconcilable DifferencesDON DrsquoCRUZ
Hussein have been virtually ignored isa searing indictment of the warped ide-ology feeble analysis and moral blind-ness of the sector For them now to re-discover the plight of the Iraqi peopleand to invoke their name in the mediais beyond contempt
THE OXFAM COMMUNITYAID ABROAD POSITIONOf the 30 FANGO signatories to theopen letter Oxfam Community AidAbroad (OCAA) has been perhaps themost outspoken It opposed military ac-tionmdasheven with UN Security Councilapproval4 In spite of all the evidence tothe contrary OCAA was comfortablewith Saddam Husseinrsquos assurances thathe did not have weapons of mass destruc-tion5 Adopting the common policyagreed to by the other Oxfam affiliatesOCAA stated that it will not take anymoney from the lsquobelligerentsrsquomdasha quaintterm used to the describe democraticnations planning to disarm a dictatorguilty of countless human rights abuses
OCAArsquos outrage against the so-called lsquobelligerentsrsquo appears to be geo-graphically confined to Iraq OCAAappears happy to take governmentmoney from the belligerents elsewherearound the world
According to OCAArsquos ExecutiveDirector Andrew Hewitt refusing totake money from the belligerents wasdone to lsquoprotect its impartialityrsquo6 Thisis a very curious position from Australiarsquosarguably most political FANGOOCAA has a long track-record of beinganything but impartial or reluctant totake sides in miliary action It wasnrsquotimpartial in East Timor where it sidedwith Fretlin in its quest for indepen-dence According to its own testimonyto a Senate committee OCAA wasgiven the choice by the IndonesianGovernment between lsquoplaying politicsrsquoor delivering aid projects in Indonesia7
Group Amnesty International Austra-lia AngliCORD Australian Aid forCambodia Fund Burnet InstituteRedR Friends of the Earth PLAN Aus-tralia and Australian Volunteers Inter-national2
This open letter highlighted a num-ber of problems with the FANGOs sec-tor First it highlighted the weak logicthat passes for advocacy in the sectorThe letter argued against military actionwas critical of sanctions and suggestedthat nations should settle issues only bydiplomatic means It is a viewpointwhich totally ignores the fact that theGovernment had to deal with SaddamHussein
The shallowness of their logic wasbest exposed by the Prime Minister inhis response to the open letter in whichhe stated that the humanitarian situa-tion in Iraq is best addressed by SaddamHusseinrsquos removal and perhaps morepointedly that Saddamrsquos manipulationof foreign aid had allowed him to main-tain and pursue his weapons of mass de-struction capability and human rightsabuses3
Second it also highlighted the factthat the so-called lsquohuman rights-basedapproachrsquo to development (embraced byseveral of the signatories) is not so muchabout realizing human rights (as its pro-ponents argue) but is more about pro-viding them with an excuse to lsquoplay poli-ticsrsquo According to the theory the hu-man rights-based approach to develop-ment allows FANGOs to tackle the rootcauses of poverty and injustice
Yet the root cause of the Iraqipeoplersquos suffering can be summed up intwo simple wordsmdashSaddam HusseinThe fact that the FANGOs who sub-scribe to this particular approach havebeen obsessed with imaginary humanrights abuses committed by Shell NikeRio Tinto BHP-Billiton and AuroraGold while the activities of Saddam
23MARCH 2003
E V I E WR
It chose the former thus making it per-sona non grata in Indonesia for almost adecade8 It wasnrsquot impartial inMozambique when it sided with Frelimoin the countryrsquos civil war9 It wasnrsquot im-partial in Ethiopia when it developedlinks to the Eritrean Peoplersquos LiberationFront during its war against the thengovernment10 It was not impartial oranti-war when it sided with the TigrayPeoplersquos Liberation Front in the neigh-bouring province to Eritrea when thatgroup was waging a guerrilla war againstthe government11 And recently therehave been claims that in the Middle Eastit was little more than an lsquoeager propa-gandistrsquo for the Palestinians12
In East Timor Ethiopia and Mozam-bique OCAA was linked with organi-zations which supported direct militaryaction that led to the deaths of thou-sands of civilians In none of these loca-tions were the enemies of their friendany worse than Saddam Hussein In-deed in many cases OCAArsquos friendswere arguably no better than their en-emies in terms of human rights
OCAArsquos decision not to accept Aus-tralian Government funding is the cor-rect one in the sense that it clearly doesnot share the Governmentrsquos values onthe question of Iraq and thereforeshouldnrsquot receive any governmentmoney
Hewitt went on to state in a pressrelease that lsquoWe will not take funds thatmight allow a government to use hu-manitarian efforts as an instrument offoreign policyhelliprsquo13
This is finemdashexcept the AustralianGovernmentrsquos foreign aid is an instru-ment of foreign policy And it always hasbeen This is spelt out quite clearly inthe Australian Governmentrsquos latest for-eign and trade policy White Paper Ad-vancing the National Interest14
FANGOs that cannot accept thisrather basic proposition should not begetting taxpayersrsquo money They areclearly unsuitable for the task at hand
The consequences of Australian tax-payersrsquo money falling into the wronghands were brought home to Prime Min-ister Howard when he met IndonesianPresident Megawati Sukarnoputri to dis-cuss the war against terrorism and
Australiarsquos involvement against Iraq Atthe top of the Indonesian agenda wasthe issue of Australian funding toFANGOs being used to support sepa-ratist movements in Indonesia15
Post-war Iraq will be a better placewithout Saddam Hussein and his thugsThis does not mean that it will be a safeplace or necessarily a stable place Afterall one of the reasons for Western tol-eration of Saddam Hussein for manyyears was his ability to hold the various
ethnic minorities in Iraq together albeitrather brutally thereby maintaining abalance of power in the Middle East Hisdeparture would see strains on Iraq fromthe various ethnic minorities that makeup Iraq There is a strong chance thatIraq will fragment
The last thing the Australian Gov-ernment or any of the so-called belli-gerents needs in a post-war Iraq is west-ern NGOs running around and becom-ing self-styled advocates for national self-determination for Iraqrsquos ethnic minori-ties and injecting themselves into Iraqrsquosinternal politics This is a real risk Thebehaviour of Australian foreign aidNGOs in Indonesia should make Aus-tralian decision-makers extremely waryof funding any NGOs with Australiantaxpayersrsquo money so that they can oper-ate in Iraq
As things stand now FANGOs facevery few restrictions on their actionsfrom government If they undertake ac-tivity that is inconsistent with being anagent of government they may losefunding for specific projects or in moredramatic circumstances lose funding ina country Nonetheless they are gener-
ally able to access Australian Govern-ment funding for other projects andcountries In other words the penaltiesfor becoming caught up in political ac-tivities are very light for NGOs and posethem no serious problems
Foreign aid NGOs that lsquoplay politicsrsquoare unsuitable contractors for the deliv-ery of aid That these overtly politicalorganizations have been allowed to gaingovernment accreditation and receivegovernment funding points to some se-rious problems at AusAID Australiarsquosofficial aid agency The time has comefor this to change
NOTES1 httpwwwacfoaasnaumedia_releases
2003_releases26_3_03PDF2 httpwwwacfoaasnauemergencies
openletterPDF3 httpwwwacfoaasnauemergencies
iraq_responsehtm4 Oxfam Horizons Vol 3 No 1 (Febru-
ary 2003) page 25 Oxfam Community Aid Abroad lsquoIraq
Overviewrsquo February 20036 Hewitt quoted in Liz Gooch lsquoOxfam
wersquoll say no cashrsquo The Age 16 March2003
7 Community Aid Abroad Submission tothe Senate Foreign Affairs Defence andTrade References Committee Inquiryinto East Timor Downloaded at httpwwwcaaorg aucampaignssubmissionstimorhtml
8 Ibid9 Susan Blackburn Practical Visionaries A
Study of Community Aid Abroad (Mel-bourne Melbourne University Press1993) page 313
10 Ibid pages 325-333 passim11 Ibid12 Gerald Steinberg lsquoPropaganda vs Hu-
manitarianismrsquo Australian Financial Re-view 7 June 2002 Downloaded at httpfacultybiuacil~steingconflictopedpropvshumanitarianismhtm
13 ht tp wwwcaa o rg au p r 2003 iraqfundshtml
14 httpwwwdfatgovauani15 Dennis Shanahan lsquoJakarta fears aid funds
for rebellionrsquo The Australian 17 Febru-ary 2003 page 2
Don DrsquoCruz is Research Fellow at the IPAand Director of IPArsquos NGOWatch
OCAA has a longtrack-record of
being anything butimpartial or
reluctant to takesides in miliary
action
API
24 MARCH 2003
E V I E WR
GEORGE Bush Tony Blairand John Howard haveprovided many reasons forsupporting military action
against Iraq One of those reasons hasbecome known as the lsquohumanitarianrsquojustification Put simply the lsquohu-manitarianrsquo justification for the US-led invasion of Iraq is that such ac-tion is necessary to free the Iraqipeople from their totalitariandictator
Such an argument is attractive tothose who believe that there aresome fundamental human rights thatall individuals possess regardless ofwhere and how they live Whatserves as the source of those rightshas been the subject of debate forcenturies One of the pre-eminentstatements on the subject was madeby John Locke who in The SecondTreatise of Government wrote thatmankind was lsquoequal and indepen-dentrsquo and that lsquono-one ought to harmanother in his life health liberty orpossessionsrsquo
Saddam Husseinrsquos mass murdertorture and terror are reasonablyclear breaches of human rightsTherefore some would ask why thereshould be opposition to the UnitedStates and its allies taking whatevermeasures might be necessary totopple the Iraqi regime Surely thesame standard of behaviour that ap-plies to individuals applies also tonation states If an individual walk-ing in the street witnessed a rapeoccurring wouldnrsquot that individualbe entitled to do everything in hispower to stop the crime and assistthe victim
The point is of course that in-ternational law and convention do
After IraqIs Sovereignty Dead
JOHN ROSKAM
not allow nation states to act in thesame way as individuals Countriescannot simply lsquotake the law into theirown handsrsquo To restrain lsquovigilantestatesrsquo (who might be acting fromeither lsquogoodrsquo or lsquobadrsquo motives) a num-ber of legal and political theorieshave been developed One of theseis the doctrine of lsquosovereigntyrsquo whichprovides that states should not inter-vene in the domestic affairs of otherstates
In relation to Iraq the lsquosover-eigntyrsquo question is perhaps the stron-gest argument against the US-ledCoalition Most of the other criti-cisms of lsquohumanitarianrsquo interventionin Iraq are either grounded in simpleanti-Americanism or are fallaciousFor example there is the claim thatbecause some of the countries in theCoalition have previously ignoredHusseinrsquos cruelties therefore it is il-legitimate to take action now Sucha view has been expressed by aMelbourne international relationsacademic
While there is no disputing thebrutal nature of Saddam Hus-seinrsquos regime the case for inter-vention made by those in Can-berra London and Washingtonis weakened by the fact that atthe peak of Saddamrsquos crimes inthe late 1980s they were eitherdirectly supporting him withweapons technology and intelli-gence or were entirely indifferentto his behaviour Even if theyhave belatedly recognised theerror of their ways how seriouslycan we take their concerns aboutweapons of mass destruction nowgiven they were his suppliersthen1
On the basis of this argument itcould be said that Britainrsquos (andAustraliarsquos) case for intervening toassist Poland upon the German in-vasion in 1939 was lsquoweakenedrsquo be-cause Britain had previously acqui-esced to Germanyrsquos rearmament theremilitarization of the Rhinelandand the annexation of both Austriaand parts of Czechoslovakia Fewpeople who chanted lsquoFreedom forEast Timorrsquo said that the HowardGovernment should not act becausea quarter of a century before theWhitlam Government had been lsquoin-differentrsquo to Indonesiarsquos occupationof the island
There is also the claim that al-though Hussein is bad he is not theworst dictator in the world and thatit is hypocritical for the Americansto attack only Iraq This is an as-tounding proposition It attempts toapply to the United States a standardof behaviour that is impossible to sat-isfy Should the police not attemptto solve any crimes because theycanrsquot solve all crimes If a crime iscommitted by two people and thepolice arrest one perpetrator unlessthe other is also caught must the firstperpetrator be released When indi-viduals donate money for famine re-lief in Africa very few believe thattheir donation is pointless becauseit might prevent the starvation ofonly one person rather than thou-sands Christian ethics sets down norequirement that we should help no-one unless we can help everyone
The issue about state sovereigntyhowever is one that deserves to betaken seriously Regardless of onersquosopinions on the extent and limits ofstate sovereignty it is true that our
25MARCH 2003
E V I E WR
international relations system is builtupon the principle and to modify oroverturn it is a matter of some con-sequence
Even those who are generally sup-portive of the United States andtheir allies see the problem As it wasput by a leading commentator whenanalysing the Australian PrimeMinisterrsquos lsquohumanitarianrsquo justifica-tion for war
Finally Howardrsquos argumentagainst Hussein on human rightsis correct So is his moral case forwanting to liberate the Iraqipeople from their torment Theproblem however is that youcanrsquot trip around the worldwanting to overthrow regimesbecause of human rights2
Some would askmdashlsquowhy notrsquo Be-cause to do so would overthrow theUnited Nations Charter comes therejoinder And in turn the responseto that might bemdashlsquogoodrsquo
If itrsquos a choice between the main-tenance of the UN Charter and free-dom from tyranny freedom wins ev-ery time (although an internationallawyer sitting in Sydney might havea different view on this question fromthat of a political prisoner manacledin a Baghdad jail cell)
When the interests of lsquointerna-tional lawrsquo are more important thanthe life and liberty of individuals itcould be concluded that lsquothe Em-peror has no clothesrsquo Would inter-national law have sanctioned inter-vention to stop the Holocaust hadHitler not waged war and proceededwith his methods entirely within theconfines of the German territorialstate
Many who argue that lsquohumanitar-ianrsquo intervention in Iraq is not justi-fied because it infringes on thatcountryrsquos lsquosovereigntyrsquo would happilyhave other countries cede their po-litical sovereignty to supra-nationalbodies Certain features of the Inter-national Criminal Court overridethe principles of sovereignty but thatdid not stop a phalanx of interna-tional law experts urging sovereigngovernments to join it so as to en-
able the prosecution of war criminalsBut when it comes to actually stop-ping war crimes not simply prosecut-ing them that phalanx is largely si-lent
Without the doctrine of state sov-ereignty and without an arbiter fordetermining when interference withthe principle is justified (the roleclaimed by the United Nations andits Security Council) it is said thatstates would be free to impose theirown will and intervene in other
countries whose standards did notmeet their own (In The Second Trea-tise of Government Locke argued thata characteristic of a lsquostate of warrsquo be-tween individuals was the absence ofa superior authority to adjudicatedisputes and prevent individualsfrom administering justice them-selves)
Iraq might be claimed as a rea-sonably clear-cut case for interven-tion but other situations are notlikely to be as simple In Culture andEquality first published in 2001Brian Barry explored a lsquoliberalrsquo per-spective on this question
The liberal position is clearNobody anywhere in the worldshould be denied liberal pro-tections against injustice andoppression However in exactlythe same way as liberals arepragmatic about what liberalismmeans in terms of boundaries sohere the move from principle tointervention has to be mediated bypractical considerationshellip
[L]iberals are not so simple-mindedas to imagine that the answer toall violations of liberal rights is tosend in the Marines or even aUnited Nations force As in anyjust war theory there must be somedoctrine of lsquoproportionalityrsquohellip[S]carcely anybody would be infavour of the western powersinvading Saudi Arabia so at to sortout the way in which it lsquounjustlydenies political rights to women ornon-Muslimsrsquomdashaccording to theirliberal idea of justicersquo3
The question remainsmdashafterIraq what remains of lsquostate sover-eigntyrsquo Should the doctrine applyonly to lsquoliberal democraticrsquo statesSuch a solution might be attractiveto some lsquoliberalsrsquo but it doesnrsquot avoidthe problem of what exactly a lsquolib-eral democraticrsquo state is
One irony arising from the argu-ments about the war in Iraq is thatmany of those who have urged astrict application of lsquostate sover-eigntyrsquo principles in the past havegenerally supported the US-led in-tervention while those who havebeen willing to abridge or even aban-don the doctrine have had to rely onit to counter the lsquohumanitarianrsquo jus-tification for war
There are not many certaintiesabout the nature of the world afterthe war in Iraq but it can be saidwith some assurance that one defi-nite outcome is going to be a morevigorous debate about state sover-eignty
NOTES1 Scott Burchill lsquoThe humanitar-
ian arguments for this war are spu-riousrsquo The Age 21 March 2003
2 Paul Kelly lsquoThe hapless per-suaderrsquo The Australian 15ndash16March 2003
3 Brian Barry Culture and Equal-ity An egalitarian critique ofmulticulturalism Harvard Uni-versity Press page 138
John Roskam is a Research Fellow with the IPA
The lsquosovereigntyrsquo
question is perhaps
the strongest
argument against
the US-led
Coalition
API
26 MARCH 2003
E V I E WR
Which Way for theDemocrats
The 2002 mid-term elections were adramatic victory for President GeorgeW Bush and the Republicans Insteadof the historical norm of the partycontrolling the White House losingBushrsquos party gained seats in the Sen-ate House Governorsrsquo races andState legislatures The result was abitter disappointment for the Demo-crats and has led to a fierce debatebetween the Left and Centrists aboutthe future policy direction of the partytowards the 2004 elections
The Leftrsquos analysis is that the ma-jority of Americans are natural Demo-crats Electoral defeat was due to thefailure to energize that base of Demo-crats The party failed to distinguishitself sufficiently from Bush and thusgive their voters a reason to turn outWhile the majority of Democrats op-posed Bush on tax cuts and the warwith Iraq a significant minority sup-ported him and campaigned on thatsupport The result the Left claimwas that the Democrats lacked a con-sistent message in contrast to Bush
Support for this argument can befound in the higher turnout amongstRepublicans than Democrats in 2002while in 2000 the combined vote forGore and Nader was 51 per cent Aninfluential book by John Judis andRuy Texeira identified lsquoThe Emerg-ing Democrat Majorityrsquo Theyclaimed that growing demographicgroups trended Democrat includingthe young socially liberal profession-als minorities and women
What policies would motivate thisnatural Democrat base The Left callfor rescinding the Bush tax cut a classwar against the corporate world amajor increase in lsquopublic investmentrsquoin schools childcare health care and
Letter from AmericaNIGEL ASHFORD
public transport and strong opposi-tion to the war
Centrists however have a verydifferent analysis of the Democratsrsquoproblems the public did not trustthem to pursue the war against ter-rorism vigorously to keep down taxesto spend their tax dollars wisely or toreflect their cultural values
A Gallup opinion poll found that57 per cent of Americans askedthought that the Democrats were nottough enough on the war on terror-ism while 64 per cent thought theRepublicans were There was the per-ception that the Democrats were notserious on the issue and just playingpolitics Evidence for this was the de-bate over the new Department ofHomeland Security blocked becausethe Democrats wanted to protectunion rights while the President de-manded more flexibility to deploy theworkforce Many voters saw the issueas the national interest versus a spe-cial interestmdashin this case that of theunions The Democrats were seen asputting the interests of one of theirmajor constituencies before nationalsecurity
The Democratic LeadershipCouncil in lsquoThe Road Aheadrsquo by AlFrom and Bruce Reed presented theCentrist case lsquoStop pretending wecan win a majority simply by energiz-ing our basersquo The Democrats were
not trusted on the war against terror-ism were hostile to the cultural con-cerns of many working-class Demo-crats on abortion and guns and stillseen as the tax-and-spend party lsquoToomany Americans donrsquot trust us tokeep their taxes down or to spendtheir money wellrsquo
The Centrist agenda is to stronglyprosecute the war against terrorismwhether against al-Qarsquoeda Saddam orothers and to abandon knee-jerk iso-lationism arising from the experienceof the Vietnam War to defend capi-talism and support small investorsagainst irresponsible managers to cutpayroll taxes and to downplay thecultural issues that divide Democrats
Which path will the Democratstake The Left is in the ascendancyMost of the remaining Democrats inoffice come from left-wing districtsNancy Pelosi a left-liberal from SanFrancisco was easily elected the newleader of the House Democrats over-whelming her Centrist opponent andrising star African-American HaroldFord The early field of presidentialcandidates for 2004 is dominated bythe Left tendency including SenatorJohn Kerry Representative DickGephardt Governor Howard DeanRev Al Sharpton former SenatorCarol Moseley-Braun and Represen-tative Dennis Kucinich Only Sena-tor Joe Lieberman and Senator JohnEdwards represent the Centrist wing
The future of US politics may de-pend on which road the Democratsdecide to take The US is currently alsquo50ndash50rsquo nation evenly balanced be-tween the parties A left turn couldlead to Republican dominance farinto the future
Dr Nigel Ashford is at the Institute of Humane Studiesat George Mason University and is co-author of US
Politics Today (Manchester University Press)
API
27MARCH 2003
E V I E WR
Trusting TonyFrankly itrsquos all just too depressing Theeconomyrsquos heading for trouble Busi-ness confidence is low investment in2002 was 92 per cent lower than theprevious year and manufacturing in-vestment was nearly 18 per cent downThe budget deficit is spiralling becauseour once lsquoprudentrsquo Chancellor (trea-surer) Gordon Brown made over-opti-mistic growth projections and startedthrowing money at problems
Therersquos a load of health-and-safetyand anti-discrimination measuresthatmdashto put it most politelymdashare ex-amples of letting the best be the en-emy of the good Every school tripneeds a formal risk assessment withthe result that many trips are simplynot taking place New trains orderedfor London commuter routes wonrsquothave toilets because the rules say thatat least one toilet in each four-car unitmust be wheelchair-accessible whichwould have cost ten or a dozen seatson every overcrowded train
Some of this is just insane Somelocal authorities say that safety at workrules mean that home-care workersmustnrsquot lift the disabled people theyare looking after Or therersquos rail safetyUntil recently we were seriously pro-posing to spend $10 billion on a bet-ter system to stop trains going throughred signals On average this would havesaved the lives of about three passen-gers every four years which is a lousybargain compared with other safety in-vestments Worse it would also havereduced the capacity of the networkby up to 15 per cent and forced morepeople onto the roads which are muchmore dangerous than even ourclapped-out railways The result was aprojected net increase of 13 to 21 deathsper year
Meanwhile in London the Cen-tral line of the Underground has been
Letter from LondonJOHN NURICK
API
closed for weeks after a train derailedwhen one of its motors fell off Therewere no deaths or major injuries in theaccidentmdashbut itrsquos a safe bet that someof the people who havenrsquot been ableto use the Central line have been in-jured or killed on the roads
What can one say If the authori-ties took the same attitude to the riskof fatal accidents in the health serviceevery hospital in the country wouldhave been closed for years
Despite all this the Conservativesare still hopeless Their leader IanDuncan Smith has a new wheezewhen a journalist asks him anythingdifficult he chortles merrily and saysitrsquos the most uninteresting questionimaginable and hersquos not going to wasteanyonersquos time by answering it His col-leagues have their knives out for him
Meanwhile in spite of the govern-mentrsquos problems with the economy andthe public services Tony Blair is grow-ing in stature having his waymdashandantagonising large sections of his ownparty in the process On several recentissues he has faced down the formi-dable Gordon Brown in a way that notlong ago was hard to imagine
Then he shocked everyone by com-ing out against having elected mem-bers in the reformed House of Lordswhen most voters want an all-elected
chamber and most MPs want a partly-elected one In the event Parliamentcouldnrsquot agree on any of the optionsfor reform so wersquore stuck with the sta-tus quomdashwhich is fine by Mr Blair
Then therersquos the war By the timeyou read this it may be over or we maystill be waiting or our lads may befighting Mr Blairrsquos strong line againstIraq has made him very unpopular Theanti-war march on 15 February was thebiggest demonstration London hasever seen A few days later 122 Labourbackbenchers voted against the gov-ernment and many more abstained
Mr Blair didnrsquot budge War is a se-rious thing he says lsquoBut in a situationsuch as this you have to do what youbelieve to be right because thatrsquos theprice of having responsibilityrsquo1
He has often been accused of gov-erning by focus group Certainly he hasseemed reluctant to antagonise anypowerful group That has clearlychanged In a sense his stand on Iraqmerely follows his action in sendingtroops to Sierra Leone and Kosovomdashbut it has stirred up far stronger domes-tic and international opposition
The irony is that now when he re-ally needs people to trust him wedonrsquot Even in the desperately seriousbusiness of justifying an unpopular warDowning Street canrsquot play it straightremember the dossier from lsquointelli-gence sourcesrsquo that turned out to belargely cribbed from a PhD thesis onthe Internet
NOTE1 The Guardian 1 March 2003
John Nurick is a management consultant based in theSouth of England From 1985 to 1990 he was
editorial director of the Australian Institute for PublicPolicy and later edited newsletters reporting on theUK Parliament and European Union institutions
28 MARCH 2003
E V I E WR
KEVIN DONNELLY
Private EducationEquals Public Good
When it comes to choosing be-tween government and non-gov-ernment schools Australian par-ents are lsquovoting with their feetrsquo Asshown by recent ABS figures(Schools Australia 2002) over thelast decade there has been a dra-matic increase in non-governmentschool enrolments
Approximately 30 per cent ofstudents now attend non-govern-ment schools compared with 22per cent in 1980 and 28 per centin 1990 Over the last decadewhile the number of governmentschools has fallen by 64 per centnon-government schools havegrown by 61 per cent
Of course not everybody valuesparentsrsquo right to choose and theAustralian Education Union(AEU) Labor governments andlsquoleft-wingrsquo academics in particularconsistently argue against non-government schools
One of the arguments put for-ward by those opposed to givingparents greater freedom of choiceis that government schools are bet-ter at promoting social cohesionand a strong sense of what KenBoston the ex-head of the NSWEducation Department terms lsquothebonds of civic friendshiprsquo
The assumption is that becausestudents attend non-governmentschools there will be greater socialdivisiveness and a breakdown inthe civic values needed to hold so-ciety together But there is no cred-ible evidence offered to support theclaim that government schools arebetter at promoting the commongood
In fact there is much to provethe opposite
First as anyone familiar withthe lsquoculture warsrsquo and politicallycorrect curricula will know insteadof government-controlled educa-tion promoting unity and cohe-sion it has led to public angst andparental complaints
Witness the very bitter debatein Queensland a year or two agowhen the government-mandatedStudies of Society and Environ-ment (SOSE) curriculum was in-troduced into schools Such was
the lsquoleft-wingrsquo bias in the curricu-lum in particular in the areas ofmulticulturalism and the environ-ment that many parents felt be-trayed
The Queensland debate is mir-rored by what is happening in theUnited States As noted by Ste-phen Arons in his book Short Routeto Chaos instead of promotingunity government control of thecurriculum leads to the opposite
What the school wars tell us isthat somehow we have been
Education Agenda
transforming a vital instrumentfor creating social cohesioninto a source of division andhostility that there is some-thing built into the structure ofpublic schooling that under-mines one of its most importantfunctionsAronrsquos argument that govern-
ment schools no longer transmit aviable sense of a common cultureor agreed civic values is reinforcedby another noted United Stateseducationalist Diane Ravitch
In a recent article in the jour-nal Education Next Ravitch be-moans the impact of cultural rela-tivism and the post-modern on theschool curriculum (where there areno commonly agreed values) andeven goes so far as to argue thatparents should be free to choosenon-government schools becausesuch schools have a better chanceof reflecting their values
In the current education sys-tem with the public schoolscommitted to multiculturalismbilingualism and other forms ofparticularism it is difficult toargue that parents should notbe able to choose schools thatmeet their cultural needsSecond if one accepts that lsquoso-
cial capitalrsquomdashthe networks volun-tary associations and civic bondsthat hold a community togethermdashis important for the health of ademocratic society then non-gov-ernment schools clearly have theadvantage
Unlike the government schoolsystem characterized by a heavy-handed centralized bureaucracyand teacher union control non-government schools are closer tothe communities they serve Bytheir very nature non-government
There is no credible
evidence offered to
support the claim
that government
schools are better
at promoting the
common good
29MARCH 2003
E V I E WR
ALAN MORAN
The lsquoRrsquo Files
Private propertyrights the key toachieving efficiency inrural water use
WATER IN AUSTRALIAWater has always been a definingissue in Australiarsquos prosperityAnd in recent decades irrigationhas grown rapidly Even so theproportion of Australia that is ir-rigated at two per cent of theland comprises a share that isamongst the lowest among OECDcountries Only Canada and therainiest countries New Zealandand the UK have lower sharesthat of the US is 11 per cent andin Japan it reaches 60 per cent
Modern agriculture is only 200years old in Australia and thoughin the first 100 years agriculturalproductivity was increased toequal that of anywhere in theworld gains continue to bemademdashoutput has doubled overthe past 50 years a growth thatcould not have taken place with-out a similar expansion of irriga-tion Irrigation in the MurrayndashDarling agricultural provincealone contributes $5 billion toAustralian agricultural outputand non-irrigated agriculture inthe region contributes a further $5billion This makes the areawhich comprises 14 per cent ofAustraliarsquos land mass responsiblefor a third of the nationrsquos $35 bil-lion agricultural output
Applying Property Rights to WaterMost of the uses of water involvechoices or compromisesmdashdrink-ing water versus irrigation versus
industrial and so on Some how-ever involve complementaritiesparticularly certain recreationaluses such as water sports that arefacilitated by storage and consis-tent availability
In many cases water will per-form sequential functionsmdashthesame water can be used and re-used for irrigation used for indus-trial cooling and finish as drink-ing water Water with differentsometimes competing productiveuses will be optimally used as longas two conditions are in placeThe first is that its ownership isclearly specified and the ownersrsquoobligations to other users (orclaims from other beneficiaries)are well understood The secondrequires each property right to betradable to enable acquisition bythose who value it most therebymaximizing its value
The rights specification andtherefore property ownership canrarely commence with a cleansheet of paper People acquire in-dividual rights to property ini-tially through a variety of routesOne of these is seizure of some-thing that was originally of littlevalue until it was acquired and im-proved Squatters assume rights inthis way However they are firstacquired they need to be tradableAPI
schools establish strong commu-nity networks and have a greaterreliance on the voluntary work ofparents
That non-government schoolsare more effective in this regard issupported by research into lsquoChar-ter schoolsrsquo in the United StatesAs noted by Chester Finn at theFordham Foundation giving localcommunities lsquoownershiprsquo overtheir school builds networks oftrust and reciprocity so vital forsocial cohesion
Social capital also relies on citi-zens being disciplined and orderedin their behaviour Selfishness vio-lent behaviour and rudeness act tofragment the community instead ofpromoting cohesion According toa number of Australian surveys itis here once again that non-gov-ernment schools are seen to bemore effective
As noted by the Centre for In-dependent Studies researcher Jen-nifer Buckingham in The Truthabout Private Schools in Australiawhen analysing why so many par-ents forsake the government schoolsystem
When comparing independentprivate schools with publicschools the major theme thatemerged was not differences inacademic standards and curri-culum but issues of disciplineand order The surveyed par-ents felt that the behaviour andattitudes of students in publicschools was unacceptablehellipAll accept that non-govern-
ment schools achieve better aca-demic results provide greater cur-riculum flexibility and save Aus-tralian taxpayers millions of dol-lars Equally as important is theargument that such schools streng-then Australiarsquos civic health andstock of lsquosocial capitalrsquo
Dr Kevin Donnelly is Director of EducationStrategies a Melbourne-based consulting group
E-mailkevindnetspacenetau
s
30 MARCH 2003
E V I E WR
and relatively inviolable Thisprovides the incentive for them tobe improved and for their ownersand others to search out ways inwhich the assets they representcan be used to provide increasedvalue or other benefits
If confidence in the exclusiv-ity an owner has over the prop-erty right is lost or was neverpresent the asset will be used lessproductively For example own-ers will milk them for their cur-rent-use value rather than trade-off present value for a future valuethat is less certain
Even without a total emascu-lation of individual rights (for ex-ample when title to the propertydepends on continuing govern-mental assent) lack of certaintybrings lower incomes and dimin-ished asset protection One out-come of this can be observed inthe MurrayndashDarling system Wa-ter rights on the Victorian side ofthe Murray are secure while thoseon the NSW side have been over-allocated and are subject to ad-ministrative discretion includinghaving a firm duration of only tenyears In Victoria high securitywater (available 95 per cent of thetime) comprises the great bulk ofentitlements In contrast in
NSW high security water is avail-able only 60-80 per cent of thetime The result is that farmers onthe Victorian side plant perennialcrops while those in NSW tendto focus on annual crops espe-cially rice
There are claims that Victoriarsquosmore robust property rights meanthat the State Government haslost lsquocapabilityrsquo to manage com-pared with NSW The flip side ofthis is the increased risk and as-sociated lower value of productionnorth of the Murray where prop-erty rights are attenuated Gov-ernments that give themselves in-creased capacity to direct produc-tion or to take individualrsquos prop-erty will need to accept lower lev-els of income and output
IRRIGATION ENVIRON-MENTAL BENEFITS AND SA-LINITY
The Types of IssuesIssues stemming from irrigationcomprise two types those impact-ing on the environment and thoseimpacting on private uses Theformer includes issues such as pre-venting loss of species ensuringthat certain sorts of species flourishand avoiding unattractive growths
such as blue-green algae which re-sult from fertilizer build-up
The second involves economicimpacts on different users
While environmental flows toensure species flourish are oftenhighlighted salinity is the mainfocus And while salinity has animpact on the environment itsimportance is in the conflict of in-terest between productive usersmdashthe complaint of lsquodamaged goodsrsquoby downstream users against thoseupstream
The MurrayndashDarling Basin Sa-linity Strategy 2001ndash2015 has es-timated that increased salinitybrings costs of $294 million perannum to the basin
Yet data on the salinity of theMurray Darling shows levels up-stream of South Australia arelower than they were in the early1980s and are only seriously abovethese levels as the river ap-proaches its mouth at the GoolwaBarrage
The Basin Salinity Manage-ment Strategy argues that progressachieved over the past decade willlsquobe cancelled within 20-50 yearsand median salinity levels wouldexceed the Australian DrinkingWater Guidelines for good waterquality within 50-100 yearsrsquo Thecause of this is said to be risinggroundwater tables due to land usechanges across the Basin
The disputes over salinizationare largely disputes between com-mercial parties Full specificationof rights and obligations will al-low these to be resolved as longas the impacts are measurabletheir causes identifiable and thevarious rights and obligations areknown and stable In this respecttechnology to measure salt in wa-ter and to trace increases to par-ticular locations is readily avail-able
Agreements about the alloca-tion of water rights between ju-risdictions and to the main irri-gation provinces have been inplace for over a century In the
Average Salinity in the River Murray (EC Units)1
3500
3000
2500
2000
1500
1000
500
0
January 2003
July 2002ndashJanuary 2003
July 1982ndashJanuary 2003
Hume D
am
Swan
Hill
Merbein
Morgan
Milang
Mening
ie
Goolw
a
Barra
ge
31MARCH 2003
E V I E WR
I
API
Musinghellipcase of the Murray the lsquocaprsquo onwater abstractions agreed betweenthe various jurisdictions in 1995largely validated agreements madeearly in the last century and be-fore Disturbing these agreementswould greatly undermine the trustin the sanctity of property rightsand seriously reduce agriculturalproductivity Hence increased al-locations for certain parties or forcertain uses (including environ-mental flows) would need to bepurchased at market prices
Developments in Australiaover recent decades have con-spired to make irrigation water farmore valuable This is exacer-bated by1 Activation of NSW lsquosleeperrsquo
and lsquodozerrsquo water rights as a re-sult of the increased scarcityvalue a change that bringseven greater pressure on theavailable supply
2 Increased scarcity leading tomeasures that more carefullyhusband the water Whilesome of these prevent evapo-ration loss and have thereforebrought a net increase in effec-tive availability others havereduced availability (these in-clude a more careful wateringwhich results in reduced run-off and re-use)
3 Increased capture of waterwithin the land on which itfalls once water is recognizedas scarce landowners will seekto ensure it does not leave theirland NSW and Victoria haveplaced limits (a strict 10 percent in NSW) of water fallingon property as entitlements ofthe owner Queensland has notyet enacted an equivalent tothis Such adaptations of thecommon law are essentialhowever if downstream usersare not to be expropriatedThere is likely to be constant
bickering over water rights espe-cially if State Governments seek toelevate sharing issues and to sanc-tify them with claims about promot-
Daniel Pipes in The New York Posthas a very cogent explanation forwhy the Left appears to be so happywith the likes of Osama bin Ladenand Saddam Hussein
To be clear about their attitudeshe quotes the renowned Germanelectronic music composer KarlHeinz Stockhausen who saidstraight after the attack on NewYork that it was lsquothe greatest workof art for the whole cosmosrsquo
As Pipes and many of us observedaily there is barely a bad word tosay about Saddam Hussein nor aniota of sympathy for thoseoppressed tortured and murderedby his reacutegime Instead they venttheir fury against the AmericanPresident and British Prime Minister
Why the nonchalancePipes draws our attention to Lee
Harris writing in a recent issue ofthe Hoover Institutionrsquos journalPolicy Review According to KarlMarxrsquos central thesis the demise ofcapitalism hangs on workersgrowing poorer over timemdashwhichof course did not happen Sorather than give up on cherishedexpectations of socialist revolutionHarris notes Marxists tweaked theirtheory and looked instead to theentire populations of poor countriesto carry out the revolution Classanalysis went out the windowreplaced by geography
The trouble is they have tooverlook militant Islamrsquos slightly un-socialist practicesmdashsuch as itsimposing religious law excludingwomen from the workplace andpersecuting atheists
As Pipes sums up September 11and the prospect of war againstSaddam Hussein have exposed theLeftrsquos political self-delusionintellectual bankruptcy and moralturpitude
The Loopy Leftby Andrew McIntyre
ing an improved environment Realsolutions require the issue be placedwithin a normal commercial frame-work which involves1 Clarifying the property rights2 Allowing water rights to be
fully detachable from propertyand able to be used howeverthe holder wishes subject toany damage this might imposeon others
3 Ensuring full rights to buy andsell the water
4 Defining rights so as not to re-duce the quality of other usersThis means ensuring that farm-ing practices that do not bringgreater salination than somestandard
5 Allowing rights holders tobank their water and ensureeven greater certaintyAllocating specific individual
ownership rights to water and al-lowing its trade is a well-foundedmeans of maximizing the usevalue It would also be likely tohave the beneficial side-effects ofreducing salinity and farm-basedpollutants caused by intensiveuse We should grasp such oppor-tunities But if the impending sa-linity problem is as great as someclaim other solutions might wellinclude buying out some allocatedirrigatorsrsquo rights However alter-natives may be to remove saltfrom the water by engineering so-lutions or simply to live withhigher salt
NOTE1 Human drinking water should
be less than 800 ECs (electri-cal conductivity one ECequals about 06 mglitre)while higher levels are accept-able for much farming activity
Dr Alan Moran is Director Deregulation Unitat the Institute of Public Affairs
32 MARCH 2003
E V I E WR
Reading FileDone
eral political systems worldwidehave consistently accretedpower to the centre often in theface of clear constitutional im-peratives to the contrary) Ifeared instead that a UN thathad been patently successful insomethingmdashanythingmdashmightbe granted greater powers to thepoint where it would kill truediversity and individualism (ortry to anyway) through inevi-table bureaucratic practices
Is such a fear unfounded Ap-parently not if many peopleshare the moral touchstone ofthe Opposition Leader SimonCrean He believes according tohis own words in Parliamentthat what the UN SecurityCouncil declares is moral whatit refuses is immoral
The latest manoeuvrings overIraq have therefore been heart-
ening It seems that the desiresof the powers small and largeto promote their own interestswill continue to hobble the UN
The problem with a unitedworld is that as the threateningimpasse over Iraq suggestedthere are very divergent viewsabout how that world ought tobe run on an international leveljust as there are at national and
sub-national levels The virtueof multi-layered levels of gov-ernments is that competing ju-risdictions give the individual adegree of choice
The greatest sin of totalitar-ian governments past and pres-ent is to deny their citizens theright to leave The greatest dan-ger that the United Nationsposes as far off as it now (hap-pily) seems is that leaving its ju-risdiction is for all practical pur-poses impossible
THE IMPASSE JUST PASSEDI listened to Prime MinisterHoward speaking to the motionbefore Parliament in relation tothe war It was a good speechbut neither he nor PresidentBush seems able to structure andlay out an argument with thestyle and content of BritishPrime Minister Blair His equi-valent speech before the BritishCommons provides a masterfulsummary of the reasons for thiswar and includes an immenselyreadable time-line of the utterineffectiveness of the UN pro-cesses in dealing with Iraq Henicely deals with allegations ofthe lsquorushrsquo to war lsquoOur fault hasnot been impatience The truth
UNITED OR DIVIDEDI write just hours after US Presi-dent George W Bush has deliv-ered his ultimatum to Iraqi Presi-dent Saddam Hussein leave Iraqwithin 48 hours or be removedBy the time this appears beforeyour eyes you will knowwhether Hussein has decided hischances of survival will be sig-nificantly greater by choosingexile or by remaining in IraqThe recent creation of the In-ternational Criminal Court ofcourse makes war more likelysince Hussein can have no guar-antee of a peaceful lsquoretirementrsquo
In the event that Hussein re-mains in Iraq you will also knowwhether Bush has kept his wordand most likely the outcome ofthis military venture
This matter is immensely im-portant for the people of Iraqand for the military personnelinvolved (including our ownAustralian soldiers sailors andaviators) But then so was theprevious Gulf War the US in-vasion of Grenada the Austra-lian intervention in East Timorand so on But a difference be-tween the current conflict andthose others could be the impactit has upon international insti-tutions Actually just one inter-national institution the UnitedNations
Prior to the first Gulf War Ifeared the coalitionrsquos success forthe reason that some of it mighthave rubbed off onto the UnitedNations I hasten to deny that Ifear the UN as some vast con-spiracy for world domination Ifeared instead that it couldstumble into a piecemeal cen-tralization of power (just as Fed-
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
E V I E WRs
33MARCH 2003
E V I E WR
Reading FileDone
ATTACKING THE GLOBALGOVERNORSThe Cato Institute is a whole-some body as demonstrated byits opposition to such interna-tional organizations as the Inter-national Criminal Court and forthat matter the United Nationsitself Ted Galen Carpenter forexample argues in lsquoPutting theUnited Nations on Noticersquo thatthe UN can and has done somemodest good occasionally It ishe says lsquoa good idea to have aplace where governments cangather to air grievancesrsquo But headds if it lsquoattempts to acquire ataxing authority [or] raise astanding armyrsquo then the USshould withdraw (as indeedshould Australia) Because thatwould turn it into an lsquoembryonicsuperstate that would menacelibertyrsquo
Go to
wwwcatoorgforeignpolicyunhtml
THE INTERNATIONALORGANIZATIONS THEM-SELVESThe United Nations has beenaccused of being often ineffec-tive and always slow Well ev-ery time Irsquove hit the UNrsquos Web-site even with my nifty broad-band Internet connection slow-ness rules Perhaps the site isbeing continually accessed bythe teeming masses Anyway goto
wwwunorg
With 15 members alreadyand 13 more on the way thereremain hopes that the EuropeanUnion will be a force for a stable
twenty-first century Equallywith 15 members already exhib-iting rather divergent views overthe issue of Iraq and most of theforthcoming members sidingwith the United States perhapsthis is overly hopeful Go to
europaeuintindex_enhtm
Then there is the WorldTrade Organization the organi-zation behind which protection-ist nations can hide from unilat-eral trade liberalization by pre-tending to support multilateraltrade liberalization Go to
wwwwtoorg
And we mustnrsquot forget the In-ternational Criminal Court fearof which was no doubt a featureof Saddam Husseinrsquos rejection ofexile as an option and the furyof which is promised by a num-ber of prominent lawyers to bevisited upon our very own PrimeMinister Go to
wwwicc-cpiint
FEEDBACKI would welcome advice fromreaders on any other sites of inter-est to IPA Review readers E-mailme on scdawsonbigpondnetau
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
is our patience should have beenexhausted weeks and monthsand years agorsquo
Go to
wwwnumber10govukoutputPage3294asp
THE STRUGGLE BETWEENTHE CONTINENTSIf you are patient you can readthat wonderful British rag TheSpectator for free Last weekrsquoscopy is available on-line One ofits regular columnists is MarkSteyn an Americo-phile Cana-dian who has a robust turn ofphrase and an abiding disdain formuch modern music (whichseems to place him very comfort-ably into The Spectatorrsquos culturalmatrix)
His piece on the future de-cline of Europe vis-agrave-vis Ame-rica makes for fascinating read-ing Go to
wwwspectatorcouk
then click on the lsquoBack Issuesrsquobutton and choose the edition of15 March 2003
E V I E WR
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
6 MARCH 2003
E V I E WR
riod without burning is far farlonger The area is choked with nox-ious weeds and provides sanctuaryfor feral cats dogs and goats whichinvade private property
More relevant in the context ofthis forum was the fact that he esti-mated forest floor litter to have beenin the order of lsquohundredsrsquo of tonnesper hectare rather than the 4 tonnesconsidered optimal for ecologicalbalance It was so thick and densethat it was impossible to ride a horsein parts and difficult to penetrateeven on foot
Similarly despite repeated re-quests from Major Smith the Vic-torian Department of Natural Re-sources and Environment (nowSustainability and Environment)had not forced a neighbouring ab-sentee landowner to clear hugethickets of fire-hazardous blackberryand briar
When the bushfires came theseunburnt public and private landserupted into an inferno and al-though a combination of rigorousfire-prevention measures (which in-cluded conducting his own fuel-re-duction burning to create a fire breakthat extended well into the park adecision he took unilaterally whenthe park managers declined) and awell-rehearsed action plan saved hisown property the fire swept thoughthe rest of the valley
Russell Smith now believes thatthere are vital lessons to be learnedif this sort of disaster is not to be re-peated Fuel reduction is one impor-tant priority but there is also a hugeamount that can be done to improveplanning coordination and re-sponse He has a dosier of planningand communications failings manyof which could have been avoidedwith greater training and prepara-tion
(For David Coonan there is acruel irony in the fact that his grouphas presented extensive evidence tothe ACT coroner investigatingdeaths that occurred during the 1991Canberra fires The coronerrsquos find-ings are not yet public but Coonan
is saddened that he and his col-leagues may yet find themselves pre-senting similar evidence to any in-quiry into the 2003 fires)
One theme that emerged repeat-edly in the Conference from all quar-ters (scientists the case studies anddelegates from the floor) is that StateGovernments are far more enthusi-astic about creating electorally-
popular National Parks than they areabout funding the management ofthe parks they have created Timeand again reference was made to thelack of management of these parkswhich are progressively degradedthrough infestations of weeds andferal animals and which become in-creasing fire hazards
This is environmentally as wellas economically and politically dan-gerous the habitatsmdashand perhapseven entire populationsmdashof somethreatened species were engulfed inthe huge fires that spread throughthe parks of north-eastern Victoriain January February and March
One delegate asked whether thecause of environmentalism wouldnot be better served if there weregreater commercial exploitation ofNational Parks to generate fundingfor their upkeep It would at least
ensure their management was givena secure funding base he said
The continued creation and ex-tension of National Parks whenthere was not sufficient funding tomanage even existing parks was seenas evidence of State Governmentsurrender to uninformed urban-based green populists who were inturn swayed more by emotion andsymbolism than by any real under-standing of environmental manage-ment
The passion generated by thesefires was evident in the packed au-ditorium (every seat was taken andmany who tried to book late had tobe refused) Scores of residents andfirefighters from hard-hit areas ofVictoria made the journey to Mel-bourne to hear the experts and tohave their say Several busloads camefrom north-east Victoria the epi-centre of the fire disasters For themit was a 16-hour day
Other individuals made a similarjourney from Victoriarsquos north-westwhere more than 200000 hectaresof National Park along with exten-sive farmlands were also destroyed
GREEN GODSMany people expressed their con-cerns at the possible influence ofgreen activists on forest manage-ment policy These concerns wereonly confirmed by Andrew Bolt As-sociate Editor of Melbournersquos Herald-Sun newspaper who gave a talk dur-ing post-conference refreshmentsHis theme was Green Religion thetriumph of a set of mystical valuesover science
The thesis he advanced was thatwith the decline of traditional reli-gions and belief in God many mod-ern individuals were left with thechoice of either believing that hu-man beings were in charge of theirown destiny or believing that theyshouldnrsquot be and subsume humanfate to omniscient Nature Giventheir lack of faith in fellow manmany had chosen the latter courseThe result was a value-system inwhich scientific principles of sound
Governments are formore enthusiastic
about creatingelectorally-popular
National Parksthan they are
about funding themanagement of the
parks they havecreated
7MARCH 2003
E V I E WR
ON 28 January the Queens-land Government re-leased Report on the studyof land-sourced pollutants
and their impacts on water quality inand adjacent to the Great Barrier ReefIn the associated media release theQueensland Premier Peter Beattiesaid lsquoNow the report is in work onthe Great Barrier Reef Water Qual-ity Protection Plan will continuewithout arguments about whetherland activities harm the Reef Thereport is the adjudicatorrsquos decisionand is based on the best available sci-encersquo
The report written by a panelof scientists chaired by Queens-landrsquos Chief Scientist Dr Joe Bakermakes several key findings regard-ing impacts of land-based pollutionon the reef A key allegation in thereportrsquos summary highlighted in thePremierrsquos media release is that el-evated concentrations of pesticideresidue have been found in dugongs
Since publication of the book Si-lent Spring by Rachel Carson in1962 there has been concern thatpesticides can bio-accumulate inthe fat tissue of animals Prior to1987 organochlorine pesticides (forexample DDT) were used in GreatBarrier Reef catchments includingfor sugarcane production Thesechemicals have since been banneddue to global concerns about theirpersistence in the environment andtheir capacity to bio-accumulate
I first became aware of the spe-cific issue of pesticide in dugongs inAugust 1998 A senior officer withthe Great Barrier Reef Marine ParkAuthority (GBRMPA) phoned mewith the news that a soon-to-be-
Deceit in the Nameof Conservation
JENNIFER MAROHASY
published research study had foundthat elevated levels of pesticide resi-due most likely from cane farmingwere accumulating in the fat tissueof dugongs Media headlines fol-lowed including Pesticide in reefcreatures and Cane burning link withdioxin in dugong
I obtained a copy of the studyand found it was primarily an analy-sis of the type and quantity of diox-ins found in the fat tissue of dug-ong carcasses that had been killedin fishing nets1 Dioxins are a groupof organochlorine compounds com-monly associated with industrialwaste incineration The researchpaper made reference to a differentstudy that had analyzed the dioxinsfound in soils under sugarcane cul-tivation and commented that thecane-land soils and dugong fatsamples both had elevated levels ofthe same type of dioxins
Concerned by this news I con-tacted a dioxin expert at the Uni-versity of Queensland Dr BrianStanmore informed me that thetype of dioxin considered by theGBRMPA to be elevated in thedugongs was common and the leasttoxic of all dioxins Furthermore DrStanmore indicated that the levelof dioxins found in the dugongs wasless than the national average inpeople in the United States Hecommented that lsquoit looks like thedugong is better off than we arersquo
The GBRMPA study clearlystated lsquoAll (dugong) carcasses werein good condition at the time ofsampling All animal deaths wereconfirmed or suspected (fishing) netdrowningrsquo However instead of fo-cusing on net fishing practices the
environmental management were oflittle significance compared with theneed for a re-creation of a mythicalpristine Nature
Elements of this attitude he sug-gested might underlie some of thepressures which discourage the pre-scribed burning of National Parksand State Forests
Whether this hypothesis provesvalid or not there is little doubt thatthe management of Australiarsquos parksforests and other public lands willcome under greater scrutiny as a re-sult of the horrific fires of 2003 Thescale of damagemdashhuman economicand environmentalmdashis such that atleast three separate inquiries Fed-eral Victorian and from the ACThave already been proposed
The overwhelming view of del-egates at the IPA forummdashas re-flected in questions from the floorand in post-conference discussionsmdashwas that only a Federal inquiry islikely to achieve an adequate resultThis is because State and TerritoryGovernments in their role as landmanagers must share direct respon-sibility for any lack of prescribedburning and other forms of hazard re-duction that might have contributedto these fires This means that theycould potentially face hugely expen-sive legal claims and that as a re-sult there could be pressure on themto manipulate terms of reference andother criteria to diminish scrutiny ofthese important issues
Even if this concern proves ut-terly unfounded the public percep-tion could still linger that any suchinvestigation was a State Govern-ment inquiry into a matter in whichthe State had a very real vested in-terest For these reasons a Federalinquiry would have greater credibil-ity and is in fact essential if we areto come to a comprehensive under-standing of the causes of last sum-merrsquos catastrophic bushfires
Graham White is an issues management consultantwho chaired a session of the IPA bushfires forum
API s
8 MARCH 2003
E V I E WR
GBRMPA subsequently providedfunding for a full investigation bythe National Research Centre forEnvironmental Toxicology(NRCET) into the likely origin ofthe dioxin considered to be at el-evated levels in the dugong car-casses including possible links withsugarcane production
Two years later the NRCET in-vestigation concluded that the di-oxin of concern to the GBRMPAwas common in soils along the en-tire Queensland coastline includ-ing in regions beyond sugarcane cul-tivation2 Analyses of dated marinesediment cores indicated that thechemical was present prior to Eu-ropean settlement in QueenslandIn other words the dioxin is a natu-rally occurring organochlorine andnot a pesticide residue There areapparently many naturally occur-ring non-toxic dioxins
But what of the organochlorineinsecticides used in the sugar indus-try from the late 1940s until theywere banned in 1987 Have thesepesticides been found in dugongs
The GBRMPA and the Austra-lian Institute of Marine Science(AIMS) have undertaken extensivesurveys for traces of organochlorineinsecticides including an Australia-wide programme for collecting andtesting samples from stranded or re-cently killed dugongsmdashfrom whichthe dioxins were isolated While itwas expected that these program-mes would find persistent orga-nochlorine pesticide this has notbeen the case
Estuarine and near-shore marinesediments have been extensivelysampled on the basis that these ar-eas are likely to contain the high-est concentrations of contaminantsfrom human activity in adjacentcatchments Trace amounts of someorganochlorine insecticides havebeen found in sediment from a smallnumber of river mouths3 No orga-nochlorine insecticides howeverhave been found in near-shore ma-rine sediments of the Great BarrierReef4 This finding has surprised
many researchers some of whomhave postulated that the absence oforganochlorine contamination inthe inner shelf is a consequence ofenhanced degradation of the orga-nochlorines in the aquatic system
In late November 2002 I re-ceived a copy of the draft summaryof the Baker reportmdashthe report sub-sequently described by the Premieras the best available science I no-ticed the allegation of elevated con-centrations of fat-soluble pesticide
in dugongs I emailed Dr Baker que-rying this and other allegations inthe draft summary Dr Baker repliedthat he would consult with the Sci-ence Panel and get back to me Thereport was published two monthslatter without any changes to thesummary
The reef pesticide research iswell-documented and should be un-derstood by members of the SciencePanel In fact a member of the Sci-ence Panel communicated the find-ings from the NRCET investigationto me in September 2001 Whythen was the allegation of pesticidein dugongs included in the originalsummary report Why was the alle-gation not corrected after I brought API
the error to Dr Bakerrsquos attention inDecember 2002
Two years earlier following pres-sure from the World Wide Fund forNature (WWF) and as part of theQueensland governmentrsquos reelec-tion campaign the QueenslandPremier committed his governmentto saving the reef Since this timeit has been Queensland governmentpolicy that the reef is in troubleThe on-going deception is perhapsnecessary to maintain the percep-tion that the reef is in trouble
NOTES1 Haynes D Muller J F amp
McLachlan MS (1999) lsquoPoly-cholorinated dibenzo-p-dioxinsand dibenzofurans in Great Bar-rier Reef (Australia) Dugongs(Dugong dugon)rsquo Chemosphere38 pages 255ndash262
2 Prange JA Gaus C PapkeO amp Muller JF (2002) lsquoInves-tigations into the PCDD con-tamination of topsoil river sedi-ments and kaolinite clay inQueensland Australiarsquo Chemo-sphere 46 pages 1335ndash1342
3 Haynes D Muller J amp CarterS (2000) lsquoPesticide and Herbi-cide Residue in Sediments andSeagrasses from the Great Bar-rier Reef World Heritage Areaand Queensland Coastrsquo MarinePollution Bulletin 41 pages279ndash287
4 Cavanagh JE Burns K ABrunskill GJ amp Coventry RJ(1999) lsquoOrganochlorine pesti-cide residues in soils and sedi-ments of the Herbert and Bur-dekin River regions northQueenslandmdashimplications forcontamination of the GreatBarrier Reefrsquo Marine PollutionBulletin 39 pages 367ndash375
Dr Jennifer Marohasy is Environment Managerwith Queensland Canegrowers Organisation Ltd
Why was theallegation of pesticidein dugongs included inthe original summary
report Why wasthe allegation notcorrected after I
brought the error toDr Bakerrsquos attentionin December 2002
9MARCH 2003
E V I E WR
IN THE LONG AGOPlanet Earth condensed 4550million years ago (Ma) from re-cycled stardust Since that timethe continents have been enlarg-ing Earth materials have beenconstantly recycled and the Earthand all associated systems havebeen dynamically evolving TheEarth has not stopped being anevolving dynamic system just be-cause humans now live on thecontinents
As soon as there was liquid wa-ter on Earth there was life Bac-teria slowly diversified and by thetime the Earth was middle agedone group of bacteria had emit-ted such large quantities of oxy-gen (O2) that the atmospherecontained minor O2 Some of thisexcess O2 was trapped in rocks byweathering most dissolved in theoceans resulting in the precipita-tion of iron oxides It is these ironoxides that form the great iron orefields of planet Earth (for ex-ample in the Hamersley Basin)Life the atmosphere the oceansand the rocks interacted a pro-cess that has been occurring forat least 2500 million years on ourdynamic evolving planet
For at least the last 2500 mil-lion years the continents havebeen pulled apart and stitchedback together Every time thecontinents are pulled apart hugequantities of volcanic water car-bon dioxide (CO2) and methane(CH4) are released into the atmo-sphere and greenhouse conditionsprevail When continents stitchtogether mountain ranges formMountains are stripped of soilsnew soils form and remove CO2
The Past is the Key to the PresentGreenhouse and Icehouse over Time
IAN PLIMER
from the atmosphere these soilsare stripped from the land and theCO2 becomes locked in sedimentson the ocean floor When atmo-spheric CO2 is low glaciation oc-curs Large climate cycles can berelated to plate tectonics
The origin of the greatest cli-mate change on Earth is anenigma Between 750 and 600Ma there were two major glacialevents and numerous smallerevents Sea level changed by upto 400 metres and interglacial seatemperatures were 40˚C Afterglaciation the atmosphere hadsome 20 per cent CO2 and bacte-ria thrived and diversified in thewarm oceans Multicellular lifeappeared diversified and used theCO2 to make shells and skeletonsThis explosion of life from 580 to520 Ma gave us all of the majorlife forms currently present onEarth
Plants appeared at 470 Ma andthere was a major mass extinctionof multicellular life at 430 MaThe origin of this mass extinctionis not known Vacated ecologieswere quickly filled and life con-tinued diversifying Between 368and 248 Ma massive coal depos-its formed there was a major 50million-year period of glaciationand the atmosphere was blessedwith a very high CO2 and O2 con-tent Life continued to diversifyMinor mass extinctions continuedand at 248 Ma the biggest majormass extinction on Earth tookplace Some 96 per cent of spe-cies became extinct Life diversi-fied quickly to fill the vacatedecologies The record written instone by fossils in the period520Ma to the present shows thatthe planet is a warm wet green-house volcanic planet with thenormal cycles of rising and fall-
Sea Levels
Greenhouse Greenhouse GreenhouseIcehouse Icehouse
Tem
pera
ture
Tem
pera
ture
Millions of years ago1000 900 800 700 500 400 300 200 100600
There are 400 million year supercycles of greenhouseicehouse related to the pulling apart and
stitching together of continents
Icehouse
s
s
10 MARCH 2003
E V I E WR
ing sea levels rising and fallingland levels and changing climates
THE DAY BEFORE YESTER-DAYSome 120 million years ago Aus-tralia was at the South Pole en-joying a temperate climate Glo-bal sea level was more than 100metres higher than at present thesea surface temperature was 10ndash15˚ C higher than now and manycontinents were covered by shal-low tropical seas Planet Earthwas a warm wet greenhouseparadise and thick vegetationcovered the land masses Atmo-spheric CO2 was about 1 per centwhen the worldrsquos major coal de-posits formed 368 to 248 Ma
From 250 to 120 Ma the glo-bal CO2 content varied greatlyand increased to a peak 6 per centCO2 120 Ma This derived fromintense volcanic activity associ-ated with continental fragmenta-tion Thick vegetation coveredthe land masses
Australia started to pull awayfrom Antarctica at about 100 MaIt drifted northwards the TasmanSea opened and the IndianOcean opened with India start-ing to drift away from WesternAustralia The opening of theTasman Sea produced the rise ofthe Great Dividing Range thediversion of the major river sys-tems and changes to the climateof eastern Australia
A minor mass extinction oflife 90 million years ago was theresult of volcanoes in the Indianand Pacific Oceans belching outCO2 and other gases into theoceans and atmosphere Therewas a runaway greenhouse untilvolcanism waned But volcanicemissions of CO2 are common In1984 and 1986 burps of CO2 fromthe volcanic crater lakes ofMonoun and Nyos respectivelykilled thousands and added CO2to the atmosphere Near MtGambier volcanic CO2 is com-mercially extracted from rocks
one small hot spring on Miloscontributes 1 per cent of theplanetrsquos volcanic CO2 and hugequantities of CO2 the planetrsquossecond most common volcanicgas constantly leak from unseensubmarine volcanoes
Another minor mass extinc-tion at 55 Ma was caused by aCaribbean volcano There was arise in sea temperatures by up to8˚C for 100000 years and atmo-spheric CO2 was 10 times that oftoday During this greenhouseplankton sucked up the atmo-spheric CO2 mammals thrivedand life filled the vacated ecolo-gies Atmospheric CO2 decreasedfrom 3500 to 700 ppm within amillion years stayed low until 47Ma and went up and down toabout the present level (365ppm) at 40 Ma
India collided with Asia at 50Ma Uplift produced the TibetanPlateau which started to scrubCO2 out of the atmosphere TheTibetan plateau is still rising andCO2 is still being scrubbed out ofthe atmosphere The Drake Pas-sage opened as South Americadrifted from Antarctica a cir-cumpolar current developed andAntarctica refrigerated SouthernAustralia from 17 to 145 Mawas again tropical with mid-lati-tude temperatures 6˚C warmerthan today Atmospheric CO2was 180ndash290 ppm This green-house occurred when atmos-pheric CO2 was 30ndash50 per centlower than today
By 5 Ma Earth cooled andwas so cool that very slight orbitalwobbles now had a bearing on cli-mate and every 100000 yearswas characterized by 90000 yearsof glaciation and 10000 years ofinterglacial We are currently inone of those interglacial periods
The penultimate interglacialwas 120000 years ago Homoerectus Homo neanderthalensisand Homo sapiens coexisted sealevel was 6 metres higher than atpresent the planet was far
Millions of Years Ago
400 200600 0
2
4
6
8
10
12
14
16
18
20
0
Perc
enta
ge o
f CO
2
PrecambrianIce Age
s
Permian-CarboniferousIce Age
s
LastIce Age
s
There have been enormous changes incarbon dioxide (CO2) over time related to
volcanism sedimentation mountain-building and life on Earth
11MARCH 2003
E V I E WR
warmer and wetter than now andatmospheric CO2 was 78 per centof that today After warming theatmospheric CO2 and CH4 con-tent increased suggesting that at-mospheric temperature rise drivesan increase in atmospheric car-bon dioxide and methane con-tents During the history of thelatest glaciation armadas of icewere released into the sea every7000 years resulting from thephysical failure of thick icesheets These had a profound ef-fect on climate Small cool peri-ods occurred every 1100 to 1300years
The zenith of the last glacia-tion was 18000 years ago Sealevel was 130 metres lower thantoday temperature was 10ndash15˚Clower than today and the north-ern hemisphere was covered byice to 38˚N up to 3 kilometresthick
YESTERDAYThe northern polar ice sheetstarted to melt 14700 years agoThere were very rapid and majortemperature fluctuations sea lev-els rose and fell and the total sealevel rise over the last 14700years has been at least 130metres Sea level rise resulted inthe breaching of the Mediterra-nean into the Black Sea Basinsome 7600 years ago and is prob-ably the origin of the SumarianBabylonian and biblical stories ofa great flood
One of the consequences of amassive sea level rise over the last14700 years is that the WestAntarctic Ice Sheet was nolonger underpinned by the landTwo thirds of the West Antarc-tic Ice Sheet collapsed into theoceans and sea level rose 12metres The final third of theWest Antarctic Ice Sheet has yetto collapse to produce a 6 metresea level rise as part of the dy-namic post-glacial climate onEarth Climate changes inducedby changes in ocean currents
cooled North Africa grasslandschanged to a desert humans mi-grated and the great Mesopo-tamian cities were established
Sea levels were 1ndash3 metreshigher in a greenhouse 6000years ago There was 20 per centmore rainfall Cold dry periodsglacier expansion and crop fail-ures between 5800 and 4900years ago resulted in deforesta-tion flooding silting of irrigationchannels salinization and thecollapse of the Sumerian citystates Long periods of El Nintildeo-induced drought resulted in theabandonment of Middle EasternIndian and North Americantowns In 1470 BC () Thira ex-ploded weakened the dominantMinoans and changed the courseof western history
Global cooling from 1300 to500 BC gave rise to the advanceof glaciers migration invasionand famine Global warmingcommenced again at 500 BCthere was an excess of food andgreat empires such as the AshokaChrsquohin and the Romans grewContemporary records and Ro-man clothing shows that condi-tions were some 5˚C warmer thantoday
In 535 AD Krakatoa explodedas did Rabaul in 536 AD TheEarth passed through cometarydust in 536 AD The dusty atmo-sphere reflected heat and dark-ness prevailed As a result theclimate cooled and there wasfamine and warfare Changes inocean currents resulted in theMedieval Warm Period from 900to 1300 AD The first to feel thechange were the Vikings whowere able to navigate the north-ern waters colonized Newfound-land colonized Greenland andestablished extensive trade routesas far south as the modern GulfStates On Greenland crops weregrown and there were cattle Thiswould not be possible today Thewarmer wetter climate of Europeproduced excess crops and wealthwhich resulted in the building ofcastles cathedrals and monas-tries As with previous green-house events there was greatprosperity
In 1280 AD volcanic erup-tions on Iceland and a change inocean currents started the LittleIce Age which finished in 1920The North Sea froze in 1303 and1306ndash1307 there was massivefamine in 1315 and the plague
Sea
Surf
ace
Tem
pera
ture
degC
21
22
23
24
25
26
Years Ago
Large temperature changes over the last 200years have been recorded in history and fromthe oxygen isotopes of floating marine animals
Dark Agescold period
Medievalwarm period
LittleIce Age
2000 1500 1000 500 Now
s
12 MARCH 2003
E V I E WR
pandemic attacked the weakenedpopulation in 1347ndash1349 Therewas massive depopulation and ittook Europe 250 years to reachthe population of 1280 AD Dur-ing the Little Ice Age there werewarmer periods associated withsunspot activity During mini-mum sunspot activity (1440ndash1460 1687ndash1703 and 1808ndash1821) the intensely cold condi-tions were recorded by the Dutchmasters and King Henry VIII wasable to roast oxen on the frozenThames There were food short-ages Short cold periods occurredafter the eruptions of Tambora(1815) and Krakatoa (1883) re-spectively In fact 1816 wasknown as the lsquoyear without asummerrsquo This was the time whenTurner painted stormy oceansand skies full of volcanic dustMary Shelley wrote Frankensteinand Byron wrote Darkness
TODAYThe twentieth century and earlytwenty-first century AD are timesof natural post-glacial reboundIce sheets a rare phenomenon inthe history of time still exist Sealevel is relatively low as are glo-bal temperatures and atmos-pheric CO2 Between 1920 and1945 there was a period of warm-ing (037˚C) and another thatcommenced in 1976 (032˚C) In1976ndash1977 global temperaturesin the lower atmosphere jumped03˚C sea surface temperature inthe equatorial Pacific jumped06˚C sea surface temperatureduring upwelling increased 15 to3˚C but there was reduced up-welling the heat content of theupper 300 metres of the worldrsquosoceans increased there was in-creased wave activity in theNorth Sea and the length of theday changed The stepwise in-crease in temperature in 1976ndash1977 shows that there was a ma-jor re-ordering of the ocean heattransport coinciding with anorbital change expressed as a
change in the length of the dayMaybe the global warming of thetwentieth century is just a mea-sure of the variability on a dy-namic evolving planet
To put such measurementsinto perspective over the historyof time changes in atmospherictemperature in the twentieth
century can only be consideredsmall and slow A 24-year globalcoverage of satellite atmospheretemperatures shows only modestwarming in the Northern Hemi-sphere and a slight cooling in theSouthern Hemisphere Tempera-ture measurements from balloonsagree with the satellite measure-ments for the period of overlapBecause greenhouse warming is aphenomenon of the atmospheresignificant changes should havebeen recorded They have not
CONCLUSIONSUnderpinning the global warm-ing and climate change mantra isthe imputation that humans liveon a non-dynamic planet On allscales of observation and mea-surement sea level and climateare not constant Change is nor-mal and is driven by a large num- API
ber of natural forces Change canbe slow or very fast However wesee political slogans such as StopClimate Change or governmentpublications such as Living withClimate Change demonstratingthat both the community andgovernment believe that climatevariability and change are notnormal By using the past as thekey to the present we are facingthe next inevitable glaciationyet the climate economic politi-cal and social models of todayassess the impact of a very slightwarming and do not evaluate thehigher risk of yet another glacia-tion Geology archaeology andhistory show that during glacia-tion famine war depopulationand extinction are the norm
In 1831 Admiral Sir JamesRobert George Graham had theUnion Jack hoisted on a volca-nic land mass that suddenly ap-peared near Sicily It was calledGraham Bank and was claimed byEngland It was also claimed bythe Kingdom of the Two Sicilieswho called it Isola Ferdinandeathe French (LrsquoIsle Julia) andother powers In the subsequentdispute over ownership Franceand the Kingdom of the TwoSicilies almost came to war andEngland and the Two Kingdomsof Sicily had a diplomatic rowDuring the intense diplomaticdispute the island quietly slippedback underwater Graham Banksserves to show that whateverpolitical decisions we humansmake the land rises and falls sealevels rise and fall and climateschange as they have done sincethe dawn of time
Ian Plimer is the Professor of Geology in the Schoolof Earth Sciences at The University of MelbourneThis article is an edited version of his recent paperto the IPArsquos Climate Conference delivered on 28
February 2003 a full version of which can befound on the IPArsquos Website
On all scales of
observation and
measurement sea
level and climate
are not constant
Change is normal
and is driven by a
large number of
natural forces
13MARCH 2003
E V I E WR
FOR two years the worldrsquossecond largest hydrocarbonsproducer spent beaucoupdollars on a clever public re-
lations and advertising campaign toconvince consumers that BP no longerstands for British Petroleum but for Be-yond Petroleum
One advert proclaimed lsquoWersquore oneof the largest producers of natural gashellip and are investing in the new energysources of the futuremdashhydrogen andwind Itrsquos a startrsquo Another tried to getthis line past the guffaw test lsquoWe be-lieve in alternative energy Like solarcappuccinorsquo
Many people expressed surprise thata huge oil company was so committedto alternative energy technologiesThey neednrsquot have
BPrsquos total six-year investment in re-newable technologies was $200 mil-lionmdashthe same amount it spent on thelsquoBeyond Petroleumrsquo advertising cam-paign Thatrsquos certainly an impressivetab for image enhancement But itrsquos adrop in the barrel for futuristic tech-nologies that were the centrepiece forthe slick marketing effort
Indeed all its preening and pufferynotwithstanding BPrsquos actual invest-ment in renewable energy was a whop-ping 005 per cent of the $91 billion itspent to buy oil giants Arco and Amocoback in the 1990s Moreover just as theadvertising campaign was windingdown BP announced it was spending$675 billion for a 50 per cent control-ling interest in a rich Russian oil pros-pectmdashand will be spending another$20 billion over the next five years ex-ploring this and other newer fieldsaround the world
In other words the advertising cam-paign was little more than lsquogreen-washingrsquomdashdisinformation intended topresent an environmentally responsiblepublic image BP wanted people to per-
BPmdashBack to PetroleumPAUL K DRIESSEN
theoretically harmless puffery It also re-flects the desire of many multinationalcompanies to appease critics and gaina public relations advantage over com-petitors by adopting the language ofideological environmentalism
This radical school of thought in-creasingly uses ethical buzz-words anddogmas to justify its demands Chiefamong them are sustainable develop-ment and the precautionary principlethe foundations of so-called lsquocorporatesocial responsibilityrsquo (CSR) and lsquoso-cially responsible investingrsquo (SRI) doc-trines
Eco-activists from affluent Westerncountries developed the doctrines topromote their agendas and oppose en-ergy and economic development BPhas long been at the forefront of theseefforts as a charter member of theWorld Business Council for SustainableDevelopment through frequent meet-ings with activist groups and by fund-ing many radical groups
The activists define what is lsquorespon-siblersquo focusing debate on conjecturalproblems and theoretical needs of fu-ture generations of wealthy elitesmdashandignoring real immediate life-and-death needs of people who struggledaily just to survive The stakes arehuge
More than 15 billion people in de-veloping countries still do not have ac-cess to electricity Half a billion womenand children spend their days collect-ing firewood or squatting in mud andanimal faeces to collect and dry ma-nure for fuel Millions die every yearfrom lung diseases caused by indoor airpollution from cooking fires and dys-entery due to contaminated drinkingwater
Hydroelectric or fossil fuel projectscould provide electricity for familieswater purification plants and economicdevelopment But radical activists op-
ceive it as a lsquosocially responsiblersquo leaderand reward it accordingly Few did
Green activists denounced BP forlsquohypocrisyrsquo and blasted the company forcontinuing to lsquoexploit some of theworldrsquos most sensitive ecological areasrsquoA major business magazine said sim-ply lsquoWell please If the worldrsquos secondlargest oil company is beyond petro-leum Fortune is beyond wordsrsquo
Meanwhile BPrsquos total wind and so-lar electrical output last year was barelyenough to keep the lights burning inRegina Saskatchewanmdashand thought-ful observers are beginning to realizethat wind and solar arenrsquot quite as eco-friendly as activists claim
A single new 555-MW gas-firedgenerating plant in California producesmore electricity than do all the statersquos13000 wind turbines The gas-firedplant occupies about ten acres the gi-ant 200-foot-tall windmills dominatethousands of once-scenic acres and killthousands of raptors and other birdsevery year Current photovoltaic tech-nology is just as habitat-hungry
Worse chief executive Lord JohnBrowne was forced to lower BPrsquos pro-duction estimates three times last yearand the companyrsquos 11 per cent returnon average capital was well below thatof arch-rivals ExxonMobil (137 percent) and Royal DutchShell (148 percent) BP share prices reflected inves-torsrsquo displeasure with its poor perfor-mance and the fact that the companyrsquosprofit margins would not improve for adecade or more if the company re-mained focused on renewable energyand old oil fields
Thus if BP ever really was BeyondPetroleum going Back to Petroleum(and Bigger Profits) was a sound busi-ness decision
However the lsquoGreat Beyondorsquo adcampaign involves more than meregreenwashing and disingenuous but s
14 MARCH 2003
E V I E WR
API
pose these projects and say that theworldrsquos rural poor should be contentwith solar panels on huts
Investors are also at risk particu-larly retirees whose futures depend onpension and mutual funds that ownnearly $8 trillion in market sharemdash50per cent of the total stock marketMany of these funds are managed lessto safeguard or benefit the investor thanto promote radical principles under thedisguise of so-called ethical funds
These funds claim to provide pro-fessional unbiased analytical and ad-visory services But in reality they sup-port political agendas based on often-questionable analyses and on lsquostake-holderrsquo (activist) input to justify howthey grade companies in client portfo-lios They regularly excoriate compa-nies such as ExxonMobil claiming itsrefusal to back the Kyoto climate treatywill destroy shareholder value Mean-while they praise companies such asBP and promote global governanceand solar panels on huts
Australiarsquos energy consumers willbecome yet another example of lsquocol-lateral damagersquo if the radicals havetheir way over global warming Onceagain some of the culprits are right inthe BP boardroom
In 1997 BP chief Browne endorsedthe global warming theory and saidtough measures should be imposedquickly even in the absence of scien-tific proof A Clinton-era Energy In-formation Administration report con-cluded that the climate treaty woulddrain $340 billion a year from the USeconomy The Australian economywould also get hammered And all thispain even assuming perfect compli-ance with the treaty would reduce av-erage global temperatures in 2050 byonly 02˚C below what they would bewithout the treaty according to theUSArsquos National Center for Atmo-spheric Research
But BP Australasia President GregBourne is undaunted Hersquos stumping thecountry from Melbourne to Brisbaneand Darwin to Perth importuning busi-nesses to pressure the PM to ratifyKyoto Could it be pure altruism Ormight the old profit motive be at work
A 1997 memo to Enron presidentKen Lay described BP as Enronrsquos lsquoin-ternational equivalentrsquo Indeed BP isstriving mightily to replace Enron asthe worldrsquos premier broker in the newbusiness of buying and selling permitsto emit greenhouse gases The expec-tation is that playing the climatechange game could earn BP billions ofdollars via traditional petroleum opera-tionsmdashand billions more via emissiontrading schemes The company is al-ready trading credits among its unitsas part of a training regimen for theanticipated emission Olympics
One cannot help but suspect thatthis huge EU oil giant might also bemotivated by Europersquos obvious desireto protect its industries from US and
other foreign competition They clearlysee the Kyoto Protocol not merely asan environmental programme but alsoas a way to pressure the United StatesAustralia and other countries to reduceenergy use and economic productivity
EU Environment CommissionerMargot Wallstrom put it bluntly whenPresident Bush abandoned the Kyotoclimate treaty lsquoThis is not a simple en-vironmental issuersquo she railed lsquoThis isabout international relations this isabout economy about trying to createa level playing field for big businessesthroughout the worldrsquo Several EU of-ficials echoed her sentiments suggest-ing that Americarsquos lower energy taxesconstitute an unfair trade advantagethat could justify trade sanctionsagainst the US
In short what we are witnessing isa profound and disturbing convergenceof ideology activism marketing poli-tics and financial gainmdashall in the ser-vice of radical policy agendas and allbeautifully attired in the lavish raimentof corporate ethics and responsibilityThis is proof positive that social respon-sibility can be a wondrous thing in thedexterous hands of craftsmen who re-ally know how to display and utilize it
How can we stop the charade Forstarters demand that corporate socialresponsibility puts people first puts de-velopment back into sustainable devel-opment and ensures that precaution-ary guidelines safeguard people andcommunities from the havoc wreakedby radical green policies Insist that alldecisions be based on sound peer-re-viewed science and solid evidencemdashnot on hysterical claims and shrillrhetoric by activists regulators andjournalists who reward pseudo-scien-tific soul-mates and pillory any scien-tists who dare disagree with them
Next urge principled regulators andjournalists to investigate these compa-nies and investor firms for self-servingarrangements and breech of fiduciaryduty Demand that the companiesfirms and activist groups open theirbooks and provide full disclosure oftheir meetings contacts and monetaryand other relationships
Last in this era of high-minded re-form prevail upon legislators to changethe law to make these groups subjectto the same false advertising laws andthe same standards of transparency andaccountability that activists insistshould govern for-profit corporationsUnbelievably right now these ideo-logues are mostly exempt
The world will thank you For it willbe a better safer more ethical placemdashespecially for energy consumers retir-ees and the worldrsquos poor
Paul Driessen is a senior fellow for the AtlasEconomic Research Foundation in Fairfax VA This
article is based on his recent white paper lsquoBeyondPetroleummdashor Beyond Probityrsquo which can be read
in its entirety at wwwcdfeorgdriessenhtm
BPrsquos total six-year
investment in renewable
technologies was $200
millionmdashthe same
amount it spent on the
lsquoBeyond Petroleumrsquo
advertising campaign
15MARCH 2003
E V I E WR
FOR three years Reputa-tion Measurement Ltd andThe Age and The SydneyMorning Herald have been
trying to impose their political agen-das on Australiarsquos top 100 corpora-tions They think that Australiarsquos cor-porations should be good citizens andthat by measuring what they think itmeans to be a good citizen they canchange corporate behaviour
Westpac ranked number one on the2002 Index and rated well in everycategory Flight Centre ranked num-ber one on financial performance but47 overall It was in the doldrums inevery other category including beingranked 99 on environment On thesurface this seems very strangemdashFlightCentre manages shopfront travel agen-cies The reason for this bizarre resultwas not hard to find
Reputation Measurement sug-gested that lsquocompanies seeking to dem-onstrate their worthiness as sociallyresponsible organizations are most suc-cessful when they widen their tradi-tional business stakeholder base to in-clude community stakeholdersrsquo Fur-ther lsquo[i]nvestors and consumers are in-creasingly making decisions based onlonger-term issues linked to a com-panyrsquos capacity to contribute to a sus-tainable futurersquo In other words theReputation Index is an instrument foradvancing a number of political agen-das corporate social responsibilitystakeholder capitalism and sustain-ability
For example corporate social re-sponsibility suggests a common agree-ment about what is good Whose defi-nition of good is to be believedmdashtheelectoratersquos or the activistsrsquo In a lib-eral democracy the rules are set by aconsensus that determines not so muchwhat is good corporate behaviour but
The Good Reputation Index 2002A Tale of Two Strategies
GARY JOHNS
what is and what is not acceptablebehaviour The Index is an exercise incapturing the reputation agenda andusing it to regulate corporate beha-viour
Stakeholder theory suggests that allinterests in an enterprise compete toobtain benefits from the enterprise butthat none has priority It is in effectasking lsquoin whose interests should theenterprise be runrsquo It assumes that so-ciety grants an enterprise the right toexist The community through its law-makers may grant licences and certainprivileges in return for the enterprisecomplying with the law It does notlicense stakeholders at large to imposetheir views on the corporation
Sustainability refers to ecologicalsustainability and ecological sustaina-bility is premised on the notion of lim-its to growth based on limits to resour-ces It argues that natural resources arebecoming scarcer It ignores the his-tory of technological innovation of-ten promoted by competition betweencorporations and the fact that such in-novation has extended physical re-sources in ways untold
An analysis of the 2002 Index re-veals that those corporations whosescore improved massively between2001 and 2002 did so because they didnot participate in 2001mdashthey wererated anywaymdashbut did so in 2002Conversely those whose score plum-meted in 2002 did so because they par-ticipated in 2001 but not in 2002Moreover the corporations who rosemassively in the ranks did not changetheir behaviour they just filled out theforms better
Greenpeace were very aggressive intheir attitude to corporations lsquoTo en-able us to verify your responses pleaseprovide us with further supportingdocumentation If hellip we are unable
to verify your response we will defaultyour response answer to a ldquodonrsquot knowrdquowhich will be marked and downgradedaccordinglyrsquo Unfortunately those ofwhom we would expect bettermdashforexample The Brotherhood of St Laur-encemdashalso penalized non-respon-dents As the technique was used byalmost all of the research groups thiswas presumably a deliberate strategy ofReputation Measurement Ltd
More disconcerting were reportsfrom corporations of the researchgroups touting for business by ringingfirms and offering their services to helpfill out the questionnaire Althoughthe level of disclosure has increasedsince the 2001 survey the touting con-tinued
The Index was published in Octo-ber 2002 obviously to coincide withthe reporting season and in the hopethat shareholders would use the Indexto seek changes to corporate behav-iour A sample of the major gainers andlosers on the Index reported no men-tion of the Index More importantlythere was no discernible impact onshare prices
The good news is that the Indexfailed miserably to achieve its objec-tives The bad news is that enough cor-porations played along to keep it alivein certain media and academic circlesIt was a chance for self-appointedNGOsmdashwho provided the ques-tionsmdashto regulate corporations bypublishing a list of good capitalists andbad capitalists Every corporation thatparticipated in the Index should thinkcarefully about whether it can justifythe agenda to its shareholders
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
16 MARCH 2003
E V I E WR
Tomorrowrsquos Reform
RALPH Waldo Emersontold us that lsquoa foolish con-sistency is the hobgoblinof little minds adored by
little statesmen philosophers and di-vinesrsquo and enjoined us lsquoto speak whatwe think today in words as hard ascanon balls and tomorrow speak whattomorrow thinksrsquo While statesmenshould not persist with known errortheir wanton inconsistency makespolicy formulation confoundedly dif-ficult
When he asserted that lsquoWhat de-termines the course of a nationrsquos eco-nomic policies is always the eco-nomic ideas held by public opinionrsquoLudwig von Mises must have hadeven less confidence in little states-men His pupil Friedrich von Hayekurged Antony Fisher not to enterpolitics but instead to found think-tanks which with fact and argumentwould change public opinion
Even among liberalismrsquos oppo-nents few today argue that Misesrsquoand Hayekrsquos ideas and Fisherrsquos liberalthink-tanks did not lead the 1980sand 90s almost world-wide liberal re-vival Why would they when bymuch the same means Fabian So-cialism had brought the welfare stateto Western nations In neither trendhowever were politicians the mereagents of popular opinion Especiallyin democracies political leadersrsquo ca-pacities to ignore it are indeed mod-est but their abilities to influence itare very much less so Even SaddamHussein works hard at influencingIraqi opinion Can we hypothesizethat the ways that leaders use theirinfluence distinguish tyrants fromdemocrats and the purposes forwhich they use it distinguish politi-cians from statesmen
Liberalismrsquos headlong chargethrough the corridors of power could
JOHN HYDE
arguments could have been em-ployed are nonetheless being de-fended by appeal to popular miscon-ceptions of the sort that PaulineHanson the Democrats and Greensactually believe Unless the majorparties have had a radical change ofheart they believe differently
Take the proposed Free TradeAgreement (FTA) with the UnitedStates Trade experts are not of onemind about its net worth My quar-rel is therefore not with the FTAitself but with the Governmentrsquos de-fence of it If the FTA will bring netbenefits then these will come mostlyfrom improved access to Americangoods and capital our own reductionof anti-competitive regulation ofdrugs medical insurance performingarts professional services textilesrural commodities etc and the dy-namic advantages of mixing it withthe Yanks But the government ispromoting the FTA almost solely inmercantilist (exports goodimportsbad) terms
To treat foreign goods servicesinvestment and ideas as an invasionparodies voluntary exchange whichdoes not happen unless both partiesbenefit The Government trumpetsa fact that nobody disputes namelythat it pays to sell into the best pay-ing markets but says nothing to edu-cate us in the advantages of buyingwell from foreigners as well asneighbours Once long ago Howardcriticized Pauline Hanson for her xe-nophobia That day he seemed to un-derstand the benefits of exchangewith foreigners
Until recently Australia hadbeen insisting that the only way toworld trade reform was via the mul-tilateral processes of the World TradeOrganisation and currently theDoha round A bilateral FTA with
not have proceeded without leaderssuch as Margaret Thatcher and ZhouEnlai who changed public opinionas did Bob Hawke in Australia Nowhowever liberalismrsquos charge hasslowed even in some places beensomewhat reversed Canberra hasnot been immune from trends thatsee politicians no longer so firmly re-sisting demands for economic privi-leges or as others see the same phe-nomenon no longer so blindly fol-lowing economic rationalism
Very poor economic decisionsaboundmdashrejection of the Trebeck re-port on petrol pricing preference forethanol production extending mo-tor and textile protection rural sub-sidies taxpayer contribution to theDarwin-to-Alice Springs railwayetc etc But there is also progressThe pride that John Howard takesin the fact that Australians are lessdivided against each other is surelyjustified The hugely importantlabour welfare and arguably also thehealth-care markets have been im-proved Budget balance has beenachieved albeit with high taxes Al-though net legislative and adminis-trative progress toward a more lib-eral more open more efficienteconomy has dwindled it would stillbe fair to say it has not been reversed
Our statesmenrsquos words as hard ascannon balls however that is thoseintended to enlighten rather thanappeal to public opinion are beingreserved for the Iraqi conflict In con-trast in the economic arena we areno longer encouraged to accept anyunwelcome truths Even when de-fending measures that I am morethan content to accept as beneficialthe government seems to select itsargument at best randomly ignoringprinciples of economic efficiency andequity Policies for which textbook
17MARCH 2003
E V I E WR
the US may or may not result in anet increase in trade flows but if itis not a meaningless piece of paperdelivering only political benefits tothe Government it will certainlydivert trade from our other tradingpartners How will China KoreaJapan etc react to losing their lsquomostfavoured nationrsquo status Such ques-tions should be addressed in termsthat do better than reinforce our xe-nophobic prejudices
By appealing to Hansonite mis-conceptions the Government mayand probably will improve itschances of bringing forward a policythat I am more than willing to ac-cept it believes is a good one It isafter all the recommendation of theDepartment of Foreign Affairs andTrade However by so doing it is re-inforcing delusions it must overcomefor further economic reform Whatis more I am reminded of a quip thatI am sure the PM has also heard lsquoNoGovernment is really dangerous un-til it believes its own bullshitrsquo Poli-ticians and I suspect bureaucratsalso are all too prone to believingtheir own utterances Unwilling toadmit their deceptions even whenspeaking in house they quickly con-vince themselves of the truth of theirown and colleaguesrsquo loose rhetoricand worse These are the people whomust negotiate the Agreement whilelooking over their shoulders at anAustralian electorate whose alreadystrong mercantilist tendencies havebeen reinforced by the people bestplaced to disabuse them The poten-tial cost is obvious
The US Free Trade Agreement isbut an example of a tendency thatought to be worrying In debateabout refugee policy motor fuel sup-ply single-desk wheat sales the sup-ply of medical practitioners and pres-ervation of the environment has notthe Government employed argu-ments that are not compatible withits professed liberal philosophy Hasit not seemed that it does not knowthe standard liberal responses to theself-serving demands of vested inter-ests and bigots With due respect to
Emerson consistency allows deci-sions to be made without the neces-sity of thinking every one throughfrom fundamental principles whichnobody in authority has the time orthe mental agility to do
Politically disinterested educa-tors such as the IPA can often callsome pretty good minds to their aidEven so when the Government it-self fosters public misconceptionthey cannot be expected to undo theerror The single greatest sin of thecurrent government is that it is notbuilding opinion for tomorrowrsquos re-form Why not
I suggest because it is politicallydifficult Whereas calls to resist out-siders appeal to deeply ingrainedtribal instincts calls to uphold thecivilizing and wealth-building insti-tutions that afford protection tostrangers and admit their goods ser-vices persons and ideas make nosuch visceral appeal These codes aremuch later developments in themarch of mankind and to manypeople they remain counter-intui-tive They must therefore be de-fended by sustained argumentHayek knew that politicians whosetime horizons in the absence ofknown crises tend to be the nextelection would (to use Howardrsquosown expression) seldom have the
tickers He turned therefore to theless articulate but far more resolutethink-tanks
It is relatively easy to appeal tothe sort of Chauvinism that sur-rounds sporting activity and argu-ments about refugees and meat quo-tas When a Prime Minister talks ofsovereignty guaranteeing our bor-ders or the interests of our exportersor domestic manufacturers he is notnecessarily wrong but his task iseasier than that of defending rulesthat permit voluntary co-operationamong strangers The principle thatdefends the non-unionistrsquos right towork the consumerrsquos right to buy for-eign goods and everyonersquos right tohear alien ideas and which shouldprotect racial and religious minori-ties from exclusion still needs hisleadership
Unless statesmen recognize theinconsistencies that arise not fromthe changed opinions that con-cerned Emerson but from trying tobe all things to all men they arelikely to govern in ways that are un-fair and inefficient If the public doesnot recognize consistency then thelsquolittle statesmenrsquo may find them-selves compelled to yield to the de-mands of the more articulate vestedinterests In such a case Heaven helpthe inarticulate who will be effec-tively disenfranchised But the insti-tutions which when consistentlyapplied give us liberty equity andprosperity are not strongly intuitive
They nevertheless distinguishAustralian society from say Iraqi so-ciety They give us the economicstrength to defy tyrants and they giveus a land worth defending They arecertainly not in danger of disappear-ing but they are in danger of beingeroded Lead us Mr Howard
While statesmen
should not persist
with known error
their wanton
inconsistency makes
policy formulation
confoundedly
difficult
API
John Hyde is a Senior Fellow with the Institute ofPublic Affairs His book Dry In Defence of
Economic Freedom was published by the IPA in November 2002
18 MARCH 2003
E V I E WR
DESPITE the obsessivepublic attention to pricesat the petrol pump thepetroleum-refining sector
rarely registers on the media radarscreen This is unfortunate as the sec-tor fuels most movement of peopleand goods in our economy and soci-ety And it is in trouble
It is fragmented stunted and sur-vives by abjuring profit and mortgag-ing its future Without radical reshap-ing it is likely to wither leaving usexposed to the vagaries of the inter-national refined-products market
FEATURES OF THE AUSTRA-LIAN REFINING SECTORThe first thing to note is that by in-ternational standards Australia is arelatively small player The most re-cent international figures show thatour total output of refined productsin the third quarter of 2002 was 89million tonnes This compared withOECD production of 486 milliontonnes including US production of202 million tonnes Total Australianrefinery capacity of 870000 thousandbarrels per day (bpd) compares withthe figures for China (53 million)South Korea (26 million) and Singa-pore (11 million) Total regional re-fining capacity and production con-tinues to grow as Australiarsquos stagnatesIn the five years to 2000 regional out-put grew by 22 per cent
Second the structure of the indus-try is weak The dispersed geographi-cal distribution of our refining sectorreflects its historical developmentwith each State capital city support-ing one or more refineries Over thelast two decades the number of ma-jor oil companies operating in Aus-
Petroleum RefiningRationalization or Atrophy
JIM HOGGETT
tralia has shrunk from nine to fourAlthough the number of players hasmore than halved the number of re-fineries has reduced by only two fromten to eight The average capacity ofAustralian refineries is around100000 bpd New refineries in theregion are generally significantlylarger Singaporersquos largest has a capac-ity of 375000 bpd
Given the open Australian mar-ket our ex-refinery prices are virtu-ally set by the major exporters in theregion who are also operating on tightmargins Moreover the proportion-ately heavy demand for diesel in SEAsia tends to generate a persistentsurplus of gasoline which is availablefor export to Australia at discountedprices
The pattern of relatively smallscattered refineries is no longer opti-mal in an open market in which weare a price-taker
Third despite its sub-optimalstructure the Australian refining in-dustry is not grossly inefficient Oneindicator is the value added per em-ployee which is in the top five per-formers in the Australian manufac-turing sector
The cost competitiveness of Aus-tralian products is indicated by thefact that we have the cheapest ex-taxprice of petrol in the OECD Perfor-mance comparisons with the rest ofthe AsiandashPacific however suggestthat we lag the average efficiency inthe region And the best performersin the region are superior to our best
Finally the financial performanceof the industry is poor gross annualrevenues for the whole industry in-cluding marketing were $32 billionin calendar year 2001 For the five
years to 2001 the return on assets forrefining and marketing averaged 38per cent and was negative in the lasttwo years The indications are that2002 may have been a better year forthe industry but that the return onassets remains well below the cost ofcapital Over the four years to 2001the fixed asset base of the industrydeclined by almost 6 per cent to $12billion even after $24 billion of newinvestment in the period
This is clearly unsustainable andit raises the question Why is no-oneleaving the game
There are perhaps four main rea-sonsbull First the industry has engaged in
continual productivity improve-ment allowing it to keep withinrange of ruling prices
bull Second each refiner hopes thatsomeone else will blink first sothat the waiting will pay off
bull Third the costs of leaving thetable the exit costs are very highbecause of the nature of the prod-uct and the long occupancy ofmost sites
bull Fourth even while profitability islow the industry has generallybeen marginally cash positive
These add up to a big lsquofirst mover dis-advantagersquo
FUTURE TRENDSClearly petroleum will remain ourmost important energy source Petro-leum products constitute 52 per centof Australiarsquos final consumption ofenergy Liquid petroleum fuels pro-vide more than 95 per cent of Aus-traliarsquos transport needs There are nomajor foreseeable influences that willaffect this pattern dramatically There
19MARCH 2003
E V I E WR
have been major advances in fueleconomy and these will no doubtcontinue But more than counterbal-ancing this is the inexorable growthin demand for personal mobility andfor goods from distant parts Althoughgrowth in energy consumption mayslow down in Australia we will notbe reducing our consumption to anysignificant degree
Our export role will also be lim-ited Australian export volumes havetended to be steady over recent yearsand future new export potential forpetroleum products seems likely to beminimal China and India have re-cently become major exporters par-ticularly of gasoline Refinery capac-ity is planned to continue to growstrongly in the region even thoughthere is already significant excessThe decline in capacity utilization inmajor exporters such as Singaporewill make exporting difficult Further-more it is expected that productspecifications in Asia the US andEurope will converge in the comingyears thereby eliminating niche ex-port opportunities
The choice we face is what to doabout our essentially import-compet-ing industry
INCENTIVES NOT STRONGWhile there are strong pressures forthe industry to restructure there islittle incentive to invest for this pur-pose Investments in the Australianrefining industry have to competewith many alternatives across theglobe
Lack of sufficient return is thesingle biggest deterrent to investmentin the industry at present But thereare othersbull There is no prospect of strong growth
in demand to offset the substantialrisks associated with large new in-vestments
bull The persistent refinery capacity over-hang in our region will keep sus-tained pressure on our margins
bull The corporate taxation regime is nowless favourable than hitherto after thesubstitution of effective-life foraccelerated depreciation The
competing Singapore option offersa three-year write-off
bull The regulatory cost burden is grow-ing This applies to all Australianindustry but is potent in overseascomparisons Tighter fuel stan-dards environmental restrictionsintervention in prices and indus-trial law are some of the factors
bull There is increased sovereign riskstemming from inconsistent regula-tions We have eight parliamentswhich enact inconsistent laws Acurrent example is the higher fuelstandards applied in Western Aus-tralia
bull The sovereign risk also arises fromuncertainty in the regulatory processThere are unpredictable changesof direction (the deferral of thediesel sulphur excise differential[DSED]) and uncertainty in theface of conflicting interests (willthe Government act on ethanolcontent)
All these factors enter into the riskreward calculation When the re-wards are minimal the risks take onan extra dimension
WHAT INDUSTRY STRUC-TURE DO WE NEEDThe short answer is we cannot knowin detail
In the Downstream Petroleum In-dustry Framework 2002 the Depart-ment of Industry Tourism and Re-sources set out a broad vision
bull A preference for market-based so-lutions
bull A strong efficient environmen-tally responsible industry supply-ing most of the nationrsquos needs forproducts
bull Regulation only for market failureor national interest objectives
bull Regulation to be transparent andconsistent
bull Reform and regulation to maxi-mize long-term community ben-efitThis vision has some prescriptive
elements but the Government hasmade it clear that it will not nomi-nate an optimal number of refineriesor a pattern of production
The general public would probablyopt for a structure that guaranteedlower more stable automotive fuelprices Unfortunately they cannothave both in the short term
In fairness the investors in the in-dustry are the ones entitled and bestfitted to determine its future In theextreme they will do it anyway bypersisting or walking away Generallyspeaking they will seek to maximizetheir returns and thus promote themost efficient use of resources
Australian refineries are not inef-ficient but that is not the point Ourmarket is open so the competitionwe face is the best of the overseas per-formers often with more favourabletax and subsidy regimes
Nor is this simply a question ofclosing the smallest refineries A bet-ter approach might well be to allowrefining companies to concentrate onwhat they do bestmdashperhaps throughrefinery alliances Caltex and Shellhave co-operated in this way in Thai-land
The fact is that the detail of thedecisions can only be made by theindustry relatively free of governmentdirection The series of detailed de-cisions entailed will determine theoverall structure of the industry
COMPETITION REGULATIONCAN IMPEDE RESTRUCTURINGThe relevant provision of Section 50of the Trade Practices Act (TPA) pro
While there are
strong pressures for
the industry to
restructure there is
little incentive to
invest for this
purpose
s
20 MARCH 2003
E V I E WR
hibits mergers or asset acquisitionsthat would have the effect or belikely to have the effect ofsubstantially lessening compe-tition in a marketIt is both potentially and in prac-
tice an extremely restrictive provi-sion The Australian Consumer andCompetition Commission (ACCC)has expressed concern at concentra-tion in the sector in applying the pro-vision
The ACCCrsquos concerns seem ex-aggerated in the light of history Butthey are complemented by a persis-tent public misapprehension thatlarge petrol price swings equal profi-teering This perception has been soexploited for political advantage andmedia excitement that it is now al-most impossible for the truth toemerge
The future intensity of competi-tion in this industrymdashif it is allowedto restructuremdashshould not be indoubt Any rationalization would inall likelihood still leave strong do-mestic competition in each majorproduct category perhaps with fewermore efficient production units
The market is also contestableThere would be numerous potentialimporters and many independent re-tailers High margins would be rap-idly eroded by competition As re-cently ruled in the Boral case mar-ket reality is more conclusive than aperception of anti-competitiveness
Proposed mergers have been per-mitted in the past but the process isslow and permission is generally onlygranted with severe conditionsNonetheless there is a strong case forallowing restructuring within theterms of the merger provisions
AUTHORIZATION COULD BETHE KEYIf Section 50 of the TPA is an im-passable barrier then the authoriza-tion provisions of the Act could bethe way to greater efficiency The testsunder these provisions require a pub-lic benefit which outweighs the com-petition detriment The ACCC listsfostering business efficiency industry
rationalization and import-competi-tiveness as important public benefits
There is a strong prima facie casethat rationalization of the industrycould satisfy these tests It wouldallow greater scale of productioneconomies in distribution and closureof the least efficient production units
But the authorization process isslow and the onus for demonstratingthe public benefits rests on the appli-cant Slow process can amount to ef-fective rejection
POLICY OPTIONS AND REC-OMMENDATIONSIf government cannot help the indus-try to adjust it should allow it to ad-just by supporting sensible changeThis would involve both improving
the operating environment throughregulatory reform and altering thebalance of competition regulation sothat the industry could restructurevoluntarily The CommonwealthGovernment has already indicated awillingness to support both but hasnot yet delivered
The ball would then be in theindustryrsquos court to bring forward newproposals if a new policy environmentcould be created This could all hap-pen within a very broad strategicframework agreed with the industrywhereby Australia continued to besure of sufficient refining capacity tomeet a severe international fuel short-age
We therefore recommend thatbull The Commonwealth Govern-
ment provide explicit indicationto the ACCC of the public ben-efits it sees from the rationaliza-tion of the refining sector In par-ticular joint ventures should becontemplated
bull The ACCC give sufficient weightto the public interest benefits ofrestructuring to allow rationaliza-tion of production facilities
bull All governments reduce distortingfuel subsidies and taxes that favourparticular sectors or fuels
bull The State Governments act im-mediately to harmonize their regu-lation of the industry and agreenot to issue any new inconsistentregulation
bull More specifically the States havea single set of fuel standards withwhich refiners can reasonablycomply withdraw from all formsof price regulation and refrainfrom thwarting or distorting therationalization process
bull Governments generally not intro-duce new regulations mandatingthe use of alternative fuels
CONCLUSIONThe choice for the industry appearsto be between accelerated rational-ization and atrophy The process ofchange is something which the indus-try must plan and effect The task isnot impossible but it will require theactive support of government at alllevels For the time being there is anexpressed willingness at the Com-monwealth level but no real solu-tions
If nothing is done the refiners willcontinue to stumble along in a regu-latory fog and will invest only whenobliged to do so by changing fuel stan-dards They will become increasinglyvulnerable to low-priced imports andeventual closure
Jim Hoggett is a Senior Fellow at theInstitute of Public Affairs
If Section 50 of the
TPA is an impassable
barrier then the
authorization
provisions of the Act
could be the way to
greater efficiency
API
Last week the Government tabled 22 volumes of theCole Royal Commission into the Building andConstruction Industry Former Court of Appeal judgeTerence Cole made 392 specific findings of unlawfulconduct and in the confidential final volumerecommended that 31 individuals be referred for possiblecriminal prosecution As was to be expected theconstruction unions claimed that the report was a witch-hunt and people who should have known better claimedthat Cole was biased
The anti-union allegations were never very plausiblegiven that most unions had refused to cooperate withthe Commission and had even boycotted theCommissionrsquos special conference on occupational healthand safety As things have turned out one of their ownhas fatally undermined the unionsrsquo case No less anauthority than the National Secretary of the ConstructionDivision of the CFMEU has unwittingly confirmed thatCole is right In what was no doubt an unguardedmoment John Sutton admitted to a Melbournenewspaper that ldquovirtually everything we do breaches partof this Actrdquo Suttonrsquos admission means that Colersquosdescription of a largely lawless industry can be disputedat the margins but not credibly denied The problemsof the industry have been established beyond credibledoubt and the question now is what needs to be doneabout it
Nothing says the CFMEU because itrsquos alright tobreak the law in the best interests of the working classLeading union officials take the view that in a toughindustry only wimps take the law seriously The newsthat ldquoonlyrdquo 31 individuals had been recommended toface criminal charges was greeted with somethingapproaching jubilation as if the industryrsquos code of silencebased on fear had largely kept the Royal Commission atbay
As the Australian Financial Review commented in aneditorial the unionrsquos dismissive reaction to Colersquos report
ldquospeaks as loudly as his damning findings of entrenchedlawlessnessrdquo Imagine the reaction if a royalcommissioner had identified 31 people in the financeindustry or the steel industry for possible criminalcharges This would rightly be regarded as the sign ofan industry in crisis demanding urgent governmentintervention
Change wonrsquot be easy in an industry conditioned tothink that might is right Change which shifts powerfrom one unscrupulous group to another will not bereform As Grocon has discovered the first company toldquobuck the systemrdquo is liable to heavy-duty industrialpayback No one wants to be the first to change butchange is necessary in the national interest
In 2002 the Victorian construction industry aloneaccounted for 17 per cent of all days lost through strikesThe West Australian construction industry accountedfor another 8 per cent of the national strike tallyConstruction is a $40 billion a year industry comprisingnearly six per cent of GDP and employing nearly500000 Australians Due to over-manning demarcationdisputes and chronic stoppages labour productivity incommercial construction averages 13 per cent less thanin home building Plastering the same wall in the sameway costs 40 per cent more in a high rise building thanin a standard house Just raising labour productivity incommercial construction to the home building standard(let alone the 50 per cent increase needed to match NorthAmerican levels) would mean according to Econtech aone per cent drop in the cost of living a one per centincrease in GDP and $23 billion in benefits toconsumers workers and taxpayers every year
Still change is about decent Australian values notjust a more efficient industry Workers donrsquot like latenight house calls compulsory attendance at demos anddays spent sitting in the shed to make an industrial pointany more than bosses Threats of violence contempt forcourt and commission orders mob rampages when one
Restoring the Rule of Law in theConstruction Industry
Tony Abbott MHR
s
As this issue of the IPA Review was at the press we were alerted to the delivery of the following speechby the Minister for Employment and Workplace Relations The paper marks a seminal change in the
governmentrsquos approach to systemic corruption in the construction industry and isanother major step in the reform of workplace relations in Australia
SI-1MARCH 2003
IPA REVIEW SPECIAL INSERT
side doesnrsquot get its way habitual failure to honouragreements and routine harassment of people exercisingtheir legal rights are not acceptable in modern Australiaand cannot be excused even in a good cause
Breaching ldquobourgeois lawrdquo may not matter tomilitant activists but few others take such a self-indulgent view Itrsquos said that ldquooppositions can afford tobe irresponsiblerdquo but no government or alternativegovernment can accept the principle of optionalobedience to the law of the land No less than the HowardGovernment the federal Labor Opposition and the stateLabor Governments understand the dangers of playingpolitics with the rule of lawmdasheven theauthority of laws they might preferto change such as the federal WorkplaceRelations Act
The rule of law is not asmorgasbord from which a fewfavoured items can be chosen and therest ignored Freedom under the lawrequires respect for the law generallynot just the laws individualspersonally support Obedience to thelaw is not a question of choice It is arequirement of civilisation because thelaw is our guarantee of equaltreatment after a fair hearing ldquoBe youever so high the law is above yourdquoThis reproach hurled at the Stuartkings has rightly echoed through thecenturies as a warning against theconceits of office and the arrogance ofpower regardless of the cause in whichitrsquos exercised
After last weekrsquos meeting of theWorkplace Relations MinisterialCouncil of the Council of Australian Governments stateand territory ministers were keen to declare in acommuniqueacute ldquothere was unanimous agreement thatunlawful behaviour in the building and constructionindustry is not acceptablerdquo This was an importantaffirmation of the rule of law in circumstances wheresome Labor ministers might have been tempted to putpolitics ahead of principle
Unfortunately the state and territory ministerssupported more powers for the Australian IndustrialRelations Commission to settle construction industrydisputes In fact the Commission already has power tosettle disputes Whatrsquos missing is effective power toenforce agreements The issue is not settling disputesThe issue is enforcing the law
The construction industry typically conducts itselflike this A certified agreement is in place including anagreed dispute resolution procedure Unions identify agrievance often a spurious safety issue Agreed disputeprocedures are not followed and a strike ensues eventhough strikes outside ldquobargaining periodsrdquo areldquounprotectedrdquo and theoretically subject to damagesorders At that point employers often ask theCommission to end industrial action but instead ofordering an immediate return to work because anagreement has been breached the Commission willtypically seek to conciliate on the basis of the ldquomeritsrdquo
of the issue After a couple of dayswith costs escalating and liquidateddamages looming the employerinvariably agrees to rectify the matteralleged and to pay increasedallowances (including pay for days onstrike) At this point the Commissionorders a return to work on the basisof the agreed settlementmdashwhich lastsonly until the union decides on itsnext move
The union has ignored the law andbroken its original agreement buttypically suffers no adverseconsequences whatsoever Theemployer has been manoeuvred intoconceding most of a demand thatshould never have been made Afaccedilade of legality conceals a travestyof unionism and a travesty of justiceNearly all construction industrystrikes are unprotected and potentiallyunlawful under section 170MN of theWorkplace Relations Act Even so
employers nearly always opt to pass the costs ontoconsumers while existing arrangements for gatheringinformation launching prosecutions and imposing finesdonrsquot work well anywhere but hardly work at all in anindustry where giving evidence against the unions isthought to mean commercial suicide
The construction industry is a classic case not ofmarket failure but of regulatory failure The fact thatthe construction industry does not face potential importcompetition limits its exposure to market discipline Stillthe main reason why unions can get what they want frombusiness and business can get what it needs from haplessconsumers is the absence of independent policing andenforcement of the industrial equivalent of fair tradinglaws To an extraordinary degree in this industry the
SI-2 MARCH 2003
IPA REVIEW SPECIAL INSERT
The rule of law is nota smorgasbord from
which a few favoureditems can be chosenand the rest ignoredFreedom under thelaw requires respectfor the law generally
not just thelaws individuals
personally support
request documents but they canrsquot compel witnesses toanswer or demand that material be produced Althoughit is a criminal offence under the Workplace Relations Actto hinder workplace inspectors the Cole report notedthat no prosecutions have yet been launched despiteevidence that Office of the Employment Advocateinspectors have been abused had objects thrown at themand their property damaged It has been commonpractice for the arrival of OEA inspectors to lead to workstoppages and even site invasions in a bid to thwart anddemoralise an independent investigator not susceptibleto the unionrsquos usual weapon of commercial retaliation
One of the problems with theworkplace relations system is theassumption that parties will enforcethe law against each other This worksup to a point in industries whereworkplace parties are more-or-lessevenly matched and the issues are theworkplace equivalent of an argumentbetween neighbours over the heightof a fence It completely breaks downwhen one side has an effectivemonopoly over the supply of labourand disputes resemble a more-or-lessnormal family telling the house fullof footballers next door that the partyrsquosover Expecting contractors to enforcethe law against the CFMEU is likeexpecting people in the street to makecitizenrsquos arrests hence Colersquos principalrecommendations are an AustralianBuilding and ConstructionCommission to investigate prosecuteand enforce the provisions of a beefed-up industry specific workplace
relations actYesterday Cabinet decided to support Colersquos key
recommendations First the Government will seek aseparate act governing workplace relations in theconstruction industry providing for secret ballots beforestrikes compulsory cooling off periods after extendedstrikes and damages awards in the event of unprotectedindustrial action Second the Government will establisha new law enforcement agency for the industry withpowers to compel witnesses to testify bring prosecutionsand enforce judgments and with sufficient on-the-ground presence to police CBD building sites Thirdthe Government will establish a Safety Commissionerto monitor federally-funded construction sites to try toensure that these become industry models Fourth the
s
commissions lack sufficient power the courts lacksufficient speed the employment advocate lacks sufficientauthority and the police lack sufficient interest
Not before time the Cole Commission has acted as agiant searchlight probing the dark underside of thispotentially great Australian industry It confirmed whatpolicy makers had long suspected and what influentialinsiders knew but had always tried to deny or explainaway that the industry operates under the rule of thejungle and that there will be no improvement until thepeople who work in it understand that the law has to betaken seriously Legislative institutional and structuralchange will start to mean somethingwhen law breakers in this industry arecharged convicted and punished likelaw breakers everywhere else A fewsalutary bars of that old song need towaft over construction sites ldquoI foughtthe law and the law wonrdquo
Late last year in response to theRoyal Commissionrsquos first report thefederal Government set up theBuilding and Construction IndustryInterim Task Force The Governmentrsquosbrief to the Task Force is to ensure zerotolerance of industrial law-breakingThe Task Force is not primarily toenforce the tax laws or the safety rulesbecause other bodies exist for this(although the Task Force will certainlyshare information with them) TheTask Force is to investigate and enforceWorkplace Relations Act prohibitions oncoercion unprotected strikes strikepay and breach of industrialagreements So far the Task Force hasvisited nearly 300 sites launched more than 50investigations brought three prosecutions and referrednine other matters to state police the Australian FederalPolice or the Australian Competition and ConsumerCommission for further action
These are the first public prosecutions arising out ofindustrial action in the construction industry at leastsince the 1980s and are the result of a public policycommitment to law enforcement not seen since thehumiliating Clarrie OrsquoShea case in 1969 and the end ofldquopenal sanctionsrdquo Yesterday Cabinet decided to extendthe interim Task Forcersquos operations until more permanentarrangements to secure the rule of law can be established
Task Force agents have the powers of inspectors underthe Workplace Relations Act They can enter premises and
SI-3MARCH 2003
IPA REVIEW SPECIAL INSERT
The main reason whyunions can get what
they want frombusiness and businesscan get what it needs
from haplessconsumers is theabsence of inde-
pendent policing andenforcement of the
industrial equivalent offair trading laws
API
Government will insist on the application of theNational Construction Code and implementationguidelines to all significant new projects which are fullyor partly federally funded
Directly or indirectly the federal Government fundsabout $5 billion worth of construction projects everyyear and is determined to use its role as client to drivechange in the industry In essence the NationalConstruction Code stipulates that construction projectsmust take place in conformity with the WorkplaceRelations Act Under the Code and implementationguidelines the federal Governmentwill not engage tenderers whoseworkplace agreements and practicesensure a closed shop on site The TaskForce (and any replacement body) willhave full access to federally fundedsites to ensure that the law is beingobserved and workplace agreementscomplied with
For the federal Government theissue is upholding the law and tryingto tackle the ldquounion rulesrdquo culturewhich is at the heart of lawlessness inthe industry For the states the issueis whether they are prepared to refusefederal money in order to protect theclosed shop However much theymight prefer different federal laws thestates ought to accept thatconstruction projects have to complywith the law as it stands includingthe law mandating compliance withcertified agreements
State Labor governments whichhave made a point of their middle-ground credentials risk losing some$4 billion a year in federal building and constructiongrants if they side with the union movementrsquos mostmilitant minority There are likely to be limits to Laborrsquosdefence of a union whose stock-in-trade (at least in somestates) is the site invasion and the demand for paymentand which quietly reinstates organisers sacked for assaultor perjury Opposition senators will find it hard to brandas ldquoideologicalrdquo the recommendations of a royalcommission which spent 171 days in public hearingsand which pursued 11 shop stewards and 97 unionofficials to obtain their side of the argument
As Justice Cole pointed out in his report previousattempts to reform the industry have proven ineffectivedespite two earlier royal commissions and numerous
SI-4 MARCH 2003
IPA REVIEW SPECIAL INSERT
enquiries Although this Royal Commissionrsquosinvestigations seem to have temporarily checkedlawlessness in the industry a campaign is now emergingto extend the anarchic culture of CBD construction intoregional centres and the domestic housing industryThings will certainly be different this time if parliamentapproves a permanent well resourced watchdog withnew powers new personnel and new attitudes Unlikeprevious arrangements a new statutory watchdog withthe powers of a law enforcement agency should beeffective and permanent
Hundreds of people took big riskswith their commercial future and eventheir personal security to testify to theRoyal Commission It should neveragain be so hard for people in thisindustry to exercise their ordinaryrights and responsibilities asAustralian citizens They expected theGovernment to take the Commissionrsquosreport seriously and the Governmentfor its part is determined not to letthem down The Governmentunderstands that joining fights yoursquorenot prepared to win only makes badsituations worse Establishing the ruleof law in the construction industry isa challenge Australia canrsquot afford tofailSome of the worldrsquos best workersshould no longer have to put up withsome of the worldrsquos worst industrialpractices They have a right to anhonest industry where they can earna fair dayrsquos pay for a fair dayrsquos workand expect to come home uninjuredThe enduring image of this industry
should not be noisy marchers replaying the ideologicalstruggles of the 1970s and raising clenched fists againstauthorities they donrsquot like At its best the Australianindustry is capable of work which is stunningly beautifulyet intensely practical and it now needs to performconsistently on time on budget and in accordance withlaw
Hundreds of peopletook big risks withtheir commercial
future and even theirpersonal security totestify to the Royal
Commission It shouldnever again be so
hard for people in thisindustry to exercisetheir ordinary rights
and responsibilities asAustralian citizens
NOTE
The foregoing speech was first delivered as an Addressto the National Press Club on 2 April 2003
21MARCH 2003
E V I E WR
IN psychology behaviouris defined as irrational ifan action continues to berepeated despite its re-
peated failure to achieve the desiredoutcome On this definition our aidpolicy towards Papua New Guineahas been irrational
Despite over twelve billion dol-lars in Australian aid to PNG sincethat countryrsquos independence in 1975key development indicators such asliteracy rates infant mortality lifeexpectancy and real income percapita are either stagnating or dete-riorating Worse wersquove known forover a decade1
Today acknowledgement of thefailure of our aid policy in PNG hasgone well beyond the writings of in-dividual international policy analystssuch as myself to institution-spon-sored reports such as Beyond Baliwhich was released by the AustralianStrategic Policy Institute (the Aus-tralian Governmentrsquos own strategicpolicy adviser) and Papua NewGuinea on the Brink which was writ-ten by Susan Windybank and MikeManning for the Centre for Indepen-dent Studies Both reports confirmthe gross failure of Australian aidpolicy in PNG
Yet still our aid policy irrational-ity towards Papua New Guinea con-tinues While the ASPI and CIS re-ports acknowledge the gross failureof our aid policy in PNG they alsoargue that we need to continue ouraid to that country Indeed the ASPIreport argues that we should increaseour aid to Papua New Guinea Thepolicy saviour The ASPI report ar-gues that we should exert greater con-trol over our aid Not just over theform of our aid but direct interven-tion in policy and implementation inPNGmdashin essence for a return to pre-
Aid Detox for PNGPETER URBAN
independence days in PNG whereas UN-sanctioned administrator weran government in that country
Despite the mind-frame of secu-rity-focused strategists such as thoseat ASPI and the CIS (which en-dorses the aid approach advocated byASPI) the reality is that we canrsquotPNG is now independent and to ig-nore this reality would simply com-pound the problems of our past aidpolicy irrationality with irrationalityabout our political relationship withour nearest neighbour
A more interventionist aid policytowards PNG on our part as advo-cated in Beyond Bali and by HughWhite (the executive director ofASPSI) in the media might havepopulist appeal but it would haveserious adverse implications for ourrelationship with other Pacific islandcountries and even IndonesiaWorse it would give succour to theviews of our east Asian critics (suchas Malaysian PM Dr Mahathir) whoclaim that Australia continues toharbour colonial aspirations
We have to accept that to be suc-cessful aid policy must not just helpreduce mass poverty it also has to doso as a guest in the aid recipientcountry To do otherwise is not aidbut imperialismmdashwhether inten-tional or not
A more interventionist approachto aid policy in PNG would also givethe current corrupt political elite inPort Moresby a rallying point againstus and an excuse to delay changingtheir own policies Neither Austra-lia nor PNG can afford any furtherdelays to policy reform For us to givePNG politicians yet another excuseto delay reform would be not onlyirrational it would be inexcusableWhile our aid continues so will thecorrupt elite that is at the heart ofPNGrsquos problems Until we send themessage to the PNG political elitethat we are prepared to stop ouraidmdashto put them on aid detoxmdashwewill continue to waste our aid in thecorruption that is PNG politics Itmay be hard to accept but the sadreality we face in PNG is that no aidmay prove to be good aid at least inthe short to medium-term2
NOTES
1 Peter Urban lsquoOne Clear ObjectiveNo Clear Approachrsquo IPA Review1997 Vol 50 No 1
2 With Iraq also likely to require verysignificant Australian aid fundingover the next few years the Gov-ernment will need to review our aidprogram as part of the 2003-04 fed-eral Budget A decision to suspendaid to PNG could be taken as partof that review
Peter Urban is former chief economist with theDepartment of Foreign Affairs and Trade
We have to accept
that to be successful
aid policy must not
just help reduce
mass poverty it also
has to do so as a
guest in the aid
recipient country
API
22 MARCH 2003
E V I E WR
IN his speech to the Na-tional Press Club on theprospect of war with Iraqand the case for disarma-
ment Prime Minister Howard statedthat Australia will play a significant hu-manitarian role in Iraq
If so the Howard Government needsto evaluate carefully the foreign-aid non-government organizations (FANGOs)which it funds to carry-out this humani-tarian programme Many FANGOshave made it clear that they do not sharethe Australian Governmentrsquos objectivesand values in Iraq Moreover some donot agree with the Governmentrsquos over-all aid policies in general
THE COALITION OF THEUNWILLINGIn the lead-up to latest Gulf War some30 Australian aid agencies put theirnames to an Open Letter to the PrimeMinister organized by the AustralianCouncil of Foreign and Overseas Aid(ACFOA) The aim of the letter was tolsquospeak out against war in Iraqrsquo and it ex-pressed grave concerns about the hu-manitarian consequences of the war andthe effects of the existing sanctions1 TheFANGOs that signed the letter wereOxfam Community Aid Abroad WorldVision Australia TEAR AustraliaUnion Aid Australia - APHEDACaritas Australia National Council ofChurches Australian Council for For-eign and Overseas Aid Save the Chil-dren Australia CARE Australia OzGreen United Nations Association ofAustralia Family Planning AustraliaMercy Works Marist Mission CentreAustralia Every Home for Christ Bap-tist World Aid for Christ CCF Austra-lia Quaker Service Australia Austra-lian Lutheran World Service AustralianRelief and Mercy Services AnglicanBoard of Mission AUSTCARE Com-munity Development and Health
Irreconcilable DifferencesDON DrsquoCRUZ
Hussein have been virtually ignored isa searing indictment of the warped ide-ology feeble analysis and moral blind-ness of the sector For them now to re-discover the plight of the Iraqi peopleand to invoke their name in the mediais beyond contempt
THE OXFAM COMMUNITYAID ABROAD POSITIONOf the 30 FANGO signatories to theopen letter Oxfam Community AidAbroad (OCAA) has been perhaps themost outspoken It opposed military ac-tionmdasheven with UN Security Councilapproval4 In spite of all the evidence tothe contrary OCAA was comfortablewith Saddam Husseinrsquos assurances thathe did not have weapons of mass destruc-tion5 Adopting the common policyagreed to by the other Oxfam affiliatesOCAA stated that it will not take anymoney from the lsquobelligerentsrsquomdasha quaintterm used to the describe democraticnations planning to disarm a dictatorguilty of countless human rights abuses
OCAArsquos outrage against the so-called lsquobelligerentsrsquo appears to be geo-graphically confined to Iraq OCAAappears happy to take governmentmoney from the belligerents elsewherearound the world
According to OCAArsquos ExecutiveDirector Andrew Hewitt refusing totake money from the belligerents wasdone to lsquoprotect its impartialityrsquo6 Thisis a very curious position from Australiarsquosarguably most political FANGOOCAA has a long track-record of beinganything but impartial or reluctant totake sides in miliary action It wasnrsquotimpartial in East Timor where it sidedwith Fretlin in its quest for indepen-dence According to its own testimonyto a Senate committee OCAA wasgiven the choice by the IndonesianGovernment between lsquoplaying politicsrsquoor delivering aid projects in Indonesia7
Group Amnesty International Austra-lia AngliCORD Australian Aid forCambodia Fund Burnet InstituteRedR Friends of the Earth PLAN Aus-tralia and Australian Volunteers Inter-national2
This open letter highlighted a num-ber of problems with the FANGOs sec-tor First it highlighted the weak logicthat passes for advocacy in the sectorThe letter argued against military actionwas critical of sanctions and suggestedthat nations should settle issues only bydiplomatic means It is a viewpointwhich totally ignores the fact that theGovernment had to deal with SaddamHussein
The shallowness of their logic wasbest exposed by the Prime Minister inhis response to the open letter in whichhe stated that the humanitarian situa-tion in Iraq is best addressed by SaddamHusseinrsquos removal and perhaps morepointedly that Saddamrsquos manipulationof foreign aid had allowed him to main-tain and pursue his weapons of mass de-struction capability and human rightsabuses3
Second it also highlighted the factthat the so-called lsquohuman rights-basedapproachrsquo to development (embraced byseveral of the signatories) is not so muchabout realizing human rights (as its pro-ponents argue) but is more about pro-viding them with an excuse to lsquoplay poli-ticsrsquo According to the theory the hu-man rights-based approach to develop-ment allows FANGOs to tackle the rootcauses of poverty and injustice
Yet the root cause of the Iraqipeoplersquos suffering can be summed up intwo simple wordsmdashSaddam HusseinThe fact that the FANGOs who sub-scribe to this particular approach havebeen obsessed with imaginary humanrights abuses committed by Shell NikeRio Tinto BHP-Billiton and AuroraGold while the activities of Saddam
23MARCH 2003
E V I E WR
It chose the former thus making it per-sona non grata in Indonesia for almost adecade8 It wasnrsquot impartial inMozambique when it sided with Frelimoin the countryrsquos civil war9 It wasnrsquot im-partial in Ethiopia when it developedlinks to the Eritrean Peoplersquos LiberationFront during its war against the thengovernment10 It was not impartial oranti-war when it sided with the TigrayPeoplersquos Liberation Front in the neigh-bouring province to Eritrea when thatgroup was waging a guerrilla war againstthe government11 And recently therehave been claims that in the Middle Eastit was little more than an lsquoeager propa-gandistrsquo for the Palestinians12
In East Timor Ethiopia and Mozam-bique OCAA was linked with organi-zations which supported direct militaryaction that led to the deaths of thou-sands of civilians In none of these loca-tions were the enemies of their friendany worse than Saddam Hussein In-deed in many cases OCAArsquos friendswere arguably no better than their en-emies in terms of human rights
OCAArsquos decision not to accept Aus-tralian Government funding is the cor-rect one in the sense that it clearly doesnot share the Governmentrsquos values onthe question of Iraq and thereforeshouldnrsquot receive any governmentmoney
Hewitt went on to state in a pressrelease that lsquoWe will not take funds thatmight allow a government to use hu-manitarian efforts as an instrument offoreign policyhelliprsquo13
This is finemdashexcept the AustralianGovernmentrsquos foreign aid is an instru-ment of foreign policy And it always hasbeen This is spelt out quite clearly inthe Australian Governmentrsquos latest for-eign and trade policy White Paper Ad-vancing the National Interest14
FANGOs that cannot accept thisrather basic proposition should not begetting taxpayersrsquo money They areclearly unsuitable for the task at hand
The consequences of Australian tax-payersrsquo money falling into the wronghands were brought home to Prime Min-ister Howard when he met IndonesianPresident Megawati Sukarnoputri to dis-cuss the war against terrorism and
Australiarsquos involvement against Iraq Atthe top of the Indonesian agenda wasthe issue of Australian funding toFANGOs being used to support sepa-ratist movements in Indonesia15
Post-war Iraq will be a better placewithout Saddam Hussein and his thugsThis does not mean that it will be a safeplace or necessarily a stable place Afterall one of the reasons for Western tol-eration of Saddam Hussein for manyyears was his ability to hold the various
ethnic minorities in Iraq together albeitrather brutally thereby maintaining abalance of power in the Middle East Hisdeparture would see strains on Iraq fromthe various ethnic minorities that makeup Iraq There is a strong chance thatIraq will fragment
The last thing the Australian Gov-ernment or any of the so-called belli-gerents needs in a post-war Iraq is west-ern NGOs running around and becom-ing self-styled advocates for national self-determination for Iraqrsquos ethnic minori-ties and injecting themselves into Iraqrsquosinternal politics This is a real risk Thebehaviour of Australian foreign aidNGOs in Indonesia should make Aus-tralian decision-makers extremely waryof funding any NGOs with Australiantaxpayersrsquo money so that they can oper-ate in Iraq
As things stand now FANGOs facevery few restrictions on their actionsfrom government If they undertake ac-tivity that is inconsistent with being anagent of government they may losefunding for specific projects or in moredramatic circumstances lose funding ina country Nonetheless they are gener-
ally able to access Australian Govern-ment funding for other projects andcountries In other words the penaltiesfor becoming caught up in political ac-tivities are very light for NGOs and posethem no serious problems
Foreign aid NGOs that lsquoplay politicsrsquoare unsuitable contractors for the deliv-ery of aid That these overtly politicalorganizations have been allowed to gaingovernment accreditation and receivegovernment funding points to some se-rious problems at AusAID Australiarsquosofficial aid agency The time has comefor this to change
NOTES1 httpwwwacfoaasnaumedia_releases
2003_releases26_3_03PDF2 httpwwwacfoaasnauemergencies
openletterPDF3 httpwwwacfoaasnauemergencies
iraq_responsehtm4 Oxfam Horizons Vol 3 No 1 (Febru-
ary 2003) page 25 Oxfam Community Aid Abroad lsquoIraq
Overviewrsquo February 20036 Hewitt quoted in Liz Gooch lsquoOxfam
wersquoll say no cashrsquo The Age 16 March2003
7 Community Aid Abroad Submission tothe Senate Foreign Affairs Defence andTrade References Committee Inquiryinto East Timor Downloaded at httpwwwcaaorg aucampaignssubmissionstimorhtml
8 Ibid9 Susan Blackburn Practical Visionaries A
Study of Community Aid Abroad (Mel-bourne Melbourne University Press1993) page 313
10 Ibid pages 325-333 passim11 Ibid12 Gerald Steinberg lsquoPropaganda vs Hu-
manitarianismrsquo Australian Financial Re-view 7 June 2002 Downloaded at httpfacultybiuacil~steingconflictopedpropvshumanitarianismhtm
13 ht tp wwwcaa o rg au p r 2003 iraqfundshtml
14 httpwwwdfatgovauani15 Dennis Shanahan lsquoJakarta fears aid funds
for rebellionrsquo The Australian 17 Febru-ary 2003 page 2
Don DrsquoCruz is Research Fellow at the IPAand Director of IPArsquos NGOWatch
OCAA has a longtrack-record of
being anything butimpartial or
reluctant to takesides in miliary
action
API
24 MARCH 2003
E V I E WR
GEORGE Bush Tony Blairand John Howard haveprovided many reasons forsupporting military action
against Iraq One of those reasons hasbecome known as the lsquohumanitarianrsquojustification Put simply the lsquohu-manitarianrsquo justification for the US-led invasion of Iraq is that such ac-tion is necessary to free the Iraqipeople from their totalitariandictator
Such an argument is attractive tothose who believe that there aresome fundamental human rights thatall individuals possess regardless ofwhere and how they live Whatserves as the source of those rightshas been the subject of debate forcenturies One of the pre-eminentstatements on the subject was madeby John Locke who in The SecondTreatise of Government wrote thatmankind was lsquoequal and indepen-dentrsquo and that lsquono-one ought to harmanother in his life health liberty orpossessionsrsquo
Saddam Husseinrsquos mass murdertorture and terror are reasonablyclear breaches of human rightsTherefore some would ask why thereshould be opposition to the UnitedStates and its allies taking whatevermeasures might be necessary totopple the Iraqi regime Surely thesame standard of behaviour that ap-plies to individuals applies also tonation states If an individual walk-ing in the street witnessed a rapeoccurring wouldnrsquot that individualbe entitled to do everything in hispower to stop the crime and assistthe victim
The point is of course that in-ternational law and convention do
After IraqIs Sovereignty Dead
JOHN ROSKAM
not allow nation states to act in thesame way as individuals Countriescannot simply lsquotake the law into theirown handsrsquo To restrain lsquovigilantestatesrsquo (who might be acting fromeither lsquogoodrsquo or lsquobadrsquo motives) a num-ber of legal and political theorieshave been developed One of theseis the doctrine of lsquosovereigntyrsquo whichprovides that states should not inter-vene in the domestic affairs of otherstates
In relation to Iraq the lsquosover-eigntyrsquo question is perhaps the stron-gest argument against the US-ledCoalition Most of the other criti-cisms of lsquohumanitarianrsquo interventionin Iraq are either grounded in simpleanti-Americanism or are fallaciousFor example there is the claim thatbecause some of the countries in theCoalition have previously ignoredHusseinrsquos cruelties therefore it is il-legitimate to take action now Sucha view has been expressed by aMelbourne international relationsacademic
While there is no disputing thebrutal nature of Saddam Hus-seinrsquos regime the case for inter-vention made by those in Can-berra London and Washingtonis weakened by the fact that atthe peak of Saddamrsquos crimes inthe late 1980s they were eitherdirectly supporting him withweapons technology and intelli-gence or were entirely indifferentto his behaviour Even if theyhave belatedly recognised theerror of their ways how seriouslycan we take their concerns aboutweapons of mass destruction nowgiven they were his suppliersthen1
On the basis of this argument itcould be said that Britainrsquos (andAustraliarsquos) case for intervening toassist Poland upon the German in-vasion in 1939 was lsquoweakenedrsquo be-cause Britain had previously acqui-esced to Germanyrsquos rearmament theremilitarization of the Rhinelandand the annexation of both Austriaand parts of Czechoslovakia Fewpeople who chanted lsquoFreedom forEast Timorrsquo said that the HowardGovernment should not act becausea quarter of a century before theWhitlam Government had been lsquoin-differentrsquo to Indonesiarsquos occupationof the island
There is also the claim that al-though Hussein is bad he is not theworst dictator in the world and thatit is hypocritical for the Americansto attack only Iraq This is an as-tounding proposition It attempts toapply to the United States a standardof behaviour that is impossible to sat-isfy Should the police not attemptto solve any crimes because theycanrsquot solve all crimes If a crime iscommitted by two people and thepolice arrest one perpetrator unlessthe other is also caught must the firstperpetrator be released When indi-viduals donate money for famine re-lief in Africa very few believe thattheir donation is pointless becauseit might prevent the starvation ofonly one person rather than thou-sands Christian ethics sets down norequirement that we should help no-one unless we can help everyone
The issue about state sovereigntyhowever is one that deserves to betaken seriously Regardless of onersquosopinions on the extent and limits ofstate sovereignty it is true that our
25MARCH 2003
E V I E WR
international relations system is builtupon the principle and to modify oroverturn it is a matter of some con-sequence
Even those who are generally sup-portive of the United States andtheir allies see the problem As it wasput by a leading commentator whenanalysing the Australian PrimeMinisterrsquos lsquohumanitarianrsquo justifica-tion for war
Finally Howardrsquos argumentagainst Hussein on human rightsis correct So is his moral case forwanting to liberate the Iraqipeople from their torment Theproblem however is that youcanrsquot trip around the worldwanting to overthrow regimesbecause of human rights2
Some would askmdashlsquowhy notrsquo Be-cause to do so would overthrow theUnited Nations Charter comes therejoinder And in turn the responseto that might bemdashlsquogoodrsquo
If itrsquos a choice between the main-tenance of the UN Charter and free-dom from tyranny freedom wins ev-ery time (although an internationallawyer sitting in Sydney might havea different view on this question fromthat of a political prisoner manacledin a Baghdad jail cell)
When the interests of lsquointerna-tional lawrsquo are more important thanthe life and liberty of individuals itcould be concluded that lsquothe Em-peror has no clothesrsquo Would inter-national law have sanctioned inter-vention to stop the Holocaust hadHitler not waged war and proceededwith his methods entirely within theconfines of the German territorialstate
Many who argue that lsquohumanitar-ianrsquo intervention in Iraq is not justi-fied because it infringes on thatcountryrsquos lsquosovereigntyrsquo would happilyhave other countries cede their po-litical sovereignty to supra-nationalbodies Certain features of the Inter-national Criminal Court overridethe principles of sovereignty but thatdid not stop a phalanx of interna-tional law experts urging sovereigngovernments to join it so as to en-
able the prosecution of war criminalsBut when it comes to actually stop-ping war crimes not simply prosecut-ing them that phalanx is largely si-lent
Without the doctrine of state sov-ereignty and without an arbiter fordetermining when interference withthe principle is justified (the roleclaimed by the United Nations andits Security Council) it is said thatstates would be free to impose theirown will and intervene in other
countries whose standards did notmeet their own (In The Second Trea-tise of Government Locke argued thata characteristic of a lsquostate of warrsquo be-tween individuals was the absence ofa superior authority to adjudicatedisputes and prevent individualsfrom administering justice them-selves)
Iraq might be claimed as a rea-sonably clear-cut case for interven-tion but other situations are notlikely to be as simple In Culture andEquality first published in 2001Brian Barry explored a lsquoliberalrsquo per-spective on this question
The liberal position is clearNobody anywhere in the worldshould be denied liberal pro-tections against injustice andoppression However in exactlythe same way as liberals arepragmatic about what liberalismmeans in terms of boundaries sohere the move from principle tointervention has to be mediated bypractical considerationshellip
[L]iberals are not so simple-mindedas to imagine that the answer toall violations of liberal rights is tosend in the Marines or even aUnited Nations force As in anyjust war theory there must be somedoctrine of lsquoproportionalityrsquohellip[S]carcely anybody would be infavour of the western powersinvading Saudi Arabia so at to sortout the way in which it lsquounjustlydenies political rights to women ornon-Muslimsrsquomdashaccording to theirliberal idea of justicersquo3
The question remainsmdashafterIraq what remains of lsquostate sover-eigntyrsquo Should the doctrine applyonly to lsquoliberal democraticrsquo statesSuch a solution might be attractiveto some lsquoliberalsrsquo but it doesnrsquot avoidthe problem of what exactly a lsquolib-eral democraticrsquo state is
One irony arising from the argu-ments about the war in Iraq is thatmany of those who have urged astrict application of lsquostate sover-eigntyrsquo principles in the past havegenerally supported the US-led in-tervention while those who havebeen willing to abridge or even aban-don the doctrine have had to rely onit to counter the lsquohumanitarianrsquo jus-tification for war
There are not many certaintiesabout the nature of the world afterthe war in Iraq but it can be saidwith some assurance that one defi-nite outcome is going to be a morevigorous debate about state sover-eignty
NOTES1 Scott Burchill lsquoThe humanitar-
ian arguments for this war are spu-riousrsquo The Age 21 March 2003
2 Paul Kelly lsquoThe hapless per-suaderrsquo The Australian 15ndash16March 2003
3 Brian Barry Culture and Equal-ity An egalitarian critique ofmulticulturalism Harvard Uni-versity Press page 138
John Roskam is a Research Fellow with the IPA
The lsquosovereigntyrsquo
question is perhaps
the strongest
argument against
the US-led
Coalition
API
26 MARCH 2003
E V I E WR
Which Way for theDemocrats
The 2002 mid-term elections were adramatic victory for President GeorgeW Bush and the Republicans Insteadof the historical norm of the partycontrolling the White House losingBushrsquos party gained seats in the Sen-ate House Governorsrsquo races andState legislatures The result was abitter disappointment for the Demo-crats and has led to a fierce debatebetween the Left and Centrists aboutthe future policy direction of the partytowards the 2004 elections
The Leftrsquos analysis is that the ma-jority of Americans are natural Demo-crats Electoral defeat was due to thefailure to energize that base of Demo-crats The party failed to distinguishitself sufficiently from Bush and thusgive their voters a reason to turn outWhile the majority of Democrats op-posed Bush on tax cuts and the warwith Iraq a significant minority sup-ported him and campaigned on thatsupport The result the Left claimwas that the Democrats lacked a con-sistent message in contrast to Bush
Support for this argument can befound in the higher turnout amongstRepublicans than Democrats in 2002while in 2000 the combined vote forGore and Nader was 51 per cent Aninfluential book by John Judis andRuy Texeira identified lsquoThe Emerg-ing Democrat Majorityrsquo Theyclaimed that growing demographicgroups trended Democrat includingthe young socially liberal profession-als minorities and women
What policies would motivate thisnatural Democrat base The Left callfor rescinding the Bush tax cut a classwar against the corporate world amajor increase in lsquopublic investmentrsquoin schools childcare health care and
Letter from AmericaNIGEL ASHFORD
public transport and strong opposi-tion to the war
Centrists however have a verydifferent analysis of the Democratsrsquoproblems the public did not trustthem to pursue the war against ter-rorism vigorously to keep down taxesto spend their tax dollars wisely or toreflect their cultural values
A Gallup opinion poll found that57 per cent of Americans askedthought that the Democrats were nottough enough on the war on terror-ism while 64 per cent thought theRepublicans were There was the per-ception that the Democrats were notserious on the issue and just playingpolitics Evidence for this was the de-bate over the new Department ofHomeland Security blocked becausethe Democrats wanted to protectunion rights while the President de-manded more flexibility to deploy theworkforce Many voters saw the issueas the national interest versus a spe-cial interestmdashin this case that of theunions The Democrats were seen asputting the interests of one of theirmajor constituencies before nationalsecurity
The Democratic LeadershipCouncil in lsquoThe Road Aheadrsquo by AlFrom and Bruce Reed presented theCentrist case lsquoStop pretending wecan win a majority simply by energiz-ing our basersquo The Democrats were
not trusted on the war against terror-ism were hostile to the cultural con-cerns of many working-class Demo-crats on abortion and guns and stillseen as the tax-and-spend party lsquoToomany Americans donrsquot trust us tokeep their taxes down or to spendtheir money wellrsquo
The Centrist agenda is to stronglyprosecute the war against terrorismwhether against al-Qarsquoeda Saddam orothers and to abandon knee-jerk iso-lationism arising from the experienceof the Vietnam War to defend capi-talism and support small investorsagainst irresponsible managers to cutpayroll taxes and to downplay thecultural issues that divide Democrats
Which path will the Democratstake The Left is in the ascendancyMost of the remaining Democrats inoffice come from left-wing districtsNancy Pelosi a left-liberal from SanFrancisco was easily elected the newleader of the House Democrats over-whelming her Centrist opponent andrising star African-American HaroldFord The early field of presidentialcandidates for 2004 is dominated bythe Left tendency including SenatorJohn Kerry Representative DickGephardt Governor Howard DeanRev Al Sharpton former SenatorCarol Moseley-Braun and Represen-tative Dennis Kucinich Only Sena-tor Joe Lieberman and Senator JohnEdwards represent the Centrist wing
The future of US politics may de-pend on which road the Democratsdecide to take The US is currently alsquo50ndash50rsquo nation evenly balanced be-tween the parties A left turn couldlead to Republican dominance farinto the future
Dr Nigel Ashford is at the Institute of Humane Studiesat George Mason University and is co-author of US
Politics Today (Manchester University Press)
API
27MARCH 2003
E V I E WR
Trusting TonyFrankly itrsquos all just too depressing Theeconomyrsquos heading for trouble Busi-ness confidence is low investment in2002 was 92 per cent lower than theprevious year and manufacturing in-vestment was nearly 18 per cent downThe budget deficit is spiralling becauseour once lsquoprudentrsquo Chancellor (trea-surer) Gordon Brown made over-opti-mistic growth projections and startedthrowing money at problems
Therersquos a load of health-and-safetyand anti-discrimination measuresthatmdashto put it most politelymdashare ex-amples of letting the best be the en-emy of the good Every school tripneeds a formal risk assessment withthe result that many trips are simplynot taking place New trains orderedfor London commuter routes wonrsquothave toilets because the rules say thatat least one toilet in each four-car unitmust be wheelchair-accessible whichwould have cost ten or a dozen seatson every overcrowded train
Some of this is just insane Somelocal authorities say that safety at workrules mean that home-care workersmustnrsquot lift the disabled people theyare looking after Or therersquos rail safetyUntil recently we were seriously pro-posing to spend $10 billion on a bet-ter system to stop trains going throughred signals On average this would havesaved the lives of about three passen-gers every four years which is a lousybargain compared with other safety in-vestments Worse it would also havereduced the capacity of the networkby up to 15 per cent and forced morepeople onto the roads which are muchmore dangerous than even ourclapped-out railways The result was aprojected net increase of 13 to 21 deathsper year
Meanwhile in London the Cen-tral line of the Underground has been
Letter from LondonJOHN NURICK
API
closed for weeks after a train derailedwhen one of its motors fell off Therewere no deaths or major injuries in theaccidentmdashbut itrsquos a safe bet that someof the people who havenrsquot been ableto use the Central line have been in-jured or killed on the roads
What can one say If the authori-ties took the same attitude to the riskof fatal accidents in the health serviceevery hospital in the country wouldhave been closed for years
Despite all this the Conservativesare still hopeless Their leader IanDuncan Smith has a new wheezewhen a journalist asks him anythingdifficult he chortles merrily and saysitrsquos the most uninteresting questionimaginable and hersquos not going to wasteanyonersquos time by answering it His col-leagues have their knives out for him
Meanwhile in spite of the govern-mentrsquos problems with the economy andthe public services Tony Blair is grow-ing in stature having his waymdashandantagonising large sections of his ownparty in the process On several recentissues he has faced down the formi-dable Gordon Brown in a way that notlong ago was hard to imagine
Then he shocked everyone by com-ing out against having elected mem-bers in the reformed House of Lordswhen most voters want an all-elected
chamber and most MPs want a partly-elected one In the event Parliamentcouldnrsquot agree on any of the optionsfor reform so wersquore stuck with the sta-tus quomdashwhich is fine by Mr Blair
Then therersquos the war By the timeyou read this it may be over or we maystill be waiting or our lads may befighting Mr Blairrsquos strong line againstIraq has made him very unpopular Theanti-war march on 15 February was thebiggest demonstration London hasever seen A few days later 122 Labourbackbenchers voted against the gov-ernment and many more abstained
Mr Blair didnrsquot budge War is a se-rious thing he says lsquoBut in a situationsuch as this you have to do what youbelieve to be right because thatrsquos theprice of having responsibilityrsquo1
He has often been accused of gov-erning by focus group Certainly he hasseemed reluctant to antagonise anypowerful group That has clearlychanged In a sense his stand on Iraqmerely follows his action in sendingtroops to Sierra Leone and Kosovomdashbut it has stirred up far stronger domes-tic and international opposition
The irony is that now when he re-ally needs people to trust him wedonrsquot Even in the desperately seriousbusiness of justifying an unpopular warDowning Street canrsquot play it straightremember the dossier from lsquointelli-gence sourcesrsquo that turned out to belargely cribbed from a PhD thesis onthe Internet
NOTE1 The Guardian 1 March 2003
John Nurick is a management consultant based in theSouth of England From 1985 to 1990 he was
editorial director of the Australian Institute for PublicPolicy and later edited newsletters reporting on theUK Parliament and European Union institutions
28 MARCH 2003
E V I E WR
KEVIN DONNELLY
Private EducationEquals Public Good
When it comes to choosing be-tween government and non-gov-ernment schools Australian par-ents are lsquovoting with their feetrsquo Asshown by recent ABS figures(Schools Australia 2002) over thelast decade there has been a dra-matic increase in non-governmentschool enrolments
Approximately 30 per cent ofstudents now attend non-govern-ment schools compared with 22per cent in 1980 and 28 per centin 1990 Over the last decadewhile the number of governmentschools has fallen by 64 per centnon-government schools havegrown by 61 per cent
Of course not everybody valuesparentsrsquo right to choose and theAustralian Education Union(AEU) Labor governments andlsquoleft-wingrsquo academics in particularconsistently argue against non-government schools
One of the arguments put for-ward by those opposed to givingparents greater freedom of choiceis that government schools are bet-ter at promoting social cohesionand a strong sense of what KenBoston the ex-head of the NSWEducation Department terms lsquothebonds of civic friendshiprsquo
The assumption is that becausestudents attend non-governmentschools there will be greater socialdivisiveness and a breakdown inthe civic values needed to hold so-ciety together But there is no cred-ible evidence offered to support theclaim that government schools arebetter at promoting the commongood
In fact there is much to provethe opposite
First as anyone familiar withthe lsquoculture warsrsquo and politicallycorrect curricula will know insteadof government-controlled educa-tion promoting unity and cohe-sion it has led to public angst andparental complaints
Witness the very bitter debatein Queensland a year or two agowhen the government-mandatedStudies of Society and Environ-ment (SOSE) curriculum was in-troduced into schools Such was
the lsquoleft-wingrsquo bias in the curricu-lum in particular in the areas ofmulticulturalism and the environ-ment that many parents felt be-trayed
The Queensland debate is mir-rored by what is happening in theUnited States As noted by Ste-phen Arons in his book Short Routeto Chaos instead of promotingunity government control of thecurriculum leads to the opposite
What the school wars tell us isthat somehow we have been
Education Agenda
transforming a vital instrumentfor creating social cohesioninto a source of division andhostility that there is some-thing built into the structure ofpublic schooling that under-mines one of its most importantfunctionsAronrsquos argument that govern-
ment schools no longer transmit aviable sense of a common cultureor agreed civic values is reinforcedby another noted United Stateseducationalist Diane Ravitch
In a recent article in the jour-nal Education Next Ravitch be-moans the impact of cultural rela-tivism and the post-modern on theschool curriculum (where there areno commonly agreed values) andeven goes so far as to argue thatparents should be free to choosenon-government schools becausesuch schools have a better chanceof reflecting their values
In the current education sys-tem with the public schoolscommitted to multiculturalismbilingualism and other forms ofparticularism it is difficult toargue that parents should notbe able to choose schools thatmeet their cultural needsSecond if one accepts that lsquoso-
cial capitalrsquomdashthe networks volun-tary associations and civic bondsthat hold a community togethermdashis important for the health of ademocratic society then non-gov-ernment schools clearly have theadvantage
Unlike the government schoolsystem characterized by a heavy-handed centralized bureaucracyand teacher union control non-government schools are closer tothe communities they serve Bytheir very nature non-government
There is no credible
evidence offered to
support the claim
that government
schools are better
at promoting the
common good
29MARCH 2003
E V I E WR
ALAN MORAN
The lsquoRrsquo Files
Private propertyrights the key toachieving efficiency inrural water use
WATER IN AUSTRALIAWater has always been a definingissue in Australiarsquos prosperityAnd in recent decades irrigationhas grown rapidly Even so theproportion of Australia that is ir-rigated at two per cent of theland comprises a share that isamongst the lowest among OECDcountries Only Canada and therainiest countries New Zealandand the UK have lower sharesthat of the US is 11 per cent andin Japan it reaches 60 per cent
Modern agriculture is only 200years old in Australia and thoughin the first 100 years agriculturalproductivity was increased toequal that of anywhere in theworld gains continue to bemademdashoutput has doubled overthe past 50 years a growth thatcould not have taken place with-out a similar expansion of irriga-tion Irrigation in the MurrayndashDarling agricultural provincealone contributes $5 billion toAustralian agricultural outputand non-irrigated agriculture inthe region contributes a further $5billion This makes the areawhich comprises 14 per cent ofAustraliarsquos land mass responsiblefor a third of the nationrsquos $35 bil-lion agricultural output
Applying Property Rights to WaterMost of the uses of water involvechoices or compromisesmdashdrink-ing water versus irrigation versus
industrial and so on Some how-ever involve complementaritiesparticularly certain recreationaluses such as water sports that arefacilitated by storage and consis-tent availability
In many cases water will per-form sequential functionsmdashthesame water can be used and re-used for irrigation used for indus-trial cooling and finish as drink-ing water Water with differentsometimes competing productiveuses will be optimally used as longas two conditions are in placeThe first is that its ownership isclearly specified and the ownersrsquoobligations to other users (orclaims from other beneficiaries)are well understood The secondrequires each property right to betradable to enable acquisition bythose who value it most therebymaximizing its value
The rights specification andtherefore property ownership canrarely commence with a cleansheet of paper People acquire in-dividual rights to property ini-tially through a variety of routesOne of these is seizure of some-thing that was originally of littlevalue until it was acquired and im-proved Squatters assume rights inthis way However they are firstacquired they need to be tradableAPI
schools establish strong commu-nity networks and have a greaterreliance on the voluntary work ofparents
That non-government schoolsare more effective in this regard issupported by research into lsquoChar-ter schoolsrsquo in the United StatesAs noted by Chester Finn at theFordham Foundation giving localcommunities lsquoownershiprsquo overtheir school builds networks oftrust and reciprocity so vital forsocial cohesion
Social capital also relies on citi-zens being disciplined and orderedin their behaviour Selfishness vio-lent behaviour and rudeness act tofragment the community instead ofpromoting cohesion According toa number of Australian surveys itis here once again that non-gov-ernment schools are seen to bemore effective
As noted by the Centre for In-dependent Studies researcher Jen-nifer Buckingham in The Truthabout Private Schools in Australiawhen analysing why so many par-ents forsake the government schoolsystem
When comparing independentprivate schools with publicschools the major theme thatemerged was not differences inacademic standards and curri-culum but issues of disciplineand order The surveyed par-ents felt that the behaviour andattitudes of students in publicschools was unacceptablehellipAll accept that non-govern-
ment schools achieve better aca-demic results provide greater cur-riculum flexibility and save Aus-tralian taxpayers millions of dol-lars Equally as important is theargument that such schools streng-then Australiarsquos civic health andstock of lsquosocial capitalrsquo
Dr Kevin Donnelly is Director of EducationStrategies a Melbourne-based consulting group
E-mailkevindnetspacenetau
s
30 MARCH 2003
E V I E WR
and relatively inviolable Thisprovides the incentive for them tobe improved and for their ownersand others to search out ways inwhich the assets they representcan be used to provide increasedvalue or other benefits
If confidence in the exclusiv-ity an owner has over the prop-erty right is lost or was neverpresent the asset will be used lessproductively For example own-ers will milk them for their cur-rent-use value rather than trade-off present value for a future valuethat is less certain
Even without a total emascu-lation of individual rights (for ex-ample when title to the propertydepends on continuing govern-mental assent) lack of certaintybrings lower incomes and dimin-ished asset protection One out-come of this can be observed inthe MurrayndashDarling system Wa-ter rights on the Victorian side ofthe Murray are secure while thoseon the NSW side have been over-allocated and are subject to ad-ministrative discretion includinghaving a firm duration of only tenyears In Victoria high securitywater (available 95 per cent of thetime) comprises the great bulk ofentitlements In contrast in
NSW high security water is avail-able only 60-80 per cent of thetime The result is that farmers onthe Victorian side plant perennialcrops while those in NSW tendto focus on annual crops espe-cially rice
There are claims that Victoriarsquosmore robust property rights meanthat the State Government haslost lsquocapabilityrsquo to manage com-pared with NSW The flip side ofthis is the increased risk and as-sociated lower value of productionnorth of the Murray where prop-erty rights are attenuated Gov-ernments that give themselves in-creased capacity to direct produc-tion or to take individualrsquos prop-erty will need to accept lower lev-els of income and output
IRRIGATION ENVIRON-MENTAL BENEFITS AND SA-LINITY
The Types of IssuesIssues stemming from irrigationcomprise two types those impact-ing on the environment and thoseimpacting on private uses Theformer includes issues such as pre-venting loss of species ensuringthat certain sorts of species flourishand avoiding unattractive growths
such as blue-green algae which re-sult from fertilizer build-up
The second involves economicimpacts on different users
While environmental flows toensure species flourish are oftenhighlighted salinity is the mainfocus And while salinity has animpact on the environment itsimportance is in the conflict of in-terest between productive usersmdashthe complaint of lsquodamaged goodsrsquoby downstream users against thoseupstream
The MurrayndashDarling Basin Sa-linity Strategy 2001ndash2015 has es-timated that increased salinitybrings costs of $294 million perannum to the basin
Yet data on the salinity of theMurray Darling shows levels up-stream of South Australia arelower than they were in the early1980s and are only seriously abovethese levels as the river ap-proaches its mouth at the GoolwaBarrage
The Basin Salinity Manage-ment Strategy argues that progressachieved over the past decade willlsquobe cancelled within 20-50 yearsand median salinity levels wouldexceed the Australian DrinkingWater Guidelines for good waterquality within 50-100 yearsrsquo Thecause of this is said to be risinggroundwater tables due to land usechanges across the Basin
The disputes over salinizationare largely disputes between com-mercial parties Full specificationof rights and obligations will al-low these to be resolved as longas the impacts are measurabletheir causes identifiable and thevarious rights and obligations areknown and stable In this respecttechnology to measure salt in wa-ter and to trace increases to par-ticular locations is readily avail-able
Agreements about the alloca-tion of water rights between ju-risdictions and to the main irri-gation provinces have been inplace for over a century In the
Average Salinity in the River Murray (EC Units)1
3500
3000
2500
2000
1500
1000
500
0
January 2003
July 2002ndashJanuary 2003
July 1982ndashJanuary 2003
Hume D
am
Swan
Hill
Merbein
Morgan
Milang
Mening
ie
Goolw
a
Barra
ge
31MARCH 2003
E V I E WR
I
API
Musinghellipcase of the Murray the lsquocaprsquo onwater abstractions agreed betweenthe various jurisdictions in 1995largely validated agreements madeearly in the last century and be-fore Disturbing these agreementswould greatly undermine the trustin the sanctity of property rightsand seriously reduce agriculturalproductivity Hence increased al-locations for certain parties or forcertain uses (including environ-mental flows) would need to bepurchased at market prices
Developments in Australiaover recent decades have con-spired to make irrigation water farmore valuable This is exacer-bated by1 Activation of NSW lsquosleeperrsquo
and lsquodozerrsquo water rights as a re-sult of the increased scarcityvalue a change that bringseven greater pressure on theavailable supply
2 Increased scarcity leading tomeasures that more carefullyhusband the water Whilesome of these prevent evapo-ration loss and have thereforebrought a net increase in effec-tive availability others havereduced availability (these in-clude a more careful wateringwhich results in reduced run-off and re-use)
3 Increased capture of waterwithin the land on which itfalls once water is recognizedas scarce landowners will seekto ensure it does not leave theirland NSW and Victoria haveplaced limits (a strict 10 percent in NSW) of water fallingon property as entitlements ofthe owner Queensland has notyet enacted an equivalent tothis Such adaptations of thecommon law are essentialhowever if downstream usersare not to be expropriatedThere is likely to be constant
bickering over water rights espe-cially if State Governments seek toelevate sharing issues and to sanc-tify them with claims about promot-
Daniel Pipes in The New York Posthas a very cogent explanation forwhy the Left appears to be so happywith the likes of Osama bin Ladenand Saddam Hussein
To be clear about their attitudeshe quotes the renowned Germanelectronic music composer KarlHeinz Stockhausen who saidstraight after the attack on NewYork that it was lsquothe greatest workof art for the whole cosmosrsquo
As Pipes and many of us observedaily there is barely a bad word tosay about Saddam Hussein nor aniota of sympathy for thoseoppressed tortured and murderedby his reacutegime Instead they venttheir fury against the AmericanPresident and British Prime Minister
Why the nonchalancePipes draws our attention to Lee
Harris writing in a recent issue ofthe Hoover Institutionrsquos journalPolicy Review According to KarlMarxrsquos central thesis the demise ofcapitalism hangs on workersgrowing poorer over timemdashwhichof course did not happen Sorather than give up on cherishedexpectations of socialist revolutionHarris notes Marxists tweaked theirtheory and looked instead to theentire populations of poor countriesto carry out the revolution Classanalysis went out the windowreplaced by geography
The trouble is they have tooverlook militant Islamrsquos slightly un-socialist practicesmdashsuch as itsimposing religious law excludingwomen from the workplace andpersecuting atheists
As Pipes sums up September 11and the prospect of war againstSaddam Hussein have exposed theLeftrsquos political self-delusionintellectual bankruptcy and moralturpitude
The Loopy Leftby Andrew McIntyre
ing an improved environment Realsolutions require the issue be placedwithin a normal commercial frame-work which involves1 Clarifying the property rights2 Allowing water rights to be
fully detachable from propertyand able to be used howeverthe holder wishes subject toany damage this might imposeon others
3 Ensuring full rights to buy andsell the water
4 Defining rights so as not to re-duce the quality of other usersThis means ensuring that farm-ing practices that do not bringgreater salination than somestandard
5 Allowing rights holders tobank their water and ensureeven greater certaintyAllocating specific individual
ownership rights to water and al-lowing its trade is a well-foundedmeans of maximizing the usevalue It would also be likely tohave the beneficial side-effects ofreducing salinity and farm-basedpollutants caused by intensiveuse We should grasp such oppor-tunities But if the impending sa-linity problem is as great as someclaim other solutions might wellinclude buying out some allocatedirrigatorsrsquo rights However alter-natives may be to remove saltfrom the water by engineering so-lutions or simply to live withhigher salt
NOTE1 Human drinking water should
be less than 800 ECs (electri-cal conductivity one ECequals about 06 mglitre)while higher levels are accept-able for much farming activity
Dr Alan Moran is Director Deregulation Unitat the Institute of Public Affairs
32 MARCH 2003
E V I E WR
Reading FileDone
eral political systems worldwidehave consistently accretedpower to the centre often in theface of clear constitutional im-peratives to the contrary) Ifeared instead that a UN thathad been patently successful insomethingmdashanythingmdashmightbe granted greater powers to thepoint where it would kill truediversity and individualism (ortry to anyway) through inevi-table bureaucratic practices
Is such a fear unfounded Ap-parently not if many peopleshare the moral touchstone ofthe Opposition Leader SimonCrean He believes according tohis own words in Parliamentthat what the UN SecurityCouncil declares is moral whatit refuses is immoral
The latest manoeuvrings overIraq have therefore been heart-
ening It seems that the desiresof the powers small and largeto promote their own interestswill continue to hobble the UN
The problem with a unitedworld is that as the threateningimpasse over Iraq suggestedthere are very divergent viewsabout how that world ought tobe run on an international leveljust as there are at national and
sub-national levels The virtueof multi-layered levels of gov-ernments is that competing ju-risdictions give the individual adegree of choice
The greatest sin of totalitar-ian governments past and pres-ent is to deny their citizens theright to leave The greatest dan-ger that the United Nationsposes as far off as it now (hap-pily) seems is that leaving its ju-risdiction is for all practical pur-poses impossible
THE IMPASSE JUST PASSEDI listened to Prime MinisterHoward speaking to the motionbefore Parliament in relation tothe war It was a good speechbut neither he nor PresidentBush seems able to structure andlay out an argument with thestyle and content of BritishPrime Minister Blair His equi-valent speech before the BritishCommons provides a masterfulsummary of the reasons for thiswar and includes an immenselyreadable time-line of the utterineffectiveness of the UN pro-cesses in dealing with Iraq Henicely deals with allegations ofthe lsquorushrsquo to war lsquoOur fault hasnot been impatience The truth
UNITED OR DIVIDEDI write just hours after US Presi-dent George W Bush has deliv-ered his ultimatum to Iraqi Presi-dent Saddam Hussein leave Iraqwithin 48 hours or be removedBy the time this appears beforeyour eyes you will knowwhether Hussein has decided hischances of survival will be sig-nificantly greater by choosingexile or by remaining in IraqThe recent creation of the In-ternational Criminal Court ofcourse makes war more likelysince Hussein can have no guar-antee of a peaceful lsquoretirementrsquo
In the event that Hussein re-mains in Iraq you will also knowwhether Bush has kept his wordand most likely the outcome ofthis military venture
This matter is immensely im-portant for the people of Iraqand for the military personnelinvolved (including our ownAustralian soldiers sailors andaviators) But then so was theprevious Gulf War the US in-vasion of Grenada the Austra-lian intervention in East Timorand so on But a difference be-tween the current conflict andthose others could be the impactit has upon international insti-tutions Actually just one inter-national institution the UnitedNations
Prior to the first Gulf War Ifeared the coalitionrsquos success forthe reason that some of it mighthave rubbed off onto the UnitedNations I hasten to deny that Ifear the UN as some vast con-spiracy for world domination Ifeared instead that it couldstumble into a piecemeal cen-tralization of power (just as Fed-
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
E V I E WRs
33MARCH 2003
E V I E WR
Reading FileDone
ATTACKING THE GLOBALGOVERNORSThe Cato Institute is a whole-some body as demonstrated byits opposition to such interna-tional organizations as the Inter-national Criminal Court and forthat matter the United Nationsitself Ted Galen Carpenter forexample argues in lsquoPutting theUnited Nations on Noticersquo thatthe UN can and has done somemodest good occasionally It ishe says lsquoa good idea to have aplace where governments cangather to air grievancesrsquo But headds if it lsquoattempts to acquire ataxing authority [or] raise astanding armyrsquo then the USshould withdraw (as indeedshould Australia) Because thatwould turn it into an lsquoembryonicsuperstate that would menacelibertyrsquo
Go to
wwwcatoorgforeignpolicyunhtml
THE INTERNATIONALORGANIZATIONS THEM-SELVESThe United Nations has beenaccused of being often ineffec-tive and always slow Well ev-ery time Irsquove hit the UNrsquos Web-site even with my nifty broad-band Internet connection slow-ness rules Perhaps the site isbeing continually accessed bythe teeming masses Anyway goto
wwwunorg
With 15 members alreadyand 13 more on the way thereremain hopes that the EuropeanUnion will be a force for a stable
twenty-first century Equallywith 15 members already exhib-iting rather divergent views overthe issue of Iraq and most of theforthcoming members sidingwith the United States perhapsthis is overly hopeful Go to
europaeuintindex_enhtm
Then there is the WorldTrade Organization the organi-zation behind which protection-ist nations can hide from unilat-eral trade liberalization by pre-tending to support multilateraltrade liberalization Go to
wwwwtoorg
And we mustnrsquot forget the In-ternational Criminal Court fearof which was no doubt a featureof Saddam Husseinrsquos rejection ofexile as an option and the furyof which is promised by a num-ber of prominent lawyers to bevisited upon our very own PrimeMinister Go to
wwwicc-cpiint
FEEDBACKI would welcome advice fromreaders on any other sites of inter-est to IPA Review readers E-mailme on scdawsonbigpondnetau
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
is our patience should have beenexhausted weeks and monthsand years agorsquo
Go to
wwwnumber10govukoutputPage3294asp
THE STRUGGLE BETWEENTHE CONTINENTSIf you are patient you can readthat wonderful British rag TheSpectator for free Last weekrsquoscopy is available on-line One ofits regular columnists is MarkSteyn an Americo-phile Cana-dian who has a robust turn ofphrase and an abiding disdain formuch modern music (whichseems to place him very comfort-ably into The Spectatorrsquos culturalmatrix)
His piece on the future de-cline of Europe vis-agrave-vis Ame-rica makes for fascinating read-ing Go to
wwwspectatorcouk
then click on the lsquoBack Issuesrsquobutton and choose the edition of15 March 2003
E V I E WR
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
7MARCH 2003
E V I E WR
ON 28 January the Queens-land Government re-leased Report on the studyof land-sourced pollutants
and their impacts on water quality inand adjacent to the Great Barrier ReefIn the associated media release theQueensland Premier Peter Beattiesaid lsquoNow the report is in work onthe Great Barrier Reef Water Qual-ity Protection Plan will continuewithout arguments about whetherland activities harm the Reef Thereport is the adjudicatorrsquos decisionand is based on the best available sci-encersquo
The report written by a panelof scientists chaired by Queens-landrsquos Chief Scientist Dr Joe Bakermakes several key findings regard-ing impacts of land-based pollutionon the reef A key allegation in thereportrsquos summary highlighted in thePremierrsquos media release is that el-evated concentrations of pesticideresidue have been found in dugongs
Since publication of the book Si-lent Spring by Rachel Carson in1962 there has been concern thatpesticides can bio-accumulate inthe fat tissue of animals Prior to1987 organochlorine pesticides (forexample DDT) were used in GreatBarrier Reef catchments includingfor sugarcane production Thesechemicals have since been banneddue to global concerns about theirpersistence in the environment andtheir capacity to bio-accumulate
I first became aware of the spe-cific issue of pesticide in dugongs inAugust 1998 A senior officer withthe Great Barrier Reef Marine ParkAuthority (GBRMPA) phoned mewith the news that a soon-to-be-
Deceit in the Nameof Conservation
JENNIFER MAROHASY
published research study had foundthat elevated levels of pesticide resi-due most likely from cane farmingwere accumulating in the fat tissueof dugongs Media headlines fol-lowed including Pesticide in reefcreatures and Cane burning link withdioxin in dugong
I obtained a copy of the studyand found it was primarily an analy-sis of the type and quantity of diox-ins found in the fat tissue of dug-ong carcasses that had been killedin fishing nets1 Dioxins are a groupof organochlorine compounds com-monly associated with industrialwaste incineration The researchpaper made reference to a differentstudy that had analyzed the dioxinsfound in soils under sugarcane cul-tivation and commented that thecane-land soils and dugong fatsamples both had elevated levels ofthe same type of dioxins
Concerned by this news I con-tacted a dioxin expert at the Uni-versity of Queensland Dr BrianStanmore informed me that thetype of dioxin considered by theGBRMPA to be elevated in thedugongs was common and the leasttoxic of all dioxins Furthermore DrStanmore indicated that the levelof dioxins found in the dugongs wasless than the national average inpeople in the United States Hecommented that lsquoit looks like thedugong is better off than we arersquo
The GBRMPA study clearlystated lsquoAll (dugong) carcasses werein good condition at the time ofsampling All animal deaths wereconfirmed or suspected (fishing) netdrowningrsquo However instead of fo-cusing on net fishing practices the
environmental management were oflittle significance compared with theneed for a re-creation of a mythicalpristine Nature
Elements of this attitude he sug-gested might underlie some of thepressures which discourage the pre-scribed burning of National Parksand State Forests
Whether this hypothesis provesvalid or not there is little doubt thatthe management of Australiarsquos parksforests and other public lands willcome under greater scrutiny as a re-sult of the horrific fires of 2003 Thescale of damagemdashhuman economicand environmentalmdashis such that atleast three separate inquiries Fed-eral Victorian and from the ACThave already been proposed
The overwhelming view of del-egates at the IPA forummdashas re-flected in questions from the floorand in post-conference discussionsmdashwas that only a Federal inquiry islikely to achieve an adequate resultThis is because State and TerritoryGovernments in their role as landmanagers must share direct respon-sibility for any lack of prescribedburning and other forms of hazard re-duction that might have contributedto these fires This means that theycould potentially face hugely expen-sive legal claims and that as a re-sult there could be pressure on themto manipulate terms of reference andother criteria to diminish scrutiny ofthese important issues
Even if this concern proves ut-terly unfounded the public percep-tion could still linger that any suchinvestigation was a State Govern-ment inquiry into a matter in whichthe State had a very real vested in-terest For these reasons a Federalinquiry would have greater credibil-ity and is in fact essential if we areto come to a comprehensive under-standing of the causes of last sum-merrsquos catastrophic bushfires
Graham White is an issues management consultantwho chaired a session of the IPA bushfires forum
API s
8 MARCH 2003
E V I E WR
GBRMPA subsequently providedfunding for a full investigation bythe National Research Centre forEnvironmental Toxicology(NRCET) into the likely origin ofthe dioxin considered to be at el-evated levels in the dugong car-casses including possible links withsugarcane production
Two years later the NRCET in-vestigation concluded that the di-oxin of concern to the GBRMPAwas common in soils along the en-tire Queensland coastline includ-ing in regions beyond sugarcane cul-tivation2 Analyses of dated marinesediment cores indicated that thechemical was present prior to Eu-ropean settlement in QueenslandIn other words the dioxin is a natu-rally occurring organochlorine andnot a pesticide residue There areapparently many naturally occur-ring non-toxic dioxins
But what of the organochlorineinsecticides used in the sugar indus-try from the late 1940s until theywere banned in 1987 Have thesepesticides been found in dugongs
The GBRMPA and the Austra-lian Institute of Marine Science(AIMS) have undertaken extensivesurveys for traces of organochlorineinsecticides including an Australia-wide programme for collecting andtesting samples from stranded or re-cently killed dugongsmdashfrom whichthe dioxins were isolated While itwas expected that these program-mes would find persistent orga-nochlorine pesticide this has notbeen the case
Estuarine and near-shore marinesediments have been extensivelysampled on the basis that these ar-eas are likely to contain the high-est concentrations of contaminantsfrom human activity in adjacentcatchments Trace amounts of someorganochlorine insecticides havebeen found in sediment from a smallnumber of river mouths3 No orga-nochlorine insecticides howeverhave been found in near-shore ma-rine sediments of the Great BarrierReef4 This finding has surprised
many researchers some of whomhave postulated that the absence oforganochlorine contamination inthe inner shelf is a consequence ofenhanced degradation of the orga-nochlorines in the aquatic system
In late November 2002 I re-ceived a copy of the draft summaryof the Baker reportmdashthe report sub-sequently described by the Premieras the best available science I no-ticed the allegation of elevated con-centrations of fat-soluble pesticide
in dugongs I emailed Dr Baker que-rying this and other allegations inthe draft summary Dr Baker repliedthat he would consult with the Sci-ence Panel and get back to me Thereport was published two monthslatter without any changes to thesummary
The reef pesticide research iswell-documented and should be un-derstood by members of the SciencePanel In fact a member of the Sci-ence Panel communicated the find-ings from the NRCET investigationto me in September 2001 Whythen was the allegation of pesticidein dugongs included in the originalsummary report Why was the alle-gation not corrected after I brought API
the error to Dr Bakerrsquos attention inDecember 2002
Two years earlier following pres-sure from the World Wide Fund forNature (WWF) and as part of theQueensland governmentrsquos reelec-tion campaign the QueenslandPremier committed his governmentto saving the reef Since this timeit has been Queensland governmentpolicy that the reef is in troubleThe on-going deception is perhapsnecessary to maintain the percep-tion that the reef is in trouble
NOTES1 Haynes D Muller J F amp
McLachlan MS (1999) lsquoPoly-cholorinated dibenzo-p-dioxinsand dibenzofurans in Great Bar-rier Reef (Australia) Dugongs(Dugong dugon)rsquo Chemosphere38 pages 255ndash262
2 Prange JA Gaus C PapkeO amp Muller JF (2002) lsquoInves-tigations into the PCDD con-tamination of topsoil river sedi-ments and kaolinite clay inQueensland Australiarsquo Chemo-sphere 46 pages 1335ndash1342
3 Haynes D Muller J amp CarterS (2000) lsquoPesticide and Herbi-cide Residue in Sediments andSeagrasses from the Great Bar-rier Reef World Heritage Areaand Queensland Coastrsquo MarinePollution Bulletin 41 pages279ndash287
4 Cavanagh JE Burns K ABrunskill GJ amp Coventry RJ(1999) lsquoOrganochlorine pesti-cide residues in soils and sedi-ments of the Herbert and Bur-dekin River regions northQueenslandmdashimplications forcontamination of the GreatBarrier Reefrsquo Marine PollutionBulletin 39 pages 367ndash375
Dr Jennifer Marohasy is Environment Managerwith Queensland Canegrowers Organisation Ltd
Why was theallegation of pesticidein dugongs included inthe original summary
report Why wasthe allegation notcorrected after I
brought the error toDr Bakerrsquos attentionin December 2002
9MARCH 2003
E V I E WR
IN THE LONG AGOPlanet Earth condensed 4550million years ago (Ma) from re-cycled stardust Since that timethe continents have been enlarg-ing Earth materials have beenconstantly recycled and the Earthand all associated systems havebeen dynamically evolving TheEarth has not stopped being anevolving dynamic system just be-cause humans now live on thecontinents
As soon as there was liquid wa-ter on Earth there was life Bac-teria slowly diversified and by thetime the Earth was middle agedone group of bacteria had emit-ted such large quantities of oxy-gen (O2) that the atmospherecontained minor O2 Some of thisexcess O2 was trapped in rocks byweathering most dissolved in theoceans resulting in the precipita-tion of iron oxides It is these ironoxides that form the great iron orefields of planet Earth (for ex-ample in the Hamersley Basin)Life the atmosphere the oceansand the rocks interacted a pro-cess that has been occurring forat least 2500 million years on ourdynamic evolving planet
For at least the last 2500 mil-lion years the continents havebeen pulled apart and stitchedback together Every time thecontinents are pulled apart hugequantities of volcanic water car-bon dioxide (CO2) and methane(CH4) are released into the atmo-sphere and greenhouse conditionsprevail When continents stitchtogether mountain ranges formMountains are stripped of soilsnew soils form and remove CO2
The Past is the Key to the PresentGreenhouse and Icehouse over Time
IAN PLIMER
from the atmosphere these soilsare stripped from the land and theCO2 becomes locked in sedimentson the ocean floor When atmo-spheric CO2 is low glaciation oc-curs Large climate cycles can berelated to plate tectonics
The origin of the greatest cli-mate change on Earth is anenigma Between 750 and 600Ma there were two major glacialevents and numerous smallerevents Sea level changed by upto 400 metres and interglacial seatemperatures were 40˚C Afterglaciation the atmosphere hadsome 20 per cent CO2 and bacte-ria thrived and diversified in thewarm oceans Multicellular lifeappeared diversified and used theCO2 to make shells and skeletonsThis explosion of life from 580 to520 Ma gave us all of the majorlife forms currently present onEarth
Plants appeared at 470 Ma andthere was a major mass extinctionof multicellular life at 430 MaThe origin of this mass extinctionis not known Vacated ecologieswere quickly filled and life con-tinued diversifying Between 368and 248 Ma massive coal depos-its formed there was a major 50million-year period of glaciationand the atmosphere was blessedwith a very high CO2 and O2 con-tent Life continued to diversifyMinor mass extinctions continuedand at 248 Ma the biggest majormass extinction on Earth tookplace Some 96 per cent of spe-cies became extinct Life diversi-fied quickly to fill the vacatedecologies The record written instone by fossils in the period520Ma to the present shows thatthe planet is a warm wet green-house volcanic planet with thenormal cycles of rising and fall-
Sea Levels
Greenhouse Greenhouse GreenhouseIcehouse Icehouse
Tem
pera
ture
Tem
pera
ture
Millions of years ago1000 900 800 700 500 400 300 200 100600
There are 400 million year supercycles of greenhouseicehouse related to the pulling apart and
stitching together of continents
Icehouse
s
s
10 MARCH 2003
E V I E WR
ing sea levels rising and fallingland levels and changing climates
THE DAY BEFORE YESTER-DAYSome 120 million years ago Aus-tralia was at the South Pole en-joying a temperate climate Glo-bal sea level was more than 100metres higher than at present thesea surface temperature was 10ndash15˚ C higher than now and manycontinents were covered by shal-low tropical seas Planet Earthwas a warm wet greenhouseparadise and thick vegetationcovered the land masses Atmo-spheric CO2 was about 1 per centwhen the worldrsquos major coal de-posits formed 368 to 248 Ma
From 250 to 120 Ma the glo-bal CO2 content varied greatlyand increased to a peak 6 per centCO2 120 Ma This derived fromintense volcanic activity associ-ated with continental fragmenta-tion Thick vegetation coveredthe land masses
Australia started to pull awayfrom Antarctica at about 100 MaIt drifted northwards the TasmanSea opened and the IndianOcean opened with India start-ing to drift away from WesternAustralia The opening of theTasman Sea produced the rise ofthe Great Dividing Range thediversion of the major river sys-tems and changes to the climateof eastern Australia
A minor mass extinction oflife 90 million years ago was theresult of volcanoes in the Indianand Pacific Oceans belching outCO2 and other gases into theoceans and atmosphere Therewas a runaway greenhouse untilvolcanism waned But volcanicemissions of CO2 are common In1984 and 1986 burps of CO2 fromthe volcanic crater lakes ofMonoun and Nyos respectivelykilled thousands and added CO2to the atmosphere Near MtGambier volcanic CO2 is com-mercially extracted from rocks
one small hot spring on Miloscontributes 1 per cent of theplanetrsquos volcanic CO2 and hugequantities of CO2 the planetrsquossecond most common volcanicgas constantly leak from unseensubmarine volcanoes
Another minor mass extinc-tion at 55 Ma was caused by aCaribbean volcano There was arise in sea temperatures by up to8˚C for 100000 years and atmo-spheric CO2 was 10 times that oftoday During this greenhouseplankton sucked up the atmo-spheric CO2 mammals thrivedand life filled the vacated ecolo-gies Atmospheric CO2 decreasedfrom 3500 to 700 ppm within amillion years stayed low until 47Ma and went up and down toabout the present level (365ppm) at 40 Ma
India collided with Asia at 50Ma Uplift produced the TibetanPlateau which started to scrubCO2 out of the atmosphere TheTibetan plateau is still rising andCO2 is still being scrubbed out ofthe atmosphere The Drake Pas-sage opened as South Americadrifted from Antarctica a cir-cumpolar current developed andAntarctica refrigerated SouthernAustralia from 17 to 145 Mawas again tropical with mid-lati-tude temperatures 6˚C warmerthan today Atmospheric CO2was 180ndash290 ppm This green-house occurred when atmos-pheric CO2 was 30ndash50 per centlower than today
By 5 Ma Earth cooled andwas so cool that very slight orbitalwobbles now had a bearing on cli-mate and every 100000 yearswas characterized by 90000 yearsof glaciation and 10000 years ofinterglacial We are currently inone of those interglacial periods
The penultimate interglacialwas 120000 years ago Homoerectus Homo neanderthalensisand Homo sapiens coexisted sealevel was 6 metres higher than atpresent the planet was far
Millions of Years Ago
400 200600 0
2
4
6
8
10
12
14
16
18
20
0
Perc
enta
ge o
f CO
2
PrecambrianIce Age
s
Permian-CarboniferousIce Age
s
LastIce Age
s
There have been enormous changes incarbon dioxide (CO2) over time related to
volcanism sedimentation mountain-building and life on Earth
11MARCH 2003
E V I E WR
warmer and wetter than now andatmospheric CO2 was 78 per centof that today After warming theatmospheric CO2 and CH4 con-tent increased suggesting that at-mospheric temperature rise drivesan increase in atmospheric car-bon dioxide and methane con-tents During the history of thelatest glaciation armadas of icewere released into the sea every7000 years resulting from thephysical failure of thick icesheets These had a profound ef-fect on climate Small cool peri-ods occurred every 1100 to 1300years
The zenith of the last glacia-tion was 18000 years ago Sealevel was 130 metres lower thantoday temperature was 10ndash15˚Clower than today and the north-ern hemisphere was covered byice to 38˚N up to 3 kilometresthick
YESTERDAYThe northern polar ice sheetstarted to melt 14700 years agoThere were very rapid and majortemperature fluctuations sea lev-els rose and fell and the total sealevel rise over the last 14700years has been at least 130metres Sea level rise resulted inthe breaching of the Mediterra-nean into the Black Sea Basinsome 7600 years ago and is prob-ably the origin of the SumarianBabylonian and biblical stories ofa great flood
One of the consequences of amassive sea level rise over the last14700 years is that the WestAntarctic Ice Sheet was nolonger underpinned by the landTwo thirds of the West Antarc-tic Ice Sheet collapsed into theoceans and sea level rose 12metres The final third of theWest Antarctic Ice Sheet has yetto collapse to produce a 6 metresea level rise as part of the dy-namic post-glacial climate onEarth Climate changes inducedby changes in ocean currents
cooled North Africa grasslandschanged to a desert humans mi-grated and the great Mesopo-tamian cities were established
Sea levels were 1ndash3 metreshigher in a greenhouse 6000years ago There was 20 per centmore rainfall Cold dry periodsglacier expansion and crop fail-ures between 5800 and 4900years ago resulted in deforesta-tion flooding silting of irrigationchannels salinization and thecollapse of the Sumerian citystates Long periods of El Nintildeo-induced drought resulted in theabandonment of Middle EasternIndian and North Americantowns In 1470 BC () Thira ex-ploded weakened the dominantMinoans and changed the courseof western history
Global cooling from 1300 to500 BC gave rise to the advanceof glaciers migration invasionand famine Global warmingcommenced again at 500 BCthere was an excess of food andgreat empires such as the AshokaChrsquohin and the Romans grewContemporary records and Ro-man clothing shows that condi-tions were some 5˚C warmer thantoday
In 535 AD Krakatoa explodedas did Rabaul in 536 AD TheEarth passed through cometarydust in 536 AD The dusty atmo-sphere reflected heat and dark-ness prevailed As a result theclimate cooled and there wasfamine and warfare Changes inocean currents resulted in theMedieval Warm Period from 900to 1300 AD The first to feel thechange were the Vikings whowere able to navigate the north-ern waters colonized Newfound-land colonized Greenland andestablished extensive trade routesas far south as the modern GulfStates On Greenland crops weregrown and there were cattle Thiswould not be possible today Thewarmer wetter climate of Europeproduced excess crops and wealthwhich resulted in the building ofcastles cathedrals and monas-tries As with previous green-house events there was greatprosperity
In 1280 AD volcanic erup-tions on Iceland and a change inocean currents started the LittleIce Age which finished in 1920The North Sea froze in 1303 and1306ndash1307 there was massivefamine in 1315 and the plague
Sea
Surf
ace
Tem
pera
ture
degC
21
22
23
24
25
26
Years Ago
Large temperature changes over the last 200years have been recorded in history and fromthe oxygen isotopes of floating marine animals
Dark Agescold period
Medievalwarm period
LittleIce Age
2000 1500 1000 500 Now
s
12 MARCH 2003
E V I E WR
pandemic attacked the weakenedpopulation in 1347ndash1349 Therewas massive depopulation and ittook Europe 250 years to reachthe population of 1280 AD Dur-ing the Little Ice Age there werewarmer periods associated withsunspot activity During mini-mum sunspot activity (1440ndash1460 1687ndash1703 and 1808ndash1821) the intensely cold condi-tions were recorded by the Dutchmasters and King Henry VIII wasable to roast oxen on the frozenThames There were food short-ages Short cold periods occurredafter the eruptions of Tambora(1815) and Krakatoa (1883) re-spectively In fact 1816 wasknown as the lsquoyear without asummerrsquo This was the time whenTurner painted stormy oceansand skies full of volcanic dustMary Shelley wrote Frankensteinand Byron wrote Darkness
TODAYThe twentieth century and earlytwenty-first century AD are timesof natural post-glacial reboundIce sheets a rare phenomenon inthe history of time still exist Sealevel is relatively low as are glo-bal temperatures and atmos-pheric CO2 Between 1920 and1945 there was a period of warm-ing (037˚C) and another thatcommenced in 1976 (032˚C) In1976ndash1977 global temperaturesin the lower atmosphere jumped03˚C sea surface temperature inthe equatorial Pacific jumped06˚C sea surface temperatureduring upwelling increased 15 to3˚C but there was reduced up-welling the heat content of theupper 300 metres of the worldrsquosoceans increased there was in-creased wave activity in theNorth Sea and the length of theday changed The stepwise in-crease in temperature in 1976ndash1977 shows that there was a ma-jor re-ordering of the ocean heattransport coinciding with anorbital change expressed as a
change in the length of the dayMaybe the global warming of thetwentieth century is just a mea-sure of the variability on a dy-namic evolving planet
To put such measurementsinto perspective over the historyof time changes in atmospherictemperature in the twentieth
century can only be consideredsmall and slow A 24-year globalcoverage of satellite atmospheretemperatures shows only modestwarming in the Northern Hemi-sphere and a slight cooling in theSouthern Hemisphere Tempera-ture measurements from balloonsagree with the satellite measure-ments for the period of overlapBecause greenhouse warming is aphenomenon of the atmospheresignificant changes should havebeen recorded They have not
CONCLUSIONSUnderpinning the global warm-ing and climate change mantra isthe imputation that humans liveon a non-dynamic planet On allscales of observation and mea-surement sea level and climateare not constant Change is nor-mal and is driven by a large num- API
ber of natural forces Change canbe slow or very fast However wesee political slogans such as StopClimate Change or governmentpublications such as Living withClimate Change demonstratingthat both the community andgovernment believe that climatevariability and change are notnormal By using the past as thekey to the present we are facingthe next inevitable glaciationyet the climate economic politi-cal and social models of todayassess the impact of a very slightwarming and do not evaluate thehigher risk of yet another glacia-tion Geology archaeology andhistory show that during glacia-tion famine war depopulationand extinction are the norm
In 1831 Admiral Sir JamesRobert George Graham had theUnion Jack hoisted on a volca-nic land mass that suddenly ap-peared near Sicily It was calledGraham Bank and was claimed byEngland It was also claimed bythe Kingdom of the Two Sicilieswho called it Isola Ferdinandeathe French (LrsquoIsle Julia) andother powers In the subsequentdispute over ownership Franceand the Kingdom of the TwoSicilies almost came to war andEngland and the Two Kingdomsof Sicily had a diplomatic rowDuring the intense diplomaticdispute the island quietly slippedback underwater Graham Banksserves to show that whateverpolitical decisions we humansmake the land rises and falls sealevels rise and fall and climateschange as they have done sincethe dawn of time
Ian Plimer is the Professor of Geology in the Schoolof Earth Sciences at The University of MelbourneThis article is an edited version of his recent paperto the IPArsquos Climate Conference delivered on 28
February 2003 a full version of which can befound on the IPArsquos Website
On all scales of
observation and
measurement sea
level and climate
are not constant
Change is normal
and is driven by a
large number of
natural forces
13MARCH 2003
E V I E WR
FOR two years the worldrsquossecond largest hydrocarbonsproducer spent beaucoupdollars on a clever public re-
lations and advertising campaign toconvince consumers that BP no longerstands for British Petroleum but for Be-yond Petroleum
One advert proclaimed lsquoWersquore oneof the largest producers of natural gashellip and are investing in the new energysources of the futuremdashhydrogen andwind Itrsquos a startrsquo Another tried to getthis line past the guffaw test lsquoWe be-lieve in alternative energy Like solarcappuccinorsquo
Many people expressed surprise thata huge oil company was so committedto alternative energy technologiesThey neednrsquot have
BPrsquos total six-year investment in re-newable technologies was $200 mil-lionmdashthe same amount it spent on thelsquoBeyond Petroleumrsquo advertising cam-paign Thatrsquos certainly an impressivetab for image enhancement But itrsquos adrop in the barrel for futuristic tech-nologies that were the centrepiece forthe slick marketing effort
Indeed all its preening and pufferynotwithstanding BPrsquos actual invest-ment in renewable energy was a whop-ping 005 per cent of the $91 billion itspent to buy oil giants Arco and Amocoback in the 1990s Moreover just as theadvertising campaign was windingdown BP announced it was spending$675 billion for a 50 per cent control-ling interest in a rich Russian oil pros-pectmdashand will be spending another$20 billion over the next five years ex-ploring this and other newer fieldsaround the world
In other words the advertising cam-paign was little more than lsquogreen-washingrsquomdashdisinformation intended topresent an environmentally responsiblepublic image BP wanted people to per-
BPmdashBack to PetroleumPAUL K DRIESSEN
theoretically harmless puffery It also re-flects the desire of many multinationalcompanies to appease critics and gaina public relations advantage over com-petitors by adopting the language ofideological environmentalism
This radical school of thought in-creasingly uses ethical buzz-words anddogmas to justify its demands Chiefamong them are sustainable develop-ment and the precautionary principlethe foundations of so-called lsquocorporatesocial responsibilityrsquo (CSR) and lsquoso-cially responsible investingrsquo (SRI) doc-trines
Eco-activists from affluent Westerncountries developed the doctrines topromote their agendas and oppose en-ergy and economic development BPhas long been at the forefront of theseefforts as a charter member of theWorld Business Council for SustainableDevelopment through frequent meet-ings with activist groups and by fund-ing many radical groups
The activists define what is lsquorespon-siblersquo focusing debate on conjecturalproblems and theoretical needs of fu-ture generations of wealthy elitesmdashandignoring real immediate life-and-death needs of people who struggledaily just to survive The stakes arehuge
More than 15 billion people in de-veloping countries still do not have ac-cess to electricity Half a billion womenand children spend their days collect-ing firewood or squatting in mud andanimal faeces to collect and dry ma-nure for fuel Millions die every yearfrom lung diseases caused by indoor airpollution from cooking fires and dys-entery due to contaminated drinkingwater
Hydroelectric or fossil fuel projectscould provide electricity for familieswater purification plants and economicdevelopment But radical activists op-
ceive it as a lsquosocially responsiblersquo leaderand reward it accordingly Few did
Green activists denounced BP forlsquohypocrisyrsquo and blasted the company forcontinuing to lsquoexploit some of theworldrsquos most sensitive ecological areasrsquoA major business magazine said sim-ply lsquoWell please If the worldrsquos secondlargest oil company is beyond petro-leum Fortune is beyond wordsrsquo
Meanwhile BPrsquos total wind and so-lar electrical output last year was barelyenough to keep the lights burning inRegina Saskatchewanmdashand thought-ful observers are beginning to realizethat wind and solar arenrsquot quite as eco-friendly as activists claim
A single new 555-MW gas-firedgenerating plant in California producesmore electricity than do all the statersquos13000 wind turbines The gas-firedplant occupies about ten acres the gi-ant 200-foot-tall windmills dominatethousands of once-scenic acres and killthousands of raptors and other birdsevery year Current photovoltaic tech-nology is just as habitat-hungry
Worse chief executive Lord JohnBrowne was forced to lower BPrsquos pro-duction estimates three times last yearand the companyrsquos 11 per cent returnon average capital was well below thatof arch-rivals ExxonMobil (137 percent) and Royal DutchShell (148 percent) BP share prices reflected inves-torsrsquo displeasure with its poor perfor-mance and the fact that the companyrsquosprofit margins would not improve for adecade or more if the company re-mained focused on renewable energyand old oil fields
Thus if BP ever really was BeyondPetroleum going Back to Petroleum(and Bigger Profits) was a sound busi-ness decision
However the lsquoGreat Beyondorsquo adcampaign involves more than meregreenwashing and disingenuous but s
14 MARCH 2003
E V I E WR
API
pose these projects and say that theworldrsquos rural poor should be contentwith solar panels on huts
Investors are also at risk particu-larly retirees whose futures depend onpension and mutual funds that ownnearly $8 trillion in market sharemdash50per cent of the total stock marketMany of these funds are managed lessto safeguard or benefit the investor thanto promote radical principles under thedisguise of so-called ethical funds
These funds claim to provide pro-fessional unbiased analytical and ad-visory services But in reality they sup-port political agendas based on often-questionable analyses and on lsquostake-holderrsquo (activist) input to justify howthey grade companies in client portfo-lios They regularly excoriate compa-nies such as ExxonMobil claiming itsrefusal to back the Kyoto climate treatywill destroy shareholder value Mean-while they praise companies such asBP and promote global governanceand solar panels on huts
Australiarsquos energy consumers willbecome yet another example of lsquocol-lateral damagersquo if the radicals havetheir way over global warming Onceagain some of the culprits are right inthe BP boardroom
In 1997 BP chief Browne endorsedthe global warming theory and saidtough measures should be imposedquickly even in the absence of scien-tific proof A Clinton-era Energy In-formation Administration report con-cluded that the climate treaty woulddrain $340 billion a year from the USeconomy The Australian economywould also get hammered And all thispain even assuming perfect compli-ance with the treaty would reduce av-erage global temperatures in 2050 byonly 02˚C below what they would bewithout the treaty according to theUSArsquos National Center for Atmo-spheric Research
But BP Australasia President GregBourne is undaunted Hersquos stumping thecountry from Melbourne to Brisbaneand Darwin to Perth importuning busi-nesses to pressure the PM to ratifyKyoto Could it be pure altruism Ormight the old profit motive be at work
A 1997 memo to Enron presidentKen Lay described BP as Enronrsquos lsquoin-ternational equivalentrsquo Indeed BP isstriving mightily to replace Enron asthe worldrsquos premier broker in the newbusiness of buying and selling permitsto emit greenhouse gases The expec-tation is that playing the climatechange game could earn BP billions ofdollars via traditional petroleum opera-tionsmdashand billions more via emissiontrading schemes The company is al-ready trading credits among its unitsas part of a training regimen for theanticipated emission Olympics
One cannot help but suspect thatthis huge EU oil giant might also bemotivated by Europersquos obvious desireto protect its industries from US and
other foreign competition They clearlysee the Kyoto Protocol not merely asan environmental programme but alsoas a way to pressure the United StatesAustralia and other countries to reduceenergy use and economic productivity
EU Environment CommissionerMargot Wallstrom put it bluntly whenPresident Bush abandoned the Kyotoclimate treaty lsquoThis is not a simple en-vironmental issuersquo she railed lsquoThis isabout international relations this isabout economy about trying to createa level playing field for big businessesthroughout the worldrsquo Several EU of-ficials echoed her sentiments suggest-ing that Americarsquos lower energy taxesconstitute an unfair trade advantagethat could justify trade sanctionsagainst the US
In short what we are witnessing isa profound and disturbing convergenceof ideology activism marketing poli-tics and financial gainmdashall in the ser-vice of radical policy agendas and allbeautifully attired in the lavish raimentof corporate ethics and responsibilityThis is proof positive that social respon-sibility can be a wondrous thing in thedexterous hands of craftsmen who re-ally know how to display and utilize it
How can we stop the charade Forstarters demand that corporate socialresponsibility puts people first puts de-velopment back into sustainable devel-opment and ensures that precaution-ary guidelines safeguard people andcommunities from the havoc wreakedby radical green policies Insist that alldecisions be based on sound peer-re-viewed science and solid evidencemdashnot on hysterical claims and shrillrhetoric by activists regulators andjournalists who reward pseudo-scien-tific soul-mates and pillory any scien-tists who dare disagree with them
Next urge principled regulators andjournalists to investigate these compa-nies and investor firms for self-servingarrangements and breech of fiduciaryduty Demand that the companiesfirms and activist groups open theirbooks and provide full disclosure oftheir meetings contacts and monetaryand other relationships
Last in this era of high-minded re-form prevail upon legislators to changethe law to make these groups subjectto the same false advertising laws andthe same standards of transparency andaccountability that activists insistshould govern for-profit corporationsUnbelievably right now these ideo-logues are mostly exempt
The world will thank you For it willbe a better safer more ethical placemdashespecially for energy consumers retir-ees and the worldrsquos poor
Paul Driessen is a senior fellow for the AtlasEconomic Research Foundation in Fairfax VA This
article is based on his recent white paper lsquoBeyondPetroleummdashor Beyond Probityrsquo which can be read
in its entirety at wwwcdfeorgdriessenhtm
BPrsquos total six-year
investment in renewable
technologies was $200
millionmdashthe same
amount it spent on the
lsquoBeyond Petroleumrsquo
advertising campaign
15MARCH 2003
E V I E WR
FOR three years Reputa-tion Measurement Ltd andThe Age and The SydneyMorning Herald have been
trying to impose their political agen-das on Australiarsquos top 100 corpora-tions They think that Australiarsquos cor-porations should be good citizens andthat by measuring what they think itmeans to be a good citizen they canchange corporate behaviour
Westpac ranked number one on the2002 Index and rated well in everycategory Flight Centre ranked num-ber one on financial performance but47 overall It was in the doldrums inevery other category including beingranked 99 on environment On thesurface this seems very strangemdashFlightCentre manages shopfront travel agen-cies The reason for this bizarre resultwas not hard to find
Reputation Measurement sug-gested that lsquocompanies seeking to dem-onstrate their worthiness as sociallyresponsible organizations are most suc-cessful when they widen their tradi-tional business stakeholder base to in-clude community stakeholdersrsquo Fur-ther lsquo[i]nvestors and consumers are in-creasingly making decisions based onlonger-term issues linked to a com-panyrsquos capacity to contribute to a sus-tainable futurersquo In other words theReputation Index is an instrument foradvancing a number of political agen-das corporate social responsibilitystakeholder capitalism and sustain-ability
For example corporate social re-sponsibility suggests a common agree-ment about what is good Whose defi-nition of good is to be believedmdashtheelectoratersquos or the activistsrsquo In a lib-eral democracy the rules are set by aconsensus that determines not so muchwhat is good corporate behaviour but
The Good Reputation Index 2002A Tale of Two Strategies
GARY JOHNS
what is and what is not acceptablebehaviour The Index is an exercise incapturing the reputation agenda andusing it to regulate corporate beha-viour
Stakeholder theory suggests that allinterests in an enterprise compete toobtain benefits from the enterprise butthat none has priority It is in effectasking lsquoin whose interests should theenterprise be runrsquo It assumes that so-ciety grants an enterprise the right toexist The community through its law-makers may grant licences and certainprivileges in return for the enterprisecomplying with the law It does notlicense stakeholders at large to imposetheir views on the corporation
Sustainability refers to ecologicalsustainability and ecological sustaina-bility is premised on the notion of lim-its to growth based on limits to resour-ces It argues that natural resources arebecoming scarcer It ignores the his-tory of technological innovation of-ten promoted by competition betweencorporations and the fact that such in-novation has extended physical re-sources in ways untold
An analysis of the 2002 Index re-veals that those corporations whosescore improved massively between2001 and 2002 did so because they didnot participate in 2001mdashthey wererated anywaymdashbut did so in 2002Conversely those whose score plum-meted in 2002 did so because they par-ticipated in 2001 but not in 2002Moreover the corporations who rosemassively in the ranks did not changetheir behaviour they just filled out theforms better
Greenpeace were very aggressive intheir attitude to corporations lsquoTo en-able us to verify your responses pleaseprovide us with further supportingdocumentation If hellip we are unable
to verify your response we will defaultyour response answer to a ldquodonrsquot knowrdquowhich will be marked and downgradedaccordinglyrsquo Unfortunately those ofwhom we would expect bettermdashforexample The Brotherhood of St Laur-encemdashalso penalized non-respon-dents As the technique was used byalmost all of the research groups thiswas presumably a deliberate strategy ofReputation Measurement Ltd
More disconcerting were reportsfrom corporations of the researchgroups touting for business by ringingfirms and offering their services to helpfill out the questionnaire Althoughthe level of disclosure has increasedsince the 2001 survey the touting con-tinued
The Index was published in Octo-ber 2002 obviously to coincide withthe reporting season and in the hopethat shareholders would use the Indexto seek changes to corporate behav-iour A sample of the major gainers andlosers on the Index reported no men-tion of the Index More importantlythere was no discernible impact onshare prices
The good news is that the Indexfailed miserably to achieve its objec-tives The bad news is that enough cor-porations played along to keep it alivein certain media and academic circlesIt was a chance for self-appointedNGOsmdashwho provided the ques-tionsmdashto regulate corporations bypublishing a list of good capitalists andbad capitalists Every corporation thatparticipated in the Index should thinkcarefully about whether it can justifythe agenda to its shareholders
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
16 MARCH 2003
E V I E WR
Tomorrowrsquos Reform
RALPH Waldo Emersontold us that lsquoa foolish con-sistency is the hobgoblinof little minds adored by
little statesmen philosophers and di-vinesrsquo and enjoined us lsquoto speak whatwe think today in words as hard ascanon balls and tomorrow speak whattomorrow thinksrsquo While statesmenshould not persist with known errortheir wanton inconsistency makespolicy formulation confoundedly dif-ficult
When he asserted that lsquoWhat de-termines the course of a nationrsquos eco-nomic policies is always the eco-nomic ideas held by public opinionrsquoLudwig von Mises must have hadeven less confidence in little states-men His pupil Friedrich von Hayekurged Antony Fisher not to enterpolitics but instead to found think-tanks which with fact and argumentwould change public opinion
Even among liberalismrsquos oppo-nents few today argue that Misesrsquoand Hayekrsquos ideas and Fisherrsquos liberalthink-tanks did not lead the 1980sand 90s almost world-wide liberal re-vival Why would they when bymuch the same means Fabian So-cialism had brought the welfare stateto Western nations In neither trendhowever were politicians the mereagents of popular opinion Especiallyin democracies political leadersrsquo ca-pacities to ignore it are indeed mod-est but their abilities to influence itare very much less so Even SaddamHussein works hard at influencingIraqi opinion Can we hypothesizethat the ways that leaders use theirinfluence distinguish tyrants fromdemocrats and the purposes forwhich they use it distinguish politi-cians from statesmen
Liberalismrsquos headlong chargethrough the corridors of power could
JOHN HYDE
arguments could have been em-ployed are nonetheless being de-fended by appeal to popular miscon-ceptions of the sort that PaulineHanson the Democrats and Greensactually believe Unless the majorparties have had a radical change ofheart they believe differently
Take the proposed Free TradeAgreement (FTA) with the UnitedStates Trade experts are not of onemind about its net worth My quar-rel is therefore not with the FTAitself but with the Governmentrsquos de-fence of it If the FTA will bring netbenefits then these will come mostlyfrom improved access to Americangoods and capital our own reductionof anti-competitive regulation ofdrugs medical insurance performingarts professional services textilesrural commodities etc and the dy-namic advantages of mixing it withthe Yanks But the government ispromoting the FTA almost solely inmercantilist (exports goodimportsbad) terms
To treat foreign goods servicesinvestment and ideas as an invasionparodies voluntary exchange whichdoes not happen unless both partiesbenefit The Government trumpetsa fact that nobody disputes namelythat it pays to sell into the best pay-ing markets but says nothing to edu-cate us in the advantages of buyingwell from foreigners as well asneighbours Once long ago Howardcriticized Pauline Hanson for her xe-nophobia That day he seemed to un-derstand the benefits of exchangewith foreigners
Until recently Australia hadbeen insisting that the only way toworld trade reform was via the mul-tilateral processes of the World TradeOrganisation and currently theDoha round A bilateral FTA with
not have proceeded without leaderssuch as Margaret Thatcher and ZhouEnlai who changed public opinionas did Bob Hawke in Australia Nowhowever liberalismrsquos charge hasslowed even in some places beensomewhat reversed Canberra hasnot been immune from trends thatsee politicians no longer so firmly re-sisting demands for economic privi-leges or as others see the same phe-nomenon no longer so blindly fol-lowing economic rationalism
Very poor economic decisionsaboundmdashrejection of the Trebeck re-port on petrol pricing preference forethanol production extending mo-tor and textile protection rural sub-sidies taxpayer contribution to theDarwin-to-Alice Springs railwayetc etc But there is also progressThe pride that John Howard takesin the fact that Australians are lessdivided against each other is surelyjustified The hugely importantlabour welfare and arguably also thehealth-care markets have been im-proved Budget balance has beenachieved albeit with high taxes Al-though net legislative and adminis-trative progress toward a more lib-eral more open more efficienteconomy has dwindled it would stillbe fair to say it has not been reversed
Our statesmenrsquos words as hard ascannon balls however that is thoseintended to enlighten rather thanappeal to public opinion are beingreserved for the Iraqi conflict In con-trast in the economic arena we areno longer encouraged to accept anyunwelcome truths Even when de-fending measures that I am morethan content to accept as beneficialthe government seems to select itsargument at best randomly ignoringprinciples of economic efficiency andequity Policies for which textbook
17MARCH 2003
E V I E WR
the US may or may not result in anet increase in trade flows but if itis not a meaningless piece of paperdelivering only political benefits tothe Government it will certainlydivert trade from our other tradingpartners How will China KoreaJapan etc react to losing their lsquomostfavoured nationrsquo status Such ques-tions should be addressed in termsthat do better than reinforce our xe-nophobic prejudices
By appealing to Hansonite mis-conceptions the Government mayand probably will improve itschances of bringing forward a policythat I am more than willing to ac-cept it believes is a good one It isafter all the recommendation of theDepartment of Foreign Affairs andTrade However by so doing it is re-inforcing delusions it must overcomefor further economic reform Whatis more I am reminded of a quip thatI am sure the PM has also heard lsquoNoGovernment is really dangerous un-til it believes its own bullshitrsquo Poli-ticians and I suspect bureaucratsalso are all too prone to believingtheir own utterances Unwilling toadmit their deceptions even whenspeaking in house they quickly con-vince themselves of the truth of theirown and colleaguesrsquo loose rhetoricand worse These are the people whomust negotiate the Agreement whilelooking over their shoulders at anAustralian electorate whose alreadystrong mercantilist tendencies havebeen reinforced by the people bestplaced to disabuse them The poten-tial cost is obvious
The US Free Trade Agreement isbut an example of a tendency thatought to be worrying In debateabout refugee policy motor fuel sup-ply single-desk wheat sales the sup-ply of medical practitioners and pres-ervation of the environment has notthe Government employed argu-ments that are not compatible withits professed liberal philosophy Hasit not seemed that it does not knowthe standard liberal responses to theself-serving demands of vested inter-ests and bigots With due respect to
Emerson consistency allows deci-sions to be made without the neces-sity of thinking every one throughfrom fundamental principles whichnobody in authority has the time orthe mental agility to do
Politically disinterested educa-tors such as the IPA can often callsome pretty good minds to their aidEven so when the Government it-self fosters public misconceptionthey cannot be expected to undo theerror The single greatest sin of thecurrent government is that it is notbuilding opinion for tomorrowrsquos re-form Why not
I suggest because it is politicallydifficult Whereas calls to resist out-siders appeal to deeply ingrainedtribal instincts calls to uphold thecivilizing and wealth-building insti-tutions that afford protection tostrangers and admit their goods ser-vices persons and ideas make nosuch visceral appeal These codes aremuch later developments in themarch of mankind and to manypeople they remain counter-intui-tive They must therefore be de-fended by sustained argumentHayek knew that politicians whosetime horizons in the absence ofknown crises tend to be the nextelection would (to use Howardrsquosown expression) seldom have the
tickers He turned therefore to theless articulate but far more resolutethink-tanks
It is relatively easy to appeal tothe sort of Chauvinism that sur-rounds sporting activity and argu-ments about refugees and meat quo-tas When a Prime Minister talks ofsovereignty guaranteeing our bor-ders or the interests of our exportersor domestic manufacturers he is notnecessarily wrong but his task iseasier than that of defending rulesthat permit voluntary co-operationamong strangers The principle thatdefends the non-unionistrsquos right towork the consumerrsquos right to buy for-eign goods and everyonersquos right tohear alien ideas and which shouldprotect racial and religious minori-ties from exclusion still needs hisleadership
Unless statesmen recognize theinconsistencies that arise not fromthe changed opinions that con-cerned Emerson but from trying tobe all things to all men they arelikely to govern in ways that are un-fair and inefficient If the public doesnot recognize consistency then thelsquolittle statesmenrsquo may find them-selves compelled to yield to the de-mands of the more articulate vestedinterests In such a case Heaven helpthe inarticulate who will be effec-tively disenfranchised But the insti-tutions which when consistentlyapplied give us liberty equity andprosperity are not strongly intuitive
They nevertheless distinguishAustralian society from say Iraqi so-ciety They give us the economicstrength to defy tyrants and they giveus a land worth defending They arecertainly not in danger of disappear-ing but they are in danger of beingeroded Lead us Mr Howard
While statesmen
should not persist
with known error
their wanton
inconsistency makes
policy formulation
confoundedly
difficult
API
John Hyde is a Senior Fellow with the Institute ofPublic Affairs His book Dry In Defence of
Economic Freedom was published by the IPA in November 2002
18 MARCH 2003
E V I E WR
DESPITE the obsessivepublic attention to pricesat the petrol pump thepetroleum-refining sector
rarely registers on the media radarscreen This is unfortunate as the sec-tor fuels most movement of peopleand goods in our economy and soci-ety And it is in trouble
It is fragmented stunted and sur-vives by abjuring profit and mortgag-ing its future Without radical reshap-ing it is likely to wither leaving usexposed to the vagaries of the inter-national refined-products market
FEATURES OF THE AUSTRA-LIAN REFINING SECTORThe first thing to note is that by in-ternational standards Australia is arelatively small player The most re-cent international figures show thatour total output of refined productsin the third quarter of 2002 was 89million tonnes This compared withOECD production of 486 milliontonnes including US production of202 million tonnes Total Australianrefinery capacity of 870000 thousandbarrels per day (bpd) compares withthe figures for China (53 million)South Korea (26 million) and Singa-pore (11 million) Total regional re-fining capacity and production con-tinues to grow as Australiarsquos stagnatesIn the five years to 2000 regional out-put grew by 22 per cent
Second the structure of the indus-try is weak The dispersed geographi-cal distribution of our refining sectorreflects its historical developmentwith each State capital city support-ing one or more refineries Over thelast two decades the number of ma-jor oil companies operating in Aus-
Petroleum RefiningRationalization or Atrophy
JIM HOGGETT
tralia has shrunk from nine to fourAlthough the number of players hasmore than halved the number of re-fineries has reduced by only two fromten to eight The average capacity ofAustralian refineries is around100000 bpd New refineries in theregion are generally significantlylarger Singaporersquos largest has a capac-ity of 375000 bpd
Given the open Australian mar-ket our ex-refinery prices are virtu-ally set by the major exporters in theregion who are also operating on tightmargins Moreover the proportion-ately heavy demand for diesel in SEAsia tends to generate a persistentsurplus of gasoline which is availablefor export to Australia at discountedprices
The pattern of relatively smallscattered refineries is no longer opti-mal in an open market in which weare a price-taker
Third despite its sub-optimalstructure the Australian refining in-dustry is not grossly inefficient Oneindicator is the value added per em-ployee which is in the top five per-formers in the Australian manufac-turing sector
The cost competitiveness of Aus-tralian products is indicated by thefact that we have the cheapest ex-taxprice of petrol in the OECD Perfor-mance comparisons with the rest ofthe AsiandashPacific however suggestthat we lag the average efficiency inthe region And the best performersin the region are superior to our best
Finally the financial performanceof the industry is poor gross annualrevenues for the whole industry in-cluding marketing were $32 billionin calendar year 2001 For the five
years to 2001 the return on assets forrefining and marketing averaged 38per cent and was negative in the lasttwo years The indications are that2002 may have been a better year forthe industry but that the return onassets remains well below the cost ofcapital Over the four years to 2001the fixed asset base of the industrydeclined by almost 6 per cent to $12billion even after $24 billion of newinvestment in the period
This is clearly unsustainable andit raises the question Why is no-oneleaving the game
There are perhaps four main rea-sonsbull First the industry has engaged in
continual productivity improve-ment allowing it to keep withinrange of ruling prices
bull Second each refiner hopes thatsomeone else will blink first sothat the waiting will pay off
bull Third the costs of leaving thetable the exit costs are very highbecause of the nature of the prod-uct and the long occupancy ofmost sites
bull Fourth even while profitability islow the industry has generallybeen marginally cash positive
These add up to a big lsquofirst mover dis-advantagersquo
FUTURE TRENDSClearly petroleum will remain ourmost important energy source Petro-leum products constitute 52 per centof Australiarsquos final consumption ofenergy Liquid petroleum fuels pro-vide more than 95 per cent of Aus-traliarsquos transport needs There are nomajor foreseeable influences that willaffect this pattern dramatically There
19MARCH 2003
E V I E WR
have been major advances in fueleconomy and these will no doubtcontinue But more than counterbal-ancing this is the inexorable growthin demand for personal mobility andfor goods from distant parts Althoughgrowth in energy consumption mayslow down in Australia we will notbe reducing our consumption to anysignificant degree
Our export role will also be lim-ited Australian export volumes havetended to be steady over recent yearsand future new export potential forpetroleum products seems likely to beminimal China and India have re-cently become major exporters par-ticularly of gasoline Refinery capac-ity is planned to continue to growstrongly in the region even thoughthere is already significant excessThe decline in capacity utilization inmajor exporters such as Singaporewill make exporting difficult Further-more it is expected that productspecifications in Asia the US andEurope will converge in the comingyears thereby eliminating niche ex-port opportunities
The choice we face is what to doabout our essentially import-compet-ing industry
INCENTIVES NOT STRONGWhile there are strong pressures forthe industry to restructure there islittle incentive to invest for this pur-pose Investments in the Australianrefining industry have to competewith many alternatives across theglobe
Lack of sufficient return is thesingle biggest deterrent to investmentin the industry at present But thereare othersbull There is no prospect of strong growth
in demand to offset the substantialrisks associated with large new in-vestments
bull The persistent refinery capacity over-hang in our region will keep sus-tained pressure on our margins
bull The corporate taxation regime is nowless favourable than hitherto after thesubstitution of effective-life foraccelerated depreciation The
competing Singapore option offersa three-year write-off
bull The regulatory cost burden is grow-ing This applies to all Australianindustry but is potent in overseascomparisons Tighter fuel stan-dards environmental restrictionsintervention in prices and indus-trial law are some of the factors
bull There is increased sovereign riskstemming from inconsistent regula-tions We have eight parliamentswhich enact inconsistent laws Acurrent example is the higher fuelstandards applied in Western Aus-tralia
bull The sovereign risk also arises fromuncertainty in the regulatory processThere are unpredictable changesof direction (the deferral of thediesel sulphur excise differential[DSED]) and uncertainty in theface of conflicting interests (willthe Government act on ethanolcontent)
All these factors enter into the riskreward calculation When the re-wards are minimal the risks take onan extra dimension
WHAT INDUSTRY STRUC-TURE DO WE NEEDThe short answer is we cannot knowin detail
In the Downstream Petroleum In-dustry Framework 2002 the Depart-ment of Industry Tourism and Re-sources set out a broad vision
bull A preference for market-based so-lutions
bull A strong efficient environmen-tally responsible industry supply-ing most of the nationrsquos needs forproducts
bull Regulation only for market failureor national interest objectives
bull Regulation to be transparent andconsistent
bull Reform and regulation to maxi-mize long-term community ben-efitThis vision has some prescriptive
elements but the Government hasmade it clear that it will not nomi-nate an optimal number of refineriesor a pattern of production
The general public would probablyopt for a structure that guaranteedlower more stable automotive fuelprices Unfortunately they cannothave both in the short term
In fairness the investors in the in-dustry are the ones entitled and bestfitted to determine its future In theextreme they will do it anyway bypersisting or walking away Generallyspeaking they will seek to maximizetheir returns and thus promote themost efficient use of resources
Australian refineries are not inef-ficient but that is not the point Ourmarket is open so the competitionwe face is the best of the overseas per-formers often with more favourabletax and subsidy regimes
Nor is this simply a question ofclosing the smallest refineries A bet-ter approach might well be to allowrefining companies to concentrate onwhat they do bestmdashperhaps throughrefinery alliances Caltex and Shellhave co-operated in this way in Thai-land
The fact is that the detail of thedecisions can only be made by theindustry relatively free of governmentdirection The series of detailed de-cisions entailed will determine theoverall structure of the industry
COMPETITION REGULATIONCAN IMPEDE RESTRUCTURINGThe relevant provision of Section 50of the Trade Practices Act (TPA) pro
While there are
strong pressures for
the industry to
restructure there is
little incentive to
invest for this
purpose
s
20 MARCH 2003
E V I E WR
hibits mergers or asset acquisitionsthat would have the effect or belikely to have the effect ofsubstantially lessening compe-tition in a marketIt is both potentially and in prac-
tice an extremely restrictive provi-sion The Australian Consumer andCompetition Commission (ACCC)has expressed concern at concentra-tion in the sector in applying the pro-vision
The ACCCrsquos concerns seem ex-aggerated in the light of history Butthey are complemented by a persis-tent public misapprehension thatlarge petrol price swings equal profi-teering This perception has been soexploited for political advantage andmedia excitement that it is now al-most impossible for the truth toemerge
The future intensity of competi-tion in this industrymdashif it is allowedto restructuremdashshould not be indoubt Any rationalization would inall likelihood still leave strong do-mestic competition in each majorproduct category perhaps with fewermore efficient production units
The market is also contestableThere would be numerous potentialimporters and many independent re-tailers High margins would be rap-idly eroded by competition As re-cently ruled in the Boral case mar-ket reality is more conclusive than aperception of anti-competitiveness
Proposed mergers have been per-mitted in the past but the process isslow and permission is generally onlygranted with severe conditionsNonetheless there is a strong case forallowing restructuring within theterms of the merger provisions
AUTHORIZATION COULD BETHE KEYIf Section 50 of the TPA is an im-passable barrier then the authoriza-tion provisions of the Act could bethe way to greater efficiency The testsunder these provisions require a pub-lic benefit which outweighs the com-petition detriment The ACCC listsfostering business efficiency industry
rationalization and import-competi-tiveness as important public benefits
There is a strong prima facie casethat rationalization of the industrycould satisfy these tests It wouldallow greater scale of productioneconomies in distribution and closureof the least efficient production units
But the authorization process isslow and the onus for demonstratingthe public benefits rests on the appli-cant Slow process can amount to ef-fective rejection
POLICY OPTIONS AND REC-OMMENDATIONSIf government cannot help the indus-try to adjust it should allow it to ad-just by supporting sensible changeThis would involve both improving
the operating environment throughregulatory reform and altering thebalance of competition regulation sothat the industry could restructurevoluntarily The CommonwealthGovernment has already indicated awillingness to support both but hasnot yet delivered
The ball would then be in theindustryrsquos court to bring forward newproposals if a new policy environmentcould be created This could all hap-pen within a very broad strategicframework agreed with the industrywhereby Australia continued to besure of sufficient refining capacity tomeet a severe international fuel short-age
We therefore recommend thatbull The Commonwealth Govern-
ment provide explicit indicationto the ACCC of the public ben-efits it sees from the rationaliza-tion of the refining sector In par-ticular joint ventures should becontemplated
bull The ACCC give sufficient weightto the public interest benefits ofrestructuring to allow rationaliza-tion of production facilities
bull All governments reduce distortingfuel subsidies and taxes that favourparticular sectors or fuels
bull The State Governments act im-mediately to harmonize their regu-lation of the industry and agreenot to issue any new inconsistentregulation
bull More specifically the States havea single set of fuel standards withwhich refiners can reasonablycomply withdraw from all formsof price regulation and refrainfrom thwarting or distorting therationalization process
bull Governments generally not intro-duce new regulations mandatingthe use of alternative fuels
CONCLUSIONThe choice for the industry appearsto be between accelerated rational-ization and atrophy The process ofchange is something which the indus-try must plan and effect The task isnot impossible but it will require theactive support of government at alllevels For the time being there is anexpressed willingness at the Com-monwealth level but no real solu-tions
If nothing is done the refiners willcontinue to stumble along in a regu-latory fog and will invest only whenobliged to do so by changing fuel stan-dards They will become increasinglyvulnerable to low-priced imports andeventual closure
Jim Hoggett is a Senior Fellow at theInstitute of Public Affairs
If Section 50 of the
TPA is an impassable
barrier then the
authorization
provisions of the Act
could be the way to
greater efficiency
API
Last week the Government tabled 22 volumes of theCole Royal Commission into the Building andConstruction Industry Former Court of Appeal judgeTerence Cole made 392 specific findings of unlawfulconduct and in the confidential final volumerecommended that 31 individuals be referred for possiblecriminal prosecution As was to be expected theconstruction unions claimed that the report was a witch-hunt and people who should have known better claimedthat Cole was biased
The anti-union allegations were never very plausiblegiven that most unions had refused to cooperate withthe Commission and had even boycotted theCommissionrsquos special conference on occupational healthand safety As things have turned out one of their ownhas fatally undermined the unionsrsquo case No less anauthority than the National Secretary of the ConstructionDivision of the CFMEU has unwittingly confirmed thatCole is right In what was no doubt an unguardedmoment John Sutton admitted to a Melbournenewspaper that ldquovirtually everything we do breaches partof this Actrdquo Suttonrsquos admission means that Colersquosdescription of a largely lawless industry can be disputedat the margins but not credibly denied The problemsof the industry have been established beyond credibledoubt and the question now is what needs to be doneabout it
Nothing says the CFMEU because itrsquos alright tobreak the law in the best interests of the working classLeading union officials take the view that in a toughindustry only wimps take the law seriously The newsthat ldquoonlyrdquo 31 individuals had been recommended toface criminal charges was greeted with somethingapproaching jubilation as if the industryrsquos code of silencebased on fear had largely kept the Royal Commission atbay
As the Australian Financial Review commented in aneditorial the unionrsquos dismissive reaction to Colersquos report
ldquospeaks as loudly as his damning findings of entrenchedlawlessnessrdquo Imagine the reaction if a royalcommissioner had identified 31 people in the financeindustry or the steel industry for possible criminalcharges This would rightly be regarded as the sign ofan industry in crisis demanding urgent governmentintervention
Change wonrsquot be easy in an industry conditioned tothink that might is right Change which shifts powerfrom one unscrupulous group to another will not bereform As Grocon has discovered the first company toldquobuck the systemrdquo is liable to heavy-duty industrialpayback No one wants to be the first to change butchange is necessary in the national interest
In 2002 the Victorian construction industry aloneaccounted for 17 per cent of all days lost through strikesThe West Australian construction industry accountedfor another 8 per cent of the national strike tallyConstruction is a $40 billion a year industry comprisingnearly six per cent of GDP and employing nearly500000 Australians Due to over-manning demarcationdisputes and chronic stoppages labour productivity incommercial construction averages 13 per cent less thanin home building Plastering the same wall in the sameway costs 40 per cent more in a high rise building thanin a standard house Just raising labour productivity incommercial construction to the home building standard(let alone the 50 per cent increase needed to match NorthAmerican levels) would mean according to Econtech aone per cent drop in the cost of living a one per centincrease in GDP and $23 billion in benefits toconsumers workers and taxpayers every year
Still change is about decent Australian values notjust a more efficient industry Workers donrsquot like latenight house calls compulsory attendance at demos anddays spent sitting in the shed to make an industrial pointany more than bosses Threats of violence contempt forcourt and commission orders mob rampages when one
Restoring the Rule of Law in theConstruction Industry
Tony Abbott MHR
s
As this issue of the IPA Review was at the press we were alerted to the delivery of the following speechby the Minister for Employment and Workplace Relations The paper marks a seminal change in the
governmentrsquos approach to systemic corruption in the construction industry and isanother major step in the reform of workplace relations in Australia
SI-1MARCH 2003
IPA REVIEW SPECIAL INSERT
side doesnrsquot get its way habitual failure to honouragreements and routine harassment of people exercisingtheir legal rights are not acceptable in modern Australiaand cannot be excused even in a good cause
Breaching ldquobourgeois lawrdquo may not matter tomilitant activists but few others take such a self-indulgent view Itrsquos said that ldquooppositions can afford tobe irresponsiblerdquo but no government or alternativegovernment can accept the principle of optionalobedience to the law of the land No less than the HowardGovernment the federal Labor Opposition and the stateLabor Governments understand the dangers of playingpolitics with the rule of lawmdasheven theauthority of laws they might preferto change such as the federal WorkplaceRelations Act
The rule of law is not asmorgasbord from which a fewfavoured items can be chosen and therest ignored Freedom under the lawrequires respect for the law generallynot just the laws individualspersonally support Obedience to thelaw is not a question of choice It is arequirement of civilisation because thelaw is our guarantee of equaltreatment after a fair hearing ldquoBe youever so high the law is above yourdquoThis reproach hurled at the Stuartkings has rightly echoed through thecenturies as a warning against theconceits of office and the arrogance ofpower regardless of the cause in whichitrsquos exercised
After last weekrsquos meeting of theWorkplace Relations MinisterialCouncil of the Council of Australian Governments stateand territory ministers were keen to declare in acommuniqueacute ldquothere was unanimous agreement thatunlawful behaviour in the building and constructionindustry is not acceptablerdquo This was an importantaffirmation of the rule of law in circumstances wheresome Labor ministers might have been tempted to putpolitics ahead of principle
Unfortunately the state and territory ministerssupported more powers for the Australian IndustrialRelations Commission to settle construction industrydisputes In fact the Commission already has power tosettle disputes Whatrsquos missing is effective power toenforce agreements The issue is not settling disputesThe issue is enforcing the law
The construction industry typically conducts itselflike this A certified agreement is in place including anagreed dispute resolution procedure Unions identify agrievance often a spurious safety issue Agreed disputeprocedures are not followed and a strike ensues eventhough strikes outside ldquobargaining periodsrdquo areldquounprotectedrdquo and theoretically subject to damagesorders At that point employers often ask theCommission to end industrial action but instead ofordering an immediate return to work because anagreement has been breached the Commission willtypically seek to conciliate on the basis of the ldquomeritsrdquo
of the issue After a couple of dayswith costs escalating and liquidateddamages looming the employerinvariably agrees to rectify the matteralleged and to pay increasedallowances (including pay for days onstrike) At this point the Commissionorders a return to work on the basisof the agreed settlementmdashwhich lastsonly until the union decides on itsnext move
The union has ignored the law andbroken its original agreement buttypically suffers no adverseconsequences whatsoever Theemployer has been manoeuvred intoconceding most of a demand thatshould never have been made Afaccedilade of legality conceals a travestyof unionism and a travesty of justiceNearly all construction industrystrikes are unprotected and potentiallyunlawful under section 170MN of theWorkplace Relations Act Even so
employers nearly always opt to pass the costs ontoconsumers while existing arrangements for gatheringinformation launching prosecutions and imposing finesdonrsquot work well anywhere but hardly work at all in anindustry where giving evidence against the unions isthought to mean commercial suicide
The construction industry is a classic case not ofmarket failure but of regulatory failure The fact thatthe construction industry does not face potential importcompetition limits its exposure to market discipline Stillthe main reason why unions can get what they want frombusiness and business can get what it needs from haplessconsumers is the absence of independent policing andenforcement of the industrial equivalent of fair tradinglaws To an extraordinary degree in this industry the
SI-2 MARCH 2003
IPA REVIEW SPECIAL INSERT
The rule of law is nota smorgasbord from
which a few favoureditems can be chosenand the rest ignoredFreedom under thelaw requires respectfor the law generally
not just thelaws individuals
personally support
request documents but they canrsquot compel witnesses toanswer or demand that material be produced Althoughit is a criminal offence under the Workplace Relations Actto hinder workplace inspectors the Cole report notedthat no prosecutions have yet been launched despiteevidence that Office of the Employment Advocateinspectors have been abused had objects thrown at themand their property damaged It has been commonpractice for the arrival of OEA inspectors to lead to workstoppages and even site invasions in a bid to thwart anddemoralise an independent investigator not susceptibleto the unionrsquos usual weapon of commercial retaliation
One of the problems with theworkplace relations system is theassumption that parties will enforcethe law against each other This worksup to a point in industries whereworkplace parties are more-or-lessevenly matched and the issues are theworkplace equivalent of an argumentbetween neighbours over the heightof a fence It completely breaks downwhen one side has an effectivemonopoly over the supply of labourand disputes resemble a more-or-lessnormal family telling the house fullof footballers next door that the partyrsquosover Expecting contractors to enforcethe law against the CFMEU is likeexpecting people in the street to makecitizenrsquos arrests hence Colersquos principalrecommendations are an AustralianBuilding and ConstructionCommission to investigate prosecuteand enforce the provisions of a beefed-up industry specific workplace
relations actYesterday Cabinet decided to support Colersquos key
recommendations First the Government will seek aseparate act governing workplace relations in theconstruction industry providing for secret ballots beforestrikes compulsory cooling off periods after extendedstrikes and damages awards in the event of unprotectedindustrial action Second the Government will establisha new law enforcement agency for the industry withpowers to compel witnesses to testify bring prosecutionsand enforce judgments and with sufficient on-the-ground presence to police CBD building sites Thirdthe Government will establish a Safety Commissionerto monitor federally-funded construction sites to try toensure that these become industry models Fourth the
s
commissions lack sufficient power the courts lacksufficient speed the employment advocate lacks sufficientauthority and the police lack sufficient interest
Not before time the Cole Commission has acted as agiant searchlight probing the dark underside of thispotentially great Australian industry It confirmed whatpolicy makers had long suspected and what influentialinsiders knew but had always tried to deny or explainaway that the industry operates under the rule of thejungle and that there will be no improvement until thepeople who work in it understand that the law has to betaken seriously Legislative institutional and structuralchange will start to mean somethingwhen law breakers in this industry arecharged convicted and punished likelaw breakers everywhere else A fewsalutary bars of that old song need towaft over construction sites ldquoI foughtthe law and the law wonrdquo
Late last year in response to theRoyal Commissionrsquos first report thefederal Government set up theBuilding and Construction IndustryInterim Task Force The Governmentrsquosbrief to the Task Force is to ensure zerotolerance of industrial law-breakingThe Task Force is not primarily toenforce the tax laws or the safety rulesbecause other bodies exist for this(although the Task Force will certainlyshare information with them) TheTask Force is to investigate and enforceWorkplace Relations Act prohibitions oncoercion unprotected strikes strikepay and breach of industrialagreements So far the Task Force hasvisited nearly 300 sites launched more than 50investigations brought three prosecutions and referrednine other matters to state police the Australian FederalPolice or the Australian Competition and ConsumerCommission for further action
These are the first public prosecutions arising out ofindustrial action in the construction industry at leastsince the 1980s and are the result of a public policycommitment to law enforcement not seen since thehumiliating Clarrie OrsquoShea case in 1969 and the end ofldquopenal sanctionsrdquo Yesterday Cabinet decided to extendthe interim Task Forcersquos operations until more permanentarrangements to secure the rule of law can be established
Task Force agents have the powers of inspectors underthe Workplace Relations Act They can enter premises and
SI-3MARCH 2003
IPA REVIEW SPECIAL INSERT
The main reason whyunions can get what
they want frombusiness and businesscan get what it needs
from haplessconsumers is theabsence of inde-
pendent policing andenforcement of the
industrial equivalent offair trading laws
API
Government will insist on the application of theNational Construction Code and implementationguidelines to all significant new projects which are fullyor partly federally funded
Directly or indirectly the federal Government fundsabout $5 billion worth of construction projects everyyear and is determined to use its role as client to drivechange in the industry In essence the NationalConstruction Code stipulates that construction projectsmust take place in conformity with the WorkplaceRelations Act Under the Code and implementationguidelines the federal Governmentwill not engage tenderers whoseworkplace agreements and practicesensure a closed shop on site The TaskForce (and any replacement body) willhave full access to federally fundedsites to ensure that the law is beingobserved and workplace agreementscomplied with
For the federal Government theissue is upholding the law and tryingto tackle the ldquounion rulesrdquo culturewhich is at the heart of lawlessness inthe industry For the states the issueis whether they are prepared to refusefederal money in order to protect theclosed shop However much theymight prefer different federal laws thestates ought to accept thatconstruction projects have to complywith the law as it stands includingthe law mandating compliance withcertified agreements
State Labor governments whichhave made a point of their middle-ground credentials risk losing some$4 billion a year in federal building and constructiongrants if they side with the union movementrsquos mostmilitant minority There are likely to be limits to Laborrsquosdefence of a union whose stock-in-trade (at least in somestates) is the site invasion and the demand for paymentand which quietly reinstates organisers sacked for assaultor perjury Opposition senators will find it hard to brandas ldquoideologicalrdquo the recommendations of a royalcommission which spent 171 days in public hearingsand which pursued 11 shop stewards and 97 unionofficials to obtain their side of the argument
As Justice Cole pointed out in his report previousattempts to reform the industry have proven ineffectivedespite two earlier royal commissions and numerous
SI-4 MARCH 2003
IPA REVIEW SPECIAL INSERT
enquiries Although this Royal Commissionrsquosinvestigations seem to have temporarily checkedlawlessness in the industry a campaign is now emergingto extend the anarchic culture of CBD construction intoregional centres and the domestic housing industryThings will certainly be different this time if parliamentapproves a permanent well resourced watchdog withnew powers new personnel and new attitudes Unlikeprevious arrangements a new statutory watchdog withthe powers of a law enforcement agency should beeffective and permanent
Hundreds of people took big riskswith their commercial future and eventheir personal security to testify to theRoyal Commission It should neveragain be so hard for people in thisindustry to exercise their ordinaryrights and responsibilities asAustralian citizens They expected theGovernment to take the Commissionrsquosreport seriously and the Governmentfor its part is determined not to letthem down The Governmentunderstands that joining fights yoursquorenot prepared to win only makes badsituations worse Establishing the ruleof law in the construction industry isa challenge Australia canrsquot afford tofailSome of the worldrsquos best workersshould no longer have to put up withsome of the worldrsquos worst industrialpractices They have a right to anhonest industry where they can earna fair dayrsquos pay for a fair dayrsquos workand expect to come home uninjuredThe enduring image of this industry
should not be noisy marchers replaying the ideologicalstruggles of the 1970s and raising clenched fists againstauthorities they donrsquot like At its best the Australianindustry is capable of work which is stunningly beautifulyet intensely practical and it now needs to performconsistently on time on budget and in accordance withlaw
Hundreds of peopletook big risks withtheir commercial
future and even theirpersonal security totestify to the Royal
Commission It shouldnever again be so
hard for people in thisindustry to exercisetheir ordinary rights
and responsibilities asAustralian citizens
NOTE
The foregoing speech was first delivered as an Addressto the National Press Club on 2 April 2003
21MARCH 2003
E V I E WR
IN psychology behaviouris defined as irrational ifan action continues to berepeated despite its re-
peated failure to achieve the desiredoutcome On this definition our aidpolicy towards Papua New Guineahas been irrational
Despite over twelve billion dol-lars in Australian aid to PNG sincethat countryrsquos independence in 1975key development indicators such asliteracy rates infant mortality lifeexpectancy and real income percapita are either stagnating or dete-riorating Worse wersquove known forover a decade1
Today acknowledgement of thefailure of our aid policy in PNG hasgone well beyond the writings of in-dividual international policy analystssuch as myself to institution-spon-sored reports such as Beyond Baliwhich was released by the AustralianStrategic Policy Institute (the Aus-tralian Governmentrsquos own strategicpolicy adviser) and Papua NewGuinea on the Brink which was writ-ten by Susan Windybank and MikeManning for the Centre for Indepen-dent Studies Both reports confirmthe gross failure of Australian aidpolicy in PNG
Yet still our aid policy irrational-ity towards Papua New Guinea con-tinues While the ASPI and CIS re-ports acknowledge the gross failureof our aid policy in PNG they alsoargue that we need to continue ouraid to that country Indeed the ASPIreport argues that we should increaseour aid to Papua New Guinea Thepolicy saviour The ASPI report ar-gues that we should exert greater con-trol over our aid Not just over theform of our aid but direct interven-tion in policy and implementation inPNGmdashin essence for a return to pre-
Aid Detox for PNGPETER URBAN
independence days in PNG whereas UN-sanctioned administrator weran government in that country
Despite the mind-frame of secu-rity-focused strategists such as thoseat ASPI and the CIS (which en-dorses the aid approach advocated byASPI) the reality is that we canrsquotPNG is now independent and to ig-nore this reality would simply com-pound the problems of our past aidpolicy irrationality with irrationalityabout our political relationship withour nearest neighbour
A more interventionist aid policytowards PNG on our part as advo-cated in Beyond Bali and by HughWhite (the executive director ofASPSI) in the media might havepopulist appeal but it would haveserious adverse implications for ourrelationship with other Pacific islandcountries and even IndonesiaWorse it would give succour to theviews of our east Asian critics (suchas Malaysian PM Dr Mahathir) whoclaim that Australia continues toharbour colonial aspirations
We have to accept that to be suc-cessful aid policy must not just helpreduce mass poverty it also has to doso as a guest in the aid recipientcountry To do otherwise is not aidbut imperialismmdashwhether inten-tional or not
A more interventionist approachto aid policy in PNG would also givethe current corrupt political elite inPort Moresby a rallying point againstus and an excuse to delay changingtheir own policies Neither Austra-lia nor PNG can afford any furtherdelays to policy reform For us to givePNG politicians yet another excuseto delay reform would be not onlyirrational it would be inexcusableWhile our aid continues so will thecorrupt elite that is at the heart ofPNGrsquos problems Until we send themessage to the PNG political elitethat we are prepared to stop ouraidmdashto put them on aid detoxmdashwewill continue to waste our aid in thecorruption that is PNG politics Itmay be hard to accept but the sadreality we face in PNG is that no aidmay prove to be good aid at least inthe short to medium-term2
NOTES
1 Peter Urban lsquoOne Clear ObjectiveNo Clear Approachrsquo IPA Review1997 Vol 50 No 1
2 With Iraq also likely to require verysignificant Australian aid fundingover the next few years the Gov-ernment will need to review our aidprogram as part of the 2003-04 fed-eral Budget A decision to suspendaid to PNG could be taken as partof that review
Peter Urban is former chief economist with theDepartment of Foreign Affairs and Trade
We have to accept
that to be successful
aid policy must not
just help reduce
mass poverty it also
has to do so as a
guest in the aid
recipient country
API
22 MARCH 2003
E V I E WR
IN his speech to the Na-tional Press Club on theprospect of war with Iraqand the case for disarma-
ment Prime Minister Howard statedthat Australia will play a significant hu-manitarian role in Iraq
If so the Howard Government needsto evaluate carefully the foreign-aid non-government organizations (FANGOs)which it funds to carry-out this humani-tarian programme Many FANGOshave made it clear that they do not sharethe Australian Governmentrsquos objectivesand values in Iraq Moreover some donot agree with the Governmentrsquos over-all aid policies in general
THE COALITION OF THEUNWILLINGIn the lead-up to latest Gulf War some30 Australian aid agencies put theirnames to an Open Letter to the PrimeMinister organized by the AustralianCouncil of Foreign and Overseas Aid(ACFOA) The aim of the letter was tolsquospeak out against war in Iraqrsquo and it ex-pressed grave concerns about the hu-manitarian consequences of the war andthe effects of the existing sanctions1 TheFANGOs that signed the letter wereOxfam Community Aid Abroad WorldVision Australia TEAR AustraliaUnion Aid Australia - APHEDACaritas Australia National Council ofChurches Australian Council for For-eign and Overseas Aid Save the Chil-dren Australia CARE Australia OzGreen United Nations Association ofAustralia Family Planning AustraliaMercy Works Marist Mission CentreAustralia Every Home for Christ Bap-tist World Aid for Christ CCF Austra-lia Quaker Service Australia Austra-lian Lutheran World Service AustralianRelief and Mercy Services AnglicanBoard of Mission AUSTCARE Com-munity Development and Health
Irreconcilable DifferencesDON DrsquoCRUZ
Hussein have been virtually ignored isa searing indictment of the warped ide-ology feeble analysis and moral blind-ness of the sector For them now to re-discover the plight of the Iraqi peopleand to invoke their name in the mediais beyond contempt
THE OXFAM COMMUNITYAID ABROAD POSITIONOf the 30 FANGO signatories to theopen letter Oxfam Community AidAbroad (OCAA) has been perhaps themost outspoken It opposed military ac-tionmdasheven with UN Security Councilapproval4 In spite of all the evidence tothe contrary OCAA was comfortablewith Saddam Husseinrsquos assurances thathe did not have weapons of mass destruc-tion5 Adopting the common policyagreed to by the other Oxfam affiliatesOCAA stated that it will not take anymoney from the lsquobelligerentsrsquomdasha quaintterm used to the describe democraticnations planning to disarm a dictatorguilty of countless human rights abuses
OCAArsquos outrage against the so-called lsquobelligerentsrsquo appears to be geo-graphically confined to Iraq OCAAappears happy to take governmentmoney from the belligerents elsewherearound the world
According to OCAArsquos ExecutiveDirector Andrew Hewitt refusing totake money from the belligerents wasdone to lsquoprotect its impartialityrsquo6 Thisis a very curious position from Australiarsquosarguably most political FANGOOCAA has a long track-record of beinganything but impartial or reluctant totake sides in miliary action It wasnrsquotimpartial in East Timor where it sidedwith Fretlin in its quest for indepen-dence According to its own testimonyto a Senate committee OCAA wasgiven the choice by the IndonesianGovernment between lsquoplaying politicsrsquoor delivering aid projects in Indonesia7
Group Amnesty International Austra-lia AngliCORD Australian Aid forCambodia Fund Burnet InstituteRedR Friends of the Earth PLAN Aus-tralia and Australian Volunteers Inter-national2
This open letter highlighted a num-ber of problems with the FANGOs sec-tor First it highlighted the weak logicthat passes for advocacy in the sectorThe letter argued against military actionwas critical of sanctions and suggestedthat nations should settle issues only bydiplomatic means It is a viewpointwhich totally ignores the fact that theGovernment had to deal with SaddamHussein
The shallowness of their logic wasbest exposed by the Prime Minister inhis response to the open letter in whichhe stated that the humanitarian situa-tion in Iraq is best addressed by SaddamHusseinrsquos removal and perhaps morepointedly that Saddamrsquos manipulationof foreign aid had allowed him to main-tain and pursue his weapons of mass de-struction capability and human rightsabuses3
Second it also highlighted the factthat the so-called lsquohuman rights-basedapproachrsquo to development (embraced byseveral of the signatories) is not so muchabout realizing human rights (as its pro-ponents argue) but is more about pro-viding them with an excuse to lsquoplay poli-ticsrsquo According to the theory the hu-man rights-based approach to develop-ment allows FANGOs to tackle the rootcauses of poverty and injustice
Yet the root cause of the Iraqipeoplersquos suffering can be summed up intwo simple wordsmdashSaddam HusseinThe fact that the FANGOs who sub-scribe to this particular approach havebeen obsessed with imaginary humanrights abuses committed by Shell NikeRio Tinto BHP-Billiton and AuroraGold while the activities of Saddam
23MARCH 2003
E V I E WR
It chose the former thus making it per-sona non grata in Indonesia for almost adecade8 It wasnrsquot impartial inMozambique when it sided with Frelimoin the countryrsquos civil war9 It wasnrsquot im-partial in Ethiopia when it developedlinks to the Eritrean Peoplersquos LiberationFront during its war against the thengovernment10 It was not impartial oranti-war when it sided with the TigrayPeoplersquos Liberation Front in the neigh-bouring province to Eritrea when thatgroup was waging a guerrilla war againstthe government11 And recently therehave been claims that in the Middle Eastit was little more than an lsquoeager propa-gandistrsquo for the Palestinians12
In East Timor Ethiopia and Mozam-bique OCAA was linked with organi-zations which supported direct militaryaction that led to the deaths of thou-sands of civilians In none of these loca-tions were the enemies of their friendany worse than Saddam Hussein In-deed in many cases OCAArsquos friendswere arguably no better than their en-emies in terms of human rights
OCAArsquos decision not to accept Aus-tralian Government funding is the cor-rect one in the sense that it clearly doesnot share the Governmentrsquos values onthe question of Iraq and thereforeshouldnrsquot receive any governmentmoney
Hewitt went on to state in a pressrelease that lsquoWe will not take funds thatmight allow a government to use hu-manitarian efforts as an instrument offoreign policyhelliprsquo13
This is finemdashexcept the AustralianGovernmentrsquos foreign aid is an instru-ment of foreign policy And it always hasbeen This is spelt out quite clearly inthe Australian Governmentrsquos latest for-eign and trade policy White Paper Ad-vancing the National Interest14
FANGOs that cannot accept thisrather basic proposition should not begetting taxpayersrsquo money They areclearly unsuitable for the task at hand
The consequences of Australian tax-payersrsquo money falling into the wronghands were brought home to Prime Min-ister Howard when he met IndonesianPresident Megawati Sukarnoputri to dis-cuss the war against terrorism and
Australiarsquos involvement against Iraq Atthe top of the Indonesian agenda wasthe issue of Australian funding toFANGOs being used to support sepa-ratist movements in Indonesia15
Post-war Iraq will be a better placewithout Saddam Hussein and his thugsThis does not mean that it will be a safeplace or necessarily a stable place Afterall one of the reasons for Western tol-eration of Saddam Hussein for manyyears was his ability to hold the various
ethnic minorities in Iraq together albeitrather brutally thereby maintaining abalance of power in the Middle East Hisdeparture would see strains on Iraq fromthe various ethnic minorities that makeup Iraq There is a strong chance thatIraq will fragment
The last thing the Australian Gov-ernment or any of the so-called belli-gerents needs in a post-war Iraq is west-ern NGOs running around and becom-ing self-styled advocates for national self-determination for Iraqrsquos ethnic minori-ties and injecting themselves into Iraqrsquosinternal politics This is a real risk Thebehaviour of Australian foreign aidNGOs in Indonesia should make Aus-tralian decision-makers extremely waryof funding any NGOs with Australiantaxpayersrsquo money so that they can oper-ate in Iraq
As things stand now FANGOs facevery few restrictions on their actionsfrom government If they undertake ac-tivity that is inconsistent with being anagent of government they may losefunding for specific projects or in moredramatic circumstances lose funding ina country Nonetheless they are gener-
ally able to access Australian Govern-ment funding for other projects andcountries In other words the penaltiesfor becoming caught up in political ac-tivities are very light for NGOs and posethem no serious problems
Foreign aid NGOs that lsquoplay politicsrsquoare unsuitable contractors for the deliv-ery of aid That these overtly politicalorganizations have been allowed to gaingovernment accreditation and receivegovernment funding points to some se-rious problems at AusAID Australiarsquosofficial aid agency The time has comefor this to change
NOTES1 httpwwwacfoaasnaumedia_releases
2003_releases26_3_03PDF2 httpwwwacfoaasnauemergencies
openletterPDF3 httpwwwacfoaasnauemergencies
iraq_responsehtm4 Oxfam Horizons Vol 3 No 1 (Febru-
ary 2003) page 25 Oxfam Community Aid Abroad lsquoIraq
Overviewrsquo February 20036 Hewitt quoted in Liz Gooch lsquoOxfam
wersquoll say no cashrsquo The Age 16 March2003
7 Community Aid Abroad Submission tothe Senate Foreign Affairs Defence andTrade References Committee Inquiryinto East Timor Downloaded at httpwwwcaaorg aucampaignssubmissionstimorhtml
8 Ibid9 Susan Blackburn Practical Visionaries A
Study of Community Aid Abroad (Mel-bourne Melbourne University Press1993) page 313
10 Ibid pages 325-333 passim11 Ibid12 Gerald Steinberg lsquoPropaganda vs Hu-
manitarianismrsquo Australian Financial Re-view 7 June 2002 Downloaded at httpfacultybiuacil~steingconflictopedpropvshumanitarianismhtm
13 ht tp wwwcaa o rg au p r 2003 iraqfundshtml
14 httpwwwdfatgovauani15 Dennis Shanahan lsquoJakarta fears aid funds
for rebellionrsquo The Australian 17 Febru-ary 2003 page 2
Don DrsquoCruz is Research Fellow at the IPAand Director of IPArsquos NGOWatch
OCAA has a longtrack-record of
being anything butimpartial or
reluctant to takesides in miliary
action
API
24 MARCH 2003
E V I E WR
GEORGE Bush Tony Blairand John Howard haveprovided many reasons forsupporting military action
against Iraq One of those reasons hasbecome known as the lsquohumanitarianrsquojustification Put simply the lsquohu-manitarianrsquo justification for the US-led invasion of Iraq is that such ac-tion is necessary to free the Iraqipeople from their totalitariandictator
Such an argument is attractive tothose who believe that there aresome fundamental human rights thatall individuals possess regardless ofwhere and how they live Whatserves as the source of those rightshas been the subject of debate forcenturies One of the pre-eminentstatements on the subject was madeby John Locke who in The SecondTreatise of Government wrote thatmankind was lsquoequal and indepen-dentrsquo and that lsquono-one ought to harmanother in his life health liberty orpossessionsrsquo
Saddam Husseinrsquos mass murdertorture and terror are reasonablyclear breaches of human rightsTherefore some would ask why thereshould be opposition to the UnitedStates and its allies taking whatevermeasures might be necessary totopple the Iraqi regime Surely thesame standard of behaviour that ap-plies to individuals applies also tonation states If an individual walk-ing in the street witnessed a rapeoccurring wouldnrsquot that individualbe entitled to do everything in hispower to stop the crime and assistthe victim
The point is of course that in-ternational law and convention do
After IraqIs Sovereignty Dead
JOHN ROSKAM
not allow nation states to act in thesame way as individuals Countriescannot simply lsquotake the law into theirown handsrsquo To restrain lsquovigilantestatesrsquo (who might be acting fromeither lsquogoodrsquo or lsquobadrsquo motives) a num-ber of legal and political theorieshave been developed One of theseis the doctrine of lsquosovereigntyrsquo whichprovides that states should not inter-vene in the domestic affairs of otherstates
In relation to Iraq the lsquosover-eigntyrsquo question is perhaps the stron-gest argument against the US-ledCoalition Most of the other criti-cisms of lsquohumanitarianrsquo interventionin Iraq are either grounded in simpleanti-Americanism or are fallaciousFor example there is the claim thatbecause some of the countries in theCoalition have previously ignoredHusseinrsquos cruelties therefore it is il-legitimate to take action now Sucha view has been expressed by aMelbourne international relationsacademic
While there is no disputing thebrutal nature of Saddam Hus-seinrsquos regime the case for inter-vention made by those in Can-berra London and Washingtonis weakened by the fact that atthe peak of Saddamrsquos crimes inthe late 1980s they were eitherdirectly supporting him withweapons technology and intelli-gence or were entirely indifferentto his behaviour Even if theyhave belatedly recognised theerror of their ways how seriouslycan we take their concerns aboutweapons of mass destruction nowgiven they were his suppliersthen1
On the basis of this argument itcould be said that Britainrsquos (andAustraliarsquos) case for intervening toassist Poland upon the German in-vasion in 1939 was lsquoweakenedrsquo be-cause Britain had previously acqui-esced to Germanyrsquos rearmament theremilitarization of the Rhinelandand the annexation of both Austriaand parts of Czechoslovakia Fewpeople who chanted lsquoFreedom forEast Timorrsquo said that the HowardGovernment should not act becausea quarter of a century before theWhitlam Government had been lsquoin-differentrsquo to Indonesiarsquos occupationof the island
There is also the claim that al-though Hussein is bad he is not theworst dictator in the world and thatit is hypocritical for the Americansto attack only Iraq This is an as-tounding proposition It attempts toapply to the United States a standardof behaviour that is impossible to sat-isfy Should the police not attemptto solve any crimes because theycanrsquot solve all crimes If a crime iscommitted by two people and thepolice arrest one perpetrator unlessthe other is also caught must the firstperpetrator be released When indi-viduals donate money for famine re-lief in Africa very few believe thattheir donation is pointless becauseit might prevent the starvation ofonly one person rather than thou-sands Christian ethics sets down norequirement that we should help no-one unless we can help everyone
The issue about state sovereigntyhowever is one that deserves to betaken seriously Regardless of onersquosopinions on the extent and limits ofstate sovereignty it is true that our
25MARCH 2003
E V I E WR
international relations system is builtupon the principle and to modify oroverturn it is a matter of some con-sequence
Even those who are generally sup-portive of the United States andtheir allies see the problem As it wasput by a leading commentator whenanalysing the Australian PrimeMinisterrsquos lsquohumanitarianrsquo justifica-tion for war
Finally Howardrsquos argumentagainst Hussein on human rightsis correct So is his moral case forwanting to liberate the Iraqipeople from their torment Theproblem however is that youcanrsquot trip around the worldwanting to overthrow regimesbecause of human rights2
Some would askmdashlsquowhy notrsquo Be-cause to do so would overthrow theUnited Nations Charter comes therejoinder And in turn the responseto that might bemdashlsquogoodrsquo
If itrsquos a choice between the main-tenance of the UN Charter and free-dom from tyranny freedom wins ev-ery time (although an internationallawyer sitting in Sydney might havea different view on this question fromthat of a political prisoner manacledin a Baghdad jail cell)
When the interests of lsquointerna-tional lawrsquo are more important thanthe life and liberty of individuals itcould be concluded that lsquothe Em-peror has no clothesrsquo Would inter-national law have sanctioned inter-vention to stop the Holocaust hadHitler not waged war and proceededwith his methods entirely within theconfines of the German territorialstate
Many who argue that lsquohumanitar-ianrsquo intervention in Iraq is not justi-fied because it infringes on thatcountryrsquos lsquosovereigntyrsquo would happilyhave other countries cede their po-litical sovereignty to supra-nationalbodies Certain features of the Inter-national Criminal Court overridethe principles of sovereignty but thatdid not stop a phalanx of interna-tional law experts urging sovereigngovernments to join it so as to en-
able the prosecution of war criminalsBut when it comes to actually stop-ping war crimes not simply prosecut-ing them that phalanx is largely si-lent
Without the doctrine of state sov-ereignty and without an arbiter fordetermining when interference withthe principle is justified (the roleclaimed by the United Nations andits Security Council) it is said thatstates would be free to impose theirown will and intervene in other
countries whose standards did notmeet their own (In The Second Trea-tise of Government Locke argued thata characteristic of a lsquostate of warrsquo be-tween individuals was the absence ofa superior authority to adjudicatedisputes and prevent individualsfrom administering justice them-selves)
Iraq might be claimed as a rea-sonably clear-cut case for interven-tion but other situations are notlikely to be as simple In Culture andEquality first published in 2001Brian Barry explored a lsquoliberalrsquo per-spective on this question
The liberal position is clearNobody anywhere in the worldshould be denied liberal pro-tections against injustice andoppression However in exactlythe same way as liberals arepragmatic about what liberalismmeans in terms of boundaries sohere the move from principle tointervention has to be mediated bypractical considerationshellip
[L]iberals are not so simple-mindedas to imagine that the answer toall violations of liberal rights is tosend in the Marines or even aUnited Nations force As in anyjust war theory there must be somedoctrine of lsquoproportionalityrsquohellip[S]carcely anybody would be infavour of the western powersinvading Saudi Arabia so at to sortout the way in which it lsquounjustlydenies political rights to women ornon-Muslimsrsquomdashaccording to theirliberal idea of justicersquo3
The question remainsmdashafterIraq what remains of lsquostate sover-eigntyrsquo Should the doctrine applyonly to lsquoliberal democraticrsquo statesSuch a solution might be attractiveto some lsquoliberalsrsquo but it doesnrsquot avoidthe problem of what exactly a lsquolib-eral democraticrsquo state is
One irony arising from the argu-ments about the war in Iraq is thatmany of those who have urged astrict application of lsquostate sover-eigntyrsquo principles in the past havegenerally supported the US-led in-tervention while those who havebeen willing to abridge or even aban-don the doctrine have had to rely onit to counter the lsquohumanitarianrsquo jus-tification for war
There are not many certaintiesabout the nature of the world afterthe war in Iraq but it can be saidwith some assurance that one defi-nite outcome is going to be a morevigorous debate about state sover-eignty
NOTES1 Scott Burchill lsquoThe humanitar-
ian arguments for this war are spu-riousrsquo The Age 21 March 2003
2 Paul Kelly lsquoThe hapless per-suaderrsquo The Australian 15ndash16March 2003
3 Brian Barry Culture and Equal-ity An egalitarian critique ofmulticulturalism Harvard Uni-versity Press page 138
John Roskam is a Research Fellow with the IPA
The lsquosovereigntyrsquo
question is perhaps
the strongest
argument against
the US-led
Coalition
API
26 MARCH 2003
E V I E WR
Which Way for theDemocrats
The 2002 mid-term elections were adramatic victory for President GeorgeW Bush and the Republicans Insteadof the historical norm of the partycontrolling the White House losingBushrsquos party gained seats in the Sen-ate House Governorsrsquo races andState legislatures The result was abitter disappointment for the Demo-crats and has led to a fierce debatebetween the Left and Centrists aboutthe future policy direction of the partytowards the 2004 elections
The Leftrsquos analysis is that the ma-jority of Americans are natural Demo-crats Electoral defeat was due to thefailure to energize that base of Demo-crats The party failed to distinguishitself sufficiently from Bush and thusgive their voters a reason to turn outWhile the majority of Democrats op-posed Bush on tax cuts and the warwith Iraq a significant minority sup-ported him and campaigned on thatsupport The result the Left claimwas that the Democrats lacked a con-sistent message in contrast to Bush
Support for this argument can befound in the higher turnout amongstRepublicans than Democrats in 2002while in 2000 the combined vote forGore and Nader was 51 per cent Aninfluential book by John Judis andRuy Texeira identified lsquoThe Emerg-ing Democrat Majorityrsquo Theyclaimed that growing demographicgroups trended Democrat includingthe young socially liberal profession-als minorities and women
What policies would motivate thisnatural Democrat base The Left callfor rescinding the Bush tax cut a classwar against the corporate world amajor increase in lsquopublic investmentrsquoin schools childcare health care and
Letter from AmericaNIGEL ASHFORD
public transport and strong opposi-tion to the war
Centrists however have a verydifferent analysis of the Democratsrsquoproblems the public did not trustthem to pursue the war against ter-rorism vigorously to keep down taxesto spend their tax dollars wisely or toreflect their cultural values
A Gallup opinion poll found that57 per cent of Americans askedthought that the Democrats were nottough enough on the war on terror-ism while 64 per cent thought theRepublicans were There was the per-ception that the Democrats were notserious on the issue and just playingpolitics Evidence for this was the de-bate over the new Department ofHomeland Security blocked becausethe Democrats wanted to protectunion rights while the President de-manded more flexibility to deploy theworkforce Many voters saw the issueas the national interest versus a spe-cial interestmdashin this case that of theunions The Democrats were seen asputting the interests of one of theirmajor constituencies before nationalsecurity
The Democratic LeadershipCouncil in lsquoThe Road Aheadrsquo by AlFrom and Bruce Reed presented theCentrist case lsquoStop pretending wecan win a majority simply by energiz-ing our basersquo The Democrats were
not trusted on the war against terror-ism were hostile to the cultural con-cerns of many working-class Demo-crats on abortion and guns and stillseen as the tax-and-spend party lsquoToomany Americans donrsquot trust us tokeep their taxes down or to spendtheir money wellrsquo
The Centrist agenda is to stronglyprosecute the war against terrorismwhether against al-Qarsquoeda Saddam orothers and to abandon knee-jerk iso-lationism arising from the experienceof the Vietnam War to defend capi-talism and support small investorsagainst irresponsible managers to cutpayroll taxes and to downplay thecultural issues that divide Democrats
Which path will the Democratstake The Left is in the ascendancyMost of the remaining Democrats inoffice come from left-wing districtsNancy Pelosi a left-liberal from SanFrancisco was easily elected the newleader of the House Democrats over-whelming her Centrist opponent andrising star African-American HaroldFord The early field of presidentialcandidates for 2004 is dominated bythe Left tendency including SenatorJohn Kerry Representative DickGephardt Governor Howard DeanRev Al Sharpton former SenatorCarol Moseley-Braun and Represen-tative Dennis Kucinich Only Sena-tor Joe Lieberman and Senator JohnEdwards represent the Centrist wing
The future of US politics may de-pend on which road the Democratsdecide to take The US is currently alsquo50ndash50rsquo nation evenly balanced be-tween the parties A left turn couldlead to Republican dominance farinto the future
Dr Nigel Ashford is at the Institute of Humane Studiesat George Mason University and is co-author of US
Politics Today (Manchester University Press)
API
27MARCH 2003
E V I E WR
Trusting TonyFrankly itrsquos all just too depressing Theeconomyrsquos heading for trouble Busi-ness confidence is low investment in2002 was 92 per cent lower than theprevious year and manufacturing in-vestment was nearly 18 per cent downThe budget deficit is spiralling becauseour once lsquoprudentrsquo Chancellor (trea-surer) Gordon Brown made over-opti-mistic growth projections and startedthrowing money at problems
Therersquos a load of health-and-safetyand anti-discrimination measuresthatmdashto put it most politelymdashare ex-amples of letting the best be the en-emy of the good Every school tripneeds a formal risk assessment withthe result that many trips are simplynot taking place New trains orderedfor London commuter routes wonrsquothave toilets because the rules say thatat least one toilet in each four-car unitmust be wheelchair-accessible whichwould have cost ten or a dozen seatson every overcrowded train
Some of this is just insane Somelocal authorities say that safety at workrules mean that home-care workersmustnrsquot lift the disabled people theyare looking after Or therersquos rail safetyUntil recently we were seriously pro-posing to spend $10 billion on a bet-ter system to stop trains going throughred signals On average this would havesaved the lives of about three passen-gers every four years which is a lousybargain compared with other safety in-vestments Worse it would also havereduced the capacity of the networkby up to 15 per cent and forced morepeople onto the roads which are muchmore dangerous than even ourclapped-out railways The result was aprojected net increase of 13 to 21 deathsper year
Meanwhile in London the Cen-tral line of the Underground has been
Letter from LondonJOHN NURICK
API
closed for weeks after a train derailedwhen one of its motors fell off Therewere no deaths or major injuries in theaccidentmdashbut itrsquos a safe bet that someof the people who havenrsquot been ableto use the Central line have been in-jured or killed on the roads
What can one say If the authori-ties took the same attitude to the riskof fatal accidents in the health serviceevery hospital in the country wouldhave been closed for years
Despite all this the Conservativesare still hopeless Their leader IanDuncan Smith has a new wheezewhen a journalist asks him anythingdifficult he chortles merrily and saysitrsquos the most uninteresting questionimaginable and hersquos not going to wasteanyonersquos time by answering it His col-leagues have their knives out for him
Meanwhile in spite of the govern-mentrsquos problems with the economy andthe public services Tony Blair is grow-ing in stature having his waymdashandantagonising large sections of his ownparty in the process On several recentissues he has faced down the formi-dable Gordon Brown in a way that notlong ago was hard to imagine
Then he shocked everyone by com-ing out against having elected mem-bers in the reformed House of Lordswhen most voters want an all-elected
chamber and most MPs want a partly-elected one In the event Parliamentcouldnrsquot agree on any of the optionsfor reform so wersquore stuck with the sta-tus quomdashwhich is fine by Mr Blair
Then therersquos the war By the timeyou read this it may be over or we maystill be waiting or our lads may befighting Mr Blairrsquos strong line againstIraq has made him very unpopular Theanti-war march on 15 February was thebiggest demonstration London hasever seen A few days later 122 Labourbackbenchers voted against the gov-ernment and many more abstained
Mr Blair didnrsquot budge War is a se-rious thing he says lsquoBut in a situationsuch as this you have to do what youbelieve to be right because thatrsquos theprice of having responsibilityrsquo1
He has often been accused of gov-erning by focus group Certainly he hasseemed reluctant to antagonise anypowerful group That has clearlychanged In a sense his stand on Iraqmerely follows his action in sendingtroops to Sierra Leone and Kosovomdashbut it has stirred up far stronger domes-tic and international opposition
The irony is that now when he re-ally needs people to trust him wedonrsquot Even in the desperately seriousbusiness of justifying an unpopular warDowning Street canrsquot play it straightremember the dossier from lsquointelli-gence sourcesrsquo that turned out to belargely cribbed from a PhD thesis onthe Internet
NOTE1 The Guardian 1 March 2003
John Nurick is a management consultant based in theSouth of England From 1985 to 1990 he was
editorial director of the Australian Institute for PublicPolicy and later edited newsletters reporting on theUK Parliament and European Union institutions
28 MARCH 2003
E V I E WR
KEVIN DONNELLY
Private EducationEquals Public Good
When it comes to choosing be-tween government and non-gov-ernment schools Australian par-ents are lsquovoting with their feetrsquo Asshown by recent ABS figures(Schools Australia 2002) over thelast decade there has been a dra-matic increase in non-governmentschool enrolments
Approximately 30 per cent ofstudents now attend non-govern-ment schools compared with 22per cent in 1980 and 28 per centin 1990 Over the last decadewhile the number of governmentschools has fallen by 64 per centnon-government schools havegrown by 61 per cent
Of course not everybody valuesparentsrsquo right to choose and theAustralian Education Union(AEU) Labor governments andlsquoleft-wingrsquo academics in particularconsistently argue against non-government schools
One of the arguments put for-ward by those opposed to givingparents greater freedom of choiceis that government schools are bet-ter at promoting social cohesionand a strong sense of what KenBoston the ex-head of the NSWEducation Department terms lsquothebonds of civic friendshiprsquo
The assumption is that becausestudents attend non-governmentschools there will be greater socialdivisiveness and a breakdown inthe civic values needed to hold so-ciety together But there is no cred-ible evidence offered to support theclaim that government schools arebetter at promoting the commongood
In fact there is much to provethe opposite
First as anyone familiar withthe lsquoculture warsrsquo and politicallycorrect curricula will know insteadof government-controlled educa-tion promoting unity and cohe-sion it has led to public angst andparental complaints
Witness the very bitter debatein Queensland a year or two agowhen the government-mandatedStudies of Society and Environ-ment (SOSE) curriculum was in-troduced into schools Such was
the lsquoleft-wingrsquo bias in the curricu-lum in particular in the areas ofmulticulturalism and the environ-ment that many parents felt be-trayed
The Queensland debate is mir-rored by what is happening in theUnited States As noted by Ste-phen Arons in his book Short Routeto Chaos instead of promotingunity government control of thecurriculum leads to the opposite
What the school wars tell us isthat somehow we have been
Education Agenda
transforming a vital instrumentfor creating social cohesioninto a source of division andhostility that there is some-thing built into the structure ofpublic schooling that under-mines one of its most importantfunctionsAronrsquos argument that govern-
ment schools no longer transmit aviable sense of a common cultureor agreed civic values is reinforcedby another noted United Stateseducationalist Diane Ravitch
In a recent article in the jour-nal Education Next Ravitch be-moans the impact of cultural rela-tivism and the post-modern on theschool curriculum (where there areno commonly agreed values) andeven goes so far as to argue thatparents should be free to choosenon-government schools becausesuch schools have a better chanceof reflecting their values
In the current education sys-tem with the public schoolscommitted to multiculturalismbilingualism and other forms ofparticularism it is difficult toargue that parents should notbe able to choose schools thatmeet their cultural needsSecond if one accepts that lsquoso-
cial capitalrsquomdashthe networks volun-tary associations and civic bondsthat hold a community togethermdashis important for the health of ademocratic society then non-gov-ernment schools clearly have theadvantage
Unlike the government schoolsystem characterized by a heavy-handed centralized bureaucracyand teacher union control non-government schools are closer tothe communities they serve Bytheir very nature non-government
There is no credible
evidence offered to
support the claim
that government
schools are better
at promoting the
common good
29MARCH 2003
E V I E WR
ALAN MORAN
The lsquoRrsquo Files
Private propertyrights the key toachieving efficiency inrural water use
WATER IN AUSTRALIAWater has always been a definingissue in Australiarsquos prosperityAnd in recent decades irrigationhas grown rapidly Even so theproportion of Australia that is ir-rigated at two per cent of theland comprises a share that isamongst the lowest among OECDcountries Only Canada and therainiest countries New Zealandand the UK have lower sharesthat of the US is 11 per cent andin Japan it reaches 60 per cent
Modern agriculture is only 200years old in Australia and thoughin the first 100 years agriculturalproductivity was increased toequal that of anywhere in theworld gains continue to bemademdashoutput has doubled overthe past 50 years a growth thatcould not have taken place with-out a similar expansion of irriga-tion Irrigation in the MurrayndashDarling agricultural provincealone contributes $5 billion toAustralian agricultural outputand non-irrigated agriculture inthe region contributes a further $5billion This makes the areawhich comprises 14 per cent ofAustraliarsquos land mass responsiblefor a third of the nationrsquos $35 bil-lion agricultural output
Applying Property Rights to WaterMost of the uses of water involvechoices or compromisesmdashdrink-ing water versus irrigation versus
industrial and so on Some how-ever involve complementaritiesparticularly certain recreationaluses such as water sports that arefacilitated by storage and consis-tent availability
In many cases water will per-form sequential functionsmdashthesame water can be used and re-used for irrigation used for indus-trial cooling and finish as drink-ing water Water with differentsometimes competing productiveuses will be optimally used as longas two conditions are in placeThe first is that its ownership isclearly specified and the ownersrsquoobligations to other users (orclaims from other beneficiaries)are well understood The secondrequires each property right to betradable to enable acquisition bythose who value it most therebymaximizing its value
The rights specification andtherefore property ownership canrarely commence with a cleansheet of paper People acquire in-dividual rights to property ini-tially through a variety of routesOne of these is seizure of some-thing that was originally of littlevalue until it was acquired and im-proved Squatters assume rights inthis way However they are firstacquired they need to be tradableAPI
schools establish strong commu-nity networks and have a greaterreliance on the voluntary work ofparents
That non-government schoolsare more effective in this regard issupported by research into lsquoChar-ter schoolsrsquo in the United StatesAs noted by Chester Finn at theFordham Foundation giving localcommunities lsquoownershiprsquo overtheir school builds networks oftrust and reciprocity so vital forsocial cohesion
Social capital also relies on citi-zens being disciplined and orderedin their behaviour Selfishness vio-lent behaviour and rudeness act tofragment the community instead ofpromoting cohesion According toa number of Australian surveys itis here once again that non-gov-ernment schools are seen to bemore effective
As noted by the Centre for In-dependent Studies researcher Jen-nifer Buckingham in The Truthabout Private Schools in Australiawhen analysing why so many par-ents forsake the government schoolsystem
When comparing independentprivate schools with publicschools the major theme thatemerged was not differences inacademic standards and curri-culum but issues of disciplineand order The surveyed par-ents felt that the behaviour andattitudes of students in publicschools was unacceptablehellipAll accept that non-govern-
ment schools achieve better aca-demic results provide greater cur-riculum flexibility and save Aus-tralian taxpayers millions of dol-lars Equally as important is theargument that such schools streng-then Australiarsquos civic health andstock of lsquosocial capitalrsquo
Dr Kevin Donnelly is Director of EducationStrategies a Melbourne-based consulting group
E-mailkevindnetspacenetau
s
30 MARCH 2003
E V I E WR
and relatively inviolable Thisprovides the incentive for them tobe improved and for their ownersand others to search out ways inwhich the assets they representcan be used to provide increasedvalue or other benefits
If confidence in the exclusiv-ity an owner has over the prop-erty right is lost or was neverpresent the asset will be used lessproductively For example own-ers will milk them for their cur-rent-use value rather than trade-off present value for a future valuethat is less certain
Even without a total emascu-lation of individual rights (for ex-ample when title to the propertydepends on continuing govern-mental assent) lack of certaintybrings lower incomes and dimin-ished asset protection One out-come of this can be observed inthe MurrayndashDarling system Wa-ter rights on the Victorian side ofthe Murray are secure while thoseon the NSW side have been over-allocated and are subject to ad-ministrative discretion includinghaving a firm duration of only tenyears In Victoria high securitywater (available 95 per cent of thetime) comprises the great bulk ofentitlements In contrast in
NSW high security water is avail-able only 60-80 per cent of thetime The result is that farmers onthe Victorian side plant perennialcrops while those in NSW tendto focus on annual crops espe-cially rice
There are claims that Victoriarsquosmore robust property rights meanthat the State Government haslost lsquocapabilityrsquo to manage com-pared with NSW The flip side ofthis is the increased risk and as-sociated lower value of productionnorth of the Murray where prop-erty rights are attenuated Gov-ernments that give themselves in-creased capacity to direct produc-tion or to take individualrsquos prop-erty will need to accept lower lev-els of income and output
IRRIGATION ENVIRON-MENTAL BENEFITS AND SA-LINITY
The Types of IssuesIssues stemming from irrigationcomprise two types those impact-ing on the environment and thoseimpacting on private uses Theformer includes issues such as pre-venting loss of species ensuringthat certain sorts of species flourishand avoiding unattractive growths
such as blue-green algae which re-sult from fertilizer build-up
The second involves economicimpacts on different users
While environmental flows toensure species flourish are oftenhighlighted salinity is the mainfocus And while salinity has animpact on the environment itsimportance is in the conflict of in-terest between productive usersmdashthe complaint of lsquodamaged goodsrsquoby downstream users against thoseupstream
The MurrayndashDarling Basin Sa-linity Strategy 2001ndash2015 has es-timated that increased salinitybrings costs of $294 million perannum to the basin
Yet data on the salinity of theMurray Darling shows levels up-stream of South Australia arelower than they were in the early1980s and are only seriously abovethese levels as the river ap-proaches its mouth at the GoolwaBarrage
The Basin Salinity Manage-ment Strategy argues that progressachieved over the past decade willlsquobe cancelled within 20-50 yearsand median salinity levels wouldexceed the Australian DrinkingWater Guidelines for good waterquality within 50-100 yearsrsquo Thecause of this is said to be risinggroundwater tables due to land usechanges across the Basin
The disputes over salinizationare largely disputes between com-mercial parties Full specificationof rights and obligations will al-low these to be resolved as longas the impacts are measurabletheir causes identifiable and thevarious rights and obligations areknown and stable In this respecttechnology to measure salt in wa-ter and to trace increases to par-ticular locations is readily avail-able
Agreements about the alloca-tion of water rights between ju-risdictions and to the main irri-gation provinces have been inplace for over a century In the
Average Salinity in the River Murray (EC Units)1
3500
3000
2500
2000
1500
1000
500
0
January 2003
July 2002ndashJanuary 2003
July 1982ndashJanuary 2003
Hume D
am
Swan
Hill
Merbein
Morgan
Milang
Mening
ie
Goolw
a
Barra
ge
31MARCH 2003
E V I E WR
I
API
Musinghellipcase of the Murray the lsquocaprsquo onwater abstractions agreed betweenthe various jurisdictions in 1995largely validated agreements madeearly in the last century and be-fore Disturbing these agreementswould greatly undermine the trustin the sanctity of property rightsand seriously reduce agriculturalproductivity Hence increased al-locations for certain parties or forcertain uses (including environ-mental flows) would need to bepurchased at market prices
Developments in Australiaover recent decades have con-spired to make irrigation water farmore valuable This is exacer-bated by1 Activation of NSW lsquosleeperrsquo
and lsquodozerrsquo water rights as a re-sult of the increased scarcityvalue a change that bringseven greater pressure on theavailable supply
2 Increased scarcity leading tomeasures that more carefullyhusband the water Whilesome of these prevent evapo-ration loss and have thereforebrought a net increase in effec-tive availability others havereduced availability (these in-clude a more careful wateringwhich results in reduced run-off and re-use)
3 Increased capture of waterwithin the land on which itfalls once water is recognizedas scarce landowners will seekto ensure it does not leave theirland NSW and Victoria haveplaced limits (a strict 10 percent in NSW) of water fallingon property as entitlements ofthe owner Queensland has notyet enacted an equivalent tothis Such adaptations of thecommon law are essentialhowever if downstream usersare not to be expropriatedThere is likely to be constant
bickering over water rights espe-cially if State Governments seek toelevate sharing issues and to sanc-tify them with claims about promot-
Daniel Pipes in The New York Posthas a very cogent explanation forwhy the Left appears to be so happywith the likes of Osama bin Ladenand Saddam Hussein
To be clear about their attitudeshe quotes the renowned Germanelectronic music composer KarlHeinz Stockhausen who saidstraight after the attack on NewYork that it was lsquothe greatest workof art for the whole cosmosrsquo
As Pipes and many of us observedaily there is barely a bad word tosay about Saddam Hussein nor aniota of sympathy for thoseoppressed tortured and murderedby his reacutegime Instead they venttheir fury against the AmericanPresident and British Prime Minister
Why the nonchalancePipes draws our attention to Lee
Harris writing in a recent issue ofthe Hoover Institutionrsquos journalPolicy Review According to KarlMarxrsquos central thesis the demise ofcapitalism hangs on workersgrowing poorer over timemdashwhichof course did not happen Sorather than give up on cherishedexpectations of socialist revolutionHarris notes Marxists tweaked theirtheory and looked instead to theentire populations of poor countriesto carry out the revolution Classanalysis went out the windowreplaced by geography
The trouble is they have tooverlook militant Islamrsquos slightly un-socialist practicesmdashsuch as itsimposing religious law excludingwomen from the workplace andpersecuting atheists
As Pipes sums up September 11and the prospect of war againstSaddam Hussein have exposed theLeftrsquos political self-delusionintellectual bankruptcy and moralturpitude
The Loopy Leftby Andrew McIntyre
ing an improved environment Realsolutions require the issue be placedwithin a normal commercial frame-work which involves1 Clarifying the property rights2 Allowing water rights to be
fully detachable from propertyand able to be used howeverthe holder wishes subject toany damage this might imposeon others
3 Ensuring full rights to buy andsell the water
4 Defining rights so as not to re-duce the quality of other usersThis means ensuring that farm-ing practices that do not bringgreater salination than somestandard
5 Allowing rights holders tobank their water and ensureeven greater certaintyAllocating specific individual
ownership rights to water and al-lowing its trade is a well-foundedmeans of maximizing the usevalue It would also be likely tohave the beneficial side-effects ofreducing salinity and farm-basedpollutants caused by intensiveuse We should grasp such oppor-tunities But if the impending sa-linity problem is as great as someclaim other solutions might wellinclude buying out some allocatedirrigatorsrsquo rights However alter-natives may be to remove saltfrom the water by engineering so-lutions or simply to live withhigher salt
NOTE1 Human drinking water should
be less than 800 ECs (electri-cal conductivity one ECequals about 06 mglitre)while higher levels are accept-able for much farming activity
Dr Alan Moran is Director Deregulation Unitat the Institute of Public Affairs
32 MARCH 2003
E V I E WR
Reading FileDone
eral political systems worldwidehave consistently accretedpower to the centre often in theface of clear constitutional im-peratives to the contrary) Ifeared instead that a UN thathad been patently successful insomethingmdashanythingmdashmightbe granted greater powers to thepoint where it would kill truediversity and individualism (ortry to anyway) through inevi-table bureaucratic practices
Is such a fear unfounded Ap-parently not if many peopleshare the moral touchstone ofthe Opposition Leader SimonCrean He believes according tohis own words in Parliamentthat what the UN SecurityCouncil declares is moral whatit refuses is immoral
The latest manoeuvrings overIraq have therefore been heart-
ening It seems that the desiresof the powers small and largeto promote their own interestswill continue to hobble the UN
The problem with a unitedworld is that as the threateningimpasse over Iraq suggestedthere are very divergent viewsabout how that world ought tobe run on an international leveljust as there are at national and
sub-national levels The virtueof multi-layered levels of gov-ernments is that competing ju-risdictions give the individual adegree of choice
The greatest sin of totalitar-ian governments past and pres-ent is to deny their citizens theright to leave The greatest dan-ger that the United Nationsposes as far off as it now (hap-pily) seems is that leaving its ju-risdiction is for all practical pur-poses impossible
THE IMPASSE JUST PASSEDI listened to Prime MinisterHoward speaking to the motionbefore Parliament in relation tothe war It was a good speechbut neither he nor PresidentBush seems able to structure andlay out an argument with thestyle and content of BritishPrime Minister Blair His equi-valent speech before the BritishCommons provides a masterfulsummary of the reasons for thiswar and includes an immenselyreadable time-line of the utterineffectiveness of the UN pro-cesses in dealing with Iraq Henicely deals with allegations ofthe lsquorushrsquo to war lsquoOur fault hasnot been impatience The truth
UNITED OR DIVIDEDI write just hours after US Presi-dent George W Bush has deliv-ered his ultimatum to Iraqi Presi-dent Saddam Hussein leave Iraqwithin 48 hours or be removedBy the time this appears beforeyour eyes you will knowwhether Hussein has decided hischances of survival will be sig-nificantly greater by choosingexile or by remaining in IraqThe recent creation of the In-ternational Criminal Court ofcourse makes war more likelysince Hussein can have no guar-antee of a peaceful lsquoretirementrsquo
In the event that Hussein re-mains in Iraq you will also knowwhether Bush has kept his wordand most likely the outcome ofthis military venture
This matter is immensely im-portant for the people of Iraqand for the military personnelinvolved (including our ownAustralian soldiers sailors andaviators) But then so was theprevious Gulf War the US in-vasion of Grenada the Austra-lian intervention in East Timorand so on But a difference be-tween the current conflict andthose others could be the impactit has upon international insti-tutions Actually just one inter-national institution the UnitedNations
Prior to the first Gulf War Ifeared the coalitionrsquos success forthe reason that some of it mighthave rubbed off onto the UnitedNations I hasten to deny that Ifear the UN as some vast con-spiracy for world domination Ifeared instead that it couldstumble into a piecemeal cen-tralization of power (just as Fed-
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
E V I E WRs
33MARCH 2003
E V I E WR
Reading FileDone
ATTACKING THE GLOBALGOVERNORSThe Cato Institute is a whole-some body as demonstrated byits opposition to such interna-tional organizations as the Inter-national Criminal Court and forthat matter the United Nationsitself Ted Galen Carpenter forexample argues in lsquoPutting theUnited Nations on Noticersquo thatthe UN can and has done somemodest good occasionally It ishe says lsquoa good idea to have aplace where governments cangather to air grievancesrsquo But headds if it lsquoattempts to acquire ataxing authority [or] raise astanding armyrsquo then the USshould withdraw (as indeedshould Australia) Because thatwould turn it into an lsquoembryonicsuperstate that would menacelibertyrsquo
Go to
wwwcatoorgforeignpolicyunhtml
THE INTERNATIONALORGANIZATIONS THEM-SELVESThe United Nations has beenaccused of being often ineffec-tive and always slow Well ev-ery time Irsquove hit the UNrsquos Web-site even with my nifty broad-band Internet connection slow-ness rules Perhaps the site isbeing continually accessed bythe teeming masses Anyway goto
wwwunorg
With 15 members alreadyand 13 more on the way thereremain hopes that the EuropeanUnion will be a force for a stable
twenty-first century Equallywith 15 members already exhib-iting rather divergent views overthe issue of Iraq and most of theforthcoming members sidingwith the United States perhapsthis is overly hopeful Go to
europaeuintindex_enhtm
Then there is the WorldTrade Organization the organi-zation behind which protection-ist nations can hide from unilat-eral trade liberalization by pre-tending to support multilateraltrade liberalization Go to
wwwwtoorg
And we mustnrsquot forget the In-ternational Criminal Court fearof which was no doubt a featureof Saddam Husseinrsquos rejection ofexile as an option and the furyof which is promised by a num-ber of prominent lawyers to bevisited upon our very own PrimeMinister Go to
wwwicc-cpiint
FEEDBACKI would welcome advice fromreaders on any other sites of inter-est to IPA Review readers E-mailme on scdawsonbigpondnetau
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
is our patience should have beenexhausted weeks and monthsand years agorsquo
Go to
wwwnumber10govukoutputPage3294asp
THE STRUGGLE BETWEENTHE CONTINENTSIf you are patient you can readthat wonderful British rag TheSpectator for free Last weekrsquoscopy is available on-line One ofits regular columnists is MarkSteyn an Americo-phile Cana-dian who has a robust turn ofphrase and an abiding disdain formuch modern music (whichseems to place him very comfort-ably into The Spectatorrsquos culturalmatrix)
His piece on the future de-cline of Europe vis-agrave-vis Ame-rica makes for fascinating read-ing Go to
wwwspectatorcouk
then click on the lsquoBack Issuesrsquobutton and choose the edition of15 March 2003
E V I E WR
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
8 MARCH 2003
E V I E WR
GBRMPA subsequently providedfunding for a full investigation bythe National Research Centre forEnvironmental Toxicology(NRCET) into the likely origin ofthe dioxin considered to be at el-evated levels in the dugong car-casses including possible links withsugarcane production
Two years later the NRCET in-vestigation concluded that the di-oxin of concern to the GBRMPAwas common in soils along the en-tire Queensland coastline includ-ing in regions beyond sugarcane cul-tivation2 Analyses of dated marinesediment cores indicated that thechemical was present prior to Eu-ropean settlement in QueenslandIn other words the dioxin is a natu-rally occurring organochlorine andnot a pesticide residue There areapparently many naturally occur-ring non-toxic dioxins
But what of the organochlorineinsecticides used in the sugar indus-try from the late 1940s until theywere banned in 1987 Have thesepesticides been found in dugongs
The GBRMPA and the Austra-lian Institute of Marine Science(AIMS) have undertaken extensivesurveys for traces of organochlorineinsecticides including an Australia-wide programme for collecting andtesting samples from stranded or re-cently killed dugongsmdashfrom whichthe dioxins were isolated While itwas expected that these program-mes would find persistent orga-nochlorine pesticide this has notbeen the case
Estuarine and near-shore marinesediments have been extensivelysampled on the basis that these ar-eas are likely to contain the high-est concentrations of contaminantsfrom human activity in adjacentcatchments Trace amounts of someorganochlorine insecticides havebeen found in sediment from a smallnumber of river mouths3 No orga-nochlorine insecticides howeverhave been found in near-shore ma-rine sediments of the Great BarrierReef4 This finding has surprised
many researchers some of whomhave postulated that the absence oforganochlorine contamination inthe inner shelf is a consequence ofenhanced degradation of the orga-nochlorines in the aquatic system
In late November 2002 I re-ceived a copy of the draft summaryof the Baker reportmdashthe report sub-sequently described by the Premieras the best available science I no-ticed the allegation of elevated con-centrations of fat-soluble pesticide
in dugongs I emailed Dr Baker que-rying this and other allegations inthe draft summary Dr Baker repliedthat he would consult with the Sci-ence Panel and get back to me Thereport was published two monthslatter without any changes to thesummary
The reef pesticide research iswell-documented and should be un-derstood by members of the SciencePanel In fact a member of the Sci-ence Panel communicated the find-ings from the NRCET investigationto me in September 2001 Whythen was the allegation of pesticidein dugongs included in the originalsummary report Why was the alle-gation not corrected after I brought API
the error to Dr Bakerrsquos attention inDecember 2002
Two years earlier following pres-sure from the World Wide Fund forNature (WWF) and as part of theQueensland governmentrsquos reelec-tion campaign the QueenslandPremier committed his governmentto saving the reef Since this timeit has been Queensland governmentpolicy that the reef is in troubleThe on-going deception is perhapsnecessary to maintain the percep-tion that the reef is in trouble
NOTES1 Haynes D Muller J F amp
McLachlan MS (1999) lsquoPoly-cholorinated dibenzo-p-dioxinsand dibenzofurans in Great Bar-rier Reef (Australia) Dugongs(Dugong dugon)rsquo Chemosphere38 pages 255ndash262
2 Prange JA Gaus C PapkeO amp Muller JF (2002) lsquoInves-tigations into the PCDD con-tamination of topsoil river sedi-ments and kaolinite clay inQueensland Australiarsquo Chemo-sphere 46 pages 1335ndash1342
3 Haynes D Muller J amp CarterS (2000) lsquoPesticide and Herbi-cide Residue in Sediments andSeagrasses from the Great Bar-rier Reef World Heritage Areaand Queensland Coastrsquo MarinePollution Bulletin 41 pages279ndash287
4 Cavanagh JE Burns K ABrunskill GJ amp Coventry RJ(1999) lsquoOrganochlorine pesti-cide residues in soils and sedi-ments of the Herbert and Bur-dekin River regions northQueenslandmdashimplications forcontamination of the GreatBarrier Reefrsquo Marine PollutionBulletin 39 pages 367ndash375
Dr Jennifer Marohasy is Environment Managerwith Queensland Canegrowers Organisation Ltd
Why was theallegation of pesticidein dugongs included inthe original summary
report Why wasthe allegation notcorrected after I
brought the error toDr Bakerrsquos attentionin December 2002
9MARCH 2003
E V I E WR
IN THE LONG AGOPlanet Earth condensed 4550million years ago (Ma) from re-cycled stardust Since that timethe continents have been enlarg-ing Earth materials have beenconstantly recycled and the Earthand all associated systems havebeen dynamically evolving TheEarth has not stopped being anevolving dynamic system just be-cause humans now live on thecontinents
As soon as there was liquid wa-ter on Earth there was life Bac-teria slowly diversified and by thetime the Earth was middle agedone group of bacteria had emit-ted such large quantities of oxy-gen (O2) that the atmospherecontained minor O2 Some of thisexcess O2 was trapped in rocks byweathering most dissolved in theoceans resulting in the precipita-tion of iron oxides It is these ironoxides that form the great iron orefields of planet Earth (for ex-ample in the Hamersley Basin)Life the atmosphere the oceansand the rocks interacted a pro-cess that has been occurring forat least 2500 million years on ourdynamic evolving planet
For at least the last 2500 mil-lion years the continents havebeen pulled apart and stitchedback together Every time thecontinents are pulled apart hugequantities of volcanic water car-bon dioxide (CO2) and methane(CH4) are released into the atmo-sphere and greenhouse conditionsprevail When continents stitchtogether mountain ranges formMountains are stripped of soilsnew soils form and remove CO2
The Past is the Key to the PresentGreenhouse and Icehouse over Time
IAN PLIMER
from the atmosphere these soilsare stripped from the land and theCO2 becomes locked in sedimentson the ocean floor When atmo-spheric CO2 is low glaciation oc-curs Large climate cycles can berelated to plate tectonics
The origin of the greatest cli-mate change on Earth is anenigma Between 750 and 600Ma there were two major glacialevents and numerous smallerevents Sea level changed by upto 400 metres and interglacial seatemperatures were 40˚C Afterglaciation the atmosphere hadsome 20 per cent CO2 and bacte-ria thrived and diversified in thewarm oceans Multicellular lifeappeared diversified and used theCO2 to make shells and skeletonsThis explosion of life from 580 to520 Ma gave us all of the majorlife forms currently present onEarth
Plants appeared at 470 Ma andthere was a major mass extinctionof multicellular life at 430 MaThe origin of this mass extinctionis not known Vacated ecologieswere quickly filled and life con-tinued diversifying Between 368and 248 Ma massive coal depos-its formed there was a major 50million-year period of glaciationand the atmosphere was blessedwith a very high CO2 and O2 con-tent Life continued to diversifyMinor mass extinctions continuedand at 248 Ma the biggest majormass extinction on Earth tookplace Some 96 per cent of spe-cies became extinct Life diversi-fied quickly to fill the vacatedecologies The record written instone by fossils in the period520Ma to the present shows thatthe planet is a warm wet green-house volcanic planet with thenormal cycles of rising and fall-
Sea Levels
Greenhouse Greenhouse GreenhouseIcehouse Icehouse
Tem
pera
ture
Tem
pera
ture
Millions of years ago1000 900 800 700 500 400 300 200 100600
There are 400 million year supercycles of greenhouseicehouse related to the pulling apart and
stitching together of continents
Icehouse
s
s
10 MARCH 2003
E V I E WR
ing sea levels rising and fallingland levels and changing climates
THE DAY BEFORE YESTER-DAYSome 120 million years ago Aus-tralia was at the South Pole en-joying a temperate climate Glo-bal sea level was more than 100metres higher than at present thesea surface temperature was 10ndash15˚ C higher than now and manycontinents were covered by shal-low tropical seas Planet Earthwas a warm wet greenhouseparadise and thick vegetationcovered the land masses Atmo-spheric CO2 was about 1 per centwhen the worldrsquos major coal de-posits formed 368 to 248 Ma
From 250 to 120 Ma the glo-bal CO2 content varied greatlyand increased to a peak 6 per centCO2 120 Ma This derived fromintense volcanic activity associ-ated with continental fragmenta-tion Thick vegetation coveredthe land masses
Australia started to pull awayfrom Antarctica at about 100 MaIt drifted northwards the TasmanSea opened and the IndianOcean opened with India start-ing to drift away from WesternAustralia The opening of theTasman Sea produced the rise ofthe Great Dividing Range thediversion of the major river sys-tems and changes to the climateof eastern Australia
A minor mass extinction oflife 90 million years ago was theresult of volcanoes in the Indianand Pacific Oceans belching outCO2 and other gases into theoceans and atmosphere Therewas a runaway greenhouse untilvolcanism waned But volcanicemissions of CO2 are common In1984 and 1986 burps of CO2 fromthe volcanic crater lakes ofMonoun and Nyos respectivelykilled thousands and added CO2to the atmosphere Near MtGambier volcanic CO2 is com-mercially extracted from rocks
one small hot spring on Miloscontributes 1 per cent of theplanetrsquos volcanic CO2 and hugequantities of CO2 the planetrsquossecond most common volcanicgas constantly leak from unseensubmarine volcanoes
Another minor mass extinc-tion at 55 Ma was caused by aCaribbean volcano There was arise in sea temperatures by up to8˚C for 100000 years and atmo-spheric CO2 was 10 times that oftoday During this greenhouseplankton sucked up the atmo-spheric CO2 mammals thrivedand life filled the vacated ecolo-gies Atmospheric CO2 decreasedfrom 3500 to 700 ppm within amillion years stayed low until 47Ma and went up and down toabout the present level (365ppm) at 40 Ma
India collided with Asia at 50Ma Uplift produced the TibetanPlateau which started to scrubCO2 out of the atmosphere TheTibetan plateau is still rising andCO2 is still being scrubbed out ofthe atmosphere The Drake Pas-sage opened as South Americadrifted from Antarctica a cir-cumpolar current developed andAntarctica refrigerated SouthernAustralia from 17 to 145 Mawas again tropical with mid-lati-tude temperatures 6˚C warmerthan today Atmospheric CO2was 180ndash290 ppm This green-house occurred when atmos-pheric CO2 was 30ndash50 per centlower than today
By 5 Ma Earth cooled andwas so cool that very slight orbitalwobbles now had a bearing on cli-mate and every 100000 yearswas characterized by 90000 yearsof glaciation and 10000 years ofinterglacial We are currently inone of those interglacial periods
The penultimate interglacialwas 120000 years ago Homoerectus Homo neanderthalensisand Homo sapiens coexisted sealevel was 6 metres higher than atpresent the planet was far
Millions of Years Ago
400 200600 0
2
4
6
8
10
12
14
16
18
20
0
Perc
enta
ge o
f CO
2
PrecambrianIce Age
s
Permian-CarboniferousIce Age
s
LastIce Age
s
There have been enormous changes incarbon dioxide (CO2) over time related to
volcanism sedimentation mountain-building and life on Earth
11MARCH 2003
E V I E WR
warmer and wetter than now andatmospheric CO2 was 78 per centof that today After warming theatmospheric CO2 and CH4 con-tent increased suggesting that at-mospheric temperature rise drivesan increase in atmospheric car-bon dioxide and methane con-tents During the history of thelatest glaciation armadas of icewere released into the sea every7000 years resulting from thephysical failure of thick icesheets These had a profound ef-fect on climate Small cool peri-ods occurred every 1100 to 1300years
The zenith of the last glacia-tion was 18000 years ago Sealevel was 130 metres lower thantoday temperature was 10ndash15˚Clower than today and the north-ern hemisphere was covered byice to 38˚N up to 3 kilometresthick
YESTERDAYThe northern polar ice sheetstarted to melt 14700 years agoThere were very rapid and majortemperature fluctuations sea lev-els rose and fell and the total sealevel rise over the last 14700years has been at least 130metres Sea level rise resulted inthe breaching of the Mediterra-nean into the Black Sea Basinsome 7600 years ago and is prob-ably the origin of the SumarianBabylonian and biblical stories ofa great flood
One of the consequences of amassive sea level rise over the last14700 years is that the WestAntarctic Ice Sheet was nolonger underpinned by the landTwo thirds of the West Antarc-tic Ice Sheet collapsed into theoceans and sea level rose 12metres The final third of theWest Antarctic Ice Sheet has yetto collapse to produce a 6 metresea level rise as part of the dy-namic post-glacial climate onEarth Climate changes inducedby changes in ocean currents
cooled North Africa grasslandschanged to a desert humans mi-grated and the great Mesopo-tamian cities were established
Sea levels were 1ndash3 metreshigher in a greenhouse 6000years ago There was 20 per centmore rainfall Cold dry periodsglacier expansion and crop fail-ures between 5800 and 4900years ago resulted in deforesta-tion flooding silting of irrigationchannels salinization and thecollapse of the Sumerian citystates Long periods of El Nintildeo-induced drought resulted in theabandonment of Middle EasternIndian and North Americantowns In 1470 BC () Thira ex-ploded weakened the dominantMinoans and changed the courseof western history
Global cooling from 1300 to500 BC gave rise to the advanceof glaciers migration invasionand famine Global warmingcommenced again at 500 BCthere was an excess of food andgreat empires such as the AshokaChrsquohin and the Romans grewContemporary records and Ro-man clothing shows that condi-tions were some 5˚C warmer thantoday
In 535 AD Krakatoa explodedas did Rabaul in 536 AD TheEarth passed through cometarydust in 536 AD The dusty atmo-sphere reflected heat and dark-ness prevailed As a result theclimate cooled and there wasfamine and warfare Changes inocean currents resulted in theMedieval Warm Period from 900to 1300 AD The first to feel thechange were the Vikings whowere able to navigate the north-ern waters colonized Newfound-land colonized Greenland andestablished extensive trade routesas far south as the modern GulfStates On Greenland crops weregrown and there were cattle Thiswould not be possible today Thewarmer wetter climate of Europeproduced excess crops and wealthwhich resulted in the building ofcastles cathedrals and monas-tries As with previous green-house events there was greatprosperity
In 1280 AD volcanic erup-tions on Iceland and a change inocean currents started the LittleIce Age which finished in 1920The North Sea froze in 1303 and1306ndash1307 there was massivefamine in 1315 and the plague
Sea
Surf
ace
Tem
pera
ture
degC
21
22
23
24
25
26
Years Ago
Large temperature changes over the last 200years have been recorded in history and fromthe oxygen isotopes of floating marine animals
Dark Agescold period
Medievalwarm period
LittleIce Age
2000 1500 1000 500 Now
s
12 MARCH 2003
E V I E WR
pandemic attacked the weakenedpopulation in 1347ndash1349 Therewas massive depopulation and ittook Europe 250 years to reachthe population of 1280 AD Dur-ing the Little Ice Age there werewarmer periods associated withsunspot activity During mini-mum sunspot activity (1440ndash1460 1687ndash1703 and 1808ndash1821) the intensely cold condi-tions were recorded by the Dutchmasters and King Henry VIII wasable to roast oxen on the frozenThames There were food short-ages Short cold periods occurredafter the eruptions of Tambora(1815) and Krakatoa (1883) re-spectively In fact 1816 wasknown as the lsquoyear without asummerrsquo This was the time whenTurner painted stormy oceansand skies full of volcanic dustMary Shelley wrote Frankensteinand Byron wrote Darkness
TODAYThe twentieth century and earlytwenty-first century AD are timesof natural post-glacial reboundIce sheets a rare phenomenon inthe history of time still exist Sealevel is relatively low as are glo-bal temperatures and atmos-pheric CO2 Between 1920 and1945 there was a period of warm-ing (037˚C) and another thatcommenced in 1976 (032˚C) In1976ndash1977 global temperaturesin the lower atmosphere jumped03˚C sea surface temperature inthe equatorial Pacific jumped06˚C sea surface temperatureduring upwelling increased 15 to3˚C but there was reduced up-welling the heat content of theupper 300 metres of the worldrsquosoceans increased there was in-creased wave activity in theNorth Sea and the length of theday changed The stepwise in-crease in temperature in 1976ndash1977 shows that there was a ma-jor re-ordering of the ocean heattransport coinciding with anorbital change expressed as a
change in the length of the dayMaybe the global warming of thetwentieth century is just a mea-sure of the variability on a dy-namic evolving planet
To put such measurementsinto perspective over the historyof time changes in atmospherictemperature in the twentieth
century can only be consideredsmall and slow A 24-year globalcoverage of satellite atmospheretemperatures shows only modestwarming in the Northern Hemi-sphere and a slight cooling in theSouthern Hemisphere Tempera-ture measurements from balloonsagree with the satellite measure-ments for the period of overlapBecause greenhouse warming is aphenomenon of the atmospheresignificant changes should havebeen recorded They have not
CONCLUSIONSUnderpinning the global warm-ing and climate change mantra isthe imputation that humans liveon a non-dynamic planet On allscales of observation and mea-surement sea level and climateare not constant Change is nor-mal and is driven by a large num- API
ber of natural forces Change canbe slow or very fast However wesee political slogans such as StopClimate Change or governmentpublications such as Living withClimate Change demonstratingthat both the community andgovernment believe that climatevariability and change are notnormal By using the past as thekey to the present we are facingthe next inevitable glaciationyet the climate economic politi-cal and social models of todayassess the impact of a very slightwarming and do not evaluate thehigher risk of yet another glacia-tion Geology archaeology andhistory show that during glacia-tion famine war depopulationand extinction are the norm
In 1831 Admiral Sir JamesRobert George Graham had theUnion Jack hoisted on a volca-nic land mass that suddenly ap-peared near Sicily It was calledGraham Bank and was claimed byEngland It was also claimed bythe Kingdom of the Two Sicilieswho called it Isola Ferdinandeathe French (LrsquoIsle Julia) andother powers In the subsequentdispute over ownership Franceand the Kingdom of the TwoSicilies almost came to war andEngland and the Two Kingdomsof Sicily had a diplomatic rowDuring the intense diplomaticdispute the island quietly slippedback underwater Graham Banksserves to show that whateverpolitical decisions we humansmake the land rises and falls sealevels rise and fall and climateschange as they have done sincethe dawn of time
Ian Plimer is the Professor of Geology in the Schoolof Earth Sciences at The University of MelbourneThis article is an edited version of his recent paperto the IPArsquos Climate Conference delivered on 28
February 2003 a full version of which can befound on the IPArsquos Website
On all scales of
observation and
measurement sea
level and climate
are not constant
Change is normal
and is driven by a
large number of
natural forces
13MARCH 2003
E V I E WR
FOR two years the worldrsquossecond largest hydrocarbonsproducer spent beaucoupdollars on a clever public re-
lations and advertising campaign toconvince consumers that BP no longerstands for British Petroleum but for Be-yond Petroleum
One advert proclaimed lsquoWersquore oneof the largest producers of natural gashellip and are investing in the new energysources of the futuremdashhydrogen andwind Itrsquos a startrsquo Another tried to getthis line past the guffaw test lsquoWe be-lieve in alternative energy Like solarcappuccinorsquo
Many people expressed surprise thata huge oil company was so committedto alternative energy technologiesThey neednrsquot have
BPrsquos total six-year investment in re-newable technologies was $200 mil-lionmdashthe same amount it spent on thelsquoBeyond Petroleumrsquo advertising cam-paign Thatrsquos certainly an impressivetab for image enhancement But itrsquos adrop in the barrel for futuristic tech-nologies that were the centrepiece forthe slick marketing effort
Indeed all its preening and pufferynotwithstanding BPrsquos actual invest-ment in renewable energy was a whop-ping 005 per cent of the $91 billion itspent to buy oil giants Arco and Amocoback in the 1990s Moreover just as theadvertising campaign was windingdown BP announced it was spending$675 billion for a 50 per cent control-ling interest in a rich Russian oil pros-pectmdashand will be spending another$20 billion over the next five years ex-ploring this and other newer fieldsaround the world
In other words the advertising cam-paign was little more than lsquogreen-washingrsquomdashdisinformation intended topresent an environmentally responsiblepublic image BP wanted people to per-
BPmdashBack to PetroleumPAUL K DRIESSEN
theoretically harmless puffery It also re-flects the desire of many multinationalcompanies to appease critics and gaina public relations advantage over com-petitors by adopting the language ofideological environmentalism
This radical school of thought in-creasingly uses ethical buzz-words anddogmas to justify its demands Chiefamong them are sustainable develop-ment and the precautionary principlethe foundations of so-called lsquocorporatesocial responsibilityrsquo (CSR) and lsquoso-cially responsible investingrsquo (SRI) doc-trines
Eco-activists from affluent Westerncountries developed the doctrines topromote their agendas and oppose en-ergy and economic development BPhas long been at the forefront of theseefforts as a charter member of theWorld Business Council for SustainableDevelopment through frequent meet-ings with activist groups and by fund-ing many radical groups
The activists define what is lsquorespon-siblersquo focusing debate on conjecturalproblems and theoretical needs of fu-ture generations of wealthy elitesmdashandignoring real immediate life-and-death needs of people who struggledaily just to survive The stakes arehuge
More than 15 billion people in de-veloping countries still do not have ac-cess to electricity Half a billion womenand children spend their days collect-ing firewood or squatting in mud andanimal faeces to collect and dry ma-nure for fuel Millions die every yearfrom lung diseases caused by indoor airpollution from cooking fires and dys-entery due to contaminated drinkingwater
Hydroelectric or fossil fuel projectscould provide electricity for familieswater purification plants and economicdevelopment But radical activists op-
ceive it as a lsquosocially responsiblersquo leaderand reward it accordingly Few did
Green activists denounced BP forlsquohypocrisyrsquo and blasted the company forcontinuing to lsquoexploit some of theworldrsquos most sensitive ecological areasrsquoA major business magazine said sim-ply lsquoWell please If the worldrsquos secondlargest oil company is beyond petro-leum Fortune is beyond wordsrsquo
Meanwhile BPrsquos total wind and so-lar electrical output last year was barelyenough to keep the lights burning inRegina Saskatchewanmdashand thought-ful observers are beginning to realizethat wind and solar arenrsquot quite as eco-friendly as activists claim
A single new 555-MW gas-firedgenerating plant in California producesmore electricity than do all the statersquos13000 wind turbines The gas-firedplant occupies about ten acres the gi-ant 200-foot-tall windmills dominatethousands of once-scenic acres and killthousands of raptors and other birdsevery year Current photovoltaic tech-nology is just as habitat-hungry
Worse chief executive Lord JohnBrowne was forced to lower BPrsquos pro-duction estimates three times last yearand the companyrsquos 11 per cent returnon average capital was well below thatof arch-rivals ExxonMobil (137 percent) and Royal DutchShell (148 percent) BP share prices reflected inves-torsrsquo displeasure with its poor perfor-mance and the fact that the companyrsquosprofit margins would not improve for adecade or more if the company re-mained focused on renewable energyand old oil fields
Thus if BP ever really was BeyondPetroleum going Back to Petroleum(and Bigger Profits) was a sound busi-ness decision
However the lsquoGreat Beyondorsquo adcampaign involves more than meregreenwashing and disingenuous but s
14 MARCH 2003
E V I E WR
API
pose these projects and say that theworldrsquos rural poor should be contentwith solar panels on huts
Investors are also at risk particu-larly retirees whose futures depend onpension and mutual funds that ownnearly $8 trillion in market sharemdash50per cent of the total stock marketMany of these funds are managed lessto safeguard or benefit the investor thanto promote radical principles under thedisguise of so-called ethical funds
These funds claim to provide pro-fessional unbiased analytical and ad-visory services But in reality they sup-port political agendas based on often-questionable analyses and on lsquostake-holderrsquo (activist) input to justify howthey grade companies in client portfo-lios They regularly excoriate compa-nies such as ExxonMobil claiming itsrefusal to back the Kyoto climate treatywill destroy shareholder value Mean-while they praise companies such asBP and promote global governanceand solar panels on huts
Australiarsquos energy consumers willbecome yet another example of lsquocol-lateral damagersquo if the radicals havetheir way over global warming Onceagain some of the culprits are right inthe BP boardroom
In 1997 BP chief Browne endorsedthe global warming theory and saidtough measures should be imposedquickly even in the absence of scien-tific proof A Clinton-era Energy In-formation Administration report con-cluded that the climate treaty woulddrain $340 billion a year from the USeconomy The Australian economywould also get hammered And all thispain even assuming perfect compli-ance with the treaty would reduce av-erage global temperatures in 2050 byonly 02˚C below what they would bewithout the treaty according to theUSArsquos National Center for Atmo-spheric Research
But BP Australasia President GregBourne is undaunted Hersquos stumping thecountry from Melbourne to Brisbaneand Darwin to Perth importuning busi-nesses to pressure the PM to ratifyKyoto Could it be pure altruism Ormight the old profit motive be at work
A 1997 memo to Enron presidentKen Lay described BP as Enronrsquos lsquoin-ternational equivalentrsquo Indeed BP isstriving mightily to replace Enron asthe worldrsquos premier broker in the newbusiness of buying and selling permitsto emit greenhouse gases The expec-tation is that playing the climatechange game could earn BP billions ofdollars via traditional petroleum opera-tionsmdashand billions more via emissiontrading schemes The company is al-ready trading credits among its unitsas part of a training regimen for theanticipated emission Olympics
One cannot help but suspect thatthis huge EU oil giant might also bemotivated by Europersquos obvious desireto protect its industries from US and
other foreign competition They clearlysee the Kyoto Protocol not merely asan environmental programme but alsoas a way to pressure the United StatesAustralia and other countries to reduceenergy use and economic productivity
EU Environment CommissionerMargot Wallstrom put it bluntly whenPresident Bush abandoned the Kyotoclimate treaty lsquoThis is not a simple en-vironmental issuersquo she railed lsquoThis isabout international relations this isabout economy about trying to createa level playing field for big businessesthroughout the worldrsquo Several EU of-ficials echoed her sentiments suggest-ing that Americarsquos lower energy taxesconstitute an unfair trade advantagethat could justify trade sanctionsagainst the US
In short what we are witnessing isa profound and disturbing convergenceof ideology activism marketing poli-tics and financial gainmdashall in the ser-vice of radical policy agendas and allbeautifully attired in the lavish raimentof corporate ethics and responsibilityThis is proof positive that social respon-sibility can be a wondrous thing in thedexterous hands of craftsmen who re-ally know how to display and utilize it
How can we stop the charade Forstarters demand that corporate socialresponsibility puts people first puts de-velopment back into sustainable devel-opment and ensures that precaution-ary guidelines safeguard people andcommunities from the havoc wreakedby radical green policies Insist that alldecisions be based on sound peer-re-viewed science and solid evidencemdashnot on hysterical claims and shrillrhetoric by activists regulators andjournalists who reward pseudo-scien-tific soul-mates and pillory any scien-tists who dare disagree with them
Next urge principled regulators andjournalists to investigate these compa-nies and investor firms for self-servingarrangements and breech of fiduciaryduty Demand that the companiesfirms and activist groups open theirbooks and provide full disclosure oftheir meetings contacts and monetaryand other relationships
Last in this era of high-minded re-form prevail upon legislators to changethe law to make these groups subjectto the same false advertising laws andthe same standards of transparency andaccountability that activists insistshould govern for-profit corporationsUnbelievably right now these ideo-logues are mostly exempt
The world will thank you For it willbe a better safer more ethical placemdashespecially for energy consumers retir-ees and the worldrsquos poor
Paul Driessen is a senior fellow for the AtlasEconomic Research Foundation in Fairfax VA This
article is based on his recent white paper lsquoBeyondPetroleummdashor Beyond Probityrsquo which can be read
in its entirety at wwwcdfeorgdriessenhtm
BPrsquos total six-year
investment in renewable
technologies was $200
millionmdashthe same
amount it spent on the
lsquoBeyond Petroleumrsquo
advertising campaign
15MARCH 2003
E V I E WR
FOR three years Reputa-tion Measurement Ltd andThe Age and The SydneyMorning Herald have been
trying to impose their political agen-das on Australiarsquos top 100 corpora-tions They think that Australiarsquos cor-porations should be good citizens andthat by measuring what they think itmeans to be a good citizen they canchange corporate behaviour
Westpac ranked number one on the2002 Index and rated well in everycategory Flight Centre ranked num-ber one on financial performance but47 overall It was in the doldrums inevery other category including beingranked 99 on environment On thesurface this seems very strangemdashFlightCentre manages shopfront travel agen-cies The reason for this bizarre resultwas not hard to find
Reputation Measurement sug-gested that lsquocompanies seeking to dem-onstrate their worthiness as sociallyresponsible organizations are most suc-cessful when they widen their tradi-tional business stakeholder base to in-clude community stakeholdersrsquo Fur-ther lsquo[i]nvestors and consumers are in-creasingly making decisions based onlonger-term issues linked to a com-panyrsquos capacity to contribute to a sus-tainable futurersquo In other words theReputation Index is an instrument foradvancing a number of political agen-das corporate social responsibilitystakeholder capitalism and sustain-ability
For example corporate social re-sponsibility suggests a common agree-ment about what is good Whose defi-nition of good is to be believedmdashtheelectoratersquos or the activistsrsquo In a lib-eral democracy the rules are set by aconsensus that determines not so muchwhat is good corporate behaviour but
The Good Reputation Index 2002A Tale of Two Strategies
GARY JOHNS
what is and what is not acceptablebehaviour The Index is an exercise incapturing the reputation agenda andusing it to regulate corporate beha-viour
Stakeholder theory suggests that allinterests in an enterprise compete toobtain benefits from the enterprise butthat none has priority It is in effectasking lsquoin whose interests should theenterprise be runrsquo It assumes that so-ciety grants an enterprise the right toexist The community through its law-makers may grant licences and certainprivileges in return for the enterprisecomplying with the law It does notlicense stakeholders at large to imposetheir views on the corporation
Sustainability refers to ecologicalsustainability and ecological sustaina-bility is premised on the notion of lim-its to growth based on limits to resour-ces It argues that natural resources arebecoming scarcer It ignores the his-tory of technological innovation of-ten promoted by competition betweencorporations and the fact that such in-novation has extended physical re-sources in ways untold
An analysis of the 2002 Index re-veals that those corporations whosescore improved massively between2001 and 2002 did so because they didnot participate in 2001mdashthey wererated anywaymdashbut did so in 2002Conversely those whose score plum-meted in 2002 did so because they par-ticipated in 2001 but not in 2002Moreover the corporations who rosemassively in the ranks did not changetheir behaviour they just filled out theforms better
Greenpeace were very aggressive intheir attitude to corporations lsquoTo en-able us to verify your responses pleaseprovide us with further supportingdocumentation If hellip we are unable
to verify your response we will defaultyour response answer to a ldquodonrsquot knowrdquowhich will be marked and downgradedaccordinglyrsquo Unfortunately those ofwhom we would expect bettermdashforexample The Brotherhood of St Laur-encemdashalso penalized non-respon-dents As the technique was used byalmost all of the research groups thiswas presumably a deliberate strategy ofReputation Measurement Ltd
More disconcerting were reportsfrom corporations of the researchgroups touting for business by ringingfirms and offering their services to helpfill out the questionnaire Althoughthe level of disclosure has increasedsince the 2001 survey the touting con-tinued
The Index was published in Octo-ber 2002 obviously to coincide withthe reporting season and in the hopethat shareholders would use the Indexto seek changes to corporate behav-iour A sample of the major gainers andlosers on the Index reported no men-tion of the Index More importantlythere was no discernible impact onshare prices
The good news is that the Indexfailed miserably to achieve its objec-tives The bad news is that enough cor-porations played along to keep it alivein certain media and academic circlesIt was a chance for self-appointedNGOsmdashwho provided the ques-tionsmdashto regulate corporations bypublishing a list of good capitalists andbad capitalists Every corporation thatparticipated in the Index should thinkcarefully about whether it can justifythe agenda to its shareholders
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
16 MARCH 2003
E V I E WR
Tomorrowrsquos Reform
RALPH Waldo Emersontold us that lsquoa foolish con-sistency is the hobgoblinof little minds adored by
little statesmen philosophers and di-vinesrsquo and enjoined us lsquoto speak whatwe think today in words as hard ascanon balls and tomorrow speak whattomorrow thinksrsquo While statesmenshould not persist with known errortheir wanton inconsistency makespolicy formulation confoundedly dif-ficult
When he asserted that lsquoWhat de-termines the course of a nationrsquos eco-nomic policies is always the eco-nomic ideas held by public opinionrsquoLudwig von Mises must have hadeven less confidence in little states-men His pupil Friedrich von Hayekurged Antony Fisher not to enterpolitics but instead to found think-tanks which with fact and argumentwould change public opinion
Even among liberalismrsquos oppo-nents few today argue that Misesrsquoand Hayekrsquos ideas and Fisherrsquos liberalthink-tanks did not lead the 1980sand 90s almost world-wide liberal re-vival Why would they when bymuch the same means Fabian So-cialism had brought the welfare stateto Western nations In neither trendhowever were politicians the mereagents of popular opinion Especiallyin democracies political leadersrsquo ca-pacities to ignore it are indeed mod-est but their abilities to influence itare very much less so Even SaddamHussein works hard at influencingIraqi opinion Can we hypothesizethat the ways that leaders use theirinfluence distinguish tyrants fromdemocrats and the purposes forwhich they use it distinguish politi-cians from statesmen
Liberalismrsquos headlong chargethrough the corridors of power could
JOHN HYDE
arguments could have been em-ployed are nonetheless being de-fended by appeal to popular miscon-ceptions of the sort that PaulineHanson the Democrats and Greensactually believe Unless the majorparties have had a radical change ofheart they believe differently
Take the proposed Free TradeAgreement (FTA) with the UnitedStates Trade experts are not of onemind about its net worth My quar-rel is therefore not with the FTAitself but with the Governmentrsquos de-fence of it If the FTA will bring netbenefits then these will come mostlyfrom improved access to Americangoods and capital our own reductionof anti-competitive regulation ofdrugs medical insurance performingarts professional services textilesrural commodities etc and the dy-namic advantages of mixing it withthe Yanks But the government ispromoting the FTA almost solely inmercantilist (exports goodimportsbad) terms
To treat foreign goods servicesinvestment and ideas as an invasionparodies voluntary exchange whichdoes not happen unless both partiesbenefit The Government trumpetsa fact that nobody disputes namelythat it pays to sell into the best pay-ing markets but says nothing to edu-cate us in the advantages of buyingwell from foreigners as well asneighbours Once long ago Howardcriticized Pauline Hanson for her xe-nophobia That day he seemed to un-derstand the benefits of exchangewith foreigners
Until recently Australia hadbeen insisting that the only way toworld trade reform was via the mul-tilateral processes of the World TradeOrganisation and currently theDoha round A bilateral FTA with
not have proceeded without leaderssuch as Margaret Thatcher and ZhouEnlai who changed public opinionas did Bob Hawke in Australia Nowhowever liberalismrsquos charge hasslowed even in some places beensomewhat reversed Canberra hasnot been immune from trends thatsee politicians no longer so firmly re-sisting demands for economic privi-leges or as others see the same phe-nomenon no longer so blindly fol-lowing economic rationalism
Very poor economic decisionsaboundmdashrejection of the Trebeck re-port on petrol pricing preference forethanol production extending mo-tor and textile protection rural sub-sidies taxpayer contribution to theDarwin-to-Alice Springs railwayetc etc But there is also progressThe pride that John Howard takesin the fact that Australians are lessdivided against each other is surelyjustified The hugely importantlabour welfare and arguably also thehealth-care markets have been im-proved Budget balance has beenachieved albeit with high taxes Al-though net legislative and adminis-trative progress toward a more lib-eral more open more efficienteconomy has dwindled it would stillbe fair to say it has not been reversed
Our statesmenrsquos words as hard ascannon balls however that is thoseintended to enlighten rather thanappeal to public opinion are beingreserved for the Iraqi conflict In con-trast in the economic arena we areno longer encouraged to accept anyunwelcome truths Even when de-fending measures that I am morethan content to accept as beneficialthe government seems to select itsargument at best randomly ignoringprinciples of economic efficiency andequity Policies for which textbook
17MARCH 2003
E V I E WR
the US may or may not result in anet increase in trade flows but if itis not a meaningless piece of paperdelivering only political benefits tothe Government it will certainlydivert trade from our other tradingpartners How will China KoreaJapan etc react to losing their lsquomostfavoured nationrsquo status Such ques-tions should be addressed in termsthat do better than reinforce our xe-nophobic prejudices
By appealing to Hansonite mis-conceptions the Government mayand probably will improve itschances of bringing forward a policythat I am more than willing to ac-cept it believes is a good one It isafter all the recommendation of theDepartment of Foreign Affairs andTrade However by so doing it is re-inforcing delusions it must overcomefor further economic reform Whatis more I am reminded of a quip thatI am sure the PM has also heard lsquoNoGovernment is really dangerous un-til it believes its own bullshitrsquo Poli-ticians and I suspect bureaucratsalso are all too prone to believingtheir own utterances Unwilling toadmit their deceptions even whenspeaking in house they quickly con-vince themselves of the truth of theirown and colleaguesrsquo loose rhetoricand worse These are the people whomust negotiate the Agreement whilelooking over their shoulders at anAustralian electorate whose alreadystrong mercantilist tendencies havebeen reinforced by the people bestplaced to disabuse them The poten-tial cost is obvious
The US Free Trade Agreement isbut an example of a tendency thatought to be worrying In debateabout refugee policy motor fuel sup-ply single-desk wheat sales the sup-ply of medical practitioners and pres-ervation of the environment has notthe Government employed argu-ments that are not compatible withits professed liberal philosophy Hasit not seemed that it does not knowthe standard liberal responses to theself-serving demands of vested inter-ests and bigots With due respect to
Emerson consistency allows deci-sions to be made without the neces-sity of thinking every one throughfrom fundamental principles whichnobody in authority has the time orthe mental agility to do
Politically disinterested educa-tors such as the IPA can often callsome pretty good minds to their aidEven so when the Government it-self fosters public misconceptionthey cannot be expected to undo theerror The single greatest sin of thecurrent government is that it is notbuilding opinion for tomorrowrsquos re-form Why not
I suggest because it is politicallydifficult Whereas calls to resist out-siders appeal to deeply ingrainedtribal instincts calls to uphold thecivilizing and wealth-building insti-tutions that afford protection tostrangers and admit their goods ser-vices persons and ideas make nosuch visceral appeal These codes aremuch later developments in themarch of mankind and to manypeople they remain counter-intui-tive They must therefore be de-fended by sustained argumentHayek knew that politicians whosetime horizons in the absence ofknown crises tend to be the nextelection would (to use Howardrsquosown expression) seldom have the
tickers He turned therefore to theless articulate but far more resolutethink-tanks
It is relatively easy to appeal tothe sort of Chauvinism that sur-rounds sporting activity and argu-ments about refugees and meat quo-tas When a Prime Minister talks ofsovereignty guaranteeing our bor-ders or the interests of our exportersor domestic manufacturers he is notnecessarily wrong but his task iseasier than that of defending rulesthat permit voluntary co-operationamong strangers The principle thatdefends the non-unionistrsquos right towork the consumerrsquos right to buy for-eign goods and everyonersquos right tohear alien ideas and which shouldprotect racial and religious minori-ties from exclusion still needs hisleadership
Unless statesmen recognize theinconsistencies that arise not fromthe changed opinions that con-cerned Emerson but from trying tobe all things to all men they arelikely to govern in ways that are un-fair and inefficient If the public doesnot recognize consistency then thelsquolittle statesmenrsquo may find them-selves compelled to yield to the de-mands of the more articulate vestedinterests In such a case Heaven helpthe inarticulate who will be effec-tively disenfranchised But the insti-tutions which when consistentlyapplied give us liberty equity andprosperity are not strongly intuitive
They nevertheless distinguishAustralian society from say Iraqi so-ciety They give us the economicstrength to defy tyrants and they giveus a land worth defending They arecertainly not in danger of disappear-ing but they are in danger of beingeroded Lead us Mr Howard
While statesmen
should not persist
with known error
their wanton
inconsistency makes
policy formulation
confoundedly
difficult
API
John Hyde is a Senior Fellow with the Institute ofPublic Affairs His book Dry In Defence of
Economic Freedom was published by the IPA in November 2002
18 MARCH 2003
E V I E WR
DESPITE the obsessivepublic attention to pricesat the petrol pump thepetroleum-refining sector
rarely registers on the media radarscreen This is unfortunate as the sec-tor fuels most movement of peopleand goods in our economy and soci-ety And it is in trouble
It is fragmented stunted and sur-vives by abjuring profit and mortgag-ing its future Without radical reshap-ing it is likely to wither leaving usexposed to the vagaries of the inter-national refined-products market
FEATURES OF THE AUSTRA-LIAN REFINING SECTORThe first thing to note is that by in-ternational standards Australia is arelatively small player The most re-cent international figures show thatour total output of refined productsin the third quarter of 2002 was 89million tonnes This compared withOECD production of 486 milliontonnes including US production of202 million tonnes Total Australianrefinery capacity of 870000 thousandbarrels per day (bpd) compares withthe figures for China (53 million)South Korea (26 million) and Singa-pore (11 million) Total regional re-fining capacity and production con-tinues to grow as Australiarsquos stagnatesIn the five years to 2000 regional out-put grew by 22 per cent
Second the structure of the indus-try is weak The dispersed geographi-cal distribution of our refining sectorreflects its historical developmentwith each State capital city support-ing one or more refineries Over thelast two decades the number of ma-jor oil companies operating in Aus-
Petroleum RefiningRationalization or Atrophy
JIM HOGGETT
tralia has shrunk from nine to fourAlthough the number of players hasmore than halved the number of re-fineries has reduced by only two fromten to eight The average capacity ofAustralian refineries is around100000 bpd New refineries in theregion are generally significantlylarger Singaporersquos largest has a capac-ity of 375000 bpd
Given the open Australian mar-ket our ex-refinery prices are virtu-ally set by the major exporters in theregion who are also operating on tightmargins Moreover the proportion-ately heavy demand for diesel in SEAsia tends to generate a persistentsurplus of gasoline which is availablefor export to Australia at discountedprices
The pattern of relatively smallscattered refineries is no longer opti-mal in an open market in which weare a price-taker
Third despite its sub-optimalstructure the Australian refining in-dustry is not grossly inefficient Oneindicator is the value added per em-ployee which is in the top five per-formers in the Australian manufac-turing sector
The cost competitiveness of Aus-tralian products is indicated by thefact that we have the cheapest ex-taxprice of petrol in the OECD Perfor-mance comparisons with the rest ofthe AsiandashPacific however suggestthat we lag the average efficiency inthe region And the best performersin the region are superior to our best
Finally the financial performanceof the industry is poor gross annualrevenues for the whole industry in-cluding marketing were $32 billionin calendar year 2001 For the five
years to 2001 the return on assets forrefining and marketing averaged 38per cent and was negative in the lasttwo years The indications are that2002 may have been a better year forthe industry but that the return onassets remains well below the cost ofcapital Over the four years to 2001the fixed asset base of the industrydeclined by almost 6 per cent to $12billion even after $24 billion of newinvestment in the period
This is clearly unsustainable andit raises the question Why is no-oneleaving the game
There are perhaps four main rea-sonsbull First the industry has engaged in
continual productivity improve-ment allowing it to keep withinrange of ruling prices
bull Second each refiner hopes thatsomeone else will blink first sothat the waiting will pay off
bull Third the costs of leaving thetable the exit costs are very highbecause of the nature of the prod-uct and the long occupancy ofmost sites
bull Fourth even while profitability islow the industry has generallybeen marginally cash positive
These add up to a big lsquofirst mover dis-advantagersquo
FUTURE TRENDSClearly petroleum will remain ourmost important energy source Petro-leum products constitute 52 per centof Australiarsquos final consumption ofenergy Liquid petroleum fuels pro-vide more than 95 per cent of Aus-traliarsquos transport needs There are nomajor foreseeable influences that willaffect this pattern dramatically There
19MARCH 2003
E V I E WR
have been major advances in fueleconomy and these will no doubtcontinue But more than counterbal-ancing this is the inexorable growthin demand for personal mobility andfor goods from distant parts Althoughgrowth in energy consumption mayslow down in Australia we will notbe reducing our consumption to anysignificant degree
Our export role will also be lim-ited Australian export volumes havetended to be steady over recent yearsand future new export potential forpetroleum products seems likely to beminimal China and India have re-cently become major exporters par-ticularly of gasoline Refinery capac-ity is planned to continue to growstrongly in the region even thoughthere is already significant excessThe decline in capacity utilization inmajor exporters such as Singaporewill make exporting difficult Further-more it is expected that productspecifications in Asia the US andEurope will converge in the comingyears thereby eliminating niche ex-port opportunities
The choice we face is what to doabout our essentially import-compet-ing industry
INCENTIVES NOT STRONGWhile there are strong pressures forthe industry to restructure there islittle incentive to invest for this pur-pose Investments in the Australianrefining industry have to competewith many alternatives across theglobe
Lack of sufficient return is thesingle biggest deterrent to investmentin the industry at present But thereare othersbull There is no prospect of strong growth
in demand to offset the substantialrisks associated with large new in-vestments
bull The persistent refinery capacity over-hang in our region will keep sus-tained pressure on our margins
bull The corporate taxation regime is nowless favourable than hitherto after thesubstitution of effective-life foraccelerated depreciation The
competing Singapore option offersa three-year write-off
bull The regulatory cost burden is grow-ing This applies to all Australianindustry but is potent in overseascomparisons Tighter fuel stan-dards environmental restrictionsintervention in prices and indus-trial law are some of the factors
bull There is increased sovereign riskstemming from inconsistent regula-tions We have eight parliamentswhich enact inconsistent laws Acurrent example is the higher fuelstandards applied in Western Aus-tralia
bull The sovereign risk also arises fromuncertainty in the regulatory processThere are unpredictable changesof direction (the deferral of thediesel sulphur excise differential[DSED]) and uncertainty in theface of conflicting interests (willthe Government act on ethanolcontent)
All these factors enter into the riskreward calculation When the re-wards are minimal the risks take onan extra dimension
WHAT INDUSTRY STRUC-TURE DO WE NEEDThe short answer is we cannot knowin detail
In the Downstream Petroleum In-dustry Framework 2002 the Depart-ment of Industry Tourism and Re-sources set out a broad vision
bull A preference for market-based so-lutions
bull A strong efficient environmen-tally responsible industry supply-ing most of the nationrsquos needs forproducts
bull Regulation only for market failureor national interest objectives
bull Regulation to be transparent andconsistent
bull Reform and regulation to maxi-mize long-term community ben-efitThis vision has some prescriptive
elements but the Government hasmade it clear that it will not nomi-nate an optimal number of refineriesor a pattern of production
The general public would probablyopt for a structure that guaranteedlower more stable automotive fuelprices Unfortunately they cannothave both in the short term
In fairness the investors in the in-dustry are the ones entitled and bestfitted to determine its future In theextreme they will do it anyway bypersisting or walking away Generallyspeaking they will seek to maximizetheir returns and thus promote themost efficient use of resources
Australian refineries are not inef-ficient but that is not the point Ourmarket is open so the competitionwe face is the best of the overseas per-formers often with more favourabletax and subsidy regimes
Nor is this simply a question ofclosing the smallest refineries A bet-ter approach might well be to allowrefining companies to concentrate onwhat they do bestmdashperhaps throughrefinery alliances Caltex and Shellhave co-operated in this way in Thai-land
The fact is that the detail of thedecisions can only be made by theindustry relatively free of governmentdirection The series of detailed de-cisions entailed will determine theoverall structure of the industry
COMPETITION REGULATIONCAN IMPEDE RESTRUCTURINGThe relevant provision of Section 50of the Trade Practices Act (TPA) pro
While there are
strong pressures for
the industry to
restructure there is
little incentive to
invest for this
purpose
s
20 MARCH 2003
E V I E WR
hibits mergers or asset acquisitionsthat would have the effect or belikely to have the effect ofsubstantially lessening compe-tition in a marketIt is both potentially and in prac-
tice an extremely restrictive provi-sion The Australian Consumer andCompetition Commission (ACCC)has expressed concern at concentra-tion in the sector in applying the pro-vision
The ACCCrsquos concerns seem ex-aggerated in the light of history Butthey are complemented by a persis-tent public misapprehension thatlarge petrol price swings equal profi-teering This perception has been soexploited for political advantage andmedia excitement that it is now al-most impossible for the truth toemerge
The future intensity of competi-tion in this industrymdashif it is allowedto restructuremdashshould not be indoubt Any rationalization would inall likelihood still leave strong do-mestic competition in each majorproduct category perhaps with fewermore efficient production units
The market is also contestableThere would be numerous potentialimporters and many independent re-tailers High margins would be rap-idly eroded by competition As re-cently ruled in the Boral case mar-ket reality is more conclusive than aperception of anti-competitiveness
Proposed mergers have been per-mitted in the past but the process isslow and permission is generally onlygranted with severe conditionsNonetheless there is a strong case forallowing restructuring within theterms of the merger provisions
AUTHORIZATION COULD BETHE KEYIf Section 50 of the TPA is an im-passable barrier then the authoriza-tion provisions of the Act could bethe way to greater efficiency The testsunder these provisions require a pub-lic benefit which outweighs the com-petition detriment The ACCC listsfostering business efficiency industry
rationalization and import-competi-tiveness as important public benefits
There is a strong prima facie casethat rationalization of the industrycould satisfy these tests It wouldallow greater scale of productioneconomies in distribution and closureof the least efficient production units
But the authorization process isslow and the onus for demonstratingthe public benefits rests on the appli-cant Slow process can amount to ef-fective rejection
POLICY OPTIONS AND REC-OMMENDATIONSIf government cannot help the indus-try to adjust it should allow it to ad-just by supporting sensible changeThis would involve both improving
the operating environment throughregulatory reform and altering thebalance of competition regulation sothat the industry could restructurevoluntarily The CommonwealthGovernment has already indicated awillingness to support both but hasnot yet delivered
The ball would then be in theindustryrsquos court to bring forward newproposals if a new policy environmentcould be created This could all hap-pen within a very broad strategicframework agreed with the industrywhereby Australia continued to besure of sufficient refining capacity tomeet a severe international fuel short-age
We therefore recommend thatbull The Commonwealth Govern-
ment provide explicit indicationto the ACCC of the public ben-efits it sees from the rationaliza-tion of the refining sector In par-ticular joint ventures should becontemplated
bull The ACCC give sufficient weightto the public interest benefits ofrestructuring to allow rationaliza-tion of production facilities
bull All governments reduce distortingfuel subsidies and taxes that favourparticular sectors or fuels
bull The State Governments act im-mediately to harmonize their regu-lation of the industry and agreenot to issue any new inconsistentregulation
bull More specifically the States havea single set of fuel standards withwhich refiners can reasonablycomply withdraw from all formsof price regulation and refrainfrom thwarting or distorting therationalization process
bull Governments generally not intro-duce new regulations mandatingthe use of alternative fuels
CONCLUSIONThe choice for the industry appearsto be between accelerated rational-ization and atrophy The process ofchange is something which the indus-try must plan and effect The task isnot impossible but it will require theactive support of government at alllevels For the time being there is anexpressed willingness at the Com-monwealth level but no real solu-tions
If nothing is done the refiners willcontinue to stumble along in a regu-latory fog and will invest only whenobliged to do so by changing fuel stan-dards They will become increasinglyvulnerable to low-priced imports andeventual closure
Jim Hoggett is a Senior Fellow at theInstitute of Public Affairs
If Section 50 of the
TPA is an impassable
barrier then the
authorization
provisions of the Act
could be the way to
greater efficiency
API
Last week the Government tabled 22 volumes of theCole Royal Commission into the Building andConstruction Industry Former Court of Appeal judgeTerence Cole made 392 specific findings of unlawfulconduct and in the confidential final volumerecommended that 31 individuals be referred for possiblecriminal prosecution As was to be expected theconstruction unions claimed that the report was a witch-hunt and people who should have known better claimedthat Cole was biased
The anti-union allegations were never very plausiblegiven that most unions had refused to cooperate withthe Commission and had even boycotted theCommissionrsquos special conference on occupational healthand safety As things have turned out one of their ownhas fatally undermined the unionsrsquo case No less anauthority than the National Secretary of the ConstructionDivision of the CFMEU has unwittingly confirmed thatCole is right In what was no doubt an unguardedmoment John Sutton admitted to a Melbournenewspaper that ldquovirtually everything we do breaches partof this Actrdquo Suttonrsquos admission means that Colersquosdescription of a largely lawless industry can be disputedat the margins but not credibly denied The problemsof the industry have been established beyond credibledoubt and the question now is what needs to be doneabout it
Nothing says the CFMEU because itrsquos alright tobreak the law in the best interests of the working classLeading union officials take the view that in a toughindustry only wimps take the law seriously The newsthat ldquoonlyrdquo 31 individuals had been recommended toface criminal charges was greeted with somethingapproaching jubilation as if the industryrsquos code of silencebased on fear had largely kept the Royal Commission atbay
As the Australian Financial Review commented in aneditorial the unionrsquos dismissive reaction to Colersquos report
ldquospeaks as loudly as his damning findings of entrenchedlawlessnessrdquo Imagine the reaction if a royalcommissioner had identified 31 people in the financeindustry or the steel industry for possible criminalcharges This would rightly be regarded as the sign ofan industry in crisis demanding urgent governmentintervention
Change wonrsquot be easy in an industry conditioned tothink that might is right Change which shifts powerfrom one unscrupulous group to another will not bereform As Grocon has discovered the first company toldquobuck the systemrdquo is liable to heavy-duty industrialpayback No one wants to be the first to change butchange is necessary in the national interest
In 2002 the Victorian construction industry aloneaccounted for 17 per cent of all days lost through strikesThe West Australian construction industry accountedfor another 8 per cent of the national strike tallyConstruction is a $40 billion a year industry comprisingnearly six per cent of GDP and employing nearly500000 Australians Due to over-manning demarcationdisputes and chronic stoppages labour productivity incommercial construction averages 13 per cent less thanin home building Plastering the same wall in the sameway costs 40 per cent more in a high rise building thanin a standard house Just raising labour productivity incommercial construction to the home building standard(let alone the 50 per cent increase needed to match NorthAmerican levels) would mean according to Econtech aone per cent drop in the cost of living a one per centincrease in GDP and $23 billion in benefits toconsumers workers and taxpayers every year
Still change is about decent Australian values notjust a more efficient industry Workers donrsquot like latenight house calls compulsory attendance at demos anddays spent sitting in the shed to make an industrial pointany more than bosses Threats of violence contempt forcourt and commission orders mob rampages when one
Restoring the Rule of Law in theConstruction Industry
Tony Abbott MHR
s
As this issue of the IPA Review was at the press we were alerted to the delivery of the following speechby the Minister for Employment and Workplace Relations The paper marks a seminal change in the
governmentrsquos approach to systemic corruption in the construction industry and isanother major step in the reform of workplace relations in Australia
SI-1MARCH 2003
IPA REVIEW SPECIAL INSERT
side doesnrsquot get its way habitual failure to honouragreements and routine harassment of people exercisingtheir legal rights are not acceptable in modern Australiaand cannot be excused even in a good cause
Breaching ldquobourgeois lawrdquo may not matter tomilitant activists but few others take such a self-indulgent view Itrsquos said that ldquooppositions can afford tobe irresponsiblerdquo but no government or alternativegovernment can accept the principle of optionalobedience to the law of the land No less than the HowardGovernment the federal Labor Opposition and the stateLabor Governments understand the dangers of playingpolitics with the rule of lawmdasheven theauthority of laws they might preferto change such as the federal WorkplaceRelations Act
The rule of law is not asmorgasbord from which a fewfavoured items can be chosen and therest ignored Freedom under the lawrequires respect for the law generallynot just the laws individualspersonally support Obedience to thelaw is not a question of choice It is arequirement of civilisation because thelaw is our guarantee of equaltreatment after a fair hearing ldquoBe youever so high the law is above yourdquoThis reproach hurled at the Stuartkings has rightly echoed through thecenturies as a warning against theconceits of office and the arrogance ofpower regardless of the cause in whichitrsquos exercised
After last weekrsquos meeting of theWorkplace Relations MinisterialCouncil of the Council of Australian Governments stateand territory ministers were keen to declare in acommuniqueacute ldquothere was unanimous agreement thatunlawful behaviour in the building and constructionindustry is not acceptablerdquo This was an importantaffirmation of the rule of law in circumstances wheresome Labor ministers might have been tempted to putpolitics ahead of principle
Unfortunately the state and territory ministerssupported more powers for the Australian IndustrialRelations Commission to settle construction industrydisputes In fact the Commission already has power tosettle disputes Whatrsquos missing is effective power toenforce agreements The issue is not settling disputesThe issue is enforcing the law
The construction industry typically conducts itselflike this A certified agreement is in place including anagreed dispute resolution procedure Unions identify agrievance often a spurious safety issue Agreed disputeprocedures are not followed and a strike ensues eventhough strikes outside ldquobargaining periodsrdquo areldquounprotectedrdquo and theoretically subject to damagesorders At that point employers often ask theCommission to end industrial action but instead ofordering an immediate return to work because anagreement has been breached the Commission willtypically seek to conciliate on the basis of the ldquomeritsrdquo
of the issue After a couple of dayswith costs escalating and liquidateddamages looming the employerinvariably agrees to rectify the matteralleged and to pay increasedallowances (including pay for days onstrike) At this point the Commissionorders a return to work on the basisof the agreed settlementmdashwhich lastsonly until the union decides on itsnext move
The union has ignored the law andbroken its original agreement buttypically suffers no adverseconsequences whatsoever Theemployer has been manoeuvred intoconceding most of a demand thatshould never have been made Afaccedilade of legality conceals a travestyof unionism and a travesty of justiceNearly all construction industrystrikes are unprotected and potentiallyunlawful under section 170MN of theWorkplace Relations Act Even so
employers nearly always opt to pass the costs ontoconsumers while existing arrangements for gatheringinformation launching prosecutions and imposing finesdonrsquot work well anywhere but hardly work at all in anindustry where giving evidence against the unions isthought to mean commercial suicide
The construction industry is a classic case not ofmarket failure but of regulatory failure The fact thatthe construction industry does not face potential importcompetition limits its exposure to market discipline Stillthe main reason why unions can get what they want frombusiness and business can get what it needs from haplessconsumers is the absence of independent policing andenforcement of the industrial equivalent of fair tradinglaws To an extraordinary degree in this industry the
SI-2 MARCH 2003
IPA REVIEW SPECIAL INSERT
The rule of law is nota smorgasbord from
which a few favoureditems can be chosenand the rest ignoredFreedom under thelaw requires respectfor the law generally
not just thelaws individuals
personally support
request documents but they canrsquot compel witnesses toanswer or demand that material be produced Althoughit is a criminal offence under the Workplace Relations Actto hinder workplace inspectors the Cole report notedthat no prosecutions have yet been launched despiteevidence that Office of the Employment Advocateinspectors have been abused had objects thrown at themand their property damaged It has been commonpractice for the arrival of OEA inspectors to lead to workstoppages and even site invasions in a bid to thwart anddemoralise an independent investigator not susceptibleto the unionrsquos usual weapon of commercial retaliation
One of the problems with theworkplace relations system is theassumption that parties will enforcethe law against each other This worksup to a point in industries whereworkplace parties are more-or-lessevenly matched and the issues are theworkplace equivalent of an argumentbetween neighbours over the heightof a fence It completely breaks downwhen one side has an effectivemonopoly over the supply of labourand disputes resemble a more-or-lessnormal family telling the house fullof footballers next door that the partyrsquosover Expecting contractors to enforcethe law against the CFMEU is likeexpecting people in the street to makecitizenrsquos arrests hence Colersquos principalrecommendations are an AustralianBuilding and ConstructionCommission to investigate prosecuteand enforce the provisions of a beefed-up industry specific workplace
relations actYesterday Cabinet decided to support Colersquos key
recommendations First the Government will seek aseparate act governing workplace relations in theconstruction industry providing for secret ballots beforestrikes compulsory cooling off periods after extendedstrikes and damages awards in the event of unprotectedindustrial action Second the Government will establisha new law enforcement agency for the industry withpowers to compel witnesses to testify bring prosecutionsand enforce judgments and with sufficient on-the-ground presence to police CBD building sites Thirdthe Government will establish a Safety Commissionerto monitor federally-funded construction sites to try toensure that these become industry models Fourth the
s
commissions lack sufficient power the courts lacksufficient speed the employment advocate lacks sufficientauthority and the police lack sufficient interest
Not before time the Cole Commission has acted as agiant searchlight probing the dark underside of thispotentially great Australian industry It confirmed whatpolicy makers had long suspected and what influentialinsiders knew but had always tried to deny or explainaway that the industry operates under the rule of thejungle and that there will be no improvement until thepeople who work in it understand that the law has to betaken seriously Legislative institutional and structuralchange will start to mean somethingwhen law breakers in this industry arecharged convicted and punished likelaw breakers everywhere else A fewsalutary bars of that old song need towaft over construction sites ldquoI foughtthe law and the law wonrdquo
Late last year in response to theRoyal Commissionrsquos first report thefederal Government set up theBuilding and Construction IndustryInterim Task Force The Governmentrsquosbrief to the Task Force is to ensure zerotolerance of industrial law-breakingThe Task Force is not primarily toenforce the tax laws or the safety rulesbecause other bodies exist for this(although the Task Force will certainlyshare information with them) TheTask Force is to investigate and enforceWorkplace Relations Act prohibitions oncoercion unprotected strikes strikepay and breach of industrialagreements So far the Task Force hasvisited nearly 300 sites launched more than 50investigations brought three prosecutions and referrednine other matters to state police the Australian FederalPolice or the Australian Competition and ConsumerCommission for further action
These are the first public prosecutions arising out ofindustrial action in the construction industry at leastsince the 1980s and are the result of a public policycommitment to law enforcement not seen since thehumiliating Clarrie OrsquoShea case in 1969 and the end ofldquopenal sanctionsrdquo Yesterday Cabinet decided to extendthe interim Task Forcersquos operations until more permanentarrangements to secure the rule of law can be established
Task Force agents have the powers of inspectors underthe Workplace Relations Act They can enter premises and
SI-3MARCH 2003
IPA REVIEW SPECIAL INSERT
The main reason whyunions can get what
they want frombusiness and businesscan get what it needs
from haplessconsumers is theabsence of inde-
pendent policing andenforcement of the
industrial equivalent offair trading laws
API
Government will insist on the application of theNational Construction Code and implementationguidelines to all significant new projects which are fullyor partly federally funded
Directly or indirectly the federal Government fundsabout $5 billion worth of construction projects everyyear and is determined to use its role as client to drivechange in the industry In essence the NationalConstruction Code stipulates that construction projectsmust take place in conformity with the WorkplaceRelations Act Under the Code and implementationguidelines the federal Governmentwill not engage tenderers whoseworkplace agreements and practicesensure a closed shop on site The TaskForce (and any replacement body) willhave full access to federally fundedsites to ensure that the law is beingobserved and workplace agreementscomplied with
For the federal Government theissue is upholding the law and tryingto tackle the ldquounion rulesrdquo culturewhich is at the heart of lawlessness inthe industry For the states the issueis whether they are prepared to refusefederal money in order to protect theclosed shop However much theymight prefer different federal laws thestates ought to accept thatconstruction projects have to complywith the law as it stands includingthe law mandating compliance withcertified agreements
State Labor governments whichhave made a point of their middle-ground credentials risk losing some$4 billion a year in federal building and constructiongrants if they side with the union movementrsquos mostmilitant minority There are likely to be limits to Laborrsquosdefence of a union whose stock-in-trade (at least in somestates) is the site invasion and the demand for paymentand which quietly reinstates organisers sacked for assaultor perjury Opposition senators will find it hard to brandas ldquoideologicalrdquo the recommendations of a royalcommission which spent 171 days in public hearingsand which pursued 11 shop stewards and 97 unionofficials to obtain their side of the argument
As Justice Cole pointed out in his report previousattempts to reform the industry have proven ineffectivedespite two earlier royal commissions and numerous
SI-4 MARCH 2003
IPA REVIEW SPECIAL INSERT
enquiries Although this Royal Commissionrsquosinvestigations seem to have temporarily checkedlawlessness in the industry a campaign is now emergingto extend the anarchic culture of CBD construction intoregional centres and the domestic housing industryThings will certainly be different this time if parliamentapproves a permanent well resourced watchdog withnew powers new personnel and new attitudes Unlikeprevious arrangements a new statutory watchdog withthe powers of a law enforcement agency should beeffective and permanent
Hundreds of people took big riskswith their commercial future and eventheir personal security to testify to theRoyal Commission It should neveragain be so hard for people in thisindustry to exercise their ordinaryrights and responsibilities asAustralian citizens They expected theGovernment to take the Commissionrsquosreport seriously and the Governmentfor its part is determined not to letthem down The Governmentunderstands that joining fights yoursquorenot prepared to win only makes badsituations worse Establishing the ruleof law in the construction industry isa challenge Australia canrsquot afford tofailSome of the worldrsquos best workersshould no longer have to put up withsome of the worldrsquos worst industrialpractices They have a right to anhonest industry where they can earna fair dayrsquos pay for a fair dayrsquos workand expect to come home uninjuredThe enduring image of this industry
should not be noisy marchers replaying the ideologicalstruggles of the 1970s and raising clenched fists againstauthorities they donrsquot like At its best the Australianindustry is capable of work which is stunningly beautifulyet intensely practical and it now needs to performconsistently on time on budget and in accordance withlaw
Hundreds of peopletook big risks withtheir commercial
future and even theirpersonal security totestify to the Royal
Commission It shouldnever again be so
hard for people in thisindustry to exercisetheir ordinary rights
and responsibilities asAustralian citizens
NOTE
The foregoing speech was first delivered as an Addressto the National Press Club on 2 April 2003
21MARCH 2003
E V I E WR
IN psychology behaviouris defined as irrational ifan action continues to berepeated despite its re-
peated failure to achieve the desiredoutcome On this definition our aidpolicy towards Papua New Guineahas been irrational
Despite over twelve billion dol-lars in Australian aid to PNG sincethat countryrsquos independence in 1975key development indicators such asliteracy rates infant mortality lifeexpectancy and real income percapita are either stagnating or dete-riorating Worse wersquove known forover a decade1
Today acknowledgement of thefailure of our aid policy in PNG hasgone well beyond the writings of in-dividual international policy analystssuch as myself to institution-spon-sored reports such as Beyond Baliwhich was released by the AustralianStrategic Policy Institute (the Aus-tralian Governmentrsquos own strategicpolicy adviser) and Papua NewGuinea on the Brink which was writ-ten by Susan Windybank and MikeManning for the Centre for Indepen-dent Studies Both reports confirmthe gross failure of Australian aidpolicy in PNG
Yet still our aid policy irrational-ity towards Papua New Guinea con-tinues While the ASPI and CIS re-ports acknowledge the gross failureof our aid policy in PNG they alsoargue that we need to continue ouraid to that country Indeed the ASPIreport argues that we should increaseour aid to Papua New Guinea Thepolicy saviour The ASPI report ar-gues that we should exert greater con-trol over our aid Not just over theform of our aid but direct interven-tion in policy and implementation inPNGmdashin essence for a return to pre-
Aid Detox for PNGPETER URBAN
independence days in PNG whereas UN-sanctioned administrator weran government in that country
Despite the mind-frame of secu-rity-focused strategists such as thoseat ASPI and the CIS (which en-dorses the aid approach advocated byASPI) the reality is that we canrsquotPNG is now independent and to ig-nore this reality would simply com-pound the problems of our past aidpolicy irrationality with irrationalityabout our political relationship withour nearest neighbour
A more interventionist aid policytowards PNG on our part as advo-cated in Beyond Bali and by HughWhite (the executive director ofASPSI) in the media might havepopulist appeal but it would haveserious adverse implications for ourrelationship with other Pacific islandcountries and even IndonesiaWorse it would give succour to theviews of our east Asian critics (suchas Malaysian PM Dr Mahathir) whoclaim that Australia continues toharbour colonial aspirations
We have to accept that to be suc-cessful aid policy must not just helpreduce mass poverty it also has to doso as a guest in the aid recipientcountry To do otherwise is not aidbut imperialismmdashwhether inten-tional or not
A more interventionist approachto aid policy in PNG would also givethe current corrupt political elite inPort Moresby a rallying point againstus and an excuse to delay changingtheir own policies Neither Austra-lia nor PNG can afford any furtherdelays to policy reform For us to givePNG politicians yet another excuseto delay reform would be not onlyirrational it would be inexcusableWhile our aid continues so will thecorrupt elite that is at the heart ofPNGrsquos problems Until we send themessage to the PNG political elitethat we are prepared to stop ouraidmdashto put them on aid detoxmdashwewill continue to waste our aid in thecorruption that is PNG politics Itmay be hard to accept but the sadreality we face in PNG is that no aidmay prove to be good aid at least inthe short to medium-term2
NOTES
1 Peter Urban lsquoOne Clear ObjectiveNo Clear Approachrsquo IPA Review1997 Vol 50 No 1
2 With Iraq also likely to require verysignificant Australian aid fundingover the next few years the Gov-ernment will need to review our aidprogram as part of the 2003-04 fed-eral Budget A decision to suspendaid to PNG could be taken as partof that review
Peter Urban is former chief economist with theDepartment of Foreign Affairs and Trade
We have to accept
that to be successful
aid policy must not
just help reduce
mass poverty it also
has to do so as a
guest in the aid
recipient country
API
22 MARCH 2003
E V I E WR
IN his speech to the Na-tional Press Club on theprospect of war with Iraqand the case for disarma-
ment Prime Minister Howard statedthat Australia will play a significant hu-manitarian role in Iraq
If so the Howard Government needsto evaluate carefully the foreign-aid non-government organizations (FANGOs)which it funds to carry-out this humani-tarian programme Many FANGOshave made it clear that they do not sharethe Australian Governmentrsquos objectivesand values in Iraq Moreover some donot agree with the Governmentrsquos over-all aid policies in general
THE COALITION OF THEUNWILLINGIn the lead-up to latest Gulf War some30 Australian aid agencies put theirnames to an Open Letter to the PrimeMinister organized by the AustralianCouncil of Foreign and Overseas Aid(ACFOA) The aim of the letter was tolsquospeak out against war in Iraqrsquo and it ex-pressed grave concerns about the hu-manitarian consequences of the war andthe effects of the existing sanctions1 TheFANGOs that signed the letter wereOxfam Community Aid Abroad WorldVision Australia TEAR AustraliaUnion Aid Australia - APHEDACaritas Australia National Council ofChurches Australian Council for For-eign and Overseas Aid Save the Chil-dren Australia CARE Australia OzGreen United Nations Association ofAustralia Family Planning AustraliaMercy Works Marist Mission CentreAustralia Every Home for Christ Bap-tist World Aid for Christ CCF Austra-lia Quaker Service Australia Austra-lian Lutheran World Service AustralianRelief and Mercy Services AnglicanBoard of Mission AUSTCARE Com-munity Development and Health
Irreconcilable DifferencesDON DrsquoCRUZ
Hussein have been virtually ignored isa searing indictment of the warped ide-ology feeble analysis and moral blind-ness of the sector For them now to re-discover the plight of the Iraqi peopleand to invoke their name in the mediais beyond contempt
THE OXFAM COMMUNITYAID ABROAD POSITIONOf the 30 FANGO signatories to theopen letter Oxfam Community AidAbroad (OCAA) has been perhaps themost outspoken It opposed military ac-tionmdasheven with UN Security Councilapproval4 In spite of all the evidence tothe contrary OCAA was comfortablewith Saddam Husseinrsquos assurances thathe did not have weapons of mass destruc-tion5 Adopting the common policyagreed to by the other Oxfam affiliatesOCAA stated that it will not take anymoney from the lsquobelligerentsrsquomdasha quaintterm used to the describe democraticnations planning to disarm a dictatorguilty of countless human rights abuses
OCAArsquos outrage against the so-called lsquobelligerentsrsquo appears to be geo-graphically confined to Iraq OCAAappears happy to take governmentmoney from the belligerents elsewherearound the world
According to OCAArsquos ExecutiveDirector Andrew Hewitt refusing totake money from the belligerents wasdone to lsquoprotect its impartialityrsquo6 Thisis a very curious position from Australiarsquosarguably most political FANGOOCAA has a long track-record of beinganything but impartial or reluctant totake sides in miliary action It wasnrsquotimpartial in East Timor where it sidedwith Fretlin in its quest for indepen-dence According to its own testimonyto a Senate committee OCAA wasgiven the choice by the IndonesianGovernment between lsquoplaying politicsrsquoor delivering aid projects in Indonesia7
Group Amnesty International Austra-lia AngliCORD Australian Aid forCambodia Fund Burnet InstituteRedR Friends of the Earth PLAN Aus-tralia and Australian Volunteers Inter-national2
This open letter highlighted a num-ber of problems with the FANGOs sec-tor First it highlighted the weak logicthat passes for advocacy in the sectorThe letter argued against military actionwas critical of sanctions and suggestedthat nations should settle issues only bydiplomatic means It is a viewpointwhich totally ignores the fact that theGovernment had to deal with SaddamHussein
The shallowness of their logic wasbest exposed by the Prime Minister inhis response to the open letter in whichhe stated that the humanitarian situa-tion in Iraq is best addressed by SaddamHusseinrsquos removal and perhaps morepointedly that Saddamrsquos manipulationof foreign aid had allowed him to main-tain and pursue his weapons of mass de-struction capability and human rightsabuses3
Second it also highlighted the factthat the so-called lsquohuman rights-basedapproachrsquo to development (embraced byseveral of the signatories) is not so muchabout realizing human rights (as its pro-ponents argue) but is more about pro-viding them with an excuse to lsquoplay poli-ticsrsquo According to the theory the hu-man rights-based approach to develop-ment allows FANGOs to tackle the rootcauses of poverty and injustice
Yet the root cause of the Iraqipeoplersquos suffering can be summed up intwo simple wordsmdashSaddam HusseinThe fact that the FANGOs who sub-scribe to this particular approach havebeen obsessed with imaginary humanrights abuses committed by Shell NikeRio Tinto BHP-Billiton and AuroraGold while the activities of Saddam
23MARCH 2003
E V I E WR
It chose the former thus making it per-sona non grata in Indonesia for almost adecade8 It wasnrsquot impartial inMozambique when it sided with Frelimoin the countryrsquos civil war9 It wasnrsquot im-partial in Ethiopia when it developedlinks to the Eritrean Peoplersquos LiberationFront during its war against the thengovernment10 It was not impartial oranti-war when it sided with the TigrayPeoplersquos Liberation Front in the neigh-bouring province to Eritrea when thatgroup was waging a guerrilla war againstthe government11 And recently therehave been claims that in the Middle Eastit was little more than an lsquoeager propa-gandistrsquo for the Palestinians12
In East Timor Ethiopia and Mozam-bique OCAA was linked with organi-zations which supported direct militaryaction that led to the deaths of thou-sands of civilians In none of these loca-tions were the enemies of their friendany worse than Saddam Hussein In-deed in many cases OCAArsquos friendswere arguably no better than their en-emies in terms of human rights
OCAArsquos decision not to accept Aus-tralian Government funding is the cor-rect one in the sense that it clearly doesnot share the Governmentrsquos values onthe question of Iraq and thereforeshouldnrsquot receive any governmentmoney
Hewitt went on to state in a pressrelease that lsquoWe will not take funds thatmight allow a government to use hu-manitarian efforts as an instrument offoreign policyhelliprsquo13
This is finemdashexcept the AustralianGovernmentrsquos foreign aid is an instru-ment of foreign policy And it always hasbeen This is spelt out quite clearly inthe Australian Governmentrsquos latest for-eign and trade policy White Paper Ad-vancing the National Interest14
FANGOs that cannot accept thisrather basic proposition should not begetting taxpayersrsquo money They areclearly unsuitable for the task at hand
The consequences of Australian tax-payersrsquo money falling into the wronghands were brought home to Prime Min-ister Howard when he met IndonesianPresident Megawati Sukarnoputri to dis-cuss the war against terrorism and
Australiarsquos involvement against Iraq Atthe top of the Indonesian agenda wasthe issue of Australian funding toFANGOs being used to support sepa-ratist movements in Indonesia15
Post-war Iraq will be a better placewithout Saddam Hussein and his thugsThis does not mean that it will be a safeplace or necessarily a stable place Afterall one of the reasons for Western tol-eration of Saddam Hussein for manyyears was his ability to hold the various
ethnic minorities in Iraq together albeitrather brutally thereby maintaining abalance of power in the Middle East Hisdeparture would see strains on Iraq fromthe various ethnic minorities that makeup Iraq There is a strong chance thatIraq will fragment
The last thing the Australian Gov-ernment or any of the so-called belli-gerents needs in a post-war Iraq is west-ern NGOs running around and becom-ing self-styled advocates for national self-determination for Iraqrsquos ethnic minori-ties and injecting themselves into Iraqrsquosinternal politics This is a real risk Thebehaviour of Australian foreign aidNGOs in Indonesia should make Aus-tralian decision-makers extremely waryof funding any NGOs with Australiantaxpayersrsquo money so that they can oper-ate in Iraq
As things stand now FANGOs facevery few restrictions on their actionsfrom government If they undertake ac-tivity that is inconsistent with being anagent of government they may losefunding for specific projects or in moredramatic circumstances lose funding ina country Nonetheless they are gener-
ally able to access Australian Govern-ment funding for other projects andcountries In other words the penaltiesfor becoming caught up in political ac-tivities are very light for NGOs and posethem no serious problems
Foreign aid NGOs that lsquoplay politicsrsquoare unsuitable contractors for the deliv-ery of aid That these overtly politicalorganizations have been allowed to gaingovernment accreditation and receivegovernment funding points to some se-rious problems at AusAID Australiarsquosofficial aid agency The time has comefor this to change
NOTES1 httpwwwacfoaasnaumedia_releases
2003_releases26_3_03PDF2 httpwwwacfoaasnauemergencies
openletterPDF3 httpwwwacfoaasnauemergencies
iraq_responsehtm4 Oxfam Horizons Vol 3 No 1 (Febru-
ary 2003) page 25 Oxfam Community Aid Abroad lsquoIraq
Overviewrsquo February 20036 Hewitt quoted in Liz Gooch lsquoOxfam
wersquoll say no cashrsquo The Age 16 March2003
7 Community Aid Abroad Submission tothe Senate Foreign Affairs Defence andTrade References Committee Inquiryinto East Timor Downloaded at httpwwwcaaorg aucampaignssubmissionstimorhtml
8 Ibid9 Susan Blackburn Practical Visionaries A
Study of Community Aid Abroad (Mel-bourne Melbourne University Press1993) page 313
10 Ibid pages 325-333 passim11 Ibid12 Gerald Steinberg lsquoPropaganda vs Hu-
manitarianismrsquo Australian Financial Re-view 7 June 2002 Downloaded at httpfacultybiuacil~steingconflictopedpropvshumanitarianismhtm
13 ht tp wwwcaa o rg au p r 2003 iraqfundshtml
14 httpwwwdfatgovauani15 Dennis Shanahan lsquoJakarta fears aid funds
for rebellionrsquo The Australian 17 Febru-ary 2003 page 2
Don DrsquoCruz is Research Fellow at the IPAand Director of IPArsquos NGOWatch
OCAA has a longtrack-record of
being anything butimpartial or
reluctant to takesides in miliary
action
API
24 MARCH 2003
E V I E WR
GEORGE Bush Tony Blairand John Howard haveprovided many reasons forsupporting military action
against Iraq One of those reasons hasbecome known as the lsquohumanitarianrsquojustification Put simply the lsquohu-manitarianrsquo justification for the US-led invasion of Iraq is that such ac-tion is necessary to free the Iraqipeople from their totalitariandictator
Such an argument is attractive tothose who believe that there aresome fundamental human rights thatall individuals possess regardless ofwhere and how they live Whatserves as the source of those rightshas been the subject of debate forcenturies One of the pre-eminentstatements on the subject was madeby John Locke who in The SecondTreatise of Government wrote thatmankind was lsquoequal and indepen-dentrsquo and that lsquono-one ought to harmanother in his life health liberty orpossessionsrsquo
Saddam Husseinrsquos mass murdertorture and terror are reasonablyclear breaches of human rightsTherefore some would ask why thereshould be opposition to the UnitedStates and its allies taking whatevermeasures might be necessary totopple the Iraqi regime Surely thesame standard of behaviour that ap-plies to individuals applies also tonation states If an individual walk-ing in the street witnessed a rapeoccurring wouldnrsquot that individualbe entitled to do everything in hispower to stop the crime and assistthe victim
The point is of course that in-ternational law and convention do
After IraqIs Sovereignty Dead
JOHN ROSKAM
not allow nation states to act in thesame way as individuals Countriescannot simply lsquotake the law into theirown handsrsquo To restrain lsquovigilantestatesrsquo (who might be acting fromeither lsquogoodrsquo or lsquobadrsquo motives) a num-ber of legal and political theorieshave been developed One of theseis the doctrine of lsquosovereigntyrsquo whichprovides that states should not inter-vene in the domestic affairs of otherstates
In relation to Iraq the lsquosover-eigntyrsquo question is perhaps the stron-gest argument against the US-ledCoalition Most of the other criti-cisms of lsquohumanitarianrsquo interventionin Iraq are either grounded in simpleanti-Americanism or are fallaciousFor example there is the claim thatbecause some of the countries in theCoalition have previously ignoredHusseinrsquos cruelties therefore it is il-legitimate to take action now Sucha view has been expressed by aMelbourne international relationsacademic
While there is no disputing thebrutal nature of Saddam Hus-seinrsquos regime the case for inter-vention made by those in Can-berra London and Washingtonis weakened by the fact that atthe peak of Saddamrsquos crimes inthe late 1980s they were eitherdirectly supporting him withweapons technology and intelli-gence or were entirely indifferentto his behaviour Even if theyhave belatedly recognised theerror of their ways how seriouslycan we take their concerns aboutweapons of mass destruction nowgiven they were his suppliersthen1
On the basis of this argument itcould be said that Britainrsquos (andAustraliarsquos) case for intervening toassist Poland upon the German in-vasion in 1939 was lsquoweakenedrsquo be-cause Britain had previously acqui-esced to Germanyrsquos rearmament theremilitarization of the Rhinelandand the annexation of both Austriaand parts of Czechoslovakia Fewpeople who chanted lsquoFreedom forEast Timorrsquo said that the HowardGovernment should not act becausea quarter of a century before theWhitlam Government had been lsquoin-differentrsquo to Indonesiarsquos occupationof the island
There is also the claim that al-though Hussein is bad he is not theworst dictator in the world and thatit is hypocritical for the Americansto attack only Iraq This is an as-tounding proposition It attempts toapply to the United States a standardof behaviour that is impossible to sat-isfy Should the police not attemptto solve any crimes because theycanrsquot solve all crimes If a crime iscommitted by two people and thepolice arrest one perpetrator unlessthe other is also caught must the firstperpetrator be released When indi-viduals donate money for famine re-lief in Africa very few believe thattheir donation is pointless becauseit might prevent the starvation ofonly one person rather than thou-sands Christian ethics sets down norequirement that we should help no-one unless we can help everyone
The issue about state sovereigntyhowever is one that deserves to betaken seriously Regardless of onersquosopinions on the extent and limits ofstate sovereignty it is true that our
25MARCH 2003
E V I E WR
international relations system is builtupon the principle and to modify oroverturn it is a matter of some con-sequence
Even those who are generally sup-portive of the United States andtheir allies see the problem As it wasput by a leading commentator whenanalysing the Australian PrimeMinisterrsquos lsquohumanitarianrsquo justifica-tion for war
Finally Howardrsquos argumentagainst Hussein on human rightsis correct So is his moral case forwanting to liberate the Iraqipeople from their torment Theproblem however is that youcanrsquot trip around the worldwanting to overthrow regimesbecause of human rights2
Some would askmdashlsquowhy notrsquo Be-cause to do so would overthrow theUnited Nations Charter comes therejoinder And in turn the responseto that might bemdashlsquogoodrsquo
If itrsquos a choice between the main-tenance of the UN Charter and free-dom from tyranny freedom wins ev-ery time (although an internationallawyer sitting in Sydney might havea different view on this question fromthat of a political prisoner manacledin a Baghdad jail cell)
When the interests of lsquointerna-tional lawrsquo are more important thanthe life and liberty of individuals itcould be concluded that lsquothe Em-peror has no clothesrsquo Would inter-national law have sanctioned inter-vention to stop the Holocaust hadHitler not waged war and proceededwith his methods entirely within theconfines of the German territorialstate
Many who argue that lsquohumanitar-ianrsquo intervention in Iraq is not justi-fied because it infringes on thatcountryrsquos lsquosovereigntyrsquo would happilyhave other countries cede their po-litical sovereignty to supra-nationalbodies Certain features of the Inter-national Criminal Court overridethe principles of sovereignty but thatdid not stop a phalanx of interna-tional law experts urging sovereigngovernments to join it so as to en-
able the prosecution of war criminalsBut when it comes to actually stop-ping war crimes not simply prosecut-ing them that phalanx is largely si-lent
Without the doctrine of state sov-ereignty and without an arbiter fordetermining when interference withthe principle is justified (the roleclaimed by the United Nations andits Security Council) it is said thatstates would be free to impose theirown will and intervene in other
countries whose standards did notmeet their own (In The Second Trea-tise of Government Locke argued thata characteristic of a lsquostate of warrsquo be-tween individuals was the absence ofa superior authority to adjudicatedisputes and prevent individualsfrom administering justice them-selves)
Iraq might be claimed as a rea-sonably clear-cut case for interven-tion but other situations are notlikely to be as simple In Culture andEquality first published in 2001Brian Barry explored a lsquoliberalrsquo per-spective on this question
The liberal position is clearNobody anywhere in the worldshould be denied liberal pro-tections against injustice andoppression However in exactlythe same way as liberals arepragmatic about what liberalismmeans in terms of boundaries sohere the move from principle tointervention has to be mediated bypractical considerationshellip
[L]iberals are not so simple-mindedas to imagine that the answer toall violations of liberal rights is tosend in the Marines or even aUnited Nations force As in anyjust war theory there must be somedoctrine of lsquoproportionalityrsquohellip[S]carcely anybody would be infavour of the western powersinvading Saudi Arabia so at to sortout the way in which it lsquounjustlydenies political rights to women ornon-Muslimsrsquomdashaccording to theirliberal idea of justicersquo3
The question remainsmdashafterIraq what remains of lsquostate sover-eigntyrsquo Should the doctrine applyonly to lsquoliberal democraticrsquo statesSuch a solution might be attractiveto some lsquoliberalsrsquo but it doesnrsquot avoidthe problem of what exactly a lsquolib-eral democraticrsquo state is
One irony arising from the argu-ments about the war in Iraq is thatmany of those who have urged astrict application of lsquostate sover-eigntyrsquo principles in the past havegenerally supported the US-led in-tervention while those who havebeen willing to abridge or even aban-don the doctrine have had to rely onit to counter the lsquohumanitarianrsquo jus-tification for war
There are not many certaintiesabout the nature of the world afterthe war in Iraq but it can be saidwith some assurance that one defi-nite outcome is going to be a morevigorous debate about state sover-eignty
NOTES1 Scott Burchill lsquoThe humanitar-
ian arguments for this war are spu-riousrsquo The Age 21 March 2003
2 Paul Kelly lsquoThe hapless per-suaderrsquo The Australian 15ndash16March 2003
3 Brian Barry Culture and Equal-ity An egalitarian critique ofmulticulturalism Harvard Uni-versity Press page 138
John Roskam is a Research Fellow with the IPA
The lsquosovereigntyrsquo
question is perhaps
the strongest
argument against
the US-led
Coalition
API
26 MARCH 2003
E V I E WR
Which Way for theDemocrats
The 2002 mid-term elections were adramatic victory for President GeorgeW Bush and the Republicans Insteadof the historical norm of the partycontrolling the White House losingBushrsquos party gained seats in the Sen-ate House Governorsrsquo races andState legislatures The result was abitter disappointment for the Demo-crats and has led to a fierce debatebetween the Left and Centrists aboutthe future policy direction of the partytowards the 2004 elections
The Leftrsquos analysis is that the ma-jority of Americans are natural Demo-crats Electoral defeat was due to thefailure to energize that base of Demo-crats The party failed to distinguishitself sufficiently from Bush and thusgive their voters a reason to turn outWhile the majority of Democrats op-posed Bush on tax cuts and the warwith Iraq a significant minority sup-ported him and campaigned on thatsupport The result the Left claimwas that the Democrats lacked a con-sistent message in contrast to Bush
Support for this argument can befound in the higher turnout amongstRepublicans than Democrats in 2002while in 2000 the combined vote forGore and Nader was 51 per cent Aninfluential book by John Judis andRuy Texeira identified lsquoThe Emerg-ing Democrat Majorityrsquo Theyclaimed that growing demographicgroups trended Democrat includingthe young socially liberal profession-als minorities and women
What policies would motivate thisnatural Democrat base The Left callfor rescinding the Bush tax cut a classwar against the corporate world amajor increase in lsquopublic investmentrsquoin schools childcare health care and
Letter from AmericaNIGEL ASHFORD
public transport and strong opposi-tion to the war
Centrists however have a verydifferent analysis of the Democratsrsquoproblems the public did not trustthem to pursue the war against ter-rorism vigorously to keep down taxesto spend their tax dollars wisely or toreflect their cultural values
A Gallup opinion poll found that57 per cent of Americans askedthought that the Democrats were nottough enough on the war on terror-ism while 64 per cent thought theRepublicans were There was the per-ception that the Democrats were notserious on the issue and just playingpolitics Evidence for this was the de-bate over the new Department ofHomeland Security blocked becausethe Democrats wanted to protectunion rights while the President de-manded more flexibility to deploy theworkforce Many voters saw the issueas the national interest versus a spe-cial interestmdashin this case that of theunions The Democrats were seen asputting the interests of one of theirmajor constituencies before nationalsecurity
The Democratic LeadershipCouncil in lsquoThe Road Aheadrsquo by AlFrom and Bruce Reed presented theCentrist case lsquoStop pretending wecan win a majority simply by energiz-ing our basersquo The Democrats were
not trusted on the war against terror-ism were hostile to the cultural con-cerns of many working-class Demo-crats on abortion and guns and stillseen as the tax-and-spend party lsquoToomany Americans donrsquot trust us tokeep their taxes down or to spendtheir money wellrsquo
The Centrist agenda is to stronglyprosecute the war against terrorismwhether against al-Qarsquoeda Saddam orothers and to abandon knee-jerk iso-lationism arising from the experienceof the Vietnam War to defend capi-talism and support small investorsagainst irresponsible managers to cutpayroll taxes and to downplay thecultural issues that divide Democrats
Which path will the Democratstake The Left is in the ascendancyMost of the remaining Democrats inoffice come from left-wing districtsNancy Pelosi a left-liberal from SanFrancisco was easily elected the newleader of the House Democrats over-whelming her Centrist opponent andrising star African-American HaroldFord The early field of presidentialcandidates for 2004 is dominated bythe Left tendency including SenatorJohn Kerry Representative DickGephardt Governor Howard DeanRev Al Sharpton former SenatorCarol Moseley-Braun and Represen-tative Dennis Kucinich Only Sena-tor Joe Lieberman and Senator JohnEdwards represent the Centrist wing
The future of US politics may de-pend on which road the Democratsdecide to take The US is currently alsquo50ndash50rsquo nation evenly balanced be-tween the parties A left turn couldlead to Republican dominance farinto the future
Dr Nigel Ashford is at the Institute of Humane Studiesat George Mason University and is co-author of US
Politics Today (Manchester University Press)
API
27MARCH 2003
E V I E WR
Trusting TonyFrankly itrsquos all just too depressing Theeconomyrsquos heading for trouble Busi-ness confidence is low investment in2002 was 92 per cent lower than theprevious year and manufacturing in-vestment was nearly 18 per cent downThe budget deficit is spiralling becauseour once lsquoprudentrsquo Chancellor (trea-surer) Gordon Brown made over-opti-mistic growth projections and startedthrowing money at problems
Therersquos a load of health-and-safetyand anti-discrimination measuresthatmdashto put it most politelymdashare ex-amples of letting the best be the en-emy of the good Every school tripneeds a formal risk assessment withthe result that many trips are simplynot taking place New trains orderedfor London commuter routes wonrsquothave toilets because the rules say thatat least one toilet in each four-car unitmust be wheelchair-accessible whichwould have cost ten or a dozen seatson every overcrowded train
Some of this is just insane Somelocal authorities say that safety at workrules mean that home-care workersmustnrsquot lift the disabled people theyare looking after Or therersquos rail safetyUntil recently we were seriously pro-posing to spend $10 billion on a bet-ter system to stop trains going throughred signals On average this would havesaved the lives of about three passen-gers every four years which is a lousybargain compared with other safety in-vestments Worse it would also havereduced the capacity of the networkby up to 15 per cent and forced morepeople onto the roads which are muchmore dangerous than even ourclapped-out railways The result was aprojected net increase of 13 to 21 deathsper year
Meanwhile in London the Cen-tral line of the Underground has been
Letter from LondonJOHN NURICK
API
closed for weeks after a train derailedwhen one of its motors fell off Therewere no deaths or major injuries in theaccidentmdashbut itrsquos a safe bet that someof the people who havenrsquot been ableto use the Central line have been in-jured or killed on the roads
What can one say If the authori-ties took the same attitude to the riskof fatal accidents in the health serviceevery hospital in the country wouldhave been closed for years
Despite all this the Conservativesare still hopeless Their leader IanDuncan Smith has a new wheezewhen a journalist asks him anythingdifficult he chortles merrily and saysitrsquos the most uninteresting questionimaginable and hersquos not going to wasteanyonersquos time by answering it His col-leagues have their knives out for him
Meanwhile in spite of the govern-mentrsquos problems with the economy andthe public services Tony Blair is grow-ing in stature having his waymdashandantagonising large sections of his ownparty in the process On several recentissues he has faced down the formi-dable Gordon Brown in a way that notlong ago was hard to imagine
Then he shocked everyone by com-ing out against having elected mem-bers in the reformed House of Lordswhen most voters want an all-elected
chamber and most MPs want a partly-elected one In the event Parliamentcouldnrsquot agree on any of the optionsfor reform so wersquore stuck with the sta-tus quomdashwhich is fine by Mr Blair
Then therersquos the war By the timeyou read this it may be over or we maystill be waiting or our lads may befighting Mr Blairrsquos strong line againstIraq has made him very unpopular Theanti-war march on 15 February was thebiggest demonstration London hasever seen A few days later 122 Labourbackbenchers voted against the gov-ernment and many more abstained
Mr Blair didnrsquot budge War is a se-rious thing he says lsquoBut in a situationsuch as this you have to do what youbelieve to be right because thatrsquos theprice of having responsibilityrsquo1
He has often been accused of gov-erning by focus group Certainly he hasseemed reluctant to antagonise anypowerful group That has clearlychanged In a sense his stand on Iraqmerely follows his action in sendingtroops to Sierra Leone and Kosovomdashbut it has stirred up far stronger domes-tic and international opposition
The irony is that now when he re-ally needs people to trust him wedonrsquot Even in the desperately seriousbusiness of justifying an unpopular warDowning Street canrsquot play it straightremember the dossier from lsquointelli-gence sourcesrsquo that turned out to belargely cribbed from a PhD thesis onthe Internet
NOTE1 The Guardian 1 March 2003
John Nurick is a management consultant based in theSouth of England From 1985 to 1990 he was
editorial director of the Australian Institute for PublicPolicy and later edited newsletters reporting on theUK Parliament and European Union institutions
28 MARCH 2003
E V I E WR
KEVIN DONNELLY
Private EducationEquals Public Good
When it comes to choosing be-tween government and non-gov-ernment schools Australian par-ents are lsquovoting with their feetrsquo Asshown by recent ABS figures(Schools Australia 2002) over thelast decade there has been a dra-matic increase in non-governmentschool enrolments
Approximately 30 per cent ofstudents now attend non-govern-ment schools compared with 22per cent in 1980 and 28 per centin 1990 Over the last decadewhile the number of governmentschools has fallen by 64 per centnon-government schools havegrown by 61 per cent
Of course not everybody valuesparentsrsquo right to choose and theAustralian Education Union(AEU) Labor governments andlsquoleft-wingrsquo academics in particularconsistently argue against non-government schools
One of the arguments put for-ward by those opposed to givingparents greater freedom of choiceis that government schools are bet-ter at promoting social cohesionand a strong sense of what KenBoston the ex-head of the NSWEducation Department terms lsquothebonds of civic friendshiprsquo
The assumption is that becausestudents attend non-governmentschools there will be greater socialdivisiveness and a breakdown inthe civic values needed to hold so-ciety together But there is no cred-ible evidence offered to support theclaim that government schools arebetter at promoting the commongood
In fact there is much to provethe opposite
First as anyone familiar withthe lsquoculture warsrsquo and politicallycorrect curricula will know insteadof government-controlled educa-tion promoting unity and cohe-sion it has led to public angst andparental complaints
Witness the very bitter debatein Queensland a year or two agowhen the government-mandatedStudies of Society and Environ-ment (SOSE) curriculum was in-troduced into schools Such was
the lsquoleft-wingrsquo bias in the curricu-lum in particular in the areas ofmulticulturalism and the environ-ment that many parents felt be-trayed
The Queensland debate is mir-rored by what is happening in theUnited States As noted by Ste-phen Arons in his book Short Routeto Chaos instead of promotingunity government control of thecurriculum leads to the opposite
What the school wars tell us isthat somehow we have been
Education Agenda
transforming a vital instrumentfor creating social cohesioninto a source of division andhostility that there is some-thing built into the structure ofpublic schooling that under-mines one of its most importantfunctionsAronrsquos argument that govern-
ment schools no longer transmit aviable sense of a common cultureor agreed civic values is reinforcedby another noted United Stateseducationalist Diane Ravitch
In a recent article in the jour-nal Education Next Ravitch be-moans the impact of cultural rela-tivism and the post-modern on theschool curriculum (where there areno commonly agreed values) andeven goes so far as to argue thatparents should be free to choosenon-government schools becausesuch schools have a better chanceof reflecting their values
In the current education sys-tem with the public schoolscommitted to multiculturalismbilingualism and other forms ofparticularism it is difficult toargue that parents should notbe able to choose schools thatmeet their cultural needsSecond if one accepts that lsquoso-
cial capitalrsquomdashthe networks volun-tary associations and civic bondsthat hold a community togethermdashis important for the health of ademocratic society then non-gov-ernment schools clearly have theadvantage
Unlike the government schoolsystem characterized by a heavy-handed centralized bureaucracyand teacher union control non-government schools are closer tothe communities they serve Bytheir very nature non-government
There is no credible
evidence offered to
support the claim
that government
schools are better
at promoting the
common good
29MARCH 2003
E V I E WR
ALAN MORAN
The lsquoRrsquo Files
Private propertyrights the key toachieving efficiency inrural water use
WATER IN AUSTRALIAWater has always been a definingissue in Australiarsquos prosperityAnd in recent decades irrigationhas grown rapidly Even so theproportion of Australia that is ir-rigated at two per cent of theland comprises a share that isamongst the lowest among OECDcountries Only Canada and therainiest countries New Zealandand the UK have lower sharesthat of the US is 11 per cent andin Japan it reaches 60 per cent
Modern agriculture is only 200years old in Australia and thoughin the first 100 years agriculturalproductivity was increased toequal that of anywhere in theworld gains continue to bemademdashoutput has doubled overthe past 50 years a growth thatcould not have taken place with-out a similar expansion of irriga-tion Irrigation in the MurrayndashDarling agricultural provincealone contributes $5 billion toAustralian agricultural outputand non-irrigated agriculture inthe region contributes a further $5billion This makes the areawhich comprises 14 per cent ofAustraliarsquos land mass responsiblefor a third of the nationrsquos $35 bil-lion agricultural output
Applying Property Rights to WaterMost of the uses of water involvechoices or compromisesmdashdrink-ing water versus irrigation versus
industrial and so on Some how-ever involve complementaritiesparticularly certain recreationaluses such as water sports that arefacilitated by storage and consis-tent availability
In many cases water will per-form sequential functionsmdashthesame water can be used and re-used for irrigation used for indus-trial cooling and finish as drink-ing water Water with differentsometimes competing productiveuses will be optimally used as longas two conditions are in placeThe first is that its ownership isclearly specified and the ownersrsquoobligations to other users (orclaims from other beneficiaries)are well understood The secondrequires each property right to betradable to enable acquisition bythose who value it most therebymaximizing its value
The rights specification andtherefore property ownership canrarely commence with a cleansheet of paper People acquire in-dividual rights to property ini-tially through a variety of routesOne of these is seizure of some-thing that was originally of littlevalue until it was acquired and im-proved Squatters assume rights inthis way However they are firstacquired they need to be tradableAPI
schools establish strong commu-nity networks and have a greaterreliance on the voluntary work ofparents
That non-government schoolsare more effective in this regard issupported by research into lsquoChar-ter schoolsrsquo in the United StatesAs noted by Chester Finn at theFordham Foundation giving localcommunities lsquoownershiprsquo overtheir school builds networks oftrust and reciprocity so vital forsocial cohesion
Social capital also relies on citi-zens being disciplined and orderedin their behaviour Selfishness vio-lent behaviour and rudeness act tofragment the community instead ofpromoting cohesion According toa number of Australian surveys itis here once again that non-gov-ernment schools are seen to bemore effective
As noted by the Centre for In-dependent Studies researcher Jen-nifer Buckingham in The Truthabout Private Schools in Australiawhen analysing why so many par-ents forsake the government schoolsystem
When comparing independentprivate schools with publicschools the major theme thatemerged was not differences inacademic standards and curri-culum but issues of disciplineand order The surveyed par-ents felt that the behaviour andattitudes of students in publicschools was unacceptablehellipAll accept that non-govern-
ment schools achieve better aca-demic results provide greater cur-riculum flexibility and save Aus-tralian taxpayers millions of dol-lars Equally as important is theargument that such schools streng-then Australiarsquos civic health andstock of lsquosocial capitalrsquo
Dr Kevin Donnelly is Director of EducationStrategies a Melbourne-based consulting group
E-mailkevindnetspacenetau
s
30 MARCH 2003
E V I E WR
and relatively inviolable Thisprovides the incentive for them tobe improved and for their ownersand others to search out ways inwhich the assets they representcan be used to provide increasedvalue or other benefits
If confidence in the exclusiv-ity an owner has over the prop-erty right is lost or was neverpresent the asset will be used lessproductively For example own-ers will milk them for their cur-rent-use value rather than trade-off present value for a future valuethat is less certain
Even without a total emascu-lation of individual rights (for ex-ample when title to the propertydepends on continuing govern-mental assent) lack of certaintybrings lower incomes and dimin-ished asset protection One out-come of this can be observed inthe MurrayndashDarling system Wa-ter rights on the Victorian side ofthe Murray are secure while thoseon the NSW side have been over-allocated and are subject to ad-ministrative discretion includinghaving a firm duration of only tenyears In Victoria high securitywater (available 95 per cent of thetime) comprises the great bulk ofentitlements In contrast in
NSW high security water is avail-able only 60-80 per cent of thetime The result is that farmers onthe Victorian side plant perennialcrops while those in NSW tendto focus on annual crops espe-cially rice
There are claims that Victoriarsquosmore robust property rights meanthat the State Government haslost lsquocapabilityrsquo to manage com-pared with NSW The flip side ofthis is the increased risk and as-sociated lower value of productionnorth of the Murray where prop-erty rights are attenuated Gov-ernments that give themselves in-creased capacity to direct produc-tion or to take individualrsquos prop-erty will need to accept lower lev-els of income and output
IRRIGATION ENVIRON-MENTAL BENEFITS AND SA-LINITY
The Types of IssuesIssues stemming from irrigationcomprise two types those impact-ing on the environment and thoseimpacting on private uses Theformer includes issues such as pre-venting loss of species ensuringthat certain sorts of species flourishand avoiding unattractive growths
such as blue-green algae which re-sult from fertilizer build-up
The second involves economicimpacts on different users
While environmental flows toensure species flourish are oftenhighlighted salinity is the mainfocus And while salinity has animpact on the environment itsimportance is in the conflict of in-terest between productive usersmdashthe complaint of lsquodamaged goodsrsquoby downstream users against thoseupstream
The MurrayndashDarling Basin Sa-linity Strategy 2001ndash2015 has es-timated that increased salinitybrings costs of $294 million perannum to the basin
Yet data on the salinity of theMurray Darling shows levels up-stream of South Australia arelower than they were in the early1980s and are only seriously abovethese levels as the river ap-proaches its mouth at the GoolwaBarrage
The Basin Salinity Manage-ment Strategy argues that progressachieved over the past decade willlsquobe cancelled within 20-50 yearsand median salinity levels wouldexceed the Australian DrinkingWater Guidelines for good waterquality within 50-100 yearsrsquo Thecause of this is said to be risinggroundwater tables due to land usechanges across the Basin
The disputes over salinizationare largely disputes between com-mercial parties Full specificationof rights and obligations will al-low these to be resolved as longas the impacts are measurabletheir causes identifiable and thevarious rights and obligations areknown and stable In this respecttechnology to measure salt in wa-ter and to trace increases to par-ticular locations is readily avail-able
Agreements about the alloca-tion of water rights between ju-risdictions and to the main irri-gation provinces have been inplace for over a century In the
Average Salinity in the River Murray (EC Units)1
3500
3000
2500
2000
1500
1000
500
0
January 2003
July 2002ndashJanuary 2003
July 1982ndashJanuary 2003
Hume D
am
Swan
Hill
Merbein
Morgan
Milang
Mening
ie
Goolw
a
Barra
ge
31MARCH 2003
E V I E WR
I
API
Musinghellipcase of the Murray the lsquocaprsquo onwater abstractions agreed betweenthe various jurisdictions in 1995largely validated agreements madeearly in the last century and be-fore Disturbing these agreementswould greatly undermine the trustin the sanctity of property rightsand seriously reduce agriculturalproductivity Hence increased al-locations for certain parties or forcertain uses (including environ-mental flows) would need to bepurchased at market prices
Developments in Australiaover recent decades have con-spired to make irrigation water farmore valuable This is exacer-bated by1 Activation of NSW lsquosleeperrsquo
and lsquodozerrsquo water rights as a re-sult of the increased scarcityvalue a change that bringseven greater pressure on theavailable supply
2 Increased scarcity leading tomeasures that more carefullyhusband the water Whilesome of these prevent evapo-ration loss and have thereforebrought a net increase in effec-tive availability others havereduced availability (these in-clude a more careful wateringwhich results in reduced run-off and re-use)
3 Increased capture of waterwithin the land on which itfalls once water is recognizedas scarce landowners will seekto ensure it does not leave theirland NSW and Victoria haveplaced limits (a strict 10 percent in NSW) of water fallingon property as entitlements ofthe owner Queensland has notyet enacted an equivalent tothis Such adaptations of thecommon law are essentialhowever if downstream usersare not to be expropriatedThere is likely to be constant
bickering over water rights espe-cially if State Governments seek toelevate sharing issues and to sanc-tify them with claims about promot-
Daniel Pipes in The New York Posthas a very cogent explanation forwhy the Left appears to be so happywith the likes of Osama bin Ladenand Saddam Hussein
To be clear about their attitudeshe quotes the renowned Germanelectronic music composer KarlHeinz Stockhausen who saidstraight after the attack on NewYork that it was lsquothe greatest workof art for the whole cosmosrsquo
As Pipes and many of us observedaily there is barely a bad word tosay about Saddam Hussein nor aniota of sympathy for thoseoppressed tortured and murderedby his reacutegime Instead they venttheir fury against the AmericanPresident and British Prime Minister
Why the nonchalancePipes draws our attention to Lee
Harris writing in a recent issue ofthe Hoover Institutionrsquos journalPolicy Review According to KarlMarxrsquos central thesis the demise ofcapitalism hangs on workersgrowing poorer over timemdashwhichof course did not happen Sorather than give up on cherishedexpectations of socialist revolutionHarris notes Marxists tweaked theirtheory and looked instead to theentire populations of poor countriesto carry out the revolution Classanalysis went out the windowreplaced by geography
The trouble is they have tooverlook militant Islamrsquos slightly un-socialist practicesmdashsuch as itsimposing religious law excludingwomen from the workplace andpersecuting atheists
As Pipes sums up September 11and the prospect of war againstSaddam Hussein have exposed theLeftrsquos political self-delusionintellectual bankruptcy and moralturpitude
The Loopy Leftby Andrew McIntyre
ing an improved environment Realsolutions require the issue be placedwithin a normal commercial frame-work which involves1 Clarifying the property rights2 Allowing water rights to be
fully detachable from propertyand able to be used howeverthe holder wishes subject toany damage this might imposeon others
3 Ensuring full rights to buy andsell the water
4 Defining rights so as not to re-duce the quality of other usersThis means ensuring that farm-ing practices that do not bringgreater salination than somestandard
5 Allowing rights holders tobank their water and ensureeven greater certaintyAllocating specific individual
ownership rights to water and al-lowing its trade is a well-foundedmeans of maximizing the usevalue It would also be likely tohave the beneficial side-effects ofreducing salinity and farm-basedpollutants caused by intensiveuse We should grasp such oppor-tunities But if the impending sa-linity problem is as great as someclaim other solutions might wellinclude buying out some allocatedirrigatorsrsquo rights However alter-natives may be to remove saltfrom the water by engineering so-lutions or simply to live withhigher salt
NOTE1 Human drinking water should
be less than 800 ECs (electri-cal conductivity one ECequals about 06 mglitre)while higher levels are accept-able for much farming activity
Dr Alan Moran is Director Deregulation Unitat the Institute of Public Affairs
32 MARCH 2003
E V I E WR
Reading FileDone
eral political systems worldwidehave consistently accretedpower to the centre often in theface of clear constitutional im-peratives to the contrary) Ifeared instead that a UN thathad been patently successful insomethingmdashanythingmdashmightbe granted greater powers to thepoint where it would kill truediversity and individualism (ortry to anyway) through inevi-table bureaucratic practices
Is such a fear unfounded Ap-parently not if many peopleshare the moral touchstone ofthe Opposition Leader SimonCrean He believes according tohis own words in Parliamentthat what the UN SecurityCouncil declares is moral whatit refuses is immoral
The latest manoeuvrings overIraq have therefore been heart-
ening It seems that the desiresof the powers small and largeto promote their own interestswill continue to hobble the UN
The problem with a unitedworld is that as the threateningimpasse over Iraq suggestedthere are very divergent viewsabout how that world ought tobe run on an international leveljust as there are at national and
sub-national levels The virtueof multi-layered levels of gov-ernments is that competing ju-risdictions give the individual adegree of choice
The greatest sin of totalitar-ian governments past and pres-ent is to deny their citizens theright to leave The greatest dan-ger that the United Nationsposes as far off as it now (hap-pily) seems is that leaving its ju-risdiction is for all practical pur-poses impossible
THE IMPASSE JUST PASSEDI listened to Prime MinisterHoward speaking to the motionbefore Parliament in relation tothe war It was a good speechbut neither he nor PresidentBush seems able to structure andlay out an argument with thestyle and content of BritishPrime Minister Blair His equi-valent speech before the BritishCommons provides a masterfulsummary of the reasons for thiswar and includes an immenselyreadable time-line of the utterineffectiveness of the UN pro-cesses in dealing with Iraq Henicely deals with allegations ofthe lsquorushrsquo to war lsquoOur fault hasnot been impatience The truth
UNITED OR DIVIDEDI write just hours after US Presi-dent George W Bush has deliv-ered his ultimatum to Iraqi Presi-dent Saddam Hussein leave Iraqwithin 48 hours or be removedBy the time this appears beforeyour eyes you will knowwhether Hussein has decided hischances of survival will be sig-nificantly greater by choosingexile or by remaining in IraqThe recent creation of the In-ternational Criminal Court ofcourse makes war more likelysince Hussein can have no guar-antee of a peaceful lsquoretirementrsquo
In the event that Hussein re-mains in Iraq you will also knowwhether Bush has kept his wordand most likely the outcome ofthis military venture
This matter is immensely im-portant for the people of Iraqand for the military personnelinvolved (including our ownAustralian soldiers sailors andaviators) But then so was theprevious Gulf War the US in-vasion of Grenada the Austra-lian intervention in East Timorand so on But a difference be-tween the current conflict andthose others could be the impactit has upon international insti-tutions Actually just one inter-national institution the UnitedNations
Prior to the first Gulf War Ifeared the coalitionrsquos success forthe reason that some of it mighthave rubbed off onto the UnitedNations I hasten to deny that Ifear the UN as some vast con-spiracy for world domination Ifeared instead that it couldstumble into a piecemeal cen-tralization of power (just as Fed-
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
E V I E WRs
33MARCH 2003
E V I E WR
Reading FileDone
ATTACKING THE GLOBALGOVERNORSThe Cato Institute is a whole-some body as demonstrated byits opposition to such interna-tional organizations as the Inter-national Criminal Court and forthat matter the United Nationsitself Ted Galen Carpenter forexample argues in lsquoPutting theUnited Nations on Noticersquo thatthe UN can and has done somemodest good occasionally It ishe says lsquoa good idea to have aplace where governments cangather to air grievancesrsquo But headds if it lsquoattempts to acquire ataxing authority [or] raise astanding armyrsquo then the USshould withdraw (as indeedshould Australia) Because thatwould turn it into an lsquoembryonicsuperstate that would menacelibertyrsquo
Go to
wwwcatoorgforeignpolicyunhtml
THE INTERNATIONALORGANIZATIONS THEM-SELVESThe United Nations has beenaccused of being often ineffec-tive and always slow Well ev-ery time Irsquove hit the UNrsquos Web-site even with my nifty broad-band Internet connection slow-ness rules Perhaps the site isbeing continually accessed bythe teeming masses Anyway goto
wwwunorg
With 15 members alreadyand 13 more on the way thereremain hopes that the EuropeanUnion will be a force for a stable
twenty-first century Equallywith 15 members already exhib-iting rather divergent views overthe issue of Iraq and most of theforthcoming members sidingwith the United States perhapsthis is overly hopeful Go to
europaeuintindex_enhtm
Then there is the WorldTrade Organization the organi-zation behind which protection-ist nations can hide from unilat-eral trade liberalization by pre-tending to support multilateraltrade liberalization Go to
wwwwtoorg
And we mustnrsquot forget the In-ternational Criminal Court fearof which was no doubt a featureof Saddam Husseinrsquos rejection ofexile as an option and the furyof which is promised by a num-ber of prominent lawyers to bevisited upon our very own PrimeMinister Go to
wwwicc-cpiint
FEEDBACKI would welcome advice fromreaders on any other sites of inter-est to IPA Review readers E-mailme on scdawsonbigpondnetau
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
is our patience should have beenexhausted weeks and monthsand years agorsquo
Go to
wwwnumber10govukoutputPage3294asp
THE STRUGGLE BETWEENTHE CONTINENTSIf you are patient you can readthat wonderful British rag TheSpectator for free Last weekrsquoscopy is available on-line One ofits regular columnists is MarkSteyn an Americo-phile Cana-dian who has a robust turn ofphrase and an abiding disdain formuch modern music (whichseems to place him very comfort-ably into The Spectatorrsquos culturalmatrix)
His piece on the future de-cline of Europe vis-agrave-vis Ame-rica makes for fascinating read-ing Go to
wwwspectatorcouk
then click on the lsquoBack Issuesrsquobutton and choose the edition of15 March 2003
E V I E WR
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
9MARCH 2003
E V I E WR
IN THE LONG AGOPlanet Earth condensed 4550million years ago (Ma) from re-cycled stardust Since that timethe continents have been enlarg-ing Earth materials have beenconstantly recycled and the Earthand all associated systems havebeen dynamically evolving TheEarth has not stopped being anevolving dynamic system just be-cause humans now live on thecontinents
As soon as there was liquid wa-ter on Earth there was life Bac-teria slowly diversified and by thetime the Earth was middle agedone group of bacteria had emit-ted such large quantities of oxy-gen (O2) that the atmospherecontained minor O2 Some of thisexcess O2 was trapped in rocks byweathering most dissolved in theoceans resulting in the precipita-tion of iron oxides It is these ironoxides that form the great iron orefields of planet Earth (for ex-ample in the Hamersley Basin)Life the atmosphere the oceansand the rocks interacted a pro-cess that has been occurring forat least 2500 million years on ourdynamic evolving planet
For at least the last 2500 mil-lion years the continents havebeen pulled apart and stitchedback together Every time thecontinents are pulled apart hugequantities of volcanic water car-bon dioxide (CO2) and methane(CH4) are released into the atmo-sphere and greenhouse conditionsprevail When continents stitchtogether mountain ranges formMountains are stripped of soilsnew soils form and remove CO2
The Past is the Key to the PresentGreenhouse and Icehouse over Time
IAN PLIMER
from the atmosphere these soilsare stripped from the land and theCO2 becomes locked in sedimentson the ocean floor When atmo-spheric CO2 is low glaciation oc-curs Large climate cycles can berelated to plate tectonics
The origin of the greatest cli-mate change on Earth is anenigma Between 750 and 600Ma there were two major glacialevents and numerous smallerevents Sea level changed by upto 400 metres and interglacial seatemperatures were 40˚C Afterglaciation the atmosphere hadsome 20 per cent CO2 and bacte-ria thrived and diversified in thewarm oceans Multicellular lifeappeared diversified and used theCO2 to make shells and skeletonsThis explosion of life from 580 to520 Ma gave us all of the majorlife forms currently present onEarth
Plants appeared at 470 Ma andthere was a major mass extinctionof multicellular life at 430 MaThe origin of this mass extinctionis not known Vacated ecologieswere quickly filled and life con-tinued diversifying Between 368and 248 Ma massive coal depos-its formed there was a major 50million-year period of glaciationand the atmosphere was blessedwith a very high CO2 and O2 con-tent Life continued to diversifyMinor mass extinctions continuedand at 248 Ma the biggest majormass extinction on Earth tookplace Some 96 per cent of spe-cies became extinct Life diversi-fied quickly to fill the vacatedecologies The record written instone by fossils in the period520Ma to the present shows thatthe planet is a warm wet green-house volcanic planet with thenormal cycles of rising and fall-
Sea Levels
Greenhouse Greenhouse GreenhouseIcehouse Icehouse
Tem
pera
ture
Tem
pera
ture
Millions of years ago1000 900 800 700 500 400 300 200 100600
There are 400 million year supercycles of greenhouseicehouse related to the pulling apart and
stitching together of continents
Icehouse
s
s
10 MARCH 2003
E V I E WR
ing sea levels rising and fallingland levels and changing climates
THE DAY BEFORE YESTER-DAYSome 120 million years ago Aus-tralia was at the South Pole en-joying a temperate climate Glo-bal sea level was more than 100metres higher than at present thesea surface temperature was 10ndash15˚ C higher than now and manycontinents were covered by shal-low tropical seas Planet Earthwas a warm wet greenhouseparadise and thick vegetationcovered the land masses Atmo-spheric CO2 was about 1 per centwhen the worldrsquos major coal de-posits formed 368 to 248 Ma
From 250 to 120 Ma the glo-bal CO2 content varied greatlyand increased to a peak 6 per centCO2 120 Ma This derived fromintense volcanic activity associ-ated with continental fragmenta-tion Thick vegetation coveredthe land masses
Australia started to pull awayfrom Antarctica at about 100 MaIt drifted northwards the TasmanSea opened and the IndianOcean opened with India start-ing to drift away from WesternAustralia The opening of theTasman Sea produced the rise ofthe Great Dividing Range thediversion of the major river sys-tems and changes to the climateof eastern Australia
A minor mass extinction oflife 90 million years ago was theresult of volcanoes in the Indianand Pacific Oceans belching outCO2 and other gases into theoceans and atmosphere Therewas a runaway greenhouse untilvolcanism waned But volcanicemissions of CO2 are common In1984 and 1986 burps of CO2 fromthe volcanic crater lakes ofMonoun and Nyos respectivelykilled thousands and added CO2to the atmosphere Near MtGambier volcanic CO2 is com-mercially extracted from rocks
one small hot spring on Miloscontributes 1 per cent of theplanetrsquos volcanic CO2 and hugequantities of CO2 the planetrsquossecond most common volcanicgas constantly leak from unseensubmarine volcanoes
Another minor mass extinc-tion at 55 Ma was caused by aCaribbean volcano There was arise in sea temperatures by up to8˚C for 100000 years and atmo-spheric CO2 was 10 times that oftoday During this greenhouseplankton sucked up the atmo-spheric CO2 mammals thrivedand life filled the vacated ecolo-gies Atmospheric CO2 decreasedfrom 3500 to 700 ppm within amillion years stayed low until 47Ma and went up and down toabout the present level (365ppm) at 40 Ma
India collided with Asia at 50Ma Uplift produced the TibetanPlateau which started to scrubCO2 out of the atmosphere TheTibetan plateau is still rising andCO2 is still being scrubbed out ofthe atmosphere The Drake Pas-sage opened as South Americadrifted from Antarctica a cir-cumpolar current developed andAntarctica refrigerated SouthernAustralia from 17 to 145 Mawas again tropical with mid-lati-tude temperatures 6˚C warmerthan today Atmospheric CO2was 180ndash290 ppm This green-house occurred when atmos-pheric CO2 was 30ndash50 per centlower than today
By 5 Ma Earth cooled andwas so cool that very slight orbitalwobbles now had a bearing on cli-mate and every 100000 yearswas characterized by 90000 yearsof glaciation and 10000 years ofinterglacial We are currently inone of those interglacial periods
The penultimate interglacialwas 120000 years ago Homoerectus Homo neanderthalensisand Homo sapiens coexisted sealevel was 6 metres higher than atpresent the planet was far
Millions of Years Ago
400 200600 0
2
4
6
8
10
12
14
16
18
20
0
Perc
enta
ge o
f CO
2
PrecambrianIce Age
s
Permian-CarboniferousIce Age
s
LastIce Age
s
There have been enormous changes incarbon dioxide (CO2) over time related to
volcanism sedimentation mountain-building and life on Earth
11MARCH 2003
E V I E WR
warmer and wetter than now andatmospheric CO2 was 78 per centof that today After warming theatmospheric CO2 and CH4 con-tent increased suggesting that at-mospheric temperature rise drivesan increase in atmospheric car-bon dioxide and methane con-tents During the history of thelatest glaciation armadas of icewere released into the sea every7000 years resulting from thephysical failure of thick icesheets These had a profound ef-fect on climate Small cool peri-ods occurred every 1100 to 1300years
The zenith of the last glacia-tion was 18000 years ago Sealevel was 130 metres lower thantoday temperature was 10ndash15˚Clower than today and the north-ern hemisphere was covered byice to 38˚N up to 3 kilometresthick
YESTERDAYThe northern polar ice sheetstarted to melt 14700 years agoThere were very rapid and majortemperature fluctuations sea lev-els rose and fell and the total sealevel rise over the last 14700years has been at least 130metres Sea level rise resulted inthe breaching of the Mediterra-nean into the Black Sea Basinsome 7600 years ago and is prob-ably the origin of the SumarianBabylonian and biblical stories ofa great flood
One of the consequences of amassive sea level rise over the last14700 years is that the WestAntarctic Ice Sheet was nolonger underpinned by the landTwo thirds of the West Antarc-tic Ice Sheet collapsed into theoceans and sea level rose 12metres The final third of theWest Antarctic Ice Sheet has yetto collapse to produce a 6 metresea level rise as part of the dy-namic post-glacial climate onEarth Climate changes inducedby changes in ocean currents
cooled North Africa grasslandschanged to a desert humans mi-grated and the great Mesopo-tamian cities were established
Sea levels were 1ndash3 metreshigher in a greenhouse 6000years ago There was 20 per centmore rainfall Cold dry periodsglacier expansion and crop fail-ures between 5800 and 4900years ago resulted in deforesta-tion flooding silting of irrigationchannels salinization and thecollapse of the Sumerian citystates Long periods of El Nintildeo-induced drought resulted in theabandonment of Middle EasternIndian and North Americantowns In 1470 BC () Thira ex-ploded weakened the dominantMinoans and changed the courseof western history
Global cooling from 1300 to500 BC gave rise to the advanceof glaciers migration invasionand famine Global warmingcommenced again at 500 BCthere was an excess of food andgreat empires such as the AshokaChrsquohin and the Romans grewContemporary records and Ro-man clothing shows that condi-tions were some 5˚C warmer thantoday
In 535 AD Krakatoa explodedas did Rabaul in 536 AD TheEarth passed through cometarydust in 536 AD The dusty atmo-sphere reflected heat and dark-ness prevailed As a result theclimate cooled and there wasfamine and warfare Changes inocean currents resulted in theMedieval Warm Period from 900to 1300 AD The first to feel thechange were the Vikings whowere able to navigate the north-ern waters colonized Newfound-land colonized Greenland andestablished extensive trade routesas far south as the modern GulfStates On Greenland crops weregrown and there were cattle Thiswould not be possible today Thewarmer wetter climate of Europeproduced excess crops and wealthwhich resulted in the building ofcastles cathedrals and monas-tries As with previous green-house events there was greatprosperity
In 1280 AD volcanic erup-tions on Iceland and a change inocean currents started the LittleIce Age which finished in 1920The North Sea froze in 1303 and1306ndash1307 there was massivefamine in 1315 and the plague
Sea
Surf
ace
Tem
pera
ture
degC
21
22
23
24
25
26
Years Ago
Large temperature changes over the last 200years have been recorded in history and fromthe oxygen isotopes of floating marine animals
Dark Agescold period
Medievalwarm period
LittleIce Age
2000 1500 1000 500 Now
s
12 MARCH 2003
E V I E WR
pandemic attacked the weakenedpopulation in 1347ndash1349 Therewas massive depopulation and ittook Europe 250 years to reachthe population of 1280 AD Dur-ing the Little Ice Age there werewarmer periods associated withsunspot activity During mini-mum sunspot activity (1440ndash1460 1687ndash1703 and 1808ndash1821) the intensely cold condi-tions were recorded by the Dutchmasters and King Henry VIII wasable to roast oxen on the frozenThames There were food short-ages Short cold periods occurredafter the eruptions of Tambora(1815) and Krakatoa (1883) re-spectively In fact 1816 wasknown as the lsquoyear without asummerrsquo This was the time whenTurner painted stormy oceansand skies full of volcanic dustMary Shelley wrote Frankensteinand Byron wrote Darkness
TODAYThe twentieth century and earlytwenty-first century AD are timesof natural post-glacial reboundIce sheets a rare phenomenon inthe history of time still exist Sealevel is relatively low as are glo-bal temperatures and atmos-pheric CO2 Between 1920 and1945 there was a period of warm-ing (037˚C) and another thatcommenced in 1976 (032˚C) In1976ndash1977 global temperaturesin the lower atmosphere jumped03˚C sea surface temperature inthe equatorial Pacific jumped06˚C sea surface temperatureduring upwelling increased 15 to3˚C but there was reduced up-welling the heat content of theupper 300 metres of the worldrsquosoceans increased there was in-creased wave activity in theNorth Sea and the length of theday changed The stepwise in-crease in temperature in 1976ndash1977 shows that there was a ma-jor re-ordering of the ocean heattransport coinciding with anorbital change expressed as a
change in the length of the dayMaybe the global warming of thetwentieth century is just a mea-sure of the variability on a dy-namic evolving planet
To put such measurementsinto perspective over the historyof time changes in atmospherictemperature in the twentieth
century can only be consideredsmall and slow A 24-year globalcoverage of satellite atmospheretemperatures shows only modestwarming in the Northern Hemi-sphere and a slight cooling in theSouthern Hemisphere Tempera-ture measurements from balloonsagree with the satellite measure-ments for the period of overlapBecause greenhouse warming is aphenomenon of the atmospheresignificant changes should havebeen recorded They have not
CONCLUSIONSUnderpinning the global warm-ing and climate change mantra isthe imputation that humans liveon a non-dynamic planet On allscales of observation and mea-surement sea level and climateare not constant Change is nor-mal and is driven by a large num- API
ber of natural forces Change canbe slow or very fast However wesee political slogans such as StopClimate Change or governmentpublications such as Living withClimate Change demonstratingthat both the community andgovernment believe that climatevariability and change are notnormal By using the past as thekey to the present we are facingthe next inevitable glaciationyet the climate economic politi-cal and social models of todayassess the impact of a very slightwarming and do not evaluate thehigher risk of yet another glacia-tion Geology archaeology andhistory show that during glacia-tion famine war depopulationand extinction are the norm
In 1831 Admiral Sir JamesRobert George Graham had theUnion Jack hoisted on a volca-nic land mass that suddenly ap-peared near Sicily It was calledGraham Bank and was claimed byEngland It was also claimed bythe Kingdom of the Two Sicilieswho called it Isola Ferdinandeathe French (LrsquoIsle Julia) andother powers In the subsequentdispute over ownership Franceand the Kingdom of the TwoSicilies almost came to war andEngland and the Two Kingdomsof Sicily had a diplomatic rowDuring the intense diplomaticdispute the island quietly slippedback underwater Graham Banksserves to show that whateverpolitical decisions we humansmake the land rises and falls sealevels rise and fall and climateschange as they have done sincethe dawn of time
Ian Plimer is the Professor of Geology in the Schoolof Earth Sciences at The University of MelbourneThis article is an edited version of his recent paperto the IPArsquos Climate Conference delivered on 28
February 2003 a full version of which can befound on the IPArsquos Website
On all scales of
observation and
measurement sea
level and climate
are not constant
Change is normal
and is driven by a
large number of
natural forces
13MARCH 2003
E V I E WR
FOR two years the worldrsquossecond largest hydrocarbonsproducer spent beaucoupdollars on a clever public re-
lations and advertising campaign toconvince consumers that BP no longerstands for British Petroleum but for Be-yond Petroleum
One advert proclaimed lsquoWersquore oneof the largest producers of natural gashellip and are investing in the new energysources of the futuremdashhydrogen andwind Itrsquos a startrsquo Another tried to getthis line past the guffaw test lsquoWe be-lieve in alternative energy Like solarcappuccinorsquo
Many people expressed surprise thata huge oil company was so committedto alternative energy technologiesThey neednrsquot have
BPrsquos total six-year investment in re-newable technologies was $200 mil-lionmdashthe same amount it spent on thelsquoBeyond Petroleumrsquo advertising cam-paign Thatrsquos certainly an impressivetab for image enhancement But itrsquos adrop in the barrel for futuristic tech-nologies that were the centrepiece forthe slick marketing effort
Indeed all its preening and pufferynotwithstanding BPrsquos actual invest-ment in renewable energy was a whop-ping 005 per cent of the $91 billion itspent to buy oil giants Arco and Amocoback in the 1990s Moreover just as theadvertising campaign was windingdown BP announced it was spending$675 billion for a 50 per cent control-ling interest in a rich Russian oil pros-pectmdashand will be spending another$20 billion over the next five years ex-ploring this and other newer fieldsaround the world
In other words the advertising cam-paign was little more than lsquogreen-washingrsquomdashdisinformation intended topresent an environmentally responsiblepublic image BP wanted people to per-
BPmdashBack to PetroleumPAUL K DRIESSEN
theoretically harmless puffery It also re-flects the desire of many multinationalcompanies to appease critics and gaina public relations advantage over com-petitors by adopting the language ofideological environmentalism
This radical school of thought in-creasingly uses ethical buzz-words anddogmas to justify its demands Chiefamong them are sustainable develop-ment and the precautionary principlethe foundations of so-called lsquocorporatesocial responsibilityrsquo (CSR) and lsquoso-cially responsible investingrsquo (SRI) doc-trines
Eco-activists from affluent Westerncountries developed the doctrines topromote their agendas and oppose en-ergy and economic development BPhas long been at the forefront of theseefforts as a charter member of theWorld Business Council for SustainableDevelopment through frequent meet-ings with activist groups and by fund-ing many radical groups
The activists define what is lsquorespon-siblersquo focusing debate on conjecturalproblems and theoretical needs of fu-ture generations of wealthy elitesmdashandignoring real immediate life-and-death needs of people who struggledaily just to survive The stakes arehuge
More than 15 billion people in de-veloping countries still do not have ac-cess to electricity Half a billion womenand children spend their days collect-ing firewood or squatting in mud andanimal faeces to collect and dry ma-nure for fuel Millions die every yearfrom lung diseases caused by indoor airpollution from cooking fires and dys-entery due to contaminated drinkingwater
Hydroelectric or fossil fuel projectscould provide electricity for familieswater purification plants and economicdevelopment But radical activists op-
ceive it as a lsquosocially responsiblersquo leaderand reward it accordingly Few did
Green activists denounced BP forlsquohypocrisyrsquo and blasted the company forcontinuing to lsquoexploit some of theworldrsquos most sensitive ecological areasrsquoA major business magazine said sim-ply lsquoWell please If the worldrsquos secondlargest oil company is beyond petro-leum Fortune is beyond wordsrsquo
Meanwhile BPrsquos total wind and so-lar electrical output last year was barelyenough to keep the lights burning inRegina Saskatchewanmdashand thought-ful observers are beginning to realizethat wind and solar arenrsquot quite as eco-friendly as activists claim
A single new 555-MW gas-firedgenerating plant in California producesmore electricity than do all the statersquos13000 wind turbines The gas-firedplant occupies about ten acres the gi-ant 200-foot-tall windmills dominatethousands of once-scenic acres and killthousands of raptors and other birdsevery year Current photovoltaic tech-nology is just as habitat-hungry
Worse chief executive Lord JohnBrowne was forced to lower BPrsquos pro-duction estimates three times last yearand the companyrsquos 11 per cent returnon average capital was well below thatof arch-rivals ExxonMobil (137 percent) and Royal DutchShell (148 percent) BP share prices reflected inves-torsrsquo displeasure with its poor perfor-mance and the fact that the companyrsquosprofit margins would not improve for adecade or more if the company re-mained focused on renewable energyand old oil fields
Thus if BP ever really was BeyondPetroleum going Back to Petroleum(and Bigger Profits) was a sound busi-ness decision
However the lsquoGreat Beyondorsquo adcampaign involves more than meregreenwashing and disingenuous but s
14 MARCH 2003
E V I E WR
API
pose these projects and say that theworldrsquos rural poor should be contentwith solar panels on huts
Investors are also at risk particu-larly retirees whose futures depend onpension and mutual funds that ownnearly $8 trillion in market sharemdash50per cent of the total stock marketMany of these funds are managed lessto safeguard or benefit the investor thanto promote radical principles under thedisguise of so-called ethical funds
These funds claim to provide pro-fessional unbiased analytical and ad-visory services But in reality they sup-port political agendas based on often-questionable analyses and on lsquostake-holderrsquo (activist) input to justify howthey grade companies in client portfo-lios They regularly excoriate compa-nies such as ExxonMobil claiming itsrefusal to back the Kyoto climate treatywill destroy shareholder value Mean-while they praise companies such asBP and promote global governanceand solar panels on huts
Australiarsquos energy consumers willbecome yet another example of lsquocol-lateral damagersquo if the radicals havetheir way over global warming Onceagain some of the culprits are right inthe BP boardroom
In 1997 BP chief Browne endorsedthe global warming theory and saidtough measures should be imposedquickly even in the absence of scien-tific proof A Clinton-era Energy In-formation Administration report con-cluded that the climate treaty woulddrain $340 billion a year from the USeconomy The Australian economywould also get hammered And all thispain even assuming perfect compli-ance with the treaty would reduce av-erage global temperatures in 2050 byonly 02˚C below what they would bewithout the treaty according to theUSArsquos National Center for Atmo-spheric Research
But BP Australasia President GregBourne is undaunted Hersquos stumping thecountry from Melbourne to Brisbaneand Darwin to Perth importuning busi-nesses to pressure the PM to ratifyKyoto Could it be pure altruism Ormight the old profit motive be at work
A 1997 memo to Enron presidentKen Lay described BP as Enronrsquos lsquoin-ternational equivalentrsquo Indeed BP isstriving mightily to replace Enron asthe worldrsquos premier broker in the newbusiness of buying and selling permitsto emit greenhouse gases The expec-tation is that playing the climatechange game could earn BP billions ofdollars via traditional petroleum opera-tionsmdashand billions more via emissiontrading schemes The company is al-ready trading credits among its unitsas part of a training regimen for theanticipated emission Olympics
One cannot help but suspect thatthis huge EU oil giant might also bemotivated by Europersquos obvious desireto protect its industries from US and
other foreign competition They clearlysee the Kyoto Protocol not merely asan environmental programme but alsoas a way to pressure the United StatesAustralia and other countries to reduceenergy use and economic productivity
EU Environment CommissionerMargot Wallstrom put it bluntly whenPresident Bush abandoned the Kyotoclimate treaty lsquoThis is not a simple en-vironmental issuersquo she railed lsquoThis isabout international relations this isabout economy about trying to createa level playing field for big businessesthroughout the worldrsquo Several EU of-ficials echoed her sentiments suggest-ing that Americarsquos lower energy taxesconstitute an unfair trade advantagethat could justify trade sanctionsagainst the US
In short what we are witnessing isa profound and disturbing convergenceof ideology activism marketing poli-tics and financial gainmdashall in the ser-vice of radical policy agendas and allbeautifully attired in the lavish raimentof corporate ethics and responsibilityThis is proof positive that social respon-sibility can be a wondrous thing in thedexterous hands of craftsmen who re-ally know how to display and utilize it
How can we stop the charade Forstarters demand that corporate socialresponsibility puts people first puts de-velopment back into sustainable devel-opment and ensures that precaution-ary guidelines safeguard people andcommunities from the havoc wreakedby radical green policies Insist that alldecisions be based on sound peer-re-viewed science and solid evidencemdashnot on hysterical claims and shrillrhetoric by activists regulators andjournalists who reward pseudo-scien-tific soul-mates and pillory any scien-tists who dare disagree with them
Next urge principled regulators andjournalists to investigate these compa-nies and investor firms for self-servingarrangements and breech of fiduciaryduty Demand that the companiesfirms and activist groups open theirbooks and provide full disclosure oftheir meetings contacts and monetaryand other relationships
Last in this era of high-minded re-form prevail upon legislators to changethe law to make these groups subjectto the same false advertising laws andthe same standards of transparency andaccountability that activists insistshould govern for-profit corporationsUnbelievably right now these ideo-logues are mostly exempt
The world will thank you For it willbe a better safer more ethical placemdashespecially for energy consumers retir-ees and the worldrsquos poor
Paul Driessen is a senior fellow for the AtlasEconomic Research Foundation in Fairfax VA This
article is based on his recent white paper lsquoBeyondPetroleummdashor Beyond Probityrsquo which can be read
in its entirety at wwwcdfeorgdriessenhtm
BPrsquos total six-year
investment in renewable
technologies was $200
millionmdashthe same
amount it spent on the
lsquoBeyond Petroleumrsquo
advertising campaign
15MARCH 2003
E V I E WR
FOR three years Reputa-tion Measurement Ltd andThe Age and The SydneyMorning Herald have been
trying to impose their political agen-das on Australiarsquos top 100 corpora-tions They think that Australiarsquos cor-porations should be good citizens andthat by measuring what they think itmeans to be a good citizen they canchange corporate behaviour
Westpac ranked number one on the2002 Index and rated well in everycategory Flight Centre ranked num-ber one on financial performance but47 overall It was in the doldrums inevery other category including beingranked 99 on environment On thesurface this seems very strangemdashFlightCentre manages shopfront travel agen-cies The reason for this bizarre resultwas not hard to find
Reputation Measurement sug-gested that lsquocompanies seeking to dem-onstrate their worthiness as sociallyresponsible organizations are most suc-cessful when they widen their tradi-tional business stakeholder base to in-clude community stakeholdersrsquo Fur-ther lsquo[i]nvestors and consumers are in-creasingly making decisions based onlonger-term issues linked to a com-panyrsquos capacity to contribute to a sus-tainable futurersquo In other words theReputation Index is an instrument foradvancing a number of political agen-das corporate social responsibilitystakeholder capitalism and sustain-ability
For example corporate social re-sponsibility suggests a common agree-ment about what is good Whose defi-nition of good is to be believedmdashtheelectoratersquos or the activistsrsquo In a lib-eral democracy the rules are set by aconsensus that determines not so muchwhat is good corporate behaviour but
The Good Reputation Index 2002A Tale of Two Strategies
GARY JOHNS
what is and what is not acceptablebehaviour The Index is an exercise incapturing the reputation agenda andusing it to regulate corporate beha-viour
Stakeholder theory suggests that allinterests in an enterprise compete toobtain benefits from the enterprise butthat none has priority It is in effectasking lsquoin whose interests should theenterprise be runrsquo It assumes that so-ciety grants an enterprise the right toexist The community through its law-makers may grant licences and certainprivileges in return for the enterprisecomplying with the law It does notlicense stakeholders at large to imposetheir views on the corporation
Sustainability refers to ecologicalsustainability and ecological sustaina-bility is premised on the notion of lim-its to growth based on limits to resour-ces It argues that natural resources arebecoming scarcer It ignores the his-tory of technological innovation of-ten promoted by competition betweencorporations and the fact that such in-novation has extended physical re-sources in ways untold
An analysis of the 2002 Index re-veals that those corporations whosescore improved massively between2001 and 2002 did so because they didnot participate in 2001mdashthey wererated anywaymdashbut did so in 2002Conversely those whose score plum-meted in 2002 did so because they par-ticipated in 2001 but not in 2002Moreover the corporations who rosemassively in the ranks did not changetheir behaviour they just filled out theforms better
Greenpeace were very aggressive intheir attitude to corporations lsquoTo en-able us to verify your responses pleaseprovide us with further supportingdocumentation If hellip we are unable
to verify your response we will defaultyour response answer to a ldquodonrsquot knowrdquowhich will be marked and downgradedaccordinglyrsquo Unfortunately those ofwhom we would expect bettermdashforexample The Brotherhood of St Laur-encemdashalso penalized non-respon-dents As the technique was used byalmost all of the research groups thiswas presumably a deliberate strategy ofReputation Measurement Ltd
More disconcerting were reportsfrom corporations of the researchgroups touting for business by ringingfirms and offering their services to helpfill out the questionnaire Althoughthe level of disclosure has increasedsince the 2001 survey the touting con-tinued
The Index was published in Octo-ber 2002 obviously to coincide withthe reporting season and in the hopethat shareholders would use the Indexto seek changes to corporate behav-iour A sample of the major gainers andlosers on the Index reported no men-tion of the Index More importantlythere was no discernible impact onshare prices
The good news is that the Indexfailed miserably to achieve its objec-tives The bad news is that enough cor-porations played along to keep it alivein certain media and academic circlesIt was a chance for self-appointedNGOsmdashwho provided the ques-tionsmdashto regulate corporations bypublishing a list of good capitalists andbad capitalists Every corporation thatparticipated in the Index should thinkcarefully about whether it can justifythe agenda to its shareholders
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
16 MARCH 2003
E V I E WR
Tomorrowrsquos Reform
RALPH Waldo Emersontold us that lsquoa foolish con-sistency is the hobgoblinof little minds adored by
little statesmen philosophers and di-vinesrsquo and enjoined us lsquoto speak whatwe think today in words as hard ascanon balls and tomorrow speak whattomorrow thinksrsquo While statesmenshould not persist with known errortheir wanton inconsistency makespolicy formulation confoundedly dif-ficult
When he asserted that lsquoWhat de-termines the course of a nationrsquos eco-nomic policies is always the eco-nomic ideas held by public opinionrsquoLudwig von Mises must have hadeven less confidence in little states-men His pupil Friedrich von Hayekurged Antony Fisher not to enterpolitics but instead to found think-tanks which with fact and argumentwould change public opinion
Even among liberalismrsquos oppo-nents few today argue that Misesrsquoand Hayekrsquos ideas and Fisherrsquos liberalthink-tanks did not lead the 1980sand 90s almost world-wide liberal re-vival Why would they when bymuch the same means Fabian So-cialism had brought the welfare stateto Western nations In neither trendhowever were politicians the mereagents of popular opinion Especiallyin democracies political leadersrsquo ca-pacities to ignore it are indeed mod-est but their abilities to influence itare very much less so Even SaddamHussein works hard at influencingIraqi opinion Can we hypothesizethat the ways that leaders use theirinfluence distinguish tyrants fromdemocrats and the purposes forwhich they use it distinguish politi-cians from statesmen
Liberalismrsquos headlong chargethrough the corridors of power could
JOHN HYDE
arguments could have been em-ployed are nonetheless being de-fended by appeal to popular miscon-ceptions of the sort that PaulineHanson the Democrats and Greensactually believe Unless the majorparties have had a radical change ofheart they believe differently
Take the proposed Free TradeAgreement (FTA) with the UnitedStates Trade experts are not of onemind about its net worth My quar-rel is therefore not with the FTAitself but with the Governmentrsquos de-fence of it If the FTA will bring netbenefits then these will come mostlyfrom improved access to Americangoods and capital our own reductionof anti-competitive regulation ofdrugs medical insurance performingarts professional services textilesrural commodities etc and the dy-namic advantages of mixing it withthe Yanks But the government ispromoting the FTA almost solely inmercantilist (exports goodimportsbad) terms
To treat foreign goods servicesinvestment and ideas as an invasionparodies voluntary exchange whichdoes not happen unless both partiesbenefit The Government trumpetsa fact that nobody disputes namelythat it pays to sell into the best pay-ing markets but says nothing to edu-cate us in the advantages of buyingwell from foreigners as well asneighbours Once long ago Howardcriticized Pauline Hanson for her xe-nophobia That day he seemed to un-derstand the benefits of exchangewith foreigners
Until recently Australia hadbeen insisting that the only way toworld trade reform was via the mul-tilateral processes of the World TradeOrganisation and currently theDoha round A bilateral FTA with
not have proceeded without leaderssuch as Margaret Thatcher and ZhouEnlai who changed public opinionas did Bob Hawke in Australia Nowhowever liberalismrsquos charge hasslowed even in some places beensomewhat reversed Canberra hasnot been immune from trends thatsee politicians no longer so firmly re-sisting demands for economic privi-leges or as others see the same phe-nomenon no longer so blindly fol-lowing economic rationalism
Very poor economic decisionsaboundmdashrejection of the Trebeck re-port on petrol pricing preference forethanol production extending mo-tor and textile protection rural sub-sidies taxpayer contribution to theDarwin-to-Alice Springs railwayetc etc But there is also progressThe pride that John Howard takesin the fact that Australians are lessdivided against each other is surelyjustified The hugely importantlabour welfare and arguably also thehealth-care markets have been im-proved Budget balance has beenachieved albeit with high taxes Al-though net legislative and adminis-trative progress toward a more lib-eral more open more efficienteconomy has dwindled it would stillbe fair to say it has not been reversed
Our statesmenrsquos words as hard ascannon balls however that is thoseintended to enlighten rather thanappeal to public opinion are beingreserved for the Iraqi conflict In con-trast in the economic arena we areno longer encouraged to accept anyunwelcome truths Even when de-fending measures that I am morethan content to accept as beneficialthe government seems to select itsargument at best randomly ignoringprinciples of economic efficiency andequity Policies for which textbook
17MARCH 2003
E V I E WR
the US may or may not result in anet increase in trade flows but if itis not a meaningless piece of paperdelivering only political benefits tothe Government it will certainlydivert trade from our other tradingpartners How will China KoreaJapan etc react to losing their lsquomostfavoured nationrsquo status Such ques-tions should be addressed in termsthat do better than reinforce our xe-nophobic prejudices
By appealing to Hansonite mis-conceptions the Government mayand probably will improve itschances of bringing forward a policythat I am more than willing to ac-cept it believes is a good one It isafter all the recommendation of theDepartment of Foreign Affairs andTrade However by so doing it is re-inforcing delusions it must overcomefor further economic reform Whatis more I am reminded of a quip thatI am sure the PM has also heard lsquoNoGovernment is really dangerous un-til it believes its own bullshitrsquo Poli-ticians and I suspect bureaucratsalso are all too prone to believingtheir own utterances Unwilling toadmit their deceptions even whenspeaking in house they quickly con-vince themselves of the truth of theirown and colleaguesrsquo loose rhetoricand worse These are the people whomust negotiate the Agreement whilelooking over their shoulders at anAustralian electorate whose alreadystrong mercantilist tendencies havebeen reinforced by the people bestplaced to disabuse them The poten-tial cost is obvious
The US Free Trade Agreement isbut an example of a tendency thatought to be worrying In debateabout refugee policy motor fuel sup-ply single-desk wheat sales the sup-ply of medical practitioners and pres-ervation of the environment has notthe Government employed argu-ments that are not compatible withits professed liberal philosophy Hasit not seemed that it does not knowthe standard liberal responses to theself-serving demands of vested inter-ests and bigots With due respect to
Emerson consistency allows deci-sions to be made without the neces-sity of thinking every one throughfrom fundamental principles whichnobody in authority has the time orthe mental agility to do
Politically disinterested educa-tors such as the IPA can often callsome pretty good minds to their aidEven so when the Government it-self fosters public misconceptionthey cannot be expected to undo theerror The single greatest sin of thecurrent government is that it is notbuilding opinion for tomorrowrsquos re-form Why not
I suggest because it is politicallydifficult Whereas calls to resist out-siders appeal to deeply ingrainedtribal instincts calls to uphold thecivilizing and wealth-building insti-tutions that afford protection tostrangers and admit their goods ser-vices persons and ideas make nosuch visceral appeal These codes aremuch later developments in themarch of mankind and to manypeople they remain counter-intui-tive They must therefore be de-fended by sustained argumentHayek knew that politicians whosetime horizons in the absence ofknown crises tend to be the nextelection would (to use Howardrsquosown expression) seldom have the
tickers He turned therefore to theless articulate but far more resolutethink-tanks
It is relatively easy to appeal tothe sort of Chauvinism that sur-rounds sporting activity and argu-ments about refugees and meat quo-tas When a Prime Minister talks ofsovereignty guaranteeing our bor-ders or the interests of our exportersor domestic manufacturers he is notnecessarily wrong but his task iseasier than that of defending rulesthat permit voluntary co-operationamong strangers The principle thatdefends the non-unionistrsquos right towork the consumerrsquos right to buy for-eign goods and everyonersquos right tohear alien ideas and which shouldprotect racial and religious minori-ties from exclusion still needs hisleadership
Unless statesmen recognize theinconsistencies that arise not fromthe changed opinions that con-cerned Emerson but from trying tobe all things to all men they arelikely to govern in ways that are un-fair and inefficient If the public doesnot recognize consistency then thelsquolittle statesmenrsquo may find them-selves compelled to yield to the de-mands of the more articulate vestedinterests In such a case Heaven helpthe inarticulate who will be effec-tively disenfranchised But the insti-tutions which when consistentlyapplied give us liberty equity andprosperity are not strongly intuitive
They nevertheless distinguishAustralian society from say Iraqi so-ciety They give us the economicstrength to defy tyrants and they giveus a land worth defending They arecertainly not in danger of disappear-ing but they are in danger of beingeroded Lead us Mr Howard
While statesmen
should not persist
with known error
their wanton
inconsistency makes
policy formulation
confoundedly
difficult
API
John Hyde is a Senior Fellow with the Institute ofPublic Affairs His book Dry In Defence of
Economic Freedom was published by the IPA in November 2002
18 MARCH 2003
E V I E WR
DESPITE the obsessivepublic attention to pricesat the petrol pump thepetroleum-refining sector
rarely registers on the media radarscreen This is unfortunate as the sec-tor fuels most movement of peopleand goods in our economy and soci-ety And it is in trouble
It is fragmented stunted and sur-vives by abjuring profit and mortgag-ing its future Without radical reshap-ing it is likely to wither leaving usexposed to the vagaries of the inter-national refined-products market
FEATURES OF THE AUSTRA-LIAN REFINING SECTORThe first thing to note is that by in-ternational standards Australia is arelatively small player The most re-cent international figures show thatour total output of refined productsin the third quarter of 2002 was 89million tonnes This compared withOECD production of 486 milliontonnes including US production of202 million tonnes Total Australianrefinery capacity of 870000 thousandbarrels per day (bpd) compares withthe figures for China (53 million)South Korea (26 million) and Singa-pore (11 million) Total regional re-fining capacity and production con-tinues to grow as Australiarsquos stagnatesIn the five years to 2000 regional out-put grew by 22 per cent
Second the structure of the indus-try is weak The dispersed geographi-cal distribution of our refining sectorreflects its historical developmentwith each State capital city support-ing one or more refineries Over thelast two decades the number of ma-jor oil companies operating in Aus-
Petroleum RefiningRationalization or Atrophy
JIM HOGGETT
tralia has shrunk from nine to fourAlthough the number of players hasmore than halved the number of re-fineries has reduced by only two fromten to eight The average capacity ofAustralian refineries is around100000 bpd New refineries in theregion are generally significantlylarger Singaporersquos largest has a capac-ity of 375000 bpd
Given the open Australian mar-ket our ex-refinery prices are virtu-ally set by the major exporters in theregion who are also operating on tightmargins Moreover the proportion-ately heavy demand for diesel in SEAsia tends to generate a persistentsurplus of gasoline which is availablefor export to Australia at discountedprices
The pattern of relatively smallscattered refineries is no longer opti-mal in an open market in which weare a price-taker
Third despite its sub-optimalstructure the Australian refining in-dustry is not grossly inefficient Oneindicator is the value added per em-ployee which is in the top five per-formers in the Australian manufac-turing sector
The cost competitiveness of Aus-tralian products is indicated by thefact that we have the cheapest ex-taxprice of petrol in the OECD Perfor-mance comparisons with the rest ofthe AsiandashPacific however suggestthat we lag the average efficiency inthe region And the best performersin the region are superior to our best
Finally the financial performanceof the industry is poor gross annualrevenues for the whole industry in-cluding marketing were $32 billionin calendar year 2001 For the five
years to 2001 the return on assets forrefining and marketing averaged 38per cent and was negative in the lasttwo years The indications are that2002 may have been a better year forthe industry but that the return onassets remains well below the cost ofcapital Over the four years to 2001the fixed asset base of the industrydeclined by almost 6 per cent to $12billion even after $24 billion of newinvestment in the period
This is clearly unsustainable andit raises the question Why is no-oneleaving the game
There are perhaps four main rea-sonsbull First the industry has engaged in
continual productivity improve-ment allowing it to keep withinrange of ruling prices
bull Second each refiner hopes thatsomeone else will blink first sothat the waiting will pay off
bull Third the costs of leaving thetable the exit costs are very highbecause of the nature of the prod-uct and the long occupancy ofmost sites
bull Fourth even while profitability islow the industry has generallybeen marginally cash positive
These add up to a big lsquofirst mover dis-advantagersquo
FUTURE TRENDSClearly petroleum will remain ourmost important energy source Petro-leum products constitute 52 per centof Australiarsquos final consumption ofenergy Liquid petroleum fuels pro-vide more than 95 per cent of Aus-traliarsquos transport needs There are nomajor foreseeable influences that willaffect this pattern dramatically There
19MARCH 2003
E V I E WR
have been major advances in fueleconomy and these will no doubtcontinue But more than counterbal-ancing this is the inexorable growthin demand for personal mobility andfor goods from distant parts Althoughgrowth in energy consumption mayslow down in Australia we will notbe reducing our consumption to anysignificant degree
Our export role will also be lim-ited Australian export volumes havetended to be steady over recent yearsand future new export potential forpetroleum products seems likely to beminimal China and India have re-cently become major exporters par-ticularly of gasoline Refinery capac-ity is planned to continue to growstrongly in the region even thoughthere is already significant excessThe decline in capacity utilization inmajor exporters such as Singaporewill make exporting difficult Further-more it is expected that productspecifications in Asia the US andEurope will converge in the comingyears thereby eliminating niche ex-port opportunities
The choice we face is what to doabout our essentially import-compet-ing industry
INCENTIVES NOT STRONGWhile there are strong pressures forthe industry to restructure there islittle incentive to invest for this pur-pose Investments in the Australianrefining industry have to competewith many alternatives across theglobe
Lack of sufficient return is thesingle biggest deterrent to investmentin the industry at present But thereare othersbull There is no prospect of strong growth
in demand to offset the substantialrisks associated with large new in-vestments
bull The persistent refinery capacity over-hang in our region will keep sus-tained pressure on our margins
bull The corporate taxation regime is nowless favourable than hitherto after thesubstitution of effective-life foraccelerated depreciation The
competing Singapore option offersa three-year write-off
bull The regulatory cost burden is grow-ing This applies to all Australianindustry but is potent in overseascomparisons Tighter fuel stan-dards environmental restrictionsintervention in prices and indus-trial law are some of the factors
bull There is increased sovereign riskstemming from inconsistent regula-tions We have eight parliamentswhich enact inconsistent laws Acurrent example is the higher fuelstandards applied in Western Aus-tralia
bull The sovereign risk also arises fromuncertainty in the regulatory processThere are unpredictable changesof direction (the deferral of thediesel sulphur excise differential[DSED]) and uncertainty in theface of conflicting interests (willthe Government act on ethanolcontent)
All these factors enter into the riskreward calculation When the re-wards are minimal the risks take onan extra dimension
WHAT INDUSTRY STRUC-TURE DO WE NEEDThe short answer is we cannot knowin detail
In the Downstream Petroleum In-dustry Framework 2002 the Depart-ment of Industry Tourism and Re-sources set out a broad vision
bull A preference for market-based so-lutions
bull A strong efficient environmen-tally responsible industry supply-ing most of the nationrsquos needs forproducts
bull Regulation only for market failureor national interest objectives
bull Regulation to be transparent andconsistent
bull Reform and regulation to maxi-mize long-term community ben-efitThis vision has some prescriptive
elements but the Government hasmade it clear that it will not nomi-nate an optimal number of refineriesor a pattern of production
The general public would probablyopt for a structure that guaranteedlower more stable automotive fuelprices Unfortunately they cannothave both in the short term
In fairness the investors in the in-dustry are the ones entitled and bestfitted to determine its future In theextreme they will do it anyway bypersisting or walking away Generallyspeaking they will seek to maximizetheir returns and thus promote themost efficient use of resources
Australian refineries are not inef-ficient but that is not the point Ourmarket is open so the competitionwe face is the best of the overseas per-formers often with more favourabletax and subsidy regimes
Nor is this simply a question ofclosing the smallest refineries A bet-ter approach might well be to allowrefining companies to concentrate onwhat they do bestmdashperhaps throughrefinery alliances Caltex and Shellhave co-operated in this way in Thai-land
The fact is that the detail of thedecisions can only be made by theindustry relatively free of governmentdirection The series of detailed de-cisions entailed will determine theoverall structure of the industry
COMPETITION REGULATIONCAN IMPEDE RESTRUCTURINGThe relevant provision of Section 50of the Trade Practices Act (TPA) pro
While there are
strong pressures for
the industry to
restructure there is
little incentive to
invest for this
purpose
s
20 MARCH 2003
E V I E WR
hibits mergers or asset acquisitionsthat would have the effect or belikely to have the effect ofsubstantially lessening compe-tition in a marketIt is both potentially and in prac-
tice an extremely restrictive provi-sion The Australian Consumer andCompetition Commission (ACCC)has expressed concern at concentra-tion in the sector in applying the pro-vision
The ACCCrsquos concerns seem ex-aggerated in the light of history Butthey are complemented by a persis-tent public misapprehension thatlarge petrol price swings equal profi-teering This perception has been soexploited for political advantage andmedia excitement that it is now al-most impossible for the truth toemerge
The future intensity of competi-tion in this industrymdashif it is allowedto restructuremdashshould not be indoubt Any rationalization would inall likelihood still leave strong do-mestic competition in each majorproduct category perhaps with fewermore efficient production units
The market is also contestableThere would be numerous potentialimporters and many independent re-tailers High margins would be rap-idly eroded by competition As re-cently ruled in the Boral case mar-ket reality is more conclusive than aperception of anti-competitiveness
Proposed mergers have been per-mitted in the past but the process isslow and permission is generally onlygranted with severe conditionsNonetheless there is a strong case forallowing restructuring within theterms of the merger provisions
AUTHORIZATION COULD BETHE KEYIf Section 50 of the TPA is an im-passable barrier then the authoriza-tion provisions of the Act could bethe way to greater efficiency The testsunder these provisions require a pub-lic benefit which outweighs the com-petition detriment The ACCC listsfostering business efficiency industry
rationalization and import-competi-tiveness as important public benefits
There is a strong prima facie casethat rationalization of the industrycould satisfy these tests It wouldallow greater scale of productioneconomies in distribution and closureof the least efficient production units
But the authorization process isslow and the onus for demonstratingthe public benefits rests on the appli-cant Slow process can amount to ef-fective rejection
POLICY OPTIONS AND REC-OMMENDATIONSIf government cannot help the indus-try to adjust it should allow it to ad-just by supporting sensible changeThis would involve both improving
the operating environment throughregulatory reform and altering thebalance of competition regulation sothat the industry could restructurevoluntarily The CommonwealthGovernment has already indicated awillingness to support both but hasnot yet delivered
The ball would then be in theindustryrsquos court to bring forward newproposals if a new policy environmentcould be created This could all hap-pen within a very broad strategicframework agreed with the industrywhereby Australia continued to besure of sufficient refining capacity tomeet a severe international fuel short-age
We therefore recommend thatbull The Commonwealth Govern-
ment provide explicit indicationto the ACCC of the public ben-efits it sees from the rationaliza-tion of the refining sector In par-ticular joint ventures should becontemplated
bull The ACCC give sufficient weightto the public interest benefits ofrestructuring to allow rationaliza-tion of production facilities
bull All governments reduce distortingfuel subsidies and taxes that favourparticular sectors or fuels
bull The State Governments act im-mediately to harmonize their regu-lation of the industry and agreenot to issue any new inconsistentregulation
bull More specifically the States havea single set of fuel standards withwhich refiners can reasonablycomply withdraw from all formsof price regulation and refrainfrom thwarting or distorting therationalization process
bull Governments generally not intro-duce new regulations mandatingthe use of alternative fuels
CONCLUSIONThe choice for the industry appearsto be between accelerated rational-ization and atrophy The process ofchange is something which the indus-try must plan and effect The task isnot impossible but it will require theactive support of government at alllevels For the time being there is anexpressed willingness at the Com-monwealth level but no real solu-tions
If nothing is done the refiners willcontinue to stumble along in a regu-latory fog and will invest only whenobliged to do so by changing fuel stan-dards They will become increasinglyvulnerable to low-priced imports andeventual closure
Jim Hoggett is a Senior Fellow at theInstitute of Public Affairs
If Section 50 of the
TPA is an impassable
barrier then the
authorization
provisions of the Act
could be the way to
greater efficiency
API
Last week the Government tabled 22 volumes of theCole Royal Commission into the Building andConstruction Industry Former Court of Appeal judgeTerence Cole made 392 specific findings of unlawfulconduct and in the confidential final volumerecommended that 31 individuals be referred for possiblecriminal prosecution As was to be expected theconstruction unions claimed that the report was a witch-hunt and people who should have known better claimedthat Cole was biased
The anti-union allegations were never very plausiblegiven that most unions had refused to cooperate withthe Commission and had even boycotted theCommissionrsquos special conference on occupational healthand safety As things have turned out one of their ownhas fatally undermined the unionsrsquo case No less anauthority than the National Secretary of the ConstructionDivision of the CFMEU has unwittingly confirmed thatCole is right In what was no doubt an unguardedmoment John Sutton admitted to a Melbournenewspaper that ldquovirtually everything we do breaches partof this Actrdquo Suttonrsquos admission means that Colersquosdescription of a largely lawless industry can be disputedat the margins but not credibly denied The problemsof the industry have been established beyond credibledoubt and the question now is what needs to be doneabout it
Nothing says the CFMEU because itrsquos alright tobreak the law in the best interests of the working classLeading union officials take the view that in a toughindustry only wimps take the law seriously The newsthat ldquoonlyrdquo 31 individuals had been recommended toface criminal charges was greeted with somethingapproaching jubilation as if the industryrsquos code of silencebased on fear had largely kept the Royal Commission atbay
As the Australian Financial Review commented in aneditorial the unionrsquos dismissive reaction to Colersquos report
ldquospeaks as loudly as his damning findings of entrenchedlawlessnessrdquo Imagine the reaction if a royalcommissioner had identified 31 people in the financeindustry or the steel industry for possible criminalcharges This would rightly be regarded as the sign ofan industry in crisis demanding urgent governmentintervention
Change wonrsquot be easy in an industry conditioned tothink that might is right Change which shifts powerfrom one unscrupulous group to another will not bereform As Grocon has discovered the first company toldquobuck the systemrdquo is liable to heavy-duty industrialpayback No one wants to be the first to change butchange is necessary in the national interest
In 2002 the Victorian construction industry aloneaccounted for 17 per cent of all days lost through strikesThe West Australian construction industry accountedfor another 8 per cent of the national strike tallyConstruction is a $40 billion a year industry comprisingnearly six per cent of GDP and employing nearly500000 Australians Due to over-manning demarcationdisputes and chronic stoppages labour productivity incommercial construction averages 13 per cent less thanin home building Plastering the same wall in the sameway costs 40 per cent more in a high rise building thanin a standard house Just raising labour productivity incommercial construction to the home building standard(let alone the 50 per cent increase needed to match NorthAmerican levels) would mean according to Econtech aone per cent drop in the cost of living a one per centincrease in GDP and $23 billion in benefits toconsumers workers and taxpayers every year
Still change is about decent Australian values notjust a more efficient industry Workers donrsquot like latenight house calls compulsory attendance at demos anddays spent sitting in the shed to make an industrial pointany more than bosses Threats of violence contempt forcourt and commission orders mob rampages when one
Restoring the Rule of Law in theConstruction Industry
Tony Abbott MHR
s
As this issue of the IPA Review was at the press we were alerted to the delivery of the following speechby the Minister for Employment and Workplace Relations The paper marks a seminal change in the
governmentrsquos approach to systemic corruption in the construction industry and isanother major step in the reform of workplace relations in Australia
SI-1MARCH 2003
IPA REVIEW SPECIAL INSERT
side doesnrsquot get its way habitual failure to honouragreements and routine harassment of people exercisingtheir legal rights are not acceptable in modern Australiaand cannot be excused even in a good cause
Breaching ldquobourgeois lawrdquo may not matter tomilitant activists but few others take such a self-indulgent view Itrsquos said that ldquooppositions can afford tobe irresponsiblerdquo but no government or alternativegovernment can accept the principle of optionalobedience to the law of the land No less than the HowardGovernment the federal Labor Opposition and the stateLabor Governments understand the dangers of playingpolitics with the rule of lawmdasheven theauthority of laws they might preferto change such as the federal WorkplaceRelations Act
The rule of law is not asmorgasbord from which a fewfavoured items can be chosen and therest ignored Freedom under the lawrequires respect for the law generallynot just the laws individualspersonally support Obedience to thelaw is not a question of choice It is arequirement of civilisation because thelaw is our guarantee of equaltreatment after a fair hearing ldquoBe youever so high the law is above yourdquoThis reproach hurled at the Stuartkings has rightly echoed through thecenturies as a warning against theconceits of office and the arrogance ofpower regardless of the cause in whichitrsquos exercised
After last weekrsquos meeting of theWorkplace Relations MinisterialCouncil of the Council of Australian Governments stateand territory ministers were keen to declare in acommuniqueacute ldquothere was unanimous agreement thatunlawful behaviour in the building and constructionindustry is not acceptablerdquo This was an importantaffirmation of the rule of law in circumstances wheresome Labor ministers might have been tempted to putpolitics ahead of principle
Unfortunately the state and territory ministerssupported more powers for the Australian IndustrialRelations Commission to settle construction industrydisputes In fact the Commission already has power tosettle disputes Whatrsquos missing is effective power toenforce agreements The issue is not settling disputesThe issue is enforcing the law
The construction industry typically conducts itselflike this A certified agreement is in place including anagreed dispute resolution procedure Unions identify agrievance often a spurious safety issue Agreed disputeprocedures are not followed and a strike ensues eventhough strikes outside ldquobargaining periodsrdquo areldquounprotectedrdquo and theoretically subject to damagesorders At that point employers often ask theCommission to end industrial action but instead ofordering an immediate return to work because anagreement has been breached the Commission willtypically seek to conciliate on the basis of the ldquomeritsrdquo
of the issue After a couple of dayswith costs escalating and liquidateddamages looming the employerinvariably agrees to rectify the matteralleged and to pay increasedallowances (including pay for days onstrike) At this point the Commissionorders a return to work on the basisof the agreed settlementmdashwhich lastsonly until the union decides on itsnext move
The union has ignored the law andbroken its original agreement buttypically suffers no adverseconsequences whatsoever Theemployer has been manoeuvred intoconceding most of a demand thatshould never have been made Afaccedilade of legality conceals a travestyof unionism and a travesty of justiceNearly all construction industrystrikes are unprotected and potentiallyunlawful under section 170MN of theWorkplace Relations Act Even so
employers nearly always opt to pass the costs ontoconsumers while existing arrangements for gatheringinformation launching prosecutions and imposing finesdonrsquot work well anywhere but hardly work at all in anindustry where giving evidence against the unions isthought to mean commercial suicide
The construction industry is a classic case not ofmarket failure but of regulatory failure The fact thatthe construction industry does not face potential importcompetition limits its exposure to market discipline Stillthe main reason why unions can get what they want frombusiness and business can get what it needs from haplessconsumers is the absence of independent policing andenforcement of the industrial equivalent of fair tradinglaws To an extraordinary degree in this industry the
SI-2 MARCH 2003
IPA REVIEW SPECIAL INSERT
The rule of law is nota smorgasbord from
which a few favoureditems can be chosenand the rest ignoredFreedom under thelaw requires respectfor the law generally
not just thelaws individuals
personally support
request documents but they canrsquot compel witnesses toanswer or demand that material be produced Althoughit is a criminal offence under the Workplace Relations Actto hinder workplace inspectors the Cole report notedthat no prosecutions have yet been launched despiteevidence that Office of the Employment Advocateinspectors have been abused had objects thrown at themand their property damaged It has been commonpractice for the arrival of OEA inspectors to lead to workstoppages and even site invasions in a bid to thwart anddemoralise an independent investigator not susceptibleto the unionrsquos usual weapon of commercial retaliation
One of the problems with theworkplace relations system is theassumption that parties will enforcethe law against each other This worksup to a point in industries whereworkplace parties are more-or-lessevenly matched and the issues are theworkplace equivalent of an argumentbetween neighbours over the heightof a fence It completely breaks downwhen one side has an effectivemonopoly over the supply of labourand disputes resemble a more-or-lessnormal family telling the house fullof footballers next door that the partyrsquosover Expecting contractors to enforcethe law against the CFMEU is likeexpecting people in the street to makecitizenrsquos arrests hence Colersquos principalrecommendations are an AustralianBuilding and ConstructionCommission to investigate prosecuteand enforce the provisions of a beefed-up industry specific workplace
relations actYesterday Cabinet decided to support Colersquos key
recommendations First the Government will seek aseparate act governing workplace relations in theconstruction industry providing for secret ballots beforestrikes compulsory cooling off periods after extendedstrikes and damages awards in the event of unprotectedindustrial action Second the Government will establisha new law enforcement agency for the industry withpowers to compel witnesses to testify bring prosecutionsand enforce judgments and with sufficient on-the-ground presence to police CBD building sites Thirdthe Government will establish a Safety Commissionerto monitor federally-funded construction sites to try toensure that these become industry models Fourth the
s
commissions lack sufficient power the courts lacksufficient speed the employment advocate lacks sufficientauthority and the police lack sufficient interest
Not before time the Cole Commission has acted as agiant searchlight probing the dark underside of thispotentially great Australian industry It confirmed whatpolicy makers had long suspected and what influentialinsiders knew but had always tried to deny or explainaway that the industry operates under the rule of thejungle and that there will be no improvement until thepeople who work in it understand that the law has to betaken seriously Legislative institutional and structuralchange will start to mean somethingwhen law breakers in this industry arecharged convicted and punished likelaw breakers everywhere else A fewsalutary bars of that old song need towaft over construction sites ldquoI foughtthe law and the law wonrdquo
Late last year in response to theRoyal Commissionrsquos first report thefederal Government set up theBuilding and Construction IndustryInterim Task Force The Governmentrsquosbrief to the Task Force is to ensure zerotolerance of industrial law-breakingThe Task Force is not primarily toenforce the tax laws or the safety rulesbecause other bodies exist for this(although the Task Force will certainlyshare information with them) TheTask Force is to investigate and enforceWorkplace Relations Act prohibitions oncoercion unprotected strikes strikepay and breach of industrialagreements So far the Task Force hasvisited nearly 300 sites launched more than 50investigations brought three prosecutions and referrednine other matters to state police the Australian FederalPolice or the Australian Competition and ConsumerCommission for further action
These are the first public prosecutions arising out ofindustrial action in the construction industry at leastsince the 1980s and are the result of a public policycommitment to law enforcement not seen since thehumiliating Clarrie OrsquoShea case in 1969 and the end ofldquopenal sanctionsrdquo Yesterday Cabinet decided to extendthe interim Task Forcersquos operations until more permanentarrangements to secure the rule of law can be established
Task Force agents have the powers of inspectors underthe Workplace Relations Act They can enter premises and
SI-3MARCH 2003
IPA REVIEW SPECIAL INSERT
The main reason whyunions can get what
they want frombusiness and businesscan get what it needs
from haplessconsumers is theabsence of inde-
pendent policing andenforcement of the
industrial equivalent offair trading laws
API
Government will insist on the application of theNational Construction Code and implementationguidelines to all significant new projects which are fullyor partly federally funded
Directly or indirectly the federal Government fundsabout $5 billion worth of construction projects everyyear and is determined to use its role as client to drivechange in the industry In essence the NationalConstruction Code stipulates that construction projectsmust take place in conformity with the WorkplaceRelations Act Under the Code and implementationguidelines the federal Governmentwill not engage tenderers whoseworkplace agreements and practicesensure a closed shop on site The TaskForce (and any replacement body) willhave full access to federally fundedsites to ensure that the law is beingobserved and workplace agreementscomplied with
For the federal Government theissue is upholding the law and tryingto tackle the ldquounion rulesrdquo culturewhich is at the heart of lawlessness inthe industry For the states the issueis whether they are prepared to refusefederal money in order to protect theclosed shop However much theymight prefer different federal laws thestates ought to accept thatconstruction projects have to complywith the law as it stands includingthe law mandating compliance withcertified agreements
State Labor governments whichhave made a point of their middle-ground credentials risk losing some$4 billion a year in federal building and constructiongrants if they side with the union movementrsquos mostmilitant minority There are likely to be limits to Laborrsquosdefence of a union whose stock-in-trade (at least in somestates) is the site invasion and the demand for paymentand which quietly reinstates organisers sacked for assaultor perjury Opposition senators will find it hard to brandas ldquoideologicalrdquo the recommendations of a royalcommission which spent 171 days in public hearingsand which pursued 11 shop stewards and 97 unionofficials to obtain their side of the argument
As Justice Cole pointed out in his report previousattempts to reform the industry have proven ineffectivedespite two earlier royal commissions and numerous
SI-4 MARCH 2003
IPA REVIEW SPECIAL INSERT
enquiries Although this Royal Commissionrsquosinvestigations seem to have temporarily checkedlawlessness in the industry a campaign is now emergingto extend the anarchic culture of CBD construction intoregional centres and the domestic housing industryThings will certainly be different this time if parliamentapproves a permanent well resourced watchdog withnew powers new personnel and new attitudes Unlikeprevious arrangements a new statutory watchdog withthe powers of a law enforcement agency should beeffective and permanent
Hundreds of people took big riskswith their commercial future and eventheir personal security to testify to theRoyal Commission It should neveragain be so hard for people in thisindustry to exercise their ordinaryrights and responsibilities asAustralian citizens They expected theGovernment to take the Commissionrsquosreport seriously and the Governmentfor its part is determined not to letthem down The Governmentunderstands that joining fights yoursquorenot prepared to win only makes badsituations worse Establishing the ruleof law in the construction industry isa challenge Australia canrsquot afford tofailSome of the worldrsquos best workersshould no longer have to put up withsome of the worldrsquos worst industrialpractices They have a right to anhonest industry where they can earna fair dayrsquos pay for a fair dayrsquos workand expect to come home uninjuredThe enduring image of this industry
should not be noisy marchers replaying the ideologicalstruggles of the 1970s and raising clenched fists againstauthorities they donrsquot like At its best the Australianindustry is capable of work which is stunningly beautifulyet intensely practical and it now needs to performconsistently on time on budget and in accordance withlaw
Hundreds of peopletook big risks withtheir commercial
future and even theirpersonal security totestify to the Royal
Commission It shouldnever again be so
hard for people in thisindustry to exercisetheir ordinary rights
and responsibilities asAustralian citizens
NOTE
The foregoing speech was first delivered as an Addressto the National Press Club on 2 April 2003
21MARCH 2003
E V I E WR
IN psychology behaviouris defined as irrational ifan action continues to berepeated despite its re-
peated failure to achieve the desiredoutcome On this definition our aidpolicy towards Papua New Guineahas been irrational
Despite over twelve billion dol-lars in Australian aid to PNG sincethat countryrsquos independence in 1975key development indicators such asliteracy rates infant mortality lifeexpectancy and real income percapita are either stagnating or dete-riorating Worse wersquove known forover a decade1
Today acknowledgement of thefailure of our aid policy in PNG hasgone well beyond the writings of in-dividual international policy analystssuch as myself to institution-spon-sored reports such as Beyond Baliwhich was released by the AustralianStrategic Policy Institute (the Aus-tralian Governmentrsquos own strategicpolicy adviser) and Papua NewGuinea on the Brink which was writ-ten by Susan Windybank and MikeManning for the Centre for Indepen-dent Studies Both reports confirmthe gross failure of Australian aidpolicy in PNG
Yet still our aid policy irrational-ity towards Papua New Guinea con-tinues While the ASPI and CIS re-ports acknowledge the gross failureof our aid policy in PNG they alsoargue that we need to continue ouraid to that country Indeed the ASPIreport argues that we should increaseour aid to Papua New Guinea Thepolicy saviour The ASPI report ar-gues that we should exert greater con-trol over our aid Not just over theform of our aid but direct interven-tion in policy and implementation inPNGmdashin essence for a return to pre-
Aid Detox for PNGPETER URBAN
independence days in PNG whereas UN-sanctioned administrator weran government in that country
Despite the mind-frame of secu-rity-focused strategists such as thoseat ASPI and the CIS (which en-dorses the aid approach advocated byASPI) the reality is that we canrsquotPNG is now independent and to ig-nore this reality would simply com-pound the problems of our past aidpolicy irrationality with irrationalityabout our political relationship withour nearest neighbour
A more interventionist aid policytowards PNG on our part as advo-cated in Beyond Bali and by HughWhite (the executive director ofASPSI) in the media might havepopulist appeal but it would haveserious adverse implications for ourrelationship with other Pacific islandcountries and even IndonesiaWorse it would give succour to theviews of our east Asian critics (suchas Malaysian PM Dr Mahathir) whoclaim that Australia continues toharbour colonial aspirations
We have to accept that to be suc-cessful aid policy must not just helpreduce mass poverty it also has to doso as a guest in the aid recipientcountry To do otherwise is not aidbut imperialismmdashwhether inten-tional or not
A more interventionist approachto aid policy in PNG would also givethe current corrupt political elite inPort Moresby a rallying point againstus and an excuse to delay changingtheir own policies Neither Austra-lia nor PNG can afford any furtherdelays to policy reform For us to givePNG politicians yet another excuseto delay reform would be not onlyirrational it would be inexcusableWhile our aid continues so will thecorrupt elite that is at the heart ofPNGrsquos problems Until we send themessage to the PNG political elitethat we are prepared to stop ouraidmdashto put them on aid detoxmdashwewill continue to waste our aid in thecorruption that is PNG politics Itmay be hard to accept but the sadreality we face in PNG is that no aidmay prove to be good aid at least inthe short to medium-term2
NOTES
1 Peter Urban lsquoOne Clear ObjectiveNo Clear Approachrsquo IPA Review1997 Vol 50 No 1
2 With Iraq also likely to require verysignificant Australian aid fundingover the next few years the Gov-ernment will need to review our aidprogram as part of the 2003-04 fed-eral Budget A decision to suspendaid to PNG could be taken as partof that review
Peter Urban is former chief economist with theDepartment of Foreign Affairs and Trade
We have to accept
that to be successful
aid policy must not
just help reduce
mass poverty it also
has to do so as a
guest in the aid
recipient country
API
22 MARCH 2003
E V I E WR
IN his speech to the Na-tional Press Club on theprospect of war with Iraqand the case for disarma-
ment Prime Minister Howard statedthat Australia will play a significant hu-manitarian role in Iraq
If so the Howard Government needsto evaluate carefully the foreign-aid non-government organizations (FANGOs)which it funds to carry-out this humani-tarian programme Many FANGOshave made it clear that they do not sharethe Australian Governmentrsquos objectivesand values in Iraq Moreover some donot agree with the Governmentrsquos over-all aid policies in general
THE COALITION OF THEUNWILLINGIn the lead-up to latest Gulf War some30 Australian aid agencies put theirnames to an Open Letter to the PrimeMinister organized by the AustralianCouncil of Foreign and Overseas Aid(ACFOA) The aim of the letter was tolsquospeak out against war in Iraqrsquo and it ex-pressed grave concerns about the hu-manitarian consequences of the war andthe effects of the existing sanctions1 TheFANGOs that signed the letter wereOxfam Community Aid Abroad WorldVision Australia TEAR AustraliaUnion Aid Australia - APHEDACaritas Australia National Council ofChurches Australian Council for For-eign and Overseas Aid Save the Chil-dren Australia CARE Australia OzGreen United Nations Association ofAustralia Family Planning AustraliaMercy Works Marist Mission CentreAustralia Every Home for Christ Bap-tist World Aid for Christ CCF Austra-lia Quaker Service Australia Austra-lian Lutheran World Service AustralianRelief and Mercy Services AnglicanBoard of Mission AUSTCARE Com-munity Development and Health
Irreconcilable DifferencesDON DrsquoCRUZ
Hussein have been virtually ignored isa searing indictment of the warped ide-ology feeble analysis and moral blind-ness of the sector For them now to re-discover the plight of the Iraqi peopleand to invoke their name in the mediais beyond contempt
THE OXFAM COMMUNITYAID ABROAD POSITIONOf the 30 FANGO signatories to theopen letter Oxfam Community AidAbroad (OCAA) has been perhaps themost outspoken It opposed military ac-tionmdasheven with UN Security Councilapproval4 In spite of all the evidence tothe contrary OCAA was comfortablewith Saddam Husseinrsquos assurances thathe did not have weapons of mass destruc-tion5 Adopting the common policyagreed to by the other Oxfam affiliatesOCAA stated that it will not take anymoney from the lsquobelligerentsrsquomdasha quaintterm used to the describe democraticnations planning to disarm a dictatorguilty of countless human rights abuses
OCAArsquos outrage against the so-called lsquobelligerentsrsquo appears to be geo-graphically confined to Iraq OCAAappears happy to take governmentmoney from the belligerents elsewherearound the world
According to OCAArsquos ExecutiveDirector Andrew Hewitt refusing totake money from the belligerents wasdone to lsquoprotect its impartialityrsquo6 Thisis a very curious position from Australiarsquosarguably most political FANGOOCAA has a long track-record of beinganything but impartial or reluctant totake sides in miliary action It wasnrsquotimpartial in East Timor where it sidedwith Fretlin in its quest for indepen-dence According to its own testimonyto a Senate committee OCAA wasgiven the choice by the IndonesianGovernment between lsquoplaying politicsrsquoor delivering aid projects in Indonesia7
Group Amnesty International Austra-lia AngliCORD Australian Aid forCambodia Fund Burnet InstituteRedR Friends of the Earth PLAN Aus-tralia and Australian Volunteers Inter-national2
This open letter highlighted a num-ber of problems with the FANGOs sec-tor First it highlighted the weak logicthat passes for advocacy in the sectorThe letter argued against military actionwas critical of sanctions and suggestedthat nations should settle issues only bydiplomatic means It is a viewpointwhich totally ignores the fact that theGovernment had to deal with SaddamHussein
The shallowness of their logic wasbest exposed by the Prime Minister inhis response to the open letter in whichhe stated that the humanitarian situa-tion in Iraq is best addressed by SaddamHusseinrsquos removal and perhaps morepointedly that Saddamrsquos manipulationof foreign aid had allowed him to main-tain and pursue his weapons of mass de-struction capability and human rightsabuses3
Second it also highlighted the factthat the so-called lsquohuman rights-basedapproachrsquo to development (embraced byseveral of the signatories) is not so muchabout realizing human rights (as its pro-ponents argue) but is more about pro-viding them with an excuse to lsquoplay poli-ticsrsquo According to the theory the hu-man rights-based approach to develop-ment allows FANGOs to tackle the rootcauses of poverty and injustice
Yet the root cause of the Iraqipeoplersquos suffering can be summed up intwo simple wordsmdashSaddam HusseinThe fact that the FANGOs who sub-scribe to this particular approach havebeen obsessed with imaginary humanrights abuses committed by Shell NikeRio Tinto BHP-Billiton and AuroraGold while the activities of Saddam
23MARCH 2003
E V I E WR
It chose the former thus making it per-sona non grata in Indonesia for almost adecade8 It wasnrsquot impartial inMozambique when it sided with Frelimoin the countryrsquos civil war9 It wasnrsquot im-partial in Ethiopia when it developedlinks to the Eritrean Peoplersquos LiberationFront during its war against the thengovernment10 It was not impartial oranti-war when it sided with the TigrayPeoplersquos Liberation Front in the neigh-bouring province to Eritrea when thatgroup was waging a guerrilla war againstthe government11 And recently therehave been claims that in the Middle Eastit was little more than an lsquoeager propa-gandistrsquo for the Palestinians12
In East Timor Ethiopia and Mozam-bique OCAA was linked with organi-zations which supported direct militaryaction that led to the deaths of thou-sands of civilians In none of these loca-tions were the enemies of their friendany worse than Saddam Hussein In-deed in many cases OCAArsquos friendswere arguably no better than their en-emies in terms of human rights
OCAArsquos decision not to accept Aus-tralian Government funding is the cor-rect one in the sense that it clearly doesnot share the Governmentrsquos values onthe question of Iraq and thereforeshouldnrsquot receive any governmentmoney
Hewitt went on to state in a pressrelease that lsquoWe will not take funds thatmight allow a government to use hu-manitarian efforts as an instrument offoreign policyhelliprsquo13
This is finemdashexcept the AustralianGovernmentrsquos foreign aid is an instru-ment of foreign policy And it always hasbeen This is spelt out quite clearly inthe Australian Governmentrsquos latest for-eign and trade policy White Paper Ad-vancing the National Interest14
FANGOs that cannot accept thisrather basic proposition should not begetting taxpayersrsquo money They areclearly unsuitable for the task at hand
The consequences of Australian tax-payersrsquo money falling into the wronghands were brought home to Prime Min-ister Howard when he met IndonesianPresident Megawati Sukarnoputri to dis-cuss the war against terrorism and
Australiarsquos involvement against Iraq Atthe top of the Indonesian agenda wasthe issue of Australian funding toFANGOs being used to support sepa-ratist movements in Indonesia15
Post-war Iraq will be a better placewithout Saddam Hussein and his thugsThis does not mean that it will be a safeplace or necessarily a stable place Afterall one of the reasons for Western tol-eration of Saddam Hussein for manyyears was his ability to hold the various
ethnic minorities in Iraq together albeitrather brutally thereby maintaining abalance of power in the Middle East Hisdeparture would see strains on Iraq fromthe various ethnic minorities that makeup Iraq There is a strong chance thatIraq will fragment
The last thing the Australian Gov-ernment or any of the so-called belli-gerents needs in a post-war Iraq is west-ern NGOs running around and becom-ing self-styled advocates for national self-determination for Iraqrsquos ethnic minori-ties and injecting themselves into Iraqrsquosinternal politics This is a real risk Thebehaviour of Australian foreign aidNGOs in Indonesia should make Aus-tralian decision-makers extremely waryof funding any NGOs with Australiantaxpayersrsquo money so that they can oper-ate in Iraq
As things stand now FANGOs facevery few restrictions on their actionsfrom government If they undertake ac-tivity that is inconsistent with being anagent of government they may losefunding for specific projects or in moredramatic circumstances lose funding ina country Nonetheless they are gener-
ally able to access Australian Govern-ment funding for other projects andcountries In other words the penaltiesfor becoming caught up in political ac-tivities are very light for NGOs and posethem no serious problems
Foreign aid NGOs that lsquoplay politicsrsquoare unsuitable contractors for the deliv-ery of aid That these overtly politicalorganizations have been allowed to gaingovernment accreditation and receivegovernment funding points to some se-rious problems at AusAID Australiarsquosofficial aid agency The time has comefor this to change
NOTES1 httpwwwacfoaasnaumedia_releases
2003_releases26_3_03PDF2 httpwwwacfoaasnauemergencies
openletterPDF3 httpwwwacfoaasnauemergencies
iraq_responsehtm4 Oxfam Horizons Vol 3 No 1 (Febru-
ary 2003) page 25 Oxfam Community Aid Abroad lsquoIraq
Overviewrsquo February 20036 Hewitt quoted in Liz Gooch lsquoOxfam
wersquoll say no cashrsquo The Age 16 March2003
7 Community Aid Abroad Submission tothe Senate Foreign Affairs Defence andTrade References Committee Inquiryinto East Timor Downloaded at httpwwwcaaorg aucampaignssubmissionstimorhtml
8 Ibid9 Susan Blackburn Practical Visionaries A
Study of Community Aid Abroad (Mel-bourne Melbourne University Press1993) page 313
10 Ibid pages 325-333 passim11 Ibid12 Gerald Steinberg lsquoPropaganda vs Hu-
manitarianismrsquo Australian Financial Re-view 7 June 2002 Downloaded at httpfacultybiuacil~steingconflictopedpropvshumanitarianismhtm
13 ht tp wwwcaa o rg au p r 2003 iraqfundshtml
14 httpwwwdfatgovauani15 Dennis Shanahan lsquoJakarta fears aid funds
for rebellionrsquo The Australian 17 Febru-ary 2003 page 2
Don DrsquoCruz is Research Fellow at the IPAand Director of IPArsquos NGOWatch
OCAA has a longtrack-record of
being anything butimpartial or
reluctant to takesides in miliary
action
API
24 MARCH 2003
E V I E WR
GEORGE Bush Tony Blairand John Howard haveprovided many reasons forsupporting military action
against Iraq One of those reasons hasbecome known as the lsquohumanitarianrsquojustification Put simply the lsquohu-manitarianrsquo justification for the US-led invasion of Iraq is that such ac-tion is necessary to free the Iraqipeople from their totalitariandictator
Such an argument is attractive tothose who believe that there aresome fundamental human rights thatall individuals possess regardless ofwhere and how they live Whatserves as the source of those rightshas been the subject of debate forcenturies One of the pre-eminentstatements on the subject was madeby John Locke who in The SecondTreatise of Government wrote thatmankind was lsquoequal and indepen-dentrsquo and that lsquono-one ought to harmanother in his life health liberty orpossessionsrsquo
Saddam Husseinrsquos mass murdertorture and terror are reasonablyclear breaches of human rightsTherefore some would ask why thereshould be opposition to the UnitedStates and its allies taking whatevermeasures might be necessary totopple the Iraqi regime Surely thesame standard of behaviour that ap-plies to individuals applies also tonation states If an individual walk-ing in the street witnessed a rapeoccurring wouldnrsquot that individualbe entitled to do everything in hispower to stop the crime and assistthe victim
The point is of course that in-ternational law and convention do
After IraqIs Sovereignty Dead
JOHN ROSKAM
not allow nation states to act in thesame way as individuals Countriescannot simply lsquotake the law into theirown handsrsquo To restrain lsquovigilantestatesrsquo (who might be acting fromeither lsquogoodrsquo or lsquobadrsquo motives) a num-ber of legal and political theorieshave been developed One of theseis the doctrine of lsquosovereigntyrsquo whichprovides that states should not inter-vene in the domestic affairs of otherstates
In relation to Iraq the lsquosover-eigntyrsquo question is perhaps the stron-gest argument against the US-ledCoalition Most of the other criti-cisms of lsquohumanitarianrsquo interventionin Iraq are either grounded in simpleanti-Americanism or are fallaciousFor example there is the claim thatbecause some of the countries in theCoalition have previously ignoredHusseinrsquos cruelties therefore it is il-legitimate to take action now Sucha view has been expressed by aMelbourne international relationsacademic
While there is no disputing thebrutal nature of Saddam Hus-seinrsquos regime the case for inter-vention made by those in Can-berra London and Washingtonis weakened by the fact that atthe peak of Saddamrsquos crimes inthe late 1980s they were eitherdirectly supporting him withweapons technology and intelli-gence or were entirely indifferentto his behaviour Even if theyhave belatedly recognised theerror of their ways how seriouslycan we take their concerns aboutweapons of mass destruction nowgiven they were his suppliersthen1
On the basis of this argument itcould be said that Britainrsquos (andAustraliarsquos) case for intervening toassist Poland upon the German in-vasion in 1939 was lsquoweakenedrsquo be-cause Britain had previously acqui-esced to Germanyrsquos rearmament theremilitarization of the Rhinelandand the annexation of both Austriaand parts of Czechoslovakia Fewpeople who chanted lsquoFreedom forEast Timorrsquo said that the HowardGovernment should not act becausea quarter of a century before theWhitlam Government had been lsquoin-differentrsquo to Indonesiarsquos occupationof the island
There is also the claim that al-though Hussein is bad he is not theworst dictator in the world and thatit is hypocritical for the Americansto attack only Iraq This is an as-tounding proposition It attempts toapply to the United States a standardof behaviour that is impossible to sat-isfy Should the police not attemptto solve any crimes because theycanrsquot solve all crimes If a crime iscommitted by two people and thepolice arrest one perpetrator unlessthe other is also caught must the firstperpetrator be released When indi-viduals donate money for famine re-lief in Africa very few believe thattheir donation is pointless becauseit might prevent the starvation ofonly one person rather than thou-sands Christian ethics sets down norequirement that we should help no-one unless we can help everyone
The issue about state sovereigntyhowever is one that deserves to betaken seriously Regardless of onersquosopinions on the extent and limits ofstate sovereignty it is true that our
25MARCH 2003
E V I E WR
international relations system is builtupon the principle and to modify oroverturn it is a matter of some con-sequence
Even those who are generally sup-portive of the United States andtheir allies see the problem As it wasput by a leading commentator whenanalysing the Australian PrimeMinisterrsquos lsquohumanitarianrsquo justifica-tion for war
Finally Howardrsquos argumentagainst Hussein on human rightsis correct So is his moral case forwanting to liberate the Iraqipeople from their torment Theproblem however is that youcanrsquot trip around the worldwanting to overthrow regimesbecause of human rights2
Some would askmdashlsquowhy notrsquo Be-cause to do so would overthrow theUnited Nations Charter comes therejoinder And in turn the responseto that might bemdashlsquogoodrsquo
If itrsquos a choice between the main-tenance of the UN Charter and free-dom from tyranny freedom wins ev-ery time (although an internationallawyer sitting in Sydney might havea different view on this question fromthat of a political prisoner manacledin a Baghdad jail cell)
When the interests of lsquointerna-tional lawrsquo are more important thanthe life and liberty of individuals itcould be concluded that lsquothe Em-peror has no clothesrsquo Would inter-national law have sanctioned inter-vention to stop the Holocaust hadHitler not waged war and proceededwith his methods entirely within theconfines of the German territorialstate
Many who argue that lsquohumanitar-ianrsquo intervention in Iraq is not justi-fied because it infringes on thatcountryrsquos lsquosovereigntyrsquo would happilyhave other countries cede their po-litical sovereignty to supra-nationalbodies Certain features of the Inter-national Criminal Court overridethe principles of sovereignty but thatdid not stop a phalanx of interna-tional law experts urging sovereigngovernments to join it so as to en-
able the prosecution of war criminalsBut when it comes to actually stop-ping war crimes not simply prosecut-ing them that phalanx is largely si-lent
Without the doctrine of state sov-ereignty and without an arbiter fordetermining when interference withthe principle is justified (the roleclaimed by the United Nations andits Security Council) it is said thatstates would be free to impose theirown will and intervene in other
countries whose standards did notmeet their own (In The Second Trea-tise of Government Locke argued thata characteristic of a lsquostate of warrsquo be-tween individuals was the absence ofa superior authority to adjudicatedisputes and prevent individualsfrom administering justice them-selves)
Iraq might be claimed as a rea-sonably clear-cut case for interven-tion but other situations are notlikely to be as simple In Culture andEquality first published in 2001Brian Barry explored a lsquoliberalrsquo per-spective on this question
The liberal position is clearNobody anywhere in the worldshould be denied liberal pro-tections against injustice andoppression However in exactlythe same way as liberals arepragmatic about what liberalismmeans in terms of boundaries sohere the move from principle tointervention has to be mediated bypractical considerationshellip
[L]iberals are not so simple-mindedas to imagine that the answer toall violations of liberal rights is tosend in the Marines or even aUnited Nations force As in anyjust war theory there must be somedoctrine of lsquoproportionalityrsquohellip[S]carcely anybody would be infavour of the western powersinvading Saudi Arabia so at to sortout the way in which it lsquounjustlydenies political rights to women ornon-Muslimsrsquomdashaccording to theirliberal idea of justicersquo3
The question remainsmdashafterIraq what remains of lsquostate sover-eigntyrsquo Should the doctrine applyonly to lsquoliberal democraticrsquo statesSuch a solution might be attractiveto some lsquoliberalsrsquo but it doesnrsquot avoidthe problem of what exactly a lsquolib-eral democraticrsquo state is
One irony arising from the argu-ments about the war in Iraq is thatmany of those who have urged astrict application of lsquostate sover-eigntyrsquo principles in the past havegenerally supported the US-led in-tervention while those who havebeen willing to abridge or even aban-don the doctrine have had to rely onit to counter the lsquohumanitarianrsquo jus-tification for war
There are not many certaintiesabout the nature of the world afterthe war in Iraq but it can be saidwith some assurance that one defi-nite outcome is going to be a morevigorous debate about state sover-eignty
NOTES1 Scott Burchill lsquoThe humanitar-
ian arguments for this war are spu-riousrsquo The Age 21 March 2003
2 Paul Kelly lsquoThe hapless per-suaderrsquo The Australian 15ndash16March 2003
3 Brian Barry Culture and Equal-ity An egalitarian critique ofmulticulturalism Harvard Uni-versity Press page 138
John Roskam is a Research Fellow with the IPA
The lsquosovereigntyrsquo
question is perhaps
the strongest
argument against
the US-led
Coalition
API
26 MARCH 2003
E V I E WR
Which Way for theDemocrats
The 2002 mid-term elections were adramatic victory for President GeorgeW Bush and the Republicans Insteadof the historical norm of the partycontrolling the White House losingBushrsquos party gained seats in the Sen-ate House Governorsrsquo races andState legislatures The result was abitter disappointment for the Demo-crats and has led to a fierce debatebetween the Left and Centrists aboutthe future policy direction of the partytowards the 2004 elections
The Leftrsquos analysis is that the ma-jority of Americans are natural Demo-crats Electoral defeat was due to thefailure to energize that base of Demo-crats The party failed to distinguishitself sufficiently from Bush and thusgive their voters a reason to turn outWhile the majority of Democrats op-posed Bush on tax cuts and the warwith Iraq a significant minority sup-ported him and campaigned on thatsupport The result the Left claimwas that the Democrats lacked a con-sistent message in contrast to Bush
Support for this argument can befound in the higher turnout amongstRepublicans than Democrats in 2002while in 2000 the combined vote forGore and Nader was 51 per cent Aninfluential book by John Judis andRuy Texeira identified lsquoThe Emerg-ing Democrat Majorityrsquo Theyclaimed that growing demographicgroups trended Democrat includingthe young socially liberal profession-als minorities and women
What policies would motivate thisnatural Democrat base The Left callfor rescinding the Bush tax cut a classwar against the corporate world amajor increase in lsquopublic investmentrsquoin schools childcare health care and
Letter from AmericaNIGEL ASHFORD
public transport and strong opposi-tion to the war
Centrists however have a verydifferent analysis of the Democratsrsquoproblems the public did not trustthem to pursue the war against ter-rorism vigorously to keep down taxesto spend their tax dollars wisely or toreflect their cultural values
A Gallup opinion poll found that57 per cent of Americans askedthought that the Democrats were nottough enough on the war on terror-ism while 64 per cent thought theRepublicans were There was the per-ception that the Democrats were notserious on the issue and just playingpolitics Evidence for this was the de-bate over the new Department ofHomeland Security blocked becausethe Democrats wanted to protectunion rights while the President de-manded more flexibility to deploy theworkforce Many voters saw the issueas the national interest versus a spe-cial interestmdashin this case that of theunions The Democrats were seen asputting the interests of one of theirmajor constituencies before nationalsecurity
The Democratic LeadershipCouncil in lsquoThe Road Aheadrsquo by AlFrom and Bruce Reed presented theCentrist case lsquoStop pretending wecan win a majority simply by energiz-ing our basersquo The Democrats were
not trusted on the war against terror-ism were hostile to the cultural con-cerns of many working-class Demo-crats on abortion and guns and stillseen as the tax-and-spend party lsquoToomany Americans donrsquot trust us tokeep their taxes down or to spendtheir money wellrsquo
The Centrist agenda is to stronglyprosecute the war against terrorismwhether against al-Qarsquoeda Saddam orothers and to abandon knee-jerk iso-lationism arising from the experienceof the Vietnam War to defend capi-talism and support small investorsagainst irresponsible managers to cutpayroll taxes and to downplay thecultural issues that divide Democrats
Which path will the Democratstake The Left is in the ascendancyMost of the remaining Democrats inoffice come from left-wing districtsNancy Pelosi a left-liberal from SanFrancisco was easily elected the newleader of the House Democrats over-whelming her Centrist opponent andrising star African-American HaroldFord The early field of presidentialcandidates for 2004 is dominated bythe Left tendency including SenatorJohn Kerry Representative DickGephardt Governor Howard DeanRev Al Sharpton former SenatorCarol Moseley-Braun and Represen-tative Dennis Kucinich Only Sena-tor Joe Lieberman and Senator JohnEdwards represent the Centrist wing
The future of US politics may de-pend on which road the Democratsdecide to take The US is currently alsquo50ndash50rsquo nation evenly balanced be-tween the parties A left turn couldlead to Republican dominance farinto the future
Dr Nigel Ashford is at the Institute of Humane Studiesat George Mason University and is co-author of US
Politics Today (Manchester University Press)
API
27MARCH 2003
E V I E WR
Trusting TonyFrankly itrsquos all just too depressing Theeconomyrsquos heading for trouble Busi-ness confidence is low investment in2002 was 92 per cent lower than theprevious year and manufacturing in-vestment was nearly 18 per cent downThe budget deficit is spiralling becauseour once lsquoprudentrsquo Chancellor (trea-surer) Gordon Brown made over-opti-mistic growth projections and startedthrowing money at problems
Therersquos a load of health-and-safetyand anti-discrimination measuresthatmdashto put it most politelymdashare ex-amples of letting the best be the en-emy of the good Every school tripneeds a formal risk assessment withthe result that many trips are simplynot taking place New trains orderedfor London commuter routes wonrsquothave toilets because the rules say thatat least one toilet in each four-car unitmust be wheelchair-accessible whichwould have cost ten or a dozen seatson every overcrowded train
Some of this is just insane Somelocal authorities say that safety at workrules mean that home-care workersmustnrsquot lift the disabled people theyare looking after Or therersquos rail safetyUntil recently we were seriously pro-posing to spend $10 billion on a bet-ter system to stop trains going throughred signals On average this would havesaved the lives of about three passen-gers every four years which is a lousybargain compared with other safety in-vestments Worse it would also havereduced the capacity of the networkby up to 15 per cent and forced morepeople onto the roads which are muchmore dangerous than even ourclapped-out railways The result was aprojected net increase of 13 to 21 deathsper year
Meanwhile in London the Cen-tral line of the Underground has been
Letter from LondonJOHN NURICK
API
closed for weeks after a train derailedwhen one of its motors fell off Therewere no deaths or major injuries in theaccidentmdashbut itrsquos a safe bet that someof the people who havenrsquot been ableto use the Central line have been in-jured or killed on the roads
What can one say If the authori-ties took the same attitude to the riskof fatal accidents in the health serviceevery hospital in the country wouldhave been closed for years
Despite all this the Conservativesare still hopeless Their leader IanDuncan Smith has a new wheezewhen a journalist asks him anythingdifficult he chortles merrily and saysitrsquos the most uninteresting questionimaginable and hersquos not going to wasteanyonersquos time by answering it His col-leagues have their knives out for him
Meanwhile in spite of the govern-mentrsquos problems with the economy andthe public services Tony Blair is grow-ing in stature having his waymdashandantagonising large sections of his ownparty in the process On several recentissues he has faced down the formi-dable Gordon Brown in a way that notlong ago was hard to imagine
Then he shocked everyone by com-ing out against having elected mem-bers in the reformed House of Lordswhen most voters want an all-elected
chamber and most MPs want a partly-elected one In the event Parliamentcouldnrsquot agree on any of the optionsfor reform so wersquore stuck with the sta-tus quomdashwhich is fine by Mr Blair
Then therersquos the war By the timeyou read this it may be over or we maystill be waiting or our lads may befighting Mr Blairrsquos strong line againstIraq has made him very unpopular Theanti-war march on 15 February was thebiggest demonstration London hasever seen A few days later 122 Labourbackbenchers voted against the gov-ernment and many more abstained
Mr Blair didnrsquot budge War is a se-rious thing he says lsquoBut in a situationsuch as this you have to do what youbelieve to be right because thatrsquos theprice of having responsibilityrsquo1
He has often been accused of gov-erning by focus group Certainly he hasseemed reluctant to antagonise anypowerful group That has clearlychanged In a sense his stand on Iraqmerely follows his action in sendingtroops to Sierra Leone and Kosovomdashbut it has stirred up far stronger domes-tic and international opposition
The irony is that now when he re-ally needs people to trust him wedonrsquot Even in the desperately seriousbusiness of justifying an unpopular warDowning Street canrsquot play it straightremember the dossier from lsquointelli-gence sourcesrsquo that turned out to belargely cribbed from a PhD thesis onthe Internet
NOTE1 The Guardian 1 March 2003
John Nurick is a management consultant based in theSouth of England From 1985 to 1990 he was
editorial director of the Australian Institute for PublicPolicy and later edited newsletters reporting on theUK Parliament and European Union institutions
28 MARCH 2003
E V I E WR
KEVIN DONNELLY
Private EducationEquals Public Good
When it comes to choosing be-tween government and non-gov-ernment schools Australian par-ents are lsquovoting with their feetrsquo Asshown by recent ABS figures(Schools Australia 2002) over thelast decade there has been a dra-matic increase in non-governmentschool enrolments
Approximately 30 per cent ofstudents now attend non-govern-ment schools compared with 22per cent in 1980 and 28 per centin 1990 Over the last decadewhile the number of governmentschools has fallen by 64 per centnon-government schools havegrown by 61 per cent
Of course not everybody valuesparentsrsquo right to choose and theAustralian Education Union(AEU) Labor governments andlsquoleft-wingrsquo academics in particularconsistently argue against non-government schools
One of the arguments put for-ward by those opposed to givingparents greater freedom of choiceis that government schools are bet-ter at promoting social cohesionand a strong sense of what KenBoston the ex-head of the NSWEducation Department terms lsquothebonds of civic friendshiprsquo
The assumption is that becausestudents attend non-governmentschools there will be greater socialdivisiveness and a breakdown inthe civic values needed to hold so-ciety together But there is no cred-ible evidence offered to support theclaim that government schools arebetter at promoting the commongood
In fact there is much to provethe opposite
First as anyone familiar withthe lsquoculture warsrsquo and politicallycorrect curricula will know insteadof government-controlled educa-tion promoting unity and cohe-sion it has led to public angst andparental complaints
Witness the very bitter debatein Queensland a year or two agowhen the government-mandatedStudies of Society and Environ-ment (SOSE) curriculum was in-troduced into schools Such was
the lsquoleft-wingrsquo bias in the curricu-lum in particular in the areas ofmulticulturalism and the environ-ment that many parents felt be-trayed
The Queensland debate is mir-rored by what is happening in theUnited States As noted by Ste-phen Arons in his book Short Routeto Chaos instead of promotingunity government control of thecurriculum leads to the opposite
What the school wars tell us isthat somehow we have been
Education Agenda
transforming a vital instrumentfor creating social cohesioninto a source of division andhostility that there is some-thing built into the structure ofpublic schooling that under-mines one of its most importantfunctionsAronrsquos argument that govern-
ment schools no longer transmit aviable sense of a common cultureor agreed civic values is reinforcedby another noted United Stateseducationalist Diane Ravitch
In a recent article in the jour-nal Education Next Ravitch be-moans the impact of cultural rela-tivism and the post-modern on theschool curriculum (where there areno commonly agreed values) andeven goes so far as to argue thatparents should be free to choosenon-government schools becausesuch schools have a better chanceof reflecting their values
In the current education sys-tem with the public schoolscommitted to multiculturalismbilingualism and other forms ofparticularism it is difficult toargue that parents should notbe able to choose schools thatmeet their cultural needsSecond if one accepts that lsquoso-
cial capitalrsquomdashthe networks volun-tary associations and civic bondsthat hold a community togethermdashis important for the health of ademocratic society then non-gov-ernment schools clearly have theadvantage
Unlike the government schoolsystem characterized by a heavy-handed centralized bureaucracyand teacher union control non-government schools are closer tothe communities they serve Bytheir very nature non-government
There is no credible
evidence offered to
support the claim
that government
schools are better
at promoting the
common good
29MARCH 2003
E V I E WR
ALAN MORAN
The lsquoRrsquo Files
Private propertyrights the key toachieving efficiency inrural water use
WATER IN AUSTRALIAWater has always been a definingissue in Australiarsquos prosperityAnd in recent decades irrigationhas grown rapidly Even so theproportion of Australia that is ir-rigated at two per cent of theland comprises a share that isamongst the lowest among OECDcountries Only Canada and therainiest countries New Zealandand the UK have lower sharesthat of the US is 11 per cent andin Japan it reaches 60 per cent
Modern agriculture is only 200years old in Australia and thoughin the first 100 years agriculturalproductivity was increased toequal that of anywhere in theworld gains continue to bemademdashoutput has doubled overthe past 50 years a growth thatcould not have taken place with-out a similar expansion of irriga-tion Irrigation in the MurrayndashDarling agricultural provincealone contributes $5 billion toAustralian agricultural outputand non-irrigated agriculture inthe region contributes a further $5billion This makes the areawhich comprises 14 per cent ofAustraliarsquos land mass responsiblefor a third of the nationrsquos $35 bil-lion agricultural output
Applying Property Rights to WaterMost of the uses of water involvechoices or compromisesmdashdrink-ing water versus irrigation versus
industrial and so on Some how-ever involve complementaritiesparticularly certain recreationaluses such as water sports that arefacilitated by storage and consis-tent availability
In many cases water will per-form sequential functionsmdashthesame water can be used and re-used for irrigation used for indus-trial cooling and finish as drink-ing water Water with differentsometimes competing productiveuses will be optimally used as longas two conditions are in placeThe first is that its ownership isclearly specified and the ownersrsquoobligations to other users (orclaims from other beneficiaries)are well understood The secondrequires each property right to betradable to enable acquisition bythose who value it most therebymaximizing its value
The rights specification andtherefore property ownership canrarely commence with a cleansheet of paper People acquire in-dividual rights to property ini-tially through a variety of routesOne of these is seizure of some-thing that was originally of littlevalue until it was acquired and im-proved Squatters assume rights inthis way However they are firstacquired they need to be tradableAPI
schools establish strong commu-nity networks and have a greaterreliance on the voluntary work ofparents
That non-government schoolsare more effective in this regard issupported by research into lsquoChar-ter schoolsrsquo in the United StatesAs noted by Chester Finn at theFordham Foundation giving localcommunities lsquoownershiprsquo overtheir school builds networks oftrust and reciprocity so vital forsocial cohesion
Social capital also relies on citi-zens being disciplined and orderedin their behaviour Selfishness vio-lent behaviour and rudeness act tofragment the community instead ofpromoting cohesion According toa number of Australian surveys itis here once again that non-gov-ernment schools are seen to bemore effective
As noted by the Centre for In-dependent Studies researcher Jen-nifer Buckingham in The Truthabout Private Schools in Australiawhen analysing why so many par-ents forsake the government schoolsystem
When comparing independentprivate schools with publicschools the major theme thatemerged was not differences inacademic standards and curri-culum but issues of disciplineand order The surveyed par-ents felt that the behaviour andattitudes of students in publicschools was unacceptablehellipAll accept that non-govern-
ment schools achieve better aca-demic results provide greater cur-riculum flexibility and save Aus-tralian taxpayers millions of dol-lars Equally as important is theargument that such schools streng-then Australiarsquos civic health andstock of lsquosocial capitalrsquo
Dr Kevin Donnelly is Director of EducationStrategies a Melbourne-based consulting group
E-mailkevindnetspacenetau
s
30 MARCH 2003
E V I E WR
and relatively inviolable Thisprovides the incentive for them tobe improved and for their ownersand others to search out ways inwhich the assets they representcan be used to provide increasedvalue or other benefits
If confidence in the exclusiv-ity an owner has over the prop-erty right is lost or was neverpresent the asset will be used lessproductively For example own-ers will milk them for their cur-rent-use value rather than trade-off present value for a future valuethat is less certain
Even without a total emascu-lation of individual rights (for ex-ample when title to the propertydepends on continuing govern-mental assent) lack of certaintybrings lower incomes and dimin-ished asset protection One out-come of this can be observed inthe MurrayndashDarling system Wa-ter rights on the Victorian side ofthe Murray are secure while thoseon the NSW side have been over-allocated and are subject to ad-ministrative discretion includinghaving a firm duration of only tenyears In Victoria high securitywater (available 95 per cent of thetime) comprises the great bulk ofentitlements In contrast in
NSW high security water is avail-able only 60-80 per cent of thetime The result is that farmers onthe Victorian side plant perennialcrops while those in NSW tendto focus on annual crops espe-cially rice
There are claims that Victoriarsquosmore robust property rights meanthat the State Government haslost lsquocapabilityrsquo to manage com-pared with NSW The flip side ofthis is the increased risk and as-sociated lower value of productionnorth of the Murray where prop-erty rights are attenuated Gov-ernments that give themselves in-creased capacity to direct produc-tion or to take individualrsquos prop-erty will need to accept lower lev-els of income and output
IRRIGATION ENVIRON-MENTAL BENEFITS AND SA-LINITY
The Types of IssuesIssues stemming from irrigationcomprise two types those impact-ing on the environment and thoseimpacting on private uses Theformer includes issues such as pre-venting loss of species ensuringthat certain sorts of species flourishand avoiding unattractive growths
such as blue-green algae which re-sult from fertilizer build-up
The second involves economicimpacts on different users
While environmental flows toensure species flourish are oftenhighlighted salinity is the mainfocus And while salinity has animpact on the environment itsimportance is in the conflict of in-terest between productive usersmdashthe complaint of lsquodamaged goodsrsquoby downstream users against thoseupstream
The MurrayndashDarling Basin Sa-linity Strategy 2001ndash2015 has es-timated that increased salinitybrings costs of $294 million perannum to the basin
Yet data on the salinity of theMurray Darling shows levels up-stream of South Australia arelower than they were in the early1980s and are only seriously abovethese levels as the river ap-proaches its mouth at the GoolwaBarrage
The Basin Salinity Manage-ment Strategy argues that progressachieved over the past decade willlsquobe cancelled within 20-50 yearsand median salinity levels wouldexceed the Australian DrinkingWater Guidelines for good waterquality within 50-100 yearsrsquo Thecause of this is said to be risinggroundwater tables due to land usechanges across the Basin
The disputes over salinizationare largely disputes between com-mercial parties Full specificationof rights and obligations will al-low these to be resolved as longas the impacts are measurabletheir causes identifiable and thevarious rights and obligations areknown and stable In this respecttechnology to measure salt in wa-ter and to trace increases to par-ticular locations is readily avail-able
Agreements about the alloca-tion of water rights between ju-risdictions and to the main irri-gation provinces have been inplace for over a century In the
Average Salinity in the River Murray (EC Units)1
3500
3000
2500
2000
1500
1000
500
0
January 2003
July 2002ndashJanuary 2003
July 1982ndashJanuary 2003
Hume D
am
Swan
Hill
Merbein
Morgan
Milang
Mening
ie
Goolw
a
Barra
ge
31MARCH 2003
E V I E WR
I
API
Musinghellipcase of the Murray the lsquocaprsquo onwater abstractions agreed betweenthe various jurisdictions in 1995largely validated agreements madeearly in the last century and be-fore Disturbing these agreementswould greatly undermine the trustin the sanctity of property rightsand seriously reduce agriculturalproductivity Hence increased al-locations for certain parties or forcertain uses (including environ-mental flows) would need to bepurchased at market prices
Developments in Australiaover recent decades have con-spired to make irrigation water farmore valuable This is exacer-bated by1 Activation of NSW lsquosleeperrsquo
and lsquodozerrsquo water rights as a re-sult of the increased scarcityvalue a change that bringseven greater pressure on theavailable supply
2 Increased scarcity leading tomeasures that more carefullyhusband the water Whilesome of these prevent evapo-ration loss and have thereforebrought a net increase in effec-tive availability others havereduced availability (these in-clude a more careful wateringwhich results in reduced run-off and re-use)
3 Increased capture of waterwithin the land on which itfalls once water is recognizedas scarce landowners will seekto ensure it does not leave theirland NSW and Victoria haveplaced limits (a strict 10 percent in NSW) of water fallingon property as entitlements ofthe owner Queensland has notyet enacted an equivalent tothis Such adaptations of thecommon law are essentialhowever if downstream usersare not to be expropriatedThere is likely to be constant
bickering over water rights espe-cially if State Governments seek toelevate sharing issues and to sanc-tify them with claims about promot-
Daniel Pipes in The New York Posthas a very cogent explanation forwhy the Left appears to be so happywith the likes of Osama bin Ladenand Saddam Hussein
To be clear about their attitudeshe quotes the renowned Germanelectronic music composer KarlHeinz Stockhausen who saidstraight after the attack on NewYork that it was lsquothe greatest workof art for the whole cosmosrsquo
As Pipes and many of us observedaily there is barely a bad word tosay about Saddam Hussein nor aniota of sympathy for thoseoppressed tortured and murderedby his reacutegime Instead they venttheir fury against the AmericanPresident and British Prime Minister
Why the nonchalancePipes draws our attention to Lee
Harris writing in a recent issue ofthe Hoover Institutionrsquos journalPolicy Review According to KarlMarxrsquos central thesis the demise ofcapitalism hangs on workersgrowing poorer over timemdashwhichof course did not happen Sorather than give up on cherishedexpectations of socialist revolutionHarris notes Marxists tweaked theirtheory and looked instead to theentire populations of poor countriesto carry out the revolution Classanalysis went out the windowreplaced by geography
The trouble is they have tooverlook militant Islamrsquos slightly un-socialist practicesmdashsuch as itsimposing religious law excludingwomen from the workplace andpersecuting atheists
As Pipes sums up September 11and the prospect of war againstSaddam Hussein have exposed theLeftrsquos political self-delusionintellectual bankruptcy and moralturpitude
The Loopy Leftby Andrew McIntyre
ing an improved environment Realsolutions require the issue be placedwithin a normal commercial frame-work which involves1 Clarifying the property rights2 Allowing water rights to be
fully detachable from propertyand able to be used howeverthe holder wishes subject toany damage this might imposeon others
3 Ensuring full rights to buy andsell the water
4 Defining rights so as not to re-duce the quality of other usersThis means ensuring that farm-ing practices that do not bringgreater salination than somestandard
5 Allowing rights holders tobank their water and ensureeven greater certaintyAllocating specific individual
ownership rights to water and al-lowing its trade is a well-foundedmeans of maximizing the usevalue It would also be likely tohave the beneficial side-effects ofreducing salinity and farm-basedpollutants caused by intensiveuse We should grasp such oppor-tunities But if the impending sa-linity problem is as great as someclaim other solutions might wellinclude buying out some allocatedirrigatorsrsquo rights However alter-natives may be to remove saltfrom the water by engineering so-lutions or simply to live withhigher salt
NOTE1 Human drinking water should
be less than 800 ECs (electri-cal conductivity one ECequals about 06 mglitre)while higher levels are accept-able for much farming activity
Dr Alan Moran is Director Deregulation Unitat the Institute of Public Affairs
32 MARCH 2003
E V I E WR
Reading FileDone
eral political systems worldwidehave consistently accretedpower to the centre often in theface of clear constitutional im-peratives to the contrary) Ifeared instead that a UN thathad been patently successful insomethingmdashanythingmdashmightbe granted greater powers to thepoint where it would kill truediversity and individualism (ortry to anyway) through inevi-table bureaucratic practices
Is such a fear unfounded Ap-parently not if many peopleshare the moral touchstone ofthe Opposition Leader SimonCrean He believes according tohis own words in Parliamentthat what the UN SecurityCouncil declares is moral whatit refuses is immoral
The latest manoeuvrings overIraq have therefore been heart-
ening It seems that the desiresof the powers small and largeto promote their own interestswill continue to hobble the UN
The problem with a unitedworld is that as the threateningimpasse over Iraq suggestedthere are very divergent viewsabout how that world ought tobe run on an international leveljust as there are at national and
sub-national levels The virtueof multi-layered levels of gov-ernments is that competing ju-risdictions give the individual adegree of choice
The greatest sin of totalitar-ian governments past and pres-ent is to deny their citizens theright to leave The greatest dan-ger that the United Nationsposes as far off as it now (hap-pily) seems is that leaving its ju-risdiction is for all practical pur-poses impossible
THE IMPASSE JUST PASSEDI listened to Prime MinisterHoward speaking to the motionbefore Parliament in relation tothe war It was a good speechbut neither he nor PresidentBush seems able to structure andlay out an argument with thestyle and content of BritishPrime Minister Blair His equi-valent speech before the BritishCommons provides a masterfulsummary of the reasons for thiswar and includes an immenselyreadable time-line of the utterineffectiveness of the UN pro-cesses in dealing with Iraq Henicely deals with allegations ofthe lsquorushrsquo to war lsquoOur fault hasnot been impatience The truth
UNITED OR DIVIDEDI write just hours after US Presi-dent George W Bush has deliv-ered his ultimatum to Iraqi Presi-dent Saddam Hussein leave Iraqwithin 48 hours or be removedBy the time this appears beforeyour eyes you will knowwhether Hussein has decided hischances of survival will be sig-nificantly greater by choosingexile or by remaining in IraqThe recent creation of the In-ternational Criminal Court ofcourse makes war more likelysince Hussein can have no guar-antee of a peaceful lsquoretirementrsquo
In the event that Hussein re-mains in Iraq you will also knowwhether Bush has kept his wordand most likely the outcome ofthis military venture
This matter is immensely im-portant for the people of Iraqand for the military personnelinvolved (including our ownAustralian soldiers sailors andaviators) But then so was theprevious Gulf War the US in-vasion of Grenada the Austra-lian intervention in East Timorand so on But a difference be-tween the current conflict andthose others could be the impactit has upon international insti-tutions Actually just one inter-national institution the UnitedNations
Prior to the first Gulf War Ifeared the coalitionrsquos success forthe reason that some of it mighthave rubbed off onto the UnitedNations I hasten to deny that Ifear the UN as some vast con-spiracy for world domination Ifeared instead that it couldstumble into a piecemeal cen-tralization of power (just as Fed-
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
E V I E WRs
33MARCH 2003
E V I E WR
Reading FileDone
ATTACKING THE GLOBALGOVERNORSThe Cato Institute is a whole-some body as demonstrated byits opposition to such interna-tional organizations as the Inter-national Criminal Court and forthat matter the United Nationsitself Ted Galen Carpenter forexample argues in lsquoPutting theUnited Nations on Noticersquo thatthe UN can and has done somemodest good occasionally It ishe says lsquoa good idea to have aplace where governments cangather to air grievancesrsquo But headds if it lsquoattempts to acquire ataxing authority [or] raise astanding armyrsquo then the USshould withdraw (as indeedshould Australia) Because thatwould turn it into an lsquoembryonicsuperstate that would menacelibertyrsquo
Go to
wwwcatoorgforeignpolicyunhtml
THE INTERNATIONALORGANIZATIONS THEM-SELVESThe United Nations has beenaccused of being often ineffec-tive and always slow Well ev-ery time Irsquove hit the UNrsquos Web-site even with my nifty broad-band Internet connection slow-ness rules Perhaps the site isbeing continually accessed bythe teeming masses Anyway goto
wwwunorg
With 15 members alreadyand 13 more on the way thereremain hopes that the EuropeanUnion will be a force for a stable
twenty-first century Equallywith 15 members already exhib-iting rather divergent views overthe issue of Iraq and most of theforthcoming members sidingwith the United States perhapsthis is overly hopeful Go to
europaeuintindex_enhtm
Then there is the WorldTrade Organization the organi-zation behind which protection-ist nations can hide from unilat-eral trade liberalization by pre-tending to support multilateraltrade liberalization Go to
wwwwtoorg
And we mustnrsquot forget the In-ternational Criminal Court fearof which was no doubt a featureof Saddam Husseinrsquos rejection ofexile as an option and the furyof which is promised by a num-ber of prominent lawyers to bevisited upon our very own PrimeMinister Go to
wwwicc-cpiint
FEEDBACKI would welcome advice fromreaders on any other sites of inter-est to IPA Review readers E-mailme on scdawsonbigpondnetau
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
is our patience should have beenexhausted weeks and monthsand years agorsquo
Go to
wwwnumber10govukoutputPage3294asp
THE STRUGGLE BETWEENTHE CONTINENTSIf you are patient you can readthat wonderful British rag TheSpectator for free Last weekrsquoscopy is available on-line One ofits regular columnists is MarkSteyn an Americo-phile Cana-dian who has a robust turn ofphrase and an abiding disdain formuch modern music (whichseems to place him very comfort-ably into The Spectatorrsquos culturalmatrix)
His piece on the future de-cline of Europe vis-agrave-vis Ame-rica makes for fascinating read-ing Go to
wwwspectatorcouk
then click on the lsquoBack Issuesrsquobutton and choose the edition of15 March 2003
E V I E WR
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
10 MARCH 2003
E V I E WR
ing sea levels rising and fallingland levels and changing climates
THE DAY BEFORE YESTER-DAYSome 120 million years ago Aus-tralia was at the South Pole en-joying a temperate climate Glo-bal sea level was more than 100metres higher than at present thesea surface temperature was 10ndash15˚ C higher than now and manycontinents were covered by shal-low tropical seas Planet Earthwas a warm wet greenhouseparadise and thick vegetationcovered the land masses Atmo-spheric CO2 was about 1 per centwhen the worldrsquos major coal de-posits formed 368 to 248 Ma
From 250 to 120 Ma the glo-bal CO2 content varied greatlyand increased to a peak 6 per centCO2 120 Ma This derived fromintense volcanic activity associ-ated with continental fragmenta-tion Thick vegetation coveredthe land masses
Australia started to pull awayfrom Antarctica at about 100 MaIt drifted northwards the TasmanSea opened and the IndianOcean opened with India start-ing to drift away from WesternAustralia The opening of theTasman Sea produced the rise ofthe Great Dividing Range thediversion of the major river sys-tems and changes to the climateof eastern Australia
A minor mass extinction oflife 90 million years ago was theresult of volcanoes in the Indianand Pacific Oceans belching outCO2 and other gases into theoceans and atmosphere Therewas a runaway greenhouse untilvolcanism waned But volcanicemissions of CO2 are common In1984 and 1986 burps of CO2 fromthe volcanic crater lakes ofMonoun and Nyos respectivelykilled thousands and added CO2to the atmosphere Near MtGambier volcanic CO2 is com-mercially extracted from rocks
one small hot spring on Miloscontributes 1 per cent of theplanetrsquos volcanic CO2 and hugequantities of CO2 the planetrsquossecond most common volcanicgas constantly leak from unseensubmarine volcanoes
Another minor mass extinc-tion at 55 Ma was caused by aCaribbean volcano There was arise in sea temperatures by up to8˚C for 100000 years and atmo-spheric CO2 was 10 times that oftoday During this greenhouseplankton sucked up the atmo-spheric CO2 mammals thrivedand life filled the vacated ecolo-gies Atmospheric CO2 decreasedfrom 3500 to 700 ppm within amillion years stayed low until 47Ma and went up and down toabout the present level (365ppm) at 40 Ma
India collided with Asia at 50Ma Uplift produced the TibetanPlateau which started to scrubCO2 out of the atmosphere TheTibetan plateau is still rising andCO2 is still being scrubbed out ofthe atmosphere The Drake Pas-sage opened as South Americadrifted from Antarctica a cir-cumpolar current developed andAntarctica refrigerated SouthernAustralia from 17 to 145 Mawas again tropical with mid-lati-tude temperatures 6˚C warmerthan today Atmospheric CO2was 180ndash290 ppm This green-house occurred when atmos-pheric CO2 was 30ndash50 per centlower than today
By 5 Ma Earth cooled andwas so cool that very slight orbitalwobbles now had a bearing on cli-mate and every 100000 yearswas characterized by 90000 yearsof glaciation and 10000 years ofinterglacial We are currently inone of those interglacial periods
The penultimate interglacialwas 120000 years ago Homoerectus Homo neanderthalensisand Homo sapiens coexisted sealevel was 6 metres higher than atpresent the planet was far
Millions of Years Ago
400 200600 0
2
4
6
8
10
12
14
16
18
20
0
Perc
enta
ge o
f CO
2
PrecambrianIce Age
s
Permian-CarboniferousIce Age
s
LastIce Age
s
There have been enormous changes incarbon dioxide (CO2) over time related to
volcanism sedimentation mountain-building and life on Earth
11MARCH 2003
E V I E WR
warmer and wetter than now andatmospheric CO2 was 78 per centof that today After warming theatmospheric CO2 and CH4 con-tent increased suggesting that at-mospheric temperature rise drivesan increase in atmospheric car-bon dioxide and methane con-tents During the history of thelatest glaciation armadas of icewere released into the sea every7000 years resulting from thephysical failure of thick icesheets These had a profound ef-fect on climate Small cool peri-ods occurred every 1100 to 1300years
The zenith of the last glacia-tion was 18000 years ago Sealevel was 130 metres lower thantoday temperature was 10ndash15˚Clower than today and the north-ern hemisphere was covered byice to 38˚N up to 3 kilometresthick
YESTERDAYThe northern polar ice sheetstarted to melt 14700 years agoThere were very rapid and majortemperature fluctuations sea lev-els rose and fell and the total sealevel rise over the last 14700years has been at least 130metres Sea level rise resulted inthe breaching of the Mediterra-nean into the Black Sea Basinsome 7600 years ago and is prob-ably the origin of the SumarianBabylonian and biblical stories ofa great flood
One of the consequences of amassive sea level rise over the last14700 years is that the WestAntarctic Ice Sheet was nolonger underpinned by the landTwo thirds of the West Antarc-tic Ice Sheet collapsed into theoceans and sea level rose 12metres The final third of theWest Antarctic Ice Sheet has yetto collapse to produce a 6 metresea level rise as part of the dy-namic post-glacial climate onEarth Climate changes inducedby changes in ocean currents
cooled North Africa grasslandschanged to a desert humans mi-grated and the great Mesopo-tamian cities were established
Sea levels were 1ndash3 metreshigher in a greenhouse 6000years ago There was 20 per centmore rainfall Cold dry periodsglacier expansion and crop fail-ures between 5800 and 4900years ago resulted in deforesta-tion flooding silting of irrigationchannels salinization and thecollapse of the Sumerian citystates Long periods of El Nintildeo-induced drought resulted in theabandonment of Middle EasternIndian and North Americantowns In 1470 BC () Thira ex-ploded weakened the dominantMinoans and changed the courseof western history
Global cooling from 1300 to500 BC gave rise to the advanceof glaciers migration invasionand famine Global warmingcommenced again at 500 BCthere was an excess of food andgreat empires such as the AshokaChrsquohin and the Romans grewContemporary records and Ro-man clothing shows that condi-tions were some 5˚C warmer thantoday
In 535 AD Krakatoa explodedas did Rabaul in 536 AD TheEarth passed through cometarydust in 536 AD The dusty atmo-sphere reflected heat and dark-ness prevailed As a result theclimate cooled and there wasfamine and warfare Changes inocean currents resulted in theMedieval Warm Period from 900to 1300 AD The first to feel thechange were the Vikings whowere able to navigate the north-ern waters colonized Newfound-land colonized Greenland andestablished extensive trade routesas far south as the modern GulfStates On Greenland crops weregrown and there were cattle Thiswould not be possible today Thewarmer wetter climate of Europeproduced excess crops and wealthwhich resulted in the building ofcastles cathedrals and monas-tries As with previous green-house events there was greatprosperity
In 1280 AD volcanic erup-tions on Iceland and a change inocean currents started the LittleIce Age which finished in 1920The North Sea froze in 1303 and1306ndash1307 there was massivefamine in 1315 and the plague
Sea
Surf
ace
Tem
pera
ture
degC
21
22
23
24
25
26
Years Ago
Large temperature changes over the last 200years have been recorded in history and fromthe oxygen isotopes of floating marine animals
Dark Agescold period
Medievalwarm period
LittleIce Age
2000 1500 1000 500 Now
s
12 MARCH 2003
E V I E WR
pandemic attacked the weakenedpopulation in 1347ndash1349 Therewas massive depopulation and ittook Europe 250 years to reachthe population of 1280 AD Dur-ing the Little Ice Age there werewarmer periods associated withsunspot activity During mini-mum sunspot activity (1440ndash1460 1687ndash1703 and 1808ndash1821) the intensely cold condi-tions were recorded by the Dutchmasters and King Henry VIII wasable to roast oxen on the frozenThames There were food short-ages Short cold periods occurredafter the eruptions of Tambora(1815) and Krakatoa (1883) re-spectively In fact 1816 wasknown as the lsquoyear without asummerrsquo This was the time whenTurner painted stormy oceansand skies full of volcanic dustMary Shelley wrote Frankensteinand Byron wrote Darkness
TODAYThe twentieth century and earlytwenty-first century AD are timesof natural post-glacial reboundIce sheets a rare phenomenon inthe history of time still exist Sealevel is relatively low as are glo-bal temperatures and atmos-pheric CO2 Between 1920 and1945 there was a period of warm-ing (037˚C) and another thatcommenced in 1976 (032˚C) In1976ndash1977 global temperaturesin the lower atmosphere jumped03˚C sea surface temperature inthe equatorial Pacific jumped06˚C sea surface temperatureduring upwelling increased 15 to3˚C but there was reduced up-welling the heat content of theupper 300 metres of the worldrsquosoceans increased there was in-creased wave activity in theNorth Sea and the length of theday changed The stepwise in-crease in temperature in 1976ndash1977 shows that there was a ma-jor re-ordering of the ocean heattransport coinciding with anorbital change expressed as a
change in the length of the dayMaybe the global warming of thetwentieth century is just a mea-sure of the variability on a dy-namic evolving planet
To put such measurementsinto perspective over the historyof time changes in atmospherictemperature in the twentieth
century can only be consideredsmall and slow A 24-year globalcoverage of satellite atmospheretemperatures shows only modestwarming in the Northern Hemi-sphere and a slight cooling in theSouthern Hemisphere Tempera-ture measurements from balloonsagree with the satellite measure-ments for the period of overlapBecause greenhouse warming is aphenomenon of the atmospheresignificant changes should havebeen recorded They have not
CONCLUSIONSUnderpinning the global warm-ing and climate change mantra isthe imputation that humans liveon a non-dynamic planet On allscales of observation and mea-surement sea level and climateare not constant Change is nor-mal and is driven by a large num- API
ber of natural forces Change canbe slow or very fast However wesee political slogans such as StopClimate Change or governmentpublications such as Living withClimate Change demonstratingthat both the community andgovernment believe that climatevariability and change are notnormal By using the past as thekey to the present we are facingthe next inevitable glaciationyet the climate economic politi-cal and social models of todayassess the impact of a very slightwarming and do not evaluate thehigher risk of yet another glacia-tion Geology archaeology andhistory show that during glacia-tion famine war depopulationand extinction are the norm
In 1831 Admiral Sir JamesRobert George Graham had theUnion Jack hoisted on a volca-nic land mass that suddenly ap-peared near Sicily It was calledGraham Bank and was claimed byEngland It was also claimed bythe Kingdom of the Two Sicilieswho called it Isola Ferdinandeathe French (LrsquoIsle Julia) andother powers In the subsequentdispute over ownership Franceand the Kingdom of the TwoSicilies almost came to war andEngland and the Two Kingdomsof Sicily had a diplomatic rowDuring the intense diplomaticdispute the island quietly slippedback underwater Graham Banksserves to show that whateverpolitical decisions we humansmake the land rises and falls sealevels rise and fall and climateschange as they have done sincethe dawn of time
Ian Plimer is the Professor of Geology in the Schoolof Earth Sciences at The University of MelbourneThis article is an edited version of his recent paperto the IPArsquos Climate Conference delivered on 28
February 2003 a full version of which can befound on the IPArsquos Website
On all scales of
observation and
measurement sea
level and climate
are not constant
Change is normal
and is driven by a
large number of
natural forces
13MARCH 2003
E V I E WR
FOR two years the worldrsquossecond largest hydrocarbonsproducer spent beaucoupdollars on a clever public re-
lations and advertising campaign toconvince consumers that BP no longerstands for British Petroleum but for Be-yond Petroleum
One advert proclaimed lsquoWersquore oneof the largest producers of natural gashellip and are investing in the new energysources of the futuremdashhydrogen andwind Itrsquos a startrsquo Another tried to getthis line past the guffaw test lsquoWe be-lieve in alternative energy Like solarcappuccinorsquo
Many people expressed surprise thata huge oil company was so committedto alternative energy technologiesThey neednrsquot have
BPrsquos total six-year investment in re-newable technologies was $200 mil-lionmdashthe same amount it spent on thelsquoBeyond Petroleumrsquo advertising cam-paign Thatrsquos certainly an impressivetab for image enhancement But itrsquos adrop in the barrel for futuristic tech-nologies that were the centrepiece forthe slick marketing effort
Indeed all its preening and pufferynotwithstanding BPrsquos actual invest-ment in renewable energy was a whop-ping 005 per cent of the $91 billion itspent to buy oil giants Arco and Amocoback in the 1990s Moreover just as theadvertising campaign was windingdown BP announced it was spending$675 billion for a 50 per cent control-ling interest in a rich Russian oil pros-pectmdashand will be spending another$20 billion over the next five years ex-ploring this and other newer fieldsaround the world
In other words the advertising cam-paign was little more than lsquogreen-washingrsquomdashdisinformation intended topresent an environmentally responsiblepublic image BP wanted people to per-
BPmdashBack to PetroleumPAUL K DRIESSEN
theoretically harmless puffery It also re-flects the desire of many multinationalcompanies to appease critics and gaina public relations advantage over com-petitors by adopting the language ofideological environmentalism
This radical school of thought in-creasingly uses ethical buzz-words anddogmas to justify its demands Chiefamong them are sustainable develop-ment and the precautionary principlethe foundations of so-called lsquocorporatesocial responsibilityrsquo (CSR) and lsquoso-cially responsible investingrsquo (SRI) doc-trines
Eco-activists from affluent Westerncountries developed the doctrines topromote their agendas and oppose en-ergy and economic development BPhas long been at the forefront of theseefforts as a charter member of theWorld Business Council for SustainableDevelopment through frequent meet-ings with activist groups and by fund-ing many radical groups
The activists define what is lsquorespon-siblersquo focusing debate on conjecturalproblems and theoretical needs of fu-ture generations of wealthy elitesmdashandignoring real immediate life-and-death needs of people who struggledaily just to survive The stakes arehuge
More than 15 billion people in de-veloping countries still do not have ac-cess to electricity Half a billion womenand children spend their days collect-ing firewood or squatting in mud andanimal faeces to collect and dry ma-nure for fuel Millions die every yearfrom lung diseases caused by indoor airpollution from cooking fires and dys-entery due to contaminated drinkingwater
Hydroelectric or fossil fuel projectscould provide electricity for familieswater purification plants and economicdevelopment But radical activists op-
ceive it as a lsquosocially responsiblersquo leaderand reward it accordingly Few did
Green activists denounced BP forlsquohypocrisyrsquo and blasted the company forcontinuing to lsquoexploit some of theworldrsquos most sensitive ecological areasrsquoA major business magazine said sim-ply lsquoWell please If the worldrsquos secondlargest oil company is beyond petro-leum Fortune is beyond wordsrsquo
Meanwhile BPrsquos total wind and so-lar electrical output last year was barelyenough to keep the lights burning inRegina Saskatchewanmdashand thought-ful observers are beginning to realizethat wind and solar arenrsquot quite as eco-friendly as activists claim
A single new 555-MW gas-firedgenerating plant in California producesmore electricity than do all the statersquos13000 wind turbines The gas-firedplant occupies about ten acres the gi-ant 200-foot-tall windmills dominatethousands of once-scenic acres and killthousands of raptors and other birdsevery year Current photovoltaic tech-nology is just as habitat-hungry
Worse chief executive Lord JohnBrowne was forced to lower BPrsquos pro-duction estimates three times last yearand the companyrsquos 11 per cent returnon average capital was well below thatof arch-rivals ExxonMobil (137 percent) and Royal DutchShell (148 percent) BP share prices reflected inves-torsrsquo displeasure with its poor perfor-mance and the fact that the companyrsquosprofit margins would not improve for adecade or more if the company re-mained focused on renewable energyand old oil fields
Thus if BP ever really was BeyondPetroleum going Back to Petroleum(and Bigger Profits) was a sound busi-ness decision
However the lsquoGreat Beyondorsquo adcampaign involves more than meregreenwashing and disingenuous but s
14 MARCH 2003
E V I E WR
API
pose these projects and say that theworldrsquos rural poor should be contentwith solar panels on huts
Investors are also at risk particu-larly retirees whose futures depend onpension and mutual funds that ownnearly $8 trillion in market sharemdash50per cent of the total stock marketMany of these funds are managed lessto safeguard or benefit the investor thanto promote radical principles under thedisguise of so-called ethical funds
These funds claim to provide pro-fessional unbiased analytical and ad-visory services But in reality they sup-port political agendas based on often-questionable analyses and on lsquostake-holderrsquo (activist) input to justify howthey grade companies in client portfo-lios They regularly excoriate compa-nies such as ExxonMobil claiming itsrefusal to back the Kyoto climate treatywill destroy shareholder value Mean-while they praise companies such asBP and promote global governanceand solar panels on huts
Australiarsquos energy consumers willbecome yet another example of lsquocol-lateral damagersquo if the radicals havetheir way over global warming Onceagain some of the culprits are right inthe BP boardroom
In 1997 BP chief Browne endorsedthe global warming theory and saidtough measures should be imposedquickly even in the absence of scien-tific proof A Clinton-era Energy In-formation Administration report con-cluded that the climate treaty woulddrain $340 billion a year from the USeconomy The Australian economywould also get hammered And all thispain even assuming perfect compli-ance with the treaty would reduce av-erage global temperatures in 2050 byonly 02˚C below what they would bewithout the treaty according to theUSArsquos National Center for Atmo-spheric Research
But BP Australasia President GregBourne is undaunted Hersquos stumping thecountry from Melbourne to Brisbaneand Darwin to Perth importuning busi-nesses to pressure the PM to ratifyKyoto Could it be pure altruism Ormight the old profit motive be at work
A 1997 memo to Enron presidentKen Lay described BP as Enronrsquos lsquoin-ternational equivalentrsquo Indeed BP isstriving mightily to replace Enron asthe worldrsquos premier broker in the newbusiness of buying and selling permitsto emit greenhouse gases The expec-tation is that playing the climatechange game could earn BP billions ofdollars via traditional petroleum opera-tionsmdashand billions more via emissiontrading schemes The company is al-ready trading credits among its unitsas part of a training regimen for theanticipated emission Olympics
One cannot help but suspect thatthis huge EU oil giant might also bemotivated by Europersquos obvious desireto protect its industries from US and
other foreign competition They clearlysee the Kyoto Protocol not merely asan environmental programme but alsoas a way to pressure the United StatesAustralia and other countries to reduceenergy use and economic productivity
EU Environment CommissionerMargot Wallstrom put it bluntly whenPresident Bush abandoned the Kyotoclimate treaty lsquoThis is not a simple en-vironmental issuersquo she railed lsquoThis isabout international relations this isabout economy about trying to createa level playing field for big businessesthroughout the worldrsquo Several EU of-ficials echoed her sentiments suggest-ing that Americarsquos lower energy taxesconstitute an unfair trade advantagethat could justify trade sanctionsagainst the US
In short what we are witnessing isa profound and disturbing convergenceof ideology activism marketing poli-tics and financial gainmdashall in the ser-vice of radical policy agendas and allbeautifully attired in the lavish raimentof corporate ethics and responsibilityThis is proof positive that social respon-sibility can be a wondrous thing in thedexterous hands of craftsmen who re-ally know how to display and utilize it
How can we stop the charade Forstarters demand that corporate socialresponsibility puts people first puts de-velopment back into sustainable devel-opment and ensures that precaution-ary guidelines safeguard people andcommunities from the havoc wreakedby radical green policies Insist that alldecisions be based on sound peer-re-viewed science and solid evidencemdashnot on hysterical claims and shrillrhetoric by activists regulators andjournalists who reward pseudo-scien-tific soul-mates and pillory any scien-tists who dare disagree with them
Next urge principled regulators andjournalists to investigate these compa-nies and investor firms for self-servingarrangements and breech of fiduciaryduty Demand that the companiesfirms and activist groups open theirbooks and provide full disclosure oftheir meetings contacts and monetaryand other relationships
Last in this era of high-minded re-form prevail upon legislators to changethe law to make these groups subjectto the same false advertising laws andthe same standards of transparency andaccountability that activists insistshould govern for-profit corporationsUnbelievably right now these ideo-logues are mostly exempt
The world will thank you For it willbe a better safer more ethical placemdashespecially for energy consumers retir-ees and the worldrsquos poor
Paul Driessen is a senior fellow for the AtlasEconomic Research Foundation in Fairfax VA This
article is based on his recent white paper lsquoBeyondPetroleummdashor Beyond Probityrsquo which can be read
in its entirety at wwwcdfeorgdriessenhtm
BPrsquos total six-year
investment in renewable
technologies was $200
millionmdashthe same
amount it spent on the
lsquoBeyond Petroleumrsquo
advertising campaign
15MARCH 2003
E V I E WR
FOR three years Reputa-tion Measurement Ltd andThe Age and The SydneyMorning Herald have been
trying to impose their political agen-das on Australiarsquos top 100 corpora-tions They think that Australiarsquos cor-porations should be good citizens andthat by measuring what they think itmeans to be a good citizen they canchange corporate behaviour
Westpac ranked number one on the2002 Index and rated well in everycategory Flight Centre ranked num-ber one on financial performance but47 overall It was in the doldrums inevery other category including beingranked 99 on environment On thesurface this seems very strangemdashFlightCentre manages shopfront travel agen-cies The reason for this bizarre resultwas not hard to find
Reputation Measurement sug-gested that lsquocompanies seeking to dem-onstrate their worthiness as sociallyresponsible organizations are most suc-cessful when they widen their tradi-tional business stakeholder base to in-clude community stakeholdersrsquo Fur-ther lsquo[i]nvestors and consumers are in-creasingly making decisions based onlonger-term issues linked to a com-panyrsquos capacity to contribute to a sus-tainable futurersquo In other words theReputation Index is an instrument foradvancing a number of political agen-das corporate social responsibilitystakeholder capitalism and sustain-ability
For example corporate social re-sponsibility suggests a common agree-ment about what is good Whose defi-nition of good is to be believedmdashtheelectoratersquos or the activistsrsquo In a lib-eral democracy the rules are set by aconsensus that determines not so muchwhat is good corporate behaviour but
The Good Reputation Index 2002A Tale of Two Strategies
GARY JOHNS
what is and what is not acceptablebehaviour The Index is an exercise incapturing the reputation agenda andusing it to regulate corporate beha-viour
Stakeholder theory suggests that allinterests in an enterprise compete toobtain benefits from the enterprise butthat none has priority It is in effectasking lsquoin whose interests should theenterprise be runrsquo It assumes that so-ciety grants an enterprise the right toexist The community through its law-makers may grant licences and certainprivileges in return for the enterprisecomplying with the law It does notlicense stakeholders at large to imposetheir views on the corporation
Sustainability refers to ecologicalsustainability and ecological sustaina-bility is premised on the notion of lim-its to growth based on limits to resour-ces It argues that natural resources arebecoming scarcer It ignores the his-tory of technological innovation of-ten promoted by competition betweencorporations and the fact that such in-novation has extended physical re-sources in ways untold
An analysis of the 2002 Index re-veals that those corporations whosescore improved massively between2001 and 2002 did so because they didnot participate in 2001mdashthey wererated anywaymdashbut did so in 2002Conversely those whose score plum-meted in 2002 did so because they par-ticipated in 2001 but not in 2002Moreover the corporations who rosemassively in the ranks did not changetheir behaviour they just filled out theforms better
Greenpeace were very aggressive intheir attitude to corporations lsquoTo en-able us to verify your responses pleaseprovide us with further supportingdocumentation If hellip we are unable
to verify your response we will defaultyour response answer to a ldquodonrsquot knowrdquowhich will be marked and downgradedaccordinglyrsquo Unfortunately those ofwhom we would expect bettermdashforexample The Brotherhood of St Laur-encemdashalso penalized non-respon-dents As the technique was used byalmost all of the research groups thiswas presumably a deliberate strategy ofReputation Measurement Ltd
More disconcerting were reportsfrom corporations of the researchgroups touting for business by ringingfirms and offering their services to helpfill out the questionnaire Althoughthe level of disclosure has increasedsince the 2001 survey the touting con-tinued
The Index was published in Octo-ber 2002 obviously to coincide withthe reporting season and in the hopethat shareholders would use the Indexto seek changes to corporate behav-iour A sample of the major gainers andlosers on the Index reported no men-tion of the Index More importantlythere was no discernible impact onshare prices
The good news is that the Indexfailed miserably to achieve its objec-tives The bad news is that enough cor-porations played along to keep it alivein certain media and academic circlesIt was a chance for self-appointedNGOsmdashwho provided the ques-tionsmdashto regulate corporations bypublishing a list of good capitalists andbad capitalists Every corporation thatparticipated in the Index should thinkcarefully about whether it can justifythe agenda to its shareholders
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
16 MARCH 2003
E V I E WR
Tomorrowrsquos Reform
RALPH Waldo Emersontold us that lsquoa foolish con-sistency is the hobgoblinof little minds adored by
little statesmen philosophers and di-vinesrsquo and enjoined us lsquoto speak whatwe think today in words as hard ascanon balls and tomorrow speak whattomorrow thinksrsquo While statesmenshould not persist with known errortheir wanton inconsistency makespolicy formulation confoundedly dif-ficult
When he asserted that lsquoWhat de-termines the course of a nationrsquos eco-nomic policies is always the eco-nomic ideas held by public opinionrsquoLudwig von Mises must have hadeven less confidence in little states-men His pupil Friedrich von Hayekurged Antony Fisher not to enterpolitics but instead to found think-tanks which with fact and argumentwould change public opinion
Even among liberalismrsquos oppo-nents few today argue that Misesrsquoand Hayekrsquos ideas and Fisherrsquos liberalthink-tanks did not lead the 1980sand 90s almost world-wide liberal re-vival Why would they when bymuch the same means Fabian So-cialism had brought the welfare stateto Western nations In neither trendhowever were politicians the mereagents of popular opinion Especiallyin democracies political leadersrsquo ca-pacities to ignore it are indeed mod-est but their abilities to influence itare very much less so Even SaddamHussein works hard at influencingIraqi opinion Can we hypothesizethat the ways that leaders use theirinfluence distinguish tyrants fromdemocrats and the purposes forwhich they use it distinguish politi-cians from statesmen
Liberalismrsquos headlong chargethrough the corridors of power could
JOHN HYDE
arguments could have been em-ployed are nonetheless being de-fended by appeal to popular miscon-ceptions of the sort that PaulineHanson the Democrats and Greensactually believe Unless the majorparties have had a radical change ofheart they believe differently
Take the proposed Free TradeAgreement (FTA) with the UnitedStates Trade experts are not of onemind about its net worth My quar-rel is therefore not with the FTAitself but with the Governmentrsquos de-fence of it If the FTA will bring netbenefits then these will come mostlyfrom improved access to Americangoods and capital our own reductionof anti-competitive regulation ofdrugs medical insurance performingarts professional services textilesrural commodities etc and the dy-namic advantages of mixing it withthe Yanks But the government ispromoting the FTA almost solely inmercantilist (exports goodimportsbad) terms
To treat foreign goods servicesinvestment and ideas as an invasionparodies voluntary exchange whichdoes not happen unless both partiesbenefit The Government trumpetsa fact that nobody disputes namelythat it pays to sell into the best pay-ing markets but says nothing to edu-cate us in the advantages of buyingwell from foreigners as well asneighbours Once long ago Howardcriticized Pauline Hanson for her xe-nophobia That day he seemed to un-derstand the benefits of exchangewith foreigners
Until recently Australia hadbeen insisting that the only way toworld trade reform was via the mul-tilateral processes of the World TradeOrganisation and currently theDoha round A bilateral FTA with
not have proceeded without leaderssuch as Margaret Thatcher and ZhouEnlai who changed public opinionas did Bob Hawke in Australia Nowhowever liberalismrsquos charge hasslowed even in some places beensomewhat reversed Canberra hasnot been immune from trends thatsee politicians no longer so firmly re-sisting demands for economic privi-leges or as others see the same phe-nomenon no longer so blindly fol-lowing economic rationalism
Very poor economic decisionsaboundmdashrejection of the Trebeck re-port on petrol pricing preference forethanol production extending mo-tor and textile protection rural sub-sidies taxpayer contribution to theDarwin-to-Alice Springs railwayetc etc But there is also progressThe pride that John Howard takesin the fact that Australians are lessdivided against each other is surelyjustified The hugely importantlabour welfare and arguably also thehealth-care markets have been im-proved Budget balance has beenachieved albeit with high taxes Al-though net legislative and adminis-trative progress toward a more lib-eral more open more efficienteconomy has dwindled it would stillbe fair to say it has not been reversed
Our statesmenrsquos words as hard ascannon balls however that is thoseintended to enlighten rather thanappeal to public opinion are beingreserved for the Iraqi conflict In con-trast in the economic arena we areno longer encouraged to accept anyunwelcome truths Even when de-fending measures that I am morethan content to accept as beneficialthe government seems to select itsargument at best randomly ignoringprinciples of economic efficiency andequity Policies for which textbook
17MARCH 2003
E V I E WR
the US may or may not result in anet increase in trade flows but if itis not a meaningless piece of paperdelivering only political benefits tothe Government it will certainlydivert trade from our other tradingpartners How will China KoreaJapan etc react to losing their lsquomostfavoured nationrsquo status Such ques-tions should be addressed in termsthat do better than reinforce our xe-nophobic prejudices
By appealing to Hansonite mis-conceptions the Government mayand probably will improve itschances of bringing forward a policythat I am more than willing to ac-cept it believes is a good one It isafter all the recommendation of theDepartment of Foreign Affairs andTrade However by so doing it is re-inforcing delusions it must overcomefor further economic reform Whatis more I am reminded of a quip thatI am sure the PM has also heard lsquoNoGovernment is really dangerous un-til it believes its own bullshitrsquo Poli-ticians and I suspect bureaucratsalso are all too prone to believingtheir own utterances Unwilling toadmit their deceptions even whenspeaking in house they quickly con-vince themselves of the truth of theirown and colleaguesrsquo loose rhetoricand worse These are the people whomust negotiate the Agreement whilelooking over their shoulders at anAustralian electorate whose alreadystrong mercantilist tendencies havebeen reinforced by the people bestplaced to disabuse them The poten-tial cost is obvious
The US Free Trade Agreement isbut an example of a tendency thatought to be worrying In debateabout refugee policy motor fuel sup-ply single-desk wheat sales the sup-ply of medical practitioners and pres-ervation of the environment has notthe Government employed argu-ments that are not compatible withits professed liberal philosophy Hasit not seemed that it does not knowthe standard liberal responses to theself-serving demands of vested inter-ests and bigots With due respect to
Emerson consistency allows deci-sions to be made without the neces-sity of thinking every one throughfrom fundamental principles whichnobody in authority has the time orthe mental agility to do
Politically disinterested educa-tors such as the IPA can often callsome pretty good minds to their aidEven so when the Government it-self fosters public misconceptionthey cannot be expected to undo theerror The single greatest sin of thecurrent government is that it is notbuilding opinion for tomorrowrsquos re-form Why not
I suggest because it is politicallydifficult Whereas calls to resist out-siders appeal to deeply ingrainedtribal instincts calls to uphold thecivilizing and wealth-building insti-tutions that afford protection tostrangers and admit their goods ser-vices persons and ideas make nosuch visceral appeal These codes aremuch later developments in themarch of mankind and to manypeople they remain counter-intui-tive They must therefore be de-fended by sustained argumentHayek knew that politicians whosetime horizons in the absence ofknown crises tend to be the nextelection would (to use Howardrsquosown expression) seldom have the
tickers He turned therefore to theless articulate but far more resolutethink-tanks
It is relatively easy to appeal tothe sort of Chauvinism that sur-rounds sporting activity and argu-ments about refugees and meat quo-tas When a Prime Minister talks ofsovereignty guaranteeing our bor-ders or the interests of our exportersor domestic manufacturers he is notnecessarily wrong but his task iseasier than that of defending rulesthat permit voluntary co-operationamong strangers The principle thatdefends the non-unionistrsquos right towork the consumerrsquos right to buy for-eign goods and everyonersquos right tohear alien ideas and which shouldprotect racial and religious minori-ties from exclusion still needs hisleadership
Unless statesmen recognize theinconsistencies that arise not fromthe changed opinions that con-cerned Emerson but from trying tobe all things to all men they arelikely to govern in ways that are un-fair and inefficient If the public doesnot recognize consistency then thelsquolittle statesmenrsquo may find them-selves compelled to yield to the de-mands of the more articulate vestedinterests In such a case Heaven helpthe inarticulate who will be effec-tively disenfranchised But the insti-tutions which when consistentlyapplied give us liberty equity andprosperity are not strongly intuitive
They nevertheless distinguishAustralian society from say Iraqi so-ciety They give us the economicstrength to defy tyrants and they giveus a land worth defending They arecertainly not in danger of disappear-ing but they are in danger of beingeroded Lead us Mr Howard
While statesmen
should not persist
with known error
their wanton
inconsistency makes
policy formulation
confoundedly
difficult
API
John Hyde is a Senior Fellow with the Institute ofPublic Affairs His book Dry In Defence of
Economic Freedom was published by the IPA in November 2002
18 MARCH 2003
E V I E WR
DESPITE the obsessivepublic attention to pricesat the petrol pump thepetroleum-refining sector
rarely registers on the media radarscreen This is unfortunate as the sec-tor fuels most movement of peopleand goods in our economy and soci-ety And it is in trouble
It is fragmented stunted and sur-vives by abjuring profit and mortgag-ing its future Without radical reshap-ing it is likely to wither leaving usexposed to the vagaries of the inter-national refined-products market
FEATURES OF THE AUSTRA-LIAN REFINING SECTORThe first thing to note is that by in-ternational standards Australia is arelatively small player The most re-cent international figures show thatour total output of refined productsin the third quarter of 2002 was 89million tonnes This compared withOECD production of 486 milliontonnes including US production of202 million tonnes Total Australianrefinery capacity of 870000 thousandbarrels per day (bpd) compares withthe figures for China (53 million)South Korea (26 million) and Singa-pore (11 million) Total regional re-fining capacity and production con-tinues to grow as Australiarsquos stagnatesIn the five years to 2000 regional out-put grew by 22 per cent
Second the structure of the indus-try is weak The dispersed geographi-cal distribution of our refining sectorreflects its historical developmentwith each State capital city support-ing one or more refineries Over thelast two decades the number of ma-jor oil companies operating in Aus-
Petroleum RefiningRationalization or Atrophy
JIM HOGGETT
tralia has shrunk from nine to fourAlthough the number of players hasmore than halved the number of re-fineries has reduced by only two fromten to eight The average capacity ofAustralian refineries is around100000 bpd New refineries in theregion are generally significantlylarger Singaporersquos largest has a capac-ity of 375000 bpd
Given the open Australian mar-ket our ex-refinery prices are virtu-ally set by the major exporters in theregion who are also operating on tightmargins Moreover the proportion-ately heavy demand for diesel in SEAsia tends to generate a persistentsurplus of gasoline which is availablefor export to Australia at discountedprices
The pattern of relatively smallscattered refineries is no longer opti-mal in an open market in which weare a price-taker
Third despite its sub-optimalstructure the Australian refining in-dustry is not grossly inefficient Oneindicator is the value added per em-ployee which is in the top five per-formers in the Australian manufac-turing sector
The cost competitiveness of Aus-tralian products is indicated by thefact that we have the cheapest ex-taxprice of petrol in the OECD Perfor-mance comparisons with the rest ofthe AsiandashPacific however suggestthat we lag the average efficiency inthe region And the best performersin the region are superior to our best
Finally the financial performanceof the industry is poor gross annualrevenues for the whole industry in-cluding marketing were $32 billionin calendar year 2001 For the five
years to 2001 the return on assets forrefining and marketing averaged 38per cent and was negative in the lasttwo years The indications are that2002 may have been a better year forthe industry but that the return onassets remains well below the cost ofcapital Over the four years to 2001the fixed asset base of the industrydeclined by almost 6 per cent to $12billion even after $24 billion of newinvestment in the period
This is clearly unsustainable andit raises the question Why is no-oneleaving the game
There are perhaps four main rea-sonsbull First the industry has engaged in
continual productivity improve-ment allowing it to keep withinrange of ruling prices
bull Second each refiner hopes thatsomeone else will blink first sothat the waiting will pay off
bull Third the costs of leaving thetable the exit costs are very highbecause of the nature of the prod-uct and the long occupancy ofmost sites
bull Fourth even while profitability islow the industry has generallybeen marginally cash positive
These add up to a big lsquofirst mover dis-advantagersquo
FUTURE TRENDSClearly petroleum will remain ourmost important energy source Petro-leum products constitute 52 per centof Australiarsquos final consumption ofenergy Liquid petroleum fuels pro-vide more than 95 per cent of Aus-traliarsquos transport needs There are nomajor foreseeable influences that willaffect this pattern dramatically There
19MARCH 2003
E V I E WR
have been major advances in fueleconomy and these will no doubtcontinue But more than counterbal-ancing this is the inexorable growthin demand for personal mobility andfor goods from distant parts Althoughgrowth in energy consumption mayslow down in Australia we will notbe reducing our consumption to anysignificant degree
Our export role will also be lim-ited Australian export volumes havetended to be steady over recent yearsand future new export potential forpetroleum products seems likely to beminimal China and India have re-cently become major exporters par-ticularly of gasoline Refinery capac-ity is planned to continue to growstrongly in the region even thoughthere is already significant excessThe decline in capacity utilization inmajor exporters such as Singaporewill make exporting difficult Further-more it is expected that productspecifications in Asia the US andEurope will converge in the comingyears thereby eliminating niche ex-port opportunities
The choice we face is what to doabout our essentially import-compet-ing industry
INCENTIVES NOT STRONGWhile there are strong pressures forthe industry to restructure there islittle incentive to invest for this pur-pose Investments in the Australianrefining industry have to competewith many alternatives across theglobe
Lack of sufficient return is thesingle biggest deterrent to investmentin the industry at present But thereare othersbull There is no prospect of strong growth
in demand to offset the substantialrisks associated with large new in-vestments
bull The persistent refinery capacity over-hang in our region will keep sus-tained pressure on our margins
bull The corporate taxation regime is nowless favourable than hitherto after thesubstitution of effective-life foraccelerated depreciation The
competing Singapore option offersa three-year write-off
bull The regulatory cost burden is grow-ing This applies to all Australianindustry but is potent in overseascomparisons Tighter fuel stan-dards environmental restrictionsintervention in prices and indus-trial law are some of the factors
bull There is increased sovereign riskstemming from inconsistent regula-tions We have eight parliamentswhich enact inconsistent laws Acurrent example is the higher fuelstandards applied in Western Aus-tralia
bull The sovereign risk also arises fromuncertainty in the regulatory processThere are unpredictable changesof direction (the deferral of thediesel sulphur excise differential[DSED]) and uncertainty in theface of conflicting interests (willthe Government act on ethanolcontent)
All these factors enter into the riskreward calculation When the re-wards are minimal the risks take onan extra dimension
WHAT INDUSTRY STRUC-TURE DO WE NEEDThe short answer is we cannot knowin detail
In the Downstream Petroleum In-dustry Framework 2002 the Depart-ment of Industry Tourism and Re-sources set out a broad vision
bull A preference for market-based so-lutions
bull A strong efficient environmen-tally responsible industry supply-ing most of the nationrsquos needs forproducts
bull Regulation only for market failureor national interest objectives
bull Regulation to be transparent andconsistent
bull Reform and regulation to maxi-mize long-term community ben-efitThis vision has some prescriptive
elements but the Government hasmade it clear that it will not nomi-nate an optimal number of refineriesor a pattern of production
The general public would probablyopt for a structure that guaranteedlower more stable automotive fuelprices Unfortunately they cannothave both in the short term
In fairness the investors in the in-dustry are the ones entitled and bestfitted to determine its future In theextreme they will do it anyway bypersisting or walking away Generallyspeaking they will seek to maximizetheir returns and thus promote themost efficient use of resources
Australian refineries are not inef-ficient but that is not the point Ourmarket is open so the competitionwe face is the best of the overseas per-formers often with more favourabletax and subsidy regimes
Nor is this simply a question ofclosing the smallest refineries A bet-ter approach might well be to allowrefining companies to concentrate onwhat they do bestmdashperhaps throughrefinery alliances Caltex and Shellhave co-operated in this way in Thai-land
The fact is that the detail of thedecisions can only be made by theindustry relatively free of governmentdirection The series of detailed de-cisions entailed will determine theoverall structure of the industry
COMPETITION REGULATIONCAN IMPEDE RESTRUCTURINGThe relevant provision of Section 50of the Trade Practices Act (TPA) pro
While there are
strong pressures for
the industry to
restructure there is
little incentive to
invest for this
purpose
s
20 MARCH 2003
E V I E WR
hibits mergers or asset acquisitionsthat would have the effect or belikely to have the effect ofsubstantially lessening compe-tition in a marketIt is both potentially and in prac-
tice an extremely restrictive provi-sion The Australian Consumer andCompetition Commission (ACCC)has expressed concern at concentra-tion in the sector in applying the pro-vision
The ACCCrsquos concerns seem ex-aggerated in the light of history Butthey are complemented by a persis-tent public misapprehension thatlarge petrol price swings equal profi-teering This perception has been soexploited for political advantage andmedia excitement that it is now al-most impossible for the truth toemerge
The future intensity of competi-tion in this industrymdashif it is allowedto restructuremdashshould not be indoubt Any rationalization would inall likelihood still leave strong do-mestic competition in each majorproduct category perhaps with fewermore efficient production units
The market is also contestableThere would be numerous potentialimporters and many independent re-tailers High margins would be rap-idly eroded by competition As re-cently ruled in the Boral case mar-ket reality is more conclusive than aperception of anti-competitiveness
Proposed mergers have been per-mitted in the past but the process isslow and permission is generally onlygranted with severe conditionsNonetheless there is a strong case forallowing restructuring within theterms of the merger provisions
AUTHORIZATION COULD BETHE KEYIf Section 50 of the TPA is an im-passable barrier then the authoriza-tion provisions of the Act could bethe way to greater efficiency The testsunder these provisions require a pub-lic benefit which outweighs the com-petition detriment The ACCC listsfostering business efficiency industry
rationalization and import-competi-tiveness as important public benefits
There is a strong prima facie casethat rationalization of the industrycould satisfy these tests It wouldallow greater scale of productioneconomies in distribution and closureof the least efficient production units
But the authorization process isslow and the onus for demonstratingthe public benefits rests on the appli-cant Slow process can amount to ef-fective rejection
POLICY OPTIONS AND REC-OMMENDATIONSIf government cannot help the indus-try to adjust it should allow it to ad-just by supporting sensible changeThis would involve both improving
the operating environment throughregulatory reform and altering thebalance of competition regulation sothat the industry could restructurevoluntarily The CommonwealthGovernment has already indicated awillingness to support both but hasnot yet delivered
The ball would then be in theindustryrsquos court to bring forward newproposals if a new policy environmentcould be created This could all hap-pen within a very broad strategicframework agreed with the industrywhereby Australia continued to besure of sufficient refining capacity tomeet a severe international fuel short-age
We therefore recommend thatbull The Commonwealth Govern-
ment provide explicit indicationto the ACCC of the public ben-efits it sees from the rationaliza-tion of the refining sector In par-ticular joint ventures should becontemplated
bull The ACCC give sufficient weightto the public interest benefits ofrestructuring to allow rationaliza-tion of production facilities
bull All governments reduce distortingfuel subsidies and taxes that favourparticular sectors or fuels
bull The State Governments act im-mediately to harmonize their regu-lation of the industry and agreenot to issue any new inconsistentregulation
bull More specifically the States havea single set of fuel standards withwhich refiners can reasonablycomply withdraw from all formsof price regulation and refrainfrom thwarting or distorting therationalization process
bull Governments generally not intro-duce new regulations mandatingthe use of alternative fuels
CONCLUSIONThe choice for the industry appearsto be between accelerated rational-ization and atrophy The process ofchange is something which the indus-try must plan and effect The task isnot impossible but it will require theactive support of government at alllevels For the time being there is anexpressed willingness at the Com-monwealth level but no real solu-tions
If nothing is done the refiners willcontinue to stumble along in a regu-latory fog and will invest only whenobliged to do so by changing fuel stan-dards They will become increasinglyvulnerable to low-priced imports andeventual closure
Jim Hoggett is a Senior Fellow at theInstitute of Public Affairs
If Section 50 of the
TPA is an impassable
barrier then the
authorization
provisions of the Act
could be the way to
greater efficiency
API
Last week the Government tabled 22 volumes of theCole Royal Commission into the Building andConstruction Industry Former Court of Appeal judgeTerence Cole made 392 specific findings of unlawfulconduct and in the confidential final volumerecommended that 31 individuals be referred for possiblecriminal prosecution As was to be expected theconstruction unions claimed that the report was a witch-hunt and people who should have known better claimedthat Cole was biased
The anti-union allegations were never very plausiblegiven that most unions had refused to cooperate withthe Commission and had even boycotted theCommissionrsquos special conference on occupational healthand safety As things have turned out one of their ownhas fatally undermined the unionsrsquo case No less anauthority than the National Secretary of the ConstructionDivision of the CFMEU has unwittingly confirmed thatCole is right In what was no doubt an unguardedmoment John Sutton admitted to a Melbournenewspaper that ldquovirtually everything we do breaches partof this Actrdquo Suttonrsquos admission means that Colersquosdescription of a largely lawless industry can be disputedat the margins but not credibly denied The problemsof the industry have been established beyond credibledoubt and the question now is what needs to be doneabout it
Nothing says the CFMEU because itrsquos alright tobreak the law in the best interests of the working classLeading union officials take the view that in a toughindustry only wimps take the law seriously The newsthat ldquoonlyrdquo 31 individuals had been recommended toface criminal charges was greeted with somethingapproaching jubilation as if the industryrsquos code of silencebased on fear had largely kept the Royal Commission atbay
As the Australian Financial Review commented in aneditorial the unionrsquos dismissive reaction to Colersquos report
ldquospeaks as loudly as his damning findings of entrenchedlawlessnessrdquo Imagine the reaction if a royalcommissioner had identified 31 people in the financeindustry or the steel industry for possible criminalcharges This would rightly be regarded as the sign ofan industry in crisis demanding urgent governmentintervention
Change wonrsquot be easy in an industry conditioned tothink that might is right Change which shifts powerfrom one unscrupulous group to another will not bereform As Grocon has discovered the first company toldquobuck the systemrdquo is liable to heavy-duty industrialpayback No one wants to be the first to change butchange is necessary in the national interest
In 2002 the Victorian construction industry aloneaccounted for 17 per cent of all days lost through strikesThe West Australian construction industry accountedfor another 8 per cent of the national strike tallyConstruction is a $40 billion a year industry comprisingnearly six per cent of GDP and employing nearly500000 Australians Due to over-manning demarcationdisputes and chronic stoppages labour productivity incommercial construction averages 13 per cent less thanin home building Plastering the same wall in the sameway costs 40 per cent more in a high rise building thanin a standard house Just raising labour productivity incommercial construction to the home building standard(let alone the 50 per cent increase needed to match NorthAmerican levels) would mean according to Econtech aone per cent drop in the cost of living a one per centincrease in GDP and $23 billion in benefits toconsumers workers and taxpayers every year
Still change is about decent Australian values notjust a more efficient industry Workers donrsquot like latenight house calls compulsory attendance at demos anddays spent sitting in the shed to make an industrial pointany more than bosses Threats of violence contempt forcourt and commission orders mob rampages when one
Restoring the Rule of Law in theConstruction Industry
Tony Abbott MHR
s
As this issue of the IPA Review was at the press we were alerted to the delivery of the following speechby the Minister for Employment and Workplace Relations The paper marks a seminal change in the
governmentrsquos approach to systemic corruption in the construction industry and isanother major step in the reform of workplace relations in Australia
SI-1MARCH 2003
IPA REVIEW SPECIAL INSERT
side doesnrsquot get its way habitual failure to honouragreements and routine harassment of people exercisingtheir legal rights are not acceptable in modern Australiaand cannot be excused even in a good cause
Breaching ldquobourgeois lawrdquo may not matter tomilitant activists but few others take such a self-indulgent view Itrsquos said that ldquooppositions can afford tobe irresponsiblerdquo but no government or alternativegovernment can accept the principle of optionalobedience to the law of the land No less than the HowardGovernment the federal Labor Opposition and the stateLabor Governments understand the dangers of playingpolitics with the rule of lawmdasheven theauthority of laws they might preferto change such as the federal WorkplaceRelations Act
The rule of law is not asmorgasbord from which a fewfavoured items can be chosen and therest ignored Freedom under the lawrequires respect for the law generallynot just the laws individualspersonally support Obedience to thelaw is not a question of choice It is arequirement of civilisation because thelaw is our guarantee of equaltreatment after a fair hearing ldquoBe youever so high the law is above yourdquoThis reproach hurled at the Stuartkings has rightly echoed through thecenturies as a warning against theconceits of office and the arrogance ofpower regardless of the cause in whichitrsquos exercised
After last weekrsquos meeting of theWorkplace Relations MinisterialCouncil of the Council of Australian Governments stateand territory ministers were keen to declare in acommuniqueacute ldquothere was unanimous agreement thatunlawful behaviour in the building and constructionindustry is not acceptablerdquo This was an importantaffirmation of the rule of law in circumstances wheresome Labor ministers might have been tempted to putpolitics ahead of principle
Unfortunately the state and territory ministerssupported more powers for the Australian IndustrialRelations Commission to settle construction industrydisputes In fact the Commission already has power tosettle disputes Whatrsquos missing is effective power toenforce agreements The issue is not settling disputesThe issue is enforcing the law
The construction industry typically conducts itselflike this A certified agreement is in place including anagreed dispute resolution procedure Unions identify agrievance often a spurious safety issue Agreed disputeprocedures are not followed and a strike ensues eventhough strikes outside ldquobargaining periodsrdquo areldquounprotectedrdquo and theoretically subject to damagesorders At that point employers often ask theCommission to end industrial action but instead ofordering an immediate return to work because anagreement has been breached the Commission willtypically seek to conciliate on the basis of the ldquomeritsrdquo
of the issue After a couple of dayswith costs escalating and liquidateddamages looming the employerinvariably agrees to rectify the matteralleged and to pay increasedallowances (including pay for days onstrike) At this point the Commissionorders a return to work on the basisof the agreed settlementmdashwhich lastsonly until the union decides on itsnext move
The union has ignored the law andbroken its original agreement buttypically suffers no adverseconsequences whatsoever Theemployer has been manoeuvred intoconceding most of a demand thatshould never have been made Afaccedilade of legality conceals a travestyof unionism and a travesty of justiceNearly all construction industrystrikes are unprotected and potentiallyunlawful under section 170MN of theWorkplace Relations Act Even so
employers nearly always opt to pass the costs ontoconsumers while existing arrangements for gatheringinformation launching prosecutions and imposing finesdonrsquot work well anywhere but hardly work at all in anindustry where giving evidence against the unions isthought to mean commercial suicide
The construction industry is a classic case not ofmarket failure but of regulatory failure The fact thatthe construction industry does not face potential importcompetition limits its exposure to market discipline Stillthe main reason why unions can get what they want frombusiness and business can get what it needs from haplessconsumers is the absence of independent policing andenforcement of the industrial equivalent of fair tradinglaws To an extraordinary degree in this industry the
SI-2 MARCH 2003
IPA REVIEW SPECIAL INSERT
The rule of law is nota smorgasbord from
which a few favoureditems can be chosenand the rest ignoredFreedom under thelaw requires respectfor the law generally
not just thelaws individuals
personally support
request documents but they canrsquot compel witnesses toanswer or demand that material be produced Althoughit is a criminal offence under the Workplace Relations Actto hinder workplace inspectors the Cole report notedthat no prosecutions have yet been launched despiteevidence that Office of the Employment Advocateinspectors have been abused had objects thrown at themand their property damaged It has been commonpractice for the arrival of OEA inspectors to lead to workstoppages and even site invasions in a bid to thwart anddemoralise an independent investigator not susceptibleto the unionrsquos usual weapon of commercial retaliation
One of the problems with theworkplace relations system is theassumption that parties will enforcethe law against each other This worksup to a point in industries whereworkplace parties are more-or-lessevenly matched and the issues are theworkplace equivalent of an argumentbetween neighbours over the heightof a fence It completely breaks downwhen one side has an effectivemonopoly over the supply of labourand disputes resemble a more-or-lessnormal family telling the house fullof footballers next door that the partyrsquosover Expecting contractors to enforcethe law against the CFMEU is likeexpecting people in the street to makecitizenrsquos arrests hence Colersquos principalrecommendations are an AustralianBuilding and ConstructionCommission to investigate prosecuteand enforce the provisions of a beefed-up industry specific workplace
relations actYesterday Cabinet decided to support Colersquos key
recommendations First the Government will seek aseparate act governing workplace relations in theconstruction industry providing for secret ballots beforestrikes compulsory cooling off periods after extendedstrikes and damages awards in the event of unprotectedindustrial action Second the Government will establisha new law enforcement agency for the industry withpowers to compel witnesses to testify bring prosecutionsand enforce judgments and with sufficient on-the-ground presence to police CBD building sites Thirdthe Government will establish a Safety Commissionerto monitor federally-funded construction sites to try toensure that these become industry models Fourth the
s
commissions lack sufficient power the courts lacksufficient speed the employment advocate lacks sufficientauthority and the police lack sufficient interest
Not before time the Cole Commission has acted as agiant searchlight probing the dark underside of thispotentially great Australian industry It confirmed whatpolicy makers had long suspected and what influentialinsiders knew but had always tried to deny or explainaway that the industry operates under the rule of thejungle and that there will be no improvement until thepeople who work in it understand that the law has to betaken seriously Legislative institutional and structuralchange will start to mean somethingwhen law breakers in this industry arecharged convicted and punished likelaw breakers everywhere else A fewsalutary bars of that old song need towaft over construction sites ldquoI foughtthe law and the law wonrdquo
Late last year in response to theRoyal Commissionrsquos first report thefederal Government set up theBuilding and Construction IndustryInterim Task Force The Governmentrsquosbrief to the Task Force is to ensure zerotolerance of industrial law-breakingThe Task Force is not primarily toenforce the tax laws or the safety rulesbecause other bodies exist for this(although the Task Force will certainlyshare information with them) TheTask Force is to investigate and enforceWorkplace Relations Act prohibitions oncoercion unprotected strikes strikepay and breach of industrialagreements So far the Task Force hasvisited nearly 300 sites launched more than 50investigations brought three prosecutions and referrednine other matters to state police the Australian FederalPolice or the Australian Competition and ConsumerCommission for further action
These are the first public prosecutions arising out ofindustrial action in the construction industry at leastsince the 1980s and are the result of a public policycommitment to law enforcement not seen since thehumiliating Clarrie OrsquoShea case in 1969 and the end ofldquopenal sanctionsrdquo Yesterday Cabinet decided to extendthe interim Task Forcersquos operations until more permanentarrangements to secure the rule of law can be established
Task Force agents have the powers of inspectors underthe Workplace Relations Act They can enter premises and
SI-3MARCH 2003
IPA REVIEW SPECIAL INSERT
The main reason whyunions can get what
they want frombusiness and businesscan get what it needs
from haplessconsumers is theabsence of inde-
pendent policing andenforcement of the
industrial equivalent offair trading laws
API
Government will insist on the application of theNational Construction Code and implementationguidelines to all significant new projects which are fullyor partly federally funded
Directly or indirectly the federal Government fundsabout $5 billion worth of construction projects everyyear and is determined to use its role as client to drivechange in the industry In essence the NationalConstruction Code stipulates that construction projectsmust take place in conformity with the WorkplaceRelations Act Under the Code and implementationguidelines the federal Governmentwill not engage tenderers whoseworkplace agreements and practicesensure a closed shop on site The TaskForce (and any replacement body) willhave full access to federally fundedsites to ensure that the law is beingobserved and workplace agreementscomplied with
For the federal Government theissue is upholding the law and tryingto tackle the ldquounion rulesrdquo culturewhich is at the heart of lawlessness inthe industry For the states the issueis whether they are prepared to refusefederal money in order to protect theclosed shop However much theymight prefer different federal laws thestates ought to accept thatconstruction projects have to complywith the law as it stands includingthe law mandating compliance withcertified agreements
State Labor governments whichhave made a point of their middle-ground credentials risk losing some$4 billion a year in federal building and constructiongrants if they side with the union movementrsquos mostmilitant minority There are likely to be limits to Laborrsquosdefence of a union whose stock-in-trade (at least in somestates) is the site invasion and the demand for paymentand which quietly reinstates organisers sacked for assaultor perjury Opposition senators will find it hard to brandas ldquoideologicalrdquo the recommendations of a royalcommission which spent 171 days in public hearingsand which pursued 11 shop stewards and 97 unionofficials to obtain their side of the argument
As Justice Cole pointed out in his report previousattempts to reform the industry have proven ineffectivedespite two earlier royal commissions and numerous
SI-4 MARCH 2003
IPA REVIEW SPECIAL INSERT
enquiries Although this Royal Commissionrsquosinvestigations seem to have temporarily checkedlawlessness in the industry a campaign is now emergingto extend the anarchic culture of CBD construction intoregional centres and the domestic housing industryThings will certainly be different this time if parliamentapproves a permanent well resourced watchdog withnew powers new personnel and new attitudes Unlikeprevious arrangements a new statutory watchdog withthe powers of a law enforcement agency should beeffective and permanent
Hundreds of people took big riskswith their commercial future and eventheir personal security to testify to theRoyal Commission It should neveragain be so hard for people in thisindustry to exercise their ordinaryrights and responsibilities asAustralian citizens They expected theGovernment to take the Commissionrsquosreport seriously and the Governmentfor its part is determined not to letthem down The Governmentunderstands that joining fights yoursquorenot prepared to win only makes badsituations worse Establishing the ruleof law in the construction industry isa challenge Australia canrsquot afford tofailSome of the worldrsquos best workersshould no longer have to put up withsome of the worldrsquos worst industrialpractices They have a right to anhonest industry where they can earna fair dayrsquos pay for a fair dayrsquos workand expect to come home uninjuredThe enduring image of this industry
should not be noisy marchers replaying the ideologicalstruggles of the 1970s and raising clenched fists againstauthorities they donrsquot like At its best the Australianindustry is capable of work which is stunningly beautifulyet intensely practical and it now needs to performconsistently on time on budget and in accordance withlaw
Hundreds of peopletook big risks withtheir commercial
future and even theirpersonal security totestify to the Royal
Commission It shouldnever again be so
hard for people in thisindustry to exercisetheir ordinary rights
and responsibilities asAustralian citizens
NOTE
The foregoing speech was first delivered as an Addressto the National Press Club on 2 April 2003
21MARCH 2003
E V I E WR
IN psychology behaviouris defined as irrational ifan action continues to berepeated despite its re-
peated failure to achieve the desiredoutcome On this definition our aidpolicy towards Papua New Guineahas been irrational
Despite over twelve billion dol-lars in Australian aid to PNG sincethat countryrsquos independence in 1975key development indicators such asliteracy rates infant mortality lifeexpectancy and real income percapita are either stagnating or dete-riorating Worse wersquove known forover a decade1
Today acknowledgement of thefailure of our aid policy in PNG hasgone well beyond the writings of in-dividual international policy analystssuch as myself to institution-spon-sored reports such as Beyond Baliwhich was released by the AustralianStrategic Policy Institute (the Aus-tralian Governmentrsquos own strategicpolicy adviser) and Papua NewGuinea on the Brink which was writ-ten by Susan Windybank and MikeManning for the Centre for Indepen-dent Studies Both reports confirmthe gross failure of Australian aidpolicy in PNG
Yet still our aid policy irrational-ity towards Papua New Guinea con-tinues While the ASPI and CIS re-ports acknowledge the gross failureof our aid policy in PNG they alsoargue that we need to continue ouraid to that country Indeed the ASPIreport argues that we should increaseour aid to Papua New Guinea Thepolicy saviour The ASPI report ar-gues that we should exert greater con-trol over our aid Not just over theform of our aid but direct interven-tion in policy and implementation inPNGmdashin essence for a return to pre-
Aid Detox for PNGPETER URBAN
independence days in PNG whereas UN-sanctioned administrator weran government in that country
Despite the mind-frame of secu-rity-focused strategists such as thoseat ASPI and the CIS (which en-dorses the aid approach advocated byASPI) the reality is that we canrsquotPNG is now independent and to ig-nore this reality would simply com-pound the problems of our past aidpolicy irrationality with irrationalityabout our political relationship withour nearest neighbour
A more interventionist aid policytowards PNG on our part as advo-cated in Beyond Bali and by HughWhite (the executive director ofASPSI) in the media might havepopulist appeal but it would haveserious adverse implications for ourrelationship with other Pacific islandcountries and even IndonesiaWorse it would give succour to theviews of our east Asian critics (suchas Malaysian PM Dr Mahathir) whoclaim that Australia continues toharbour colonial aspirations
We have to accept that to be suc-cessful aid policy must not just helpreduce mass poverty it also has to doso as a guest in the aid recipientcountry To do otherwise is not aidbut imperialismmdashwhether inten-tional or not
A more interventionist approachto aid policy in PNG would also givethe current corrupt political elite inPort Moresby a rallying point againstus and an excuse to delay changingtheir own policies Neither Austra-lia nor PNG can afford any furtherdelays to policy reform For us to givePNG politicians yet another excuseto delay reform would be not onlyirrational it would be inexcusableWhile our aid continues so will thecorrupt elite that is at the heart ofPNGrsquos problems Until we send themessage to the PNG political elitethat we are prepared to stop ouraidmdashto put them on aid detoxmdashwewill continue to waste our aid in thecorruption that is PNG politics Itmay be hard to accept but the sadreality we face in PNG is that no aidmay prove to be good aid at least inthe short to medium-term2
NOTES
1 Peter Urban lsquoOne Clear ObjectiveNo Clear Approachrsquo IPA Review1997 Vol 50 No 1
2 With Iraq also likely to require verysignificant Australian aid fundingover the next few years the Gov-ernment will need to review our aidprogram as part of the 2003-04 fed-eral Budget A decision to suspendaid to PNG could be taken as partof that review
Peter Urban is former chief economist with theDepartment of Foreign Affairs and Trade
We have to accept
that to be successful
aid policy must not
just help reduce
mass poverty it also
has to do so as a
guest in the aid
recipient country
API
22 MARCH 2003
E V I E WR
IN his speech to the Na-tional Press Club on theprospect of war with Iraqand the case for disarma-
ment Prime Minister Howard statedthat Australia will play a significant hu-manitarian role in Iraq
If so the Howard Government needsto evaluate carefully the foreign-aid non-government organizations (FANGOs)which it funds to carry-out this humani-tarian programme Many FANGOshave made it clear that they do not sharethe Australian Governmentrsquos objectivesand values in Iraq Moreover some donot agree with the Governmentrsquos over-all aid policies in general
THE COALITION OF THEUNWILLINGIn the lead-up to latest Gulf War some30 Australian aid agencies put theirnames to an Open Letter to the PrimeMinister organized by the AustralianCouncil of Foreign and Overseas Aid(ACFOA) The aim of the letter was tolsquospeak out against war in Iraqrsquo and it ex-pressed grave concerns about the hu-manitarian consequences of the war andthe effects of the existing sanctions1 TheFANGOs that signed the letter wereOxfam Community Aid Abroad WorldVision Australia TEAR AustraliaUnion Aid Australia - APHEDACaritas Australia National Council ofChurches Australian Council for For-eign and Overseas Aid Save the Chil-dren Australia CARE Australia OzGreen United Nations Association ofAustralia Family Planning AustraliaMercy Works Marist Mission CentreAustralia Every Home for Christ Bap-tist World Aid for Christ CCF Austra-lia Quaker Service Australia Austra-lian Lutheran World Service AustralianRelief and Mercy Services AnglicanBoard of Mission AUSTCARE Com-munity Development and Health
Irreconcilable DifferencesDON DrsquoCRUZ
Hussein have been virtually ignored isa searing indictment of the warped ide-ology feeble analysis and moral blind-ness of the sector For them now to re-discover the plight of the Iraqi peopleand to invoke their name in the mediais beyond contempt
THE OXFAM COMMUNITYAID ABROAD POSITIONOf the 30 FANGO signatories to theopen letter Oxfam Community AidAbroad (OCAA) has been perhaps themost outspoken It opposed military ac-tionmdasheven with UN Security Councilapproval4 In spite of all the evidence tothe contrary OCAA was comfortablewith Saddam Husseinrsquos assurances thathe did not have weapons of mass destruc-tion5 Adopting the common policyagreed to by the other Oxfam affiliatesOCAA stated that it will not take anymoney from the lsquobelligerentsrsquomdasha quaintterm used to the describe democraticnations planning to disarm a dictatorguilty of countless human rights abuses
OCAArsquos outrage against the so-called lsquobelligerentsrsquo appears to be geo-graphically confined to Iraq OCAAappears happy to take governmentmoney from the belligerents elsewherearound the world
According to OCAArsquos ExecutiveDirector Andrew Hewitt refusing totake money from the belligerents wasdone to lsquoprotect its impartialityrsquo6 Thisis a very curious position from Australiarsquosarguably most political FANGOOCAA has a long track-record of beinganything but impartial or reluctant totake sides in miliary action It wasnrsquotimpartial in East Timor where it sidedwith Fretlin in its quest for indepen-dence According to its own testimonyto a Senate committee OCAA wasgiven the choice by the IndonesianGovernment between lsquoplaying politicsrsquoor delivering aid projects in Indonesia7
Group Amnesty International Austra-lia AngliCORD Australian Aid forCambodia Fund Burnet InstituteRedR Friends of the Earth PLAN Aus-tralia and Australian Volunteers Inter-national2
This open letter highlighted a num-ber of problems with the FANGOs sec-tor First it highlighted the weak logicthat passes for advocacy in the sectorThe letter argued against military actionwas critical of sanctions and suggestedthat nations should settle issues only bydiplomatic means It is a viewpointwhich totally ignores the fact that theGovernment had to deal with SaddamHussein
The shallowness of their logic wasbest exposed by the Prime Minister inhis response to the open letter in whichhe stated that the humanitarian situa-tion in Iraq is best addressed by SaddamHusseinrsquos removal and perhaps morepointedly that Saddamrsquos manipulationof foreign aid had allowed him to main-tain and pursue his weapons of mass de-struction capability and human rightsabuses3
Second it also highlighted the factthat the so-called lsquohuman rights-basedapproachrsquo to development (embraced byseveral of the signatories) is not so muchabout realizing human rights (as its pro-ponents argue) but is more about pro-viding them with an excuse to lsquoplay poli-ticsrsquo According to the theory the hu-man rights-based approach to develop-ment allows FANGOs to tackle the rootcauses of poverty and injustice
Yet the root cause of the Iraqipeoplersquos suffering can be summed up intwo simple wordsmdashSaddam HusseinThe fact that the FANGOs who sub-scribe to this particular approach havebeen obsessed with imaginary humanrights abuses committed by Shell NikeRio Tinto BHP-Billiton and AuroraGold while the activities of Saddam
23MARCH 2003
E V I E WR
It chose the former thus making it per-sona non grata in Indonesia for almost adecade8 It wasnrsquot impartial inMozambique when it sided with Frelimoin the countryrsquos civil war9 It wasnrsquot im-partial in Ethiopia when it developedlinks to the Eritrean Peoplersquos LiberationFront during its war against the thengovernment10 It was not impartial oranti-war when it sided with the TigrayPeoplersquos Liberation Front in the neigh-bouring province to Eritrea when thatgroup was waging a guerrilla war againstthe government11 And recently therehave been claims that in the Middle Eastit was little more than an lsquoeager propa-gandistrsquo for the Palestinians12
In East Timor Ethiopia and Mozam-bique OCAA was linked with organi-zations which supported direct militaryaction that led to the deaths of thou-sands of civilians In none of these loca-tions were the enemies of their friendany worse than Saddam Hussein In-deed in many cases OCAArsquos friendswere arguably no better than their en-emies in terms of human rights
OCAArsquos decision not to accept Aus-tralian Government funding is the cor-rect one in the sense that it clearly doesnot share the Governmentrsquos values onthe question of Iraq and thereforeshouldnrsquot receive any governmentmoney
Hewitt went on to state in a pressrelease that lsquoWe will not take funds thatmight allow a government to use hu-manitarian efforts as an instrument offoreign policyhelliprsquo13
This is finemdashexcept the AustralianGovernmentrsquos foreign aid is an instru-ment of foreign policy And it always hasbeen This is spelt out quite clearly inthe Australian Governmentrsquos latest for-eign and trade policy White Paper Ad-vancing the National Interest14
FANGOs that cannot accept thisrather basic proposition should not begetting taxpayersrsquo money They areclearly unsuitable for the task at hand
The consequences of Australian tax-payersrsquo money falling into the wronghands were brought home to Prime Min-ister Howard when he met IndonesianPresident Megawati Sukarnoputri to dis-cuss the war against terrorism and
Australiarsquos involvement against Iraq Atthe top of the Indonesian agenda wasthe issue of Australian funding toFANGOs being used to support sepa-ratist movements in Indonesia15
Post-war Iraq will be a better placewithout Saddam Hussein and his thugsThis does not mean that it will be a safeplace or necessarily a stable place Afterall one of the reasons for Western tol-eration of Saddam Hussein for manyyears was his ability to hold the various
ethnic minorities in Iraq together albeitrather brutally thereby maintaining abalance of power in the Middle East Hisdeparture would see strains on Iraq fromthe various ethnic minorities that makeup Iraq There is a strong chance thatIraq will fragment
The last thing the Australian Gov-ernment or any of the so-called belli-gerents needs in a post-war Iraq is west-ern NGOs running around and becom-ing self-styled advocates for national self-determination for Iraqrsquos ethnic minori-ties and injecting themselves into Iraqrsquosinternal politics This is a real risk Thebehaviour of Australian foreign aidNGOs in Indonesia should make Aus-tralian decision-makers extremely waryof funding any NGOs with Australiantaxpayersrsquo money so that they can oper-ate in Iraq
As things stand now FANGOs facevery few restrictions on their actionsfrom government If they undertake ac-tivity that is inconsistent with being anagent of government they may losefunding for specific projects or in moredramatic circumstances lose funding ina country Nonetheless they are gener-
ally able to access Australian Govern-ment funding for other projects andcountries In other words the penaltiesfor becoming caught up in political ac-tivities are very light for NGOs and posethem no serious problems
Foreign aid NGOs that lsquoplay politicsrsquoare unsuitable contractors for the deliv-ery of aid That these overtly politicalorganizations have been allowed to gaingovernment accreditation and receivegovernment funding points to some se-rious problems at AusAID Australiarsquosofficial aid agency The time has comefor this to change
NOTES1 httpwwwacfoaasnaumedia_releases
2003_releases26_3_03PDF2 httpwwwacfoaasnauemergencies
openletterPDF3 httpwwwacfoaasnauemergencies
iraq_responsehtm4 Oxfam Horizons Vol 3 No 1 (Febru-
ary 2003) page 25 Oxfam Community Aid Abroad lsquoIraq
Overviewrsquo February 20036 Hewitt quoted in Liz Gooch lsquoOxfam
wersquoll say no cashrsquo The Age 16 March2003
7 Community Aid Abroad Submission tothe Senate Foreign Affairs Defence andTrade References Committee Inquiryinto East Timor Downloaded at httpwwwcaaorg aucampaignssubmissionstimorhtml
8 Ibid9 Susan Blackburn Practical Visionaries A
Study of Community Aid Abroad (Mel-bourne Melbourne University Press1993) page 313
10 Ibid pages 325-333 passim11 Ibid12 Gerald Steinberg lsquoPropaganda vs Hu-
manitarianismrsquo Australian Financial Re-view 7 June 2002 Downloaded at httpfacultybiuacil~steingconflictopedpropvshumanitarianismhtm
13 ht tp wwwcaa o rg au p r 2003 iraqfundshtml
14 httpwwwdfatgovauani15 Dennis Shanahan lsquoJakarta fears aid funds
for rebellionrsquo The Australian 17 Febru-ary 2003 page 2
Don DrsquoCruz is Research Fellow at the IPAand Director of IPArsquos NGOWatch
OCAA has a longtrack-record of
being anything butimpartial or
reluctant to takesides in miliary
action
API
24 MARCH 2003
E V I E WR
GEORGE Bush Tony Blairand John Howard haveprovided many reasons forsupporting military action
against Iraq One of those reasons hasbecome known as the lsquohumanitarianrsquojustification Put simply the lsquohu-manitarianrsquo justification for the US-led invasion of Iraq is that such ac-tion is necessary to free the Iraqipeople from their totalitariandictator
Such an argument is attractive tothose who believe that there aresome fundamental human rights thatall individuals possess regardless ofwhere and how they live Whatserves as the source of those rightshas been the subject of debate forcenturies One of the pre-eminentstatements on the subject was madeby John Locke who in The SecondTreatise of Government wrote thatmankind was lsquoequal and indepen-dentrsquo and that lsquono-one ought to harmanother in his life health liberty orpossessionsrsquo
Saddam Husseinrsquos mass murdertorture and terror are reasonablyclear breaches of human rightsTherefore some would ask why thereshould be opposition to the UnitedStates and its allies taking whatevermeasures might be necessary totopple the Iraqi regime Surely thesame standard of behaviour that ap-plies to individuals applies also tonation states If an individual walk-ing in the street witnessed a rapeoccurring wouldnrsquot that individualbe entitled to do everything in hispower to stop the crime and assistthe victim
The point is of course that in-ternational law and convention do
After IraqIs Sovereignty Dead
JOHN ROSKAM
not allow nation states to act in thesame way as individuals Countriescannot simply lsquotake the law into theirown handsrsquo To restrain lsquovigilantestatesrsquo (who might be acting fromeither lsquogoodrsquo or lsquobadrsquo motives) a num-ber of legal and political theorieshave been developed One of theseis the doctrine of lsquosovereigntyrsquo whichprovides that states should not inter-vene in the domestic affairs of otherstates
In relation to Iraq the lsquosover-eigntyrsquo question is perhaps the stron-gest argument against the US-ledCoalition Most of the other criti-cisms of lsquohumanitarianrsquo interventionin Iraq are either grounded in simpleanti-Americanism or are fallaciousFor example there is the claim thatbecause some of the countries in theCoalition have previously ignoredHusseinrsquos cruelties therefore it is il-legitimate to take action now Sucha view has been expressed by aMelbourne international relationsacademic
While there is no disputing thebrutal nature of Saddam Hus-seinrsquos regime the case for inter-vention made by those in Can-berra London and Washingtonis weakened by the fact that atthe peak of Saddamrsquos crimes inthe late 1980s they were eitherdirectly supporting him withweapons technology and intelli-gence or were entirely indifferentto his behaviour Even if theyhave belatedly recognised theerror of their ways how seriouslycan we take their concerns aboutweapons of mass destruction nowgiven they were his suppliersthen1
On the basis of this argument itcould be said that Britainrsquos (andAustraliarsquos) case for intervening toassist Poland upon the German in-vasion in 1939 was lsquoweakenedrsquo be-cause Britain had previously acqui-esced to Germanyrsquos rearmament theremilitarization of the Rhinelandand the annexation of both Austriaand parts of Czechoslovakia Fewpeople who chanted lsquoFreedom forEast Timorrsquo said that the HowardGovernment should not act becausea quarter of a century before theWhitlam Government had been lsquoin-differentrsquo to Indonesiarsquos occupationof the island
There is also the claim that al-though Hussein is bad he is not theworst dictator in the world and thatit is hypocritical for the Americansto attack only Iraq This is an as-tounding proposition It attempts toapply to the United States a standardof behaviour that is impossible to sat-isfy Should the police not attemptto solve any crimes because theycanrsquot solve all crimes If a crime iscommitted by two people and thepolice arrest one perpetrator unlessthe other is also caught must the firstperpetrator be released When indi-viduals donate money for famine re-lief in Africa very few believe thattheir donation is pointless becauseit might prevent the starvation ofonly one person rather than thou-sands Christian ethics sets down norequirement that we should help no-one unless we can help everyone
The issue about state sovereigntyhowever is one that deserves to betaken seriously Regardless of onersquosopinions on the extent and limits ofstate sovereignty it is true that our
25MARCH 2003
E V I E WR
international relations system is builtupon the principle and to modify oroverturn it is a matter of some con-sequence
Even those who are generally sup-portive of the United States andtheir allies see the problem As it wasput by a leading commentator whenanalysing the Australian PrimeMinisterrsquos lsquohumanitarianrsquo justifica-tion for war
Finally Howardrsquos argumentagainst Hussein on human rightsis correct So is his moral case forwanting to liberate the Iraqipeople from their torment Theproblem however is that youcanrsquot trip around the worldwanting to overthrow regimesbecause of human rights2
Some would askmdashlsquowhy notrsquo Be-cause to do so would overthrow theUnited Nations Charter comes therejoinder And in turn the responseto that might bemdashlsquogoodrsquo
If itrsquos a choice between the main-tenance of the UN Charter and free-dom from tyranny freedom wins ev-ery time (although an internationallawyer sitting in Sydney might havea different view on this question fromthat of a political prisoner manacledin a Baghdad jail cell)
When the interests of lsquointerna-tional lawrsquo are more important thanthe life and liberty of individuals itcould be concluded that lsquothe Em-peror has no clothesrsquo Would inter-national law have sanctioned inter-vention to stop the Holocaust hadHitler not waged war and proceededwith his methods entirely within theconfines of the German territorialstate
Many who argue that lsquohumanitar-ianrsquo intervention in Iraq is not justi-fied because it infringes on thatcountryrsquos lsquosovereigntyrsquo would happilyhave other countries cede their po-litical sovereignty to supra-nationalbodies Certain features of the Inter-national Criminal Court overridethe principles of sovereignty but thatdid not stop a phalanx of interna-tional law experts urging sovereigngovernments to join it so as to en-
able the prosecution of war criminalsBut when it comes to actually stop-ping war crimes not simply prosecut-ing them that phalanx is largely si-lent
Without the doctrine of state sov-ereignty and without an arbiter fordetermining when interference withthe principle is justified (the roleclaimed by the United Nations andits Security Council) it is said thatstates would be free to impose theirown will and intervene in other
countries whose standards did notmeet their own (In The Second Trea-tise of Government Locke argued thata characteristic of a lsquostate of warrsquo be-tween individuals was the absence ofa superior authority to adjudicatedisputes and prevent individualsfrom administering justice them-selves)
Iraq might be claimed as a rea-sonably clear-cut case for interven-tion but other situations are notlikely to be as simple In Culture andEquality first published in 2001Brian Barry explored a lsquoliberalrsquo per-spective on this question
The liberal position is clearNobody anywhere in the worldshould be denied liberal pro-tections against injustice andoppression However in exactlythe same way as liberals arepragmatic about what liberalismmeans in terms of boundaries sohere the move from principle tointervention has to be mediated bypractical considerationshellip
[L]iberals are not so simple-mindedas to imagine that the answer toall violations of liberal rights is tosend in the Marines or even aUnited Nations force As in anyjust war theory there must be somedoctrine of lsquoproportionalityrsquohellip[S]carcely anybody would be infavour of the western powersinvading Saudi Arabia so at to sortout the way in which it lsquounjustlydenies political rights to women ornon-Muslimsrsquomdashaccording to theirliberal idea of justicersquo3
The question remainsmdashafterIraq what remains of lsquostate sover-eigntyrsquo Should the doctrine applyonly to lsquoliberal democraticrsquo statesSuch a solution might be attractiveto some lsquoliberalsrsquo but it doesnrsquot avoidthe problem of what exactly a lsquolib-eral democraticrsquo state is
One irony arising from the argu-ments about the war in Iraq is thatmany of those who have urged astrict application of lsquostate sover-eigntyrsquo principles in the past havegenerally supported the US-led in-tervention while those who havebeen willing to abridge or even aban-don the doctrine have had to rely onit to counter the lsquohumanitarianrsquo jus-tification for war
There are not many certaintiesabout the nature of the world afterthe war in Iraq but it can be saidwith some assurance that one defi-nite outcome is going to be a morevigorous debate about state sover-eignty
NOTES1 Scott Burchill lsquoThe humanitar-
ian arguments for this war are spu-riousrsquo The Age 21 March 2003
2 Paul Kelly lsquoThe hapless per-suaderrsquo The Australian 15ndash16March 2003
3 Brian Barry Culture and Equal-ity An egalitarian critique ofmulticulturalism Harvard Uni-versity Press page 138
John Roskam is a Research Fellow with the IPA
The lsquosovereigntyrsquo
question is perhaps
the strongest
argument against
the US-led
Coalition
API
26 MARCH 2003
E V I E WR
Which Way for theDemocrats
The 2002 mid-term elections were adramatic victory for President GeorgeW Bush and the Republicans Insteadof the historical norm of the partycontrolling the White House losingBushrsquos party gained seats in the Sen-ate House Governorsrsquo races andState legislatures The result was abitter disappointment for the Demo-crats and has led to a fierce debatebetween the Left and Centrists aboutthe future policy direction of the partytowards the 2004 elections
The Leftrsquos analysis is that the ma-jority of Americans are natural Demo-crats Electoral defeat was due to thefailure to energize that base of Demo-crats The party failed to distinguishitself sufficiently from Bush and thusgive their voters a reason to turn outWhile the majority of Democrats op-posed Bush on tax cuts and the warwith Iraq a significant minority sup-ported him and campaigned on thatsupport The result the Left claimwas that the Democrats lacked a con-sistent message in contrast to Bush
Support for this argument can befound in the higher turnout amongstRepublicans than Democrats in 2002while in 2000 the combined vote forGore and Nader was 51 per cent Aninfluential book by John Judis andRuy Texeira identified lsquoThe Emerg-ing Democrat Majorityrsquo Theyclaimed that growing demographicgroups trended Democrat includingthe young socially liberal profession-als minorities and women
What policies would motivate thisnatural Democrat base The Left callfor rescinding the Bush tax cut a classwar against the corporate world amajor increase in lsquopublic investmentrsquoin schools childcare health care and
Letter from AmericaNIGEL ASHFORD
public transport and strong opposi-tion to the war
Centrists however have a verydifferent analysis of the Democratsrsquoproblems the public did not trustthem to pursue the war against ter-rorism vigorously to keep down taxesto spend their tax dollars wisely or toreflect their cultural values
A Gallup opinion poll found that57 per cent of Americans askedthought that the Democrats were nottough enough on the war on terror-ism while 64 per cent thought theRepublicans were There was the per-ception that the Democrats were notserious on the issue and just playingpolitics Evidence for this was the de-bate over the new Department ofHomeland Security blocked becausethe Democrats wanted to protectunion rights while the President de-manded more flexibility to deploy theworkforce Many voters saw the issueas the national interest versus a spe-cial interestmdashin this case that of theunions The Democrats were seen asputting the interests of one of theirmajor constituencies before nationalsecurity
The Democratic LeadershipCouncil in lsquoThe Road Aheadrsquo by AlFrom and Bruce Reed presented theCentrist case lsquoStop pretending wecan win a majority simply by energiz-ing our basersquo The Democrats were
not trusted on the war against terror-ism were hostile to the cultural con-cerns of many working-class Demo-crats on abortion and guns and stillseen as the tax-and-spend party lsquoToomany Americans donrsquot trust us tokeep their taxes down or to spendtheir money wellrsquo
The Centrist agenda is to stronglyprosecute the war against terrorismwhether against al-Qarsquoeda Saddam orothers and to abandon knee-jerk iso-lationism arising from the experienceof the Vietnam War to defend capi-talism and support small investorsagainst irresponsible managers to cutpayroll taxes and to downplay thecultural issues that divide Democrats
Which path will the Democratstake The Left is in the ascendancyMost of the remaining Democrats inoffice come from left-wing districtsNancy Pelosi a left-liberal from SanFrancisco was easily elected the newleader of the House Democrats over-whelming her Centrist opponent andrising star African-American HaroldFord The early field of presidentialcandidates for 2004 is dominated bythe Left tendency including SenatorJohn Kerry Representative DickGephardt Governor Howard DeanRev Al Sharpton former SenatorCarol Moseley-Braun and Represen-tative Dennis Kucinich Only Sena-tor Joe Lieberman and Senator JohnEdwards represent the Centrist wing
The future of US politics may de-pend on which road the Democratsdecide to take The US is currently alsquo50ndash50rsquo nation evenly balanced be-tween the parties A left turn couldlead to Republican dominance farinto the future
Dr Nigel Ashford is at the Institute of Humane Studiesat George Mason University and is co-author of US
Politics Today (Manchester University Press)
API
27MARCH 2003
E V I E WR
Trusting TonyFrankly itrsquos all just too depressing Theeconomyrsquos heading for trouble Busi-ness confidence is low investment in2002 was 92 per cent lower than theprevious year and manufacturing in-vestment was nearly 18 per cent downThe budget deficit is spiralling becauseour once lsquoprudentrsquo Chancellor (trea-surer) Gordon Brown made over-opti-mistic growth projections and startedthrowing money at problems
Therersquos a load of health-and-safetyand anti-discrimination measuresthatmdashto put it most politelymdashare ex-amples of letting the best be the en-emy of the good Every school tripneeds a formal risk assessment withthe result that many trips are simplynot taking place New trains orderedfor London commuter routes wonrsquothave toilets because the rules say thatat least one toilet in each four-car unitmust be wheelchair-accessible whichwould have cost ten or a dozen seatson every overcrowded train
Some of this is just insane Somelocal authorities say that safety at workrules mean that home-care workersmustnrsquot lift the disabled people theyare looking after Or therersquos rail safetyUntil recently we were seriously pro-posing to spend $10 billion on a bet-ter system to stop trains going throughred signals On average this would havesaved the lives of about three passen-gers every four years which is a lousybargain compared with other safety in-vestments Worse it would also havereduced the capacity of the networkby up to 15 per cent and forced morepeople onto the roads which are muchmore dangerous than even ourclapped-out railways The result was aprojected net increase of 13 to 21 deathsper year
Meanwhile in London the Cen-tral line of the Underground has been
Letter from LondonJOHN NURICK
API
closed for weeks after a train derailedwhen one of its motors fell off Therewere no deaths or major injuries in theaccidentmdashbut itrsquos a safe bet that someof the people who havenrsquot been ableto use the Central line have been in-jured or killed on the roads
What can one say If the authori-ties took the same attitude to the riskof fatal accidents in the health serviceevery hospital in the country wouldhave been closed for years
Despite all this the Conservativesare still hopeless Their leader IanDuncan Smith has a new wheezewhen a journalist asks him anythingdifficult he chortles merrily and saysitrsquos the most uninteresting questionimaginable and hersquos not going to wasteanyonersquos time by answering it His col-leagues have their knives out for him
Meanwhile in spite of the govern-mentrsquos problems with the economy andthe public services Tony Blair is grow-ing in stature having his waymdashandantagonising large sections of his ownparty in the process On several recentissues he has faced down the formi-dable Gordon Brown in a way that notlong ago was hard to imagine
Then he shocked everyone by com-ing out against having elected mem-bers in the reformed House of Lordswhen most voters want an all-elected
chamber and most MPs want a partly-elected one In the event Parliamentcouldnrsquot agree on any of the optionsfor reform so wersquore stuck with the sta-tus quomdashwhich is fine by Mr Blair
Then therersquos the war By the timeyou read this it may be over or we maystill be waiting or our lads may befighting Mr Blairrsquos strong line againstIraq has made him very unpopular Theanti-war march on 15 February was thebiggest demonstration London hasever seen A few days later 122 Labourbackbenchers voted against the gov-ernment and many more abstained
Mr Blair didnrsquot budge War is a se-rious thing he says lsquoBut in a situationsuch as this you have to do what youbelieve to be right because thatrsquos theprice of having responsibilityrsquo1
He has often been accused of gov-erning by focus group Certainly he hasseemed reluctant to antagonise anypowerful group That has clearlychanged In a sense his stand on Iraqmerely follows his action in sendingtroops to Sierra Leone and Kosovomdashbut it has stirred up far stronger domes-tic and international opposition
The irony is that now when he re-ally needs people to trust him wedonrsquot Even in the desperately seriousbusiness of justifying an unpopular warDowning Street canrsquot play it straightremember the dossier from lsquointelli-gence sourcesrsquo that turned out to belargely cribbed from a PhD thesis onthe Internet
NOTE1 The Guardian 1 March 2003
John Nurick is a management consultant based in theSouth of England From 1985 to 1990 he was
editorial director of the Australian Institute for PublicPolicy and later edited newsletters reporting on theUK Parliament and European Union institutions
28 MARCH 2003
E V I E WR
KEVIN DONNELLY
Private EducationEquals Public Good
When it comes to choosing be-tween government and non-gov-ernment schools Australian par-ents are lsquovoting with their feetrsquo Asshown by recent ABS figures(Schools Australia 2002) over thelast decade there has been a dra-matic increase in non-governmentschool enrolments
Approximately 30 per cent ofstudents now attend non-govern-ment schools compared with 22per cent in 1980 and 28 per centin 1990 Over the last decadewhile the number of governmentschools has fallen by 64 per centnon-government schools havegrown by 61 per cent
Of course not everybody valuesparentsrsquo right to choose and theAustralian Education Union(AEU) Labor governments andlsquoleft-wingrsquo academics in particularconsistently argue against non-government schools
One of the arguments put for-ward by those opposed to givingparents greater freedom of choiceis that government schools are bet-ter at promoting social cohesionand a strong sense of what KenBoston the ex-head of the NSWEducation Department terms lsquothebonds of civic friendshiprsquo
The assumption is that becausestudents attend non-governmentschools there will be greater socialdivisiveness and a breakdown inthe civic values needed to hold so-ciety together But there is no cred-ible evidence offered to support theclaim that government schools arebetter at promoting the commongood
In fact there is much to provethe opposite
First as anyone familiar withthe lsquoculture warsrsquo and politicallycorrect curricula will know insteadof government-controlled educa-tion promoting unity and cohe-sion it has led to public angst andparental complaints
Witness the very bitter debatein Queensland a year or two agowhen the government-mandatedStudies of Society and Environ-ment (SOSE) curriculum was in-troduced into schools Such was
the lsquoleft-wingrsquo bias in the curricu-lum in particular in the areas ofmulticulturalism and the environ-ment that many parents felt be-trayed
The Queensland debate is mir-rored by what is happening in theUnited States As noted by Ste-phen Arons in his book Short Routeto Chaos instead of promotingunity government control of thecurriculum leads to the opposite
What the school wars tell us isthat somehow we have been
Education Agenda
transforming a vital instrumentfor creating social cohesioninto a source of division andhostility that there is some-thing built into the structure ofpublic schooling that under-mines one of its most importantfunctionsAronrsquos argument that govern-
ment schools no longer transmit aviable sense of a common cultureor agreed civic values is reinforcedby another noted United Stateseducationalist Diane Ravitch
In a recent article in the jour-nal Education Next Ravitch be-moans the impact of cultural rela-tivism and the post-modern on theschool curriculum (where there areno commonly agreed values) andeven goes so far as to argue thatparents should be free to choosenon-government schools becausesuch schools have a better chanceof reflecting their values
In the current education sys-tem with the public schoolscommitted to multiculturalismbilingualism and other forms ofparticularism it is difficult toargue that parents should notbe able to choose schools thatmeet their cultural needsSecond if one accepts that lsquoso-
cial capitalrsquomdashthe networks volun-tary associations and civic bondsthat hold a community togethermdashis important for the health of ademocratic society then non-gov-ernment schools clearly have theadvantage
Unlike the government schoolsystem characterized by a heavy-handed centralized bureaucracyand teacher union control non-government schools are closer tothe communities they serve Bytheir very nature non-government
There is no credible
evidence offered to
support the claim
that government
schools are better
at promoting the
common good
29MARCH 2003
E V I E WR
ALAN MORAN
The lsquoRrsquo Files
Private propertyrights the key toachieving efficiency inrural water use
WATER IN AUSTRALIAWater has always been a definingissue in Australiarsquos prosperityAnd in recent decades irrigationhas grown rapidly Even so theproportion of Australia that is ir-rigated at two per cent of theland comprises a share that isamongst the lowest among OECDcountries Only Canada and therainiest countries New Zealandand the UK have lower sharesthat of the US is 11 per cent andin Japan it reaches 60 per cent
Modern agriculture is only 200years old in Australia and thoughin the first 100 years agriculturalproductivity was increased toequal that of anywhere in theworld gains continue to bemademdashoutput has doubled overthe past 50 years a growth thatcould not have taken place with-out a similar expansion of irriga-tion Irrigation in the MurrayndashDarling agricultural provincealone contributes $5 billion toAustralian agricultural outputand non-irrigated agriculture inthe region contributes a further $5billion This makes the areawhich comprises 14 per cent ofAustraliarsquos land mass responsiblefor a third of the nationrsquos $35 bil-lion agricultural output
Applying Property Rights to WaterMost of the uses of water involvechoices or compromisesmdashdrink-ing water versus irrigation versus
industrial and so on Some how-ever involve complementaritiesparticularly certain recreationaluses such as water sports that arefacilitated by storage and consis-tent availability
In many cases water will per-form sequential functionsmdashthesame water can be used and re-used for irrigation used for indus-trial cooling and finish as drink-ing water Water with differentsometimes competing productiveuses will be optimally used as longas two conditions are in placeThe first is that its ownership isclearly specified and the ownersrsquoobligations to other users (orclaims from other beneficiaries)are well understood The secondrequires each property right to betradable to enable acquisition bythose who value it most therebymaximizing its value
The rights specification andtherefore property ownership canrarely commence with a cleansheet of paper People acquire in-dividual rights to property ini-tially through a variety of routesOne of these is seizure of some-thing that was originally of littlevalue until it was acquired and im-proved Squatters assume rights inthis way However they are firstacquired they need to be tradableAPI
schools establish strong commu-nity networks and have a greaterreliance on the voluntary work ofparents
That non-government schoolsare more effective in this regard issupported by research into lsquoChar-ter schoolsrsquo in the United StatesAs noted by Chester Finn at theFordham Foundation giving localcommunities lsquoownershiprsquo overtheir school builds networks oftrust and reciprocity so vital forsocial cohesion
Social capital also relies on citi-zens being disciplined and orderedin their behaviour Selfishness vio-lent behaviour and rudeness act tofragment the community instead ofpromoting cohesion According toa number of Australian surveys itis here once again that non-gov-ernment schools are seen to bemore effective
As noted by the Centre for In-dependent Studies researcher Jen-nifer Buckingham in The Truthabout Private Schools in Australiawhen analysing why so many par-ents forsake the government schoolsystem
When comparing independentprivate schools with publicschools the major theme thatemerged was not differences inacademic standards and curri-culum but issues of disciplineand order The surveyed par-ents felt that the behaviour andattitudes of students in publicschools was unacceptablehellipAll accept that non-govern-
ment schools achieve better aca-demic results provide greater cur-riculum flexibility and save Aus-tralian taxpayers millions of dol-lars Equally as important is theargument that such schools streng-then Australiarsquos civic health andstock of lsquosocial capitalrsquo
Dr Kevin Donnelly is Director of EducationStrategies a Melbourne-based consulting group
E-mailkevindnetspacenetau
s
30 MARCH 2003
E V I E WR
and relatively inviolable Thisprovides the incentive for them tobe improved and for their ownersand others to search out ways inwhich the assets they representcan be used to provide increasedvalue or other benefits
If confidence in the exclusiv-ity an owner has over the prop-erty right is lost or was neverpresent the asset will be used lessproductively For example own-ers will milk them for their cur-rent-use value rather than trade-off present value for a future valuethat is less certain
Even without a total emascu-lation of individual rights (for ex-ample when title to the propertydepends on continuing govern-mental assent) lack of certaintybrings lower incomes and dimin-ished asset protection One out-come of this can be observed inthe MurrayndashDarling system Wa-ter rights on the Victorian side ofthe Murray are secure while thoseon the NSW side have been over-allocated and are subject to ad-ministrative discretion includinghaving a firm duration of only tenyears In Victoria high securitywater (available 95 per cent of thetime) comprises the great bulk ofentitlements In contrast in
NSW high security water is avail-able only 60-80 per cent of thetime The result is that farmers onthe Victorian side plant perennialcrops while those in NSW tendto focus on annual crops espe-cially rice
There are claims that Victoriarsquosmore robust property rights meanthat the State Government haslost lsquocapabilityrsquo to manage com-pared with NSW The flip side ofthis is the increased risk and as-sociated lower value of productionnorth of the Murray where prop-erty rights are attenuated Gov-ernments that give themselves in-creased capacity to direct produc-tion or to take individualrsquos prop-erty will need to accept lower lev-els of income and output
IRRIGATION ENVIRON-MENTAL BENEFITS AND SA-LINITY
The Types of IssuesIssues stemming from irrigationcomprise two types those impact-ing on the environment and thoseimpacting on private uses Theformer includes issues such as pre-venting loss of species ensuringthat certain sorts of species flourishand avoiding unattractive growths
such as blue-green algae which re-sult from fertilizer build-up
The second involves economicimpacts on different users
While environmental flows toensure species flourish are oftenhighlighted salinity is the mainfocus And while salinity has animpact on the environment itsimportance is in the conflict of in-terest between productive usersmdashthe complaint of lsquodamaged goodsrsquoby downstream users against thoseupstream
The MurrayndashDarling Basin Sa-linity Strategy 2001ndash2015 has es-timated that increased salinitybrings costs of $294 million perannum to the basin
Yet data on the salinity of theMurray Darling shows levels up-stream of South Australia arelower than they were in the early1980s and are only seriously abovethese levels as the river ap-proaches its mouth at the GoolwaBarrage
The Basin Salinity Manage-ment Strategy argues that progressachieved over the past decade willlsquobe cancelled within 20-50 yearsand median salinity levels wouldexceed the Australian DrinkingWater Guidelines for good waterquality within 50-100 yearsrsquo Thecause of this is said to be risinggroundwater tables due to land usechanges across the Basin
The disputes over salinizationare largely disputes between com-mercial parties Full specificationof rights and obligations will al-low these to be resolved as longas the impacts are measurabletheir causes identifiable and thevarious rights and obligations areknown and stable In this respecttechnology to measure salt in wa-ter and to trace increases to par-ticular locations is readily avail-able
Agreements about the alloca-tion of water rights between ju-risdictions and to the main irri-gation provinces have been inplace for over a century In the
Average Salinity in the River Murray (EC Units)1
3500
3000
2500
2000
1500
1000
500
0
January 2003
July 2002ndashJanuary 2003
July 1982ndashJanuary 2003
Hume D
am
Swan
Hill
Merbein
Morgan
Milang
Mening
ie
Goolw
a
Barra
ge
31MARCH 2003
E V I E WR
I
API
Musinghellipcase of the Murray the lsquocaprsquo onwater abstractions agreed betweenthe various jurisdictions in 1995largely validated agreements madeearly in the last century and be-fore Disturbing these agreementswould greatly undermine the trustin the sanctity of property rightsand seriously reduce agriculturalproductivity Hence increased al-locations for certain parties or forcertain uses (including environ-mental flows) would need to bepurchased at market prices
Developments in Australiaover recent decades have con-spired to make irrigation water farmore valuable This is exacer-bated by1 Activation of NSW lsquosleeperrsquo
and lsquodozerrsquo water rights as a re-sult of the increased scarcityvalue a change that bringseven greater pressure on theavailable supply
2 Increased scarcity leading tomeasures that more carefullyhusband the water Whilesome of these prevent evapo-ration loss and have thereforebrought a net increase in effec-tive availability others havereduced availability (these in-clude a more careful wateringwhich results in reduced run-off and re-use)
3 Increased capture of waterwithin the land on which itfalls once water is recognizedas scarce landowners will seekto ensure it does not leave theirland NSW and Victoria haveplaced limits (a strict 10 percent in NSW) of water fallingon property as entitlements ofthe owner Queensland has notyet enacted an equivalent tothis Such adaptations of thecommon law are essentialhowever if downstream usersare not to be expropriatedThere is likely to be constant
bickering over water rights espe-cially if State Governments seek toelevate sharing issues and to sanc-tify them with claims about promot-
Daniel Pipes in The New York Posthas a very cogent explanation forwhy the Left appears to be so happywith the likes of Osama bin Ladenand Saddam Hussein
To be clear about their attitudeshe quotes the renowned Germanelectronic music composer KarlHeinz Stockhausen who saidstraight after the attack on NewYork that it was lsquothe greatest workof art for the whole cosmosrsquo
As Pipes and many of us observedaily there is barely a bad word tosay about Saddam Hussein nor aniota of sympathy for thoseoppressed tortured and murderedby his reacutegime Instead they venttheir fury against the AmericanPresident and British Prime Minister
Why the nonchalancePipes draws our attention to Lee
Harris writing in a recent issue ofthe Hoover Institutionrsquos journalPolicy Review According to KarlMarxrsquos central thesis the demise ofcapitalism hangs on workersgrowing poorer over timemdashwhichof course did not happen Sorather than give up on cherishedexpectations of socialist revolutionHarris notes Marxists tweaked theirtheory and looked instead to theentire populations of poor countriesto carry out the revolution Classanalysis went out the windowreplaced by geography
The trouble is they have tooverlook militant Islamrsquos slightly un-socialist practicesmdashsuch as itsimposing religious law excludingwomen from the workplace andpersecuting atheists
As Pipes sums up September 11and the prospect of war againstSaddam Hussein have exposed theLeftrsquos political self-delusionintellectual bankruptcy and moralturpitude
The Loopy Leftby Andrew McIntyre
ing an improved environment Realsolutions require the issue be placedwithin a normal commercial frame-work which involves1 Clarifying the property rights2 Allowing water rights to be
fully detachable from propertyand able to be used howeverthe holder wishes subject toany damage this might imposeon others
3 Ensuring full rights to buy andsell the water
4 Defining rights so as not to re-duce the quality of other usersThis means ensuring that farm-ing practices that do not bringgreater salination than somestandard
5 Allowing rights holders tobank their water and ensureeven greater certaintyAllocating specific individual
ownership rights to water and al-lowing its trade is a well-foundedmeans of maximizing the usevalue It would also be likely tohave the beneficial side-effects ofreducing salinity and farm-basedpollutants caused by intensiveuse We should grasp such oppor-tunities But if the impending sa-linity problem is as great as someclaim other solutions might wellinclude buying out some allocatedirrigatorsrsquo rights However alter-natives may be to remove saltfrom the water by engineering so-lutions or simply to live withhigher salt
NOTE1 Human drinking water should
be less than 800 ECs (electri-cal conductivity one ECequals about 06 mglitre)while higher levels are accept-able for much farming activity
Dr Alan Moran is Director Deregulation Unitat the Institute of Public Affairs
32 MARCH 2003
E V I E WR
Reading FileDone
eral political systems worldwidehave consistently accretedpower to the centre often in theface of clear constitutional im-peratives to the contrary) Ifeared instead that a UN thathad been patently successful insomethingmdashanythingmdashmightbe granted greater powers to thepoint where it would kill truediversity and individualism (ortry to anyway) through inevi-table bureaucratic practices
Is such a fear unfounded Ap-parently not if many peopleshare the moral touchstone ofthe Opposition Leader SimonCrean He believes according tohis own words in Parliamentthat what the UN SecurityCouncil declares is moral whatit refuses is immoral
The latest manoeuvrings overIraq have therefore been heart-
ening It seems that the desiresof the powers small and largeto promote their own interestswill continue to hobble the UN
The problem with a unitedworld is that as the threateningimpasse over Iraq suggestedthere are very divergent viewsabout how that world ought tobe run on an international leveljust as there are at national and
sub-national levels The virtueof multi-layered levels of gov-ernments is that competing ju-risdictions give the individual adegree of choice
The greatest sin of totalitar-ian governments past and pres-ent is to deny their citizens theright to leave The greatest dan-ger that the United Nationsposes as far off as it now (hap-pily) seems is that leaving its ju-risdiction is for all practical pur-poses impossible
THE IMPASSE JUST PASSEDI listened to Prime MinisterHoward speaking to the motionbefore Parliament in relation tothe war It was a good speechbut neither he nor PresidentBush seems able to structure andlay out an argument with thestyle and content of BritishPrime Minister Blair His equi-valent speech before the BritishCommons provides a masterfulsummary of the reasons for thiswar and includes an immenselyreadable time-line of the utterineffectiveness of the UN pro-cesses in dealing with Iraq Henicely deals with allegations ofthe lsquorushrsquo to war lsquoOur fault hasnot been impatience The truth
UNITED OR DIVIDEDI write just hours after US Presi-dent George W Bush has deliv-ered his ultimatum to Iraqi Presi-dent Saddam Hussein leave Iraqwithin 48 hours or be removedBy the time this appears beforeyour eyes you will knowwhether Hussein has decided hischances of survival will be sig-nificantly greater by choosingexile or by remaining in IraqThe recent creation of the In-ternational Criminal Court ofcourse makes war more likelysince Hussein can have no guar-antee of a peaceful lsquoretirementrsquo
In the event that Hussein re-mains in Iraq you will also knowwhether Bush has kept his wordand most likely the outcome ofthis military venture
This matter is immensely im-portant for the people of Iraqand for the military personnelinvolved (including our ownAustralian soldiers sailors andaviators) But then so was theprevious Gulf War the US in-vasion of Grenada the Austra-lian intervention in East Timorand so on But a difference be-tween the current conflict andthose others could be the impactit has upon international insti-tutions Actually just one inter-national institution the UnitedNations
Prior to the first Gulf War Ifeared the coalitionrsquos success forthe reason that some of it mighthave rubbed off onto the UnitedNations I hasten to deny that Ifear the UN as some vast con-spiracy for world domination Ifeared instead that it couldstumble into a piecemeal cen-tralization of power (just as Fed-
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
E V I E WRs
33MARCH 2003
E V I E WR
Reading FileDone
ATTACKING THE GLOBALGOVERNORSThe Cato Institute is a whole-some body as demonstrated byits opposition to such interna-tional organizations as the Inter-national Criminal Court and forthat matter the United Nationsitself Ted Galen Carpenter forexample argues in lsquoPutting theUnited Nations on Noticersquo thatthe UN can and has done somemodest good occasionally It ishe says lsquoa good idea to have aplace where governments cangather to air grievancesrsquo But headds if it lsquoattempts to acquire ataxing authority [or] raise astanding armyrsquo then the USshould withdraw (as indeedshould Australia) Because thatwould turn it into an lsquoembryonicsuperstate that would menacelibertyrsquo
Go to
wwwcatoorgforeignpolicyunhtml
THE INTERNATIONALORGANIZATIONS THEM-SELVESThe United Nations has beenaccused of being often ineffec-tive and always slow Well ev-ery time Irsquove hit the UNrsquos Web-site even with my nifty broad-band Internet connection slow-ness rules Perhaps the site isbeing continually accessed bythe teeming masses Anyway goto
wwwunorg
With 15 members alreadyand 13 more on the way thereremain hopes that the EuropeanUnion will be a force for a stable
twenty-first century Equallywith 15 members already exhib-iting rather divergent views overthe issue of Iraq and most of theforthcoming members sidingwith the United States perhapsthis is overly hopeful Go to
europaeuintindex_enhtm
Then there is the WorldTrade Organization the organi-zation behind which protection-ist nations can hide from unilat-eral trade liberalization by pre-tending to support multilateraltrade liberalization Go to
wwwwtoorg
And we mustnrsquot forget the In-ternational Criminal Court fearof which was no doubt a featureof Saddam Husseinrsquos rejection ofexile as an option and the furyof which is promised by a num-ber of prominent lawyers to bevisited upon our very own PrimeMinister Go to
wwwicc-cpiint
FEEDBACKI would welcome advice fromreaders on any other sites of inter-est to IPA Review readers E-mailme on scdawsonbigpondnetau
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
is our patience should have beenexhausted weeks and monthsand years agorsquo
Go to
wwwnumber10govukoutputPage3294asp
THE STRUGGLE BETWEENTHE CONTINENTSIf you are patient you can readthat wonderful British rag TheSpectator for free Last weekrsquoscopy is available on-line One ofits regular columnists is MarkSteyn an Americo-phile Cana-dian who has a robust turn ofphrase and an abiding disdain formuch modern music (whichseems to place him very comfort-ably into The Spectatorrsquos culturalmatrix)
His piece on the future de-cline of Europe vis-agrave-vis Ame-rica makes for fascinating read-ing Go to
wwwspectatorcouk
then click on the lsquoBack Issuesrsquobutton and choose the edition of15 March 2003
E V I E WR
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
11MARCH 2003
E V I E WR
warmer and wetter than now andatmospheric CO2 was 78 per centof that today After warming theatmospheric CO2 and CH4 con-tent increased suggesting that at-mospheric temperature rise drivesan increase in atmospheric car-bon dioxide and methane con-tents During the history of thelatest glaciation armadas of icewere released into the sea every7000 years resulting from thephysical failure of thick icesheets These had a profound ef-fect on climate Small cool peri-ods occurred every 1100 to 1300years
The zenith of the last glacia-tion was 18000 years ago Sealevel was 130 metres lower thantoday temperature was 10ndash15˚Clower than today and the north-ern hemisphere was covered byice to 38˚N up to 3 kilometresthick
YESTERDAYThe northern polar ice sheetstarted to melt 14700 years agoThere were very rapid and majortemperature fluctuations sea lev-els rose and fell and the total sealevel rise over the last 14700years has been at least 130metres Sea level rise resulted inthe breaching of the Mediterra-nean into the Black Sea Basinsome 7600 years ago and is prob-ably the origin of the SumarianBabylonian and biblical stories ofa great flood
One of the consequences of amassive sea level rise over the last14700 years is that the WestAntarctic Ice Sheet was nolonger underpinned by the landTwo thirds of the West Antarc-tic Ice Sheet collapsed into theoceans and sea level rose 12metres The final third of theWest Antarctic Ice Sheet has yetto collapse to produce a 6 metresea level rise as part of the dy-namic post-glacial climate onEarth Climate changes inducedby changes in ocean currents
cooled North Africa grasslandschanged to a desert humans mi-grated and the great Mesopo-tamian cities were established
Sea levels were 1ndash3 metreshigher in a greenhouse 6000years ago There was 20 per centmore rainfall Cold dry periodsglacier expansion and crop fail-ures between 5800 and 4900years ago resulted in deforesta-tion flooding silting of irrigationchannels salinization and thecollapse of the Sumerian citystates Long periods of El Nintildeo-induced drought resulted in theabandonment of Middle EasternIndian and North Americantowns In 1470 BC () Thira ex-ploded weakened the dominantMinoans and changed the courseof western history
Global cooling from 1300 to500 BC gave rise to the advanceof glaciers migration invasionand famine Global warmingcommenced again at 500 BCthere was an excess of food andgreat empires such as the AshokaChrsquohin and the Romans grewContemporary records and Ro-man clothing shows that condi-tions were some 5˚C warmer thantoday
In 535 AD Krakatoa explodedas did Rabaul in 536 AD TheEarth passed through cometarydust in 536 AD The dusty atmo-sphere reflected heat and dark-ness prevailed As a result theclimate cooled and there wasfamine and warfare Changes inocean currents resulted in theMedieval Warm Period from 900to 1300 AD The first to feel thechange were the Vikings whowere able to navigate the north-ern waters colonized Newfound-land colonized Greenland andestablished extensive trade routesas far south as the modern GulfStates On Greenland crops weregrown and there were cattle Thiswould not be possible today Thewarmer wetter climate of Europeproduced excess crops and wealthwhich resulted in the building ofcastles cathedrals and monas-tries As with previous green-house events there was greatprosperity
In 1280 AD volcanic erup-tions on Iceland and a change inocean currents started the LittleIce Age which finished in 1920The North Sea froze in 1303 and1306ndash1307 there was massivefamine in 1315 and the plague
Sea
Surf
ace
Tem
pera
ture
degC
21
22
23
24
25
26
Years Ago
Large temperature changes over the last 200years have been recorded in history and fromthe oxygen isotopes of floating marine animals
Dark Agescold period
Medievalwarm period
LittleIce Age
2000 1500 1000 500 Now
s
12 MARCH 2003
E V I E WR
pandemic attacked the weakenedpopulation in 1347ndash1349 Therewas massive depopulation and ittook Europe 250 years to reachthe population of 1280 AD Dur-ing the Little Ice Age there werewarmer periods associated withsunspot activity During mini-mum sunspot activity (1440ndash1460 1687ndash1703 and 1808ndash1821) the intensely cold condi-tions were recorded by the Dutchmasters and King Henry VIII wasable to roast oxen on the frozenThames There were food short-ages Short cold periods occurredafter the eruptions of Tambora(1815) and Krakatoa (1883) re-spectively In fact 1816 wasknown as the lsquoyear without asummerrsquo This was the time whenTurner painted stormy oceansand skies full of volcanic dustMary Shelley wrote Frankensteinand Byron wrote Darkness
TODAYThe twentieth century and earlytwenty-first century AD are timesof natural post-glacial reboundIce sheets a rare phenomenon inthe history of time still exist Sealevel is relatively low as are glo-bal temperatures and atmos-pheric CO2 Between 1920 and1945 there was a period of warm-ing (037˚C) and another thatcommenced in 1976 (032˚C) In1976ndash1977 global temperaturesin the lower atmosphere jumped03˚C sea surface temperature inthe equatorial Pacific jumped06˚C sea surface temperatureduring upwelling increased 15 to3˚C but there was reduced up-welling the heat content of theupper 300 metres of the worldrsquosoceans increased there was in-creased wave activity in theNorth Sea and the length of theday changed The stepwise in-crease in temperature in 1976ndash1977 shows that there was a ma-jor re-ordering of the ocean heattransport coinciding with anorbital change expressed as a
change in the length of the dayMaybe the global warming of thetwentieth century is just a mea-sure of the variability on a dy-namic evolving planet
To put such measurementsinto perspective over the historyof time changes in atmospherictemperature in the twentieth
century can only be consideredsmall and slow A 24-year globalcoverage of satellite atmospheretemperatures shows only modestwarming in the Northern Hemi-sphere and a slight cooling in theSouthern Hemisphere Tempera-ture measurements from balloonsagree with the satellite measure-ments for the period of overlapBecause greenhouse warming is aphenomenon of the atmospheresignificant changes should havebeen recorded They have not
CONCLUSIONSUnderpinning the global warm-ing and climate change mantra isthe imputation that humans liveon a non-dynamic planet On allscales of observation and mea-surement sea level and climateare not constant Change is nor-mal and is driven by a large num- API
ber of natural forces Change canbe slow or very fast However wesee political slogans such as StopClimate Change or governmentpublications such as Living withClimate Change demonstratingthat both the community andgovernment believe that climatevariability and change are notnormal By using the past as thekey to the present we are facingthe next inevitable glaciationyet the climate economic politi-cal and social models of todayassess the impact of a very slightwarming and do not evaluate thehigher risk of yet another glacia-tion Geology archaeology andhistory show that during glacia-tion famine war depopulationand extinction are the norm
In 1831 Admiral Sir JamesRobert George Graham had theUnion Jack hoisted on a volca-nic land mass that suddenly ap-peared near Sicily It was calledGraham Bank and was claimed byEngland It was also claimed bythe Kingdom of the Two Sicilieswho called it Isola Ferdinandeathe French (LrsquoIsle Julia) andother powers In the subsequentdispute over ownership Franceand the Kingdom of the TwoSicilies almost came to war andEngland and the Two Kingdomsof Sicily had a diplomatic rowDuring the intense diplomaticdispute the island quietly slippedback underwater Graham Banksserves to show that whateverpolitical decisions we humansmake the land rises and falls sealevels rise and fall and climateschange as they have done sincethe dawn of time
Ian Plimer is the Professor of Geology in the Schoolof Earth Sciences at The University of MelbourneThis article is an edited version of his recent paperto the IPArsquos Climate Conference delivered on 28
February 2003 a full version of which can befound on the IPArsquos Website
On all scales of
observation and
measurement sea
level and climate
are not constant
Change is normal
and is driven by a
large number of
natural forces
13MARCH 2003
E V I E WR
FOR two years the worldrsquossecond largest hydrocarbonsproducer spent beaucoupdollars on a clever public re-
lations and advertising campaign toconvince consumers that BP no longerstands for British Petroleum but for Be-yond Petroleum
One advert proclaimed lsquoWersquore oneof the largest producers of natural gashellip and are investing in the new energysources of the futuremdashhydrogen andwind Itrsquos a startrsquo Another tried to getthis line past the guffaw test lsquoWe be-lieve in alternative energy Like solarcappuccinorsquo
Many people expressed surprise thata huge oil company was so committedto alternative energy technologiesThey neednrsquot have
BPrsquos total six-year investment in re-newable technologies was $200 mil-lionmdashthe same amount it spent on thelsquoBeyond Petroleumrsquo advertising cam-paign Thatrsquos certainly an impressivetab for image enhancement But itrsquos adrop in the barrel for futuristic tech-nologies that were the centrepiece forthe slick marketing effort
Indeed all its preening and pufferynotwithstanding BPrsquos actual invest-ment in renewable energy was a whop-ping 005 per cent of the $91 billion itspent to buy oil giants Arco and Amocoback in the 1990s Moreover just as theadvertising campaign was windingdown BP announced it was spending$675 billion for a 50 per cent control-ling interest in a rich Russian oil pros-pectmdashand will be spending another$20 billion over the next five years ex-ploring this and other newer fieldsaround the world
In other words the advertising cam-paign was little more than lsquogreen-washingrsquomdashdisinformation intended topresent an environmentally responsiblepublic image BP wanted people to per-
BPmdashBack to PetroleumPAUL K DRIESSEN
theoretically harmless puffery It also re-flects the desire of many multinationalcompanies to appease critics and gaina public relations advantage over com-petitors by adopting the language ofideological environmentalism
This radical school of thought in-creasingly uses ethical buzz-words anddogmas to justify its demands Chiefamong them are sustainable develop-ment and the precautionary principlethe foundations of so-called lsquocorporatesocial responsibilityrsquo (CSR) and lsquoso-cially responsible investingrsquo (SRI) doc-trines
Eco-activists from affluent Westerncountries developed the doctrines topromote their agendas and oppose en-ergy and economic development BPhas long been at the forefront of theseefforts as a charter member of theWorld Business Council for SustainableDevelopment through frequent meet-ings with activist groups and by fund-ing many radical groups
The activists define what is lsquorespon-siblersquo focusing debate on conjecturalproblems and theoretical needs of fu-ture generations of wealthy elitesmdashandignoring real immediate life-and-death needs of people who struggledaily just to survive The stakes arehuge
More than 15 billion people in de-veloping countries still do not have ac-cess to electricity Half a billion womenand children spend their days collect-ing firewood or squatting in mud andanimal faeces to collect and dry ma-nure for fuel Millions die every yearfrom lung diseases caused by indoor airpollution from cooking fires and dys-entery due to contaminated drinkingwater
Hydroelectric or fossil fuel projectscould provide electricity for familieswater purification plants and economicdevelopment But radical activists op-
ceive it as a lsquosocially responsiblersquo leaderand reward it accordingly Few did
Green activists denounced BP forlsquohypocrisyrsquo and blasted the company forcontinuing to lsquoexploit some of theworldrsquos most sensitive ecological areasrsquoA major business magazine said sim-ply lsquoWell please If the worldrsquos secondlargest oil company is beyond petro-leum Fortune is beyond wordsrsquo
Meanwhile BPrsquos total wind and so-lar electrical output last year was barelyenough to keep the lights burning inRegina Saskatchewanmdashand thought-ful observers are beginning to realizethat wind and solar arenrsquot quite as eco-friendly as activists claim
A single new 555-MW gas-firedgenerating plant in California producesmore electricity than do all the statersquos13000 wind turbines The gas-firedplant occupies about ten acres the gi-ant 200-foot-tall windmills dominatethousands of once-scenic acres and killthousands of raptors and other birdsevery year Current photovoltaic tech-nology is just as habitat-hungry
Worse chief executive Lord JohnBrowne was forced to lower BPrsquos pro-duction estimates three times last yearand the companyrsquos 11 per cent returnon average capital was well below thatof arch-rivals ExxonMobil (137 percent) and Royal DutchShell (148 percent) BP share prices reflected inves-torsrsquo displeasure with its poor perfor-mance and the fact that the companyrsquosprofit margins would not improve for adecade or more if the company re-mained focused on renewable energyand old oil fields
Thus if BP ever really was BeyondPetroleum going Back to Petroleum(and Bigger Profits) was a sound busi-ness decision
However the lsquoGreat Beyondorsquo adcampaign involves more than meregreenwashing and disingenuous but s
14 MARCH 2003
E V I E WR
API
pose these projects and say that theworldrsquos rural poor should be contentwith solar panels on huts
Investors are also at risk particu-larly retirees whose futures depend onpension and mutual funds that ownnearly $8 trillion in market sharemdash50per cent of the total stock marketMany of these funds are managed lessto safeguard or benefit the investor thanto promote radical principles under thedisguise of so-called ethical funds
These funds claim to provide pro-fessional unbiased analytical and ad-visory services But in reality they sup-port political agendas based on often-questionable analyses and on lsquostake-holderrsquo (activist) input to justify howthey grade companies in client portfo-lios They regularly excoriate compa-nies such as ExxonMobil claiming itsrefusal to back the Kyoto climate treatywill destroy shareholder value Mean-while they praise companies such asBP and promote global governanceand solar panels on huts
Australiarsquos energy consumers willbecome yet another example of lsquocol-lateral damagersquo if the radicals havetheir way over global warming Onceagain some of the culprits are right inthe BP boardroom
In 1997 BP chief Browne endorsedthe global warming theory and saidtough measures should be imposedquickly even in the absence of scien-tific proof A Clinton-era Energy In-formation Administration report con-cluded that the climate treaty woulddrain $340 billion a year from the USeconomy The Australian economywould also get hammered And all thispain even assuming perfect compli-ance with the treaty would reduce av-erage global temperatures in 2050 byonly 02˚C below what they would bewithout the treaty according to theUSArsquos National Center for Atmo-spheric Research
But BP Australasia President GregBourne is undaunted Hersquos stumping thecountry from Melbourne to Brisbaneand Darwin to Perth importuning busi-nesses to pressure the PM to ratifyKyoto Could it be pure altruism Ormight the old profit motive be at work
A 1997 memo to Enron presidentKen Lay described BP as Enronrsquos lsquoin-ternational equivalentrsquo Indeed BP isstriving mightily to replace Enron asthe worldrsquos premier broker in the newbusiness of buying and selling permitsto emit greenhouse gases The expec-tation is that playing the climatechange game could earn BP billions ofdollars via traditional petroleum opera-tionsmdashand billions more via emissiontrading schemes The company is al-ready trading credits among its unitsas part of a training regimen for theanticipated emission Olympics
One cannot help but suspect thatthis huge EU oil giant might also bemotivated by Europersquos obvious desireto protect its industries from US and
other foreign competition They clearlysee the Kyoto Protocol not merely asan environmental programme but alsoas a way to pressure the United StatesAustralia and other countries to reduceenergy use and economic productivity
EU Environment CommissionerMargot Wallstrom put it bluntly whenPresident Bush abandoned the Kyotoclimate treaty lsquoThis is not a simple en-vironmental issuersquo she railed lsquoThis isabout international relations this isabout economy about trying to createa level playing field for big businessesthroughout the worldrsquo Several EU of-ficials echoed her sentiments suggest-ing that Americarsquos lower energy taxesconstitute an unfair trade advantagethat could justify trade sanctionsagainst the US
In short what we are witnessing isa profound and disturbing convergenceof ideology activism marketing poli-tics and financial gainmdashall in the ser-vice of radical policy agendas and allbeautifully attired in the lavish raimentof corporate ethics and responsibilityThis is proof positive that social respon-sibility can be a wondrous thing in thedexterous hands of craftsmen who re-ally know how to display and utilize it
How can we stop the charade Forstarters demand that corporate socialresponsibility puts people first puts de-velopment back into sustainable devel-opment and ensures that precaution-ary guidelines safeguard people andcommunities from the havoc wreakedby radical green policies Insist that alldecisions be based on sound peer-re-viewed science and solid evidencemdashnot on hysterical claims and shrillrhetoric by activists regulators andjournalists who reward pseudo-scien-tific soul-mates and pillory any scien-tists who dare disagree with them
Next urge principled regulators andjournalists to investigate these compa-nies and investor firms for self-servingarrangements and breech of fiduciaryduty Demand that the companiesfirms and activist groups open theirbooks and provide full disclosure oftheir meetings contacts and monetaryand other relationships
Last in this era of high-minded re-form prevail upon legislators to changethe law to make these groups subjectto the same false advertising laws andthe same standards of transparency andaccountability that activists insistshould govern for-profit corporationsUnbelievably right now these ideo-logues are mostly exempt
The world will thank you For it willbe a better safer more ethical placemdashespecially for energy consumers retir-ees and the worldrsquos poor
Paul Driessen is a senior fellow for the AtlasEconomic Research Foundation in Fairfax VA This
article is based on his recent white paper lsquoBeyondPetroleummdashor Beyond Probityrsquo which can be read
in its entirety at wwwcdfeorgdriessenhtm
BPrsquos total six-year
investment in renewable
technologies was $200
millionmdashthe same
amount it spent on the
lsquoBeyond Petroleumrsquo
advertising campaign
15MARCH 2003
E V I E WR
FOR three years Reputa-tion Measurement Ltd andThe Age and The SydneyMorning Herald have been
trying to impose their political agen-das on Australiarsquos top 100 corpora-tions They think that Australiarsquos cor-porations should be good citizens andthat by measuring what they think itmeans to be a good citizen they canchange corporate behaviour
Westpac ranked number one on the2002 Index and rated well in everycategory Flight Centre ranked num-ber one on financial performance but47 overall It was in the doldrums inevery other category including beingranked 99 on environment On thesurface this seems very strangemdashFlightCentre manages shopfront travel agen-cies The reason for this bizarre resultwas not hard to find
Reputation Measurement sug-gested that lsquocompanies seeking to dem-onstrate their worthiness as sociallyresponsible organizations are most suc-cessful when they widen their tradi-tional business stakeholder base to in-clude community stakeholdersrsquo Fur-ther lsquo[i]nvestors and consumers are in-creasingly making decisions based onlonger-term issues linked to a com-panyrsquos capacity to contribute to a sus-tainable futurersquo In other words theReputation Index is an instrument foradvancing a number of political agen-das corporate social responsibilitystakeholder capitalism and sustain-ability
For example corporate social re-sponsibility suggests a common agree-ment about what is good Whose defi-nition of good is to be believedmdashtheelectoratersquos or the activistsrsquo In a lib-eral democracy the rules are set by aconsensus that determines not so muchwhat is good corporate behaviour but
The Good Reputation Index 2002A Tale of Two Strategies
GARY JOHNS
what is and what is not acceptablebehaviour The Index is an exercise incapturing the reputation agenda andusing it to regulate corporate beha-viour
Stakeholder theory suggests that allinterests in an enterprise compete toobtain benefits from the enterprise butthat none has priority It is in effectasking lsquoin whose interests should theenterprise be runrsquo It assumes that so-ciety grants an enterprise the right toexist The community through its law-makers may grant licences and certainprivileges in return for the enterprisecomplying with the law It does notlicense stakeholders at large to imposetheir views on the corporation
Sustainability refers to ecologicalsustainability and ecological sustaina-bility is premised on the notion of lim-its to growth based on limits to resour-ces It argues that natural resources arebecoming scarcer It ignores the his-tory of technological innovation of-ten promoted by competition betweencorporations and the fact that such in-novation has extended physical re-sources in ways untold
An analysis of the 2002 Index re-veals that those corporations whosescore improved massively between2001 and 2002 did so because they didnot participate in 2001mdashthey wererated anywaymdashbut did so in 2002Conversely those whose score plum-meted in 2002 did so because they par-ticipated in 2001 but not in 2002Moreover the corporations who rosemassively in the ranks did not changetheir behaviour they just filled out theforms better
Greenpeace were very aggressive intheir attitude to corporations lsquoTo en-able us to verify your responses pleaseprovide us with further supportingdocumentation If hellip we are unable
to verify your response we will defaultyour response answer to a ldquodonrsquot knowrdquowhich will be marked and downgradedaccordinglyrsquo Unfortunately those ofwhom we would expect bettermdashforexample The Brotherhood of St Laur-encemdashalso penalized non-respon-dents As the technique was used byalmost all of the research groups thiswas presumably a deliberate strategy ofReputation Measurement Ltd
More disconcerting were reportsfrom corporations of the researchgroups touting for business by ringingfirms and offering their services to helpfill out the questionnaire Althoughthe level of disclosure has increasedsince the 2001 survey the touting con-tinued
The Index was published in Octo-ber 2002 obviously to coincide withthe reporting season and in the hopethat shareholders would use the Indexto seek changes to corporate behav-iour A sample of the major gainers andlosers on the Index reported no men-tion of the Index More importantlythere was no discernible impact onshare prices
The good news is that the Indexfailed miserably to achieve its objec-tives The bad news is that enough cor-porations played along to keep it alivein certain media and academic circlesIt was a chance for self-appointedNGOsmdashwho provided the ques-tionsmdashto regulate corporations bypublishing a list of good capitalists andbad capitalists Every corporation thatparticipated in the Index should thinkcarefully about whether it can justifythe agenda to its shareholders
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
16 MARCH 2003
E V I E WR
Tomorrowrsquos Reform
RALPH Waldo Emersontold us that lsquoa foolish con-sistency is the hobgoblinof little minds adored by
little statesmen philosophers and di-vinesrsquo and enjoined us lsquoto speak whatwe think today in words as hard ascanon balls and tomorrow speak whattomorrow thinksrsquo While statesmenshould not persist with known errortheir wanton inconsistency makespolicy formulation confoundedly dif-ficult
When he asserted that lsquoWhat de-termines the course of a nationrsquos eco-nomic policies is always the eco-nomic ideas held by public opinionrsquoLudwig von Mises must have hadeven less confidence in little states-men His pupil Friedrich von Hayekurged Antony Fisher not to enterpolitics but instead to found think-tanks which with fact and argumentwould change public opinion
Even among liberalismrsquos oppo-nents few today argue that Misesrsquoand Hayekrsquos ideas and Fisherrsquos liberalthink-tanks did not lead the 1980sand 90s almost world-wide liberal re-vival Why would they when bymuch the same means Fabian So-cialism had brought the welfare stateto Western nations In neither trendhowever were politicians the mereagents of popular opinion Especiallyin democracies political leadersrsquo ca-pacities to ignore it are indeed mod-est but their abilities to influence itare very much less so Even SaddamHussein works hard at influencingIraqi opinion Can we hypothesizethat the ways that leaders use theirinfluence distinguish tyrants fromdemocrats and the purposes forwhich they use it distinguish politi-cians from statesmen
Liberalismrsquos headlong chargethrough the corridors of power could
JOHN HYDE
arguments could have been em-ployed are nonetheless being de-fended by appeal to popular miscon-ceptions of the sort that PaulineHanson the Democrats and Greensactually believe Unless the majorparties have had a radical change ofheart they believe differently
Take the proposed Free TradeAgreement (FTA) with the UnitedStates Trade experts are not of onemind about its net worth My quar-rel is therefore not with the FTAitself but with the Governmentrsquos de-fence of it If the FTA will bring netbenefits then these will come mostlyfrom improved access to Americangoods and capital our own reductionof anti-competitive regulation ofdrugs medical insurance performingarts professional services textilesrural commodities etc and the dy-namic advantages of mixing it withthe Yanks But the government ispromoting the FTA almost solely inmercantilist (exports goodimportsbad) terms
To treat foreign goods servicesinvestment and ideas as an invasionparodies voluntary exchange whichdoes not happen unless both partiesbenefit The Government trumpetsa fact that nobody disputes namelythat it pays to sell into the best pay-ing markets but says nothing to edu-cate us in the advantages of buyingwell from foreigners as well asneighbours Once long ago Howardcriticized Pauline Hanson for her xe-nophobia That day he seemed to un-derstand the benefits of exchangewith foreigners
Until recently Australia hadbeen insisting that the only way toworld trade reform was via the mul-tilateral processes of the World TradeOrganisation and currently theDoha round A bilateral FTA with
not have proceeded without leaderssuch as Margaret Thatcher and ZhouEnlai who changed public opinionas did Bob Hawke in Australia Nowhowever liberalismrsquos charge hasslowed even in some places beensomewhat reversed Canberra hasnot been immune from trends thatsee politicians no longer so firmly re-sisting demands for economic privi-leges or as others see the same phe-nomenon no longer so blindly fol-lowing economic rationalism
Very poor economic decisionsaboundmdashrejection of the Trebeck re-port on petrol pricing preference forethanol production extending mo-tor and textile protection rural sub-sidies taxpayer contribution to theDarwin-to-Alice Springs railwayetc etc But there is also progressThe pride that John Howard takesin the fact that Australians are lessdivided against each other is surelyjustified The hugely importantlabour welfare and arguably also thehealth-care markets have been im-proved Budget balance has beenachieved albeit with high taxes Al-though net legislative and adminis-trative progress toward a more lib-eral more open more efficienteconomy has dwindled it would stillbe fair to say it has not been reversed
Our statesmenrsquos words as hard ascannon balls however that is thoseintended to enlighten rather thanappeal to public opinion are beingreserved for the Iraqi conflict In con-trast in the economic arena we areno longer encouraged to accept anyunwelcome truths Even when de-fending measures that I am morethan content to accept as beneficialthe government seems to select itsargument at best randomly ignoringprinciples of economic efficiency andequity Policies for which textbook
17MARCH 2003
E V I E WR
the US may or may not result in anet increase in trade flows but if itis not a meaningless piece of paperdelivering only political benefits tothe Government it will certainlydivert trade from our other tradingpartners How will China KoreaJapan etc react to losing their lsquomostfavoured nationrsquo status Such ques-tions should be addressed in termsthat do better than reinforce our xe-nophobic prejudices
By appealing to Hansonite mis-conceptions the Government mayand probably will improve itschances of bringing forward a policythat I am more than willing to ac-cept it believes is a good one It isafter all the recommendation of theDepartment of Foreign Affairs andTrade However by so doing it is re-inforcing delusions it must overcomefor further economic reform Whatis more I am reminded of a quip thatI am sure the PM has also heard lsquoNoGovernment is really dangerous un-til it believes its own bullshitrsquo Poli-ticians and I suspect bureaucratsalso are all too prone to believingtheir own utterances Unwilling toadmit their deceptions even whenspeaking in house they quickly con-vince themselves of the truth of theirown and colleaguesrsquo loose rhetoricand worse These are the people whomust negotiate the Agreement whilelooking over their shoulders at anAustralian electorate whose alreadystrong mercantilist tendencies havebeen reinforced by the people bestplaced to disabuse them The poten-tial cost is obvious
The US Free Trade Agreement isbut an example of a tendency thatought to be worrying In debateabout refugee policy motor fuel sup-ply single-desk wheat sales the sup-ply of medical practitioners and pres-ervation of the environment has notthe Government employed argu-ments that are not compatible withits professed liberal philosophy Hasit not seemed that it does not knowthe standard liberal responses to theself-serving demands of vested inter-ests and bigots With due respect to
Emerson consistency allows deci-sions to be made without the neces-sity of thinking every one throughfrom fundamental principles whichnobody in authority has the time orthe mental agility to do
Politically disinterested educa-tors such as the IPA can often callsome pretty good minds to their aidEven so when the Government it-self fosters public misconceptionthey cannot be expected to undo theerror The single greatest sin of thecurrent government is that it is notbuilding opinion for tomorrowrsquos re-form Why not
I suggest because it is politicallydifficult Whereas calls to resist out-siders appeal to deeply ingrainedtribal instincts calls to uphold thecivilizing and wealth-building insti-tutions that afford protection tostrangers and admit their goods ser-vices persons and ideas make nosuch visceral appeal These codes aremuch later developments in themarch of mankind and to manypeople they remain counter-intui-tive They must therefore be de-fended by sustained argumentHayek knew that politicians whosetime horizons in the absence ofknown crises tend to be the nextelection would (to use Howardrsquosown expression) seldom have the
tickers He turned therefore to theless articulate but far more resolutethink-tanks
It is relatively easy to appeal tothe sort of Chauvinism that sur-rounds sporting activity and argu-ments about refugees and meat quo-tas When a Prime Minister talks ofsovereignty guaranteeing our bor-ders or the interests of our exportersor domestic manufacturers he is notnecessarily wrong but his task iseasier than that of defending rulesthat permit voluntary co-operationamong strangers The principle thatdefends the non-unionistrsquos right towork the consumerrsquos right to buy for-eign goods and everyonersquos right tohear alien ideas and which shouldprotect racial and religious minori-ties from exclusion still needs hisleadership
Unless statesmen recognize theinconsistencies that arise not fromthe changed opinions that con-cerned Emerson but from trying tobe all things to all men they arelikely to govern in ways that are un-fair and inefficient If the public doesnot recognize consistency then thelsquolittle statesmenrsquo may find them-selves compelled to yield to the de-mands of the more articulate vestedinterests In such a case Heaven helpthe inarticulate who will be effec-tively disenfranchised But the insti-tutions which when consistentlyapplied give us liberty equity andprosperity are not strongly intuitive
They nevertheless distinguishAustralian society from say Iraqi so-ciety They give us the economicstrength to defy tyrants and they giveus a land worth defending They arecertainly not in danger of disappear-ing but they are in danger of beingeroded Lead us Mr Howard
While statesmen
should not persist
with known error
their wanton
inconsistency makes
policy formulation
confoundedly
difficult
API
John Hyde is a Senior Fellow with the Institute ofPublic Affairs His book Dry In Defence of
Economic Freedom was published by the IPA in November 2002
18 MARCH 2003
E V I E WR
DESPITE the obsessivepublic attention to pricesat the petrol pump thepetroleum-refining sector
rarely registers on the media radarscreen This is unfortunate as the sec-tor fuels most movement of peopleand goods in our economy and soci-ety And it is in trouble
It is fragmented stunted and sur-vives by abjuring profit and mortgag-ing its future Without radical reshap-ing it is likely to wither leaving usexposed to the vagaries of the inter-national refined-products market
FEATURES OF THE AUSTRA-LIAN REFINING SECTORThe first thing to note is that by in-ternational standards Australia is arelatively small player The most re-cent international figures show thatour total output of refined productsin the third quarter of 2002 was 89million tonnes This compared withOECD production of 486 milliontonnes including US production of202 million tonnes Total Australianrefinery capacity of 870000 thousandbarrels per day (bpd) compares withthe figures for China (53 million)South Korea (26 million) and Singa-pore (11 million) Total regional re-fining capacity and production con-tinues to grow as Australiarsquos stagnatesIn the five years to 2000 regional out-put grew by 22 per cent
Second the structure of the indus-try is weak The dispersed geographi-cal distribution of our refining sectorreflects its historical developmentwith each State capital city support-ing one or more refineries Over thelast two decades the number of ma-jor oil companies operating in Aus-
Petroleum RefiningRationalization or Atrophy
JIM HOGGETT
tralia has shrunk from nine to fourAlthough the number of players hasmore than halved the number of re-fineries has reduced by only two fromten to eight The average capacity ofAustralian refineries is around100000 bpd New refineries in theregion are generally significantlylarger Singaporersquos largest has a capac-ity of 375000 bpd
Given the open Australian mar-ket our ex-refinery prices are virtu-ally set by the major exporters in theregion who are also operating on tightmargins Moreover the proportion-ately heavy demand for diesel in SEAsia tends to generate a persistentsurplus of gasoline which is availablefor export to Australia at discountedprices
The pattern of relatively smallscattered refineries is no longer opti-mal in an open market in which weare a price-taker
Third despite its sub-optimalstructure the Australian refining in-dustry is not grossly inefficient Oneindicator is the value added per em-ployee which is in the top five per-formers in the Australian manufac-turing sector
The cost competitiveness of Aus-tralian products is indicated by thefact that we have the cheapest ex-taxprice of petrol in the OECD Perfor-mance comparisons with the rest ofthe AsiandashPacific however suggestthat we lag the average efficiency inthe region And the best performersin the region are superior to our best
Finally the financial performanceof the industry is poor gross annualrevenues for the whole industry in-cluding marketing were $32 billionin calendar year 2001 For the five
years to 2001 the return on assets forrefining and marketing averaged 38per cent and was negative in the lasttwo years The indications are that2002 may have been a better year forthe industry but that the return onassets remains well below the cost ofcapital Over the four years to 2001the fixed asset base of the industrydeclined by almost 6 per cent to $12billion even after $24 billion of newinvestment in the period
This is clearly unsustainable andit raises the question Why is no-oneleaving the game
There are perhaps four main rea-sonsbull First the industry has engaged in
continual productivity improve-ment allowing it to keep withinrange of ruling prices
bull Second each refiner hopes thatsomeone else will blink first sothat the waiting will pay off
bull Third the costs of leaving thetable the exit costs are very highbecause of the nature of the prod-uct and the long occupancy ofmost sites
bull Fourth even while profitability islow the industry has generallybeen marginally cash positive
These add up to a big lsquofirst mover dis-advantagersquo
FUTURE TRENDSClearly petroleum will remain ourmost important energy source Petro-leum products constitute 52 per centof Australiarsquos final consumption ofenergy Liquid petroleum fuels pro-vide more than 95 per cent of Aus-traliarsquos transport needs There are nomajor foreseeable influences that willaffect this pattern dramatically There
19MARCH 2003
E V I E WR
have been major advances in fueleconomy and these will no doubtcontinue But more than counterbal-ancing this is the inexorable growthin demand for personal mobility andfor goods from distant parts Althoughgrowth in energy consumption mayslow down in Australia we will notbe reducing our consumption to anysignificant degree
Our export role will also be lim-ited Australian export volumes havetended to be steady over recent yearsand future new export potential forpetroleum products seems likely to beminimal China and India have re-cently become major exporters par-ticularly of gasoline Refinery capac-ity is planned to continue to growstrongly in the region even thoughthere is already significant excessThe decline in capacity utilization inmajor exporters such as Singaporewill make exporting difficult Further-more it is expected that productspecifications in Asia the US andEurope will converge in the comingyears thereby eliminating niche ex-port opportunities
The choice we face is what to doabout our essentially import-compet-ing industry
INCENTIVES NOT STRONGWhile there are strong pressures forthe industry to restructure there islittle incentive to invest for this pur-pose Investments in the Australianrefining industry have to competewith many alternatives across theglobe
Lack of sufficient return is thesingle biggest deterrent to investmentin the industry at present But thereare othersbull There is no prospect of strong growth
in demand to offset the substantialrisks associated with large new in-vestments
bull The persistent refinery capacity over-hang in our region will keep sus-tained pressure on our margins
bull The corporate taxation regime is nowless favourable than hitherto after thesubstitution of effective-life foraccelerated depreciation The
competing Singapore option offersa three-year write-off
bull The regulatory cost burden is grow-ing This applies to all Australianindustry but is potent in overseascomparisons Tighter fuel stan-dards environmental restrictionsintervention in prices and indus-trial law are some of the factors
bull There is increased sovereign riskstemming from inconsistent regula-tions We have eight parliamentswhich enact inconsistent laws Acurrent example is the higher fuelstandards applied in Western Aus-tralia
bull The sovereign risk also arises fromuncertainty in the regulatory processThere are unpredictable changesof direction (the deferral of thediesel sulphur excise differential[DSED]) and uncertainty in theface of conflicting interests (willthe Government act on ethanolcontent)
All these factors enter into the riskreward calculation When the re-wards are minimal the risks take onan extra dimension
WHAT INDUSTRY STRUC-TURE DO WE NEEDThe short answer is we cannot knowin detail
In the Downstream Petroleum In-dustry Framework 2002 the Depart-ment of Industry Tourism and Re-sources set out a broad vision
bull A preference for market-based so-lutions
bull A strong efficient environmen-tally responsible industry supply-ing most of the nationrsquos needs forproducts
bull Regulation only for market failureor national interest objectives
bull Regulation to be transparent andconsistent
bull Reform and regulation to maxi-mize long-term community ben-efitThis vision has some prescriptive
elements but the Government hasmade it clear that it will not nomi-nate an optimal number of refineriesor a pattern of production
The general public would probablyopt for a structure that guaranteedlower more stable automotive fuelprices Unfortunately they cannothave both in the short term
In fairness the investors in the in-dustry are the ones entitled and bestfitted to determine its future In theextreme they will do it anyway bypersisting or walking away Generallyspeaking they will seek to maximizetheir returns and thus promote themost efficient use of resources
Australian refineries are not inef-ficient but that is not the point Ourmarket is open so the competitionwe face is the best of the overseas per-formers often with more favourabletax and subsidy regimes
Nor is this simply a question ofclosing the smallest refineries A bet-ter approach might well be to allowrefining companies to concentrate onwhat they do bestmdashperhaps throughrefinery alliances Caltex and Shellhave co-operated in this way in Thai-land
The fact is that the detail of thedecisions can only be made by theindustry relatively free of governmentdirection The series of detailed de-cisions entailed will determine theoverall structure of the industry
COMPETITION REGULATIONCAN IMPEDE RESTRUCTURINGThe relevant provision of Section 50of the Trade Practices Act (TPA) pro
While there are
strong pressures for
the industry to
restructure there is
little incentive to
invest for this
purpose
s
20 MARCH 2003
E V I E WR
hibits mergers or asset acquisitionsthat would have the effect or belikely to have the effect ofsubstantially lessening compe-tition in a marketIt is both potentially and in prac-
tice an extremely restrictive provi-sion The Australian Consumer andCompetition Commission (ACCC)has expressed concern at concentra-tion in the sector in applying the pro-vision
The ACCCrsquos concerns seem ex-aggerated in the light of history Butthey are complemented by a persis-tent public misapprehension thatlarge petrol price swings equal profi-teering This perception has been soexploited for political advantage andmedia excitement that it is now al-most impossible for the truth toemerge
The future intensity of competi-tion in this industrymdashif it is allowedto restructuremdashshould not be indoubt Any rationalization would inall likelihood still leave strong do-mestic competition in each majorproduct category perhaps with fewermore efficient production units
The market is also contestableThere would be numerous potentialimporters and many independent re-tailers High margins would be rap-idly eroded by competition As re-cently ruled in the Boral case mar-ket reality is more conclusive than aperception of anti-competitiveness
Proposed mergers have been per-mitted in the past but the process isslow and permission is generally onlygranted with severe conditionsNonetheless there is a strong case forallowing restructuring within theterms of the merger provisions
AUTHORIZATION COULD BETHE KEYIf Section 50 of the TPA is an im-passable barrier then the authoriza-tion provisions of the Act could bethe way to greater efficiency The testsunder these provisions require a pub-lic benefit which outweighs the com-petition detriment The ACCC listsfostering business efficiency industry
rationalization and import-competi-tiveness as important public benefits
There is a strong prima facie casethat rationalization of the industrycould satisfy these tests It wouldallow greater scale of productioneconomies in distribution and closureof the least efficient production units
But the authorization process isslow and the onus for demonstratingthe public benefits rests on the appli-cant Slow process can amount to ef-fective rejection
POLICY OPTIONS AND REC-OMMENDATIONSIf government cannot help the indus-try to adjust it should allow it to ad-just by supporting sensible changeThis would involve both improving
the operating environment throughregulatory reform and altering thebalance of competition regulation sothat the industry could restructurevoluntarily The CommonwealthGovernment has already indicated awillingness to support both but hasnot yet delivered
The ball would then be in theindustryrsquos court to bring forward newproposals if a new policy environmentcould be created This could all hap-pen within a very broad strategicframework agreed with the industrywhereby Australia continued to besure of sufficient refining capacity tomeet a severe international fuel short-age
We therefore recommend thatbull The Commonwealth Govern-
ment provide explicit indicationto the ACCC of the public ben-efits it sees from the rationaliza-tion of the refining sector In par-ticular joint ventures should becontemplated
bull The ACCC give sufficient weightto the public interest benefits ofrestructuring to allow rationaliza-tion of production facilities
bull All governments reduce distortingfuel subsidies and taxes that favourparticular sectors or fuels
bull The State Governments act im-mediately to harmonize their regu-lation of the industry and agreenot to issue any new inconsistentregulation
bull More specifically the States havea single set of fuel standards withwhich refiners can reasonablycomply withdraw from all formsof price regulation and refrainfrom thwarting or distorting therationalization process
bull Governments generally not intro-duce new regulations mandatingthe use of alternative fuels
CONCLUSIONThe choice for the industry appearsto be between accelerated rational-ization and atrophy The process ofchange is something which the indus-try must plan and effect The task isnot impossible but it will require theactive support of government at alllevels For the time being there is anexpressed willingness at the Com-monwealth level but no real solu-tions
If nothing is done the refiners willcontinue to stumble along in a regu-latory fog and will invest only whenobliged to do so by changing fuel stan-dards They will become increasinglyvulnerable to low-priced imports andeventual closure
Jim Hoggett is a Senior Fellow at theInstitute of Public Affairs
If Section 50 of the
TPA is an impassable
barrier then the
authorization
provisions of the Act
could be the way to
greater efficiency
API
Last week the Government tabled 22 volumes of theCole Royal Commission into the Building andConstruction Industry Former Court of Appeal judgeTerence Cole made 392 specific findings of unlawfulconduct and in the confidential final volumerecommended that 31 individuals be referred for possiblecriminal prosecution As was to be expected theconstruction unions claimed that the report was a witch-hunt and people who should have known better claimedthat Cole was biased
The anti-union allegations were never very plausiblegiven that most unions had refused to cooperate withthe Commission and had even boycotted theCommissionrsquos special conference on occupational healthand safety As things have turned out one of their ownhas fatally undermined the unionsrsquo case No less anauthority than the National Secretary of the ConstructionDivision of the CFMEU has unwittingly confirmed thatCole is right In what was no doubt an unguardedmoment John Sutton admitted to a Melbournenewspaper that ldquovirtually everything we do breaches partof this Actrdquo Suttonrsquos admission means that Colersquosdescription of a largely lawless industry can be disputedat the margins but not credibly denied The problemsof the industry have been established beyond credibledoubt and the question now is what needs to be doneabout it
Nothing says the CFMEU because itrsquos alright tobreak the law in the best interests of the working classLeading union officials take the view that in a toughindustry only wimps take the law seriously The newsthat ldquoonlyrdquo 31 individuals had been recommended toface criminal charges was greeted with somethingapproaching jubilation as if the industryrsquos code of silencebased on fear had largely kept the Royal Commission atbay
As the Australian Financial Review commented in aneditorial the unionrsquos dismissive reaction to Colersquos report
ldquospeaks as loudly as his damning findings of entrenchedlawlessnessrdquo Imagine the reaction if a royalcommissioner had identified 31 people in the financeindustry or the steel industry for possible criminalcharges This would rightly be regarded as the sign ofan industry in crisis demanding urgent governmentintervention
Change wonrsquot be easy in an industry conditioned tothink that might is right Change which shifts powerfrom one unscrupulous group to another will not bereform As Grocon has discovered the first company toldquobuck the systemrdquo is liable to heavy-duty industrialpayback No one wants to be the first to change butchange is necessary in the national interest
In 2002 the Victorian construction industry aloneaccounted for 17 per cent of all days lost through strikesThe West Australian construction industry accountedfor another 8 per cent of the national strike tallyConstruction is a $40 billion a year industry comprisingnearly six per cent of GDP and employing nearly500000 Australians Due to over-manning demarcationdisputes and chronic stoppages labour productivity incommercial construction averages 13 per cent less thanin home building Plastering the same wall in the sameway costs 40 per cent more in a high rise building thanin a standard house Just raising labour productivity incommercial construction to the home building standard(let alone the 50 per cent increase needed to match NorthAmerican levels) would mean according to Econtech aone per cent drop in the cost of living a one per centincrease in GDP and $23 billion in benefits toconsumers workers and taxpayers every year
Still change is about decent Australian values notjust a more efficient industry Workers donrsquot like latenight house calls compulsory attendance at demos anddays spent sitting in the shed to make an industrial pointany more than bosses Threats of violence contempt forcourt and commission orders mob rampages when one
Restoring the Rule of Law in theConstruction Industry
Tony Abbott MHR
s
As this issue of the IPA Review was at the press we were alerted to the delivery of the following speechby the Minister for Employment and Workplace Relations The paper marks a seminal change in the
governmentrsquos approach to systemic corruption in the construction industry and isanother major step in the reform of workplace relations in Australia
SI-1MARCH 2003
IPA REVIEW SPECIAL INSERT
side doesnrsquot get its way habitual failure to honouragreements and routine harassment of people exercisingtheir legal rights are not acceptable in modern Australiaand cannot be excused even in a good cause
Breaching ldquobourgeois lawrdquo may not matter tomilitant activists but few others take such a self-indulgent view Itrsquos said that ldquooppositions can afford tobe irresponsiblerdquo but no government or alternativegovernment can accept the principle of optionalobedience to the law of the land No less than the HowardGovernment the federal Labor Opposition and the stateLabor Governments understand the dangers of playingpolitics with the rule of lawmdasheven theauthority of laws they might preferto change such as the federal WorkplaceRelations Act
The rule of law is not asmorgasbord from which a fewfavoured items can be chosen and therest ignored Freedom under the lawrequires respect for the law generallynot just the laws individualspersonally support Obedience to thelaw is not a question of choice It is arequirement of civilisation because thelaw is our guarantee of equaltreatment after a fair hearing ldquoBe youever so high the law is above yourdquoThis reproach hurled at the Stuartkings has rightly echoed through thecenturies as a warning against theconceits of office and the arrogance ofpower regardless of the cause in whichitrsquos exercised
After last weekrsquos meeting of theWorkplace Relations MinisterialCouncil of the Council of Australian Governments stateand territory ministers were keen to declare in acommuniqueacute ldquothere was unanimous agreement thatunlawful behaviour in the building and constructionindustry is not acceptablerdquo This was an importantaffirmation of the rule of law in circumstances wheresome Labor ministers might have been tempted to putpolitics ahead of principle
Unfortunately the state and territory ministerssupported more powers for the Australian IndustrialRelations Commission to settle construction industrydisputes In fact the Commission already has power tosettle disputes Whatrsquos missing is effective power toenforce agreements The issue is not settling disputesThe issue is enforcing the law
The construction industry typically conducts itselflike this A certified agreement is in place including anagreed dispute resolution procedure Unions identify agrievance often a spurious safety issue Agreed disputeprocedures are not followed and a strike ensues eventhough strikes outside ldquobargaining periodsrdquo areldquounprotectedrdquo and theoretically subject to damagesorders At that point employers often ask theCommission to end industrial action but instead ofordering an immediate return to work because anagreement has been breached the Commission willtypically seek to conciliate on the basis of the ldquomeritsrdquo
of the issue After a couple of dayswith costs escalating and liquidateddamages looming the employerinvariably agrees to rectify the matteralleged and to pay increasedallowances (including pay for days onstrike) At this point the Commissionorders a return to work on the basisof the agreed settlementmdashwhich lastsonly until the union decides on itsnext move
The union has ignored the law andbroken its original agreement buttypically suffers no adverseconsequences whatsoever Theemployer has been manoeuvred intoconceding most of a demand thatshould never have been made Afaccedilade of legality conceals a travestyof unionism and a travesty of justiceNearly all construction industrystrikes are unprotected and potentiallyunlawful under section 170MN of theWorkplace Relations Act Even so
employers nearly always opt to pass the costs ontoconsumers while existing arrangements for gatheringinformation launching prosecutions and imposing finesdonrsquot work well anywhere but hardly work at all in anindustry where giving evidence against the unions isthought to mean commercial suicide
The construction industry is a classic case not ofmarket failure but of regulatory failure The fact thatthe construction industry does not face potential importcompetition limits its exposure to market discipline Stillthe main reason why unions can get what they want frombusiness and business can get what it needs from haplessconsumers is the absence of independent policing andenforcement of the industrial equivalent of fair tradinglaws To an extraordinary degree in this industry the
SI-2 MARCH 2003
IPA REVIEW SPECIAL INSERT
The rule of law is nota smorgasbord from
which a few favoureditems can be chosenand the rest ignoredFreedom under thelaw requires respectfor the law generally
not just thelaws individuals
personally support
request documents but they canrsquot compel witnesses toanswer or demand that material be produced Althoughit is a criminal offence under the Workplace Relations Actto hinder workplace inspectors the Cole report notedthat no prosecutions have yet been launched despiteevidence that Office of the Employment Advocateinspectors have been abused had objects thrown at themand their property damaged It has been commonpractice for the arrival of OEA inspectors to lead to workstoppages and even site invasions in a bid to thwart anddemoralise an independent investigator not susceptibleto the unionrsquos usual weapon of commercial retaliation
One of the problems with theworkplace relations system is theassumption that parties will enforcethe law against each other This worksup to a point in industries whereworkplace parties are more-or-lessevenly matched and the issues are theworkplace equivalent of an argumentbetween neighbours over the heightof a fence It completely breaks downwhen one side has an effectivemonopoly over the supply of labourand disputes resemble a more-or-lessnormal family telling the house fullof footballers next door that the partyrsquosover Expecting contractors to enforcethe law against the CFMEU is likeexpecting people in the street to makecitizenrsquos arrests hence Colersquos principalrecommendations are an AustralianBuilding and ConstructionCommission to investigate prosecuteand enforce the provisions of a beefed-up industry specific workplace
relations actYesterday Cabinet decided to support Colersquos key
recommendations First the Government will seek aseparate act governing workplace relations in theconstruction industry providing for secret ballots beforestrikes compulsory cooling off periods after extendedstrikes and damages awards in the event of unprotectedindustrial action Second the Government will establisha new law enforcement agency for the industry withpowers to compel witnesses to testify bring prosecutionsand enforce judgments and with sufficient on-the-ground presence to police CBD building sites Thirdthe Government will establish a Safety Commissionerto monitor federally-funded construction sites to try toensure that these become industry models Fourth the
s
commissions lack sufficient power the courts lacksufficient speed the employment advocate lacks sufficientauthority and the police lack sufficient interest
Not before time the Cole Commission has acted as agiant searchlight probing the dark underside of thispotentially great Australian industry It confirmed whatpolicy makers had long suspected and what influentialinsiders knew but had always tried to deny or explainaway that the industry operates under the rule of thejungle and that there will be no improvement until thepeople who work in it understand that the law has to betaken seriously Legislative institutional and structuralchange will start to mean somethingwhen law breakers in this industry arecharged convicted and punished likelaw breakers everywhere else A fewsalutary bars of that old song need towaft over construction sites ldquoI foughtthe law and the law wonrdquo
Late last year in response to theRoyal Commissionrsquos first report thefederal Government set up theBuilding and Construction IndustryInterim Task Force The Governmentrsquosbrief to the Task Force is to ensure zerotolerance of industrial law-breakingThe Task Force is not primarily toenforce the tax laws or the safety rulesbecause other bodies exist for this(although the Task Force will certainlyshare information with them) TheTask Force is to investigate and enforceWorkplace Relations Act prohibitions oncoercion unprotected strikes strikepay and breach of industrialagreements So far the Task Force hasvisited nearly 300 sites launched more than 50investigations brought three prosecutions and referrednine other matters to state police the Australian FederalPolice or the Australian Competition and ConsumerCommission for further action
These are the first public prosecutions arising out ofindustrial action in the construction industry at leastsince the 1980s and are the result of a public policycommitment to law enforcement not seen since thehumiliating Clarrie OrsquoShea case in 1969 and the end ofldquopenal sanctionsrdquo Yesterday Cabinet decided to extendthe interim Task Forcersquos operations until more permanentarrangements to secure the rule of law can be established
Task Force agents have the powers of inspectors underthe Workplace Relations Act They can enter premises and
SI-3MARCH 2003
IPA REVIEW SPECIAL INSERT
The main reason whyunions can get what
they want frombusiness and businesscan get what it needs
from haplessconsumers is theabsence of inde-
pendent policing andenforcement of the
industrial equivalent offair trading laws
API
Government will insist on the application of theNational Construction Code and implementationguidelines to all significant new projects which are fullyor partly federally funded
Directly or indirectly the federal Government fundsabout $5 billion worth of construction projects everyyear and is determined to use its role as client to drivechange in the industry In essence the NationalConstruction Code stipulates that construction projectsmust take place in conformity with the WorkplaceRelations Act Under the Code and implementationguidelines the federal Governmentwill not engage tenderers whoseworkplace agreements and practicesensure a closed shop on site The TaskForce (and any replacement body) willhave full access to federally fundedsites to ensure that the law is beingobserved and workplace agreementscomplied with
For the federal Government theissue is upholding the law and tryingto tackle the ldquounion rulesrdquo culturewhich is at the heart of lawlessness inthe industry For the states the issueis whether they are prepared to refusefederal money in order to protect theclosed shop However much theymight prefer different federal laws thestates ought to accept thatconstruction projects have to complywith the law as it stands includingthe law mandating compliance withcertified agreements
State Labor governments whichhave made a point of their middle-ground credentials risk losing some$4 billion a year in federal building and constructiongrants if they side with the union movementrsquos mostmilitant minority There are likely to be limits to Laborrsquosdefence of a union whose stock-in-trade (at least in somestates) is the site invasion and the demand for paymentand which quietly reinstates organisers sacked for assaultor perjury Opposition senators will find it hard to brandas ldquoideologicalrdquo the recommendations of a royalcommission which spent 171 days in public hearingsand which pursued 11 shop stewards and 97 unionofficials to obtain their side of the argument
As Justice Cole pointed out in his report previousattempts to reform the industry have proven ineffectivedespite two earlier royal commissions and numerous
SI-4 MARCH 2003
IPA REVIEW SPECIAL INSERT
enquiries Although this Royal Commissionrsquosinvestigations seem to have temporarily checkedlawlessness in the industry a campaign is now emergingto extend the anarchic culture of CBD construction intoregional centres and the domestic housing industryThings will certainly be different this time if parliamentapproves a permanent well resourced watchdog withnew powers new personnel and new attitudes Unlikeprevious arrangements a new statutory watchdog withthe powers of a law enforcement agency should beeffective and permanent
Hundreds of people took big riskswith their commercial future and eventheir personal security to testify to theRoyal Commission It should neveragain be so hard for people in thisindustry to exercise their ordinaryrights and responsibilities asAustralian citizens They expected theGovernment to take the Commissionrsquosreport seriously and the Governmentfor its part is determined not to letthem down The Governmentunderstands that joining fights yoursquorenot prepared to win only makes badsituations worse Establishing the ruleof law in the construction industry isa challenge Australia canrsquot afford tofailSome of the worldrsquos best workersshould no longer have to put up withsome of the worldrsquos worst industrialpractices They have a right to anhonest industry where they can earna fair dayrsquos pay for a fair dayrsquos workand expect to come home uninjuredThe enduring image of this industry
should not be noisy marchers replaying the ideologicalstruggles of the 1970s and raising clenched fists againstauthorities they donrsquot like At its best the Australianindustry is capable of work which is stunningly beautifulyet intensely practical and it now needs to performconsistently on time on budget and in accordance withlaw
Hundreds of peopletook big risks withtheir commercial
future and even theirpersonal security totestify to the Royal
Commission It shouldnever again be so
hard for people in thisindustry to exercisetheir ordinary rights
and responsibilities asAustralian citizens
NOTE
The foregoing speech was first delivered as an Addressto the National Press Club on 2 April 2003
21MARCH 2003
E V I E WR
IN psychology behaviouris defined as irrational ifan action continues to berepeated despite its re-
peated failure to achieve the desiredoutcome On this definition our aidpolicy towards Papua New Guineahas been irrational
Despite over twelve billion dol-lars in Australian aid to PNG sincethat countryrsquos independence in 1975key development indicators such asliteracy rates infant mortality lifeexpectancy and real income percapita are either stagnating or dete-riorating Worse wersquove known forover a decade1
Today acknowledgement of thefailure of our aid policy in PNG hasgone well beyond the writings of in-dividual international policy analystssuch as myself to institution-spon-sored reports such as Beyond Baliwhich was released by the AustralianStrategic Policy Institute (the Aus-tralian Governmentrsquos own strategicpolicy adviser) and Papua NewGuinea on the Brink which was writ-ten by Susan Windybank and MikeManning for the Centre for Indepen-dent Studies Both reports confirmthe gross failure of Australian aidpolicy in PNG
Yet still our aid policy irrational-ity towards Papua New Guinea con-tinues While the ASPI and CIS re-ports acknowledge the gross failureof our aid policy in PNG they alsoargue that we need to continue ouraid to that country Indeed the ASPIreport argues that we should increaseour aid to Papua New Guinea Thepolicy saviour The ASPI report ar-gues that we should exert greater con-trol over our aid Not just over theform of our aid but direct interven-tion in policy and implementation inPNGmdashin essence for a return to pre-
Aid Detox for PNGPETER URBAN
independence days in PNG whereas UN-sanctioned administrator weran government in that country
Despite the mind-frame of secu-rity-focused strategists such as thoseat ASPI and the CIS (which en-dorses the aid approach advocated byASPI) the reality is that we canrsquotPNG is now independent and to ig-nore this reality would simply com-pound the problems of our past aidpolicy irrationality with irrationalityabout our political relationship withour nearest neighbour
A more interventionist aid policytowards PNG on our part as advo-cated in Beyond Bali and by HughWhite (the executive director ofASPSI) in the media might havepopulist appeal but it would haveserious adverse implications for ourrelationship with other Pacific islandcountries and even IndonesiaWorse it would give succour to theviews of our east Asian critics (suchas Malaysian PM Dr Mahathir) whoclaim that Australia continues toharbour colonial aspirations
We have to accept that to be suc-cessful aid policy must not just helpreduce mass poverty it also has to doso as a guest in the aid recipientcountry To do otherwise is not aidbut imperialismmdashwhether inten-tional or not
A more interventionist approachto aid policy in PNG would also givethe current corrupt political elite inPort Moresby a rallying point againstus and an excuse to delay changingtheir own policies Neither Austra-lia nor PNG can afford any furtherdelays to policy reform For us to givePNG politicians yet another excuseto delay reform would be not onlyirrational it would be inexcusableWhile our aid continues so will thecorrupt elite that is at the heart ofPNGrsquos problems Until we send themessage to the PNG political elitethat we are prepared to stop ouraidmdashto put them on aid detoxmdashwewill continue to waste our aid in thecorruption that is PNG politics Itmay be hard to accept but the sadreality we face in PNG is that no aidmay prove to be good aid at least inthe short to medium-term2
NOTES
1 Peter Urban lsquoOne Clear ObjectiveNo Clear Approachrsquo IPA Review1997 Vol 50 No 1
2 With Iraq also likely to require verysignificant Australian aid fundingover the next few years the Gov-ernment will need to review our aidprogram as part of the 2003-04 fed-eral Budget A decision to suspendaid to PNG could be taken as partof that review
Peter Urban is former chief economist with theDepartment of Foreign Affairs and Trade
We have to accept
that to be successful
aid policy must not
just help reduce
mass poverty it also
has to do so as a
guest in the aid
recipient country
API
22 MARCH 2003
E V I E WR
IN his speech to the Na-tional Press Club on theprospect of war with Iraqand the case for disarma-
ment Prime Minister Howard statedthat Australia will play a significant hu-manitarian role in Iraq
If so the Howard Government needsto evaluate carefully the foreign-aid non-government organizations (FANGOs)which it funds to carry-out this humani-tarian programme Many FANGOshave made it clear that they do not sharethe Australian Governmentrsquos objectivesand values in Iraq Moreover some donot agree with the Governmentrsquos over-all aid policies in general
THE COALITION OF THEUNWILLINGIn the lead-up to latest Gulf War some30 Australian aid agencies put theirnames to an Open Letter to the PrimeMinister organized by the AustralianCouncil of Foreign and Overseas Aid(ACFOA) The aim of the letter was tolsquospeak out against war in Iraqrsquo and it ex-pressed grave concerns about the hu-manitarian consequences of the war andthe effects of the existing sanctions1 TheFANGOs that signed the letter wereOxfam Community Aid Abroad WorldVision Australia TEAR AustraliaUnion Aid Australia - APHEDACaritas Australia National Council ofChurches Australian Council for For-eign and Overseas Aid Save the Chil-dren Australia CARE Australia OzGreen United Nations Association ofAustralia Family Planning AustraliaMercy Works Marist Mission CentreAustralia Every Home for Christ Bap-tist World Aid for Christ CCF Austra-lia Quaker Service Australia Austra-lian Lutheran World Service AustralianRelief and Mercy Services AnglicanBoard of Mission AUSTCARE Com-munity Development and Health
Irreconcilable DifferencesDON DrsquoCRUZ
Hussein have been virtually ignored isa searing indictment of the warped ide-ology feeble analysis and moral blind-ness of the sector For them now to re-discover the plight of the Iraqi peopleand to invoke their name in the mediais beyond contempt
THE OXFAM COMMUNITYAID ABROAD POSITIONOf the 30 FANGO signatories to theopen letter Oxfam Community AidAbroad (OCAA) has been perhaps themost outspoken It opposed military ac-tionmdasheven with UN Security Councilapproval4 In spite of all the evidence tothe contrary OCAA was comfortablewith Saddam Husseinrsquos assurances thathe did not have weapons of mass destruc-tion5 Adopting the common policyagreed to by the other Oxfam affiliatesOCAA stated that it will not take anymoney from the lsquobelligerentsrsquomdasha quaintterm used to the describe democraticnations planning to disarm a dictatorguilty of countless human rights abuses
OCAArsquos outrage against the so-called lsquobelligerentsrsquo appears to be geo-graphically confined to Iraq OCAAappears happy to take governmentmoney from the belligerents elsewherearound the world
According to OCAArsquos ExecutiveDirector Andrew Hewitt refusing totake money from the belligerents wasdone to lsquoprotect its impartialityrsquo6 Thisis a very curious position from Australiarsquosarguably most political FANGOOCAA has a long track-record of beinganything but impartial or reluctant totake sides in miliary action It wasnrsquotimpartial in East Timor where it sidedwith Fretlin in its quest for indepen-dence According to its own testimonyto a Senate committee OCAA wasgiven the choice by the IndonesianGovernment between lsquoplaying politicsrsquoor delivering aid projects in Indonesia7
Group Amnesty International Austra-lia AngliCORD Australian Aid forCambodia Fund Burnet InstituteRedR Friends of the Earth PLAN Aus-tralia and Australian Volunteers Inter-national2
This open letter highlighted a num-ber of problems with the FANGOs sec-tor First it highlighted the weak logicthat passes for advocacy in the sectorThe letter argued against military actionwas critical of sanctions and suggestedthat nations should settle issues only bydiplomatic means It is a viewpointwhich totally ignores the fact that theGovernment had to deal with SaddamHussein
The shallowness of their logic wasbest exposed by the Prime Minister inhis response to the open letter in whichhe stated that the humanitarian situa-tion in Iraq is best addressed by SaddamHusseinrsquos removal and perhaps morepointedly that Saddamrsquos manipulationof foreign aid had allowed him to main-tain and pursue his weapons of mass de-struction capability and human rightsabuses3
Second it also highlighted the factthat the so-called lsquohuman rights-basedapproachrsquo to development (embraced byseveral of the signatories) is not so muchabout realizing human rights (as its pro-ponents argue) but is more about pro-viding them with an excuse to lsquoplay poli-ticsrsquo According to the theory the hu-man rights-based approach to develop-ment allows FANGOs to tackle the rootcauses of poverty and injustice
Yet the root cause of the Iraqipeoplersquos suffering can be summed up intwo simple wordsmdashSaddam HusseinThe fact that the FANGOs who sub-scribe to this particular approach havebeen obsessed with imaginary humanrights abuses committed by Shell NikeRio Tinto BHP-Billiton and AuroraGold while the activities of Saddam
23MARCH 2003
E V I E WR
It chose the former thus making it per-sona non grata in Indonesia for almost adecade8 It wasnrsquot impartial inMozambique when it sided with Frelimoin the countryrsquos civil war9 It wasnrsquot im-partial in Ethiopia when it developedlinks to the Eritrean Peoplersquos LiberationFront during its war against the thengovernment10 It was not impartial oranti-war when it sided with the TigrayPeoplersquos Liberation Front in the neigh-bouring province to Eritrea when thatgroup was waging a guerrilla war againstthe government11 And recently therehave been claims that in the Middle Eastit was little more than an lsquoeager propa-gandistrsquo for the Palestinians12
In East Timor Ethiopia and Mozam-bique OCAA was linked with organi-zations which supported direct militaryaction that led to the deaths of thou-sands of civilians In none of these loca-tions were the enemies of their friendany worse than Saddam Hussein In-deed in many cases OCAArsquos friendswere arguably no better than their en-emies in terms of human rights
OCAArsquos decision not to accept Aus-tralian Government funding is the cor-rect one in the sense that it clearly doesnot share the Governmentrsquos values onthe question of Iraq and thereforeshouldnrsquot receive any governmentmoney
Hewitt went on to state in a pressrelease that lsquoWe will not take funds thatmight allow a government to use hu-manitarian efforts as an instrument offoreign policyhelliprsquo13
This is finemdashexcept the AustralianGovernmentrsquos foreign aid is an instru-ment of foreign policy And it always hasbeen This is spelt out quite clearly inthe Australian Governmentrsquos latest for-eign and trade policy White Paper Ad-vancing the National Interest14
FANGOs that cannot accept thisrather basic proposition should not begetting taxpayersrsquo money They areclearly unsuitable for the task at hand
The consequences of Australian tax-payersrsquo money falling into the wronghands were brought home to Prime Min-ister Howard when he met IndonesianPresident Megawati Sukarnoputri to dis-cuss the war against terrorism and
Australiarsquos involvement against Iraq Atthe top of the Indonesian agenda wasthe issue of Australian funding toFANGOs being used to support sepa-ratist movements in Indonesia15
Post-war Iraq will be a better placewithout Saddam Hussein and his thugsThis does not mean that it will be a safeplace or necessarily a stable place Afterall one of the reasons for Western tol-eration of Saddam Hussein for manyyears was his ability to hold the various
ethnic minorities in Iraq together albeitrather brutally thereby maintaining abalance of power in the Middle East Hisdeparture would see strains on Iraq fromthe various ethnic minorities that makeup Iraq There is a strong chance thatIraq will fragment
The last thing the Australian Gov-ernment or any of the so-called belli-gerents needs in a post-war Iraq is west-ern NGOs running around and becom-ing self-styled advocates for national self-determination for Iraqrsquos ethnic minori-ties and injecting themselves into Iraqrsquosinternal politics This is a real risk Thebehaviour of Australian foreign aidNGOs in Indonesia should make Aus-tralian decision-makers extremely waryof funding any NGOs with Australiantaxpayersrsquo money so that they can oper-ate in Iraq
As things stand now FANGOs facevery few restrictions on their actionsfrom government If they undertake ac-tivity that is inconsistent with being anagent of government they may losefunding for specific projects or in moredramatic circumstances lose funding ina country Nonetheless they are gener-
ally able to access Australian Govern-ment funding for other projects andcountries In other words the penaltiesfor becoming caught up in political ac-tivities are very light for NGOs and posethem no serious problems
Foreign aid NGOs that lsquoplay politicsrsquoare unsuitable contractors for the deliv-ery of aid That these overtly politicalorganizations have been allowed to gaingovernment accreditation and receivegovernment funding points to some se-rious problems at AusAID Australiarsquosofficial aid agency The time has comefor this to change
NOTES1 httpwwwacfoaasnaumedia_releases
2003_releases26_3_03PDF2 httpwwwacfoaasnauemergencies
openletterPDF3 httpwwwacfoaasnauemergencies
iraq_responsehtm4 Oxfam Horizons Vol 3 No 1 (Febru-
ary 2003) page 25 Oxfam Community Aid Abroad lsquoIraq
Overviewrsquo February 20036 Hewitt quoted in Liz Gooch lsquoOxfam
wersquoll say no cashrsquo The Age 16 March2003
7 Community Aid Abroad Submission tothe Senate Foreign Affairs Defence andTrade References Committee Inquiryinto East Timor Downloaded at httpwwwcaaorg aucampaignssubmissionstimorhtml
8 Ibid9 Susan Blackburn Practical Visionaries A
Study of Community Aid Abroad (Mel-bourne Melbourne University Press1993) page 313
10 Ibid pages 325-333 passim11 Ibid12 Gerald Steinberg lsquoPropaganda vs Hu-
manitarianismrsquo Australian Financial Re-view 7 June 2002 Downloaded at httpfacultybiuacil~steingconflictopedpropvshumanitarianismhtm
13 ht tp wwwcaa o rg au p r 2003 iraqfundshtml
14 httpwwwdfatgovauani15 Dennis Shanahan lsquoJakarta fears aid funds
for rebellionrsquo The Australian 17 Febru-ary 2003 page 2
Don DrsquoCruz is Research Fellow at the IPAand Director of IPArsquos NGOWatch
OCAA has a longtrack-record of
being anything butimpartial or
reluctant to takesides in miliary
action
API
24 MARCH 2003
E V I E WR
GEORGE Bush Tony Blairand John Howard haveprovided many reasons forsupporting military action
against Iraq One of those reasons hasbecome known as the lsquohumanitarianrsquojustification Put simply the lsquohu-manitarianrsquo justification for the US-led invasion of Iraq is that such ac-tion is necessary to free the Iraqipeople from their totalitariandictator
Such an argument is attractive tothose who believe that there aresome fundamental human rights thatall individuals possess regardless ofwhere and how they live Whatserves as the source of those rightshas been the subject of debate forcenturies One of the pre-eminentstatements on the subject was madeby John Locke who in The SecondTreatise of Government wrote thatmankind was lsquoequal and indepen-dentrsquo and that lsquono-one ought to harmanother in his life health liberty orpossessionsrsquo
Saddam Husseinrsquos mass murdertorture and terror are reasonablyclear breaches of human rightsTherefore some would ask why thereshould be opposition to the UnitedStates and its allies taking whatevermeasures might be necessary totopple the Iraqi regime Surely thesame standard of behaviour that ap-plies to individuals applies also tonation states If an individual walk-ing in the street witnessed a rapeoccurring wouldnrsquot that individualbe entitled to do everything in hispower to stop the crime and assistthe victim
The point is of course that in-ternational law and convention do
After IraqIs Sovereignty Dead
JOHN ROSKAM
not allow nation states to act in thesame way as individuals Countriescannot simply lsquotake the law into theirown handsrsquo To restrain lsquovigilantestatesrsquo (who might be acting fromeither lsquogoodrsquo or lsquobadrsquo motives) a num-ber of legal and political theorieshave been developed One of theseis the doctrine of lsquosovereigntyrsquo whichprovides that states should not inter-vene in the domestic affairs of otherstates
In relation to Iraq the lsquosover-eigntyrsquo question is perhaps the stron-gest argument against the US-ledCoalition Most of the other criti-cisms of lsquohumanitarianrsquo interventionin Iraq are either grounded in simpleanti-Americanism or are fallaciousFor example there is the claim thatbecause some of the countries in theCoalition have previously ignoredHusseinrsquos cruelties therefore it is il-legitimate to take action now Sucha view has been expressed by aMelbourne international relationsacademic
While there is no disputing thebrutal nature of Saddam Hus-seinrsquos regime the case for inter-vention made by those in Can-berra London and Washingtonis weakened by the fact that atthe peak of Saddamrsquos crimes inthe late 1980s they were eitherdirectly supporting him withweapons technology and intelli-gence or were entirely indifferentto his behaviour Even if theyhave belatedly recognised theerror of their ways how seriouslycan we take their concerns aboutweapons of mass destruction nowgiven they were his suppliersthen1
On the basis of this argument itcould be said that Britainrsquos (andAustraliarsquos) case for intervening toassist Poland upon the German in-vasion in 1939 was lsquoweakenedrsquo be-cause Britain had previously acqui-esced to Germanyrsquos rearmament theremilitarization of the Rhinelandand the annexation of both Austriaand parts of Czechoslovakia Fewpeople who chanted lsquoFreedom forEast Timorrsquo said that the HowardGovernment should not act becausea quarter of a century before theWhitlam Government had been lsquoin-differentrsquo to Indonesiarsquos occupationof the island
There is also the claim that al-though Hussein is bad he is not theworst dictator in the world and thatit is hypocritical for the Americansto attack only Iraq This is an as-tounding proposition It attempts toapply to the United States a standardof behaviour that is impossible to sat-isfy Should the police not attemptto solve any crimes because theycanrsquot solve all crimes If a crime iscommitted by two people and thepolice arrest one perpetrator unlessthe other is also caught must the firstperpetrator be released When indi-viduals donate money for famine re-lief in Africa very few believe thattheir donation is pointless becauseit might prevent the starvation ofonly one person rather than thou-sands Christian ethics sets down norequirement that we should help no-one unless we can help everyone
The issue about state sovereigntyhowever is one that deserves to betaken seriously Regardless of onersquosopinions on the extent and limits ofstate sovereignty it is true that our
25MARCH 2003
E V I E WR
international relations system is builtupon the principle and to modify oroverturn it is a matter of some con-sequence
Even those who are generally sup-portive of the United States andtheir allies see the problem As it wasput by a leading commentator whenanalysing the Australian PrimeMinisterrsquos lsquohumanitarianrsquo justifica-tion for war
Finally Howardrsquos argumentagainst Hussein on human rightsis correct So is his moral case forwanting to liberate the Iraqipeople from their torment Theproblem however is that youcanrsquot trip around the worldwanting to overthrow regimesbecause of human rights2
Some would askmdashlsquowhy notrsquo Be-cause to do so would overthrow theUnited Nations Charter comes therejoinder And in turn the responseto that might bemdashlsquogoodrsquo
If itrsquos a choice between the main-tenance of the UN Charter and free-dom from tyranny freedom wins ev-ery time (although an internationallawyer sitting in Sydney might havea different view on this question fromthat of a political prisoner manacledin a Baghdad jail cell)
When the interests of lsquointerna-tional lawrsquo are more important thanthe life and liberty of individuals itcould be concluded that lsquothe Em-peror has no clothesrsquo Would inter-national law have sanctioned inter-vention to stop the Holocaust hadHitler not waged war and proceededwith his methods entirely within theconfines of the German territorialstate
Many who argue that lsquohumanitar-ianrsquo intervention in Iraq is not justi-fied because it infringes on thatcountryrsquos lsquosovereigntyrsquo would happilyhave other countries cede their po-litical sovereignty to supra-nationalbodies Certain features of the Inter-national Criminal Court overridethe principles of sovereignty but thatdid not stop a phalanx of interna-tional law experts urging sovereigngovernments to join it so as to en-
able the prosecution of war criminalsBut when it comes to actually stop-ping war crimes not simply prosecut-ing them that phalanx is largely si-lent
Without the doctrine of state sov-ereignty and without an arbiter fordetermining when interference withthe principle is justified (the roleclaimed by the United Nations andits Security Council) it is said thatstates would be free to impose theirown will and intervene in other
countries whose standards did notmeet their own (In The Second Trea-tise of Government Locke argued thata characteristic of a lsquostate of warrsquo be-tween individuals was the absence ofa superior authority to adjudicatedisputes and prevent individualsfrom administering justice them-selves)
Iraq might be claimed as a rea-sonably clear-cut case for interven-tion but other situations are notlikely to be as simple In Culture andEquality first published in 2001Brian Barry explored a lsquoliberalrsquo per-spective on this question
The liberal position is clearNobody anywhere in the worldshould be denied liberal pro-tections against injustice andoppression However in exactlythe same way as liberals arepragmatic about what liberalismmeans in terms of boundaries sohere the move from principle tointervention has to be mediated bypractical considerationshellip
[L]iberals are not so simple-mindedas to imagine that the answer toall violations of liberal rights is tosend in the Marines or even aUnited Nations force As in anyjust war theory there must be somedoctrine of lsquoproportionalityrsquohellip[S]carcely anybody would be infavour of the western powersinvading Saudi Arabia so at to sortout the way in which it lsquounjustlydenies political rights to women ornon-Muslimsrsquomdashaccording to theirliberal idea of justicersquo3
The question remainsmdashafterIraq what remains of lsquostate sover-eigntyrsquo Should the doctrine applyonly to lsquoliberal democraticrsquo statesSuch a solution might be attractiveto some lsquoliberalsrsquo but it doesnrsquot avoidthe problem of what exactly a lsquolib-eral democraticrsquo state is
One irony arising from the argu-ments about the war in Iraq is thatmany of those who have urged astrict application of lsquostate sover-eigntyrsquo principles in the past havegenerally supported the US-led in-tervention while those who havebeen willing to abridge or even aban-don the doctrine have had to rely onit to counter the lsquohumanitarianrsquo jus-tification for war
There are not many certaintiesabout the nature of the world afterthe war in Iraq but it can be saidwith some assurance that one defi-nite outcome is going to be a morevigorous debate about state sover-eignty
NOTES1 Scott Burchill lsquoThe humanitar-
ian arguments for this war are spu-riousrsquo The Age 21 March 2003
2 Paul Kelly lsquoThe hapless per-suaderrsquo The Australian 15ndash16March 2003
3 Brian Barry Culture and Equal-ity An egalitarian critique ofmulticulturalism Harvard Uni-versity Press page 138
John Roskam is a Research Fellow with the IPA
The lsquosovereigntyrsquo
question is perhaps
the strongest
argument against
the US-led
Coalition
API
26 MARCH 2003
E V I E WR
Which Way for theDemocrats
The 2002 mid-term elections were adramatic victory for President GeorgeW Bush and the Republicans Insteadof the historical norm of the partycontrolling the White House losingBushrsquos party gained seats in the Sen-ate House Governorsrsquo races andState legislatures The result was abitter disappointment for the Demo-crats and has led to a fierce debatebetween the Left and Centrists aboutthe future policy direction of the partytowards the 2004 elections
The Leftrsquos analysis is that the ma-jority of Americans are natural Demo-crats Electoral defeat was due to thefailure to energize that base of Demo-crats The party failed to distinguishitself sufficiently from Bush and thusgive their voters a reason to turn outWhile the majority of Democrats op-posed Bush on tax cuts and the warwith Iraq a significant minority sup-ported him and campaigned on thatsupport The result the Left claimwas that the Democrats lacked a con-sistent message in contrast to Bush
Support for this argument can befound in the higher turnout amongstRepublicans than Democrats in 2002while in 2000 the combined vote forGore and Nader was 51 per cent Aninfluential book by John Judis andRuy Texeira identified lsquoThe Emerg-ing Democrat Majorityrsquo Theyclaimed that growing demographicgroups trended Democrat includingthe young socially liberal profession-als minorities and women
What policies would motivate thisnatural Democrat base The Left callfor rescinding the Bush tax cut a classwar against the corporate world amajor increase in lsquopublic investmentrsquoin schools childcare health care and
Letter from AmericaNIGEL ASHFORD
public transport and strong opposi-tion to the war
Centrists however have a verydifferent analysis of the Democratsrsquoproblems the public did not trustthem to pursue the war against ter-rorism vigorously to keep down taxesto spend their tax dollars wisely or toreflect their cultural values
A Gallup opinion poll found that57 per cent of Americans askedthought that the Democrats were nottough enough on the war on terror-ism while 64 per cent thought theRepublicans were There was the per-ception that the Democrats were notserious on the issue and just playingpolitics Evidence for this was the de-bate over the new Department ofHomeland Security blocked becausethe Democrats wanted to protectunion rights while the President de-manded more flexibility to deploy theworkforce Many voters saw the issueas the national interest versus a spe-cial interestmdashin this case that of theunions The Democrats were seen asputting the interests of one of theirmajor constituencies before nationalsecurity
The Democratic LeadershipCouncil in lsquoThe Road Aheadrsquo by AlFrom and Bruce Reed presented theCentrist case lsquoStop pretending wecan win a majority simply by energiz-ing our basersquo The Democrats were
not trusted on the war against terror-ism were hostile to the cultural con-cerns of many working-class Demo-crats on abortion and guns and stillseen as the tax-and-spend party lsquoToomany Americans donrsquot trust us tokeep their taxes down or to spendtheir money wellrsquo
The Centrist agenda is to stronglyprosecute the war against terrorismwhether against al-Qarsquoeda Saddam orothers and to abandon knee-jerk iso-lationism arising from the experienceof the Vietnam War to defend capi-talism and support small investorsagainst irresponsible managers to cutpayroll taxes and to downplay thecultural issues that divide Democrats
Which path will the Democratstake The Left is in the ascendancyMost of the remaining Democrats inoffice come from left-wing districtsNancy Pelosi a left-liberal from SanFrancisco was easily elected the newleader of the House Democrats over-whelming her Centrist opponent andrising star African-American HaroldFord The early field of presidentialcandidates for 2004 is dominated bythe Left tendency including SenatorJohn Kerry Representative DickGephardt Governor Howard DeanRev Al Sharpton former SenatorCarol Moseley-Braun and Represen-tative Dennis Kucinich Only Sena-tor Joe Lieberman and Senator JohnEdwards represent the Centrist wing
The future of US politics may de-pend on which road the Democratsdecide to take The US is currently alsquo50ndash50rsquo nation evenly balanced be-tween the parties A left turn couldlead to Republican dominance farinto the future
Dr Nigel Ashford is at the Institute of Humane Studiesat George Mason University and is co-author of US
Politics Today (Manchester University Press)
API
27MARCH 2003
E V I E WR
Trusting TonyFrankly itrsquos all just too depressing Theeconomyrsquos heading for trouble Busi-ness confidence is low investment in2002 was 92 per cent lower than theprevious year and manufacturing in-vestment was nearly 18 per cent downThe budget deficit is spiralling becauseour once lsquoprudentrsquo Chancellor (trea-surer) Gordon Brown made over-opti-mistic growth projections and startedthrowing money at problems
Therersquos a load of health-and-safetyand anti-discrimination measuresthatmdashto put it most politelymdashare ex-amples of letting the best be the en-emy of the good Every school tripneeds a formal risk assessment withthe result that many trips are simplynot taking place New trains orderedfor London commuter routes wonrsquothave toilets because the rules say thatat least one toilet in each four-car unitmust be wheelchair-accessible whichwould have cost ten or a dozen seatson every overcrowded train
Some of this is just insane Somelocal authorities say that safety at workrules mean that home-care workersmustnrsquot lift the disabled people theyare looking after Or therersquos rail safetyUntil recently we were seriously pro-posing to spend $10 billion on a bet-ter system to stop trains going throughred signals On average this would havesaved the lives of about three passen-gers every four years which is a lousybargain compared with other safety in-vestments Worse it would also havereduced the capacity of the networkby up to 15 per cent and forced morepeople onto the roads which are muchmore dangerous than even ourclapped-out railways The result was aprojected net increase of 13 to 21 deathsper year
Meanwhile in London the Cen-tral line of the Underground has been
Letter from LondonJOHN NURICK
API
closed for weeks after a train derailedwhen one of its motors fell off Therewere no deaths or major injuries in theaccidentmdashbut itrsquos a safe bet that someof the people who havenrsquot been ableto use the Central line have been in-jured or killed on the roads
What can one say If the authori-ties took the same attitude to the riskof fatal accidents in the health serviceevery hospital in the country wouldhave been closed for years
Despite all this the Conservativesare still hopeless Their leader IanDuncan Smith has a new wheezewhen a journalist asks him anythingdifficult he chortles merrily and saysitrsquos the most uninteresting questionimaginable and hersquos not going to wasteanyonersquos time by answering it His col-leagues have their knives out for him
Meanwhile in spite of the govern-mentrsquos problems with the economy andthe public services Tony Blair is grow-ing in stature having his waymdashandantagonising large sections of his ownparty in the process On several recentissues he has faced down the formi-dable Gordon Brown in a way that notlong ago was hard to imagine
Then he shocked everyone by com-ing out against having elected mem-bers in the reformed House of Lordswhen most voters want an all-elected
chamber and most MPs want a partly-elected one In the event Parliamentcouldnrsquot agree on any of the optionsfor reform so wersquore stuck with the sta-tus quomdashwhich is fine by Mr Blair
Then therersquos the war By the timeyou read this it may be over or we maystill be waiting or our lads may befighting Mr Blairrsquos strong line againstIraq has made him very unpopular Theanti-war march on 15 February was thebiggest demonstration London hasever seen A few days later 122 Labourbackbenchers voted against the gov-ernment and many more abstained
Mr Blair didnrsquot budge War is a se-rious thing he says lsquoBut in a situationsuch as this you have to do what youbelieve to be right because thatrsquos theprice of having responsibilityrsquo1
He has often been accused of gov-erning by focus group Certainly he hasseemed reluctant to antagonise anypowerful group That has clearlychanged In a sense his stand on Iraqmerely follows his action in sendingtroops to Sierra Leone and Kosovomdashbut it has stirred up far stronger domes-tic and international opposition
The irony is that now when he re-ally needs people to trust him wedonrsquot Even in the desperately seriousbusiness of justifying an unpopular warDowning Street canrsquot play it straightremember the dossier from lsquointelli-gence sourcesrsquo that turned out to belargely cribbed from a PhD thesis onthe Internet
NOTE1 The Guardian 1 March 2003
John Nurick is a management consultant based in theSouth of England From 1985 to 1990 he was
editorial director of the Australian Institute for PublicPolicy and later edited newsletters reporting on theUK Parliament and European Union institutions
28 MARCH 2003
E V I E WR
KEVIN DONNELLY
Private EducationEquals Public Good
When it comes to choosing be-tween government and non-gov-ernment schools Australian par-ents are lsquovoting with their feetrsquo Asshown by recent ABS figures(Schools Australia 2002) over thelast decade there has been a dra-matic increase in non-governmentschool enrolments
Approximately 30 per cent ofstudents now attend non-govern-ment schools compared with 22per cent in 1980 and 28 per centin 1990 Over the last decadewhile the number of governmentschools has fallen by 64 per centnon-government schools havegrown by 61 per cent
Of course not everybody valuesparentsrsquo right to choose and theAustralian Education Union(AEU) Labor governments andlsquoleft-wingrsquo academics in particularconsistently argue against non-government schools
One of the arguments put for-ward by those opposed to givingparents greater freedom of choiceis that government schools are bet-ter at promoting social cohesionand a strong sense of what KenBoston the ex-head of the NSWEducation Department terms lsquothebonds of civic friendshiprsquo
The assumption is that becausestudents attend non-governmentschools there will be greater socialdivisiveness and a breakdown inthe civic values needed to hold so-ciety together But there is no cred-ible evidence offered to support theclaim that government schools arebetter at promoting the commongood
In fact there is much to provethe opposite
First as anyone familiar withthe lsquoculture warsrsquo and politicallycorrect curricula will know insteadof government-controlled educa-tion promoting unity and cohe-sion it has led to public angst andparental complaints
Witness the very bitter debatein Queensland a year or two agowhen the government-mandatedStudies of Society and Environ-ment (SOSE) curriculum was in-troduced into schools Such was
the lsquoleft-wingrsquo bias in the curricu-lum in particular in the areas ofmulticulturalism and the environ-ment that many parents felt be-trayed
The Queensland debate is mir-rored by what is happening in theUnited States As noted by Ste-phen Arons in his book Short Routeto Chaos instead of promotingunity government control of thecurriculum leads to the opposite
What the school wars tell us isthat somehow we have been
Education Agenda
transforming a vital instrumentfor creating social cohesioninto a source of division andhostility that there is some-thing built into the structure ofpublic schooling that under-mines one of its most importantfunctionsAronrsquos argument that govern-
ment schools no longer transmit aviable sense of a common cultureor agreed civic values is reinforcedby another noted United Stateseducationalist Diane Ravitch
In a recent article in the jour-nal Education Next Ravitch be-moans the impact of cultural rela-tivism and the post-modern on theschool curriculum (where there areno commonly agreed values) andeven goes so far as to argue thatparents should be free to choosenon-government schools becausesuch schools have a better chanceof reflecting their values
In the current education sys-tem with the public schoolscommitted to multiculturalismbilingualism and other forms ofparticularism it is difficult toargue that parents should notbe able to choose schools thatmeet their cultural needsSecond if one accepts that lsquoso-
cial capitalrsquomdashthe networks volun-tary associations and civic bondsthat hold a community togethermdashis important for the health of ademocratic society then non-gov-ernment schools clearly have theadvantage
Unlike the government schoolsystem characterized by a heavy-handed centralized bureaucracyand teacher union control non-government schools are closer tothe communities they serve Bytheir very nature non-government
There is no credible
evidence offered to
support the claim
that government
schools are better
at promoting the
common good
29MARCH 2003
E V I E WR
ALAN MORAN
The lsquoRrsquo Files
Private propertyrights the key toachieving efficiency inrural water use
WATER IN AUSTRALIAWater has always been a definingissue in Australiarsquos prosperityAnd in recent decades irrigationhas grown rapidly Even so theproportion of Australia that is ir-rigated at two per cent of theland comprises a share that isamongst the lowest among OECDcountries Only Canada and therainiest countries New Zealandand the UK have lower sharesthat of the US is 11 per cent andin Japan it reaches 60 per cent
Modern agriculture is only 200years old in Australia and thoughin the first 100 years agriculturalproductivity was increased toequal that of anywhere in theworld gains continue to bemademdashoutput has doubled overthe past 50 years a growth thatcould not have taken place with-out a similar expansion of irriga-tion Irrigation in the MurrayndashDarling agricultural provincealone contributes $5 billion toAustralian agricultural outputand non-irrigated agriculture inthe region contributes a further $5billion This makes the areawhich comprises 14 per cent ofAustraliarsquos land mass responsiblefor a third of the nationrsquos $35 bil-lion agricultural output
Applying Property Rights to WaterMost of the uses of water involvechoices or compromisesmdashdrink-ing water versus irrigation versus
industrial and so on Some how-ever involve complementaritiesparticularly certain recreationaluses such as water sports that arefacilitated by storage and consis-tent availability
In many cases water will per-form sequential functionsmdashthesame water can be used and re-used for irrigation used for indus-trial cooling and finish as drink-ing water Water with differentsometimes competing productiveuses will be optimally used as longas two conditions are in placeThe first is that its ownership isclearly specified and the ownersrsquoobligations to other users (orclaims from other beneficiaries)are well understood The secondrequires each property right to betradable to enable acquisition bythose who value it most therebymaximizing its value
The rights specification andtherefore property ownership canrarely commence with a cleansheet of paper People acquire in-dividual rights to property ini-tially through a variety of routesOne of these is seizure of some-thing that was originally of littlevalue until it was acquired and im-proved Squatters assume rights inthis way However they are firstacquired they need to be tradableAPI
schools establish strong commu-nity networks and have a greaterreliance on the voluntary work ofparents
That non-government schoolsare more effective in this regard issupported by research into lsquoChar-ter schoolsrsquo in the United StatesAs noted by Chester Finn at theFordham Foundation giving localcommunities lsquoownershiprsquo overtheir school builds networks oftrust and reciprocity so vital forsocial cohesion
Social capital also relies on citi-zens being disciplined and orderedin their behaviour Selfishness vio-lent behaviour and rudeness act tofragment the community instead ofpromoting cohesion According toa number of Australian surveys itis here once again that non-gov-ernment schools are seen to bemore effective
As noted by the Centre for In-dependent Studies researcher Jen-nifer Buckingham in The Truthabout Private Schools in Australiawhen analysing why so many par-ents forsake the government schoolsystem
When comparing independentprivate schools with publicschools the major theme thatemerged was not differences inacademic standards and curri-culum but issues of disciplineand order The surveyed par-ents felt that the behaviour andattitudes of students in publicschools was unacceptablehellipAll accept that non-govern-
ment schools achieve better aca-demic results provide greater cur-riculum flexibility and save Aus-tralian taxpayers millions of dol-lars Equally as important is theargument that such schools streng-then Australiarsquos civic health andstock of lsquosocial capitalrsquo
Dr Kevin Donnelly is Director of EducationStrategies a Melbourne-based consulting group
E-mailkevindnetspacenetau
s
30 MARCH 2003
E V I E WR
and relatively inviolable Thisprovides the incentive for them tobe improved and for their ownersand others to search out ways inwhich the assets they representcan be used to provide increasedvalue or other benefits
If confidence in the exclusiv-ity an owner has over the prop-erty right is lost or was neverpresent the asset will be used lessproductively For example own-ers will milk them for their cur-rent-use value rather than trade-off present value for a future valuethat is less certain
Even without a total emascu-lation of individual rights (for ex-ample when title to the propertydepends on continuing govern-mental assent) lack of certaintybrings lower incomes and dimin-ished asset protection One out-come of this can be observed inthe MurrayndashDarling system Wa-ter rights on the Victorian side ofthe Murray are secure while thoseon the NSW side have been over-allocated and are subject to ad-ministrative discretion includinghaving a firm duration of only tenyears In Victoria high securitywater (available 95 per cent of thetime) comprises the great bulk ofentitlements In contrast in
NSW high security water is avail-able only 60-80 per cent of thetime The result is that farmers onthe Victorian side plant perennialcrops while those in NSW tendto focus on annual crops espe-cially rice
There are claims that Victoriarsquosmore robust property rights meanthat the State Government haslost lsquocapabilityrsquo to manage com-pared with NSW The flip side ofthis is the increased risk and as-sociated lower value of productionnorth of the Murray where prop-erty rights are attenuated Gov-ernments that give themselves in-creased capacity to direct produc-tion or to take individualrsquos prop-erty will need to accept lower lev-els of income and output
IRRIGATION ENVIRON-MENTAL BENEFITS AND SA-LINITY
The Types of IssuesIssues stemming from irrigationcomprise two types those impact-ing on the environment and thoseimpacting on private uses Theformer includes issues such as pre-venting loss of species ensuringthat certain sorts of species flourishand avoiding unattractive growths
such as blue-green algae which re-sult from fertilizer build-up
The second involves economicimpacts on different users
While environmental flows toensure species flourish are oftenhighlighted salinity is the mainfocus And while salinity has animpact on the environment itsimportance is in the conflict of in-terest between productive usersmdashthe complaint of lsquodamaged goodsrsquoby downstream users against thoseupstream
The MurrayndashDarling Basin Sa-linity Strategy 2001ndash2015 has es-timated that increased salinitybrings costs of $294 million perannum to the basin
Yet data on the salinity of theMurray Darling shows levels up-stream of South Australia arelower than they were in the early1980s and are only seriously abovethese levels as the river ap-proaches its mouth at the GoolwaBarrage
The Basin Salinity Manage-ment Strategy argues that progressachieved over the past decade willlsquobe cancelled within 20-50 yearsand median salinity levels wouldexceed the Australian DrinkingWater Guidelines for good waterquality within 50-100 yearsrsquo Thecause of this is said to be risinggroundwater tables due to land usechanges across the Basin
The disputes over salinizationare largely disputes between com-mercial parties Full specificationof rights and obligations will al-low these to be resolved as longas the impacts are measurabletheir causes identifiable and thevarious rights and obligations areknown and stable In this respecttechnology to measure salt in wa-ter and to trace increases to par-ticular locations is readily avail-able
Agreements about the alloca-tion of water rights between ju-risdictions and to the main irri-gation provinces have been inplace for over a century In the
Average Salinity in the River Murray (EC Units)1
3500
3000
2500
2000
1500
1000
500
0
January 2003
July 2002ndashJanuary 2003
July 1982ndashJanuary 2003
Hume D
am
Swan
Hill
Merbein
Morgan
Milang
Mening
ie
Goolw
a
Barra
ge
31MARCH 2003
E V I E WR
I
API
Musinghellipcase of the Murray the lsquocaprsquo onwater abstractions agreed betweenthe various jurisdictions in 1995largely validated agreements madeearly in the last century and be-fore Disturbing these agreementswould greatly undermine the trustin the sanctity of property rightsand seriously reduce agriculturalproductivity Hence increased al-locations for certain parties or forcertain uses (including environ-mental flows) would need to bepurchased at market prices
Developments in Australiaover recent decades have con-spired to make irrigation water farmore valuable This is exacer-bated by1 Activation of NSW lsquosleeperrsquo
and lsquodozerrsquo water rights as a re-sult of the increased scarcityvalue a change that bringseven greater pressure on theavailable supply
2 Increased scarcity leading tomeasures that more carefullyhusband the water Whilesome of these prevent evapo-ration loss and have thereforebrought a net increase in effec-tive availability others havereduced availability (these in-clude a more careful wateringwhich results in reduced run-off and re-use)
3 Increased capture of waterwithin the land on which itfalls once water is recognizedas scarce landowners will seekto ensure it does not leave theirland NSW and Victoria haveplaced limits (a strict 10 percent in NSW) of water fallingon property as entitlements ofthe owner Queensland has notyet enacted an equivalent tothis Such adaptations of thecommon law are essentialhowever if downstream usersare not to be expropriatedThere is likely to be constant
bickering over water rights espe-cially if State Governments seek toelevate sharing issues and to sanc-tify them with claims about promot-
Daniel Pipes in The New York Posthas a very cogent explanation forwhy the Left appears to be so happywith the likes of Osama bin Ladenand Saddam Hussein
To be clear about their attitudeshe quotes the renowned Germanelectronic music composer KarlHeinz Stockhausen who saidstraight after the attack on NewYork that it was lsquothe greatest workof art for the whole cosmosrsquo
As Pipes and many of us observedaily there is barely a bad word tosay about Saddam Hussein nor aniota of sympathy for thoseoppressed tortured and murderedby his reacutegime Instead they venttheir fury against the AmericanPresident and British Prime Minister
Why the nonchalancePipes draws our attention to Lee
Harris writing in a recent issue ofthe Hoover Institutionrsquos journalPolicy Review According to KarlMarxrsquos central thesis the demise ofcapitalism hangs on workersgrowing poorer over timemdashwhichof course did not happen Sorather than give up on cherishedexpectations of socialist revolutionHarris notes Marxists tweaked theirtheory and looked instead to theentire populations of poor countriesto carry out the revolution Classanalysis went out the windowreplaced by geography
The trouble is they have tooverlook militant Islamrsquos slightly un-socialist practicesmdashsuch as itsimposing religious law excludingwomen from the workplace andpersecuting atheists
As Pipes sums up September 11and the prospect of war againstSaddam Hussein have exposed theLeftrsquos political self-delusionintellectual bankruptcy and moralturpitude
The Loopy Leftby Andrew McIntyre
ing an improved environment Realsolutions require the issue be placedwithin a normal commercial frame-work which involves1 Clarifying the property rights2 Allowing water rights to be
fully detachable from propertyand able to be used howeverthe holder wishes subject toany damage this might imposeon others
3 Ensuring full rights to buy andsell the water
4 Defining rights so as not to re-duce the quality of other usersThis means ensuring that farm-ing practices that do not bringgreater salination than somestandard
5 Allowing rights holders tobank their water and ensureeven greater certaintyAllocating specific individual
ownership rights to water and al-lowing its trade is a well-foundedmeans of maximizing the usevalue It would also be likely tohave the beneficial side-effects ofreducing salinity and farm-basedpollutants caused by intensiveuse We should grasp such oppor-tunities But if the impending sa-linity problem is as great as someclaim other solutions might wellinclude buying out some allocatedirrigatorsrsquo rights However alter-natives may be to remove saltfrom the water by engineering so-lutions or simply to live withhigher salt
NOTE1 Human drinking water should
be less than 800 ECs (electri-cal conductivity one ECequals about 06 mglitre)while higher levels are accept-able for much farming activity
Dr Alan Moran is Director Deregulation Unitat the Institute of Public Affairs
32 MARCH 2003
E V I E WR
Reading FileDone
eral political systems worldwidehave consistently accretedpower to the centre often in theface of clear constitutional im-peratives to the contrary) Ifeared instead that a UN thathad been patently successful insomethingmdashanythingmdashmightbe granted greater powers to thepoint where it would kill truediversity and individualism (ortry to anyway) through inevi-table bureaucratic practices
Is such a fear unfounded Ap-parently not if many peopleshare the moral touchstone ofthe Opposition Leader SimonCrean He believes according tohis own words in Parliamentthat what the UN SecurityCouncil declares is moral whatit refuses is immoral
The latest manoeuvrings overIraq have therefore been heart-
ening It seems that the desiresof the powers small and largeto promote their own interestswill continue to hobble the UN
The problem with a unitedworld is that as the threateningimpasse over Iraq suggestedthere are very divergent viewsabout how that world ought tobe run on an international leveljust as there are at national and
sub-national levels The virtueof multi-layered levels of gov-ernments is that competing ju-risdictions give the individual adegree of choice
The greatest sin of totalitar-ian governments past and pres-ent is to deny their citizens theright to leave The greatest dan-ger that the United Nationsposes as far off as it now (hap-pily) seems is that leaving its ju-risdiction is for all practical pur-poses impossible
THE IMPASSE JUST PASSEDI listened to Prime MinisterHoward speaking to the motionbefore Parliament in relation tothe war It was a good speechbut neither he nor PresidentBush seems able to structure andlay out an argument with thestyle and content of BritishPrime Minister Blair His equi-valent speech before the BritishCommons provides a masterfulsummary of the reasons for thiswar and includes an immenselyreadable time-line of the utterineffectiveness of the UN pro-cesses in dealing with Iraq Henicely deals with allegations ofthe lsquorushrsquo to war lsquoOur fault hasnot been impatience The truth
UNITED OR DIVIDEDI write just hours after US Presi-dent George W Bush has deliv-ered his ultimatum to Iraqi Presi-dent Saddam Hussein leave Iraqwithin 48 hours or be removedBy the time this appears beforeyour eyes you will knowwhether Hussein has decided hischances of survival will be sig-nificantly greater by choosingexile or by remaining in IraqThe recent creation of the In-ternational Criminal Court ofcourse makes war more likelysince Hussein can have no guar-antee of a peaceful lsquoretirementrsquo
In the event that Hussein re-mains in Iraq you will also knowwhether Bush has kept his wordand most likely the outcome ofthis military venture
This matter is immensely im-portant for the people of Iraqand for the military personnelinvolved (including our ownAustralian soldiers sailors andaviators) But then so was theprevious Gulf War the US in-vasion of Grenada the Austra-lian intervention in East Timorand so on But a difference be-tween the current conflict andthose others could be the impactit has upon international insti-tutions Actually just one inter-national institution the UnitedNations
Prior to the first Gulf War Ifeared the coalitionrsquos success forthe reason that some of it mighthave rubbed off onto the UnitedNations I hasten to deny that Ifear the UN as some vast con-spiracy for world domination Ifeared instead that it couldstumble into a piecemeal cen-tralization of power (just as Fed-
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
E V I E WRs
33MARCH 2003
E V I E WR
Reading FileDone
ATTACKING THE GLOBALGOVERNORSThe Cato Institute is a whole-some body as demonstrated byits opposition to such interna-tional organizations as the Inter-national Criminal Court and forthat matter the United Nationsitself Ted Galen Carpenter forexample argues in lsquoPutting theUnited Nations on Noticersquo thatthe UN can and has done somemodest good occasionally It ishe says lsquoa good idea to have aplace where governments cangather to air grievancesrsquo But headds if it lsquoattempts to acquire ataxing authority [or] raise astanding armyrsquo then the USshould withdraw (as indeedshould Australia) Because thatwould turn it into an lsquoembryonicsuperstate that would menacelibertyrsquo
Go to
wwwcatoorgforeignpolicyunhtml
THE INTERNATIONALORGANIZATIONS THEM-SELVESThe United Nations has beenaccused of being often ineffec-tive and always slow Well ev-ery time Irsquove hit the UNrsquos Web-site even with my nifty broad-band Internet connection slow-ness rules Perhaps the site isbeing continually accessed bythe teeming masses Anyway goto
wwwunorg
With 15 members alreadyand 13 more on the way thereremain hopes that the EuropeanUnion will be a force for a stable
twenty-first century Equallywith 15 members already exhib-iting rather divergent views overthe issue of Iraq and most of theforthcoming members sidingwith the United States perhapsthis is overly hopeful Go to
europaeuintindex_enhtm
Then there is the WorldTrade Organization the organi-zation behind which protection-ist nations can hide from unilat-eral trade liberalization by pre-tending to support multilateraltrade liberalization Go to
wwwwtoorg
And we mustnrsquot forget the In-ternational Criminal Court fearof which was no doubt a featureof Saddam Husseinrsquos rejection ofexile as an option and the furyof which is promised by a num-ber of prominent lawyers to bevisited upon our very own PrimeMinister Go to
wwwicc-cpiint
FEEDBACKI would welcome advice fromreaders on any other sites of inter-est to IPA Review readers E-mailme on scdawsonbigpondnetau
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
is our patience should have beenexhausted weeks and monthsand years agorsquo
Go to
wwwnumber10govukoutputPage3294asp
THE STRUGGLE BETWEENTHE CONTINENTSIf you are patient you can readthat wonderful British rag TheSpectator for free Last weekrsquoscopy is available on-line One ofits regular columnists is MarkSteyn an Americo-phile Cana-dian who has a robust turn ofphrase and an abiding disdain formuch modern music (whichseems to place him very comfort-ably into The Spectatorrsquos culturalmatrix)
His piece on the future de-cline of Europe vis-agrave-vis Ame-rica makes for fascinating read-ing Go to
wwwspectatorcouk
then click on the lsquoBack Issuesrsquobutton and choose the edition of15 March 2003
E V I E WR
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
12 MARCH 2003
E V I E WR
pandemic attacked the weakenedpopulation in 1347ndash1349 Therewas massive depopulation and ittook Europe 250 years to reachthe population of 1280 AD Dur-ing the Little Ice Age there werewarmer periods associated withsunspot activity During mini-mum sunspot activity (1440ndash1460 1687ndash1703 and 1808ndash1821) the intensely cold condi-tions were recorded by the Dutchmasters and King Henry VIII wasable to roast oxen on the frozenThames There were food short-ages Short cold periods occurredafter the eruptions of Tambora(1815) and Krakatoa (1883) re-spectively In fact 1816 wasknown as the lsquoyear without asummerrsquo This was the time whenTurner painted stormy oceansand skies full of volcanic dustMary Shelley wrote Frankensteinand Byron wrote Darkness
TODAYThe twentieth century and earlytwenty-first century AD are timesof natural post-glacial reboundIce sheets a rare phenomenon inthe history of time still exist Sealevel is relatively low as are glo-bal temperatures and atmos-pheric CO2 Between 1920 and1945 there was a period of warm-ing (037˚C) and another thatcommenced in 1976 (032˚C) In1976ndash1977 global temperaturesin the lower atmosphere jumped03˚C sea surface temperature inthe equatorial Pacific jumped06˚C sea surface temperatureduring upwelling increased 15 to3˚C but there was reduced up-welling the heat content of theupper 300 metres of the worldrsquosoceans increased there was in-creased wave activity in theNorth Sea and the length of theday changed The stepwise in-crease in temperature in 1976ndash1977 shows that there was a ma-jor re-ordering of the ocean heattransport coinciding with anorbital change expressed as a
change in the length of the dayMaybe the global warming of thetwentieth century is just a mea-sure of the variability on a dy-namic evolving planet
To put such measurementsinto perspective over the historyof time changes in atmospherictemperature in the twentieth
century can only be consideredsmall and slow A 24-year globalcoverage of satellite atmospheretemperatures shows only modestwarming in the Northern Hemi-sphere and a slight cooling in theSouthern Hemisphere Tempera-ture measurements from balloonsagree with the satellite measure-ments for the period of overlapBecause greenhouse warming is aphenomenon of the atmospheresignificant changes should havebeen recorded They have not
CONCLUSIONSUnderpinning the global warm-ing and climate change mantra isthe imputation that humans liveon a non-dynamic planet On allscales of observation and mea-surement sea level and climateare not constant Change is nor-mal and is driven by a large num- API
ber of natural forces Change canbe slow or very fast However wesee political slogans such as StopClimate Change or governmentpublications such as Living withClimate Change demonstratingthat both the community andgovernment believe that climatevariability and change are notnormal By using the past as thekey to the present we are facingthe next inevitable glaciationyet the climate economic politi-cal and social models of todayassess the impact of a very slightwarming and do not evaluate thehigher risk of yet another glacia-tion Geology archaeology andhistory show that during glacia-tion famine war depopulationand extinction are the norm
In 1831 Admiral Sir JamesRobert George Graham had theUnion Jack hoisted on a volca-nic land mass that suddenly ap-peared near Sicily It was calledGraham Bank and was claimed byEngland It was also claimed bythe Kingdom of the Two Sicilieswho called it Isola Ferdinandeathe French (LrsquoIsle Julia) andother powers In the subsequentdispute over ownership Franceand the Kingdom of the TwoSicilies almost came to war andEngland and the Two Kingdomsof Sicily had a diplomatic rowDuring the intense diplomaticdispute the island quietly slippedback underwater Graham Banksserves to show that whateverpolitical decisions we humansmake the land rises and falls sealevels rise and fall and climateschange as they have done sincethe dawn of time
Ian Plimer is the Professor of Geology in the Schoolof Earth Sciences at The University of MelbourneThis article is an edited version of his recent paperto the IPArsquos Climate Conference delivered on 28
February 2003 a full version of which can befound on the IPArsquos Website
On all scales of
observation and
measurement sea
level and climate
are not constant
Change is normal
and is driven by a
large number of
natural forces
13MARCH 2003
E V I E WR
FOR two years the worldrsquossecond largest hydrocarbonsproducer spent beaucoupdollars on a clever public re-
lations and advertising campaign toconvince consumers that BP no longerstands for British Petroleum but for Be-yond Petroleum
One advert proclaimed lsquoWersquore oneof the largest producers of natural gashellip and are investing in the new energysources of the futuremdashhydrogen andwind Itrsquos a startrsquo Another tried to getthis line past the guffaw test lsquoWe be-lieve in alternative energy Like solarcappuccinorsquo
Many people expressed surprise thata huge oil company was so committedto alternative energy technologiesThey neednrsquot have
BPrsquos total six-year investment in re-newable technologies was $200 mil-lionmdashthe same amount it spent on thelsquoBeyond Petroleumrsquo advertising cam-paign Thatrsquos certainly an impressivetab for image enhancement But itrsquos adrop in the barrel for futuristic tech-nologies that were the centrepiece forthe slick marketing effort
Indeed all its preening and pufferynotwithstanding BPrsquos actual invest-ment in renewable energy was a whop-ping 005 per cent of the $91 billion itspent to buy oil giants Arco and Amocoback in the 1990s Moreover just as theadvertising campaign was windingdown BP announced it was spending$675 billion for a 50 per cent control-ling interest in a rich Russian oil pros-pectmdashand will be spending another$20 billion over the next five years ex-ploring this and other newer fieldsaround the world
In other words the advertising cam-paign was little more than lsquogreen-washingrsquomdashdisinformation intended topresent an environmentally responsiblepublic image BP wanted people to per-
BPmdashBack to PetroleumPAUL K DRIESSEN
theoretically harmless puffery It also re-flects the desire of many multinationalcompanies to appease critics and gaina public relations advantage over com-petitors by adopting the language ofideological environmentalism
This radical school of thought in-creasingly uses ethical buzz-words anddogmas to justify its demands Chiefamong them are sustainable develop-ment and the precautionary principlethe foundations of so-called lsquocorporatesocial responsibilityrsquo (CSR) and lsquoso-cially responsible investingrsquo (SRI) doc-trines
Eco-activists from affluent Westerncountries developed the doctrines topromote their agendas and oppose en-ergy and economic development BPhas long been at the forefront of theseefforts as a charter member of theWorld Business Council for SustainableDevelopment through frequent meet-ings with activist groups and by fund-ing many radical groups
The activists define what is lsquorespon-siblersquo focusing debate on conjecturalproblems and theoretical needs of fu-ture generations of wealthy elitesmdashandignoring real immediate life-and-death needs of people who struggledaily just to survive The stakes arehuge
More than 15 billion people in de-veloping countries still do not have ac-cess to electricity Half a billion womenand children spend their days collect-ing firewood or squatting in mud andanimal faeces to collect and dry ma-nure for fuel Millions die every yearfrom lung diseases caused by indoor airpollution from cooking fires and dys-entery due to contaminated drinkingwater
Hydroelectric or fossil fuel projectscould provide electricity for familieswater purification plants and economicdevelopment But radical activists op-
ceive it as a lsquosocially responsiblersquo leaderand reward it accordingly Few did
Green activists denounced BP forlsquohypocrisyrsquo and blasted the company forcontinuing to lsquoexploit some of theworldrsquos most sensitive ecological areasrsquoA major business magazine said sim-ply lsquoWell please If the worldrsquos secondlargest oil company is beyond petro-leum Fortune is beyond wordsrsquo
Meanwhile BPrsquos total wind and so-lar electrical output last year was barelyenough to keep the lights burning inRegina Saskatchewanmdashand thought-ful observers are beginning to realizethat wind and solar arenrsquot quite as eco-friendly as activists claim
A single new 555-MW gas-firedgenerating plant in California producesmore electricity than do all the statersquos13000 wind turbines The gas-firedplant occupies about ten acres the gi-ant 200-foot-tall windmills dominatethousands of once-scenic acres and killthousands of raptors and other birdsevery year Current photovoltaic tech-nology is just as habitat-hungry
Worse chief executive Lord JohnBrowne was forced to lower BPrsquos pro-duction estimates three times last yearand the companyrsquos 11 per cent returnon average capital was well below thatof arch-rivals ExxonMobil (137 percent) and Royal DutchShell (148 percent) BP share prices reflected inves-torsrsquo displeasure with its poor perfor-mance and the fact that the companyrsquosprofit margins would not improve for adecade or more if the company re-mained focused on renewable energyand old oil fields
Thus if BP ever really was BeyondPetroleum going Back to Petroleum(and Bigger Profits) was a sound busi-ness decision
However the lsquoGreat Beyondorsquo adcampaign involves more than meregreenwashing and disingenuous but s
14 MARCH 2003
E V I E WR
API
pose these projects and say that theworldrsquos rural poor should be contentwith solar panels on huts
Investors are also at risk particu-larly retirees whose futures depend onpension and mutual funds that ownnearly $8 trillion in market sharemdash50per cent of the total stock marketMany of these funds are managed lessto safeguard or benefit the investor thanto promote radical principles under thedisguise of so-called ethical funds
These funds claim to provide pro-fessional unbiased analytical and ad-visory services But in reality they sup-port political agendas based on often-questionable analyses and on lsquostake-holderrsquo (activist) input to justify howthey grade companies in client portfo-lios They regularly excoriate compa-nies such as ExxonMobil claiming itsrefusal to back the Kyoto climate treatywill destroy shareholder value Mean-while they praise companies such asBP and promote global governanceand solar panels on huts
Australiarsquos energy consumers willbecome yet another example of lsquocol-lateral damagersquo if the radicals havetheir way over global warming Onceagain some of the culprits are right inthe BP boardroom
In 1997 BP chief Browne endorsedthe global warming theory and saidtough measures should be imposedquickly even in the absence of scien-tific proof A Clinton-era Energy In-formation Administration report con-cluded that the climate treaty woulddrain $340 billion a year from the USeconomy The Australian economywould also get hammered And all thispain even assuming perfect compli-ance with the treaty would reduce av-erage global temperatures in 2050 byonly 02˚C below what they would bewithout the treaty according to theUSArsquos National Center for Atmo-spheric Research
But BP Australasia President GregBourne is undaunted Hersquos stumping thecountry from Melbourne to Brisbaneand Darwin to Perth importuning busi-nesses to pressure the PM to ratifyKyoto Could it be pure altruism Ormight the old profit motive be at work
A 1997 memo to Enron presidentKen Lay described BP as Enronrsquos lsquoin-ternational equivalentrsquo Indeed BP isstriving mightily to replace Enron asthe worldrsquos premier broker in the newbusiness of buying and selling permitsto emit greenhouse gases The expec-tation is that playing the climatechange game could earn BP billions ofdollars via traditional petroleum opera-tionsmdashand billions more via emissiontrading schemes The company is al-ready trading credits among its unitsas part of a training regimen for theanticipated emission Olympics
One cannot help but suspect thatthis huge EU oil giant might also bemotivated by Europersquos obvious desireto protect its industries from US and
other foreign competition They clearlysee the Kyoto Protocol not merely asan environmental programme but alsoas a way to pressure the United StatesAustralia and other countries to reduceenergy use and economic productivity
EU Environment CommissionerMargot Wallstrom put it bluntly whenPresident Bush abandoned the Kyotoclimate treaty lsquoThis is not a simple en-vironmental issuersquo she railed lsquoThis isabout international relations this isabout economy about trying to createa level playing field for big businessesthroughout the worldrsquo Several EU of-ficials echoed her sentiments suggest-ing that Americarsquos lower energy taxesconstitute an unfair trade advantagethat could justify trade sanctionsagainst the US
In short what we are witnessing isa profound and disturbing convergenceof ideology activism marketing poli-tics and financial gainmdashall in the ser-vice of radical policy agendas and allbeautifully attired in the lavish raimentof corporate ethics and responsibilityThis is proof positive that social respon-sibility can be a wondrous thing in thedexterous hands of craftsmen who re-ally know how to display and utilize it
How can we stop the charade Forstarters demand that corporate socialresponsibility puts people first puts de-velopment back into sustainable devel-opment and ensures that precaution-ary guidelines safeguard people andcommunities from the havoc wreakedby radical green policies Insist that alldecisions be based on sound peer-re-viewed science and solid evidencemdashnot on hysterical claims and shrillrhetoric by activists regulators andjournalists who reward pseudo-scien-tific soul-mates and pillory any scien-tists who dare disagree with them
Next urge principled regulators andjournalists to investigate these compa-nies and investor firms for self-servingarrangements and breech of fiduciaryduty Demand that the companiesfirms and activist groups open theirbooks and provide full disclosure oftheir meetings contacts and monetaryand other relationships
Last in this era of high-minded re-form prevail upon legislators to changethe law to make these groups subjectto the same false advertising laws andthe same standards of transparency andaccountability that activists insistshould govern for-profit corporationsUnbelievably right now these ideo-logues are mostly exempt
The world will thank you For it willbe a better safer more ethical placemdashespecially for energy consumers retir-ees and the worldrsquos poor
Paul Driessen is a senior fellow for the AtlasEconomic Research Foundation in Fairfax VA This
article is based on his recent white paper lsquoBeyondPetroleummdashor Beyond Probityrsquo which can be read
in its entirety at wwwcdfeorgdriessenhtm
BPrsquos total six-year
investment in renewable
technologies was $200
millionmdashthe same
amount it spent on the
lsquoBeyond Petroleumrsquo
advertising campaign
15MARCH 2003
E V I E WR
FOR three years Reputa-tion Measurement Ltd andThe Age and The SydneyMorning Herald have been
trying to impose their political agen-das on Australiarsquos top 100 corpora-tions They think that Australiarsquos cor-porations should be good citizens andthat by measuring what they think itmeans to be a good citizen they canchange corporate behaviour
Westpac ranked number one on the2002 Index and rated well in everycategory Flight Centre ranked num-ber one on financial performance but47 overall It was in the doldrums inevery other category including beingranked 99 on environment On thesurface this seems very strangemdashFlightCentre manages shopfront travel agen-cies The reason for this bizarre resultwas not hard to find
Reputation Measurement sug-gested that lsquocompanies seeking to dem-onstrate their worthiness as sociallyresponsible organizations are most suc-cessful when they widen their tradi-tional business stakeholder base to in-clude community stakeholdersrsquo Fur-ther lsquo[i]nvestors and consumers are in-creasingly making decisions based onlonger-term issues linked to a com-panyrsquos capacity to contribute to a sus-tainable futurersquo In other words theReputation Index is an instrument foradvancing a number of political agen-das corporate social responsibilitystakeholder capitalism and sustain-ability
For example corporate social re-sponsibility suggests a common agree-ment about what is good Whose defi-nition of good is to be believedmdashtheelectoratersquos or the activistsrsquo In a lib-eral democracy the rules are set by aconsensus that determines not so muchwhat is good corporate behaviour but
The Good Reputation Index 2002A Tale of Two Strategies
GARY JOHNS
what is and what is not acceptablebehaviour The Index is an exercise incapturing the reputation agenda andusing it to regulate corporate beha-viour
Stakeholder theory suggests that allinterests in an enterprise compete toobtain benefits from the enterprise butthat none has priority It is in effectasking lsquoin whose interests should theenterprise be runrsquo It assumes that so-ciety grants an enterprise the right toexist The community through its law-makers may grant licences and certainprivileges in return for the enterprisecomplying with the law It does notlicense stakeholders at large to imposetheir views on the corporation
Sustainability refers to ecologicalsustainability and ecological sustaina-bility is premised on the notion of lim-its to growth based on limits to resour-ces It argues that natural resources arebecoming scarcer It ignores the his-tory of technological innovation of-ten promoted by competition betweencorporations and the fact that such in-novation has extended physical re-sources in ways untold
An analysis of the 2002 Index re-veals that those corporations whosescore improved massively between2001 and 2002 did so because they didnot participate in 2001mdashthey wererated anywaymdashbut did so in 2002Conversely those whose score plum-meted in 2002 did so because they par-ticipated in 2001 but not in 2002Moreover the corporations who rosemassively in the ranks did not changetheir behaviour they just filled out theforms better
Greenpeace were very aggressive intheir attitude to corporations lsquoTo en-able us to verify your responses pleaseprovide us with further supportingdocumentation If hellip we are unable
to verify your response we will defaultyour response answer to a ldquodonrsquot knowrdquowhich will be marked and downgradedaccordinglyrsquo Unfortunately those ofwhom we would expect bettermdashforexample The Brotherhood of St Laur-encemdashalso penalized non-respon-dents As the technique was used byalmost all of the research groups thiswas presumably a deliberate strategy ofReputation Measurement Ltd
More disconcerting were reportsfrom corporations of the researchgroups touting for business by ringingfirms and offering their services to helpfill out the questionnaire Althoughthe level of disclosure has increasedsince the 2001 survey the touting con-tinued
The Index was published in Octo-ber 2002 obviously to coincide withthe reporting season and in the hopethat shareholders would use the Indexto seek changes to corporate behav-iour A sample of the major gainers andlosers on the Index reported no men-tion of the Index More importantlythere was no discernible impact onshare prices
The good news is that the Indexfailed miserably to achieve its objec-tives The bad news is that enough cor-porations played along to keep it alivein certain media and academic circlesIt was a chance for self-appointedNGOsmdashwho provided the ques-tionsmdashto regulate corporations bypublishing a list of good capitalists andbad capitalists Every corporation thatparticipated in the Index should thinkcarefully about whether it can justifythe agenda to its shareholders
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
16 MARCH 2003
E V I E WR
Tomorrowrsquos Reform
RALPH Waldo Emersontold us that lsquoa foolish con-sistency is the hobgoblinof little minds adored by
little statesmen philosophers and di-vinesrsquo and enjoined us lsquoto speak whatwe think today in words as hard ascanon balls and tomorrow speak whattomorrow thinksrsquo While statesmenshould not persist with known errortheir wanton inconsistency makespolicy formulation confoundedly dif-ficult
When he asserted that lsquoWhat de-termines the course of a nationrsquos eco-nomic policies is always the eco-nomic ideas held by public opinionrsquoLudwig von Mises must have hadeven less confidence in little states-men His pupil Friedrich von Hayekurged Antony Fisher not to enterpolitics but instead to found think-tanks which with fact and argumentwould change public opinion
Even among liberalismrsquos oppo-nents few today argue that Misesrsquoand Hayekrsquos ideas and Fisherrsquos liberalthink-tanks did not lead the 1980sand 90s almost world-wide liberal re-vival Why would they when bymuch the same means Fabian So-cialism had brought the welfare stateto Western nations In neither trendhowever were politicians the mereagents of popular opinion Especiallyin democracies political leadersrsquo ca-pacities to ignore it are indeed mod-est but their abilities to influence itare very much less so Even SaddamHussein works hard at influencingIraqi opinion Can we hypothesizethat the ways that leaders use theirinfluence distinguish tyrants fromdemocrats and the purposes forwhich they use it distinguish politi-cians from statesmen
Liberalismrsquos headlong chargethrough the corridors of power could
JOHN HYDE
arguments could have been em-ployed are nonetheless being de-fended by appeal to popular miscon-ceptions of the sort that PaulineHanson the Democrats and Greensactually believe Unless the majorparties have had a radical change ofheart they believe differently
Take the proposed Free TradeAgreement (FTA) with the UnitedStates Trade experts are not of onemind about its net worth My quar-rel is therefore not with the FTAitself but with the Governmentrsquos de-fence of it If the FTA will bring netbenefits then these will come mostlyfrom improved access to Americangoods and capital our own reductionof anti-competitive regulation ofdrugs medical insurance performingarts professional services textilesrural commodities etc and the dy-namic advantages of mixing it withthe Yanks But the government ispromoting the FTA almost solely inmercantilist (exports goodimportsbad) terms
To treat foreign goods servicesinvestment and ideas as an invasionparodies voluntary exchange whichdoes not happen unless both partiesbenefit The Government trumpetsa fact that nobody disputes namelythat it pays to sell into the best pay-ing markets but says nothing to edu-cate us in the advantages of buyingwell from foreigners as well asneighbours Once long ago Howardcriticized Pauline Hanson for her xe-nophobia That day he seemed to un-derstand the benefits of exchangewith foreigners
Until recently Australia hadbeen insisting that the only way toworld trade reform was via the mul-tilateral processes of the World TradeOrganisation and currently theDoha round A bilateral FTA with
not have proceeded without leaderssuch as Margaret Thatcher and ZhouEnlai who changed public opinionas did Bob Hawke in Australia Nowhowever liberalismrsquos charge hasslowed even in some places beensomewhat reversed Canberra hasnot been immune from trends thatsee politicians no longer so firmly re-sisting demands for economic privi-leges or as others see the same phe-nomenon no longer so blindly fol-lowing economic rationalism
Very poor economic decisionsaboundmdashrejection of the Trebeck re-port on petrol pricing preference forethanol production extending mo-tor and textile protection rural sub-sidies taxpayer contribution to theDarwin-to-Alice Springs railwayetc etc But there is also progressThe pride that John Howard takesin the fact that Australians are lessdivided against each other is surelyjustified The hugely importantlabour welfare and arguably also thehealth-care markets have been im-proved Budget balance has beenachieved albeit with high taxes Al-though net legislative and adminis-trative progress toward a more lib-eral more open more efficienteconomy has dwindled it would stillbe fair to say it has not been reversed
Our statesmenrsquos words as hard ascannon balls however that is thoseintended to enlighten rather thanappeal to public opinion are beingreserved for the Iraqi conflict In con-trast in the economic arena we areno longer encouraged to accept anyunwelcome truths Even when de-fending measures that I am morethan content to accept as beneficialthe government seems to select itsargument at best randomly ignoringprinciples of economic efficiency andequity Policies for which textbook
17MARCH 2003
E V I E WR
the US may or may not result in anet increase in trade flows but if itis not a meaningless piece of paperdelivering only political benefits tothe Government it will certainlydivert trade from our other tradingpartners How will China KoreaJapan etc react to losing their lsquomostfavoured nationrsquo status Such ques-tions should be addressed in termsthat do better than reinforce our xe-nophobic prejudices
By appealing to Hansonite mis-conceptions the Government mayand probably will improve itschances of bringing forward a policythat I am more than willing to ac-cept it believes is a good one It isafter all the recommendation of theDepartment of Foreign Affairs andTrade However by so doing it is re-inforcing delusions it must overcomefor further economic reform Whatis more I am reminded of a quip thatI am sure the PM has also heard lsquoNoGovernment is really dangerous un-til it believes its own bullshitrsquo Poli-ticians and I suspect bureaucratsalso are all too prone to believingtheir own utterances Unwilling toadmit their deceptions even whenspeaking in house they quickly con-vince themselves of the truth of theirown and colleaguesrsquo loose rhetoricand worse These are the people whomust negotiate the Agreement whilelooking over their shoulders at anAustralian electorate whose alreadystrong mercantilist tendencies havebeen reinforced by the people bestplaced to disabuse them The poten-tial cost is obvious
The US Free Trade Agreement isbut an example of a tendency thatought to be worrying In debateabout refugee policy motor fuel sup-ply single-desk wheat sales the sup-ply of medical practitioners and pres-ervation of the environment has notthe Government employed argu-ments that are not compatible withits professed liberal philosophy Hasit not seemed that it does not knowthe standard liberal responses to theself-serving demands of vested inter-ests and bigots With due respect to
Emerson consistency allows deci-sions to be made without the neces-sity of thinking every one throughfrom fundamental principles whichnobody in authority has the time orthe mental agility to do
Politically disinterested educa-tors such as the IPA can often callsome pretty good minds to their aidEven so when the Government it-self fosters public misconceptionthey cannot be expected to undo theerror The single greatest sin of thecurrent government is that it is notbuilding opinion for tomorrowrsquos re-form Why not
I suggest because it is politicallydifficult Whereas calls to resist out-siders appeal to deeply ingrainedtribal instincts calls to uphold thecivilizing and wealth-building insti-tutions that afford protection tostrangers and admit their goods ser-vices persons and ideas make nosuch visceral appeal These codes aremuch later developments in themarch of mankind and to manypeople they remain counter-intui-tive They must therefore be de-fended by sustained argumentHayek knew that politicians whosetime horizons in the absence ofknown crises tend to be the nextelection would (to use Howardrsquosown expression) seldom have the
tickers He turned therefore to theless articulate but far more resolutethink-tanks
It is relatively easy to appeal tothe sort of Chauvinism that sur-rounds sporting activity and argu-ments about refugees and meat quo-tas When a Prime Minister talks ofsovereignty guaranteeing our bor-ders or the interests of our exportersor domestic manufacturers he is notnecessarily wrong but his task iseasier than that of defending rulesthat permit voluntary co-operationamong strangers The principle thatdefends the non-unionistrsquos right towork the consumerrsquos right to buy for-eign goods and everyonersquos right tohear alien ideas and which shouldprotect racial and religious minori-ties from exclusion still needs hisleadership
Unless statesmen recognize theinconsistencies that arise not fromthe changed opinions that con-cerned Emerson but from trying tobe all things to all men they arelikely to govern in ways that are un-fair and inefficient If the public doesnot recognize consistency then thelsquolittle statesmenrsquo may find them-selves compelled to yield to the de-mands of the more articulate vestedinterests In such a case Heaven helpthe inarticulate who will be effec-tively disenfranchised But the insti-tutions which when consistentlyapplied give us liberty equity andprosperity are not strongly intuitive
They nevertheless distinguishAustralian society from say Iraqi so-ciety They give us the economicstrength to defy tyrants and they giveus a land worth defending They arecertainly not in danger of disappear-ing but they are in danger of beingeroded Lead us Mr Howard
While statesmen
should not persist
with known error
their wanton
inconsistency makes
policy formulation
confoundedly
difficult
API
John Hyde is a Senior Fellow with the Institute ofPublic Affairs His book Dry In Defence of
Economic Freedom was published by the IPA in November 2002
18 MARCH 2003
E V I E WR
DESPITE the obsessivepublic attention to pricesat the petrol pump thepetroleum-refining sector
rarely registers on the media radarscreen This is unfortunate as the sec-tor fuels most movement of peopleand goods in our economy and soci-ety And it is in trouble
It is fragmented stunted and sur-vives by abjuring profit and mortgag-ing its future Without radical reshap-ing it is likely to wither leaving usexposed to the vagaries of the inter-national refined-products market
FEATURES OF THE AUSTRA-LIAN REFINING SECTORThe first thing to note is that by in-ternational standards Australia is arelatively small player The most re-cent international figures show thatour total output of refined productsin the third quarter of 2002 was 89million tonnes This compared withOECD production of 486 milliontonnes including US production of202 million tonnes Total Australianrefinery capacity of 870000 thousandbarrels per day (bpd) compares withthe figures for China (53 million)South Korea (26 million) and Singa-pore (11 million) Total regional re-fining capacity and production con-tinues to grow as Australiarsquos stagnatesIn the five years to 2000 regional out-put grew by 22 per cent
Second the structure of the indus-try is weak The dispersed geographi-cal distribution of our refining sectorreflects its historical developmentwith each State capital city support-ing one or more refineries Over thelast two decades the number of ma-jor oil companies operating in Aus-
Petroleum RefiningRationalization or Atrophy
JIM HOGGETT
tralia has shrunk from nine to fourAlthough the number of players hasmore than halved the number of re-fineries has reduced by only two fromten to eight The average capacity ofAustralian refineries is around100000 bpd New refineries in theregion are generally significantlylarger Singaporersquos largest has a capac-ity of 375000 bpd
Given the open Australian mar-ket our ex-refinery prices are virtu-ally set by the major exporters in theregion who are also operating on tightmargins Moreover the proportion-ately heavy demand for diesel in SEAsia tends to generate a persistentsurplus of gasoline which is availablefor export to Australia at discountedprices
The pattern of relatively smallscattered refineries is no longer opti-mal in an open market in which weare a price-taker
Third despite its sub-optimalstructure the Australian refining in-dustry is not grossly inefficient Oneindicator is the value added per em-ployee which is in the top five per-formers in the Australian manufac-turing sector
The cost competitiveness of Aus-tralian products is indicated by thefact that we have the cheapest ex-taxprice of petrol in the OECD Perfor-mance comparisons with the rest ofthe AsiandashPacific however suggestthat we lag the average efficiency inthe region And the best performersin the region are superior to our best
Finally the financial performanceof the industry is poor gross annualrevenues for the whole industry in-cluding marketing were $32 billionin calendar year 2001 For the five
years to 2001 the return on assets forrefining and marketing averaged 38per cent and was negative in the lasttwo years The indications are that2002 may have been a better year forthe industry but that the return onassets remains well below the cost ofcapital Over the four years to 2001the fixed asset base of the industrydeclined by almost 6 per cent to $12billion even after $24 billion of newinvestment in the period
This is clearly unsustainable andit raises the question Why is no-oneleaving the game
There are perhaps four main rea-sonsbull First the industry has engaged in
continual productivity improve-ment allowing it to keep withinrange of ruling prices
bull Second each refiner hopes thatsomeone else will blink first sothat the waiting will pay off
bull Third the costs of leaving thetable the exit costs are very highbecause of the nature of the prod-uct and the long occupancy ofmost sites
bull Fourth even while profitability islow the industry has generallybeen marginally cash positive
These add up to a big lsquofirst mover dis-advantagersquo
FUTURE TRENDSClearly petroleum will remain ourmost important energy source Petro-leum products constitute 52 per centof Australiarsquos final consumption ofenergy Liquid petroleum fuels pro-vide more than 95 per cent of Aus-traliarsquos transport needs There are nomajor foreseeable influences that willaffect this pattern dramatically There
19MARCH 2003
E V I E WR
have been major advances in fueleconomy and these will no doubtcontinue But more than counterbal-ancing this is the inexorable growthin demand for personal mobility andfor goods from distant parts Althoughgrowth in energy consumption mayslow down in Australia we will notbe reducing our consumption to anysignificant degree
Our export role will also be lim-ited Australian export volumes havetended to be steady over recent yearsand future new export potential forpetroleum products seems likely to beminimal China and India have re-cently become major exporters par-ticularly of gasoline Refinery capac-ity is planned to continue to growstrongly in the region even thoughthere is already significant excessThe decline in capacity utilization inmajor exporters such as Singaporewill make exporting difficult Further-more it is expected that productspecifications in Asia the US andEurope will converge in the comingyears thereby eliminating niche ex-port opportunities
The choice we face is what to doabout our essentially import-compet-ing industry
INCENTIVES NOT STRONGWhile there are strong pressures forthe industry to restructure there islittle incentive to invest for this pur-pose Investments in the Australianrefining industry have to competewith many alternatives across theglobe
Lack of sufficient return is thesingle biggest deterrent to investmentin the industry at present But thereare othersbull There is no prospect of strong growth
in demand to offset the substantialrisks associated with large new in-vestments
bull The persistent refinery capacity over-hang in our region will keep sus-tained pressure on our margins
bull The corporate taxation regime is nowless favourable than hitherto after thesubstitution of effective-life foraccelerated depreciation The
competing Singapore option offersa three-year write-off
bull The regulatory cost burden is grow-ing This applies to all Australianindustry but is potent in overseascomparisons Tighter fuel stan-dards environmental restrictionsintervention in prices and indus-trial law are some of the factors
bull There is increased sovereign riskstemming from inconsistent regula-tions We have eight parliamentswhich enact inconsistent laws Acurrent example is the higher fuelstandards applied in Western Aus-tralia
bull The sovereign risk also arises fromuncertainty in the regulatory processThere are unpredictable changesof direction (the deferral of thediesel sulphur excise differential[DSED]) and uncertainty in theface of conflicting interests (willthe Government act on ethanolcontent)
All these factors enter into the riskreward calculation When the re-wards are minimal the risks take onan extra dimension
WHAT INDUSTRY STRUC-TURE DO WE NEEDThe short answer is we cannot knowin detail
In the Downstream Petroleum In-dustry Framework 2002 the Depart-ment of Industry Tourism and Re-sources set out a broad vision
bull A preference for market-based so-lutions
bull A strong efficient environmen-tally responsible industry supply-ing most of the nationrsquos needs forproducts
bull Regulation only for market failureor national interest objectives
bull Regulation to be transparent andconsistent
bull Reform and regulation to maxi-mize long-term community ben-efitThis vision has some prescriptive
elements but the Government hasmade it clear that it will not nomi-nate an optimal number of refineriesor a pattern of production
The general public would probablyopt for a structure that guaranteedlower more stable automotive fuelprices Unfortunately they cannothave both in the short term
In fairness the investors in the in-dustry are the ones entitled and bestfitted to determine its future In theextreme they will do it anyway bypersisting or walking away Generallyspeaking they will seek to maximizetheir returns and thus promote themost efficient use of resources
Australian refineries are not inef-ficient but that is not the point Ourmarket is open so the competitionwe face is the best of the overseas per-formers often with more favourabletax and subsidy regimes
Nor is this simply a question ofclosing the smallest refineries A bet-ter approach might well be to allowrefining companies to concentrate onwhat they do bestmdashperhaps throughrefinery alliances Caltex and Shellhave co-operated in this way in Thai-land
The fact is that the detail of thedecisions can only be made by theindustry relatively free of governmentdirection The series of detailed de-cisions entailed will determine theoverall structure of the industry
COMPETITION REGULATIONCAN IMPEDE RESTRUCTURINGThe relevant provision of Section 50of the Trade Practices Act (TPA) pro
While there are
strong pressures for
the industry to
restructure there is
little incentive to
invest for this
purpose
s
20 MARCH 2003
E V I E WR
hibits mergers or asset acquisitionsthat would have the effect or belikely to have the effect ofsubstantially lessening compe-tition in a marketIt is both potentially and in prac-
tice an extremely restrictive provi-sion The Australian Consumer andCompetition Commission (ACCC)has expressed concern at concentra-tion in the sector in applying the pro-vision
The ACCCrsquos concerns seem ex-aggerated in the light of history Butthey are complemented by a persis-tent public misapprehension thatlarge petrol price swings equal profi-teering This perception has been soexploited for political advantage andmedia excitement that it is now al-most impossible for the truth toemerge
The future intensity of competi-tion in this industrymdashif it is allowedto restructuremdashshould not be indoubt Any rationalization would inall likelihood still leave strong do-mestic competition in each majorproduct category perhaps with fewermore efficient production units
The market is also contestableThere would be numerous potentialimporters and many independent re-tailers High margins would be rap-idly eroded by competition As re-cently ruled in the Boral case mar-ket reality is more conclusive than aperception of anti-competitiveness
Proposed mergers have been per-mitted in the past but the process isslow and permission is generally onlygranted with severe conditionsNonetheless there is a strong case forallowing restructuring within theterms of the merger provisions
AUTHORIZATION COULD BETHE KEYIf Section 50 of the TPA is an im-passable barrier then the authoriza-tion provisions of the Act could bethe way to greater efficiency The testsunder these provisions require a pub-lic benefit which outweighs the com-petition detriment The ACCC listsfostering business efficiency industry
rationalization and import-competi-tiveness as important public benefits
There is a strong prima facie casethat rationalization of the industrycould satisfy these tests It wouldallow greater scale of productioneconomies in distribution and closureof the least efficient production units
But the authorization process isslow and the onus for demonstratingthe public benefits rests on the appli-cant Slow process can amount to ef-fective rejection
POLICY OPTIONS AND REC-OMMENDATIONSIf government cannot help the indus-try to adjust it should allow it to ad-just by supporting sensible changeThis would involve both improving
the operating environment throughregulatory reform and altering thebalance of competition regulation sothat the industry could restructurevoluntarily The CommonwealthGovernment has already indicated awillingness to support both but hasnot yet delivered
The ball would then be in theindustryrsquos court to bring forward newproposals if a new policy environmentcould be created This could all hap-pen within a very broad strategicframework agreed with the industrywhereby Australia continued to besure of sufficient refining capacity tomeet a severe international fuel short-age
We therefore recommend thatbull The Commonwealth Govern-
ment provide explicit indicationto the ACCC of the public ben-efits it sees from the rationaliza-tion of the refining sector In par-ticular joint ventures should becontemplated
bull The ACCC give sufficient weightto the public interest benefits ofrestructuring to allow rationaliza-tion of production facilities
bull All governments reduce distortingfuel subsidies and taxes that favourparticular sectors or fuels
bull The State Governments act im-mediately to harmonize their regu-lation of the industry and agreenot to issue any new inconsistentregulation
bull More specifically the States havea single set of fuel standards withwhich refiners can reasonablycomply withdraw from all formsof price regulation and refrainfrom thwarting or distorting therationalization process
bull Governments generally not intro-duce new regulations mandatingthe use of alternative fuels
CONCLUSIONThe choice for the industry appearsto be between accelerated rational-ization and atrophy The process ofchange is something which the indus-try must plan and effect The task isnot impossible but it will require theactive support of government at alllevels For the time being there is anexpressed willingness at the Com-monwealth level but no real solu-tions
If nothing is done the refiners willcontinue to stumble along in a regu-latory fog and will invest only whenobliged to do so by changing fuel stan-dards They will become increasinglyvulnerable to low-priced imports andeventual closure
Jim Hoggett is a Senior Fellow at theInstitute of Public Affairs
If Section 50 of the
TPA is an impassable
barrier then the
authorization
provisions of the Act
could be the way to
greater efficiency
API
Last week the Government tabled 22 volumes of theCole Royal Commission into the Building andConstruction Industry Former Court of Appeal judgeTerence Cole made 392 specific findings of unlawfulconduct and in the confidential final volumerecommended that 31 individuals be referred for possiblecriminal prosecution As was to be expected theconstruction unions claimed that the report was a witch-hunt and people who should have known better claimedthat Cole was biased
The anti-union allegations were never very plausiblegiven that most unions had refused to cooperate withthe Commission and had even boycotted theCommissionrsquos special conference on occupational healthand safety As things have turned out one of their ownhas fatally undermined the unionsrsquo case No less anauthority than the National Secretary of the ConstructionDivision of the CFMEU has unwittingly confirmed thatCole is right In what was no doubt an unguardedmoment John Sutton admitted to a Melbournenewspaper that ldquovirtually everything we do breaches partof this Actrdquo Suttonrsquos admission means that Colersquosdescription of a largely lawless industry can be disputedat the margins but not credibly denied The problemsof the industry have been established beyond credibledoubt and the question now is what needs to be doneabout it
Nothing says the CFMEU because itrsquos alright tobreak the law in the best interests of the working classLeading union officials take the view that in a toughindustry only wimps take the law seriously The newsthat ldquoonlyrdquo 31 individuals had been recommended toface criminal charges was greeted with somethingapproaching jubilation as if the industryrsquos code of silencebased on fear had largely kept the Royal Commission atbay
As the Australian Financial Review commented in aneditorial the unionrsquos dismissive reaction to Colersquos report
ldquospeaks as loudly as his damning findings of entrenchedlawlessnessrdquo Imagine the reaction if a royalcommissioner had identified 31 people in the financeindustry or the steel industry for possible criminalcharges This would rightly be regarded as the sign ofan industry in crisis demanding urgent governmentintervention
Change wonrsquot be easy in an industry conditioned tothink that might is right Change which shifts powerfrom one unscrupulous group to another will not bereform As Grocon has discovered the first company toldquobuck the systemrdquo is liable to heavy-duty industrialpayback No one wants to be the first to change butchange is necessary in the national interest
In 2002 the Victorian construction industry aloneaccounted for 17 per cent of all days lost through strikesThe West Australian construction industry accountedfor another 8 per cent of the national strike tallyConstruction is a $40 billion a year industry comprisingnearly six per cent of GDP and employing nearly500000 Australians Due to over-manning demarcationdisputes and chronic stoppages labour productivity incommercial construction averages 13 per cent less thanin home building Plastering the same wall in the sameway costs 40 per cent more in a high rise building thanin a standard house Just raising labour productivity incommercial construction to the home building standard(let alone the 50 per cent increase needed to match NorthAmerican levels) would mean according to Econtech aone per cent drop in the cost of living a one per centincrease in GDP and $23 billion in benefits toconsumers workers and taxpayers every year
Still change is about decent Australian values notjust a more efficient industry Workers donrsquot like latenight house calls compulsory attendance at demos anddays spent sitting in the shed to make an industrial pointany more than bosses Threats of violence contempt forcourt and commission orders mob rampages when one
Restoring the Rule of Law in theConstruction Industry
Tony Abbott MHR
s
As this issue of the IPA Review was at the press we were alerted to the delivery of the following speechby the Minister for Employment and Workplace Relations The paper marks a seminal change in the
governmentrsquos approach to systemic corruption in the construction industry and isanother major step in the reform of workplace relations in Australia
SI-1MARCH 2003
IPA REVIEW SPECIAL INSERT
side doesnrsquot get its way habitual failure to honouragreements and routine harassment of people exercisingtheir legal rights are not acceptable in modern Australiaand cannot be excused even in a good cause
Breaching ldquobourgeois lawrdquo may not matter tomilitant activists but few others take such a self-indulgent view Itrsquos said that ldquooppositions can afford tobe irresponsiblerdquo but no government or alternativegovernment can accept the principle of optionalobedience to the law of the land No less than the HowardGovernment the federal Labor Opposition and the stateLabor Governments understand the dangers of playingpolitics with the rule of lawmdasheven theauthority of laws they might preferto change such as the federal WorkplaceRelations Act
The rule of law is not asmorgasbord from which a fewfavoured items can be chosen and therest ignored Freedom under the lawrequires respect for the law generallynot just the laws individualspersonally support Obedience to thelaw is not a question of choice It is arequirement of civilisation because thelaw is our guarantee of equaltreatment after a fair hearing ldquoBe youever so high the law is above yourdquoThis reproach hurled at the Stuartkings has rightly echoed through thecenturies as a warning against theconceits of office and the arrogance ofpower regardless of the cause in whichitrsquos exercised
After last weekrsquos meeting of theWorkplace Relations MinisterialCouncil of the Council of Australian Governments stateand territory ministers were keen to declare in acommuniqueacute ldquothere was unanimous agreement thatunlawful behaviour in the building and constructionindustry is not acceptablerdquo This was an importantaffirmation of the rule of law in circumstances wheresome Labor ministers might have been tempted to putpolitics ahead of principle
Unfortunately the state and territory ministerssupported more powers for the Australian IndustrialRelations Commission to settle construction industrydisputes In fact the Commission already has power tosettle disputes Whatrsquos missing is effective power toenforce agreements The issue is not settling disputesThe issue is enforcing the law
The construction industry typically conducts itselflike this A certified agreement is in place including anagreed dispute resolution procedure Unions identify agrievance often a spurious safety issue Agreed disputeprocedures are not followed and a strike ensues eventhough strikes outside ldquobargaining periodsrdquo areldquounprotectedrdquo and theoretically subject to damagesorders At that point employers often ask theCommission to end industrial action but instead ofordering an immediate return to work because anagreement has been breached the Commission willtypically seek to conciliate on the basis of the ldquomeritsrdquo
of the issue After a couple of dayswith costs escalating and liquidateddamages looming the employerinvariably agrees to rectify the matteralleged and to pay increasedallowances (including pay for days onstrike) At this point the Commissionorders a return to work on the basisof the agreed settlementmdashwhich lastsonly until the union decides on itsnext move
The union has ignored the law andbroken its original agreement buttypically suffers no adverseconsequences whatsoever Theemployer has been manoeuvred intoconceding most of a demand thatshould never have been made Afaccedilade of legality conceals a travestyof unionism and a travesty of justiceNearly all construction industrystrikes are unprotected and potentiallyunlawful under section 170MN of theWorkplace Relations Act Even so
employers nearly always opt to pass the costs ontoconsumers while existing arrangements for gatheringinformation launching prosecutions and imposing finesdonrsquot work well anywhere but hardly work at all in anindustry where giving evidence against the unions isthought to mean commercial suicide
The construction industry is a classic case not ofmarket failure but of regulatory failure The fact thatthe construction industry does not face potential importcompetition limits its exposure to market discipline Stillthe main reason why unions can get what they want frombusiness and business can get what it needs from haplessconsumers is the absence of independent policing andenforcement of the industrial equivalent of fair tradinglaws To an extraordinary degree in this industry the
SI-2 MARCH 2003
IPA REVIEW SPECIAL INSERT
The rule of law is nota smorgasbord from
which a few favoureditems can be chosenand the rest ignoredFreedom under thelaw requires respectfor the law generally
not just thelaws individuals
personally support
request documents but they canrsquot compel witnesses toanswer or demand that material be produced Althoughit is a criminal offence under the Workplace Relations Actto hinder workplace inspectors the Cole report notedthat no prosecutions have yet been launched despiteevidence that Office of the Employment Advocateinspectors have been abused had objects thrown at themand their property damaged It has been commonpractice for the arrival of OEA inspectors to lead to workstoppages and even site invasions in a bid to thwart anddemoralise an independent investigator not susceptibleto the unionrsquos usual weapon of commercial retaliation
One of the problems with theworkplace relations system is theassumption that parties will enforcethe law against each other This worksup to a point in industries whereworkplace parties are more-or-lessevenly matched and the issues are theworkplace equivalent of an argumentbetween neighbours over the heightof a fence It completely breaks downwhen one side has an effectivemonopoly over the supply of labourand disputes resemble a more-or-lessnormal family telling the house fullof footballers next door that the partyrsquosover Expecting contractors to enforcethe law against the CFMEU is likeexpecting people in the street to makecitizenrsquos arrests hence Colersquos principalrecommendations are an AustralianBuilding and ConstructionCommission to investigate prosecuteand enforce the provisions of a beefed-up industry specific workplace
relations actYesterday Cabinet decided to support Colersquos key
recommendations First the Government will seek aseparate act governing workplace relations in theconstruction industry providing for secret ballots beforestrikes compulsory cooling off periods after extendedstrikes and damages awards in the event of unprotectedindustrial action Second the Government will establisha new law enforcement agency for the industry withpowers to compel witnesses to testify bring prosecutionsand enforce judgments and with sufficient on-the-ground presence to police CBD building sites Thirdthe Government will establish a Safety Commissionerto monitor federally-funded construction sites to try toensure that these become industry models Fourth the
s
commissions lack sufficient power the courts lacksufficient speed the employment advocate lacks sufficientauthority and the police lack sufficient interest
Not before time the Cole Commission has acted as agiant searchlight probing the dark underside of thispotentially great Australian industry It confirmed whatpolicy makers had long suspected and what influentialinsiders knew but had always tried to deny or explainaway that the industry operates under the rule of thejungle and that there will be no improvement until thepeople who work in it understand that the law has to betaken seriously Legislative institutional and structuralchange will start to mean somethingwhen law breakers in this industry arecharged convicted and punished likelaw breakers everywhere else A fewsalutary bars of that old song need towaft over construction sites ldquoI foughtthe law and the law wonrdquo
Late last year in response to theRoyal Commissionrsquos first report thefederal Government set up theBuilding and Construction IndustryInterim Task Force The Governmentrsquosbrief to the Task Force is to ensure zerotolerance of industrial law-breakingThe Task Force is not primarily toenforce the tax laws or the safety rulesbecause other bodies exist for this(although the Task Force will certainlyshare information with them) TheTask Force is to investigate and enforceWorkplace Relations Act prohibitions oncoercion unprotected strikes strikepay and breach of industrialagreements So far the Task Force hasvisited nearly 300 sites launched more than 50investigations brought three prosecutions and referrednine other matters to state police the Australian FederalPolice or the Australian Competition and ConsumerCommission for further action
These are the first public prosecutions arising out ofindustrial action in the construction industry at leastsince the 1980s and are the result of a public policycommitment to law enforcement not seen since thehumiliating Clarrie OrsquoShea case in 1969 and the end ofldquopenal sanctionsrdquo Yesterday Cabinet decided to extendthe interim Task Forcersquos operations until more permanentarrangements to secure the rule of law can be established
Task Force agents have the powers of inspectors underthe Workplace Relations Act They can enter premises and
SI-3MARCH 2003
IPA REVIEW SPECIAL INSERT
The main reason whyunions can get what
they want frombusiness and businesscan get what it needs
from haplessconsumers is theabsence of inde-
pendent policing andenforcement of the
industrial equivalent offair trading laws
API
Government will insist on the application of theNational Construction Code and implementationguidelines to all significant new projects which are fullyor partly federally funded
Directly or indirectly the federal Government fundsabout $5 billion worth of construction projects everyyear and is determined to use its role as client to drivechange in the industry In essence the NationalConstruction Code stipulates that construction projectsmust take place in conformity with the WorkplaceRelations Act Under the Code and implementationguidelines the federal Governmentwill not engage tenderers whoseworkplace agreements and practicesensure a closed shop on site The TaskForce (and any replacement body) willhave full access to federally fundedsites to ensure that the law is beingobserved and workplace agreementscomplied with
For the federal Government theissue is upholding the law and tryingto tackle the ldquounion rulesrdquo culturewhich is at the heart of lawlessness inthe industry For the states the issueis whether they are prepared to refusefederal money in order to protect theclosed shop However much theymight prefer different federal laws thestates ought to accept thatconstruction projects have to complywith the law as it stands includingthe law mandating compliance withcertified agreements
State Labor governments whichhave made a point of their middle-ground credentials risk losing some$4 billion a year in federal building and constructiongrants if they side with the union movementrsquos mostmilitant minority There are likely to be limits to Laborrsquosdefence of a union whose stock-in-trade (at least in somestates) is the site invasion and the demand for paymentand which quietly reinstates organisers sacked for assaultor perjury Opposition senators will find it hard to brandas ldquoideologicalrdquo the recommendations of a royalcommission which spent 171 days in public hearingsand which pursued 11 shop stewards and 97 unionofficials to obtain their side of the argument
As Justice Cole pointed out in his report previousattempts to reform the industry have proven ineffectivedespite two earlier royal commissions and numerous
SI-4 MARCH 2003
IPA REVIEW SPECIAL INSERT
enquiries Although this Royal Commissionrsquosinvestigations seem to have temporarily checkedlawlessness in the industry a campaign is now emergingto extend the anarchic culture of CBD construction intoregional centres and the domestic housing industryThings will certainly be different this time if parliamentapproves a permanent well resourced watchdog withnew powers new personnel and new attitudes Unlikeprevious arrangements a new statutory watchdog withthe powers of a law enforcement agency should beeffective and permanent
Hundreds of people took big riskswith their commercial future and eventheir personal security to testify to theRoyal Commission It should neveragain be so hard for people in thisindustry to exercise their ordinaryrights and responsibilities asAustralian citizens They expected theGovernment to take the Commissionrsquosreport seriously and the Governmentfor its part is determined not to letthem down The Governmentunderstands that joining fights yoursquorenot prepared to win only makes badsituations worse Establishing the ruleof law in the construction industry isa challenge Australia canrsquot afford tofailSome of the worldrsquos best workersshould no longer have to put up withsome of the worldrsquos worst industrialpractices They have a right to anhonest industry where they can earna fair dayrsquos pay for a fair dayrsquos workand expect to come home uninjuredThe enduring image of this industry
should not be noisy marchers replaying the ideologicalstruggles of the 1970s and raising clenched fists againstauthorities they donrsquot like At its best the Australianindustry is capable of work which is stunningly beautifulyet intensely practical and it now needs to performconsistently on time on budget and in accordance withlaw
Hundreds of peopletook big risks withtheir commercial
future and even theirpersonal security totestify to the Royal
Commission It shouldnever again be so
hard for people in thisindustry to exercisetheir ordinary rights
and responsibilities asAustralian citizens
NOTE
The foregoing speech was first delivered as an Addressto the National Press Club on 2 April 2003
21MARCH 2003
E V I E WR
IN psychology behaviouris defined as irrational ifan action continues to berepeated despite its re-
peated failure to achieve the desiredoutcome On this definition our aidpolicy towards Papua New Guineahas been irrational
Despite over twelve billion dol-lars in Australian aid to PNG sincethat countryrsquos independence in 1975key development indicators such asliteracy rates infant mortality lifeexpectancy and real income percapita are either stagnating or dete-riorating Worse wersquove known forover a decade1
Today acknowledgement of thefailure of our aid policy in PNG hasgone well beyond the writings of in-dividual international policy analystssuch as myself to institution-spon-sored reports such as Beyond Baliwhich was released by the AustralianStrategic Policy Institute (the Aus-tralian Governmentrsquos own strategicpolicy adviser) and Papua NewGuinea on the Brink which was writ-ten by Susan Windybank and MikeManning for the Centre for Indepen-dent Studies Both reports confirmthe gross failure of Australian aidpolicy in PNG
Yet still our aid policy irrational-ity towards Papua New Guinea con-tinues While the ASPI and CIS re-ports acknowledge the gross failureof our aid policy in PNG they alsoargue that we need to continue ouraid to that country Indeed the ASPIreport argues that we should increaseour aid to Papua New Guinea Thepolicy saviour The ASPI report ar-gues that we should exert greater con-trol over our aid Not just over theform of our aid but direct interven-tion in policy and implementation inPNGmdashin essence for a return to pre-
Aid Detox for PNGPETER URBAN
independence days in PNG whereas UN-sanctioned administrator weran government in that country
Despite the mind-frame of secu-rity-focused strategists such as thoseat ASPI and the CIS (which en-dorses the aid approach advocated byASPI) the reality is that we canrsquotPNG is now independent and to ig-nore this reality would simply com-pound the problems of our past aidpolicy irrationality with irrationalityabout our political relationship withour nearest neighbour
A more interventionist aid policytowards PNG on our part as advo-cated in Beyond Bali and by HughWhite (the executive director ofASPSI) in the media might havepopulist appeal but it would haveserious adverse implications for ourrelationship with other Pacific islandcountries and even IndonesiaWorse it would give succour to theviews of our east Asian critics (suchas Malaysian PM Dr Mahathir) whoclaim that Australia continues toharbour colonial aspirations
We have to accept that to be suc-cessful aid policy must not just helpreduce mass poverty it also has to doso as a guest in the aid recipientcountry To do otherwise is not aidbut imperialismmdashwhether inten-tional or not
A more interventionist approachto aid policy in PNG would also givethe current corrupt political elite inPort Moresby a rallying point againstus and an excuse to delay changingtheir own policies Neither Austra-lia nor PNG can afford any furtherdelays to policy reform For us to givePNG politicians yet another excuseto delay reform would be not onlyirrational it would be inexcusableWhile our aid continues so will thecorrupt elite that is at the heart ofPNGrsquos problems Until we send themessage to the PNG political elitethat we are prepared to stop ouraidmdashto put them on aid detoxmdashwewill continue to waste our aid in thecorruption that is PNG politics Itmay be hard to accept but the sadreality we face in PNG is that no aidmay prove to be good aid at least inthe short to medium-term2
NOTES
1 Peter Urban lsquoOne Clear ObjectiveNo Clear Approachrsquo IPA Review1997 Vol 50 No 1
2 With Iraq also likely to require verysignificant Australian aid fundingover the next few years the Gov-ernment will need to review our aidprogram as part of the 2003-04 fed-eral Budget A decision to suspendaid to PNG could be taken as partof that review
Peter Urban is former chief economist with theDepartment of Foreign Affairs and Trade
We have to accept
that to be successful
aid policy must not
just help reduce
mass poverty it also
has to do so as a
guest in the aid
recipient country
API
22 MARCH 2003
E V I E WR
IN his speech to the Na-tional Press Club on theprospect of war with Iraqand the case for disarma-
ment Prime Minister Howard statedthat Australia will play a significant hu-manitarian role in Iraq
If so the Howard Government needsto evaluate carefully the foreign-aid non-government organizations (FANGOs)which it funds to carry-out this humani-tarian programme Many FANGOshave made it clear that they do not sharethe Australian Governmentrsquos objectivesand values in Iraq Moreover some donot agree with the Governmentrsquos over-all aid policies in general
THE COALITION OF THEUNWILLINGIn the lead-up to latest Gulf War some30 Australian aid agencies put theirnames to an Open Letter to the PrimeMinister organized by the AustralianCouncil of Foreign and Overseas Aid(ACFOA) The aim of the letter was tolsquospeak out against war in Iraqrsquo and it ex-pressed grave concerns about the hu-manitarian consequences of the war andthe effects of the existing sanctions1 TheFANGOs that signed the letter wereOxfam Community Aid Abroad WorldVision Australia TEAR AustraliaUnion Aid Australia - APHEDACaritas Australia National Council ofChurches Australian Council for For-eign and Overseas Aid Save the Chil-dren Australia CARE Australia OzGreen United Nations Association ofAustralia Family Planning AustraliaMercy Works Marist Mission CentreAustralia Every Home for Christ Bap-tist World Aid for Christ CCF Austra-lia Quaker Service Australia Austra-lian Lutheran World Service AustralianRelief and Mercy Services AnglicanBoard of Mission AUSTCARE Com-munity Development and Health
Irreconcilable DifferencesDON DrsquoCRUZ
Hussein have been virtually ignored isa searing indictment of the warped ide-ology feeble analysis and moral blind-ness of the sector For them now to re-discover the plight of the Iraqi peopleand to invoke their name in the mediais beyond contempt
THE OXFAM COMMUNITYAID ABROAD POSITIONOf the 30 FANGO signatories to theopen letter Oxfam Community AidAbroad (OCAA) has been perhaps themost outspoken It opposed military ac-tionmdasheven with UN Security Councilapproval4 In spite of all the evidence tothe contrary OCAA was comfortablewith Saddam Husseinrsquos assurances thathe did not have weapons of mass destruc-tion5 Adopting the common policyagreed to by the other Oxfam affiliatesOCAA stated that it will not take anymoney from the lsquobelligerentsrsquomdasha quaintterm used to the describe democraticnations planning to disarm a dictatorguilty of countless human rights abuses
OCAArsquos outrage against the so-called lsquobelligerentsrsquo appears to be geo-graphically confined to Iraq OCAAappears happy to take governmentmoney from the belligerents elsewherearound the world
According to OCAArsquos ExecutiveDirector Andrew Hewitt refusing totake money from the belligerents wasdone to lsquoprotect its impartialityrsquo6 Thisis a very curious position from Australiarsquosarguably most political FANGOOCAA has a long track-record of beinganything but impartial or reluctant totake sides in miliary action It wasnrsquotimpartial in East Timor where it sidedwith Fretlin in its quest for indepen-dence According to its own testimonyto a Senate committee OCAA wasgiven the choice by the IndonesianGovernment between lsquoplaying politicsrsquoor delivering aid projects in Indonesia7
Group Amnesty International Austra-lia AngliCORD Australian Aid forCambodia Fund Burnet InstituteRedR Friends of the Earth PLAN Aus-tralia and Australian Volunteers Inter-national2
This open letter highlighted a num-ber of problems with the FANGOs sec-tor First it highlighted the weak logicthat passes for advocacy in the sectorThe letter argued against military actionwas critical of sanctions and suggestedthat nations should settle issues only bydiplomatic means It is a viewpointwhich totally ignores the fact that theGovernment had to deal with SaddamHussein
The shallowness of their logic wasbest exposed by the Prime Minister inhis response to the open letter in whichhe stated that the humanitarian situa-tion in Iraq is best addressed by SaddamHusseinrsquos removal and perhaps morepointedly that Saddamrsquos manipulationof foreign aid had allowed him to main-tain and pursue his weapons of mass de-struction capability and human rightsabuses3
Second it also highlighted the factthat the so-called lsquohuman rights-basedapproachrsquo to development (embraced byseveral of the signatories) is not so muchabout realizing human rights (as its pro-ponents argue) but is more about pro-viding them with an excuse to lsquoplay poli-ticsrsquo According to the theory the hu-man rights-based approach to develop-ment allows FANGOs to tackle the rootcauses of poverty and injustice
Yet the root cause of the Iraqipeoplersquos suffering can be summed up intwo simple wordsmdashSaddam HusseinThe fact that the FANGOs who sub-scribe to this particular approach havebeen obsessed with imaginary humanrights abuses committed by Shell NikeRio Tinto BHP-Billiton and AuroraGold while the activities of Saddam
23MARCH 2003
E V I E WR
It chose the former thus making it per-sona non grata in Indonesia for almost adecade8 It wasnrsquot impartial inMozambique when it sided with Frelimoin the countryrsquos civil war9 It wasnrsquot im-partial in Ethiopia when it developedlinks to the Eritrean Peoplersquos LiberationFront during its war against the thengovernment10 It was not impartial oranti-war when it sided with the TigrayPeoplersquos Liberation Front in the neigh-bouring province to Eritrea when thatgroup was waging a guerrilla war againstthe government11 And recently therehave been claims that in the Middle Eastit was little more than an lsquoeager propa-gandistrsquo for the Palestinians12
In East Timor Ethiopia and Mozam-bique OCAA was linked with organi-zations which supported direct militaryaction that led to the deaths of thou-sands of civilians In none of these loca-tions were the enemies of their friendany worse than Saddam Hussein In-deed in many cases OCAArsquos friendswere arguably no better than their en-emies in terms of human rights
OCAArsquos decision not to accept Aus-tralian Government funding is the cor-rect one in the sense that it clearly doesnot share the Governmentrsquos values onthe question of Iraq and thereforeshouldnrsquot receive any governmentmoney
Hewitt went on to state in a pressrelease that lsquoWe will not take funds thatmight allow a government to use hu-manitarian efforts as an instrument offoreign policyhelliprsquo13
This is finemdashexcept the AustralianGovernmentrsquos foreign aid is an instru-ment of foreign policy And it always hasbeen This is spelt out quite clearly inthe Australian Governmentrsquos latest for-eign and trade policy White Paper Ad-vancing the National Interest14
FANGOs that cannot accept thisrather basic proposition should not begetting taxpayersrsquo money They areclearly unsuitable for the task at hand
The consequences of Australian tax-payersrsquo money falling into the wronghands were brought home to Prime Min-ister Howard when he met IndonesianPresident Megawati Sukarnoputri to dis-cuss the war against terrorism and
Australiarsquos involvement against Iraq Atthe top of the Indonesian agenda wasthe issue of Australian funding toFANGOs being used to support sepa-ratist movements in Indonesia15
Post-war Iraq will be a better placewithout Saddam Hussein and his thugsThis does not mean that it will be a safeplace or necessarily a stable place Afterall one of the reasons for Western tol-eration of Saddam Hussein for manyyears was his ability to hold the various
ethnic minorities in Iraq together albeitrather brutally thereby maintaining abalance of power in the Middle East Hisdeparture would see strains on Iraq fromthe various ethnic minorities that makeup Iraq There is a strong chance thatIraq will fragment
The last thing the Australian Gov-ernment or any of the so-called belli-gerents needs in a post-war Iraq is west-ern NGOs running around and becom-ing self-styled advocates for national self-determination for Iraqrsquos ethnic minori-ties and injecting themselves into Iraqrsquosinternal politics This is a real risk Thebehaviour of Australian foreign aidNGOs in Indonesia should make Aus-tralian decision-makers extremely waryof funding any NGOs with Australiantaxpayersrsquo money so that they can oper-ate in Iraq
As things stand now FANGOs facevery few restrictions on their actionsfrom government If they undertake ac-tivity that is inconsistent with being anagent of government they may losefunding for specific projects or in moredramatic circumstances lose funding ina country Nonetheless they are gener-
ally able to access Australian Govern-ment funding for other projects andcountries In other words the penaltiesfor becoming caught up in political ac-tivities are very light for NGOs and posethem no serious problems
Foreign aid NGOs that lsquoplay politicsrsquoare unsuitable contractors for the deliv-ery of aid That these overtly politicalorganizations have been allowed to gaingovernment accreditation and receivegovernment funding points to some se-rious problems at AusAID Australiarsquosofficial aid agency The time has comefor this to change
NOTES1 httpwwwacfoaasnaumedia_releases
2003_releases26_3_03PDF2 httpwwwacfoaasnauemergencies
openletterPDF3 httpwwwacfoaasnauemergencies
iraq_responsehtm4 Oxfam Horizons Vol 3 No 1 (Febru-
ary 2003) page 25 Oxfam Community Aid Abroad lsquoIraq
Overviewrsquo February 20036 Hewitt quoted in Liz Gooch lsquoOxfam
wersquoll say no cashrsquo The Age 16 March2003
7 Community Aid Abroad Submission tothe Senate Foreign Affairs Defence andTrade References Committee Inquiryinto East Timor Downloaded at httpwwwcaaorg aucampaignssubmissionstimorhtml
8 Ibid9 Susan Blackburn Practical Visionaries A
Study of Community Aid Abroad (Mel-bourne Melbourne University Press1993) page 313
10 Ibid pages 325-333 passim11 Ibid12 Gerald Steinberg lsquoPropaganda vs Hu-
manitarianismrsquo Australian Financial Re-view 7 June 2002 Downloaded at httpfacultybiuacil~steingconflictopedpropvshumanitarianismhtm
13 ht tp wwwcaa o rg au p r 2003 iraqfundshtml
14 httpwwwdfatgovauani15 Dennis Shanahan lsquoJakarta fears aid funds
for rebellionrsquo The Australian 17 Febru-ary 2003 page 2
Don DrsquoCruz is Research Fellow at the IPAand Director of IPArsquos NGOWatch
OCAA has a longtrack-record of
being anything butimpartial or
reluctant to takesides in miliary
action
API
24 MARCH 2003
E V I E WR
GEORGE Bush Tony Blairand John Howard haveprovided many reasons forsupporting military action
against Iraq One of those reasons hasbecome known as the lsquohumanitarianrsquojustification Put simply the lsquohu-manitarianrsquo justification for the US-led invasion of Iraq is that such ac-tion is necessary to free the Iraqipeople from their totalitariandictator
Such an argument is attractive tothose who believe that there aresome fundamental human rights thatall individuals possess regardless ofwhere and how they live Whatserves as the source of those rightshas been the subject of debate forcenturies One of the pre-eminentstatements on the subject was madeby John Locke who in The SecondTreatise of Government wrote thatmankind was lsquoequal and indepen-dentrsquo and that lsquono-one ought to harmanother in his life health liberty orpossessionsrsquo
Saddam Husseinrsquos mass murdertorture and terror are reasonablyclear breaches of human rightsTherefore some would ask why thereshould be opposition to the UnitedStates and its allies taking whatevermeasures might be necessary totopple the Iraqi regime Surely thesame standard of behaviour that ap-plies to individuals applies also tonation states If an individual walk-ing in the street witnessed a rapeoccurring wouldnrsquot that individualbe entitled to do everything in hispower to stop the crime and assistthe victim
The point is of course that in-ternational law and convention do
After IraqIs Sovereignty Dead
JOHN ROSKAM
not allow nation states to act in thesame way as individuals Countriescannot simply lsquotake the law into theirown handsrsquo To restrain lsquovigilantestatesrsquo (who might be acting fromeither lsquogoodrsquo or lsquobadrsquo motives) a num-ber of legal and political theorieshave been developed One of theseis the doctrine of lsquosovereigntyrsquo whichprovides that states should not inter-vene in the domestic affairs of otherstates
In relation to Iraq the lsquosover-eigntyrsquo question is perhaps the stron-gest argument against the US-ledCoalition Most of the other criti-cisms of lsquohumanitarianrsquo interventionin Iraq are either grounded in simpleanti-Americanism or are fallaciousFor example there is the claim thatbecause some of the countries in theCoalition have previously ignoredHusseinrsquos cruelties therefore it is il-legitimate to take action now Sucha view has been expressed by aMelbourne international relationsacademic
While there is no disputing thebrutal nature of Saddam Hus-seinrsquos regime the case for inter-vention made by those in Can-berra London and Washingtonis weakened by the fact that atthe peak of Saddamrsquos crimes inthe late 1980s they were eitherdirectly supporting him withweapons technology and intelli-gence or were entirely indifferentto his behaviour Even if theyhave belatedly recognised theerror of their ways how seriouslycan we take their concerns aboutweapons of mass destruction nowgiven they were his suppliersthen1
On the basis of this argument itcould be said that Britainrsquos (andAustraliarsquos) case for intervening toassist Poland upon the German in-vasion in 1939 was lsquoweakenedrsquo be-cause Britain had previously acqui-esced to Germanyrsquos rearmament theremilitarization of the Rhinelandand the annexation of both Austriaand parts of Czechoslovakia Fewpeople who chanted lsquoFreedom forEast Timorrsquo said that the HowardGovernment should not act becausea quarter of a century before theWhitlam Government had been lsquoin-differentrsquo to Indonesiarsquos occupationof the island
There is also the claim that al-though Hussein is bad he is not theworst dictator in the world and thatit is hypocritical for the Americansto attack only Iraq This is an as-tounding proposition It attempts toapply to the United States a standardof behaviour that is impossible to sat-isfy Should the police not attemptto solve any crimes because theycanrsquot solve all crimes If a crime iscommitted by two people and thepolice arrest one perpetrator unlessthe other is also caught must the firstperpetrator be released When indi-viduals donate money for famine re-lief in Africa very few believe thattheir donation is pointless becauseit might prevent the starvation ofonly one person rather than thou-sands Christian ethics sets down norequirement that we should help no-one unless we can help everyone
The issue about state sovereigntyhowever is one that deserves to betaken seriously Regardless of onersquosopinions on the extent and limits ofstate sovereignty it is true that our
25MARCH 2003
E V I E WR
international relations system is builtupon the principle and to modify oroverturn it is a matter of some con-sequence
Even those who are generally sup-portive of the United States andtheir allies see the problem As it wasput by a leading commentator whenanalysing the Australian PrimeMinisterrsquos lsquohumanitarianrsquo justifica-tion for war
Finally Howardrsquos argumentagainst Hussein on human rightsis correct So is his moral case forwanting to liberate the Iraqipeople from their torment Theproblem however is that youcanrsquot trip around the worldwanting to overthrow regimesbecause of human rights2
Some would askmdashlsquowhy notrsquo Be-cause to do so would overthrow theUnited Nations Charter comes therejoinder And in turn the responseto that might bemdashlsquogoodrsquo
If itrsquos a choice between the main-tenance of the UN Charter and free-dom from tyranny freedom wins ev-ery time (although an internationallawyer sitting in Sydney might havea different view on this question fromthat of a political prisoner manacledin a Baghdad jail cell)
When the interests of lsquointerna-tional lawrsquo are more important thanthe life and liberty of individuals itcould be concluded that lsquothe Em-peror has no clothesrsquo Would inter-national law have sanctioned inter-vention to stop the Holocaust hadHitler not waged war and proceededwith his methods entirely within theconfines of the German territorialstate
Many who argue that lsquohumanitar-ianrsquo intervention in Iraq is not justi-fied because it infringes on thatcountryrsquos lsquosovereigntyrsquo would happilyhave other countries cede their po-litical sovereignty to supra-nationalbodies Certain features of the Inter-national Criminal Court overridethe principles of sovereignty but thatdid not stop a phalanx of interna-tional law experts urging sovereigngovernments to join it so as to en-
able the prosecution of war criminalsBut when it comes to actually stop-ping war crimes not simply prosecut-ing them that phalanx is largely si-lent
Without the doctrine of state sov-ereignty and without an arbiter fordetermining when interference withthe principle is justified (the roleclaimed by the United Nations andits Security Council) it is said thatstates would be free to impose theirown will and intervene in other
countries whose standards did notmeet their own (In The Second Trea-tise of Government Locke argued thata characteristic of a lsquostate of warrsquo be-tween individuals was the absence ofa superior authority to adjudicatedisputes and prevent individualsfrom administering justice them-selves)
Iraq might be claimed as a rea-sonably clear-cut case for interven-tion but other situations are notlikely to be as simple In Culture andEquality first published in 2001Brian Barry explored a lsquoliberalrsquo per-spective on this question
The liberal position is clearNobody anywhere in the worldshould be denied liberal pro-tections against injustice andoppression However in exactlythe same way as liberals arepragmatic about what liberalismmeans in terms of boundaries sohere the move from principle tointervention has to be mediated bypractical considerationshellip
[L]iberals are not so simple-mindedas to imagine that the answer toall violations of liberal rights is tosend in the Marines or even aUnited Nations force As in anyjust war theory there must be somedoctrine of lsquoproportionalityrsquohellip[S]carcely anybody would be infavour of the western powersinvading Saudi Arabia so at to sortout the way in which it lsquounjustlydenies political rights to women ornon-Muslimsrsquomdashaccording to theirliberal idea of justicersquo3
The question remainsmdashafterIraq what remains of lsquostate sover-eigntyrsquo Should the doctrine applyonly to lsquoliberal democraticrsquo statesSuch a solution might be attractiveto some lsquoliberalsrsquo but it doesnrsquot avoidthe problem of what exactly a lsquolib-eral democraticrsquo state is
One irony arising from the argu-ments about the war in Iraq is thatmany of those who have urged astrict application of lsquostate sover-eigntyrsquo principles in the past havegenerally supported the US-led in-tervention while those who havebeen willing to abridge or even aban-don the doctrine have had to rely onit to counter the lsquohumanitarianrsquo jus-tification for war
There are not many certaintiesabout the nature of the world afterthe war in Iraq but it can be saidwith some assurance that one defi-nite outcome is going to be a morevigorous debate about state sover-eignty
NOTES1 Scott Burchill lsquoThe humanitar-
ian arguments for this war are spu-riousrsquo The Age 21 March 2003
2 Paul Kelly lsquoThe hapless per-suaderrsquo The Australian 15ndash16March 2003
3 Brian Barry Culture and Equal-ity An egalitarian critique ofmulticulturalism Harvard Uni-versity Press page 138
John Roskam is a Research Fellow with the IPA
The lsquosovereigntyrsquo
question is perhaps
the strongest
argument against
the US-led
Coalition
API
26 MARCH 2003
E V I E WR
Which Way for theDemocrats
The 2002 mid-term elections were adramatic victory for President GeorgeW Bush and the Republicans Insteadof the historical norm of the partycontrolling the White House losingBushrsquos party gained seats in the Sen-ate House Governorsrsquo races andState legislatures The result was abitter disappointment for the Demo-crats and has led to a fierce debatebetween the Left and Centrists aboutthe future policy direction of the partytowards the 2004 elections
The Leftrsquos analysis is that the ma-jority of Americans are natural Demo-crats Electoral defeat was due to thefailure to energize that base of Demo-crats The party failed to distinguishitself sufficiently from Bush and thusgive their voters a reason to turn outWhile the majority of Democrats op-posed Bush on tax cuts and the warwith Iraq a significant minority sup-ported him and campaigned on thatsupport The result the Left claimwas that the Democrats lacked a con-sistent message in contrast to Bush
Support for this argument can befound in the higher turnout amongstRepublicans than Democrats in 2002while in 2000 the combined vote forGore and Nader was 51 per cent Aninfluential book by John Judis andRuy Texeira identified lsquoThe Emerg-ing Democrat Majorityrsquo Theyclaimed that growing demographicgroups trended Democrat includingthe young socially liberal profession-als minorities and women
What policies would motivate thisnatural Democrat base The Left callfor rescinding the Bush tax cut a classwar against the corporate world amajor increase in lsquopublic investmentrsquoin schools childcare health care and
Letter from AmericaNIGEL ASHFORD
public transport and strong opposi-tion to the war
Centrists however have a verydifferent analysis of the Democratsrsquoproblems the public did not trustthem to pursue the war against ter-rorism vigorously to keep down taxesto spend their tax dollars wisely or toreflect their cultural values
A Gallup opinion poll found that57 per cent of Americans askedthought that the Democrats were nottough enough on the war on terror-ism while 64 per cent thought theRepublicans were There was the per-ception that the Democrats were notserious on the issue and just playingpolitics Evidence for this was the de-bate over the new Department ofHomeland Security blocked becausethe Democrats wanted to protectunion rights while the President de-manded more flexibility to deploy theworkforce Many voters saw the issueas the national interest versus a spe-cial interestmdashin this case that of theunions The Democrats were seen asputting the interests of one of theirmajor constituencies before nationalsecurity
The Democratic LeadershipCouncil in lsquoThe Road Aheadrsquo by AlFrom and Bruce Reed presented theCentrist case lsquoStop pretending wecan win a majority simply by energiz-ing our basersquo The Democrats were
not trusted on the war against terror-ism were hostile to the cultural con-cerns of many working-class Demo-crats on abortion and guns and stillseen as the tax-and-spend party lsquoToomany Americans donrsquot trust us tokeep their taxes down or to spendtheir money wellrsquo
The Centrist agenda is to stronglyprosecute the war against terrorismwhether against al-Qarsquoeda Saddam orothers and to abandon knee-jerk iso-lationism arising from the experienceof the Vietnam War to defend capi-talism and support small investorsagainst irresponsible managers to cutpayroll taxes and to downplay thecultural issues that divide Democrats
Which path will the Democratstake The Left is in the ascendancyMost of the remaining Democrats inoffice come from left-wing districtsNancy Pelosi a left-liberal from SanFrancisco was easily elected the newleader of the House Democrats over-whelming her Centrist opponent andrising star African-American HaroldFord The early field of presidentialcandidates for 2004 is dominated bythe Left tendency including SenatorJohn Kerry Representative DickGephardt Governor Howard DeanRev Al Sharpton former SenatorCarol Moseley-Braun and Represen-tative Dennis Kucinich Only Sena-tor Joe Lieberman and Senator JohnEdwards represent the Centrist wing
The future of US politics may de-pend on which road the Democratsdecide to take The US is currently alsquo50ndash50rsquo nation evenly balanced be-tween the parties A left turn couldlead to Republican dominance farinto the future
Dr Nigel Ashford is at the Institute of Humane Studiesat George Mason University and is co-author of US
Politics Today (Manchester University Press)
API
27MARCH 2003
E V I E WR
Trusting TonyFrankly itrsquos all just too depressing Theeconomyrsquos heading for trouble Busi-ness confidence is low investment in2002 was 92 per cent lower than theprevious year and manufacturing in-vestment was nearly 18 per cent downThe budget deficit is spiralling becauseour once lsquoprudentrsquo Chancellor (trea-surer) Gordon Brown made over-opti-mistic growth projections and startedthrowing money at problems
Therersquos a load of health-and-safetyand anti-discrimination measuresthatmdashto put it most politelymdashare ex-amples of letting the best be the en-emy of the good Every school tripneeds a formal risk assessment withthe result that many trips are simplynot taking place New trains orderedfor London commuter routes wonrsquothave toilets because the rules say thatat least one toilet in each four-car unitmust be wheelchair-accessible whichwould have cost ten or a dozen seatson every overcrowded train
Some of this is just insane Somelocal authorities say that safety at workrules mean that home-care workersmustnrsquot lift the disabled people theyare looking after Or therersquos rail safetyUntil recently we were seriously pro-posing to spend $10 billion on a bet-ter system to stop trains going throughred signals On average this would havesaved the lives of about three passen-gers every four years which is a lousybargain compared with other safety in-vestments Worse it would also havereduced the capacity of the networkby up to 15 per cent and forced morepeople onto the roads which are muchmore dangerous than even ourclapped-out railways The result was aprojected net increase of 13 to 21 deathsper year
Meanwhile in London the Cen-tral line of the Underground has been
Letter from LondonJOHN NURICK
API
closed for weeks after a train derailedwhen one of its motors fell off Therewere no deaths or major injuries in theaccidentmdashbut itrsquos a safe bet that someof the people who havenrsquot been ableto use the Central line have been in-jured or killed on the roads
What can one say If the authori-ties took the same attitude to the riskof fatal accidents in the health serviceevery hospital in the country wouldhave been closed for years
Despite all this the Conservativesare still hopeless Their leader IanDuncan Smith has a new wheezewhen a journalist asks him anythingdifficult he chortles merrily and saysitrsquos the most uninteresting questionimaginable and hersquos not going to wasteanyonersquos time by answering it His col-leagues have their knives out for him
Meanwhile in spite of the govern-mentrsquos problems with the economy andthe public services Tony Blair is grow-ing in stature having his waymdashandantagonising large sections of his ownparty in the process On several recentissues he has faced down the formi-dable Gordon Brown in a way that notlong ago was hard to imagine
Then he shocked everyone by com-ing out against having elected mem-bers in the reformed House of Lordswhen most voters want an all-elected
chamber and most MPs want a partly-elected one In the event Parliamentcouldnrsquot agree on any of the optionsfor reform so wersquore stuck with the sta-tus quomdashwhich is fine by Mr Blair
Then therersquos the war By the timeyou read this it may be over or we maystill be waiting or our lads may befighting Mr Blairrsquos strong line againstIraq has made him very unpopular Theanti-war march on 15 February was thebiggest demonstration London hasever seen A few days later 122 Labourbackbenchers voted against the gov-ernment and many more abstained
Mr Blair didnrsquot budge War is a se-rious thing he says lsquoBut in a situationsuch as this you have to do what youbelieve to be right because thatrsquos theprice of having responsibilityrsquo1
He has often been accused of gov-erning by focus group Certainly he hasseemed reluctant to antagonise anypowerful group That has clearlychanged In a sense his stand on Iraqmerely follows his action in sendingtroops to Sierra Leone and Kosovomdashbut it has stirred up far stronger domes-tic and international opposition
The irony is that now when he re-ally needs people to trust him wedonrsquot Even in the desperately seriousbusiness of justifying an unpopular warDowning Street canrsquot play it straightremember the dossier from lsquointelli-gence sourcesrsquo that turned out to belargely cribbed from a PhD thesis onthe Internet
NOTE1 The Guardian 1 March 2003
John Nurick is a management consultant based in theSouth of England From 1985 to 1990 he was
editorial director of the Australian Institute for PublicPolicy and later edited newsletters reporting on theUK Parliament and European Union institutions
28 MARCH 2003
E V I E WR
KEVIN DONNELLY
Private EducationEquals Public Good
When it comes to choosing be-tween government and non-gov-ernment schools Australian par-ents are lsquovoting with their feetrsquo Asshown by recent ABS figures(Schools Australia 2002) over thelast decade there has been a dra-matic increase in non-governmentschool enrolments
Approximately 30 per cent ofstudents now attend non-govern-ment schools compared with 22per cent in 1980 and 28 per centin 1990 Over the last decadewhile the number of governmentschools has fallen by 64 per centnon-government schools havegrown by 61 per cent
Of course not everybody valuesparentsrsquo right to choose and theAustralian Education Union(AEU) Labor governments andlsquoleft-wingrsquo academics in particularconsistently argue against non-government schools
One of the arguments put for-ward by those opposed to givingparents greater freedom of choiceis that government schools are bet-ter at promoting social cohesionand a strong sense of what KenBoston the ex-head of the NSWEducation Department terms lsquothebonds of civic friendshiprsquo
The assumption is that becausestudents attend non-governmentschools there will be greater socialdivisiveness and a breakdown inthe civic values needed to hold so-ciety together But there is no cred-ible evidence offered to support theclaim that government schools arebetter at promoting the commongood
In fact there is much to provethe opposite
First as anyone familiar withthe lsquoculture warsrsquo and politicallycorrect curricula will know insteadof government-controlled educa-tion promoting unity and cohe-sion it has led to public angst andparental complaints
Witness the very bitter debatein Queensland a year or two agowhen the government-mandatedStudies of Society and Environ-ment (SOSE) curriculum was in-troduced into schools Such was
the lsquoleft-wingrsquo bias in the curricu-lum in particular in the areas ofmulticulturalism and the environ-ment that many parents felt be-trayed
The Queensland debate is mir-rored by what is happening in theUnited States As noted by Ste-phen Arons in his book Short Routeto Chaos instead of promotingunity government control of thecurriculum leads to the opposite
What the school wars tell us isthat somehow we have been
Education Agenda
transforming a vital instrumentfor creating social cohesioninto a source of division andhostility that there is some-thing built into the structure ofpublic schooling that under-mines one of its most importantfunctionsAronrsquos argument that govern-
ment schools no longer transmit aviable sense of a common cultureor agreed civic values is reinforcedby another noted United Stateseducationalist Diane Ravitch
In a recent article in the jour-nal Education Next Ravitch be-moans the impact of cultural rela-tivism and the post-modern on theschool curriculum (where there areno commonly agreed values) andeven goes so far as to argue thatparents should be free to choosenon-government schools becausesuch schools have a better chanceof reflecting their values
In the current education sys-tem with the public schoolscommitted to multiculturalismbilingualism and other forms ofparticularism it is difficult toargue that parents should notbe able to choose schools thatmeet their cultural needsSecond if one accepts that lsquoso-
cial capitalrsquomdashthe networks volun-tary associations and civic bondsthat hold a community togethermdashis important for the health of ademocratic society then non-gov-ernment schools clearly have theadvantage
Unlike the government schoolsystem characterized by a heavy-handed centralized bureaucracyand teacher union control non-government schools are closer tothe communities they serve Bytheir very nature non-government
There is no credible
evidence offered to
support the claim
that government
schools are better
at promoting the
common good
29MARCH 2003
E V I E WR
ALAN MORAN
The lsquoRrsquo Files
Private propertyrights the key toachieving efficiency inrural water use
WATER IN AUSTRALIAWater has always been a definingissue in Australiarsquos prosperityAnd in recent decades irrigationhas grown rapidly Even so theproportion of Australia that is ir-rigated at two per cent of theland comprises a share that isamongst the lowest among OECDcountries Only Canada and therainiest countries New Zealandand the UK have lower sharesthat of the US is 11 per cent andin Japan it reaches 60 per cent
Modern agriculture is only 200years old in Australia and thoughin the first 100 years agriculturalproductivity was increased toequal that of anywhere in theworld gains continue to bemademdashoutput has doubled overthe past 50 years a growth thatcould not have taken place with-out a similar expansion of irriga-tion Irrigation in the MurrayndashDarling agricultural provincealone contributes $5 billion toAustralian agricultural outputand non-irrigated agriculture inthe region contributes a further $5billion This makes the areawhich comprises 14 per cent ofAustraliarsquos land mass responsiblefor a third of the nationrsquos $35 bil-lion agricultural output
Applying Property Rights to WaterMost of the uses of water involvechoices or compromisesmdashdrink-ing water versus irrigation versus
industrial and so on Some how-ever involve complementaritiesparticularly certain recreationaluses such as water sports that arefacilitated by storage and consis-tent availability
In many cases water will per-form sequential functionsmdashthesame water can be used and re-used for irrigation used for indus-trial cooling and finish as drink-ing water Water with differentsometimes competing productiveuses will be optimally used as longas two conditions are in placeThe first is that its ownership isclearly specified and the ownersrsquoobligations to other users (orclaims from other beneficiaries)are well understood The secondrequires each property right to betradable to enable acquisition bythose who value it most therebymaximizing its value
The rights specification andtherefore property ownership canrarely commence with a cleansheet of paper People acquire in-dividual rights to property ini-tially through a variety of routesOne of these is seizure of some-thing that was originally of littlevalue until it was acquired and im-proved Squatters assume rights inthis way However they are firstacquired they need to be tradableAPI
schools establish strong commu-nity networks and have a greaterreliance on the voluntary work ofparents
That non-government schoolsare more effective in this regard issupported by research into lsquoChar-ter schoolsrsquo in the United StatesAs noted by Chester Finn at theFordham Foundation giving localcommunities lsquoownershiprsquo overtheir school builds networks oftrust and reciprocity so vital forsocial cohesion
Social capital also relies on citi-zens being disciplined and orderedin their behaviour Selfishness vio-lent behaviour and rudeness act tofragment the community instead ofpromoting cohesion According toa number of Australian surveys itis here once again that non-gov-ernment schools are seen to bemore effective
As noted by the Centre for In-dependent Studies researcher Jen-nifer Buckingham in The Truthabout Private Schools in Australiawhen analysing why so many par-ents forsake the government schoolsystem
When comparing independentprivate schools with publicschools the major theme thatemerged was not differences inacademic standards and curri-culum but issues of disciplineand order The surveyed par-ents felt that the behaviour andattitudes of students in publicschools was unacceptablehellipAll accept that non-govern-
ment schools achieve better aca-demic results provide greater cur-riculum flexibility and save Aus-tralian taxpayers millions of dol-lars Equally as important is theargument that such schools streng-then Australiarsquos civic health andstock of lsquosocial capitalrsquo
Dr Kevin Donnelly is Director of EducationStrategies a Melbourne-based consulting group
E-mailkevindnetspacenetau
s
30 MARCH 2003
E V I E WR
and relatively inviolable Thisprovides the incentive for them tobe improved and for their ownersand others to search out ways inwhich the assets they representcan be used to provide increasedvalue or other benefits
If confidence in the exclusiv-ity an owner has over the prop-erty right is lost or was neverpresent the asset will be used lessproductively For example own-ers will milk them for their cur-rent-use value rather than trade-off present value for a future valuethat is less certain
Even without a total emascu-lation of individual rights (for ex-ample when title to the propertydepends on continuing govern-mental assent) lack of certaintybrings lower incomes and dimin-ished asset protection One out-come of this can be observed inthe MurrayndashDarling system Wa-ter rights on the Victorian side ofthe Murray are secure while thoseon the NSW side have been over-allocated and are subject to ad-ministrative discretion includinghaving a firm duration of only tenyears In Victoria high securitywater (available 95 per cent of thetime) comprises the great bulk ofentitlements In contrast in
NSW high security water is avail-able only 60-80 per cent of thetime The result is that farmers onthe Victorian side plant perennialcrops while those in NSW tendto focus on annual crops espe-cially rice
There are claims that Victoriarsquosmore robust property rights meanthat the State Government haslost lsquocapabilityrsquo to manage com-pared with NSW The flip side ofthis is the increased risk and as-sociated lower value of productionnorth of the Murray where prop-erty rights are attenuated Gov-ernments that give themselves in-creased capacity to direct produc-tion or to take individualrsquos prop-erty will need to accept lower lev-els of income and output
IRRIGATION ENVIRON-MENTAL BENEFITS AND SA-LINITY
The Types of IssuesIssues stemming from irrigationcomprise two types those impact-ing on the environment and thoseimpacting on private uses Theformer includes issues such as pre-venting loss of species ensuringthat certain sorts of species flourishand avoiding unattractive growths
such as blue-green algae which re-sult from fertilizer build-up
The second involves economicimpacts on different users
While environmental flows toensure species flourish are oftenhighlighted salinity is the mainfocus And while salinity has animpact on the environment itsimportance is in the conflict of in-terest between productive usersmdashthe complaint of lsquodamaged goodsrsquoby downstream users against thoseupstream
The MurrayndashDarling Basin Sa-linity Strategy 2001ndash2015 has es-timated that increased salinitybrings costs of $294 million perannum to the basin
Yet data on the salinity of theMurray Darling shows levels up-stream of South Australia arelower than they were in the early1980s and are only seriously abovethese levels as the river ap-proaches its mouth at the GoolwaBarrage
The Basin Salinity Manage-ment Strategy argues that progressachieved over the past decade willlsquobe cancelled within 20-50 yearsand median salinity levels wouldexceed the Australian DrinkingWater Guidelines for good waterquality within 50-100 yearsrsquo Thecause of this is said to be risinggroundwater tables due to land usechanges across the Basin
The disputes over salinizationare largely disputes between com-mercial parties Full specificationof rights and obligations will al-low these to be resolved as longas the impacts are measurabletheir causes identifiable and thevarious rights and obligations areknown and stable In this respecttechnology to measure salt in wa-ter and to trace increases to par-ticular locations is readily avail-able
Agreements about the alloca-tion of water rights between ju-risdictions and to the main irri-gation provinces have been inplace for over a century In the
Average Salinity in the River Murray (EC Units)1
3500
3000
2500
2000
1500
1000
500
0
January 2003
July 2002ndashJanuary 2003
July 1982ndashJanuary 2003
Hume D
am
Swan
Hill
Merbein
Morgan
Milang
Mening
ie
Goolw
a
Barra
ge
31MARCH 2003
E V I E WR
I
API
Musinghellipcase of the Murray the lsquocaprsquo onwater abstractions agreed betweenthe various jurisdictions in 1995largely validated agreements madeearly in the last century and be-fore Disturbing these agreementswould greatly undermine the trustin the sanctity of property rightsand seriously reduce agriculturalproductivity Hence increased al-locations for certain parties or forcertain uses (including environ-mental flows) would need to bepurchased at market prices
Developments in Australiaover recent decades have con-spired to make irrigation water farmore valuable This is exacer-bated by1 Activation of NSW lsquosleeperrsquo
and lsquodozerrsquo water rights as a re-sult of the increased scarcityvalue a change that bringseven greater pressure on theavailable supply
2 Increased scarcity leading tomeasures that more carefullyhusband the water Whilesome of these prevent evapo-ration loss and have thereforebrought a net increase in effec-tive availability others havereduced availability (these in-clude a more careful wateringwhich results in reduced run-off and re-use)
3 Increased capture of waterwithin the land on which itfalls once water is recognizedas scarce landowners will seekto ensure it does not leave theirland NSW and Victoria haveplaced limits (a strict 10 percent in NSW) of water fallingon property as entitlements ofthe owner Queensland has notyet enacted an equivalent tothis Such adaptations of thecommon law are essentialhowever if downstream usersare not to be expropriatedThere is likely to be constant
bickering over water rights espe-cially if State Governments seek toelevate sharing issues and to sanc-tify them with claims about promot-
Daniel Pipes in The New York Posthas a very cogent explanation forwhy the Left appears to be so happywith the likes of Osama bin Ladenand Saddam Hussein
To be clear about their attitudeshe quotes the renowned Germanelectronic music composer KarlHeinz Stockhausen who saidstraight after the attack on NewYork that it was lsquothe greatest workof art for the whole cosmosrsquo
As Pipes and many of us observedaily there is barely a bad word tosay about Saddam Hussein nor aniota of sympathy for thoseoppressed tortured and murderedby his reacutegime Instead they venttheir fury against the AmericanPresident and British Prime Minister
Why the nonchalancePipes draws our attention to Lee
Harris writing in a recent issue ofthe Hoover Institutionrsquos journalPolicy Review According to KarlMarxrsquos central thesis the demise ofcapitalism hangs on workersgrowing poorer over timemdashwhichof course did not happen Sorather than give up on cherishedexpectations of socialist revolutionHarris notes Marxists tweaked theirtheory and looked instead to theentire populations of poor countriesto carry out the revolution Classanalysis went out the windowreplaced by geography
The trouble is they have tooverlook militant Islamrsquos slightly un-socialist practicesmdashsuch as itsimposing religious law excludingwomen from the workplace andpersecuting atheists
As Pipes sums up September 11and the prospect of war againstSaddam Hussein have exposed theLeftrsquos political self-delusionintellectual bankruptcy and moralturpitude
The Loopy Leftby Andrew McIntyre
ing an improved environment Realsolutions require the issue be placedwithin a normal commercial frame-work which involves1 Clarifying the property rights2 Allowing water rights to be
fully detachable from propertyand able to be used howeverthe holder wishes subject toany damage this might imposeon others
3 Ensuring full rights to buy andsell the water
4 Defining rights so as not to re-duce the quality of other usersThis means ensuring that farm-ing practices that do not bringgreater salination than somestandard
5 Allowing rights holders tobank their water and ensureeven greater certaintyAllocating specific individual
ownership rights to water and al-lowing its trade is a well-foundedmeans of maximizing the usevalue It would also be likely tohave the beneficial side-effects ofreducing salinity and farm-basedpollutants caused by intensiveuse We should grasp such oppor-tunities But if the impending sa-linity problem is as great as someclaim other solutions might wellinclude buying out some allocatedirrigatorsrsquo rights However alter-natives may be to remove saltfrom the water by engineering so-lutions or simply to live withhigher salt
NOTE1 Human drinking water should
be less than 800 ECs (electri-cal conductivity one ECequals about 06 mglitre)while higher levels are accept-able for much farming activity
Dr Alan Moran is Director Deregulation Unitat the Institute of Public Affairs
32 MARCH 2003
E V I E WR
Reading FileDone
eral political systems worldwidehave consistently accretedpower to the centre often in theface of clear constitutional im-peratives to the contrary) Ifeared instead that a UN thathad been patently successful insomethingmdashanythingmdashmightbe granted greater powers to thepoint where it would kill truediversity and individualism (ortry to anyway) through inevi-table bureaucratic practices
Is such a fear unfounded Ap-parently not if many peopleshare the moral touchstone ofthe Opposition Leader SimonCrean He believes according tohis own words in Parliamentthat what the UN SecurityCouncil declares is moral whatit refuses is immoral
The latest manoeuvrings overIraq have therefore been heart-
ening It seems that the desiresof the powers small and largeto promote their own interestswill continue to hobble the UN
The problem with a unitedworld is that as the threateningimpasse over Iraq suggestedthere are very divergent viewsabout how that world ought tobe run on an international leveljust as there are at national and
sub-national levels The virtueof multi-layered levels of gov-ernments is that competing ju-risdictions give the individual adegree of choice
The greatest sin of totalitar-ian governments past and pres-ent is to deny their citizens theright to leave The greatest dan-ger that the United Nationsposes as far off as it now (hap-pily) seems is that leaving its ju-risdiction is for all practical pur-poses impossible
THE IMPASSE JUST PASSEDI listened to Prime MinisterHoward speaking to the motionbefore Parliament in relation tothe war It was a good speechbut neither he nor PresidentBush seems able to structure andlay out an argument with thestyle and content of BritishPrime Minister Blair His equi-valent speech before the BritishCommons provides a masterfulsummary of the reasons for thiswar and includes an immenselyreadable time-line of the utterineffectiveness of the UN pro-cesses in dealing with Iraq Henicely deals with allegations ofthe lsquorushrsquo to war lsquoOur fault hasnot been impatience The truth
UNITED OR DIVIDEDI write just hours after US Presi-dent George W Bush has deliv-ered his ultimatum to Iraqi Presi-dent Saddam Hussein leave Iraqwithin 48 hours or be removedBy the time this appears beforeyour eyes you will knowwhether Hussein has decided hischances of survival will be sig-nificantly greater by choosingexile or by remaining in IraqThe recent creation of the In-ternational Criminal Court ofcourse makes war more likelysince Hussein can have no guar-antee of a peaceful lsquoretirementrsquo
In the event that Hussein re-mains in Iraq you will also knowwhether Bush has kept his wordand most likely the outcome ofthis military venture
This matter is immensely im-portant for the people of Iraqand for the military personnelinvolved (including our ownAustralian soldiers sailors andaviators) But then so was theprevious Gulf War the US in-vasion of Grenada the Austra-lian intervention in East Timorand so on But a difference be-tween the current conflict andthose others could be the impactit has upon international insti-tutions Actually just one inter-national institution the UnitedNations
Prior to the first Gulf War Ifeared the coalitionrsquos success forthe reason that some of it mighthave rubbed off onto the UnitedNations I hasten to deny that Ifear the UN as some vast con-spiracy for world domination Ifeared instead that it couldstumble into a piecemeal cen-tralization of power (just as Fed-
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
E V I E WRs
33MARCH 2003
E V I E WR
Reading FileDone
ATTACKING THE GLOBALGOVERNORSThe Cato Institute is a whole-some body as demonstrated byits opposition to such interna-tional organizations as the Inter-national Criminal Court and forthat matter the United Nationsitself Ted Galen Carpenter forexample argues in lsquoPutting theUnited Nations on Noticersquo thatthe UN can and has done somemodest good occasionally It ishe says lsquoa good idea to have aplace where governments cangather to air grievancesrsquo But headds if it lsquoattempts to acquire ataxing authority [or] raise astanding armyrsquo then the USshould withdraw (as indeedshould Australia) Because thatwould turn it into an lsquoembryonicsuperstate that would menacelibertyrsquo
Go to
wwwcatoorgforeignpolicyunhtml
THE INTERNATIONALORGANIZATIONS THEM-SELVESThe United Nations has beenaccused of being often ineffec-tive and always slow Well ev-ery time Irsquove hit the UNrsquos Web-site even with my nifty broad-band Internet connection slow-ness rules Perhaps the site isbeing continually accessed bythe teeming masses Anyway goto
wwwunorg
With 15 members alreadyand 13 more on the way thereremain hopes that the EuropeanUnion will be a force for a stable
twenty-first century Equallywith 15 members already exhib-iting rather divergent views overthe issue of Iraq and most of theforthcoming members sidingwith the United States perhapsthis is overly hopeful Go to
europaeuintindex_enhtm
Then there is the WorldTrade Organization the organi-zation behind which protection-ist nations can hide from unilat-eral trade liberalization by pre-tending to support multilateraltrade liberalization Go to
wwwwtoorg
And we mustnrsquot forget the In-ternational Criminal Court fearof which was no doubt a featureof Saddam Husseinrsquos rejection ofexile as an option and the furyof which is promised by a num-ber of prominent lawyers to bevisited upon our very own PrimeMinister Go to
wwwicc-cpiint
FEEDBACKI would welcome advice fromreaders on any other sites of inter-est to IPA Review readers E-mailme on scdawsonbigpondnetau
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
is our patience should have beenexhausted weeks and monthsand years agorsquo
Go to
wwwnumber10govukoutputPage3294asp
THE STRUGGLE BETWEENTHE CONTINENTSIf you are patient you can readthat wonderful British rag TheSpectator for free Last weekrsquoscopy is available on-line One ofits regular columnists is MarkSteyn an Americo-phile Cana-dian who has a robust turn ofphrase and an abiding disdain formuch modern music (whichseems to place him very comfort-ably into The Spectatorrsquos culturalmatrix)
His piece on the future de-cline of Europe vis-agrave-vis Ame-rica makes for fascinating read-ing Go to
wwwspectatorcouk
then click on the lsquoBack Issuesrsquobutton and choose the edition of15 March 2003
E V I E WR
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
13MARCH 2003
E V I E WR
FOR two years the worldrsquossecond largest hydrocarbonsproducer spent beaucoupdollars on a clever public re-
lations and advertising campaign toconvince consumers that BP no longerstands for British Petroleum but for Be-yond Petroleum
One advert proclaimed lsquoWersquore oneof the largest producers of natural gashellip and are investing in the new energysources of the futuremdashhydrogen andwind Itrsquos a startrsquo Another tried to getthis line past the guffaw test lsquoWe be-lieve in alternative energy Like solarcappuccinorsquo
Many people expressed surprise thata huge oil company was so committedto alternative energy technologiesThey neednrsquot have
BPrsquos total six-year investment in re-newable technologies was $200 mil-lionmdashthe same amount it spent on thelsquoBeyond Petroleumrsquo advertising cam-paign Thatrsquos certainly an impressivetab for image enhancement But itrsquos adrop in the barrel for futuristic tech-nologies that were the centrepiece forthe slick marketing effort
Indeed all its preening and pufferynotwithstanding BPrsquos actual invest-ment in renewable energy was a whop-ping 005 per cent of the $91 billion itspent to buy oil giants Arco and Amocoback in the 1990s Moreover just as theadvertising campaign was windingdown BP announced it was spending$675 billion for a 50 per cent control-ling interest in a rich Russian oil pros-pectmdashand will be spending another$20 billion over the next five years ex-ploring this and other newer fieldsaround the world
In other words the advertising cam-paign was little more than lsquogreen-washingrsquomdashdisinformation intended topresent an environmentally responsiblepublic image BP wanted people to per-
BPmdashBack to PetroleumPAUL K DRIESSEN
theoretically harmless puffery It also re-flects the desire of many multinationalcompanies to appease critics and gaina public relations advantage over com-petitors by adopting the language ofideological environmentalism
This radical school of thought in-creasingly uses ethical buzz-words anddogmas to justify its demands Chiefamong them are sustainable develop-ment and the precautionary principlethe foundations of so-called lsquocorporatesocial responsibilityrsquo (CSR) and lsquoso-cially responsible investingrsquo (SRI) doc-trines
Eco-activists from affluent Westerncountries developed the doctrines topromote their agendas and oppose en-ergy and economic development BPhas long been at the forefront of theseefforts as a charter member of theWorld Business Council for SustainableDevelopment through frequent meet-ings with activist groups and by fund-ing many radical groups
The activists define what is lsquorespon-siblersquo focusing debate on conjecturalproblems and theoretical needs of fu-ture generations of wealthy elitesmdashandignoring real immediate life-and-death needs of people who struggledaily just to survive The stakes arehuge
More than 15 billion people in de-veloping countries still do not have ac-cess to electricity Half a billion womenand children spend their days collect-ing firewood or squatting in mud andanimal faeces to collect and dry ma-nure for fuel Millions die every yearfrom lung diseases caused by indoor airpollution from cooking fires and dys-entery due to contaminated drinkingwater
Hydroelectric or fossil fuel projectscould provide electricity for familieswater purification plants and economicdevelopment But radical activists op-
ceive it as a lsquosocially responsiblersquo leaderand reward it accordingly Few did
Green activists denounced BP forlsquohypocrisyrsquo and blasted the company forcontinuing to lsquoexploit some of theworldrsquos most sensitive ecological areasrsquoA major business magazine said sim-ply lsquoWell please If the worldrsquos secondlargest oil company is beyond petro-leum Fortune is beyond wordsrsquo
Meanwhile BPrsquos total wind and so-lar electrical output last year was barelyenough to keep the lights burning inRegina Saskatchewanmdashand thought-ful observers are beginning to realizethat wind and solar arenrsquot quite as eco-friendly as activists claim
A single new 555-MW gas-firedgenerating plant in California producesmore electricity than do all the statersquos13000 wind turbines The gas-firedplant occupies about ten acres the gi-ant 200-foot-tall windmills dominatethousands of once-scenic acres and killthousands of raptors and other birdsevery year Current photovoltaic tech-nology is just as habitat-hungry
Worse chief executive Lord JohnBrowne was forced to lower BPrsquos pro-duction estimates three times last yearand the companyrsquos 11 per cent returnon average capital was well below thatof arch-rivals ExxonMobil (137 percent) and Royal DutchShell (148 percent) BP share prices reflected inves-torsrsquo displeasure with its poor perfor-mance and the fact that the companyrsquosprofit margins would not improve for adecade or more if the company re-mained focused on renewable energyand old oil fields
Thus if BP ever really was BeyondPetroleum going Back to Petroleum(and Bigger Profits) was a sound busi-ness decision
However the lsquoGreat Beyondorsquo adcampaign involves more than meregreenwashing and disingenuous but s
14 MARCH 2003
E V I E WR
API
pose these projects and say that theworldrsquos rural poor should be contentwith solar panels on huts
Investors are also at risk particu-larly retirees whose futures depend onpension and mutual funds that ownnearly $8 trillion in market sharemdash50per cent of the total stock marketMany of these funds are managed lessto safeguard or benefit the investor thanto promote radical principles under thedisguise of so-called ethical funds
These funds claim to provide pro-fessional unbiased analytical and ad-visory services But in reality they sup-port political agendas based on often-questionable analyses and on lsquostake-holderrsquo (activist) input to justify howthey grade companies in client portfo-lios They regularly excoriate compa-nies such as ExxonMobil claiming itsrefusal to back the Kyoto climate treatywill destroy shareholder value Mean-while they praise companies such asBP and promote global governanceand solar panels on huts
Australiarsquos energy consumers willbecome yet another example of lsquocol-lateral damagersquo if the radicals havetheir way over global warming Onceagain some of the culprits are right inthe BP boardroom
In 1997 BP chief Browne endorsedthe global warming theory and saidtough measures should be imposedquickly even in the absence of scien-tific proof A Clinton-era Energy In-formation Administration report con-cluded that the climate treaty woulddrain $340 billion a year from the USeconomy The Australian economywould also get hammered And all thispain even assuming perfect compli-ance with the treaty would reduce av-erage global temperatures in 2050 byonly 02˚C below what they would bewithout the treaty according to theUSArsquos National Center for Atmo-spheric Research
But BP Australasia President GregBourne is undaunted Hersquos stumping thecountry from Melbourne to Brisbaneand Darwin to Perth importuning busi-nesses to pressure the PM to ratifyKyoto Could it be pure altruism Ormight the old profit motive be at work
A 1997 memo to Enron presidentKen Lay described BP as Enronrsquos lsquoin-ternational equivalentrsquo Indeed BP isstriving mightily to replace Enron asthe worldrsquos premier broker in the newbusiness of buying and selling permitsto emit greenhouse gases The expec-tation is that playing the climatechange game could earn BP billions ofdollars via traditional petroleum opera-tionsmdashand billions more via emissiontrading schemes The company is al-ready trading credits among its unitsas part of a training regimen for theanticipated emission Olympics
One cannot help but suspect thatthis huge EU oil giant might also bemotivated by Europersquos obvious desireto protect its industries from US and
other foreign competition They clearlysee the Kyoto Protocol not merely asan environmental programme but alsoas a way to pressure the United StatesAustralia and other countries to reduceenergy use and economic productivity
EU Environment CommissionerMargot Wallstrom put it bluntly whenPresident Bush abandoned the Kyotoclimate treaty lsquoThis is not a simple en-vironmental issuersquo she railed lsquoThis isabout international relations this isabout economy about trying to createa level playing field for big businessesthroughout the worldrsquo Several EU of-ficials echoed her sentiments suggest-ing that Americarsquos lower energy taxesconstitute an unfair trade advantagethat could justify trade sanctionsagainst the US
In short what we are witnessing isa profound and disturbing convergenceof ideology activism marketing poli-tics and financial gainmdashall in the ser-vice of radical policy agendas and allbeautifully attired in the lavish raimentof corporate ethics and responsibilityThis is proof positive that social respon-sibility can be a wondrous thing in thedexterous hands of craftsmen who re-ally know how to display and utilize it
How can we stop the charade Forstarters demand that corporate socialresponsibility puts people first puts de-velopment back into sustainable devel-opment and ensures that precaution-ary guidelines safeguard people andcommunities from the havoc wreakedby radical green policies Insist that alldecisions be based on sound peer-re-viewed science and solid evidencemdashnot on hysterical claims and shrillrhetoric by activists regulators andjournalists who reward pseudo-scien-tific soul-mates and pillory any scien-tists who dare disagree with them
Next urge principled regulators andjournalists to investigate these compa-nies and investor firms for self-servingarrangements and breech of fiduciaryduty Demand that the companiesfirms and activist groups open theirbooks and provide full disclosure oftheir meetings contacts and monetaryand other relationships
Last in this era of high-minded re-form prevail upon legislators to changethe law to make these groups subjectto the same false advertising laws andthe same standards of transparency andaccountability that activists insistshould govern for-profit corporationsUnbelievably right now these ideo-logues are mostly exempt
The world will thank you For it willbe a better safer more ethical placemdashespecially for energy consumers retir-ees and the worldrsquos poor
Paul Driessen is a senior fellow for the AtlasEconomic Research Foundation in Fairfax VA This
article is based on his recent white paper lsquoBeyondPetroleummdashor Beyond Probityrsquo which can be read
in its entirety at wwwcdfeorgdriessenhtm
BPrsquos total six-year
investment in renewable
technologies was $200
millionmdashthe same
amount it spent on the
lsquoBeyond Petroleumrsquo
advertising campaign
15MARCH 2003
E V I E WR
FOR three years Reputa-tion Measurement Ltd andThe Age and The SydneyMorning Herald have been
trying to impose their political agen-das on Australiarsquos top 100 corpora-tions They think that Australiarsquos cor-porations should be good citizens andthat by measuring what they think itmeans to be a good citizen they canchange corporate behaviour
Westpac ranked number one on the2002 Index and rated well in everycategory Flight Centre ranked num-ber one on financial performance but47 overall It was in the doldrums inevery other category including beingranked 99 on environment On thesurface this seems very strangemdashFlightCentre manages shopfront travel agen-cies The reason for this bizarre resultwas not hard to find
Reputation Measurement sug-gested that lsquocompanies seeking to dem-onstrate their worthiness as sociallyresponsible organizations are most suc-cessful when they widen their tradi-tional business stakeholder base to in-clude community stakeholdersrsquo Fur-ther lsquo[i]nvestors and consumers are in-creasingly making decisions based onlonger-term issues linked to a com-panyrsquos capacity to contribute to a sus-tainable futurersquo In other words theReputation Index is an instrument foradvancing a number of political agen-das corporate social responsibilitystakeholder capitalism and sustain-ability
For example corporate social re-sponsibility suggests a common agree-ment about what is good Whose defi-nition of good is to be believedmdashtheelectoratersquos or the activistsrsquo In a lib-eral democracy the rules are set by aconsensus that determines not so muchwhat is good corporate behaviour but
The Good Reputation Index 2002A Tale of Two Strategies
GARY JOHNS
what is and what is not acceptablebehaviour The Index is an exercise incapturing the reputation agenda andusing it to regulate corporate beha-viour
Stakeholder theory suggests that allinterests in an enterprise compete toobtain benefits from the enterprise butthat none has priority It is in effectasking lsquoin whose interests should theenterprise be runrsquo It assumes that so-ciety grants an enterprise the right toexist The community through its law-makers may grant licences and certainprivileges in return for the enterprisecomplying with the law It does notlicense stakeholders at large to imposetheir views on the corporation
Sustainability refers to ecologicalsustainability and ecological sustaina-bility is premised on the notion of lim-its to growth based on limits to resour-ces It argues that natural resources arebecoming scarcer It ignores the his-tory of technological innovation of-ten promoted by competition betweencorporations and the fact that such in-novation has extended physical re-sources in ways untold
An analysis of the 2002 Index re-veals that those corporations whosescore improved massively between2001 and 2002 did so because they didnot participate in 2001mdashthey wererated anywaymdashbut did so in 2002Conversely those whose score plum-meted in 2002 did so because they par-ticipated in 2001 but not in 2002Moreover the corporations who rosemassively in the ranks did not changetheir behaviour they just filled out theforms better
Greenpeace were very aggressive intheir attitude to corporations lsquoTo en-able us to verify your responses pleaseprovide us with further supportingdocumentation If hellip we are unable
to verify your response we will defaultyour response answer to a ldquodonrsquot knowrdquowhich will be marked and downgradedaccordinglyrsquo Unfortunately those ofwhom we would expect bettermdashforexample The Brotherhood of St Laur-encemdashalso penalized non-respon-dents As the technique was used byalmost all of the research groups thiswas presumably a deliberate strategy ofReputation Measurement Ltd
More disconcerting were reportsfrom corporations of the researchgroups touting for business by ringingfirms and offering their services to helpfill out the questionnaire Althoughthe level of disclosure has increasedsince the 2001 survey the touting con-tinued
The Index was published in Octo-ber 2002 obviously to coincide withthe reporting season and in the hopethat shareholders would use the Indexto seek changes to corporate behav-iour A sample of the major gainers andlosers on the Index reported no men-tion of the Index More importantlythere was no discernible impact onshare prices
The good news is that the Indexfailed miserably to achieve its objec-tives The bad news is that enough cor-porations played along to keep it alivein certain media and academic circlesIt was a chance for self-appointedNGOsmdashwho provided the ques-tionsmdashto regulate corporations bypublishing a list of good capitalists andbad capitalists Every corporation thatparticipated in the Index should thinkcarefully about whether it can justifythe agenda to its shareholders
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
16 MARCH 2003
E V I E WR
Tomorrowrsquos Reform
RALPH Waldo Emersontold us that lsquoa foolish con-sistency is the hobgoblinof little minds adored by
little statesmen philosophers and di-vinesrsquo and enjoined us lsquoto speak whatwe think today in words as hard ascanon balls and tomorrow speak whattomorrow thinksrsquo While statesmenshould not persist with known errortheir wanton inconsistency makespolicy formulation confoundedly dif-ficult
When he asserted that lsquoWhat de-termines the course of a nationrsquos eco-nomic policies is always the eco-nomic ideas held by public opinionrsquoLudwig von Mises must have hadeven less confidence in little states-men His pupil Friedrich von Hayekurged Antony Fisher not to enterpolitics but instead to found think-tanks which with fact and argumentwould change public opinion
Even among liberalismrsquos oppo-nents few today argue that Misesrsquoand Hayekrsquos ideas and Fisherrsquos liberalthink-tanks did not lead the 1980sand 90s almost world-wide liberal re-vival Why would they when bymuch the same means Fabian So-cialism had brought the welfare stateto Western nations In neither trendhowever were politicians the mereagents of popular opinion Especiallyin democracies political leadersrsquo ca-pacities to ignore it are indeed mod-est but their abilities to influence itare very much less so Even SaddamHussein works hard at influencingIraqi opinion Can we hypothesizethat the ways that leaders use theirinfluence distinguish tyrants fromdemocrats and the purposes forwhich they use it distinguish politi-cians from statesmen
Liberalismrsquos headlong chargethrough the corridors of power could
JOHN HYDE
arguments could have been em-ployed are nonetheless being de-fended by appeal to popular miscon-ceptions of the sort that PaulineHanson the Democrats and Greensactually believe Unless the majorparties have had a radical change ofheart they believe differently
Take the proposed Free TradeAgreement (FTA) with the UnitedStates Trade experts are not of onemind about its net worth My quar-rel is therefore not with the FTAitself but with the Governmentrsquos de-fence of it If the FTA will bring netbenefits then these will come mostlyfrom improved access to Americangoods and capital our own reductionof anti-competitive regulation ofdrugs medical insurance performingarts professional services textilesrural commodities etc and the dy-namic advantages of mixing it withthe Yanks But the government ispromoting the FTA almost solely inmercantilist (exports goodimportsbad) terms
To treat foreign goods servicesinvestment and ideas as an invasionparodies voluntary exchange whichdoes not happen unless both partiesbenefit The Government trumpetsa fact that nobody disputes namelythat it pays to sell into the best pay-ing markets but says nothing to edu-cate us in the advantages of buyingwell from foreigners as well asneighbours Once long ago Howardcriticized Pauline Hanson for her xe-nophobia That day he seemed to un-derstand the benefits of exchangewith foreigners
Until recently Australia hadbeen insisting that the only way toworld trade reform was via the mul-tilateral processes of the World TradeOrganisation and currently theDoha round A bilateral FTA with
not have proceeded without leaderssuch as Margaret Thatcher and ZhouEnlai who changed public opinionas did Bob Hawke in Australia Nowhowever liberalismrsquos charge hasslowed even in some places beensomewhat reversed Canberra hasnot been immune from trends thatsee politicians no longer so firmly re-sisting demands for economic privi-leges or as others see the same phe-nomenon no longer so blindly fol-lowing economic rationalism
Very poor economic decisionsaboundmdashrejection of the Trebeck re-port on petrol pricing preference forethanol production extending mo-tor and textile protection rural sub-sidies taxpayer contribution to theDarwin-to-Alice Springs railwayetc etc But there is also progressThe pride that John Howard takesin the fact that Australians are lessdivided against each other is surelyjustified The hugely importantlabour welfare and arguably also thehealth-care markets have been im-proved Budget balance has beenachieved albeit with high taxes Al-though net legislative and adminis-trative progress toward a more lib-eral more open more efficienteconomy has dwindled it would stillbe fair to say it has not been reversed
Our statesmenrsquos words as hard ascannon balls however that is thoseintended to enlighten rather thanappeal to public opinion are beingreserved for the Iraqi conflict In con-trast in the economic arena we areno longer encouraged to accept anyunwelcome truths Even when de-fending measures that I am morethan content to accept as beneficialthe government seems to select itsargument at best randomly ignoringprinciples of economic efficiency andequity Policies for which textbook
17MARCH 2003
E V I E WR
the US may or may not result in anet increase in trade flows but if itis not a meaningless piece of paperdelivering only political benefits tothe Government it will certainlydivert trade from our other tradingpartners How will China KoreaJapan etc react to losing their lsquomostfavoured nationrsquo status Such ques-tions should be addressed in termsthat do better than reinforce our xe-nophobic prejudices
By appealing to Hansonite mis-conceptions the Government mayand probably will improve itschances of bringing forward a policythat I am more than willing to ac-cept it believes is a good one It isafter all the recommendation of theDepartment of Foreign Affairs andTrade However by so doing it is re-inforcing delusions it must overcomefor further economic reform Whatis more I am reminded of a quip thatI am sure the PM has also heard lsquoNoGovernment is really dangerous un-til it believes its own bullshitrsquo Poli-ticians and I suspect bureaucratsalso are all too prone to believingtheir own utterances Unwilling toadmit their deceptions even whenspeaking in house they quickly con-vince themselves of the truth of theirown and colleaguesrsquo loose rhetoricand worse These are the people whomust negotiate the Agreement whilelooking over their shoulders at anAustralian electorate whose alreadystrong mercantilist tendencies havebeen reinforced by the people bestplaced to disabuse them The poten-tial cost is obvious
The US Free Trade Agreement isbut an example of a tendency thatought to be worrying In debateabout refugee policy motor fuel sup-ply single-desk wheat sales the sup-ply of medical practitioners and pres-ervation of the environment has notthe Government employed argu-ments that are not compatible withits professed liberal philosophy Hasit not seemed that it does not knowthe standard liberal responses to theself-serving demands of vested inter-ests and bigots With due respect to
Emerson consistency allows deci-sions to be made without the neces-sity of thinking every one throughfrom fundamental principles whichnobody in authority has the time orthe mental agility to do
Politically disinterested educa-tors such as the IPA can often callsome pretty good minds to their aidEven so when the Government it-self fosters public misconceptionthey cannot be expected to undo theerror The single greatest sin of thecurrent government is that it is notbuilding opinion for tomorrowrsquos re-form Why not
I suggest because it is politicallydifficult Whereas calls to resist out-siders appeal to deeply ingrainedtribal instincts calls to uphold thecivilizing and wealth-building insti-tutions that afford protection tostrangers and admit their goods ser-vices persons and ideas make nosuch visceral appeal These codes aremuch later developments in themarch of mankind and to manypeople they remain counter-intui-tive They must therefore be de-fended by sustained argumentHayek knew that politicians whosetime horizons in the absence ofknown crises tend to be the nextelection would (to use Howardrsquosown expression) seldom have the
tickers He turned therefore to theless articulate but far more resolutethink-tanks
It is relatively easy to appeal tothe sort of Chauvinism that sur-rounds sporting activity and argu-ments about refugees and meat quo-tas When a Prime Minister talks ofsovereignty guaranteeing our bor-ders or the interests of our exportersor domestic manufacturers he is notnecessarily wrong but his task iseasier than that of defending rulesthat permit voluntary co-operationamong strangers The principle thatdefends the non-unionistrsquos right towork the consumerrsquos right to buy for-eign goods and everyonersquos right tohear alien ideas and which shouldprotect racial and religious minori-ties from exclusion still needs hisleadership
Unless statesmen recognize theinconsistencies that arise not fromthe changed opinions that con-cerned Emerson but from trying tobe all things to all men they arelikely to govern in ways that are un-fair and inefficient If the public doesnot recognize consistency then thelsquolittle statesmenrsquo may find them-selves compelled to yield to the de-mands of the more articulate vestedinterests In such a case Heaven helpthe inarticulate who will be effec-tively disenfranchised But the insti-tutions which when consistentlyapplied give us liberty equity andprosperity are not strongly intuitive
They nevertheless distinguishAustralian society from say Iraqi so-ciety They give us the economicstrength to defy tyrants and they giveus a land worth defending They arecertainly not in danger of disappear-ing but they are in danger of beingeroded Lead us Mr Howard
While statesmen
should not persist
with known error
their wanton
inconsistency makes
policy formulation
confoundedly
difficult
API
John Hyde is a Senior Fellow with the Institute ofPublic Affairs His book Dry In Defence of
Economic Freedom was published by the IPA in November 2002
18 MARCH 2003
E V I E WR
DESPITE the obsessivepublic attention to pricesat the petrol pump thepetroleum-refining sector
rarely registers on the media radarscreen This is unfortunate as the sec-tor fuels most movement of peopleand goods in our economy and soci-ety And it is in trouble
It is fragmented stunted and sur-vives by abjuring profit and mortgag-ing its future Without radical reshap-ing it is likely to wither leaving usexposed to the vagaries of the inter-national refined-products market
FEATURES OF THE AUSTRA-LIAN REFINING SECTORThe first thing to note is that by in-ternational standards Australia is arelatively small player The most re-cent international figures show thatour total output of refined productsin the third quarter of 2002 was 89million tonnes This compared withOECD production of 486 milliontonnes including US production of202 million tonnes Total Australianrefinery capacity of 870000 thousandbarrels per day (bpd) compares withthe figures for China (53 million)South Korea (26 million) and Singa-pore (11 million) Total regional re-fining capacity and production con-tinues to grow as Australiarsquos stagnatesIn the five years to 2000 regional out-put grew by 22 per cent
Second the structure of the indus-try is weak The dispersed geographi-cal distribution of our refining sectorreflects its historical developmentwith each State capital city support-ing one or more refineries Over thelast two decades the number of ma-jor oil companies operating in Aus-
Petroleum RefiningRationalization or Atrophy
JIM HOGGETT
tralia has shrunk from nine to fourAlthough the number of players hasmore than halved the number of re-fineries has reduced by only two fromten to eight The average capacity ofAustralian refineries is around100000 bpd New refineries in theregion are generally significantlylarger Singaporersquos largest has a capac-ity of 375000 bpd
Given the open Australian mar-ket our ex-refinery prices are virtu-ally set by the major exporters in theregion who are also operating on tightmargins Moreover the proportion-ately heavy demand for diesel in SEAsia tends to generate a persistentsurplus of gasoline which is availablefor export to Australia at discountedprices
The pattern of relatively smallscattered refineries is no longer opti-mal in an open market in which weare a price-taker
Third despite its sub-optimalstructure the Australian refining in-dustry is not grossly inefficient Oneindicator is the value added per em-ployee which is in the top five per-formers in the Australian manufac-turing sector
The cost competitiveness of Aus-tralian products is indicated by thefact that we have the cheapest ex-taxprice of petrol in the OECD Perfor-mance comparisons with the rest ofthe AsiandashPacific however suggestthat we lag the average efficiency inthe region And the best performersin the region are superior to our best
Finally the financial performanceof the industry is poor gross annualrevenues for the whole industry in-cluding marketing were $32 billionin calendar year 2001 For the five
years to 2001 the return on assets forrefining and marketing averaged 38per cent and was negative in the lasttwo years The indications are that2002 may have been a better year forthe industry but that the return onassets remains well below the cost ofcapital Over the four years to 2001the fixed asset base of the industrydeclined by almost 6 per cent to $12billion even after $24 billion of newinvestment in the period
This is clearly unsustainable andit raises the question Why is no-oneleaving the game
There are perhaps four main rea-sonsbull First the industry has engaged in
continual productivity improve-ment allowing it to keep withinrange of ruling prices
bull Second each refiner hopes thatsomeone else will blink first sothat the waiting will pay off
bull Third the costs of leaving thetable the exit costs are very highbecause of the nature of the prod-uct and the long occupancy ofmost sites
bull Fourth even while profitability islow the industry has generallybeen marginally cash positive
These add up to a big lsquofirst mover dis-advantagersquo
FUTURE TRENDSClearly petroleum will remain ourmost important energy source Petro-leum products constitute 52 per centof Australiarsquos final consumption ofenergy Liquid petroleum fuels pro-vide more than 95 per cent of Aus-traliarsquos transport needs There are nomajor foreseeable influences that willaffect this pattern dramatically There
19MARCH 2003
E V I E WR
have been major advances in fueleconomy and these will no doubtcontinue But more than counterbal-ancing this is the inexorable growthin demand for personal mobility andfor goods from distant parts Althoughgrowth in energy consumption mayslow down in Australia we will notbe reducing our consumption to anysignificant degree
Our export role will also be lim-ited Australian export volumes havetended to be steady over recent yearsand future new export potential forpetroleum products seems likely to beminimal China and India have re-cently become major exporters par-ticularly of gasoline Refinery capac-ity is planned to continue to growstrongly in the region even thoughthere is already significant excessThe decline in capacity utilization inmajor exporters such as Singaporewill make exporting difficult Further-more it is expected that productspecifications in Asia the US andEurope will converge in the comingyears thereby eliminating niche ex-port opportunities
The choice we face is what to doabout our essentially import-compet-ing industry
INCENTIVES NOT STRONGWhile there are strong pressures forthe industry to restructure there islittle incentive to invest for this pur-pose Investments in the Australianrefining industry have to competewith many alternatives across theglobe
Lack of sufficient return is thesingle biggest deterrent to investmentin the industry at present But thereare othersbull There is no prospect of strong growth
in demand to offset the substantialrisks associated with large new in-vestments
bull The persistent refinery capacity over-hang in our region will keep sus-tained pressure on our margins
bull The corporate taxation regime is nowless favourable than hitherto after thesubstitution of effective-life foraccelerated depreciation The
competing Singapore option offersa three-year write-off
bull The regulatory cost burden is grow-ing This applies to all Australianindustry but is potent in overseascomparisons Tighter fuel stan-dards environmental restrictionsintervention in prices and indus-trial law are some of the factors
bull There is increased sovereign riskstemming from inconsistent regula-tions We have eight parliamentswhich enact inconsistent laws Acurrent example is the higher fuelstandards applied in Western Aus-tralia
bull The sovereign risk also arises fromuncertainty in the regulatory processThere are unpredictable changesof direction (the deferral of thediesel sulphur excise differential[DSED]) and uncertainty in theface of conflicting interests (willthe Government act on ethanolcontent)
All these factors enter into the riskreward calculation When the re-wards are minimal the risks take onan extra dimension
WHAT INDUSTRY STRUC-TURE DO WE NEEDThe short answer is we cannot knowin detail
In the Downstream Petroleum In-dustry Framework 2002 the Depart-ment of Industry Tourism and Re-sources set out a broad vision
bull A preference for market-based so-lutions
bull A strong efficient environmen-tally responsible industry supply-ing most of the nationrsquos needs forproducts
bull Regulation only for market failureor national interest objectives
bull Regulation to be transparent andconsistent
bull Reform and regulation to maxi-mize long-term community ben-efitThis vision has some prescriptive
elements but the Government hasmade it clear that it will not nomi-nate an optimal number of refineriesor a pattern of production
The general public would probablyopt for a structure that guaranteedlower more stable automotive fuelprices Unfortunately they cannothave both in the short term
In fairness the investors in the in-dustry are the ones entitled and bestfitted to determine its future In theextreme they will do it anyway bypersisting or walking away Generallyspeaking they will seek to maximizetheir returns and thus promote themost efficient use of resources
Australian refineries are not inef-ficient but that is not the point Ourmarket is open so the competitionwe face is the best of the overseas per-formers often with more favourabletax and subsidy regimes
Nor is this simply a question ofclosing the smallest refineries A bet-ter approach might well be to allowrefining companies to concentrate onwhat they do bestmdashperhaps throughrefinery alliances Caltex and Shellhave co-operated in this way in Thai-land
The fact is that the detail of thedecisions can only be made by theindustry relatively free of governmentdirection The series of detailed de-cisions entailed will determine theoverall structure of the industry
COMPETITION REGULATIONCAN IMPEDE RESTRUCTURINGThe relevant provision of Section 50of the Trade Practices Act (TPA) pro
While there are
strong pressures for
the industry to
restructure there is
little incentive to
invest for this
purpose
s
20 MARCH 2003
E V I E WR
hibits mergers or asset acquisitionsthat would have the effect or belikely to have the effect ofsubstantially lessening compe-tition in a marketIt is both potentially and in prac-
tice an extremely restrictive provi-sion The Australian Consumer andCompetition Commission (ACCC)has expressed concern at concentra-tion in the sector in applying the pro-vision
The ACCCrsquos concerns seem ex-aggerated in the light of history Butthey are complemented by a persis-tent public misapprehension thatlarge petrol price swings equal profi-teering This perception has been soexploited for political advantage andmedia excitement that it is now al-most impossible for the truth toemerge
The future intensity of competi-tion in this industrymdashif it is allowedto restructuremdashshould not be indoubt Any rationalization would inall likelihood still leave strong do-mestic competition in each majorproduct category perhaps with fewermore efficient production units
The market is also contestableThere would be numerous potentialimporters and many independent re-tailers High margins would be rap-idly eroded by competition As re-cently ruled in the Boral case mar-ket reality is more conclusive than aperception of anti-competitiveness
Proposed mergers have been per-mitted in the past but the process isslow and permission is generally onlygranted with severe conditionsNonetheless there is a strong case forallowing restructuring within theterms of the merger provisions
AUTHORIZATION COULD BETHE KEYIf Section 50 of the TPA is an im-passable barrier then the authoriza-tion provisions of the Act could bethe way to greater efficiency The testsunder these provisions require a pub-lic benefit which outweighs the com-petition detriment The ACCC listsfostering business efficiency industry
rationalization and import-competi-tiveness as important public benefits
There is a strong prima facie casethat rationalization of the industrycould satisfy these tests It wouldallow greater scale of productioneconomies in distribution and closureof the least efficient production units
But the authorization process isslow and the onus for demonstratingthe public benefits rests on the appli-cant Slow process can amount to ef-fective rejection
POLICY OPTIONS AND REC-OMMENDATIONSIf government cannot help the indus-try to adjust it should allow it to ad-just by supporting sensible changeThis would involve both improving
the operating environment throughregulatory reform and altering thebalance of competition regulation sothat the industry could restructurevoluntarily The CommonwealthGovernment has already indicated awillingness to support both but hasnot yet delivered
The ball would then be in theindustryrsquos court to bring forward newproposals if a new policy environmentcould be created This could all hap-pen within a very broad strategicframework agreed with the industrywhereby Australia continued to besure of sufficient refining capacity tomeet a severe international fuel short-age
We therefore recommend thatbull The Commonwealth Govern-
ment provide explicit indicationto the ACCC of the public ben-efits it sees from the rationaliza-tion of the refining sector In par-ticular joint ventures should becontemplated
bull The ACCC give sufficient weightto the public interest benefits ofrestructuring to allow rationaliza-tion of production facilities
bull All governments reduce distortingfuel subsidies and taxes that favourparticular sectors or fuels
bull The State Governments act im-mediately to harmonize their regu-lation of the industry and agreenot to issue any new inconsistentregulation
bull More specifically the States havea single set of fuel standards withwhich refiners can reasonablycomply withdraw from all formsof price regulation and refrainfrom thwarting or distorting therationalization process
bull Governments generally not intro-duce new regulations mandatingthe use of alternative fuels
CONCLUSIONThe choice for the industry appearsto be between accelerated rational-ization and atrophy The process ofchange is something which the indus-try must plan and effect The task isnot impossible but it will require theactive support of government at alllevels For the time being there is anexpressed willingness at the Com-monwealth level but no real solu-tions
If nothing is done the refiners willcontinue to stumble along in a regu-latory fog and will invest only whenobliged to do so by changing fuel stan-dards They will become increasinglyvulnerable to low-priced imports andeventual closure
Jim Hoggett is a Senior Fellow at theInstitute of Public Affairs
If Section 50 of the
TPA is an impassable
barrier then the
authorization
provisions of the Act
could be the way to
greater efficiency
API
Last week the Government tabled 22 volumes of theCole Royal Commission into the Building andConstruction Industry Former Court of Appeal judgeTerence Cole made 392 specific findings of unlawfulconduct and in the confidential final volumerecommended that 31 individuals be referred for possiblecriminal prosecution As was to be expected theconstruction unions claimed that the report was a witch-hunt and people who should have known better claimedthat Cole was biased
The anti-union allegations were never very plausiblegiven that most unions had refused to cooperate withthe Commission and had even boycotted theCommissionrsquos special conference on occupational healthand safety As things have turned out one of their ownhas fatally undermined the unionsrsquo case No less anauthority than the National Secretary of the ConstructionDivision of the CFMEU has unwittingly confirmed thatCole is right In what was no doubt an unguardedmoment John Sutton admitted to a Melbournenewspaper that ldquovirtually everything we do breaches partof this Actrdquo Suttonrsquos admission means that Colersquosdescription of a largely lawless industry can be disputedat the margins but not credibly denied The problemsof the industry have been established beyond credibledoubt and the question now is what needs to be doneabout it
Nothing says the CFMEU because itrsquos alright tobreak the law in the best interests of the working classLeading union officials take the view that in a toughindustry only wimps take the law seriously The newsthat ldquoonlyrdquo 31 individuals had been recommended toface criminal charges was greeted with somethingapproaching jubilation as if the industryrsquos code of silencebased on fear had largely kept the Royal Commission atbay
As the Australian Financial Review commented in aneditorial the unionrsquos dismissive reaction to Colersquos report
ldquospeaks as loudly as his damning findings of entrenchedlawlessnessrdquo Imagine the reaction if a royalcommissioner had identified 31 people in the financeindustry or the steel industry for possible criminalcharges This would rightly be regarded as the sign ofan industry in crisis demanding urgent governmentintervention
Change wonrsquot be easy in an industry conditioned tothink that might is right Change which shifts powerfrom one unscrupulous group to another will not bereform As Grocon has discovered the first company toldquobuck the systemrdquo is liable to heavy-duty industrialpayback No one wants to be the first to change butchange is necessary in the national interest
In 2002 the Victorian construction industry aloneaccounted for 17 per cent of all days lost through strikesThe West Australian construction industry accountedfor another 8 per cent of the national strike tallyConstruction is a $40 billion a year industry comprisingnearly six per cent of GDP and employing nearly500000 Australians Due to over-manning demarcationdisputes and chronic stoppages labour productivity incommercial construction averages 13 per cent less thanin home building Plastering the same wall in the sameway costs 40 per cent more in a high rise building thanin a standard house Just raising labour productivity incommercial construction to the home building standard(let alone the 50 per cent increase needed to match NorthAmerican levels) would mean according to Econtech aone per cent drop in the cost of living a one per centincrease in GDP and $23 billion in benefits toconsumers workers and taxpayers every year
Still change is about decent Australian values notjust a more efficient industry Workers donrsquot like latenight house calls compulsory attendance at demos anddays spent sitting in the shed to make an industrial pointany more than bosses Threats of violence contempt forcourt and commission orders mob rampages when one
Restoring the Rule of Law in theConstruction Industry
Tony Abbott MHR
s
As this issue of the IPA Review was at the press we were alerted to the delivery of the following speechby the Minister for Employment and Workplace Relations The paper marks a seminal change in the
governmentrsquos approach to systemic corruption in the construction industry and isanother major step in the reform of workplace relations in Australia
SI-1MARCH 2003
IPA REVIEW SPECIAL INSERT
side doesnrsquot get its way habitual failure to honouragreements and routine harassment of people exercisingtheir legal rights are not acceptable in modern Australiaand cannot be excused even in a good cause
Breaching ldquobourgeois lawrdquo may not matter tomilitant activists but few others take such a self-indulgent view Itrsquos said that ldquooppositions can afford tobe irresponsiblerdquo but no government or alternativegovernment can accept the principle of optionalobedience to the law of the land No less than the HowardGovernment the federal Labor Opposition and the stateLabor Governments understand the dangers of playingpolitics with the rule of lawmdasheven theauthority of laws they might preferto change such as the federal WorkplaceRelations Act
The rule of law is not asmorgasbord from which a fewfavoured items can be chosen and therest ignored Freedom under the lawrequires respect for the law generallynot just the laws individualspersonally support Obedience to thelaw is not a question of choice It is arequirement of civilisation because thelaw is our guarantee of equaltreatment after a fair hearing ldquoBe youever so high the law is above yourdquoThis reproach hurled at the Stuartkings has rightly echoed through thecenturies as a warning against theconceits of office and the arrogance ofpower regardless of the cause in whichitrsquos exercised
After last weekrsquos meeting of theWorkplace Relations MinisterialCouncil of the Council of Australian Governments stateand territory ministers were keen to declare in acommuniqueacute ldquothere was unanimous agreement thatunlawful behaviour in the building and constructionindustry is not acceptablerdquo This was an importantaffirmation of the rule of law in circumstances wheresome Labor ministers might have been tempted to putpolitics ahead of principle
Unfortunately the state and territory ministerssupported more powers for the Australian IndustrialRelations Commission to settle construction industrydisputes In fact the Commission already has power tosettle disputes Whatrsquos missing is effective power toenforce agreements The issue is not settling disputesThe issue is enforcing the law
The construction industry typically conducts itselflike this A certified agreement is in place including anagreed dispute resolution procedure Unions identify agrievance often a spurious safety issue Agreed disputeprocedures are not followed and a strike ensues eventhough strikes outside ldquobargaining periodsrdquo areldquounprotectedrdquo and theoretically subject to damagesorders At that point employers often ask theCommission to end industrial action but instead ofordering an immediate return to work because anagreement has been breached the Commission willtypically seek to conciliate on the basis of the ldquomeritsrdquo
of the issue After a couple of dayswith costs escalating and liquidateddamages looming the employerinvariably agrees to rectify the matteralleged and to pay increasedallowances (including pay for days onstrike) At this point the Commissionorders a return to work on the basisof the agreed settlementmdashwhich lastsonly until the union decides on itsnext move
The union has ignored the law andbroken its original agreement buttypically suffers no adverseconsequences whatsoever Theemployer has been manoeuvred intoconceding most of a demand thatshould never have been made Afaccedilade of legality conceals a travestyof unionism and a travesty of justiceNearly all construction industrystrikes are unprotected and potentiallyunlawful under section 170MN of theWorkplace Relations Act Even so
employers nearly always opt to pass the costs ontoconsumers while existing arrangements for gatheringinformation launching prosecutions and imposing finesdonrsquot work well anywhere but hardly work at all in anindustry where giving evidence against the unions isthought to mean commercial suicide
The construction industry is a classic case not ofmarket failure but of regulatory failure The fact thatthe construction industry does not face potential importcompetition limits its exposure to market discipline Stillthe main reason why unions can get what they want frombusiness and business can get what it needs from haplessconsumers is the absence of independent policing andenforcement of the industrial equivalent of fair tradinglaws To an extraordinary degree in this industry the
SI-2 MARCH 2003
IPA REVIEW SPECIAL INSERT
The rule of law is nota smorgasbord from
which a few favoureditems can be chosenand the rest ignoredFreedom under thelaw requires respectfor the law generally
not just thelaws individuals
personally support
request documents but they canrsquot compel witnesses toanswer or demand that material be produced Althoughit is a criminal offence under the Workplace Relations Actto hinder workplace inspectors the Cole report notedthat no prosecutions have yet been launched despiteevidence that Office of the Employment Advocateinspectors have been abused had objects thrown at themand their property damaged It has been commonpractice for the arrival of OEA inspectors to lead to workstoppages and even site invasions in a bid to thwart anddemoralise an independent investigator not susceptibleto the unionrsquos usual weapon of commercial retaliation
One of the problems with theworkplace relations system is theassumption that parties will enforcethe law against each other This worksup to a point in industries whereworkplace parties are more-or-lessevenly matched and the issues are theworkplace equivalent of an argumentbetween neighbours over the heightof a fence It completely breaks downwhen one side has an effectivemonopoly over the supply of labourand disputes resemble a more-or-lessnormal family telling the house fullof footballers next door that the partyrsquosover Expecting contractors to enforcethe law against the CFMEU is likeexpecting people in the street to makecitizenrsquos arrests hence Colersquos principalrecommendations are an AustralianBuilding and ConstructionCommission to investigate prosecuteand enforce the provisions of a beefed-up industry specific workplace
relations actYesterday Cabinet decided to support Colersquos key
recommendations First the Government will seek aseparate act governing workplace relations in theconstruction industry providing for secret ballots beforestrikes compulsory cooling off periods after extendedstrikes and damages awards in the event of unprotectedindustrial action Second the Government will establisha new law enforcement agency for the industry withpowers to compel witnesses to testify bring prosecutionsand enforce judgments and with sufficient on-the-ground presence to police CBD building sites Thirdthe Government will establish a Safety Commissionerto monitor federally-funded construction sites to try toensure that these become industry models Fourth the
s
commissions lack sufficient power the courts lacksufficient speed the employment advocate lacks sufficientauthority and the police lack sufficient interest
Not before time the Cole Commission has acted as agiant searchlight probing the dark underside of thispotentially great Australian industry It confirmed whatpolicy makers had long suspected and what influentialinsiders knew but had always tried to deny or explainaway that the industry operates under the rule of thejungle and that there will be no improvement until thepeople who work in it understand that the law has to betaken seriously Legislative institutional and structuralchange will start to mean somethingwhen law breakers in this industry arecharged convicted and punished likelaw breakers everywhere else A fewsalutary bars of that old song need towaft over construction sites ldquoI foughtthe law and the law wonrdquo
Late last year in response to theRoyal Commissionrsquos first report thefederal Government set up theBuilding and Construction IndustryInterim Task Force The Governmentrsquosbrief to the Task Force is to ensure zerotolerance of industrial law-breakingThe Task Force is not primarily toenforce the tax laws or the safety rulesbecause other bodies exist for this(although the Task Force will certainlyshare information with them) TheTask Force is to investigate and enforceWorkplace Relations Act prohibitions oncoercion unprotected strikes strikepay and breach of industrialagreements So far the Task Force hasvisited nearly 300 sites launched more than 50investigations brought three prosecutions and referrednine other matters to state police the Australian FederalPolice or the Australian Competition and ConsumerCommission for further action
These are the first public prosecutions arising out ofindustrial action in the construction industry at leastsince the 1980s and are the result of a public policycommitment to law enforcement not seen since thehumiliating Clarrie OrsquoShea case in 1969 and the end ofldquopenal sanctionsrdquo Yesterday Cabinet decided to extendthe interim Task Forcersquos operations until more permanentarrangements to secure the rule of law can be established
Task Force agents have the powers of inspectors underthe Workplace Relations Act They can enter premises and
SI-3MARCH 2003
IPA REVIEW SPECIAL INSERT
The main reason whyunions can get what
they want frombusiness and businesscan get what it needs
from haplessconsumers is theabsence of inde-
pendent policing andenforcement of the
industrial equivalent offair trading laws
API
Government will insist on the application of theNational Construction Code and implementationguidelines to all significant new projects which are fullyor partly federally funded
Directly or indirectly the federal Government fundsabout $5 billion worth of construction projects everyyear and is determined to use its role as client to drivechange in the industry In essence the NationalConstruction Code stipulates that construction projectsmust take place in conformity with the WorkplaceRelations Act Under the Code and implementationguidelines the federal Governmentwill not engage tenderers whoseworkplace agreements and practicesensure a closed shop on site The TaskForce (and any replacement body) willhave full access to federally fundedsites to ensure that the law is beingobserved and workplace agreementscomplied with
For the federal Government theissue is upholding the law and tryingto tackle the ldquounion rulesrdquo culturewhich is at the heart of lawlessness inthe industry For the states the issueis whether they are prepared to refusefederal money in order to protect theclosed shop However much theymight prefer different federal laws thestates ought to accept thatconstruction projects have to complywith the law as it stands includingthe law mandating compliance withcertified agreements
State Labor governments whichhave made a point of their middle-ground credentials risk losing some$4 billion a year in federal building and constructiongrants if they side with the union movementrsquos mostmilitant minority There are likely to be limits to Laborrsquosdefence of a union whose stock-in-trade (at least in somestates) is the site invasion and the demand for paymentand which quietly reinstates organisers sacked for assaultor perjury Opposition senators will find it hard to brandas ldquoideologicalrdquo the recommendations of a royalcommission which spent 171 days in public hearingsand which pursued 11 shop stewards and 97 unionofficials to obtain their side of the argument
As Justice Cole pointed out in his report previousattempts to reform the industry have proven ineffectivedespite two earlier royal commissions and numerous
SI-4 MARCH 2003
IPA REVIEW SPECIAL INSERT
enquiries Although this Royal Commissionrsquosinvestigations seem to have temporarily checkedlawlessness in the industry a campaign is now emergingto extend the anarchic culture of CBD construction intoregional centres and the domestic housing industryThings will certainly be different this time if parliamentapproves a permanent well resourced watchdog withnew powers new personnel and new attitudes Unlikeprevious arrangements a new statutory watchdog withthe powers of a law enforcement agency should beeffective and permanent
Hundreds of people took big riskswith their commercial future and eventheir personal security to testify to theRoyal Commission It should neveragain be so hard for people in thisindustry to exercise their ordinaryrights and responsibilities asAustralian citizens They expected theGovernment to take the Commissionrsquosreport seriously and the Governmentfor its part is determined not to letthem down The Governmentunderstands that joining fights yoursquorenot prepared to win only makes badsituations worse Establishing the ruleof law in the construction industry isa challenge Australia canrsquot afford tofailSome of the worldrsquos best workersshould no longer have to put up withsome of the worldrsquos worst industrialpractices They have a right to anhonest industry where they can earna fair dayrsquos pay for a fair dayrsquos workand expect to come home uninjuredThe enduring image of this industry
should not be noisy marchers replaying the ideologicalstruggles of the 1970s and raising clenched fists againstauthorities they donrsquot like At its best the Australianindustry is capable of work which is stunningly beautifulyet intensely practical and it now needs to performconsistently on time on budget and in accordance withlaw
Hundreds of peopletook big risks withtheir commercial
future and even theirpersonal security totestify to the Royal
Commission It shouldnever again be so
hard for people in thisindustry to exercisetheir ordinary rights
and responsibilities asAustralian citizens
NOTE
The foregoing speech was first delivered as an Addressto the National Press Club on 2 April 2003
21MARCH 2003
E V I E WR
IN psychology behaviouris defined as irrational ifan action continues to berepeated despite its re-
peated failure to achieve the desiredoutcome On this definition our aidpolicy towards Papua New Guineahas been irrational
Despite over twelve billion dol-lars in Australian aid to PNG sincethat countryrsquos independence in 1975key development indicators such asliteracy rates infant mortality lifeexpectancy and real income percapita are either stagnating or dete-riorating Worse wersquove known forover a decade1
Today acknowledgement of thefailure of our aid policy in PNG hasgone well beyond the writings of in-dividual international policy analystssuch as myself to institution-spon-sored reports such as Beyond Baliwhich was released by the AustralianStrategic Policy Institute (the Aus-tralian Governmentrsquos own strategicpolicy adviser) and Papua NewGuinea on the Brink which was writ-ten by Susan Windybank and MikeManning for the Centre for Indepen-dent Studies Both reports confirmthe gross failure of Australian aidpolicy in PNG
Yet still our aid policy irrational-ity towards Papua New Guinea con-tinues While the ASPI and CIS re-ports acknowledge the gross failureof our aid policy in PNG they alsoargue that we need to continue ouraid to that country Indeed the ASPIreport argues that we should increaseour aid to Papua New Guinea Thepolicy saviour The ASPI report ar-gues that we should exert greater con-trol over our aid Not just over theform of our aid but direct interven-tion in policy and implementation inPNGmdashin essence for a return to pre-
Aid Detox for PNGPETER URBAN
independence days in PNG whereas UN-sanctioned administrator weran government in that country
Despite the mind-frame of secu-rity-focused strategists such as thoseat ASPI and the CIS (which en-dorses the aid approach advocated byASPI) the reality is that we canrsquotPNG is now independent and to ig-nore this reality would simply com-pound the problems of our past aidpolicy irrationality with irrationalityabout our political relationship withour nearest neighbour
A more interventionist aid policytowards PNG on our part as advo-cated in Beyond Bali and by HughWhite (the executive director ofASPSI) in the media might havepopulist appeal but it would haveserious adverse implications for ourrelationship with other Pacific islandcountries and even IndonesiaWorse it would give succour to theviews of our east Asian critics (suchas Malaysian PM Dr Mahathir) whoclaim that Australia continues toharbour colonial aspirations
We have to accept that to be suc-cessful aid policy must not just helpreduce mass poverty it also has to doso as a guest in the aid recipientcountry To do otherwise is not aidbut imperialismmdashwhether inten-tional or not
A more interventionist approachto aid policy in PNG would also givethe current corrupt political elite inPort Moresby a rallying point againstus and an excuse to delay changingtheir own policies Neither Austra-lia nor PNG can afford any furtherdelays to policy reform For us to givePNG politicians yet another excuseto delay reform would be not onlyirrational it would be inexcusableWhile our aid continues so will thecorrupt elite that is at the heart ofPNGrsquos problems Until we send themessage to the PNG political elitethat we are prepared to stop ouraidmdashto put them on aid detoxmdashwewill continue to waste our aid in thecorruption that is PNG politics Itmay be hard to accept but the sadreality we face in PNG is that no aidmay prove to be good aid at least inthe short to medium-term2
NOTES
1 Peter Urban lsquoOne Clear ObjectiveNo Clear Approachrsquo IPA Review1997 Vol 50 No 1
2 With Iraq also likely to require verysignificant Australian aid fundingover the next few years the Gov-ernment will need to review our aidprogram as part of the 2003-04 fed-eral Budget A decision to suspendaid to PNG could be taken as partof that review
Peter Urban is former chief economist with theDepartment of Foreign Affairs and Trade
We have to accept
that to be successful
aid policy must not
just help reduce
mass poverty it also
has to do so as a
guest in the aid
recipient country
API
22 MARCH 2003
E V I E WR
IN his speech to the Na-tional Press Club on theprospect of war with Iraqand the case for disarma-
ment Prime Minister Howard statedthat Australia will play a significant hu-manitarian role in Iraq
If so the Howard Government needsto evaluate carefully the foreign-aid non-government organizations (FANGOs)which it funds to carry-out this humani-tarian programme Many FANGOshave made it clear that they do not sharethe Australian Governmentrsquos objectivesand values in Iraq Moreover some donot agree with the Governmentrsquos over-all aid policies in general
THE COALITION OF THEUNWILLINGIn the lead-up to latest Gulf War some30 Australian aid agencies put theirnames to an Open Letter to the PrimeMinister organized by the AustralianCouncil of Foreign and Overseas Aid(ACFOA) The aim of the letter was tolsquospeak out against war in Iraqrsquo and it ex-pressed grave concerns about the hu-manitarian consequences of the war andthe effects of the existing sanctions1 TheFANGOs that signed the letter wereOxfam Community Aid Abroad WorldVision Australia TEAR AustraliaUnion Aid Australia - APHEDACaritas Australia National Council ofChurches Australian Council for For-eign and Overseas Aid Save the Chil-dren Australia CARE Australia OzGreen United Nations Association ofAustralia Family Planning AustraliaMercy Works Marist Mission CentreAustralia Every Home for Christ Bap-tist World Aid for Christ CCF Austra-lia Quaker Service Australia Austra-lian Lutheran World Service AustralianRelief and Mercy Services AnglicanBoard of Mission AUSTCARE Com-munity Development and Health
Irreconcilable DifferencesDON DrsquoCRUZ
Hussein have been virtually ignored isa searing indictment of the warped ide-ology feeble analysis and moral blind-ness of the sector For them now to re-discover the plight of the Iraqi peopleand to invoke their name in the mediais beyond contempt
THE OXFAM COMMUNITYAID ABROAD POSITIONOf the 30 FANGO signatories to theopen letter Oxfam Community AidAbroad (OCAA) has been perhaps themost outspoken It opposed military ac-tionmdasheven with UN Security Councilapproval4 In spite of all the evidence tothe contrary OCAA was comfortablewith Saddam Husseinrsquos assurances thathe did not have weapons of mass destruc-tion5 Adopting the common policyagreed to by the other Oxfam affiliatesOCAA stated that it will not take anymoney from the lsquobelligerentsrsquomdasha quaintterm used to the describe democraticnations planning to disarm a dictatorguilty of countless human rights abuses
OCAArsquos outrage against the so-called lsquobelligerentsrsquo appears to be geo-graphically confined to Iraq OCAAappears happy to take governmentmoney from the belligerents elsewherearound the world
According to OCAArsquos ExecutiveDirector Andrew Hewitt refusing totake money from the belligerents wasdone to lsquoprotect its impartialityrsquo6 Thisis a very curious position from Australiarsquosarguably most political FANGOOCAA has a long track-record of beinganything but impartial or reluctant totake sides in miliary action It wasnrsquotimpartial in East Timor where it sidedwith Fretlin in its quest for indepen-dence According to its own testimonyto a Senate committee OCAA wasgiven the choice by the IndonesianGovernment between lsquoplaying politicsrsquoor delivering aid projects in Indonesia7
Group Amnesty International Austra-lia AngliCORD Australian Aid forCambodia Fund Burnet InstituteRedR Friends of the Earth PLAN Aus-tralia and Australian Volunteers Inter-national2
This open letter highlighted a num-ber of problems with the FANGOs sec-tor First it highlighted the weak logicthat passes for advocacy in the sectorThe letter argued against military actionwas critical of sanctions and suggestedthat nations should settle issues only bydiplomatic means It is a viewpointwhich totally ignores the fact that theGovernment had to deal with SaddamHussein
The shallowness of their logic wasbest exposed by the Prime Minister inhis response to the open letter in whichhe stated that the humanitarian situa-tion in Iraq is best addressed by SaddamHusseinrsquos removal and perhaps morepointedly that Saddamrsquos manipulationof foreign aid had allowed him to main-tain and pursue his weapons of mass de-struction capability and human rightsabuses3
Second it also highlighted the factthat the so-called lsquohuman rights-basedapproachrsquo to development (embraced byseveral of the signatories) is not so muchabout realizing human rights (as its pro-ponents argue) but is more about pro-viding them with an excuse to lsquoplay poli-ticsrsquo According to the theory the hu-man rights-based approach to develop-ment allows FANGOs to tackle the rootcauses of poverty and injustice
Yet the root cause of the Iraqipeoplersquos suffering can be summed up intwo simple wordsmdashSaddam HusseinThe fact that the FANGOs who sub-scribe to this particular approach havebeen obsessed with imaginary humanrights abuses committed by Shell NikeRio Tinto BHP-Billiton and AuroraGold while the activities of Saddam
23MARCH 2003
E V I E WR
It chose the former thus making it per-sona non grata in Indonesia for almost adecade8 It wasnrsquot impartial inMozambique when it sided with Frelimoin the countryrsquos civil war9 It wasnrsquot im-partial in Ethiopia when it developedlinks to the Eritrean Peoplersquos LiberationFront during its war against the thengovernment10 It was not impartial oranti-war when it sided with the TigrayPeoplersquos Liberation Front in the neigh-bouring province to Eritrea when thatgroup was waging a guerrilla war againstthe government11 And recently therehave been claims that in the Middle Eastit was little more than an lsquoeager propa-gandistrsquo for the Palestinians12
In East Timor Ethiopia and Mozam-bique OCAA was linked with organi-zations which supported direct militaryaction that led to the deaths of thou-sands of civilians In none of these loca-tions were the enemies of their friendany worse than Saddam Hussein In-deed in many cases OCAArsquos friendswere arguably no better than their en-emies in terms of human rights
OCAArsquos decision not to accept Aus-tralian Government funding is the cor-rect one in the sense that it clearly doesnot share the Governmentrsquos values onthe question of Iraq and thereforeshouldnrsquot receive any governmentmoney
Hewitt went on to state in a pressrelease that lsquoWe will not take funds thatmight allow a government to use hu-manitarian efforts as an instrument offoreign policyhelliprsquo13
This is finemdashexcept the AustralianGovernmentrsquos foreign aid is an instru-ment of foreign policy And it always hasbeen This is spelt out quite clearly inthe Australian Governmentrsquos latest for-eign and trade policy White Paper Ad-vancing the National Interest14
FANGOs that cannot accept thisrather basic proposition should not begetting taxpayersrsquo money They areclearly unsuitable for the task at hand
The consequences of Australian tax-payersrsquo money falling into the wronghands were brought home to Prime Min-ister Howard when he met IndonesianPresident Megawati Sukarnoputri to dis-cuss the war against terrorism and
Australiarsquos involvement against Iraq Atthe top of the Indonesian agenda wasthe issue of Australian funding toFANGOs being used to support sepa-ratist movements in Indonesia15
Post-war Iraq will be a better placewithout Saddam Hussein and his thugsThis does not mean that it will be a safeplace or necessarily a stable place Afterall one of the reasons for Western tol-eration of Saddam Hussein for manyyears was his ability to hold the various
ethnic minorities in Iraq together albeitrather brutally thereby maintaining abalance of power in the Middle East Hisdeparture would see strains on Iraq fromthe various ethnic minorities that makeup Iraq There is a strong chance thatIraq will fragment
The last thing the Australian Gov-ernment or any of the so-called belli-gerents needs in a post-war Iraq is west-ern NGOs running around and becom-ing self-styled advocates for national self-determination for Iraqrsquos ethnic minori-ties and injecting themselves into Iraqrsquosinternal politics This is a real risk Thebehaviour of Australian foreign aidNGOs in Indonesia should make Aus-tralian decision-makers extremely waryof funding any NGOs with Australiantaxpayersrsquo money so that they can oper-ate in Iraq
As things stand now FANGOs facevery few restrictions on their actionsfrom government If they undertake ac-tivity that is inconsistent with being anagent of government they may losefunding for specific projects or in moredramatic circumstances lose funding ina country Nonetheless they are gener-
ally able to access Australian Govern-ment funding for other projects andcountries In other words the penaltiesfor becoming caught up in political ac-tivities are very light for NGOs and posethem no serious problems
Foreign aid NGOs that lsquoplay politicsrsquoare unsuitable contractors for the deliv-ery of aid That these overtly politicalorganizations have been allowed to gaingovernment accreditation and receivegovernment funding points to some se-rious problems at AusAID Australiarsquosofficial aid agency The time has comefor this to change
NOTES1 httpwwwacfoaasnaumedia_releases
2003_releases26_3_03PDF2 httpwwwacfoaasnauemergencies
openletterPDF3 httpwwwacfoaasnauemergencies
iraq_responsehtm4 Oxfam Horizons Vol 3 No 1 (Febru-
ary 2003) page 25 Oxfam Community Aid Abroad lsquoIraq
Overviewrsquo February 20036 Hewitt quoted in Liz Gooch lsquoOxfam
wersquoll say no cashrsquo The Age 16 March2003
7 Community Aid Abroad Submission tothe Senate Foreign Affairs Defence andTrade References Committee Inquiryinto East Timor Downloaded at httpwwwcaaorg aucampaignssubmissionstimorhtml
8 Ibid9 Susan Blackburn Practical Visionaries A
Study of Community Aid Abroad (Mel-bourne Melbourne University Press1993) page 313
10 Ibid pages 325-333 passim11 Ibid12 Gerald Steinberg lsquoPropaganda vs Hu-
manitarianismrsquo Australian Financial Re-view 7 June 2002 Downloaded at httpfacultybiuacil~steingconflictopedpropvshumanitarianismhtm
13 ht tp wwwcaa o rg au p r 2003 iraqfundshtml
14 httpwwwdfatgovauani15 Dennis Shanahan lsquoJakarta fears aid funds
for rebellionrsquo The Australian 17 Febru-ary 2003 page 2
Don DrsquoCruz is Research Fellow at the IPAand Director of IPArsquos NGOWatch
OCAA has a longtrack-record of
being anything butimpartial or
reluctant to takesides in miliary
action
API
24 MARCH 2003
E V I E WR
GEORGE Bush Tony Blairand John Howard haveprovided many reasons forsupporting military action
against Iraq One of those reasons hasbecome known as the lsquohumanitarianrsquojustification Put simply the lsquohu-manitarianrsquo justification for the US-led invasion of Iraq is that such ac-tion is necessary to free the Iraqipeople from their totalitariandictator
Such an argument is attractive tothose who believe that there aresome fundamental human rights thatall individuals possess regardless ofwhere and how they live Whatserves as the source of those rightshas been the subject of debate forcenturies One of the pre-eminentstatements on the subject was madeby John Locke who in The SecondTreatise of Government wrote thatmankind was lsquoequal and indepen-dentrsquo and that lsquono-one ought to harmanother in his life health liberty orpossessionsrsquo
Saddam Husseinrsquos mass murdertorture and terror are reasonablyclear breaches of human rightsTherefore some would ask why thereshould be opposition to the UnitedStates and its allies taking whatevermeasures might be necessary totopple the Iraqi regime Surely thesame standard of behaviour that ap-plies to individuals applies also tonation states If an individual walk-ing in the street witnessed a rapeoccurring wouldnrsquot that individualbe entitled to do everything in hispower to stop the crime and assistthe victim
The point is of course that in-ternational law and convention do
After IraqIs Sovereignty Dead
JOHN ROSKAM
not allow nation states to act in thesame way as individuals Countriescannot simply lsquotake the law into theirown handsrsquo To restrain lsquovigilantestatesrsquo (who might be acting fromeither lsquogoodrsquo or lsquobadrsquo motives) a num-ber of legal and political theorieshave been developed One of theseis the doctrine of lsquosovereigntyrsquo whichprovides that states should not inter-vene in the domestic affairs of otherstates
In relation to Iraq the lsquosover-eigntyrsquo question is perhaps the stron-gest argument against the US-ledCoalition Most of the other criti-cisms of lsquohumanitarianrsquo interventionin Iraq are either grounded in simpleanti-Americanism or are fallaciousFor example there is the claim thatbecause some of the countries in theCoalition have previously ignoredHusseinrsquos cruelties therefore it is il-legitimate to take action now Sucha view has been expressed by aMelbourne international relationsacademic
While there is no disputing thebrutal nature of Saddam Hus-seinrsquos regime the case for inter-vention made by those in Can-berra London and Washingtonis weakened by the fact that atthe peak of Saddamrsquos crimes inthe late 1980s they were eitherdirectly supporting him withweapons technology and intelli-gence or were entirely indifferentto his behaviour Even if theyhave belatedly recognised theerror of their ways how seriouslycan we take their concerns aboutweapons of mass destruction nowgiven they were his suppliersthen1
On the basis of this argument itcould be said that Britainrsquos (andAustraliarsquos) case for intervening toassist Poland upon the German in-vasion in 1939 was lsquoweakenedrsquo be-cause Britain had previously acqui-esced to Germanyrsquos rearmament theremilitarization of the Rhinelandand the annexation of both Austriaand parts of Czechoslovakia Fewpeople who chanted lsquoFreedom forEast Timorrsquo said that the HowardGovernment should not act becausea quarter of a century before theWhitlam Government had been lsquoin-differentrsquo to Indonesiarsquos occupationof the island
There is also the claim that al-though Hussein is bad he is not theworst dictator in the world and thatit is hypocritical for the Americansto attack only Iraq This is an as-tounding proposition It attempts toapply to the United States a standardof behaviour that is impossible to sat-isfy Should the police not attemptto solve any crimes because theycanrsquot solve all crimes If a crime iscommitted by two people and thepolice arrest one perpetrator unlessthe other is also caught must the firstperpetrator be released When indi-viduals donate money for famine re-lief in Africa very few believe thattheir donation is pointless becauseit might prevent the starvation ofonly one person rather than thou-sands Christian ethics sets down norequirement that we should help no-one unless we can help everyone
The issue about state sovereigntyhowever is one that deserves to betaken seriously Regardless of onersquosopinions on the extent and limits ofstate sovereignty it is true that our
25MARCH 2003
E V I E WR
international relations system is builtupon the principle and to modify oroverturn it is a matter of some con-sequence
Even those who are generally sup-portive of the United States andtheir allies see the problem As it wasput by a leading commentator whenanalysing the Australian PrimeMinisterrsquos lsquohumanitarianrsquo justifica-tion for war
Finally Howardrsquos argumentagainst Hussein on human rightsis correct So is his moral case forwanting to liberate the Iraqipeople from their torment Theproblem however is that youcanrsquot trip around the worldwanting to overthrow regimesbecause of human rights2
Some would askmdashlsquowhy notrsquo Be-cause to do so would overthrow theUnited Nations Charter comes therejoinder And in turn the responseto that might bemdashlsquogoodrsquo
If itrsquos a choice between the main-tenance of the UN Charter and free-dom from tyranny freedom wins ev-ery time (although an internationallawyer sitting in Sydney might havea different view on this question fromthat of a political prisoner manacledin a Baghdad jail cell)
When the interests of lsquointerna-tional lawrsquo are more important thanthe life and liberty of individuals itcould be concluded that lsquothe Em-peror has no clothesrsquo Would inter-national law have sanctioned inter-vention to stop the Holocaust hadHitler not waged war and proceededwith his methods entirely within theconfines of the German territorialstate
Many who argue that lsquohumanitar-ianrsquo intervention in Iraq is not justi-fied because it infringes on thatcountryrsquos lsquosovereigntyrsquo would happilyhave other countries cede their po-litical sovereignty to supra-nationalbodies Certain features of the Inter-national Criminal Court overridethe principles of sovereignty but thatdid not stop a phalanx of interna-tional law experts urging sovereigngovernments to join it so as to en-
able the prosecution of war criminalsBut when it comes to actually stop-ping war crimes not simply prosecut-ing them that phalanx is largely si-lent
Without the doctrine of state sov-ereignty and without an arbiter fordetermining when interference withthe principle is justified (the roleclaimed by the United Nations andits Security Council) it is said thatstates would be free to impose theirown will and intervene in other
countries whose standards did notmeet their own (In The Second Trea-tise of Government Locke argued thata characteristic of a lsquostate of warrsquo be-tween individuals was the absence ofa superior authority to adjudicatedisputes and prevent individualsfrom administering justice them-selves)
Iraq might be claimed as a rea-sonably clear-cut case for interven-tion but other situations are notlikely to be as simple In Culture andEquality first published in 2001Brian Barry explored a lsquoliberalrsquo per-spective on this question
The liberal position is clearNobody anywhere in the worldshould be denied liberal pro-tections against injustice andoppression However in exactlythe same way as liberals arepragmatic about what liberalismmeans in terms of boundaries sohere the move from principle tointervention has to be mediated bypractical considerationshellip
[L]iberals are not so simple-mindedas to imagine that the answer toall violations of liberal rights is tosend in the Marines or even aUnited Nations force As in anyjust war theory there must be somedoctrine of lsquoproportionalityrsquohellip[S]carcely anybody would be infavour of the western powersinvading Saudi Arabia so at to sortout the way in which it lsquounjustlydenies political rights to women ornon-Muslimsrsquomdashaccording to theirliberal idea of justicersquo3
The question remainsmdashafterIraq what remains of lsquostate sover-eigntyrsquo Should the doctrine applyonly to lsquoliberal democraticrsquo statesSuch a solution might be attractiveto some lsquoliberalsrsquo but it doesnrsquot avoidthe problem of what exactly a lsquolib-eral democraticrsquo state is
One irony arising from the argu-ments about the war in Iraq is thatmany of those who have urged astrict application of lsquostate sover-eigntyrsquo principles in the past havegenerally supported the US-led in-tervention while those who havebeen willing to abridge or even aban-don the doctrine have had to rely onit to counter the lsquohumanitarianrsquo jus-tification for war
There are not many certaintiesabout the nature of the world afterthe war in Iraq but it can be saidwith some assurance that one defi-nite outcome is going to be a morevigorous debate about state sover-eignty
NOTES1 Scott Burchill lsquoThe humanitar-
ian arguments for this war are spu-riousrsquo The Age 21 March 2003
2 Paul Kelly lsquoThe hapless per-suaderrsquo The Australian 15ndash16March 2003
3 Brian Barry Culture and Equal-ity An egalitarian critique ofmulticulturalism Harvard Uni-versity Press page 138
John Roskam is a Research Fellow with the IPA
The lsquosovereigntyrsquo
question is perhaps
the strongest
argument against
the US-led
Coalition
API
26 MARCH 2003
E V I E WR
Which Way for theDemocrats
The 2002 mid-term elections were adramatic victory for President GeorgeW Bush and the Republicans Insteadof the historical norm of the partycontrolling the White House losingBushrsquos party gained seats in the Sen-ate House Governorsrsquo races andState legislatures The result was abitter disappointment for the Demo-crats and has led to a fierce debatebetween the Left and Centrists aboutthe future policy direction of the partytowards the 2004 elections
The Leftrsquos analysis is that the ma-jority of Americans are natural Demo-crats Electoral defeat was due to thefailure to energize that base of Demo-crats The party failed to distinguishitself sufficiently from Bush and thusgive their voters a reason to turn outWhile the majority of Democrats op-posed Bush on tax cuts and the warwith Iraq a significant minority sup-ported him and campaigned on thatsupport The result the Left claimwas that the Democrats lacked a con-sistent message in contrast to Bush
Support for this argument can befound in the higher turnout amongstRepublicans than Democrats in 2002while in 2000 the combined vote forGore and Nader was 51 per cent Aninfluential book by John Judis andRuy Texeira identified lsquoThe Emerg-ing Democrat Majorityrsquo Theyclaimed that growing demographicgroups trended Democrat includingthe young socially liberal profession-als minorities and women
What policies would motivate thisnatural Democrat base The Left callfor rescinding the Bush tax cut a classwar against the corporate world amajor increase in lsquopublic investmentrsquoin schools childcare health care and
Letter from AmericaNIGEL ASHFORD
public transport and strong opposi-tion to the war
Centrists however have a verydifferent analysis of the Democratsrsquoproblems the public did not trustthem to pursue the war against ter-rorism vigorously to keep down taxesto spend their tax dollars wisely or toreflect their cultural values
A Gallup opinion poll found that57 per cent of Americans askedthought that the Democrats were nottough enough on the war on terror-ism while 64 per cent thought theRepublicans were There was the per-ception that the Democrats were notserious on the issue and just playingpolitics Evidence for this was the de-bate over the new Department ofHomeland Security blocked becausethe Democrats wanted to protectunion rights while the President de-manded more flexibility to deploy theworkforce Many voters saw the issueas the national interest versus a spe-cial interestmdashin this case that of theunions The Democrats were seen asputting the interests of one of theirmajor constituencies before nationalsecurity
The Democratic LeadershipCouncil in lsquoThe Road Aheadrsquo by AlFrom and Bruce Reed presented theCentrist case lsquoStop pretending wecan win a majority simply by energiz-ing our basersquo The Democrats were
not trusted on the war against terror-ism were hostile to the cultural con-cerns of many working-class Demo-crats on abortion and guns and stillseen as the tax-and-spend party lsquoToomany Americans donrsquot trust us tokeep their taxes down or to spendtheir money wellrsquo
The Centrist agenda is to stronglyprosecute the war against terrorismwhether against al-Qarsquoeda Saddam orothers and to abandon knee-jerk iso-lationism arising from the experienceof the Vietnam War to defend capi-talism and support small investorsagainst irresponsible managers to cutpayroll taxes and to downplay thecultural issues that divide Democrats
Which path will the Democratstake The Left is in the ascendancyMost of the remaining Democrats inoffice come from left-wing districtsNancy Pelosi a left-liberal from SanFrancisco was easily elected the newleader of the House Democrats over-whelming her Centrist opponent andrising star African-American HaroldFord The early field of presidentialcandidates for 2004 is dominated bythe Left tendency including SenatorJohn Kerry Representative DickGephardt Governor Howard DeanRev Al Sharpton former SenatorCarol Moseley-Braun and Represen-tative Dennis Kucinich Only Sena-tor Joe Lieberman and Senator JohnEdwards represent the Centrist wing
The future of US politics may de-pend on which road the Democratsdecide to take The US is currently alsquo50ndash50rsquo nation evenly balanced be-tween the parties A left turn couldlead to Republican dominance farinto the future
Dr Nigel Ashford is at the Institute of Humane Studiesat George Mason University and is co-author of US
Politics Today (Manchester University Press)
API
27MARCH 2003
E V I E WR
Trusting TonyFrankly itrsquos all just too depressing Theeconomyrsquos heading for trouble Busi-ness confidence is low investment in2002 was 92 per cent lower than theprevious year and manufacturing in-vestment was nearly 18 per cent downThe budget deficit is spiralling becauseour once lsquoprudentrsquo Chancellor (trea-surer) Gordon Brown made over-opti-mistic growth projections and startedthrowing money at problems
Therersquos a load of health-and-safetyand anti-discrimination measuresthatmdashto put it most politelymdashare ex-amples of letting the best be the en-emy of the good Every school tripneeds a formal risk assessment withthe result that many trips are simplynot taking place New trains orderedfor London commuter routes wonrsquothave toilets because the rules say thatat least one toilet in each four-car unitmust be wheelchair-accessible whichwould have cost ten or a dozen seatson every overcrowded train
Some of this is just insane Somelocal authorities say that safety at workrules mean that home-care workersmustnrsquot lift the disabled people theyare looking after Or therersquos rail safetyUntil recently we were seriously pro-posing to spend $10 billion on a bet-ter system to stop trains going throughred signals On average this would havesaved the lives of about three passen-gers every four years which is a lousybargain compared with other safety in-vestments Worse it would also havereduced the capacity of the networkby up to 15 per cent and forced morepeople onto the roads which are muchmore dangerous than even ourclapped-out railways The result was aprojected net increase of 13 to 21 deathsper year
Meanwhile in London the Cen-tral line of the Underground has been
Letter from LondonJOHN NURICK
API
closed for weeks after a train derailedwhen one of its motors fell off Therewere no deaths or major injuries in theaccidentmdashbut itrsquos a safe bet that someof the people who havenrsquot been ableto use the Central line have been in-jured or killed on the roads
What can one say If the authori-ties took the same attitude to the riskof fatal accidents in the health serviceevery hospital in the country wouldhave been closed for years
Despite all this the Conservativesare still hopeless Their leader IanDuncan Smith has a new wheezewhen a journalist asks him anythingdifficult he chortles merrily and saysitrsquos the most uninteresting questionimaginable and hersquos not going to wasteanyonersquos time by answering it His col-leagues have their knives out for him
Meanwhile in spite of the govern-mentrsquos problems with the economy andthe public services Tony Blair is grow-ing in stature having his waymdashandantagonising large sections of his ownparty in the process On several recentissues he has faced down the formi-dable Gordon Brown in a way that notlong ago was hard to imagine
Then he shocked everyone by com-ing out against having elected mem-bers in the reformed House of Lordswhen most voters want an all-elected
chamber and most MPs want a partly-elected one In the event Parliamentcouldnrsquot agree on any of the optionsfor reform so wersquore stuck with the sta-tus quomdashwhich is fine by Mr Blair
Then therersquos the war By the timeyou read this it may be over or we maystill be waiting or our lads may befighting Mr Blairrsquos strong line againstIraq has made him very unpopular Theanti-war march on 15 February was thebiggest demonstration London hasever seen A few days later 122 Labourbackbenchers voted against the gov-ernment and many more abstained
Mr Blair didnrsquot budge War is a se-rious thing he says lsquoBut in a situationsuch as this you have to do what youbelieve to be right because thatrsquos theprice of having responsibilityrsquo1
He has often been accused of gov-erning by focus group Certainly he hasseemed reluctant to antagonise anypowerful group That has clearlychanged In a sense his stand on Iraqmerely follows his action in sendingtroops to Sierra Leone and Kosovomdashbut it has stirred up far stronger domes-tic and international opposition
The irony is that now when he re-ally needs people to trust him wedonrsquot Even in the desperately seriousbusiness of justifying an unpopular warDowning Street canrsquot play it straightremember the dossier from lsquointelli-gence sourcesrsquo that turned out to belargely cribbed from a PhD thesis onthe Internet
NOTE1 The Guardian 1 March 2003
John Nurick is a management consultant based in theSouth of England From 1985 to 1990 he was
editorial director of the Australian Institute for PublicPolicy and later edited newsletters reporting on theUK Parliament and European Union institutions
28 MARCH 2003
E V I E WR
KEVIN DONNELLY
Private EducationEquals Public Good
When it comes to choosing be-tween government and non-gov-ernment schools Australian par-ents are lsquovoting with their feetrsquo Asshown by recent ABS figures(Schools Australia 2002) over thelast decade there has been a dra-matic increase in non-governmentschool enrolments
Approximately 30 per cent ofstudents now attend non-govern-ment schools compared with 22per cent in 1980 and 28 per centin 1990 Over the last decadewhile the number of governmentschools has fallen by 64 per centnon-government schools havegrown by 61 per cent
Of course not everybody valuesparentsrsquo right to choose and theAustralian Education Union(AEU) Labor governments andlsquoleft-wingrsquo academics in particularconsistently argue against non-government schools
One of the arguments put for-ward by those opposed to givingparents greater freedom of choiceis that government schools are bet-ter at promoting social cohesionand a strong sense of what KenBoston the ex-head of the NSWEducation Department terms lsquothebonds of civic friendshiprsquo
The assumption is that becausestudents attend non-governmentschools there will be greater socialdivisiveness and a breakdown inthe civic values needed to hold so-ciety together But there is no cred-ible evidence offered to support theclaim that government schools arebetter at promoting the commongood
In fact there is much to provethe opposite
First as anyone familiar withthe lsquoculture warsrsquo and politicallycorrect curricula will know insteadof government-controlled educa-tion promoting unity and cohe-sion it has led to public angst andparental complaints
Witness the very bitter debatein Queensland a year or two agowhen the government-mandatedStudies of Society and Environ-ment (SOSE) curriculum was in-troduced into schools Such was
the lsquoleft-wingrsquo bias in the curricu-lum in particular in the areas ofmulticulturalism and the environ-ment that many parents felt be-trayed
The Queensland debate is mir-rored by what is happening in theUnited States As noted by Ste-phen Arons in his book Short Routeto Chaos instead of promotingunity government control of thecurriculum leads to the opposite
What the school wars tell us isthat somehow we have been
Education Agenda
transforming a vital instrumentfor creating social cohesioninto a source of division andhostility that there is some-thing built into the structure ofpublic schooling that under-mines one of its most importantfunctionsAronrsquos argument that govern-
ment schools no longer transmit aviable sense of a common cultureor agreed civic values is reinforcedby another noted United Stateseducationalist Diane Ravitch
In a recent article in the jour-nal Education Next Ravitch be-moans the impact of cultural rela-tivism and the post-modern on theschool curriculum (where there areno commonly agreed values) andeven goes so far as to argue thatparents should be free to choosenon-government schools becausesuch schools have a better chanceof reflecting their values
In the current education sys-tem with the public schoolscommitted to multiculturalismbilingualism and other forms ofparticularism it is difficult toargue that parents should notbe able to choose schools thatmeet their cultural needsSecond if one accepts that lsquoso-
cial capitalrsquomdashthe networks volun-tary associations and civic bondsthat hold a community togethermdashis important for the health of ademocratic society then non-gov-ernment schools clearly have theadvantage
Unlike the government schoolsystem characterized by a heavy-handed centralized bureaucracyand teacher union control non-government schools are closer tothe communities they serve Bytheir very nature non-government
There is no credible
evidence offered to
support the claim
that government
schools are better
at promoting the
common good
29MARCH 2003
E V I E WR
ALAN MORAN
The lsquoRrsquo Files
Private propertyrights the key toachieving efficiency inrural water use
WATER IN AUSTRALIAWater has always been a definingissue in Australiarsquos prosperityAnd in recent decades irrigationhas grown rapidly Even so theproportion of Australia that is ir-rigated at two per cent of theland comprises a share that isamongst the lowest among OECDcountries Only Canada and therainiest countries New Zealandand the UK have lower sharesthat of the US is 11 per cent andin Japan it reaches 60 per cent
Modern agriculture is only 200years old in Australia and thoughin the first 100 years agriculturalproductivity was increased toequal that of anywhere in theworld gains continue to bemademdashoutput has doubled overthe past 50 years a growth thatcould not have taken place with-out a similar expansion of irriga-tion Irrigation in the MurrayndashDarling agricultural provincealone contributes $5 billion toAustralian agricultural outputand non-irrigated agriculture inthe region contributes a further $5billion This makes the areawhich comprises 14 per cent ofAustraliarsquos land mass responsiblefor a third of the nationrsquos $35 bil-lion agricultural output
Applying Property Rights to WaterMost of the uses of water involvechoices or compromisesmdashdrink-ing water versus irrigation versus
industrial and so on Some how-ever involve complementaritiesparticularly certain recreationaluses such as water sports that arefacilitated by storage and consis-tent availability
In many cases water will per-form sequential functionsmdashthesame water can be used and re-used for irrigation used for indus-trial cooling and finish as drink-ing water Water with differentsometimes competing productiveuses will be optimally used as longas two conditions are in placeThe first is that its ownership isclearly specified and the ownersrsquoobligations to other users (orclaims from other beneficiaries)are well understood The secondrequires each property right to betradable to enable acquisition bythose who value it most therebymaximizing its value
The rights specification andtherefore property ownership canrarely commence with a cleansheet of paper People acquire in-dividual rights to property ini-tially through a variety of routesOne of these is seizure of some-thing that was originally of littlevalue until it was acquired and im-proved Squatters assume rights inthis way However they are firstacquired they need to be tradableAPI
schools establish strong commu-nity networks and have a greaterreliance on the voluntary work ofparents
That non-government schoolsare more effective in this regard issupported by research into lsquoChar-ter schoolsrsquo in the United StatesAs noted by Chester Finn at theFordham Foundation giving localcommunities lsquoownershiprsquo overtheir school builds networks oftrust and reciprocity so vital forsocial cohesion
Social capital also relies on citi-zens being disciplined and orderedin their behaviour Selfishness vio-lent behaviour and rudeness act tofragment the community instead ofpromoting cohesion According toa number of Australian surveys itis here once again that non-gov-ernment schools are seen to bemore effective
As noted by the Centre for In-dependent Studies researcher Jen-nifer Buckingham in The Truthabout Private Schools in Australiawhen analysing why so many par-ents forsake the government schoolsystem
When comparing independentprivate schools with publicschools the major theme thatemerged was not differences inacademic standards and curri-culum but issues of disciplineand order The surveyed par-ents felt that the behaviour andattitudes of students in publicschools was unacceptablehellipAll accept that non-govern-
ment schools achieve better aca-demic results provide greater cur-riculum flexibility and save Aus-tralian taxpayers millions of dol-lars Equally as important is theargument that such schools streng-then Australiarsquos civic health andstock of lsquosocial capitalrsquo
Dr Kevin Donnelly is Director of EducationStrategies a Melbourne-based consulting group
E-mailkevindnetspacenetau
s
30 MARCH 2003
E V I E WR
and relatively inviolable Thisprovides the incentive for them tobe improved and for their ownersand others to search out ways inwhich the assets they representcan be used to provide increasedvalue or other benefits
If confidence in the exclusiv-ity an owner has over the prop-erty right is lost or was neverpresent the asset will be used lessproductively For example own-ers will milk them for their cur-rent-use value rather than trade-off present value for a future valuethat is less certain
Even without a total emascu-lation of individual rights (for ex-ample when title to the propertydepends on continuing govern-mental assent) lack of certaintybrings lower incomes and dimin-ished asset protection One out-come of this can be observed inthe MurrayndashDarling system Wa-ter rights on the Victorian side ofthe Murray are secure while thoseon the NSW side have been over-allocated and are subject to ad-ministrative discretion includinghaving a firm duration of only tenyears In Victoria high securitywater (available 95 per cent of thetime) comprises the great bulk ofentitlements In contrast in
NSW high security water is avail-able only 60-80 per cent of thetime The result is that farmers onthe Victorian side plant perennialcrops while those in NSW tendto focus on annual crops espe-cially rice
There are claims that Victoriarsquosmore robust property rights meanthat the State Government haslost lsquocapabilityrsquo to manage com-pared with NSW The flip side ofthis is the increased risk and as-sociated lower value of productionnorth of the Murray where prop-erty rights are attenuated Gov-ernments that give themselves in-creased capacity to direct produc-tion or to take individualrsquos prop-erty will need to accept lower lev-els of income and output
IRRIGATION ENVIRON-MENTAL BENEFITS AND SA-LINITY
The Types of IssuesIssues stemming from irrigationcomprise two types those impact-ing on the environment and thoseimpacting on private uses Theformer includes issues such as pre-venting loss of species ensuringthat certain sorts of species flourishand avoiding unattractive growths
such as blue-green algae which re-sult from fertilizer build-up
The second involves economicimpacts on different users
While environmental flows toensure species flourish are oftenhighlighted salinity is the mainfocus And while salinity has animpact on the environment itsimportance is in the conflict of in-terest between productive usersmdashthe complaint of lsquodamaged goodsrsquoby downstream users against thoseupstream
The MurrayndashDarling Basin Sa-linity Strategy 2001ndash2015 has es-timated that increased salinitybrings costs of $294 million perannum to the basin
Yet data on the salinity of theMurray Darling shows levels up-stream of South Australia arelower than they were in the early1980s and are only seriously abovethese levels as the river ap-proaches its mouth at the GoolwaBarrage
The Basin Salinity Manage-ment Strategy argues that progressachieved over the past decade willlsquobe cancelled within 20-50 yearsand median salinity levels wouldexceed the Australian DrinkingWater Guidelines for good waterquality within 50-100 yearsrsquo Thecause of this is said to be risinggroundwater tables due to land usechanges across the Basin
The disputes over salinizationare largely disputes between com-mercial parties Full specificationof rights and obligations will al-low these to be resolved as longas the impacts are measurabletheir causes identifiable and thevarious rights and obligations areknown and stable In this respecttechnology to measure salt in wa-ter and to trace increases to par-ticular locations is readily avail-able
Agreements about the alloca-tion of water rights between ju-risdictions and to the main irri-gation provinces have been inplace for over a century In the
Average Salinity in the River Murray (EC Units)1
3500
3000
2500
2000
1500
1000
500
0
January 2003
July 2002ndashJanuary 2003
July 1982ndashJanuary 2003
Hume D
am
Swan
Hill
Merbein
Morgan
Milang
Mening
ie
Goolw
a
Barra
ge
31MARCH 2003
E V I E WR
I
API
Musinghellipcase of the Murray the lsquocaprsquo onwater abstractions agreed betweenthe various jurisdictions in 1995largely validated agreements madeearly in the last century and be-fore Disturbing these agreementswould greatly undermine the trustin the sanctity of property rightsand seriously reduce agriculturalproductivity Hence increased al-locations for certain parties or forcertain uses (including environ-mental flows) would need to bepurchased at market prices
Developments in Australiaover recent decades have con-spired to make irrigation water farmore valuable This is exacer-bated by1 Activation of NSW lsquosleeperrsquo
and lsquodozerrsquo water rights as a re-sult of the increased scarcityvalue a change that bringseven greater pressure on theavailable supply
2 Increased scarcity leading tomeasures that more carefullyhusband the water Whilesome of these prevent evapo-ration loss and have thereforebrought a net increase in effec-tive availability others havereduced availability (these in-clude a more careful wateringwhich results in reduced run-off and re-use)
3 Increased capture of waterwithin the land on which itfalls once water is recognizedas scarce landowners will seekto ensure it does not leave theirland NSW and Victoria haveplaced limits (a strict 10 percent in NSW) of water fallingon property as entitlements ofthe owner Queensland has notyet enacted an equivalent tothis Such adaptations of thecommon law are essentialhowever if downstream usersare not to be expropriatedThere is likely to be constant
bickering over water rights espe-cially if State Governments seek toelevate sharing issues and to sanc-tify them with claims about promot-
Daniel Pipes in The New York Posthas a very cogent explanation forwhy the Left appears to be so happywith the likes of Osama bin Ladenand Saddam Hussein
To be clear about their attitudeshe quotes the renowned Germanelectronic music composer KarlHeinz Stockhausen who saidstraight after the attack on NewYork that it was lsquothe greatest workof art for the whole cosmosrsquo
As Pipes and many of us observedaily there is barely a bad word tosay about Saddam Hussein nor aniota of sympathy for thoseoppressed tortured and murderedby his reacutegime Instead they venttheir fury against the AmericanPresident and British Prime Minister
Why the nonchalancePipes draws our attention to Lee
Harris writing in a recent issue ofthe Hoover Institutionrsquos journalPolicy Review According to KarlMarxrsquos central thesis the demise ofcapitalism hangs on workersgrowing poorer over timemdashwhichof course did not happen Sorather than give up on cherishedexpectations of socialist revolutionHarris notes Marxists tweaked theirtheory and looked instead to theentire populations of poor countriesto carry out the revolution Classanalysis went out the windowreplaced by geography
The trouble is they have tooverlook militant Islamrsquos slightly un-socialist practicesmdashsuch as itsimposing religious law excludingwomen from the workplace andpersecuting atheists
As Pipes sums up September 11and the prospect of war againstSaddam Hussein have exposed theLeftrsquos political self-delusionintellectual bankruptcy and moralturpitude
The Loopy Leftby Andrew McIntyre
ing an improved environment Realsolutions require the issue be placedwithin a normal commercial frame-work which involves1 Clarifying the property rights2 Allowing water rights to be
fully detachable from propertyand able to be used howeverthe holder wishes subject toany damage this might imposeon others
3 Ensuring full rights to buy andsell the water
4 Defining rights so as not to re-duce the quality of other usersThis means ensuring that farm-ing practices that do not bringgreater salination than somestandard
5 Allowing rights holders tobank their water and ensureeven greater certaintyAllocating specific individual
ownership rights to water and al-lowing its trade is a well-foundedmeans of maximizing the usevalue It would also be likely tohave the beneficial side-effects ofreducing salinity and farm-basedpollutants caused by intensiveuse We should grasp such oppor-tunities But if the impending sa-linity problem is as great as someclaim other solutions might wellinclude buying out some allocatedirrigatorsrsquo rights However alter-natives may be to remove saltfrom the water by engineering so-lutions or simply to live withhigher salt
NOTE1 Human drinking water should
be less than 800 ECs (electri-cal conductivity one ECequals about 06 mglitre)while higher levels are accept-able for much farming activity
Dr Alan Moran is Director Deregulation Unitat the Institute of Public Affairs
32 MARCH 2003
E V I E WR
Reading FileDone
eral political systems worldwidehave consistently accretedpower to the centre often in theface of clear constitutional im-peratives to the contrary) Ifeared instead that a UN thathad been patently successful insomethingmdashanythingmdashmightbe granted greater powers to thepoint where it would kill truediversity and individualism (ortry to anyway) through inevi-table bureaucratic practices
Is such a fear unfounded Ap-parently not if many peopleshare the moral touchstone ofthe Opposition Leader SimonCrean He believes according tohis own words in Parliamentthat what the UN SecurityCouncil declares is moral whatit refuses is immoral
The latest manoeuvrings overIraq have therefore been heart-
ening It seems that the desiresof the powers small and largeto promote their own interestswill continue to hobble the UN
The problem with a unitedworld is that as the threateningimpasse over Iraq suggestedthere are very divergent viewsabout how that world ought tobe run on an international leveljust as there are at national and
sub-national levels The virtueof multi-layered levels of gov-ernments is that competing ju-risdictions give the individual adegree of choice
The greatest sin of totalitar-ian governments past and pres-ent is to deny their citizens theright to leave The greatest dan-ger that the United Nationsposes as far off as it now (hap-pily) seems is that leaving its ju-risdiction is for all practical pur-poses impossible
THE IMPASSE JUST PASSEDI listened to Prime MinisterHoward speaking to the motionbefore Parliament in relation tothe war It was a good speechbut neither he nor PresidentBush seems able to structure andlay out an argument with thestyle and content of BritishPrime Minister Blair His equi-valent speech before the BritishCommons provides a masterfulsummary of the reasons for thiswar and includes an immenselyreadable time-line of the utterineffectiveness of the UN pro-cesses in dealing with Iraq Henicely deals with allegations ofthe lsquorushrsquo to war lsquoOur fault hasnot been impatience The truth
UNITED OR DIVIDEDI write just hours after US Presi-dent George W Bush has deliv-ered his ultimatum to Iraqi Presi-dent Saddam Hussein leave Iraqwithin 48 hours or be removedBy the time this appears beforeyour eyes you will knowwhether Hussein has decided hischances of survival will be sig-nificantly greater by choosingexile or by remaining in IraqThe recent creation of the In-ternational Criminal Court ofcourse makes war more likelysince Hussein can have no guar-antee of a peaceful lsquoretirementrsquo
In the event that Hussein re-mains in Iraq you will also knowwhether Bush has kept his wordand most likely the outcome ofthis military venture
This matter is immensely im-portant for the people of Iraqand for the military personnelinvolved (including our ownAustralian soldiers sailors andaviators) But then so was theprevious Gulf War the US in-vasion of Grenada the Austra-lian intervention in East Timorand so on But a difference be-tween the current conflict andthose others could be the impactit has upon international insti-tutions Actually just one inter-national institution the UnitedNations
Prior to the first Gulf War Ifeared the coalitionrsquos success forthe reason that some of it mighthave rubbed off onto the UnitedNations I hasten to deny that Ifear the UN as some vast con-spiracy for world domination Ifeared instead that it couldstumble into a piecemeal cen-tralization of power (just as Fed-
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
E V I E WRs
33MARCH 2003
E V I E WR
Reading FileDone
ATTACKING THE GLOBALGOVERNORSThe Cato Institute is a whole-some body as demonstrated byits opposition to such interna-tional organizations as the Inter-national Criminal Court and forthat matter the United Nationsitself Ted Galen Carpenter forexample argues in lsquoPutting theUnited Nations on Noticersquo thatthe UN can and has done somemodest good occasionally It ishe says lsquoa good idea to have aplace where governments cangather to air grievancesrsquo But headds if it lsquoattempts to acquire ataxing authority [or] raise astanding armyrsquo then the USshould withdraw (as indeedshould Australia) Because thatwould turn it into an lsquoembryonicsuperstate that would menacelibertyrsquo
Go to
wwwcatoorgforeignpolicyunhtml
THE INTERNATIONALORGANIZATIONS THEM-SELVESThe United Nations has beenaccused of being often ineffec-tive and always slow Well ev-ery time Irsquove hit the UNrsquos Web-site even with my nifty broad-band Internet connection slow-ness rules Perhaps the site isbeing continually accessed bythe teeming masses Anyway goto
wwwunorg
With 15 members alreadyand 13 more on the way thereremain hopes that the EuropeanUnion will be a force for a stable
twenty-first century Equallywith 15 members already exhib-iting rather divergent views overthe issue of Iraq and most of theforthcoming members sidingwith the United States perhapsthis is overly hopeful Go to
europaeuintindex_enhtm
Then there is the WorldTrade Organization the organi-zation behind which protection-ist nations can hide from unilat-eral trade liberalization by pre-tending to support multilateraltrade liberalization Go to
wwwwtoorg
And we mustnrsquot forget the In-ternational Criminal Court fearof which was no doubt a featureof Saddam Husseinrsquos rejection ofexile as an option and the furyof which is promised by a num-ber of prominent lawyers to bevisited upon our very own PrimeMinister Go to
wwwicc-cpiint
FEEDBACKI would welcome advice fromreaders on any other sites of inter-est to IPA Review readers E-mailme on scdawsonbigpondnetau
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
is our patience should have beenexhausted weeks and monthsand years agorsquo
Go to
wwwnumber10govukoutputPage3294asp
THE STRUGGLE BETWEENTHE CONTINENTSIf you are patient you can readthat wonderful British rag TheSpectator for free Last weekrsquoscopy is available on-line One ofits regular columnists is MarkSteyn an Americo-phile Cana-dian who has a robust turn ofphrase and an abiding disdain formuch modern music (whichseems to place him very comfort-ably into The Spectatorrsquos culturalmatrix)
His piece on the future de-cline of Europe vis-agrave-vis Ame-rica makes for fascinating read-ing Go to
wwwspectatorcouk
then click on the lsquoBack Issuesrsquobutton and choose the edition of15 March 2003
E V I E WR
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
14 MARCH 2003
E V I E WR
API
pose these projects and say that theworldrsquos rural poor should be contentwith solar panels on huts
Investors are also at risk particu-larly retirees whose futures depend onpension and mutual funds that ownnearly $8 trillion in market sharemdash50per cent of the total stock marketMany of these funds are managed lessto safeguard or benefit the investor thanto promote radical principles under thedisguise of so-called ethical funds
These funds claim to provide pro-fessional unbiased analytical and ad-visory services But in reality they sup-port political agendas based on often-questionable analyses and on lsquostake-holderrsquo (activist) input to justify howthey grade companies in client portfo-lios They regularly excoriate compa-nies such as ExxonMobil claiming itsrefusal to back the Kyoto climate treatywill destroy shareholder value Mean-while they praise companies such asBP and promote global governanceand solar panels on huts
Australiarsquos energy consumers willbecome yet another example of lsquocol-lateral damagersquo if the radicals havetheir way over global warming Onceagain some of the culprits are right inthe BP boardroom
In 1997 BP chief Browne endorsedthe global warming theory and saidtough measures should be imposedquickly even in the absence of scien-tific proof A Clinton-era Energy In-formation Administration report con-cluded that the climate treaty woulddrain $340 billion a year from the USeconomy The Australian economywould also get hammered And all thispain even assuming perfect compli-ance with the treaty would reduce av-erage global temperatures in 2050 byonly 02˚C below what they would bewithout the treaty according to theUSArsquos National Center for Atmo-spheric Research
But BP Australasia President GregBourne is undaunted Hersquos stumping thecountry from Melbourne to Brisbaneand Darwin to Perth importuning busi-nesses to pressure the PM to ratifyKyoto Could it be pure altruism Ormight the old profit motive be at work
A 1997 memo to Enron presidentKen Lay described BP as Enronrsquos lsquoin-ternational equivalentrsquo Indeed BP isstriving mightily to replace Enron asthe worldrsquos premier broker in the newbusiness of buying and selling permitsto emit greenhouse gases The expec-tation is that playing the climatechange game could earn BP billions ofdollars via traditional petroleum opera-tionsmdashand billions more via emissiontrading schemes The company is al-ready trading credits among its unitsas part of a training regimen for theanticipated emission Olympics
One cannot help but suspect thatthis huge EU oil giant might also bemotivated by Europersquos obvious desireto protect its industries from US and
other foreign competition They clearlysee the Kyoto Protocol not merely asan environmental programme but alsoas a way to pressure the United StatesAustralia and other countries to reduceenergy use and economic productivity
EU Environment CommissionerMargot Wallstrom put it bluntly whenPresident Bush abandoned the Kyotoclimate treaty lsquoThis is not a simple en-vironmental issuersquo she railed lsquoThis isabout international relations this isabout economy about trying to createa level playing field for big businessesthroughout the worldrsquo Several EU of-ficials echoed her sentiments suggest-ing that Americarsquos lower energy taxesconstitute an unfair trade advantagethat could justify trade sanctionsagainst the US
In short what we are witnessing isa profound and disturbing convergenceof ideology activism marketing poli-tics and financial gainmdashall in the ser-vice of radical policy agendas and allbeautifully attired in the lavish raimentof corporate ethics and responsibilityThis is proof positive that social respon-sibility can be a wondrous thing in thedexterous hands of craftsmen who re-ally know how to display and utilize it
How can we stop the charade Forstarters demand that corporate socialresponsibility puts people first puts de-velopment back into sustainable devel-opment and ensures that precaution-ary guidelines safeguard people andcommunities from the havoc wreakedby radical green policies Insist that alldecisions be based on sound peer-re-viewed science and solid evidencemdashnot on hysterical claims and shrillrhetoric by activists regulators andjournalists who reward pseudo-scien-tific soul-mates and pillory any scien-tists who dare disagree with them
Next urge principled regulators andjournalists to investigate these compa-nies and investor firms for self-servingarrangements and breech of fiduciaryduty Demand that the companiesfirms and activist groups open theirbooks and provide full disclosure oftheir meetings contacts and monetaryand other relationships
Last in this era of high-minded re-form prevail upon legislators to changethe law to make these groups subjectto the same false advertising laws andthe same standards of transparency andaccountability that activists insistshould govern for-profit corporationsUnbelievably right now these ideo-logues are mostly exempt
The world will thank you For it willbe a better safer more ethical placemdashespecially for energy consumers retir-ees and the worldrsquos poor
Paul Driessen is a senior fellow for the AtlasEconomic Research Foundation in Fairfax VA This
article is based on his recent white paper lsquoBeyondPetroleummdashor Beyond Probityrsquo which can be read
in its entirety at wwwcdfeorgdriessenhtm
BPrsquos total six-year
investment in renewable
technologies was $200
millionmdashthe same
amount it spent on the
lsquoBeyond Petroleumrsquo
advertising campaign
15MARCH 2003
E V I E WR
FOR three years Reputa-tion Measurement Ltd andThe Age and The SydneyMorning Herald have been
trying to impose their political agen-das on Australiarsquos top 100 corpora-tions They think that Australiarsquos cor-porations should be good citizens andthat by measuring what they think itmeans to be a good citizen they canchange corporate behaviour
Westpac ranked number one on the2002 Index and rated well in everycategory Flight Centre ranked num-ber one on financial performance but47 overall It was in the doldrums inevery other category including beingranked 99 on environment On thesurface this seems very strangemdashFlightCentre manages shopfront travel agen-cies The reason for this bizarre resultwas not hard to find
Reputation Measurement sug-gested that lsquocompanies seeking to dem-onstrate their worthiness as sociallyresponsible organizations are most suc-cessful when they widen their tradi-tional business stakeholder base to in-clude community stakeholdersrsquo Fur-ther lsquo[i]nvestors and consumers are in-creasingly making decisions based onlonger-term issues linked to a com-panyrsquos capacity to contribute to a sus-tainable futurersquo In other words theReputation Index is an instrument foradvancing a number of political agen-das corporate social responsibilitystakeholder capitalism and sustain-ability
For example corporate social re-sponsibility suggests a common agree-ment about what is good Whose defi-nition of good is to be believedmdashtheelectoratersquos or the activistsrsquo In a lib-eral democracy the rules are set by aconsensus that determines not so muchwhat is good corporate behaviour but
The Good Reputation Index 2002A Tale of Two Strategies
GARY JOHNS
what is and what is not acceptablebehaviour The Index is an exercise incapturing the reputation agenda andusing it to regulate corporate beha-viour
Stakeholder theory suggests that allinterests in an enterprise compete toobtain benefits from the enterprise butthat none has priority It is in effectasking lsquoin whose interests should theenterprise be runrsquo It assumes that so-ciety grants an enterprise the right toexist The community through its law-makers may grant licences and certainprivileges in return for the enterprisecomplying with the law It does notlicense stakeholders at large to imposetheir views on the corporation
Sustainability refers to ecologicalsustainability and ecological sustaina-bility is premised on the notion of lim-its to growth based on limits to resour-ces It argues that natural resources arebecoming scarcer It ignores the his-tory of technological innovation of-ten promoted by competition betweencorporations and the fact that such in-novation has extended physical re-sources in ways untold
An analysis of the 2002 Index re-veals that those corporations whosescore improved massively between2001 and 2002 did so because they didnot participate in 2001mdashthey wererated anywaymdashbut did so in 2002Conversely those whose score plum-meted in 2002 did so because they par-ticipated in 2001 but not in 2002Moreover the corporations who rosemassively in the ranks did not changetheir behaviour they just filled out theforms better
Greenpeace were very aggressive intheir attitude to corporations lsquoTo en-able us to verify your responses pleaseprovide us with further supportingdocumentation If hellip we are unable
to verify your response we will defaultyour response answer to a ldquodonrsquot knowrdquowhich will be marked and downgradedaccordinglyrsquo Unfortunately those ofwhom we would expect bettermdashforexample The Brotherhood of St Laur-encemdashalso penalized non-respon-dents As the technique was used byalmost all of the research groups thiswas presumably a deliberate strategy ofReputation Measurement Ltd
More disconcerting were reportsfrom corporations of the researchgroups touting for business by ringingfirms and offering their services to helpfill out the questionnaire Althoughthe level of disclosure has increasedsince the 2001 survey the touting con-tinued
The Index was published in Octo-ber 2002 obviously to coincide withthe reporting season and in the hopethat shareholders would use the Indexto seek changes to corporate behav-iour A sample of the major gainers andlosers on the Index reported no men-tion of the Index More importantlythere was no discernible impact onshare prices
The good news is that the Indexfailed miserably to achieve its objec-tives The bad news is that enough cor-porations played along to keep it alivein certain media and academic circlesIt was a chance for self-appointedNGOsmdashwho provided the ques-tionsmdashto regulate corporations bypublishing a list of good capitalists andbad capitalists Every corporation thatparticipated in the Index should thinkcarefully about whether it can justifythe agenda to its shareholders
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
16 MARCH 2003
E V I E WR
Tomorrowrsquos Reform
RALPH Waldo Emersontold us that lsquoa foolish con-sistency is the hobgoblinof little minds adored by
little statesmen philosophers and di-vinesrsquo and enjoined us lsquoto speak whatwe think today in words as hard ascanon balls and tomorrow speak whattomorrow thinksrsquo While statesmenshould not persist with known errortheir wanton inconsistency makespolicy formulation confoundedly dif-ficult
When he asserted that lsquoWhat de-termines the course of a nationrsquos eco-nomic policies is always the eco-nomic ideas held by public opinionrsquoLudwig von Mises must have hadeven less confidence in little states-men His pupil Friedrich von Hayekurged Antony Fisher not to enterpolitics but instead to found think-tanks which with fact and argumentwould change public opinion
Even among liberalismrsquos oppo-nents few today argue that Misesrsquoand Hayekrsquos ideas and Fisherrsquos liberalthink-tanks did not lead the 1980sand 90s almost world-wide liberal re-vival Why would they when bymuch the same means Fabian So-cialism had brought the welfare stateto Western nations In neither trendhowever were politicians the mereagents of popular opinion Especiallyin democracies political leadersrsquo ca-pacities to ignore it are indeed mod-est but their abilities to influence itare very much less so Even SaddamHussein works hard at influencingIraqi opinion Can we hypothesizethat the ways that leaders use theirinfluence distinguish tyrants fromdemocrats and the purposes forwhich they use it distinguish politi-cians from statesmen
Liberalismrsquos headlong chargethrough the corridors of power could
JOHN HYDE
arguments could have been em-ployed are nonetheless being de-fended by appeal to popular miscon-ceptions of the sort that PaulineHanson the Democrats and Greensactually believe Unless the majorparties have had a radical change ofheart they believe differently
Take the proposed Free TradeAgreement (FTA) with the UnitedStates Trade experts are not of onemind about its net worth My quar-rel is therefore not with the FTAitself but with the Governmentrsquos de-fence of it If the FTA will bring netbenefits then these will come mostlyfrom improved access to Americangoods and capital our own reductionof anti-competitive regulation ofdrugs medical insurance performingarts professional services textilesrural commodities etc and the dy-namic advantages of mixing it withthe Yanks But the government ispromoting the FTA almost solely inmercantilist (exports goodimportsbad) terms
To treat foreign goods servicesinvestment and ideas as an invasionparodies voluntary exchange whichdoes not happen unless both partiesbenefit The Government trumpetsa fact that nobody disputes namelythat it pays to sell into the best pay-ing markets but says nothing to edu-cate us in the advantages of buyingwell from foreigners as well asneighbours Once long ago Howardcriticized Pauline Hanson for her xe-nophobia That day he seemed to un-derstand the benefits of exchangewith foreigners
Until recently Australia hadbeen insisting that the only way toworld trade reform was via the mul-tilateral processes of the World TradeOrganisation and currently theDoha round A bilateral FTA with
not have proceeded without leaderssuch as Margaret Thatcher and ZhouEnlai who changed public opinionas did Bob Hawke in Australia Nowhowever liberalismrsquos charge hasslowed even in some places beensomewhat reversed Canberra hasnot been immune from trends thatsee politicians no longer so firmly re-sisting demands for economic privi-leges or as others see the same phe-nomenon no longer so blindly fol-lowing economic rationalism
Very poor economic decisionsaboundmdashrejection of the Trebeck re-port on petrol pricing preference forethanol production extending mo-tor and textile protection rural sub-sidies taxpayer contribution to theDarwin-to-Alice Springs railwayetc etc But there is also progressThe pride that John Howard takesin the fact that Australians are lessdivided against each other is surelyjustified The hugely importantlabour welfare and arguably also thehealth-care markets have been im-proved Budget balance has beenachieved albeit with high taxes Al-though net legislative and adminis-trative progress toward a more lib-eral more open more efficienteconomy has dwindled it would stillbe fair to say it has not been reversed
Our statesmenrsquos words as hard ascannon balls however that is thoseintended to enlighten rather thanappeal to public opinion are beingreserved for the Iraqi conflict In con-trast in the economic arena we areno longer encouraged to accept anyunwelcome truths Even when de-fending measures that I am morethan content to accept as beneficialthe government seems to select itsargument at best randomly ignoringprinciples of economic efficiency andequity Policies for which textbook
17MARCH 2003
E V I E WR
the US may or may not result in anet increase in trade flows but if itis not a meaningless piece of paperdelivering only political benefits tothe Government it will certainlydivert trade from our other tradingpartners How will China KoreaJapan etc react to losing their lsquomostfavoured nationrsquo status Such ques-tions should be addressed in termsthat do better than reinforce our xe-nophobic prejudices
By appealing to Hansonite mis-conceptions the Government mayand probably will improve itschances of bringing forward a policythat I am more than willing to ac-cept it believes is a good one It isafter all the recommendation of theDepartment of Foreign Affairs andTrade However by so doing it is re-inforcing delusions it must overcomefor further economic reform Whatis more I am reminded of a quip thatI am sure the PM has also heard lsquoNoGovernment is really dangerous un-til it believes its own bullshitrsquo Poli-ticians and I suspect bureaucratsalso are all too prone to believingtheir own utterances Unwilling toadmit their deceptions even whenspeaking in house they quickly con-vince themselves of the truth of theirown and colleaguesrsquo loose rhetoricand worse These are the people whomust negotiate the Agreement whilelooking over their shoulders at anAustralian electorate whose alreadystrong mercantilist tendencies havebeen reinforced by the people bestplaced to disabuse them The poten-tial cost is obvious
The US Free Trade Agreement isbut an example of a tendency thatought to be worrying In debateabout refugee policy motor fuel sup-ply single-desk wheat sales the sup-ply of medical practitioners and pres-ervation of the environment has notthe Government employed argu-ments that are not compatible withits professed liberal philosophy Hasit not seemed that it does not knowthe standard liberal responses to theself-serving demands of vested inter-ests and bigots With due respect to
Emerson consistency allows deci-sions to be made without the neces-sity of thinking every one throughfrom fundamental principles whichnobody in authority has the time orthe mental agility to do
Politically disinterested educa-tors such as the IPA can often callsome pretty good minds to their aidEven so when the Government it-self fosters public misconceptionthey cannot be expected to undo theerror The single greatest sin of thecurrent government is that it is notbuilding opinion for tomorrowrsquos re-form Why not
I suggest because it is politicallydifficult Whereas calls to resist out-siders appeal to deeply ingrainedtribal instincts calls to uphold thecivilizing and wealth-building insti-tutions that afford protection tostrangers and admit their goods ser-vices persons and ideas make nosuch visceral appeal These codes aremuch later developments in themarch of mankind and to manypeople they remain counter-intui-tive They must therefore be de-fended by sustained argumentHayek knew that politicians whosetime horizons in the absence ofknown crises tend to be the nextelection would (to use Howardrsquosown expression) seldom have the
tickers He turned therefore to theless articulate but far more resolutethink-tanks
It is relatively easy to appeal tothe sort of Chauvinism that sur-rounds sporting activity and argu-ments about refugees and meat quo-tas When a Prime Minister talks ofsovereignty guaranteeing our bor-ders or the interests of our exportersor domestic manufacturers he is notnecessarily wrong but his task iseasier than that of defending rulesthat permit voluntary co-operationamong strangers The principle thatdefends the non-unionistrsquos right towork the consumerrsquos right to buy for-eign goods and everyonersquos right tohear alien ideas and which shouldprotect racial and religious minori-ties from exclusion still needs hisleadership
Unless statesmen recognize theinconsistencies that arise not fromthe changed opinions that con-cerned Emerson but from trying tobe all things to all men they arelikely to govern in ways that are un-fair and inefficient If the public doesnot recognize consistency then thelsquolittle statesmenrsquo may find them-selves compelled to yield to the de-mands of the more articulate vestedinterests In such a case Heaven helpthe inarticulate who will be effec-tively disenfranchised But the insti-tutions which when consistentlyapplied give us liberty equity andprosperity are not strongly intuitive
They nevertheless distinguishAustralian society from say Iraqi so-ciety They give us the economicstrength to defy tyrants and they giveus a land worth defending They arecertainly not in danger of disappear-ing but they are in danger of beingeroded Lead us Mr Howard
While statesmen
should not persist
with known error
their wanton
inconsistency makes
policy formulation
confoundedly
difficult
API
John Hyde is a Senior Fellow with the Institute ofPublic Affairs His book Dry In Defence of
Economic Freedom was published by the IPA in November 2002
18 MARCH 2003
E V I E WR
DESPITE the obsessivepublic attention to pricesat the petrol pump thepetroleum-refining sector
rarely registers on the media radarscreen This is unfortunate as the sec-tor fuels most movement of peopleand goods in our economy and soci-ety And it is in trouble
It is fragmented stunted and sur-vives by abjuring profit and mortgag-ing its future Without radical reshap-ing it is likely to wither leaving usexposed to the vagaries of the inter-national refined-products market
FEATURES OF THE AUSTRA-LIAN REFINING SECTORThe first thing to note is that by in-ternational standards Australia is arelatively small player The most re-cent international figures show thatour total output of refined productsin the third quarter of 2002 was 89million tonnes This compared withOECD production of 486 milliontonnes including US production of202 million tonnes Total Australianrefinery capacity of 870000 thousandbarrels per day (bpd) compares withthe figures for China (53 million)South Korea (26 million) and Singa-pore (11 million) Total regional re-fining capacity and production con-tinues to grow as Australiarsquos stagnatesIn the five years to 2000 regional out-put grew by 22 per cent
Second the structure of the indus-try is weak The dispersed geographi-cal distribution of our refining sectorreflects its historical developmentwith each State capital city support-ing one or more refineries Over thelast two decades the number of ma-jor oil companies operating in Aus-
Petroleum RefiningRationalization or Atrophy
JIM HOGGETT
tralia has shrunk from nine to fourAlthough the number of players hasmore than halved the number of re-fineries has reduced by only two fromten to eight The average capacity ofAustralian refineries is around100000 bpd New refineries in theregion are generally significantlylarger Singaporersquos largest has a capac-ity of 375000 bpd
Given the open Australian mar-ket our ex-refinery prices are virtu-ally set by the major exporters in theregion who are also operating on tightmargins Moreover the proportion-ately heavy demand for diesel in SEAsia tends to generate a persistentsurplus of gasoline which is availablefor export to Australia at discountedprices
The pattern of relatively smallscattered refineries is no longer opti-mal in an open market in which weare a price-taker
Third despite its sub-optimalstructure the Australian refining in-dustry is not grossly inefficient Oneindicator is the value added per em-ployee which is in the top five per-formers in the Australian manufac-turing sector
The cost competitiveness of Aus-tralian products is indicated by thefact that we have the cheapest ex-taxprice of petrol in the OECD Perfor-mance comparisons with the rest ofthe AsiandashPacific however suggestthat we lag the average efficiency inthe region And the best performersin the region are superior to our best
Finally the financial performanceof the industry is poor gross annualrevenues for the whole industry in-cluding marketing were $32 billionin calendar year 2001 For the five
years to 2001 the return on assets forrefining and marketing averaged 38per cent and was negative in the lasttwo years The indications are that2002 may have been a better year forthe industry but that the return onassets remains well below the cost ofcapital Over the four years to 2001the fixed asset base of the industrydeclined by almost 6 per cent to $12billion even after $24 billion of newinvestment in the period
This is clearly unsustainable andit raises the question Why is no-oneleaving the game
There are perhaps four main rea-sonsbull First the industry has engaged in
continual productivity improve-ment allowing it to keep withinrange of ruling prices
bull Second each refiner hopes thatsomeone else will blink first sothat the waiting will pay off
bull Third the costs of leaving thetable the exit costs are very highbecause of the nature of the prod-uct and the long occupancy ofmost sites
bull Fourth even while profitability islow the industry has generallybeen marginally cash positive
These add up to a big lsquofirst mover dis-advantagersquo
FUTURE TRENDSClearly petroleum will remain ourmost important energy source Petro-leum products constitute 52 per centof Australiarsquos final consumption ofenergy Liquid petroleum fuels pro-vide more than 95 per cent of Aus-traliarsquos transport needs There are nomajor foreseeable influences that willaffect this pattern dramatically There
19MARCH 2003
E V I E WR
have been major advances in fueleconomy and these will no doubtcontinue But more than counterbal-ancing this is the inexorable growthin demand for personal mobility andfor goods from distant parts Althoughgrowth in energy consumption mayslow down in Australia we will notbe reducing our consumption to anysignificant degree
Our export role will also be lim-ited Australian export volumes havetended to be steady over recent yearsand future new export potential forpetroleum products seems likely to beminimal China and India have re-cently become major exporters par-ticularly of gasoline Refinery capac-ity is planned to continue to growstrongly in the region even thoughthere is already significant excessThe decline in capacity utilization inmajor exporters such as Singaporewill make exporting difficult Further-more it is expected that productspecifications in Asia the US andEurope will converge in the comingyears thereby eliminating niche ex-port opportunities
The choice we face is what to doabout our essentially import-compet-ing industry
INCENTIVES NOT STRONGWhile there are strong pressures forthe industry to restructure there islittle incentive to invest for this pur-pose Investments in the Australianrefining industry have to competewith many alternatives across theglobe
Lack of sufficient return is thesingle biggest deterrent to investmentin the industry at present But thereare othersbull There is no prospect of strong growth
in demand to offset the substantialrisks associated with large new in-vestments
bull The persistent refinery capacity over-hang in our region will keep sus-tained pressure on our margins
bull The corporate taxation regime is nowless favourable than hitherto after thesubstitution of effective-life foraccelerated depreciation The
competing Singapore option offersa three-year write-off
bull The regulatory cost burden is grow-ing This applies to all Australianindustry but is potent in overseascomparisons Tighter fuel stan-dards environmental restrictionsintervention in prices and indus-trial law are some of the factors
bull There is increased sovereign riskstemming from inconsistent regula-tions We have eight parliamentswhich enact inconsistent laws Acurrent example is the higher fuelstandards applied in Western Aus-tralia
bull The sovereign risk also arises fromuncertainty in the regulatory processThere are unpredictable changesof direction (the deferral of thediesel sulphur excise differential[DSED]) and uncertainty in theface of conflicting interests (willthe Government act on ethanolcontent)
All these factors enter into the riskreward calculation When the re-wards are minimal the risks take onan extra dimension
WHAT INDUSTRY STRUC-TURE DO WE NEEDThe short answer is we cannot knowin detail
In the Downstream Petroleum In-dustry Framework 2002 the Depart-ment of Industry Tourism and Re-sources set out a broad vision
bull A preference for market-based so-lutions
bull A strong efficient environmen-tally responsible industry supply-ing most of the nationrsquos needs forproducts
bull Regulation only for market failureor national interest objectives
bull Regulation to be transparent andconsistent
bull Reform and regulation to maxi-mize long-term community ben-efitThis vision has some prescriptive
elements but the Government hasmade it clear that it will not nomi-nate an optimal number of refineriesor a pattern of production
The general public would probablyopt for a structure that guaranteedlower more stable automotive fuelprices Unfortunately they cannothave both in the short term
In fairness the investors in the in-dustry are the ones entitled and bestfitted to determine its future In theextreme they will do it anyway bypersisting or walking away Generallyspeaking they will seek to maximizetheir returns and thus promote themost efficient use of resources
Australian refineries are not inef-ficient but that is not the point Ourmarket is open so the competitionwe face is the best of the overseas per-formers often with more favourabletax and subsidy regimes
Nor is this simply a question ofclosing the smallest refineries A bet-ter approach might well be to allowrefining companies to concentrate onwhat they do bestmdashperhaps throughrefinery alliances Caltex and Shellhave co-operated in this way in Thai-land
The fact is that the detail of thedecisions can only be made by theindustry relatively free of governmentdirection The series of detailed de-cisions entailed will determine theoverall structure of the industry
COMPETITION REGULATIONCAN IMPEDE RESTRUCTURINGThe relevant provision of Section 50of the Trade Practices Act (TPA) pro
While there are
strong pressures for
the industry to
restructure there is
little incentive to
invest for this
purpose
s
20 MARCH 2003
E V I E WR
hibits mergers or asset acquisitionsthat would have the effect or belikely to have the effect ofsubstantially lessening compe-tition in a marketIt is both potentially and in prac-
tice an extremely restrictive provi-sion The Australian Consumer andCompetition Commission (ACCC)has expressed concern at concentra-tion in the sector in applying the pro-vision
The ACCCrsquos concerns seem ex-aggerated in the light of history Butthey are complemented by a persis-tent public misapprehension thatlarge petrol price swings equal profi-teering This perception has been soexploited for political advantage andmedia excitement that it is now al-most impossible for the truth toemerge
The future intensity of competi-tion in this industrymdashif it is allowedto restructuremdashshould not be indoubt Any rationalization would inall likelihood still leave strong do-mestic competition in each majorproduct category perhaps with fewermore efficient production units
The market is also contestableThere would be numerous potentialimporters and many independent re-tailers High margins would be rap-idly eroded by competition As re-cently ruled in the Boral case mar-ket reality is more conclusive than aperception of anti-competitiveness
Proposed mergers have been per-mitted in the past but the process isslow and permission is generally onlygranted with severe conditionsNonetheless there is a strong case forallowing restructuring within theterms of the merger provisions
AUTHORIZATION COULD BETHE KEYIf Section 50 of the TPA is an im-passable barrier then the authoriza-tion provisions of the Act could bethe way to greater efficiency The testsunder these provisions require a pub-lic benefit which outweighs the com-petition detriment The ACCC listsfostering business efficiency industry
rationalization and import-competi-tiveness as important public benefits
There is a strong prima facie casethat rationalization of the industrycould satisfy these tests It wouldallow greater scale of productioneconomies in distribution and closureof the least efficient production units
But the authorization process isslow and the onus for demonstratingthe public benefits rests on the appli-cant Slow process can amount to ef-fective rejection
POLICY OPTIONS AND REC-OMMENDATIONSIf government cannot help the indus-try to adjust it should allow it to ad-just by supporting sensible changeThis would involve both improving
the operating environment throughregulatory reform and altering thebalance of competition regulation sothat the industry could restructurevoluntarily The CommonwealthGovernment has already indicated awillingness to support both but hasnot yet delivered
The ball would then be in theindustryrsquos court to bring forward newproposals if a new policy environmentcould be created This could all hap-pen within a very broad strategicframework agreed with the industrywhereby Australia continued to besure of sufficient refining capacity tomeet a severe international fuel short-age
We therefore recommend thatbull The Commonwealth Govern-
ment provide explicit indicationto the ACCC of the public ben-efits it sees from the rationaliza-tion of the refining sector In par-ticular joint ventures should becontemplated
bull The ACCC give sufficient weightto the public interest benefits ofrestructuring to allow rationaliza-tion of production facilities
bull All governments reduce distortingfuel subsidies and taxes that favourparticular sectors or fuels
bull The State Governments act im-mediately to harmonize their regu-lation of the industry and agreenot to issue any new inconsistentregulation
bull More specifically the States havea single set of fuel standards withwhich refiners can reasonablycomply withdraw from all formsof price regulation and refrainfrom thwarting or distorting therationalization process
bull Governments generally not intro-duce new regulations mandatingthe use of alternative fuels
CONCLUSIONThe choice for the industry appearsto be between accelerated rational-ization and atrophy The process ofchange is something which the indus-try must plan and effect The task isnot impossible but it will require theactive support of government at alllevels For the time being there is anexpressed willingness at the Com-monwealth level but no real solu-tions
If nothing is done the refiners willcontinue to stumble along in a regu-latory fog and will invest only whenobliged to do so by changing fuel stan-dards They will become increasinglyvulnerable to low-priced imports andeventual closure
Jim Hoggett is a Senior Fellow at theInstitute of Public Affairs
If Section 50 of the
TPA is an impassable
barrier then the
authorization
provisions of the Act
could be the way to
greater efficiency
API
Last week the Government tabled 22 volumes of theCole Royal Commission into the Building andConstruction Industry Former Court of Appeal judgeTerence Cole made 392 specific findings of unlawfulconduct and in the confidential final volumerecommended that 31 individuals be referred for possiblecriminal prosecution As was to be expected theconstruction unions claimed that the report was a witch-hunt and people who should have known better claimedthat Cole was biased
The anti-union allegations were never very plausiblegiven that most unions had refused to cooperate withthe Commission and had even boycotted theCommissionrsquos special conference on occupational healthand safety As things have turned out one of their ownhas fatally undermined the unionsrsquo case No less anauthority than the National Secretary of the ConstructionDivision of the CFMEU has unwittingly confirmed thatCole is right In what was no doubt an unguardedmoment John Sutton admitted to a Melbournenewspaper that ldquovirtually everything we do breaches partof this Actrdquo Suttonrsquos admission means that Colersquosdescription of a largely lawless industry can be disputedat the margins but not credibly denied The problemsof the industry have been established beyond credibledoubt and the question now is what needs to be doneabout it
Nothing says the CFMEU because itrsquos alright tobreak the law in the best interests of the working classLeading union officials take the view that in a toughindustry only wimps take the law seriously The newsthat ldquoonlyrdquo 31 individuals had been recommended toface criminal charges was greeted with somethingapproaching jubilation as if the industryrsquos code of silencebased on fear had largely kept the Royal Commission atbay
As the Australian Financial Review commented in aneditorial the unionrsquos dismissive reaction to Colersquos report
ldquospeaks as loudly as his damning findings of entrenchedlawlessnessrdquo Imagine the reaction if a royalcommissioner had identified 31 people in the financeindustry or the steel industry for possible criminalcharges This would rightly be regarded as the sign ofan industry in crisis demanding urgent governmentintervention
Change wonrsquot be easy in an industry conditioned tothink that might is right Change which shifts powerfrom one unscrupulous group to another will not bereform As Grocon has discovered the first company toldquobuck the systemrdquo is liable to heavy-duty industrialpayback No one wants to be the first to change butchange is necessary in the national interest
In 2002 the Victorian construction industry aloneaccounted for 17 per cent of all days lost through strikesThe West Australian construction industry accountedfor another 8 per cent of the national strike tallyConstruction is a $40 billion a year industry comprisingnearly six per cent of GDP and employing nearly500000 Australians Due to over-manning demarcationdisputes and chronic stoppages labour productivity incommercial construction averages 13 per cent less thanin home building Plastering the same wall in the sameway costs 40 per cent more in a high rise building thanin a standard house Just raising labour productivity incommercial construction to the home building standard(let alone the 50 per cent increase needed to match NorthAmerican levels) would mean according to Econtech aone per cent drop in the cost of living a one per centincrease in GDP and $23 billion in benefits toconsumers workers and taxpayers every year
Still change is about decent Australian values notjust a more efficient industry Workers donrsquot like latenight house calls compulsory attendance at demos anddays spent sitting in the shed to make an industrial pointany more than bosses Threats of violence contempt forcourt and commission orders mob rampages when one
Restoring the Rule of Law in theConstruction Industry
Tony Abbott MHR
s
As this issue of the IPA Review was at the press we were alerted to the delivery of the following speechby the Minister for Employment and Workplace Relations The paper marks a seminal change in the
governmentrsquos approach to systemic corruption in the construction industry and isanother major step in the reform of workplace relations in Australia
SI-1MARCH 2003
IPA REVIEW SPECIAL INSERT
side doesnrsquot get its way habitual failure to honouragreements and routine harassment of people exercisingtheir legal rights are not acceptable in modern Australiaand cannot be excused even in a good cause
Breaching ldquobourgeois lawrdquo may not matter tomilitant activists but few others take such a self-indulgent view Itrsquos said that ldquooppositions can afford tobe irresponsiblerdquo but no government or alternativegovernment can accept the principle of optionalobedience to the law of the land No less than the HowardGovernment the federal Labor Opposition and the stateLabor Governments understand the dangers of playingpolitics with the rule of lawmdasheven theauthority of laws they might preferto change such as the federal WorkplaceRelations Act
The rule of law is not asmorgasbord from which a fewfavoured items can be chosen and therest ignored Freedom under the lawrequires respect for the law generallynot just the laws individualspersonally support Obedience to thelaw is not a question of choice It is arequirement of civilisation because thelaw is our guarantee of equaltreatment after a fair hearing ldquoBe youever so high the law is above yourdquoThis reproach hurled at the Stuartkings has rightly echoed through thecenturies as a warning against theconceits of office and the arrogance ofpower regardless of the cause in whichitrsquos exercised
After last weekrsquos meeting of theWorkplace Relations MinisterialCouncil of the Council of Australian Governments stateand territory ministers were keen to declare in acommuniqueacute ldquothere was unanimous agreement thatunlawful behaviour in the building and constructionindustry is not acceptablerdquo This was an importantaffirmation of the rule of law in circumstances wheresome Labor ministers might have been tempted to putpolitics ahead of principle
Unfortunately the state and territory ministerssupported more powers for the Australian IndustrialRelations Commission to settle construction industrydisputes In fact the Commission already has power tosettle disputes Whatrsquos missing is effective power toenforce agreements The issue is not settling disputesThe issue is enforcing the law
The construction industry typically conducts itselflike this A certified agreement is in place including anagreed dispute resolution procedure Unions identify agrievance often a spurious safety issue Agreed disputeprocedures are not followed and a strike ensues eventhough strikes outside ldquobargaining periodsrdquo areldquounprotectedrdquo and theoretically subject to damagesorders At that point employers often ask theCommission to end industrial action but instead ofordering an immediate return to work because anagreement has been breached the Commission willtypically seek to conciliate on the basis of the ldquomeritsrdquo
of the issue After a couple of dayswith costs escalating and liquidateddamages looming the employerinvariably agrees to rectify the matteralleged and to pay increasedallowances (including pay for days onstrike) At this point the Commissionorders a return to work on the basisof the agreed settlementmdashwhich lastsonly until the union decides on itsnext move
The union has ignored the law andbroken its original agreement buttypically suffers no adverseconsequences whatsoever Theemployer has been manoeuvred intoconceding most of a demand thatshould never have been made Afaccedilade of legality conceals a travestyof unionism and a travesty of justiceNearly all construction industrystrikes are unprotected and potentiallyunlawful under section 170MN of theWorkplace Relations Act Even so
employers nearly always opt to pass the costs ontoconsumers while existing arrangements for gatheringinformation launching prosecutions and imposing finesdonrsquot work well anywhere but hardly work at all in anindustry where giving evidence against the unions isthought to mean commercial suicide
The construction industry is a classic case not ofmarket failure but of regulatory failure The fact thatthe construction industry does not face potential importcompetition limits its exposure to market discipline Stillthe main reason why unions can get what they want frombusiness and business can get what it needs from haplessconsumers is the absence of independent policing andenforcement of the industrial equivalent of fair tradinglaws To an extraordinary degree in this industry the
SI-2 MARCH 2003
IPA REVIEW SPECIAL INSERT
The rule of law is nota smorgasbord from
which a few favoureditems can be chosenand the rest ignoredFreedom under thelaw requires respectfor the law generally
not just thelaws individuals
personally support
request documents but they canrsquot compel witnesses toanswer or demand that material be produced Althoughit is a criminal offence under the Workplace Relations Actto hinder workplace inspectors the Cole report notedthat no prosecutions have yet been launched despiteevidence that Office of the Employment Advocateinspectors have been abused had objects thrown at themand their property damaged It has been commonpractice for the arrival of OEA inspectors to lead to workstoppages and even site invasions in a bid to thwart anddemoralise an independent investigator not susceptibleto the unionrsquos usual weapon of commercial retaliation
One of the problems with theworkplace relations system is theassumption that parties will enforcethe law against each other This worksup to a point in industries whereworkplace parties are more-or-lessevenly matched and the issues are theworkplace equivalent of an argumentbetween neighbours over the heightof a fence It completely breaks downwhen one side has an effectivemonopoly over the supply of labourand disputes resemble a more-or-lessnormal family telling the house fullof footballers next door that the partyrsquosover Expecting contractors to enforcethe law against the CFMEU is likeexpecting people in the street to makecitizenrsquos arrests hence Colersquos principalrecommendations are an AustralianBuilding and ConstructionCommission to investigate prosecuteand enforce the provisions of a beefed-up industry specific workplace
relations actYesterday Cabinet decided to support Colersquos key
recommendations First the Government will seek aseparate act governing workplace relations in theconstruction industry providing for secret ballots beforestrikes compulsory cooling off periods after extendedstrikes and damages awards in the event of unprotectedindustrial action Second the Government will establisha new law enforcement agency for the industry withpowers to compel witnesses to testify bring prosecutionsand enforce judgments and with sufficient on-the-ground presence to police CBD building sites Thirdthe Government will establish a Safety Commissionerto monitor federally-funded construction sites to try toensure that these become industry models Fourth the
s
commissions lack sufficient power the courts lacksufficient speed the employment advocate lacks sufficientauthority and the police lack sufficient interest
Not before time the Cole Commission has acted as agiant searchlight probing the dark underside of thispotentially great Australian industry It confirmed whatpolicy makers had long suspected and what influentialinsiders knew but had always tried to deny or explainaway that the industry operates under the rule of thejungle and that there will be no improvement until thepeople who work in it understand that the law has to betaken seriously Legislative institutional and structuralchange will start to mean somethingwhen law breakers in this industry arecharged convicted and punished likelaw breakers everywhere else A fewsalutary bars of that old song need towaft over construction sites ldquoI foughtthe law and the law wonrdquo
Late last year in response to theRoyal Commissionrsquos first report thefederal Government set up theBuilding and Construction IndustryInterim Task Force The Governmentrsquosbrief to the Task Force is to ensure zerotolerance of industrial law-breakingThe Task Force is not primarily toenforce the tax laws or the safety rulesbecause other bodies exist for this(although the Task Force will certainlyshare information with them) TheTask Force is to investigate and enforceWorkplace Relations Act prohibitions oncoercion unprotected strikes strikepay and breach of industrialagreements So far the Task Force hasvisited nearly 300 sites launched more than 50investigations brought three prosecutions and referrednine other matters to state police the Australian FederalPolice or the Australian Competition and ConsumerCommission for further action
These are the first public prosecutions arising out ofindustrial action in the construction industry at leastsince the 1980s and are the result of a public policycommitment to law enforcement not seen since thehumiliating Clarrie OrsquoShea case in 1969 and the end ofldquopenal sanctionsrdquo Yesterday Cabinet decided to extendthe interim Task Forcersquos operations until more permanentarrangements to secure the rule of law can be established
Task Force agents have the powers of inspectors underthe Workplace Relations Act They can enter premises and
SI-3MARCH 2003
IPA REVIEW SPECIAL INSERT
The main reason whyunions can get what
they want frombusiness and businesscan get what it needs
from haplessconsumers is theabsence of inde-
pendent policing andenforcement of the
industrial equivalent offair trading laws
API
Government will insist on the application of theNational Construction Code and implementationguidelines to all significant new projects which are fullyor partly federally funded
Directly or indirectly the federal Government fundsabout $5 billion worth of construction projects everyyear and is determined to use its role as client to drivechange in the industry In essence the NationalConstruction Code stipulates that construction projectsmust take place in conformity with the WorkplaceRelations Act Under the Code and implementationguidelines the federal Governmentwill not engage tenderers whoseworkplace agreements and practicesensure a closed shop on site The TaskForce (and any replacement body) willhave full access to federally fundedsites to ensure that the law is beingobserved and workplace agreementscomplied with
For the federal Government theissue is upholding the law and tryingto tackle the ldquounion rulesrdquo culturewhich is at the heart of lawlessness inthe industry For the states the issueis whether they are prepared to refusefederal money in order to protect theclosed shop However much theymight prefer different federal laws thestates ought to accept thatconstruction projects have to complywith the law as it stands includingthe law mandating compliance withcertified agreements
State Labor governments whichhave made a point of their middle-ground credentials risk losing some$4 billion a year in federal building and constructiongrants if they side with the union movementrsquos mostmilitant minority There are likely to be limits to Laborrsquosdefence of a union whose stock-in-trade (at least in somestates) is the site invasion and the demand for paymentand which quietly reinstates organisers sacked for assaultor perjury Opposition senators will find it hard to brandas ldquoideologicalrdquo the recommendations of a royalcommission which spent 171 days in public hearingsand which pursued 11 shop stewards and 97 unionofficials to obtain their side of the argument
As Justice Cole pointed out in his report previousattempts to reform the industry have proven ineffectivedespite two earlier royal commissions and numerous
SI-4 MARCH 2003
IPA REVIEW SPECIAL INSERT
enquiries Although this Royal Commissionrsquosinvestigations seem to have temporarily checkedlawlessness in the industry a campaign is now emergingto extend the anarchic culture of CBD construction intoregional centres and the domestic housing industryThings will certainly be different this time if parliamentapproves a permanent well resourced watchdog withnew powers new personnel and new attitudes Unlikeprevious arrangements a new statutory watchdog withthe powers of a law enforcement agency should beeffective and permanent
Hundreds of people took big riskswith their commercial future and eventheir personal security to testify to theRoyal Commission It should neveragain be so hard for people in thisindustry to exercise their ordinaryrights and responsibilities asAustralian citizens They expected theGovernment to take the Commissionrsquosreport seriously and the Governmentfor its part is determined not to letthem down The Governmentunderstands that joining fights yoursquorenot prepared to win only makes badsituations worse Establishing the ruleof law in the construction industry isa challenge Australia canrsquot afford tofailSome of the worldrsquos best workersshould no longer have to put up withsome of the worldrsquos worst industrialpractices They have a right to anhonest industry where they can earna fair dayrsquos pay for a fair dayrsquos workand expect to come home uninjuredThe enduring image of this industry
should not be noisy marchers replaying the ideologicalstruggles of the 1970s and raising clenched fists againstauthorities they donrsquot like At its best the Australianindustry is capable of work which is stunningly beautifulyet intensely practical and it now needs to performconsistently on time on budget and in accordance withlaw
Hundreds of peopletook big risks withtheir commercial
future and even theirpersonal security totestify to the Royal
Commission It shouldnever again be so
hard for people in thisindustry to exercisetheir ordinary rights
and responsibilities asAustralian citizens
NOTE
The foregoing speech was first delivered as an Addressto the National Press Club on 2 April 2003
21MARCH 2003
E V I E WR
IN psychology behaviouris defined as irrational ifan action continues to berepeated despite its re-
peated failure to achieve the desiredoutcome On this definition our aidpolicy towards Papua New Guineahas been irrational
Despite over twelve billion dol-lars in Australian aid to PNG sincethat countryrsquos independence in 1975key development indicators such asliteracy rates infant mortality lifeexpectancy and real income percapita are either stagnating or dete-riorating Worse wersquove known forover a decade1
Today acknowledgement of thefailure of our aid policy in PNG hasgone well beyond the writings of in-dividual international policy analystssuch as myself to institution-spon-sored reports such as Beyond Baliwhich was released by the AustralianStrategic Policy Institute (the Aus-tralian Governmentrsquos own strategicpolicy adviser) and Papua NewGuinea on the Brink which was writ-ten by Susan Windybank and MikeManning for the Centre for Indepen-dent Studies Both reports confirmthe gross failure of Australian aidpolicy in PNG
Yet still our aid policy irrational-ity towards Papua New Guinea con-tinues While the ASPI and CIS re-ports acknowledge the gross failureof our aid policy in PNG they alsoargue that we need to continue ouraid to that country Indeed the ASPIreport argues that we should increaseour aid to Papua New Guinea Thepolicy saviour The ASPI report ar-gues that we should exert greater con-trol over our aid Not just over theform of our aid but direct interven-tion in policy and implementation inPNGmdashin essence for a return to pre-
Aid Detox for PNGPETER URBAN
independence days in PNG whereas UN-sanctioned administrator weran government in that country
Despite the mind-frame of secu-rity-focused strategists such as thoseat ASPI and the CIS (which en-dorses the aid approach advocated byASPI) the reality is that we canrsquotPNG is now independent and to ig-nore this reality would simply com-pound the problems of our past aidpolicy irrationality with irrationalityabout our political relationship withour nearest neighbour
A more interventionist aid policytowards PNG on our part as advo-cated in Beyond Bali and by HughWhite (the executive director ofASPSI) in the media might havepopulist appeal but it would haveserious adverse implications for ourrelationship with other Pacific islandcountries and even IndonesiaWorse it would give succour to theviews of our east Asian critics (suchas Malaysian PM Dr Mahathir) whoclaim that Australia continues toharbour colonial aspirations
We have to accept that to be suc-cessful aid policy must not just helpreduce mass poverty it also has to doso as a guest in the aid recipientcountry To do otherwise is not aidbut imperialismmdashwhether inten-tional or not
A more interventionist approachto aid policy in PNG would also givethe current corrupt political elite inPort Moresby a rallying point againstus and an excuse to delay changingtheir own policies Neither Austra-lia nor PNG can afford any furtherdelays to policy reform For us to givePNG politicians yet another excuseto delay reform would be not onlyirrational it would be inexcusableWhile our aid continues so will thecorrupt elite that is at the heart ofPNGrsquos problems Until we send themessage to the PNG political elitethat we are prepared to stop ouraidmdashto put them on aid detoxmdashwewill continue to waste our aid in thecorruption that is PNG politics Itmay be hard to accept but the sadreality we face in PNG is that no aidmay prove to be good aid at least inthe short to medium-term2
NOTES
1 Peter Urban lsquoOne Clear ObjectiveNo Clear Approachrsquo IPA Review1997 Vol 50 No 1
2 With Iraq also likely to require verysignificant Australian aid fundingover the next few years the Gov-ernment will need to review our aidprogram as part of the 2003-04 fed-eral Budget A decision to suspendaid to PNG could be taken as partof that review
Peter Urban is former chief economist with theDepartment of Foreign Affairs and Trade
We have to accept
that to be successful
aid policy must not
just help reduce
mass poverty it also
has to do so as a
guest in the aid
recipient country
API
22 MARCH 2003
E V I E WR
IN his speech to the Na-tional Press Club on theprospect of war with Iraqand the case for disarma-
ment Prime Minister Howard statedthat Australia will play a significant hu-manitarian role in Iraq
If so the Howard Government needsto evaluate carefully the foreign-aid non-government organizations (FANGOs)which it funds to carry-out this humani-tarian programme Many FANGOshave made it clear that they do not sharethe Australian Governmentrsquos objectivesand values in Iraq Moreover some donot agree with the Governmentrsquos over-all aid policies in general
THE COALITION OF THEUNWILLINGIn the lead-up to latest Gulf War some30 Australian aid agencies put theirnames to an Open Letter to the PrimeMinister organized by the AustralianCouncil of Foreign and Overseas Aid(ACFOA) The aim of the letter was tolsquospeak out against war in Iraqrsquo and it ex-pressed grave concerns about the hu-manitarian consequences of the war andthe effects of the existing sanctions1 TheFANGOs that signed the letter wereOxfam Community Aid Abroad WorldVision Australia TEAR AustraliaUnion Aid Australia - APHEDACaritas Australia National Council ofChurches Australian Council for For-eign and Overseas Aid Save the Chil-dren Australia CARE Australia OzGreen United Nations Association ofAustralia Family Planning AustraliaMercy Works Marist Mission CentreAustralia Every Home for Christ Bap-tist World Aid for Christ CCF Austra-lia Quaker Service Australia Austra-lian Lutheran World Service AustralianRelief and Mercy Services AnglicanBoard of Mission AUSTCARE Com-munity Development and Health
Irreconcilable DifferencesDON DrsquoCRUZ
Hussein have been virtually ignored isa searing indictment of the warped ide-ology feeble analysis and moral blind-ness of the sector For them now to re-discover the plight of the Iraqi peopleand to invoke their name in the mediais beyond contempt
THE OXFAM COMMUNITYAID ABROAD POSITIONOf the 30 FANGO signatories to theopen letter Oxfam Community AidAbroad (OCAA) has been perhaps themost outspoken It opposed military ac-tionmdasheven with UN Security Councilapproval4 In spite of all the evidence tothe contrary OCAA was comfortablewith Saddam Husseinrsquos assurances thathe did not have weapons of mass destruc-tion5 Adopting the common policyagreed to by the other Oxfam affiliatesOCAA stated that it will not take anymoney from the lsquobelligerentsrsquomdasha quaintterm used to the describe democraticnations planning to disarm a dictatorguilty of countless human rights abuses
OCAArsquos outrage against the so-called lsquobelligerentsrsquo appears to be geo-graphically confined to Iraq OCAAappears happy to take governmentmoney from the belligerents elsewherearound the world
According to OCAArsquos ExecutiveDirector Andrew Hewitt refusing totake money from the belligerents wasdone to lsquoprotect its impartialityrsquo6 Thisis a very curious position from Australiarsquosarguably most political FANGOOCAA has a long track-record of beinganything but impartial or reluctant totake sides in miliary action It wasnrsquotimpartial in East Timor where it sidedwith Fretlin in its quest for indepen-dence According to its own testimonyto a Senate committee OCAA wasgiven the choice by the IndonesianGovernment between lsquoplaying politicsrsquoor delivering aid projects in Indonesia7
Group Amnesty International Austra-lia AngliCORD Australian Aid forCambodia Fund Burnet InstituteRedR Friends of the Earth PLAN Aus-tralia and Australian Volunteers Inter-national2
This open letter highlighted a num-ber of problems with the FANGOs sec-tor First it highlighted the weak logicthat passes for advocacy in the sectorThe letter argued against military actionwas critical of sanctions and suggestedthat nations should settle issues only bydiplomatic means It is a viewpointwhich totally ignores the fact that theGovernment had to deal with SaddamHussein
The shallowness of their logic wasbest exposed by the Prime Minister inhis response to the open letter in whichhe stated that the humanitarian situa-tion in Iraq is best addressed by SaddamHusseinrsquos removal and perhaps morepointedly that Saddamrsquos manipulationof foreign aid had allowed him to main-tain and pursue his weapons of mass de-struction capability and human rightsabuses3
Second it also highlighted the factthat the so-called lsquohuman rights-basedapproachrsquo to development (embraced byseveral of the signatories) is not so muchabout realizing human rights (as its pro-ponents argue) but is more about pro-viding them with an excuse to lsquoplay poli-ticsrsquo According to the theory the hu-man rights-based approach to develop-ment allows FANGOs to tackle the rootcauses of poverty and injustice
Yet the root cause of the Iraqipeoplersquos suffering can be summed up intwo simple wordsmdashSaddam HusseinThe fact that the FANGOs who sub-scribe to this particular approach havebeen obsessed with imaginary humanrights abuses committed by Shell NikeRio Tinto BHP-Billiton and AuroraGold while the activities of Saddam
23MARCH 2003
E V I E WR
It chose the former thus making it per-sona non grata in Indonesia for almost adecade8 It wasnrsquot impartial inMozambique when it sided with Frelimoin the countryrsquos civil war9 It wasnrsquot im-partial in Ethiopia when it developedlinks to the Eritrean Peoplersquos LiberationFront during its war against the thengovernment10 It was not impartial oranti-war when it sided with the TigrayPeoplersquos Liberation Front in the neigh-bouring province to Eritrea when thatgroup was waging a guerrilla war againstthe government11 And recently therehave been claims that in the Middle Eastit was little more than an lsquoeager propa-gandistrsquo for the Palestinians12
In East Timor Ethiopia and Mozam-bique OCAA was linked with organi-zations which supported direct militaryaction that led to the deaths of thou-sands of civilians In none of these loca-tions were the enemies of their friendany worse than Saddam Hussein In-deed in many cases OCAArsquos friendswere arguably no better than their en-emies in terms of human rights
OCAArsquos decision not to accept Aus-tralian Government funding is the cor-rect one in the sense that it clearly doesnot share the Governmentrsquos values onthe question of Iraq and thereforeshouldnrsquot receive any governmentmoney
Hewitt went on to state in a pressrelease that lsquoWe will not take funds thatmight allow a government to use hu-manitarian efforts as an instrument offoreign policyhelliprsquo13
This is finemdashexcept the AustralianGovernmentrsquos foreign aid is an instru-ment of foreign policy And it always hasbeen This is spelt out quite clearly inthe Australian Governmentrsquos latest for-eign and trade policy White Paper Ad-vancing the National Interest14
FANGOs that cannot accept thisrather basic proposition should not begetting taxpayersrsquo money They areclearly unsuitable for the task at hand
The consequences of Australian tax-payersrsquo money falling into the wronghands were brought home to Prime Min-ister Howard when he met IndonesianPresident Megawati Sukarnoputri to dis-cuss the war against terrorism and
Australiarsquos involvement against Iraq Atthe top of the Indonesian agenda wasthe issue of Australian funding toFANGOs being used to support sepa-ratist movements in Indonesia15
Post-war Iraq will be a better placewithout Saddam Hussein and his thugsThis does not mean that it will be a safeplace or necessarily a stable place Afterall one of the reasons for Western tol-eration of Saddam Hussein for manyyears was his ability to hold the various
ethnic minorities in Iraq together albeitrather brutally thereby maintaining abalance of power in the Middle East Hisdeparture would see strains on Iraq fromthe various ethnic minorities that makeup Iraq There is a strong chance thatIraq will fragment
The last thing the Australian Gov-ernment or any of the so-called belli-gerents needs in a post-war Iraq is west-ern NGOs running around and becom-ing self-styled advocates for national self-determination for Iraqrsquos ethnic minori-ties and injecting themselves into Iraqrsquosinternal politics This is a real risk Thebehaviour of Australian foreign aidNGOs in Indonesia should make Aus-tralian decision-makers extremely waryof funding any NGOs with Australiantaxpayersrsquo money so that they can oper-ate in Iraq
As things stand now FANGOs facevery few restrictions on their actionsfrom government If they undertake ac-tivity that is inconsistent with being anagent of government they may losefunding for specific projects or in moredramatic circumstances lose funding ina country Nonetheless they are gener-
ally able to access Australian Govern-ment funding for other projects andcountries In other words the penaltiesfor becoming caught up in political ac-tivities are very light for NGOs and posethem no serious problems
Foreign aid NGOs that lsquoplay politicsrsquoare unsuitable contractors for the deliv-ery of aid That these overtly politicalorganizations have been allowed to gaingovernment accreditation and receivegovernment funding points to some se-rious problems at AusAID Australiarsquosofficial aid agency The time has comefor this to change
NOTES1 httpwwwacfoaasnaumedia_releases
2003_releases26_3_03PDF2 httpwwwacfoaasnauemergencies
openletterPDF3 httpwwwacfoaasnauemergencies
iraq_responsehtm4 Oxfam Horizons Vol 3 No 1 (Febru-
ary 2003) page 25 Oxfam Community Aid Abroad lsquoIraq
Overviewrsquo February 20036 Hewitt quoted in Liz Gooch lsquoOxfam
wersquoll say no cashrsquo The Age 16 March2003
7 Community Aid Abroad Submission tothe Senate Foreign Affairs Defence andTrade References Committee Inquiryinto East Timor Downloaded at httpwwwcaaorg aucampaignssubmissionstimorhtml
8 Ibid9 Susan Blackburn Practical Visionaries A
Study of Community Aid Abroad (Mel-bourne Melbourne University Press1993) page 313
10 Ibid pages 325-333 passim11 Ibid12 Gerald Steinberg lsquoPropaganda vs Hu-
manitarianismrsquo Australian Financial Re-view 7 June 2002 Downloaded at httpfacultybiuacil~steingconflictopedpropvshumanitarianismhtm
13 ht tp wwwcaa o rg au p r 2003 iraqfundshtml
14 httpwwwdfatgovauani15 Dennis Shanahan lsquoJakarta fears aid funds
for rebellionrsquo The Australian 17 Febru-ary 2003 page 2
Don DrsquoCruz is Research Fellow at the IPAand Director of IPArsquos NGOWatch
OCAA has a longtrack-record of
being anything butimpartial or
reluctant to takesides in miliary
action
API
24 MARCH 2003
E V I E WR
GEORGE Bush Tony Blairand John Howard haveprovided many reasons forsupporting military action
against Iraq One of those reasons hasbecome known as the lsquohumanitarianrsquojustification Put simply the lsquohu-manitarianrsquo justification for the US-led invasion of Iraq is that such ac-tion is necessary to free the Iraqipeople from their totalitariandictator
Such an argument is attractive tothose who believe that there aresome fundamental human rights thatall individuals possess regardless ofwhere and how they live Whatserves as the source of those rightshas been the subject of debate forcenturies One of the pre-eminentstatements on the subject was madeby John Locke who in The SecondTreatise of Government wrote thatmankind was lsquoequal and indepen-dentrsquo and that lsquono-one ought to harmanother in his life health liberty orpossessionsrsquo
Saddam Husseinrsquos mass murdertorture and terror are reasonablyclear breaches of human rightsTherefore some would ask why thereshould be opposition to the UnitedStates and its allies taking whatevermeasures might be necessary totopple the Iraqi regime Surely thesame standard of behaviour that ap-plies to individuals applies also tonation states If an individual walk-ing in the street witnessed a rapeoccurring wouldnrsquot that individualbe entitled to do everything in hispower to stop the crime and assistthe victim
The point is of course that in-ternational law and convention do
After IraqIs Sovereignty Dead
JOHN ROSKAM
not allow nation states to act in thesame way as individuals Countriescannot simply lsquotake the law into theirown handsrsquo To restrain lsquovigilantestatesrsquo (who might be acting fromeither lsquogoodrsquo or lsquobadrsquo motives) a num-ber of legal and political theorieshave been developed One of theseis the doctrine of lsquosovereigntyrsquo whichprovides that states should not inter-vene in the domestic affairs of otherstates
In relation to Iraq the lsquosover-eigntyrsquo question is perhaps the stron-gest argument against the US-ledCoalition Most of the other criti-cisms of lsquohumanitarianrsquo interventionin Iraq are either grounded in simpleanti-Americanism or are fallaciousFor example there is the claim thatbecause some of the countries in theCoalition have previously ignoredHusseinrsquos cruelties therefore it is il-legitimate to take action now Sucha view has been expressed by aMelbourne international relationsacademic
While there is no disputing thebrutal nature of Saddam Hus-seinrsquos regime the case for inter-vention made by those in Can-berra London and Washingtonis weakened by the fact that atthe peak of Saddamrsquos crimes inthe late 1980s they were eitherdirectly supporting him withweapons technology and intelli-gence or were entirely indifferentto his behaviour Even if theyhave belatedly recognised theerror of their ways how seriouslycan we take their concerns aboutweapons of mass destruction nowgiven they were his suppliersthen1
On the basis of this argument itcould be said that Britainrsquos (andAustraliarsquos) case for intervening toassist Poland upon the German in-vasion in 1939 was lsquoweakenedrsquo be-cause Britain had previously acqui-esced to Germanyrsquos rearmament theremilitarization of the Rhinelandand the annexation of both Austriaand parts of Czechoslovakia Fewpeople who chanted lsquoFreedom forEast Timorrsquo said that the HowardGovernment should not act becausea quarter of a century before theWhitlam Government had been lsquoin-differentrsquo to Indonesiarsquos occupationof the island
There is also the claim that al-though Hussein is bad he is not theworst dictator in the world and thatit is hypocritical for the Americansto attack only Iraq This is an as-tounding proposition It attempts toapply to the United States a standardof behaviour that is impossible to sat-isfy Should the police not attemptto solve any crimes because theycanrsquot solve all crimes If a crime iscommitted by two people and thepolice arrest one perpetrator unlessthe other is also caught must the firstperpetrator be released When indi-viduals donate money for famine re-lief in Africa very few believe thattheir donation is pointless becauseit might prevent the starvation ofonly one person rather than thou-sands Christian ethics sets down norequirement that we should help no-one unless we can help everyone
The issue about state sovereigntyhowever is one that deserves to betaken seriously Regardless of onersquosopinions on the extent and limits ofstate sovereignty it is true that our
25MARCH 2003
E V I E WR
international relations system is builtupon the principle and to modify oroverturn it is a matter of some con-sequence
Even those who are generally sup-portive of the United States andtheir allies see the problem As it wasput by a leading commentator whenanalysing the Australian PrimeMinisterrsquos lsquohumanitarianrsquo justifica-tion for war
Finally Howardrsquos argumentagainst Hussein on human rightsis correct So is his moral case forwanting to liberate the Iraqipeople from their torment Theproblem however is that youcanrsquot trip around the worldwanting to overthrow regimesbecause of human rights2
Some would askmdashlsquowhy notrsquo Be-cause to do so would overthrow theUnited Nations Charter comes therejoinder And in turn the responseto that might bemdashlsquogoodrsquo
If itrsquos a choice between the main-tenance of the UN Charter and free-dom from tyranny freedom wins ev-ery time (although an internationallawyer sitting in Sydney might havea different view on this question fromthat of a political prisoner manacledin a Baghdad jail cell)
When the interests of lsquointerna-tional lawrsquo are more important thanthe life and liberty of individuals itcould be concluded that lsquothe Em-peror has no clothesrsquo Would inter-national law have sanctioned inter-vention to stop the Holocaust hadHitler not waged war and proceededwith his methods entirely within theconfines of the German territorialstate
Many who argue that lsquohumanitar-ianrsquo intervention in Iraq is not justi-fied because it infringes on thatcountryrsquos lsquosovereigntyrsquo would happilyhave other countries cede their po-litical sovereignty to supra-nationalbodies Certain features of the Inter-national Criminal Court overridethe principles of sovereignty but thatdid not stop a phalanx of interna-tional law experts urging sovereigngovernments to join it so as to en-
able the prosecution of war criminalsBut when it comes to actually stop-ping war crimes not simply prosecut-ing them that phalanx is largely si-lent
Without the doctrine of state sov-ereignty and without an arbiter fordetermining when interference withthe principle is justified (the roleclaimed by the United Nations andits Security Council) it is said thatstates would be free to impose theirown will and intervene in other
countries whose standards did notmeet their own (In The Second Trea-tise of Government Locke argued thata characteristic of a lsquostate of warrsquo be-tween individuals was the absence ofa superior authority to adjudicatedisputes and prevent individualsfrom administering justice them-selves)
Iraq might be claimed as a rea-sonably clear-cut case for interven-tion but other situations are notlikely to be as simple In Culture andEquality first published in 2001Brian Barry explored a lsquoliberalrsquo per-spective on this question
The liberal position is clearNobody anywhere in the worldshould be denied liberal pro-tections against injustice andoppression However in exactlythe same way as liberals arepragmatic about what liberalismmeans in terms of boundaries sohere the move from principle tointervention has to be mediated bypractical considerationshellip
[L]iberals are not so simple-mindedas to imagine that the answer toall violations of liberal rights is tosend in the Marines or even aUnited Nations force As in anyjust war theory there must be somedoctrine of lsquoproportionalityrsquohellip[S]carcely anybody would be infavour of the western powersinvading Saudi Arabia so at to sortout the way in which it lsquounjustlydenies political rights to women ornon-Muslimsrsquomdashaccording to theirliberal idea of justicersquo3
The question remainsmdashafterIraq what remains of lsquostate sover-eigntyrsquo Should the doctrine applyonly to lsquoliberal democraticrsquo statesSuch a solution might be attractiveto some lsquoliberalsrsquo but it doesnrsquot avoidthe problem of what exactly a lsquolib-eral democraticrsquo state is
One irony arising from the argu-ments about the war in Iraq is thatmany of those who have urged astrict application of lsquostate sover-eigntyrsquo principles in the past havegenerally supported the US-led in-tervention while those who havebeen willing to abridge or even aban-don the doctrine have had to rely onit to counter the lsquohumanitarianrsquo jus-tification for war
There are not many certaintiesabout the nature of the world afterthe war in Iraq but it can be saidwith some assurance that one defi-nite outcome is going to be a morevigorous debate about state sover-eignty
NOTES1 Scott Burchill lsquoThe humanitar-
ian arguments for this war are spu-riousrsquo The Age 21 March 2003
2 Paul Kelly lsquoThe hapless per-suaderrsquo The Australian 15ndash16March 2003
3 Brian Barry Culture and Equal-ity An egalitarian critique ofmulticulturalism Harvard Uni-versity Press page 138
John Roskam is a Research Fellow with the IPA
The lsquosovereigntyrsquo
question is perhaps
the strongest
argument against
the US-led
Coalition
API
26 MARCH 2003
E V I E WR
Which Way for theDemocrats
The 2002 mid-term elections were adramatic victory for President GeorgeW Bush and the Republicans Insteadof the historical norm of the partycontrolling the White House losingBushrsquos party gained seats in the Sen-ate House Governorsrsquo races andState legislatures The result was abitter disappointment for the Demo-crats and has led to a fierce debatebetween the Left and Centrists aboutthe future policy direction of the partytowards the 2004 elections
The Leftrsquos analysis is that the ma-jority of Americans are natural Demo-crats Electoral defeat was due to thefailure to energize that base of Demo-crats The party failed to distinguishitself sufficiently from Bush and thusgive their voters a reason to turn outWhile the majority of Democrats op-posed Bush on tax cuts and the warwith Iraq a significant minority sup-ported him and campaigned on thatsupport The result the Left claimwas that the Democrats lacked a con-sistent message in contrast to Bush
Support for this argument can befound in the higher turnout amongstRepublicans than Democrats in 2002while in 2000 the combined vote forGore and Nader was 51 per cent Aninfluential book by John Judis andRuy Texeira identified lsquoThe Emerg-ing Democrat Majorityrsquo Theyclaimed that growing demographicgroups trended Democrat includingthe young socially liberal profession-als minorities and women
What policies would motivate thisnatural Democrat base The Left callfor rescinding the Bush tax cut a classwar against the corporate world amajor increase in lsquopublic investmentrsquoin schools childcare health care and
Letter from AmericaNIGEL ASHFORD
public transport and strong opposi-tion to the war
Centrists however have a verydifferent analysis of the Democratsrsquoproblems the public did not trustthem to pursue the war against ter-rorism vigorously to keep down taxesto spend their tax dollars wisely or toreflect their cultural values
A Gallup opinion poll found that57 per cent of Americans askedthought that the Democrats were nottough enough on the war on terror-ism while 64 per cent thought theRepublicans were There was the per-ception that the Democrats were notserious on the issue and just playingpolitics Evidence for this was the de-bate over the new Department ofHomeland Security blocked becausethe Democrats wanted to protectunion rights while the President de-manded more flexibility to deploy theworkforce Many voters saw the issueas the national interest versus a spe-cial interestmdashin this case that of theunions The Democrats were seen asputting the interests of one of theirmajor constituencies before nationalsecurity
The Democratic LeadershipCouncil in lsquoThe Road Aheadrsquo by AlFrom and Bruce Reed presented theCentrist case lsquoStop pretending wecan win a majority simply by energiz-ing our basersquo The Democrats were
not trusted on the war against terror-ism were hostile to the cultural con-cerns of many working-class Demo-crats on abortion and guns and stillseen as the tax-and-spend party lsquoToomany Americans donrsquot trust us tokeep their taxes down or to spendtheir money wellrsquo
The Centrist agenda is to stronglyprosecute the war against terrorismwhether against al-Qarsquoeda Saddam orothers and to abandon knee-jerk iso-lationism arising from the experienceof the Vietnam War to defend capi-talism and support small investorsagainst irresponsible managers to cutpayroll taxes and to downplay thecultural issues that divide Democrats
Which path will the Democratstake The Left is in the ascendancyMost of the remaining Democrats inoffice come from left-wing districtsNancy Pelosi a left-liberal from SanFrancisco was easily elected the newleader of the House Democrats over-whelming her Centrist opponent andrising star African-American HaroldFord The early field of presidentialcandidates for 2004 is dominated bythe Left tendency including SenatorJohn Kerry Representative DickGephardt Governor Howard DeanRev Al Sharpton former SenatorCarol Moseley-Braun and Represen-tative Dennis Kucinich Only Sena-tor Joe Lieberman and Senator JohnEdwards represent the Centrist wing
The future of US politics may de-pend on which road the Democratsdecide to take The US is currently alsquo50ndash50rsquo nation evenly balanced be-tween the parties A left turn couldlead to Republican dominance farinto the future
Dr Nigel Ashford is at the Institute of Humane Studiesat George Mason University and is co-author of US
Politics Today (Manchester University Press)
API
27MARCH 2003
E V I E WR
Trusting TonyFrankly itrsquos all just too depressing Theeconomyrsquos heading for trouble Busi-ness confidence is low investment in2002 was 92 per cent lower than theprevious year and manufacturing in-vestment was nearly 18 per cent downThe budget deficit is spiralling becauseour once lsquoprudentrsquo Chancellor (trea-surer) Gordon Brown made over-opti-mistic growth projections and startedthrowing money at problems
Therersquos a load of health-and-safetyand anti-discrimination measuresthatmdashto put it most politelymdashare ex-amples of letting the best be the en-emy of the good Every school tripneeds a formal risk assessment withthe result that many trips are simplynot taking place New trains orderedfor London commuter routes wonrsquothave toilets because the rules say thatat least one toilet in each four-car unitmust be wheelchair-accessible whichwould have cost ten or a dozen seatson every overcrowded train
Some of this is just insane Somelocal authorities say that safety at workrules mean that home-care workersmustnrsquot lift the disabled people theyare looking after Or therersquos rail safetyUntil recently we were seriously pro-posing to spend $10 billion on a bet-ter system to stop trains going throughred signals On average this would havesaved the lives of about three passen-gers every four years which is a lousybargain compared with other safety in-vestments Worse it would also havereduced the capacity of the networkby up to 15 per cent and forced morepeople onto the roads which are muchmore dangerous than even ourclapped-out railways The result was aprojected net increase of 13 to 21 deathsper year
Meanwhile in London the Cen-tral line of the Underground has been
Letter from LondonJOHN NURICK
API
closed for weeks after a train derailedwhen one of its motors fell off Therewere no deaths or major injuries in theaccidentmdashbut itrsquos a safe bet that someof the people who havenrsquot been ableto use the Central line have been in-jured or killed on the roads
What can one say If the authori-ties took the same attitude to the riskof fatal accidents in the health serviceevery hospital in the country wouldhave been closed for years
Despite all this the Conservativesare still hopeless Their leader IanDuncan Smith has a new wheezewhen a journalist asks him anythingdifficult he chortles merrily and saysitrsquos the most uninteresting questionimaginable and hersquos not going to wasteanyonersquos time by answering it His col-leagues have their knives out for him
Meanwhile in spite of the govern-mentrsquos problems with the economy andthe public services Tony Blair is grow-ing in stature having his waymdashandantagonising large sections of his ownparty in the process On several recentissues he has faced down the formi-dable Gordon Brown in a way that notlong ago was hard to imagine
Then he shocked everyone by com-ing out against having elected mem-bers in the reformed House of Lordswhen most voters want an all-elected
chamber and most MPs want a partly-elected one In the event Parliamentcouldnrsquot agree on any of the optionsfor reform so wersquore stuck with the sta-tus quomdashwhich is fine by Mr Blair
Then therersquos the war By the timeyou read this it may be over or we maystill be waiting or our lads may befighting Mr Blairrsquos strong line againstIraq has made him very unpopular Theanti-war march on 15 February was thebiggest demonstration London hasever seen A few days later 122 Labourbackbenchers voted against the gov-ernment and many more abstained
Mr Blair didnrsquot budge War is a se-rious thing he says lsquoBut in a situationsuch as this you have to do what youbelieve to be right because thatrsquos theprice of having responsibilityrsquo1
He has often been accused of gov-erning by focus group Certainly he hasseemed reluctant to antagonise anypowerful group That has clearlychanged In a sense his stand on Iraqmerely follows his action in sendingtroops to Sierra Leone and Kosovomdashbut it has stirred up far stronger domes-tic and international opposition
The irony is that now when he re-ally needs people to trust him wedonrsquot Even in the desperately seriousbusiness of justifying an unpopular warDowning Street canrsquot play it straightremember the dossier from lsquointelli-gence sourcesrsquo that turned out to belargely cribbed from a PhD thesis onthe Internet
NOTE1 The Guardian 1 March 2003
John Nurick is a management consultant based in theSouth of England From 1985 to 1990 he was
editorial director of the Australian Institute for PublicPolicy and later edited newsletters reporting on theUK Parliament and European Union institutions
28 MARCH 2003
E V I E WR
KEVIN DONNELLY
Private EducationEquals Public Good
When it comes to choosing be-tween government and non-gov-ernment schools Australian par-ents are lsquovoting with their feetrsquo Asshown by recent ABS figures(Schools Australia 2002) over thelast decade there has been a dra-matic increase in non-governmentschool enrolments
Approximately 30 per cent ofstudents now attend non-govern-ment schools compared with 22per cent in 1980 and 28 per centin 1990 Over the last decadewhile the number of governmentschools has fallen by 64 per centnon-government schools havegrown by 61 per cent
Of course not everybody valuesparentsrsquo right to choose and theAustralian Education Union(AEU) Labor governments andlsquoleft-wingrsquo academics in particularconsistently argue against non-government schools
One of the arguments put for-ward by those opposed to givingparents greater freedom of choiceis that government schools are bet-ter at promoting social cohesionand a strong sense of what KenBoston the ex-head of the NSWEducation Department terms lsquothebonds of civic friendshiprsquo
The assumption is that becausestudents attend non-governmentschools there will be greater socialdivisiveness and a breakdown inthe civic values needed to hold so-ciety together But there is no cred-ible evidence offered to support theclaim that government schools arebetter at promoting the commongood
In fact there is much to provethe opposite
First as anyone familiar withthe lsquoculture warsrsquo and politicallycorrect curricula will know insteadof government-controlled educa-tion promoting unity and cohe-sion it has led to public angst andparental complaints
Witness the very bitter debatein Queensland a year or two agowhen the government-mandatedStudies of Society and Environ-ment (SOSE) curriculum was in-troduced into schools Such was
the lsquoleft-wingrsquo bias in the curricu-lum in particular in the areas ofmulticulturalism and the environ-ment that many parents felt be-trayed
The Queensland debate is mir-rored by what is happening in theUnited States As noted by Ste-phen Arons in his book Short Routeto Chaos instead of promotingunity government control of thecurriculum leads to the opposite
What the school wars tell us isthat somehow we have been
Education Agenda
transforming a vital instrumentfor creating social cohesioninto a source of division andhostility that there is some-thing built into the structure ofpublic schooling that under-mines one of its most importantfunctionsAronrsquos argument that govern-
ment schools no longer transmit aviable sense of a common cultureor agreed civic values is reinforcedby another noted United Stateseducationalist Diane Ravitch
In a recent article in the jour-nal Education Next Ravitch be-moans the impact of cultural rela-tivism and the post-modern on theschool curriculum (where there areno commonly agreed values) andeven goes so far as to argue thatparents should be free to choosenon-government schools becausesuch schools have a better chanceof reflecting their values
In the current education sys-tem with the public schoolscommitted to multiculturalismbilingualism and other forms ofparticularism it is difficult toargue that parents should notbe able to choose schools thatmeet their cultural needsSecond if one accepts that lsquoso-
cial capitalrsquomdashthe networks volun-tary associations and civic bondsthat hold a community togethermdashis important for the health of ademocratic society then non-gov-ernment schools clearly have theadvantage
Unlike the government schoolsystem characterized by a heavy-handed centralized bureaucracyand teacher union control non-government schools are closer tothe communities they serve Bytheir very nature non-government
There is no credible
evidence offered to
support the claim
that government
schools are better
at promoting the
common good
29MARCH 2003
E V I E WR
ALAN MORAN
The lsquoRrsquo Files
Private propertyrights the key toachieving efficiency inrural water use
WATER IN AUSTRALIAWater has always been a definingissue in Australiarsquos prosperityAnd in recent decades irrigationhas grown rapidly Even so theproportion of Australia that is ir-rigated at two per cent of theland comprises a share that isamongst the lowest among OECDcountries Only Canada and therainiest countries New Zealandand the UK have lower sharesthat of the US is 11 per cent andin Japan it reaches 60 per cent
Modern agriculture is only 200years old in Australia and thoughin the first 100 years agriculturalproductivity was increased toequal that of anywhere in theworld gains continue to bemademdashoutput has doubled overthe past 50 years a growth thatcould not have taken place with-out a similar expansion of irriga-tion Irrigation in the MurrayndashDarling agricultural provincealone contributes $5 billion toAustralian agricultural outputand non-irrigated agriculture inthe region contributes a further $5billion This makes the areawhich comprises 14 per cent ofAustraliarsquos land mass responsiblefor a third of the nationrsquos $35 bil-lion agricultural output
Applying Property Rights to WaterMost of the uses of water involvechoices or compromisesmdashdrink-ing water versus irrigation versus
industrial and so on Some how-ever involve complementaritiesparticularly certain recreationaluses such as water sports that arefacilitated by storage and consis-tent availability
In many cases water will per-form sequential functionsmdashthesame water can be used and re-used for irrigation used for indus-trial cooling and finish as drink-ing water Water with differentsometimes competing productiveuses will be optimally used as longas two conditions are in placeThe first is that its ownership isclearly specified and the ownersrsquoobligations to other users (orclaims from other beneficiaries)are well understood The secondrequires each property right to betradable to enable acquisition bythose who value it most therebymaximizing its value
The rights specification andtherefore property ownership canrarely commence with a cleansheet of paper People acquire in-dividual rights to property ini-tially through a variety of routesOne of these is seizure of some-thing that was originally of littlevalue until it was acquired and im-proved Squatters assume rights inthis way However they are firstacquired they need to be tradableAPI
schools establish strong commu-nity networks and have a greaterreliance on the voluntary work ofparents
That non-government schoolsare more effective in this regard issupported by research into lsquoChar-ter schoolsrsquo in the United StatesAs noted by Chester Finn at theFordham Foundation giving localcommunities lsquoownershiprsquo overtheir school builds networks oftrust and reciprocity so vital forsocial cohesion
Social capital also relies on citi-zens being disciplined and orderedin their behaviour Selfishness vio-lent behaviour and rudeness act tofragment the community instead ofpromoting cohesion According toa number of Australian surveys itis here once again that non-gov-ernment schools are seen to bemore effective
As noted by the Centre for In-dependent Studies researcher Jen-nifer Buckingham in The Truthabout Private Schools in Australiawhen analysing why so many par-ents forsake the government schoolsystem
When comparing independentprivate schools with publicschools the major theme thatemerged was not differences inacademic standards and curri-culum but issues of disciplineand order The surveyed par-ents felt that the behaviour andattitudes of students in publicschools was unacceptablehellipAll accept that non-govern-
ment schools achieve better aca-demic results provide greater cur-riculum flexibility and save Aus-tralian taxpayers millions of dol-lars Equally as important is theargument that such schools streng-then Australiarsquos civic health andstock of lsquosocial capitalrsquo
Dr Kevin Donnelly is Director of EducationStrategies a Melbourne-based consulting group
E-mailkevindnetspacenetau
s
30 MARCH 2003
E V I E WR
and relatively inviolable Thisprovides the incentive for them tobe improved and for their ownersand others to search out ways inwhich the assets they representcan be used to provide increasedvalue or other benefits
If confidence in the exclusiv-ity an owner has over the prop-erty right is lost or was neverpresent the asset will be used lessproductively For example own-ers will milk them for their cur-rent-use value rather than trade-off present value for a future valuethat is less certain
Even without a total emascu-lation of individual rights (for ex-ample when title to the propertydepends on continuing govern-mental assent) lack of certaintybrings lower incomes and dimin-ished asset protection One out-come of this can be observed inthe MurrayndashDarling system Wa-ter rights on the Victorian side ofthe Murray are secure while thoseon the NSW side have been over-allocated and are subject to ad-ministrative discretion includinghaving a firm duration of only tenyears In Victoria high securitywater (available 95 per cent of thetime) comprises the great bulk ofentitlements In contrast in
NSW high security water is avail-able only 60-80 per cent of thetime The result is that farmers onthe Victorian side plant perennialcrops while those in NSW tendto focus on annual crops espe-cially rice
There are claims that Victoriarsquosmore robust property rights meanthat the State Government haslost lsquocapabilityrsquo to manage com-pared with NSW The flip side ofthis is the increased risk and as-sociated lower value of productionnorth of the Murray where prop-erty rights are attenuated Gov-ernments that give themselves in-creased capacity to direct produc-tion or to take individualrsquos prop-erty will need to accept lower lev-els of income and output
IRRIGATION ENVIRON-MENTAL BENEFITS AND SA-LINITY
The Types of IssuesIssues stemming from irrigationcomprise two types those impact-ing on the environment and thoseimpacting on private uses Theformer includes issues such as pre-venting loss of species ensuringthat certain sorts of species flourishand avoiding unattractive growths
such as blue-green algae which re-sult from fertilizer build-up
The second involves economicimpacts on different users
While environmental flows toensure species flourish are oftenhighlighted salinity is the mainfocus And while salinity has animpact on the environment itsimportance is in the conflict of in-terest between productive usersmdashthe complaint of lsquodamaged goodsrsquoby downstream users against thoseupstream
The MurrayndashDarling Basin Sa-linity Strategy 2001ndash2015 has es-timated that increased salinitybrings costs of $294 million perannum to the basin
Yet data on the salinity of theMurray Darling shows levels up-stream of South Australia arelower than they were in the early1980s and are only seriously abovethese levels as the river ap-proaches its mouth at the GoolwaBarrage
The Basin Salinity Manage-ment Strategy argues that progressachieved over the past decade willlsquobe cancelled within 20-50 yearsand median salinity levels wouldexceed the Australian DrinkingWater Guidelines for good waterquality within 50-100 yearsrsquo Thecause of this is said to be risinggroundwater tables due to land usechanges across the Basin
The disputes over salinizationare largely disputes between com-mercial parties Full specificationof rights and obligations will al-low these to be resolved as longas the impacts are measurabletheir causes identifiable and thevarious rights and obligations areknown and stable In this respecttechnology to measure salt in wa-ter and to trace increases to par-ticular locations is readily avail-able
Agreements about the alloca-tion of water rights between ju-risdictions and to the main irri-gation provinces have been inplace for over a century In the
Average Salinity in the River Murray (EC Units)1
3500
3000
2500
2000
1500
1000
500
0
January 2003
July 2002ndashJanuary 2003
July 1982ndashJanuary 2003
Hume D
am
Swan
Hill
Merbein
Morgan
Milang
Mening
ie
Goolw
a
Barra
ge
31MARCH 2003
E V I E WR
I
API
Musinghellipcase of the Murray the lsquocaprsquo onwater abstractions agreed betweenthe various jurisdictions in 1995largely validated agreements madeearly in the last century and be-fore Disturbing these agreementswould greatly undermine the trustin the sanctity of property rightsand seriously reduce agriculturalproductivity Hence increased al-locations for certain parties or forcertain uses (including environ-mental flows) would need to bepurchased at market prices
Developments in Australiaover recent decades have con-spired to make irrigation water farmore valuable This is exacer-bated by1 Activation of NSW lsquosleeperrsquo
and lsquodozerrsquo water rights as a re-sult of the increased scarcityvalue a change that bringseven greater pressure on theavailable supply
2 Increased scarcity leading tomeasures that more carefullyhusband the water Whilesome of these prevent evapo-ration loss and have thereforebrought a net increase in effec-tive availability others havereduced availability (these in-clude a more careful wateringwhich results in reduced run-off and re-use)
3 Increased capture of waterwithin the land on which itfalls once water is recognizedas scarce landowners will seekto ensure it does not leave theirland NSW and Victoria haveplaced limits (a strict 10 percent in NSW) of water fallingon property as entitlements ofthe owner Queensland has notyet enacted an equivalent tothis Such adaptations of thecommon law are essentialhowever if downstream usersare not to be expropriatedThere is likely to be constant
bickering over water rights espe-cially if State Governments seek toelevate sharing issues and to sanc-tify them with claims about promot-
Daniel Pipes in The New York Posthas a very cogent explanation forwhy the Left appears to be so happywith the likes of Osama bin Ladenand Saddam Hussein
To be clear about their attitudeshe quotes the renowned Germanelectronic music composer KarlHeinz Stockhausen who saidstraight after the attack on NewYork that it was lsquothe greatest workof art for the whole cosmosrsquo
As Pipes and many of us observedaily there is barely a bad word tosay about Saddam Hussein nor aniota of sympathy for thoseoppressed tortured and murderedby his reacutegime Instead they venttheir fury against the AmericanPresident and British Prime Minister
Why the nonchalancePipes draws our attention to Lee
Harris writing in a recent issue ofthe Hoover Institutionrsquos journalPolicy Review According to KarlMarxrsquos central thesis the demise ofcapitalism hangs on workersgrowing poorer over timemdashwhichof course did not happen Sorather than give up on cherishedexpectations of socialist revolutionHarris notes Marxists tweaked theirtheory and looked instead to theentire populations of poor countriesto carry out the revolution Classanalysis went out the windowreplaced by geography
The trouble is they have tooverlook militant Islamrsquos slightly un-socialist practicesmdashsuch as itsimposing religious law excludingwomen from the workplace andpersecuting atheists
As Pipes sums up September 11and the prospect of war againstSaddam Hussein have exposed theLeftrsquos political self-delusionintellectual bankruptcy and moralturpitude
The Loopy Leftby Andrew McIntyre
ing an improved environment Realsolutions require the issue be placedwithin a normal commercial frame-work which involves1 Clarifying the property rights2 Allowing water rights to be
fully detachable from propertyand able to be used howeverthe holder wishes subject toany damage this might imposeon others
3 Ensuring full rights to buy andsell the water
4 Defining rights so as not to re-duce the quality of other usersThis means ensuring that farm-ing practices that do not bringgreater salination than somestandard
5 Allowing rights holders tobank their water and ensureeven greater certaintyAllocating specific individual
ownership rights to water and al-lowing its trade is a well-foundedmeans of maximizing the usevalue It would also be likely tohave the beneficial side-effects ofreducing salinity and farm-basedpollutants caused by intensiveuse We should grasp such oppor-tunities But if the impending sa-linity problem is as great as someclaim other solutions might wellinclude buying out some allocatedirrigatorsrsquo rights However alter-natives may be to remove saltfrom the water by engineering so-lutions or simply to live withhigher salt
NOTE1 Human drinking water should
be less than 800 ECs (electri-cal conductivity one ECequals about 06 mglitre)while higher levels are accept-able for much farming activity
Dr Alan Moran is Director Deregulation Unitat the Institute of Public Affairs
32 MARCH 2003
E V I E WR
Reading FileDone
eral political systems worldwidehave consistently accretedpower to the centre often in theface of clear constitutional im-peratives to the contrary) Ifeared instead that a UN thathad been patently successful insomethingmdashanythingmdashmightbe granted greater powers to thepoint where it would kill truediversity and individualism (ortry to anyway) through inevi-table bureaucratic practices
Is such a fear unfounded Ap-parently not if many peopleshare the moral touchstone ofthe Opposition Leader SimonCrean He believes according tohis own words in Parliamentthat what the UN SecurityCouncil declares is moral whatit refuses is immoral
The latest manoeuvrings overIraq have therefore been heart-
ening It seems that the desiresof the powers small and largeto promote their own interestswill continue to hobble the UN
The problem with a unitedworld is that as the threateningimpasse over Iraq suggestedthere are very divergent viewsabout how that world ought tobe run on an international leveljust as there are at national and
sub-national levels The virtueof multi-layered levels of gov-ernments is that competing ju-risdictions give the individual adegree of choice
The greatest sin of totalitar-ian governments past and pres-ent is to deny their citizens theright to leave The greatest dan-ger that the United Nationsposes as far off as it now (hap-pily) seems is that leaving its ju-risdiction is for all practical pur-poses impossible
THE IMPASSE JUST PASSEDI listened to Prime MinisterHoward speaking to the motionbefore Parliament in relation tothe war It was a good speechbut neither he nor PresidentBush seems able to structure andlay out an argument with thestyle and content of BritishPrime Minister Blair His equi-valent speech before the BritishCommons provides a masterfulsummary of the reasons for thiswar and includes an immenselyreadable time-line of the utterineffectiveness of the UN pro-cesses in dealing with Iraq Henicely deals with allegations ofthe lsquorushrsquo to war lsquoOur fault hasnot been impatience The truth
UNITED OR DIVIDEDI write just hours after US Presi-dent George W Bush has deliv-ered his ultimatum to Iraqi Presi-dent Saddam Hussein leave Iraqwithin 48 hours or be removedBy the time this appears beforeyour eyes you will knowwhether Hussein has decided hischances of survival will be sig-nificantly greater by choosingexile or by remaining in IraqThe recent creation of the In-ternational Criminal Court ofcourse makes war more likelysince Hussein can have no guar-antee of a peaceful lsquoretirementrsquo
In the event that Hussein re-mains in Iraq you will also knowwhether Bush has kept his wordand most likely the outcome ofthis military venture
This matter is immensely im-portant for the people of Iraqand for the military personnelinvolved (including our ownAustralian soldiers sailors andaviators) But then so was theprevious Gulf War the US in-vasion of Grenada the Austra-lian intervention in East Timorand so on But a difference be-tween the current conflict andthose others could be the impactit has upon international insti-tutions Actually just one inter-national institution the UnitedNations
Prior to the first Gulf War Ifeared the coalitionrsquos success forthe reason that some of it mighthave rubbed off onto the UnitedNations I hasten to deny that Ifear the UN as some vast con-spiracy for world domination Ifeared instead that it couldstumble into a piecemeal cen-tralization of power (just as Fed-
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
E V I E WRs
33MARCH 2003
E V I E WR
Reading FileDone
ATTACKING THE GLOBALGOVERNORSThe Cato Institute is a whole-some body as demonstrated byits opposition to such interna-tional organizations as the Inter-national Criminal Court and forthat matter the United Nationsitself Ted Galen Carpenter forexample argues in lsquoPutting theUnited Nations on Noticersquo thatthe UN can and has done somemodest good occasionally It ishe says lsquoa good idea to have aplace where governments cangather to air grievancesrsquo But headds if it lsquoattempts to acquire ataxing authority [or] raise astanding armyrsquo then the USshould withdraw (as indeedshould Australia) Because thatwould turn it into an lsquoembryonicsuperstate that would menacelibertyrsquo
Go to
wwwcatoorgforeignpolicyunhtml
THE INTERNATIONALORGANIZATIONS THEM-SELVESThe United Nations has beenaccused of being often ineffec-tive and always slow Well ev-ery time Irsquove hit the UNrsquos Web-site even with my nifty broad-band Internet connection slow-ness rules Perhaps the site isbeing continually accessed bythe teeming masses Anyway goto
wwwunorg
With 15 members alreadyand 13 more on the way thereremain hopes that the EuropeanUnion will be a force for a stable
twenty-first century Equallywith 15 members already exhib-iting rather divergent views overthe issue of Iraq and most of theforthcoming members sidingwith the United States perhapsthis is overly hopeful Go to
europaeuintindex_enhtm
Then there is the WorldTrade Organization the organi-zation behind which protection-ist nations can hide from unilat-eral trade liberalization by pre-tending to support multilateraltrade liberalization Go to
wwwwtoorg
And we mustnrsquot forget the In-ternational Criminal Court fearof which was no doubt a featureof Saddam Husseinrsquos rejection ofexile as an option and the furyof which is promised by a num-ber of prominent lawyers to bevisited upon our very own PrimeMinister Go to
wwwicc-cpiint
FEEDBACKI would welcome advice fromreaders on any other sites of inter-est to IPA Review readers E-mailme on scdawsonbigpondnetau
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
is our patience should have beenexhausted weeks and monthsand years agorsquo
Go to
wwwnumber10govukoutputPage3294asp
THE STRUGGLE BETWEENTHE CONTINENTSIf you are patient you can readthat wonderful British rag TheSpectator for free Last weekrsquoscopy is available on-line One ofits regular columnists is MarkSteyn an Americo-phile Cana-dian who has a robust turn ofphrase and an abiding disdain formuch modern music (whichseems to place him very comfort-ably into The Spectatorrsquos culturalmatrix)
His piece on the future de-cline of Europe vis-agrave-vis Ame-rica makes for fascinating read-ing Go to
wwwspectatorcouk
then click on the lsquoBack Issuesrsquobutton and choose the edition of15 March 2003
E V I E WR
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
15MARCH 2003
E V I E WR
FOR three years Reputa-tion Measurement Ltd andThe Age and The SydneyMorning Herald have been
trying to impose their political agen-das on Australiarsquos top 100 corpora-tions They think that Australiarsquos cor-porations should be good citizens andthat by measuring what they think itmeans to be a good citizen they canchange corporate behaviour
Westpac ranked number one on the2002 Index and rated well in everycategory Flight Centre ranked num-ber one on financial performance but47 overall It was in the doldrums inevery other category including beingranked 99 on environment On thesurface this seems very strangemdashFlightCentre manages shopfront travel agen-cies The reason for this bizarre resultwas not hard to find
Reputation Measurement sug-gested that lsquocompanies seeking to dem-onstrate their worthiness as sociallyresponsible organizations are most suc-cessful when they widen their tradi-tional business stakeholder base to in-clude community stakeholdersrsquo Fur-ther lsquo[i]nvestors and consumers are in-creasingly making decisions based onlonger-term issues linked to a com-panyrsquos capacity to contribute to a sus-tainable futurersquo In other words theReputation Index is an instrument foradvancing a number of political agen-das corporate social responsibilitystakeholder capitalism and sustain-ability
For example corporate social re-sponsibility suggests a common agree-ment about what is good Whose defi-nition of good is to be believedmdashtheelectoratersquos or the activistsrsquo In a lib-eral democracy the rules are set by aconsensus that determines not so muchwhat is good corporate behaviour but
The Good Reputation Index 2002A Tale of Two Strategies
GARY JOHNS
what is and what is not acceptablebehaviour The Index is an exercise incapturing the reputation agenda andusing it to regulate corporate beha-viour
Stakeholder theory suggests that allinterests in an enterprise compete toobtain benefits from the enterprise butthat none has priority It is in effectasking lsquoin whose interests should theenterprise be runrsquo It assumes that so-ciety grants an enterprise the right toexist The community through its law-makers may grant licences and certainprivileges in return for the enterprisecomplying with the law It does notlicense stakeholders at large to imposetheir views on the corporation
Sustainability refers to ecologicalsustainability and ecological sustaina-bility is premised on the notion of lim-its to growth based on limits to resour-ces It argues that natural resources arebecoming scarcer It ignores the his-tory of technological innovation of-ten promoted by competition betweencorporations and the fact that such in-novation has extended physical re-sources in ways untold
An analysis of the 2002 Index re-veals that those corporations whosescore improved massively between2001 and 2002 did so because they didnot participate in 2001mdashthey wererated anywaymdashbut did so in 2002Conversely those whose score plum-meted in 2002 did so because they par-ticipated in 2001 but not in 2002Moreover the corporations who rosemassively in the ranks did not changetheir behaviour they just filled out theforms better
Greenpeace were very aggressive intheir attitude to corporations lsquoTo en-able us to verify your responses pleaseprovide us with further supportingdocumentation If hellip we are unable
to verify your response we will defaultyour response answer to a ldquodonrsquot knowrdquowhich will be marked and downgradedaccordinglyrsquo Unfortunately those ofwhom we would expect bettermdashforexample The Brotherhood of St Laur-encemdashalso penalized non-respon-dents As the technique was used byalmost all of the research groups thiswas presumably a deliberate strategy ofReputation Measurement Ltd
More disconcerting were reportsfrom corporations of the researchgroups touting for business by ringingfirms and offering their services to helpfill out the questionnaire Althoughthe level of disclosure has increasedsince the 2001 survey the touting con-tinued
The Index was published in Octo-ber 2002 obviously to coincide withthe reporting season and in the hopethat shareholders would use the Indexto seek changes to corporate behav-iour A sample of the major gainers andlosers on the Index reported no men-tion of the Index More importantlythere was no discernible impact onshare prices
The good news is that the Indexfailed miserably to achieve its objec-tives The bad news is that enough cor-porations played along to keep it alivein certain media and academic circlesIt was a chance for self-appointedNGOsmdashwho provided the ques-tionsmdashto regulate corporations bypublishing a list of good capitalists andbad capitalists Every corporation thatparticipated in the Index should thinkcarefully about whether it can justifythe agenda to its shareholders
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
16 MARCH 2003
E V I E WR
Tomorrowrsquos Reform
RALPH Waldo Emersontold us that lsquoa foolish con-sistency is the hobgoblinof little minds adored by
little statesmen philosophers and di-vinesrsquo and enjoined us lsquoto speak whatwe think today in words as hard ascanon balls and tomorrow speak whattomorrow thinksrsquo While statesmenshould not persist with known errortheir wanton inconsistency makespolicy formulation confoundedly dif-ficult
When he asserted that lsquoWhat de-termines the course of a nationrsquos eco-nomic policies is always the eco-nomic ideas held by public opinionrsquoLudwig von Mises must have hadeven less confidence in little states-men His pupil Friedrich von Hayekurged Antony Fisher not to enterpolitics but instead to found think-tanks which with fact and argumentwould change public opinion
Even among liberalismrsquos oppo-nents few today argue that Misesrsquoand Hayekrsquos ideas and Fisherrsquos liberalthink-tanks did not lead the 1980sand 90s almost world-wide liberal re-vival Why would they when bymuch the same means Fabian So-cialism had brought the welfare stateto Western nations In neither trendhowever were politicians the mereagents of popular opinion Especiallyin democracies political leadersrsquo ca-pacities to ignore it are indeed mod-est but their abilities to influence itare very much less so Even SaddamHussein works hard at influencingIraqi opinion Can we hypothesizethat the ways that leaders use theirinfluence distinguish tyrants fromdemocrats and the purposes forwhich they use it distinguish politi-cians from statesmen
Liberalismrsquos headlong chargethrough the corridors of power could
JOHN HYDE
arguments could have been em-ployed are nonetheless being de-fended by appeal to popular miscon-ceptions of the sort that PaulineHanson the Democrats and Greensactually believe Unless the majorparties have had a radical change ofheart they believe differently
Take the proposed Free TradeAgreement (FTA) with the UnitedStates Trade experts are not of onemind about its net worth My quar-rel is therefore not with the FTAitself but with the Governmentrsquos de-fence of it If the FTA will bring netbenefits then these will come mostlyfrom improved access to Americangoods and capital our own reductionof anti-competitive regulation ofdrugs medical insurance performingarts professional services textilesrural commodities etc and the dy-namic advantages of mixing it withthe Yanks But the government ispromoting the FTA almost solely inmercantilist (exports goodimportsbad) terms
To treat foreign goods servicesinvestment and ideas as an invasionparodies voluntary exchange whichdoes not happen unless both partiesbenefit The Government trumpetsa fact that nobody disputes namelythat it pays to sell into the best pay-ing markets but says nothing to edu-cate us in the advantages of buyingwell from foreigners as well asneighbours Once long ago Howardcriticized Pauline Hanson for her xe-nophobia That day he seemed to un-derstand the benefits of exchangewith foreigners
Until recently Australia hadbeen insisting that the only way toworld trade reform was via the mul-tilateral processes of the World TradeOrganisation and currently theDoha round A bilateral FTA with
not have proceeded without leaderssuch as Margaret Thatcher and ZhouEnlai who changed public opinionas did Bob Hawke in Australia Nowhowever liberalismrsquos charge hasslowed even in some places beensomewhat reversed Canberra hasnot been immune from trends thatsee politicians no longer so firmly re-sisting demands for economic privi-leges or as others see the same phe-nomenon no longer so blindly fol-lowing economic rationalism
Very poor economic decisionsaboundmdashrejection of the Trebeck re-port on petrol pricing preference forethanol production extending mo-tor and textile protection rural sub-sidies taxpayer contribution to theDarwin-to-Alice Springs railwayetc etc But there is also progressThe pride that John Howard takesin the fact that Australians are lessdivided against each other is surelyjustified The hugely importantlabour welfare and arguably also thehealth-care markets have been im-proved Budget balance has beenachieved albeit with high taxes Al-though net legislative and adminis-trative progress toward a more lib-eral more open more efficienteconomy has dwindled it would stillbe fair to say it has not been reversed
Our statesmenrsquos words as hard ascannon balls however that is thoseintended to enlighten rather thanappeal to public opinion are beingreserved for the Iraqi conflict In con-trast in the economic arena we areno longer encouraged to accept anyunwelcome truths Even when de-fending measures that I am morethan content to accept as beneficialthe government seems to select itsargument at best randomly ignoringprinciples of economic efficiency andequity Policies for which textbook
17MARCH 2003
E V I E WR
the US may or may not result in anet increase in trade flows but if itis not a meaningless piece of paperdelivering only political benefits tothe Government it will certainlydivert trade from our other tradingpartners How will China KoreaJapan etc react to losing their lsquomostfavoured nationrsquo status Such ques-tions should be addressed in termsthat do better than reinforce our xe-nophobic prejudices
By appealing to Hansonite mis-conceptions the Government mayand probably will improve itschances of bringing forward a policythat I am more than willing to ac-cept it believes is a good one It isafter all the recommendation of theDepartment of Foreign Affairs andTrade However by so doing it is re-inforcing delusions it must overcomefor further economic reform Whatis more I am reminded of a quip thatI am sure the PM has also heard lsquoNoGovernment is really dangerous un-til it believes its own bullshitrsquo Poli-ticians and I suspect bureaucratsalso are all too prone to believingtheir own utterances Unwilling toadmit their deceptions even whenspeaking in house they quickly con-vince themselves of the truth of theirown and colleaguesrsquo loose rhetoricand worse These are the people whomust negotiate the Agreement whilelooking over their shoulders at anAustralian electorate whose alreadystrong mercantilist tendencies havebeen reinforced by the people bestplaced to disabuse them The poten-tial cost is obvious
The US Free Trade Agreement isbut an example of a tendency thatought to be worrying In debateabout refugee policy motor fuel sup-ply single-desk wheat sales the sup-ply of medical practitioners and pres-ervation of the environment has notthe Government employed argu-ments that are not compatible withits professed liberal philosophy Hasit not seemed that it does not knowthe standard liberal responses to theself-serving demands of vested inter-ests and bigots With due respect to
Emerson consistency allows deci-sions to be made without the neces-sity of thinking every one throughfrom fundamental principles whichnobody in authority has the time orthe mental agility to do
Politically disinterested educa-tors such as the IPA can often callsome pretty good minds to their aidEven so when the Government it-self fosters public misconceptionthey cannot be expected to undo theerror The single greatest sin of thecurrent government is that it is notbuilding opinion for tomorrowrsquos re-form Why not
I suggest because it is politicallydifficult Whereas calls to resist out-siders appeal to deeply ingrainedtribal instincts calls to uphold thecivilizing and wealth-building insti-tutions that afford protection tostrangers and admit their goods ser-vices persons and ideas make nosuch visceral appeal These codes aremuch later developments in themarch of mankind and to manypeople they remain counter-intui-tive They must therefore be de-fended by sustained argumentHayek knew that politicians whosetime horizons in the absence ofknown crises tend to be the nextelection would (to use Howardrsquosown expression) seldom have the
tickers He turned therefore to theless articulate but far more resolutethink-tanks
It is relatively easy to appeal tothe sort of Chauvinism that sur-rounds sporting activity and argu-ments about refugees and meat quo-tas When a Prime Minister talks ofsovereignty guaranteeing our bor-ders or the interests of our exportersor domestic manufacturers he is notnecessarily wrong but his task iseasier than that of defending rulesthat permit voluntary co-operationamong strangers The principle thatdefends the non-unionistrsquos right towork the consumerrsquos right to buy for-eign goods and everyonersquos right tohear alien ideas and which shouldprotect racial and religious minori-ties from exclusion still needs hisleadership
Unless statesmen recognize theinconsistencies that arise not fromthe changed opinions that con-cerned Emerson but from trying tobe all things to all men they arelikely to govern in ways that are un-fair and inefficient If the public doesnot recognize consistency then thelsquolittle statesmenrsquo may find them-selves compelled to yield to the de-mands of the more articulate vestedinterests In such a case Heaven helpthe inarticulate who will be effec-tively disenfranchised But the insti-tutions which when consistentlyapplied give us liberty equity andprosperity are not strongly intuitive
They nevertheless distinguishAustralian society from say Iraqi so-ciety They give us the economicstrength to defy tyrants and they giveus a land worth defending They arecertainly not in danger of disappear-ing but they are in danger of beingeroded Lead us Mr Howard
While statesmen
should not persist
with known error
their wanton
inconsistency makes
policy formulation
confoundedly
difficult
API
John Hyde is a Senior Fellow with the Institute ofPublic Affairs His book Dry In Defence of
Economic Freedom was published by the IPA in November 2002
18 MARCH 2003
E V I E WR
DESPITE the obsessivepublic attention to pricesat the petrol pump thepetroleum-refining sector
rarely registers on the media radarscreen This is unfortunate as the sec-tor fuels most movement of peopleand goods in our economy and soci-ety And it is in trouble
It is fragmented stunted and sur-vives by abjuring profit and mortgag-ing its future Without radical reshap-ing it is likely to wither leaving usexposed to the vagaries of the inter-national refined-products market
FEATURES OF THE AUSTRA-LIAN REFINING SECTORThe first thing to note is that by in-ternational standards Australia is arelatively small player The most re-cent international figures show thatour total output of refined productsin the third quarter of 2002 was 89million tonnes This compared withOECD production of 486 milliontonnes including US production of202 million tonnes Total Australianrefinery capacity of 870000 thousandbarrels per day (bpd) compares withthe figures for China (53 million)South Korea (26 million) and Singa-pore (11 million) Total regional re-fining capacity and production con-tinues to grow as Australiarsquos stagnatesIn the five years to 2000 regional out-put grew by 22 per cent
Second the structure of the indus-try is weak The dispersed geographi-cal distribution of our refining sectorreflects its historical developmentwith each State capital city support-ing one or more refineries Over thelast two decades the number of ma-jor oil companies operating in Aus-
Petroleum RefiningRationalization or Atrophy
JIM HOGGETT
tralia has shrunk from nine to fourAlthough the number of players hasmore than halved the number of re-fineries has reduced by only two fromten to eight The average capacity ofAustralian refineries is around100000 bpd New refineries in theregion are generally significantlylarger Singaporersquos largest has a capac-ity of 375000 bpd
Given the open Australian mar-ket our ex-refinery prices are virtu-ally set by the major exporters in theregion who are also operating on tightmargins Moreover the proportion-ately heavy demand for diesel in SEAsia tends to generate a persistentsurplus of gasoline which is availablefor export to Australia at discountedprices
The pattern of relatively smallscattered refineries is no longer opti-mal in an open market in which weare a price-taker
Third despite its sub-optimalstructure the Australian refining in-dustry is not grossly inefficient Oneindicator is the value added per em-ployee which is in the top five per-formers in the Australian manufac-turing sector
The cost competitiveness of Aus-tralian products is indicated by thefact that we have the cheapest ex-taxprice of petrol in the OECD Perfor-mance comparisons with the rest ofthe AsiandashPacific however suggestthat we lag the average efficiency inthe region And the best performersin the region are superior to our best
Finally the financial performanceof the industry is poor gross annualrevenues for the whole industry in-cluding marketing were $32 billionin calendar year 2001 For the five
years to 2001 the return on assets forrefining and marketing averaged 38per cent and was negative in the lasttwo years The indications are that2002 may have been a better year forthe industry but that the return onassets remains well below the cost ofcapital Over the four years to 2001the fixed asset base of the industrydeclined by almost 6 per cent to $12billion even after $24 billion of newinvestment in the period
This is clearly unsustainable andit raises the question Why is no-oneleaving the game
There are perhaps four main rea-sonsbull First the industry has engaged in
continual productivity improve-ment allowing it to keep withinrange of ruling prices
bull Second each refiner hopes thatsomeone else will blink first sothat the waiting will pay off
bull Third the costs of leaving thetable the exit costs are very highbecause of the nature of the prod-uct and the long occupancy ofmost sites
bull Fourth even while profitability islow the industry has generallybeen marginally cash positive
These add up to a big lsquofirst mover dis-advantagersquo
FUTURE TRENDSClearly petroleum will remain ourmost important energy source Petro-leum products constitute 52 per centof Australiarsquos final consumption ofenergy Liquid petroleum fuels pro-vide more than 95 per cent of Aus-traliarsquos transport needs There are nomajor foreseeable influences that willaffect this pattern dramatically There
19MARCH 2003
E V I E WR
have been major advances in fueleconomy and these will no doubtcontinue But more than counterbal-ancing this is the inexorable growthin demand for personal mobility andfor goods from distant parts Althoughgrowth in energy consumption mayslow down in Australia we will notbe reducing our consumption to anysignificant degree
Our export role will also be lim-ited Australian export volumes havetended to be steady over recent yearsand future new export potential forpetroleum products seems likely to beminimal China and India have re-cently become major exporters par-ticularly of gasoline Refinery capac-ity is planned to continue to growstrongly in the region even thoughthere is already significant excessThe decline in capacity utilization inmajor exporters such as Singaporewill make exporting difficult Further-more it is expected that productspecifications in Asia the US andEurope will converge in the comingyears thereby eliminating niche ex-port opportunities
The choice we face is what to doabout our essentially import-compet-ing industry
INCENTIVES NOT STRONGWhile there are strong pressures forthe industry to restructure there islittle incentive to invest for this pur-pose Investments in the Australianrefining industry have to competewith many alternatives across theglobe
Lack of sufficient return is thesingle biggest deterrent to investmentin the industry at present But thereare othersbull There is no prospect of strong growth
in demand to offset the substantialrisks associated with large new in-vestments
bull The persistent refinery capacity over-hang in our region will keep sus-tained pressure on our margins
bull The corporate taxation regime is nowless favourable than hitherto after thesubstitution of effective-life foraccelerated depreciation The
competing Singapore option offersa three-year write-off
bull The regulatory cost burden is grow-ing This applies to all Australianindustry but is potent in overseascomparisons Tighter fuel stan-dards environmental restrictionsintervention in prices and indus-trial law are some of the factors
bull There is increased sovereign riskstemming from inconsistent regula-tions We have eight parliamentswhich enact inconsistent laws Acurrent example is the higher fuelstandards applied in Western Aus-tralia
bull The sovereign risk also arises fromuncertainty in the regulatory processThere are unpredictable changesof direction (the deferral of thediesel sulphur excise differential[DSED]) and uncertainty in theface of conflicting interests (willthe Government act on ethanolcontent)
All these factors enter into the riskreward calculation When the re-wards are minimal the risks take onan extra dimension
WHAT INDUSTRY STRUC-TURE DO WE NEEDThe short answer is we cannot knowin detail
In the Downstream Petroleum In-dustry Framework 2002 the Depart-ment of Industry Tourism and Re-sources set out a broad vision
bull A preference for market-based so-lutions
bull A strong efficient environmen-tally responsible industry supply-ing most of the nationrsquos needs forproducts
bull Regulation only for market failureor national interest objectives
bull Regulation to be transparent andconsistent
bull Reform and regulation to maxi-mize long-term community ben-efitThis vision has some prescriptive
elements but the Government hasmade it clear that it will not nomi-nate an optimal number of refineriesor a pattern of production
The general public would probablyopt for a structure that guaranteedlower more stable automotive fuelprices Unfortunately they cannothave both in the short term
In fairness the investors in the in-dustry are the ones entitled and bestfitted to determine its future In theextreme they will do it anyway bypersisting or walking away Generallyspeaking they will seek to maximizetheir returns and thus promote themost efficient use of resources
Australian refineries are not inef-ficient but that is not the point Ourmarket is open so the competitionwe face is the best of the overseas per-formers often with more favourabletax and subsidy regimes
Nor is this simply a question ofclosing the smallest refineries A bet-ter approach might well be to allowrefining companies to concentrate onwhat they do bestmdashperhaps throughrefinery alliances Caltex and Shellhave co-operated in this way in Thai-land
The fact is that the detail of thedecisions can only be made by theindustry relatively free of governmentdirection The series of detailed de-cisions entailed will determine theoverall structure of the industry
COMPETITION REGULATIONCAN IMPEDE RESTRUCTURINGThe relevant provision of Section 50of the Trade Practices Act (TPA) pro
While there are
strong pressures for
the industry to
restructure there is
little incentive to
invest for this
purpose
s
20 MARCH 2003
E V I E WR
hibits mergers or asset acquisitionsthat would have the effect or belikely to have the effect ofsubstantially lessening compe-tition in a marketIt is both potentially and in prac-
tice an extremely restrictive provi-sion The Australian Consumer andCompetition Commission (ACCC)has expressed concern at concentra-tion in the sector in applying the pro-vision
The ACCCrsquos concerns seem ex-aggerated in the light of history Butthey are complemented by a persis-tent public misapprehension thatlarge petrol price swings equal profi-teering This perception has been soexploited for political advantage andmedia excitement that it is now al-most impossible for the truth toemerge
The future intensity of competi-tion in this industrymdashif it is allowedto restructuremdashshould not be indoubt Any rationalization would inall likelihood still leave strong do-mestic competition in each majorproduct category perhaps with fewermore efficient production units
The market is also contestableThere would be numerous potentialimporters and many independent re-tailers High margins would be rap-idly eroded by competition As re-cently ruled in the Boral case mar-ket reality is more conclusive than aperception of anti-competitiveness
Proposed mergers have been per-mitted in the past but the process isslow and permission is generally onlygranted with severe conditionsNonetheless there is a strong case forallowing restructuring within theterms of the merger provisions
AUTHORIZATION COULD BETHE KEYIf Section 50 of the TPA is an im-passable barrier then the authoriza-tion provisions of the Act could bethe way to greater efficiency The testsunder these provisions require a pub-lic benefit which outweighs the com-petition detriment The ACCC listsfostering business efficiency industry
rationalization and import-competi-tiveness as important public benefits
There is a strong prima facie casethat rationalization of the industrycould satisfy these tests It wouldallow greater scale of productioneconomies in distribution and closureof the least efficient production units
But the authorization process isslow and the onus for demonstratingthe public benefits rests on the appli-cant Slow process can amount to ef-fective rejection
POLICY OPTIONS AND REC-OMMENDATIONSIf government cannot help the indus-try to adjust it should allow it to ad-just by supporting sensible changeThis would involve both improving
the operating environment throughregulatory reform and altering thebalance of competition regulation sothat the industry could restructurevoluntarily The CommonwealthGovernment has already indicated awillingness to support both but hasnot yet delivered
The ball would then be in theindustryrsquos court to bring forward newproposals if a new policy environmentcould be created This could all hap-pen within a very broad strategicframework agreed with the industrywhereby Australia continued to besure of sufficient refining capacity tomeet a severe international fuel short-age
We therefore recommend thatbull The Commonwealth Govern-
ment provide explicit indicationto the ACCC of the public ben-efits it sees from the rationaliza-tion of the refining sector In par-ticular joint ventures should becontemplated
bull The ACCC give sufficient weightto the public interest benefits ofrestructuring to allow rationaliza-tion of production facilities
bull All governments reduce distortingfuel subsidies and taxes that favourparticular sectors or fuels
bull The State Governments act im-mediately to harmonize their regu-lation of the industry and agreenot to issue any new inconsistentregulation
bull More specifically the States havea single set of fuel standards withwhich refiners can reasonablycomply withdraw from all formsof price regulation and refrainfrom thwarting or distorting therationalization process
bull Governments generally not intro-duce new regulations mandatingthe use of alternative fuels
CONCLUSIONThe choice for the industry appearsto be between accelerated rational-ization and atrophy The process ofchange is something which the indus-try must plan and effect The task isnot impossible but it will require theactive support of government at alllevels For the time being there is anexpressed willingness at the Com-monwealth level but no real solu-tions
If nothing is done the refiners willcontinue to stumble along in a regu-latory fog and will invest only whenobliged to do so by changing fuel stan-dards They will become increasinglyvulnerable to low-priced imports andeventual closure
Jim Hoggett is a Senior Fellow at theInstitute of Public Affairs
If Section 50 of the
TPA is an impassable
barrier then the
authorization
provisions of the Act
could be the way to
greater efficiency
API
Last week the Government tabled 22 volumes of theCole Royal Commission into the Building andConstruction Industry Former Court of Appeal judgeTerence Cole made 392 specific findings of unlawfulconduct and in the confidential final volumerecommended that 31 individuals be referred for possiblecriminal prosecution As was to be expected theconstruction unions claimed that the report was a witch-hunt and people who should have known better claimedthat Cole was biased
The anti-union allegations were never very plausiblegiven that most unions had refused to cooperate withthe Commission and had even boycotted theCommissionrsquos special conference on occupational healthand safety As things have turned out one of their ownhas fatally undermined the unionsrsquo case No less anauthority than the National Secretary of the ConstructionDivision of the CFMEU has unwittingly confirmed thatCole is right In what was no doubt an unguardedmoment John Sutton admitted to a Melbournenewspaper that ldquovirtually everything we do breaches partof this Actrdquo Suttonrsquos admission means that Colersquosdescription of a largely lawless industry can be disputedat the margins but not credibly denied The problemsof the industry have been established beyond credibledoubt and the question now is what needs to be doneabout it
Nothing says the CFMEU because itrsquos alright tobreak the law in the best interests of the working classLeading union officials take the view that in a toughindustry only wimps take the law seriously The newsthat ldquoonlyrdquo 31 individuals had been recommended toface criminal charges was greeted with somethingapproaching jubilation as if the industryrsquos code of silencebased on fear had largely kept the Royal Commission atbay
As the Australian Financial Review commented in aneditorial the unionrsquos dismissive reaction to Colersquos report
ldquospeaks as loudly as his damning findings of entrenchedlawlessnessrdquo Imagine the reaction if a royalcommissioner had identified 31 people in the financeindustry or the steel industry for possible criminalcharges This would rightly be regarded as the sign ofan industry in crisis demanding urgent governmentintervention
Change wonrsquot be easy in an industry conditioned tothink that might is right Change which shifts powerfrom one unscrupulous group to another will not bereform As Grocon has discovered the first company toldquobuck the systemrdquo is liable to heavy-duty industrialpayback No one wants to be the first to change butchange is necessary in the national interest
In 2002 the Victorian construction industry aloneaccounted for 17 per cent of all days lost through strikesThe West Australian construction industry accountedfor another 8 per cent of the national strike tallyConstruction is a $40 billion a year industry comprisingnearly six per cent of GDP and employing nearly500000 Australians Due to over-manning demarcationdisputes and chronic stoppages labour productivity incommercial construction averages 13 per cent less thanin home building Plastering the same wall in the sameway costs 40 per cent more in a high rise building thanin a standard house Just raising labour productivity incommercial construction to the home building standard(let alone the 50 per cent increase needed to match NorthAmerican levels) would mean according to Econtech aone per cent drop in the cost of living a one per centincrease in GDP and $23 billion in benefits toconsumers workers and taxpayers every year
Still change is about decent Australian values notjust a more efficient industry Workers donrsquot like latenight house calls compulsory attendance at demos anddays spent sitting in the shed to make an industrial pointany more than bosses Threats of violence contempt forcourt and commission orders mob rampages when one
Restoring the Rule of Law in theConstruction Industry
Tony Abbott MHR
s
As this issue of the IPA Review was at the press we were alerted to the delivery of the following speechby the Minister for Employment and Workplace Relations The paper marks a seminal change in the
governmentrsquos approach to systemic corruption in the construction industry and isanother major step in the reform of workplace relations in Australia
SI-1MARCH 2003
IPA REVIEW SPECIAL INSERT
side doesnrsquot get its way habitual failure to honouragreements and routine harassment of people exercisingtheir legal rights are not acceptable in modern Australiaand cannot be excused even in a good cause
Breaching ldquobourgeois lawrdquo may not matter tomilitant activists but few others take such a self-indulgent view Itrsquos said that ldquooppositions can afford tobe irresponsiblerdquo but no government or alternativegovernment can accept the principle of optionalobedience to the law of the land No less than the HowardGovernment the federal Labor Opposition and the stateLabor Governments understand the dangers of playingpolitics with the rule of lawmdasheven theauthority of laws they might preferto change such as the federal WorkplaceRelations Act
The rule of law is not asmorgasbord from which a fewfavoured items can be chosen and therest ignored Freedom under the lawrequires respect for the law generallynot just the laws individualspersonally support Obedience to thelaw is not a question of choice It is arequirement of civilisation because thelaw is our guarantee of equaltreatment after a fair hearing ldquoBe youever so high the law is above yourdquoThis reproach hurled at the Stuartkings has rightly echoed through thecenturies as a warning against theconceits of office and the arrogance ofpower regardless of the cause in whichitrsquos exercised
After last weekrsquos meeting of theWorkplace Relations MinisterialCouncil of the Council of Australian Governments stateand territory ministers were keen to declare in acommuniqueacute ldquothere was unanimous agreement thatunlawful behaviour in the building and constructionindustry is not acceptablerdquo This was an importantaffirmation of the rule of law in circumstances wheresome Labor ministers might have been tempted to putpolitics ahead of principle
Unfortunately the state and territory ministerssupported more powers for the Australian IndustrialRelations Commission to settle construction industrydisputes In fact the Commission already has power tosettle disputes Whatrsquos missing is effective power toenforce agreements The issue is not settling disputesThe issue is enforcing the law
The construction industry typically conducts itselflike this A certified agreement is in place including anagreed dispute resolution procedure Unions identify agrievance often a spurious safety issue Agreed disputeprocedures are not followed and a strike ensues eventhough strikes outside ldquobargaining periodsrdquo areldquounprotectedrdquo and theoretically subject to damagesorders At that point employers often ask theCommission to end industrial action but instead ofordering an immediate return to work because anagreement has been breached the Commission willtypically seek to conciliate on the basis of the ldquomeritsrdquo
of the issue After a couple of dayswith costs escalating and liquidateddamages looming the employerinvariably agrees to rectify the matteralleged and to pay increasedallowances (including pay for days onstrike) At this point the Commissionorders a return to work on the basisof the agreed settlementmdashwhich lastsonly until the union decides on itsnext move
The union has ignored the law andbroken its original agreement buttypically suffers no adverseconsequences whatsoever Theemployer has been manoeuvred intoconceding most of a demand thatshould never have been made Afaccedilade of legality conceals a travestyof unionism and a travesty of justiceNearly all construction industrystrikes are unprotected and potentiallyunlawful under section 170MN of theWorkplace Relations Act Even so
employers nearly always opt to pass the costs ontoconsumers while existing arrangements for gatheringinformation launching prosecutions and imposing finesdonrsquot work well anywhere but hardly work at all in anindustry where giving evidence against the unions isthought to mean commercial suicide
The construction industry is a classic case not ofmarket failure but of regulatory failure The fact thatthe construction industry does not face potential importcompetition limits its exposure to market discipline Stillthe main reason why unions can get what they want frombusiness and business can get what it needs from haplessconsumers is the absence of independent policing andenforcement of the industrial equivalent of fair tradinglaws To an extraordinary degree in this industry the
SI-2 MARCH 2003
IPA REVIEW SPECIAL INSERT
The rule of law is nota smorgasbord from
which a few favoureditems can be chosenand the rest ignoredFreedom under thelaw requires respectfor the law generally
not just thelaws individuals
personally support
request documents but they canrsquot compel witnesses toanswer or demand that material be produced Althoughit is a criminal offence under the Workplace Relations Actto hinder workplace inspectors the Cole report notedthat no prosecutions have yet been launched despiteevidence that Office of the Employment Advocateinspectors have been abused had objects thrown at themand their property damaged It has been commonpractice for the arrival of OEA inspectors to lead to workstoppages and even site invasions in a bid to thwart anddemoralise an independent investigator not susceptibleto the unionrsquos usual weapon of commercial retaliation
One of the problems with theworkplace relations system is theassumption that parties will enforcethe law against each other This worksup to a point in industries whereworkplace parties are more-or-lessevenly matched and the issues are theworkplace equivalent of an argumentbetween neighbours over the heightof a fence It completely breaks downwhen one side has an effectivemonopoly over the supply of labourand disputes resemble a more-or-lessnormal family telling the house fullof footballers next door that the partyrsquosover Expecting contractors to enforcethe law against the CFMEU is likeexpecting people in the street to makecitizenrsquos arrests hence Colersquos principalrecommendations are an AustralianBuilding and ConstructionCommission to investigate prosecuteand enforce the provisions of a beefed-up industry specific workplace
relations actYesterday Cabinet decided to support Colersquos key
recommendations First the Government will seek aseparate act governing workplace relations in theconstruction industry providing for secret ballots beforestrikes compulsory cooling off periods after extendedstrikes and damages awards in the event of unprotectedindustrial action Second the Government will establisha new law enforcement agency for the industry withpowers to compel witnesses to testify bring prosecutionsand enforce judgments and with sufficient on-the-ground presence to police CBD building sites Thirdthe Government will establish a Safety Commissionerto monitor federally-funded construction sites to try toensure that these become industry models Fourth the
s
commissions lack sufficient power the courts lacksufficient speed the employment advocate lacks sufficientauthority and the police lack sufficient interest
Not before time the Cole Commission has acted as agiant searchlight probing the dark underside of thispotentially great Australian industry It confirmed whatpolicy makers had long suspected and what influentialinsiders knew but had always tried to deny or explainaway that the industry operates under the rule of thejungle and that there will be no improvement until thepeople who work in it understand that the law has to betaken seriously Legislative institutional and structuralchange will start to mean somethingwhen law breakers in this industry arecharged convicted and punished likelaw breakers everywhere else A fewsalutary bars of that old song need towaft over construction sites ldquoI foughtthe law and the law wonrdquo
Late last year in response to theRoyal Commissionrsquos first report thefederal Government set up theBuilding and Construction IndustryInterim Task Force The Governmentrsquosbrief to the Task Force is to ensure zerotolerance of industrial law-breakingThe Task Force is not primarily toenforce the tax laws or the safety rulesbecause other bodies exist for this(although the Task Force will certainlyshare information with them) TheTask Force is to investigate and enforceWorkplace Relations Act prohibitions oncoercion unprotected strikes strikepay and breach of industrialagreements So far the Task Force hasvisited nearly 300 sites launched more than 50investigations brought three prosecutions and referrednine other matters to state police the Australian FederalPolice or the Australian Competition and ConsumerCommission for further action
These are the first public prosecutions arising out ofindustrial action in the construction industry at leastsince the 1980s and are the result of a public policycommitment to law enforcement not seen since thehumiliating Clarrie OrsquoShea case in 1969 and the end ofldquopenal sanctionsrdquo Yesterday Cabinet decided to extendthe interim Task Forcersquos operations until more permanentarrangements to secure the rule of law can be established
Task Force agents have the powers of inspectors underthe Workplace Relations Act They can enter premises and
SI-3MARCH 2003
IPA REVIEW SPECIAL INSERT
The main reason whyunions can get what
they want frombusiness and businesscan get what it needs
from haplessconsumers is theabsence of inde-
pendent policing andenforcement of the
industrial equivalent offair trading laws
API
Government will insist on the application of theNational Construction Code and implementationguidelines to all significant new projects which are fullyor partly federally funded
Directly or indirectly the federal Government fundsabout $5 billion worth of construction projects everyyear and is determined to use its role as client to drivechange in the industry In essence the NationalConstruction Code stipulates that construction projectsmust take place in conformity with the WorkplaceRelations Act Under the Code and implementationguidelines the federal Governmentwill not engage tenderers whoseworkplace agreements and practicesensure a closed shop on site The TaskForce (and any replacement body) willhave full access to federally fundedsites to ensure that the law is beingobserved and workplace agreementscomplied with
For the federal Government theissue is upholding the law and tryingto tackle the ldquounion rulesrdquo culturewhich is at the heart of lawlessness inthe industry For the states the issueis whether they are prepared to refusefederal money in order to protect theclosed shop However much theymight prefer different federal laws thestates ought to accept thatconstruction projects have to complywith the law as it stands includingthe law mandating compliance withcertified agreements
State Labor governments whichhave made a point of their middle-ground credentials risk losing some$4 billion a year in federal building and constructiongrants if they side with the union movementrsquos mostmilitant minority There are likely to be limits to Laborrsquosdefence of a union whose stock-in-trade (at least in somestates) is the site invasion and the demand for paymentand which quietly reinstates organisers sacked for assaultor perjury Opposition senators will find it hard to brandas ldquoideologicalrdquo the recommendations of a royalcommission which spent 171 days in public hearingsand which pursued 11 shop stewards and 97 unionofficials to obtain their side of the argument
As Justice Cole pointed out in his report previousattempts to reform the industry have proven ineffectivedespite two earlier royal commissions and numerous
SI-4 MARCH 2003
IPA REVIEW SPECIAL INSERT
enquiries Although this Royal Commissionrsquosinvestigations seem to have temporarily checkedlawlessness in the industry a campaign is now emergingto extend the anarchic culture of CBD construction intoregional centres and the domestic housing industryThings will certainly be different this time if parliamentapproves a permanent well resourced watchdog withnew powers new personnel and new attitudes Unlikeprevious arrangements a new statutory watchdog withthe powers of a law enforcement agency should beeffective and permanent
Hundreds of people took big riskswith their commercial future and eventheir personal security to testify to theRoyal Commission It should neveragain be so hard for people in thisindustry to exercise their ordinaryrights and responsibilities asAustralian citizens They expected theGovernment to take the Commissionrsquosreport seriously and the Governmentfor its part is determined not to letthem down The Governmentunderstands that joining fights yoursquorenot prepared to win only makes badsituations worse Establishing the ruleof law in the construction industry isa challenge Australia canrsquot afford tofailSome of the worldrsquos best workersshould no longer have to put up withsome of the worldrsquos worst industrialpractices They have a right to anhonest industry where they can earna fair dayrsquos pay for a fair dayrsquos workand expect to come home uninjuredThe enduring image of this industry
should not be noisy marchers replaying the ideologicalstruggles of the 1970s and raising clenched fists againstauthorities they donrsquot like At its best the Australianindustry is capable of work which is stunningly beautifulyet intensely practical and it now needs to performconsistently on time on budget and in accordance withlaw
Hundreds of peopletook big risks withtheir commercial
future and even theirpersonal security totestify to the Royal
Commission It shouldnever again be so
hard for people in thisindustry to exercisetheir ordinary rights
and responsibilities asAustralian citizens
NOTE
The foregoing speech was first delivered as an Addressto the National Press Club on 2 April 2003
21MARCH 2003
E V I E WR
IN psychology behaviouris defined as irrational ifan action continues to berepeated despite its re-
peated failure to achieve the desiredoutcome On this definition our aidpolicy towards Papua New Guineahas been irrational
Despite over twelve billion dol-lars in Australian aid to PNG sincethat countryrsquos independence in 1975key development indicators such asliteracy rates infant mortality lifeexpectancy and real income percapita are either stagnating or dete-riorating Worse wersquove known forover a decade1
Today acknowledgement of thefailure of our aid policy in PNG hasgone well beyond the writings of in-dividual international policy analystssuch as myself to institution-spon-sored reports such as Beyond Baliwhich was released by the AustralianStrategic Policy Institute (the Aus-tralian Governmentrsquos own strategicpolicy adviser) and Papua NewGuinea on the Brink which was writ-ten by Susan Windybank and MikeManning for the Centre for Indepen-dent Studies Both reports confirmthe gross failure of Australian aidpolicy in PNG
Yet still our aid policy irrational-ity towards Papua New Guinea con-tinues While the ASPI and CIS re-ports acknowledge the gross failureof our aid policy in PNG they alsoargue that we need to continue ouraid to that country Indeed the ASPIreport argues that we should increaseour aid to Papua New Guinea Thepolicy saviour The ASPI report ar-gues that we should exert greater con-trol over our aid Not just over theform of our aid but direct interven-tion in policy and implementation inPNGmdashin essence for a return to pre-
Aid Detox for PNGPETER URBAN
independence days in PNG whereas UN-sanctioned administrator weran government in that country
Despite the mind-frame of secu-rity-focused strategists such as thoseat ASPI and the CIS (which en-dorses the aid approach advocated byASPI) the reality is that we canrsquotPNG is now independent and to ig-nore this reality would simply com-pound the problems of our past aidpolicy irrationality with irrationalityabout our political relationship withour nearest neighbour
A more interventionist aid policytowards PNG on our part as advo-cated in Beyond Bali and by HughWhite (the executive director ofASPSI) in the media might havepopulist appeal but it would haveserious adverse implications for ourrelationship with other Pacific islandcountries and even IndonesiaWorse it would give succour to theviews of our east Asian critics (suchas Malaysian PM Dr Mahathir) whoclaim that Australia continues toharbour colonial aspirations
We have to accept that to be suc-cessful aid policy must not just helpreduce mass poverty it also has to doso as a guest in the aid recipientcountry To do otherwise is not aidbut imperialismmdashwhether inten-tional or not
A more interventionist approachto aid policy in PNG would also givethe current corrupt political elite inPort Moresby a rallying point againstus and an excuse to delay changingtheir own policies Neither Austra-lia nor PNG can afford any furtherdelays to policy reform For us to givePNG politicians yet another excuseto delay reform would be not onlyirrational it would be inexcusableWhile our aid continues so will thecorrupt elite that is at the heart ofPNGrsquos problems Until we send themessage to the PNG political elitethat we are prepared to stop ouraidmdashto put them on aid detoxmdashwewill continue to waste our aid in thecorruption that is PNG politics Itmay be hard to accept but the sadreality we face in PNG is that no aidmay prove to be good aid at least inthe short to medium-term2
NOTES
1 Peter Urban lsquoOne Clear ObjectiveNo Clear Approachrsquo IPA Review1997 Vol 50 No 1
2 With Iraq also likely to require verysignificant Australian aid fundingover the next few years the Gov-ernment will need to review our aidprogram as part of the 2003-04 fed-eral Budget A decision to suspendaid to PNG could be taken as partof that review
Peter Urban is former chief economist with theDepartment of Foreign Affairs and Trade
We have to accept
that to be successful
aid policy must not
just help reduce
mass poverty it also
has to do so as a
guest in the aid
recipient country
API
22 MARCH 2003
E V I E WR
IN his speech to the Na-tional Press Club on theprospect of war with Iraqand the case for disarma-
ment Prime Minister Howard statedthat Australia will play a significant hu-manitarian role in Iraq
If so the Howard Government needsto evaluate carefully the foreign-aid non-government organizations (FANGOs)which it funds to carry-out this humani-tarian programme Many FANGOshave made it clear that they do not sharethe Australian Governmentrsquos objectivesand values in Iraq Moreover some donot agree with the Governmentrsquos over-all aid policies in general
THE COALITION OF THEUNWILLINGIn the lead-up to latest Gulf War some30 Australian aid agencies put theirnames to an Open Letter to the PrimeMinister organized by the AustralianCouncil of Foreign and Overseas Aid(ACFOA) The aim of the letter was tolsquospeak out against war in Iraqrsquo and it ex-pressed grave concerns about the hu-manitarian consequences of the war andthe effects of the existing sanctions1 TheFANGOs that signed the letter wereOxfam Community Aid Abroad WorldVision Australia TEAR AustraliaUnion Aid Australia - APHEDACaritas Australia National Council ofChurches Australian Council for For-eign and Overseas Aid Save the Chil-dren Australia CARE Australia OzGreen United Nations Association ofAustralia Family Planning AustraliaMercy Works Marist Mission CentreAustralia Every Home for Christ Bap-tist World Aid for Christ CCF Austra-lia Quaker Service Australia Austra-lian Lutheran World Service AustralianRelief and Mercy Services AnglicanBoard of Mission AUSTCARE Com-munity Development and Health
Irreconcilable DifferencesDON DrsquoCRUZ
Hussein have been virtually ignored isa searing indictment of the warped ide-ology feeble analysis and moral blind-ness of the sector For them now to re-discover the plight of the Iraqi peopleand to invoke their name in the mediais beyond contempt
THE OXFAM COMMUNITYAID ABROAD POSITIONOf the 30 FANGO signatories to theopen letter Oxfam Community AidAbroad (OCAA) has been perhaps themost outspoken It opposed military ac-tionmdasheven with UN Security Councilapproval4 In spite of all the evidence tothe contrary OCAA was comfortablewith Saddam Husseinrsquos assurances thathe did not have weapons of mass destruc-tion5 Adopting the common policyagreed to by the other Oxfam affiliatesOCAA stated that it will not take anymoney from the lsquobelligerentsrsquomdasha quaintterm used to the describe democraticnations planning to disarm a dictatorguilty of countless human rights abuses
OCAArsquos outrage against the so-called lsquobelligerentsrsquo appears to be geo-graphically confined to Iraq OCAAappears happy to take governmentmoney from the belligerents elsewherearound the world
According to OCAArsquos ExecutiveDirector Andrew Hewitt refusing totake money from the belligerents wasdone to lsquoprotect its impartialityrsquo6 Thisis a very curious position from Australiarsquosarguably most political FANGOOCAA has a long track-record of beinganything but impartial or reluctant totake sides in miliary action It wasnrsquotimpartial in East Timor where it sidedwith Fretlin in its quest for indepen-dence According to its own testimonyto a Senate committee OCAA wasgiven the choice by the IndonesianGovernment between lsquoplaying politicsrsquoor delivering aid projects in Indonesia7
Group Amnesty International Austra-lia AngliCORD Australian Aid forCambodia Fund Burnet InstituteRedR Friends of the Earth PLAN Aus-tralia and Australian Volunteers Inter-national2
This open letter highlighted a num-ber of problems with the FANGOs sec-tor First it highlighted the weak logicthat passes for advocacy in the sectorThe letter argued against military actionwas critical of sanctions and suggestedthat nations should settle issues only bydiplomatic means It is a viewpointwhich totally ignores the fact that theGovernment had to deal with SaddamHussein
The shallowness of their logic wasbest exposed by the Prime Minister inhis response to the open letter in whichhe stated that the humanitarian situa-tion in Iraq is best addressed by SaddamHusseinrsquos removal and perhaps morepointedly that Saddamrsquos manipulationof foreign aid had allowed him to main-tain and pursue his weapons of mass de-struction capability and human rightsabuses3
Second it also highlighted the factthat the so-called lsquohuman rights-basedapproachrsquo to development (embraced byseveral of the signatories) is not so muchabout realizing human rights (as its pro-ponents argue) but is more about pro-viding them with an excuse to lsquoplay poli-ticsrsquo According to the theory the hu-man rights-based approach to develop-ment allows FANGOs to tackle the rootcauses of poverty and injustice
Yet the root cause of the Iraqipeoplersquos suffering can be summed up intwo simple wordsmdashSaddam HusseinThe fact that the FANGOs who sub-scribe to this particular approach havebeen obsessed with imaginary humanrights abuses committed by Shell NikeRio Tinto BHP-Billiton and AuroraGold while the activities of Saddam
23MARCH 2003
E V I E WR
It chose the former thus making it per-sona non grata in Indonesia for almost adecade8 It wasnrsquot impartial inMozambique when it sided with Frelimoin the countryrsquos civil war9 It wasnrsquot im-partial in Ethiopia when it developedlinks to the Eritrean Peoplersquos LiberationFront during its war against the thengovernment10 It was not impartial oranti-war when it sided with the TigrayPeoplersquos Liberation Front in the neigh-bouring province to Eritrea when thatgroup was waging a guerrilla war againstthe government11 And recently therehave been claims that in the Middle Eastit was little more than an lsquoeager propa-gandistrsquo for the Palestinians12
In East Timor Ethiopia and Mozam-bique OCAA was linked with organi-zations which supported direct militaryaction that led to the deaths of thou-sands of civilians In none of these loca-tions were the enemies of their friendany worse than Saddam Hussein In-deed in many cases OCAArsquos friendswere arguably no better than their en-emies in terms of human rights
OCAArsquos decision not to accept Aus-tralian Government funding is the cor-rect one in the sense that it clearly doesnot share the Governmentrsquos values onthe question of Iraq and thereforeshouldnrsquot receive any governmentmoney
Hewitt went on to state in a pressrelease that lsquoWe will not take funds thatmight allow a government to use hu-manitarian efforts as an instrument offoreign policyhelliprsquo13
This is finemdashexcept the AustralianGovernmentrsquos foreign aid is an instru-ment of foreign policy And it always hasbeen This is spelt out quite clearly inthe Australian Governmentrsquos latest for-eign and trade policy White Paper Ad-vancing the National Interest14
FANGOs that cannot accept thisrather basic proposition should not begetting taxpayersrsquo money They areclearly unsuitable for the task at hand
The consequences of Australian tax-payersrsquo money falling into the wronghands were brought home to Prime Min-ister Howard when he met IndonesianPresident Megawati Sukarnoputri to dis-cuss the war against terrorism and
Australiarsquos involvement against Iraq Atthe top of the Indonesian agenda wasthe issue of Australian funding toFANGOs being used to support sepa-ratist movements in Indonesia15
Post-war Iraq will be a better placewithout Saddam Hussein and his thugsThis does not mean that it will be a safeplace or necessarily a stable place Afterall one of the reasons for Western tol-eration of Saddam Hussein for manyyears was his ability to hold the various
ethnic minorities in Iraq together albeitrather brutally thereby maintaining abalance of power in the Middle East Hisdeparture would see strains on Iraq fromthe various ethnic minorities that makeup Iraq There is a strong chance thatIraq will fragment
The last thing the Australian Gov-ernment or any of the so-called belli-gerents needs in a post-war Iraq is west-ern NGOs running around and becom-ing self-styled advocates for national self-determination for Iraqrsquos ethnic minori-ties and injecting themselves into Iraqrsquosinternal politics This is a real risk Thebehaviour of Australian foreign aidNGOs in Indonesia should make Aus-tralian decision-makers extremely waryof funding any NGOs with Australiantaxpayersrsquo money so that they can oper-ate in Iraq
As things stand now FANGOs facevery few restrictions on their actionsfrom government If they undertake ac-tivity that is inconsistent with being anagent of government they may losefunding for specific projects or in moredramatic circumstances lose funding ina country Nonetheless they are gener-
ally able to access Australian Govern-ment funding for other projects andcountries In other words the penaltiesfor becoming caught up in political ac-tivities are very light for NGOs and posethem no serious problems
Foreign aid NGOs that lsquoplay politicsrsquoare unsuitable contractors for the deliv-ery of aid That these overtly politicalorganizations have been allowed to gaingovernment accreditation and receivegovernment funding points to some se-rious problems at AusAID Australiarsquosofficial aid agency The time has comefor this to change
NOTES1 httpwwwacfoaasnaumedia_releases
2003_releases26_3_03PDF2 httpwwwacfoaasnauemergencies
openletterPDF3 httpwwwacfoaasnauemergencies
iraq_responsehtm4 Oxfam Horizons Vol 3 No 1 (Febru-
ary 2003) page 25 Oxfam Community Aid Abroad lsquoIraq
Overviewrsquo February 20036 Hewitt quoted in Liz Gooch lsquoOxfam
wersquoll say no cashrsquo The Age 16 March2003
7 Community Aid Abroad Submission tothe Senate Foreign Affairs Defence andTrade References Committee Inquiryinto East Timor Downloaded at httpwwwcaaorg aucampaignssubmissionstimorhtml
8 Ibid9 Susan Blackburn Practical Visionaries A
Study of Community Aid Abroad (Mel-bourne Melbourne University Press1993) page 313
10 Ibid pages 325-333 passim11 Ibid12 Gerald Steinberg lsquoPropaganda vs Hu-
manitarianismrsquo Australian Financial Re-view 7 June 2002 Downloaded at httpfacultybiuacil~steingconflictopedpropvshumanitarianismhtm
13 ht tp wwwcaa o rg au p r 2003 iraqfundshtml
14 httpwwwdfatgovauani15 Dennis Shanahan lsquoJakarta fears aid funds
for rebellionrsquo The Australian 17 Febru-ary 2003 page 2
Don DrsquoCruz is Research Fellow at the IPAand Director of IPArsquos NGOWatch
OCAA has a longtrack-record of
being anything butimpartial or
reluctant to takesides in miliary
action
API
24 MARCH 2003
E V I E WR
GEORGE Bush Tony Blairand John Howard haveprovided many reasons forsupporting military action
against Iraq One of those reasons hasbecome known as the lsquohumanitarianrsquojustification Put simply the lsquohu-manitarianrsquo justification for the US-led invasion of Iraq is that such ac-tion is necessary to free the Iraqipeople from their totalitariandictator
Such an argument is attractive tothose who believe that there aresome fundamental human rights thatall individuals possess regardless ofwhere and how they live Whatserves as the source of those rightshas been the subject of debate forcenturies One of the pre-eminentstatements on the subject was madeby John Locke who in The SecondTreatise of Government wrote thatmankind was lsquoequal and indepen-dentrsquo and that lsquono-one ought to harmanother in his life health liberty orpossessionsrsquo
Saddam Husseinrsquos mass murdertorture and terror are reasonablyclear breaches of human rightsTherefore some would ask why thereshould be opposition to the UnitedStates and its allies taking whatevermeasures might be necessary totopple the Iraqi regime Surely thesame standard of behaviour that ap-plies to individuals applies also tonation states If an individual walk-ing in the street witnessed a rapeoccurring wouldnrsquot that individualbe entitled to do everything in hispower to stop the crime and assistthe victim
The point is of course that in-ternational law and convention do
After IraqIs Sovereignty Dead
JOHN ROSKAM
not allow nation states to act in thesame way as individuals Countriescannot simply lsquotake the law into theirown handsrsquo To restrain lsquovigilantestatesrsquo (who might be acting fromeither lsquogoodrsquo or lsquobadrsquo motives) a num-ber of legal and political theorieshave been developed One of theseis the doctrine of lsquosovereigntyrsquo whichprovides that states should not inter-vene in the domestic affairs of otherstates
In relation to Iraq the lsquosover-eigntyrsquo question is perhaps the stron-gest argument against the US-ledCoalition Most of the other criti-cisms of lsquohumanitarianrsquo interventionin Iraq are either grounded in simpleanti-Americanism or are fallaciousFor example there is the claim thatbecause some of the countries in theCoalition have previously ignoredHusseinrsquos cruelties therefore it is il-legitimate to take action now Sucha view has been expressed by aMelbourne international relationsacademic
While there is no disputing thebrutal nature of Saddam Hus-seinrsquos regime the case for inter-vention made by those in Can-berra London and Washingtonis weakened by the fact that atthe peak of Saddamrsquos crimes inthe late 1980s they were eitherdirectly supporting him withweapons technology and intelli-gence or were entirely indifferentto his behaviour Even if theyhave belatedly recognised theerror of their ways how seriouslycan we take their concerns aboutweapons of mass destruction nowgiven they were his suppliersthen1
On the basis of this argument itcould be said that Britainrsquos (andAustraliarsquos) case for intervening toassist Poland upon the German in-vasion in 1939 was lsquoweakenedrsquo be-cause Britain had previously acqui-esced to Germanyrsquos rearmament theremilitarization of the Rhinelandand the annexation of both Austriaand parts of Czechoslovakia Fewpeople who chanted lsquoFreedom forEast Timorrsquo said that the HowardGovernment should not act becausea quarter of a century before theWhitlam Government had been lsquoin-differentrsquo to Indonesiarsquos occupationof the island
There is also the claim that al-though Hussein is bad he is not theworst dictator in the world and thatit is hypocritical for the Americansto attack only Iraq This is an as-tounding proposition It attempts toapply to the United States a standardof behaviour that is impossible to sat-isfy Should the police not attemptto solve any crimes because theycanrsquot solve all crimes If a crime iscommitted by two people and thepolice arrest one perpetrator unlessthe other is also caught must the firstperpetrator be released When indi-viduals donate money for famine re-lief in Africa very few believe thattheir donation is pointless becauseit might prevent the starvation ofonly one person rather than thou-sands Christian ethics sets down norequirement that we should help no-one unless we can help everyone
The issue about state sovereigntyhowever is one that deserves to betaken seriously Regardless of onersquosopinions on the extent and limits ofstate sovereignty it is true that our
25MARCH 2003
E V I E WR
international relations system is builtupon the principle and to modify oroverturn it is a matter of some con-sequence
Even those who are generally sup-portive of the United States andtheir allies see the problem As it wasput by a leading commentator whenanalysing the Australian PrimeMinisterrsquos lsquohumanitarianrsquo justifica-tion for war
Finally Howardrsquos argumentagainst Hussein on human rightsis correct So is his moral case forwanting to liberate the Iraqipeople from their torment Theproblem however is that youcanrsquot trip around the worldwanting to overthrow regimesbecause of human rights2
Some would askmdashlsquowhy notrsquo Be-cause to do so would overthrow theUnited Nations Charter comes therejoinder And in turn the responseto that might bemdashlsquogoodrsquo
If itrsquos a choice between the main-tenance of the UN Charter and free-dom from tyranny freedom wins ev-ery time (although an internationallawyer sitting in Sydney might havea different view on this question fromthat of a political prisoner manacledin a Baghdad jail cell)
When the interests of lsquointerna-tional lawrsquo are more important thanthe life and liberty of individuals itcould be concluded that lsquothe Em-peror has no clothesrsquo Would inter-national law have sanctioned inter-vention to stop the Holocaust hadHitler not waged war and proceededwith his methods entirely within theconfines of the German territorialstate
Many who argue that lsquohumanitar-ianrsquo intervention in Iraq is not justi-fied because it infringes on thatcountryrsquos lsquosovereigntyrsquo would happilyhave other countries cede their po-litical sovereignty to supra-nationalbodies Certain features of the Inter-national Criminal Court overridethe principles of sovereignty but thatdid not stop a phalanx of interna-tional law experts urging sovereigngovernments to join it so as to en-
able the prosecution of war criminalsBut when it comes to actually stop-ping war crimes not simply prosecut-ing them that phalanx is largely si-lent
Without the doctrine of state sov-ereignty and without an arbiter fordetermining when interference withthe principle is justified (the roleclaimed by the United Nations andits Security Council) it is said thatstates would be free to impose theirown will and intervene in other
countries whose standards did notmeet their own (In The Second Trea-tise of Government Locke argued thata characteristic of a lsquostate of warrsquo be-tween individuals was the absence ofa superior authority to adjudicatedisputes and prevent individualsfrom administering justice them-selves)
Iraq might be claimed as a rea-sonably clear-cut case for interven-tion but other situations are notlikely to be as simple In Culture andEquality first published in 2001Brian Barry explored a lsquoliberalrsquo per-spective on this question
The liberal position is clearNobody anywhere in the worldshould be denied liberal pro-tections against injustice andoppression However in exactlythe same way as liberals arepragmatic about what liberalismmeans in terms of boundaries sohere the move from principle tointervention has to be mediated bypractical considerationshellip
[L]iberals are not so simple-mindedas to imagine that the answer toall violations of liberal rights is tosend in the Marines or even aUnited Nations force As in anyjust war theory there must be somedoctrine of lsquoproportionalityrsquohellip[S]carcely anybody would be infavour of the western powersinvading Saudi Arabia so at to sortout the way in which it lsquounjustlydenies political rights to women ornon-Muslimsrsquomdashaccording to theirliberal idea of justicersquo3
The question remainsmdashafterIraq what remains of lsquostate sover-eigntyrsquo Should the doctrine applyonly to lsquoliberal democraticrsquo statesSuch a solution might be attractiveto some lsquoliberalsrsquo but it doesnrsquot avoidthe problem of what exactly a lsquolib-eral democraticrsquo state is
One irony arising from the argu-ments about the war in Iraq is thatmany of those who have urged astrict application of lsquostate sover-eigntyrsquo principles in the past havegenerally supported the US-led in-tervention while those who havebeen willing to abridge or even aban-don the doctrine have had to rely onit to counter the lsquohumanitarianrsquo jus-tification for war
There are not many certaintiesabout the nature of the world afterthe war in Iraq but it can be saidwith some assurance that one defi-nite outcome is going to be a morevigorous debate about state sover-eignty
NOTES1 Scott Burchill lsquoThe humanitar-
ian arguments for this war are spu-riousrsquo The Age 21 March 2003
2 Paul Kelly lsquoThe hapless per-suaderrsquo The Australian 15ndash16March 2003
3 Brian Barry Culture and Equal-ity An egalitarian critique ofmulticulturalism Harvard Uni-versity Press page 138
John Roskam is a Research Fellow with the IPA
The lsquosovereigntyrsquo
question is perhaps
the strongest
argument against
the US-led
Coalition
API
26 MARCH 2003
E V I E WR
Which Way for theDemocrats
The 2002 mid-term elections were adramatic victory for President GeorgeW Bush and the Republicans Insteadof the historical norm of the partycontrolling the White House losingBushrsquos party gained seats in the Sen-ate House Governorsrsquo races andState legislatures The result was abitter disappointment for the Demo-crats and has led to a fierce debatebetween the Left and Centrists aboutthe future policy direction of the partytowards the 2004 elections
The Leftrsquos analysis is that the ma-jority of Americans are natural Demo-crats Electoral defeat was due to thefailure to energize that base of Demo-crats The party failed to distinguishitself sufficiently from Bush and thusgive their voters a reason to turn outWhile the majority of Democrats op-posed Bush on tax cuts and the warwith Iraq a significant minority sup-ported him and campaigned on thatsupport The result the Left claimwas that the Democrats lacked a con-sistent message in contrast to Bush
Support for this argument can befound in the higher turnout amongstRepublicans than Democrats in 2002while in 2000 the combined vote forGore and Nader was 51 per cent Aninfluential book by John Judis andRuy Texeira identified lsquoThe Emerg-ing Democrat Majorityrsquo Theyclaimed that growing demographicgroups trended Democrat includingthe young socially liberal profession-als minorities and women
What policies would motivate thisnatural Democrat base The Left callfor rescinding the Bush tax cut a classwar against the corporate world amajor increase in lsquopublic investmentrsquoin schools childcare health care and
Letter from AmericaNIGEL ASHFORD
public transport and strong opposi-tion to the war
Centrists however have a verydifferent analysis of the Democratsrsquoproblems the public did not trustthem to pursue the war against ter-rorism vigorously to keep down taxesto spend their tax dollars wisely or toreflect their cultural values
A Gallup opinion poll found that57 per cent of Americans askedthought that the Democrats were nottough enough on the war on terror-ism while 64 per cent thought theRepublicans were There was the per-ception that the Democrats were notserious on the issue and just playingpolitics Evidence for this was the de-bate over the new Department ofHomeland Security blocked becausethe Democrats wanted to protectunion rights while the President de-manded more flexibility to deploy theworkforce Many voters saw the issueas the national interest versus a spe-cial interestmdashin this case that of theunions The Democrats were seen asputting the interests of one of theirmajor constituencies before nationalsecurity
The Democratic LeadershipCouncil in lsquoThe Road Aheadrsquo by AlFrom and Bruce Reed presented theCentrist case lsquoStop pretending wecan win a majority simply by energiz-ing our basersquo The Democrats were
not trusted on the war against terror-ism were hostile to the cultural con-cerns of many working-class Demo-crats on abortion and guns and stillseen as the tax-and-spend party lsquoToomany Americans donrsquot trust us tokeep their taxes down or to spendtheir money wellrsquo
The Centrist agenda is to stronglyprosecute the war against terrorismwhether against al-Qarsquoeda Saddam orothers and to abandon knee-jerk iso-lationism arising from the experienceof the Vietnam War to defend capi-talism and support small investorsagainst irresponsible managers to cutpayroll taxes and to downplay thecultural issues that divide Democrats
Which path will the Democratstake The Left is in the ascendancyMost of the remaining Democrats inoffice come from left-wing districtsNancy Pelosi a left-liberal from SanFrancisco was easily elected the newleader of the House Democrats over-whelming her Centrist opponent andrising star African-American HaroldFord The early field of presidentialcandidates for 2004 is dominated bythe Left tendency including SenatorJohn Kerry Representative DickGephardt Governor Howard DeanRev Al Sharpton former SenatorCarol Moseley-Braun and Represen-tative Dennis Kucinich Only Sena-tor Joe Lieberman and Senator JohnEdwards represent the Centrist wing
The future of US politics may de-pend on which road the Democratsdecide to take The US is currently alsquo50ndash50rsquo nation evenly balanced be-tween the parties A left turn couldlead to Republican dominance farinto the future
Dr Nigel Ashford is at the Institute of Humane Studiesat George Mason University and is co-author of US
Politics Today (Manchester University Press)
API
27MARCH 2003
E V I E WR
Trusting TonyFrankly itrsquos all just too depressing Theeconomyrsquos heading for trouble Busi-ness confidence is low investment in2002 was 92 per cent lower than theprevious year and manufacturing in-vestment was nearly 18 per cent downThe budget deficit is spiralling becauseour once lsquoprudentrsquo Chancellor (trea-surer) Gordon Brown made over-opti-mistic growth projections and startedthrowing money at problems
Therersquos a load of health-and-safetyand anti-discrimination measuresthatmdashto put it most politelymdashare ex-amples of letting the best be the en-emy of the good Every school tripneeds a formal risk assessment withthe result that many trips are simplynot taking place New trains orderedfor London commuter routes wonrsquothave toilets because the rules say thatat least one toilet in each four-car unitmust be wheelchair-accessible whichwould have cost ten or a dozen seatson every overcrowded train
Some of this is just insane Somelocal authorities say that safety at workrules mean that home-care workersmustnrsquot lift the disabled people theyare looking after Or therersquos rail safetyUntil recently we were seriously pro-posing to spend $10 billion on a bet-ter system to stop trains going throughred signals On average this would havesaved the lives of about three passen-gers every four years which is a lousybargain compared with other safety in-vestments Worse it would also havereduced the capacity of the networkby up to 15 per cent and forced morepeople onto the roads which are muchmore dangerous than even ourclapped-out railways The result was aprojected net increase of 13 to 21 deathsper year
Meanwhile in London the Cen-tral line of the Underground has been
Letter from LondonJOHN NURICK
API
closed for weeks after a train derailedwhen one of its motors fell off Therewere no deaths or major injuries in theaccidentmdashbut itrsquos a safe bet that someof the people who havenrsquot been ableto use the Central line have been in-jured or killed on the roads
What can one say If the authori-ties took the same attitude to the riskof fatal accidents in the health serviceevery hospital in the country wouldhave been closed for years
Despite all this the Conservativesare still hopeless Their leader IanDuncan Smith has a new wheezewhen a journalist asks him anythingdifficult he chortles merrily and saysitrsquos the most uninteresting questionimaginable and hersquos not going to wasteanyonersquos time by answering it His col-leagues have their knives out for him
Meanwhile in spite of the govern-mentrsquos problems with the economy andthe public services Tony Blair is grow-ing in stature having his waymdashandantagonising large sections of his ownparty in the process On several recentissues he has faced down the formi-dable Gordon Brown in a way that notlong ago was hard to imagine
Then he shocked everyone by com-ing out against having elected mem-bers in the reformed House of Lordswhen most voters want an all-elected
chamber and most MPs want a partly-elected one In the event Parliamentcouldnrsquot agree on any of the optionsfor reform so wersquore stuck with the sta-tus quomdashwhich is fine by Mr Blair
Then therersquos the war By the timeyou read this it may be over or we maystill be waiting or our lads may befighting Mr Blairrsquos strong line againstIraq has made him very unpopular Theanti-war march on 15 February was thebiggest demonstration London hasever seen A few days later 122 Labourbackbenchers voted against the gov-ernment and many more abstained
Mr Blair didnrsquot budge War is a se-rious thing he says lsquoBut in a situationsuch as this you have to do what youbelieve to be right because thatrsquos theprice of having responsibilityrsquo1
He has often been accused of gov-erning by focus group Certainly he hasseemed reluctant to antagonise anypowerful group That has clearlychanged In a sense his stand on Iraqmerely follows his action in sendingtroops to Sierra Leone and Kosovomdashbut it has stirred up far stronger domes-tic and international opposition
The irony is that now when he re-ally needs people to trust him wedonrsquot Even in the desperately seriousbusiness of justifying an unpopular warDowning Street canrsquot play it straightremember the dossier from lsquointelli-gence sourcesrsquo that turned out to belargely cribbed from a PhD thesis onthe Internet
NOTE1 The Guardian 1 March 2003
John Nurick is a management consultant based in theSouth of England From 1985 to 1990 he was
editorial director of the Australian Institute for PublicPolicy and later edited newsletters reporting on theUK Parliament and European Union institutions
28 MARCH 2003
E V I E WR
KEVIN DONNELLY
Private EducationEquals Public Good
When it comes to choosing be-tween government and non-gov-ernment schools Australian par-ents are lsquovoting with their feetrsquo Asshown by recent ABS figures(Schools Australia 2002) over thelast decade there has been a dra-matic increase in non-governmentschool enrolments
Approximately 30 per cent ofstudents now attend non-govern-ment schools compared with 22per cent in 1980 and 28 per centin 1990 Over the last decadewhile the number of governmentschools has fallen by 64 per centnon-government schools havegrown by 61 per cent
Of course not everybody valuesparentsrsquo right to choose and theAustralian Education Union(AEU) Labor governments andlsquoleft-wingrsquo academics in particularconsistently argue against non-government schools
One of the arguments put for-ward by those opposed to givingparents greater freedom of choiceis that government schools are bet-ter at promoting social cohesionand a strong sense of what KenBoston the ex-head of the NSWEducation Department terms lsquothebonds of civic friendshiprsquo
The assumption is that becausestudents attend non-governmentschools there will be greater socialdivisiveness and a breakdown inthe civic values needed to hold so-ciety together But there is no cred-ible evidence offered to support theclaim that government schools arebetter at promoting the commongood
In fact there is much to provethe opposite
First as anyone familiar withthe lsquoculture warsrsquo and politicallycorrect curricula will know insteadof government-controlled educa-tion promoting unity and cohe-sion it has led to public angst andparental complaints
Witness the very bitter debatein Queensland a year or two agowhen the government-mandatedStudies of Society and Environ-ment (SOSE) curriculum was in-troduced into schools Such was
the lsquoleft-wingrsquo bias in the curricu-lum in particular in the areas ofmulticulturalism and the environ-ment that many parents felt be-trayed
The Queensland debate is mir-rored by what is happening in theUnited States As noted by Ste-phen Arons in his book Short Routeto Chaos instead of promotingunity government control of thecurriculum leads to the opposite
What the school wars tell us isthat somehow we have been
Education Agenda
transforming a vital instrumentfor creating social cohesioninto a source of division andhostility that there is some-thing built into the structure ofpublic schooling that under-mines one of its most importantfunctionsAronrsquos argument that govern-
ment schools no longer transmit aviable sense of a common cultureor agreed civic values is reinforcedby another noted United Stateseducationalist Diane Ravitch
In a recent article in the jour-nal Education Next Ravitch be-moans the impact of cultural rela-tivism and the post-modern on theschool curriculum (where there areno commonly agreed values) andeven goes so far as to argue thatparents should be free to choosenon-government schools becausesuch schools have a better chanceof reflecting their values
In the current education sys-tem with the public schoolscommitted to multiculturalismbilingualism and other forms ofparticularism it is difficult toargue that parents should notbe able to choose schools thatmeet their cultural needsSecond if one accepts that lsquoso-
cial capitalrsquomdashthe networks volun-tary associations and civic bondsthat hold a community togethermdashis important for the health of ademocratic society then non-gov-ernment schools clearly have theadvantage
Unlike the government schoolsystem characterized by a heavy-handed centralized bureaucracyand teacher union control non-government schools are closer tothe communities they serve Bytheir very nature non-government
There is no credible
evidence offered to
support the claim
that government
schools are better
at promoting the
common good
29MARCH 2003
E V I E WR
ALAN MORAN
The lsquoRrsquo Files
Private propertyrights the key toachieving efficiency inrural water use
WATER IN AUSTRALIAWater has always been a definingissue in Australiarsquos prosperityAnd in recent decades irrigationhas grown rapidly Even so theproportion of Australia that is ir-rigated at two per cent of theland comprises a share that isamongst the lowest among OECDcountries Only Canada and therainiest countries New Zealandand the UK have lower sharesthat of the US is 11 per cent andin Japan it reaches 60 per cent
Modern agriculture is only 200years old in Australia and thoughin the first 100 years agriculturalproductivity was increased toequal that of anywhere in theworld gains continue to bemademdashoutput has doubled overthe past 50 years a growth thatcould not have taken place with-out a similar expansion of irriga-tion Irrigation in the MurrayndashDarling agricultural provincealone contributes $5 billion toAustralian agricultural outputand non-irrigated agriculture inthe region contributes a further $5billion This makes the areawhich comprises 14 per cent ofAustraliarsquos land mass responsiblefor a third of the nationrsquos $35 bil-lion agricultural output
Applying Property Rights to WaterMost of the uses of water involvechoices or compromisesmdashdrink-ing water versus irrigation versus
industrial and so on Some how-ever involve complementaritiesparticularly certain recreationaluses such as water sports that arefacilitated by storage and consis-tent availability
In many cases water will per-form sequential functionsmdashthesame water can be used and re-used for irrigation used for indus-trial cooling and finish as drink-ing water Water with differentsometimes competing productiveuses will be optimally used as longas two conditions are in placeThe first is that its ownership isclearly specified and the ownersrsquoobligations to other users (orclaims from other beneficiaries)are well understood The secondrequires each property right to betradable to enable acquisition bythose who value it most therebymaximizing its value
The rights specification andtherefore property ownership canrarely commence with a cleansheet of paper People acquire in-dividual rights to property ini-tially through a variety of routesOne of these is seizure of some-thing that was originally of littlevalue until it was acquired and im-proved Squatters assume rights inthis way However they are firstacquired they need to be tradableAPI
schools establish strong commu-nity networks and have a greaterreliance on the voluntary work ofparents
That non-government schoolsare more effective in this regard issupported by research into lsquoChar-ter schoolsrsquo in the United StatesAs noted by Chester Finn at theFordham Foundation giving localcommunities lsquoownershiprsquo overtheir school builds networks oftrust and reciprocity so vital forsocial cohesion
Social capital also relies on citi-zens being disciplined and orderedin their behaviour Selfishness vio-lent behaviour and rudeness act tofragment the community instead ofpromoting cohesion According toa number of Australian surveys itis here once again that non-gov-ernment schools are seen to bemore effective
As noted by the Centre for In-dependent Studies researcher Jen-nifer Buckingham in The Truthabout Private Schools in Australiawhen analysing why so many par-ents forsake the government schoolsystem
When comparing independentprivate schools with publicschools the major theme thatemerged was not differences inacademic standards and curri-culum but issues of disciplineand order The surveyed par-ents felt that the behaviour andattitudes of students in publicschools was unacceptablehellipAll accept that non-govern-
ment schools achieve better aca-demic results provide greater cur-riculum flexibility and save Aus-tralian taxpayers millions of dol-lars Equally as important is theargument that such schools streng-then Australiarsquos civic health andstock of lsquosocial capitalrsquo
Dr Kevin Donnelly is Director of EducationStrategies a Melbourne-based consulting group
E-mailkevindnetspacenetau
s
30 MARCH 2003
E V I E WR
and relatively inviolable Thisprovides the incentive for them tobe improved and for their ownersand others to search out ways inwhich the assets they representcan be used to provide increasedvalue or other benefits
If confidence in the exclusiv-ity an owner has over the prop-erty right is lost or was neverpresent the asset will be used lessproductively For example own-ers will milk them for their cur-rent-use value rather than trade-off present value for a future valuethat is less certain
Even without a total emascu-lation of individual rights (for ex-ample when title to the propertydepends on continuing govern-mental assent) lack of certaintybrings lower incomes and dimin-ished asset protection One out-come of this can be observed inthe MurrayndashDarling system Wa-ter rights on the Victorian side ofthe Murray are secure while thoseon the NSW side have been over-allocated and are subject to ad-ministrative discretion includinghaving a firm duration of only tenyears In Victoria high securitywater (available 95 per cent of thetime) comprises the great bulk ofentitlements In contrast in
NSW high security water is avail-able only 60-80 per cent of thetime The result is that farmers onthe Victorian side plant perennialcrops while those in NSW tendto focus on annual crops espe-cially rice
There are claims that Victoriarsquosmore robust property rights meanthat the State Government haslost lsquocapabilityrsquo to manage com-pared with NSW The flip side ofthis is the increased risk and as-sociated lower value of productionnorth of the Murray where prop-erty rights are attenuated Gov-ernments that give themselves in-creased capacity to direct produc-tion or to take individualrsquos prop-erty will need to accept lower lev-els of income and output
IRRIGATION ENVIRON-MENTAL BENEFITS AND SA-LINITY
The Types of IssuesIssues stemming from irrigationcomprise two types those impact-ing on the environment and thoseimpacting on private uses Theformer includes issues such as pre-venting loss of species ensuringthat certain sorts of species flourishand avoiding unattractive growths
such as blue-green algae which re-sult from fertilizer build-up
The second involves economicimpacts on different users
While environmental flows toensure species flourish are oftenhighlighted salinity is the mainfocus And while salinity has animpact on the environment itsimportance is in the conflict of in-terest between productive usersmdashthe complaint of lsquodamaged goodsrsquoby downstream users against thoseupstream
The MurrayndashDarling Basin Sa-linity Strategy 2001ndash2015 has es-timated that increased salinitybrings costs of $294 million perannum to the basin
Yet data on the salinity of theMurray Darling shows levels up-stream of South Australia arelower than they were in the early1980s and are only seriously abovethese levels as the river ap-proaches its mouth at the GoolwaBarrage
The Basin Salinity Manage-ment Strategy argues that progressachieved over the past decade willlsquobe cancelled within 20-50 yearsand median salinity levels wouldexceed the Australian DrinkingWater Guidelines for good waterquality within 50-100 yearsrsquo Thecause of this is said to be risinggroundwater tables due to land usechanges across the Basin
The disputes over salinizationare largely disputes between com-mercial parties Full specificationof rights and obligations will al-low these to be resolved as longas the impacts are measurabletheir causes identifiable and thevarious rights and obligations areknown and stable In this respecttechnology to measure salt in wa-ter and to trace increases to par-ticular locations is readily avail-able
Agreements about the alloca-tion of water rights between ju-risdictions and to the main irri-gation provinces have been inplace for over a century In the
Average Salinity in the River Murray (EC Units)1
3500
3000
2500
2000
1500
1000
500
0
January 2003
July 2002ndashJanuary 2003
July 1982ndashJanuary 2003
Hume D
am
Swan
Hill
Merbein
Morgan
Milang
Mening
ie
Goolw
a
Barra
ge
31MARCH 2003
E V I E WR
I
API
Musinghellipcase of the Murray the lsquocaprsquo onwater abstractions agreed betweenthe various jurisdictions in 1995largely validated agreements madeearly in the last century and be-fore Disturbing these agreementswould greatly undermine the trustin the sanctity of property rightsand seriously reduce agriculturalproductivity Hence increased al-locations for certain parties or forcertain uses (including environ-mental flows) would need to bepurchased at market prices
Developments in Australiaover recent decades have con-spired to make irrigation water farmore valuable This is exacer-bated by1 Activation of NSW lsquosleeperrsquo
and lsquodozerrsquo water rights as a re-sult of the increased scarcityvalue a change that bringseven greater pressure on theavailable supply
2 Increased scarcity leading tomeasures that more carefullyhusband the water Whilesome of these prevent evapo-ration loss and have thereforebrought a net increase in effec-tive availability others havereduced availability (these in-clude a more careful wateringwhich results in reduced run-off and re-use)
3 Increased capture of waterwithin the land on which itfalls once water is recognizedas scarce landowners will seekto ensure it does not leave theirland NSW and Victoria haveplaced limits (a strict 10 percent in NSW) of water fallingon property as entitlements ofthe owner Queensland has notyet enacted an equivalent tothis Such adaptations of thecommon law are essentialhowever if downstream usersare not to be expropriatedThere is likely to be constant
bickering over water rights espe-cially if State Governments seek toelevate sharing issues and to sanc-tify them with claims about promot-
Daniel Pipes in The New York Posthas a very cogent explanation forwhy the Left appears to be so happywith the likes of Osama bin Ladenand Saddam Hussein
To be clear about their attitudeshe quotes the renowned Germanelectronic music composer KarlHeinz Stockhausen who saidstraight after the attack on NewYork that it was lsquothe greatest workof art for the whole cosmosrsquo
As Pipes and many of us observedaily there is barely a bad word tosay about Saddam Hussein nor aniota of sympathy for thoseoppressed tortured and murderedby his reacutegime Instead they venttheir fury against the AmericanPresident and British Prime Minister
Why the nonchalancePipes draws our attention to Lee
Harris writing in a recent issue ofthe Hoover Institutionrsquos journalPolicy Review According to KarlMarxrsquos central thesis the demise ofcapitalism hangs on workersgrowing poorer over timemdashwhichof course did not happen Sorather than give up on cherishedexpectations of socialist revolutionHarris notes Marxists tweaked theirtheory and looked instead to theentire populations of poor countriesto carry out the revolution Classanalysis went out the windowreplaced by geography
The trouble is they have tooverlook militant Islamrsquos slightly un-socialist practicesmdashsuch as itsimposing religious law excludingwomen from the workplace andpersecuting atheists
As Pipes sums up September 11and the prospect of war againstSaddam Hussein have exposed theLeftrsquos political self-delusionintellectual bankruptcy and moralturpitude
The Loopy Leftby Andrew McIntyre
ing an improved environment Realsolutions require the issue be placedwithin a normal commercial frame-work which involves1 Clarifying the property rights2 Allowing water rights to be
fully detachable from propertyand able to be used howeverthe holder wishes subject toany damage this might imposeon others
3 Ensuring full rights to buy andsell the water
4 Defining rights so as not to re-duce the quality of other usersThis means ensuring that farm-ing practices that do not bringgreater salination than somestandard
5 Allowing rights holders tobank their water and ensureeven greater certaintyAllocating specific individual
ownership rights to water and al-lowing its trade is a well-foundedmeans of maximizing the usevalue It would also be likely tohave the beneficial side-effects ofreducing salinity and farm-basedpollutants caused by intensiveuse We should grasp such oppor-tunities But if the impending sa-linity problem is as great as someclaim other solutions might wellinclude buying out some allocatedirrigatorsrsquo rights However alter-natives may be to remove saltfrom the water by engineering so-lutions or simply to live withhigher salt
NOTE1 Human drinking water should
be less than 800 ECs (electri-cal conductivity one ECequals about 06 mglitre)while higher levels are accept-able for much farming activity
Dr Alan Moran is Director Deregulation Unitat the Institute of Public Affairs
32 MARCH 2003
E V I E WR
Reading FileDone
eral political systems worldwidehave consistently accretedpower to the centre often in theface of clear constitutional im-peratives to the contrary) Ifeared instead that a UN thathad been patently successful insomethingmdashanythingmdashmightbe granted greater powers to thepoint where it would kill truediversity and individualism (ortry to anyway) through inevi-table bureaucratic practices
Is such a fear unfounded Ap-parently not if many peopleshare the moral touchstone ofthe Opposition Leader SimonCrean He believes according tohis own words in Parliamentthat what the UN SecurityCouncil declares is moral whatit refuses is immoral
The latest manoeuvrings overIraq have therefore been heart-
ening It seems that the desiresof the powers small and largeto promote their own interestswill continue to hobble the UN
The problem with a unitedworld is that as the threateningimpasse over Iraq suggestedthere are very divergent viewsabout how that world ought tobe run on an international leveljust as there are at national and
sub-national levels The virtueof multi-layered levels of gov-ernments is that competing ju-risdictions give the individual adegree of choice
The greatest sin of totalitar-ian governments past and pres-ent is to deny their citizens theright to leave The greatest dan-ger that the United Nationsposes as far off as it now (hap-pily) seems is that leaving its ju-risdiction is for all practical pur-poses impossible
THE IMPASSE JUST PASSEDI listened to Prime MinisterHoward speaking to the motionbefore Parliament in relation tothe war It was a good speechbut neither he nor PresidentBush seems able to structure andlay out an argument with thestyle and content of BritishPrime Minister Blair His equi-valent speech before the BritishCommons provides a masterfulsummary of the reasons for thiswar and includes an immenselyreadable time-line of the utterineffectiveness of the UN pro-cesses in dealing with Iraq Henicely deals with allegations ofthe lsquorushrsquo to war lsquoOur fault hasnot been impatience The truth
UNITED OR DIVIDEDI write just hours after US Presi-dent George W Bush has deliv-ered his ultimatum to Iraqi Presi-dent Saddam Hussein leave Iraqwithin 48 hours or be removedBy the time this appears beforeyour eyes you will knowwhether Hussein has decided hischances of survival will be sig-nificantly greater by choosingexile or by remaining in IraqThe recent creation of the In-ternational Criminal Court ofcourse makes war more likelysince Hussein can have no guar-antee of a peaceful lsquoretirementrsquo
In the event that Hussein re-mains in Iraq you will also knowwhether Bush has kept his wordand most likely the outcome ofthis military venture
This matter is immensely im-portant for the people of Iraqand for the military personnelinvolved (including our ownAustralian soldiers sailors andaviators) But then so was theprevious Gulf War the US in-vasion of Grenada the Austra-lian intervention in East Timorand so on But a difference be-tween the current conflict andthose others could be the impactit has upon international insti-tutions Actually just one inter-national institution the UnitedNations
Prior to the first Gulf War Ifeared the coalitionrsquos success forthe reason that some of it mighthave rubbed off onto the UnitedNations I hasten to deny that Ifear the UN as some vast con-spiracy for world domination Ifeared instead that it couldstumble into a piecemeal cen-tralization of power (just as Fed-
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
E V I E WRs
33MARCH 2003
E V I E WR
Reading FileDone
ATTACKING THE GLOBALGOVERNORSThe Cato Institute is a whole-some body as demonstrated byits opposition to such interna-tional organizations as the Inter-national Criminal Court and forthat matter the United Nationsitself Ted Galen Carpenter forexample argues in lsquoPutting theUnited Nations on Noticersquo thatthe UN can and has done somemodest good occasionally It ishe says lsquoa good idea to have aplace where governments cangather to air grievancesrsquo But headds if it lsquoattempts to acquire ataxing authority [or] raise astanding armyrsquo then the USshould withdraw (as indeedshould Australia) Because thatwould turn it into an lsquoembryonicsuperstate that would menacelibertyrsquo
Go to
wwwcatoorgforeignpolicyunhtml
THE INTERNATIONALORGANIZATIONS THEM-SELVESThe United Nations has beenaccused of being often ineffec-tive and always slow Well ev-ery time Irsquove hit the UNrsquos Web-site even with my nifty broad-band Internet connection slow-ness rules Perhaps the site isbeing continually accessed bythe teeming masses Anyway goto
wwwunorg
With 15 members alreadyand 13 more on the way thereremain hopes that the EuropeanUnion will be a force for a stable
twenty-first century Equallywith 15 members already exhib-iting rather divergent views overthe issue of Iraq and most of theforthcoming members sidingwith the United States perhapsthis is overly hopeful Go to
europaeuintindex_enhtm
Then there is the WorldTrade Organization the organi-zation behind which protection-ist nations can hide from unilat-eral trade liberalization by pre-tending to support multilateraltrade liberalization Go to
wwwwtoorg
And we mustnrsquot forget the In-ternational Criminal Court fearof which was no doubt a featureof Saddam Husseinrsquos rejection ofexile as an option and the furyof which is promised by a num-ber of prominent lawyers to bevisited upon our very own PrimeMinister Go to
wwwicc-cpiint
FEEDBACKI would welcome advice fromreaders on any other sites of inter-est to IPA Review readers E-mailme on scdawsonbigpondnetau
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
is our patience should have beenexhausted weeks and monthsand years agorsquo
Go to
wwwnumber10govukoutputPage3294asp
THE STRUGGLE BETWEENTHE CONTINENTSIf you are patient you can readthat wonderful British rag TheSpectator for free Last weekrsquoscopy is available on-line One ofits regular columnists is MarkSteyn an Americo-phile Cana-dian who has a robust turn ofphrase and an abiding disdain formuch modern music (whichseems to place him very comfort-ably into The Spectatorrsquos culturalmatrix)
His piece on the future de-cline of Europe vis-agrave-vis Ame-rica makes for fascinating read-ing Go to
wwwspectatorcouk
then click on the lsquoBack Issuesrsquobutton and choose the edition of15 March 2003
E V I E WR
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
16 MARCH 2003
E V I E WR
Tomorrowrsquos Reform
RALPH Waldo Emersontold us that lsquoa foolish con-sistency is the hobgoblinof little minds adored by
little statesmen philosophers and di-vinesrsquo and enjoined us lsquoto speak whatwe think today in words as hard ascanon balls and tomorrow speak whattomorrow thinksrsquo While statesmenshould not persist with known errortheir wanton inconsistency makespolicy formulation confoundedly dif-ficult
When he asserted that lsquoWhat de-termines the course of a nationrsquos eco-nomic policies is always the eco-nomic ideas held by public opinionrsquoLudwig von Mises must have hadeven less confidence in little states-men His pupil Friedrich von Hayekurged Antony Fisher not to enterpolitics but instead to found think-tanks which with fact and argumentwould change public opinion
Even among liberalismrsquos oppo-nents few today argue that Misesrsquoand Hayekrsquos ideas and Fisherrsquos liberalthink-tanks did not lead the 1980sand 90s almost world-wide liberal re-vival Why would they when bymuch the same means Fabian So-cialism had brought the welfare stateto Western nations In neither trendhowever were politicians the mereagents of popular opinion Especiallyin democracies political leadersrsquo ca-pacities to ignore it are indeed mod-est but their abilities to influence itare very much less so Even SaddamHussein works hard at influencingIraqi opinion Can we hypothesizethat the ways that leaders use theirinfluence distinguish tyrants fromdemocrats and the purposes forwhich they use it distinguish politi-cians from statesmen
Liberalismrsquos headlong chargethrough the corridors of power could
JOHN HYDE
arguments could have been em-ployed are nonetheless being de-fended by appeal to popular miscon-ceptions of the sort that PaulineHanson the Democrats and Greensactually believe Unless the majorparties have had a radical change ofheart they believe differently
Take the proposed Free TradeAgreement (FTA) with the UnitedStates Trade experts are not of onemind about its net worth My quar-rel is therefore not with the FTAitself but with the Governmentrsquos de-fence of it If the FTA will bring netbenefits then these will come mostlyfrom improved access to Americangoods and capital our own reductionof anti-competitive regulation ofdrugs medical insurance performingarts professional services textilesrural commodities etc and the dy-namic advantages of mixing it withthe Yanks But the government ispromoting the FTA almost solely inmercantilist (exports goodimportsbad) terms
To treat foreign goods servicesinvestment and ideas as an invasionparodies voluntary exchange whichdoes not happen unless both partiesbenefit The Government trumpetsa fact that nobody disputes namelythat it pays to sell into the best pay-ing markets but says nothing to edu-cate us in the advantages of buyingwell from foreigners as well asneighbours Once long ago Howardcriticized Pauline Hanson for her xe-nophobia That day he seemed to un-derstand the benefits of exchangewith foreigners
Until recently Australia hadbeen insisting that the only way toworld trade reform was via the mul-tilateral processes of the World TradeOrganisation and currently theDoha round A bilateral FTA with
not have proceeded without leaderssuch as Margaret Thatcher and ZhouEnlai who changed public opinionas did Bob Hawke in Australia Nowhowever liberalismrsquos charge hasslowed even in some places beensomewhat reversed Canberra hasnot been immune from trends thatsee politicians no longer so firmly re-sisting demands for economic privi-leges or as others see the same phe-nomenon no longer so blindly fol-lowing economic rationalism
Very poor economic decisionsaboundmdashrejection of the Trebeck re-port on petrol pricing preference forethanol production extending mo-tor and textile protection rural sub-sidies taxpayer contribution to theDarwin-to-Alice Springs railwayetc etc But there is also progressThe pride that John Howard takesin the fact that Australians are lessdivided against each other is surelyjustified The hugely importantlabour welfare and arguably also thehealth-care markets have been im-proved Budget balance has beenachieved albeit with high taxes Al-though net legislative and adminis-trative progress toward a more lib-eral more open more efficienteconomy has dwindled it would stillbe fair to say it has not been reversed
Our statesmenrsquos words as hard ascannon balls however that is thoseintended to enlighten rather thanappeal to public opinion are beingreserved for the Iraqi conflict In con-trast in the economic arena we areno longer encouraged to accept anyunwelcome truths Even when de-fending measures that I am morethan content to accept as beneficialthe government seems to select itsargument at best randomly ignoringprinciples of economic efficiency andequity Policies for which textbook
17MARCH 2003
E V I E WR
the US may or may not result in anet increase in trade flows but if itis not a meaningless piece of paperdelivering only political benefits tothe Government it will certainlydivert trade from our other tradingpartners How will China KoreaJapan etc react to losing their lsquomostfavoured nationrsquo status Such ques-tions should be addressed in termsthat do better than reinforce our xe-nophobic prejudices
By appealing to Hansonite mis-conceptions the Government mayand probably will improve itschances of bringing forward a policythat I am more than willing to ac-cept it believes is a good one It isafter all the recommendation of theDepartment of Foreign Affairs andTrade However by so doing it is re-inforcing delusions it must overcomefor further economic reform Whatis more I am reminded of a quip thatI am sure the PM has also heard lsquoNoGovernment is really dangerous un-til it believes its own bullshitrsquo Poli-ticians and I suspect bureaucratsalso are all too prone to believingtheir own utterances Unwilling toadmit their deceptions even whenspeaking in house they quickly con-vince themselves of the truth of theirown and colleaguesrsquo loose rhetoricand worse These are the people whomust negotiate the Agreement whilelooking over their shoulders at anAustralian electorate whose alreadystrong mercantilist tendencies havebeen reinforced by the people bestplaced to disabuse them The poten-tial cost is obvious
The US Free Trade Agreement isbut an example of a tendency thatought to be worrying In debateabout refugee policy motor fuel sup-ply single-desk wheat sales the sup-ply of medical practitioners and pres-ervation of the environment has notthe Government employed argu-ments that are not compatible withits professed liberal philosophy Hasit not seemed that it does not knowthe standard liberal responses to theself-serving demands of vested inter-ests and bigots With due respect to
Emerson consistency allows deci-sions to be made without the neces-sity of thinking every one throughfrom fundamental principles whichnobody in authority has the time orthe mental agility to do
Politically disinterested educa-tors such as the IPA can often callsome pretty good minds to their aidEven so when the Government it-self fosters public misconceptionthey cannot be expected to undo theerror The single greatest sin of thecurrent government is that it is notbuilding opinion for tomorrowrsquos re-form Why not
I suggest because it is politicallydifficult Whereas calls to resist out-siders appeal to deeply ingrainedtribal instincts calls to uphold thecivilizing and wealth-building insti-tutions that afford protection tostrangers and admit their goods ser-vices persons and ideas make nosuch visceral appeal These codes aremuch later developments in themarch of mankind and to manypeople they remain counter-intui-tive They must therefore be de-fended by sustained argumentHayek knew that politicians whosetime horizons in the absence ofknown crises tend to be the nextelection would (to use Howardrsquosown expression) seldom have the
tickers He turned therefore to theless articulate but far more resolutethink-tanks
It is relatively easy to appeal tothe sort of Chauvinism that sur-rounds sporting activity and argu-ments about refugees and meat quo-tas When a Prime Minister talks ofsovereignty guaranteeing our bor-ders or the interests of our exportersor domestic manufacturers he is notnecessarily wrong but his task iseasier than that of defending rulesthat permit voluntary co-operationamong strangers The principle thatdefends the non-unionistrsquos right towork the consumerrsquos right to buy for-eign goods and everyonersquos right tohear alien ideas and which shouldprotect racial and religious minori-ties from exclusion still needs hisleadership
Unless statesmen recognize theinconsistencies that arise not fromthe changed opinions that con-cerned Emerson but from trying tobe all things to all men they arelikely to govern in ways that are un-fair and inefficient If the public doesnot recognize consistency then thelsquolittle statesmenrsquo may find them-selves compelled to yield to the de-mands of the more articulate vestedinterests In such a case Heaven helpthe inarticulate who will be effec-tively disenfranchised But the insti-tutions which when consistentlyapplied give us liberty equity andprosperity are not strongly intuitive
They nevertheless distinguishAustralian society from say Iraqi so-ciety They give us the economicstrength to defy tyrants and they giveus a land worth defending They arecertainly not in danger of disappear-ing but they are in danger of beingeroded Lead us Mr Howard
While statesmen
should not persist
with known error
their wanton
inconsistency makes
policy formulation
confoundedly
difficult
API
John Hyde is a Senior Fellow with the Institute ofPublic Affairs His book Dry In Defence of
Economic Freedom was published by the IPA in November 2002
18 MARCH 2003
E V I E WR
DESPITE the obsessivepublic attention to pricesat the petrol pump thepetroleum-refining sector
rarely registers on the media radarscreen This is unfortunate as the sec-tor fuels most movement of peopleand goods in our economy and soci-ety And it is in trouble
It is fragmented stunted and sur-vives by abjuring profit and mortgag-ing its future Without radical reshap-ing it is likely to wither leaving usexposed to the vagaries of the inter-national refined-products market
FEATURES OF THE AUSTRA-LIAN REFINING SECTORThe first thing to note is that by in-ternational standards Australia is arelatively small player The most re-cent international figures show thatour total output of refined productsin the third quarter of 2002 was 89million tonnes This compared withOECD production of 486 milliontonnes including US production of202 million tonnes Total Australianrefinery capacity of 870000 thousandbarrels per day (bpd) compares withthe figures for China (53 million)South Korea (26 million) and Singa-pore (11 million) Total regional re-fining capacity and production con-tinues to grow as Australiarsquos stagnatesIn the five years to 2000 regional out-put grew by 22 per cent
Second the structure of the indus-try is weak The dispersed geographi-cal distribution of our refining sectorreflects its historical developmentwith each State capital city support-ing one or more refineries Over thelast two decades the number of ma-jor oil companies operating in Aus-
Petroleum RefiningRationalization or Atrophy
JIM HOGGETT
tralia has shrunk from nine to fourAlthough the number of players hasmore than halved the number of re-fineries has reduced by only two fromten to eight The average capacity ofAustralian refineries is around100000 bpd New refineries in theregion are generally significantlylarger Singaporersquos largest has a capac-ity of 375000 bpd
Given the open Australian mar-ket our ex-refinery prices are virtu-ally set by the major exporters in theregion who are also operating on tightmargins Moreover the proportion-ately heavy demand for diesel in SEAsia tends to generate a persistentsurplus of gasoline which is availablefor export to Australia at discountedprices
The pattern of relatively smallscattered refineries is no longer opti-mal in an open market in which weare a price-taker
Third despite its sub-optimalstructure the Australian refining in-dustry is not grossly inefficient Oneindicator is the value added per em-ployee which is in the top five per-formers in the Australian manufac-turing sector
The cost competitiveness of Aus-tralian products is indicated by thefact that we have the cheapest ex-taxprice of petrol in the OECD Perfor-mance comparisons with the rest ofthe AsiandashPacific however suggestthat we lag the average efficiency inthe region And the best performersin the region are superior to our best
Finally the financial performanceof the industry is poor gross annualrevenues for the whole industry in-cluding marketing were $32 billionin calendar year 2001 For the five
years to 2001 the return on assets forrefining and marketing averaged 38per cent and was negative in the lasttwo years The indications are that2002 may have been a better year forthe industry but that the return onassets remains well below the cost ofcapital Over the four years to 2001the fixed asset base of the industrydeclined by almost 6 per cent to $12billion even after $24 billion of newinvestment in the period
This is clearly unsustainable andit raises the question Why is no-oneleaving the game
There are perhaps four main rea-sonsbull First the industry has engaged in
continual productivity improve-ment allowing it to keep withinrange of ruling prices
bull Second each refiner hopes thatsomeone else will blink first sothat the waiting will pay off
bull Third the costs of leaving thetable the exit costs are very highbecause of the nature of the prod-uct and the long occupancy ofmost sites
bull Fourth even while profitability islow the industry has generallybeen marginally cash positive
These add up to a big lsquofirst mover dis-advantagersquo
FUTURE TRENDSClearly petroleum will remain ourmost important energy source Petro-leum products constitute 52 per centof Australiarsquos final consumption ofenergy Liquid petroleum fuels pro-vide more than 95 per cent of Aus-traliarsquos transport needs There are nomajor foreseeable influences that willaffect this pattern dramatically There
19MARCH 2003
E V I E WR
have been major advances in fueleconomy and these will no doubtcontinue But more than counterbal-ancing this is the inexorable growthin demand for personal mobility andfor goods from distant parts Althoughgrowth in energy consumption mayslow down in Australia we will notbe reducing our consumption to anysignificant degree
Our export role will also be lim-ited Australian export volumes havetended to be steady over recent yearsand future new export potential forpetroleum products seems likely to beminimal China and India have re-cently become major exporters par-ticularly of gasoline Refinery capac-ity is planned to continue to growstrongly in the region even thoughthere is already significant excessThe decline in capacity utilization inmajor exporters such as Singaporewill make exporting difficult Further-more it is expected that productspecifications in Asia the US andEurope will converge in the comingyears thereby eliminating niche ex-port opportunities
The choice we face is what to doabout our essentially import-compet-ing industry
INCENTIVES NOT STRONGWhile there are strong pressures forthe industry to restructure there islittle incentive to invest for this pur-pose Investments in the Australianrefining industry have to competewith many alternatives across theglobe
Lack of sufficient return is thesingle biggest deterrent to investmentin the industry at present But thereare othersbull There is no prospect of strong growth
in demand to offset the substantialrisks associated with large new in-vestments
bull The persistent refinery capacity over-hang in our region will keep sus-tained pressure on our margins
bull The corporate taxation regime is nowless favourable than hitherto after thesubstitution of effective-life foraccelerated depreciation The
competing Singapore option offersa three-year write-off
bull The regulatory cost burden is grow-ing This applies to all Australianindustry but is potent in overseascomparisons Tighter fuel stan-dards environmental restrictionsintervention in prices and indus-trial law are some of the factors
bull There is increased sovereign riskstemming from inconsistent regula-tions We have eight parliamentswhich enact inconsistent laws Acurrent example is the higher fuelstandards applied in Western Aus-tralia
bull The sovereign risk also arises fromuncertainty in the regulatory processThere are unpredictable changesof direction (the deferral of thediesel sulphur excise differential[DSED]) and uncertainty in theface of conflicting interests (willthe Government act on ethanolcontent)
All these factors enter into the riskreward calculation When the re-wards are minimal the risks take onan extra dimension
WHAT INDUSTRY STRUC-TURE DO WE NEEDThe short answer is we cannot knowin detail
In the Downstream Petroleum In-dustry Framework 2002 the Depart-ment of Industry Tourism and Re-sources set out a broad vision
bull A preference for market-based so-lutions
bull A strong efficient environmen-tally responsible industry supply-ing most of the nationrsquos needs forproducts
bull Regulation only for market failureor national interest objectives
bull Regulation to be transparent andconsistent
bull Reform and regulation to maxi-mize long-term community ben-efitThis vision has some prescriptive
elements but the Government hasmade it clear that it will not nomi-nate an optimal number of refineriesor a pattern of production
The general public would probablyopt for a structure that guaranteedlower more stable automotive fuelprices Unfortunately they cannothave both in the short term
In fairness the investors in the in-dustry are the ones entitled and bestfitted to determine its future In theextreme they will do it anyway bypersisting or walking away Generallyspeaking they will seek to maximizetheir returns and thus promote themost efficient use of resources
Australian refineries are not inef-ficient but that is not the point Ourmarket is open so the competitionwe face is the best of the overseas per-formers often with more favourabletax and subsidy regimes
Nor is this simply a question ofclosing the smallest refineries A bet-ter approach might well be to allowrefining companies to concentrate onwhat they do bestmdashperhaps throughrefinery alliances Caltex and Shellhave co-operated in this way in Thai-land
The fact is that the detail of thedecisions can only be made by theindustry relatively free of governmentdirection The series of detailed de-cisions entailed will determine theoverall structure of the industry
COMPETITION REGULATIONCAN IMPEDE RESTRUCTURINGThe relevant provision of Section 50of the Trade Practices Act (TPA) pro
While there are
strong pressures for
the industry to
restructure there is
little incentive to
invest for this
purpose
s
20 MARCH 2003
E V I E WR
hibits mergers or asset acquisitionsthat would have the effect or belikely to have the effect ofsubstantially lessening compe-tition in a marketIt is both potentially and in prac-
tice an extremely restrictive provi-sion The Australian Consumer andCompetition Commission (ACCC)has expressed concern at concentra-tion in the sector in applying the pro-vision
The ACCCrsquos concerns seem ex-aggerated in the light of history Butthey are complemented by a persis-tent public misapprehension thatlarge petrol price swings equal profi-teering This perception has been soexploited for political advantage andmedia excitement that it is now al-most impossible for the truth toemerge
The future intensity of competi-tion in this industrymdashif it is allowedto restructuremdashshould not be indoubt Any rationalization would inall likelihood still leave strong do-mestic competition in each majorproduct category perhaps with fewermore efficient production units
The market is also contestableThere would be numerous potentialimporters and many independent re-tailers High margins would be rap-idly eroded by competition As re-cently ruled in the Boral case mar-ket reality is more conclusive than aperception of anti-competitiveness
Proposed mergers have been per-mitted in the past but the process isslow and permission is generally onlygranted with severe conditionsNonetheless there is a strong case forallowing restructuring within theterms of the merger provisions
AUTHORIZATION COULD BETHE KEYIf Section 50 of the TPA is an im-passable barrier then the authoriza-tion provisions of the Act could bethe way to greater efficiency The testsunder these provisions require a pub-lic benefit which outweighs the com-petition detriment The ACCC listsfostering business efficiency industry
rationalization and import-competi-tiveness as important public benefits
There is a strong prima facie casethat rationalization of the industrycould satisfy these tests It wouldallow greater scale of productioneconomies in distribution and closureof the least efficient production units
But the authorization process isslow and the onus for demonstratingthe public benefits rests on the appli-cant Slow process can amount to ef-fective rejection
POLICY OPTIONS AND REC-OMMENDATIONSIf government cannot help the indus-try to adjust it should allow it to ad-just by supporting sensible changeThis would involve both improving
the operating environment throughregulatory reform and altering thebalance of competition regulation sothat the industry could restructurevoluntarily The CommonwealthGovernment has already indicated awillingness to support both but hasnot yet delivered
The ball would then be in theindustryrsquos court to bring forward newproposals if a new policy environmentcould be created This could all hap-pen within a very broad strategicframework agreed with the industrywhereby Australia continued to besure of sufficient refining capacity tomeet a severe international fuel short-age
We therefore recommend thatbull The Commonwealth Govern-
ment provide explicit indicationto the ACCC of the public ben-efits it sees from the rationaliza-tion of the refining sector In par-ticular joint ventures should becontemplated
bull The ACCC give sufficient weightto the public interest benefits ofrestructuring to allow rationaliza-tion of production facilities
bull All governments reduce distortingfuel subsidies and taxes that favourparticular sectors or fuels
bull The State Governments act im-mediately to harmonize their regu-lation of the industry and agreenot to issue any new inconsistentregulation
bull More specifically the States havea single set of fuel standards withwhich refiners can reasonablycomply withdraw from all formsof price regulation and refrainfrom thwarting or distorting therationalization process
bull Governments generally not intro-duce new regulations mandatingthe use of alternative fuels
CONCLUSIONThe choice for the industry appearsto be between accelerated rational-ization and atrophy The process ofchange is something which the indus-try must plan and effect The task isnot impossible but it will require theactive support of government at alllevels For the time being there is anexpressed willingness at the Com-monwealth level but no real solu-tions
If nothing is done the refiners willcontinue to stumble along in a regu-latory fog and will invest only whenobliged to do so by changing fuel stan-dards They will become increasinglyvulnerable to low-priced imports andeventual closure
Jim Hoggett is a Senior Fellow at theInstitute of Public Affairs
If Section 50 of the
TPA is an impassable
barrier then the
authorization
provisions of the Act
could be the way to
greater efficiency
API
Last week the Government tabled 22 volumes of theCole Royal Commission into the Building andConstruction Industry Former Court of Appeal judgeTerence Cole made 392 specific findings of unlawfulconduct and in the confidential final volumerecommended that 31 individuals be referred for possiblecriminal prosecution As was to be expected theconstruction unions claimed that the report was a witch-hunt and people who should have known better claimedthat Cole was biased
The anti-union allegations were never very plausiblegiven that most unions had refused to cooperate withthe Commission and had even boycotted theCommissionrsquos special conference on occupational healthand safety As things have turned out one of their ownhas fatally undermined the unionsrsquo case No less anauthority than the National Secretary of the ConstructionDivision of the CFMEU has unwittingly confirmed thatCole is right In what was no doubt an unguardedmoment John Sutton admitted to a Melbournenewspaper that ldquovirtually everything we do breaches partof this Actrdquo Suttonrsquos admission means that Colersquosdescription of a largely lawless industry can be disputedat the margins but not credibly denied The problemsof the industry have been established beyond credibledoubt and the question now is what needs to be doneabout it
Nothing says the CFMEU because itrsquos alright tobreak the law in the best interests of the working classLeading union officials take the view that in a toughindustry only wimps take the law seriously The newsthat ldquoonlyrdquo 31 individuals had been recommended toface criminal charges was greeted with somethingapproaching jubilation as if the industryrsquos code of silencebased on fear had largely kept the Royal Commission atbay
As the Australian Financial Review commented in aneditorial the unionrsquos dismissive reaction to Colersquos report
ldquospeaks as loudly as his damning findings of entrenchedlawlessnessrdquo Imagine the reaction if a royalcommissioner had identified 31 people in the financeindustry or the steel industry for possible criminalcharges This would rightly be regarded as the sign ofan industry in crisis demanding urgent governmentintervention
Change wonrsquot be easy in an industry conditioned tothink that might is right Change which shifts powerfrom one unscrupulous group to another will not bereform As Grocon has discovered the first company toldquobuck the systemrdquo is liable to heavy-duty industrialpayback No one wants to be the first to change butchange is necessary in the national interest
In 2002 the Victorian construction industry aloneaccounted for 17 per cent of all days lost through strikesThe West Australian construction industry accountedfor another 8 per cent of the national strike tallyConstruction is a $40 billion a year industry comprisingnearly six per cent of GDP and employing nearly500000 Australians Due to over-manning demarcationdisputes and chronic stoppages labour productivity incommercial construction averages 13 per cent less thanin home building Plastering the same wall in the sameway costs 40 per cent more in a high rise building thanin a standard house Just raising labour productivity incommercial construction to the home building standard(let alone the 50 per cent increase needed to match NorthAmerican levels) would mean according to Econtech aone per cent drop in the cost of living a one per centincrease in GDP and $23 billion in benefits toconsumers workers and taxpayers every year
Still change is about decent Australian values notjust a more efficient industry Workers donrsquot like latenight house calls compulsory attendance at demos anddays spent sitting in the shed to make an industrial pointany more than bosses Threats of violence contempt forcourt and commission orders mob rampages when one
Restoring the Rule of Law in theConstruction Industry
Tony Abbott MHR
s
As this issue of the IPA Review was at the press we were alerted to the delivery of the following speechby the Minister for Employment and Workplace Relations The paper marks a seminal change in the
governmentrsquos approach to systemic corruption in the construction industry and isanother major step in the reform of workplace relations in Australia
SI-1MARCH 2003
IPA REVIEW SPECIAL INSERT
side doesnrsquot get its way habitual failure to honouragreements and routine harassment of people exercisingtheir legal rights are not acceptable in modern Australiaand cannot be excused even in a good cause
Breaching ldquobourgeois lawrdquo may not matter tomilitant activists but few others take such a self-indulgent view Itrsquos said that ldquooppositions can afford tobe irresponsiblerdquo but no government or alternativegovernment can accept the principle of optionalobedience to the law of the land No less than the HowardGovernment the federal Labor Opposition and the stateLabor Governments understand the dangers of playingpolitics with the rule of lawmdasheven theauthority of laws they might preferto change such as the federal WorkplaceRelations Act
The rule of law is not asmorgasbord from which a fewfavoured items can be chosen and therest ignored Freedom under the lawrequires respect for the law generallynot just the laws individualspersonally support Obedience to thelaw is not a question of choice It is arequirement of civilisation because thelaw is our guarantee of equaltreatment after a fair hearing ldquoBe youever so high the law is above yourdquoThis reproach hurled at the Stuartkings has rightly echoed through thecenturies as a warning against theconceits of office and the arrogance ofpower regardless of the cause in whichitrsquos exercised
After last weekrsquos meeting of theWorkplace Relations MinisterialCouncil of the Council of Australian Governments stateand territory ministers were keen to declare in acommuniqueacute ldquothere was unanimous agreement thatunlawful behaviour in the building and constructionindustry is not acceptablerdquo This was an importantaffirmation of the rule of law in circumstances wheresome Labor ministers might have been tempted to putpolitics ahead of principle
Unfortunately the state and territory ministerssupported more powers for the Australian IndustrialRelations Commission to settle construction industrydisputes In fact the Commission already has power tosettle disputes Whatrsquos missing is effective power toenforce agreements The issue is not settling disputesThe issue is enforcing the law
The construction industry typically conducts itselflike this A certified agreement is in place including anagreed dispute resolution procedure Unions identify agrievance often a spurious safety issue Agreed disputeprocedures are not followed and a strike ensues eventhough strikes outside ldquobargaining periodsrdquo areldquounprotectedrdquo and theoretically subject to damagesorders At that point employers often ask theCommission to end industrial action but instead ofordering an immediate return to work because anagreement has been breached the Commission willtypically seek to conciliate on the basis of the ldquomeritsrdquo
of the issue After a couple of dayswith costs escalating and liquidateddamages looming the employerinvariably agrees to rectify the matteralleged and to pay increasedallowances (including pay for days onstrike) At this point the Commissionorders a return to work on the basisof the agreed settlementmdashwhich lastsonly until the union decides on itsnext move
The union has ignored the law andbroken its original agreement buttypically suffers no adverseconsequences whatsoever Theemployer has been manoeuvred intoconceding most of a demand thatshould never have been made Afaccedilade of legality conceals a travestyof unionism and a travesty of justiceNearly all construction industrystrikes are unprotected and potentiallyunlawful under section 170MN of theWorkplace Relations Act Even so
employers nearly always opt to pass the costs ontoconsumers while existing arrangements for gatheringinformation launching prosecutions and imposing finesdonrsquot work well anywhere but hardly work at all in anindustry where giving evidence against the unions isthought to mean commercial suicide
The construction industry is a classic case not ofmarket failure but of regulatory failure The fact thatthe construction industry does not face potential importcompetition limits its exposure to market discipline Stillthe main reason why unions can get what they want frombusiness and business can get what it needs from haplessconsumers is the absence of independent policing andenforcement of the industrial equivalent of fair tradinglaws To an extraordinary degree in this industry the
SI-2 MARCH 2003
IPA REVIEW SPECIAL INSERT
The rule of law is nota smorgasbord from
which a few favoureditems can be chosenand the rest ignoredFreedom under thelaw requires respectfor the law generally
not just thelaws individuals
personally support
request documents but they canrsquot compel witnesses toanswer or demand that material be produced Althoughit is a criminal offence under the Workplace Relations Actto hinder workplace inspectors the Cole report notedthat no prosecutions have yet been launched despiteevidence that Office of the Employment Advocateinspectors have been abused had objects thrown at themand their property damaged It has been commonpractice for the arrival of OEA inspectors to lead to workstoppages and even site invasions in a bid to thwart anddemoralise an independent investigator not susceptibleto the unionrsquos usual weapon of commercial retaliation
One of the problems with theworkplace relations system is theassumption that parties will enforcethe law against each other This worksup to a point in industries whereworkplace parties are more-or-lessevenly matched and the issues are theworkplace equivalent of an argumentbetween neighbours over the heightof a fence It completely breaks downwhen one side has an effectivemonopoly over the supply of labourand disputes resemble a more-or-lessnormal family telling the house fullof footballers next door that the partyrsquosover Expecting contractors to enforcethe law against the CFMEU is likeexpecting people in the street to makecitizenrsquos arrests hence Colersquos principalrecommendations are an AustralianBuilding and ConstructionCommission to investigate prosecuteand enforce the provisions of a beefed-up industry specific workplace
relations actYesterday Cabinet decided to support Colersquos key
recommendations First the Government will seek aseparate act governing workplace relations in theconstruction industry providing for secret ballots beforestrikes compulsory cooling off periods after extendedstrikes and damages awards in the event of unprotectedindustrial action Second the Government will establisha new law enforcement agency for the industry withpowers to compel witnesses to testify bring prosecutionsand enforce judgments and with sufficient on-the-ground presence to police CBD building sites Thirdthe Government will establish a Safety Commissionerto monitor federally-funded construction sites to try toensure that these become industry models Fourth the
s
commissions lack sufficient power the courts lacksufficient speed the employment advocate lacks sufficientauthority and the police lack sufficient interest
Not before time the Cole Commission has acted as agiant searchlight probing the dark underside of thispotentially great Australian industry It confirmed whatpolicy makers had long suspected and what influentialinsiders knew but had always tried to deny or explainaway that the industry operates under the rule of thejungle and that there will be no improvement until thepeople who work in it understand that the law has to betaken seriously Legislative institutional and structuralchange will start to mean somethingwhen law breakers in this industry arecharged convicted and punished likelaw breakers everywhere else A fewsalutary bars of that old song need towaft over construction sites ldquoI foughtthe law and the law wonrdquo
Late last year in response to theRoyal Commissionrsquos first report thefederal Government set up theBuilding and Construction IndustryInterim Task Force The Governmentrsquosbrief to the Task Force is to ensure zerotolerance of industrial law-breakingThe Task Force is not primarily toenforce the tax laws or the safety rulesbecause other bodies exist for this(although the Task Force will certainlyshare information with them) TheTask Force is to investigate and enforceWorkplace Relations Act prohibitions oncoercion unprotected strikes strikepay and breach of industrialagreements So far the Task Force hasvisited nearly 300 sites launched more than 50investigations brought three prosecutions and referrednine other matters to state police the Australian FederalPolice or the Australian Competition and ConsumerCommission for further action
These are the first public prosecutions arising out ofindustrial action in the construction industry at leastsince the 1980s and are the result of a public policycommitment to law enforcement not seen since thehumiliating Clarrie OrsquoShea case in 1969 and the end ofldquopenal sanctionsrdquo Yesterday Cabinet decided to extendthe interim Task Forcersquos operations until more permanentarrangements to secure the rule of law can be established
Task Force agents have the powers of inspectors underthe Workplace Relations Act They can enter premises and
SI-3MARCH 2003
IPA REVIEW SPECIAL INSERT
The main reason whyunions can get what
they want frombusiness and businesscan get what it needs
from haplessconsumers is theabsence of inde-
pendent policing andenforcement of the
industrial equivalent offair trading laws
API
Government will insist on the application of theNational Construction Code and implementationguidelines to all significant new projects which are fullyor partly federally funded
Directly or indirectly the federal Government fundsabout $5 billion worth of construction projects everyyear and is determined to use its role as client to drivechange in the industry In essence the NationalConstruction Code stipulates that construction projectsmust take place in conformity with the WorkplaceRelations Act Under the Code and implementationguidelines the federal Governmentwill not engage tenderers whoseworkplace agreements and practicesensure a closed shop on site The TaskForce (and any replacement body) willhave full access to federally fundedsites to ensure that the law is beingobserved and workplace agreementscomplied with
For the federal Government theissue is upholding the law and tryingto tackle the ldquounion rulesrdquo culturewhich is at the heart of lawlessness inthe industry For the states the issueis whether they are prepared to refusefederal money in order to protect theclosed shop However much theymight prefer different federal laws thestates ought to accept thatconstruction projects have to complywith the law as it stands includingthe law mandating compliance withcertified agreements
State Labor governments whichhave made a point of their middle-ground credentials risk losing some$4 billion a year in federal building and constructiongrants if they side with the union movementrsquos mostmilitant minority There are likely to be limits to Laborrsquosdefence of a union whose stock-in-trade (at least in somestates) is the site invasion and the demand for paymentand which quietly reinstates organisers sacked for assaultor perjury Opposition senators will find it hard to brandas ldquoideologicalrdquo the recommendations of a royalcommission which spent 171 days in public hearingsand which pursued 11 shop stewards and 97 unionofficials to obtain their side of the argument
As Justice Cole pointed out in his report previousattempts to reform the industry have proven ineffectivedespite two earlier royal commissions and numerous
SI-4 MARCH 2003
IPA REVIEW SPECIAL INSERT
enquiries Although this Royal Commissionrsquosinvestigations seem to have temporarily checkedlawlessness in the industry a campaign is now emergingto extend the anarchic culture of CBD construction intoregional centres and the domestic housing industryThings will certainly be different this time if parliamentapproves a permanent well resourced watchdog withnew powers new personnel and new attitudes Unlikeprevious arrangements a new statutory watchdog withthe powers of a law enforcement agency should beeffective and permanent
Hundreds of people took big riskswith their commercial future and eventheir personal security to testify to theRoyal Commission It should neveragain be so hard for people in thisindustry to exercise their ordinaryrights and responsibilities asAustralian citizens They expected theGovernment to take the Commissionrsquosreport seriously and the Governmentfor its part is determined not to letthem down The Governmentunderstands that joining fights yoursquorenot prepared to win only makes badsituations worse Establishing the ruleof law in the construction industry isa challenge Australia canrsquot afford tofailSome of the worldrsquos best workersshould no longer have to put up withsome of the worldrsquos worst industrialpractices They have a right to anhonest industry where they can earna fair dayrsquos pay for a fair dayrsquos workand expect to come home uninjuredThe enduring image of this industry
should not be noisy marchers replaying the ideologicalstruggles of the 1970s and raising clenched fists againstauthorities they donrsquot like At its best the Australianindustry is capable of work which is stunningly beautifulyet intensely practical and it now needs to performconsistently on time on budget and in accordance withlaw
Hundreds of peopletook big risks withtheir commercial
future and even theirpersonal security totestify to the Royal
Commission It shouldnever again be so
hard for people in thisindustry to exercisetheir ordinary rights
and responsibilities asAustralian citizens
NOTE
The foregoing speech was first delivered as an Addressto the National Press Club on 2 April 2003
21MARCH 2003
E V I E WR
IN psychology behaviouris defined as irrational ifan action continues to berepeated despite its re-
peated failure to achieve the desiredoutcome On this definition our aidpolicy towards Papua New Guineahas been irrational
Despite over twelve billion dol-lars in Australian aid to PNG sincethat countryrsquos independence in 1975key development indicators such asliteracy rates infant mortality lifeexpectancy and real income percapita are either stagnating or dete-riorating Worse wersquove known forover a decade1
Today acknowledgement of thefailure of our aid policy in PNG hasgone well beyond the writings of in-dividual international policy analystssuch as myself to institution-spon-sored reports such as Beyond Baliwhich was released by the AustralianStrategic Policy Institute (the Aus-tralian Governmentrsquos own strategicpolicy adviser) and Papua NewGuinea on the Brink which was writ-ten by Susan Windybank and MikeManning for the Centre for Indepen-dent Studies Both reports confirmthe gross failure of Australian aidpolicy in PNG
Yet still our aid policy irrational-ity towards Papua New Guinea con-tinues While the ASPI and CIS re-ports acknowledge the gross failureof our aid policy in PNG they alsoargue that we need to continue ouraid to that country Indeed the ASPIreport argues that we should increaseour aid to Papua New Guinea Thepolicy saviour The ASPI report ar-gues that we should exert greater con-trol over our aid Not just over theform of our aid but direct interven-tion in policy and implementation inPNGmdashin essence for a return to pre-
Aid Detox for PNGPETER URBAN
independence days in PNG whereas UN-sanctioned administrator weran government in that country
Despite the mind-frame of secu-rity-focused strategists such as thoseat ASPI and the CIS (which en-dorses the aid approach advocated byASPI) the reality is that we canrsquotPNG is now independent and to ig-nore this reality would simply com-pound the problems of our past aidpolicy irrationality with irrationalityabout our political relationship withour nearest neighbour
A more interventionist aid policytowards PNG on our part as advo-cated in Beyond Bali and by HughWhite (the executive director ofASPSI) in the media might havepopulist appeal but it would haveserious adverse implications for ourrelationship with other Pacific islandcountries and even IndonesiaWorse it would give succour to theviews of our east Asian critics (suchas Malaysian PM Dr Mahathir) whoclaim that Australia continues toharbour colonial aspirations
We have to accept that to be suc-cessful aid policy must not just helpreduce mass poverty it also has to doso as a guest in the aid recipientcountry To do otherwise is not aidbut imperialismmdashwhether inten-tional or not
A more interventionist approachto aid policy in PNG would also givethe current corrupt political elite inPort Moresby a rallying point againstus and an excuse to delay changingtheir own policies Neither Austra-lia nor PNG can afford any furtherdelays to policy reform For us to givePNG politicians yet another excuseto delay reform would be not onlyirrational it would be inexcusableWhile our aid continues so will thecorrupt elite that is at the heart ofPNGrsquos problems Until we send themessage to the PNG political elitethat we are prepared to stop ouraidmdashto put them on aid detoxmdashwewill continue to waste our aid in thecorruption that is PNG politics Itmay be hard to accept but the sadreality we face in PNG is that no aidmay prove to be good aid at least inthe short to medium-term2
NOTES
1 Peter Urban lsquoOne Clear ObjectiveNo Clear Approachrsquo IPA Review1997 Vol 50 No 1
2 With Iraq also likely to require verysignificant Australian aid fundingover the next few years the Gov-ernment will need to review our aidprogram as part of the 2003-04 fed-eral Budget A decision to suspendaid to PNG could be taken as partof that review
Peter Urban is former chief economist with theDepartment of Foreign Affairs and Trade
We have to accept
that to be successful
aid policy must not
just help reduce
mass poverty it also
has to do so as a
guest in the aid
recipient country
API
22 MARCH 2003
E V I E WR
IN his speech to the Na-tional Press Club on theprospect of war with Iraqand the case for disarma-
ment Prime Minister Howard statedthat Australia will play a significant hu-manitarian role in Iraq
If so the Howard Government needsto evaluate carefully the foreign-aid non-government organizations (FANGOs)which it funds to carry-out this humani-tarian programme Many FANGOshave made it clear that they do not sharethe Australian Governmentrsquos objectivesand values in Iraq Moreover some donot agree with the Governmentrsquos over-all aid policies in general
THE COALITION OF THEUNWILLINGIn the lead-up to latest Gulf War some30 Australian aid agencies put theirnames to an Open Letter to the PrimeMinister organized by the AustralianCouncil of Foreign and Overseas Aid(ACFOA) The aim of the letter was tolsquospeak out against war in Iraqrsquo and it ex-pressed grave concerns about the hu-manitarian consequences of the war andthe effects of the existing sanctions1 TheFANGOs that signed the letter wereOxfam Community Aid Abroad WorldVision Australia TEAR AustraliaUnion Aid Australia - APHEDACaritas Australia National Council ofChurches Australian Council for For-eign and Overseas Aid Save the Chil-dren Australia CARE Australia OzGreen United Nations Association ofAustralia Family Planning AustraliaMercy Works Marist Mission CentreAustralia Every Home for Christ Bap-tist World Aid for Christ CCF Austra-lia Quaker Service Australia Austra-lian Lutheran World Service AustralianRelief and Mercy Services AnglicanBoard of Mission AUSTCARE Com-munity Development and Health
Irreconcilable DifferencesDON DrsquoCRUZ
Hussein have been virtually ignored isa searing indictment of the warped ide-ology feeble analysis and moral blind-ness of the sector For them now to re-discover the plight of the Iraqi peopleand to invoke their name in the mediais beyond contempt
THE OXFAM COMMUNITYAID ABROAD POSITIONOf the 30 FANGO signatories to theopen letter Oxfam Community AidAbroad (OCAA) has been perhaps themost outspoken It opposed military ac-tionmdasheven with UN Security Councilapproval4 In spite of all the evidence tothe contrary OCAA was comfortablewith Saddam Husseinrsquos assurances thathe did not have weapons of mass destruc-tion5 Adopting the common policyagreed to by the other Oxfam affiliatesOCAA stated that it will not take anymoney from the lsquobelligerentsrsquomdasha quaintterm used to the describe democraticnations planning to disarm a dictatorguilty of countless human rights abuses
OCAArsquos outrage against the so-called lsquobelligerentsrsquo appears to be geo-graphically confined to Iraq OCAAappears happy to take governmentmoney from the belligerents elsewherearound the world
According to OCAArsquos ExecutiveDirector Andrew Hewitt refusing totake money from the belligerents wasdone to lsquoprotect its impartialityrsquo6 Thisis a very curious position from Australiarsquosarguably most political FANGOOCAA has a long track-record of beinganything but impartial or reluctant totake sides in miliary action It wasnrsquotimpartial in East Timor where it sidedwith Fretlin in its quest for indepen-dence According to its own testimonyto a Senate committee OCAA wasgiven the choice by the IndonesianGovernment between lsquoplaying politicsrsquoor delivering aid projects in Indonesia7
Group Amnesty International Austra-lia AngliCORD Australian Aid forCambodia Fund Burnet InstituteRedR Friends of the Earth PLAN Aus-tralia and Australian Volunteers Inter-national2
This open letter highlighted a num-ber of problems with the FANGOs sec-tor First it highlighted the weak logicthat passes for advocacy in the sectorThe letter argued against military actionwas critical of sanctions and suggestedthat nations should settle issues only bydiplomatic means It is a viewpointwhich totally ignores the fact that theGovernment had to deal with SaddamHussein
The shallowness of their logic wasbest exposed by the Prime Minister inhis response to the open letter in whichhe stated that the humanitarian situa-tion in Iraq is best addressed by SaddamHusseinrsquos removal and perhaps morepointedly that Saddamrsquos manipulationof foreign aid had allowed him to main-tain and pursue his weapons of mass de-struction capability and human rightsabuses3
Second it also highlighted the factthat the so-called lsquohuman rights-basedapproachrsquo to development (embraced byseveral of the signatories) is not so muchabout realizing human rights (as its pro-ponents argue) but is more about pro-viding them with an excuse to lsquoplay poli-ticsrsquo According to the theory the hu-man rights-based approach to develop-ment allows FANGOs to tackle the rootcauses of poverty and injustice
Yet the root cause of the Iraqipeoplersquos suffering can be summed up intwo simple wordsmdashSaddam HusseinThe fact that the FANGOs who sub-scribe to this particular approach havebeen obsessed with imaginary humanrights abuses committed by Shell NikeRio Tinto BHP-Billiton and AuroraGold while the activities of Saddam
23MARCH 2003
E V I E WR
It chose the former thus making it per-sona non grata in Indonesia for almost adecade8 It wasnrsquot impartial inMozambique when it sided with Frelimoin the countryrsquos civil war9 It wasnrsquot im-partial in Ethiopia when it developedlinks to the Eritrean Peoplersquos LiberationFront during its war against the thengovernment10 It was not impartial oranti-war when it sided with the TigrayPeoplersquos Liberation Front in the neigh-bouring province to Eritrea when thatgroup was waging a guerrilla war againstthe government11 And recently therehave been claims that in the Middle Eastit was little more than an lsquoeager propa-gandistrsquo for the Palestinians12
In East Timor Ethiopia and Mozam-bique OCAA was linked with organi-zations which supported direct militaryaction that led to the deaths of thou-sands of civilians In none of these loca-tions were the enemies of their friendany worse than Saddam Hussein In-deed in many cases OCAArsquos friendswere arguably no better than their en-emies in terms of human rights
OCAArsquos decision not to accept Aus-tralian Government funding is the cor-rect one in the sense that it clearly doesnot share the Governmentrsquos values onthe question of Iraq and thereforeshouldnrsquot receive any governmentmoney
Hewitt went on to state in a pressrelease that lsquoWe will not take funds thatmight allow a government to use hu-manitarian efforts as an instrument offoreign policyhelliprsquo13
This is finemdashexcept the AustralianGovernmentrsquos foreign aid is an instru-ment of foreign policy And it always hasbeen This is spelt out quite clearly inthe Australian Governmentrsquos latest for-eign and trade policy White Paper Ad-vancing the National Interest14
FANGOs that cannot accept thisrather basic proposition should not begetting taxpayersrsquo money They areclearly unsuitable for the task at hand
The consequences of Australian tax-payersrsquo money falling into the wronghands were brought home to Prime Min-ister Howard when he met IndonesianPresident Megawati Sukarnoputri to dis-cuss the war against terrorism and
Australiarsquos involvement against Iraq Atthe top of the Indonesian agenda wasthe issue of Australian funding toFANGOs being used to support sepa-ratist movements in Indonesia15
Post-war Iraq will be a better placewithout Saddam Hussein and his thugsThis does not mean that it will be a safeplace or necessarily a stable place Afterall one of the reasons for Western tol-eration of Saddam Hussein for manyyears was his ability to hold the various
ethnic minorities in Iraq together albeitrather brutally thereby maintaining abalance of power in the Middle East Hisdeparture would see strains on Iraq fromthe various ethnic minorities that makeup Iraq There is a strong chance thatIraq will fragment
The last thing the Australian Gov-ernment or any of the so-called belli-gerents needs in a post-war Iraq is west-ern NGOs running around and becom-ing self-styled advocates for national self-determination for Iraqrsquos ethnic minori-ties and injecting themselves into Iraqrsquosinternal politics This is a real risk Thebehaviour of Australian foreign aidNGOs in Indonesia should make Aus-tralian decision-makers extremely waryof funding any NGOs with Australiantaxpayersrsquo money so that they can oper-ate in Iraq
As things stand now FANGOs facevery few restrictions on their actionsfrom government If they undertake ac-tivity that is inconsistent with being anagent of government they may losefunding for specific projects or in moredramatic circumstances lose funding ina country Nonetheless they are gener-
ally able to access Australian Govern-ment funding for other projects andcountries In other words the penaltiesfor becoming caught up in political ac-tivities are very light for NGOs and posethem no serious problems
Foreign aid NGOs that lsquoplay politicsrsquoare unsuitable contractors for the deliv-ery of aid That these overtly politicalorganizations have been allowed to gaingovernment accreditation and receivegovernment funding points to some se-rious problems at AusAID Australiarsquosofficial aid agency The time has comefor this to change
NOTES1 httpwwwacfoaasnaumedia_releases
2003_releases26_3_03PDF2 httpwwwacfoaasnauemergencies
openletterPDF3 httpwwwacfoaasnauemergencies
iraq_responsehtm4 Oxfam Horizons Vol 3 No 1 (Febru-
ary 2003) page 25 Oxfam Community Aid Abroad lsquoIraq
Overviewrsquo February 20036 Hewitt quoted in Liz Gooch lsquoOxfam
wersquoll say no cashrsquo The Age 16 March2003
7 Community Aid Abroad Submission tothe Senate Foreign Affairs Defence andTrade References Committee Inquiryinto East Timor Downloaded at httpwwwcaaorg aucampaignssubmissionstimorhtml
8 Ibid9 Susan Blackburn Practical Visionaries A
Study of Community Aid Abroad (Mel-bourne Melbourne University Press1993) page 313
10 Ibid pages 325-333 passim11 Ibid12 Gerald Steinberg lsquoPropaganda vs Hu-
manitarianismrsquo Australian Financial Re-view 7 June 2002 Downloaded at httpfacultybiuacil~steingconflictopedpropvshumanitarianismhtm
13 ht tp wwwcaa o rg au p r 2003 iraqfundshtml
14 httpwwwdfatgovauani15 Dennis Shanahan lsquoJakarta fears aid funds
for rebellionrsquo The Australian 17 Febru-ary 2003 page 2
Don DrsquoCruz is Research Fellow at the IPAand Director of IPArsquos NGOWatch
OCAA has a longtrack-record of
being anything butimpartial or
reluctant to takesides in miliary
action
API
24 MARCH 2003
E V I E WR
GEORGE Bush Tony Blairand John Howard haveprovided many reasons forsupporting military action
against Iraq One of those reasons hasbecome known as the lsquohumanitarianrsquojustification Put simply the lsquohu-manitarianrsquo justification for the US-led invasion of Iraq is that such ac-tion is necessary to free the Iraqipeople from their totalitariandictator
Such an argument is attractive tothose who believe that there aresome fundamental human rights thatall individuals possess regardless ofwhere and how they live Whatserves as the source of those rightshas been the subject of debate forcenturies One of the pre-eminentstatements on the subject was madeby John Locke who in The SecondTreatise of Government wrote thatmankind was lsquoequal and indepen-dentrsquo and that lsquono-one ought to harmanother in his life health liberty orpossessionsrsquo
Saddam Husseinrsquos mass murdertorture and terror are reasonablyclear breaches of human rightsTherefore some would ask why thereshould be opposition to the UnitedStates and its allies taking whatevermeasures might be necessary totopple the Iraqi regime Surely thesame standard of behaviour that ap-plies to individuals applies also tonation states If an individual walk-ing in the street witnessed a rapeoccurring wouldnrsquot that individualbe entitled to do everything in hispower to stop the crime and assistthe victim
The point is of course that in-ternational law and convention do
After IraqIs Sovereignty Dead
JOHN ROSKAM
not allow nation states to act in thesame way as individuals Countriescannot simply lsquotake the law into theirown handsrsquo To restrain lsquovigilantestatesrsquo (who might be acting fromeither lsquogoodrsquo or lsquobadrsquo motives) a num-ber of legal and political theorieshave been developed One of theseis the doctrine of lsquosovereigntyrsquo whichprovides that states should not inter-vene in the domestic affairs of otherstates
In relation to Iraq the lsquosover-eigntyrsquo question is perhaps the stron-gest argument against the US-ledCoalition Most of the other criti-cisms of lsquohumanitarianrsquo interventionin Iraq are either grounded in simpleanti-Americanism or are fallaciousFor example there is the claim thatbecause some of the countries in theCoalition have previously ignoredHusseinrsquos cruelties therefore it is il-legitimate to take action now Sucha view has been expressed by aMelbourne international relationsacademic
While there is no disputing thebrutal nature of Saddam Hus-seinrsquos regime the case for inter-vention made by those in Can-berra London and Washingtonis weakened by the fact that atthe peak of Saddamrsquos crimes inthe late 1980s they were eitherdirectly supporting him withweapons technology and intelli-gence or were entirely indifferentto his behaviour Even if theyhave belatedly recognised theerror of their ways how seriouslycan we take their concerns aboutweapons of mass destruction nowgiven they were his suppliersthen1
On the basis of this argument itcould be said that Britainrsquos (andAustraliarsquos) case for intervening toassist Poland upon the German in-vasion in 1939 was lsquoweakenedrsquo be-cause Britain had previously acqui-esced to Germanyrsquos rearmament theremilitarization of the Rhinelandand the annexation of both Austriaand parts of Czechoslovakia Fewpeople who chanted lsquoFreedom forEast Timorrsquo said that the HowardGovernment should not act becausea quarter of a century before theWhitlam Government had been lsquoin-differentrsquo to Indonesiarsquos occupationof the island
There is also the claim that al-though Hussein is bad he is not theworst dictator in the world and thatit is hypocritical for the Americansto attack only Iraq This is an as-tounding proposition It attempts toapply to the United States a standardof behaviour that is impossible to sat-isfy Should the police not attemptto solve any crimes because theycanrsquot solve all crimes If a crime iscommitted by two people and thepolice arrest one perpetrator unlessthe other is also caught must the firstperpetrator be released When indi-viduals donate money for famine re-lief in Africa very few believe thattheir donation is pointless becauseit might prevent the starvation ofonly one person rather than thou-sands Christian ethics sets down norequirement that we should help no-one unless we can help everyone
The issue about state sovereigntyhowever is one that deserves to betaken seriously Regardless of onersquosopinions on the extent and limits ofstate sovereignty it is true that our
25MARCH 2003
E V I E WR
international relations system is builtupon the principle and to modify oroverturn it is a matter of some con-sequence
Even those who are generally sup-portive of the United States andtheir allies see the problem As it wasput by a leading commentator whenanalysing the Australian PrimeMinisterrsquos lsquohumanitarianrsquo justifica-tion for war
Finally Howardrsquos argumentagainst Hussein on human rightsis correct So is his moral case forwanting to liberate the Iraqipeople from their torment Theproblem however is that youcanrsquot trip around the worldwanting to overthrow regimesbecause of human rights2
Some would askmdashlsquowhy notrsquo Be-cause to do so would overthrow theUnited Nations Charter comes therejoinder And in turn the responseto that might bemdashlsquogoodrsquo
If itrsquos a choice between the main-tenance of the UN Charter and free-dom from tyranny freedom wins ev-ery time (although an internationallawyer sitting in Sydney might havea different view on this question fromthat of a political prisoner manacledin a Baghdad jail cell)
When the interests of lsquointerna-tional lawrsquo are more important thanthe life and liberty of individuals itcould be concluded that lsquothe Em-peror has no clothesrsquo Would inter-national law have sanctioned inter-vention to stop the Holocaust hadHitler not waged war and proceededwith his methods entirely within theconfines of the German territorialstate
Many who argue that lsquohumanitar-ianrsquo intervention in Iraq is not justi-fied because it infringes on thatcountryrsquos lsquosovereigntyrsquo would happilyhave other countries cede their po-litical sovereignty to supra-nationalbodies Certain features of the Inter-national Criminal Court overridethe principles of sovereignty but thatdid not stop a phalanx of interna-tional law experts urging sovereigngovernments to join it so as to en-
able the prosecution of war criminalsBut when it comes to actually stop-ping war crimes not simply prosecut-ing them that phalanx is largely si-lent
Without the doctrine of state sov-ereignty and without an arbiter fordetermining when interference withthe principle is justified (the roleclaimed by the United Nations andits Security Council) it is said thatstates would be free to impose theirown will and intervene in other
countries whose standards did notmeet their own (In The Second Trea-tise of Government Locke argued thata characteristic of a lsquostate of warrsquo be-tween individuals was the absence ofa superior authority to adjudicatedisputes and prevent individualsfrom administering justice them-selves)
Iraq might be claimed as a rea-sonably clear-cut case for interven-tion but other situations are notlikely to be as simple In Culture andEquality first published in 2001Brian Barry explored a lsquoliberalrsquo per-spective on this question
The liberal position is clearNobody anywhere in the worldshould be denied liberal pro-tections against injustice andoppression However in exactlythe same way as liberals arepragmatic about what liberalismmeans in terms of boundaries sohere the move from principle tointervention has to be mediated bypractical considerationshellip
[L]iberals are not so simple-mindedas to imagine that the answer toall violations of liberal rights is tosend in the Marines or even aUnited Nations force As in anyjust war theory there must be somedoctrine of lsquoproportionalityrsquohellip[S]carcely anybody would be infavour of the western powersinvading Saudi Arabia so at to sortout the way in which it lsquounjustlydenies political rights to women ornon-Muslimsrsquomdashaccording to theirliberal idea of justicersquo3
The question remainsmdashafterIraq what remains of lsquostate sover-eigntyrsquo Should the doctrine applyonly to lsquoliberal democraticrsquo statesSuch a solution might be attractiveto some lsquoliberalsrsquo but it doesnrsquot avoidthe problem of what exactly a lsquolib-eral democraticrsquo state is
One irony arising from the argu-ments about the war in Iraq is thatmany of those who have urged astrict application of lsquostate sover-eigntyrsquo principles in the past havegenerally supported the US-led in-tervention while those who havebeen willing to abridge or even aban-don the doctrine have had to rely onit to counter the lsquohumanitarianrsquo jus-tification for war
There are not many certaintiesabout the nature of the world afterthe war in Iraq but it can be saidwith some assurance that one defi-nite outcome is going to be a morevigorous debate about state sover-eignty
NOTES1 Scott Burchill lsquoThe humanitar-
ian arguments for this war are spu-riousrsquo The Age 21 March 2003
2 Paul Kelly lsquoThe hapless per-suaderrsquo The Australian 15ndash16March 2003
3 Brian Barry Culture and Equal-ity An egalitarian critique ofmulticulturalism Harvard Uni-versity Press page 138
John Roskam is a Research Fellow with the IPA
The lsquosovereigntyrsquo
question is perhaps
the strongest
argument against
the US-led
Coalition
API
26 MARCH 2003
E V I E WR
Which Way for theDemocrats
The 2002 mid-term elections were adramatic victory for President GeorgeW Bush and the Republicans Insteadof the historical norm of the partycontrolling the White House losingBushrsquos party gained seats in the Sen-ate House Governorsrsquo races andState legislatures The result was abitter disappointment for the Demo-crats and has led to a fierce debatebetween the Left and Centrists aboutthe future policy direction of the partytowards the 2004 elections
The Leftrsquos analysis is that the ma-jority of Americans are natural Demo-crats Electoral defeat was due to thefailure to energize that base of Demo-crats The party failed to distinguishitself sufficiently from Bush and thusgive their voters a reason to turn outWhile the majority of Democrats op-posed Bush on tax cuts and the warwith Iraq a significant minority sup-ported him and campaigned on thatsupport The result the Left claimwas that the Democrats lacked a con-sistent message in contrast to Bush
Support for this argument can befound in the higher turnout amongstRepublicans than Democrats in 2002while in 2000 the combined vote forGore and Nader was 51 per cent Aninfluential book by John Judis andRuy Texeira identified lsquoThe Emerg-ing Democrat Majorityrsquo Theyclaimed that growing demographicgroups trended Democrat includingthe young socially liberal profession-als minorities and women
What policies would motivate thisnatural Democrat base The Left callfor rescinding the Bush tax cut a classwar against the corporate world amajor increase in lsquopublic investmentrsquoin schools childcare health care and
Letter from AmericaNIGEL ASHFORD
public transport and strong opposi-tion to the war
Centrists however have a verydifferent analysis of the Democratsrsquoproblems the public did not trustthem to pursue the war against ter-rorism vigorously to keep down taxesto spend their tax dollars wisely or toreflect their cultural values
A Gallup opinion poll found that57 per cent of Americans askedthought that the Democrats were nottough enough on the war on terror-ism while 64 per cent thought theRepublicans were There was the per-ception that the Democrats were notserious on the issue and just playingpolitics Evidence for this was the de-bate over the new Department ofHomeland Security blocked becausethe Democrats wanted to protectunion rights while the President de-manded more flexibility to deploy theworkforce Many voters saw the issueas the national interest versus a spe-cial interestmdashin this case that of theunions The Democrats were seen asputting the interests of one of theirmajor constituencies before nationalsecurity
The Democratic LeadershipCouncil in lsquoThe Road Aheadrsquo by AlFrom and Bruce Reed presented theCentrist case lsquoStop pretending wecan win a majority simply by energiz-ing our basersquo The Democrats were
not trusted on the war against terror-ism were hostile to the cultural con-cerns of many working-class Demo-crats on abortion and guns and stillseen as the tax-and-spend party lsquoToomany Americans donrsquot trust us tokeep their taxes down or to spendtheir money wellrsquo
The Centrist agenda is to stronglyprosecute the war against terrorismwhether against al-Qarsquoeda Saddam orothers and to abandon knee-jerk iso-lationism arising from the experienceof the Vietnam War to defend capi-talism and support small investorsagainst irresponsible managers to cutpayroll taxes and to downplay thecultural issues that divide Democrats
Which path will the Democratstake The Left is in the ascendancyMost of the remaining Democrats inoffice come from left-wing districtsNancy Pelosi a left-liberal from SanFrancisco was easily elected the newleader of the House Democrats over-whelming her Centrist opponent andrising star African-American HaroldFord The early field of presidentialcandidates for 2004 is dominated bythe Left tendency including SenatorJohn Kerry Representative DickGephardt Governor Howard DeanRev Al Sharpton former SenatorCarol Moseley-Braun and Represen-tative Dennis Kucinich Only Sena-tor Joe Lieberman and Senator JohnEdwards represent the Centrist wing
The future of US politics may de-pend on which road the Democratsdecide to take The US is currently alsquo50ndash50rsquo nation evenly balanced be-tween the parties A left turn couldlead to Republican dominance farinto the future
Dr Nigel Ashford is at the Institute of Humane Studiesat George Mason University and is co-author of US
Politics Today (Manchester University Press)
API
27MARCH 2003
E V I E WR
Trusting TonyFrankly itrsquos all just too depressing Theeconomyrsquos heading for trouble Busi-ness confidence is low investment in2002 was 92 per cent lower than theprevious year and manufacturing in-vestment was nearly 18 per cent downThe budget deficit is spiralling becauseour once lsquoprudentrsquo Chancellor (trea-surer) Gordon Brown made over-opti-mistic growth projections and startedthrowing money at problems
Therersquos a load of health-and-safetyand anti-discrimination measuresthatmdashto put it most politelymdashare ex-amples of letting the best be the en-emy of the good Every school tripneeds a formal risk assessment withthe result that many trips are simplynot taking place New trains orderedfor London commuter routes wonrsquothave toilets because the rules say thatat least one toilet in each four-car unitmust be wheelchair-accessible whichwould have cost ten or a dozen seatson every overcrowded train
Some of this is just insane Somelocal authorities say that safety at workrules mean that home-care workersmustnrsquot lift the disabled people theyare looking after Or therersquos rail safetyUntil recently we were seriously pro-posing to spend $10 billion on a bet-ter system to stop trains going throughred signals On average this would havesaved the lives of about three passen-gers every four years which is a lousybargain compared with other safety in-vestments Worse it would also havereduced the capacity of the networkby up to 15 per cent and forced morepeople onto the roads which are muchmore dangerous than even ourclapped-out railways The result was aprojected net increase of 13 to 21 deathsper year
Meanwhile in London the Cen-tral line of the Underground has been
Letter from LondonJOHN NURICK
API
closed for weeks after a train derailedwhen one of its motors fell off Therewere no deaths or major injuries in theaccidentmdashbut itrsquos a safe bet that someof the people who havenrsquot been ableto use the Central line have been in-jured or killed on the roads
What can one say If the authori-ties took the same attitude to the riskof fatal accidents in the health serviceevery hospital in the country wouldhave been closed for years
Despite all this the Conservativesare still hopeless Their leader IanDuncan Smith has a new wheezewhen a journalist asks him anythingdifficult he chortles merrily and saysitrsquos the most uninteresting questionimaginable and hersquos not going to wasteanyonersquos time by answering it His col-leagues have their knives out for him
Meanwhile in spite of the govern-mentrsquos problems with the economy andthe public services Tony Blair is grow-ing in stature having his waymdashandantagonising large sections of his ownparty in the process On several recentissues he has faced down the formi-dable Gordon Brown in a way that notlong ago was hard to imagine
Then he shocked everyone by com-ing out against having elected mem-bers in the reformed House of Lordswhen most voters want an all-elected
chamber and most MPs want a partly-elected one In the event Parliamentcouldnrsquot agree on any of the optionsfor reform so wersquore stuck with the sta-tus quomdashwhich is fine by Mr Blair
Then therersquos the war By the timeyou read this it may be over or we maystill be waiting or our lads may befighting Mr Blairrsquos strong line againstIraq has made him very unpopular Theanti-war march on 15 February was thebiggest demonstration London hasever seen A few days later 122 Labourbackbenchers voted against the gov-ernment and many more abstained
Mr Blair didnrsquot budge War is a se-rious thing he says lsquoBut in a situationsuch as this you have to do what youbelieve to be right because thatrsquos theprice of having responsibilityrsquo1
He has often been accused of gov-erning by focus group Certainly he hasseemed reluctant to antagonise anypowerful group That has clearlychanged In a sense his stand on Iraqmerely follows his action in sendingtroops to Sierra Leone and Kosovomdashbut it has stirred up far stronger domes-tic and international opposition
The irony is that now when he re-ally needs people to trust him wedonrsquot Even in the desperately seriousbusiness of justifying an unpopular warDowning Street canrsquot play it straightremember the dossier from lsquointelli-gence sourcesrsquo that turned out to belargely cribbed from a PhD thesis onthe Internet
NOTE1 The Guardian 1 March 2003
John Nurick is a management consultant based in theSouth of England From 1985 to 1990 he was
editorial director of the Australian Institute for PublicPolicy and later edited newsletters reporting on theUK Parliament and European Union institutions
28 MARCH 2003
E V I E WR
KEVIN DONNELLY
Private EducationEquals Public Good
When it comes to choosing be-tween government and non-gov-ernment schools Australian par-ents are lsquovoting with their feetrsquo Asshown by recent ABS figures(Schools Australia 2002) over thelast decade there has been a dra-matic increase in non-governmentschool enrolments
Approximately 30 per cent ofstudents now attend non-govern-ment schools compared with 22per cent in 1980 and 28 per centin 1990 Over the last decadewhile the number of governmentschools has fallen by 64 per centnon-government schools havegrown by 61 per cent
Of course not everybody valuesparentsrsquo right to choose and theAustralian Education Union(AEU) Labor governments andlsquoleft-wingrsquo academics in particularconsistently argue against non-government schools
One of the arguments put for-ward by those opposed to givingparents greater freedom of choiceis that government schools are bet-ter at promoting social cohesionand a strong sense of what KenBoston the ex-head of the NSWEducation Department terms lsquothebonds of civic friendshiprsquo
The assumption is that becausestudents attend non-governmentschools there will be greater socialdivisiveness and a breakdown inthe civic values needed to hold so-ciety together But there is no cred-ible evidence offered to support theclaim that government schools arebetter at promoting the commongood
In fact there is much to provethe opposite
First as anyone familiar withthe lsquoculture warsrsquo and politicallycorrect curricula will know insteadof government-controlled educa-tion promoting unity and cohe-sion it has led to public angst andparental complaints
Witness the very bitter debatein Queensland a year or two agowhen the government-mandatedStudies of Society and Environ-ment (SOSE) curriculum was in-troduced into schools Such was
the lsquoleft-wingrsquo bias in the curricu-lum in particular in the areas ofmulticulturalism and the environ-ment that many parents felt be-trayed
The Queensland debate is mir-rored by what is happening in theUnited States As noted by Ste-phen Arons in his book Short Routeto Chaos instead of promotingunity government control of thecurriculum leads to the opposite
What the school wars tell us isthat somehow we have been
Education Agenda
transforming a vital instrumentfor creating social cohesioninto a source of division andhostility that there is some-thing built into the structure ofpublic schooling that under-mines one of its most importantfunctionsAronrsquos argument that govern-
ment schools no longer transmit aviable sense of a common cultureor agreed civic values is reinforcedby another noted United Stateseducationalist Diane Ravitch
In a recent article in the jour-nal Education Next Ravitch be-moans the impact of cultural rela-tivism and the post-modern on theschool curriculum (where there areno commonly agreed values) andeven goes so far as to argue thatparents should be free to choosenon-government schools becausesuch schools have a better chanceof reflecting their values
In the current education sys-tem with the public schoolscommitted to multiculturalismbilingualism and other forms ofparticularism it is difficult toargue that parents should notbe able to choose schools thatmeet their cultural needsSecond if one accepts that lsquoso-
cial capitalrsquomdashthe networks volun-tary associations and civic bondsthat hold a community togethermdashis important for the health of ademocratic society then non-gov-ernment schools clearly have theadvantage
Unlike the government schoolsystem characterized by a heavy-handed centralized bureaucracyand teacher union control non-government schools are closer tothe communities they serve Bytheir very nature non-government
There is no credible
evidence offered to
support the claim
that government
schools are better
at promoting the
common good
29MARCH 2003
E V I E WR
ALAN MORAN
The lsquoRrsquo Files
Private propertyrights the key toachieving efficiency inrural water use
WATER IN AUSTRALIAWater has always been a definingissue in Australiarsquos prosperityAnd in recent decades irrigationhas grown rapidly Even so theproportion of Australia that is ir-rigated at two per cent of theland comprises a share that isamongst the lowest among OECDcountries Only Canada and therainiest countries New Zealandand the UK have lower sharesthat of the US is 11 per cent andin Japan it reaches 60 per cent
Modern agriculture is only 200years old in Australia and thoughin the first 100 years agriculturalproductivity was increased toequal that of anywhere in theworld gains continue to bemademdashoutput has doubled overthe past 50 years a growth thatcould not have taken place with-out a similar expansion of irriga-tion Irrigation in the MurrayndashDarling agricultural provincealone contributes $5 billion toAustralian agricultural outputand non-irrigated agriculture inthe region contributes a further $5billion This makes the areawhich comprises 14 per cent ofAustraliarsquos land mass responsiblefor a third of the nationrsquos $35 bil-lion agricultural output
Applying Property Rights to WaterMost of the uses of water involvechoices or compromisesmdashdrink-ing water versus irrigation versus
industrial and so on Some how-ever involve complementaritiesparticularly certain recreationaluses such as water sports that arefacilitated by storage and consis-tent availability
In many cases water will per-form sequential functionsmdashthesame water can be used and re-used for irrigation used for indus-trial cooling and finish as drink-ing water Water with differentsometimes competing productiveuses will be optimally used as longas two conditions are in placeThe first is that its ownership isclearly specified and the ownersrsquoobligations to other users (orclaims from other beneficiaries)are well understood The secondrequires each property right to betradable to enable acquisition bythose who value it most therebymaximizing its value
The rights specification andtherefore property ownership canrarely commence with a cleansheet of paper People acquire in-dividual rights to property ini-tially through a variety of routesOne of these is seizure of some-thing that was originally of littlevalue until it was acquired and im-proved Squatters assume rights inthis way However they are firstacquired they need to be tradableAPI
schools establish strong commu-nity networks and have a greaterreliance on the voluntary work ofparents
That non-government schoolsare more effective in this regard issupported by research into lsquoChar-ter schoolsrsquo in the United StatesAs noted by Chester Finn at theFordham Foundation giving localcommunities lsquoownershiprsquo overtheir school builds networks oftrust and reciprocity so vital forsocial cohesion
Social capital also relies on citi-zens being disciplined and orderedin their behaviour Selfishness vio-lent behaviour and rudeness act tofragment the community instead ofpromoting cohesion According toa number of Australian surveys itis here once again that non-gov-ernment schools are seen to bemore effective
As noted by the Centre for In-dependent Studies researcher Jen-nifer Buckingham in The Truthabout Private Schools in Australiawhen analysing why so many par-ents forsake the government schoolsystem
When comparing independentprivate schools with publicschools the major theme thatemerged was not differences inacademic standards and curri-culum but issues of disciplineand order The surveyed par-ents felt that the behaviour andattitudes of students in publicschools was unacceptablehellipAll accept that non-govern-
ment schools achieve better aca-demic results provide greater cur-riculum flexibility and save Aus-tralian taxpayers millions of dol-lars Equally as important is theargument that such schools streng-then Australiarsquos civic health andstock of lsquosocial capitalrsquo
Dr Kevin Donnelly is Director of EducationStrategies a Melbourne-based consulting group
E-mailkevindnetspacenetau
s
30 MARCH 2003
E V I E WR
and relatively inviolable Thisprovides the incentive for them tobe improved and for their ownersand others to search out ways inwhich the assets they representcan be used to provide increasedvalue or other benefits
If confidence in the exclusiv-ity an owner has over the prop-erty right is lost or was neverpresent the asset will be used lessproductively For example own-ers will milk them for their cur-rent-use value rather than trade-off present value for a future valuethat is less certain
Even without a total emascu-lation of individual rights (for ex-ample when title to the propertydepends on continuing govern-mental assent) lack of certaintybrings lower incomes and dimin-ished asset protection One out-come of this can be observed inthe MurrayndashDarling system Wa-ter rights on the Victorian side ofthe Murray are secure while thoseon the NSW side have been over-allocated and are subject to ad-ministrative discretion includinghaving a firm duration of only tenyears In Victoria high securitywater (available 95 per cent of thetime) comprises the great bulk ofentitlements In contrast in
NSW high security water is avail-able only 60-80 per cent of thetime The result is that farmers onthe Victorian side plant perennialcrops while those in NSW tendto focus on annual crops espe-cially rice
There are claims that Victoriarsquosmore robust property rights meanthat the State Government haslost lsquocapabilityrsquo to manage com-pared with NSW The flip side ofthis is the increased risk and as-sociated lower value of productionnorth of the Murray where prop-erty rights are attenuated Gov-ernments that give themselves in-creased capacity to direct produc-tion or to take individualrsquos prop-erty will need to accept lower lev-els of income and output
IRRIGATION ENVIRON-MENTAL BENEFITS AND SA-LINITY
The Types of IssuesIssues stemming from irrigationcomprise two types those impact-ing on the environment and thoseimpacting on private uses Theformer includes issues such as pre-venting loss of species ensuringthat certain sorts of species flourishand avoiding unattractive growths
such as blue-green algae which re-sult from fertilizer build-up
The second involves economicimpacts on different users
While environmental flows toensure species flourish are oftenhighlighted salinity is the mainfocus And while salinity has animpact on the environment itsimportance is in the conflict of in-terest between productive usersmdashthe complaint of lsquodamaged goodsrsquoby downstream users against thoseupstream
The MurrayndashDarling Basin Sa-linity Strategy 2001ndash2015 has es-timated that increased salinitybrings costs of $294 million perannum to the basin
Yet data on the salinity of theMurray Darling shows levels up-stream of South Australia arelower than they were in the early1980s and are only seriously abovethese levels as the river ap-proaches its mouth at the GoolwaBarrage
The Basin Salinity Manage-ment Strategy argues that progressachieved over the past decade willlsquobe cancelled within 20-50 yearsand median salinity levels wouldexceed the Australian DrinkingWater Guidelines for good waterquality within 50-100 yearsrsquo Thecause of this is said to be risinggroundwater tables due to land usechanges across the Basin
The disputes over salinizationare largely disputes between com-mercial parties Full specificationof rights and obligations will al-low these to be resolved as longas the impacts are measurabletheir causes identifiable and thevarious rights and obligations areknown and stable In this respecttechnology to measure salt in wa-ter and to trace increases to par-ticular locations is readily avail-able
Agreements about the alloca-tion of water rights between ju-risdictions and to the main irri-gation provinces have been inplace for over a century In the
Average Salinity in the River Murray (EC Units)1
3500
3000
2500
2000
1500
1000
500
0
January 2003
July 2002ndashJanuary 2003
July 1982ndashJanuary 2003
Hume D
am
Swan
Hill
Merbein
Morgan
Milang
Mening
ie
Goolw
a
Barra
ge
31MARCH 2003
E V I E WR
I
API
Musinghellipcase of the Murray the lsquocaprsquo onwater abstractions agreed betweenthe various jurisdictions in 1995largely validated agreements madeearly in the last century and be-fore Disturbing these agreementswould greatly undermine the trustin the sanctity of property rightsand seriously reduce agriculturalproductivity Hence increased al-locations for certain parties or forcertain uses (including environ-mental flows) would need to bepurchased at market prices
Developments in Australiaover recent decades have con-spired to make irrigation water farmore valuable This is exacer-bated by1 Activation of NSW lsquosleeperrsquo
and lsquodozerrsquo water rights as a re-sult of the increased scarcityvalue a change that bringseven greater pressure on theavailable supply
2 Increased scarcity leading tomeasures that more carefullyhusband the water Whilesome of these prevent evapo-ration loss and have thereforebrought a net increase in effec-tive availability others havereduced availability (these in-clude a more careful wateringwhich results in reduced run-off and re-use)
3 Increased capture of waterwithin the land on which itfalls once water is recognizedas scarce landowners will seekto ensure it does not leave theirland NSW and Victoria haveplaced limits (a strict 10 percent in NSW) of water fallingon property as entitlements ofthe owner Queensland has notyet enacted an equivalent tothis Such adaptations of thecommon law are essentialhowever if downstream usersare not to be expropriatedThere is likely to be constant
bickering over water rights espe-cially if State Governments seek toelevate sharing issues and to sanc-tify them with claims about promot-
Daniel Pipes in The New York Posthas a very cogent explanation forwhy the Left appears to be so happywith the likes of Osama bin Ladenand Saddam Hussein
To be clear about their attitudeshe quotes the renowned Germanelectronic music composer KarlHeinz Stockhausen who saidstraight after the attack on NewYork that it was lsquothe greatest workof art for the whole cosmosrsquo
As Pipes and many of us observedaily there is barely a bad word tosay about Saddam Hussein nor aniota of sympathy for thoseoppressed tortured and murderedby his reacutegime Instead they venttheir fury against the AmericanPresident and British Prime Minister
Why the nonchalancePipes draws our attention to Lee
Harris writing in a recent issue ofthe Hoover Institutionrsquos journalPolicy Review According to KarlMarxrsquos central thesis the demise ofcapitalism hangs on workersgrowing poorer over timemdashwhichof course did not happen Sorather than give up on cherishedexpectations of socialist revolutionHarris notes Marxists tweaked theirtheory and looked instead to theentire populations of poor countriesto carry out the revolution Classanalysis went out the windowreplaced by geography
The trouble is they have tooverlook militant Islamrsquos slightly un-socialist practicesmdashsuch as itsimposing religious law excludingwomen from the workplace andpersecuting atheists
As Pipes sums up September 11and the prospect of war againstSaddam Hussein have exposed theLeftrsquos political self-delusionintellectual bankruptcy and moralturpitude
The Loopy Leftby Andrew McIntyre
ing an improved environment Realsolutions require the issue be placedwithin a normal commercial frame-work which involves1 Clarifying the property rights2 Allowing water rights to be
fully detachable from propertyand able to be used howeverthe holder wishes subject toany damage this might imposeon others
3 Ensuring full rights to buy andsell the water
4 Defining rights so as not to re-duce the quality of other usersThis means ensuring that farm-ing practices that do not bringgreater salination than somestandard
5 Allowing rights holders tobank their water and ensureeven greater certaintyAllocating specific individual
ownership rights to water and al-lowing its trade is a well-foundedmeans of maximizing the usevalue It would also be likely tohave the beneficial side-effects ofreducing salinity and farm-basedpollutants caused by intensiveuse We should grasp such oppor-tunities But if the impending sa-linity problem is as great as someclaim other solutions might wellinclude buying out some allocatedirrigatorsrsquo rights However alter-natives may be to remove saltfrom the water by engineering so-lutions or simply to live withhigher salt
NOTE1 Human drinking water should
be less than 800 ECs (electri-cal conductivity one ECequals about 06 mglitre)while higher levels are accept-able for much farming activity
Dr Alan Moran is Director Deregulation Unitat the Institute of Public Affairs
32 MARCH 2003
E V I E WR
Reading FileDone
eral political systems worldwidehave consistently accretedpower to the centre often in theface of clear constitutional im-peratives to the contrary) Ifeared instead that a UN thathad been patently successful insomethingmdashanythingmdashmightbe granted greater powers to thepoint where it would kill truediversity and individualism (ortry to anyway) through inevi-table bureaucratic practices
Is such a fear unfounded Ap-parently not if many peopleshare the moral touchstone ofthe Opposition Leader SimonCrean He believes according tohis own words in Parliamentthat what the UN SecurityCouncil declares is moral whatit refuses is immoral
The latest manoeuvrings overIraq have therefore been heart-
ening It seems that the desiresof the powers small and largeto promote their own interestswill continue to hobble the UN
The problem with a unitedworld is that as the threateningimpasse over Iraq suggestedthere are very divergent viewsabout how that world ought tobe run on an international leveljust as there are at national and
sub-national levels The virtueof multi-layered levels of gov-ernments is that competing ju-risdictions give the individual adegree of choice
The greatest sin of totalitar-ian governments past and pres-ent is to deny their citizens theright to leave The greatest dan-ger that the United Nationsposes as far off as it now (hap-pily) seems is that leaving its ju-risdiction is for all practical pur-poses impossible
THE IMPASSE JUST PASSEDI listened to Prime MinisterHoward speaking to the motionbefore Parliament in relation tothe war It was a good speechbut neither he nor PresidentBush seems able to structure andlay out an argument with thestyle and content of BritishPrime Minister Blair His equi-valent speech before the BritishCommons provides a masterfulsummary of the reasons for thiswar and includes an immenselyreadable time-line of the utterineffectiveness of the UN pro-cesses in dealing with Iraq Henicely deals with allegations ofthe lsquorushrsquo to war lsquoOur fault hasnot been impatience The truth
UNITED OR DIVIDEDI write just hours after US Presi-dent George W Bush has deliv-ered his ultimatum to Iraqi Presi-dent Saddam Hussein leave Iraqwithin 48 hours or be removedBy the time this appears beforeyour eyes you will knowwhether Hussein has decided hischances of survival will be sig-nificantly greater by choosingexile or by remaining in IraqThe recent creation of the In-ternational Criminal Court ofcourse makes war more likelysince Hussein can have no guar-antee of a peaceful lsquoretirementrsquo
In the event that Hussein re-mains in Iraq you will also knowwhether Bush has kept his wordand most likely the outcome ofthis military venture
This matter is immensely im-portant for the people of Iraqand for the military personnelinvolved (including our ownAustralian soldiers sailors andaviators) But then so was theprevious Gulf War the US in-vasion of Grenada the Austra-lian intervention in East Timorand so on But a difference be-tween the current conflict andthose others could be the impactit has upon international insti-tutions Actually just one inter-national institution the UnitedNations
Prior to the first Gulf War Ifeared the coalitionrsquos success forthe reason that some of it mighthave rubbed off onto the UnitedNations I hasten to deny that Ifear the UN as some vast con-spiracy for world domination Ifeared instead that it couldstumble into a piecemeal cen-tralization of power (just as Fed-
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
E V I E WRs
33MARCH 2003
E V I E WR
Reading FileDone
ATTACKING THE GLOBALGOVERNORSThe Cato Institute is a whole-some body as demonstrated byits opposition to such interna-tional organizations as the Inter-national Criminal Court and forthat matter the United Nationsitself Ted Galen Carpenter forexample argues in lsquoPutting theUnited Nations on Noticersquo thatthe UN can and has done somemodest good occasionally It ishe says lsquoa good idea to have aplace where governments cangather to air grievancesrsquo But headds if it lsquoattempts to acquire ataxing authority [or] raise astanding armyrsquo then the USshould withdraw (as indeedshould Australia) Because thatwould turn it into an lsquoembryonicsuperstate that would menacelibertyrsquo
Go to
wwwcatoorgforeignpolicyunhtml
THE INTERNATIONALORGANIZATIONS THEM-SELVESThe United Nations has beenaccused of being often ineffec-tive and always slow Well ev-ery time Irsquove hit the UNrsquos Web-site even with my nifty broad-band Internet connection slow-ness rules Perhaps the site isbeing continually accessed bythe teeming masses Anyway goto
wwwunorg
With 15 members alreadyand 13 more on the way thereremain hopes that the EuropeanUnion will be a force for a stable
twenty-first century Equallywith 15 members already exhib-iting rather divergent views overthe issue of Iraq and most of theforthcoming members sidingwith the United States perhapsthis is overly hopeful Go to
europaeuintindex_enhtm
Then there is the WorldTrade Organization the organi-zation behind which protection-ist nations can hide from unilat-eral trade liberalization by pre-tending to support multilateraltrade liberalization Go to
wwwwtoorg
And we mustnrsquot forget the In-ternational Criminal Court fearof which was no doubt a featureof Saddam Husseinrsquos rejection ofexile as an option and the furyof which is promised by a num-ber of prominent lawyers to bevisited upon our very own PrimeMinister Go to
wwwicc-cpiint
FEEDBACKI would welcome advice fromreaders on any other sites of inter-est to IPA Review readers E-mailme on scdawsonbigpondnetau
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
is our patience should have beenexhausted weeks and monthsand years agorsquo
Go to
wwwnumber10govukoutputPage3294asp
THE STRUGGLE BETWEENTHE CONTINENTSIf you are patient you can readthat wonderful British rag TheSpectator for free Last weekrsquoscopy is available on-line One ofits regular columnists is MarkSteyn an Americo-phile Cana-dian who has a robust turn ofphrase and an abiding disdain formuch modern music (whichseems to place him very comfort-ably into The Spectatorrsquos culturalmatrix)
His piece on the future de-cline of Europe vis-agrave-vis Ame-rica makes for fascinating read-ing Go to
wwwspectatorcouk
then click on the lsquoBack Issuesrsquobutton and choose the edition of15 March 2003
E V I E WR
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
17MARCH 2003
E V I E WR
the US may or may not result in anet increase in trade flows but if itis not a meaningless piece of paperdelivering only political benefits tothe Government it will certainlydivert trade from our other tradingpartners How will China KoreaJapan etc react to losing their lsquomostfavoured nationrsquo status Such ques-tions should be addressed in termsthat do better than reinforce our xe-nophobic prejudices
By appealing to Hansonite mis-conceptions the Government mayand probably will improve itschances of bringing forward a policythat I am more than willing to ac-cept it believes is a good one It isafter all the recommendation of theDepartment of Foreign Affairs andTrade However by so doing it is re-inforcing delusions it must overcomefor further economic reform Whatis more I am reminded of a quip thatI am sure the PM has also heard lsquoNoGovernment is really dangerous un-til it believes its own bullshitrsquo Poli-ticians and I suspect bureaucratsalso are all too prone to believingtheir own utterances Unwilling toadmit their deceptions even whenspeaking in house they quickly con-vince themselves of the truth of theirown and colleaguesrsquo loose rhetoricand worse These are the people whomust negotiate the Agreement whilelooking over their shoulders at anAustralian electorate whose alreadystrong mercantilist tendencies havebeen reinforced by the people bestplaced to disabuse them The poten-tial cost is obvious
The US Free Trade Agreement isbut an example of a tendency thatought to be worrying In debateabout refugee policy motor fuel sup-ply single-desk wheat sales the sup-ply of medical practitioners and pres-ervation of the environment has notthe Government employed argu-ments that are not compatible withits professed liberal philosophy Hasit not seemed that it does not knowthe standard liberal responses to theself-serving demands of vested inter-ests and bigots With due respect to
Emerson consistency allows deci-sions to be made without the neces-sity of thinking every one throughfrom fundamental principles whichnobody in authority has the time orthe mental agility to do
Politically disinterested educa-tors such as the IPA can often callsome pretty good minds to their aidEven so when the Government it-self fosters public misconceptionthey cannot be expected to undo theerror The single greatest sin of thecurrent government is that it is notbuilding opinion for tomorrowrsquos re-form Why not
I suggest because it is politicallydifficult Whereas calls to resist out-siders appeal to deeply ingrainedtribal instincts calls to uphold thecivilizing and wealth-building insti-tutions that afford protection tostrangers and admit their goods ser-vices persons and ideas make nosuch visceral appeal These codes aremuch later developments in themarch of mankind and to manypeople they remain counter-intui-tive They must therefore be de-fended by sustained argumentHayek knew that politicians whosetime horizons in the absence ofknown crises tend to be the nextelection would (to use Howardrsquosown expression) seldom have the
tickers He turned therefore to theless articulate but far more resolutethink-tanks
It is relatively easy to appeal tothe sort of Chauvinism that sur-rounds sporting activity and argu-ments about refugees and meat quo-tas When a Prime Minister talks ofsovereignty guaranteeing our bor-ders or the interests of our exportersor domestic manufacturers he is notnecessarily wrong but his task iseasier than that of defending rulesthat permit voluntary co-operationamong strangers The principle thatdefends the non-unionistrsquos right towork the consumerrsquos right to buy for-eign goods and everyonersquos right tohear alien ideas and which shouldprotect racial and religious minori-ties from exclusion still needs hisleadership
Unless statesmen recognize theinconsistencies that arise not fromthe changed opinions that con-cerned Emerson but from trying tobe all things to all men they arelikely to govern in ways that are un-fair and inefficient If the public doesnot recognize consistency then thelsquolittle statesmenrsquo may find them-selves compelled to yield to the de-mands of the more articulate vestedinterests In such a case Heaven helpthe inarticulate who will be effec-tively disenfranchised But the insti-tutions which when consistentlyapplied give us liberty equity andprosperity are not strongly intuitive
They nevertheless distinguishAustralian society from say Iraqi so-ciety They give us the economicstrength to defy tyrants and they giveus a land worth defending They arecertainly not in danger of disappear-ing but they are in danger of beingeroded Lead us Mr Howard
While statesmen
should not persist
with known error
their wanton
inconsistency makes
policy formulation
confoundedly
difficult
API
John Hyde is a Senior Fellow with the Institute ofPublic Affairs His book Dry In Defence of
Economic Freedom was published by the IPA in November 2002
18 MARCH 2003
E V I E WR
DESPITE the obsessivepublic attention to pricesat the petrol pump thepetroleum-refining sector
rarely registers on the media radarscreen This is unfortunate as the sec-tor fuels most movement of peopleand goods in our economy and soci-ety And it is in trouble
It is fragmented stunted and sur-vives by abjuring profit and mortgag-ing its future Without radical reshap-ing it is likely to wither leaving usexposed to the vagaries of the inter-national refined-products market
FEATURES OF THE AUSTRA-LIAN REFINING SECTORThe first thing to note is that by in-ternational standards Australia is arelatively small player The most re-cent international figures show thatour total output of refined productsin the third quarter of 2002 was 89million tonnes This compared withOECD production of 486 milliontonnes including US production of202 million tonnes Total Australianrefinery capacity of 870000 thousandbarrels per day (bpd) compares withthe figures for China (53 million)South Korea (26 million) and Singa-pore (11 million) Total regional re-fining capacity and production con-tinues to grow as Australiarsquos stagnatesIn the five years to 2000 regional out-put grew by 22 per cent
Second the structure of the indus-try is weak The dispersed geographi-cal distribution of our refining sectorreflects its historical developmentwith each State capital city support-ing one or more refineries Over thelast two decades the number of ma-jor oil companies operating in Aus-
Petroleum RefiningRationalization or Atrophy
JIM HOGGETT
tralia has shrunk from nine to fourAlthough the number of players hasmore than halved the number of re-fineries has reduced by only two fromten to eight The average capacity ofAustralian refineries is around100000 bpd New refineries in theregion are generally significantlylarger Singaporersquos largest has a capac-ity of 375000 bpd
Given the open Australian mar-ket our ex-refinery prices are virtu-ally set by the major exporters in theregion who are also operating on tightmargins Moreover the proportion-ately heavy demand for diesel in SEAsia tends to generate a persistentsurplus of gasoline which is availablefor export to Australia at discountedprices
The pattern of relatively smallscattered refineries is no longer opti-mal in an open market in which weare a price-taker
Third despite its sub-optimalstructure the Australian refining in-dustry is not grossly inefficient Oneindicator is the value added per em-ployee which is in the top five per-formers in the Australian manufac-turing sector
The cost competitiveness of Aus-tralian products is indicated by thefact that we have the cheapest ex-taxprice of petrol in the OECD Perfor-mance comparisons with the rest ofthe AsiandashPacific however suggestthat we lag the average efficiency inthe region And the best performersin the region are superior to our best
Finally the financial performanceof the industry is poor gross annualrevenues for the whole industry in-cluding marketing were $32 billionin calendar year 2001 For the five
years to 2001 the return on assets forrefining and marketing averaged 38per cent and was negative in the lasttwo years The indications are that2002 may have been a better year forthe industry but that the return onassets remains well below the cost ofcapital Over the four years to 2001the fixed asset base of the industrydeclined by almost 6 per cent to $12billion even after $24 billion of newinvestment in the period
This is clearly unsustainable andit raises the question Why is no-oneleaving the game
There are perhaps four main rea-sonsbull First the industry has engaged in
continual productivity improve-ment allowing it to keep withinrange of ruling prices
bull Second each refiner hopes thatsomeone else will blink first sothat the waiting will pay off
bull Third the costs of leaving thetable the exit costs are very highbecause of the nature of the prod-uct and the long occupancy ofmost sites
bull Fourth even while profitability islow the industry has generallybeen marginally cash positive
These add up to a big lsquofirst mover dis-advantagersquo
FUTURE TRENDSClearly petroleum will remain ourmost important energy source Petro-leum products constitute 52 per centof Australiarsquos final consumption ofenergy Liquid petroleum fuels pro-vide more than 95 per cent of Aus-traliarsquos transport needs There are nomajor foreseeable influences that willaffect this pattern dramatically There
19MARCH 2003
E V I E WR
have been major advances in fueleconomy and these will no doubtcontinue But more than counterbal-ancing this is the inexorable growthin demand for personal mobility andfor goods from distant parts Althoughgrowth in energy consumption mayslow down in Australia we will notbe reducing our consumption to anysignificant degree
Our export role will also be lim-ited Australian export volumes havetended to be steady over recent yearsand future new export potential forpetroleum products seems likely to beminimal China and India have re-cently become major exporters par-ticularly of gasoline Refinery capac-ity is planned to continue to growstrongly in the region even thoughthere is already significant excessThe decline in capacity utilization inmajor exporters such as Singaporewill make exporting difficult Further-more it is expected that productspecifications in Asia the US andEurope will converge in the comingyears thereby eliminating niche ex-port opportunities
The choice we face is what to doabout our essentially import-compet-ing industry
INCENTIVES NOT STRONGWhile there are strong pressures forthe industry to restructure there islittle incentive to invest for this pur-pose Investments in the Australianrefining industry have to competewith many alternatives across theglobe
Lack of sufficient return is thesingle biggest deterrent to investmentin the industry at present But thereare othersbull There is no prospect of strong growth
in demand to offset the substantialrisks associated with large new in-vestments
bull The persistent refinery capacity over-hang in our region will keep sus-tained pressure on our margins
bull The corporate taxation regime is nowless favourable than hitherto after thesubstitution of effective-life foraccelerated depreciation The
competing Singapore option offersa three-year write-off
bull The regulatory cost burden is grow-ing This applies to all Australianindustry but is potent in overseascomparisons Tighter fuel stan-dards environmental restrictionsintervention in prices and indus-trial law are some of the factors
bull There is increased sovereign riskstemming from inconsistent regula-tions We have eight parliamentswhich enact inconsistent laws Acurrent example is the higher fuelstandards applied in Western Aus-tralia
bull The sovereign risk also arises fromuncertainty in the regulatory processThere are unpredictable changesof direction (the deferral of thediesel sulphur excise differential[DSED]) and uncertainty in theface of conflicting interests (willthe Government act on ethanolcontent)
All these factors enter into the riskreward calculation When the re-wards are minimal the risks take onan extra dimension
WHAT INDUSTRY STRUC-TURE DO WE NEEDThe short answer is we cannot knowin detail
In the Downstream Petroleum In-dustry Framework 2002 the Depart-ment of Industry Tourism and Re-sources set out a broad vision
bull A preference for market-based so-lutions
bull A strong efficient environmen-tally responsible industry supply-ing most of the nationrsquos needs forproducts
bull Regulation only for market failureor national interest objectives
bull Regulation to be transparent andconsistent
bull Reform and regulation to maxi-mize long-term community ben-efitThis vision has some prescriptive
elements but the Government hasmade it clear that it will not nomi-nate an optimal number of refineriesor a pattern of production
The general public would probablyopt for a structure that guaranteedlower more stable automotive fuelprices Unfortunately they cannothave both in the short term
In fairness the investors in the in-dustry are the ones entitled and bestfitted to determine its future In theextreme they will do it anyway bypersisting or walking away Generallyspeaking they will seek to maximizetheir returns and thus promote themost efficient use of resources
Australian refineries are not inef-ficient but that is not the point Ourmarket is open so the competitionwe face is the best of the overseas per-formers often with more favourabletax and subsidy regimes
Nor is this simply a question ofclosing the smallest refineries A bet-ter approach might well be to allowrefining companies to concentrate onwhat they do bestmdashperhaps throughrefinery alliances Caltex and Shellhave co-operated in this way in Thai-land
The fact is that the detail of thedecisions can only be made by theindustry relatively free of governmentdirection The series of detailed de-cisions entailed will determine theoverall structure of the industry
COMPETITION REGULATIONCAN IMPEDE RESTRUCTURINGThe relevant provision of Section 50of the Trade Practices Act (TPA) pro
While there are
strong pressures for
the industry to
restructure there is
little incentive to
invest for this
purpose
s
20 MARCH 2003
E V I E WR
hibits mergers or asset acquisitionsthat would have the effect or belikely to have the effect ofsubstantially lessening compe-tition in a marketIt is both potentially and in prac-
tice an extremely restrictive provi-sion The Australian Consumer andCompetition Commission (ACCC)has expressed concern at concentra-tion in the sector in applying the pro-vision
The ACCCrsquos concerns seem ex-aggerated in the light of history Butthey are complemented by a persis-tent public misapprehension thatlarge petrol price swings equal profi-teering This perception has been soexploited for political advantage andmedia excitement that it is now al-most impossible for the truth toemerge
The future intensity of competi-tion in this industrymdashif it is allowedto restructuremdashshould not be indoubt Any rationalization would inall likelihood still leave strong do-mestic competition in each majorproduct category perhaps with fewermore efficient production units
The market is also contestableThere would be numerous potentialimporters and many independent re-tailers High margins would be rap-idly eroded by competition As re-cently ruled in the Boral case mar-ket reality is more conclusive than aperception of anti-competitiveness
Proposed mergers have been per-mitted in the past but the process isslow and permission is generally onlygranted with severe conditionsNonetheless there is a strong case forallowing restructuring within theterms of the merger provisions
AUTHORIZATION COULD BETHE KEYIf Section 50 of the TPA is an im-passable barrier then the authoriza-tion provisions of the Act could bethe way to greater efficiency The testsunder these provisions require a pub-lic benefit which outweighs the com-petition detriment The ACCC listsfostering business efficiency industry
rationalization and import-competi-tiveness as important public benefits
There is a strong prima facie casethat rationalization of the industrycould satisfy these tests It wouldallow greater scale of productioneconomies in distribution and closureof the least efficient production units
But the authorization process isslow and the onus for demonstratingthe public benefits rests on the appli-cant Slow process can amount to ef-fective rejection
POLICY OPTIONS AND REC-OMMENDATIONSIf government cannot help the indus-try to adjust it should allow it to ad-just by supporting sensible changeThis would involve both improving
the operating environment throughregulatory reform and altering thebalance of competition regulation sothat the industry could restructurevoluntarily The CommonwealthGovernment has already indicated awillingness to support both but hasnot yet delivered
The ball would then be in theindustryrsquos court to bring forward newproposals if a new policy environmentcould be created This could all hap-pen within a very broad strategicframework agreed with the industrywhereby Australia continued to besure of sufficient refining capacity tomeet a severe international fuel short-age
We therefore recommend thatbull The Commonwealth Govern-
ment provide explicit indicationto the ACCC of the public ben-efits it sees from the rationaliza-tion of the refining sector In par-ticular joint ventures should becontemplated
bull The ACCC give sufficient weightto the public interest benefits ofrestructuring to allow rationaliza-tion of production facilities
bull All governments reduce distortingfuel subsidies and taxes that favourparticular sectors or fuels
bull The State Governments act im-mediately to harmonize their regu-lation of the industry and agreenot to issue any new inconsistentregulation
bull More specifically the States havea single set of fuel standards withwhich refiners can reasonablycomply withdraw from all formsof price regulation and refrainfrom thwarting or distorting therationalization process
bull Governments generally not intro-duce new regulations mandatingthe use of alternative fuels
CONCLUSIONThe choice for the industry appearsto be between accelerated rational-ization and atrophy The process ofchange is something which the indus-try must plan and effect The task isnot impossible but it will require theactive support of government at alllevels For the time being there is anexpressed willingness at the Com-monwealth level but no real solu-tions
If nothing is done the refiners willcontinue to stumble along in a regu-latory fog and will invest only whenobliged to do so by changing fuel stan-dards They will become increasinglyvulnerable to low-priced imports andeventual closure
Jim Hoggett is a Senior Fellow at theInstitute of Public Affairs
If Section 50 of the
TPA is an impassable
barrier then the
authorization
provisions of the Act
could be the way to
greater efficiency
API
Last week the Government tabled 22 volumes of theCole Royal Commission into the Building andConstruction Industry Former Court of Appeal judgeTerence Cole made 392 specific findings of unlawfulconduct and in the confidential final volumerecommended that 31 individuals be referred for possiblecriminal prosecution As was to be expected theconstruction unions claimed that the report was a witch-hunt and people who should have known better claimedthat Cole was biased
The anti-union allegations were never very plausiblegiven that most unions had refused to cooperate withthe Commission and had even boycotted theCommissionrsquos special conference on occupational healthand safety As things have turned out one of their ownhas fatally undermined the unionsrsquo case No less anauthority than the National Secretary of the ConstructionDivision of the CFMEU has unwittingly confirmed thatCole is right In what was no doubt an unguardedmoment John Sutton admitted to a Melbournenewspaper that ldquovirtually everything we do breaches partof this Actrdquo Suttonrsquos admission means that Colersquosdescription of a largely lawless industry can be disputedat the margins but not credibly denied The problemsof the industry have been established beyond credibledoubt and the question now is what needs to be doneabout it
Nothing says the CFMEU because itrsquos alright tobreak the law in the best interests of the working classLeading union officials take the view that in a toughindustry only wimps take the law seriously The newsthat ldquoonlyrdquo 31 individuals had been recommended toface criminal charges was greeted with somethingapproaching jubilation as if the industryrsquos code of silencebased on fear had largely kept the Royal Commission atbay
As the Australian Financial Review commented in aneditorial the unionrsquos dismissive reaction to Colersquos report
ldquospeaks as loudly as his damning findings of entrenchedlawlessnessrdquo Imagine the reaction if a royalcommissioner had identified 31 people in the financeindustry or the steel industry for possible criminalcharges This would rightly be regarded as the sign ofan industry in crisis demanding urgent governmentintervention
Change wonrsquot be easy in an industry conditioned tothink that might is right Change which shifts powerfrom one unscrupulous group to another will not bereform As Grocon has discovered the first company toldquobuck the systemrdquo is liable to heavy-duty industrialpayback No one wants to be the first to change butchange is necessary in the national interest
In 2002 the Victorian construction industry aloneaccounted for 17 per cent of all days lost through strikesThe West Australian construction industry accountedfor another 8 per cent of the national strike tallyConstruction is a $40 billion a year industry comprisingnearly six per cent of GDP and employing nearly500000 Australians Due to over-manning demarcationdisputes and chronic stoppages labour productivity incommercial construction averages 13 per cent less thanin home building Plastering the same wall in the sameway costs 40 per cent more in a high rise building thanin a standard house Just raising labour productivity incommercial construction to the home building standard(let alone the 50 per cent increase needed to match NorthAmerican levels) would mean according to Econtech aone per cent drop in the cost of living a one per centincrease in GDP and $23 billion in benefits toconsumers workers and taxpayers every year
Still change is about decent Australian values notjust a more efficient industry Workers donrsquot like latenight house calls compulsory attendance at demos anddays spent sitting in the shed to make an industrial pointany more than bosses Threats of violence contempt forcourt and commission orders mob rampages when one
Restoring the Rule of Law in theConstruction Industry
Tony Abbott MHR
s
As this issue of the IPA Review was at the press we were alerted to the delivery of the following speechby the Minister for Employment and Workplace Relations The paper marks a seminal change in the
governmentrsquos approach to systemic corruption in the construction industry and isanother major step in the reform of workplace relations in Australia
SI-1MARCH 2003
IPA REVIEW SPECIAL INSERT
side doesnrsquot get its way habitual failure to honouragreements and routine harassment of people exercisingtheir legal rights are not acceptable in modern Australiaand cannot be excused even in a good cause
Breaching ldquobourgeois lawrdquo may not matter tomilitant activists but few others take such a self-indulgent view Itrsquos said that ldquooppositions can afford tobe irresponsiblerdquo but no government or alternativegovernment can accept the principle of optionalobedience to the law of the land No less than the HowardGovernment the federal Labor Opposition and the stateLabor Governments understand the dangers of playingpolitics with the rule of lawmdasheven theauthority of laws they might preferto change such as the federal WorkplaceRelations Act
The rule of law is not asmorgasbord from which a fewfavoured items can be chosen and therest ignored Freedom under the lawrequires respect for the law generallynot just the laws individualspersonally support Obedience to thelaw is not a question of choice It is arequirement of civilisation because thelaw is our guarantee of equaltreatment after a fair hearing ldquoBe youever so high the law is above yourdquoThis reproach hurled at the Stuartkings has rightly echoed through thecenturies as a warning against theconceits of office and the arrogance ofpower regardless of the cause in whichitrsquos exercised
After last weekrsquos meeting of theWorkplace Relations MinisterialCouncil of the Council of Australian Governments stateand territory ministers were keen to declare in acommuniqueacute ldquothere was unanimous agreement thatunlawful behaviour in the building and constructionindustry is not acceptablerdquo This was an importantaffirmation of the rule of law in circumstances wheresome Labor ministers might have been tempted to putpolitics ahead of principle
Unfortunately the state and territory ministerssupported more powers for the Australian IndustrialRelations Commission to settle construction industrydisputes In fact the Commission already has power tosettle disputes Whatrsquos missing is effective power toenforce agreements The issue is not settling disputesThe issue is enforcing the law
The construction industry typically conducts itselflike this A certified agreement is in place including anagreed dispute resolution procedure Unions identify agrievance often a spurious safety issue Agreed disputeprocedures are not followed and a strike ensues eventhough strikes outside ldquobargaining periodsrdquo areldquounprotectedrdquo and theoretically subject to damagesorders At that point employers often ask theCommission to end industrial action but instead ofordering an immediate return to work because anagreement has been breached the Commission willtypically seek to conciliate on the basis of the ldquomeritsrdquo
of the issue After a couple of dayswith costs escalating and liquidateddamages looming the employerinvariably agrees to rectify the matteralleged and to pay increasedallowances (including pay for days onstrike) At this point the Commissionorders a return to work on the basisof the agreed settlementmdashwhich lastsonly until the union decides on itsnext move
The union has ignored the law andbroken its original agreement buttypically suffers no adverseconsequences whatsoever Theemployer has been manoeuvred intoconceding most of a demand thatshould never have been made Afaccedilade of legality conceals a travestyof unionism and a travesty of justiceNearly all construction industrystrikes are unprotected and potentiallyunlawful under section 170MN of theWorkplace Relations Act Even so
employers nearly always opt to pass the costs ontoconsumers while existing arrangements for gatheringinformation launching prosecutions and imposing finesdonrsquot work well anywhere but hardly work at all in anindustry where giving evidence against the unions isthought to mean commercial suicide
The construction industry is a classic case not ofmarket failure but of regulatory failure The fact thatthe construction industry does not face potential importcompetition limits its exposure to market discipline Stillthe main reason why unions can get what they want frombusiness and business can get what it needs from haplessconsumers is the absence of independent policing andenforcement of the industrial equivalent of fair tradinglaws To an extraordinary degree in this industry the
SI-2 MARCH 2003
IPA REVIEW SPECIAL INSERT
The rule of law is nota smorgasbord from
which a few favoureditems can be chosenand the rest ignoredFreedom under thelaw requires respectfor the law generally
not just thelaws individuals
personally support
request documents but they canrsquot compel witnesses toanswer or demand that material be produced Althoughit is a criminal offence under the Workplace Relations Actto hinder workplace inspectors the Cole report notedthat no prosecutions have yet been launched despiteevidence that Office of the Employment Advocateinspectors have been abused had objects thrown at themand their property damaged It has been commonpractice for the arrival of OEA inspectors to lead to workstoppages and even site invasions in a bid to thwart anddemoralise an independent investigator not susceptibleto the unionrsquos usual weapon of commercial retaliation
One of the problems with theworkplace relations system is theassumption that parties will enforcethe law against each other This worksup to a point in industries whereworkplace parties are more-or-lessevenly matched and the issues are theworkplace equivalent of an argumentbetween neighbours over the heightof a fence It completely breaks downwhen one side has an effectivemonopoly over the supply of labourand disputes resemble a more-or-lessnormal family telling the house fullof footballers next door that the partyrsquosover Expecting contractors to enforcethe law against the CFMEU is likeexpecting people in the street to makecitizenrsquos arrests hence Colersquos principalrecommendations are an AustralianBuilding and ConstructionCommission to investigate prosecuteand enforce the provisions of a beefed-up industry specific workplace
relations actYesterday Cabinet decided to support Colersquos key
recommendations First the Government will seek aseparate act governing workplace relations in theconstruction industry providing for secret ballots beforestrikes compulsory cooling off periods after extendedstrikes and damages awards in the event of unprotectedindustrial action Second the Government will establisha new law enforcement agency for the industry withpowers to compel witnesses to testify bring prosecutionsand enforce judgments and with sufficient on-the-ground presence to police CBD building sites Thirdthe Government will establish a Safety Commissionerto monitor federally-funded construction sites to try toensure that these become industry models Fourth the
s
commissions lack sufficient power the courts lacksufficient speed the employment advocate lacks sufficientauthority and the police lack sufficient interest
Not before time the Cole Commission has acted as agiant searchlight probing the dark underside of thispotentially great Australian industry It confirmed whatpolicy makers had long suspected and what influentialinsiders knew but had always tried to deny or explainaway that the industry operates under the rule of thejungle and that there will be no improvement until thepeople who work in it understand that the law has to betaken seriously Legislative institutional and structuralchange will start to mean somethingwhen law breakers in this industry arecharged convicted and punished likelaw breakers everywhere else A fewsalutary bars of that old song need towaft over construction sites ldquoI foughtthe law and the law wonrdquo
Late last year in response to theRoyal Commissionrsquos first report thefederal Government set up theBuilding and Construction IndustryInterim Task Force The Governmentrsquosbrief to the Task Force is to ensure zerotolerance of industrial law-breakingThe Task Force is not primarily toenforce the tax laws or the safety rulesbecause other bodies exist for this(although the Task Force will certainlyshare information with them) TheTask Force is to investigate and enforceWorkplace Relations Act prohibitions oncoercion unprotected strikes strikepay and breach of industrialagreements So far the Task Force hasvisited nearly 300 sites launched more than 50investigations brought three prosecutions and referrednine other matters to state police the Australian FederalPolice or the Australian Competition and ConsumerCommission for further action
These are the first public prosecutions arising out ofindustrial action in the construction industry at leastsince the 1980s and are the result of a public policycommitment to law enforcement not seen since thehumiliating Clarrie OrsquoShea case in 1969 and the end ofldquopenal sanctionsrdquo Yesterday Cabinet decided to extendthe interim Task Forcersquos operations until more permanentarrangements to secure the rule of law can be established
Task Force agents have the powers of inspectors underthe Workplace Relations Act They can enter premises and
SI-3MARCH 2003
IPA REVIEW SPECIAL INSERT
The main reason whyunions can get what
they want frombusiness and businesscan get what it needs
from haplessconsumers is theabsence of inde-
pendent policing andenforcement of the
industrial equivalent offair trading laws
API
Government will insist on the application of theNational Construction Code and implementationguidelines to all significant new projects which are fullyor partly federally funded
Directly or indirectly the federal Government fundsabout $5 billion worth of construction projects everyyear and is determined to use its role as client to drivechange in the industry In essence the NationalConstruction Code stipulates that construction projectsmust take place in conformity with the WorkplaceRelations Act Under the Code and implementationguidelines the federal Governmentwill not engage tenderers whoseworkplace agreements and practicesensure a closed shop on site The TaskForce (and any replacement body) willhave full access to federally fundedsites to ensure that the law is beingobserved and workplace agreementscomplied with
For the federal Government theissue is upholding the law and tryingto tackle the ldquounion rulesrdquo culturewhich is at the heart of lawlessness inthe industry For the states the issueis whether they are prepared to refusefederal money in order to protect theclosed shop However much theymight prefer different federal laws thestates ought to accept thatconstruction projects have to complywith the law as it stands includingthe law mandating compliance withcertified agreements
State Labor governments whichhave made a point of their middle-ground credentials risk losing some$4 billion a year in federal building and constructiongrants if they side with the union movementrsquos mostmilitant minority There are likely to be limits to Laborrsquosdefence of a union whose stock-in-trade (at least in somestates) is the site invasion and the demand for paymentand which quietly reinstates organisers sacked for assaultor perjury Opposition senators will find it hard to brandas ldquoideologicalrdquo the recommendations of a royalcommission which spent 171 days in public hearingsand which pursued 11 shop stewards and 97 unionofficials to obtain their side of the argument
As Justice Cole pointed out in his report previousattempts to reform the industry have proven ineffectivedespite two earlier royal commissions and numerous
SI-4 MARCH 2003
IPA REVIEW SPECIAL INSERT
enquiries Although this Royal Commissionrsquosinvestigations seem to have temporarily checkedlawlessness in the industry a campaign is now emergingto extend the anarchic culture of CBD construction intoregional centres and the domestic housing industryThings will certainly be different this time if parliamentapproves a permanent well resourced watchdog withnew powers new personnel and new attitudes Unlikeprevious arrangements a new statutory watchdog withthe powers of a law enforcement agency should beeffective and permanent
Hundreds of people took big riskswith their commercial future and eventheir personal security to testify to theRoyal Commission It should neveragain be so hard for people in thisindustry to exercise their ordinaryrights and responsibilities asAustralian citizens They expected theGovernment to take the Commissionrsquosreport seriously and the Governmentfor its part is determined not to letthem down The Governmentunderstands that joining fights yoursquorenot prepared to win only makes badsituations worse Establishing the ruleof law in the construction industry isa challenge Australia canrsquot afford tofailSome of the worldrsquos best workersshould no longer have to put up withsome of the worldrsquos worst industrialpractices They have a right to anhonest industry where they can earna fair dayrsquos pay for a fair dayrsquos workand expect to come home uninjuredThe enduring image of this industry
should not be noisy marchers replaying the ideologicalstruggles of the 1970s and raising clenched fists againstauthorities they donrsquot like At its best the Australianindustry is capable of work which is stunningly beautifulyet intensely practical and it now needs to performconsistently on time on budget and in accordance withlaw
Hundreds of peopletook big risks withtheir commercial
future and even theirpersonal security totestify to the Royal
Commission It shouldnever again be so
hard for people in thisindustry to exercisetheir ordinary rights
and responsibilities asAustralian citizens
NOTE
The foregoing speech was first delivered as an Addressto the National Press Club on 2 April 2003
21MARCH 2003
E V I E WR
IN psychology behaviouris defined as irrational ifan action continues to berepeated despite its re-
peated failure to achieve the desiredoutcome On this definition our aidpolicy towards Papua New Guineahas been irrational
Despite over twelve billion dol-lars in Australian aid to PNG sincethat countryrsquos independence in 1975key development indicators such asliteracy rates infant mortality lifeexpectancy and real income percapita are either stagnating or dete-riorating Worse wersquove known forover a decade1
Today acknowledgement of thefailure of our aid policy in PNG hasgone well beyond the writings of in-dividual international policy analystssuch as myself to institution-spon-sored reports such as Beyond Baliwhich was released by the AustralianStrategic Policy Institute (the Aus-tralian Governmentrsquos own strategicpolicy adviser) and Papua NewGuinea on the Brink which was writ-ten by Susan Windybank and MikeManning for the Centre for Indepen-dent Studies Both reports confirmthe gross failure of Australian aidpolicy in PNG
Yet still our aid policy irrational-ity towards Papua New Guinea con-tinues While the ASPI and CIS re-ports acknowledge the gross failureof our aid policy in PNG they alsoargue that we need to continue ouraid to that country Indeed the ASPIreport argues that we should increaseour aid to Papua New Guinea Thepolicy saviour The ASPI report ar-gues that we should exert greater con-trol over our aid Not just over theform of our aid but direct interven-tion in policy and implementation inPNGmdashin essence for a return to pre-
Aid Detox for PNGPETER URBAN
independence days in PNG whereas UN-sanctioned administrator weran government in that country
Despite the mind-frame of secu-rity-focused strategists such as thoseat ASPI and the CIS (which en-dorses the aid approach advocated byASPI) the reality is that we canrsquotPNG is now independent and to ig-nore this reality would simply com-pound the problems of our past aidpolicy irrationality with irrationalityabout our political relationship withour nearest neighbour
A more interventionist aid policytowards PNG on our part as advo-cated in Beyond Bali and by HughWhite (the executive director ofASPSI) in the media might havepopulist appeal but it would haveserious adverse implications for ourrelationship with other Pacific islandcountries and even IndonesiaWorse it would give succour to theviews of our east Asian critics (suchas Malaysian PM Dr Mahathir) whoclaim that Australia continues toharbour colonial aspirations
We have to accept that to be suc-cessful aid policy must not just helpreduce mass poverty it also has to doso as a guest in the aid recipientcountry To do otherwise is not aidbut imperialismmdashwhether inten-tional or not
A more interventionist approachto aid policy in PNG would also givethe current corrupt political elite inPort Moresby a rallying point againstus and an excuse to delay changingtheir own policies Neither Austra-lia nor PNG can afford any furtherdelays to policy reform For us to givePNG politicians yet another excuseto delay reform would be not onlyirrational it would be inexcusableWhile our aid continues so will thecorrupt elite that is at the heart ofPNGrsquos problems Until we send themessage to the PNG political elitethat we are prepared to stop ouraidmdashto put them on aid detoxmdashwewill continue to waste our aid in thecorruption that is PNG politics Itmay be hard to accept but the sadreality we face in PNG is that no aidmay prove to be good aid at least inthe short to medium-term2
NOTES
1 Peter Urban lsquoOne Clear ObjectiveNo Clear Approachrsquo IPA Review1997 Vol 50 No 1
2 With Iraq also likely to require verysignificant Australian aid fundingover the next few years the Gov-ernment will need to review our aidprogram as part of the 2003-04 fed-eral Budget A decision to suspendaid to PNG could be taken as partof that review
Peter Urban is former chief economist with theDepartment of Foreign Affairs and Trade
We have to accept
that to be successful
aid policy must not
just help reduce
mass poverty it also
has to do so as a
guest in the aid
recipient country
API
22 MARCH 2003
E V I E WR
IN his speech to the Na-tional Press Club on theprospect of war with Iraqand the case for disarma-
ment Prime Minister Howard statedthat Australia will play a significant hu-manitarian role in Iraq
If so the Howard Government needsto evaluate carefully the foreign-aid non-government organizations (FANGOs)which it funds to carry-out this humani-tarian programme Many FANGOshave made it clear that they do not sharethe Australian Governmentrsquos objectivesand values in Iraq Moreover some donot agree with the Governmentrsquos over-all aid policies in general
THE COALITION OF THEUNWILLINGIn the lead-up to latest Gulf War some30 Australian aid agencies put theirnames to an Open Letter to the PrimeMinister organized by the AustralianCouncil of Foreign and Overseas Aid(ACFOA) The aim of the letter was tolsquospeak out against war in Iraqrsquo and it ex-pressed grave concerns about the hu-manitarian consequences of the war andthe effects of the existing sanctions1 TheFANGOs that signed the letter wereOxfam Community Aid Abroad WorldVision Australia TEAR AustraliaUnion Aid Australia - APHEDACaritas Australia National Council ofChurches Australian Council for For-eign and Overseas Aid Save the Chil-dren Australia CARE Australia OzGreen United Nations Association ofAustralia Family Planning AustraliaMercy Works Marist Mission CentreAustralia Every Home for Christ Bap-tist World Aid for Christ CCF Austra-lia Quaker Service Australia Austra-lian Lutheran World Service AustralianRelief and Mercy Services AnglicanBoard of Mission AUSTCARE Com-munity Development and Health
Irreconcilable DifferencesDON DrsquoCRUZ
Hussein have been virtually ignored isa searing indictment of the warped ide-ology feeble analysis and moral blind-ness of the sector For them now to re-discover the plight of the Iraqi peopleand to invoke their name in the mediais beyond contempt
THE OXFAM COMMUNITYAID ABROAD POSITIONOf the 30 FANGO signatories to theopen letter Oxfam Community AidAbroad (OCAA) has been perhaps themost outspoken It opposed military ac-tionmdasheven with UN Security Councilapproval4 In spite of all the evidence tothe contrary OCAA was comfortablewith Saddam Husseinrsquos assurances thathe did not have weapons of mass destruc-tion5 Adopting the common policyagreed to by the other Oxfam affiliatesOCAA stated that it will not take anymoney from the lsquobelligerentsrsquomdasha quaintterm used to the describe democraticnations planning to disarm a dictatorguilty of countless human rights abuses
OCAArsquos outrage against the so-called lsquobelligerentsrsquo appears to be geo-graphically confined to Iraq OCAAappears happy to take governmentmoney from the belligerents elsewherearound the world
According to OCAArsquos ExecutiveDirector Andrew Hewitt refusing totake money from the belligerents wasdone to lsquoprotect its impartialityrsquo6 Thisis a very curious position from Australiarsquosarguably most political FANGOOCAA has a long track-record of beinganything but impartial or reluctant totake sides in miliary action It wasnrsquotimpartial in East Timor where it sidedwith Fretlin in its quest for indepen-dence According to its own testimonyto a Senate committee OCAA wasgiven the choice by the IndonesianGovernment between lsquoplaying politicsrsquoor delivering aid projects in Indonesia7
Group Amnesty International Austra-lia AngliCORD Australian Aid forCambodia Fund Burnet InstituteRedR Friends of the Earth PLAN Aus-tralia and Australian Volunteers Inter-national2
This open letter highlighted a num-ber of problems with the FANGOs sec-tor First it highlighted the weak logicthat passes for advocacy in the sectorThe letter argued against military actionwas critical of sanctions and suggestedthat nations should settle issues only bydiplomatic means It is a viewpointwhich totally ignores the fact that theGovernment had to deal with SaddamHussein
The shallowness of their logic wasbest exposed by the Prime Minister inhis response to the open letter in whichhe stated that the humanitarian situa-tion in Iraq is best addressed by SaddamHusseinrsquos removal and perhaps morepointedly that Saddamrsquos manipulationof foreign aid had allowed him to main-tain and pursue his weapons of mass de-struction capability and human rightsabuses3
Second it also highlighted the factthat the so-called lsquohuman rights-basedapproachrsquo to development (embraced byseveral of the signatories) is not so muchabout realizing human rights (as its pro-ponents argue) but is more about pro-viding them with an excuse to lsquoplay poli-ticsrsquo According to the theory the hu-man rights-based approach to develop-ment allows FANGOs to tackle the rootcauses of poverty and injustice
Yet the root cause of the Iraqipeoplersquos suffering can be summed up intwo simple wordsmdashSaddam HusseinThe fact that the FANGOs who sub-scribe to this particular approach havebeen obsessed with imaginary humanrights abuses committed by Shell NikeRio Tinto BHP-Billiton and AuroraGold while the activities of Saddam
23MARCH 2003
E V I E WR
It chose the former thus making it per-sona non grata in Indonesia for almost adecade8 It wasnrsquot impartial inMozambique when it sided with Frelimoin the countryrsquos civil war9 It wasnrsquot im-partial in Ethiopia when it developedlinks to the Eritrean Peoplersquos LiberationFront during its war against the thengovernment10 It was not impartial oranti-war when it sided with the TigrayPeoplersquos Liberation Front in the neigh-bouring province to Eritrea when thatgroup was waging a guerrilla war againstthe government11 And recently therehave been claims that in the Middle Eastit was little more than an lsquoeager propa-gandistrsquo for the Palestinians12
In East Timor Ethiopia and Mozam-bique OCAA was linked with organi-zations which supported direct militaryaction that led to the deaths of thou-sands of civilians In none of these loca-tions were the enemies of their friendany worse than Saddam Hussein In-deed in many cases OCAArsquos friendswere arguably no better than their en-emies in terms of human rights
OCAArsquos decision not to accept Aus-tralian Government funding is the cor-rect one in the sense that it clearly doesnot share the Governmentrsquos values onthe question of Iraq and thereforeshouldnrsquot receive any governmentmoney
Hewitt went on to state in a pressrelease that lsquoWe will not take funds thatmight allow a government to use hu-manitarian efforts as an instrument offoreign policyhelliprsquo13
This is finemdashexcept the AustralianGovernmentrsquos foreign aid is an instru-ment of foreign policy And it always hasbeen This is spelt out quite clearly inthe Australian Governmentrsquos latest for-eign and trade policy White Paper Ad-vancing the National Interest14
FANGOs that cannot accept thisrather basic proposition should not begetting taxpayersrsquo money They areclearly unsuitable for the task at hand
The consequences of Australian tax-payersrsquo money falling into the wronghands were brought home to Prime Min-ister Howard when he met IndonesianPresident Megawati Sukarnoputri to dis-cuss the war against terrorism and
Australiarsquos involvement against Iraq Atthe top of the Indonesian agenda wasthe issue of Australian funding toFANGOs being used to support sepa-ratist movements in Indonesia15
Post-war Iraq will be a better placewithout Saddam Hussein and his thugsThis does not mean that it will be a safeplace or necessarily a stable place Afterall one of the reasons for Western tol-eration of Saddam Hussein for manyyears was his ability to hold the various
ethnic minorities in Iraq together albeitrather brutally thereby maintaining abalance of power in the Middle East Hisdeparture would see strains on Iraq fromthe various ethnic minorities that makeup Iraq There is a strong chance thatIraq will fragment
The last thing the Australian Gov-ernment or any of the so-called belli-gerents needs in a post-war Iraq is west-ern NGOs running around and becom-ing self-styled advocates for national self-determination for Iraqrsquos ethnic minori-ties and injecting themselves into Iraqrsquosinternal politics This is a real risk Thebehaviour of Australian foreign aidNGOs in Indonesia should make Aus-tralian decision-makers extremely waryof funding any NGOs with Australiantaxpayersrsquo money so that they can oper-ate in Iraq
As things stand now FANGOs facevery few restrictions on their actionsfrom government If they undertake ac-tivity that is inconsistent with being anagent of government they may losefunding for specific projects or in moredramatic circumstances lose funding ina country Nonetheless they are gener-
ally able to access Australian Govern-ment funding for other projects andcountries In other words the penaltiesfor becoming caught up in political ac-tivities are very light for NGOs and posethem no serious problems
Foreign aid NGOs that lsquoplay politicsrsquoare unsuitable contractors for the deliv-ery of aid That these overtly politicalorganizations have been allowed to gaingovernment accreditation and receivegovernment funding points to some se-rious problems at AusAID Australiarsquosofficial aid agency The time has comefor this to change
NOTES1 httpwwwacfoaasnaumedia_releases
2003_releases26_3_03PDF2 httpwwwacfoaasnauemergencies
openletterPDF3 httpwwwacfoaasnauemergencies
iraq_responsehtm4 Oxfam Horizons Vol 3 No 1 (Febru-
ary 2003) page 25 Oxfam Community Aid Abroad lsquoIraq
Overviewrsquo February 20036 Hewitt quoted in Liz Gooch lsquoOxfam
wersquoll say no cashrsquo The Age 16 March2003
7 Community Aid Abroad Submission tothe Senate Foreign Affairs Defence andTrade References Committee Inquiryinto East Timor Downloaded at httpwwwcaaorg aucampaignssubmissionstimorhtml
8 Ibid9 Susan Blackburn Practical Visionaries A
Study of Community Aid Abroad (Mel-bourne Melbourne University Press1993) page 313
10 Ibid pages 325-333 passim11 Ibid12 Gerald Steinberg lsquoPropaganda vs Hu-
manitarianismrsquo Australian Financial Re-view 7 June 2002 Downloaded at httpfacultybiuacil~steingconflictopedpropvshumanitarianismhtm
13 ht tp wwwcaa o rg au p r 2003 iraqfundshtml
14 httpwwwdfatgovauani15 Dennis Shanahan lsquoJakarta fears aid funds
for rebellionrsquo The Australian 17 Febru-ary 2003 page 2
Don DrsquoCruz is Research Fellow at the IPAand Director of IPArsquos NGOWatch
OCAA has a longtrack-record of
being anything butimpartial or
reluctant to takesides in miliary
action
API
24 MARCH 2003
E V I E WR
GEORGE Bush Tony Blairand John Howard haveprovided many reasons forsupporting military action
against Iraq One of those reasons hasbecome known as the lsquohumanitarianrsquojustification Put simply the lsquohu-manitarianrsquo justification for the US-led invasion of Iraq is that such ac-tion is necessary to free the Iraqipeople from their totalitariandictator
Such an argument is attractive tothose who believe that there aresome fundamental human rights thatall individuals possess regardless ofwhere and how they live Whatserves as the source of those rightshas been the subject of debate forcenturies One of the pre-eminentstatements on the subject was madeby John Locke who in The SecondTreatise of Government wrote thatmankind was lsquoequal and indepen-dentrsquo and that lsquono-one ought to harmanother in his life health liberty orpossessionsrsquo
Saddam Husseinrsquos mass murdertorture and terror are reasonablyclear breaches of human rightsTherefore some would ask why thereshould be opposition to the UnitedStates and its allies taking whatevermeasures might be necessary totopple the Iraqi regime Surely thesame standard of behaviour that ap-plies to individuals applies also tonation states If an individual walk-ing in the street witnessed a rapeoccurring wouldnrsquot that individualbe entitled to do everything in hispower to stop the crime and assistthe victim
The point is of course that in-ternational law and convention do
After IraqIs Sovereignty Dead
JOHN ROSKAM
not allow nation states to act in thesame way as individuals Countriescannot simply lsquotake the law into theirown handsrsquo To restrain lsquovigilantestatesrsquo (who might be acting fromeither lsquogoodrsquo or lsquobadrsquo motives) a num-ber of legal and political theorieshave been developed One of theseis the doctrine of lsquosovereigntyrsquo whichprovides that states should not inter-vene in the domestic affairs of otherstates
In relation to Iraq the lsquosover-eigntyrsquo question is perhaps the stron-gest argument against the US-ledCoalition Most of the other criti-cisms of lsquohumanitarianrsquo interventionin Iraq are either grounded in simpleanti-Americanism or are fallaciousFor example there is the claim thatbecause some of the countries in theCoalition have previously ignoredHusseinrsquos cruelties therefore it is il-legitimate to take action now Sucha view has been expressed by aMelbourne international relationsacademic
While there is no disputing thebrutal nature of Saddam Hus-seinrsquos regime the case for inter-vention made by those in Can-berra London and Washingtonis weakened by the fact that atthe peak of Saddamrsquos crimes inthe late 1980s they were eitherdirectly supporting him withweapons technology and intelli-gence or were entirely indifferentto his behaviour Even if theyhave belatedly recognised theerror of their ways how seriouslycan we take their concerns aboutweapons of mass destruction nowgiven they were his suppliersthen1
On the basis of this argument itcould be said that Britainrsquos (andAustraliarsquos) case for intervening toassist Poland upon the German in-vasion in 1939 was lsquoweakenedrsquo be-cause Britain had previously acqui-esced to Germanyrsquos rearmament theremilitarization of the Rhinelandand the annexation of both Austriaand parts of Czechoslovakia Fewpeople who chanted lsquoFreedom forEast Timorrsquo said that the HowardGovernment should not act becausea quarter of a century before theWhitlam Government had been lsquoin-differentrsquo to Indonesiarsquos occupationof the island
There is also the claim that al-though Hussein is bad he is not theworst dictator in the world and thatit is hypocritical for the Americansto attack only Iraq This is an as-tounding proposition It attempts toapply to the United States a standardof behaviour that is impossible to sat-isfy Should the police not attemptto solve any crimes because theycanrsquot solve all crimes If a crime iscommitted by two people and thepolice arrest one perpetrator unlessthe other is also caught must the firstperpetrator be released When indi-viduals donate money for famine re-lief in Africa very few believe thattheir donation is pointless becauseit might prevent the starvation ofonly one person rather than thou-sands Christian ethics sets down norequirement that we should help no-one unless we can help everyone
The issue about state sovereigntyhowever is one that deserves to betaken seriously Regardless of onersquosopinions on the extent and limits ofstate sovereignty it is true that our
25MARCH 2003
E V I E WR
international relations system is builtupon the principle and to modify oroverturn it is a matter of some con-sequence
Even those who are generally sup-portive of the United States andtheir allies see the problem As it wasput by a leading commentator whenanalysing the Australian PrimeMinisterrsquos lsquohumanitarianrsquo justifica-tion for war
Finally Howardrsquos argumentagainst Hussein on human rightsis correct So is his moral case forwanting to liberate the Iraqipeople from their torment Theproblem however is that youcanrsquot trip around the worldwanting to overthrow regimesbecause of human rights2
Some would askmdashlsquowhy notrsquo Be-cause to do so would overthrow theUnited Nations Charter comes therejoinder And in turn the responseto that might bemdashlsquogoodrsquo
If itrsquos a choice between the main-tenance of the UN Charter and free-dom from tyranny freedom wins ev-ery time (although an internationallawyer sitting in Sydney might havea different view on this question fromthat of a political prisoner manacledin a Baghdad jail cell)
When the interests of lsquointerna-tional lawrsquo are more important thanthe life and liberty of individuals itcould be concluded that lsquothe Em-peror has no clothesrsquo Would inter-national law have sanctioned inter-vention to stop the Holocaust hadHitler not waged war and proceededwith his methods entirely within theconfines of the German territorialstate
Many who argue that lsquohumanitar-ianrsquo intervention in Iraq is not justi-fied because it infringes on thatcountryrsquos lsquosovereigntyrsquo would happilyhave other countries cede their po-litical sovereignty to supra-nationalbodies Certain features of the Inter-national Criminal Court overridethe principles of sovereignty but thatdid not stop a phalanx of interna-tional law experts urging sovereigngovernments to join it so as to en-
able the prosecution of war criminalsBut when it comes to actually stop-ping war crimes not simply prosecut-ing them that phalanx is largely si-lent
Without the doctrine of state sov-ereignty and without an arbiter fordetermining when interference withthe principle is justified (the roleclaimed by the United Nations andits Security Council) it is said thatstates would be free to impose theirown will and intervene in other
countries whose standards did notmeet their own (In The Second Trea-tise of Government Locke argued thata characteristic of a lsquostate of warrsquo be-tween individuals was the absence ofa superior authority to adjudicatedisputes and prevent individualsfrom administering justice them-selves)
Iraq might be claimed as a rea-sonably clear-cut case for interven-tion but other situations are notlikely to be as simple In Culture andEquality first published in 2001Brian Barry explored a lsquoliberalrsquo per-spective on this question
The liberal position is clearNobody anywhere in the worldshould be denied liberal pro-tections against injustice andoppression However in exactlythe same way as liberals arepragmatic about what liberalismmeans in terms of boundaries sohere the move from principle tointervention has to be mediated bypractical considerationshellip
[L]iberals are not so simple-mindedas to imagine that the answer toall violations of liberal rights is tosend in the Marines or even aUnited Nations force As in anyjust war theory there must be somedoctrine of lsquoproportionalityrsquohellip[S]carcely anybody would be infavour of the western powersinvading Saudi Arabia so at to sortout the way in which it lsquounjustlydenies political rights to women ornon-Muslimsrsquomdashaccording to theirliberal idea of justicersquo3
The question remainsmdashafterIraq what remains of lsquostate sover-eigntyrsquo Should the doctrine applyonly to lsquoliberal democraticrsquo statesSuch a solution might be attractiveto some lsquoliberalsrsquo but it doesnrsquot avoidthe problem of what exactly a lsquolib-eral democraticrsquo state is
One irony arising from the argu-ments about the war in Iraq is thatmany of those who have urged astrict application of lsquostate sover-eigntyrsquo principles in the past havegenerally supported the US-led in-tervention while those who havebeen willing to abridge or even aban-don the doctrine have had to rely onit to counter the lsquohumanitarianrsquo jus-tification for war
There are not many certaintiesabout the nature of the world afterthe war in Iraq but it can be saidwith some assurance that one defi-nite outcome is going to be a morevigorous debate about state sover-eignty
NOTES1 Scott Burchill lsquoThe humanitar-
ian arguments for this war are spu-riousrsquo The Age 21 March 2003
2 Paul Kelly lsquoThe hapless per-suaderrsquo The Australian 15ndash16March 2003
3 Brian Barry Culture and Equal-ity An egalitarian critique ofmulticulturalism Harvard Uni-versity Press page 138
John Roskam is a Research Fellow with the IPA
The lsquosovereigntyrsquo
question is perhaps
the strongest
argument against
the US-led
Coalition
API
26 MARCH 2003
E V I E WR
Which Way for theDemocrats
The 2002 mid-term elections were adramatic victory for President GeorgeW Bush and the Republicans Insteadof the historical norm of the partycontrolling the White House losingBushrsquos party gained seats in the Sen-ate House Governorsrsquo races andState legislatures The result was abitter disappointment for the Demo-crats and has led to a fierce debatebetween the Left and Centrists aboutthe future policy direction of the partytowards the 2004 elections
The Leftrsquos analysis is that the ma-jority of Americans are natural Demo-crats Electoral defeat was due to thefailure to energize that base of Demo-crats The party failed to distinguishitself sufficiently from Bush and thusgive their voters a reason to turn outWhile the majority of Democrats op-posed Bush on tax cuts and the warwith Iraq a significant minority sup-ported him and campaigned on thatsupport The result the Left claimwas that the Democrats lacked a con-sistent message in contrast to Bush
Support for this argument can befound in the higher turnout amongstRepublicans than Democrats in 2002while in 2000 the combined vote forGore and Nader was 51 per cent Aninfluential book by John Judis andRuy Texeira identified lsquoThe Emerg-ing Democrat Majorityrsquo Theyclaimed that growing demographicgroups trended Democrat includingthe young socially liberal profession-als minorities and women
What policies would motivate thisnatural Democrat base The Left callfor rescinding the Bush tax cut a classwar against the corporate world amajor increase in lsquopublic investmentrsquoin schools childcare health care and
Letter from AmericaNIGEL ASHFORD
public transport and strong opposi-tion to the war
Centrists however have a verydifferent analysis of the Democratsrsquoproblems the public did not trustthem to pursue the war against ter-rorism vigorously to keep down taxesto spend their tax dollars wisely or toreflect their cultural values
A Gallup opinion poll found that57 per cent of Americans askedthought that the Democrats were nottough enough on the war on terror-ism while 64 per cent thought theRepublicans were There was the per-ception that the Democrats were notserious on the issue and just playingpolitics Evidence for this was the de-bate over the new Department ofHomeland Security blocked becausethe Democrats wanted to protectunion rights while the President de-manded more flexibility to deploy theworkforce Many voters saw the issueas the national interest versus a spe-cial interestmdashin this case that of theunions The Democrats were seen asputting the interests of one of theirmajor constituencies before nationalsecurity
The Democratic LeadershipCouncil in lsquoThe Road Aheadrsquo by AlFrom and Bruce Reed presented theCentrist case lsquoStop pretending wecan win a majority simply by energiz-ing our basersquo The Democrats were
not trusted on the war against terror-ism were hostile to the cultural con-cerns of many working-class Demo-crats on abortion and guns and stillseen as the tax-and-spend party lsquoToomany Americans donrsquot trust us tokeep their taxes down or to spendtheir money wellrsquo
The Centrist agenda is to stronglyprosecute the war against terrorismwhether against al-Qarsquoeda Saddam orothers and to abandon knee-jerk iso-lationism arising from the experienceof the Vietnam War to defend capi-talism and support small investorsagainst irresponsible managers to cutpayroll taxes and to downplay thecultural issues that divide Democrats
Which path will the Democratstake The Left is in the ascendancyMost of the remaining Democrats inoffice come from left-wing districtsNancy Pelosi a left-liberal from SanFrancisco was easily elected the newleader of the House Democrats over-whelming her Centrist opponent andrising star African-American HaroldFord The early field of presidentialcandidates for 2004 is dominated bythe Left tendency including SenatorJohn Kerry Representative DickGephardt Governor Howard DeanRev Al Sharpton former SenatorCarol Moseley-Braun and Represen-tative Dennis Kucinich Only Sena-tor Joe Lieberman and Senator JohnEdwards represent the Centrist wing
The future of US politics may de-pend on which road the Democratsdecide to take The US is currently alsquo50ndash50rsquo nation evenly balanced be-tween the parties A left turn couldlead to Republican dominance farinto the future
Dr Nigel Ashford is at the Institute of Humane Studiesat George Mason University and is co-author of US
Politics Today (Manchester University Press)
API
27MARCH 2003
E V I E WR
Trusting TonyFrankly itrsquos all just too depressing Theeconomyrsquos heading for trouble Busi-ness confidence is low investment in2002 was 92 per cent lower than theprevious year and manufacturing in-vestment was nearly 18 per cent downThe budget deficit is spiralling becauseour once lsquoprudentrsquo Chancellor (trea-surer) Gordon Brown made over-opti-mistic growth projections and startedthrowing money at problems
Therersquos a load of health-and-safetyand anti-discrimination measuresthatmdashto put it most politelymdashare ex-amples of letting the best be the en-emy of the good Every school tripneeds a formal risk assessment withthe result that many trips are simplynot taking place New trains orderedfor London commuter routes wonrsquothave toilets because the rules say thatat least one toilet in each four-car unitmust be wheelchair-accessible whichwould have cost ten or a dozen seatson every overcrowded train
Some of this is just insane Somelocal authorities say that safety at workrules mean that home-care workersmustnrsquot lift the disabled people theyare looking after Or therersquos rail safetyUntil recently we were seriously pro-posing to spend $10 billion on a bet-ter system to stop trains going throughred signals On average this would havesaved the lives of about three passen-gers every four years which is a lousybargain compared with other safety in-vestments Worse it would also havereduced the capacity of the networkby up to 15 per cent and forced morepeople onto the roads which are muchmore dangerous than even ourclapped-out railways The result was aprojected net increase of 13 to 21 deathsper year
Meanwhile in London the Cen-tral line of the Underground has been
Letter from LondonJOHN NURICK
API
closed for weeks after a train derailedwhen one of its motors fell off Therewere no deaths or major injuries in theaccidentmdashbut itrsquos a safe bet that someof the people who havenrsquot been ableto use the Central line have been in-jured or killed on the roads
What can one say If the authori-ties took the same attitude to the riskof fatal accidents in the health serviceevery hospital in the country wouldhave been closed for years
Despite all this the Conservativesare still hopeless Their leader IanDuncan Smith has a new wheezewhen a journalist asks him anythingdifficult he chortles merrily and saysitrsquos the most uninteresting questionimaginable and hersquos not going to wasteanyonersquos time by answering it His col-leagues have their knives out for him
Meanwhile in spite of the govern-mentrsquos problems with the economy andthe public services Tony Blair is grow-ing in stature having his waymdashandantagonising large sections of his ownparty in the process On several recentissues he has faced down the formi-dable Gordon Brown in a way that notlong ago was hard to imagine
Then he shocked everyone by com-ing out against having elected mem-bers in the reformed House of Lordswhen most voters want an all-elected
chamber and most MPs want a partly-elected one In the event Parliamentcouldnrsquot agree on any of the optionsfor reform so wersquore stuck with the sta-tus quomdashwhich is fine by Mr Blair
Then therersquos the war By the timeyou read this it may be over or we maystill be waiting or our lads may befighting Mr Blairrsquos strong line againstIraq has made him very unpopular Theanti-war march on 15 February was thebiggest demonstration London hasever seen A few days later 122 Labourbackbenchers voted against the gov-ernment and many more abstained
Mr Blair didnrsquot budge War is a se-rious thing he says lsquoBut in a situationsuch as this you have to do what youbelieve to be right because thatrsquos theprice of having responsibilityrsquo1
He has often been accused of gov-erning by focus group Certainly he hasseemed reluctant to antagonise anypowerful group That has clearlychanged In a sense his stand on Iraqmerely follows his action in sendingtroops to Sierra Leone and Kosovomdashbut it has stirred up far stronger domes-tic and international opposition
The irony is that now when he re-ally needs people to trust him wedonrsquot Even in the desperately seriousbusiness of justifying an unpopular warDowning Street canrsquot play it straightremember the dossier from lsquointelli-gence sourcesrsquo that turned out to belargely cribbed from a PhD thesis onthe Internet
NOTE1 The Guardian 1 March 2003
John Nurick is a management consultant based in theSouth of England From 1985 to 1990 he was
editorial director of the Australian Institute for PublicPolicy and later edited newsletters reporting on theUK Parliament and European Union institutions
28 MARCH 2003
E V I E WR
KEVIN DONNELLY
Private EducationEquals Public Good
When it comes to choosing be-tween government and non-gov-ernment schools Australian par-ents are lsquovoting with their feetrsquo Asshown by recent ABS figures(Schools Australia 2002) over thelast decade there has been a dra-matic increase in non-governmentschool enrolments
Approximately 30 per cent ofstudents now attend non-govern-ment schools compared with 22per cent in 1980 and 28 per centin 1990 Over the last decadewhile the number of governmentschools has fallen by 64 per centnon-government schools havegrown by 61 per cent
Of course not everybody valuesparentsrsquo right to choose and theAustralian Education Union(AEU) Labor governments andlsquoleft-wingrsquo academics in particularconsistently argue against non-government schools
One of the arguments put for-ward by those opposed to givingparents greater freedom of choiceis that government schools are bet-ter at promoting social cohesionand a strong sense of what KenBoston the ex-head of the NSWEducation Department terms lsquothebonds of civic friendshiprsquo
The assumption is that becausestudents attend non-governmentschools there will be greater socialdivisiveness and a breakdown inthe civic values needed to hold so-ciety together But there is no cred-ible evidence offered to support theclaim that government schools arebetter at promoting the commongood
In fact there is much to provethe opposite
First as anyone familiar withthe lsquoculture warsrsquo and politicallycorrect curricula will know insteadof government-controlled educa-tion promoting unity and cohe-sion it has led to public angst andparental complaints
Witness the very bitter debatein Queensland a year or two agowhen the government-mandatedStudies of Society and Environ-ment (SOSE) curriculum was in-troduced into schools Such was
the lsquoleft-wingrsquo bias in the curricu-lum in particular in the areas ofmulticulturalism and the environ-ment that many parents felt be-trayed
The Queensland debate is mir-rored by what is happening in theUnited States As noted by Ste-phen Arons in his book Short Routeto Chaos instead of promotingunity government control of thecurriculum leads to the opposite
What the school wars tell us isthat somehow we have been
Education Agenda
transforming a vital instrumentfor creating social cohesioninto a source of division andhostility that there is some-thing built into the structure ofpublic schooling that under-mines one of its most importantfunctionsAronrsquos argument that govern-
ment schools no longer transmit aviable sense of a common cultureor agreed civic values is reinforcedby another noted United Stateseducationalist Diane Ravitch
In a recent article in the jour-nal Education Next Ravitch be-moans the impact of cultural rela-tivism and the post-modern on theschool curriculum (where there areno commonly agreed values) andeven goes so far as to argue thatparents should be free to choosenon-government schools becausesuch schools have a better chanceof reflecting their values
In the current education sys-tem with the public schoolscommitted to multiculturalismbilingualism and other forms ofparticularism it is difficult toargue that parents should notbe able to choose schools thatmeet their cultural needsSecond if one accepts that lsquoso-
cial capitalrsquomdashthe networks volun-tary associations and civic bondsthat hold a community togethermdashis important for the health of ademocratic society then non-gov-ernment schools clearly have theadvantage
Unlike the government schoolsystem characterized by a heavy-handed centralized bureaucracyand teacher union control non-government schools are closer tothe communities they serve Bytheir very nature non-government
There is no credible
evidence offered to
support the claim
that government
schools are better
at promoting the
common good
29MARCH 2003
E V I E WR
ALAN MORAN
The lsquoRrsquo Files
Private propertyrights the key toachieving efficiency inrural water use
WATER IN AUSTRALIAWater has always been a definingissue in Australiarsquos prosperityAnd in recent decades irrigationhas grown rapidly Even so theproportion of Australia that is ir-rigated at two per cent of theland comprises a share that isamongst the lowest among OECDcountries Only Canada and therainiest countries New Zealandand the UK have lower sharesthat of the US is 11 per cent andin Japan it reaches 60 per cent
Modern agriculture is only 200years old in Australia and thoughin the first 100 years agriculturalproductivity was increased toequal that of anywhere in theworld gains continue to bemademdashoutput has doubled overthe past 50 years a growth thatcould not have taken place with-out a similar expansion of irriga-tion Irrigation in the MurrayndashDarling agricultural provincealone contributes $5 billion toAustralian agricultural outputand non-irrigated agriculture inthe region contributes a further $5billion This makes the areawhich comprises 14 per cent ofAustraliarsquos land mass responsiblefor a third of the nationrsquos $35 bil-lion agricultural output
Applying Property Rights to WaterMost of the uses of water involvechoices or compromisesmdashdrink-ing water versus irrigation versus
industrial and so on Some how-ever involve complementaritiesparticularly certain recreationaluses such as water sports that arefacilitated by storage and consis-tent availability
In many cases water will per-form sequential functionsmdashthesame water can be used and re-used for irrigation used for indus-trial cooling and finish as drink-ing water Water with differentsometimes competing productiveuses will be optimally used as longas two conditions are in placeThe first is that its ownership isclearly specified and the ownersrsquoobligations to other users (orclaims from other beneficiaries)are well understood The secondrequires each property right to betradable to enable acquisition bythose who value it most therebymaximizing its value
The rights specification andtherefore property ownership canrarely commence with a cleansheet of paper People acquire in-dividual rights to property ini-tially through a variety of routesOne of these is seizure of some-thing that was originally of littlevalue until it was acquired and im-proved Squatters assume rights inthis way However they are firstacquired they need to be tradableAPI
schools establish strong commu-nity networks and have a greaterreliance on the voluntary work ofparents
That non-government schoolsare more effective in this regard issupported by research into lsquoChar-ter schoolsrsquo in the United StatesAs noted by Chester Finn at theFordham Foundation giving localcommunities lsquoownershiprsquo overtheir school builds networks oftrust and reciprocity so vital forsocial cohesion
Social capital also relies on citi-zens being disciplined and orderedin their behaviour Selfishness vio-lent behaviour and rudeness act tofragment the community instead ofpromoting cohesion According toa number of Australian surveys itis here once again that non-gov-ernment schools are seen to bemore effective
As noted by the Centre for In-dependent Studies researcher Jen-nifer Buckingham in The Truthabout Private Schools in Australiawhen analysing why so many par-ents forsake the government schoolsystem
When comparing independentprivate schools with publicschools the major theme thatemerged was not differences inacademic standards and curri-culum but issues of disciplineand order The surveyed par-ents felt that the behaviour andattitudes of students in publicschools was unacceptablehellipAll accept that non-govern-
ment schools achieve better aca-demic results provide greater cur-riculum flexibility and save Aus-tralian taxpayers millions of dol-lars Equally as important is theargument that such schools streng-then Australiarsquos civic health andstock of lsquosocial capitalrsquo
Dr Kevin Donnelly is Director of EducationStrategies a Melbourne-based consulting group
E-mailkevindnetspacenetau
s
30 MARCH 2003
E V I E WR
and relatively inviolable Thisprovides the incentive for them tobe improved and for their ownersand others to search out ways inwhich the assets they representcan be used to provide increasedvalue or other benefits
If confidence in the exclusiv-ity an owner has over the prop-erty right is lost or was neverpresent the asset will be used lessproductively For example own-ers will milk them for their cur-rent-use value rather than trade-off present value for a future valuethat is less certain
Even without a total emascu-lation of individual rights (for ex-ample when title to the propertydepends on continuing govern-mental assent) lack of certaintybrings lower incomes and dimin-ished asset protection One out-come of this can be observed inthe MurrayndashDarling system Wa-ter rights on the Victorian side ofthe Murray are secure while thoseon the NSW side have been over-allocated and are subject to ad-ministrative discretion includinghaving a firm duration of only tenyears In Victoria high securitywater (available 95 per cent of thetime) comprises the great bulk ofentitlements In contrast in
NSW high security water is avail-able only 60-80 per cent of thetime The result is that farmers onthe Victorian side plant perennialcrops while those in NSW tendto focus on annual crops espe-cially rice
There are claims that Victoriarsquosmore robust property rights meanthat the State Government haslost lsquocapabilityrsquo to manage com-pared with NSW The flip side ofthis is the increased risk and as-sociated lower value of productionnorth of the Murray where prop-erty rights are attenuated Gov-ernments that give themselves in-creased capacity to direct produc-tion or to take individualrsquos prop-erty will need to accept lower lev-els of income and output
IRRIGATION ENVIRON-MENTAL BENEFITS AND SA-LINITY
The Types of IssuesIssues stemming from irrigationcomprise two types those impact-ing on the environment and thoseimpacting on private uses Theformer includes issues such as pre-venting loss of species ensuringthat certain sorts of species flourishand avoiding unattractive growths
such as blue-green algae which re-sult from fertilizer build-up
The second involves economicimpacts on different users
While environmental flows toensure species flourish are oftenhighlighted salinity is the mainfocus And while salinity has animpact on the environment itsimportance is in the conflict of in-terest between productive usersmdashthe complaint of lsquodamaged goodsrsquoby downstream users against thoseupstream
The MurrayndashDarling Basin Sa-linity Strategy 2001ndash2015 has es-timated that increased salinitybrings costs of $294 million perannum to the basin
Yet data on the salinity of theMurray Darling shows levels up-stream of South Australia arelower than they were in the early1980s and are only seriously abovethese levels as the river ap-proaches its mouth at the GoolwaBarrage
The Basin Salinity Manage-ment Strategy argues that progressachieved over the past decade willlsquobe cancelled within 20-50 yearsand median salinity levels wouldexceed the Australian DrinkingWater Guidelines for good waterquality within 50-100 yearsrsquo Thecause of this is said to be risinggroundwater tables due to land usechanges across the Basin
The disputes over salinizationare largely disputes between com-mercial parties Full specificationof rights and obligations will al-low these to be resolved as longas the impacts are measurabletheir causes identifiable and thevarious rights and obligations areknown and stable In this respecttechnology to measure salt in wa-ter and to trace increases to par-ticular locations is readily avail-able
Agreements about the alloca-tion of water rights between ju-risdictions and to the main irri-gation provinces have been inplace for over a century In the
Average Salinity in the River Murray (EC Units)1
3500
3000
2500
2000
1500
1000
500
0
January 2003
July 2002ndashJanuary 2003
July 1982ndashJanuary 2003
Hume D
am
Swan
Hill
Merbein
Morgan
Milang
Mening
ie
Goolw
a
Barra
ge
31MARCH 2003
E V I E WR
I
API
Musinghellipcase of the Murray the lsquocaprsquo onwater abstractions agreed betweenthe various jurisdictions in 1995largely validated agreements madeearly in the last century and be-fore Disturbing these agreementswould greatly undermine the trustin the sanctity of property rightsand seriously reduce agriculturalproductivity Hence increased al-locations for certain parties or forcertain uses (including environ-mental flows) would need to bepurchased at market prices
Developments in Australiaover recent decades have con-spired to make irrigation water farmore valuable This is exacer-bated by1 Activation of NSW lsquosleeperrsquo
and lsquodozerrsquo water rights as a re-sult of the increased scarcityvalue a change that bringseven greater pressure on theavailable supply
2 Increased scarcity leading tomeasures that more carefullyhusband the water Whilesome of these prevent evapo-ration loss and have thereforebrought a net increase in effec-tive availability others havereduced availability (these in-clude a more careful wateringwhich results in reduced run-off and re-use)
3 Increased capture of waterwithin the land on which itfalls once water is recognizedas scarce landowners will seekto ensure it does not leave theirland NSW and Victoria haveplaced limits (a strict 10 percent in NSW) of water fallingon property as entitlements ofthe owner Queensland has notyet enacted an equivalent tothis Such adaptations of thecommon law are essentialhowever if downstream usersare not to be expropriatedThere is likely to be constant
bickering over water rights espe-cially if State Governments seek toelevate sharing issues and to sanc-tify them with claims about promot-
Daniel Pipes in The New York Posthas a very cogent explanation forwhy the Left appears to be so happywith the likes of Osama bin Ladenand Saddam Hussein
To be clear about their attitudeshe quotes the renowned Germanelectronic music composer KarlHeinz Stockhausen who saidstraight after the attack on NewYork that it was lsquothe greatest workof art for the whole cosmosrsquo
As Pipes and many of us observedaily there is barely a bad word tosay about Saddam Hussein nor aniota of sympathy for thoseoppressed tortured and murderedby his reacutegime Instead they venttheir fury against the AmericanPresident and British Prime Minister
Why the nonchalancePipes draws our attention to Lee
Harris writing in a recent issue ofthe Hoover Institutionrsquos journalPolicy Review According to KarlMarxrsquos central thesis the demise ofcapitalism hangs on workersgrowing poorer over timemdashwhichof course did not happen Sorather than give up on cherishedexpectations of socialist revolutionHarris notes Marxists tweaked theirtheory and looked instead to theentire populations of poor countriesto carry out the revolution Classanalysis went out the windowreplaced by geography
The trouble is they have tooverlook militant Islamrsquos slightly un-socialist practicesmdashsuch as itsimposing religious law excludingwomen from the workplace andpersecuting atheists
As Pipes sums up September 11and the prospect of war againstSaddam Hussein have exposed theLeftrsquos political self-delusionintellectual bankruptcy and moralturpitude
The Loopy Leftby Andrew McIntyre
ing an improved environment Realsolutions require the issue be placedwithin a normal commercial frame-work which involves1 Clarifying the property rights2 Allowing water rights to be
fully detachable from propertyand able to be used howeverthe holder wishes subject toany damage this might imposeon others
3 Ensuring full rights to buy andsell the water
4 Defining rights so as not to re-duce the quality of other usersThis means ensuring that farm-ing practices that do not bringgreater salination than somestandard
5 Allowing rights holders tobank their water and ensureeven greater certaintyAllocating specific individual
ownership rights to water and al-lowing its trade is a well-foundedmeans of maximizing the usevalue It would also be likely tohave the beneficial side-effects ofreducing salinity and farm-basedpollutants caused by intensiveuse We should grasp such oppor-tunities But if the impending sa-linity problem is as great as someclaim other solutions might wellinclude buying out some allocatedirrigatorsrsquo rights However alter-natives may be to remove saltfrom the water by engineering so-lutions or simply to live withhigher salt
NOTE1 Human drinking water should
be less than 800 ECs (electri-cal conductivity one ECequals about 06 mglitre)while higher levels are accept-able for much farming activity
Dr Alan Moran is Director Deregulation Unitat the Institute of Public Affairs
32 MARCH 2003
E V I E WR
Reading FileDone
eral political systems worldwidehave consistently accretedpower to the centre often in theface of clear constitutional im-peratives to the contrary) Ifeared instead that a UN thathad been patently successful insomethingmdashanythingmdashmightbe granted greater powers to thepoint where it would kill truediversity and individualism (ortry to anyway) through inevi-table bureaucratic practices
Is such a fear unfounded Ap-parently not if many peopleshare the moral touchstone ofthe Opposition Leader SimonCrean He believes according tohis own words in Parliamentthat what the UN SecurityCouncil declares is moral whatit refuses is immoral
The latest manoeuvrings overIraq have therefore been heart-
ening It seems that the desiresof the powers small and largeto promote their own interestswill continue to hobble the UN
The problem with a unitedworld is that as the threateningimpasse over Iraq suggestedthere are very divergent viewsabout how that world ought tobe run on an international leveljust as there are at national and
sub-national levels The virtueof multi-layered levels of gov-ernments is that competing ju-risdictions give the individual adegree of choice
The greatest sin of totalitar-ian governments past and pres-ent is to deny their citizens theright to leave The greatest dan-ger that the United Nationsposes as far off as it now (hap-pily) seems is that leaving its ju-risdiction is for all practical pur-poses impossible
THE IMPASSE JUST PASSEDI listened to Prime MinisterHoward speaking to the motionbefore Parliament in relation tothe war It was a good speechbut neither he nor PresidentBush seems able to structure andlay out an argument with thestyle and content of BritishPrime Minister Blair His equi-valent speech before the BritishCommons provides a masterfulsummary of the reasons for thiswar and includes an immenselyreadable time-line of the utterineffectiveness of the UN pro-cesses in dealing with Iraq Henicely deals with allegations ofthe lsquorushrsquo to war lsquoOur fault hasnot been impatience The truth
UNITED OR DIVIDEDI write just hours after US Presi-dent George W Bush has deliv-ered his ultimatum to Iraqi Presi-dent Saddam Hussein leave Iraqwithin 48 hours or be removedBy the time this appears beforeyour eyes you will knowwhether Hussein has decided hischances of survival will be sig-nificantly greater by choosingexile or by remaining in IraqThe recent creation of the In-ternational Criminal Court ofcourse makes war more likelysince Hussein can have no guar-antee of a peaceful lsquoretirementrsquo
In the event that Hussein re-mains in Iraq you will also knowwhether Bush has kept his wordand most likely the outcome ofthis military venture
This matter is immensely im-portant for the people of Iraqand for the military personnelinvolved (including our ownAustralian soldiers sailors andaviators) But then so was theprevious Gulf War the US in-vasion of Grenada the Austra-lian intervention in East Timorand so on But a difference be-tween the current conflict andthose others could be the impactit has upon international insti-tutions Actually just one inter-national institution the UnitedNations
Prior to the first Gulf War Ifeared the coalitionrsquos success forthe reason that some of it mighthave rubbed off onto the UnitedNations I hasten to deny that Ifear the UN as some vast con-spiracy for world domination Ifeared instead that it couldstumble into a piecemeal cen-tralization of power (just as Fed-
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
E V I E WRs
33MARCH 2003
E V I E WR
Reading FileDone
ATTACKING THE GLOBALGOVERNORSThe Cato Institute is a whole-some body as demonstrated byits opposition to such interna-tional organizations as the Inter-national Criminal Court and forthat matter the United Nationsitself Ted Galen Carpenter forexample argues in lsquoPutting theUnited Nations on Noticersquo thatthe UN can and has done somemodest good occasionally It ishe says lsquoa good idea to have aplace where governments cangather to air grievancesrsquo But headds if it lsquoattempts to acquire ataxing authority [or] raise astanding armyrsquo then the USshould withdraw (as indeedshould Australia) Because thatwould turn it into an lsquoembryonicsuperstate that would menacelibertyrsquo
Go to
wwwcatoorgforeignpolicyunhtml
THE INTERNATIONALORGANIZATIONS THEM-SELVESThe United Nations has beenaccused of being often ineffec-tive and always slow Well ev-ery time Irsquove hit the UNrsquos Web-site even with my nifty broad-band Internet connection slow-ness rules Perhaps the site isbeing continually accessed bythe teeming masses Anyway goto
wwwunorg
With 15 members alreadyand 13 more on the way thereremain hopes that the EuropeanUnion will be a force for a stable
twenty-first century Equallywith 15 members already exhib-iting rather divergent views overthe issue of Iraq and most of theforthcoming members sidingwith the United States perhapsthis is overly hopeful Go to
europaeuintindex_enhtm
Then there is the WorldTrade Organization the organi-zation behind which protection-ist nations can hide from unilat-eral trade liberalization by pre-tending to support multilateraltrade liberalization Go to
wwwwtoorg
And we mustnrsquot forget the In-ternational Criminal Court fearof which was no doubt a featureof Saddam Husseinrsquos rejection ofexile as an option and the furyof which is promised by a num-ber of prominent lawyers to bevisited upon our very own PrimeMinister Go to
wwwicc-cpiint
FEEDBACKI would welcome advice fromreaders on any other sites of inter-est to IPA Review readers E-mailme on scdawsonbigpondnetau
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
is our patience should have beenexhausted weeks and monthsand years agorsquo
Go to
wwwnumber10govukoutputPage3294asp
THE STRUGGLE BETWEENTHE CONTINENTSIf you are patient you can readthat wonderful British rag TheSpectator for free Last weekrsquoscopy is available on-line One ofits regular columnists is MarkSteyn an Americo-phile Cana-dian who has a robust turn ofphrase and an abiding disdain formuch modern music (whichseems to place him very comfort-ably into The Spectatorrsquos culturalmatrix)
His piece on the future de-cline of Europe vis-agrave-vis Ame-rica makes for fascinating read-ing Go to
wwwspectatorcouk
then click on the lsquoBack Issuesrsquobutton and choose the edition of15 March 2003
E V I E WR
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
18 MARCH 2003
E V I E WR
DESPITE the obsessivepublic attention to pricesat the petrol pump thepetroleum-refining sector
rarely registers on the media radarscreen This is unfortunate as the sec-tor fuels most movement of peopleand goods in our economy and soci-ety And it is in trouble
It is fragmented stunted and sur-vives by abjuring profit and mortgag-ing its future Without radical reshap-ing it is likely to wither leaving usexposed to the vagaries of the inter-national refined-products market
FEATURES OF THE AUSTRA-LIAN REFINING SECTORThe first thing to note is that by in-ternational standards Australia is arelatively small player The most re-cent international figures show thatour total output of refined productsin the third quarter of 2002 was 89million tonnes This compared withOECD production of 486 milliontonnes including US production of202 million tonnes Total Australianrefinery capacity of 870000 thousandbarrels per day (bpd) compares withthe figures for China (53 million)South Korea (26 million) and Singa-pore (11 million) Total regional re-fining capacity and production con-tinues to grow as Australiarsquos stagnatesIn the five years to 2000 regional out-put grew by 22 per cent
Second the structure of the indus-try is weak The dispersed geographi-cal distribution of our refining sectorreflects its historical developmentwith each State capital city support-ing one or more refineries Over thelast two decades the number of ma-jor oil companies operating in Aus-
Petroleum RefiningRationalization or Atrophy
JIM HOGGETT
tralia has shrunk from nine to fourAlthough the number of players hasmore than halved the number of re-fineries has reduced by only two fromten to eight The average capacity ofAustralian refineries is around100000 bpd New refineries in theregion are generally significantlylarger Singaporersquos largest has a capac-ity of 375000 bpd
Given the open Australian mar-ket our ex-refinery prices are virtu-ally set by the major exporters in theregion who are also operating on tightmargins Moreover the proportion-ately heavy demand for diesel in SEAsia tends to generate a persistentsurplus of gasoline which is availablefor export to Australia at discountedprices
The pattern of relatively smallscattered refineries is no longer opti-mal in an open market in which weare a price-taker
Third despite its sub-optimalstructure the Australian refining in-dustry is not grossly inefficient Oneindicator is the value added per em-ployee which is in the top five per-formers in the Australian manufac-turing sector
The cost competitiveness of Aus-tralian products is indicated by thefact that we have the cheapest ex-taxprice of petrol in the OECD Perfor-mance comparisons with the rest ofthe AsiandashPacific however suggestthat we lag the average efficiency inthe region And the best performersin the region are superior to our best
Finally the financial performanceof the industry is poor gross annualrevenues for the whole industry in-cluding marketing were $32 billionin calendar year 2001 For the five
years to 2001 the return on assets forrefining and marketing averaged 38per cent and was negative in the lasttwo years The indications are that2002 may have been a better year forthe industry but that the return onassets remains well below the cost ofcapital Over the four years to 2001the fixed asset base of the industrydeclined by almost 6 per cent to $12billion even after $24 billion of newinvestment in the period
This is clearly unsustainable andit raises the question Why is no-oneleaving the game
There are perhaps four main rea-sonsbull First the industry has engaged in
continual productivity improve-ment allowing it to keep withinrange of ruling prices
bull Second each refiner hopes thatsomeone else will blink first sothat the waiting will pay off
bull Third the costs of leaving thetable the exit costs are very highbecause of the nature of the prod-uct and the long occupancy ofmost sites
bull Fourth even while profitability islow the industry has generallybeen marginally cash positive
These add up to a big lsquofirst mover dis-advantagersquo
FUTURE TRENDSClearly petroleum will remain ourmost important energy source Petro-leum products constitute 52 per centof Australiarsquos final consumption ofenergy Liquid petroleum fuels pro-vide more than 95 per cent of Aus-traliarsquos transport needs There are nomajor foreseeable influences that willaffect this pattern dramatically There
19MARCH 2003
E V I E WR
have been major advances in fueleconomy and these will no doubtcontinue But more than counterbal-ancing this is the inexorable growthin demand for personal mobility andfor goods from distant parts Althoughgrowth in energy consumption mayslow down in Australia we will notbe reducing our consumption to anysignificant degree
Our export role will also be lim-ited Australian export volumes havetended to be steady over recent yearsand future new export potential forpetroleum products seems likely to beminimal China and India have re-cently become major exporters par-ticularly of gasoline Refinery capac-ity is planned to continue to growstrongly in the region even thoughthere is already significant excessThe decline in capacity utilization inmajor exporters such as Singaporewill make exporting difficult Further-more it is expected that productspecifications in Asia the US andEurope will converge in the comingyears thereby eliminating niche ex-port opportunities
The choice we face is what to doabout our essentially import-compet-ing industry
INCENTIVES NOT STRONGWhile there are strong pressures forthe industry to restructure there islittle incentive to invest for this pur-pose Investments in the Australianrefining industry have to competewith many alternatives across theglobe
Lack of sufficient return is thesingle biggest deterrent to investmentin the industry at present But thereare othersbull There is no prospect of strong growth
in demand to offset the substantialrisks associated with large new in-vestments
bull The persistent refinery capacity over-hang in our region will keep sus-tained pressure on our margins
bull The corporate taxation regime is nowless favourable than hitherto after thesubstitution of effective-life foraccelerated depreciation The
competing Singapore option offersa three-year write-off
bull The regulatory cost burden is grow-ing This applies to all Australianindustry but is potent in overseascomparisons Tighter fuel stan-dards environmental restrictionsintervention in prices and indus-trial law are some of the factors
bull There is increased sovereign riskstemming from inconsistent regula-tions We have eight parliamentswhich enact inconsistent laws Acurrent example is the higher fuelstandards applied in Western Aus-tralia
bull The sovereign risk also arises fromuncertainty in the regulatory processThere are unpredictable changesof direction (the deferral of thediesel sulphur excise differential[DSED]) and uncertainty in theface of conflicting interests (willthe Government act on ethanolcontent)
All these factors enter into the riskreward calculation When the re-wards are minimal the risks take onan extra dimension
WHAT INDUSTRY STRUC-TURE DO WE NEEDThe short answer is we cannot knowin detail
In the Downstream Petroleum In-dustry Framework 2002 the Depart-ment of Industry Tourism and Re-sources set out a broad vision
bull A preference for market-based so-lutions
bull A strong efficient environmen-tally responsible industry supply-ing most of the nationrsquos needs forproducts
bull Regulation only for market failureor national interest objectives
bull Regulation to be transparent andconsistent
bull Reform and regulation to maxi-mize long-term community ben-efitThis vision has some prescriptive
elements but the Government hasmade it clear that it will not nomi-nate an optimal number of refineriesor a pattern of production
The general public would probablyopt for a structure that guaranteedlower more stable automotive fuelprices Unfortunately they cannothave both in the short term
In fairness the investors in the in-dustry are the ones entitled and bestfitted to determine its future In theextreme they will do it anyway bypersisting or walking away Generallyspeaking they will seek to maximizetheir returns and thus promote themost efficient use of resources
Australian refineries are not inef-ficient but that is not the point Ourmarket is open so the competitionwe face is the best of the overseas per-formers often with more favourabletax and subsidy regimes
Nor is this simply a question ofclosing the smallest refineries A bet-ter approach might well be to allowrefining companies to concentrate onwhat they do bestmdashperhaps throughrefinery alliances Caltex and Shellhave co-operated in this way in Thai-land
The fact is that the detail of thedecisions can only be made by theindustry relatively free of governmentdirection The series of detailed de-cisions entailed will determine theoverall structure of the industry
COMPETITION REGULATIONCAN IMPEDE RESTRUCTURINGThe relevant provision of Section 50of the Trade Practices Act (TPA) pro
While there are
strong pressures for
the industry to
restructure there is
little incentive to
invest for this
purpose
s
20 MARCH 2003
E V I E WR
hibits mergers or asset acquisitionsthat would have the effect or belikely to have the effect ofsubstantially lessening compe-tition in a marketIt is both potentially and in prac-
tice an extremely restrictive provi-sion The Australian Consumer andCompetition Commission (ACCC)has expressed concern at concentra-tion in the sector in applying the pro-vision
The ACCCrsquos concerns seem ex-aggerated in the light of history Butthey are complemented by a persis-tent public misapprehension thatlarge petrol price swings equal profi-teering This perception has been soexploited for political advantage andmedia excitement that it is now al-most impossible for the truth toemerge
The future intensity of competi-tion in this industrymdashif it is allowedto restructuremdashshould not be indoubt Any rationalization would inall likelihood still leave strong do-mestic competition in each majorproduct category perhaps with fewermore efficient production units
The market is also contestableThere would be numerous potentialimporters and many independent re-tailers High margins would be rap-idly eroded by competition As re-cently ruled in the Boral case mar-ket reality is more conclusive than aperception of anti-competitiveness
Proposed mergers have been per-mitted in the past but the process isslow and permission is generally onlygranted with severe conditionsNonetheless there is a strong case forallowing restructuring within theterms of the merger provisions
AUTHORIZATION COULD BETHE KEYIf Section 50 of the TPA is an im-passable barrier then the authoriza-tion provisions of the Act could bethe way to greater efficiency The testsunder these provisions require a pub-lic benefit which outweighs the com-petition detriment The ACCC listsfostering business efficiency industry
rationalization and import-competi-tiveness as important public benefits
There is a strong prima facie casethat rationalization of the industrycould satisfy these tests It wouldallow greater scale of productioneconomies in distribution and closureof the least efficient production units
But the authorization process isslow and the onus for demonstratingthe public benefits rests on the appli-cant Slow process can amount to ef-fective rejection
POLICY OPTIONS AND REC-OMMENDATIONSIf government cannot help the indus-try to adjust it should allow it to ad-just by supporting sensible changeThis would involve both improving
the operating environment throughregulatory reform and altering thebalance of competition regulation sothat the industry could restructurevoluntarily The CommonwealthGovernment has already indicated awillingness to support both but hasnot yet delivered
The ball would then be in theindustryrsquos court to bring forward newproposals if a new policy environmentcould be created This could all hap-pen within a very broad strategicframework agreed with the industrywhereby Australia continued to besure of sufficient refining capacity tomeet a severe international fuel short-age
We therefore recommend thatbull The Commonwealth Govern-
ment provide explicit indicationto the ACCC of the public ben-efits it sees from the rationaliza-tion of the refining sector In par-ticular joint ventures should becontemplated
bull The ACCC give sufficient weightto the public interest benefits ofrestructuring to allow rationaliza-tion of production facilities
bull All governments reduce distortingfuel subsidies and taxes that favourparticular sectors or fuels
bull The State Governments act im-mediately to harmonize their regu-lation of the industry and agreenot to issue any new inconsistentregulation
bull More specifically the States havea single set of fuel standards withwhich refiners can reasonablycomply withdraw from all formsof price regulation and refrainfrom thwarting or distorting therationalization process
bull Governments generally not intro-duce new regulations mandatingthe use of alternative fuels
CONCLUSIONThe choice for the industry appearsto be between accelerated rational-ization and atrophy The process ofchange is something which the indus-try must plan and effect The task isnot impossible but it will require theactive support of government at alllevels For the time being there is anexpressed willingness at the Com-monwealth level but no real solu-tions
If nothing is done the refiners willcontinue to stumble along in a regu-latory fog and will invest only whenobliged to do so by changing fuel stan-dards They will become increasinglyvulnerable to low-priced imports andeventual closure
Jim Hoggett is a Senior Fellow at theInstitute of Public Affairs
If Section 50 of the
TPA is an impassable
barrier then the
authorization
provisions of the Act
could be the way to
greater efficiency
API
Last week the Government tabled 22 volumes of theCole Royal Commission into the Building andConstruction Industry Former Court of Appeal judgeTerence Cole made 392 specific findings of unlawfulconduct and in the confidential final volumerecommended that 31 individuals be referred for possiblecriminal prosecution As was to be expected theconstruction unions claimed that the report was a witch-hunt and people who should have known better claimedthat Cole was biased
The anti-union allegations were never very plausiblegiven that most unions had refused to cooperate withthe Commission and had even boycotted theCommissionrsquos special conference on occupational healthand safety As things have turned out one of their ownhas fatally undermined the unionsrsquo case No less anauthority than the National Secretary of the ConstructionDivision of the CFMEU has unwittingly confirmed thatCole is right In what was no doubt an unguardedmoment John Sutton admitted to a Melbournenewspaper that ldquovirtually everything we do breaches partof this Actrdquo Suttonrsquos admission means that Colersquosdescription of a largely lawless industry can be disputedat the margins but not credibly denied The problemsof the industry have been established beyond credibledoubt and the question now is what needs to be doneabout it
Nothing says the CFMEU because itrsquos alright tobreak the law in the best interests of the working classLeading union officials take the view that in a toughindustry only wimps take the law seriously The newsthat ldquoonlyrdquo 31 individuals had been recommended toface criminal charges was greeted with somethingapproaching jubilation as if the industryrsquos code of silencebased on fear had largely kept the Royal Commission atbay
As the Australian Financial Review commented in aneditorial the unionrsquos dismissive reaction to Colersquos report
ldquospeaks as loudly as his damning findings of entrenchedlawlessnessrdquo Imagine the reaction if a royalcommissioner had identified 31 people in the financeindustry or the steel industry for possible criminalcharges This would rightly be regarded as the sign ofan industry in crisis demanding urgent governmentintervention
Change wonrsquot be easy in an industry conditioned tothink that might is right Change which shifts powerfrom one unscrupulous group to another will not bereform As Grocon has discovered the first company toldquobuck the systemrdquo is liable to heavy-duty industrialpayback No one wants to be the first to change butchange is necessary in the national interest
In 2002 the Victorian construction industry aloneaccounted for 17 per cent of all days lost through strikesThe West Australian construction industry accountedfor another 8 per cent of the national strike tallyConstruction is a $40 billion a year industry comprisingnearly six per cent of GDP and employing nearly500000 Australians Due to over-manning demarcationdisputes and chronic stoppages labour productivity incommercial construction averages 13 per cent less thanin home building Plastering the same wall in the sameway costs 40 per cent more in a high rise building thanin a standard house Just raising labour productivity incommercial construction to the home building standard(let alone the 50 per cent increase needed to match NorthAmerican levels) would mean according to Econtech aone per cent drop in the cost of living a one per centincrease in GDP and $23 billion in benefits toconsumers workers and taxpayers every year
Still change is about decent Australian values notjust a more efficient industry Workers donrsquot like latenight house calls compulsory attendance at demos anddays spent sitting in the shed to make an industrial pointany more than bosses Threats of violence contempt forcourt and commission orders mob rampages when one
Restoring the Rule of Law in theConstruction Industry
Tony Abbott MHR
s
As this issue of the IPA Review was at the press we were alerted to the delivery of the following speechby the Minister for Employment and Workplace Relations The paper marks a seminal change in the
governmentrsquos approach to systemic corruption in the construction industry and isanother major step in the reform of workplace relations in Australia
SI-1MARCH 2003
IPA REVIEW SPECIAL INSERT
side doesnrsquot get its way habitual failure to honouragreements and routine harassment of people exercisingtheir legal rights are not acceptable in modern Australiaand cannot be excused even in a good cause
Breaching ldquobourgeois lawrdquo may not matter tomilitant activists but few others take such a self-indulgent view Itrsquos said that ldquooppositions can afford tobe irresponsiblerdquo but no government or alternativegovernment can accept the principle of optionalobedience to the law of the land No less than the HowardGovernment the federal Labor Opposition and the stateLabor Governments understand the dangers of playingpolitics with the rule of lawmdasheven theauthority of laws they might preferto change such as the federal WorkplaceRelations Act
The rule of law is not asmorgasbord from which a fewfavoured items can be chosen and therest ignored Freedom under the lawrequires respect for the law generallynot just the laws individualspersonally support Obedience to thelaw is not a question of choice It is arequirement of civilisation because thelaw is our guarantee of equaltreatment after a fair hearing ldquoBe youever so high the law is above yourdquoThis reproach hurled at the Stuartkings has rightly echoed through thecenturies as a warning against theconceits of office and the arrogance ofpower regardless of the cause in whichitrsquos exercised
After last weekrsquos meeting of theWorkplace Relations MinisterialCouncil of the Council of Australian Governments stateand territory ministers were keen to declare in acommuniqueacute ldquothere was unanimous agreement thatunlawful behaviour in the building and constructionindustry is not acceptablerdquo This was an importantaffirmation of the rule of law in circumstances wheresome Labor ministers might have been tempted to putpolitics ahead of principle
Unfortunately the state and territory ministerssupported more powers for the Australian IndustrialRelations Commission to settle construction industrydisputes In fact the Commission already has power tosettle disputes Whatrsquos missing is effective power toenforce agreements The issue is not settling disputesThe issue is enforcing the law
The construction industry typically conducts itselflike this A certified agreement is in place including anagreed dispute resolution procedure Unions identify agrievance often a spurious safety issue Agreed disputeprocedures are not followed and a strike ensues eventhough strikes outside ldquobargaining periodsrdquo areldquounprotectedrdquo and theoretically subject to damagesorders At that point employers often ask theCommission to end industrial action but instead ofordering an immediate return to work because anagreement has been breached the Commission willtypically seek to conciliate on the basis of the ldquomeritsrdquo
of the issue After a couple of dayswith costs escalating and liquidateddamages looming the employerinvariably agrees to rectify the matteralleged and to pay increasedallowances (including pay for days onstrike) At this point the Commissionorders a return to work on the basisof the agreed settlementmdashwhich lastsonly until the union decides on itsnext move
The union has ignored the law andbroken its original agreement buttypically suffers no adverseconsequences whatsoever Theemployer has been manoeuvred intoconceding most of a demand thatshould never have been made Afaccedilade of legality conceals a travestyof unionism and a travesty of justiceNearly all construction industrystrikes are unprotected and potentiallyunlawful under section 170MN of theWorkplace Relations Act Even so
employers nearly always opt to pass the costs ontoconsumers while existing arrangements for gatheringinformation launching prosecutions and imposing finesdonrsquot work well anywhere but hardly work at all in anindustry where giving evidence against the unions isthought to mean commercial suicide
The construction industry is a classic case not ofmarket failure but of regulatory failure The fact thatthe construction industry does not face potential importcompetition limits its exposure to market discipline Stillthe main reason why unions can get what they want frombusiness and business can get what it needs from haplessconsumers is the absence of independent policing andenforcement of the industrial equivalent of fair tradinglaws To an extraordinary degree in this industry the
SI-2 MARCH 2003
IPA REVIEW SPECIAL INSERT
The rule of law is nota smorgasbord from
which a few favoureditems can be chosenand the rest ignoredFreedom under thelaw requires respectfor the law generally
not just thelaws individuals
personally support
request documents but they canrsquot compel witnesses toanswer or demand that material be produced Althoughit is a criminal offence under the Workplace Relations Actto hinder workplace inspectors the Cole report notedthat no prosecutions have yet been launched despiteevidence that Office of the Employment Advocateinspectors have been abused had objects thrown at themand their property damaged It has been commonpractice for the arrival of OEA inspectors to lead to workstoppages and even site invasions in a bid to thwart anddemoralise an independent investigator not susceptibleto the unionrsquos usual weapon of commercial retaliation
One of the problems with theworkplace relations system is theassumption that parties will enforcethe law against each other This worksup to a point in industries whereworkplace parties are more-or-lessevenly matched and the issues are theworkplace equivalent of an argumentbetween neighbours over the heightof a fence It completely breaks downwhen one side has an effectivemonopoly over the supply of labourand disputes resemble a more-or-lessnormal family telling the house fullof footballers next door that the partyrsquosover Expecting contractors to enforcethe law against the CFMEU is likeexpecting people in the street to makecitizenrsquos arrests hence Colersquos principalrecommendations are an AustralianBuilding and ConstructionCommission to investigate prosecuteand enforce the provisions of a beefed-up industry specific workplace
relations actYesterday Cabinet decided to support Colersquos key
recommendations First the Government will seek aseparate act governing workplace relations in theconstruction industry providing for secret ballots beforestrikes compulsory cooling off periods after extendedstrikes and damages awards in the event of unprotectedindustrial action Second the Government will establisha new law enforcement agency for the industry withpowers to compel witnesses to testify bring prosecutionsand enforce judgments and with sufficient on-the-ground presence to police CBD building sites Thirdthe Government will establish a Safety Commissionerto monitor federally-funded construction sites to try toensure that these become industry models Fourth the
s
commissions lack sufficient power the courts lacksufficient speed the employment advocate lacks sufficientauthority and the police lack sufficient interest
Not before time the Cole Commission has acted as agiant searchlight probing the dark underside of thispotentially great Australian industry It confirmed whatpolicy makers had long suspected and what influentialinsiders knew but had always tried to deny or explainaway that the industry operates under the rule of thejungle and that there will be no improvement until thepeople who work in it understand that the law has to betaken seriously Legislative institutional and structuralchange will start to mean somethingwhen law breakers in this industry arecharged convicted and punished likelaw breakers everywhere else A fewsalutary bars of that old song need towaft over construction sites ldquoI foughtthe law and the law wonrdquo
Late last year in response to theRoyal Commissionrsquos first report thefederal Government set up theBuilding and Construction IndustryInterim Task Force The Governmentrsquosbrief to the Task Force is to ensure zerotolerance of industrial law-breakingThe Task Force is not primarily toenforce the tax laws or the safety rulesbecause other bodies exist for this(although the Task Force will certainlyshare information with them) TheTask Force is to investigate and enforceWorkplace Relations Act prohibitions oncoercion unprotected strikes strikepay and breach of industrialagreements So far the Task Force hasvisited nearly 300 sites launched more than 50investigations brought three prosecutions and referrednine other matters to state police the Australian FederalPolice or the Australian Competition and ConsumerCommission for further action
These are the first public prosecutions arising out ofindustrial action in the construction industry at leastsince the 1980s and are the result of a public policycommitment to law enforcement not seen since thehumiliating Clarrie OrsquoShea case in 1969 and the end ofldquopenal sanctionsrdquo Yesterday Cabinet decided to extendthe interim Task Forcersquos operations until more permanentarrangements to secure the rule of law can be established
Task Force agents have the powers of inspectors underthe Workplace Relations Act They can enter premises and
SI-3MARCH 2003
IPA REVIEW SPECIAL INSERT
The main reason whyunions can get what
they want frombusiness and businesscan get what it needs
from haplessconsumers is theabsence of inde-
pendent policing andenforcement of the
industrial equivalent offair trading laws
API
Government will insist on the application of theNational Construction Code and implementationguidelines to all significant new projects which are fullyor partly federally funded
Directly or indirectly the federal Government fundsabout $5 billion worth of construction projects everyyear and is determined to use its role as client to drivechange in the industry In essence the NationalConstruction Code stipulates that construction projectsmust take place in conformity with the WorkplaceRelations Act Under the Code and implementationguidelines the federal Governmentwill not engage tenderers whoseworkplace agreements and practicesensure a closed shop on site The TaskForce (and any replacement body) willhave full access to federally fundedsites to ensure that the law is beingobserved and workplace agreementscomplied with
For the federal Government theissue is upholding the law and tryingto tackle the ldquounion rulesrdquo culturewhich is at the heart of lawlessness inthe industry For the states the issueis whether they are prepared to refusefederal money in order to protect theclosed shop However much theymight prefer different federal laws thestates ought to accept thatconstruction projects have to complywith the law as it stands includingthe law mandating compliance withcertified agreements
State Labor governments whichhave made a point of their middle-ground credentials risk losing some$4 billion a year in federal building and constructiongrants if they side with the union movementrsquos mostmilitant minority There are likely to be limits to Laborrsquosdefence of a union whose stock-in-trade (at least in somestates) is the site invasion and the demand for paymentand which quietly reinstates organisers sacked for assaultor perjury Opposition senators will find it hard to brandas ldquoideologicalrdquo the recommendations of a royalcommission which spent 171 days in public hearingsand which pursued 11 shop stewards and 97 unionofficials to obtain their side of the argument
As Justice Cole pointed out in his report previousattempts to reform the industry have proven ineffectivedespite two earlier royal commissions and numerous
SI-4 MARCH 2003
IPA REVIEW SPECIAL INSERT
enquiries Although this Royal Commissionrsquosinvestigations seem to have temporarily checkedlawlessness in the industry a campaign is now emergingto extend the anarchic culture of CBD construction intoregional centres and the domestic housing industryThings will certainly be different this time if parliamentapproves a permanent well resourced watchdog withnew powers new personnel and new attitudes Unlikeprevious arrangements a new statutory watchdog withthe powers of a law enforcement agency should beeffective and permanent
Hundreds of people took big riskswith their commercial future and eventheir personal security to testify to theRoyal Commission It should neveragain be so hard for people in thisindustry to exercise their ordinaryrights and responsibilities asAustralian citizens They expected theGovernment to take the Commissionrsquosreport seriously and the Governmentfor its part is determined not to letthem down The Governmentunderstands that joining fights yoursquorenot prepared to win only makes badsituations worse Establishing the ruleof law in the construction industry isa challenge Australia canrsquot afford tofailSome of the worldrsquos best workersshould no longer have to put up withsome of the worldrsquos worst industrialpractices They have a right to anhonest industry where they can earna fair dayrsquos pay for a fair dayrsquos workand expect to come home uninjuredThe enduring image of this industry
should not be noisy marchers replaying the ideologicalstruggles of the 1970s and raising clenched fists againstauthorities they donrsquot like At its best the Australianindustry is capable of work which is stunningly beautifulyet intensely practical and it now needs to performconsistently on time on budget and in accordance withlaw
Hundreds of peopletook big risks withtheir commercial
future and even theirpersonal security totestify to the Royal
Commission It shouldnever again be so
hard for people in thisindustry to exercisetheir ordinary rights
and responsibilities asAustralian citizens
NOTE
The foregoing speech was first delivered as an Addressto the National Press Club on 2 April 2003
21MARCH 2003
E V I E WR
IN psychology behaviouris defined as irrational ifan action continues to berepeated despite its re-
peated failure to achieve the desiredoutcome On this definition our aidpolicy towards Papua New Guineahas been irrational
Despite over twelve billion dol-lars in Australian aid to PNG sincethat countryrsquos independence in 1975key development indicators such asliteracy rates infant mortality lifeexpectancy and real income percapita are either stagnating or dete-riorating Worse wersquove known forover a decade1
Today acknowledgement of thefailure of our aid policy in PNG hasgone well beyond the writings of in-dividual international policy analystssuch as myself to institution-spon-sored reports such as Beyond Baliwhich was released by the AustralianStrategic Policy Institute (the Aus-tralian Governmentrsquos own strategicpolicy adviser) and Papua NewGuinea on the Brink which was writ-ten by Susan Windybank and MikeManning for the Centre for Indepen-dent Studies Both reports confirmthe gross failure of Australian aidpolicy in PNG
Yet still our aid policy irrational-ity towards Papua New Guinea con-tinues While the ASPI and CIS re-ports acknowledge the gross failureof our aid policy in PNG they alsoargue that we need to continue ouraid to that country Indeed the ASPIreport argues that we should increaseour aid to Papua New Guinea Thepolicy saviour The ASPI report ar-gues that we should exert greater con-trol over our aid Not just over theform of our aid but direct interven-tion in policy and implementation inPNGmdashin essence for a return to pre-
Aid Detox for PNGPETER URBAN
independence days in PNG whereas UN-sanctioned administrator weran government in that country
Despite the mind-frame of secu-rity-focused strategists such as thoseat ASPI and the CIS (which en-dorses the aid approach advocated byASPI) the reality is that we canrsquotPNG is now independent and to ig-nore this reality would simply com-pound the problems of our past aidpolicy irrationality with irrationalityabout our political relationship withour nearest neighbour
A more interventionist aid policytowards PNG on our part as advo-cated in Beyond Bali and by HughWhite (the executive director ofASPSI) in the media might havepopulist appeal but it would haveserious adverse implications for ourrelationship with other Pacific islandcountries and even IndonesiaWorse it would give succour to theviews of our east Asian critics (suchas Malaysian PM Dr Mahathir) whoclaim that Australia continues toharbour colonial aspirations
We have to accept that to be suc-cessful aid policy must not just helpreduce mass poverty it also has to doso as a guest in the aid recipientcountry To do otherwise is not aidbut imperialismmdashwhether inten-tional or not
A more interventionist approachto aid policy in PNG would also givethe current corrupt political elite inPort Moresby a rallying point againstus and an excuse to delay changingtheir own policies Neither Austra-lia nor PNG can afford any furtherdelays to policy reform For us to givePNG politicians yet another excuseto delay reform would be not onlyirrational it would be inexcusableWhile our aid continues so will thecorrupt elite that is at the heart ofPNGrsquos problems Until we send themessage to the PNG political elitethat we are prepared to stop ouraidmdashto put them on aid detoxmdashwewill continue to waste our aid in thecorruption that is PNG politics Itmay be hard to accept but the sadreality we face in PNG is that no aidmay prove to be good aid at least inthe short to medium-term2
NOTES
1 Peter Urban lsquoOne Clear ObjectiveNo Clear Approachrsquo IPA Review1997 Vol 50 No 1
2 With Iraq also likely to require verysignificant Australian aid fundingover the next few years the Gov-ernment will need to review our aidprogram as part of the 2003-04 fed-eral Budget A decision to suspendaid to PNG could be taken as partof that review
Peter Urban is former chief economist with theDepartment of Foreign Affairs and Trade
We have to accept
that to be successful
aid policy must not
just help reduce
mass poverty it also
has to do so as a
guest in the aid
recipient country
API
22 MARCH 2003
E V I E WR
IN his speech to the Na-tional Press Club on theprospect of war with Iraqand the case for disarma-
ment Prime Minister Howard statedthat Australia will play a significant hu-manitarian role in Iraq
If so the Howard Government needsto evaluate carefully the foreign-aid non-government organizations (FANGOs)which it funds to carry-out this humani-tarian programme Many FANGOshave made it clear that they do not sharethe Australian Governmentrsquos objectivesand values in Iraq Moreover some donot agree with the Governmentrsquos over-all aid policies in general
THE COALITION OF THEUNWILLINGIn the lead-up to latest Gulf War some30 Australian aid agencies put theirnames to an Open Letter to the PrimeMinister organized by the AustralianCouncil of Foreign and Overseas Aid(ACFOA) The aim of the letter was tolsquospeak out against war in Iraqrsquo and it ex-pressed grave concerns about the hu-manitarian consequences of the war andthe effects of the existing sanctions1 TheFANGOs that signed the letter wereOxfam Community Aid Abroad WorldVision Australia TEAR AustraliaUnion Aid Australia - APHEDACaritas Australia National Council ofChurches Australian Council for For-eign and Overseas Aid Save the Chil-dren Australia CARE Australia OzGreen United Nations Association ofAustralia Family Planning AustraliaMercy Works Marist Mission CentreAustralia Every Home for Christ Bap-tist World Aid for Christ CCF Austra-lia Quaker Service Australia Austra-lian Lutheran World Service AustralianRelief and Mercy Services AnglicanBoard of Mission AUSTCARE Com-munity Development and Health
Irreconcilable DifferencesDON DrsquoCRUZ
Hussein have been virtually ignored isa searing indictment of the warped ide-ology feeble analysis and moral blind-ness of the sector For them now to re-discover the plight of the Iraqi peopleand to invoke their name in the mediais beyond contempt
THE OXFAM COMMUNITYAID ABROAD POSITIONOf the 30 FANGO signatories to theopen letter Oxfam Community AidAbroad (OCAA) has been perhaps themost outspoken It opposed military ac-tionmdasheven with UN Security Councilapproval4 In spite of all the evidence tothe contrary OCAA was comfortablewith Saddam Husseinrsquos assurances thathe did not have weapons of mass destruc-tion5 Adopting the common policyagreed to by the other Oxfam affiliatesOCAA stated that it will not take anymoney from the lsquobelligerentsrsquomdasha quaintterm used to the describe democraticnations planning to disarm a dictatorguilty of countless human rights abuses
OCAArsquos outrage against the so-called lsquobelligerentsrsquo appears to be geo-graphically confined to Iraq OCAAappears happy to take governmentmoney from the belligerents elsewherearound the world
According to OCAArsquos ExecutiveDirector Andrew Hewitt refusing totake money from the belligerents wasdone to lsquoprotect its impartialityrsquo6 Thisis a very curious position from Australiarsquosarguably most political FANGOOCAA has a long track-record of beinganything but impartial or reluctant totake sides in miliary action It wasnrsquotimpartial in East Timor where it sidedwith Fretlin in its quest for indepen-dence According to its own testimonyto a Senate committee OCAA wasgiven the choice by the IndonesianGovernment between lsquoplaying politicsrsquoor delivering aid projects in Indonesia7
Group Amnesty International Austra-lia AngliCORD Australian Aid forCambodia Fund Burnet InstituteRedR Friends of the Earth PLAN Aus-tralia and Australian Volunteers Inter-national2
This open letter highlighted a num-ber of problems with the FANGOs sec-tor First it highlighted the weak logicthat passes for advocacy in the sectorThe letter argued against military actionwas critical of sanctions and suggestedthat nations should settle issues only bydiplomatic means It is a viewpointwhich totally ignores the fact that theGovernment had to deal with SaddamHussein
The shallowness of their logic wasbest exposed by the Prime Minister inhis response to the open letter in whichhe stated that the humanitarian situa-tion in Iraq is best addressed by SaddamHusseinrsquos removal and perhaps morepointedly that Saddamrsquos manipulationof foreign aid had allowed him to main-tain and pursue his weapons of mass de-struction capability and human rightsabuses3
Second it also highlighted the factthat the so-called lsquohuman rights-basedapproachrsquo to development (embraced byseveral of the signatories) is not so muchabout realizing human rights (as its pro-ponents argue) but is more about pro-viding them with an excuse to lsquoplay poli-ticsrsquo According to the theory the hu-man rights-based approach to develop-ment allows FANGOs to tackle the rootcauses of poverty and injustice
Yet the root cause of the Iraqipeoplersquos suffering can be summed up intwo simple wordsmdashSaddam HusseinThe fact that the FANGOs who sub-scribe to this particular approach havebeen obsessed with imaginary humanrights abuses committed by Shell NikeRio Tinto BHP-Billiton and AuroraGold while the activities of Saddam
23MARCH 2003
E V I E WR
It chose the former thus making it per-sona non grata in Indonesia for almost adecade8 It wasnrsquot impartial inMozambique when it sided with Frelimoin the countryrsquos civil war9 It wasnrsquot im-partial in Ethiopia when it developedlinks to the Eritrean Peoplersquos LiberationFront during its war against the thengovernment10 It was not impartial oranti-war when it sided with the TigrayPeoplersquos Liberation Front in the neigh-bouring province to Eritrea when thatgroup was waging a guerrilla war againstthe government11 And recently therehave been claims that in the Middle Eastit was little more than an lsquoeager propa-gandistrsquo for the Palestinians12
In East Timor Ethiopia and Mozam-bique OCAA was linked with organi-zations which supported direct militaryaction that led to the deaths of thou-sands of civilians In none of these loca-tions were the enemies of their friendany worse than Saddam Hussein In-deed in many cases OCAArsquos friendswere arguably no better than their en-emies in terms of human rights
OCAArsquos decision not to accept Aus-tralian Government funding is the cor-rect one in the sense that it clearly doesnot share the Governmentrsquos values onthe question of Iraq and thereforeshouldnrsquot receive any governmentmoney
Hewitt went on to state in a pressrelease that lsquoWe will not take funds thatmight allow a government to use hu-manitarian efforts as an instrument offoreign policyhelliprsquo13
This is finemdashexcept the AustralianGovernmentrsquos foreign aid is an instru-ment of foreign policy And it always hasbeen This is spelt out quite clearly inthe Australian Governmentrsquos latest for-eign and trade policy White Paper Ad-vancing the National Interest14
FANGOs that cannot accept thisrather basic proposition should not begetting taxpayersrsquo money They areclearly unsuitable for the task at hand
The consequences of Australian tax-payersrsquo money falling into the wronghands were brought home to Prime Min-ister Howard when he met IndonesianPresident Megawati Sukarnoputri to dis-cuss the war against terrorism and
Australiarsquos involvement against Iraq Atthe top of the Indonesian agenda wasthe issue of Australian funding toFANGOs being used to support sepa-ratist movements in Indonesia15
Post-war Iraq will be a better placewithout Saddam Hussein and his thugsThis does not mean that it will be a safeplace or necessarily a stable place Afterall one of the reasons for Western tol-eration of Saddam Hussein for manyyears was his ability to hold the various
ethnic minorities in Iraq together albeitrather brutally thereby maintaining abalance of power in the Middle East Hisdeparture would see strains on Iraq fromthe various ethnic minorities that makeup Iraq There is a strong chance thatIraq will fragment
The last thing the Australian Gov-ernment or any of the so-called belli-gerents needs in a post-war Iraq is west-ern NGOs running around and becom-ing self-styled advocates for national self-determination for Iraqrsquos ethnic minori-ties and injecting themselves into Iraqrsquosinternal politics This is a real risk Thebehaviour of Australian foreign aidNGOs in Indonesia should make Aus-tralian decision-makers extremely waryof funding any NGOs with Australiantaxpayersrsquo money so that they can oper-ate in Iraq
As things stand now FANGOs facevery few restrictions on their actionsfrom government If they undertake ac-tivity that is inconsistent with being anagent of government they may losefunding for specific projects or in moredramatic circumstances lose funding ina country Nonetheless they are gener-
ally able to access Australian Govern-ment funding for other projects andcountries In other words the penaltiesfor becoming caught up in political ac-tivities are very light for NGOs and posethem no serious problems
Foreign aid NGOs that lsquoplay politicsrsquoare unsuitable contractors for the deliv-ery of aid That these overtly politicalorganizations have been allowed to gaingovernment accreditation and receivegovernment funding points to some se-rious problems at AusAID Australiarsquosofficial aid agency The time has comefor this to change
NOTES1 httpwwwacfoaasnaumedia_releases
2003_releases26_3_03PDF2 httpwwwacfoaasnauemergencies
openletterPDF3 httpwwwacfoaasnauemergencies
iraq_responsehtm4 Oxfam Horizons Vol 3 No 1 (Febru-
ary 2003) page 25 Oxfam Community Aid Abroad lsquoIraq
Overviewrsquo February 20036 Hewitt quoted in Liz Gooch lsquoOxfam
wersquoll say no cashrsquo The Age 16 March2003
7 Community Aid Abroad Submission tothe Senate Foreign Affairs Defence andTrade References Committee Inquiryinto East Timor Downloaded at httpwwwcaaorg aucampaignssubmissionstimorhtml
8 Ibid9 Susan Blackburn Practical Visionaries A
Study of Community Aid Abroad (Mel-bourne Melbourne University Press1993) page 313
10 Ibid pages 325-333 passim11 Ibid12 Gerald Steinberg lsquoPropaganda vs Hu-
manitarianismrsquo Australian Financial Re-view 7 June 2002 Downloaded at httpfacultybiuacil~steingconflictopedpropvshumanitarianismhtm
13 ht tp wwwcaa o rg au p r 2003 iraqfundshtml
14 httpwwwdfatgovauani15 Dennis Shanahan lsquoJakarta fears aid funds
for rebellionrsquo The Australian 17 Febru-ary 2003 page 2
Don DrsquoCruz is Research Fellow at the IPAand Director of IPArsquos NGOWatch
OCAA has a longtrack-record of
being anything butimpartial or
reluctant to takesides in miliary
action
API
24 MARCH 2003
E V I E WR
GEORGE Bush Tony Blairand John Howard haveprovided many reasons forsupporting military action
against Iraq One of those reasons hasbecome known as the lsquohumanitarianrsquojustification Put simply the lsquohu-manitarianrsquo justification for the US-led invasion of Iraq is that such ac-tion is necessary to free the Iraqipeople from their totalitariandictator
Such an argument is attractive tothose who believe that there aresome fundamental human rights thatall individuals possess regardless ofwhere and how they live Whatserves as the source of those rightshas been the subject of debate forcenturies One of the pre-eminentstatements on the subject was madeby John Locke who in The SecondTreatise of Government wrote thatmankind was lsquoequal and indepen-dentrsquo and that lsquono-one ought to harmanother in his life health liberty orpossessionsrsquo
Saddam Husseinrsquos mass murdertorture and terror are reasonablyclear breaches of human rightsTherefore some would ask why thereshould be opposition to the UnitedStates and its allies taking whatevermeasures might be necessary totopple the Iraqi regime Surely thesame standard of behaviour that ap-plies to individuals applies also tonation states If an individual walk-ing in the street witnessed a rapeoccurring wouldnrsquot that individualbe entitled to do everything in hispower to stop the crime and assistthe victim
The point is of course that in-ternational law and convention do
After IraqIs Sovereignty Dead
JOHN ROSKAM
not allow nation states to act in thesame way as individuals Countriescannot simply lsquotake the law into theirown handsrsquo To restrain lsquovigilantestatesrsquo (who might be acting fromeither lsquogoodrsquo or lsquobadrsquo motives) a num-ber of legal and political theorieshave been developed One of theseis the doctrine of lsquosovereigntyrsquo whichprovides that states should not inter-vene in the domestic affairs of otherstates
In relation to Iraq the lsquosover-eigntyrsquo question is perhaps the stron-gest argument against the US-ledCoalition Most of the other criti-cisms of lsquohumanitarianrsquo interventionin Iraq are either grounded in simpleanti-Americanism or are fallaciousFor example there is the claim thatbecause some of the countries in theCoalition have previously ignoredHusseinrsquos cruelties therefore it is il-legitimate to take action now Sucha view has been expressed by aMelbourne international relationsacademic
While there is no disputing thebrutal nature of Saddam Hus-seinrsquos regime the case for inter-vention made by those in Can-berra London and Washingtonis weakened by the fact that atthe peak of Saddamrsquos crimes inthe late 1980s they were eitherdirectly supporting him withweapons technology and intelli-gence or were entirely indifferentto his behaviour Even if theyhave belatedly recognised theerror of their ways how seriouslycan we take their concerns aboutweapons of mass destruction nowgiven they were his suppliersthen1
On the basis of this argument itcould be said that Britainrsquos (andAustraliarsquos) case for intervening toassist Poland upon the German in-vasion in 1939 was lsquoweakenedrsquo be-cause Britain had previously acqui-esced to Germanyrsquos rearmament theremilitarization of the Rhinelandand the annexation of both Austriaand parts of Czechoslovakia Fewpeople who chanted lsquoFreedom forEast Timorrsquo said that the HowardGovernment should not act becausea quarter of a century before theWhitlam Government had been lsquoin-differentrsquo to Indonesiarsquos occupationof the island
There is also the claim that al-though Hussein is bad he is not theworst dictator in the world and thatit is hypocritical for the Americansto attack only Iraq This is an as-tounding proposition It attempts toapply to the United States a standardof behaviour that is impossible to sat-isfy Should the police not attemptto solve any crimes because theycanrsquot solve all crimes If a crime iscommitted by two people and thepolice arrest one perpetrator unlessthe other is also caught must the firstperpetrator be released When indi-viduals donate money for famine re-lief in Africa very few believe thattheir donation is pointless becauseit might prevent the starvation ofonly one person rather than thou-sands Christian ethics sets down norequirement that we should help no-one unless we can help everyone
The issue about state sovereigntyhowever is one that deserves to betaken seriously Regardless of onersquosopinions on the extent and limits ofstate sovereignty it is true that our
25MARCH 2003
E V I E WR
international relations system is builtupon the principle and to modify oroverturn it is a matter of some con-sequence
Even those who are generally sup-portive of the United States andtheir allies see the problem As it wasput by a leading commentator whenanalysing the Australian PrimeMinisterrsquos lsquohumanitarianrsquo justifica-tion for war
Finally Howardrsquos argumentagainst Hussein on human rightsis correct So is his moral case forwanting to liberate the Iraqipeople from their torment Theproblem however is that youcanrsquot trip around the worldwanting to overthrow regimesbecause of human rights2
Some would askmdashlsquowhy notrsquo Be-cause to do so would overthrow theUnited Nations Charter comes therejoinder And in turn the responseto that might bemdashlsquogoodrsquo
If itrsquos a choice between the main-tenance of the UN Charter and free-dom from tyranny freedom wins ev-ery time (although an internationallawyer sitting in Sydney might havea different view on this question fromthat of a political prisoner manacledin a Baghdad jail cell)
When the interests of lsquointerna-tional lawrsquo are more important thanthe life and liberty of individuals itcould be concluded that lsquothe Em-peror has no clothesrsquo Would inter-national law have sanctioned inter-vention to stop the Holocaust hadHitler not waged war and proceededwith his methods entirely within theconfines of the German territorialstate
Many who argue that lsquohumanitar-ianrsquo intervention in Iraq is not justi-fied because it infringes on thatcountryrsquos lsquosovereigntyrsquo would happilyhave other countries cede their po-litical sovereignty to supra-nationalbodies Certain features of the Inter-national Criminal Court overridethe principles of sovereignty but thatdid not stop a phalanx of interna-tional law experts urging sovereigngovernments to join it so as to en-
able the prosecution of war criminalsBut when it comes to actually stop-ping war crimes not simply prosecut-ing them that phalanx is largely si-lent
Without the doctrine of state sov-ereignty and without an arbiter fordetermining when interference withthe principle is justified (the roleclaimed by the United Nations andits Security Council) it is said thatstates would be free to impose theirown will and intervene in other
countries whose standards did notmeet their own (In The Second Trea-tise of Government Locke argued thata characteristic of a lsquostate of warrsquo be-tween individuals was the absence ofa superior authority to adjudicatedisputes and prevent individualsfrom administering justice them-selves)
Iraq might be claimed as a rea-sonably clear-cut case for interven-tion but other situations are notlikely to be as simple In Culture andEquality first published in 2001Brian Barry explored a lsquoliberalrsquo per-spective on this question
The liberal position is clearNobody anywhere in the worldshould be denied liberal pro-tections against injustice andoppression However in exactlythe same way as liberals arepragmatic about what liberalismmeans in terms of boundaries sohere the move from principle tointervention has to be mediated bypractical considerationshellip
[L]iberals are not so simple-mindedas to imagine that the answer toall violations of liberal rights is tosend in the Marines or even aUnited Nations force As in anyjust war theory there must be somedoctrine of lsquoproportionalityrsquohellip[S]carcely anybody would be infavour of the western powersinvading Saudi Arabia so at to sortout the way in which it lsquounjustlydenies political rights to women ornon-Muslimsrsquomdashaccording to theirliberal idea of justicersquo3
The question remainsmdashafterIraq what remains of lsquostate sover-eigntyrsquo Should the doctrine applyonly to lsquoliberal democraticrsquo statesSuch a solution might be attractiveto some lsquoliberalsrsquo but it doesnrsquot avoidthe problem of what exactly a lsquolib-eral democraticrsquo state is
One irony arising from the argu-ments about the war in Iraq is thatmany of those who have urged astrict application of lsquostate sover-eigntyrsquo principles in the past havegenerally supported the US-led in-tervention while those who havebeen willing to abridge or even aban-don the doctrine have had to rely onit to counter the lsquohumanitarianrsquo jus-tification for war
There are not many certaintiesabout the nature of the world afterthe war in Iraq but it can be saidwith some assurance that one defi-nite outcome is going to be a morevigorous debate about state sover-eignty
NOTES1 Scott Burchill lsquoThe humanitar-
ian arguments for this war are spu-riousrsquo The Age 21 March 2003
2 Paul Kelly lsquoThe hapless per-suaderrsquo The Australian 15ndash16March 2003
3 Brian Barry Culture and Equal-ity An egalitarian critique ofmulticulturalism Harvard Uni-versity Press page 138
John Roskam is a Research Fellow with the IPA
The lsquosovereigntyrsquo
question is perhaps
the strongest
argument against
the US-led
Coalition
API
26 MARCH 2003
E V I E WR
Which Way for theDemocrats
The 2002 mid-term elections were adramatic victory for President GeorgeW Bush and the Republicans Insteadof the historical norm of the partycontrolling the White House losingBushrsquos party gained seats in the Sen-ate House Governorsrsquo races andState legislatures The result was abitter disappointment for the Demo-crats and has led to a fierce debatebetween the Left and Centrists aboutthe future policy direction of the partytowards the 2004 elections
The Leftrsquos analysis is that the ma-jority of Americans are natural Demo-crats Electoral defeat was due to thefailure to energize that base of Demo-crats The party failed to distinguishitself sufficiently from Bush and thusgive their voters a reason to turn outWhile the majority of Democrats op-posed Bush on tax cuts and the warwith Iraq a significant minority sup-ported him and campaigned on thatsupport The result the Left claimwas that the Democrats lacked a con-sistent message in contrast to Bush
Support for this argument can befound in the higher turnout amongstRepublicans than Democrats in 2002while in 2000 the combined vote forGore and Nader was 51 per cent Aninfluential book by John Judis andRuy Texeira identified lsquoThe Emerg-ing Democrat Majorityrsquo Theyclaimed that growing demographicgroups trended Democrat includingthe young socially liberal profession-als minorities and women
What policies would motivate thisnatural Democrat base The Left callfor rescinding the Bush tax cut a classwar against the corporate world amajor increase in lsquopublic investmentrsquoin schools childcare health care and
Letter from AmericaNIGEL ASHFORD
public transport and strong opposi-tion to the war
Centrists however have a verydifferent analysis of the Democratsrsquoproblems the public did not trustthem to pursue the war against ter-rorism vigorously to keep down taxesto spend their tax dollars wisely or toreflect their cultural values
A Gallup opinion poll found that57 per cent of Americans askedthought that the Democrats were nottough enough on the war on terror-ism while 64 per cent thought theRepublicans were There was the per-ception that the Democrats were notserious on the issue and just playingpolitics Evidence for this was the de-bate over the new Department ofHomeland Security blocked becausethe Democrats wanted to protectunion rights while the President de-manded more flexibility to deploy theworkforce Many voters saw the issueas the national interest versus a spe-cial interestmdashin this case that of theunions The Democrats were seen asputting the interests of one of theirmajor constituencies before nationalsecurity
The Democratic LeadershipCouncil in lsquoThe Road Aheadrsquo by AlFrom and Bruce Reed presented theCentrist case lsquoStop pretending wecan win a majority simply by energiz-ing our basersquo The Democrats were
not trusted on the war against terror-ism were hostile to the cultural con-cerns of many working-class Demo-crats on abortion and guns and stillseen as the tax-and-spend party lsquoToomany Americans donrsquot trust us tokeep their taxes down or to spendtheir money wellrsquo
The Centrist agenda is to stronglyprosecute the war against terrorismwhether against al-Qarsquoeda Saddam orothers and to abandon knee-jerk iso-lationism arising from the experienceof the Vietnam War to defend capi-talism and support small investorsagainst irresponsible managers to cutpayroll taxes and to downplay thecultural issues that divide Democrats
Which path will the Democratstake The Left is in the ascendancyMost of the remaining Democrats inoffice come from left-wing districtsNancy Pelosi a left-liberal from SanFrancisco was easily elected the newleader of the House Democrats over-whelming her Centrist opponent andrising star African-American HaroldFord The early field of presidentialcandidates for 2004 is dominated bythe Left tendency including SenatorJohn Kerry Representative DickGephardt Governor Howard DeanRev Al Sharpton former SenatorCarol Moseley-Braun and Represen-tative Dennis Kucinich Only Sena-tor Joe Lieberman and Senator JohnEdwards represent the Centrist wing
The future of US politics may de-pend on which road the Democratsdecide to take The US is currently alsquo50ndash50rsquo nation evenly balanced be-tween the parties A left turn couldlead to Republican dominance farinto the future
Dr Nigel Ashford is at the Institute of Humane Studiesat George Mason University and is co-author of US
Politics Today (Manchester University Press)
API
27MARCH 2003
E V I E WR
Trusting TonyFrankly itrsquos all just too depressing Theeconomyrsquos heading for trouble Busi-ness confidence is low investment in2002 was 92 per cent lower than theprevious year and manufacturing in-vestment was nearly 18 per cent downThe budget deficit is spiralling becauseour once lsquoprudentrsquo Chancellor (trea-surer) Gordon Brown made over-opti-mistic growth projections and startedthrowing money at problems
Therersquos a load of health-and-safetyand anti-discrimination measuresthatmdashto put it most politelymdashare ex-amples of letting the best be the en-emy of the good Every school tripneeds a formal risk assessment withthe result that many trips are simplynot taking place New trains orderedfor London commuter routes wonrsquothave toilets because the rules say thatat least one toilet in each four-car unitmust be wheelchair-accessible whichwould have cost ten or a dozen seatson every overcrowded train
Some of this is just insane Somelocal authorities say that safety at workrules mean that home-care workersmustnrsquot lift the disabled people theyare looking after Or therersquos rail safetyUntil recently we were seriously pro-posing to spend $10 billion on a bet-ter system to stop trains going throughred signals On average this would havesaved the lives of about three passen-gers every four years which is a lousybargain compared with other safety in-vestments Worse it would also havereduced the capacity of the networkby up to 15 per cent and forced morepeople onto the roads which are muchmore dangerous than even ourclapped-out railways The result was aprojected net increase of 13 to 21 deathsper year
Meanwhile in London the Cen-tral line of the Underground has been
Letter from LondonJOHN NURICK
API
closed for weeks after a train derailedwhen one of its motors fell off Therewere no deaths or major injuries in theaccidentmdashbut itrsquos a safe bet that someof the people who havenrsquot been ableto use the Central line have been in-jured or killed on the roads
What can one say If the authori-ties took the same attitude to the riskof fatal accidents in the health serviceevery hospital in the country wouldhave been closed for years
Despite all this the Conservativesare still hopeless Their leader IanDuncan Smith has a new wheezewhen a journalist asks him anythingdifficult he chortles merrily and saysitrsquos the most uninteresting questionimaginable and hersquos not going to wasteanyonersquos time by answering it His col-leagues have their knives out for him
Meanwhile in spite of the govern-mentrsquos problems with the economy andthe public services Tony Blair is grow-ing in stature having his waymdashandantagonising large sections of his ownparty in the process On several recentissues he has faced down the formi-dable Gordon Brown in a way that notlong ago was hard to imagine
Then he shocked everyone by com-ing out against having elected mem-bers in the reformed House of Lordswhen most voters want an all-elected
chamber and most MPs want a partly-elected one In the event Parliamentcouldnrsquot agree on any of the optionsfor reform so wersquore stuck with the sta-tus quomdashwhich is fine by Mr Blair
Then therersquos the war By the timeyou read this it may be over or we maystill be waiting or our lads may befighting Mr Blairrsquos strong line againstIraq has made him very unpopular Theanti-war march on 15 February was thebiggest demonstration London hasever seen A few days later 122 Labourbackbenchers voted against the gov-ernment and many more abstained
Mr Blair didnrsquot budge War is a se-rious thing he says lsquoBut in a situationsuch as this you have to do what youbelieve to be right because thatrsquos theprice of having responsibilityrsquo1
He has often been accused of gov-erning by focus group Certainly he hasseemed reluctant to antagonise anypowerful group That has clearlychanged In a sense his stand on Iraqmerely follows his action in sendingtroops to Sierra Leone and Kosovomdashbut it has stirred up far stronger domes-tic and international opposition
The irony is that now when he re-ally needs people to trust him wedonrsquot Even in the desperately seriousbusiness of justifying an unpopular warDowning Street canrsquot play it straightremember the dossier from lsquointelli-gence sourcesrsquo that turned out to belargely cribbed from a PhD thesis onthe Internet
NOTE1 The Guardian 1 March 2003
John Nurick is a management consultant based in theSouth of England From 1985 to 1990 he was
editorial director of the Australian Institute for PublicPolicy and later edited newsletters reporting on theUK Parliament and European Union institutions
28 MARCH 2003
E V I E WR
KEVIN DONNELLY
Private EducationEquals Public Good
When it comes to choosing be-tween government and non-gov-ernment schools Australian par-ents are lsquovoting with their feetrsquo Asshown by recent ABS figures(Schools Australia 2002) over thelast decade there has been a dra-matic increase in non-governmentschool enrolments
Approximately 30 per cent ofstudents now attend non-govern-ment schools compared with 22per cent in 1980 and 28 per centin 1990 Over the last decadewhile the number of governmentschools has fallen by 64 per centnon-government schools havegrown by 61 per cent
Of course not everybody valuesparentsrsquo right to choose and theAustralian Education Union(AEU) Labor governments andlsquoleft-wingrsquo academics in particularconsistently argue against non-government schools
One of the arguments put for-ward by those opposed to givingparents greater freedom of choiceis that government schools are bet-ter at promoting social cohesionand a strong sense of what KenBoston the ex-head of the NSWEducation Department terms lsquothebonds of civic friendshiprsquo
The assumption is that becausestudents attend non-governmentschools there will be greater socialdivisiveness and a breakdown inthe civic values needed to hold so-ciety together But there is no cred-ible evidence offered to support theclaim that government schools arebetter at promoting the commongood
In fact there is much to provethe opposite
First as anyone familiar withthe lsquoculture warsrsquo and politicallycorrect curricula will know insteadof government-controlled educa-tion promoting unity and cohe-sion it has led to public angst andparental complaints
Witness the very bitter debatein Queensland a year or two agowhen the government-mandatedStudies of Society and Environ-ment (SOSE) curriculum was in-troduced into schools Such was
the lsquoleft-wingrsquo bias in the curricu-lum in particular in the areas ofmulticulturalism and the environ-ment that many parents felt be-trayed
The Queensland debate is mir-rored by what is happening in theUnited States As noted by Ste-phen Arons in his book Short Routeto Chaos instead of promotingunity government control of thecurriculum leads to the opposite
What the school wars tell us isthat somehow we have been
Education Agenda
transforming a vital instrumentfor creating social cohesioninto a source of division andhostility that there is some-thing built into the structure ofpublic schooling that under-mines one of its most importantfunctionsAronrsquos argument that govern-
ment schools no longer transmit aviable sense of a common cultureor agreed civic values is reinforcedby another noted United Stateseducationalist Diane Ravitch
In a recent article in the jour-nal Education Next Ravitch be-moans the impact of cultural rela-tivism and the post-modern on theschool curriculum (where there areno commonly agreed values) andeven goes so far as to argue thatparents should be free to choosenon-government schools becausesuch schools have a better chanceof reflecting their values
In the current education sys-tem with the public schoolscommitted to multiculturalismbilingualism and other forms ofparticularism it is difficult toargue that parents should notbe able to choose schools thatmeet their cultural needsSecond if one accepts that lsquoso-
cial capitalrsquomdashthe networks volun-tary associations and civic bondsthat hold a community togethermdashis important for the health of ademocratic society then non-gov-ernment schools clearly have theadvantage
Unlike the government schoolsystem characterized by a heavy-handed centralized bureaucracyand teacher union control non-government schools are closer tothe communities they serve Bytheir very nature non-government
There is no credible
evidence offered to
support the claim
that government
schools are better
at promoting the
common good
29MARCH 2003
E V I E WR
ALAN MORAN
The lsquoRrsquo Files
Private propertyrights the key toachieving efficiency inrural water use
WATER IN AUSTRALIAWater has always been a definingissue in Australiarsquos prosperityAnd in recent decades irrigationhas grown rapidly Even so theproportion of Australia that is ir-rigated at two per cent of theland comprises a share that isamongst the lowest among OECDcountries Only Canada and therainiest countries New Zealandand the UK have lower sharesthat of the US is 11 per cent andin Japan it reaches 60 per cent
Modern agriculture is only 200years old in Australia and thoughin the first 100 years agriculturalproductivity was increased toequal that of anywhere in theworld gains continue to bemademdashoutput has doubled overthe past 50 years a growth thatcould not have taken place with-out a similar expansion of irriga-tion Irrigation in the MurrayndashDarling agricultural provincealone contributes $5 billion toAustralian agricultural outputand non-irrigated agriculture inthe region contributes a further $5billion This makes the areawhich comprises 14 per cent ofAustraliarsquos land mass responsiblefor a third of the nationrsquos $35 bil-lion agricultural output
Applying Property Rights to WaterMost of the uses of water involvechoices or compromisesmdashdrink-ing water versus irrigation versus
industrial and so on Some how-ever involve complementaritiesparticularly certain recreationaluses such as water sports that arefacilitated by storage and consis-tent availability
In many cases water will per-form sequential functionsmdashthesame water can be used and re-used for irrigation used for indus-trial cooling and finish as drink-ing water Water with differentsometimes competing productiveuses will be optimally used as longas two conditions are in placeThe first is that its ownership isclearly specified and the ownersrsquoobligations to other users (orclaims from other beneficiaries)are well understood The secondrequires each property right to betradable to enable acquisition bythose who value it most therebymaximizing its value
The rights specification andtherefore property ownership canrarely commence with a cleansheet of paper People acquire in-dividual rights to property ini-tially through a variety of routesOne of these is seizure of some-thing that was originally of littlevalue until it was acquired and im-proved Squatters assume rights inthis way However they are firstacquired they need to be tradableAPI
schools establish strong commu-nity networks and have a greaterreliance on the voluntary work ofparents
That non-government schoolsare more effective in this regard issupported by research into lsquoChar-ter schoolsrsquo in the United StatesAs noted by Chester Finn at theFordham Foundation giving localcommunities lsquoownershiprsquo overtheir school builds networks oftrust and reciprocity so vital forsocial cohesion
Social capital also relies on citi-zens being disciplined and orderedin their behaviour Selfishness vio-lent behaviour and rudeness act tofragment the community instead ofpromoting cohesion According toa number of Australian surveys itis here once again that non-gov-ernment schools are seen to bemore effective
As noted by the Centre for In-dependent Studies researcher Jen-nifer Buckingham in The Truthabout Private Schools in Australiawhen analysing why so many par-ents forsake the government schoolsystem
When comparing independentprivate schools with publicschools the major theme thatemerged was not differences inacademic standards and curri-culum but issues of disciplineand order The surveyed par-ents felt that the behaviour andattitudes of students in publicschools was unacceptablehellipAll accept that non-govern-
ment schools achieve better aca-demic results provide greater cur-riculum flexibility and save Aus-tralian taxpayers millions of dol-lars Equally as important is theargument that such schools streng-then Australiarsquos civic health andstock of lsquosocial capitalrsquo
Dr Kevin Donnelly is Director of EducationStrategies a Melbourne-based consulting group
E-mailkevindnetspacenetau
s
30 MARCH 2003
E V I E WR
and relatively inviolable Thisprovides the incentive for them tobe improved and for their ownersand others to search out ways inwhich the assets they representcan be used to provide increasedvalue or other benefits
If confidence in the exclusiv-ity an owner has over the prop-erty right is lost or was neverpresent the asset will be used lessproductively For example own-ers will milk them for their cur-rent-use value rather than trade-off present value for a future valuethat is less certain
Even without a total emascu-lation of individual rights (for ex-ample when title to the propertydepends on continuing govern-mental assent) lack of certaintybrings lower incomes and dimin-ished asset protection One out-come of this can be observed inthe MurrayndashDarling system Wa-ter rights on the Victorian side ofthe Murray are secure while thoseon the NSW side have been over-allocated and are subject to ad-ministrative discretion includinghaving a firm duration of only tenyears In Victoria high securitywater (available 95 per cent of thetime) comprises the great bulk ofentitlements In contrast in
NSW high security water is avail-able only 60-80 per cent of thetime The result is that farmers onthe Victorian side plant perennialcrops while those in NSW tendto focus on annual crops espe-cially rice
There are claims that Victoriarsquosmore robust property rights meanthat the State Government haslost lsquocapabilityrsquo to manage com-pared with NSW The flip side ofthis is the increased risk and as-sociated lower value of productionnorth of the Murray where prop-erty rights are attenuated Gov-ernments that give themselves in-creased capacity to direct produc-tion or to take individualrsquos prop-erty will need to accept lower lev-els of income and output
IRRIGATION ENVIRON-MENTAL BENEFITS AND SA-LINITY
The Types of IssuesIssues stemming from irrigationcomprise two types those impact-ing on the environment and thoseimpacting on private uses Theformer includes issues such as pre-venting loss of species ensuringthat certain sorts of species flourishand avoiding unattractive growths
such as blue-green algae which re-sult from fertilizer build-up
The second involves economicimpacts on different users
While environmental flows toensure species flourish are oftenhighlighted salinity is the mainfocus And while salinity has animpact on the environment itsimportance is in the conflict of in-terest between productive usersmdashthe complaint of lsquodamaged goodsrsquoby downstream users against thoseupstream
The MurrayndashDarling Basin Sa-linity Strategy 2001ndash2015 has es-timated that increased salinitybrings costs of $294 million perannum to the basin
Yet data on the salinity of theMurray Darling shows levels up-stream of South Australia arelower than they were in the early1980s and are only seriously abovethese levels as the river ap-proaches its mouth at the GoolwaBarrage
The Basin Salinity Manage-ment Strategy argues that progressachieved over the past decade willlsquobe cancelled within 20-50 yearsand median salinity levels wouldexceed the Australian DrinkingWater Guidelines for good waterquality within 50-100 yearsrsquo Thecause of this is said to be risinggroundwater tables due to land usechanges across the Basin
The disputes over salinizationare largely disputes between com-mercial parties Full specificationof rights and obligations will al-low these to be resolved as longas the impacts are measurabletheir causes identifiable and thevarious rights and obligations areknown and stable In this respecttechnology to measure salt in wa-ter and to trace increases to par-ticular locations is readily avail-able
Agreements about the alloca-tion of water rights between ju-risdictions and to the main irri-gation provinces have been inplace for over a century In the
Average Salinity in the River Murray (EC Units)1
3500
3000
2500
2000
1500
1000
500
0
January 2003
July 2002ndashJanuary 2003
July 1982ndashJanuary 2003
Hume D
am
Swan
Hill
Merbein
Morgan
Milang
Mening
ie
Goolw
a
Barra
ge
31MARCH 2003
E V I E WR
I
API
Musinghellipcase of the Murray the lsquocaprsquo onwater abstractions agreed betweenthe various jurisdictions in 1995largely validated agreements madeearly in the last century and be-fore Disturbing these agreementswould greatly undermine the trustin the sanctity of property rightsand seriously reduce agriculturalproductivity Hence increased al-locations for certain parties or forcertain uses (including environ-mental flows) would need to bepurchased at market prices
Developments in Australiaover recent decades have con-spired to make irrigation water farmore valuable This is exacer-bated by1 Activation of NSW lsquosleeperrsquo
and lsquodozerrsquo water rights as a re-sult of the increased scarcityvalue a change that bringseven greater pressure on theavailable supply
2 Increased scarcity leading tomeasures that more carefullyhusband the water Whilesome of these prevent evapo-ration loss and have thereforebrought a net increase in effec-tive availability others havereduced availability (these in-clude a more careful wateringwhich results in reduced run-off and re-use)
3 Increased capture of waterwithin the land on which itfalls once water is recognizedas scarce landowners will seekto ensure it does not leave theirland NSW and Victoria haveplaced limits (a strict 10 percent in NSW) of water fallingon property as entitlements ofthe owner Queensland has notyet enacted an equivalent tothis Such adaptations of thecommon law are essentialhowever if downstream usersare not to be expropriatedThere is likely to be constant
bickering over water rights espe-cially if State Governments seek toelevate sharing issues and to sanc-tify them with claims about promot-
Daniel Pipes in The New York Posthas a very cogent explanation forwhy the Left appears to be so happywith the likes of Osama bin Ladenand Saddam Hussein
To be clear about their attitudeshe quotes the renowned Germanelectronic music composer KarlHeinz Stockhausen who saidstraight after the attack on NewYork that it was lsquothe greatest workof art for the whole cosmosrsquo
As Pipes and many of us observedaily there is barely a bad word tosay about Saddam Hussein nor aniota of sympathy for thoseoppressed tortured and murderedby his reacutegime Instead they venttheir fury against the AmericanPresident and British Prime Minister
Why the nonchalancePipes draws our attention to Lee
Harris writing in a recent issue ofthe Hoover Institutionrsquos journalPolicy Review According to KarlMarxrsquos central thesis the demise ofcapitalism hangs on workersgrowing poorer over timemdashwhichof course did not happen Sorather than give up on cherishedexpectations of socialist revolutionHarris notes Marxists tweaked theirtheory and looked instead to theentire populations of poor countriesto carry out the revolution Classanalysis went out the windowreplaced by geography
The trouble is they have tooverlook militant Islamrsquos slightly un-socialist practicesmdashsuch as itsimposing religious law excludingwomen from the workplace andpersecuting atheists
As Pipes sums up September 11and the prospect of war againstSaddam Hussein have exposed theLeftrsquos political self-delusionintellectual bankruptcy and moralturpitude
The Loopy Leftby Andrew McIntyre
ing an improved environment Realsolutions require the issue be placedwithin a normal commercial frame-work which involves1 Clarifying the property rights2 Allowing water rights to be
fully detachable from propertyand able to be used howeverthe holder wishes subject toany damage this might imposeon others
3 Ensuring full rights to buy andsell the water
4 Defining rights so as not to re-duce the quality of other usersThis means ensuring that farm-ing practices that do not bringgreater salination than somestandard
5 Allowing rights holders tobank their water and ensureeven greater certaintyAllocating specific individual
ownership rights to water and al-lowing its trade is a well-foundedmeans of maximizing the usevalue It would also be likely tohave the beneficial side-effects ofreducing salinity and farm-basedpollutants caused by intensiveuse We should grasp such oppor-tunities But if the impending sa-linity problem is as great as someclaim other solutions might wellinclude buying out some allocatedirrigatorsrsquo rights However alter-natives may be to remove saltfrom the water by engineering so-lutions or simply to live withhigher salt
NOTE1 Human drinking water should
be less than 800 ECs (electri-cal conductivity one ECequals about 06 mglitre)while higher levels are accept-able for much farming activity
Dr Alan Moran is Director Deregulation Unitat the Institute of Public Affairs
32 MARCH 2003
E V I E WR
Reading FileDone
eral political systems worldwidehave consistently accretedpower to the centre often in theface of clear constitutional im-peratives to the contrary) Ifeared instead that a UN thathad been patently successful insomethingmdashanythingmdashmightbe granted greater powers to thepoint where it would kill truediversity and individualism (ortry to anyway) through inevi-table bureaucratic practices
Is such a fear unfounded Ap-parently not if many peopleshare the moral touchstone ofthe Opposition Leader SimonCrean He believes according tohis own words in Parliamentthat what the UN SecurityCouncil declares is moral whatit refuses is immoral
The latest manoeuvrings overIraq have therefore been heart-
ening It seems that the desiresof the powers small and largeto promote their own interestswill continue to hobble the UN
The problem with a unitedworld is that as the threateningimpasse over Iraq suggestedthere are very divergent viewsabout how that world ought tobe run on an international leveljust as there are at national and
sub-national levels The virtueof multi-layered levels of gov-ernments is that competing ju-risdictions give the individual adegree of choice
The greatest sin of totalitar-ian governments past and pres-ent is to deny their citizens theright to leave The greatest dan-ger that the United Nationsposes as far off as it now (hap-pily) seems is that leaving its ju-risdiction is for all practical pur-poses impossible
THE IMPASSE JUST PASSEDI listened to Prime MinisterHoward speaking to the motionbefore Parliament in relation tothe war It was a good speechbut neither he nor PresidentBush seems able to structure andlay out an argument with thestyle and content of BritishPrime Minister Blair His equi-valent speech before the BritishCommons provides a masterfulsummary of the reasons for thiswar and includes an immenselyreadable time-line of the utterineffectiveness of the UN pro-cesses in dealing with Iraq Henicely deals with allegations ofthe lsquorushrsquo to war lsquoOur fault hasnot been impatience The truth
UNITED OR DIVIDEDI write just hours after US Presi-dent George W Bush has deliv-ered his ultimatum to Iraqi Presi-dent Saddam Hussein leave Iraqwithin 48 hours or be removedBy the time this appears beforeyour eyes you will knowwhether Hussein has decided hischances of survival will be sig-nificantly greater by choosingexile or by remaining in IraqThe recent creation of the In-ternational Criminal Court ofcourse makes war more likelysince Hussein can have no guar-antee of a peaceful lsquoretirementrsquo
In the event that Hussein re-mains in Iraq you will also knowwhether Bush has kept his wordand most likely the outcome ofthis military venture
This matter is immensely im-portant for the people of Iraqand for the military personnelinvolved (including our ownAustralian soldiers sailors andaviators) But then so was theprevious Gulf War the US in-vasion of Grenada the Austra-lian intervention in East Timorand so on But a difference be-tween the current conflict andthose others could be the impactit has upon international insti-tutions Actually just one inter-national institution the UnitedNations
Prior to the first Gulf War Ifeared the coalitionrsquos success forthe reason that some of it mighthave rubbed off onto the UnitedNations I hasten to deny that Ifear the UN as some vast con-spiracy for world domination Ifeared instead that it couldstumble into a piecemeal cen-tralization of power (just as Fed-
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
E V I E WRs
33MARCH 2003
E V I E WR
Reading FileDone
ATTACKING THE GLOBALGOVERNORSThe Cato Institute is a whole-some body as demonstrated byits opposition to such interna-tional organizations as the Inter-national Criminal Court and forthat matter the United Nationsitself Ted Galen Carpenter forexample argues in lsquoPutting theUnited Nations on Noticersquo thatthe UN can and has done somemodest good occasionally It ishe says lsquoa good idea to have aplace where governments cangather to air grievancesrsquo But headds if it lsquoattempts to acquire ataxing authority [or] raise astanding armyrsquo then the USshould withdraw (as indeedshould Australia) Because thatwould turn it into an lsquoembryonicsuperstate that would menacelibertyrsquo
Go to
wwwcatoorgforeignpolicyunhtml
THE INTERNATIONALORGANIZATIONS THEM-SELVESThe United Nations has beenaccused of being often ineffec-tive and always slow Well ev-ery time Irsquove hit the UNrsquos Web-site even with my nifty broad-band Internet connection slow-ness rules Perhaps the site isbeing continually accessed bythe teeming masses Anyway goto
wwwunorg
With 15 members alreadyand 13 more on the way thereremain hopes that the EuropeanUnion will be a force for a stable
twenty-first century Equallywith 15 members already exhib-iting rather divergent views overthe issue of Iraq and most of theforthcoming members sidingwith the United States perhapsthis is overly hopeful Go to
europaeuintindex_enhtm
Then there is the WorldTrade Organization the organi-zation behind which protection-ist nations can hide from unilat-eral trade liberalization by pre-tending to support multilateraltrade liberalization Go to
wwwwtoorg
And we mustnrsquot forget the In-ternational Criminal Court fearof which was no doubt a featureof Saddam Husseinrsquos rejection ofexile as an option and the furyof which is promised by a num-ber of prominent lawyers to bevisited upon our very own PrimeMinister Go to
wwwicc-cpiint
FEEDBACKI would welcome advice fromreaders on any other sites of inter-est to IPA Review readers E-mailme on scdawsonbigpondnetau
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
is our patience should have beenexhausted weeks and monthsand years agorsquo
Go to
wwwnumber10govukoutputPage3294asp
THE STRUGGLE BETWEENTHE CONTINENTSIf you are patient you can readthat wonderful British rag TheSpectator for free Last weekrsquoscopy is available on-line One ofits regular columnists is MarkSteyn an Americo-phile Cana-dian who has a robust turn ofphrase and an abiding disdain formuch modern music (whichseems to place him very comfort-ably into The Spectatorrsquos culturalmatrix)
His piece on the future de-cline of Europe vis-agrave-vis Ame-rica makes for fascinating read-ing Go to
wwwspectatorcouk
then click on the lsquoBack Issuesrsquobutton and choose the edition of15 March 2003
E V I E WR
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
19MARCH 2003
E V I E WR
have been major advances in fueleconomy and these will no doubtcontinue But more than counterbal-ancing this is the inexorable growthin demand for personal mobility andfor goods from distant parts Althoughgrowth in energy consumption mayslow down in Australia we will notbe reducing our consumption to anysignificant degree
Our export role will also be lim-ited Australian export volumes havetended to be steady over recent yearsand future new export potential forpetroleum products seems likely to beminimal China and India have re-cently become major exporters par-ticularly of gasoline Refinery capac-ity is planned to continue to growstrongly in the region even thoughthere is already significant excessThe decline in capacity utilization inmajor exporters such as Singaporewill make exporting difficult Further-more it is expected that productspecifications in Asia the US andEurope will converge in the comingyears thereby eliminating niche ex-port opportunities
The choice we face is what to doabout our essentially import-compet-ing industry
INCENTIVES NOT STRONGWhile there are strong pressures forthe industry to restructure there islittle incentive to invest for this pur-pose Investments in the Australianrefining industry have to competewith many alternatives across theglobe
Lack of sufficient return is thesingle biggest deterrent to investmentin the industry at present But thereare othersbull There is no prospect of strong growth
in demand to offset the substantialrisks associated with large new in-vestments
bull The persistent refinery capacity over-hang in our region will keep sus-tained pressure on our margins
bull The corporate taxation regime is nowless favourable than hitherto after thesubstitution of effective-life foraccelerated depreciation The
competing Singapore option offersa three-year write-off
bull The regulatory cost burden is grow-ing This applies to all Australianindustry but is potent in overseascomparisons Tighter fuel stan-dards environmental restrictionsintervention in prices and indus-trial law are some of the factors
bull There is increased sovereign riskstemming from inconsistent regula-tions We have eight parliamentswhich enact inconsistent laws Acurrent example is the higher fuelstandards applied in Western Aus-tralia
bull The sovereign risk also arises fromuncertainty in the regulatory processThere are unpredictable changesof direction (the deferral of thediesel sulphur excise differential[DSED]) and uncertainty in theface of conflicting interests (willthe Government act on ethanolcontent)
All these factors enter into the riskreward calculation When the re-wards are minimal the risks take onan extra dimension
WHAT INDUSTRY STRUC-TURE DO WE NEEDThe short answer is we cannot knowin detail
In the Downstream Petroleum In-dustry Framework 2002 the Depart-ment of Industry Tourism and Re-sources set out a broad vision
bull A preference for market-based so-lutions
bull A strong efficient environmen-tally responsible industry supply-ing most of the nationrsquos needs forproducts
bull Regulation only for market failureor national interest objectives
bull Regulation to be transparent andconsistent
bull Reform and regulation to maxi-mize long-term community ben-efitThis vision has some prescriptive
elements but the Government hasmade it clear that it will not nomi-nate an optimal number of refineriesor a pattern of production
The general public would probablyopt for a structure that guaranteedlower more stable automotive fuelprices Unfortunately they cannothave both in the short term
In fairness the investors in the in-dustry are the ones entitled and bestfitted to determine its future In theextreme they will do it anyway bypersisting or walking away Generallyspeaking they will seek to maximizetheir returns and thus promote themost efficient use of resources
Australian refineries are not inef-ficient but that is not the point Ourmarket is open so the competitionwe face is the best of the overseas per-formers often with more favourabletax and subsidy regimes
Nor is this simply a question ofclosing the smallest refineries A bet-ter approach might well be to allowrefining companies to concentrate onwhat they do bestmdashperhaps throughrefinery alliances Caltex and Shellhave co-operated in this way in Thai-land
The fact is that the detail of thedecisions can only be made by theindustry relatively free of governmentdirection The series of detailed de-cisions entailed will determine theoverall structure of the industry
COMPETITION REGULATIONCAN IMPEDE RESTRUCTURINGThe relevant provision of Section 50of the Trade Practices Act (TPA) pro
While there are
strong pressures for
the industry to
restructure there is
little incentive to
invest for this
purpose
s
20 MARCH 2003
E V I E WR
hibits mergers or asset acquisitionsthat would have the effect or belikely to have the effect ofsubstantially lessening compe-tition in a marketIt is both potentially and in prac-
tice an extremely restrictive provi-sion The Australian Consumer andCompetition Commission (ACCC)has expressed concern at concentra-tion in the sector in applying the pro-vision
The ACCCrsquos concerns seem ex-aggerated in the light of history Butthey are complemented by a persis-tent public misapprehension thatlarge petrol price swings equal profi-teering This perception has been soexploited for political advantage andmedia excitement that it is now al-most impossible for the truth toemerge
The future intensity of competi-tion in this industrymdashif it is allowedto restructuremdashshould not be indoubt Any rationalization would inall likelihood still leave strong do-mestic competition in each majorproduct category perhaps with fewermore efficient production units
The market is also contestableThere would be numerous potentialimporters and many independent re-tailers High margins would be rap-idly eroded by competition As re-cently ruled in the Boral case mar-ket reality is more conclusive than aperception of anti-competitiveness
Proposed mergers have been per-mitted in the past but the process isslow and permission is generally onlygranted with severe conditionsNonetheless there is a strong case forallowing restructuring within theterms of the merger provisions
AUTHORIZATION COULD BETHE KEYIf Section 50 of the TPA is an im-passable barrier then the authoriza-tion provisions of the Act could bethe way to greater efficiency The testsunder these provisions require a pub-lic benefit which outweighs the com-petition detriment The ACCC listsfostering business efficiency industry
rationalization and import-competi-tiveness as important public benefits
There is a strong prima facie casethat rationalization of the industrycould satisfy these tests It wouldallow greater scale of productioneconomies in distribution and closureof the least efficient production units
But the authorization process isslow and the onus for demonstratingthe public benefits rests on the appli-cant Slow process can amount to ef-fective rejection
POLICY OPTIONS AND REC-OMMENDATIONSIf government cannot help the indus-try to adjust it should allow it to ad-just by supporting sensible changeThis would involve both improving
the operating environment throughregulatory reform and altering thebalance of competition regulation sothat the industry could restructurevoluntarily The CommonwealthGovernment has already indicated awillingness to support both but hasnot yet delivered
The ball would then be in theindustryrsquos court to bring forward newproposals if a new policy environmentcould be created This could all hap-pen within a very broad strategicframework agreed with the industrywhereby Australia continued to besure of sufficient refining capacity tomeet a severe international fuel short-age
We therefore recommend thatbull The Commonwealth Govern-
ment provide explicit indicationto the ACCC of the public ben-efits it sees from the rationaliza-tion of the refining sector In par-ticular joint ventures should becontemplated
bull The ACCC give sufficient weightto the public interest benefits ofrestructuring to allow rationaliza-tion of production facilities
bull All governments reduce distortingfuel subsidies and taxes that favourparticular sectors or fuels
bull The State Governments act im-mediately to harmonize their regu-lation of the industry and agreenot to issue any new inconsistentregulation
bull More specifically the States havea single set of fuel standards withwhich refiners can reasonablycomply withdraw from all formsof price regulation and refrainfrom thwarting or distorting therationalization process
bull Governments generally not intro-duce new regulations mandatingthe use of alternative fuels
CONCLUSIONThe choice for the industry appearsto be between accelerated rational-ization and atrophy The process ofchange is something which the indus-try must plan and effect The task isnot impossible but it will require theactive support of government at alllevels For the time being there is anexpressed willingness at the Com-monwealth level but no real solu-tions
If nothing is done the refiners willcontinue to stumble along in a regu-latory fog and will invest only whenobliged to do so by changing fuel stan-dards They will become increasinglyvulnerable to low-priced imports andeventual closure
Jim Hoggett is a Senior Fellow at theInstitute of Public Affairs
If Section 50 of the
TPA is an impassable
barrier then the
authorization
provisions of the Act
could be the way to
greater efficiency
API
Last week the Government tabled 22 volumes of theCole Royal Commission into the Building andConstruction Industry Former Court of Appeal judgeTerence Cole made 392 specific findings of unlawfulconduct and in the confidential final volumerecommended that 31 individuals be referred for possiblecriminal prosecution As was to be expected theconstruction unions claimed that the report was a witch-hunt and people who should have known better claimedthat Cole was biased
The anti-union allegations were never very plausiblegiven that most unions had refused to cooperate withthe Commission and had even boycotted theCommissionrsquos special conference on occupational healthand safety As things have turned out one of their ownhas fatally undermined the unionsrsquo case No less anauthority than the National Secretary of the ConstructionDivision of the CFMEU has unwittingly confirmed thatCole is right In what was no doubt an unguardedmoment John Sutton admitted to a Melbournenewspaper that ldquovirtually everything we do breaches partof this Actrdquo Suttonrsquos admission means that Colersquosdescription of a largely lawless industry can be disputedat the margins but not credibly denied The problemsof the industry have been established beyond credibledoubt and the question now is what needs to be doneabout it
Nothing says the CFMEU because itrsquos alright tobreak the law in the best interests of the working classLeading union officials take the view that in a toughindustry only wimps take the law seriously The newsthat ldquoonlyrdquo 31 individuals had been recommended toface criminal charges was greeted with somethingapproaching jubilation as if the industryrsquos code of silencebased on fear had largely kept the Royal Commission atbay
As the Australian Financial Review commented in aneditorial the unionrsquos dismissive reaction to Colersquos report
ldquospeaks as loudly as his damning findings of entrenchedlawlessnessrdquo Imagine the reaction if a royalcommissioner had identified 31 people in the financeindustry or the steel industry for possible criminalcharges This would rightly be regarded as the sign ofan industry in crisis demanding urgent governmentintervention
Change wonrsquot be easy in an industry conditioned tothink that might is right Change which shifts powerfrom one unscrupulous group to another will not bereform As Grocon has discovered the first company toldquobuck the systemrdquo is liable to heavy-duty industrialpayback No one wants to be the first to change butchange is necessary in the national interest
In 2002 the Victorian construction industry aloneaccounted for 17 per cent of all days lost through strikesThe West Australian construction industry accountedfor another 8 per cent of the national strike tallyConstruction is a $40 billion a year industry comprisingnearly six per cent of GDP and employing nearly500000 Australians Due to over-manning demarcationdisputes and chronic stoppages labour productivity incommercial construction averages 13 per cent less thanin home building Plastering the same wall in the sameway costs 40 per cent more in a high rise building thanin a standard house Just raising labour productivity incommercial construction to the home building standard(let alone the 50 per cent increase needed to match NorthAmerican levels) would mean according to Econtech aone per cent drop in the cost of living a one per centincrease in GDP and $23 billion in benefits toconsumers workers and taxpayers every year
Still change is about decent Australian values notjust a more efficient industry Workers donrsquot like latenight house calls compulsory attendance at demos anddays spent sitting in the shed to make an industrial pointany more than bosses Threats of violence contempt forcourt and commission orders mob rampages when one
Restoring the Rule of Law in theConstruction Industry
Tony Abbott MHR
s
As this issue of the IPA Review was at the press we were alerted to the delivery of the following speechby the Minister for Employment and Workplace Relations The paper marks a seminal change in the
governmentrsquos approach to systemic corruption in the construction industry and isanother major step in the reform of workplace relations in Australia
SI-1MARCH 2003
IPA REVIEW SPECIAL INSERT
side doesnrsquot get its way habitual failure to honouragreements and routine harassment of people exercisingtheir legal rights are not acceptable in modern Australiaand cannot be excused even in a good cause
Breaching ldquobourgeois lawrdquo may not matter tomilitant activists but few others take such a self-indulgent view Itrsquos said that ldquooppositions can afford tobe irresponsiblerdquo but no government or alternativegovernment can accept the principle of optionalobedience to the law of the land No less than the HowardGovernment the federal Labor Opposition and the stateLabor Governments understand the dangers of playingpolitics with the rule of lawmdasheven theauthority of laws they might preferto change such as the federal WorkplaceRelations Act
The rule of law is not asmorgasbord from which a fewfavoured items can be chosen and therest ignored Freedom under the lawrequires respect for the law generallynot just the laws individualspersonally support Obedience to thelaw is not a question of choice It is arequirement of civilisation because thelaw is our guarantee of equaltreatment after a fair hearing ldquoBe youever so high the law is above yourdquoThis reproach hurled at the Stuartkings has rightly echoed through thecenturies as a warning against theconceits of office and the arrogance ofpower regardless of the cause in whichitrsquos exercised
After last weekrsquos meeting of theWorkplace Relations MinisterialCouncil of the Council of Australian Governments stateand territory ministers were keen to declare in acommuniqueacute ldquothere was unanimous agreement thatunlawful behaviour in the building and constructionindustry is not acceptablerdquo This was an importantaffirmation of the rule of law in circumstances wheresome Labor ministers might have been tempted to putpolitics ahead of principle
Unfortunately the state and territory ministerssupported more powers for the Australian IndustrialRelations Commission to settle construction industrydisputes In fact the Commission already has power tosettle disputes Whatrsquos missing is effective power toenforce agreements The issue is not settling disputesThe issue is enforcing the law
The construction industry typically conducts itselflike this A certified agreement is in place including anagreed dispute resolution procedure Unions identify agrievance often a spurious safety issue Agreed disputeprocedures are not followed and a strike ensues eventhough strikes outside ldquobargaining periodsrdquo areldquounprotectedrdquo and theoretically subject to damagesorders At that point employers often ask theCommission to end industrial action but instead ofordering an immediate return to work because anagreement has been breached the Commission willtypically seek to conciliate on the basis of the ldquomeritsrdquo
of the issue After a couple of dayswith costs escalating and liquidateddamages looming the employerinvariably agrees to rectify the matteralleged and to pay increasedallowances (including pay for days onstrike) At this point the Commissionorders a return to work on the basisof the agreed settlementmdashwhich lastsonly until the union decides on itsnext move
The union has ignored the law andbroken its original agreement buttypically suffers no adverseconsequences whatsoever Theemployer has been manoeuvred intoconceding most of a demand thatshould never have been made Afaccedilade of legality conceals a travestyof unionism and a travesty of justiceNearly all construction industrystrikes are unprotected and potentiallyunlawful under section 170MN of theWorkplace Relations Act Even so
employers nearly always opt to pass the costs ontoconsumers while existing arrangements for gatheringinformation launching prosecutions and imposing finesdonrsquot work well anywhere but hardly work at all in anindustry where giving evidence against the unions isthought to mean commercial suicide
The construction industry is a classic case not ofmarket failure but of regulatory failure The fact thatthe construction industry does not face potential importcompetition limits its exposure to market discipline Stillthe main reason why unions can get what they want frombusiness and business can get what it needs from haplessconsumers is the absence of independent policing andenforcement of the industrial equivalent of fair tradinglaws To an extraordinary degree in this industry the
SI-2 MARCH 2003
IPA REVIEW SPECIAL INSERT
The rule of law is nota smorgasbord from
which a few favoureditems can be chosenand the rest ignoredFreedom under thelaw requires respectfor the law generally
not just thelaws individuals
personally support
request documents but they canrsquot compel witnesses toanswer or demand that material be produced Althoughit is a criminal offence under the Workplace Relations Actto hinder workplace inspectors the Cole report notedthat no prosecutions have yet been launched despiteevidence that Office of the Employment Advocateinspectors have been abused had objects thrown at themand their property damaged It has been commonpractice for the arrival of OEA inspectors to lead to workstoppages and even site invasions in a bid to thwart anddemoralise an independent investigator not susceptibleto the unionrsquos usual weapon of commercial retaliation
One of the problems with theworkplace relations system is theassumption that parties will enforcethe law against each other This worksup to a point in industries whereworkplace parties are more-or-lessevenly matched and the issues are theworkplace equivalent of an argumentbetween neighbours over the heightof a fence It completely breaks downwhen one side has an effectivemonopoly over the supply of labourand disputes resemble a more-or-lessnormal family telling the house fullof footballers next door that the partyrsquosover Expecting contractors to enforcethe law against the CFMEU is likeexpecting people in the street to makecitizenrsquos arrests hence Colersquos principalrecommendations are an AustralianBuilding and ConstructionCommission to investigate prosecuteand enforce the provisions of a beefed-up industry specific workplace
relations actYesterday Cabinet decided to support Colersquos key
recommendations First the Government will seek aseparate act governing workplace relations in theconstruction industry providing for secret ballots beforestrikes compulsory cooling off periods after extendedstrikes and damages awards in the event of unprotectedindustrial action Second the Government will establisha new law enforcement agency for the industry withpowers to compel witnesses to testify bring prosecutionsand enforce judgments and with sufficient on-the-ground presence to police CBD building sites Thirdthe Government will establish a Safety Commissionerto monitor federally-funded construction sites to try toensure that these become industry models Fourth the
s
commissions lack sufficient power the courts lacksufficient speed the employment advocate lacks sufficientauthority and the police lack sufficient interest
Not before time the Cole Commission has acted as agiant searchlight probing the dark underside of thispotentially great Australian industry It confirmed whatpolicy makers had long suspected and what influentialinsiders knew but had always tried to deny or explainaway that the industry operates under the rule of thejungle and that there will be no improvement until thepeople who work in it understand that the law has to betaken seriously Legislative institutional and structuralchange will start to mean somethingwhen law breakers in this industry arecharged convicted and punished likelaw breakers everywhere else A fewsalutary bars of that old song need towaft over construction sites ldquoI foughtthe law and the law wonrdquo
Late last year in response to theRoyal Commissionrsquos first report thefederal Government set up theBuilding and Construction IndustryInterim Task Force The Governmentrsquosbrief to the Task Force is to ensure zerotolerance of industrial law-breakingThe Task Force is not primarily toenforce the tax laws or the safety rulesbecause other bodies exist for this(although the Task Force will certainlyshare information with them) TheTask Force is to investigate and enforceWorkplace Relations Act prohibitions oncoercion unprotected strikes strikepay and breach of industrialagreements So far the Task Force hasvisited nearly 300 sites launched more than 50investigations brought three prosecutions and referrednine other matters to state police the Australian FederalPolice or the Australian Competition and ConsumerCommission for further action
These are the first public prosecutions arising out ofindustrial action in the construction industry at leastsince the 1980s and are the result of a public policycommitment to law enforcement not seen since thehumiliating Clarrie OrsquoShea case in 1969 and the end ofldquopenal sanctionsrdquo Yesterday Cabinet decided to extendthe interim Task Forcersquos operations until more permanentarrangements to secure the rule of law can be established
Task Force agents have the powers of inspectors underthe Workplace Relations Act They can enter premises and
SI-3MARCH 2003
IPA REVIEW SPECIAL INSERT
The main reason whyunions can get what
they want frombusiness and businesscan get what it needs
from haplessconsumers is theabsence of inde-
pendent policing andenforcement of the
industrial equivalent offair trading laws
API
Government will insist on the application of theNational Construction Code and implementationguidelines to all significant new projects which are fullyor partly federally funded
Directly or indirectly the federal Government fundsabout $5 billion worth of construction projects everyyear and is determined to use its role as client to drivechange in the industry In essence the NationalConstruction Code stipulates that construction projectsmust take place in conformity with the WorkplaceRelations Act Under the Code and implementationguidelines the federal Governmentwill not engage tenderers whoseworkplace agreements and practicesensure a closed shop on site The TaskForce (and any replacement body) willhave full access to federally fundedsites to ensure that the law is beingobserved and workplace agreementscomplied with
For the federal Government theissue is upholding the law and tryingto tackle the ldquounion rulesrdquo culturewhich is at the heart of lawlessness inthe industry For the states the issueis whether they are prepared to refusefederal money in order to protect theclosed shop However much theymight prefer different federal laws thestates ought to accept thatconstruction projects have to complywith the law as it stands includingthe law mandating compliance withcertified agreements
State Labor governments whichhave made a point of their middle-ground credentials risk losing some$4 billion a year in federal building and constructiongrants if they side with the union movementrsquos mostmilitant minority There are likely to be limits to Laborrsquosdefence of a union whose stock-in-trade (at least in somestates) is the site invasion and the demand for paymentand which quietly reinstates organisers sacked for assaultor perjury Opposition senators will find it hard to brandas ldquoideologicalrdquo the recommendations of a royalcommission which spent 171 days in public hearingsand which pursued 11 shop stewards and 97 unionofficials to obtain their side of the argument
As Justice Cole pointed out in his report previousattempts to reform the industry have proven ineffectivedespite two earlier royal commissions and numerous
SI-4 MARCH 2003
IPA REVIEW SPECIAL INSERT
enquiries Although this Royal Commissionrsquosinvestigations seem to have temporarily checkedlawlessness in the industry a campaign is now emergingto extend the anarchic culture of CBD construction intoregional centres and the domestic housing industryThings will certainly be different this time if parliamentapproves a permanent well resourced watchdog withnew powers new personnel and new attitudes Unlikeprevious arrangements a new statutory watchdog withthe powers of a law enforcement agency should beeffective and permanent
Hundreds of people took big riskswith their commercial future and eventheir personal security to testify to theRoyal Commission It should neveragain be so hard for people in thisindustry to exercise their ordinaryrights and responsibilities asAustralian citizens They expected theGovernment to take the Commissionrsquosreport seriously and the Governmentfor its part is determined not to letthem down The Governmentunderstands that joining fights yoursquorenot prepared to win only makes badsituations worse Establishing the ruleof law in the construction industry isa challenge Australia canrsquot afford tofailSome of the worldrsquos best workersshould no longer have to put up withsome of the worldrsquos worst industrialpractices They have a right to anhonest industry where they can earna fair dayrsquos pay for a fair dayrsquos workand expect to come home uninjuredThe enduring image of this industry
should not be noisy marchers replaying the ideologicalstruggles of the 1970s and raising clenched fists againstauthorities they donrsquot like At its best the Australianindustry is capable of work which is stunningly beautifulyet intensely practical and it now needs to performconsistently on time on budget and in accordance withlaw
Hundreds of peopletook big risks withtheir commercial
future and even theirpersonal security totestify to the Royal
Commission It shouldnever again be so
hard for people in thisindustry to exercisetheir ordinary rights
and responsibilities asAustralian citizens
NOTE
The foregoing speech was first delivered as an Addressto the National Press Club on 2 April 2003
21MARCH 2003
E V I E WR
IN psychology behaviouris defined as irrational ifan action continues to berepeated despite its re-
peated failure to achieve the desiredoutcome On this definition our aidpolicy towards Papua New Guineahas been irrational
Despite over twelve billion dol-lars in Australian aid to PNG sincethat countryrsquos independence in 1975key development indicators such asliteracy rates infant mortality lifeexpectancy and real income percapita are either stagnating or dete-riorating Worse wersquove known forover a decade1
Today acknowledgement of thefailure of our aid policy in PNG hasgone well beyond the writings of in-dividual international policy analystssuch as myself to institution-spon-sored reports such as Beyond Baliwhich was released by the AustralianStrategic Policy Institute (the Aus-tralian Governmentrsquos own strategicpolicy adviser) and Papua NewGuinea on the Brink which was writ-ten by Susan Windybank and MikeManning for the Centre for Indepen-dent Studies Both reports confirmthe gross failure of Australian aidpolicy in PNG
Yet still our aid policy irrational-ity towards Papua New Guinea con-tinues While the ASPI and CIS re-ports acknowledge the gross failureof our aid policy in PNG they alsoargue that we need to continue ouraid to that country Indeed the ASPIreport argues that we should increaseour aid to Papua New Guinea Thepolicy saviour The ASPI report ar-gues that we should exert greater con-trol over our aid Not just over theform of our aid but direct interven-tion in policy and implementation inPNGmdashin essence for a return to pre-
Aid Detox for PNGPETER URBAN
independence days in PNG whereas UN-sanctioned administrator weran government in that country
Despite the mind-frame of secu-rity-focused strategists such as thoseat ASPI and the CIS (which en-dorses the aid approach advocated byASPI) the reality is that we canrsquotPNG is now independent and to ig-nore this reality would simply com-pound the problems of our past aidpolicy irrationality with irrationalityabout our political relationship withour nearest neighbour
A more interventionist aid policytowards PNG on our part as advo-cated in Beyond Bali and by HughWhite (the executive director ofASPSI) in the media might havepopulist appeal but it would haveserious adverse implications for ourrelationship with other Pacific islandcountries and even IndonesiaWorse it would give succour to theviews of our east Asian critics (suchas Malaysian PM Dr Mahathir) whoclaim that Australia continues toharbour colonial aspirations
We have to accept that to be suc-cessful aid policy must not just helpreduce mass poverty it also has to doso as a guest in the aid recipientcountry To do otherwise is not aidbut imperialismmdashwhether inten-tional or not
A more interventionist approachto aid policy in PNG would also givethe current corrupt political elite inPort Moresby a rallying point againstus and an excuse to delay changingtheir own policies Neither Austra-lia nor PNG can afford any furtherdelays to policy reform For us to givePNG politicians yet another excuseto delay reform would be not onlyirrational it would be inexcusableWhile our aid continues so will thecorrupt elite that is at the heart ofPNGrsquos problems Until we send themessage to the PNG political elitethat we are prepared to stop ouraidmdashto put them on aid detoxmdashwewill continue to waste our aid in thecorruption that is PNG politics Itmay be hard to accept but the sadreality we face in PNG is that no aidmay prove to be good aid at least inthe short to medium-term2
NOTES
1 Peter Urban lsquoOne Clear ObjectiveNo Clear Approachrsquo IPA Review1997 Vol 50 No 1
2 With Iraq also likely to require verysignificant Australian aid fundingover the next few years the Gov-ernment will need to review our aidprogram as part of the 2003-04 fed-eral Budget A decision to suspendaid to PNG could be taken as partof that review
Peter Urban is former chief economist with theDepartment of Foreign Affairs and Trade
We have to accept
that to be successful
aid policy must not
just help reduce
mass poverty it also
has to do so as a
guest in the aid
recipient country
API
22 MARCH 2003
E V I E WR
IN his speech to the Na-tional Press Club on theprospect of war with Iraqand the case for disarma-
ment Prime Minister Howard statedthat Australia will play a significant hu-manitarian role in Iraq
If so the Howard Government needsto evaluate carefully the foreign-aid non-government organizations (FANGOs)which it funds to carry-out this humani-tarian programme Many FANGOshave made it clear that they do not sharethe Australian Governmentrsquos objectivesand values in Iraq Moreover some donot agree with the Governmentrsquos over-all aid policies in general
THE COALITION OF THEUNWILLINGIn the lead-up to latest Gulf War some30 Australian aid agencies put theirnames to an Open Letter to the PrimeMinister organized by the AustralianCouncil of Foreign and Overseas Aid(ACFOA) The aim of the letter was tolsquospeak out against war in Iraqrsquo and it ex-pressed grave concerns about the hu-manitarian consequences of the war andthe effects of the existing sanctions1 TheFANGOs that signed the letter wereOxfam Community Aid Abroad WorldVision Australia TEAR AustraliaUnion Aid Australia - APHEDACaritas Australia National Council ofChurches Australian Council for For-eign and Overseas Aid Save the Chil-dren Australia CARE Australia OzGreen United Nations Association ofAustralia Family Planning AustraliaMercy Works Marist Mission CentreAustralia Every Home for Christ Bap-tist World Aid for Christ CCF Austra-lia Quaker Service Australia Austra-lian Lutheran World Service AustralianRelief and Mercy Services AnglicanBoard of Mission AUSTCARE Com-munity Development and Health
Irreconcilable DifferencesDON DrsquoCRUZ
Hussein have been virtually ignored isa searing indictment of the warped ide-ology feeble analysis and moral blind-ness of the sector For them now to re-discover the plight of the Iraqi peopleand to invoke their name in the mediais beyond contempt
THE OXFAM COMMUNITYAID ABROAD POSITIONOf the 30 FANGO signatories to theopen letter Oxfam Community AidAbroad (OCAA) has been perhaps themost outspoken It opposed military ac-tionmdasheven with UN Security Councilapproval4 In spite of all the evidence tothe contrary OCAA was comfortablewith Saddam Husseinrsquos assurances thathe did not have weapons of mass destruc-tion5 Adopting the common policyagreed to by the other Oxfam affiliatesOCAA stated that it will not take anymoney from the lsquobelligerentsrsquomdasha quaintterm used to the describe democraticnations planning to disarm a dictatorguilty of countless human rights abuses
OCAArsquos outrage against the so-called lsquobelligerentsrsquo appears to be geo-graphically confined to Iraq OCAAappears happy to take governmentmoney from the belligerents elsewherearound the world
According to OCAArsquos ExecutiveDirector Andrew Hewitt refusing totake money from the belligerents wasdone to lsquoprotect its impartialityrsquo6 Thisis a very curious position from Australiarsquosarguably most political FANGOOCAA has a long track-record of beinganything but impartial or reluctant totake sides in miliary action It wasnrsquotimpartial in East Timor where it sidedwith Fretlin in its quest for indepen-dence According to its own testimonyto a Senate committee OCAA wasgiven the choice by the IndonesianGovernment between lsquoplaying politicsrsquoor delivering aid projects in Indonesia7
Group Amnesty International Austra-lia AngliCORD Australian Aid forCambodia Fund Burnet InstituteRedR Friends of the Earth PLAN Aus-tralia and Australian Volunteers Inter-national2
This open letter highlighted a num-ber of problems with the FANGOs sec-tor First it highlighted the weak logicthat passes for advocacy in the sectorThe letter argued against military actionwas critical of sanctions and suggestedthat nations should settle issues only bydiplomatic means It is a viewpointwhich totally ignores the fact that theGovernment had to deal with SaddamHussein
The shallowness of their logic wasbest exposed by the Prime Minister inhis response to the open letter in whichhe stated that the humanitarian situa-tion in Iraq is best addressed by SaddamHusseinrsquos removal and perhaps morepointedly that Saddamrsquos manipulationof foreign aid had allowed him to main-tain and pursue his weapons of mass de-struction capability and human rightsabuses3
Second it also highlighted the factthat the so-called lsquohuman rights-basedapproachrsquo to development (embraced byseveral of the signatories) is not so muchabout realizing human rights (as its pro-ponents argue) but is more about pro-viding them with an excuse to lsquoplay poli-ticsrsquo According to the theory the hu-man rights-based approach to develop-ment allows FANGOs to tackle the rootcauses of poverty and injustice
Yet the root cause of the Iraqipeoplersquos suffering can be summed up intwo simple wordsmdashSaddam HusseinThe fact that the FANGOs who sub-scribe to this particular approach havebeen obsessed with imaginary humanrights abuses committed by Shell NikeRio Tinto BHP-Billiton and AuroraGold while the activities of Saddam
23MARCH 2003
E V I E WR
It chose the former thus making it per-sona non grata in Indonesia for almost adecade8 It wasnrsquot impartial inMozambique when it sided with Frelimoin the countryrsquos civil war9 It wasnrsquot im-partial in Ethiopia when it developedlinks to the Eritrean Peoplersquos LiberationFront during its war against the thengovernment10 It was not impartial oranti-war when it sided with the TigrayPeoplersquos Liberation Front in the neigh-bouring province to Eritrea when thatgroup was waging a guerrilla war againstthe government11 And recently therehave been claims that in the Middle Eastit was little more than an lsquoeager propa-gandistrsquo for the Palestinians12
In East Timor Ethiopia and Mozam-bique OCAA was linked with organi-zations which supported direct militaryaction that led to the deaths of thou-sands of civilians In none of these loca-tions were the enemies of their friendany worse than Saddam Hussein In-deed in many cases OCAArsquos friendswere arguably no better than their en-emies in terms of human rights
OCAArsquos decision not to accept Aus-tralian Government funding is the cor-rect one in the sense that it clearly doesnot share the Governmentrsquos values onthe question of Iraq and thereforeshouldnrsquot receive any governmentmoney
Hewitt went on to state in a pressrelease that lsquoWe will not take funds thatmight allow a government to use hu-manitarian efforts as an instrument offoreign policyhelliprsquo13
This is finemdashexcept the AustralianGovernmentrsquos foreign aid is an instru-ment of foreign policy And it always hasbeen This is spelt out quite clearly inthe Australian Governmentrsquos latest for-eign and trade policy White Paper Ad-vancing the National Interest14
FANGOs that cannot accept thisrather basic proposition should not begetting taxpayersrsquo money They areclearly unsuitable for the task at hand
The consequences of Australian tax-payersrsquo money falling into the wronghands were brought home to Prime Min-ister Howard when he met IndonesianPresident Megawati Sukarnoputri to dis-cuss the war against terrorism and
Australiarsquos involvement against Iraq Atthe top of the Indonesian agenda wasthe issue of Australian funding toFANGOs being used to support sepa-ratist movements in Indonesia15
Post-war Iraq will be a better placewithout Saddam Hussein and his thugsThis does not mean that it will be a safeplace or necessarily a stable place Afterall one of the reasons for Western tol-eration of Saddam Hussein for manyyears was his ability to hold the various
ethnic minorities in Iraq together albeitrather brutally thereby maintaining abalance of power in the Middle East Hisdeparture would see strains on Iraq fromthe various ethnic minorities that makeup Iraq There is a strong chance thatIraq will fragment
The last thing the Australian Gov-ernment or any of the so-called belli-gerents needs in a post-war Iraq is west-ern NGOs running around and becom-ing self-styled advocates for national self-determination for Iraqrsquos ethnic minori-ties and injecting themselves into Iraqrsquosinternal politics This is a real risk Thebehaviour of Australian foreign aidNGOs in Indonesia should make Aus-tralian decision-makers extremely waryof funding any NGOs with Australiantaxpayersrsquo money so that they can oper-ate in Iraq
As things stand now FANGOs facevery few restrictions on their actionsfrom government If they undertake ac-tivity that is inconsistent with being anagent of government they may losefunding for specific projects or in moredramatic circumstances lose funding ina country Nonetheless they are gener-
ally able to access Australian Govern-ment funding for other projects andcountries In other words the penaltiesfor becoming caught up in political ac-tivities are very light for NGOs and posethem no serious problems
Foreign aid NGOs that lsquoplay politicsrsquoare unsuitable contractors for the deliv-ery of aid That these overtly politicalorganizations have been allowed to gaingovernment accreditation and receivegovernment funding points to some se-rious problems at AusAID Australiarsquosofficial aid agency The time has comefor this to change
NOTES1 httpwwwacfoaasnaumedia_releases
2003_releases26_3_03PDF2 httpwwwacfoaasnauemergencies
openletterPDF3 httpwwwacfoaasnauemergencies
iraq_responsehtm4 Oxfam Horizons Vol 3 No 1 (Febru-
ary 2003) page 25 Oxfam Community Aid Abroad lsquoIraq
Overviewrsquo February 20036 Hewitt quoted in Liz Gooch lsquoOxfam
wersquoll say no cashrsquo The Age 16 March2003
7 Community Aid Abroad Submission tothe Senate Foreign Affairs Defence andTrade References Committee Inquiryinto East Timor Downloaded at httpwwwcaaorg aucampaignssubmissionstimorhtml
8 Ibid9 Susan Blackburn Practical Visionaries A
Study of Community Aid Abroad (Mel-bourne Melbourne University Press1993) page 313
10 Ibid pages 325-333 passim11 Ibid12 Gerald Steinberg lsquoPropaganda vs Hu-
manitarianismrsquo Australian Financial Re-view 7 June 2002 Downloaded at httpfacultybiuacil~steingconflictopedpropvshumanitarianismhtm
13 ht tp wwwcaa o rg au p r 2003 iraqfundshtml
14 httpwwwdfatgovauani15 Dennis Shanahan lsquoJakarta fears aid funds
for rebellionrsquo The Australian 17 Febru-ary 2003 page 2
Don DrsquoCruz is Research Fellow at the IPAand Director of IPArsquos NGOWatch
OCAA has a longtrack-record of
being anything butimpartial or
reluctant to takesides in miliary
action
API
24 MARCH 2003
E V I E WR
GEORGE Bush Tony Blairand John Howard haveprovided many reasons forsupporting military action
against Iraq One of those reasons hasbecome known as the lsquohumanitarianrsquojustification Put simply the lsquohu-manitarianrsquo justification for the US-led invasion of Iraq is that such ac-tion is necessary to free the Iraqipeople from their totalitariandictator
Such an argument is attractive tothose who believe that there aresome fundamental human rights thatall individuals possess regardless ofwhere and how they live Whatserves as the source of those rightshas been the subject of debate forcenturies One of the pre-eminentstatements on the subject was madeby John Locke who in The SecondTreatise of Government wrote thatmankind was lsquoequal and indepen-dentrsquo and that lsquono-one ought to harmanother in his life health liberty orpossessionsrsquo
Saddam Husseinrsquos mass murdertorture and terror are reasonablyclear breaches of human rightsTherefore some would ask why thereshould be opposition to the UnitedStates and its allies taking whatevermeasures might be necessary totopple the Iraqi regime Surely thesame standard of behaviour that ap-plies to individuals applies also tonation states If an individual walk-ing in the street witnessed a rapeoccurring wouldnrsquot that individualbe entitled to do everything in hispower to stop the crime and assistthe victim
The point is of course that in-ternational law and convention do
After IraqIs Sovereignty Dead
JOHN ROSKAM
not allow nation states to act in thesame way as individuals Countriescannot simply lsquotake the law into theirown handsrsquo To restrain lsquovigilantestatesrsquo (who might be acting fromeither lsquogoodrsquo or lsquobadrsquo motives) a num-ber of legal and political theorieshave been developed One of theseis the doctrine of lsquosovereigntyrsquo whichprovides that states should not inter-vene in the domestic affairs of otherstates
In relation to Iraq the lsquosover-eigntyrsquo question is perhaps the stron-gest argument against the US-ledCoalition Most of the other criti-cisms of lsquohumanitarianrsquo interventionin Iraq are either grounded in simpleanti-Americanism or are fallaciousFor example there is the claim thatbecause some of the countries in theCoalition have previously ignoredHusseinrsquos cruelties therefore it is il-legitimate to take action now Sucha view has been expressed by aMelbourne international relationsacademic
While there is no disputing thebrutal nature of Saddam Hus-seinrsquos regime the case for inter-vention made by those in Can-berra London and Washingtonis weakened by the fact that atthe peak of Saddamrsquos crimes inthe late 1980s they were eitherdirectly supporting him withweapons technology and intelli-gence or were entirely indifferentto his behaviour Even if theyhave belatedly recognised theerror of their ways how seriouslycan we take their concerns aboutweapons of mass destruction nowgiven they were his suppliersthen1
On the basis of this argument itcould be said that Britainrsquos (andAustraliarsquos) case for intervening toassist Poland upon the German in-vasion in 1939 was lsquoweakenedrsquo be-cause Britain had previously acqui-esced to Germanyrsquos rearmament theremilitarization of the Rhinelandand the annexation of both Austriaand parts of Czechoslovakia Fewpeople who chanted lsquoFreedom forEast Timorrsquo said that the HowardGovernment should not act becausea quarter of a century before theWhitlam Government had been lsquoin-differentrsquo to Indonesiarsquos occupationof the island
There is also the claim that al-though Hussein is bad he is not theworst dictator in the world and thatit is hypocritical for the Americansto attack only Iraq This is an as-tounding proposition It attempts toapply to the United States a standardof behaviour that is impossible to sat-isfy Should the police not attemptto solve any crimes because theycanrsquot solve all crimes If a crime iscommitted by two people and thepolice arrest one perpetrator unlessthe other is also caught must the firstperpetrator be released When indi-viduals donate money for famine re-lief in Africa very few believe thattheir donation is pointless becauseit might prevent the starvation ofonly one person rather than thou-sands Christian ethics sets down norequirement that we should help no-one unless we can help everyone
The issue about state sovereigntyhowever is one that deserves to betaken seriously Regardless of onersquosopinions on the extent and limits ofstate sovereignty it is true that our
25MARCH 2003
E V I E WR
international relations system is builtupon the principle and to modify oroverturn it is a matter of some con-sequence
Even those who are generally sup-portive of the United States andtheir allies see the problem As it wasput by a leading commentator whenanalysing the Australian PrimeMinisterrsquos lsquohumanitarianrsquo justifica-tion for war
Finally Howardrsquos argumentagainst Hussein on human rightsis correct So is his moral case forwanting to liberate the Iraqipeople from their torment Theproblem however is that youcanrsquot trip around the worldwanting to overthrow regimesbecause of human rights2
Some would askmdashlsquowhy notrsquo Be-cause to do so would overthrow theUnited Nations Charter comes therejoinder And in turn the responseto that might bemdashlsquogoodrsquo
If itrsquos a choice between the main-tenance of the UN Charter and free-dom from tyranny freedom wins ev-ery time (although an internationallawyer sitting in Sydney might havea different view on this question fromthat of a political prisoner manacledin a Baghdad jail cell)
When the interests of lsquointerna-tional lawrsquo are more important thanthe life and liberty of individuals itcould be concluded that lsquothe Em-peror has no clothesrsquo Would inter-national law have sanctioned inter-vention to stop the Holocaust hadHitler not waged war and proceededwith his methods entirely within theconfines of the German territorialstate
Many who argue that lsquohumanitar-ianrsquo intervention in Iraq is not justi-fied because it infringes on thatcountryrsquos lsquosovereigntyrsquo would happilyhave other countries cede their po-litical sovereignty to supra-nationalbodies Certain features of the Inter-national Criminal Court overridethe principles of sovereignty but thatdid not stop a phalanx of interna-tional law experts urging sovereigngovernments to join it so as to en-
able the prosecution of war criminalsBut when it comes to actually stop-ping war crimes not simply prosecut-ing them that phalanx is largely si-lent
Without the doctrine of state sov-ereignty and without an arbiter fordetermining when interference withthe principle is justified (the roleclaimed by the United Nations andits Security Council) it is said thatstates would be free to impose theirown will and intervene in other
countries whose standards did notmeet their own (In The Second Trea-tise of Government Locke argued thata characteristic of a lsquostate of warrsquo be-tween individuals was the absence ofa superior authority to adjudicatedisputes and prevent individualsfrom administering justice them-selves)
Iraq might be claimed as a rea-sonably clear-cut case for interven-tion but other situations are notlikely to be as simple In Culture andEquality first published in 2001Brian Barry explored a lsquoliberalrsquo per-spective on this question
The liberal position is clearNobody anywhere in the worldshould be denied liberal pro-tections against injustice andoppression However in exactlythe same way as liberals arepragmatic about what liberalismmeans in terms of boundaries sohere the move from principle tointervention has to be mediated bypractical considerationshellip
[L]iberals are not so simple-mindedas to imagine that the answer toall violations of liberal rights is tosend in the Marines or even aUnited Nations force As in anyjust war theory there must be somedoctrine of lsquoproportionalityrsquohellip[S]carcely anybody would be infavour of the western powersinvading Saudi Arabia so at to sortout the way in which it lsquounjustlydenies political rights to women ornon-Muslimsrsquomdashaccording to theirliberal idea of justicersquo3
The question remainsmdashafterIraq what remains of lsquostate sover-eigntyrsquo Should the doctrine applyonly to lsquoliberal democraticrsquo statesSuch a solution might be attractiveto some lsquoliberalsrsquo but it doesnrsquot avoidthe problem of what exactly a lsquolib-eral democraticrsquo state is
One irony arising from the argu-ments about the war in Iraq is thatmany of those who have urged astrict application of lsquostate sover-eigntyrsquo principles in the past havegenerally supported the US-led in-tervention while those who havebeen willing to abridge or even aban-don the doctrine have had to rely onit to counter the lsquohumanitarianrsquo jus-tification for war
There are not many certaintiesabout the nature of the world afterthe war in Iraq but it can be saidwith some assurance that one defi-nite outcome is going to be a morevigorous debate about state sover-eignty
NOTES1 Scott Burchill lsquoThe humanitar-
ian arguments for this war are spu-riousrsquo The Age 21 March 2003
2 Paul Kelly lsquoThe hapless per-suaderrsquo The Australian 15ndash16March 2003
3 Brian Barry Culture and Equal-ity An egalitarian critique ofmulticulturalism Harvard Uni-versity Press page 138
John Roskam is a Research Fellow with the IPA
The lsquosovereigntyrsquo
question is perhaps
the strongest
argument against
the US-led
Coalition
API
26 MARCH 2003
E V I E WR
Which Way for theDemocrats
The 2002 mid-term elections were adramatic victory for President GeorgeW Bush and the Republicans Insteadof the historical norm of the partycontrolling the White House losingBushrsquos party gained seats in the Sen-ate House Governorsrsquo races andState legislatures The result was abitter disappointment for the Demo-crats and has led to a fierce debatebetween the Left and Centrists aboutthe future policy direction of the partytowards the 2004 elections
The Leftrsquos analysis is that the ma-jority of Americans are natural Demo-crats Electoral defeat was due to thefailure to energize that base of Demo-crats The party failed to distinguishitself sufficiently from Bush and thusgive their voters a reason to turn outWhile the majority of Democrats op-posed Bush on tax cuts and the warwith Iraq a significant minority sup-ported him and campaigned on thatsupport The result the Left claimwas that the Democrats lacked a con-sistent message in contrast to Bush
Support for this argument can befound in the higher turnout amongstRepublicans than Democrats in 2002while in 2000 the combined vote forGore and Nader was 51 per cent Aninfluential book by John Judis andRuy Texeira identified lsquoThe Emerg-ing Democrat Majorityrsquo Theyclaimed that growing demographicgroups trended Democrat includingthe young socially liberal profession-als minorities and women
What policies would motivate thisnatural Democrat base The Left callfor rescinding the Bush tax cut a classwar against the corporate world amajor increase in lsquopublic investmentrsquoin schools childcare health care and
Letter from AmericaNIGEL ASHFORD
public transport and strong opposi-tion to the war
Centrists however have a verydifferent analysis of the Democratsrsquoproblems the public did not trustthem to pursue the war against ter-rorism vigorously to keep down taxesto spend their tax dollars wisely or toreflect their cultural values
A Gallup opinion poll found that57 per cent of Americans askedthought that the Democrats were nottough enough on the war on terror-ism while 64 per cent thought theRepublicans were There was the per-ception that the Democrats were notserious on the issue and just playingpolitics Evidence for this was the de-bate over the new Department ofHomeland Security blocked becausethe Democrats wanted to protectunion rights while the President de-manded more flexibility to deploy theworkforce Many voters saw the issueas the national interest versus a spe-cial interestmdashin this case that of theunions The Democrats were seen asputting the interests of one of theirmajor constituencies before nationalsecurity
The Democratic LeadershipCouncil in lsquoThe Road Aheadrsquo by AlFrom and Bruce Reed presented theCentrist case lsquoStop pretending wecan win a majority simply by energiz-ing our basersquo The Democrats were
not trusted on the war against terror-ism were hostile to the cultural con-cerns of many working-class Demo-crats on abortion and guns and stillseen as the tax-and-spend party lsquoToomany Americans donrsquot trust us tokeep their taxes down or to spendtheir money wellrsquo
The Centrist agenda is to stronglyprosecute the war against terrorismwhether against al-Qarsquoeda Saddam orothers and to abandon knee-jerk iso-lationism arising from the experienceof the Vietnam War to defend capi-talism and support small investorsagainst irresponsible managers to cutpayroll taxes and to downplay thecultural issues that divide Democrats
Which path will the Democratstake The Left is in the ascendancyMost of the remaining Democrats inoffice come from left-wing districtsNancy Pelosi a left-liberal from SanFrancisco was easily elected the newleader of the House Democrats over-whelming her Centrist opponent andrising star African-American HaroldFord The early field of presidentialcandidates for 2004 is dominated bythe Left tendency including SenatorJohn Kerry Representative DickGephardt Governor Howard DeanRev Al Sharpton former SenatorCarol Moseley-Braun and Represen-tative Dennis Kucinich Only Sena-tor Joe Lieberman and Senator JohnEdwards represent the Centrist wing
The future of US politics may de-pend on which road the Democratsdecide to take The US is currently alsquo50ndash50rsquo nation evenly balanced be-tween the parties A left turn couldlead to Republican dominance farinto the future
Dr Nigel Ashford is at the Institute of Humane Studiesat George Mason University and is co-author of US
Politics Today (Manchester University Press)
API
27MARCH 2003
E V I E WR
Trusting TonyFrankly itrsquos all just too depressing Theeconomyrsquos heading for trouble Busi-ness confidence is low investment in2002 was 92 per cent lower than theprevious year and manufacturing in-vestment was nearly 18 per cent downThe budget deficit is spiralling becauseour once lsquoprudentrsquo Chancellor (trea-surer) Gordon Brown made over-opti-mistic growth projections and startedthrowing money at problems
Therersquos a load of health-and-safetyand anti-discrimination measuresthatmdashto put it most politelymdashare ex-amples of letting the best be the en-emy of the good Every school tripneeds a formal risk assessment withthe result that many trips are simplynot taking place New trains orderedfor London commuter routes wonrsquothave toilets because the rules say thatat least one toilet in each four-car unitmust be wheelchair-accessible whichwould have cost ten or a dozen seatson every overcrowded train
Some of this is just insane Somelocal authorities say that safety at workrules mean that home-care workersmustnrsquot lift the disabled people theyare looking after Or therersquos rail safetyUntil recently we were seriously pro-posing to spend $10 billion on a bet-ter system to stop trains going throughred signals On average this would havesaved the lives of about three passen-gers every four years which is a lousybargain compared with other safety in-vestments Worse it would also havereduced the capacity of the networkby up to 15 per cent and forced morepeople onto the roads which are muchmore dangerous than even ourclapped-out railways The result was aprojected net increase of 13 to 21 deathsper year
Meanwhile in London the Cen-tral line of the Underground has been
Letter from LondonJOHN NURICK
API
closed for weeks after a train derailedwhen one of its motors fell off Therewere no deaths or major injuries in theaccidentmdashbut itrsquos a safe bet that someof the people who havenrsquot been ableto use the Central line have been in-jured or killed on the roads
What can one say If the authori-ties took the same attitude to the riskof fatal accidents in the health serviceevery hospital in the country wouldhave been closed for years
Despite all this the Conservativesare still hopeless Their leader IanDuncan Smith has a new wheezewhen a journalist asks him anythingdifficult he chortles merrily and saysitrsquos the most uninteresting questionimaginable and hersquos not going to wasteanyonersquos time by answering it His col-leagues have their knives out for him
Meanwhile in spite of the govern-mentrsquos problems with the economy andthe public services Tony Blair is grow-ing in stature having his waymdashandantagonising large sections of his ownparty in the process On several recentissues he has faced down the formi-dable Gordon Brown in a way that notlong ago was hard to imagine
Then he shocked everyone by com-ing out against having elected mem-bers in the reformed House of Lordswhen most voters want an all-elected
chamber and most MPs want a partly-elected one In the event Parliamentcouldnrsquot agree on any of the optionsfor reform so wersquore stuck with the sta-tus quomdashwhich is fine by Mr Blair
Then therersquos the war By the timeyou read this it may be over or we maystill be waiting or our lads may befighting Mr Blairrsquos strong line againstIraq has made him very unpopular Theanti-war march on 15 February was thebiggest demonstration London hasever seen A few days later 122 Labourbackbenchers voted against the gov-ernment and many more abstained
Mr Blair didnrsquot budge War is a se-rious thing he says lsquoBut in a situationsuch as this you have to do what youbelieve to be right because thatrsquos theprice of having responsibilityrsquo1
He has often been accused of gov-erning by focus group Certainly he hasseemed reluctant to antagonise anypowerful group That has clearlychanged In a sense his stand on Iraqmerely follows his action in sendingtroops to Sierra Leone and Kosovomdashbut it has stirred up far stronger domes-tic and international opposition
The irony is that now when he re-ally needs people to trust him wedonrsquot Even in the desperately seriousbusiness of justifying an unpopular warDowning Street canrsquot play it straightremember the dossier from lsquointelli-gence sourcesrsquo that turned out to belargely cribbed from a PhD thesis onthe Internet
NOTE1 The Guardian 1 March 2003
John Nurick is a management consultant based in theSouth of England From 1985 to 1990 he was
editorial director of the Australian Institute for PublicPolicy and later edited newsletters reporting on theUK Parliament and European Union institutions
28 MARCH 2003
E V I E WR
KEVIN DONNELLY
Private EducationEquals Public Good
When it comes to choosing be-tween government and non-gov-ernment schools Australian par-ents are lsquovoting with their feetrsquo Asshown by recent ABS figures(Schools Australia 2002) over thelast decade there has been a dra-matic increase in non-governmentschool enrolments
Approximately 30 per cent ofstudents now attend non-govern-ment schools compared with 22per cent in 1980 and 28 per centin 1990 Over the last decadewhile the number of governmentschools has fallen by 64 per centnon-government schools havegrown by 61 per cent
Of course not everybody valuesparentsrsquo right to choose and theAustralian Education Union(AEU) Labor governments andlsquoleft-wingrsquo academics in particularconsistently argue against non-government schools
One of the arguments put for-ward by those opposed to givingparents greater freedom of choiceis that government schools are bet-ter at promoting social cohesionand a strong sense of what KenBoston the ex-head of the NSWEducation Department terms lsquothebonds of civic friendshiprsquo
The assumption is that becausestudents attend non-governmentschools there will be greater socialdivisiveness and a breakdown inthe civic values needed to hold so-ciety together But there is no cred-ible evidence offered to support theclaim that government schools arebetter at promoting the commongood
In fact there is much to provethe opposite
First as anyone familiar withthe lsquoculture warsrsquo and politicallycorrect curricula will know insteadof government-controlled educa-tion promoting unity and cohe-sion it has led to public angst andparental complaints
Witness the very bitter debatein Queensland a year or two agowhen the government-mandatedStudies of Society and Environ-ment (SOSE) curriculum was in-troduced into schools Such was
the lsquoleft-wingrsquo bias in the curricu-lum in particular in the areas ofmulticulturalism and the environ-ment that many parents felt be-trayed
The Queensland debate is mir-rored by what is happening in theUnited States As noted by Ste-phen Arons in his book Short Routeto Chaos instead of promotingunity government control of thecurriculum leads to the opposite
What the school wars tell us isthat somehow we have been
Education Agenda
transforming a vital instrumentfor creating social cohesioninto a source of division andhostility that there is some-thing built into the structure ofpublic schooling that under-mines one of its most importantfunctionsAronrsquos argument that govern-
ment schools no longer transmit aviable sense of a common cultureor agreed civic values is reinforcedby another noted United Stateseducationalist Diane Ravitch
In a recent article in the jour-nal Education Next Ravitch be-moans the impact of cultural rela-tivism and the post-modern on theschool curriculum (where there areno commonly agreed values) andeven goes so far as to argue thatparents should be free to choosenon-government schools becausesuch schools have a better chanceof reflecting their values
In the current education sys-tem with the public schoolscommitted to multiculturalismbilingualism and other forms ofparticularism it is difficult toargue that parents should notbe able to choose schools thatmeet their cultural needsSecond if one accepts that lsquoso-
cial capitalrsquomdashthe networks volun-tary associations and civic bondsthat hold a community togethermdashis important for the health of ademocratic society then non-gov-ernment schools clearly have theadvantage
Unlike the government schoolsystem characterized by a heavy-handed centralized bureaucracyand teacher union control non-government schools are closer tothe communities they serve Bytheir very nature non-government
There is no credible
evidence offered to
support the claim
that government
schools are better
at promoting the
common good
29MARCH 2003
E V I E WR
ALAN MORAN
The lsquoRrsquo Files
Private propertyrights the key toachieving efficiency inrural water use
WATER IN AUSTRALIAWater has always been a definingissue in Australiarsquos prosperityAnd in recent decades irrigationhas grown rapidly Even so theproportion of Australia that is ir-rigated at two per cent of theland comprises a share that isamongst the lowest among OECDcountries Only Canada and therainiest countries New Zealandand the UK have lower sharesthat of the US is 11 per cent andin Japan it reaches 60 per cent
Modern agriculture is only 200years old in Australia and thoughin the first 100 years agriculturalproductivity was increased toequal that of anywhere in theworld gains continue to bemademdashoutput has doubled overthe past 50 years a growth thatcould not have taken place with-out a similar expansion of irriga-tion Irrigation in the MurrayndashDarling agricultural provincealone contributes $5 billion toAustralian agricultural outputand non-irrigated agriculture inthe region contributes a further $5billion This makes the areawhich comprises 14 per cent ofAustraliarsquos land mass responsiblefor a third of the nationrsquos $35 bil-lion agricultural output
Applying Property Rights to WaterMost of the uses of water involvechoices or compromisesmdashdrink-ing water versus irrigation versus
industrial and so on Some how-ever involve complementaritiesparticularly certain recreationaluses such as water sports that arefacilitated by storage and consis-tent availability
In many cases water will per-form sequential functionsmdashthesame water can be used and re-used for irrigation used for indus-trial cooling and finish as drink-ing water Water with differentsometimes competing productiveuses will be optimally used as longas two conditions are in placeThe first is that its ownership isclearly specified and the ownersrsquoobligations to other users (orclaims from other beneficiaries)are well understood The secondrequires each property right to betradable to enable acquisition bythose who value it most therebymaximizing its value
The rights specification andtherefore property ownership canrarely commence with a cleansheet of paper People acquire in-dividual rights to property ini-tially through a variety of routesOne of these is seizure of some-thing that was originally of littlevalue until it was acquired and im-proved Squatters assume rights inthis way However they are firstacquired they need to be tradableAPI
schools establish strong commu-nity networks and have a greaterreliance on the voluntary work ofparents
That non-government schoolsare more effective in this regard issupported by research into lsquoChar-ter schoolsrsquo in the United StatesAs noted by Chester Finn at theFordham Foundation giving localcommunities lsquoownershiprsquo overtheir school builds networks oftrust and reciprocity so vital forsocial cohesion
Social capital also relies on citi-zens being disciplined and orderedin their behaviour Selfishness vio-lent behaviour and rudeness act tofragment the community instead ofpromoting cohesion According toa number of Australian surveys itis here once again that non-gov-ernment schools are seen to bemore effective
As noted by the Centre for In-dependent Studies researcher Jen-nifer Buckingham in The Truthabout Private Schools in Australiawhen analysing why so many par-ents forsake the government schoolsystem
When comparing independentprivate schools with publicschools the major theme thatemerged was not differences inacademic standards and curri-culum but issues of disciplineand order The surveyed par-ents felt that the behaviour andattitudes of students in publicschools was unacceptablehellipAll accept that non-govern-
ment schools achieve better aca-demic results provide greater cur-riculum flexibility and save Aus-tralian taxpayers millions of dol-lars Equally as important is theargument that such schools streng-then Australiarsquos civic health andstock of lsquosocial capitalrsquo
Dr Kevin Donnelly is Director of EducationStrategies a Melbourne-based consulting group
E-mailkevindnetspacenetau
s
30 MARCH 2003
E V I E WR
and relatively inviolable Thisprovides the incentive for them tobe improved and for their ownersand others to search out ways inwhich the assets they representcan be used to provide increasedvalue or other benefits
If confidence in the exclusiv-ity an owner has over the prop-erty right is lost or was neverpresent the asset will be used lessproductively For example own-ers will milk them for their cur-rent-use value rather than trade-off present value for a future valuethat is less certain
Even without a total emascu-lation of individual rights (for ex-ample when title to the propertydepends on continuing govern-mental assent) lack of certaintybrings lower incomes and dimin-ished asset protection One out-come of this can be observed inthe MurrayndashDarling system Wa-ter rights on the Victorian side ofthe Murray are secure while thoseon the NSW side have been over-allocated and are subject to ad-ministrative discretion includinghaving a firm duration of only tenyears In Victoria high securitywater (available 95 per cent of thetime) comprises the great bulk ofentitlements In contrast in
NSW high security water is avail-able only 60-80 per cent of thetime The result is that farmers onthe Victorian side plant perennialcrops while those in NSW tendto focus on annual crops espe-cially rice
There are claims that Victoriarsquosmore robust property rights meanthat the State Government haslost lsquocapabilityrsquo to manage com-pared with NSW The flip side ofthis is the increased risk and as-sociated lower value of productionnorth of the Murray where prop-erty rights are attenuated Gov-ernments that give themselves in-creased capacity to direct produc-tion or to take individualrsquos prop-erty will need to accept lower lev-els of income and output
IRRIGATION ENVIRON-MENTAL BENEFITS AND SA-LINITY
The Types of IssuesIssues stemming from irrigationcomprise two types those impact-ing on the environment and thoseimpacting on private uses Theformer includes issues such as pre-venting loss of species ensuringthat certain sorts of species flourishand avoiding unattractive growths
such as blue-green algae which re-sult from fertilizer build-up
The second involves economicimpacts on different users
While environmental flows toensure species flourish are oftenhighlighted salinity is the mainfocus And while salinity has animpact on the environment itsimportance is in the conflict of in-terest between productive usersmdashthe complaint of lsquodamaged goodsrsquoby downstream users against thoseupstream
The MurrayndashDarling Basin Sa-linity Strategy 2001ndash2015 has es-timated that increased salinitybrings costs of $294 million perannum to the basin
Yet data on the salinity of theMurray Darling shows levels up-stream of South Australia arelower than they were in the early1980s and are only seriously abovethese levels as the river ap-proaches its mouth at the GoolwaBarrage
The Basin Salinity Manage-ment Strategy argues that progressachieved over the past decade willlsquobe cancelled within 20-50 yearsand median salinity levels wouldexceed the Australian DrinkingWater Guidelines for good waterquality within 50-100 yearsrsquo Thecause of this is said to be risinggroundwater tables due to land usechanges across the Basin
The disputes over salinizationare largely disputes between com-mercial parties Full specificationof rights and obligations will al-low these to be resolved as longas the impacts are measurabletheir causes identifiable and thevarious rights and obligations areknown and stable In this respecttechnology to measure salt in wa-ter and to trace increases to par-ticular locations is readily avail-able
Agreements about the alloca-tion of water rights between ju-risdictions and to the main irri-gation provinces have been inplace for over a century In the
Average Salinity in the River Murray (EC Units)1
3500
3000
2500
2000
1500
1000
500
0
January 2003
July 2002ndashJanuary 2003
July 1982ndashJanuary 2003
Hume D
am
Swan
Hill
Merbein
Morgan
Milang
Mening
ie
Goolw
a
Barra
ge
31MARCH 2003
E V I E WR
I
API
Musinghellipcase of the Murray the lsquocaprsquo onwater abstractions agreed betweenthe various jurisdictions in 1995largely validated agreements madeearly in the last century and be-fore Disturbing these agreementswould greatly undermine the trustin the sanctity of property rightsand seriously reduce agriculturalproductivity Hence increased al-locations for certain parties or forcertain uses (including environ-mental flows) would need to bepurchased at market prices
Developments in Australiaover recent decades have con-spired to make irrigation water farmore valuable This is exacer-bated by1 Activation of NSW lsquosleeperrsquo
and lsquodozerrsquo water rights as a re-sult of the increased scarcityvalue a change that bringseven greater pressure on theavailable supply
2 Increased scarcity leading tomeasures that more carefullyhusband the water Whilesome of these prevent evapo-ration loss and have thereforebrought a net increase in effec-tive availability others havereduced availability (these in-clude a more careful wateringwhich results in reduced run-off and re-use)
3 Increased capture of waterwithin the land on which itfalls once water is recognizedas scarce landowners will seekto ensure it does not leave theirland NSW and Victoria haveplaced limits (a strict 10 percent in NSW) of water fallingon property as entitlements ofthe owner Queensland has notyet enacted an equivalent tothis Such adaptations of thecommon law are essentialhowever if downstream usersare not to be expropriatedThere is likely to be constant
bickering over water rights espe-cially if State Governments seek toelevate sharing issues and to sanc-tify them with claims about promot-
Daniel Pipes in The New York Posthas a very cogent explanation forwhy the Left appears to be so happywith the likes of Osama bin Ladenand Saddam Hussein
To be clear about their attitudeshe quotes the renowned Germanelectronic music composer KarlHeinz Stockhausen who saidstraight after the attack on NewYork that it was lsquothe greatest workof art for the whole cosmosrsquo
As Pipes and many of us observedaily there is barely a bad word tosay about Saddam Hussein nor aniota of sympathy for thoseoppressed tortured and murderedby his reacutegime Instead they venttheir fury against the AmericanPresident and British Prime Minister
Why the nonchalancePipes draws our attention to Lee
Harris writing in a recent issue ofthe Hoover Institutionrsquos journalPolicy Review According to KarlMarxrsquos central thesis the demise ofcapitalism hangs on workersgrowing poorer over timemdashwhichof course did not happen Sorather than give up on cherishedexpectations of socialist revolutionHarris notes Marxists tweaked theirtheory and looked instead to theentire populations of poor countriesto carry out the revolution Classanalysis went out the windowreplaced by geography
The trouble is they have tooverlook militant Islamrsquos slightly un-socialist practicesmdashsuch as itsimposing religious law excludingwomen from the workplace andpersecuting atheists
As Pipes sums up September 11and the prospect of war againstSaddam Hussein have exposed theLeftrsquos political self-delusionintellectual bankruptcy and moralturpitude
The Loopy Leftby Andrew McIntyre
ing an improved environment Realsolutions require the issue be placedwithin a normal commercial frame-work which involves1 Clarifying the property rights2 Allowing water rights to be
fully detachable from propertyand able to be used howeverthe holder wishes subject toany damage this might imposeon others
3 Ensuring full rights to buy andsell the water
4 Defining rights so as not to re-duce the quality of other usersThis means ensuring that farm-ing practices that do not bringgreater salination than somestandard
5 Allowing rights holders tobank their water and ensureeven greater certaintyAllocating specific individual
ownership rights to water and al-lowing its trade is a well-foundedmeans of maximizing the usevalue It would also be likely tohave the beneficial side-effects ofreducing salinity and farm-basedpollutants caused by intensiveuse We should grasp such oppor-tunities But if the impending sa-linity problem is as great as someclaim other solutions might wellinclude buying out some allocatedirrigatorsrsquo rights However alter-natives may be to remove saltfrom the water by engineering so-lutions or simply to live withhigher salt
NOTE1 Human drinking water should
be less than 800 ECs (electri-cal conductivity one ECequals about 06 mglitre)while higher levels are accept-able for much farming activity
Dr Alan Moran is Director Deregulation Unitat the Institute of Public Affairs
32 MARCH 2003
E V I E WR
Reading FileDone
eral political systems worldwidehave consistently accretedpower to the centre often in theface of clear constitutional im-peratives to the contrary) Ifeared instead that a UN thathad been patently successful insomethingmdashanythingmdashmightbe granted greater powers to thepoint where it would kill truediversity and individualism (ortry to anyway) through inevi-table bureaucratic practices
Is such a fear unfounded Ap-parently not if many peopleshare the moral touchstone ofthe Opposition Leader SimonCrean He believes according tohis own words in Parliamentthat what the UN SecurityCouncil declares is moral whatit refuses is immoral
The latest manoeuvrings overIraq have therefore been heart-
ening It seems that the desiresof the powers small and largeto promote their own interestswill continue to hobble the UN
The problem with a unitedworld is that as the threateningimpasse over Iraq suggestedthere are very divergent viewsabout how that world ought tobe run on an international leveljust as there are at national and
sub-national levels The virtueof multi-layered levels of gov-ernments is that competing ju-risdictions give the individual adegree of choice
The greatest sin of totalitar-ian governments past and pres-ent is to deny their citizens theright to leave The greatest dan-ger that the United Nationsposes as far off as it now (hap-pily) seems is that leaving its ju-risdiction is for all practical pur-poses impossible
THE IMPASSE JUST PASSEDI listened to Prime MinisterHoward speaking to the motionbefore Parliament in relation tothe war It was a good speechbut neither he nor PresidentBush seems able to structure andlay out an argument with thestyle and content of BritishPrime Minister Blair His equi-valent speech before the BritishCommons provides a masterfulsummary of the reasons for thiswar and includes an immenselyreadable time-line of the utterineffectiveness of the UN pro-cesses in dealing with Iraq Henicely deals with allegations ofthe lsquorushrsquo to war lsquoOur fault hasnot been impatience The truth
UNITED OR DIVIDEDI write just hours after US Presi-dent George W Bush has deliv-ered his ultimatum to Iraqi Presi-dent Saddam Hussein leave Iraqwithin 48 hours or be removedBy the time this appears beforeyour eyes you will knowwhether Hussein has decided hischances of survival will be sig-nificantly greater by choosingexile or by remaining in IraqThe recent creation of the In-ternational Criminal Court ofcourse makes war more likelysince Hussein can have no guar-antee of a peaceful lsquoretirementrsquo
In the event that Hussein re-mains in Iraq you will also knowwhether Bush has kept his wordand most likely the outcome ofthis military venture
This matter is immensely im-portant for the people of Iraqand for the military personnelinvolved (including our ownAustralian soldiers sailors andaviators) But then so was theprevious Gulf War the US in-vasion of Grenada the Austra-lian intervention in East Timorand so on But a difference be-tween the current conflict andthose others could be the impactit has upon international insti-tutions Actually just one inter-national institution the UnitedNations
Prior to the first Gulf War Ifeared the coalitionrsquos success forthe reason that some of it mighthave rubbed off onto the UnitedNations I hasten to deny that Ifear the UN as some vast con-spiracy for world domination Ifeared instead that it couldstumble into a piecemeal cen-tralization of power (just as Fed-
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
E V I E WRs
33MARCH 2003
E V I E WR
Reading FileDone
ATTACKING THE GLOBALGOVERNORSThe Cato Institute is a whole-some body as demonstrated byits opposition to such interna-tional organizations as the Inter-national Criminal Court and forthat matter the United Nationsitself Ted Galen Carpenter forexample argues in lsquoPutting theUnited Nations on Noticersquo thatthe UN can and has done somemodest good occasionally It ishe says lsquoa good idea to have aplace where governments cangather to air grievancesrsquo But headds if it lsquoattempts to acquire ataxing authority [or] raise astanding armyrsquo then the USshould withdraw (as indeedshould Australia) Because thatwould turn it into an lsquoembryonicsuperstate that would menacelibertyrsquo
Go to
wwwcatoorgforeignpolicyunhtml
THE INTERNATIONALORGANIZATIONS THEM-SELVESThe United Nations has beenaccused of being often ineffec-tive and always slow Well ev-ery time Irsquove hit the UNrsquos Web-site even with my nifty broad-band Internet connection slow-ness rules Perhaps the site isbeing continually accessed bythe teeming masses Anyway goto
wwwunorg
With 15 members alreadyand 13 more on the way thereremain hopes that the EuropeanUnion will be a force for a stable
twenty-first century Equallywith 15 members already exhib-iting rather divergent views overthe issue of Iraq and most of theforthcoming members sidingwith the United States perhapsthis is overly hopeful Go to
europaeuintindex_enhtm
Then there is the WorldTrade Organization the organi-zation behind which protection-ist nations can hide from unilat-eral trade liberalization by pre-tending to support multilateraltrade liberalization Go to
wwwwtoorg
And we mustnrsquot forget the In-ternational Criminal Court fearof which was no doubt a featureof Saddam Husseinrsquos rejection ofexile as an option and the furyof which is promised by a num-ber of prominent lawyers to bevisited upon our very own PrimeMinister Go to
wwwicc-cpiint
FEEDBACKI would welcome advice fromreaders on any other sites of inter-est to IPA Review readers E-mailme on scdawsonbigpondnetau
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
is our patience should have beenexhausted weeks and monthsand years agorsquo
Go to
wwwnumber10govukoutputPage3294asp
THE STRUGGLE BETWEENTHE CONTINENTSIf you are patient you can readthat wonderful British rag TheSpectator for free Last weekrsquoscopy is available on-line One ofits regular columnists is MarkSteyn an Americo-phile Cana-dian who has a robust turn ofphrase and an abiding disdain formuch modern music (whichseems to place him very comfort-ably into The Spectatorrsquos culturalmatrix)
His piece on the future de-cline of Europe vis-agrave-vis Ame-rica makes for fascinating read-ing Go to
wwwspectatorcouk
then click on the lsquoBack Issuesrsquobutton and choose the edition of15 March 2003
E V I E WR
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
20 MARCH 2003
E V I E WR
hibits mergers or asset acquisitionsthat would have the effect or belikely to have the effect ofsubstantially lessening compe-tition in a marketIt is both potentially and in prac-
tice an extremely restrictive provi-sion The Australian Consumer andCompetition Commission (ACCC)has expressed concern at concentra-tion in the sector in applying the pro-vision
The ACCCrsquos concerns seem ex-aggerated in the light of history Butthey are complemented by a persis-tent public misapprehension thatlarge petrol price swings equal profi-teering This perception has been soexploited for political advantage andmedia excitement that it is now al-most impossible for the truth toemerge
The future intensity of competi-tion in this industrymdashif it is allowedto restructuremdashshould not be indoubt Any rationalization would inall likelihood still leave strong do-mestic competition in each majorproduct category perhaps with fewermore efficient production units
The market is also contestableThere would be numerous potentialimporters and many independent re-tailers High margins would be rap-idly eroded by competition As re-cently ruled in the Boral case mar-ket reality is more conclusive than aperception of anti-competitiveness
Proposed mergers have been per-mitted in the past but the process isslow and permission is generally onlygranted with severe conditionsNonetheless there is a strong case forallowing restructuring within theterms of the merger provisions
AUTHORIZATION COULD BETHE KEYIf Section 50 of the TPA is an im-passable barrier then the authoriza-tion provisions of the Act could bethe way to greater efficiency The testsunder these provisions require a pub-lic benefit which outweighs the com-petition detriment The ACCC listsfostering business efficiency industry
rationalization and import-competi-tiveness as important public benefits
There is a strong prima facie casethat rationalization of the industrycould satisfy these tests It wouldallow greater scale of productioneconomies in distribution and closureof the least efficient production units
But the authorization process isslow and the onus for demonstratingthe public benefits rests on the appli-cant Slow process can amount to ef-fective rejection
POLICY OPTIONS AND REC-OMMENDATIONSIf government cannot help the indus-try to adjust it should allow it to ad-just by supporting sensible changeThis would involve both improving
the operating environment throughregulatory reform and altering thebalance of competition regulation sothat the industry could restructurevoluntarily The CommonwealthGovernment has already indicated awillingness to support both but hasnot yet delivered
The ball would then be in theindustryrsquos court to bring forward newproposals if a new policy environmentcould be created This could all hap-pen within a very broad strategicframework agreed with the industrywhereby Australia continued to besure of sufficient refining capacity tomeet a severe international fuel short-age
We therefore recommend thatbull The Commonwealth Govern-
ment provide explicit indicationto the ACCC of the public ben-efits it sees from the rationaliza-tion of the refining sector In par-ticular joint ventures should becontemplated
bull The ACCC give sufficient weightto the public interest benefits ofrestructuring to allow rationaliza-tion of production facilities
bull All governments reduce distortingfuel subsidies and taxes that favourparticular sectors or fuels
bull The State Governments act im-mediately to harmonize their regu-lation of the industry and agreenot to issue any new inconsistentregulation
bull More specifically the States havea single set of fuel standards withwhich refiners can reasonablycomply withdraw from all formsof price regulation and refrainfrom thwarting or distorting therationalization process
bull Governments generally not intro-duce new regulations mandatingthe use of alternative fuels
CONCLUSIONThe choice for the industry appearsto be between accelerated rational-ization and atrophy The process ofchange is something which the indus-try must plan and effect The task isnot impossible but it will require theactive support of government at alllevels For the time being there is anexpressed willingness at the Com-monwealth level but no real solu-tions
If nothing is done the refiners willcontinue to stumble along in a regu-latory fog and will invest only whenobliged to do so by changing fuel stan-dards They will become increasinglyvulnerable to low-priced imports andeventual closure
Jim Hoggett is a Senior Fellow at theInstitute of Public Affairs
If Section 50 of the
TPA is an impassable
barrier then the
authorization
provisions of the Act
could be the way to
greater efficiency
API
Last week the Government tabled 22 volumes of theCole Royal Commission into the Building andConstruction Industry Former Court of Appeal judgeTerence Cole made 392 specific findings of unlawfulconduct and in the confidential final volumerecommended that 31 individuals be referred for possiblecriminal prosecution As was to be expected theconstruction unions claimed that the report was a witch-hunt and people who should have known better claimedthat Cole was biased
The anti-union allegations were never very plausiblegiven that most unions had refused to cooperate withthe Commission and had even boycotted theCommissionrsquos special conference on occupational healthand safety As things have turned out one of their ownhas fatally undermined the unionsrsquo case No less anauthority than the National Secretary of the ConstructionDivision of the CFMEU has unwittingly confirmed thatCole is right In what was no doubt an unguardedmoment John Sutton admitted to a Melbournenewspaper that ldquovirtually everything we do breaches partof this Actrdquo Suttonrsquos admission means that Colersquosdescription of a largely lawless industry can be disputedat the margins but not credibly denied The problemsof the industry have been established beyond credibledoubt and the question now is what needs to be doneabout it
Nothing says the CFMEU because itrsquos alright tobreak the law in the best interests of the working classLeading union officials take the view that in a toughindustry only wimps take the law seriously The newsthat ldquoonlyrdquo 31 individuals had been recommended toface criminal charges was greeted with somethingapproaching jubilation as if the industryrsquos code of silencebased on fear had largely kept the Royal Commission atbay
As the Australian Financial Review commented in aneditorial the unionrsquos dismissive reaction to Colersquos report
ldquospeaks as loudly as his damning findings of entrenchedlawlessnessrdquo Imagine the reaction if a royalcommissioner had identified 31 people in the financeindustry or the steel industry for possible criminalcharges This would rightly be regarded as the sign ofan industry in crisis demanding urgent governmentintervention
Change wonrsquot be easy in an industry conditioned tothink that might is right Change which shifts powerfrom one unscrupulous group to another will not bereform As Grocon has discovered the first company toldquobuck the systemrdquo is liable to heavy-duty industrialpayback No one wants to be the first to change butchange is necessary in the national interest
In 2002 the Victorian construction industry aloneaccounted for 17 per cent of all days lost through strikesThe West Australian construction industry accountedfor another 8 per cent of the national strike tallyConstruction is a $40 billion a year industry comprisingnearly six per cent of GDP and employing nearly500000 Australians Due to over-manning demarcationdisputes and chronic stoppages labour productivity incommercial construction averages 13 per cent less thanin home building Plastering the same wall in the sameway costs 40 per cent more in a high rise building thanin a standard house Just raising labour productivity incommercial construction to the home building standard(let alone the 50 per cent increase needed to match NorthAmerican levels) would mean according to Econtech aone per cent drop in the cost of living a one per centincrease in GDP and $23 billion in benefits toconsumers workers and taxpayers every year
Still change is about decent Australian values notjust a more efficient industry Workers donrsquot like latenight house calls compulsory attendance at demos anddays spent sitting in the shed to make an industrial pointany more than bosses Threats of violence contempt forcourt and commission orders mob rampages when one
Restoring the Rule of Law in theConstruction Industry
Tony Abbott MHR
s
As this issue of the IPA Review was at the press we were alerted to the delivery of the following speechby the Minister for Employment and Workplace Relations The paper marks a seminal change in the
governmentrsquos approach to systemic corruption in the construction industry and isanother major step in the reform of workplace relations in Australia
SI-1MARCH 2003
IPA REVIEW SPECIAL INSERT
side doesnrsquot get its way habitual failure to honouragreements and routine harassment of people exercisingtheir legal rights are not acceptable in modern Australiaand cannot be excused even in a good cause
Breaching ldquobourgeois lawrdquo may not matter tomilitant activists but few others take such a self-indulgent view Itrsquos said that ldquooppositions can afford tobe irresponsiblerdquo but no government or alternativegovernment can accept the principle of optionalobedience to the law of the land No less than the HowardGovernment the federal Labor Opposition and the stateLabor Governments understand the dangers of playingpolitics with the rule of lawmdasheven theauthority of laws they might preferto change such as the federal WorkplaceRelations Act
The rule of law is not asmorgasbord from which a fewfavoured items can be chosen and therest ignored Freedom under the lawrequires respect for the law generallynot just the laws individualspersonally support Obedience to thelaw is not a question of choice It is arequirement of civilisation because thelaw is our guarantee of equaltreatment after a fair hearing ldquoBe youever so high the law is above yourdquoThis reproach hurled at the Stuartkings has rightly echoed through thecenturies as a warning against theconceits of office and the arrogance ofpower regardless of the cause in whichitrsquos exercised
After last weekrsquos meeting of theWorkplace Relations MinisterialCouncil of the Council of Australian Governments stateand territory ministers were keen to declare in acommuniqueacute ldquothere was unanimous agreement thatunlawful behaviour in the building and constructionindustry is not acceptablerdquo This was an importantaffirmation of the rule of law in circumstances wheresome Labor ministers might have been tempted to putpolitics ahead of principle
Unfortunately the state and territory ministerssupported more powers for the Australian IndustrialRelations Commission to settle construction industrydisputes In fact the Commission already has power tosettle disputes Whatrsquos missing is effective power toenforce agreements The issue is not settling disputesThe issue is enforcing the law
The construction industry typically conducts itselflike this A certified agreement is in place including anagreed dispute resolution procedure Unions identify agrievance often a spurious safety issue Agreed disputeprocedures are not followed and a strike ensues eventhough strikes outside ldquobargaining periodsrdquo areldquounprotectedrdquo and theoretically subject to damagesorders At that point employers often ask theCommission to end industrial action but instead ofordering an immediate return to work because anagreement has been breached the Commission willtypically seek to conciliate on the basis of the ldquomeritsrdquo
of the issue After a couple of dayswith costs escalating and liquidateddamages looming the employerinvariably agrees to rectify the matteralleged and to pay increasedallowances (including pay for days onstrike) At this point the Commissionorders a return to work on the basisof the agreed settlementmdashwhich lastsonly until the union decides on itsnext move
The union has ignored the law andbroken its original agreement buttypically suffers no adverseconsequences whatsoever Theemployer has been manoeuvred intoconceding most of a demand thatshould never have been made Afaccedilade of legality conceals a travestyof unionism and a travesty of justiceNearly all construction industrystrikes are unprotected and potentiallyunlawful under section 170MN of theWorkplace Relations Act Even so
employers nearly always opt to pass the costs ontoconsumers while existing arrangements for gatheringinformation launching prosecutions and imposing finesdonrsquot work well anywhere but hardly work at all in anindustry where giving evidence against the unions isthought to mean commercial suicide
The construction industry is a classic case not ofmarket failure but of regulatory failure The fact thatthe construction industry does not face potential importcompetition limits its exposure to market discipline Stillthe main reason why unions can get what they want frombusiness and business can get what it needs from haplessconsumers is the absence of independent policing andenforcement of the industrial equivalent of fair tradinglaws To an extraordinary degree in this industry the
SI-2 MARCH 2003
IPA REVIEW SPECIAL INSERT
The rule of law is nota smorgasbord from
which a few favoureditems can be chosenand the rest ignoredFreedom under thelaw requires respectfor the law generally
not just thelaws individuals
personally support
request documents but they canrsquot compel witnesses toanswer or demand that material be produced Althoughit is a criminal offence under the Workplace Relations Actto hinder workplace inspectors the Cole report notedthat no prosecutions have yet been launched despiteevidence that Office of the Employment Advocateinspectors have been abused had objects thrown at themand their property damaged It has been commonpractice for the arrival of OEA inspectors to lead to workstoppages and even site invasions in a bid to thwart anddemoralise an independent investigator not susceptibleto the unionrsquos usual weapon of commercial retaliation
One of the problems with theworkplace relations system is theassumption that parties will enforcethe law against each other This worksup to a point in industries whereworkplace parties are more-or-lessevenly matched and the issues are theworkplace equivalent of an argumentbetween neighbours over the heightof a fence It completely breaks downwhen one side has an effectivemonopoly over the supply of labourand disputes resemble a more-or-lessnormal family telling the house fullof footballers next door that the partyrsquosover Expecting contractors to enforcethe law against the CFMEU is likeexpecting people in the street to makecitizenrsquos arrests hence Colersquos principalrecommendations are an AustralianBuilding and ConstructionCommission to investigate prosecuteand enforce the provisions of a beefed-up industry specific workplace
relations actYesterday Cabinet decided to support Colersquos key
recommendations First the Government will seek aseparate act governing workplace relations in theconstruction industry providing for secret ballots beforestrikes compulsory cooling off periods after extendedstrikes and damages awards in the event of unprotectedindustrial action Second the Government will establisha new law enforcement agency for the industry withpowers to compel witnesses to testify bring prosecutionsand enforce judgments and with sufficient on-the-ground presence to police CBD building sites Thirdthe Government will establish a Safety Commissionerto monitor federally-funded construction sites to try toensure that these become industry models Fourth the
s
commissions lack sufficient power the courts lacksufficient speed the employment advocate lacks sufficientauthority and the police lack sufficient interest
Not before time the Cole Commission has acted as agiant searchlight probing the dark underside of thispotentially great Australian industry It confirmed whatpolicy makers had long suspected and what influentialinsiders knew but had always tried to deny or explainaway that the industry operates under the rule of thejungle and that there will be no improvement until thepeople who work in it understand that the law has to betaken seriously Legislative institutional and structuralchange will start to mean somethingwhen law breakers in this industry arecharged convicted and punished likelaw breakers everywhere else A fewsalutary bars of that old song need towaft over construction sites ldquoI foughtthe law and the law wonrdquo
Late last year in response to theRoyal Commissionrsquos first report thefederal Government set up theBuilding and Construction IndustryInterim Task Force The Governmentrsquosbrief to the Task Force is to ensure zerotolerance of industrial law-breakingThe Task Force is not primarily toenforce the tax laws or the safety rulesbecause other bodies exist for this(although the Task Force will certainlyshare information with them) TheTask Force is to investigate and enforceWorkplace Relations Act prohibitions oncoercion unprotected strikes strikepay and breach of industrialagreements So far the Task Force hasvisited nearly 300 sites launched more than 50investigations brought three prosecutions and referrednine other matters to state police the Australian FederalPolice or the Australian Competition and ConsumerCommission for further action
These are the first public prosecutions arising out ofindustrial action in the construction industry at leastsince the 1980s and are the result of a public policycommitment to law enforcement not seen since thehumiliating Clarrie OrsquoShea case in 1969 and the end ofldquopenal sanctionsrdquo Yesterday Cabinet decided to extendthe interim Task Forcersquos operations until more permanentarrangements to secure the rule of law can be established
Task Force agents have the powers of inspectors underthe Workplace Relations Act They can enter premises and
SI-3MARCH 2003
IPA REVIEW SPECIAL INSERT
The main reason whyunions can get what
they want frombusiness and businesscan get what it needs
from haplessconsumers is theabsence of inde-
pendent policing andenforcement of the
industrial equivalent offair trading laws
API
Government will insist on the application of theNational Construction Code and implementationguidelines to all significant new projects which are fullyor partly federally funded
Directly or indirectly the federal Government fundsabout $5 billion worth of construction projects everyyear and is determined to use its role as client to drivechange in the industry In essence the NationalConstruction Code stipulates that construction projectsmust take place in conformity with the WorkplaceRelations Act Under the Code and implementationguidelines the federal Governmentwill not engage tenderers whoseworkplace agreements and practicesensure a closed shop on site The TaskForce (and any replacement body) willhave full access to federally fundedsites to ensure that the law is beingobserved and workplace agreementscomplied with
For the federal Government theissue is upholding the law and tryingto tackle the ldquounion rulesrdquo culturewhich is at the heart of lawlessness inthe industry For the states the issueis whether they are prepared to refusefederal money in order to protect theclosed shop However much theymight prefer different federal laws thestates ought to accept thatconstruction projects have to complywith the law as it stands includingthe law mandating compliance withcertified agreements
State Labor governments whichhave made a point of their middle-ground credentials risk losing some$4 billion a year in federal building and constructiongrants if they side with the union movementrsquos mostmilitant minority There are likely to be limits to Laborrsquosdefence of a union whose stock-in-trade (at least in somestates) is the site invasion and the demand for paymentand which quietly reinstates organisers sacked for assaultor perjury Opposition senators will find it hard to brandas ldquoideologicalrdquo the recommendations of a royalcommission which spent 171 days in public hearingsand which pursued 11 shop stewards and 97 unionofficials to obtain their side of the argument
As Justice Cole pointed out in his report previousattempts to reform the industry have proven ineffectivedespite two earlier royal commissions and numerous
SI-4 MARCH 2003
IPA REVIEW SPECIAL INSERT
enquiries Although this Royal Commissionrsquosinvestigations seem to have temporarily checkedlawlessness in the industry a campaign is now emergingto extend the anarchic culture of CBD construction intoregional centres and the domestic housing industryThings will certainly be different this time if parliamentapproves a permanent well resourced watchdog withnew powers new personnel and new attitudes Unlikeprevious arrangements a new statutory watchdog withthe powers of a law enforcement agency should beeffective and permanent
Hundreds of people took big riskswith their commercial future and eventheir personal security to testify to theRoyal Commission It should neveragain be so hard for people in thisindustry to exercise their ordinaryrights and responsibilities asAustralian citizens They expected theGovernment to take the Commissionrsquosreport seriously and the Governmentfor its part is determined not to letthem down The Governmentunderstands that joining fights yoursquorenot prepared to win only makes badsituations worse Establishing the ruleof law in the construction industry isa challenge Australia canrsquot afford tofailSome of the worldrsquos best workersshould no longer have to put up withsome of the worldrsquos worst industrialpractices They have a right to anhonest industry where they can earna fair dayrsquos pay for a fair dayrsquos workand expect to come home uninjuredThe enduring image of this industry
should not be noisy marchers replaying the ideologicalstruggles of the 1970s and raising clenched fists againstauthorities they donrsquot like At its best the Australianindustry is capable of work which is stunningly beautifulyet intensely practical and it now needs to performconsistently on time on budget and in accordance withlaw
Hundreds of peopletook big risks withtheir commercial
future and even theirpersonal security totestify to the Royal
Commission It shouldnever again be so
hard for people in thisindustry to exercisetheir ordinary rights
and responsibilities asAustralian citizens
NOTE
The foregoing speech was first delivered as an Addressto the National Press Club on 2 April 2003
21MARCH 2003
E V I E WR
IN psychology behaviouris defined as irrational ifan action continues to berepeated despite its re-
peated failure to achieve the desiredoutcome On this definition our aidpolicy towards Papua New Guineahas been irrational
Despite over twelve billion dol-lars in Australian aid to PNG sincethat countryrsquos independence in 1975key development indicators such asliteracy rates infant mortality lifeexpectancy and real income percapita are either stagnating or dete-riorating Worse wersquove known forover a decade1
Today acknowledgement of thefailure of our aid policy in PNG hasgone well beyond the writings of in-dividual international policy analystssuch as myself to institution-spon-sored reports such as Beyond Baliwhich was released by the AustralianStrategic Policy Institute (the Aus-tralian Governmentrsquos own strategicpolicy adviser) and Papua NewGuinea on the Brink which was writ-ten by Susan Windybank and MikeManning for the Centre for Indepen-dent Studies Both reports confirmthe gross failure of Australian aidpolicy in PNG
Yet still our aid policy irrational-ity towards Papua New Guinea con-tinues While the ASPI and CIS re-ports acknowledge the gross failureof our aid policy in PNG they alsoargue that we need to continue ouraid to that country Indeed the ASPIreport argues that we should increaseour aid to Papua New Guinea Thepolicy saviour The ASPI report ar-gues that we should exert greater con-trol over our aid Not just over theform of our aid but direct interven-tion in policy and implementation inPNGmdashin essence for a return to pre-
Aid Detox for PNGPETER URBAN
independence days in PNG whereas UN-sanctioned administrator weran government in that country
Despite the mind-frame of secu-rity-focused strategists such as thoseat ASPI and the CIS (which en-dorses the aid approach advocated byASPI) the reality is that we canrsquotPNG is now independent and to ig-nore this reality would simply com-pound the problems of our past aidpolicy irrationality with irrationalityabout our political relationship withour nearest neighbour
A more interventionist aid policytowards PNG on our part as advo-cated in Beyond Bali and by HughWhite (the executive director ofASPSI) in the media might havepopulist appeal but it would haveserious adverse implications for ourrelationship with other Pacific islandcountries and even IndonesiaWorse it would give succour to theviews of our east Asian critics (suchas Malaysian PM Dr Mahathir) whoclaim that Australia continues toharbour colonial aspirations
We have to accept that to be suc-cessful aid policy must not just helpreduce mass poverty it also has to doso as a guest in the aid recipientcountry To do otherwise is not aidbut imperialismmdashwhether inten-tional or not
A more interventionist approachto aid policy in PNG would also givethe current corrupt political elite inPort Moresby a rallying point againstus and an excuse to delay changingtheir own policies Neither Austra-lia nor PNG can afford any furtherdelays to policy reform For us to givePNG politicians yet another excuseto delay reform would be not onlyirrational it would be inexcusableWhile our aid continues so will thecorrupt elite that is at the heart ofPNGrsquos problems Until we send themessage to the PNG political elitethat we are prepared to stop ouraidmdashto put them on aid detoxmdashwewill continue to waste our aid in thecorruption that is PNG politics Itmay be hard to accept but the sadreality we face in PNG is that no aidmay prove to be good aid at least inthe short to medium-term2
NOTES
1 Peter Urban lsquoOne Clear ObjectiveNo Clear Approachrsquo IPA Review1997 Vol 50 No 1
2 With Iraq also likely to require verysignificant Australian aid fundingover the next few years the Gov-ernment will need to review our aidprogram as part of the 2003-04 fed-eral Budget A decision to suspendaid to PNG could be taken as partof that review
Peter Urban is former chief economist with theDepartment of Foreign Affairs and Trade
We have to accept
that to be successful
aid policy must not
just help reduce
mass poverty it also
has to do so as a
guest in the aid
recipient country
API
22 MARCH 2003
E V I E WR
IN his speech to the Na-tional Press Club on theprospect of war with Iraqand the case for disarma-
ment Prime Minister Howard statedthat Australia will play a significant hu-manitarian role in Iraq
If so the Howard Government needsto evaluate carefully the foreign-aid non-government organizations (FANGOs)which it funds to carry-out this humani-tarian programme Many FANGOshave made it clear that they do not sharethe Australian Governmentrsquos objectivesand values in Iraq Moreover some donot agree with the Governmentrsquos over-all aid policies in general
THE COALITION OF THEUNWILLINGIn the lead-up to latest Gulf War some30 Australian aid agencies put theirnames to an Open Letter to the PrimeMinister organized by the AustralianCouncil of Foreign and Overseas Aid(ACFOA) The aim of the letter was tolsquospeak out against war in Iraqrsquo and it ex-pressed grave concerns about the hu-manitarian consequences of the war andthe effects of the existing sanctions1 TheFANGOs that signed the letter wereOxfam Community Aid Abroad WorldVision Australia TEAR AustraliaUnion Aid Australia - APHEDACaritas Australia National Council ofChurches Australian Council for For-eign and Overseas Aid Save the Chil-dren Australia CARE Australia OzGreen United Nations Association ofAustralia Family Planning AustraliaMercy Works Marist Mission CentreAustralia Every Home for Christ Bap-tist World Aid for Christ CCF Austra-lia Quaker Service Australia Austra-lian Lutheran World Service AustralianRelief and Mercy Services AnglicanBoard of Mission AUSTCARE Com-munity Development and Health
Irreconcilable DifferencesDON DrsquoCRUZ
Hussein have been virtually ignored isa searing indictment of the warped ide-ology feeble analysis and moral blind-ness of the sector For them now to re-discover the plight of the Iraqi peopleand to invoke their name in the mediais beyond contempt
THE OXFAM COMMUNITYAID ABROAD POSITIONOf the 30 FANGO signatories to theopen letter Oxfam Community AidAbroad (OCAA) has been perhaps themost outspoken It opposed military ac-tionmdasheven with UN Security Councilapproval4 In spite of all the evidence tothe contrary OCAA was comfortablewith Saddam Husseinrsquos assurances thathe did not have weapons of mass destruc-tion5 Adopting the common policyagreed to by the other Oxfam affiliatesOCAA stated that it will not take anymoney from the lsquobelligerentsrsquomdasha quaintterm used to the describe democraticnations planning to disarm a dictatorguilty of countless human rights abuses
OCAArsquos outrage against the so-called lsquobelligerentsrsquo appears to be geo-graphically confined to Iraq OCAAappears happy to take governmentmoney from the belligerents elsewherearound the world
According to OCAArsquos ExecutiveDirector Andrew Hewitt refusing totake money from the belligerents wasdone to lsquoprotect its impartialityrsquo6 Thisis a very curious position from Australiarsquosarguably most political FANGOOCAA has a long track-record of beinganything but impartial or reluctant totake sides in miliary action It wasnrsquotimpartial in East Timor where it sidedwith Fretlin in its quest for indepen-dence According to its own testimonyto a Senate committee OCAA wasgiven the choice by the IndonesianGovernment between lsquoplaying politicsrsquoor delivering aid projects in Indonesia7
Group Amnesty International Austra-lia AngliCORD Australian Aid forCambodia Fund Burnet InstituteRedR Friends of the Earth PLAN Aus-tralia and Australian Volunteers Inter-national2
This open letter highlighted a num-ber of problems with the FANGOs sec-tor First it highlighted the weak logicthat passes for advocacy in the sectorThe letter argued against military actionwas critical of sanctions and suggestedthat nations should settle issues only bydiplomatic means It is a viewpointwhich totally ignores the fact that theGovernment had to deal with SaddamHussein
The shallowness of their logic wasbest exposed by the Prime Minister inhis response to the open letter in whichhe stated that the humanitarian situa-tion in Iraq is best addressed by SaddamHusseinrsquos removal and perhaps morepointedly that Saddamrsquos manipulationof foreign aid had allowed him to main-tain and pursue his weapons of mass de-struction capability and human rightsabuses3
Second it also highlighted the factthat the so-called lsquohuman rights-basedapproachrsquo to development (embraced byseveral of the signatories) is not so muchabout realizing human rights (as its pro-ponents argue) but is more about pro-viding them with an excuse to lsquoplay poli-ticsrsquo According to the theory the hu-man rights-based approach to develop-ment allows FANGOs to tackle the rootcauses of poverty and injustice
Yet the root cause of the Iraqipeoplersquos suffering can be summed up intwo simple wordsmdashSaddam HusseinThe fact that the FANGOs who sub-scribe to this particular approach havebeen obsessed with imaginary humanrights abuses committed by Shell NikeRio Tinto BHP-Billiton and AuroraGold while the activities of Saddam
23MARCH 2003
E V I E WR
It chose the former thus making it per-sona non grata in Indonesia for almost adecade8 It wasnrsquot impartial inMozambique when it sided with Frelimoin the countryrsquos civil war9 It wasnrsquot im-partial in Ethiopia when it developedlinks to the Eritrean Peoplersquos LiberationFront during its war against the thengovernment10 It was not impartial oranti-war when it sided with the TigrayPeoplersquos Liberation Front in the neigh-bouring province to Eritrea when thatgroup was waging a guerrilla war againstthe government11 And recently therehave been claims that in the Middle Eastit was little more than an lsquoeager propa-gandistrsquo for the Palestinians12
In East Timor Ethiopia and Mozam-bique OCAA was linked with organi-zations which supported direct militaryaction that led to the deaths of thou-sands of civilians In none of these loca-tions were the enemies of their friendany worse than Saddam Hussein In-deed in many cases OCAArsquos friendswere arguably no better than their en-emies in terms of human rights
OCAArsquos decision not to accept Aus-tralian Government funding is the cor-rect one in the sense that it clearly doesnot share the Governmentrsquos values onthe question of Iraq and thereforeshouldnrsquot receive any governmentmoney
Hewitt went on to state in a pressrelease that lsquoWe will not take funds thatmight allow a government to use hu-manitarian efforts as an instrument offoreign policyhelliprsquo13
This is finemdashexcept the AustralianGovernmentrsquos foreign aid is an instru-ment of foreign policy And it always hasbeen This is spelt out quite clearly inthe Australian Governmentrsquos latest for-eign and trade policy White Paper Ad-vancing the National Interest14
FANGOs that cannot accept thisrather basic proposition should not begetting taxpayersrsquo money They areclearly unsuitable for the task at hand
The consequences of Australian tax-payersrsquo money falling into the wronghands were brought home to Prime Min-ister Howard when he met IndonesianPresident Megawati Sukarnoputri to dis-cuss the war against terrorism and
Australiarsquos involvement against Iraq Atthe top of the Indonesian agenda wasthe issue of Australian funding toFANGOs being used to support sepa-ratist movements in Indonesia15
Post-war Iraq will be a better placewithout Saddam Hussein and his thugsThis does not mean that it will be a safeplace or necessarily a stable place Afterall one of the reasons for Western tol-eration of Saddam Hussein for manyyears was his ability to hold the various
ethnic minorities in Iraq together albeitrather brutally thereby maintaining abalance of power in the Middle East Hisdeparture would see strains on Iraq fromthe various ethnic minorities that makeup Iraq There is a strong chance thatIraq will fragment
The last thing the Australian Gov-ernment or any of the so-called belli-gerents needs in a post-war Iraq is west-ern NGOs running around and becom-ing self-styled advocates for national self-determination for Iraqrsquos ethnic minori-ties and injecting themselves into Iraqrsquosinternal politics This is a real risk Thebehaviour of Australian foreign aidNGOs in Indonesia should make Aus-tralian decision-makers extremely waryof funding any NGOs with Australiantaxpayersrsquo money so that they can oper-ate in Iraq
As things stand now FANGOs facevery few restrictions on their actionsfrom government If they undertake ac-tivity that is inconsistent with being anagent of government they may losefunding for specific projects or in moredramatic circumstances lose funding ina country Nonetheless they are gener-
ally able to access Australian Govern-ment funding for other projects andcountries In other words the penaltiesfor becoming caught up in political ac-tivities are very light for NGOs and posethem no serious problems
Foreign aid NGOs that lsquoplay politicsrsquoare unsuitable contractors for the deliv-ery of aid That these overtly politicalorganizations have been allowed to gaingovernment accreditation and receivegovernment funding points to some se-rious problems at AusAID Australiarsquosofficial aid agency The time has comefor this to change
NOTES1 httpwwwacfoaasnaumedia_releases
2003_releases26_3_03PDF2 httpwwwacfoaasnauemergencies
openletterPDF3 httpwwwacfoaasnauemergencies
iraq_responsehtm4 Oxfam Horizons Vol 3 No 1 (Febru-
ary 2003) page 25 Oxfam Community Aid Abroad lsquoIraq
Overviewrsquo February 20036 Hewitt quoted in Liz Gooch lsquoOxfam
wersquoll say no cashrsquo The Age 16 March2003
7 Community Aid Abroad Submission tothe Senate Foreign Affairs Defence andTrade References Committee Inquiryinto East Timor Downloaded at httpwwwcaaorg aucampaignssubmissionstimorhtml
8 Ibid9 Susan Blackburn Practical Visionaries A
Study of Community Aid Abroad (Mel-bourne Melbourne University Press1993) page 313
10 Ibid pages 325-333 passim11 Ibid12 Gerald Steinberg lsquoPropaganda vs Hu-
manitarianismrsquo Australian Financial Re-view 7 June 2002 Downloaded at httpfacultybiuacil~steingconflictopedpropvshumanitarianismhtm
13 ht tp wwwcaa o rg au p r 2003 iraqfundshtml
14 httpwwwdfatgovauani15 Dennis Shanahan lsquoJakarta fears aid funds
for rebellionrsquo The Australian 17 Febru-ary 2003 page 2
Don DrsquoCruz is Research Fellow at the IPAand Director of IPArsquos NGOWatch
OCAA has a longtrack-record of
being anything butimpartial or
reluctant to takesides in miliary
action
API
24 MARCH 2003
E V I E WR
GEORGE Bush Tony Blairand John Howard haveprovided many reasons forsupporting military action
against Iraq One of those reasons hasbecome known as the lsquohumanitarianrsquojustification Put simply the lsquohu-manitarianrsquo justification for the US-led invasion of Iraq is that such ac-tion is necessary to free the Iraqipeople from their totalitariandictator
Such an argument is attractive tothose who believe that there aresome fundamental human rights thatall individuals possess regardless ofwhere and how they live Whatserves as the source of those rightshas been the subject of debate forcenturies One of the pre-eminentstatements on the subject was madeby John Locke who in The SecondTreatise of Government wrote thatmankind was lsquoequal and indepen-dentrsquo and that lsquono-one ought to harmanother in his life health liberty orpossessionsrsquo
Saddam Husseinrsquos mass murdertorture and terror are reasonablyclear breaches of human rightsTherefore some would ask why thereshould be opposition to the UnitedStates and its allies taking whatevermeasures might be necessary totopple the Iraqi regime Surely thesame standard of behaviour that ap-plies to individuals applies also tonation states If an individual walk-ing in the street witnessed a rapeoccurring wouldnrsquot that individualbe entitled to do everything in hispower to stop the crime and assistthe victim
The point is of course that in-ternational law and convention do
After IraqIs Sovereignty Dead
JOHN ROSKAM
not allow nation states to act in thesame way as individuals Countriescannot simply lsquotake the law into theirown handsrsquo To restrain lsquovigilantestatesrsquo (who might be acting fromeither lsquogoodrsquo or lsquobadrsquo motives) a num-ber of legal and political theorieshave been developed One of theseis the doctrine of lsquosovereigntyrsquo whichprovides that states should not inter-vene in the domestic affairs of otherstates
In relation to Iraq the lsquosover-eigntyrsquo question is perhaps the stron-gest argument against the US-ledCoalition Most of the other criti-cisms of lsquohumanitarianrsquo interventionin Iraq are either grounded in simpleanti-Americanism or are fallaciousFor example there is the claim thatbecause some of the countries in theCoalition have previously ignoredHusseinrsquos cruelties therefore it is il-legitimate to take action now Sucha view has been expressed by aMelbourne international relationsacademic
While there is no disputing thebrutal nature of Saddam Hus-seinrsquos regime the case for inter-vention made by those in Can-berra London and Washingtonis weakened by the fact that atthe peak of Saddamrsquos crimes inthe late 1980s they were eitherdirectly supporting him withweapons technology and intelli-gence or were entirely indifferentto his behaviour Even if theyhave belatedly recognised theerror of their ways how seriouslycan we take their concerns aboutweapons of mass destruction nowgiven they were his suppliersthen1
On the basis of this argument itcould be said that Britainrsquos (andAustraliarsquos) case for intervening toassist Poland upon the German in-vasion in 1939 was lsquoweakenedrsquo be-cause Britain had previously acqui-esced to Germanyrsquos rearmament theremilitarization of the Rhinelandand the annexation of both Austriaand parts of Czechoslovakia Fewpeople who chanted lsquoFreedom forEast Timorrsquo said that the HowardGovernment should not act becausea quarter of a century before theWhitlam Government had been lsquoin-differentrsquo to Indonesiarsquos occupationof the island
There is also the claim that al-though Hussein is bad he is not theworst dictator in the world and thatit is hypocritical for the Americansto attack only Iraq This is an as-tounding proposition It attempts toapply to the United States a standardof behaviour that is impossible to sat-isfy Should the police not attemptto solve any crimes because theycanrsquot solve all crimes If a crime iscommitted by two people and thepolice arrest one perpetrator unlessthe other is also caught must the firstperpetrator be released When indi-viduals donate money for famine re-lief in Africa very few believe thattheir donation is pointless becauseit might prevent the starvation ofonly one person rather than thou-sands Christian ethics sets down norequirement that we should help no-one unless we can help everyone
The issue about state sovereigntyhowever is one that deserves to betaken seriously Regardless of onersquosopinions on the extent and limits ofstate sovereignty it is true that our
25MARCH 2003
E V I E WR
international relations system is builtupon the principle and to modify oroverturn it is a matter of some con-sequence
Even those who are generally sup-portive of the United States andtheir allies see the problem As it wasput by a leading commentator whenanalysing the Australian PrimeMinisterrsquos lsquohumanitarianrsquo justifica-tion for war
Finally Howardrsquos argumentagainst Hussein on human rightsis correct So is his moral case forwanting to liberate the Iraqipeople from their torment Theproblem however is that youcanrsquot trip around the worldwanting to overthrow regimesbecause of human rights2
Some would askmdashlsquowhy notrsquo Be-cause to do so would overthrow theUnited Nations Charter comes therejoinder And in turn the responseto that might bemdashlsquogoodrsquo
If itrsquos a choice between the main-tenance of the UN Charter and free-dom from tyranny freedom wins ev-ery time (although an internationallawyer sitting in Sydney might havea different view on this question fromthat of a political prisoner manacledin a Baghdad jail cell)
When the interests of lsquointerna-tional lawrsquo are more important thanthe life and liberty of individuals itcould be concluded that lsquothe Em-peror has no clothesrsquo Would inter-national law have sanctioned inter-vention to stop the Holocaust hadHitler not waged war and proceededwith his methods entirely within theconfines of the German territorialstate
Many who argue that lsquohumanitar-ianrsquo intervention in Iraq is not justi-fied because it infringes on thatcountryrsquos lsquosovereigntyrsquo would happilyhave other countries cede their po-litical sovereignty to supra-nationalbodies Certain features of the Inter-national Criminal Court overridethe principles of sovereignty but thatdid not stop a phalanx of interna-tional law experts urging sovereigngovernments to join it so as to en-
able the prosecution of war criminalsBut when it comes to actually stop-ping war crimes not simply prosecut-ing them that phalanx is largely si-lent
Without the doctrine of state sov-ereignty and without an arbiter fordetermining when interference withthe principle is justified (the roleclaimed by the United Nations andits Security Council) it is said thatstates would be free to impose theirown will and intervene in other
countries whose standards did notmeet their own (In The Second Trea-tise of Government Locke argued thata characteristic of a lsquostate of warrsquo be-tween individuals was the absence ofa superior authority to adjudicatedisputes and prevent individualsfrom administering justice them-selves)
Iraq might be claimed as a rea-sonably clear-cut case for interven-tion but other situations are notlikely to be as simple In Culture andEquality first published in 2001Brian Barry explored a lsquoliberalrsquo per-spective on this question
The liberal position is clearNobody anywhere in the worldshould be denied liberal pro-tections against injustice andoppression However in exactlythe same way as liberals arepragmatic about what liberalismmeans in terms of boundaries sohere the move from principle tointervention has to be mediated bypractical considerationshellip
[L]iberals are not so simple-mindedas to imagine that the answer toall violations of liberal rights is tosend in the Marines or even aUnited Nations force As in anyjust war theory there must be somedoctrine of lsquoproportionalityrsquohellip[S]carcely anybody would be infavour of the western powersinvading Saudi Arabia so at to sortout the way in which it lsquounjustlydenies political rights to women ornon-Muslimsrsquomdashaccording to theirliberal idea of justicersquo3
The question remainsmdashafterIraq what remains of lsquostate sover-eigntyrsquo Should the doctrine applyonly to lsquoliberal democraticrsquo statesSuch a solution might be attractiveto some lsquoliberalsrsquo but it doesnrsquot avoidthe problem of what exactly a lsquolib-eral democraticrsquo state is
One irony arising from the argu-ments about the war in Iraq is thatmany of those who have urged astrict application of lsquostate sover-eigntyrsquo principles in the past havegenerally supported the US-led in-tervention while those who havebeen willing to abridge or even aban-don the doctrine have had to rely onit to counter the lsquohumanitarianrsquo jus-tification for war
There are not many certaintiesabout the nature of the world afterthe war in Iraq but it can be saidwith some assurance that one defi-nite outcome is going to be a morevigorous debate about state sover-eignty
NOTES1 Scott Burchill lsquoThe humanitar-
ian arguments for this war are spu-riousrsquo The Age 21 March 2003
2 Paul Kelly lsquoThe hapless per-suaderrsquo The Australian 15ndash16March 2003
3 Brian Barry Culture and Equal-ity An egalitarian critique ofmulticulturalism Harvard Uni-versity Press page 138
John Roskam is a Research Fellow with the IPA
The lsquosovereigntyrsquo
question is perhaps
the strongest
argument against
the US-led
Coalition
API
26 MARCH 2003
E V I E WR
Which Way for theDemocrats
The 2002 mid-term elections were adramatic victory for President GeorgeW Bush and the Republicans Insteadof the historical norm of the partycontrolling the White House losingBushrsquos party gained seats in the Sen-ate House Governorsrsquo races andState legislatures The result was abitter disappointment for the Demo-crats and has led to a fierce debatebetween the Left and Centrists aboutthe future policy direction of the partytowards the 2004 elections
The Leftrsquos analysis is that the ma-jority of Americans are natural Demo-crats Electoral defeat was due to thefailure to energize that base of Demo-crats The party failed to distinguishitself sufficiently from Bush and thusgive their voters a reason to turn outWhile the majority of Democrats op-posed Bush on tax cuts and the warwith Iraq a significant minority sup-ported him and campaigned on thatsupport The result the Left claimwas that the Democrats lacked a con-sistent message in contrast to Bush
Support for this argument can befound in the higher turnout amongstRepublicans than Democrats in 2002while in 2000 the combined vote forGore and Nader was 51 per cent Aninfluential book by John Judis andRuy Texeira identified lsquoThe Emerg-ing Democrat Majorityrsquo Theyclaimed that growing demographicgroups trended Democrat includingthe young socially liberal profession-als minorities and women
What policies would motivate thisnatural Democrat base The Left callfor rescinding the Bush tax cut a classwar against the corporate world amajor increase in lsquopublic investmentrsquoin schools childcare health care and
Letter from AmericaNIGEL ASHFORD
public transport and strong opposi-tion to the war
Centrists however have a verydifferent analysis of the Democratsrsquoproblems the public did not trustthem to pursue the war against ter-rorism vigorously to keep down taxesto spend their tax dollars wisely or toreflect their cultural values
A Gallup opinion poll found that57 per cent of Americans askedthought that the Democrats were nottough enough on the war on terror-ism while 64 per cent thought theRepublicans were There was the per-ception that the Democrats were notserious on the issue and just playingpolitics Evidence for this was the de-bate over the new Department ofHomeland Security blocked becausethe Democrats wanted to protectunion rights while the President de-manded more flexibility to deploy theworkforce Many voters saw the issueas the national interest versus a spe-cial interestmdashin this case that of theunions The Democrats were seen asputting the interests of one of theirmajor constituencies before nationalsecurity
The Democratic LeadershipCouncil in lsquoThe Road Aheadrsquo by AlFrom and Bruce Reed presented theCentrist case lsquoStop pretending wecan win a majority simply by energiz-ing our basersquo The Democrats were
not trusted on the war against terror-ism were hostile to the cultural con-cerns of many working-class Demo-crats on abortion and guns and stillseen as the tax-and-spend party lsquoToomany Americans donrsquot trust us tokeep their taxes down or to spendtheir money wellrsquo
The Centrist agenda is to stronglyprosecute the war against terrorismwhether against al-Qarsquoeda Saddam orothers and to abandon knee-jerk iso-lationism arising from the experienceof the Vietnam War to defend capi-talism and support small investorsagainst irresponsible managers to cutpayroll taxes and to downplay thecultural issues that divide Democrats
Which path will the Democratstake The Left is in the ascendancyMost of the remaining Democrats inoffice come from left-wing districtsNancy Pelosi a left-liberal from SanFrancisco was easily elected the newleader of the House Democrats over-whelming her Centrist opponent andrising star African-American HaroldFord The early field of presidentialcandidates for 2004 is dominated bythe Left tendency including SenatorJohn Kerry Representative DickGephardt Governor Howard DeanRev Al Sharpton former SenatorCarol Moseley-Braun and Represen-tative Dennis Kucinich Only Sena-tor Joe Lieberman and Senator JohnEdwards represent the Centrist wing
The future of US politics may de-pend on which road the Democratsdecide to take The US is currently alsquo50ndash50rsquo nation evenly balanced be-tween the parties A left turn couldlead to Republican dominance farinto the future
Dr Nigel Ashford is at the Institute of Humane Studiesat George Mason University and is co-author of US
Politics Today (Manchester University Press)
API
27MARCH 2003
E V I E WR
Trusting TonyFrankly itrsquos all just too depressing Theeconomyrsquos heading for trouble Busi-ness confidence is low investment in2002 was 92 per cent lower than theprevious year and manufacturing in-vestment was nearly 18 per cent downThe budget deficit is spiralling becauseour once lsquoprudentrsquo Chancellor (trea-surer) Gordon Brown made over-opti-mistic growth projections and startedthrowing money at problems
Therersquos a load of health-and-safetyand anti-discrimination measuresthatmdashto put it most politelymdashare ex-amples of letting the best be the en-emy of the good Every school tripneeds a formal risk assessment withthe result that many trips are simplynot taking place New trains orderedfor London commuter routes wonrsquothave toilets because the rules say thatat least one toilet in each four-car unitmust be wheelchair-accessible whichwould have cost ten or a dozen seatson every overcrowded train
Some of this is just insane Somelocal authorities say that safety at workrules mean that home-care workersmustnrsquot lift the disabled people theyare looking after Or therersquos rail safetyUntil recently we were seriously pro-posing to spend $10 billion on a bet-ter system to stop trains going throughred signals On average this would havesaved the lives of about three passen-gers every four years which is a lousybargain compared with other safety in-vestments Worse it would also havereduced the capacity of the networkby up to 15 per cent and forced morepeople onto the roads which are muchmore dangerous than even ourclapped-out railways The result was aprojected net increase of 13 to 21 deathsper year
Meanwhile in London the Cen-tral line of the Underground has been
Letter from LondonJOHN NURICK
API
closed for weeks after a train derailedwhen one of its motors fell off Therewere no deaths or major injuries in theaccidentmdashbut itrsquos a safe bet that someof the people who havenrsquot been ableto use the Central line have been in-jured or killed on the roads
What can one say If the authori-ties took the same attitude to the riskof fatal accidents in the health serviceevery hospital in the country wouldhave been closed for years
Despite all this the Conservativesare still hopeless Their leader IanDuncan Smith has a new wheezewhen a journalist asks him anythingdifficult he chortles merrily and saysitrsquos the most uninteresting questionimaginable and hersquos not going to wasteanyonersquos time by answering it His col-leagues have their knives out for him
Meanwhile in spite of the govern-mentrsquos problems with the economy andthe public services Tony Blair is grow-ing in stature having his waymdashandantagonising large sections of his ownparty in the process On several recentissues he has faced down the formi-dable Gordon Brown in a way that notlong ago was hard to imagine
Then he shocked everyone by com-ing out against having elected mem-bers in the reformed House of Lordswhen most voters want an all-elected
chamber and most MPs want a partly-elected one In the event Parliamentcouldnrsquot agree on any of the optionsfor reform so wersquore stuck with the sta-tus quomdashwhich is fine by Mr Blair
Then therersquos the war By the timeyou read this it may be over or we maystill be waiting or our lads may befighting Mr Blairrsquos strong line againstIraq has made him very unpopular Theanti-war march on 15 February was thebiggest demonstration London hasever seen A few days later 122 Labourbackbenchers voted against the gov-ernment and many more abstained
Mr Blair didnrsquot budge War is a se-rious thing he says lsquoBut in a situationsuch as this you have to do what youbelieve to be right because thatrsquos theprice of having responsibilityrsquo1
He has often been accused of gov-erning by focus group Certainly he hasseemed reluctant to antagonise anypowerful group That has clearlychanged In a sense his stand on Iraqmerely follows his action in sendingtroops to Sierra Leone and Kosovomdashbut it has stirred up far stronger domes-tic and international opposition
The irony is that now when he re-ally needs people to trust him wedonrsquot Even in the desperately seriousbusiness of justifying an unpopular warDowning Street canrsquot play it straightremember the dossier from lsquointelli-gence sourcesrsquo that turned out to belargely cribbed from a PhD thesis onthe Internet
NOTE1 The Guardian 1 March 2003
John Nurick is a management consultant based in theSouth of England From 1985 to 1990 he was
editorial director of the Australian Institute for PublicPolicy and later edited newsletters reporting on theUK Parliament and European Union institutions
28 MARCH 2003
E V I E WR
KEVIN DONNELLY
Private EducationEquals Public Good
When it comes to choosing be-tween government and non-gov-ernment schools Australian par-ents are lsquovoting with their feetrsquo Asshown by recent ABS figures(Schools Australia 2002) over thelast decade there has been a dra-matic increase in non-governmentschool enrolments
Approximately 30 per cent ofstudents now attend non-govern-ment schools compared with 22per cent in 1980 and 28 per centin 1990 Over the last decadewhile the number of governmentschools has fallen by 64 per centnon-government schools havegrown by 61 per cent
Of course not everybody valuesparentsrsquo right to choose and theAustralian Education Union(AEU) Labor governments andlsquoleft-wingrsquo academics in particularconsistently argue against non-government schools
One of the arguments put for-ward by those opposed to givingparents greater freedom of choiceis that government schools are bet-ter at promoting social cohesionand a strong sense of what KenBoston the ex-head of the NSWEducation Department terms lsquothebonds of civic friendshiprsquo
The assumption is that becausestudents attend non-governmentschools there will be greater socialdivisiveness and a breakdown inthe civic values needed to hold so-ciety together But there is no cred-ible evidence offered to support theclaim that government schools arebetter at promoting the commongood
In fact there is much to provethe opposite
First as anyone familiar withthe lsquoculture warsrsquo and politicallycorrect curricula will know insteadof government-controlled educa-tion promoting unity and cohe-sion it has led to public angst andparental complaints
Witness the very bitter debatein Queensland a year or two agowhen the government-mandatedStudies of Society and Environ-ment (SOSE) curriculum was in-troduced into schools Such was
the lsquoleft-wingrsquo bias in the curricu-lum in particular in the areas ofmulticulturalism and the environ-ment that many parents felt be-trayed
The Queensland debate is mir-rored by what is happening in theUnited States As noted by Ste-phen Arons in his book Short Routeto Chaos instead of promotingunity government control of thecurriculum leads to the opposite
What the school wars tell us isthat somehow we have been
Education Agenda
transforming a vital instrumentfor creating social cohesioninto a source of division andhostility that there is some-thing built into the structure ofpublic schooling that under-mines one of its most importantfunctionsAronrsquos argument that govern-
ment schools no longer transmit aviable sense of a common cultureor agreed civic values is reinforcedby another noted United Stateseducationalist Diane Ravitch
In a recent article in the jour-nal Education Next Ravitch be-moans the impact of cultural rela-tivism and the post-modern on theschool curriculum (where there areno commonly agreed values) andeven goes so far as to argue thatparents should be free to choosenon-government schools becausesuch schools have a better chanceof reflecting their values
In the current education sys-tem with the public schoolscommitted to multiculturalismbilingualism and other forms ofparticularism it is difficult toargue that parents should notbe able to choose schools thatmeet their cultural needsSecond if one accepts that lsquoso-
cial capitalrsquomdashthe networks volun-tary associations and civic bondsthat hold a community togethermdashis important for the health of ademocratic society then non-gov-ernment schools clearly have theadvantage
Unlike the government schoolsystem characterized by a heavy-handed centralized bureaucracyand teacher union control non-government schools are closer tothe communities they serve Bytheir very nature non-government
There is no credible
evidence offered to
support the claim
that government
schools are better
at promoting the
common good
29MARCH 2003
E V I E WR
ALAN MORAN
The lsquoRrsquo Files
Private propertyrights the key toachieving efficiency inrural water use
WATER IN AUSTRALIAWater has always been a definingissue in Australiarsquos prosperityAnd in recent decades irrigationhas grown rapidly Even so theproportion of Australia that is ir-rigated at two per cent of theland comprises a share that isamongst the lowest among OECDcountries Only Canada and therainiest countries New Zealandand the UK have lower sharesthat of the US is 11 per cent andin Japan it reaches 60 per cent
Modern agriculture is only 200years old in Australia and thoughin the first 100 years agriculturalproductivity was increased toequal that of anywhere in theworld gains continue to bemademdashoutput has doubled overthe past 50 years a growth thatcould not have taken place with-out a similar expansion of irriga-tion Irrigation in the MurrayndashDarling agricultural provincealone contributes $5 billion toAustralian agricultural outputand non-irrigated agriculture inthe region contributes a further $5billion This makes the areawhich comprises 14 per cent ofAustraliarsquos land mass responsiblefor a third of the nationrsquos $35 bil-lion agricultural output
Applying Property Rights to WaterMost of the uses of water involvechoices or compromisesmdashdrink-ing water versus irrigation versus
industrial and so on Some how-ever involve complementaritiesparticularly certain recreationaluses such as water sports that arefacilitated by storage and consis-tent availability
In many cases water will per-form sequential functionsmdashthesame water can be used and re-used for irrigation used for indus-trial cooling and finish as drink-ing water Water with differentsometimes competing productiveuses will be optimally used as longas two conditions are in placeThe first is that its ownership isclearly specified and the ownersrsquoobligations to other users (orclaims from other beneficiaries)are well understood The secondrequires each property right to betradable to enable acquisition bythose who value it most therebymaximizing its value
The rights specification andtherefore property ownership canrarely commence with a cleansheet of paper People acquire in-dividual rights to property ini-tially through a variety of routesOne of these is seizure of some-thing that was originally of littlevalue until it was acquired and im-proved Squatters assume rights inthis way However they are firstacquired they need to be tradableAPI
schools establish strong commu-nity networks and have a greaterreliance on the voluntary work ofparents
That non-government schoolsare more effective in this regard issupported by research into lsquoChar-ter schoolsrsquo in the United StatesAs noted by Chester Finn at theFordham Foundation giving localcommunities lsquoownershiprsquo overtheir school builds networks oftrust and reciprocity so vital forsocial cohesion
Social capital also relies on citi-zens being disciplined and orderedin their behaviour Selfishness vio-lent behaviour and rudeness act tofragment the community instead ofpromoting cohesion According toa number of Australian surveys itis here once again that non-gov-ernment schools are seen to bemore effective
As noted by the Centre for In-dependent Studies researcher Jen-nifer Buckingham in The Truthabout Private Schools in Australiawhen analysing why so many par-ents forsake the government schoolsystem
When comparing independentprivate schools with publicschools the major theme thatemerged was not differences inacademic standards and curri-culum but issues of disciplineand order The surveyed par-ents felt that the behaviour andattitudes of students in publicschools was unacceptablehellipAll accept that non-govern-
ment schools achieve better aca-demic results provide greater cur-riculum flexibility and save Aus-tralian taxpayers millions of dol-lars Equally as important is theargument that such schools streng-then Australiarsquos civic health andstock of lsquosocial capitalrsquo
Dr Kevin Donnelly is Director of EducationStrategies a Melbourne-based consulting group
E-mailkevindnetspacenetau
s
30 MARCH 2003
E V I E WR
and relatively inviolable Thisprovides the incentive for them tobe improved and for their ownersand others to search out ways inwhich the assets they representcan be used to provide increasedvalue or other benefits
If confidence in the exclusiv-ity an owner has over the prop-erty right is lost or was neverpresent the asset will be used lessproductively For example own-ers will milk them for their cur-rent-use value rather than trade-off present value for a future valuethat is less certain
Even without a total emascu-lation of individual rights (for ex-ample when title to the propertydepends on continuing govern-mental assent) lack of certaintybrings lower incomes and dimin-ished asset protection One out-come of this can be observed inthe MurrayndashDarling system Wa-ter rights on the Victorian side ofthe Murray are secure while thoseon the NSW side have been over-allocated and are subject to ad-ministrative discretion includinghaving a firm duration of only tenyears In Victoria high securitywater (available 95 per cent of thetime) comprises the great bulk ofentitlements In contrast in
NSW high security water is avail-able only 60-80 per cent of thetime The result is that farmers onthe Victorian side plant perennialcrops while those in NSW tendto focus on annual crops espe-cially rice
There are claims that Victoriarsquosmore robust property rights meanthat the State Government haslost lsquocapabilityrsquo to manage com-pared with NSW The flip side ofthis is the increased risk and as-sociated lower value of productionnorth of the Murray where prop-erty rights are attenuated Gov-ernments that give themselves in-creased capacity to direct produc-tion or to take individualrsquos prop-erty will need to accept lower lev-els of income and output
IRRIGATION ENVIRON-MENTAL BENEFITS AND SA-LINITY
The Types of IssuesIssues stemming from irrigationcomprise two types those impact-ing on the environment and thoseimpacting on private uses Theformer includes issues such as pre-venting loss of species ensuringthat certain sorts of species flourishand avoiding unattractive growths
such as blue-green algae which re-sult from fertilizer build-up
The second involves economicimpacts on different users
While environmental flows toensure species flourish are oftenhighlighted salinity is the mainfocus And while salinity has animpact on the environment itsimportance is in the conflict of in-terest between productive usersmdashthe complaint of lsquodamaged goodsrsquoby downstream users against thoseupstream
The MurrayndashDarling Basin Sa-linity Strategy 2001ndash2015 has es-timated that increased salinitybrings costs of $294 million perannum to the basin
Yet data on the salinity of theMurray Darling shows levels up-stream of South Australia arelower than they were in the early1980s and are only seriously abovethese levels as the river ap-proaches its mouth at the GoolwaBarrage
The Basin Salinity Manage-ment Strategy argues that progressachieved over the past decade willlsquobe cancelled within 20-50 yearsand median salinity levels wouldexceed the Australian DrinkingWater Guidelines for good waterquality within 50-100 yearsrsquo Thecause of this is said to be risinggroundwater tables due to land usechanges across the Basin
The disputes over salinizationare largely disputes between com-mercial parties Full specificationof rights and obligations will al-low these to be resolved as longas the impacts are measurabletheir causes identifiable and thevarious rights and obligations areknown and stable In this respecttechnology to measure salt in wa-ter and to trace increases to par-ticular locations is readily avail-able
Agreements about the alloca-tion of water rights between ju-risdictions and to the main irri-gation provinces have been inplace for over a century In the
Average Salinity in the River Murray (EC Units)1
3500
3000
2500
2000
1500
1000
500
0
January 2003
July 2002ndashJanuary 2003
July 1982ndashJanuary 2003
Hume D
am
Swan
Hill
Merbein
Morgan
Milang
Mening
ie
Goolw
a
Barra
ge
31MARCH 2003
E V I E WR
I
API
Musinghellipcase of the Murray the lsquocaprsquo onwater abstractions agreed betweenthe various jurisdictions in 1995largely validated agreements madeearly in the last century and be-fore Disturbing these agreementswould greatly undermine the trustin the sanctity of property rightsand seriously reduce agriculturalproductivity Hence increased al-locations for certain parties or forcertain uses (including environ-mental flows) would need to bepurchased at market prices
Developments in Australiaover recent decades have con-spired to make irrigation water farmore valuable This is exacer-bated by1 Activation of NSW lsquosleeperrsquo
and lsquodozerrsquo water rights as a re-sult of the increased scarcityvalue a change that bringseven greater pressure on theavailable supply
2 Increased scarcity leading tomeasures that more carefullyhusband the water Whilesome of these prevent evapo-ration loss and have thereforebrought a net increase in effec-tive availability others havereduced availability (these in-clude a more careful wateringwhich results in reduced run-off and re-use)
3 Increased capture of waterwithin the land on which itfalls once water is recognizedas scarce landowners will seekto ensure it does not leave theirland NSW and Victoria haveplaced limits (a strict 10 percent in NSW) of water fallingon property as entitlements ofthe owner Queensland has notyet enacted an equivalent tothis Such adaptations of thecommon law are essentialhowever if downstream usersare not to be expropriatedThere is likely to be constant
bickering over water rights espe-cially if State Governments seek toelevate sharing issues and to sanc-tify them with claims about promot-
Daniel Pipes in The New York Posthas a very cogent explanation forwhy the Left appears to be so happywith the likes of Osama bin Ladenand Saddam Hussein
To be clear about their attitudeshe quotes the renowned Germanelectronic music composer KarlHeinz Stockhausen who saidstraight after the attack on NewYork that it was lsquothe greatest workof art for the whole cosmosrsquo
As Pipes and many of us observedaily there is barely a bad word tosay about Saddam Hussein nor aniota of sympathy for thoseoppressed tortured and murderedby his reacutegime Instead they venttheir fury against the AmericanPresident and British Prime Minister
Why the nonchalancePipes draws our attention to Lee
Harris writing in a recent issue ofthe Hoover Institutionrsquos journalPolicy Review According to KarlMarxrsquos central thesis the demise ofcapitalism hangs on workersgrowing poorer over timemdashwhichof course did not happen Sorather than give up on cherishedexpectations of socialist revolutionHarris notes Marxists tweaked theirtheory and looked instead to theentire populations of poor countriesto carry out the revolution Classanalysis went out the windowreplaced by geography
The trouble is they have tooverlook militant Islamrsquos slightly un-socialist practicesmdashsuch as itsimposing religious law excludingwomen from the workplace andpersecuting atheists
As Pipes sums up September 11and the prospect of war againstSaddam Hussein have exposed theLeftrsquos political self-delusionintellectual bankruptcy and moralturpitude
The Loopy Leftby Andrew McIntyre
ing an improved environment Realsolutions require the issue be placedwithin a normal commercial frame-work which involves1 Clarifying the property rights2 Allowing water rights to be
fully detachable from propertyand able to be used howeverthe holder wishes subject toany damage this might imposeon others
3 Ensuring full rights to buy andsell the water
4 Defining rights so as not to re-duce the quality of other usersThis means ensuring that farm-ing practices that do not bringgreater salination than somestandard
5 Allowing rights holders tobank their water and ensureeven greater certaintyAllocating specific individual
ownership rights to water and al-lowing its trade is a well-foundedmeans of maximizing the usevalue It would also be likely tohave the beneficial side-effects ofreducing salinity and farm-basedpollutants caused by intensiveuse We should grasp such oppor-tunities But if the impending sa-linity problem is as great as someclaim other solutions might wellinclude buying out some allocatedirrigatorsrsquo rights However alter-natives may be to remove saltfrom the water by engineering so-lutions or simply to live withhigher salt
NOTE1 Human drinking water should
be less than 800 ECs (electri-cal conductivity one ECequals about 06 mglitre)while higher levels are accept-able for much farming activity
Dr Alan Moran is Director Deregulation Unitat the Institute of Public Affairs
32 MARCH 2003
E V I E WR
Reading FileDone
eral political systems worldwidehave consistently accretedpower to the centre often in theface of clear constitutional im-peratives to the contrary) Ifeared instead that a UN thathad been patently successful insomethingmdashanythingmdashmightbe granted greater powers to thepoint where it would kill truediversity and individualism (ortry to anyway) through inevi-table bureaucratic practices
Is such a fear unfounded Ap-parently not if many peopleshare the moral touchstone ofthe Opposition Leader SimonCrean He believes according tohis own words in Parliamentthat what the UN SecurityCouncil declares is moral whatit refuses is immoral
The latest manoeuvrings overIraq have therefore been heart-
ening It seems that the desiresof the powers small and largeto promote their own interestswill continue to hobble the UN
The problem with a unitedworld is that as the threateningimpasse over Iraq suggestedthere are very divergent viewsabout how that world ought tobe run on an international leveljust as there are at national and
sub-national levels The virtueof multi-layered levels of gov-ernments is that competing ju-risdictions give the individual adegree of choice
The greatest sin of totalitar-ian governments past and pres-ent is to deny their citizens theright to leave The greatest dan-ger that the United Nationsposes as far off as it now (hap-pily) seems is that leaving its ju-risdiction is for all practical pur-poses impossible
THE IMPASSE JUST PASSEDI listened to Prime MinisterHoward speaking to the motionbefore Parliament in relation tothe war It was a good speechbut neither he nor PresidentBush seems able to structure andlay out an argument with thestyle and content of BritishPrime Minister Blair His equi-valent speech before the BritishCommons provides a masterfulsummary of the reasons for thiswar and includes an immenselyreadable time-line of the utterineffectiveness of the UN pro-cesses in dealing with Iraq Henicely deals with allegations ofthe lsquorushrsquo to war lsquoOur fault hasnot been impatience The truth
UNITED OR DIVIDEDI write just hours after US Presi-dent George W Bush has deliv-ered his ultimatum to Iraqi Presi-dent Saddam Hussein leave Iraqwithin 48 hours or be removedBy the time this appears beforeyour eyes you will knowwhether Hussein has decided hischances of survival will be sig-nificantly greater by choosingexile or by remaining in IraqThe recent creation of the In-ternational Criminal Court ofcourse makes war more likelysince Hussein can have no guar-antee of a peaceful lsquoretirementrsquo
In the event that Hussein re-mains in Iraq you will also knowwhether Bush has kept his wordand most likely the outcome ofthis military venture
This matter is immensely im-portant for the people of Iraqand for the military personnelinvolved (including our ownAustralian soldiers sailors andaviators) But then so was theprevious Gulf War the US in-vasion of Grenada the Austra-lian intervention in East Timorand so on But a difference be-tween the current conflict andthose others could be the impactit has upon international insti-tutions Actually just one inter-national institution the UnitedNations
Prior to the first Gulf War Ifeared the coalitionrsquos success forthe reason that some of it mighthave rubbed off onto the UnitedNations I hasten to deny that Ifear the UN as some vast con-spiracy for world domination Ifeared instead that it couldstumble into a piecemeal cen-tralization of power (just as Fed-
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
E V I E WRs
33MARCH 2003
E V I E WR
Reading FileDone
ATTACKING THE GLOBALGOVERNORSThe Cato Institute is a whole-some body as demonstrated byits opposition to such interna-tional organizations as the Inter-national Criminal Court and forthat matter the United Nationsitself Ted Galen Carpenter forexample argues in lsquoPutting theUnited Nations on Noticersquo thatthe UN can and has done somemodest good occasionally It ishe says lsquoa good idea to have aplace where governments cangather to air grievancesrsquo But headds if it lsquoattempts to acquire ataxing authority [or] raise astanding armyrsquo then the USshould withdraw (as indeedshould Australia) Because thatwould turn it into an lsquoembryonicsuperstate that would menacelibertyrsquo
Go to
wwwcatoorgforeignpolicyunhtml
THE INTERNATIONALORGANIZATIONS THEM-SELVESThe United Nations has beenaccused of being often ineffec-tive and always slow Well ev-ery time Irsquove hit the UNrsquos Web-site even with my nifty broad-band Internet connection slow-ness rules Perhaps the site isbeing continually accessed bythe teeming masses Anyway goto
wwwunorg
With 15 members alreadyand 13 more on the way thereremain hopes that the EuropeanUnion will be a force for a stable
twenty-first century Equallywith 15 members already exhib-iting rather divergent views overthe issue of Iraq and most of theforthcoming members sidingwith the United States perhapsthis is overly hopeful Go to
europaeuintindex_enhtm
Then there is the WorldTrade Organization the organi-zation behind which protection-ist nations can hide from unilat-eral trade liberalization by pre-tending to support multilateraltrade liberalization Go to
wwwwtoorg
And we mustnrsquot forget the In-ternational Criminal Court fearof which was no doubt a featureof Saddam Husseinrsquos rejection ofexile as an option and the furyof which is promised by a num-ber of prominent lawyers to bevisited upon our very own PrimeMinister Go to
wwwicc-cpiint
FEEDBACKI would welcome advice fromreaders on any other sites of inter-est to IPA Review readers E-mailme on scdawsonbigpondnetau
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
is our patience should have beenexhausted weeks and monthsand years agorsquo
Go to
wwwnumber10govukoutputPage3294asp
THE STRUGGLE BETWEENTHE CONTINENTSIf you are patient you can readthat wonderful British rag TheSpectator for free Last weekrsquoscopy is available on-line One ofits regular columnists is MarkSteyn an Americo-phile Cana-dian who has a robust turn ofphrase and an abiding disdain formuch modern music (whichseems to place him very comfort-ably into The Spectatorrsquos culturalmatrix)
His piece on the future de-cline of Europe vis-agrave-vis Ame-rica makes for fascinating read-ing Go to
wwwspectatorcouk
then click on the lsquoBack Issuesrsquobutton and choose the edition of15 March 2003
E V I E WR
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
Last week the Government tabled 22 volumes of theCole Royal Commission into the Building andConstruction Industry Former Court of Appeal judgeTerence Cole made 392 specific findings of unlawfulconduct and in the confidential final volumerecommended that 31 individuals be referred for possiblecriminal prosecution As was to be expected theconstruction unions claimed that the report was a witch-hunt and people who should have known better claimedthat Cole was biased
The anti-union allegations were never very plausiblegiven that most unions had refused to cooperate withthe Commission and had even boycotted theCommissionrsquos special conference on occupational healthand safety As things have turned out one of their ownhas fatally undermined the unionsrsquo case No less anauthority than the National Secretary of the ConstructionDivision of the CFMEU has unwittingly confirmed thatCole is right In what was no doubt an unguardedmoment John Sutton admitted to a Melbournenewspaper that ldquovirtually everything we do breaches partof this Actrdquo Suttonrsquos admission means that Colersquosdescription of a largely lawless industry can be disputedat the margins but not credibly denied The problemsof the industry have been established beyond credibledoubt and the question now is what needs to be doneabout it
Nothing says the CFMEU because itrsquos alright tobreak the law in the best interests of the working classLeading union officials take the view that in a toughindustry only wimps take the law seriously The newsthat ldquoonlyrdquo 31 individuals had been recommended toface criminal charges was greeted with somethingapproaching jubilation as if the industryrsquos code of silencebased on fear had largely kept the Royal Commission atbay
As the Australian Financial Review commented in aneditorial the unionrsquos dismissive reaction to Colersquos report
ldquospeaks as loudly as his damning findings of entrenchedlawlessnessrdquo Imagine the reaction if a royalcommissioner had identified 31 people in the financeindustry or the steel industry for possible criminalcharges This would rightly be regarded as the sign ofan industry in crisis demanding urgent governmentintervention
Change wonrsquot be easy in an industry conditioned tothink that might is right Change which shifts powerfrom one unscrupulous group to another will not bereform As Grocon has discovered the first company toldquobuck the systemrdquo is liable to heavy-duty industrialpayback No one wants to be the first to change butchange is necessary in the national interest
In 2002 the Victorian construction industry aloneaccounted for 17 per cent of all days lost through strikesThe West Australian construction industry accountedfor another 8 per cent of the national strike tallyConstruction is a $40 billion a year industry comprisingnearly six per cent of GDP and employing nearly500000 Australians Due to over-manning demarcationdisputes and chronic stoppages labour productivity incommercial construction averages 13 per cent less thanin home building Plastering the same wall in the sameway costs 40 per cent more in a high rise building thanin a standard house Just raising labour productivity incommercial construction to the home building standard(let alone the 50 per cent increase needed to match NorthAmerican levels) would mean according to Econtech aone per cent drop in the cost of living a one per centincrease in GDP and $23 billion in benefits toconsumers workers and taxpayers every year
Still change is about decent Australian values notjust a more efficient industry Workers donrsquot like latenight house calls compulsory attendance at demos anddays spent sitting in the shed to make an industrial pointany more than bosses Threats of violence contempt forcourt and commission orders mob rampages when one
Restoring the Rule of Law in theConstruction Industry
Tony Abbott MHR
s
As this issue of the IPA Review was at the press we were alerted to the delivery of the following speechby the Minister for Employment and Workplace Relations The paper marks a seminal change in the
governmentrsquos approach to systemic corruption in the construction industry and isanother major step in the reform of workplace relations in Australia
SI-1MARCH 2003
IPA REVIEW SPECIAL INSERT
side doesnrsquot get its way habitual failure to honouragreements and routine harassment of people exercisingtheir legal rights are not acceptable in modern Australiaand cannot be excused even in a good cause
Breaching ldquobourgeois lawrdquo may not matter tomilitant activists but few others take such a self-indulgent view Itrsquos said that ldquooppositions can afford tobe irresponsiblerdquo but no government or alternativegovernment can accept the principle of optionalobedience to the law of the land No less than the HowardGovernment the federal Labor Opposition and the stateLabor Governments understand the dangers of playingpolitics with the rule of lawmdasheven theauthority of laws they might preferto change such as the federal WorkplaceRelations Act
The rule of law is not asmorgasbord from which a fewfavoured items can be chosen and therest ignored Freedom under the lawrequires respect for the law generallynot just the laws individualspersonally support Obedience to thelaw is not a question of choice It is arequirement of civilisation because thelaw is our guarantee of equaltreatment after a fair hearing ldquoBe youever so high the law is above yourdquoThis reproach hurled at the Stuartkings has rightly echoed through thecenturies as a warning against theconceits of office and the arrogance ofpower regardless of the cause in whichitrsquos exercised
After last weekrsquos meeting of theWorkplace Relations MinisterialCouncil of the Council of Australian Governments stateand territory ministers were keen to declare in acommuniqueacute ldquothere was unanimous agreement thatunlawful behaviour in the building and constructionindustry is not acceptablerdquo This was an importantaffirmation of the rule of law in circumstances wheresome Labor ministers might have been tempted to putpolitics ahead of principle
Unfortunately the state and territory ministerssupported more powers for the Australian IndustrialRelations Commission to settle construction industrydisputes In fact the Commission already has power tosettle disputes Whatrsquos missing is effective power toenforce agreements The issue is not settling disputesThe issue is enforcing the law
The construction industry typically conducts itselflike this A certified agreement is in place including anagreed dispute resolution procedure Unions identify agrievance often a spurious safety issue Agreed disputeprocedures are not followed and a strike ensues eventhough strikes outside ldquobargaining periodsrdquo areldquounprotectedrdquo and theoretically subject to damagesorders At that point employers often ask theCommission to end industrial action but instead ofordering an immediate return to work because anagreement has been breached the Commission willtypically seek to conciliate on the basis of the ldquomeritsrdquo
of the issue After a couple of dayswith costs escalating and liquidateddamages looming the employerinvariably agrees to rectify the matteralleged and to pay increasedallowances (including pay for days onstrike) At this point the Commissionorders a return to work on the basisof the agreed settlementmdashwhich lastsonly until the union decides on itsnext move
The union has ignored the law andbroken its original agreement buttypically suffers no adverseconsequences whatsoever Theemployer has been manoeuvred intoconceding most of a demand thatshould never have been made Afaccedilade of legality conceals a travestyof unionism and a travesty of justiceNearly all construction industrystrikes are unprotected and potentiallyunlawful under section 170MN of theWorkplace Relations Act Even so
employers nearly always opt to pass the costs ontoconsumers while existing arrangements for gatheringinformation launching prosecutions and imposing finesdonrsquot work well anywhere but hardly work at all in anindustry where giving evidence against the unions isthought to mean commercial suicide
The construction industry is a classic case not ofmarket failure but of regulatory failure The fact thatthe construction industry does not face potential importcompetition limits its exposure to market discipline Stillthe main reason why unions can get what they want frombusiness and business can get what it needs from haplessconsumers is the absence of independent policing andenforcement of the industrial equivalent of fair tradinglaws To an extraordinary degree in this industry the
SI-2 MARCH 2003
IPA REVIEW SPECIAL INSERT
The rule of law is nota smorgasbord from
which a few favoureditems can be chosenand the rest ignoredFreedom under thelaw requires respectfor the law generally
not just thelaws individuals
personally support
request documents but they canrsquot compel witnesses toanswer or demand that material be produced Althoughit is a criminal offence under the Workplace Relations Actto hinder workplace inspectors the Cole report notedthat no prosecutions have yet been launched despiteevidence that Office of the Employment Advocateinspectors have been abused had objects thrown at themand their property damaged It has been commonpractice for the arrival of OEA inspectors to lead to workstoppages and even site invasions in a bid to thwart anddemoralise an independent investigator not susceptibleto the unionrsquos usual weapon of commercial retaliation
One of the problems with theworkplace relations system is theassumption that parties will enforcethe law against each other This worksup to a point in industries whereworkplace parties are more-or-lessevenly matched and the issues are theworkplace equivalent of an argumentbetween neighbours over the heightof a fence It completely breaks downwhen one side has an effectivemonopoly over the supply of labourand disputes resemble a more-or-lessnormal family telling the house fullof footballers next door that the partyrsquosover Expecting contractors to enforcethe law against the CFMEU is likeexpecting people in the street to makecitizenrsquos arrests hence Colersquos principalrecommendations are an AustralianBuilding and ConstructionCommission to investigate prosecuteand enforce the provisions of a beefed-up industry specific workplace
relations actYesterday Cabinet decided to support Colersquos key
recommendations First the Government will seek aseparate act governing workplace relations in theconstruction industry providing for secret ballots beforestrikes compulsory cooling off periods after extendedstrikes and damages awards in the event of unprotectedindustrial action Second the Government will establisha new law enforcement agency for the industry withpowers to compel witnesses to testify bring prosecutionsand enforce judgments and with sufficient on-the-ground presence to police CBD building sites Thirdthe Government will establish a Safety Commissionerto monitor federally-funded construction sites to try toensure that these become industry models Fourth the
s
commissions lack sufficient power the courts lacksufficient speed the employment advocate lacks sufficientauthority and the police lack sufficient interest
Not before time the Cole Commission has acted as agiant searchlight probing the dark underside of thispotentially great Australian industry It confirmed whatpolicy makers had long suspected and what influentialinsiders knew but had always tried to deny or explainaway that the industry operates under the rule of thejungle and that there will be no improvement until thepeople who work in it understand that the law has to betaken seriously Legislative institutional and structuralchange will start to mean somethingwhen law breakers in this industry arecharged convicted and punished likelaw breakers everywhere else A fewsalutary bars of that old song need towaft over construction sites ldquoI foughtthe law and the law wonrdquo
Late last year in response to theRoyal Commissionrsquos first report thefederal Government set up theBuilding and Construction IndustryInterim Task Force The Governmentrsquosbrief to the Task Force is to ensure zerotolerance of industrial law-breakingThe Task Force is not primarily toenforce the tax laws or the safety rulesbecause other bodies exist for this(although the Task Force will certainlyshare information with them) TheTask Force is to investigate and enforceWorkplace Relations Act prohibitions oncoercion unprotected strikes strikepay and breach of industrialagreements So far the Task Force hasvisited nearly 300 sites launched more than 50investigations brought three prosecutions and referrednine other matters to state police the Australian FederalPolice or the Australian Competition and ConsumerCommission for further action
These are the first public prosecutions arising out ofindustrial action in the construction industry at leastsince the 1980s and are the result of a public policycommitment to law enforcement not seen since thehumiliating Clarrie OrsquoShea case in 1969 and the end ofldquopenal sanctionsrdquo Yesterday Cabinet decided to extendthe interim Task Forcersquos operations until more permanentarrangements to secure the rule of law can be established
Task Force agents have the powers of inspectors underthe Workplace Relations Act They can enter premises and
SI-3MARCH 2003
IPA REVIEW SPECIAL INSERT
The main reason whyunions can get what
they want frombusiness and businesscan get what it needs
from haplessconsumers is theabsence of inde-
pendent policing andenforcement of the
industrial equivalent offair trading laws
API
Government will insist on the application of theNational Construction Code and implementationguidelines to all significant new projects which are fullyor partly federally funded
Directly or indirectly the federal Government fundsabout $5 billion worth of construction projects everyyear and is determined to use its role as client to drivechange in the industry In essence the NationalConstruction Code stipulates that construction projectsmust take place in conformity with the WorkplaceRelations Act Under the Code and implementationguidelines the federal Governmentwill not engage tenderers whoseworkplace agreements and practicesensure a closed shop on site The TaskForce (and any replacement body) willhave full access to federally fundedsites to ensure that the law is beingobserved and workplace agreementscomplied with
For the federal Government theissue is upholding the law and tryingto tackle the ldquounion rulesrdquo culturewhich is at the heart of lawlessness inthe industry For the states the issueis whether they are prepared to refusefederal money in order to protect theclosed shop However much theymight prefer different federal laws thestates ought to accept thatconstruction projects have to complywith the law as it stands includingthe law mandating compliance withcertified agreements
State Labor governments whichhave made a point of their middle-ground credentials risk losing some$4 billion a year in federal building and constructiongrants if they side with the union movementrsquos mostmilitant minority There are likely to be limits to Laborrsquosdefence of a union whose stock-in-trade (at least in somestates) is the site invasion and the demand for paymentand which quietly reinstates organisers sacked for assaultor perjury Opposition senators will find it hard to brandas ldquoideologicalrdquo the recommendations of a royalcommission which spent 171 days in public hearingsand which pursued 11 shop stewards and 97 unionofficials to obtain their side of the argument
As Justice Cole pointed out in his report previousattempts to reform the industry have proven ineffectivedespite two earlier royal commissions and numerous
SI-4 MARCH 2003
IPA REVIEW SPECIAL INSERT
enquiries Although this Royal Commissionrsquosinvestigations seem to have temporarily checkedlawlessness in the industry a campaign is now emergingto extend the anarchic culture of CBD construction intoregional centres and the domestic housing industryThings will certainly be different this time if parliamentapproves a permanent well resourced watchdog withnew powers new personnel and new attitudes Unlikeprevious arrangements a new statutory watchdog withthe powers of a law enforcement agency should beeffective and permanent
Hundreds of people took big riskswith their commercial future and eventheir personal security to testify to theRoyal Commission It should neveragain be so hard for people in thisindustry to exercise their ordinaryrights and responsibilities asAustralian citizens They expected theGovernment to take the Commissionrsquosreport seriously and the Governmentfor its part is determined not to letthem down The Governmentunderstands that joining fights yoursquorenot prepared to win only makes badsituations worse Establishing the ruleof law in the construction industry isa challenge Australia canrsquot afford tofailSome of the worldrsquos best workersshould no longer have to put up withsome of the worldrsquos worst industrialpractices They have a right to anhonest industry where they can earna fair dayrsquos pay for a fair dayrsquos workand expect to come home uninjuredThe enduring image of this industry
should not be noisy marchers replaying the ideologicalstruggles of the 1970s and raising clenched fists againstauthorities they donrsquot like At its best the Australianindustry is capable of work which is stunningly beautifulyet intensely practical and it now needs to performconsistently on time on budget and in accordance withlaw
Hundreds of peopletook big risks withtheir commercial
future and even theirpersonal security totestify to the Royal
Commission It shouldnever again be so
hard for people in thisindustry to exercisetheir ordinary rights
and responsibilities asAustralian citizens
NOTE
The foregoing speech was first delivered as an Addressto the National Press Club on 2 April 2003
21MARCH 2003
E V I E WR
IN psychology behaviouris defined as irrational ifan action continues to berepeated despite its re-
peated failure to achieve the desiredoutcome On this definition our aidpolicy towards Papua New Guineahas been irrational
Despite over twelve billion dol-lars in Australian aid to PNG sincethat countryrsquos independence in 1975key development indicators such asliteracy rates infant mortality lifeexpectancy and real income percapita are either stagnating or dete-riorating Worse wersquove known forover a decade1
Today acknowledgement of thefailure of our aid policy in PNG hasgone well beyond the writings of in-dividual international policy analystssuch as myself to institution-spon-sored reports such as Beyond Baliwhich was released by the AustralianStrategic Policy Institute (the Aus-tralian Governmentrsquos own strategicpolicy adviser) and Papua NewGuinea on the Brink which was writ-ten by Susan Windybank and MikeManning for the Centre for Indepen-dent Studies Both reports confirmthe gross failure of Australian aidpolicy in PNG
Yet still our aid policy irrational-ity towards Papua New Guinea con-tinues While the ASPI and CIS re-ports acknowledge the gross failureof our aid policy in PNG they alsoargue that we need to continue ouraid to that country Indeed the ASPIreport argues that we should increaseour aid to Papua New Guinea Thepolicy saviour The ASPI report ar-gues that we should exert greater con-trol over our aid Not just over theform of our aid but direct interven-tion in policy and implementation inPNGmdashin essence for a return to pre-
Aid Detox for PNGPETER URBAN
independence days in PNG whereas UN-sanctioned administrator weran government in that country
Despite the mind-frame of secu-rity-focused strategists such as thoseat ASPI and the CIS (which en-dorses the aid approach advocated byASPI) the reality is that we canrsquotPNG is now independent and to ig-nore this reality would simply com-pound the problems of our past aidpolicy irrationality with irrationalityabout our political relationship withour nearest neighbour
A more interventionist aid policytowards PNG on our part as advo-cated in Beyond Bali and by HughWhite (the executive director ofASPSI) in the media might havepopulist appeal but it would haveserious adverse implications for ourrelationship with other Pacific islandcountries and even IndonesiaWorse it would give succour to theviews of our east Asian critics (suchas Malaysian PM Dr Mahathir) whoclaim that Australia continues toharbour colonial aspirations
We have to accept that to be suc-cessful aid policy must not just helpreduce mass poverty it also has to doso as a guest in the aid recipientcountry To do otherwise is not aidbut imperialismmdashwhether inten-tional or not
A more interventionist approachto aid policy in PNG would also givethe current corrupt political elite inPort Moresby a rallying point againstus and an excuse to delay changingtheir own policies Neither Austra-lia nor PNG can afford any furtherdelays to policy reform For us to givePNG politicians yet another excuseto delay reform would be not onlyirrational it would be inexcusableWhile our aid continues so will thecorrupt elite that is at the heart ofPNGrsquos problems Until we send themessage to the PNG political elitethat we are prepared to stop ouraidmdashto put them on aid detoxmdashwewill continue to waste our aid in thecorruption that is PNG politics Itmay be hard to accept but the sadreality we face in PNG is that no aidmay prove to be good aid at least inthe short to medium-term2
NOTES
1 Peter Urban lsquoOne Clear ObjectiveNo Clear Approachrsquo IPA Review1997 Vol 50 No 1
2 With Iraq also likely to require verysignificant Australian aid fundingover the next few years the Gov-ernment will need to review our aidprogram as part of the 2003-04 fed-eral Budget A decision to suspendaid to PNG could be taken as partof that review
Peter Urban is former chief economist with theDepartment of Foreign Affairs and Trade
We have to accept
that to be successful
aid policy must not
just help reduce
mass poverty it also
has to do so as a
guest in the aid
recipient country
API
22 MARCH 2003
E V I E WR
IN his speech to the Na-tional Press Club on theprospect of war with Iraqand the case for disarma-
ment Prime Minister Howard statedthat Australia will play a significant hu-manitarian role in Iraq
If so the Howard Government needsto evaluate carefully the foreign-aid non-government organizations (FANGOs)which it funds to carry-out this humani-tarian programme Many FANGOshave made it clear that they do not sharethe Australian Governmentrsquos objectivesand values in Iraq Moreover some donot agree with the Governmentrsquos over-all aid policies in general
THE COALITION OF THEUNWILLINGIn the lead-up to latest Gulf War some30 Australian aid agencies put theirnames to an Open Letter to the PrimeMinister organized by the AustralianCouncil of Foreign and Overseas Aid(ACFOA) The aim of the letter was tolsquospeak out against war in Iraqrsquo and it ex-pressed grave concerns about the hu-manitarian consequences of the war andthe effects of the existing sanctions1 TheFANGOs that signed the letter wereOxfam Community Aid Abroad WorldVision Australia TEAR AustraliaUnion Aid Australia - APHEDACaritas Australia National Council ofChurches Australian Council for For-eign and Overseas Aid Save the Chil-dren Australia CARE Australia OzGreen United Nations Association ofAustralia Family Planning AustraliaMercy Works Marist Mission CentreAustralia Every Home for Christ Bap-tist World Aid for Christ CCF Austra-lia Quaker Service Australia Austra-lian Lutheran World Service AustralianRelief and Mercy Services AnglicanBoard of Mission AUSTCARE Com-munity Development and Health
Irreconcilable DifferencesDON DrsquoCRUZ
Hussein have been virtually ignored isa searing indictment of the warped ide-ology feeble analysis and moral blind-ness of the sector For them now to re-discover the plight of the Iraqi peopleand to invoke their name in the mediais beyond contempt
THE OXFAM COMMUNITYAID ABROAD POSITIONOf the 30 FANGO signatories to theopen letter Oxfam Community AidAbroad (OCAA) has been perhaps themost outspoken It opposed military ac-tionmdasheven with UN Security Councilapproval4 In spite of all the evidence tothe contrary OCAA was comfortablewith Saddam Husseinrsquos assurances thathe did not have weapons of mass destruc-tion5 Adopting the common policyagreed to by the other Oxfam affiliatesOCAA stated that it will not take anymoney from the lsquobelligerentsrsquomdasha quaintterm used to the describe democraticnations planning to disarm a dictatorguilty of countless human rights abuses
OCAArsquos outrage against the so-called lsquobelligerentsrsquo appears to be geo-graphically confined to Iraq OCAAappears happy to take governmentmoney from the belligerents elsewherearound the world
According to OCAArsquos ExecutiveDirector Andrew Hewitt refusing totake money from the belligerents wasdone to lsquoprotect its impartialityrsquo6 Thisis a very curious position from Australiarsquosarguably most political FANGOOCAA has a long track-record of beinganything but impartial or reluctant totake sides in miliary action It wasnrsquotimpartial in East Timor where it sidedwith Fretlin in its quest for indepen-dence According to its own testimonyto a Senate committee OCAA wasgiven the choice by the IndonesianGovernment between lsquoplaying politicsrsquoor delivering aid projects in Indonesia7
Group Amnesty International Austra-lia AngliCORD Australian Aid forCambodia Fund Burnet InstituteRedR Friends of the Earth PLAN Aus-tralia and Australian Volunteers Inter-national2
This open letter highlighted a num-ber of problems with the FANGOs sec-tor First it highlighted the weak logicthat passes for advocacy in the sectorThe letter argued against military actionwas critical of sanctions and suggestedthat nations should settle issues only bydiplomatic means It is a viewpointwhich totally ignores the fact that theGovernment had to deal with SaddamHussein
The shallowness of their logic wasbest exposed by the Prime Minister inhis response to the open letter in whichhe stated that the humanitarian situa-tion in Iraq is best addressed by SaddamHusseinrsquos removal and perhaps morepointedly that Saddamrsquos manipulationof foreign aid had allowed him to main-tain and pursue his weapons of mass de-struction capability and human rightsabuses3
Second it also highlighted the factthat the so-called lsquohuman rights-basedapproachrsquo to development (embraced byseveral of the signatories) is not so muchabout realizing human rights (as its pro-ponents argue) but is more about pro-viding them with an excuse to lsquoplay poli-ticsrsquo According to the theory the hu-man rights-based approach to develop-ment allows FANGOs to tackle the rootcauses of poverty and injustice
Yet the root cause of the Iraqipeoplersquos suffering can be summed up intwo simple wordsmdashSaddam HusseinThe fact that the FANGOs who sub-scribe to this particular approach havebeen obsessed with imaginary humanrights abuses committed by Shell NikeRio Tinto BHP-Billiton and AuroraGold while the activities of Saddam
23MARCH 2003
E V I E WR
It chose the former thus making it per-sona non grata in Indonesia for almost adecade8 It wasnrsquot impartial inMozambique when it sided with Frelimoin the countryrsquos civil war9 It wasnrsquot im-partial in Ethiopia when it developedlinks to the Eritrean Peoplersquos LiberationFront during its war against the thengovernment10 It was not impartial oranti-war when it sided with the TigrayPeoplersquos Liberation Front in the neigh-bouring province to Eritrea when thatgroup was waging a guerrilla war againstthe government11 And recently therehave been claims that in the Middle Eastit was little more than an lsquoeager propa-gandistrsquo for the Palestinians12
In East Timor Ethiopia and Mozam-bique OCAA was linked with organi-zations which supported direct militaryaction that led to the deaths of thou-sands of civilians In none of these loca-tions were the enemies of their friendany worse than Saddam Hussein In-deed in many cases OCAArsquos friendswere arguably no better than their en-emies in terms of human rights
OCAArsquos decision not to accept Aus-tralian Government funding is the cor-rect one in the sense that it clearly doesnot share the Governmentrsquos values onthe question of Iraq and thereforeshouldnrsquot receive any governmentmoney
Hewitt went on to state in a pressrelease that lsquoWe will not take funds thatmight allow a government to use hu-manitarian efforts as an instrument offoreign policyhelliprsquo13
This is finemdashexcept the AustralianGovernmentrsquos foreign aid is an instru-ment of foreign policy And it always hasbeen This is spelt out quite clearly inthe Australian Governmentrsquos latest for-eign and trade policy White Paper Ad-vancing the National Interest14
FANGOs that cannot accept thisrather basic proposition should not begetting taxpayersrsquo money They areclearly unsuitable for the task at hand
The consequences of Australian tax-payersrsquo money falling into the wronghands were brought home to Prime Min-ister Howard when he met IndonesianPresident Megawati Sukarnoputri to dis-cuss the war against terrorism and
Australiarsquos involvement against Iraq Atthe top of the Indonesian agenda wasthe issue of Australian funding toFANGOs being used to support sepa-ratist movements in Indonesia15
Post-war Iraq will be a better placewithout Saddam Hussein and his thugsThis does not mean that it will be a safeplace or necessarily a stable place Afterall one of the reasons for Western tol-eration of Saddam Hussein for manyyears was his ability to hold the various
ethnic minorities in Iraq together albeitrather brutally thereby maintaining abalance of power in the Middle East Hisdeparture would see strains on Iraq fromthe various ethnic minorities that makeup Iraq There is a strong chance thatIraq will fragment
The last thing the Australian Gov-ernment or any of the so-called belli-gerents needs in a post-war Iraq is west-ern NGOs running around and becom-ing self-styled advocates for national self-determination for Iraqrsquos ethnic minori-ties and injecting themselves into Iraqrsquosinternal politics This is a real risk Thebehaviour of Australian foreign aidNGOs in Indonesia should make Aus-tralian decision-makers extremely waryof funding any NGOs with Australiantaxpayersrsquo money so that they can oper-ate in Iraq
As things stand now FANGOs facevery few restrictions on their actionsfrom government If they undertake ac-tivity that is inconsistent with being anagent of government they may losefunding for specific projects or in moredramatic circumstances lose funding ina country Nonetheless they are gener-
ally able to access Australian Govern-ment funding for other projects andcountries In other words the penaltiesfor becoming caught up in political ac-tivities are very light for NGOs and posethem no serious problems
Foreign aid NGOs that lsquoplay politicsrsquoare unsuitable contractors for the deliv-ery of aid That these overtly politicalorganizations have been allowed to gaingovernment accreditation and receivegovernment funding points to some se-rious problems at AusAID Australiarsquosofficial aid agency The time has comefor this to change
NOTES1 httpwwwacfoaasnaumedia_releases
2003_releases26_3_03PDF2 httpwwwacfoaasnauemergencies
openletterPDF3 httpwwwacfoaasnauemergencies
iraq_responsehtm4 Oxfam Horizons Vol 3 No 1 (Febru-
ary 2003) page 25 Oxfam Community Aid Abroad lsquoIraq
Overviewrsquo February 20036 Hewitt quoted in Liz Gooch lsquoOxfam
wersquoll say no cashrsquo The Age 16 March2003
7 Community Aid Abroad Submission tothe Senate Foreign Affairs Defence andTrade References Committee Inquiryinto East Timor Downloaded at httpwwwcaaorg aucampaignssubmissionstimorhtml
8 Ibid9 Susan Blackburn Practical Visionaries A
Study of Community Aid Abroad (Mel-bourne Melbourne University Press1993) page 313
10 Ibid pages 325-333 passim11 Ibid12 Gerald Steinberg lsquoPropaganda vs Hu-
manitarianismrsquo Australian Financial Re-view 7 June 2002 Downloaded at httpfacultybiuacil~steingconflictopedpropvshumanitarianismhtm
13 ht tp wwwcaa o rg au p r 2003 iraqfundshtml
14 httpwwwdfatgovauani15 Dennis Shanahan lsquoJakarta fears aid funds
for rebellionrsquo The Australian 17 Febru-ary 2003 page 2
Don DrsquoCruz is Research Fellow at the IPAand Director of IPArsquos NGOWatch
OCAA has a longtrack-record of
being anything butimpartial or
reluctant to takesides in miliary
action
API
24 MARCH 2003
E V I E WR
GEORGE Bush Tony Blairand John Howard haveprovided many reasons forsupporting military action
against Iraq One of those reasons hasbecome known as the lsquohumanitarianrsquojustification Put simply the lsquohu-manitarianrsquo justification for the US-led invasion of Iraq is that such ac-tion is necessary to free the Iraqipeople from their totalitariandictator
Such an argument is attractive tothose who believe that there aresome fundamental human rights thatall individuals possess regardless ofwhere and how they live Whatserves as the source of those rightshas been the subject of debate forcenturies One of the pre-eminentstatements on the subject was madeby John Locke who in The SecondTreatise of Government wrote thatmankind was lsquoequal and indepen-dentrsquo and that lsquono-one ought to harmanother in his life health liberty orpossessionsrsquo
Saddam Husseinrsquos mass murdertorture and terror are reasonablyclear breaches of human rightsTherefore some would ask why thereshould be opposition to the UnitedStates and its allies taking whatevermeasures might be necessary totopple the Iraqi regime Surely thesame standard of behaviour that ap-plies to individuals applies also tonation states If an individual walk-ing in the street witnessed a rapeoccurring wouldnrsquot that individualbe entitled to do everything in hispower to stop the crime and assistthe victim
The point is of course that in-ternational law and convention do
After IraqIs Sovereignty Dead
JOHN ROSKAM
not allow nation states to act in thesame way as individuals Countriescannot simply lsquotake the law into theirown handsrsquo To restrain lsquovigilantestatesrsquo (who might be acting fromeither lsquogoodrsquo or lsquobadrsquo motives) a num-ber of legal and political theorieshave been developed One of theseis the doctrine of lsquosovereigntyrsquo whichprovides that states should not inter-vene in the domestic affairs of otherstates
In relation to Iraq the lsquosover-eigntyrsquo question is perhaps the stron-gest argument against the US-ledCoalition Most of the other criti-cisms of lsquohumanitarianrsquo interventionin Iraq are either grounded in simpleanti-Americanism or are fallaciousFor example there is the claim thatbecause some of the countries in theCoalition have previously ignoredHusseinrsquos cruelties therefore it is il-legitimate to take action now Sucha view has been expressed by aMelbourne international relationsacademic
While there is no disputing thebrutal nature of Saddam Hus-seinrsquos regime the case for inter-vention made by those in Can-berra London and Washingtonis weakened by the fact that atthe peak of Saddamrsquos crimes inthe late 1980s they were eitherdirectly supporting him withweapons technology and intelli-gence or were entirely indifferentto his behaviour Even if theyhave belatedly recognised theerror of their ways how seriouslycan we take their concerns aboutweapons of mass destruction nowgiven they were his suppliersthen1
On the basis of this argument itcould be said that Britainrsquos (andAustraliarsquos) case for intervening toassist Poland upon the German in-vasion in 1939 was lsquoweakenedrsquo be-cause Britain had previously acqui-esced to Germanyrsquos rearmament theremilitarization of the Rhinelandand the annexation of both Austriaand parts of Czechoslovakia Fewpeople who chanted lsquoFreedom forEast Timorrsquo said that the HowardGovernment should not act becausea quarter of a century before theWhitlam Government had been lsquoin-differentrsquo to Indonesiarsquos occupationof the island
There is also the claim that al-though Hussein is bad he is not theworst dictator in the world and thatit is hypocritical for the Americansto attack only Iraq This is an as-tounding proposition It attempts toapply to the United States a standardof behaviour that is impossible to sat-isfy Should the police not attemptto solve any crimes because theycanrsquot solve all crimes If a crime iscommitted by two people and thepolice arrest one perpetrator unlessthe other is also caught must the firstperpetrator be released When indi-viduals donate money for famine re-lief in Africa very few believe thattheir donation is pointless becauseit might prevent the starvation ofonly one person rather than thou-sands Christian ethics sets down norequirement that we should help no-one unless we can help everyone
The issue about state sovereigntyhowever is one that deserves to betaken seriously Regardless of onersquosopinions on the extent and limits ofstate sovereignty it is true that our
25MARCH 2003
E V I E WR
international relations system is builtupon the principle and to modify oroverturn it is a matter of some con-sequence
Even those who are generally sup-portive of the United States andtheir allies see the problem As it wasput by a leading commentator whenanalysing the Australian PrimeMinisterrsquos lsquohumanitarianrsquo justifica-tion for war
Finally Howardrsquos argumentagainst Hussein on human rightsis correct So is his moral case forwanting to liberate the Iraqipeople from their torment Theproblem however is that youcanrsquot trip around the worldwanting to overthrow regimesbecause of human rights2
Some would askmdashlsquowhy notrsquo Be-cause to do so would overthrow theUnited Nations Charter comes therejoinder And in turn the responseto that might bemdashlsquogoodrsquo
If itrsquos a choice between the main-tenance of the UN Charter and free-dom from tyranny freedom wins ev-ery time (although an internationallawyer sitting in Sydney might havea different view on this question fromthat of a political prisoner manacledin a Baghdad jail cell)
When the interests of lsquointerna-tional lawrsquo are more important thanthe life and liberty of individuals itcould be concluded that lsquothe Em-peror has no clothesrsquo Would inter-national law have sanctioned inter-vention to stop the Holocaust hadHitler not waged war and proceededwith his methods entirely within theconfines of the German territorialstate
Many who argue that lsquohumanitar-ianrsquo intervention in Iraq is not justi-fied because it infringes on thatcountryrsquos lsquosovereigntyrsquo would happilyhave other countries cede their po-litical sovereignty to supra-nationalbodies Certain features of the Inter-national Criminal Court overridethe principles of sovereignty but thatdid not stop a phalanx of interna-tional law experts urging sovereigngovernments to join it so as to en-
able the prosecution of war criminalsBut when it comes to actually stop-ping war crimes not simply prosecut-ing them that phalanx is largely si-lent
Without the doctrine of state sov-ereignty and without an arbiter fordetermining when interference withthe principle is justified (the roleclaimed by the United Nations andits Security Council) it is said thatstates would be free to impose theirown will and intervene in other
countries whose standards did notmeet their own (In The Second Trea-tise of Government Locke argued thata characteristic of a lsquostate of warrsquo be-tween individuals was the absence ofa superior authority to adjudicatedisputes and prevent individualsfrom administering justice them-selves)
Iraq might be claimed as a rea-sonably clear-cut case for interven-tion but other situations are notlikely to be as simple In Culture andEquality first published in 2001Brian Barry explored a lsquoliberalrsquo per-spective on this question
The liberal position is clearNobody anywhere in the worldshould be denied liberal pro-tections against injustice andoppression However in exactlythe same way as liberals arepragmatic about what liberalismmeans in terms of boundaries sohere the move from principle tointervention has to be mediated bypractical considerationshellip
[L]iberals are not so simple-mindedas to imagine that the answer toall violations of liberal rights is tosend in the Marines or even aUnited Nations force As in anyjust war theory there must be somedoctrine of lsquoproportionalityrsquohellip[S]carcely anybody would be infavour of the western powersinvading Saudi Arabia so at to sortout the way in which it lsquounjustlydenies political rights to women ornon-Muslimsrsquomdashaccording to theirliberal idea of justicersquo3
The question remainsmdashafterIraq what remains of lsquostate sover-eigntyrsquo Should the doctrine applyonly to lsquoliberal democraticrsquo statesSuch a solution might be attractiveto some lsquoliberalsrsquo but it doesnrsquot avoidthe problem of what exactly a lsquolib-eral democraticrsquo state is
One irony arising from the argu-ments about the war in Iraq is thatmany of those who have urged astrict application of lsquostate sover-eigntyrsquo principles in the past havegenerally supported the US-led in-tervention while those who havebeen willing to abridge or even aban-don the doctrine have had to rely onit to counter the lsquohumanitarianrsquo jus-tification for war
There are not many certaintiesabout the nature of the world afterthe war in Iraq but it can be saidwith some assurance that one defi-nite outcome is going to be a morevigorous debate about state sover-eignty
NOTES1 Scott Burchill lsquoThe humanitar-
ian arguments for this war are spu-riousrsquo The Age 21 March 2003
2 Paul Kelly lsquoThe hapless per-suaderrsquo The Australian 15ndash16March 2003
3 Brian Barry Culture and Equal-ity An egalitarian critique ofmulticulturalism Harvard Uni-versity Press page 138
John Roskam is a Research Fellow with the IPA
The lsquosovereigntyrsquo
question is perhaps
the strongest
argument against
the US-led
Coalition
API
26 MARCH 2003
E V I E WR
Which Way for theDemocrats
The 2002 mid-term elections were adramatic victory for President GeorgeW Bush and the Republicans Insteadof the historical norm of the partycontrolling the White House losingBushrsquos party gained seats in the Sen-ate House Governorsrsquo races andState legislatures The result was abitter disappointment for the Demo-crats and has led to a fierce debatebetween the Left and Centrists aboutthe future policy direction of the partytowards the 2004 elections
The Leftrsquos analysis is that the ma-jority of Americans are natural Demo-crats Electoral defeat was due to thefailure to energize that base of Demo-crats The party failed to distinguishitself sufficiently from Bush and thusgive their voters a reason to turn outWhile the majority of Democrats op-posed Bush on tax cuts and the warwith Iraq a significant minority sup-ported him and campaigned on thatsupport The result the Left claimwas that the Democrats lacked a con-sistent message in contrast to Bush
Support for this argument can befound in the higher turnout amongstRepublicans than Democrats in 2002while in 2000 the combined vote forGore and Nader was 51 per cent Aninfluential book by John Judis andRuy Texeira identified lsquoThe Emerg-ing Democrat Majorityrsquo Theyclaimed that growing demographicgroups trended Democrat includingthe young socially liberal profession-als minorities and women
What policies would motivate thisnatural Democrat base The Left callfor rescinding the Bush tax cut a classwar against the corporate world amajor increase in lsquopublic investmentrsquoin schools childcare health care and
Letter from AmericaNIGEL ASHFORD
public transport and strong opposi-tion to the war
Centrists however have a verydifferent analysis of the Democratsrsquoproblems the public did not trustthem to pursue the war against ter-rorism vigorously to keep down taxesto spend their tax dollars wisely or toreflect their cultural values
A Gallup opinion poll found that57 per cent of Americans askedthought that the Democrats were nottough enough on the war on terror-ism while 64 per cent thought theRepublicans were There was the per-ception that the Democrats were notserious on the issue and just playingpolitics Evidence for this was the de-bate over the new Department ofHomeland Security blocked becausethe Democrats wanted to protectunion rights while the President de-manded more flexibility to deploy theworkforce Many voters saw the issueas the national interest versus a spe-cial interestmdashin this case that of theunions The Democrats were seen asputting the interests of one of theirmajor constituencies before nationalsecurity
The Democratic LeadershipCouncil in lsquoThe Road Aheadrsquo by AlFrom and Bruce Reed presented theCentrist case lsquoStop pretending wecan win a majority simply by energiz-ing our basersquo The Democrats were
not trusted on the war against terror-ism were hostile to the cultural con-cerns of many working-class Demo-crats on abortion and guns and stillseen as the tax-and-spend party lsquoToomany Americans donrsquot trust us tokeep their taxes down or to spendtheir money wellrsquo
The Centrist agenda is to stronglyprosecute the war against terrorismwhether against al-Qarsquoeda Saddam orothers and to abandon knee-jerk iso-lationism arising from the experienceof the Vietnam War to defend capi-talism and support small investorsagainst irresponsible managers to cutpayroll taxes and to downplay thecultural issues that divide Democrats
Which path will the Democratstake The Left is in the ascendancyMost of the remaining Democrats inoffice come from left-wing districtsNancy Pelosi a left-liberal from SanFrancisco was easily elected the newleader of the House Democrats over-whelming her Centrist opponent andrising star African-American HaroldFord The early field of presidentialcandidates for 2004 is dominated bythe Left tendency including SenatorJohn Kerry Representative DickGephardt Governor Howard DeanRev Al Sharpton former SenatorCarol Moseley-Braun and Represen-tative Dennis Kucinich Only Sena-tor Joe Lieberman and Senator JohnEdwards represent the Centrist wing
The future of US politics may de-pend on which road the Democratsdecide to take The US is currently alsquo50ndash50rsquo nation evenly balanced be-tween the parties A left turn couldlead to Republican dominance farinto the future
Dr Nigel Ashford is at the Institute of Humane Studiesat George Mason University and is co-author of US
Politics Today (Manchester University Press)
API
27MARCH 2003
E V I E WR
Trusting TonyFrankly itrsquos all just too depressing Theeconomyrsquos heading for trouble Busi-ness confidence is low investment in2002 was 92 per cent lower than theprevious year and manufacturing in-vestment was nearly 18 per cent downThe budget deficit is spiralling becauseour once lsquoprudentrsquo Chancellor (trea-surer) Gordon Brown made over-opti-mistic growth projections and startedthrowing money at problems
Therersquos a load of health-and-safetyand anti-discrimination measuresthatmdashto put it most politelymdashare ex-amples of letting the best be the en-emy of the good Every school tripneeds a formal risk assessment withthe result that many trips are simplynot taking place New trains orderedfor London commuter routes wonrsquothave toilets because the rules say thatat least one toilet in each four-car unitmust be wheelchair-accessible whichwould have cost ten or a dozen seatson every overcrowded train
Some of this is just insane Somelocal authorities say that safety at workrules mean that home-care workersmustnrsquot lift the disabled people theyare looking after Or therersquos rail safetyUntil recently we were seriously pro-posing to spend $10 billion on a bet-ter system to stop trains going throughred signals On average this would havesaved the lives of about three passen-gers every four years which is a lousybargain compared with other safety in-vestments Worse it would also havereduced the capacity of the networkby up to 15 per cent and forced morepeople onto the roads which are muchmore dangerous than even ourclapped-out railways The result was aprojected net increase of 13 to 21 deathsper year
Meanwhile in London the Cen-tral line of the Underground has been
Letter from LondonJOHN NURICK
API
closed for weeks after a train derailedwhen one of its motors fell off Therewere no deaths or major injuries in theaccidentmdashbut itrsquos a safe bet that someof the people who havenrsquot been ableto use the Central line have been in-jured or killed on the roads
What can one say If the authori-ties took the same attitude to the riskof fatal accidents in the health serviceevery hospital in the country wouldhave been closed for years
Despite all this the Conservativesare still hopeless Their leader IanDuncan Smith has a new wheezewhen a journalist asks him anythingdifficult he chortles merrily and saysitrsquos the most uninteresting questionimaginable and hersquos not going to wasteanyonersquos time by answering it His col-leagues have their knives out for him
Meanwhile in spite of the govern-mentrsquos problems with the economy andthe public services Tony Blair is grow-ing in stature having his waymdashandantagonising large sections of his ownparty in the process On several recentissues he has faced down the formi-dable Gordon Brown in a way that notlong ago was hard to imagine
Then he shocked everyone by com-ing out against having elected mem-bers in the reformed House of Lordswhen most voters want an all-elected
chamber and most MPs want a partly-elected one In the event Parliamentcouldnrsquot agree on any of the optionsfor reform so wersquore stuck with the sta-tus quomdashwhich is fine by Mr Blair
Then therersquos the war By the timeyou read this it may be over or we maystill be waiting or our lads may befighting Mr Blairrsquos strong line againstIraq has made him very unpopular Theanti-war march on 15 February was thebiggest demonstration London hasever seen A few days later 122 Labourbackbenchers voted against the gov-ernment and many more abstained
Mr Blair didnrsquot budge War is a se-rious thing he says lsquoBut in a situationsuch as this you have to do what youbelieve to be right because thatrsquos theprice of having responsibilityrsquo1
He has often been accused of gov-erning by focus group Certainly he hasseemed reluctant to antagonise anypowerful group That has clearlychanged In a sense his stand on Iraqmerely follows his action in sendingtroops to Sierra Leone and Kosovomdashbut it has stirred up far stronger domes-tic and international opposition
The irony is that now when he re-ally needs people to trust him wedonrsquot Even in the desperately seriousbusiness of justifying an unpopular warDowning Street canrsquot play it straightremember the dossier from lsquointelli-gence sourcesrsquo that turned out to belargely cribbed from a PhD thesis onthe Internet
NOTE1 The Guardian 1 March 2003
John Nurick is a management consultant based in theSouth of England From 1985 to 1990 he was
editorial director of the Australian Institute for PublicPolicy and later edited newsletters reporting on theUK Parliament and European Union institutions
28 MARCH 2003
E V I E WR
KEVIN DONNELLY
Private EducationEquals Public Good
When it comes to choosing be-tween government and non-gov-ernment schools Australian par-ents are lsquovoting with their feetrsquo Asshown by recent ABS figures(Schools Australia 2002) over thelast decade there has been a dra-matic increase in non-governmentschool enrolments
Approximately 30 per cent ofstudents now attend non-govern-ment schools compared with 22per cent in 1980 and 28 per centin 1990 Over the last decadewhile the number of governmentschools has fallen by 64 per centnon-government schools havegrown by 61 per cent
Of course not everybody valuesparentsrsquo right to choose and theAustralian Education Union(AEU) Labor governments andlsquoleft-wingrsquo academics in particularconsistently argue against non-government schools
One of the arguments put for-ward by those opposed to givingparents greater freedom of choiceis that government schools are bet-ter at promoting social cohesionand a strong sense of what KenBoston the ex-head of the NSWEducation Department terms lsquothebonds of civic friendshiprsquo
The assumption is that becausestudents attend non-governmentschools there will be greater socialdivisiveness and a breakdown inthe civic values needed to hold so-ciety together But there is no cred-ible evidence offered to support theclaim that government schools arebetter at promoting the commongood
In fact there is much to provethe opposite
First as anyone familiar withthe lsquoculture warsrsquo and politicallycorrect curricula will know insteadof government-controlled educa-tion promoting unity and cohe-sion it has led to public angst andparental complaints
Witness the very bitter debatein Queensland a year or two agowhen the government-mandatedStudies of Society and Environ-ment (SOSE) curriculum was in-troduced into schools Such was
the lsquoleft-wingrsquo bias in the curricu-lum in particular in the areas ofmulticulturalism and the environ-ment that many parents felt be-trayed
The Queensland debate is mir-rored by what is happening in theUnited States As noted by Ste-phen Arons in his book Short Routeto Chaos instead of promotingunity government control of thecurriculum leads to the opposite
What the school wars tell us isthat somehow we have been
Education Agenda
transforming a vital instrumentfor creating social cohesioninto a source of division andhostility that there is some-thing built into the structure ofpublic schooling that under-mines one of its most importantfunctionsAronrsquos argument that govern-
ment schools no longer transmit aviable sense of a common cultureor agreed civic values is reinforcedby another noted United Stateseducationalist Diane Ravitch
In a recent article in the jour-nal Education Next Ravitch be-moans the impact of cultural rela-tivism and the post-modern on theschool curriculum (where there areno commonly agreed values) andeven goes so far as to argue thatparents should be free to choosenon-government schools becausesuch schools have a better chanceof reflecting their values
In the current education sys-tem with the public schoolscommitted to multiculturalismbilingualism and other forms ofparticularism it is difficult toargue that parents should notbe able to choose schools thatmeet their cultural needsSecond if one accepts that lsquoso-
cial capitalrsquomdashthe networks volun-tary associations and civic bondsthat hold a community togethermdashis important for the health of ademocratic society then non-gov-ernment schools clearly have theadvantage
Unlike the government schoolsystem characterized by a heavy-handed centralized bureaucracyand teacher union control non-government schools are closer tothe communities they serve Bytheir very nature non-government
There is no credible
evidence offered to
support the claim
that government
schools are better
at promoting the
common good
29MARCH 2003
E V I E WR
ALAN MORAN
The lsquoRrsquo Files
Private propertyrights the key toachieving efficiency inrural water use
WATER IN AUSTRALIAWater has always been a definingissue in Australiarsquos prosperityAnd in recent decades irrigationhas grown rapidly Even so theproportion of Australia that is ir-rigated at two per cent of theland comprises a share that isamongst the lowest among OECDcountries Only Canada and therainiest countries New Zealandand the UK have lower sharesthat of the US is 11 per cent andin Japan it reaches 60 per cent
Modern agriculture is only 200years old in Australia and thoughin the first 100 years agriculturalproductivity was increased toequal that of anywhere in theworld gains continue to bemademdashoutput has doubled overthe past 50 years a growth thatcould not have taken place with-out a similar expansion of irriga-tion Irrigation in the MurrayndashDarling agricultural provincealone contributes $5 billion toAustralian agricultural outputand non-irrigated agriculture inthe region contributes a further $5billion This makes the areawhich comprises 14 per cent ofAustraliarsquos land mass responsiblefor a third of the nationrsquos $35 bil-lion agricultural output
Applying Property Rights to WaterMost of the uses of water involvechoices or compromisesmdashdrink-ing water versus irrigation versus
industrial and so on Some how-ever involve complementaritiesparticularly certain recreationaluses such as water sports that arefacilitated by storage and consis-tent availability
In many cases water will per-form sequential functionsmdashthesame water can be used and re-used for irrigation used for indus-trial cooling and finish as drink-ing water Water with differentsometimes competing productiveuses will be optimally used as longas two conditions are in placeThe first is that its ownership isclearly specified and the ownersrsquoobligations to other users (orclaims from other beneficiaries)are well understood The secondrequires each property right to betradable to enable acquisition bythose who value it most therebymaximizing its value
The rights specification andtherefore property ownership canrarely commence with a cleansheet of paper People acquire in-dividual rights to property ini-tially through a variety of routesOne of these is seizure of some-thing that was originally of littlevalue until it was acquired and im-proved Squatters assume rights inthis way However they are firstacquired they need to be tradableAPI
schools establish strong commu-nity networks and have a greaterreliance on the voluntary work ofparents
That non-government schoolsare more effective in this regard issupported by research into lsquoChar-ter schoolsrsquo in the United StatesAs noted by Chester Finn at theFordham Foundation giving localcommunities lsquoownershiprsquo overtheir school builds networks oftrust and reciprocity so vital forsocial cohesion
Social capital also relies on citi-zens being disciplined and orderedin their behaviour Selfishness vio-lent behaviour and rudeness act tofragment the community instead ofpromoting cohesion According toa number of Australian surveys itis here once again that non-gov-ernment schools are seen to bemore effective
As noted by the Centre for In-dependent Studies researcher Jen-nifer Buckingham in The Truthabout Private Schools in Australiawhen analysing why so many par-ents forsake the government schoolsystem
When comparing independentprivate schools with publicschools the major theme thatemerged was not differences inacademic standards and curri-culum but issues of disciplineand order The surveyed par-ents felt that the behaviour andattitudes of students in publicschools was unacceptablehellipAll accept that non-govern-
ment schools achieve better aca-demic results provide greater cur-riculum flexibility and save Aus-tralian taxpayers millions of dol-lars Equally as important is theargument that such schools streng-then Australiarsquos civic health andstock of lsquosocial capitalrsquo
Dr Kevin Donnelly is Director of EducationStrategies a Melbourne-based consulting group
E-mailkevindnetspacenetau
s
30 MARCH 2003
E V I E WR
and relatively inviolable Thisprovides the incentive for them tobe improved and for their ownersand others to search out ways inwhich the assets they representcan be used to provide increasedvalue or other benefits
If confidence in the exclusiv-ity an owner has over the prop-erty right is lost or was neverpresent the asset will be used lessproductively For example own-ers will milk them for their cur-rent-use value rather than trade-off present value for a future valuethat is less certain
Even without a total emascu-lation of individual rights (for ex-ample when title to the propertydepends on continuing govern-mental assent) lack of certaintybrings lower incomes and dimin-ished asset protection One out-come of this can be observed inthe MurrayndashDarling system Wa-ter rights on the Victorian side ofthe Murray are secure while thoseon the NSW side have been over-allocated and are subject to ad-ministrative discretion includinghaving a firm duration of only tenyears In Victoria high securitywater (available 95 per cent of thetime) comprises the great bulk ofentitlements In contrast in
NSW high security water is avail-able only 60-80 per cent of thetime The result is that farmers onthe Victorian side plant perennialcrops while those in NSW tendto focus on annual crops espe-cially rice
There are claims that Victoriarsquosmore robust property rights meanthat the State Government haslost lsquocapabilityrsquo to manage com-pared with NSW The flip side ofthis is the increased risk and as-sociated lower value of productionnorth of the Murray where prop-erty rights are attenuated Gov-ernments that give themselves in-creased capacity to direct produc-tion or to take individualrsquos prop-erty will need to accept lower lev-els of income and output
IRRIGATION ENVIRON-MENTAL BENEFITS AND SA-LINITY
The Types of IssuesIssues stemming from irrigationcomprise two types those impact-ing on the environment and thoseimpacting on private uses Theformer includes issues such as pre-venting loss of species ensuringthat certain sorts of species flourishand avoiding unattractive growths
such as blue-green algae which re-sult from fertilizer build-up
The second involves economicimpacts on different users
While environmental flows toensure species flourish are oftenhighlighted salinity is the mainfocus And while salinity has animpact on the environment itsimportance is in the conflict of in-terest between productive usersmdashthe complaint of lsquodamaged goodsrsquoby downstream users against thoseupstream
The MurrayndashDarling Basin Sa-linity Strategy 2001ndash2015 has es-timated that increased salinitybrings costs of $294 million perannum to the basin
Yet data on the salinity of theMurray Darling shows levels up-stream of South Australia arelower than they were in the early1980s and are only seriously abovethese levels as the river ap-proaches its mouth at the GoolwaBarrage
The Basin Salinity Manage-ment Strategy argues that progressachieved over the past decade willlsquobe cancelled within 20-50 yearsand median salinity levels wouldexceed the Australian DrinkingWater Guidelines for good waterquality within 50-100 yearsrsquo Thecause of this is said to be risinggroundwater tables due to land usechanges across the Basin
The disputes over salinizationare largely disputes between com-mercial parties Full specificationof rights and obligations will al-low these to be resolved as longas the impacts are measurabletheir causes identifiable and thevarious rights and obligations areknown and stable In this respecttechnology to measure salt in wa-ter and to trace increases to par-ticular locations is readily avail-able
Agreements about the alloca-tion of water rights between ju-risdictions and to the main irri-gation provinces have been inplace for over a century In the
Average Salinity in the River Murray (EC Units)1
3500
3000
2500
2000
1500
1000
500
0
January 2003
July 2002ndashJanuary 2003
July 1982ndashJanuary 2003
Hume D
am
Swan
Hill
Merbein
Morgan
Milang
Mening
ie
Goolw
a
Barra
ge
31MARCH 2003
E V I E WR
I
API
Musinghellipcase of the Murray the lsquocaprsquo onwater abstractions agreed betweenthe various jurisdictions in 1995largely validated agreements madeearly in the last century and be-fore Disturbing these agreementswould greatly undermine the trustin the sanctity of property rightsand seriously reduce agriculturalproductivity Hence increased al-locations for certain parties or forcertain uses (including environ-mental flows) would need to bepurchased at market prices
Developments in Australiaover recent decades have con-spired to make irrigation water farmore valuable This is exacer-bated by1 Activation of NSW lsquosleeperrsquo
and lsquodozerrsquo water rights as a re-sult of the increased scarcityvalue a change that bringseven greater pressure on theavailable supply
2 Increased scarcity leading tomeasures that more carefullyhusband the water Whilesome of these prevent evapo-ration loss and have thereforebrought a net increase in effec-tive availability others havereduced availability (these in-clude a more careful wateringwhich results in reduced run-off and re-use)
3 Increased capture of waterwithin the land on which itfalls once water is recognizedas scarce landowners will seekto ensure it does not leave theirland NSW and Victoria haveplaced limits (a strict 10 percent in NSW) of water fallingon property as entitlements ofthe owner Queensland has notyet enacted an equivalent tothis Such adaptations of thecommon law are essentialhowever if downstream usersare not to be expropriatedThere is likely to be constant
bickering over water rights espe-cially if State Governments seek toelevate sharing issues and to sanc-tify them with claims about promot-
Daniel Pipes in The New York Posthas a very cogent explanation forwhy the Left appears to be so happywith the likes of Osama bin Ladenand Saddam Hussein
To be clear about their attitudeshe quotes the renowned Germanelectronic music composer KarlHeinz Stockhausen who saidstraight after the attack on NewYork that it was lsquothe greatest workof art for the whole cosmosrsquo
As Pipes and many of us observedaily there is barely a bad word tosay about Saddam Hussein nor aniota of sympathy for thoseoppressed tortured and murderedby his reacutegime Instead they venttheir fury against the AmericanPresident and British Prime Minister
Why the nonchalancePipes draws our attention to Lee
Harris writing in a recent issue ofthe Hoover Institutionrsquos journalPolicy Review According to KarlMarxrsquos central thesis the demise ofcapitalism hangs on workersgrowing poorer over timemdashwhichof course did not happen Sorather than give up on cherishedexpectations of socialist revolutionHarris notes Marxists tweaked theirtheory and looked instead to theentire populations of poor countriesto carry out the revolution Classanalysis went out the windowreplaced by geography
The trouble is they have tooverlook militant Islamrsquos slightly un-socialist practicesmdashsuch as itsimposing religious law excludingwomen from the workplace andpersecuting atheists
As Pipes sums up September 11and the prospect of war againstSaddam Hussein have exposed theLeftrsquos political self-delusionintellectual bankruptcy and moralturpitude
The Loopy Leftby Andrew McIntyre
ing an improved environment Realsolutions require the issue be placedwithin a normal commercial frame-work which involves1 Clarifying the property rights2 Allowing water rights to be
fully detachable from propertyand able to be used howeverthe holder wishes subject toany damage this might imposeon others
3 Ensuring full rights to buy andsell the water
4 Defining rights so as not to re-duce the quality of other usersThis means ensuring that farm-ing practices that do not bringgreater salination than somestandard
5 Allowing rights holders tobank their water and ensureeven greater certaintyAllocating specific individual
ownership rights to water and al-lowing its trade is a well-foundedmeans of maximizing the usevalue It would also be likely tohave the beneficial side-effects ofreducing salinity and farm-basedpollutants caused by intensiveuse We should grasp such oppor-tunities But if the impending sa-linity problem is as great as someclaim other solutions might wellinclude buying out some allocatedirrigatorsrsquo rights However alter-natives may be to remove saltfrom the water by engineering so-lutions or simply to live withhigher salt
NOTE1 Human drinking water should
be less than 800 ECs (electri-cal conductivity one ECequals about 06 mglitre)while higher levels are accept-able for much farming activity
Dr Alan Moran is Director Deregulation Unitat the Institute of Public Affairs
32 MARCH 2003
E V I E WR
Reading FileDone
eral political systems worldwidehave consistently accretedpower to the centre often in theface of clear constitutional im-peratives to the contrary) Ifeared instead that a UN thathad been patently successful insomethingmdashanythingmdashmightbe granted greater powers to thepoint where it would kill truediversity and individualism (ortry to anyway) through inevi-table bureaucratic practices
Is such a fear unfounded Ap-parently not if many peopleshare the moral touchstone ofthe Opposition Leader SimonCrean He believes according tohis own words in Parliamentthat what the UN SecurityCouncil declares is moral whatit refuses is immoral
The latest manoeuvrings overIraq have therefore been heart-
ening It seems that the desiresof the powers small and largeto promote their own interestswill continue to hobble the UN
The problem with a unitedworld is that as the threateningimpasse over Iraq suggestedthere are very divergent viewsabout how that world ought tobe run on an international leveljust as there are at national and
sub-national levels The virtueof multi-layered levels of gov-ernments is that competing ju-risdictions give the individual adegree of choice
The greatest sin of totalitar-ian governments past and pres-ent is to deny their citizens theright to leave The greatest dan-ger that the United Nationsposes as far off as it now (hap-pily) seems is that leaving its ju-risdiction is for all practical pur-poses impossible
THE IMPASSE JUST PASSEDI listened to Prime MinisterHoward speaking to the motionbefore Parliament in relation tothe war It was a good speechbut neither he nor PresidentBush seems able to structure andlay out an argument with thestyle and content of BritishPrime Minister Blair His equi-valent speech before the BritishCommons provides a masterfulsummary of the reasons for thiswar and includes an immenselyreadable time-line of the utterineffectiveness of the UN pro-cesses in dealing with Iraq Henicely deals with allegations ofthe lsquorushrsquo to war lsquoOur fault hasnot been impatience The truth
UNITED OR DIVIDEDI write just hours after US Presi-dent George W Bush has deliv-ered his ultimatum to Iraqi Presi-dent Saddam Hussein leave Iraqwithin 48 hours or be removedBy the time this appears beforeyour eyes you will knowwhether Hussein has decided hischances of survival will be sig-nificantly greater by choosingexile or by remaining in IraqThe recent creation of the In-ternational Criminal Court ofcourse makes war more likelysince Hussein can have no guar-antee of a peaceful lsquoretirementrsquo
In the event that Hussein re-mains in Iraq you will also knowwhether Bush has kept his wordand most likely the outcome ofthis military venture
This matter is immensely im-portant for the people of Iraqand for the military personnelinvolved (including our ownAustralian soldiers sailors andaviators) But then so was theprevious Gulf War the US in-vasion of Grenada the Austra-lian intervention in East Timorand so on But a difference be-tween the current conflict andthose others could be the impactit has upon international insti-tutions Actually just one inter-national institution the UnitedNations
Prior to the first Gulf War Ifeared the coalitionrsquos success forthe reason that some of it mighthave rubbed off onto the UnitedNations I hasten to deny that Ifear the UN as some vast con-spiracy for world domination Ifeared instead that it couldstumble into a piecemeal cen-tralization of power (just as Fed-
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
E V I E WRs
33MARCH 2003
E V I E WR
Reading FileDone
ATTACKING THE GLOBALGOVERNORSThe Cato Institute is a whole-some body as demonstrated byits opposition to such interna-tional organizations as the Inter-national Criminal Court and forthat matter the United Nationsitself Ted Galen Carpenter forexample argues in lsquoPutting theUnited Nations on Noticersquo thatthe UN can and has done somemodest good occasionally It ishe says lsquoa good idea to have aplace where governments cangather to air grievancesrsquo But headds if it lsquoattempts to acquire ataxing authority [or] raise astanding armyrsquo then the USshould withdraw (as indeedshould Australia) Because thatwould turn it into an lsquoembryonicsuperstate that would menacelibertyrsquo
Go to
wwwcatoorgforeignpolicyunhtml
THE INTERNATIONALORGANIZATIONS THEM-SELVESThe United Nations has beenaccused of being often ineffec-tive and always slow Well ev-ery time Irsquove hit the UNrsquos Web-site even with my nifty broad-band Internet connection slow-ness rules Perhaps the site isbeing continually accessed bythe teeming masses Anyway goto
wwwunorg
With 15 members alreadyand 13 more on the way thereremain hopes that the EuropeanUnion will be a force for a stable
twenty-first century Equallywith 15 members already exhib-iting rather divergent views overthe issue of Iraq and most of theforthcoming members sidingwith the United States perhapsthis is overly hopeful Go to
europaeuintindex_enhtm
Then there is the WorldTrade Organization the organi-zation behind which protection-ist nations can hide from unilat-eral trade liberalization by pre-tending to support multilateraltrade liberalization Go to
wwwwtoorg
And we mustnrsquot forget the In-ternational Criminal Court fearof which was no doubt a featureof Saddam Husseinrsquos rejection ofexile as an option and the furyof which is promised by a num-ber of prominent lawyers to bevisited upon our very own PrimeMinister Go to
wwwicc-cpiint
FEEDBACKI would welcome advice fromreaders on any other sites of inter-est to IPA Review readers E-mailme on scdawsonbigpondnetau
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
is our patience should have beenexhausted weeks and monthsand years agorsquo
Go to
wwwnumber10govukoutputPage3294asp
THE STRUGGLE BETWEENTHE CONTINENTSIf you are patient you can readthat wonderful British rag TheSpectator for free Last weekrsquoscopy is available on-line One ofits regular columnists is MarkSteyn an Americo-phile Cana-dian who has a robust turn ofphrase and an abiding disdain formuch modern music (whichseems to place him very comfort-ably into The Spectatorrsquos culturalmatrix)
His piece on the future de-cline of Europe vis-agrave-vis Ame-rica makes for fascinating read-ing Go to
wwwspectatorcouk
then click on the lsquoBack Issuesrsquobutton and choose the edition of15 March 2003
E V I E WR
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
side doesnrsquot get its way habitual failure to honouragreements and routine harassment of people exercisingtheir legal rights are not acceptable in modern Australiaand cannot be excused even in a good cause
Breaching ldquobourgeois lawrdquo may not matter tomilitant activists but few others take such a self-indulgent view Itrsquos said that ldquooppositions can afford tobe irresponsiblerdquo but no government or alternativegovernment can accept the principle of optionalobedience to the law of the land No less than the HowardGovernment the federal Labor Opposition and the stateLabor Governments understand the dangers of playingpolitics with the rule of lawmdasheven theauthority of laws they might preferto change such as the federal WorkplaceRelations Act
The rule of law is not asmorgasbord from which a fewfavoured items can be chosen and therest ignored Freedom under the lawrequires respect for the law generallynot just the laws individualspersonally support Obedience to thelaw is not a question of choice It is arequirement of civilisation because thelaw is our guarantee of equaltreatment after a fair hearing ldquoBe youever so high the law is above yourdquoThis reproach hurled at the Stuartkings has rightly echoed through thecenturies as a warning against theconceits of office and the arrogance ofpower regardless of the cause in whichitrsquos exercised
After last weekrsquos meeting of theWorkplace Relations MinisterialCouncil of the Council of Australian Governments stateand territory ministers were keen to declare in acommuniqueacute ldquothere was unanimous agreement thatunlawful behaviour in the building and constructionindustry is not acceptablerdquo This was an importantaffirmation of the rule of law in circumstances wheresome Labor ministers might have been tempted to putpolitics ahead of principle
Unfortunately the state and territory ministerssupported more powers for the Australian IndustrialRelations Commission to settle construction industrydisputes In fact the Commission already has power tosettle disputes Whatrsquos missing is effective power toenforce agreements The issue is not settling disputesThe issue is enforcing the law
The construction industry typically conducts itselflike this A certified agreement is in place including anagreed dispute resolution procedure Unions identify agrievance often a spurious safety issue Agreed disputeprocedures are not followed and a strike ensues eventhough strikes outside ldquobargaining periodsrdquo areldquounprotectedrdquo and theoretically subject to damagesorders At that point employers often ask theCommission to end industrial action but instead ofordering an immediate return to work because anagreement has been breached the Commission willtypically seek to conciliate on the basis of the ldquomeritsrdquo
of the issue After a couple of dayswith costs escalating and liquidateddamages looming the employerinvariably agrees to rectify the matteralleged and to pay increasedallowances (including pay for days onstrike) At this point the Commissionorders a return to work on the basisof the agreed settlementmdashwhich lastsonly until the union decides on itsnext move
The union has ignored the law andbroken its original agreement buttypically suffers no adverseconsequences whatsoever Theemployer has been manoeuvred intoconceding most of a demand thatshould never have been made Afaccedilade of legality conceals a travestyof unionism and a travesty of justiceNearly all construction industrystrikes are unprotected and potentiallyunlawful under section 170MN of theWorkplace Relations Act Even so
employers nearly always opt to pass the costs ontoconsumers while existing arrangements for gatheringinformation launching prosecutions and imposing finesdonrsquot work well anywhere but hardly work at all in anindustry where giving evidence against the unions isthought to mean commercial suicide
The construction industry is a classic case not ofmarket failure but of regulatory failure The fact thatthe construction industry does not face potential importcompetition limits its exposure to market discipline Stillthe main reason why unions can get what they want frombusiness and business can get what it needs from haplessconsumers is the absence of independent policing andenforcement of the industrial equivalent of fair tradinglaws To an extraordinary degree in this industry the
SI-2 MARCH 2003
IPA REVIEW SPECIAL INSERT
The rule of law is nota smorgasbord from
which a few favoureditems can be chosenand the rest ignoredFreedom under thelaw requires respectfor the law generally
not just thelaws individuals
personally support
request documents but they canrsquot compel witnesses toanswer or demand that material be produced Althoughit is a criminal offence under the Workplace Relations Actto hinder workplace inspectors the Cole report notedthat no prosecutions have yet been launched despiteevidence that Office of the Employment Advocateinspectors have been abused had objects thrown at themand their property damaged It has been commonpractice for the arrival of OEA inspectors to lead to workstoppages and even site invasions in a bid to thwart anddemoralise an independent investigator not susceptibleto the unionrsquos usual weapon of commercial retaliation
One of the problems with theworkplace relations system is theassumption that parties will enforcethe law against each other This worksup to a point in industries whereworkplace parties are more-or-lessevenly matched and the issues are theworkplace equivalent of an argumentbetween neighbours over the heightof a fence It completely breaks downwhen one side has an effectivemonopoly over the supply of labourand disputes resemble a more-or-lessnormal family telling the house fullof footballers next door that the partyrsquosover Expecting contractors to enforcethe law against the CFMEU is likeexpecting people in the street to makecitizenrsquos arrests hence Colersquos principalrecommendations are an AustralianBuilding and ConstructionCommission to investigate prosecuteand enforce the provisions of a beefed-up industry specific workplace
relations actYesterday Cabinet decided to support Colersquos key
recommendations First the Government will seek aseparate act governing workplace relations in theconstruction industry providing for secret ballots beforestrikes compulsory cooling off periods after extendedstrikes and damages awards in the event of unprotectedindustrial action Second the Government will establisha new law enforcement agency for the industry withpowers to compel witnesses to testify bring prosecutionsand enforce judgments and with sufficient on-the-ground presence to police CBD building sites Thirdthe Government will establish a Safety Commissionerto monitor federally-funded construction sites to try toensure that these become industry models Fourth the
s
commissions lack sufficient power the courts lacksufficient speed the employment advocate lacks sufficientauthority and the police lack sufficient interest
Not before time the Cole Commission has acted as agiant searchlight probing the dark underside of thispotentially great Australian industry It confirmed whatpolicy makers had long suspected and what influentialinsiders knew but had always tried to deny or explainaway that the industry operates under the rule of thejungle and that there will be no improvement until thepeople who work in it understand that the law has to betaken seriously Legislative institutional and structuralchange will start to mean somethingwhen law breakers in this industry arecharged convicted and punished likelaw breakers everywhere else A fewsalutary bars of that old song need towaft over construction sites ldquoI foughtthe law and the law wonrdquo
Late last year in response to theRoyal Commissionrsquos first report thefederal Government set up theBuilding and Construction IndustryInterim Task Force The Governmentrsquosbrief to the Task Force is to ensure zerotolerance of industrial law-breakingThe Task Force is not primarily toenforce the tax laws or the safety rulesbecause other bodies exist for this(although the Task Force will certainlyshare information with them) TheTask Force is to investigate and enforceWorkplace Relations Act prohibitions oncoercion unprotected strikes strikepay and breach of industrialagreements So far the Task Force hasvisited nearly 300 sites launched more than 50investigations brought three prosecutions and referrednine other matters to state police the Australian FederalPolice or the Australian Competition and ConsumerCommission for further action
These are the first public prosecutions arising out ofindustrial action in the construction industry at leastsince the 1980s and are the result of a public policycommitment to law enforcement not seen since thehumiliating Clarrie OrsquoShea case in 1969 and the end ofldquopenal sanctionsrdquo Yesterday Cabinet decided to extendthe interim Task Forcersquos operations until more permanentarrangements to secure the rule of law can be established
Task Force agents have the powers of inspectors underthe Workplace Relations Act They can enter premises and
SI-3MARCH 2003
IPA REVIEW SPECIAL INSERT
The main reason whyunions can get what
they want frombusiness and businesscan get what it needs
from haplessconsumers is theabsence of inde-
pendent policing andenforcement of the
industrial equivalent offair trading laws
API
Government will insist on the application of theNational Construction Code and implementationguidelines to all significant new projects which are fullyor partly federally funded
Directly or indirectly the federal Government fundsabout $5 billion worth of construction projects everyyear and is determined to use its role as client to drivechange in the industry In essence the NationalConstruction Code stipulates that construction projectsmust take place in conformity with the WorkplaceRelations Act Under the Code and implementationguidelines the federal Governmentwill not engage tenderers whoseworkplace agreements and practicesensure a closed shop on site The TaskForce (and any replacement body) willhave full access to federally fundedsites to ensure that the law is beingobserved and workplace agreementscomplied with
For the federal Government theissue is upholding the law and tryingto tackle the ldquounion rulesrdquo culturewhich is at the heart of lawlessness inthe industry For the states the issueis whether they are prepared to refusefederal money in order to protect theclosed shop However much theymight prefer different federal laws thestates ought to accept thatconstruction projects have to complywith the law as it stands includingthe law mandating compliance withcertified agreements
State Labor governments whichhave made a point of their middle-ground credentials risk losing some$4 billion a year in federal building and constructiongrants if they side with the union movementrsquos mostmilitant minority There are likely to be limits to Laborrsquosdefence of a union whose stock-in-trade (at least in somestates) is the site invasion and the demand for paymentand which quietly reinstates organisers sacked for assaultor perjury Opposition senators will find it hard to brandas ldquoideologicalrdquo the recommendations of a royalcommission which spent 171 days in public hearingsand which pursued 11 shop stewards and 97 unionofficials to obtain their side of the argument
As Justice Cole pointed out in his report previousattempts to reform the industry have proven ineffectivedespite two earlier royal commissions and numerous
SI-4 MARCH 2003
IPA REVIEW SPECIAL INSERT
enquiries Although this Royal Commissionrsquosinvestigations seem to have temporarily checkedlawlessness in the industry a campaign is now emergingto extend the anarchic culture of CBD construction intoregional centres and the domestic housing industryThings will certainly be different this time if parliamentapproves a permanent well resourced watchdog withnew powers new personnel and new attitudes Unlikeprevious arrangements a new statutory watchdog withthe powers of a law enforcement agency should beeffective and permanent
Hundreds of people took big riskswith their commercial future and eventheir personal security to testify to theRoyal Commission It should neveragain be so hard for people in thisindustry to exercise their ordinaryrights and responsibilities asAustralian citizens They expected theGovernment to take the Commissionrsquosreport seriously and the Governmentfor its part is determined not to letthem down The Governmentunderstands that joining fights yoursquorenot prepared to win only makes badsituations worse Establishing the ruleof law in the construction industry isa challenge Australia canrsquot afford tofailSome of the worldrsquos best workersshould no longer have to put up withsome of the worldrsquos worst industrialpractices They have a right to anhonest industry where they can earna fair dayrsquos pay for a fair dayrsquos workand expect to come home uninjuredThe enduring image of this industry
should not be noisy marchers replaying the ideologicalstruggles of the 1970s and raising clenched fists againstauthorities they donrsquot like At its best the Australianindustry is capable of work which is stunningly beautifulyet intensely practical and it now needs to performconsistently on time on budget and in accordance withlaw
Hundreds of peopletook big risks withtheir commercial
future and even theirpersonal security totestify to the Royal
Commission It shouldnever again be so
hard for people in thisindustry to exercisetheir ordinary rights
and responsibilities asAustralian citizens
NOTE
The foregoing speech was first delivered as an Addressto the National Press Club on 2 April 2003
21MARCH 2003
E V I E WR
IN psychology behaviouris defined as irrational ifan action continues to berepeated despite its re-
peated failure to achieve the desiredoutcome On this definition our aidpolicy towards Papua New Guineahas been irrational
Despite over twelve billion dol-lars in Australian aid to PNG sincethat countryrsquos independence in 1975key development indicators such asliteracy rates infant mortality lifeexpectancy and real income percapita are either stagnating or dete-riorating Worse wersquove known forover a decade1
Today acknowledgement of thefailure of our aid policy in PNG hasgone well beyond the writings of in-dividual international policy analystssuch as myself to institution-spon-sored reports such as Beyond Baliwhich was released by the AustralianStrategic Policy Institute (the Aus-tralian Governmentrsquos own strategicpolicy adviser) and Papua NewGuinea on the Brink which was writ-ten by Susan Windybank and MikeManning for the Centre for Indepen-dent Studies Both reports confirmthe gross failure of Australian aidpolicy in PNG
Yet still our aid policy irrational-ity towards Papua New Guinea con-tinues While the ASPI and CIS re-ports acknowledge the gross failureof our aid policy in PNG they alsoargue that we need to continue ouraid to that country Indeed the ASPIreport argues that we should increaseour aid to Papua New Guinea Thepolicy saviour The ASPI report ar-gues that we should exert greater con-trol over our aid Not just over theform of our aid but direct interven-tion in policy and implementation inPNGmdashin essence for a return to pre-
Aid Detox for PNGPETER URBAN
independence days in PNG whereas UN-sanctioned administrator weran government in that country
Despite the mind-frame of secu-rity-focused strategists such as thoseat ASPI and the CIS (which en-dorses the aid approach advocated byASPI) the reality is that we canrsquotPNG is now independent and to ig-nore this reality would simply com-pound the problems of our past aidpolicy irrationality with irrationalityabout our political relationship withour nearest neighbour
A more interventionist aid policytowards PNG on our part as advo-cated in Beyond Bali and by HughWhite (the executive director ofASPSI) in the media might havepopulist appeal but it would haveserious adverse implications for ourrelationship with other Pacific islandcountries and even IndonesiaWorse it would give succour to theviews of our east Asian critics (suchas Malaysian PM Dr Mahathir) whoclaim that Australia continues toharbour colonial aspirations
We have to accept that to be suc-cessful aid policy must not just helpreduce mass poverty it also has to doso as a guest in the aid recipientcountry To do otherwise is not aidbut imperialismmdashwhether inten-tional or not
A more interventionist approachto aid policy in PNG would also givethe current corrupt political elite inPort Moresby a rallying point againstus and an excuse to delay changingtheir own policies Neither Austra-lia nor PNG can afford any furtherdelays to policy reform For us to givePNG politicians yet another excuseto delay reform would be not onlyirrational it would be inexcusableWhile our aid continues so will thecorrupt elite that is at the heart ofPNGrsquos problems Until we send themessage to the PNG political elitethat we are prepared to stop ouraidmdashto put them on aid detoxmdashwewill continue to waste our aid in thecorruption that is PNG politics Itmay be hard to accept but the sadreality we face in PNG is that no aidmay prove to be good aid at least inthe short to medium-term2
NOTES
1 Peter Urban lsquoOne Clear ObjectiveNo Clear Approachrsquo IPA Review1997 Vol 50 No 1
2 With Iraq also likely to require verysignificant Australian aid fundingover the next few years the Gov-ernment will need to review our aidprogram as part of the 2003-04 fed-eral Budget A decision to suspendaid to PNG could be taken as partof that review
Peter Urban is former chief economist with theDepartment of Foreign Affairs and Trade
We have to accept
that to be successful
aid policy must not
just help reduce
mass poverty it also
has to do so as a
guest in the aid
recipient country
API
22 MARCH 2003
E V I E WR
IN his speech to the Na-tional Press Club on theprospect of war with Iraqand the case for disarma-
ment Prime Minister Howard statedthat Australia will play a significant hu-manitarian role in Iraq
If so the Howard Government needsto evaluate carefully the foreign-aid non-government organizations (FANGOs)which it funds to carry-out this humani-tarian programme Many FANGOshave made it clear that they do not sharethe Australian Governmentrsquos objectivesand values in Iraq Moreover some donot agree with the Governmentrsquos over-all aid policies in general
THE COALITION OF THEUNWILLINGIn the lead-up to latest Gulf War some30 Australian aid agencies put theirnames to an Open Letter to the PrimeMinister organized by the AustralianCouncil of Foreign and Overseas Aid(ACFOA) The aim of the letter was tolsquospeak out against war in Iraqrsquo and it ex-pressed grave concerns about the hu-manitarian consequences of the war andthe effects of the existing sanctions1 TheFANGOs that signed the letter wereOxfam Community Aid Abroad WorldVision Australia TEAR AustraliaUnion Aid Australia - APHEDACaritas Australia National Council ofChurches Australian Council for For-eign and Overseas Aid Save the Chil-dren Australia CARE Australia OzGreen United Nations Association ofAustralia Family Planning AustraliaMercy Works Marist Mission CentreAustralia Every Home for Christ Bap-tist World Aid for Christ CCF Austra-lia Quaker Service Australia Austra-lian Lutheran World Service AustralianRelief and Mercy Services AnglicanBoard of Mission AUSTCARE Com-munity Development and Health
Irreconcilable DifferencesDON DrsquoCRUZ
Hussein have been virtually ignored isa searing indictment of the warped ide-ology feeble analysis and moral blind-ness of the sector For them now to re-discover the plight of the Iraqi peopleand to invoke their name in the mediais beyond contempt
THE OXFAM COMMUNITYAID ABROAD POSITIONOf the 30 FANGO signatories to theopen letter Oxfam Community AidAbroad (OCAA) has been perhaps themost outspoken It opposed military ac-tionmdasheven with UN Security Councilapproval4 In spite of all the evidence tothe contrary OCAA was comfortablewith Saddam Husseinrsquos assurances thathe did not have weapons of mass destruc-tion5 Adopting the common policyagreed to by the other Oxfam affiliatesOCAA stated that it will not take anymoney from the lsquobelligerentsrsquomdasha quaintterm used to the describe democraticnations planning to disarm a dictatorguilty of countless human rights abuses
OCAArsquos outrage against the so-called lsquobelligerentsrsquo appears to be geo-graphically confined to Iraq OCAAappears happy to take governmentmoney from the belligerents elsewherearound the world
According to OCAArsquos ExecutiveDirector Andrew Hewitt refusing totake money from the belligerents wasdone to lsquoprotect its impartialityrsquo6 Thisis a very curious position from Australiarsquosarguably most political FANGOOCAA has a long track-record of beinganything but impartial or reluctant totake sides in miliary action It wasnrsquotimpartial in East Timor where it sidedwith Fretlin in its quest for indepen-dence According to its own testimonyto a Senate committee OCAA wasgiven the choice by the IndonesianGovernment between lsquoplaying politicsrsquoor delivering aid projects in Indonesia7
Group Amnesty International Austra-lia AngliCORD Australian Aid forCambodia Fund Burnet InstituteRedR Friends of the Earth PLAN Aus-tralia and Australian Volunteers Inter-national2
This open letter highlighted a num-ber of problems with the FANGOs sec-tor First it highlighted the weak logicthat passes for advocacy in the sectorThe letter argued against military actionwas critical of sanctions and suggestedthat nations should settle issues only bydiplomatic means It is a viewpointwhich totally ignores the fact that theGovernment had to deal with SaddamHussein
The shallowness of their logic wasbest exposed by the Prime Minister inhis response to the open letter in whichhe stated that the humanitarian situa-tion in Iraq is best addressed by SaddamHusseinrsquos removal and perhaps morepointedly that Saddamrsquos manipulationof foreign aid had allowed him to main-tain and pursue his weapons of mass de-struction capability and human rightsabuses3
Second it also highlighted the factthat the so-called lsquohuman rights-basedapproachrsquo to development (embraced byseveral of the signatories) is not so muchabout realizing human rights (as its pro-ponents argue) but is more about pro-viding them with an excuse to lsquoplay poli-ticsrsquo According to the theory the hu-man rights-based approach to develop-ment allows FANGOs to tackle the rootcauses of poverty and injustice
Yet the root cause of the Iraqipeoplersquos suffering can be summed up intwo simple wordsmdashSaddam HusseinThe fact that the FANGOs who sub-scribe to this particular approach havebeen obsessed with imaginary humanrights abuses committed by Shell NikeRio Tinto BHP-Billiton and AuroraGold while the activities of Saddam
23MARCH 2003
E V I E WR
It chose the former thus making it per-sona non grata in Indonesia for almost adecade8 It wasnrsquot impartial inMozambique when it sided with Frelimoin the countryrsquos civil war9 It wasnrsquot im-partial in Ethiopia when it developedlinks to the Eritrean Peoplersquos LiberationFront during its war against the thengovernment10 It was not impartial oranti-war when it sided with the TigrayPeoplersquos Liberation Front in the neigh-bouring province to Eritrea when thatgroup was waging a guerrilla war againstthe government11 And recently therehave been claims that in the Middle Eastit was little more than an lsquoeager propa-gandistrsquo for the Palestinians12
In East Timor Ethiopia and Mozam-bique OCAA was linked with organi-zations which supported direct militaryaction that led to the deaths of thou-sands of civilians In none of these loca-tions were the enemies of their friendany worse than Saddam Hussein In-deed in many cases OCAArsquos friendswere arguably no better than their en-emies in terms of human rights
OCAArsquos decision not to accept Aus-tralian Government funding is the cor-rect one in the sense that it clearly doesnot share the Governmentrsquos values onthe question of Iraq and thereforeshouldnrsquot receive any governmentmoney
Hewitt went on to state in a pressrelease that lsquoWe will not take funds thatmight allow a government to use hu-manitarian efforts as an instrument offoreign policyhelliprsquo13
This is finemdashexcept the AustralianGovernmentrsquos foreign aid is an instru-ment of foreign policy And it always hasbeen This is spelt out quite clearly inthe Australian Governmentrsquos latest for-eign and trade policy White Paper Ad-vancing the National Interest14
FANGOs that cannot accept thisrather basic proposition should not begetting taxpayersrsquo money They areclearly unsuitable for the task at hand
The consequences of Australian tax-payersrsquo money falling into the wronghands were brought home to Prime Min-ister Howard when he met IndonesianPresident Megawati Sukarnoputri to dis-cuss the war against terrorism and
Australiarsquos involvement against Iraq Atthe top of the Indonesian agenda wasthe issue of Australian funding toFANGOs being used to support sepa-ratist movements in Indonesia15
Post-war Iraq will be a better placewithout Saddam Hussein and his thugsThis does not mean that it will be a safeplace or necessarily a stable place Afterall one of the reasons for Western tol-eration of Saddam Hussein for manyyears was his ability to hold the various
ethnic minorities in Iraq together albeitrather brutally thereby maintaining abalance of power in the Middle East Hisdeparture would see strains on Iraq fromthe various ethnic minorities that makeup Iraq There is a strong chance thatIraq will fragment
The last thing the Australian Gov-ernment or any of the so-called belli-gerents needs in a post-war Iraq is west-ern NGOs running around and becom-ing self-styled advocates for national self-determination for Iraqrsquos ethnic minori-ties and injecting themselves into Iraqrsquosinternal politics This is a real risk Thebehaviour of Australian foreign aidNGOs in Indonesia should make Aus-tralian decision-makers extremely waryof funding any NGOs with Australiantaxpayersrsquo money so that they can oper-ate in Iraq
As things stand now FANGOs facevery few restrictions on their actionsfrom government If they undertake ac-tivity that is inconsistent with being anagent of government they may losefunding for specific projects or in moredramatic circumstances lose funding ina country Nonetheless they are gener-
ally able to access Australian Govern-ment funding for other projects andcountries In other words the penaltiesfor becoming caught up in political ac-tivities are very light for NGOs and posethem no serious problems
Foreign aid NGOs that lsquoplay politicsrsquoare unsuitable contractors for the deliv-ery of aid That these overtly politicalorganizations have been allowed to gaingovernment accreditation and receivegovernment funding points to some se-rious problems at AusAID Australiarsquosofficial aid agency The time has comefor this to change
NOTES1 httpwwwacfoaasnaumedia_releases
2003_releases26_3_03PDF2 httpwwwacfoaasnauemergencies
openletterPDF3 httpwwwacfoaasnauemergencies
iraq_responsehtm4 Oxfam Horizons Vol 3 No 1 (Febru-
ary 2003) page 25 Oxfam Community Aid Abroad lsquoIraq
Overviewrsquo February 20036 Hewitt quoted in Liz Gooch lsquoOxfam
wersquoll say no cashrsquo The Age 16 March2003
7 Community Aid Abroad Submission tothe Senate Foreign Affairs Defence andTrade References Committee Inquiryinto East Timor Downloaded at httpwwwcaaorg aucampaignssubmissionstimorhtml
8 Ibid9 Susan Blackburn Practical Visionaries A
Study of Community Aid Abroad (Mel-bourne Melbourne University Press1993) page 313
10 Ibid pages 325-333 passim11 Ibid12 Gerald Steinberg lsquoPropaganda vs Hu-
manitarianismrsquo Australian Financial Re-view 7 June 2002 Downloaded at httpfacultybiuacil~steingconflictopedpropvshumanitarianismhtm
13 ht tp wwwcaa o rg au p r 2003 iraqfundshtml
14 httpwwwdfatgovauani15 Dennis Shanahan lsquoJakarta fears aid funds
for rebellionrsquo The Australian 17 Febru-ary 2003 page 2
Don DrsquoCruz is Research Fellow at the IPAand Director of IPArsquos NGOWatch
OCAA has a longtrack-record of
being anything butimpartial or
reluctant to takesides in miliary
action
API
24 MARCH 2003
E V I E WR
GEORGE Bush Tony Blairand John Howard haveprovided many reasons forsupporting military action
against Iraq One of those reasons hasbecome known as the lsquohumanitarianrsquojustification Put simply the lsquohu-manitarianrsquo justification for the US-led invasion of Iraq is that such ac-tion is necessary to free the Iraqipeople from their totalitariandictator
Such an argument is attractive tothose who believe that there aresome fundamental human rights thatall individuals possess regardless ofwhere and how they live Whatserves as the source of those rightshas been the subject of debate forcenturies One of the pre-eminentstatements on the subject was madeby John Locke who in The SecondTreatise of Government wrote thatmankind was lsquoequal and indepen-dentrsquo and that lsquono-one ought to harmanother in his life health liberty orpossessionsrsquo
Saddam Husseinrsquos mass murdertorture and terror are reasonablyclear breaches of human rightsTherefore some would ask why thereshould be opposition to the UnitedStates and its allies taking whatevermeasures might be necessary totopple the Iraqi regime Surely thesame standard of behaviour that ap-plies to individuals applies also tonation states If an individual walk-ing in the street witnessed a rapeoccurring wouldnrsquot that individualbe entitled to do everything in hispower to stop the crime and assistthe victim
The point is of course that in-ternational law and convention do
After IraqIs Sovereignty Dead
JOHN ROSKAM
not allow nation states to act in thesame way as individuals Countriescannot simply lsquotake the law into theirown handsrsquo To restrain lsquovigilantestatesrsquo (who might be acting fromeither lsquogoodrsquo or lsquobadrsquo motives) a num-ber of legal and political theorieshave been developed One of theseis the doctrine of lsquosovereigntyrsquo whichprovides that states should not inter-vene in the domestic affairs of otherstates
In relation to Iraq the lsquosover-eigntyrsquo question is perhaps the stron-gest argument against the US-ledCoalition Most of the other criti-cisms of lsquohumanitarianrsquo interventionin Iraq are either grounded in simpleanti-Americanism or are fallaciousFor example there is the claim thatbecause some of the countries in theCoalition have previously ignoredHusseinrsquos cruelties therefore it is il-legitimate to take action now Sucha view has been expressed by aMelbourne international relationsacademic
While there is no disputing thebrutal nature of Saddam Hus-seinrsquos regime the case for inter-vention made by those in Can-berra London and Washingtonis weakened by the fact that atthe peak of Saddamrsquos crimes inthe late 1980s they were eitherdirectly supporting him withweapons technology and intelli-gence or were entirely indifferentto his behaviour Even if theyhave belatedly recognised theerror of their ways how seriouslycan we take their concerns aboutweapons of mass destruction nowgiven they were his suppliersthen1
On the basis of this argument itcould be said that Britainrsquos (andAustraliarsquos) case for intervening toassist Poland upon the German in-vasion in 1939 was lsquoweakenedrsquo be-cause Britain had previously acqui-esced to Germanyrsquos rearmament theremilitarization of the Rhinelandand the annexation of both Austriaand parts of Czechoslovakia Fewpeople who chanted lsquoFreedom forEast Timorrsquo said that the HowardGovernment should not act becausea quarter of a century before theWhitlam Government had been lsquoin-differentrsquo to Indonesiarsquos occupationof the island
There is also the claim that al-though Hussein is bad he is not theworst dictator in the world and thatit is hypocritical for the Americansto attack only Iraq This is an as-tounding proposition It attempts toapply to the United States a standardof behaviour that is impossible to sat-isfy Should the police not attemptto solve any crimes because theycanrsquot solve all crimes If a crime iscommitted by two people and thepolice arrest one perpetrator unlessthe other is also caught must the firstperpetrator be released When indi-viduals donate money for famine re-lief in Africa very few believe thattheir donation is pointless becauseit might prevent the starvation ofonly one person rather than thou-sands Christian ethics sets down norequirement that we should help no-one unless we can help everyone
The issue about state sovereigntyhowever is one that deserves to betaken seriously Regardless of onersquosopinions on the extent and limits ofstate sovereignty it is true that our
25MARCH 2003
E V I E WR
international relations system is builtupon the principle and to modify oroverturn it is a matter of some con-sequence
Even those who are generally sup-portive of the United States andtheir allies see the problem As it wasput by a leading commentator whenanalysing the Australian PrimeMinisterrsquos lsquohumanitarianrsquo justifica-tion for war
Finally Howardrsquos argumentagainst Hussein on human rightsis correct So is his moral case forwanting to liberate the Iraqipeople from their torment Theproblem however is that youcanrsquot trip around the worldwanting to overthrow regimesbecause of human rights2
Some would askmdashlsquowhy notrsquo Be-cause to do so would overthrow theUnited Nations Charter comes therejoinder And in turn the responseto that might bemdashlsquogoodrsquo
If itrsquos a choice between the main-tenance of the UN Charter and free-dom from tyranny freedom wins ev-ery time (although an internationallawyer sitting in Sydney might havea different view on this question fromthat of a political prisoner manacledin a Baghdad jail cell)
When the interests of lsquointerna-tional lawrsquo are more important thanthe life and liberty of individuals itcould be concluded that lsquothe Em-peror has no clothesrsquo Would inter-national law have sanctioned inter-vention to stop the Holocaust hadHitler not waged war and proceededwith his methods entirely within theconfines of the German territorialstate
Many who argue that lsquohumanitar-ianrsquo intervention in Iraq is not justi-fied because it infringes on thatcountryrsquos lsquosovereigntyrsquo would happilyhave other countries cede their po-litical sovereignty to supra-nationalbodies Certain features of the Inter-national Criminal Court overridethe principles of sovereignty but thatdid not stop a phalanx of interna-tional law experts urging sovereigngovernments to join it so as to en-
able the prosecution of war criminalsBut when it comes to actually stop-ping war crimes not simply prosecut-ing them that phalanx is largely si-lent
Without the doctrine of state sov-ereignty and without an arbiter fordetermining when interference withthe principle is justified (the roleclaimed by the United Nations andits Security Council) it is said thatstates would be free to impose theirown will and intervene in other
countries whose standards did notmeet their own (In The Second Trea-tise of Government Locke argued thata characteristic of a lsquostate of warrsquo be-tween individuals was the absence ofa superior authority to adjudicatedisputes and prevent individualsfrom administering justice them-selves)
Iraq might be claimed as a rea-sonably clear-cut case for interven-tion but other situations are notlikely to be as simple In Culture andEquality first published in 2001Brian Barry explored a lsquoliberalrsquo per-spective on this question
The liberal position is clearNobody anywhere in the worldshould be denied liberal pro-tections against injustice andoppression However in exactlythe same way as liberals arepragmatic about what liberalismmeans in terms of boundaries sohere the move from principle tointervention has to be mediated bypractical considerationshellip
[L]iberals are not so simple-mindedas to imagine that the answer toall violations of liberal rights is tosend in the Marines or even aUnited Nations force As in anyjust war theory there must be somedoctrine of lsquoproportionalityrsquohellip[S]carcely anybody would be infavour of the western powersinvading Saudi Arabia so at to sortout the way in which it lsquounjustlydenies political rights to women ornon-Muslimsrsquomdashaccording to theirliberal idea of justicersquo3
The question remainsmdashafterIraq what remains of lsquostate sover-eigntyrsquo Should the doctrine applyonly to lsquoliberal democraticrsquo statesSuch a solution might be attractiveto some lsquoliberalsrsquo but it doesnrsquot avoidthe problem of what exactly a lsquolib-eral democraticrsquo state is
One irony arising from the argu-ments about the war in Iraq is thatmany of those who have urged astrict application of lsquostate sover-eigntyrsquo principles in the past havegenerally supported the US-led in-tervention while those who havebeen willing to abridge or even aban-don the doctrine have had to rely onit to counter the lsquohumanitarianrsquo jus-tification for war
There are not many certaintiesabout the nature of the world afterthe war in Iraq but it can be saidwith some assurance that one defi-nite outcome is going to be a morevigorous debate about state sover-eignty
NOTES1 Scott Burchill lsquoThe humanitar-
ian arguments for this war are spu-riousrsquo The Age 21 March 2003
2 Paul Kelly lsquoThe hapless per-suaderrsquo The Australian 15ndash16March 2003
3 Brian Barry Culture and Equal-ity An egalitarian critique ofmulticulturalism Harvard Uni-versity Press page 138
John Roskam is a Research Fellow with the IPA
The lsquosovereigntyrsquo
question is perhaps
the strongest
argument against
the US-led
Coalition
API
26 MARCH 2003
E V I E WR
Which Way for theDemocrats
The 2002 mid-term elections were adramatic victory for President GeorgeW Bush and the Republicans Insteadof the historical norm of the partycontrolling the White House losingBushrsquos party gained seats in the Sen-ate House Governorsrsquo races andState legislatures The result was abitter disappointment for the Demo-crats and has led to a fierce debatebetween the Left and Centrists aboutthe future policy direction of the partytowards the 2004 elections
The Leftrsquos analysis is that the ma-jority of Americans are natural Demo-crats Electoral defeat was due to thefailure to energize that base of Demo-crats The party failed to distinguishitself sufficiently from Bush and thusgive their voters a reason to turn outWhile the majority of Democrats op-posed Bush on tax cuts and the warwith Iraq a significant minority sup-ported him and campaigned on thatsupport The result the Left claimwas that the Democrats lacked a con-sistent message in contrast to Bush
Support for this argument can befound in the higher turnout amongstRepublicans than Democrats in 2002while in 2000 the combined vote forGore and Nader was 51 per cent Aninfluential book by John Judis andRuy Texeira identified lsquoThe Emerg-ing Democrat Majorityrsquo Theyclaimed that growing demographicgroups trended Democrat includingthe young socially liberal profession-als minorities and women
What policies would motivate thisnatural Democrat base The Left callfor rescinding the Bush tax cut a classwar against the corporate world amajor increase in lsquopublic investmentrsquoin schools childcare health care and
Letter from AmericaNIGEL ASHFORD
public transport and strong opposi-tion to the war
Centrists however have a verydifferent analysis of the Democratsrsquoproblems the public did not trustthem to pursue the war against ter-rorism vigorously to keep down taxesto spend their tax dollars wisely or toreflect their cultural values
A Gallup opinion poll found that57 per cent of Americans askedthought that the Democrats were nottough enough on the war on terror-ism while 64 per cent thought theRepublicans were There was the per-ception that the Democrats were notserious on the issue and just playingpolitics Evidence for this was the de-bate over the new Department ofHomeland Security blocked becausethe Democrats wanted to protectunion rights while the President de-manded more flexibility to deploy theworkforce Many voters saw the issueas the national interest versus a spe-cial interestmdashin this case that of theunions The Democrats were seen asputting the interests of one of theirmajor constituencies before nationalsecurity
The Democratic LeadershipCouncil in lsquoThe Road Aheadrsquo by AlFrom and Bruce Reed presented theCentrist case lsquoStop pretending wecan win a majority simply by energiz-ing our basersquo The Democrats were
not trusted on the war against terror-ism were hostile to the cultural con-cerns of many working-class Demo-crats on abortion and guns and stillseen as the tax-and-spend party lsquoToomany Americans donrsquot trust us tokeep their taxes down or to spendtheir money wellrsquo
The Centrist agenda is to stronglyprosecute the war against terrorismwhether against al-Qarsquoeda Saddam orothers and to abandon knee-jerk iso-lationism arising from the experienceof the Vietnam War to defend capi-talism and support small investorsagainst irresponsible managers to cutpayroll taxes and to downplay thecultural issues that divide Democrats
Which path will the Democratstake The Left is in the ascendancyMost of the remaining Democrats inoffice come from left-wing districtsNancy Pelosi a left-liberal from SanFrancisco was easily elected the newleader of the House Democrats over-whelming her Centrist opponent andrising star African-American HaroldFord The early field of presidentialcandidates for 2004 is dominated bythe Left tendency including SenatorJohn Kerry Representative DickGephardt Governor Howard DeanRev Al Sharpton former SenatorCarol Moseley-Braun and Represen-tative Dennis Kucinich Only Sena-tor Joe Lieberman and Senator JohnEdwards represent the Centrist wing
The future of US politics may de-pend on which road the Democratsdecide to take The US is currently alsquo50ndash50rsquo nation evenly balanced be-tween the parties A left turn couldlead to Republican dominance farinto the future
Dr Nigel Ashford is at the Institute of Humane Studiesat George Mason University and is co-author of US
Politics Today (Manchester University Press)
API
27MARCH 2003
E V I E WR
Trusting TonyFrankly itrsquos all just too depressing Theeconomyrsquos heading for trouble Busi-ness confidence is low investment in2002 was 92 per cent lower than theprevious year and manufacturing in-vestment was nearly 18 per cent downThe budget deficit is spiralling becauseour once lsquoprudentrsquo Chancellor (trea-surer) Gordon Brown made over-opti-mistic growth projections and startedthrowing money at problems
Therersquos a load of health-and-safetyand anti-discrimination measuresthatmdashto put it most politelymdashare ex-amples of letting the best be the en-emy of the good Every school tripneeds a formal risk assessment withthe result that many trips are simplynot taking place New trains orderedfor London commuter routes wonrsquothave toilets because the rules say thatat least one toilet in each four-car unitmust be wheelchair-accessible whichwould have cost ten or a dozen seatson every overcrowded train
Some of this is just insane Somelocal authorities say that safety at workrules mean that home-care workersmustnrsquot lift the disabled people theyare looking after Or therersquos rail safetyUntil recently we were seriously pro-posing to spend $10 billion on a bet-ter system to stop trains going throughred signals On average this would havesaved the lives of about three passen-gers every four years which is a lousybargain compared with other safety in-vestments Worse it would also havereduced the capacity of the networkby up to 15 per cent and forced morepeople onto the roads which are muchmore dangerous than even ourclapped-out railways The result was aprojected net increase of 13 to 21 deathsper year
Meanwhile in London the Cen-tral line of the Underground has been
Letter from LondonJOHN NURICK
API
closed for weeks after a train derailedwhen one of its motors fell off Therewere no deaths or major injuries in theaccidentmdashbut itrsquos a safe bet that someof the people who havenrsquot been ableto use the Central line have been in-jured or killed on the roads
What can one say If the authori-ties took the same attitude to the riskof fatal accidents in the health serviceevery hospital in the country wouldhave been closed for years
Despite all this the Conservativesare still hopeless Their leader IanDuncan Smith has a new wheezewhen a journalist asks him anythingdifficult he chortles merrily and saysitrsquos the most uninteresting questionimaginable and hersquos not going to wasteanyonersquos time by answering it His col-leagues have their knives out for him
Meanwhile in spite of the govern-mentrsquos problems with the economy andthe public services Tony Blair is grow-ing in stature having his waymdashandantagonising large sections of his ownparty in the process On several recentissues he has faced down the formi-dable Gordon Brown in a way that notlong ago was hard to imagine
Then he shocked everyone by com-ing out against having elected mem-bers in the reformed House of Lordswhen most voters want an all-elected
chamber and most MPs want a partly-elected one In the event Parliamentcouldnrsquot agree on any of the optionsfor reform so wersquore stuck with the sta-tus quomdashwhich is fine by Mr Blair
Then therersquos the war By the timeyou read this it may be over or we maystill be waiting or our lads may befighting Mr Blairrsquos strong line againstIraq has made him very unpopular Theanti-war march on 15 February was thebiggest demonstration London hasever seen A few days later 122 Labourbackbenchers voted against the gov-ernment and many more abstained
Mr Blair didnrsquot budge War is a se-rious thing he says lsquoBut in a situationsuch as this you have to do what youbelieve to be right because thatrsquos theprice of having responsibilityrsquo1
He has often been accused of gov-erning by focus group Certainly he hasseemed reluctant to antagonise anypowerful group That has clearlychanged In a sense his stand on Iraqmerely follows his action in sendingtroops to Sierra Leone and Kosovomdashbut it has stirred up far stronger domes-tic and international opposition
The irony is that now when he re-ally needs people to trust him wedonrsquot Even in the desperately seriousbusiness of justifying an unpopular warDowning Street canrsquot play it straightremember the dossier from lsquointelli-gence sourcesrsquo that turned out to belargely cribbed from a PhD thesis onthe Internet
NOTE1 The Guardian 1 March 2003
John Nurick is a management consultant based in theSouth of England From 1985 to 1990 he was
editorial director of the Australian Institute for PublicPolicy and later edited newsletters reporting on theUK Parliament and European Union institutions
28 MARCH 2003
E V I E WR
KEVIN DONNELLY
Private EducationEquals Public Good
When it comes to choosing be-tween government and non-gov-ernment schools Australian par-ents are lsquovoting with their feetrsquo Asshown by recent ABS figures(Schools Australia 2002) over thelast decade there has been a dra-matic increase in non-governmentschool enrolments
Approximately 30 per cent ofstudents now attend non-govern-ment schools compared with 22per cent in 1980 and 28 per centin 1990 Over the last decadewhile the number of governmentschools has fallen by 64 per centnon-government schools havegrown by 61 per cent
Of course not everybody valuesparentsrsquo right to choose and theAustralian Education Union(AEU) Labor governments andlsquoleft-wingrsquo academics in particularconsistently argue against non-government schools
One of the arguments put for-ward by those opposed to givingparents greater freedom of choiceis that government schools are bet-ter at promoting social cohesionand a strong sense of what KenBoston the ex-head of the NSWEducation Department terms lsquothebonds of civic friendshiprsquo
The assumption is that becausestudents attend non-governmentschools there will be greater socialdivisiveness and a breakdown inthe civic values needed to hold so-ciety together But there is no cred-ible evidence offered to support theclaim that government schools arebetter at promoting the commongood
In fact there is much to provethe opposite
First as anyone familiar withthe lsquoculture warsrsquo and politicallycorrect curricula will know insteadof government-controlled educa-tion promoting unity and cohe-sion it has led to public angst andparental complaints
Witness the very bitter debatein Queensland a year or two agowhen the government-mandatedStudies of Society and Environ-ment (SOSE) curriculum was in-troduced into schools Such was
the lsquoleft-wingrsquo bias in the curricu-lum in particular in the areas ofmulticulturalism and the environ-ment that many parents felt be-trayed
The Queensland debate is mir-rored by what is happening in theUnited States As noted by Ste-phen Arons in his book Short Routeto Chaos instead of promotingunity government control of thecurriculum leads to the opposite
What the school wars tell us isthat somehow we have been
Education Agenda
transforming a vital instrumentfor creating social cohesioninto a source of division andhostility that there is some-thing built into the structure ofpublic schooling that under-mines one of its most importantfunctionsAronrsquos argument that govern-
ment schools no longer transmit aviable sense of a common cultureor agreed civic values is reinforcedby another noted United Stateseducationalist Diane Ravitch
In a recent article in the jour-nal Education Next Ravitch be-moans the impact of cultural rela-tivism and the post-modern on theschool curriculum (where there areno commonly agreed values) andeven goes so far as to argue thatparents should be free to choosenon-government schools becausesuch schools have a better chanceof reflecting their values
In the current education sys-tem with the public schoolscommitted to multiculturalismbilingualism and other forms ofparticularism it is difficult toargue that parents should notbe able to choose schools thatmeet their cultural needsSecond if one accepts that lsquoso-
cial capitalrsquomdashthe networks volun-tary associations and civic bondsthat hold a community togethermdashis important for the health of ademocratic society then non-gov-ernment schools clearly have theadvantage
Unlike the government schoolsystem characterized by a heavy-handed centralized bureaucracyand teacher union control non-government schools are closer tothe communities they serve Bytheir very nature non-government
There is no credible
evidence offered to
support the claim
that government
schools are better
at promoting the
common good
29MARCH 2003
E V I E WR
ALAN MORAN
The lsquoRrsquo Files
Private propertyrights the key toachieving efficiency inrural water use
WATER IN AUSTRALIAWater has always been a definingissue in Australiarsquos prosperityAnd in recent decades irrigationhas grown rapidly Even so theproportion of Australia that is ir-rigated at two per cent of theland comprises a share that isamongst the lowest among OECDcountries Only Canada and therainiest countries New Zealandand the UK have lower sharesthat of the US is 11 per cent andin Japan it reaches 60 per cent
Modern agriculture is only 200years old in Australia and thoughin the first 100 years agriculturalproductivity was increased toequal that of anywhere in theworld gains continue to bemademdashoutput has doubled overthe past 50 years a growth thatcould not have taken place with-out a similar expansion of irriga-tion Irrigation in the MurrayndashDarling agricultural provincealone contributes $5 billion toAustralian agricultural outputand non-irrigated agriculture inthe region contributes a further $5billion This makes the areawhich comprises 14 per cent ofAustraliarsquos land mass responsiblefor a third of the nationrsquos $35 bil-lion agricultural output
Applying Property Rights to WaterMost of the uses of water involvechoices or compromisesmdashdrink-ing water versus irrigation versus
industrial and so on Some how-ever involve complementaritiesparticularly certain recreationaluses such as water sports that arefacilitated by storage and consis-tent availability
In many cases water will per-form sequential functionsmdashthesame water can be used and re-used for irrigation used for indus-trial cooling and finish as drink-ing water Water with differentsometimes competing productiveuses will be optimally used as longas two conditions are in placeThe first is that its ownership isclearly specified and the ownersrsquoobligations to other users (orclaims from other beneficiaries)are well understood The secondrequires each property right to betradable to enable acquisition bythose who value it most therebymaximizing its value
The rights specification andtherefore property ownership canrarely commence with a cleansheet of paper People acquire in-dividual rights to property ini-tially through a variety of routesOne of these is seizure of some-thing that was originally of littlevalue until it was acquired and im-proved Squatters assume rights inthis way However they are firstacquired they need to be tradableAPI
schools establish strong commu-nity networks and have a greaterreliance on the voluntary work ofparents
That non-government schoolsare more effective in this regard issupported by research into lsquoChar-ter schoolsrsquo in the United StatesAs noted by Chester Finn at theFordham Foundation giving localcommunities lsquoownershiprsquo overtheir school builds networks oftrust and reciprocity so vital forsocial cohesion
Social capital also relies on citi-zens being disciplined and orderedin their behaviour Selfishness vio-lent behaviour and rudeness act tofragment the community instead ofpromoting cohesion According toa number of Australian surveys itis here once again that non-gov-ernment schools are seen to bemore effective
As noted by the Centre for In-dependent Studies researcher Jen-nifer Buckingham in The Truthabout Private Schools in Australiawhen analysing why so many par-ents forsake the government schoolsystem
When comparing independentprivate schools with publicschools the major theme thatemerged was not differences inacademic standards and curri-culum but issues of disciplineand order The surveyed par-ents felt that the behaviour andattitudes of students in publicschools was unacceptablehellipAll accept that non-govern-
ment schools achieve better aca-demic results provide greater cur-riculum flexibility and save Aus-tralian taxpayers millions of dol-lars Equally as important is theargument that such schools streng-then Australiarsquos civic health andstock of lsquosocial capitalrsquo
Dr Kevin Donnelly is Director of EducationStrategies a Melbourne-based consulting group
E-mailkevindnetspacenetau
s
30 MARCH 2003
E V I E WR
and relatively inviolable Thisprovides the incentive for them tobe improved and for their ownersand others to search out ways inwhich the assets they representcan be used to provide increasedvalue or other benefits
If confidence in the exclusiv-ity an owner has over the prop-erty right is lost or was neverpresent the asset will be used lessproductively For example own-ers will milk them for their cur-rent-use value rather than trade-off present value for a future valuethat is less certain
Even without a total emascu-lation of individual rights (for ex-ample when title to the propertydepends on continuing govern-mental assent) lack of certaintybrings lower incomes and dimin-ished asset protection One out-come of this can be observed inthe MurrayndashDarling system Wa-ter rights on the Victorian side ofthe Murray are secure while thoseon the NSW side have been over-allocated and are subject to ad-ministrative discretion includinghaving a firm duration of only tenyears In Victoria high securitywater (available 95 per cent of thetime) comprises the great bulk ofentitlements In contrast in
NSW high security water is avail-able only 60-80 per cent of thetime The result is that farmers onthe Victorian side plant perennialcrops while those in NSW tendto focus on annual crops espe-cially rice
There are claims that Victoriarsquosmore robust property rights meanthat the State Government haslost lsquocapabilityrsquo to manage com-pared with NSW The flip side ofthis is the increased risk and as-sociated lower value of productionnorth of the Murray where prop-erty rights are attenuated Gov-ernments that give themselves in-creased capacity to direct produc-tion or to take individualrsquos prop-erty will need to accept lower lev-els of income and output
IRRIGATION ENVIRON-MENTAL BENEFITS AND SA-LINITY
The Types of IssuesIssues stemming from irrigationcomprise two types those impact-ing on the environment and thoseimpacting on private uses Theformer includes issues such as pre-venting loss of species ensuringthat certain sorts of species flourishand avoiding unattractive growths
such as blue-green algae which re-sult from fertilizer build-up
The second involves economicimpacts on different users
While environmental flows toensure species flourish are oftenhighlighted salinity is the mainfocus And while salinity has animpact on the environment itsimportance is in the conflict of in-terest between productive usersmdashthe complaint of lsquodamaged goodsrsquoby downstream users against thoseupstream
The MurrayndashDarling Basin Sa-linity Strategy 2001ndash2015 has es-timated that increased salinitybrings costs of $294 million perannum to the basin
Yet data on the salinity of theMurray Darling shows levels up-stream of South Australia arelower than they were in the early1980s and are only seriously abovethese levels as the river ap-proaches its mouth at the GoolwaBarrage
The Basin Salinity Manage-ment Strategy argues that progressachieved over the past decade willlsquobe cancelled within 20-50 yearsand median salinity levels wouldexceed the Australian DrinkingWater Guidelines for good waterquality within 50-100 yearsrsquo Thecause of this is said to be risinggroundwater tables due to land usechanges across the Basin
The disputes over salinizationare largely disputes between com-mercial parties Full specificationof rights and obligations will al-low these to be resolved as longas the impacts are measurabletheir causes identifiable and thevarious rights and obligations areknown and stable In this respecttechnology to measure salt in wa-ter and to trace increases to par-ticular locations is readily avail-able
Agreements about the alloca-tion of water rights between ju-risdictions and to the main irri-gation provinces have been inplace for over a century In the
Average Salinity in the River Murray (EC Units)1
3500
3000
2500
2000
1500
1000
500
0
January 2003
July 2002ndashJanuary 2003
July 1982ndashJanuary 2003
Hume D
am
Swan
Hill
Merbein
Morgan
Milang
Mening
ie
Goolw
a
Barra
ge
31MARCH 2003
E V I E WR
I
API
Musinghellipcase of the Murray the lsquocaprsquo onwater abstractions agreed betweenthe various jurisdictions in 1995largely validated agreements madeearly in the last century and be-fore Disturbing these agreementswould greatly undermine the trustin the sanctity of property rightsand seriously reduce agriculturalproductivity Hence increased al-locations for certain parties or forcertain uses (including environ-mental flows) would need to bepurchased at market prices
Developments in Australiaover recent decades have con-spired to make irrigation water farmore valuable This is exacer-bated by1 Activation of NSW lsquosleeperrsquo
and lsquodozerrsquo water rights as a re-sult of the increased scarcityvalue a change that bringseven greater pressure on theavailable supply
2 Increased scarcity leading tomeasures that more carefullyhusband the water Whilesome of these prevent evapo-ration loss and have thereforebrought a net increase in effec-tive availability others havereduced availability (these in-clude a more careful wateringwhich results in reduced run-off and re-use)
3 Increased capture of waterwithin the land on which itfalls once water is recognizedas scarce landowners will seekto ensure it does not leave theirland NSW and Victoria haveplaced limits (a strict 10 percent in NSW) of water fallingon property as entitlements ofthe owner Queensland has notyet enacted an equivalent tothis Such adaptations of thecommon law are essentialhowever if downstream usersare not to be expropriatedThere is likely to be constant
bickering over water rights espe-cially if State Governments seek toelevate sharing issues and to sanc-tify them with claims about promot-
Daniel Pipes in The New York Posthas a very cogent explanation forwhy the Left appears to be so happywith the likes of Osama bin Ladenand Saddam Hussein
To be clear about their attitudeshe quotes the renowned Germanelectronic music composer KarlHeinz Stockhausen who saidstraight after the attack on NewYork that it was lsquothe greatest workof art for the whole cosmosrsquo
As Pipes and many of us observedaily there is barely a bad word tosay about Saddam Hussein nor aniota of sympathy for thoseoppressed tortured and murderedby his reacutegime Instead they venttheir fury against the AmericanPresident and British Prime Minister
Why the nonchalancePipes draws our attention to Lee
Harris writing in a recent issue ofthe Hoover Institutionrsquos journalPolicy Review According to KarlMarxrsquos central thesis the demise ofcapitalism hangs on workersgrowing poorer over timemdashwhichof course did not happen Sorather than give up on cherishedexpectations of socialist revolutionHarris notes Marxists tweaked theirtheory and looked instead to theentire populations of poor countriesto carry out the revolution Classanalysis went out the windowreplaced by geography
The trouble is they have tooverlook militant Islamrsquos slightly un-socialist practicesmdashsuch as itsimposing religious law excludingwomen from the workplace andpersecuting atheists
As Pipes sums up September 11and the prospect of war againstSaddam Hussein have exposed theLeftrsquos political self-delusionintellectual bankruptcy and moralturpitude
The Loopy Leftby Andrew McIntyre
ing an improved environment Realsolutions require the issue be placedwithin a normal commercial frame-work which involves1 Clarifying the property rights2 Allowing water rights to be
fully detachable from propertyand able to be used howeverthe holder wishes subject toany damage this might imposeon others
3 Ensuring full rights to buy andsell the water
4 Defining rights so as not to re-duce the quality of other usersThis means ensuring that farm-ing practices that do not bringgreater salination than somestandard
5 Allowing rights holders tobank their water and ensureeven greater certaintyAllocating specific individual
ownership rights to water and al-lowing its trade is a well-foundedmeans of maximizing the usevalue It would also be likely tohave the beneficial side-effects ofreducing salinity and farm-basedpollutants caused by intensiveuse We should grasp such oppor-tunities But if the impending sa-linity problem is as great as someclaim other solutions might wellinclude buying out some allocatedirrigatorsrsquo rights However alter-natives may be to remove saltfrom the water by engineering so-lutions or simply to live withhigher salt
NOTE1 Human drinking water should
be less than 800 ECs (electri-cal conductivity one ECequals about 06 mglitre)while higher levels are accept-able for much farming activity
Dr Alan Moran is Director Deregulation Unitat the Institute of Public Affairs
32 MARCH 2003
E V I E WR
Reading FileDone
eral political systems worldwidehave consistently accretedpower to the centre often in theface of clear constitutional im-peratives to the contrary) Ifeared instead that a UN thathad been patently successful insomethingmdashanythingmdashmightbe granted greater powers to thepoint where it would kill truediversity and individualism (ortry to anyway) through inevi-table bureaucratic practices
Is such a fear unfounded Ap-parently not if many peopleshare the moral touchstone ofthe Opposition Leader SimonCrean He believes according tohis own words in Parliamentthat what the UN SecurityCouncil declares is moral whatit refuses is immoral
The latest manoeuvrings overIraq have therefore been heart-
ening It seems that the desiresof the powers small and largeto promote their own interestswill continue to hobble the UN
The problem with a unitedworld is that as the threateningimpasse over Iraq suggestedthere are very divergent viewsabout how that world ought tobe run on an international leveljust as there are at national and
sub-national levels The virtueof multi-layered levels of gov-ernments is that competing ju-risdictions give the individual adegree of choice
The greatest sin of totalitar-ian governments past and pres-ent is to deny their citizens theright to leave The greatest dan-ger that the United Nationsposes as far off as it now (hap-pily) seems is that leaving its ju-risdiction is for all practical pur-poses impossible
THE IMPASSE JUST PASSEDI listened to Prime MinisterHoward speaking to the motionbefore Parliament in relation tothe war It was a good speechbut neither he nor PresidentBush seems able to structure andlay out an argument with thestyle and content of BritishPrime Minister Blair His equi-valent speech before the BritishCommons provides a masterfulsummary of the reasons for thiswar and includes an immenselyreadable time-line of the utterineffectiveness of the UN pro-cesses in dealing with Iraq Henicely deals with allegations ofthe lsquorushrsquo to war lsquoOur fault hasnot been impatience The truth
UNITED OR DIVIDEDI write just hours after US Presi-dent George W Bush has deliv-ered his ultimatum to Iraqi Presi-dent Saddam Hussein leave Iraqwithin 48 hours or be removedBy the time this appears beforeyour eyes you will knowwhether Hussein has decided hischances of survival will be sig-nificantly greater by choosingexile or by remaining in IraqThe recent creation of the In-ternational Criminal Court ofcourse makes war more likelysince Hussein can have no guar-antee of a peaceful lsquoretirementrsquo
In the event that Hussein re-mains in Iraq you will also knowwhether Bush has kept his wordand most likely the outcome ofthis military venture
This matter is immensely im-portant for the people of Iraqand for the military personnelinvolved (including our ownAustralian soldiers sailors andaviators) But then so was theprevious Gulf War the US in-vasion of Grenada the Austra-lian intervention in East Timorand so on But a difference be-tween the current conflict andthose others could be the impactit has upon international insti-tutions Actually just one inter-national institution the UnitedNations
Prior to the first Gulf War Ifeared the coalitionrsquos success forthe reason that some of it mighthave rubbed off onto the UnitedNations I hasten to deny that Ifear the UN as some vast con-spiracy for world domination Ifeared instead that it couldstumble into a piecemeal cen-tralization of power (just as Fed-
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
E V I E WRs
33MARCH 2003
E V I E WR
Reading FileDone
ATTACKING THE GLOBALGOVERNORSThe Cato Institute is a whole-some body as demonstrated byits opposition to such interna-tional organizations as the Inter-national Criminal Court and forthat matter the United Nationsitself Ted Galen Carpenter forexample argues in lsquoPutting theUnited Nations on Noticersquo thatthe UN can and has done somemodest good occasionally It ishe says lsquoa good idea to have aplace where governments cangather to air grievancesrsquo But headds if it lsquoattempts to acquire ataxing authority [or] raise astanding armyrsquo then the USshould withdraw (as indeedshould Australia) Because thatwould turn it into an lsquoembryonicsuperstate that would menacelibertyrsquo
Go to
wwwcatoorgforeignpolicyunhtml
THE INTERNATIONALORGANIZATIONS THEM-SELVESThe United Nations has beenaccused of being often ineffec-tive and always slow Well ev-ery time Irsquove hit the UNrsquos Web-site even with my nifty broad-band Internet connection slow-ness rules Perhaps the site isbeing continually accessed bythe teeming masses Anyway goto
wwwunorg
With 15 members alreadyand 13 more on the way thereremain hopes that the EuropeanUnion will be a force for a stable
twenty-first century Equallywith 15 members already exhib-iting rather divergent views overthe issue of Iraq and most of theforthcoming members sidingwith the United States perhapsthis is overly hopeful Go to
europaeuintindex_enhtm
Then there is the WorldTrade Organization the organi-zation behind which protection-ist nations can hide from unilat-eral trade liberalization by pre-tending to support multilateraltrade liberalization Go to
wwwwtoorg
And we mustnrsquot forget the In-ternational Criminal Court fearof which was no doubt a featureof Saddam Husseinrsquos rejection ofexile as an option and the furyof which is promised by a num-ber of prominent lawyers to bevisited upon our very own PrimeMinister Go to
wwwicc-cpiint
FEEDBACKI would welcome advice fromreaders on any other sites of inter-est to IPA Review readers E-mailme on scdawsonbigpondnetau
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
is our patience should have beenexhausted weeks and monthsand years agorsquo
Go to
wwwnumber10govukoutputPage3294asp
THE STRUGGLE BETWEENTHE CONTINENTSIf you are patient you can readthat wonderful British rag TheSpectator for free Last weekrsquoscopy is available on-line One ofits regular columnists is MarkSteyn an Americo-phile Cana-dian who has a robust turn ofphrase and an abiding disdain formuch modern music (whichseems to place him very comfort-ably into The Spectatorrsquos culturalmatrix)
His piece on the future de-cline of Europe vis-agrave-vis Ame-rica makes for fascinating read-ing Go to
wwwspectatorcouk
then click on the lsquoBack Issuesrsquobutton and choose the edition of15 March 2003
E V I E WR
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
request documents but they canrsquot compel witnesses toanswer or demand that material be produced Althoughit is a criminal offence under the Workplace Relations Actto hinder workplace inspectors the Cole report notedthat no prosecutions have yet been launched despiteevidence that Office of the Employment Advocateinspectors have been abused had objects thrown at themand their property damaged It has been commonpractice for the arrival of OEA inspectors to lead to workstoppages and even site invasions in a bid to thwart anddemoralise an independent investigator not susceptibleto the unionrsquos usual weapon of commercial retaliation
One of the problems with theworkplace relations system is theassumption that parties will enforcethe law against each other This worksup to a point in industries whereworkplace parties are more-or-lessevenly matched and the issues are theworkplace equivalent of an argumentbetween neighbours over the heightof a fence It completely breaks downwhen one side has an effectivemonopoly over the supply of labourand disputes resemble a more-or-lessnormal family telling the house fullof footballers next door that the partyrsquosover Expecting contractors to enforcethe law against the CFMEU is likeexpecting people in the street to makecitizenrsquos arrests hence Colersquos principalrecommendations are an AustralianBuilding and ConstructionCommission to investigate prosecuteand enforce the provisions of a beefed-up industry specific workplace
relations actYesterday Cabinet decided to support Colersquos key
recommendations First the Government will seek aseparate act governing workplace relations in theconstruction industry providing for secret ballots beforestrikes compulsory cooling off periods after extendedstrikes and damages awards in the event of unprotectedindustrial action Second the Government will establisha new law enforcement agency for the industry withpowers to compel witnesses to testify bring prosecutionsand enforce judgments and with sufficient on-the-ground presence to police CBD building sites Thirdthe Government will establish a Safety Commissionerto monitor federally-funded construction sites to try toensure that these become industry models Fourth the
s
commissions lack sufficient power the courts lacksufficient speed the employment advocate lacks sufficientauthority and the police lack sufficient interest
Not before time the Cole Commission has acted as agiant searchlight probing the dark underside of thispotentially great Australian industry It confirmed whatpolicy makers had long suspected and what influentialinsiders knew but had always tried to deny or explainaway that the industry operates under the rule of thejungle and that there will be no improvement until thepeople who work in it understand that the law has to betaken seriously Legislative institutional and structuralchange will start to mean somethingwhen law breakers in this industry arecharged convicted and punished likelaw breakers everywhere else A fewsalutary bars of that old song need towaft over construction sites ldquoI foughtthe law and the law wonrdquo
Late last year in response to theRoyal Commissionrsquos first report thefederal Government set up theBuilding and Construction IndustryInterim Task Force The Governmentrsquosbrief to the Task Force is to ensure zerotolerance of industrial law-breakingThe Task Force is not primarily toenforce the tax laws or the safety rulesbecause other bodies exist for this(although the Task Force will certainlyshare information with them) TheTask Force is to investigate and enforceWorkplace Relations Act prohibitions oncoercion unprotected strikes strikepay and breach of industrialagreements So far the Task Force hasvisited nearly 300 sites launched more than 50investigations brought three prosecutions and referrednine other matters to state police the Australian FederalPolice or the Australian Competition and ConsumerCommission for further action
These are the first public prosecutions arising out ofindustrial action in the construction industry at leastsince the 1980s and are the result of a public policycommitment to law enforcement not seen since thehumiliating Clarrie OrsquoShea case in 1969 and the end ofldquopenal sanctionsrdquo Yesterday Cabinet decided to extendthe interim Task Forcersquos operations until more permanentarrangements to secure the rule of law can be established
Task Force agents have the powers of inspectors underthe Workplace Relations Act They can enter premises and
SI-3MARCH 2003
IPA REVIEW SPECIAL INSERT
The main reason whyunions can get what
they want frombusiness and businesscan get what it needs
from haplessconsumers is theabsence of inde-
pendent policing andenforcement of the
industrial equivalent offair trading laws
API
Government will insist on the application of theNational Construction Code and implementationguidelines to all significant new projects which are fullyor partly federally funded
Directly or indirectly the federal Government fundsabout $5 billion worth of construction projects everyyear and is determined to use its role as client to drivechange in the industry In essence the NationalConstruction Code stipulates that construction projectsmust take place in conformity with the WorkplaceRelations Act Under the Code and implementationguidelines the federal Governmentwill not engage tenderers whoseworkplace agreements and practicesensure a closed shop on site The TaskForce (and any replacement body) willhave full access to federally fundedsites to ensure that the law is beingobserved and workplace agreementscomplied with
For the federal Government theissue is upholding the law and tryingto tackle the ldquounion rulesrdquo culturewhich is at the heart of lawlessness inthe industry For the states the issueis whether they are prepared to refusefederal money in order to protect theclosed shop However much theymight prefer different federal laws thestates ought to accept thatconstruction projects have to complywith the law as it stands includingthe law mandating compliance withcertified agreements
State Labor governments whichhave made a point of their middle-ground credentials risk losing some$4 billion a year in federal building and constructiongrants if they side with the union movementrsquos mostmilitant minority There are likely to be limits to Laborrsquosdefence of a union whose stock-in-trade (at least in somestates) is the site invasion and the demand for paymentand which quietly reinstates organisers sacked for assaultor perjury Opposition senators will find it hard to brandas ldquoideologicalrdquo the recommendations of a royalcommission which spent 171 days in public hearingsand which pursued 11 shop stewards and 97 unionofficials to obtain their side of the argument
As Justice Cole pointed out in his report previousattempts to reform the industry have proven ineffectivedespite two earlier royal commissions and numerous
SI-4 MARCH 2003
IPA REVIEW SPECIAL INSERT
enquiries Although this Royal Commissionrsquosinvestigations seem to have temporarily checkedlawlessness in the industry a campaign is now emergingto extend the anarchic culture of CBD construction intoregional centres and the domestic housing industryThings will certainly be different this time if parliamentapproves a permanent well resourced watchdog withnew powers new personnel and new attitudes Unlikeprevious arrangements a new statutory watchdog withthe powers of a law enforcement agency should beeffective and permanent
Hundreds of people took big riskswith their commercial future and eventheir personal security to testify to theRoyal Commission It should neveragain be so hard for people in thisindustry to exercise their ordinaryrights and responsibilities asAustralian citizens They expected theGovernment to take the Commissionrsquosreport seriously and the Governmentfor its part is determined not to letthem down The Governmentunderstands that joining fights yoursquorenot prepared to win only makes badsituations worse Establishing the ruleof law in the construction industry isa challenge Australia canrsquot afford tofailSome of the worldrsquos best workersshould no longer have to put up withsome of the worldrsquos worst industrialpractices They have a right to anhonest industry where they can earna fair dayrsquos pay for a fair dayrsquos workand expect to come home uninjuredThe enduring image of this industry
should not be noisy marchers replaying the ideologicalstruggles of the 1970s and raising clenched fists againstauthorities they donrsquot like At its best the Australianindustry is capable of work which is stunningly beautifulyet intensely practical and it now needs to performconsistently on time on budget and in accordance withlaw
Hundreds of peopletook big risks withtheir commercial
future and even theirpersonal security totestify to the Royal
Commission It shouldnever again be so
hard for people in thisindustry to exercisetheir ordinary rights
and responsibilities asAustralian citizens
NOTE
The foregoing speech was first delivered as an Addressto the National Press Club on 2 April 2003
21MARCH 2003
E V I E WR
IN psychology behaviouris defined as irrational ifan action continues to berepeated despite its re-
peated failure to achieve the desiredoutcome On this definition our aidpolicy towards Papua New Guineahas been irrational
Despite over twelve billion dol-lars in Australian aid to PNG sincethat countryrsquos independence in 1975key development indicators such asliteracy rates infant mortality lifeexpectancy and real income percapita are either stagnating or dete-riorating Worse wersquove known forover a decade1
Today acknowledgement of thefailure of our aid policy in PNG hasgone well beyond the writings of in-dividual international policy analystssuch as myself to institution-spon-sored reports such as Beyond Baliwhich was released by the AustralianStrategic Policy Institute (the Aus-tralian Governmentrsquos own strategicpolicy adviser) and Papua NewGuinea on the Brink which was writ-ten by Susan Windybank and MikeManning for the Centre for Indepen-dent Studies Both reports confirmthe gross failure of Australian aidpolicy in PNG
Yet still our aid policy irrational-ity towards Papua New Guinea con-tinues While the ASPI and CIS re-ports acknowledge the gross failureof our aid policy in PNG they alsoargue that we need to continue ouraid to that country Indeed the ASPIreport argues that we should increaseour aid to Papua New Guinea Thepolicy saviour The ASPI report ar-gues that we should exert greater con-trol over our aid Not just over theform of our aid but direct interven-tion in policy and implementation inPNGmdashin essence for a return to pre-
Aid Detox for PNGPETER URBAN
independence days in PNG whereas UN-sanctioned administrator weran government in that country
Despite the mind-frame of secu-rity-focused strategists such as thoseat ASPI and the CIS (which en-dorses the aid approach advocated byASPI) the reality is that we canrsquotPNG is now independent and to ig-nore this reality would simply com-pound the problems of our past aidpolicy irrationality with irrationalityabout our political relationship withour nearest neighbour
A more interventionist aid policytowards PNG on our part as advo-cated in Beyond Bali and by HughWhite (the executive director ofASPSI) in the media might havepopulist appeal but it would haveserious adverse implications for ourrelationship with other Pacific islandcountries and even IndonesiaWorse it would give succour to theviews of our east Asian critics (suchas Malaysian PM Dr Mahathir) whoclaim that Australia continues toharbour colonial aspirations
We have to accept that to be suc-cessful aid policy must not just helpreduce mass poverty it also has to doso as a guest in the aid recipientcountry To do otherwise is not aidbut imperialismmdashwhether inten-tional or not
A more interventionist approachto aid policy in PNG would also givethe current corrupt political elite inPort Moresby a rallying point againstus and an excuse to delay changingtheir own policies Neither Austra-lia nor PNG can afford any furtherdelays to policy reform For us to givePNG politicians yet another excuseto delay reform would be not onlyirrational it would be inexcusableWhile our aid continues so will thecorrupt elite that is at the heart ofPNGrsquos problems Until we send themessage to the PNG political elitethat we are prepared to stop ouraidmdashto put them on aid detoxmdashwewill continue to waste our aid in thecorruption that is PNG politics Itmay be hard to accept but the sadreality we face in PNG is that no aidmay prove to be good aid at least inthe short to medium-term2
NOTES
1 Peter Urban lsquoOne Clear ObjectiveNo Clear Approachrsquo IPA Review1997 Vol 50 No 1
2 With Iraq also likely to require verysignificant Australian aid fundingover the next few years the Gov-ernment will need to review our aidprogram as part of the 2003-04 fed-eral Budget A decision to suspendaid to PNG could be taken as partof that review
Peter Urban is former chief economist with theDepartment of Foreign Affairs and Trade
We have to accept
that to be successful
aid policy must not
just help reduce
mass poverty it also
has to do so as a
guest in the aid
recipient country
API
22 MARCH 2003
E V I E WR
IN his speech to the Na-tional Press Club on theprospect of war with Iraqand the case for disarma-
ment Prime Minister Howard statedthat Australia will play a significant hu-manitarian role in Iraq
If so the Howard Government needsto evaluate carefully the foreign-aid non-government organizations (FANGOs)which it funds to carry-out this humani-tarian programme Many FANGOshave made it clear that they do not sharethe Australian Governmentrsquos objectivesand values in Iraq Moreover some donot agree with the Governmentrsquos over-all aid policies in general
THE COALITION OF THEUNWILLINGIn the lead-up to latest Gulf War some30 Australian aid agencies put theirnames to an Open Letter to the PrimeMinister organized by the AustralianCouncil of Foreign and Overseas Aid(ACFOA) The aim of the letter was tolsquospeak out against war in Iraqrsquo and it ex-pressed grave concerns about the hu-manitarian consequences of the war andthe effects of the existing sanctions1 TheFANGOs that signed the letter wereOxfam Community Aid Abroad WorldVision Australia TEAR AustraliaUnion Aid Australia - APHEDACaritas Australia National Council ofChurches Australian Council for For-eign and Overseas Aid Save the Chil-dren Australia CARE Australia OzGreen United Nations Association ofAustralia Family Planning AustraliaMercy Works Marist Mission CentreAustralia Every Home for Christ Bap-tist World Aid for Christ CCF Austra-lia Quaker Service Australia Austra-lian Lutheran World Service AustralianRelief and Mercy Services AnglicanBoard of Mission AUSTCARE Com-munity Development and Health
Irreconcilable DifferencesDON DrsquoCRUZ
Hussein have been virtually ignored isa searing indictment of the warped ide-ology feeble analysis and moral blind-ness of the sector For them now to re-discover the plight of the Iraqi peopleand to invoke their name in the mediais beyond contempt
THE OXFAM COMMUNITYAID ABROAD POSITIONOf the 30 FANGO signatories to theopen letter Oxfam Community AidAbroad (OCAA) has been perhaps themost outspoken It opposed military ac-tionmdasheven with UN Security Councilapproval4 In spite of all the evidence tothe contrary OCAA was comfortablewith Saddam Husseinrsquos assurances thathe did not have weapons of mass destruc-tion5 Adopting the common policyagreed to by the other Oxfam affiliatesOCAA stated that it will not take anymoney from the lsquobelligerentsrsquomdasha quaintterm used to the describe democraticnations planning to disarm a dictatorguilty of countless human rights abuses
OCAArsquos outrage against the so-called lsquobelligerentsrsquo appears to be geo-graphically confined to Iraq OCAAappears happy to take governmentmoney from the belligerents elsewherearound the world
According to OCAArsquos ExecutiveDirector Andrew Hewitt refusing totake money from the belligerents wasdone to lsquoprotect its impartialityrsquo6 Thisis a very curious position from Australiarsquosarguably most political FANGOOCAA has a long track-record of beinganything but impartial or reluctant totake sides in miliary action It wasnrsquotimpartial in East Timor where it sidedwith Fretlin in its quest for indepen-dence According to its own testimonyto a Senate committee OCAA wasgiven the choice by the IndonesianGovernment between lsquoplaying politicsrsquoor delivering aid projects in Indonesia7
Group Amnesty International Austra-lia AngliCORD Australian Aid forCambodia Fund Burnet InstituteRedR Friends of the Earth PLAN Aus-tralia and Australian Volunteers Inter-national2
This open letter highlighted a num-ber of problems with the FANGOs sec-tor First it highlighted the weak logicthat passes for advocacy in the sectorThe letter argued against military actionwas critical of sanctions and suggestedthat nations should settle issues only bydiplomatic means It is a viewpointwhich totally ignores the fact that theGovernment had to deal with SaddamHussein
The shallowness of their logic wasbest exposed by the Prime Minister inhis response to the open letter in whichhe stated that the humanitarian situa-tion in Iraq is best addressed by SaddamHusseinrsquos removal and perhaps morepointedly that Saddamrsquos manipulationof foreign aid had allowed him to main-tain and pursue his weapons of mass de-struction capability and human rightsabuses3
Second it also highlighted the factthat the so-called lsquohuman rights-basedapproachrsquo to development (embraced byseveral of the signatories) is not so muchabout realizing human rights (as its pro-ponents argue) but is more about pro-viding them with an excuse to lsquoplay poli-ticsrsquo According to the theory the hu-man rights-based approach to develop-ment allows FANGOs to tackle the rootcauses of poverty and injustice
Yet the root cause of the Iraqipeoplersquos suffering can be summed up intwo simple wordsmdashSaddam HusseinThe fact that the FANGOs who sub-scribe to this particular approach havebeen obsessed with imaginary humanrights abuses committed by Shell NikeRio Tinto BHP-Billiton and AuroraGold while the activities of Saddam
23MARCH 2003
E V I E WR
It chose the former thus making it per-sona non grata in Indonesia for almost adecade8 It wasnrsquot impartial inMozambique when it sided with Frelimoin the countryrsquos civil war9 It wasnrsquot im-partial in Ethiopia when it developedlinks to the Eritrean Peoplersquos LiberationFront during its war against the thengovernment10 It was not impartial oranti-war when it sided with the TigrayPeoplersquos Liberation Front in the neigh-bouring province to Eritrea when thatgroup was waging a guerrilla war againstthe government11 And recently therehave been claims that in the Middle Eastit was little more than an lsquoeager propa-gandistrsquo for the Palestinians12
In East Timor Ethiopia and Mozam-bique OCAA was linked with organi-zations which supported direct militaryaction that led to the deaths of thou-sands of civilians In none of these loca-tions were the enemies of their friendany worse than Saddam Hussein In-deed in many cases OCAArsquos friendswere arguably no better than their en-emies in terms of human rights
OCAArsquos decision not to accept Aus-tralian Government funding is the cor-rect one in the sense that it clearly doesnot share the Governmentrsquos values onthe question of Iraq and thereforeshouldnrsquot receive any governmentmoney
Hewitt went on to state in a pressrelease that lsquoWe will not take funds thatmight allow a government to use hu-manitarian efforts as an instrument offoreign policyhelliprsquo13
This is finemdashexcept the AustralianGovernmentrsquos foreign aid is an instru-ment of foreign policy And it always hasbeen This is spelt out quite clearly inthe Australian Governmentrsquos latest for-eign and trade policy White Paper Ad-vancing the National Interest14
FANGOs that cannot accept thisrather basic proposition should not begetting taxpayersrsquo money They areclearly unsuitable for the task at hand
The consequences of Australian tax-payersrsquo money falling into the wronghands were brought home to Prime Min-ister Howard when he met IndonesianPresident Megawati Sukarnoputri to dis-cuss the war against terrorism and
Australiarsquos involvement against Iraq Atthe top of the Indonesian agenda wasthe issue of Australian funding toFANGOs being used to support sepa-ratist movements in Indonesia15
Post-war Iraq will be a better placewithout Saddam Hussein and his thugsThis does not mean that it will be a safeplace or necessarily a stable place Afterall one of the reasons for Western tol-eration of Saddam Hussein for manyyears was his ability to hold the various
ethnic minorities in Iraq together albeitrather brutally thereby maintaining abalance of power in the Middle East Hisdeparture would see strains on Iraq fromthe various ethnic minorities that makeup Iraq There is a strong chance thatIraq will fragment
The last thing the Australian Gov-ernment or any of the so-called belli-gerents needs in a post-war Iraq is west-ern NGOs running around and becom-ing self-styled advocates for national self-determination for Iraqrsquos ethnic minori-ties and injecting themselves into Iraqrsquosinternal politics This is a real risk Thebehaviour of Australian foreign aidNGOs in Indonesia should make Aus-tralian decision-makers extremely waryof funding any NGOs with Australiantaxpayersrsquo money so that they can oper-ate in Iraq
As things stand now FANGOs facevery few restrictions on their actionsfrom government If they undertake ac-tivity that is inconsistent with being anagent of government they may losefunding for specific projects or in moredramatic circumstances lose funding ina country Nonetheless they are gener-
ally able to access Australian Govern-ment funding for other projects andcountries In other words the penaltiesfor becoming caught up in political ac-tivities are very light for NGOs and posethem no serious problems
Foreign aid NGOs that lsquoplay politicsrsquoare unsuitable contractors for the deliv-ery of aid That these overtly politicalorganizations have been allowed to gaingovernment accreditation and receivegovernment funding points to some se-rious problems at AusAID Australiarsquosofficial aid agency The time has comefor this to change
NOTES1 httpwwwacfoaasnaumedia_releases
2003_releases26_3_03PDF2 httpwwwacfoaasnauemergencies
openletterPDF3 httpwwwacfoaasnauemergencies
iraq_responsehtm4 Oxfam Horizons Vol 3 No 1 (Febru-
ary 2003) page 25 Oxfam Community Aid Abroad lsquoIraq
Overviewrsquo February 20036 Hewitt quoted in Liz Gooch lsquoOxfam
wersquoll say no cashrsquo The Age 16 March2003
7 Community Aid Abroad Submission tothe Senate Foreign Affairs Defence andTrade References Committee Inquiryinto East Timor Downloaded at httpwwwcaaorg aucampaignssubmissionstimorhtml
8 Ibid9 Susan Blackburn Practical Visionaries A
Study of Community Aid Abroad (Mel-bourne Melbourne University Press1993) page 313
10 Ibid pages 325-333 passim11 Ibid12 Gerald Steinberg lsquoPropaganda vs Hu-
manitarianismrsquo Australian Financial Re-view 7 June 2002 Downloaded at httpfacultybiuacil~steingconflictopedpropvshumanitarianismhtm
13 ht tp wwwcaa o rg au p r 2003 iraqfundshtml
14 httpwwwdfatgovauani15 Dennis Shanahan lsquoJakarta fears aid funds
for rebellionrsquo The Australian 17 Febru-ary 2003 page 2
Don DrsquoCruz is Research Fellow at the IPAand Director of IPArsquos NGOWatch
OCAA has a longtrack-record of
being anything butimpartial or
reluctant to takesides in miliary
action
API
24 MARCH 2003
E V I E WR
GEORGE Bush Tony Blairand John Howard haveprovided many reasons forsupporting military action
against Iraq One of those reasons hasbecome known as the lsquohumanitarianrsquojustification Put simply the lsquohu-manitarianrsquo justification for the US-led invasion of Iraq is that such ac-tion is necessary to free the Iraqipeople from their totalitariandictator
Such an argument is attractive tothose who believe that there aresome fundamental human rights thatall individuals possess regardless ofwhere and how they live Whatserves as the source of those rightshas been the subject of debate forcenturies One of the pre-eminentstatements on the subject was madeby John Locke who in The SecondTreatise of Government wrote thatmankind was lsquoequal and indepen-dentrsquo and that lsquono-one ought to harmanother in his life health liberty orpossessionsrsquo
Saddam Husseinrsquos mass murdertorture and terror are reasonablyclear breaches of human rightsTherefore some would ask why thereshould be opposition to the UnitedStates and its allies taking whatevermeasures might be necessary totopple the Iraqi regime Surely thesame standard of behaviour that ap-plies to individuals applies also tonation states If an individual walk-ing in the street witnessed a rapeoccurring wouldnrsquot that individualbe entitled to do everything in hispower to stop the crime and assistthe victim
The point is of course that in-ternational law and convention do
After IraqIs Sovereignty Dead
JOHN ROSKAM
not allow nation states to act in thesame way as individuals Countriescannot simply lsquotake the law into theirown handsrsquo To restrain lsquovigilantestatesrsquo (who might be acting fromeither lsquogoodrsquo or lsquobadrsquo motives) a num-ber of legal and political theorieshave been developed One of theseis the doctrine of lsquosovereigntyrsquo whichprovides that states should not inter-vene in the domestic affairs of otherstates
In relation to Iraq the lsquosover-eigntyrsquo question is perhaps the stron-gest argument against the US-ledCoalition Most of the other criti-cisms of lsquohumanitarianrsquo interventionin Iraq are either grounded in simpleanti-Americanism or are fallaciousFor example there is the claim thatbecause some of the countries in theCoalition have previously ignoredHusseinrsquos cruelties therefore it is il-legitimate to take action now Sucha view has been expressed by aMelbourne international relationsacademic
While there is no disputing thebrutal nature of Saddam Hus-seinrsquos regime the case for inter-vention made by those in Can-berra London and Washingtonis weakened by the fact that atthe peak of Saddamrsquos crimes inthe late 1980s they were eitherdirectly supporting him withweapons technology and intelli-gence or were entirely indifferentto his behaviour Even if theyhave belatedly recognised theerror of their ways how seriouslycan we take their concerns aboutweapons of mass destruction nowgiven they were his suppliersthen1
On the basis of this argument itcould be said that Britainrsquos (andAustraliarsquos) case for intervening toassist Poland upon the German in-vasion in 1939 was lsquoweakenedrsquo be-cause Britain had previously acqui-esced to Germanyrsquos rearmament theremilitarization of the Rhinelandand the annexation of both Austriaand parts of Czechoslovakia Fewpeople who chanted lsquoFreedom forEast Timorrsquo said that the HowardGovernment should not act becausea quarter of a century before theWhitlam Government had been lsquoin-differentrsquo to Indonesiarsquos occupationof the island
There is also the claim that al-though Hussein is bad he is not theworst dictator in the world and thatit is hypocritical for the Americansto attack only Iraq This is an as-tounding proposition It attempts toapply to the United States a standardof behaviour that is impossible to sat-isfy Should the police not attemptto solve any crimes because theycanrsquot solve all crimes If a crime iscommitted by two people and thepolice arrest one perpetrator unlessthe other is also caught must the firstperpetrator be released When indi-viduals donate money for famine re-lief in Africa very few believe thattheir donation is pointless becauseit might prevent the starvation ofonly one person rather than thou-sands Christian ethics sets down norequirement that we should help no-one unless we can help everyone
The issue about state sovereigntyhowever is one that deserves to betaken seriously Regardless of onersquosopinions on the extent and limits ofstate sovereignty it is true that our
25MARCH 2003
E V I E WR
international relations system is builtupon the principle and to modify oroverturn it is a matter of some con-sequence
Even those who are generally sup-portive of the United States andtheir allies see the problem As it wasput by a leading commentator whenanalysing the Australian PrimeMinisterrsquos lsquohumanitarianrsquo justifica-tion for war
Finally Howardrsquos argumentagainst Hussein on human rightsis correct So is his moral case forwanting to liberate the Iraqipeople from their torment Theproblem however is that youcanrsquot trip around the worldwanting to overthrow regimesbecause of human rights2
Some would askmdashlsquowhy notrsquo Be-cause to do so would overthrow theUnited Nations Charter comes therejoinder And in turn the responseto that might bemdashlsquogoodrsquo
If itrsquos a choice between the main-tenance of the UN Charter and free-dom from tyranny freedom wins ev-ery time (although an internationallawyer sitting in Sydney might havea different view on this question fromthat of a political prisoner manacledin a Baghdad jail cell)
When the interests of lsquointerna-tional lawrsquo are more important thanthe life and liberty of individuals itcould be concluded that lsquothe Em-peror has no clothesrsquo Would inter-national law have sanctioned inter-vention to stop the Holocaust hadHitler not waged war and proceededwith his methods entirely within theconfines of the German territorialstate
Many who argue that lsquohumanitar-ianrsquo intervention in Iraq is not justi-fied because it infringes on thatcountryrsquos lsquosovereigntyrsquo would happilyhave other countries cede their po-litical sovereignty to supra-nationalbodies Certain features of the Inter-national Criminal Court overridethe principles of sovereignty but thatdid not stop a phalanx of interna-tional law experts urging sovereigngovernments to join it so as to en-
able the prosecution of war criminalsBut when it comes to actually stop-ping war crimes not simply prosecut-ing them that phalanx is largely si-lent
Without the doctrine of state sov-ereignty and without an arbiter fordetermining when interference withthe principle is justified (the roleclaimed by the United Nations andits Security Council) it is said thatstates would be free to impose theirown will and intervene in other
countries whose standards did notmeet their own (In The Second Trea-tise of Government Locke argued thata characteristic of a lsquostate of warrsquo be-tween individuals was the absence ofa superior authority to adjudicatedisputes and prevent individualsfrom administering justice them-selves)
Iraq might be claimed as a rea-sonably clear-cut case for interven-tion but other situations are notlikely to be as simple In Culture andEquality first published in 2001Brian Barry explored a lsquoliberalrsquo per-spective on this question
The liberal position is clearNobody anywhere in the worldshould be denied liberal pro-tections against injustice andoppression However in exactlythe same way as liberals arepragmatic about what liberalismmeans in terms of boundaries sohere the move from principle tointervention has to be mediated bypractical considerationshellip
[L]iberals are not so simple-mindedas to imagine that the answer toall violations of liberal rights is tosend in the Marines or even aUnited Nations force As in anyjust war theory there must be somedoctrine of lsquoproportionalityrsquohellip[S]carcely anybody would be infavour of the western powersinvading Saudi Arabia so at to sortout the way in which it lsquounjustlydenies political rights to women ornon-Muslimsrsquomdashaccording to theirliberal idea of justicersquo3
The question remainsmdashafterIraq what remains of lsquostate sover-eigntyrsquo Should the doctrine applyonly to lsquoliberal democraticrsquo statesSuch a solution might be attractiveto some lsquoliberalsrsquo but it doesnrsquot avoidthe problem of what exactly a lsquolib-eral democraticrsquo state is
One irony arising from the argu-ments about the war in Iraq is thatmany of those who have urged astrict application of lsquostate sover-eigntyrsquo principles in the past havegenerally supported the US-led in-tervention while those who havebeen willing to abridge or even aban-don the doctrine have had to rely onit to counter the lsquohumanitarianrsquo jus-tification for war
There are not many certaintiesabout the nature of the world afterthe war in Iraq but it can be saidwith some assurance that one defi-nite outcome is going to be a morevigorous debate about state sover-eignty
NOTES1 Scott Burchill lsquoThe humanitar-
ian arguments for this war are spu-riousrsquo The Age 21 March 2003
2 Paul Kelly lsquoThe hapless per-suaderrsquo The Australian 15ndash16March 2003
3 Brian Barry Culture and Equal-ity An egalitarian critique ofmulticulturalism Harvard Uni-versity Press page 138
John Roskam is a Research Fellow with the IPA
The lsquosovereigntyrsquo
question is perhaps
the strongest
argument against
the US-led
Coalition
API
26 MARCH 2003
E V I E WR
Which Way for theDemocrats
The 2002 mid-term elections were adramatic victory for President GeorgeW Bush and the Republicans Insteadof the historical norm of the partycontrolling the White House losingBushrsquos party gained seats in the Sen-ate House Governorsrsquo races andState legislatures The result was abitter disappointment for the Demo-crats and has led to a fierce debatebetween the Left and Centrists aboutthe future policy direction of the partytowards the 2004 elections
The Leftrsquos analysis is that the ma-jority of Americans are natural Demo-crats Electoral defeat was due to thefailure to energize that base of Demo-crats The party failed to distinguishitself sufficiently from Bush and thusgive their voters a reason to turn outWhile the majority of Democrats op-posed Bush on tax cuts and the warwith Iraq a significant minority sup-ported him and campaigned on thatsupport The result the Left claimwas that the Democrats lacked a con-sistent message in contrast to Bush
Support for this argument can befound in the higher turnout amongstRepublicans than Democrats in 2002while in 2000 the combined vote forGore and Nader was 51 per cent Aninfluential book by John Judis andRuy Texeira identified lsquoThe Emerg-ing Democrat Majorityrsquo Theyclaimed that growing demographicgroups trended Democrat includingthe young socially liberal profession-als minorities and women
What policies would motivate thisnatural Democrat base The Left callfor rescinding the Bush tax cut a classwar against the corporate world amajor increase in lsquopublic investmentrsquoin schools childcare health care and
Letter from AmericaNIGEL ASHFORD
public transport and strong opposi-tion to the war
Centrists however have a verydifferent analysis of the Democratsrsquoproblems the public did not trustthem to pursue the war against ter-rorism vigorously to keep down taxesto spend their tax dollars wisely or toreflect their cultural values
A Gallup opinion poll found that57 per cent of Americans askedthought that the Democrats were nottough enough on the war on terror-ism while 64 per cent thought theRepublicans were There was the per-ception that the Democrats were notserious on the issue and just playingpolitics Evidence for this was the de-bate over the new Department ofHomeland Security blocked becausethe Democrats wanted to protectunion rights while the President de-manded more flexibility to deploy theworkforce Many voters saw the issueas the national interest versus a spe-cial interestmdashin this case that of theunions The Democrats were seen asputting the interests of one of theirmajor constituencies before nationalsecurity
The Democratic LeadershipCouncil in lsquoThe Road Aheadrsquo by AlFrom and Bruce Reed presented theCentrist case lsquoStop pretending wecan win a majority simply by energiz-ing our basersquo The Democrats were
not trusted on the war against terror-ism were hostile to the cultural con-cerns of many working-class Demo-crats on abortion and guns and stillseen as the tax-and-spend party lsquoToomany Americans donrsquot trust us tokeep their taxes down or to spendtheir money wellrsquo
The Centrist agenda is to stronglyprosecute the war against terrorismwhether against al-Qarsquoeda Saddam orothers and to abandon knee-jerk iso-lationism arising from the experienceof the Vietnam War to defend capi-talism and support small investorsagainst irresponsible managers to cutpayroll taxes and to downplay thecultural issues that divide Democrats
Which path will the Democratstake The Left is in the ascendancyMost of the remaining Democrats inoffice come from left-wing districtsNancy Pelosi a left-liberal from SanFrancisco was easily elected the newleader of the House Democrats over-whelming her Centrist opponent andrising star African-American HaroldFord The early field of presidentialcandidates for 2004 is dominated bythe Left tendency including SenatorJohn Kerry Representative DickGephardt Governor Howard DeanRev Al Sharpton former SenatorCarol Moseley-Braun and Represen-tative Dennis Kucinich Only Sena-tor Joe Lieberman and Senator JohnEdwards represent the Centrist wing
The future of US politics may de-pend on which road the Democratsdecide to take The US is currently alsquo50ndash50rsquo nation evenly balanced be-tween the parties A left turn couldlead to Republican dominance farinto the future
Dr Nigel Ashford is at the Institute of Humane Studiesat George Mason University and is co-author of US
Politics Today (Manchester University Press)
API
27MARCH 2003
E V I E WR
Trusting TonyFrankly itrsquos all just too depressing Theeconomyrsquos heading for trouble Busi-ness confidence is low investment in2002 was 92 per cent lower than theprevious year and manufacturing in-vestment was nearly 18 per cent downThe budget deficit is spiralling becauseour once lsquoprudentrsquo Chancellor (trea-surer) Gordon Brown made over-opti-mistic growth projections and startedthrowing money at problems
Therersquos a load of health-and-safetyand anti-discrimination measuresthatmdashto put it most politelymdashare ex-amples of letting the best be the en-emy of the good Every school tripneeds a formal risk assessment withthe result that many trips are simplynot taking place New trains orderedfor London commuter routes wonrsquothave toilets because the rules say thatat least one toilet in each four-car unitmust be wheelchair-accessible whichwould have cost ten or a dozen seatson every overcrowded train
Some of this is just insane Somelocal authorities say that safety at workrules mean that home-care workersmustnrsquot lift the disabled people theyare looking after Or therersquos rail safetyUntil recently we were seriously pro-posing to spend $10 billion on a bet-ter system to stop trains going throughred signals On average this would havesaved the lives of about three passen-gers every four years which is a lousybargain compared with other safety in-vestments Worse it would also havereduced the capacity of the networkby up to 15 per cent and forced morepeople onto the roads which are muchmore dangerous than even ourclapped-out railways The result was aprojected net increase of 13 to 21 deathsper year
Meanwhile in London the Cen-tral line of the Underground has been
Letter from LondonJOHN NURICK
API
closed for weeks after a train derailedwhen one of its motors fell off Therewere no deaths or major injuries in theaccidentmdashbut itrsquos a safe bet that someof the people who havenrsquot been ableto use the Central line have been in-jured or killed on the roads
What can one say If the authori-ties took the same attitude to the riskof fatal accidents in the health serviceevery hospital in the country wouldhave been closed for years
Despite all this the Conservativesare still hopeless Their leader IanDuncan Smith has a new wheezewhen a journalist asks him anythingdifficult he chortles merrily and saysitrsquos the most uninteresting questionimaginable and hersquos not going to wasteanyonersquos time by answering it His col-leagues have their knives out for him
Meanwhile in spite of the govern-mentrsquos problems with the economy andthe public services Tony Blair is grow-ing in stature having his waymdashandantagonising large sections of his ownparty in the process On several recentissues he has faced down the formi-dable Gordon Brown in a way that notlong ago was hard to imagine
Then he shocked everyone by com-ing out against having elected mem-bers in the reformed House of Lordswhen most voters want an all-elected
chamber and most MPs want a partly-elected one In the event Parliamentcouldnrsquot agree on any of the optionsfor reform so wersquore stuck with the sta-tus quomdashwhich is fine by Mr Blair
Then therersquos the war By the timeyou read this it may be over or we maystill be waiting or our lads may befighting Mr Blairrsquos strong line againstIraq has made him very unpopular Theanti-war march on 15 February was thebiggest demonstration London hasever seen A few days later 122 Labourbackbenchers voted against the gov-ernment and many more abstained
Mr Blair didnrsquot budge War is a se-rious thing he says lsquoBut in a situationsuch as this you have to do what youbelieve to be right because thatrsquos theprice of having responsibilityrsquo1
He has often been accused of gov-erning by focus group Certainly he hasseemed reluctant to antagonise anypowerful group That has clearlychanged In a sense his stand on Iraqmerely follows his action in sendingtroops to Sierra Leone and Kosovomdashbut it has stirred up far stronger domes-tic and international opposition
The irony is that now when he re-ally needs people to trust him wedonrsquot Even in the desperately seriousbusiness of justifying an unpopular warDowning Street canrsquot play it straightremember the dossier from lsquointelli-gence sourcesrsquo that turned out to belargely cribbed from a PhD thesis onthe Internet
NOTE1 The Guardian 1 March 2003
John Nurick is a management consultant based in theSouth of England From 1985 to 1990 he was
editorial director of the Australian Institute for PublicPolicy and later edited newsletters reporting on theUK Parliament and European Union institutions
28 MARCH 2003
E V I E WR
KEVIN DONNELLY
Private EducationEquals Public Good
When it comes to choosing be-tween government and non-gov-ernment schools Australian par-ents are lsquovoting with their feetrsquo Asshown by recent ABS figures(Schools Australia 2002) over thelast decade there has been a dra-matic increase in non-governmentschool enrolments
Approximately 30 per cent ofstudents now attend non-govern-ment schools compared with 22per cent in 1980 and 28 per centin 1990 Over the last decadewhile the number of governmentschools has fallen by 64 per centnon-government schools havegrown by 61 per cent
Of course not everybody valuesparentsrsquo right to choose and theAustralian Education Union(AEU) Labor governments andlsquoleft-wingrsquo academics in particularconsistently argue against non-government schools
One of the arguments put for-ward by those opposed to givingparents greater freedom of choiceis that government schools are bet-ter at promoting social cohesionand a strong sense of what KenBoston the ex-head of the NSWEducation Department terms lsquothebonds of civic friendshiprsquo
The assumption is that becausestudents attend non-governmentschools there will be greater socialdivisiveness and a breakdown inthe civic values needed to hold so-ciety together But there is no cred-ible evidence offered to support theclaim that government schools arebetter at promoting the commongood
In fact there is much to provethe opposite
First as anyone familiar withthe lsquoculture warsrsquo and politicallycorrect curricula will know insteadof government-controlled educa-tion promoting unity and cohe-sion it has led to public angst andparental complaints
Witness the very bitter debatein Queensland a year or two agowhen the government-mandatedStudies of Society and Environ-ment (SOSE) curriculum was in-troduced into schools Such was
the lsquoleft-wingrsquo bias in the curricu-lum in particular in the areas ofmulticulturalism and the environ-ment that many parents felt be-trayed
The Queensland debate is mir-rored by what is happening in theUnited States As noted by Ste-phen Arons in his book Short Routeto Chaos instead of promotingunity government control of thecurriculum leads to the opposite
What the school wars tell us isthat somehow we have been
Education Agenda
transforming a vital instrumentfor creating social cohesioninto a source of division andhostility that there is some-thing built into the structure ofpublic schooling that under-mines one of its most importantfunctionsAronrsquos argument that govern-
ment schools no longer transmit aviable sense of a common cultureor agreed civic values is reinforcedby another noted United Stateseducationalist Diane Ravitch
In a recent article in the jour-nal Education Next Ravitch be-moans the impact of cultural rela-tivism and the post-modern on theschool curriculum (where there areno commonly agreed values) andeven goes so far as to argue thatparents should be free to choosenon-government schools becausesuch schools have a better chanceof reflecting their values
In the current education sys-tem with the public schoolscommitted to multiculturalismbilingualism and other forms ofparticularism it is difficult toargue that parents should notbe able to choose schools thatmeet their cultural needsSecond if one accepts that lsquoso-
cial capitalrsquomdashthe networks volun-tary associations and civic bondsthat hold a community togethermdashis important for the health of ademocratic society then non-gov-ernment schools clearly have theadvantage
Unlike the government schoolsystem characterized by a heavy-handed centralized bureaucracyand teacher union control non-government schools are closer tothe communities they serve Bytheir very nature non-government
There is no credible
evidence offered to
support the claim
that government
schools are better
at promoting the
common good
29MARCH 2003
E V I E WR
ALAN MORAN
The lsquoRrsquo Files
Private propertyrights the key toachieving efficiency inrural water use
WATER IN AUSTRALIAWater has always been a definingissue in Australiarsquos prosperityAnd in recent decades irrigationhas grown rapidly Even so theproportion of Australia that is ir-rigated at two per cent of theland comprises a share that isamongst the lowest among OECDcountries Only Canada and therainiest countries New Zealandand the UK have lower sharesthat of the US is 11 per cent andin Japan it reaches 60 per cent
Modern agriculture is only 200years old in Australia and thoughin the first 100 years agriculturalproductivity was increased toequal that of anywhere in theworld gains continue to bemademdashoutput has doubled overthe past 50 years a growth thatcould not have taken place with-out a similar expansion of irriga-tion Irrigation in the MurrayndashDarling agricultural provincealone contributes $5 billion toAustralian agricultural outputand non-irrigated agriculture inthe region contributes a further $5billion This makes the areawhich comprises 14 per cent ofAustraliarsquos land mass responsiblefor a third of the nationrsquos $35 bil-lion agricultural output
Applying Property Rights to WaterMost of the uses of water involvechoices or compromisesmdashdrink-ing water versus irrigation versus
industrial and so on Some how-ever involve complementaritiesparticularly certain recreationaluses such as water sports that arefacilitated by storage and consis-tent availability
In many cases water will per-form sequential functionsmdashthesame water can be used and re-used for irrigation used for indus-trial cooling and finish as drink-ing water Water with differentsometimes competing productiveuses will be optimally used as longas two conditions are in placeThe first is that its ownership isclearly specified and the ownersrsquoobligations to other users (orclaims from other beneficiaries)are well understood The secondrequires each property right to betradable to enable acquisition bythose who value it most therebymaximizing its value
The rights specification andtherefore property ownership canrarely commence with a cleansheet of paper People acquire in-dividual rights to property ini-tially through a variety of routesOne of these is seizure of some-thing that was originally of littlevalue until it was acquired and im-proved Squatters assume rights inthis way However they are firstacquired they need to be tradableAPI
schools establish strong commu-nity networks and have a greaterreliance on the voluntary work ofparents
That non-government schoolsare more effective in this regard issupported by research into lsquoChar-ter schoolsrsquo in the United StatesAs noted by Chester Finn at theFordham Foundation giving localcommunities lsquoownershiprsquo overtheir school builds networks oftrust and reciprocity so vital forsocial cohesion
Social capital also relies on citi-zens being disciplined and orderedin their behaviour Selfishness vio-lent behaviour and rudeness act tofragment the community instead ofpromoting cohesion According toa number of Australian surveys itis here once again that non-gov-ernment schools are seen to bemore effective
As noted by the Centre for In-dependent Studies researcher Jen-nifer Buckingham in The Truthabout Private Schools in Australiawhen analysing why so many par-ents forsake the government schoolsystem
When comparing independentprivate schools with publicschools the major theme thatemerged was not differences inacademic standards and curri-culum but issues of disciplineand order The surveyed par-ents felt that the behaviour andattitudes of students in publicschools was unacceptablehellipAll accept that non-govern-
ment schools achieve better aca-demic results provide greater cur-riculum flexibility and save Aus-tralian taxpayers millions of dol-lars Equally as important is theargument that such schools streng-then Australiarsquos civic health andstock of lsquosocial capitalrsquo
Dr Kevin Donnelly is Director of EducationStrategies a Melbourne-based consulting group
E-mailkevindnetspacenetau
s
30 MARCH 2003
E V I E WR
and relatively inviolable Thisprovides the incentive for them tobe improved and for their ownersand others to search out ways inwhich the assets they representcan be used to provide increasedvalue or other benefits
If confidence in the exclusiv-ity an owner has over the prop-erty right is lost or was neverpresent the asset will be used lessproductively For example own-ers will milk them for their cur-rent-use value rather than trade-off present value for a future valuethat is less certain
Even without a total emascu-lation of individual rights (for ex-ample when title to the propertydepends on continuing govern-mental assent) lack of certaintybrings lower incomes and dimin-ished asset protection One out-come of this can be observed inthe MurrayndashDarling system Wa-ter rights on the Victorian side ofthe Murray are secure while thoseon the NSW side have been over-allocated and are subject to ad-ministrative discretion includinghaving a firm duration of only tenyears In Victoria high securitywater (available 95 per cent of thetime) comprises the great bulk ofentitlements In contrast in
NSW high security water is avail-able only 60-80 per cent of thetime The result is that farmers onthe Victorian side plant perennialcrops while those in NSW tendto focus on annual crops espe-cially rice
There are claims that Victoriarsquosmore robust property rights meanthat the State Government haslost lsquocapabilityrsquo to manage com-pared with NSW The flip side ofthis is the increased risk and as-sociated lower value of productionnorth of the Murray where prop-erty rights are attenuated Gov-ernments that give themselves in-creased capacity to direct produc-tion or to take individualrsquos prop-erty will need to accept lower lev-els of income and output
IRRIGATION ENVIRON-MENTAL BENEFITS AND SA-LINITY
The Types of IssuesIssues stemming from irrigationcomprise two types those impact-ing on the environment and thoseimpacting on private uses Theformer includes issues such as pre-venting loss of species ensuringthat certain sorts of species flourishand avoiding unattractive growths
such as blue-green algae which re-sult from fertilizer build-up
The second involves economicimpacts on different users
While environmental flows toensure species flourish are oftenhighlighted salinity is the mainfocus And while salinity has animpact on the environment itsimportance is in the conflict of in-terest between productive usersmdashthe complaint of lsquodamaged goodsrsquoby downstream users against thoseupstream
The MurrayndashDarling Basin Sa-linity Strategy 2001ndash2015 has es-timated that increased salinitybrings costs of $294 million perannum to the basin
Yet data on the salinity of theMurray Darling shows levels up-stream of South Australia arelower than they were in the early1980s and are only seriously abovethese levels as the river ap-proaches its mouth at the GoolwaBarrage
The Basin Salinity Manage-ment Strategy argues that progressachieved over the past decade willlsquobe cancelled within 20-50 yearsand median salinity levels wouldexceed the Australian DrinkingWater Guidelines for good waterquality within 50-100 yearsrsquo Thecause of this is said to be risinggroundwater tables due to land usechanges across the Basin
The disputes over salinizationare largely disputes between com-mercial parties Full specificationof rights and obligations will al-low these to be resolved as longas the impacts are measurabletheir causes identifiable and thevarious rights and obligations areknown and stable In this respecttechnology to measure salt in wa-ter and to trace increases to par-ticular locations is readily avail-able
Agreements about the alloca-tion of water rights between ju-risdictions and to the main irri-gation provinces have been inplace for over a century In the
Average Salinity in the River Murray (EC Units)1
3500
3000
2500
2000
1500
1000
500
0
January 2003
July 2002ndashJanuary 2003
July 1982ndashJanuary 2003
Hume D
am
Swan
Hill
Merbein
Morgan
Milang
Mening
ie
Goolw
a
Barra
ge
31MARCH 2003
E V I E WR
I
API
Musinghellipcase of the Murray the lsquocaprsquo onwater abstractions agreed betweenthe various jurisdictions in 1995largely validated agreements madeearly in the last century and be-fore Disturbing these agreementswould greatly undermine the trustin the sanctity of property rightsand seriously reduce agriculturalproductivity Hence increased al-locations for certain parties or forcertain uses (including environ-mental flows) would need to bepurchased at market prices
Developments in Australiaover recent decades have con-spired to make irrigation water farmore valuable This is exacer-bated by1 Activation of NSW lsquosleeperrsquo
and lsquodozerrsquo water rights as a re-sult of the increased scarcityvalue a change that bringseven greater pressure on theavailable supply
2 Increased scarcity leading tomeasures that more carefullyhusband the water Whilesome of these prevent evapo-ration loss and have thereforebrought a net increase in effec-tive availability others havereduced availability (these in-clude a more careful wateringwhich results in reduced run-off and re-use)
3 Increased capture of waterwithin the land on which itfalls once water is recognizedas scarce landowners will seekto ensure it does not leave theirland NSW and Victoria haveplaced limits (a strict 10 percent in NSW) of water fallingon property as entitlements ofthe owner Queensland has notyet enacted an equivalent tothis Such adaptations of thecommon law are essentialhowever if downstream usersare not to be expropriatedThere is likely to be constant
bickering over water rights espe-cially if State Governments seek toelevate sharing issues and to sanc-tify them with claims about promot-
Daniel Pipes in The New York Posthas a very cogent explanation forwhy the Left appears to be so happywith the likes of Osama bin Ladenand Saddam Hussein
To be clear about their attitudeshe quotes the renowned Germanelectronic music composer KarlHeinz Stockhausen who saidstraight after the attack on NewYork that it was lsquothe greatest workof art for the whole cosmosrsquo
As Pipes and many of us observedaily there is barely a bad word tosay about Saddam Hussein nor aniota of sympathy for thoseoppressed tortured and murderedby his reacutegime Instead they venttheir fury against the AmericanPresident and British Prime Minister
Why the nonchalancePipes draws our attention to Lee
Harris writing in a recent issue ofthe Hoover Institutionrsquos journalPolicy Review According to KarlMarxrsquos central thesis the demise ofcapitalism hangs on workersgrowing poorer over timemdashwhichof course did not happen Sorather than give up on cherishedexpectations of socialist revolutionHarris notes Marxists tweaked theirtheory and looked instead to theentire populations of poor countriesto carry out the revolution Classanalysis went out the windowreplaced by geography
The trouble is they have tooverlook militant Islamrsquos slightly un-socialist practicesmdashsuch as itsimposing religious law excludingwomen from the workplace andpersecuting atheists
As Pipes sums up September 11and the prospect of war againstSaddam Hussein have exposed theLeftrsquos political self-delusionintellectual bankruptcy and moralturpitude
The Loopy Leftby Andrew McIntyre
ing an improved environment Realsolutions require the issue be placedwithin a normal commercial frame-work which involves1 Clarifying the property rights2 Allowing water rights to be
fully detachable from propertyand able to be used howeverthe holder wishes subject toany damage this might imposeon others
3 Ensuring full rights to buy andsell the water
4 Defining rights so as not to re-duce the quality of other usersThis means ensuring that farm-ing practices that do not bringgreater salination than somestandard
5 Allowing rights holders tobank their water and ensureeven greater certaintyAllocating specific individual
ownership rights to water and al-lowing its trade is a well-foundedmeans of maximizing the usevalue It would also be likely tohave the beneficial side-effects ofreducing salinity and farm-basedpollutants caused by intensiveuse We should grasp such oppor-tunities But if the impending sa-linity problem is as great as someclaim other solutions might wellinclude buying out some allocatedirrigatorsrsquo rights However alter-natives may be to remove saltfrom the water by engineering so-lutions or simply to live withhigher salt
NOTE1 Human drinking water should
be less than 800 ECs (electri-cal conductivity one ECequals about 06 mglitre)while higher levels are accept-able for much farming activity
Dr Alan Moran is Director Deregulation Unitat the Institute of Public Affairs
32 MARCH 2003
E V I E WR
Reading FileDone
eral political systems worldwidehave consistently accretedpower to the centre often in theface of clear constitutional im-peratives to the contrary) Ifeared instead that a UN thathad been patently successful insomethingmdashanythingmdashmightbe granted greater powers to thepoint where it would kill truediversity and individualism (ortry to anyway) through inevi-table bureaucratic practices
Is such a fear unfounded Ap-parently not if many peopleshare the moral touchstone ofthe Opposition Leader SimonCrean He believes according tohis own words in Parliamentthat what the UN SecurityCouncil declares is moral whatit refuses is immoral
The latest manoeuvrings overIraq have therefore been heart-
ening It seems that the desiresof the powers small and largeto promote their own interestswill continue to hobble the UN
The problem with a unitedworld is that as the threateningimpasse over Iraq suggestedthere are very divergent viewsabout how that world ought tobe run on an international leveljust as there are at national and
sub-national levels The virtueof multi-layered levels of gov-ernments is that competing ju-risdictions give the individual adegree of choice
The greatest sin of totalitar-ian governments past and pres-ent is to deny their citizens theright to leave The greatest dan-ger that the United Nationsposes as far off as it now (hap-pily) seems is that leaving its ju-risdiction is for all practical pur-poses impossible
THE IMPASSE JUST PASSEDI listened to Prime MinisterHoward speaking to the motionbefore Parliament in relation tothe war It was a good speechbut neither he nor PresidentBush seems able to structure andlay out an argument with thestyle and content of BritishPrime Minister Blair His equi-valent speech before the BritishCommons provides a masterfulsummary of the reasons for thiswar and includes an immenselyreadable time-line of the utterineffectiveness of the UN pro-cesses in dealing with Iraq Henicely deals with allegations ofthe lsquorushrsquo to war lsquoOur fault hasnot been impatience The truth
UNITED OR DIVIDEDI write just hours after US Presi-dent George W Bush has deliv-ered his ultimatum to Iraqi Presi-dent Saddam Hussein leave Iraqwithin 48 hours or be removedBy the time this appears beforeyour eyes you will knowwhether Hussein has decided hischances of survival will be sig-nificantly greater by choosingexile or by remaining in IraqThe recent creation of the In-ternational Criminal Court ofcourse makes war more likelysince Hussein can have no guar-antee of a peaceful lsquoretirementrsquo
In the event that Hussein re-mains in Iraq you will also knowwhether Bush has kept his wordand most likely the outcome ofthis military venture
This matter is immensely im-portant for the people of Iraqand for the military personnelinvolved (including our ownAustralian soldiers sailors andaviators) But then so was theprevious Gulf War the US in-vasion of Grenada the Austra-lian intervention in East Timorand so on But a difference be-tween the current conflict andthose others could be the impactit has upon international insti-tutions Actually just one inter-national institution the UnitedNations
Prior to the first Gulf War Ifeared the coalitionrsquos success forthe reason that some of it mighthave rubbed off onto the UnitedNations I hasten to deny that Ifear the UN as some vast con-spiracy for world domination Ifeared instead that it couldstumble into a piecemeal cen-tralization of power (just as Fed-
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
E V I E WRs
33MARCH 2003
E V I E WR
Reading FileDone
ATTACKING THE GLOBALGOVERNORSThe Cato Institute is a whole-some body as demonstrated byits opposition to such interna-tional organizations as the Inter-national Criminal Court and forthat matter the United Nationsitself Ted Galen Carpenter forexample argues in lsquoPutting theUnited Nations on Noticersquo thatthe UN can and has done somemodest good occasionally It ishe says lsquoa good idea to have aplace where governments cangather to air grievancesrsquo But headds if it lsquoattempts to acquire ataxing authority [or] raise astanding armyrsquo then the USshould withdraw (as indeedshould Australia) Because thatwould turn it into an lsquoembryonicsuperstate that would menacelibertyrsquo
Go to
wwwcatoorgforeignpolicyunhtml
THE INTERNATIONALORGANIZATIONS THEM-SELVESThe United Nations has beenaccused of being often ineffec-tive and always slow Well ev-ery time Irsquove hit the UNrsquos Web-site even with my nifty broad-band Internet connection slow-ness rules Perhaps the site isbeing continually accessed bythe teeming masses Anyway goto
wwwunorg
With 15 members alreadyand 13 more on the way thereremain hopes that the EuropeanUnion will be a force for a stable
twenty-first century Equallywith 15 members already exhib-iting rather divergent views overthe issue of Iraq and most of theforthcoming members sidingwith the United States perhapsthis is overly hopeful Go to
europaeuintindex_enhtm
Then there is the WorldTrade Organization the organi-zation behind which protection-ist nations can hide from unilat-eral trade liberalization by pre-tending to support multilateraltrade liberalization Go to
wwwwtoorg
And we mustnrsquot forget the In-ternational Criminal Court fearof which was no doubt a featureof Saddam Husseinrsquos rejection ofexile as an option and the furyof which is promised by a num-ber of prominent lawyers to bevisited upon our very own PrimeMinister Go to
wwwicc-cpiint
FEEDBACKI would welcome advice fromreaders on any other sites of inter-est to IPA Review readers E-mailme on scdawsonbigpondnetau
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
is our patience should have beenexhausted weeks and monthsand years agorsquo
Go to
wwwnumber10govukoutputPage3294asp
THE STRUGGLE BETWEENTHE CONTINENTSIf you are patient you can readthat wonderful British rag TheSpectator for free Last weekrsquoscopy is available on-line One ofits regular columnists is MarkSteyn an Americo-phile Cana-dian who has a robust turn ofphrase and an abiding disdain formuch modern music (whichseems to place him very comfort-ably into The Spectatorrsquos culturalmatrix)
His piece on the future de-cline of Europe vis-agrave-vis Ame-rica makes for fascinating read-ing Go to
wwwspectatorcouk
then click on the lsquoBack Issuesrsquobutton and choose the edition of15 March 2003
E V I E WR
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
API
Government will insist on the application of theNational Construction Code and implementationguidelines to all significant new projects which are fullyor partly federally funded
Directly or indirectly the federal Government fundsabout $5 billion worth of construction projects everyyear and is determined to use its role as client to drivechange in the industry In essence the NationalConstruction Code stipulates that construction projectsmust take place in conformity with the WorkplaceRelations Act Under the Code and implementationguidelines the federal Governmentwill not engage tenderers whoseworkplace agreements and practicesensure a closed shop on site The TaskForce (and any replacement body) willhave full access to federally fundedsites to ensure that the law is beingobserved and workplace agreementscomplied with
For the federal Government theissue is upholding the law and tryingto tackle the ldquounion rulesrdquo culturewhich is at the heart of lawlessness inthe industry For the states the issueis whether they are prepared to refusefederal money in order to protect theclosed shop However much theymight prefer different federal laws thestates ought to accept thatconstruction projects have to complywith the law as it stands includingthe law mandating compliance withcertified agreements
State Labor governments whichhave made a point of their middle-ground credentials risk losing some$4 billion a year in federal building and constructiongrants if they side with the union movementrsquos mostmilitant minority There are likely to be limits to Laborrsquosdefence of a union whose stock-in-trade (at least in somestates) is the site invasion and the demand for paymentand which quietly reinstates organisers sacked for assaultor perjury Opposition senators will find it hard to brandas ldquoideologicalrdquo the recommendations of a royalcommission which spent 171 days in public hearingsand which pursued 11 shop stewards and 97 unionofficials to obtain their side of the argument
As Justice Cole pointed out in his report previousattempts to reform the industry have proven ineffectivedespite two earlier royal commissions and numerous
SI-4 MARCH 2003
IPA REVIEW SPECIAL INSERT
enquiries Although this Royal Commissionrsquosinvestigations seem to have temporarily checkedlawlessness in the industry a campaign is now emergingto extend the anarchic culture of CBD construction intoregional centres and the domestic housing industryThings will certainly be different this time if parliamentapproves a permanent well resourced watchdog withnew powers new personnel and new attitudes Unlikeprevious arrangements a new statutory watchdog withthe powers of a law enforcement agency should beeffective and permanent
Hundreds of people took big riskswith their commercial future and eventheir personal security to testify to theRoyal Commission It should neveragain be so hard for people in thisindustry to exercise their ordinaryrights and responsibilities asAustralian citizens They expected theGovernment to take the Commissionrsquosreport seriously and the Governmentfor its part is determined not to letthem down The Governmentunderstands that joining fights yoursquorenot prepared to win only makes badsituations worse Establishing the ruleof law in the construction industry isa challenge Australia canrsquot afford tofailSome of the worldrsquos best workersshould no longer have to put up withsome of the worldrsquos worst industrialpractices They have a right to anhonest industry where they can earna fair dayrsquos pay for a fair dayrsquos workand expect to come home uninjuredThe enduring image of this industry
should not be noisy marchers replaying the ideologicalstruggles of the 1970s and raising clenched fists againstauthorities they donrsquot like At its best the Australianindustry is capable of work which is stunningly beautifulyet intensely practical and it now needs to performconsistently on time on budget and in accordance withlaw
Hundreds of peopletook big risks withtheir commercial
future and even theirpersonal security totestify to the Royal
Commission It shouldnever again be so
hard for people in thisindustry to exercisetheir ordinary rights
and responsibilities asAustralian citizens
NOTE
The foregoing speech was first delivered as an Addressto the National Press Club on 2 April 2003
21MARCH 2003
E V I E WR
IN psychology behaviouris defined as irrational ifan action continues to berepeated despite its re-
peated failure to achieve the desiredoutcome On this definition our aidpolicy towards Papua New Guineahas been irrational
Despite over twelve billion dol-lars in Australian aid to PNG sincethat countryrsquos independence in 1975key development indicators such asliteracy rates infant mortality lifeexpectancy and real income percapita are either stagnating or dete-riorating Worse wersquove known forover a decade1
Today acknowledgement of thefailure of our aid policy in PNG hasgone well beyond the writings of in-dividual international policy analystssuch as myself to institution-spon-sored reports such as Beyond Baliwhich was released by the AustralianStrategic Policy Institute (the Aus-tralian Governmentrsquos own strategicpolicy adviser) and Papua NewGuinea on the Brink which was writ-ten by Susan Windybank and MikeManning for the Centre for Indepen-dent Studies Both reports confirmthe gross failure of Australian aidpolicy in PNG
Yet still our aid policy irrational-ity towards Papua New Guinea con-tinues While the ASPI and CIS re-ports acknowledge the gross failureof our aid policy in PNG they alsoargue that we need to continue ouraid to that country Indeed the ASPIreport argues that we should increaseour aid to Papua New Guinea Thepolicy saviour The ASPI report ar-gues that we should exert greater con-trol over our aid Not just over theform of our aid but direct interven-tion in policy and implementation inPNGmdashin essence for a return to pre-
Aid Detox for PNGPETER URBAN
independence days in PNG whereas UN-sanctioned administrator weran government in that country
Despite the mind-frame of secu-rity-focused strategists such as thoseat ASPI and the CIS (which en-dorses the aid approach advocated byASPI) the reality is that we canrsquotPNG is now independent and to ig-nore this reality would simply com-pound the problems of our past aidpolicy irrationality with irrationalityabout our political relationship withour nearest neighbour
A more interventionist aid policytowards PNG on our part as advo-cated in Beyond Bali and by HughWhite (the executive director ofASPSI) in the media might havepopulist appeal but it would haveserious adverse implications for ourrelationship with other Pacific islandcountries and even IndonesiaWorse it would give succour to theviews of our east Asian critics (suchas Malaysian PM Dr Mahathir) whoclaim that Australia continues toharbour colonial aspirations
We have to accept that to be suc-cessful aid policy must not just helpreduce mass poverty it also has to doso as a guest in the aid recipientcountry To do otherwise is not aidbut imperialismmdashwhether inten-tional or not
A more interventionist approachto aid policy in PNG would also givethe current corrupt political elite inPort Moresby a rallying point againstus and an excuse to delay changingtheir own policies Neither Austra-lia nor PNG can afford any furtherdelays to policy reform For us to givePNG politicians yet another excuseto delay reform would be not onlyirrational it would be inexcusableWhile our aid continues so will thecorrupt elite that is at the heart ofPNGrsquos problems Until we send themessage to the PNG political elitethat we are prepared to stop ouraidmdashto put them on aid detoxmdashwewill continue to waste our aid in thecorruption that is PNG politics Itmay be hard to accept but the sadreality we face in PNG is that no aidmay prove to be good aid at least inthe short to medium-term2
NOTES
1 Peter Urban lsquoOne Clear ObjectiveNo Clear Approachrsquo IPA Review1997 Vol 50 No 1
2 With Iraq also likely to require verysignificant Australian aid fundingover the next few years the Gov-ernment will need to review our aidprogram as part of the 2003-04 fed-eral Budget A decision to suspendaid to PNG could be taken as partof that review
Peter Urban is former chief economist with theDepartment of Foreign Affairs and Trade
We have to accept
that to be successful
aid policy must not
just help reduce
mass poverty it also
has to do so as a
guest in the aid
recipient country
API
22 MARCH 2003
E V I E WR
IN his speech to the Na-tional Press Club on theprospect of war with Iraqand the case for disarma-
ment Prime Minister Howard statedthat Australia will play a significant hu-manitarian role in Iraq
If so the Howard Government needsto evaluate carefully the foreign-aid non-government organizations (FANGOs)which it funds to carry-out this humani-tarian programme Many FANGOshave made it clear that they do not sharethe Australian Governmentrsquos objectivesand values in Iraq Moreover some donot agree with the Governmentrsquos over-all aid policies in general
THE COALITION OF THEUNWILLINGIn the lead-up to latest Gulf War some30 Australian aid agencies put theirnames to an Open Letter to the PrimeMinister organized by the AustralianCouncil of Foreign and Overseas Aid(ACFOA) The aim of the letter was tolsquospeak out against war in Iraqrsquo and it ex-pressed grave concerns about the hu-manitarian consequences of the war andthe effects of the existing sanctions1 TheFANGOs that signed the letter wereOxfam Community Aid Abroad WorldVision Australia TEAR AustraliaUnion Aid Australia - APHEDACaritas Australia National Council ofChurches Australian Council for For-eign and Overseas Aid Save the Chil-dren Australia CARE Australia OzGreen United Nations Association ofAustralia Family Planning AustraliaMercy Works Marist Mission CentreAustralia Every Home for Christ Bap-tist World Aid for Christ CCF Austra-lia Quaker Service Australia Austra-lian Lutheran World Service AustralianRelief and Mercy Services AnglicanBoard of Mission AUSTCARE Com-munity Development and Health
Irreconcilable DifferencesDON DrsquoCRUZ
Hussein have been virtually ignored isa searing indictment of the warped ide-ology feeble analysis and moral blind-ness of the sector For them now to re-discover the plight of the Iraqi peopleand to invoke their name in the mediais beyond contempt
THE OXFAM COMMUNITYAID ABROAD POSITIONOf the 30 FANGO signatories to theopen letter Oxfam Community AidAbroad (OCAA) has been perhaps themost outspoken It opposed military ac-tionmdasheven with UN Security Councilapproval4 In spite of all the evidence tothe contrary OCAA was comfortablewith Saddam Husseinrsquos assurances thathe did not have weapons of mass destruc-tion5 Adopting the common policyagreed to by the other Oxfam affiliatesOCAA stated that it will not take anymoney from the lsquobelligerentsrsquomdasha quaintterm used to the describe democraticnations planning to disarm a dictatorguilty of countless human rights abuses
OCAArsquos outrage against the so-called lsquobelligerentsrsquo appears to be geo-graphically confined to Iraq OCAAappears happy to take governmentmoney from the belligerents elsewherearound the world
According to OCAArsquos ExecutiveDirector Andrew Hewitt refusing totake money from the belligerents wasdone to lsquoprotect its impartialityrsquo6 Thisis a very curious position from Australiarsquosarguably most political FANGOOCAA has a long track-record of beinganything but impartial or reluctant totake sides in miliary action It wasnrsquotimpartial in East Timor where it sidedwith Fretlin in its quest for indepen-dence According to its own testimonyto a Senate committee OCAA wasgiven the choice by the IndonesianGovernment between lsquoplaying politicsrsquoor delivering aid projects in Indonesia7
Group Amnesty International Austra-lia AngliCORD Australian Aid forCambodia Fund Burnet InstituteRedR Friends of the Earth PLAN Aus-tralia and Australian Volunteers Inter-national2
This open letter highlighted a num-ber of problems with the FANGOs sec-tor First it highlighted the weak logicthat passes for advocacy in the sectorThe letter argued against military actionwas critical of sanctions and suggestedthat nations should settle issues only bydiplomatic means It is a viewpointwhich totally ignores the fact that theGovernment had to deal with SaddamHussein
The shallowness of their logic wasbest exposed by the Prime Minister inhis response to the open letter in whichhe stated that the humanitarian situa-tion in Iraq is best addressed by SaddamHusseinrsquos removal and perhaps morepointedly that Saddamrsquos manipulationof foreign aid had allowed him to main-tain and pursue his weapons of mass de-struction capability and human rightsabuses3
Second it also highlighted the factthat the so-called lsquohuman rights-basedapproachrsquo to development (embraced byseveral of the signatories) is not so muchabout realizing human rights (as its pro-ponents argue) but is more about pro-viding them with an excuse to lsquoplay poli-ticsrsquo According to the theory the hu-man rights-based approach to develop-ment allows FANGOs to tackle the rootcauses of poverty and injustice
Yet the root cause of the Iraqipeoplersquos suffering can be summed up intwo simple wordsmdashSaddam HusseinThe fact that the FANGOs who sub-scribe to this particular approach havebeen obsessed with imaginary humanrights abuses committed by Shell NikeRio Tinto BHP-Billiton and AuroraGold while the activities of Saddam
23MARCH 2003
E V I E WR
It chose the former thus making it per-sona non grata in Indonesia for almost adecade8 It wasnrsquot impartial inMozambique when it sided with Frelimoin the countryrsquos civil war9 It wasnrsquot im-partial in Ethiopia when it developedlinks to the Eritrean Peoplersquos LiberationFront during its war against the thengovernment10 It was not impartial oranti-war when it sided with the TigrayPeoplersquos Liberation Front in the neigh-bouring province to Eritrea when thatgroup was waging a guerrilla war againstthe government11 And recently therehave been claims that in the Middle Eastit was little more than an lsquoeager propa-gandistrsquo for the Palestinians12
In East Timor Ethiopia and Mozam-bique OCAA was linked with organi-zations which supported direct militaryaction that led to the deaths of thou-sands of civilians In none of these loca-tions were the enemies of their friendany worse than Saddam Hussein In-deed in many cases OCAArsquos friendswere arguably no better than their en-emies in terms of human rights
OCAArsquos decision not to accept Aus-tralian Government funding is the cor-rect one in the sense that it clearly doesnot share the Governmentrsquos values onthe question of Iraq and thereforeshouldnrsquot receive any governmentmoney
Hewitt went on to state in a pressrelease that lsquoWe will not take funds thatmight allow a government to use hu-manitarian efforts as an instrument offoreign policyhelliprsquo13
This is finemdashexcept the AustralianGovernmentrsquos foreign aid is an instru-ment of foreign policy And it always hasbeen This is spelt out quite clearly inthe Australian Governmentrsquos latest for-eign and trade policy White Paper Ad-vancing the National Interest14
FANGOs that cannot accept thisrather basic proposition should not begetting taxpayersrsquo money They areclearly unsuitable for the task at hand
The consequences of Australian tax-payersrsquo money falling into the wronghands were brought home to Prime Min-ister Howard when he met IndonesianPresident Megawati Sukarnoputri to dis-cuss the war against terrorism and
Australiarsquos involvement against Iraq Atthe top of the Indonesian agenda wasthe issue of Australian funding toFANGOs being used to support sepa-ratist movements in Indonesia15
Post-war Iraq will be a better placewithout Saddam Hussein and his thugsThis does not mean that it will be a safeplace or necessarily a stable place Afterall one of the reasons for Western tol-eration of Saddam Hussein for manyyears was his ability to hold the various
ethnic minorities in Iraq together albeitrather brutally thereby maintaining abalance of power in the Middle East Hisdeparture would see strains on Iraq fromthe various ethnic minorities that makeup Iraq There is a strong chance thatIraq will fragment
The last thing the Australian Gov-ernment or any of the so-called belli-gerents needs in a post-war Iraq is west-ern NGOs running around and becom-ing self-styled advocates for national self-determination for Iraqrsquos ethnic minori-ties and injecting themselves into Iraqrsquosinternal politics This is a real risk Thebehaviour of Australian foreign aidNGOs in Indonesia should make Aus-tralian decision-makers extremely waryof funding any NGOs with Australiantaxpayersrsquo money so that they can oper-ate in Iraq
As things stand now FANGOs facevery few restrictions on their actionsfrom government If they undertake ac-tivity that is inconsistent with being anagent of government they may losefunding for specific projects or in moredramatic circumstances lose funding ina country Nonetheless they are gener-
ally able to access Australian Govern-ment funding for other projects andcountries In other words the penaltiesfor becoming caught up in political ac-tivities are very light for NGOs and posethem no serious problems
Foreign aid NGOs that lsquoplay politicsrsquoare unsuitable contractors for the deliv-ery of aid That these overtly politicalorganizations have been allowed to gaingovernment accreditation and receivegovernment funding points to some se-rious problems at AusAID Australiarsquosofficial aid agency The time has comefor this to change
NOTES1 httpwwwacfoaasnaumedia_releases
2003_releases26_3_03PDF2 httpwwwacfoaasnauemergencies
openletterPDF3 httpwwwacfoaasnauemergencies
iraq_responsehtm4 Oxfam Horizons Vol 3 No 1 (Febru-
ary 2003) page 25 Oxfam Community Aid Abroad lsquoIraq
Overviewrsquo February 20036 Hewitt quoted in Liz Gooch lsquoOxfam
wersquoll say no cashrsquo The Age 16 March2003
7 Community Aid Abroad Submission tothe Senate Foreign Affairs Defence andTrade References Committee Inquiryinto East Timor Downloaded at httpwwwcaaorg aucampaignssubmissionstimorhtml
8 Ibid9 Susan Blackburn Practical Visionaries A
Study of Community Aid Abroad (Mel-bourne Melbourne University Press1993) page 313
10 Ibid pages 325-333 passim11 Ibid12 Gerald Steinberg lsquoPropaganda vs Hu-
manitarianismrsquo Australian Financial Re-view 7 June 2002 Downloaded at httpfacultybiuacil~steingconflictopedpropvshumanitarianismhtm
13 ht tp wwwcaa o rg au p r 2003 iraqfundshtml
14 httpwwwdfatgovauani15 Dennis Shanahan lsquoJakarta fears aid funds
for rebellionrsquo The Australian 17 Febru-ary 2003 page 2
Don DrsquoCruz is Research Fellow at the IPAand Director of IPArsquos NGOWatch
OCAA has a longtrack-record of
being anything butimpartial or
reluctant to takesides in miliary
action
API
24 MARCH 2003
E V I E WR
GEORGE Bush Tony Blairand John Howard haveprovided many reasons forsupporting military action
against Iraq One of those reasons hasbecome known as the lsquohumanitarianrsquojustification Put simply the lsquohu-manitarianrsquo justification for the US-led invasion of Iraq is that such ac-tion is necessary to free the Iraqipeople from their totalitariandictator
Such an argument is attractive tothose who believe that there aresome fundamental human rights thatall individuals possess regardless ofwhere and how they live Whatserves as the source of those rightshas been the subject of debate forcenturies One of the pre-eminentstatements on the subject was madeby John Locke who in The SecondTreatise of Government wrote thatmankind was lsquoequal and indepen-dentrsquo and that lsquono-one ought to harmanother in his life health liberty orpossessionsrsquo
Saddam Husseinrsquos mass murdertorture and terror are reasonablyclear breaches of human rightsTherefore some would ask why thereshould be opposition to the UnitedStates and its allies taking whatevermeasures might be necessary totopple the Iraqi regime Surely thesame standard of behaviour that ap-plies to individuals applies also tonation states If an individual walk-ing in the street witnessed a rapeoccurring wouldnrsquot that individualbe entitled to do everything in hispower to stop the crime and assistthe victim
The point is of course that in-ternational law and convention do
After IraqIs Sovereignty Dead
JOHN ROSKAM
not allow nation states to act in thesame way as individuals Countriescannot simply lsquotake the law into theirown handsrsquo To restrain lsquovigilantestatesrsquo (who might be acting fromeither lsquogoodrsquo or lsquobadrsquo motives) a num-ber of legal and political theorieshave been developed One of theseis the doctrine of lsquosovereigntyrsquo whichprovides that states should not inter-vene in the domestic affairs of otherstates
In relation to Iraq the lsquosover-eigntyrsquo question is perhaps the stron-gest argument against the US-ledCoalition Most of the other criti-cisms of lsquohumanitarianrsquo interventionin Iraq are either grounded in simpleanti-Americanism or are fallaciousFor example there is the claim thatbecause some of the countries in theCoalition have previously ignoredHusseinrsquos cruelties therefore it is il-legitimate to take action now Sucha view has been expressed by aMelbourne international relationsacademic
While there is no disputing thebrutal nature of Saddam Hus-seinrsquos regime the case for inter-vention made by those in Can-berra London and Washingtonis weakened by the fact that atthe peak of Saddamrsquos crimes inthe late 1980s they were eitherdirectly supporting him withweapons technology and intelli-gence or were entirely indifferentto his behaviour Even if theyhave belatedly recognised theerror of their ways how seriouslycan we take their concerns aboutweapons of mass destruction nowgiven they were his suppliersthen1
On the basis of this argument itcould be said that Britainrsquos (andAustraliarsquos) case for intervening toassist Poland upon the German in-vasion in 1939 was lsquoweakenedrsquo be-cause Britain had previously acqui-esced to Germanyrsquos rearmament theremilitarization of the Rhinelandand the annexation of both Austriaand parts of Czechoslovakia Fewpeople who chanted lsquoFreedom forEast Timorrsquo said that the HowardGovernment should not act becausea quarter of a century before theWhitlam Government had been lsquoin-differentrsquo to Indonesiarsquos occupationof the island
There is also the claim that al-though Hussein is bad he is not theworst dictator in the world and thatit is hypocritical for the Americansto attack only Iraq This is an as-tounding proposition It attempts toapply to the United States a standardof behaviour that is impossible to sat-isfy Should the police not attemptto solve any crimes because theycanrsquot solve all crimes If a crime iscommitted by two people and thepolice arrest one perpetrator unlessthe other is also caught must the firstperpetrator be released When indi-viduals donate money for famine re-lief in Africa very few believe thattheir donation is pointless becauseit might prevent the starvation ofonly one person rather than thou-sands Christian ethics sets down norequirement that we should help no-one unless we can help everyone
The issue about state sovereigntyhowever is one that deserves to betaken seriously Regardless of onersquosopinions on the extent and limits ofstate sovereignty it is true that our
25MARCH 2003
E V I E WR
international relations system is builtupon the principle and to modify oroverturn it is a matter of some con-sequence
Even those who are generally sup-portive of the United States andtheir allies see the problem As it wasput by a leading commentator whenanalysing the Australian PrimeMinisterrsquos lsquohumanitarianrsquo justifica-tion for war
Finally Howardrsquos argumentagainst Hussein on human rightsis correct So is his moral case forwanting to liberate the Iraqipeople from their torment Theproblem however is that youcanrsquot trip around the worldwanting to overthrow regimesbecause of human rights2
Some would askmdashlsquowhy notrsquo Be-cause to do so would overthrow theUnited Nations Charter comes therejoinder And in turn the responseto that might bemdashlsquogoodrsquo
If itrsquos a choice between the main-tenance of the UN Charter and free-dom from tyranny freedom wins ev-ery time (although an internationallawyer sitting in Sydney might havea different view on this question fromthat of a political prisoner manacledin a Baghdad jail cell)
When the interests of lsquointerna-tional lawrsquo are more important thanthe life and liberty of individuals itcould be concluded that lsquothe Em-peror has no clothesrsquo Would inter-national law have sanctioned inter-vention to stop the Holocaust hadHitler not waged war and proceededwith his methods entirely within theconfines of the German territorialstate
Many who argue that lsquohumanitar-ianrsquo intervention in Iraq is not justi-fied because it infringes on thatcountryrsquos lsquosovereigntyrsquo would happilyhave other countries cede their po-litical sovereignty to supra-nationalbodies Certain features of the Inter-national Criminal Court overridethe principles of sovereignty but thatdid not stop a phalanx of interna-tional law experts urging sovereigngovernments to join it so as to en-
able the prosecution of war criminalsBut when it comes to actually stop-ping war crimes not simply prosecut-ing them that phalanx is largely si-lent
Without the doctrine of state sov-ereignty and without an arbiter fordetermining when interference withthe principle is justified (the roleclaimed by the United Nations andits Security Council) it is said thatstates would be free to impose theirown will and intervene in other
countries whose standards did notmeet their own (In The Second Trea-tise of Government Locke argued thata characteristic of a lsquostate of warrsquo be-tween individuals was the absence ofa superior authority to adjudicatedisputes and prevent individualsfrom administering justice them-selves)
Iraq might be claimed as a rea-sonably clear-cut case for interven-tion but other situations are notlikely to be as simple In Culture andEquality first published in 2001Brian Barry explored a lsquoliberalrsquo per-spective on this question
The liberal position is clearNobody anywhere in the worldshould be denied liberal pro-tections against injustice andoppression However in exactlythe same way as liberals arepragmatic about what liberalismmeans in terms of boundaries sohere the move from principle tointervention has to be mediated bypractical considerationshellip
[L]iberals are not so simple-mindedas to imagine that the answer toall violations of liberal rights is tosend in the Marines or even aUnited Nations force As in anyjust war theory there must be somedoctrine of lsquoproportionalityrsquohellip[S]carcely anybody would be infavour of the western powersinvading Saudi Arabia so at to sortout the way in which it lsquounjustlydenies political rights to women ornon-Muslimsrsquomdashaccording to theirliberal idea of justicersquo3
The question remainsmdashafterIraq what remains of lsquostate sover-eigntyrsquo Should the doctrine applyonly to lsquoliberal democraticrsquo statesSuch a solution might be attractiveto some lsquoliberalsrsquo but it doesnrsquot avoidthe problem of what exactly a lsquolib-eral democraticrsquo state is
One irony arising from the argu-ments about the war in Iraq is thatmany of those who have urged astrict application of lsquostate sover-eigntyrsquo principles in the past havegenerally supported the US-led in-tervention while those who havebeen willing to abridge or even aban-don the doctrine have had to rely onit to counter the lsquohumanitarianrsquo jus-tification for war
There are not many certaintiesabout the nature of the world afterthe war in Iraq but it can be saidwith some assurance that one defi-nite outcome is going to be a morevigorous debate about state sover-eignty
NOTES1 Scott Burchill lsquoThe humanitar-
ian arguments for this war are spu-riousrsquo The Age 21 March 2003
2 Paul Kelly lsquoThe hapless per-suaderrsquo The Australian 15ndash16March 2003
3 Brian Barry Culture and Equal-ity An egalitarian critique ofmulticulturalism Harvard Uni-versity Press page 138
John Roskam is a Research Fellow with the IPA
The lsquosovereigntyrsquo
question is perhaps
the strongest
argument against
the US-led
Coalition
API
26 MARCH 2003
E V I E WR
Which Way for theDemocrats
The 2002 mid-term elections were adramatic victory for President GeorgeW Bush and the Republicans Insteadof the historical norm of the partycontrolling the White House losingBushrsquos party gained seats in the Sen-ate House Governorsrsquo races andState legislatures The result was abitter disappointment for the Demo-crats and has led to a fierce debatebetween the Left and Centrists aboutthe future policy direction of the partytowards the 2004 elections
The Leftrsquos analysis is that the ma-jority of Americans are natural Demo-crats Electoral defeat was due to thefailure to energize that base of Demo-crats The party failed to distinguishitself sufficiently from Bush and thusgive their voters a reason to turn outWhile the majority of Democrats op-posed Bush on tax cuts and the warwith Iraq a significant minority sup-ported him and campaigned on thatsupport The result the Left claimwas that the Democrats lacked a con-sistent message in contrast to Bush
Support for this argument can befound in the higher turnout amongstRepublicans than Democrats in 2002while in 2000 the combined vote forGore and Nader was 51 per cent Aninfluential book by John Judis andRuy Texeira identified lsquoThe Emerg-ing Democrat Majorityrsquo Theyclaimed that growing demographicgroups trended Democrat includingthe young socially liberal profession-als minorities and women
What policies would motivate thisnatural Democrat base The Left callfor rescinding the Bush tax cut a classwar against the corporate world amajor increase in lsquopublic investmentrsquoin schools childcare health care and
Letter from AmericaNIGEL ASHFORD
public transport and strong opposi-tion to the war
Centrists however have a verydifferent analysis of the Democratsrsquoproblems the public did not trustthem to pursue the war against ter-rorism vigorously to keep down taxesto spend their tax dollars wisely or toreflect their cultural values
A Gallup opinion poll found that57 per cent of Americans askedthought that the Democrats were nottough enough on the war on terror-ism while 64 per cent thought theRepublicans were There was the per-ception that the Democrats were notserious on the issue and just playingpolitics Evidence for this was the de-bate over the new Department ofHomeland Security blocked becausethe Democrats wanted to protectunion rights while the President de-manded more flexibility to deploy theworkforce Many voters saw the issueas the national interest versus a spe-cial interestmdashin this case that of theunions The Democrats were seen asputting the interests of one of theirmajor constituencies before nationalsecurity
The Democratic LeadershipCouncil in lsquoThe Road Aheadrsquo by AlFrom and Bruce Reed presented theCentrist case lsquoStop pretending wecan win a majority simply by energiz-ing our basersquo The Democrats were
not trusted on the war against terror-ism were hostile to the cultural con-cerns of many working-class Demo-crats on abortion and guns and stillseen as the tax-and-spend party lsquoToomany Americans donrsquot trust us tokeep their taxes down or to spendtheir money wellrsquo
The Centrist agenda is to stronglyprosecute the war against terrorismwhether against al-Qarsquoeda Saddam orothers and to abandon knee-jerk iso-lationism arising from the experienceof the Vietnam War to defend capi-talism and support small investorsagainst irresponsible managers to cutpayroll taxes and to downplay thecultural issues that divide Democrats
Which path will the Democratstake The Left is in the ascendancyMost of the remaining Democrats inoffice come from left-wing districtsNancy Pelosi a left-liberal from SanFrancisco was easily elected the newleader of the House Democrats over-whelming her Centrist opponent andrising star African-American HaroldFord The early field of presidentialcandidates for 2004 is dominated bythe Left tendency including SenatorJohn Kerry Representative DickGephardt Governor Howard DeanRev Al Sharpton former SenatorCarol Moseley-Braun and Represen-tative Dennis Kucinich Only Sena-tor Joe Lieberman and Senator JohnEdwards represent the Centrist wing
The future of US politics may de-pend on which road the Democratsdecide to take The US is currently alsquo50ndash50rsquo nation evenly balanced be-tween the parties A left turn couldlead to Republican dominance farinto the future
Dr Nigel Ashford is at the Institute of Humane Studiesat George Mason University and is co-author of US
Politics Today (Manchester University Press)
API
27MARCH 2003
E V I E WR
Trusting TonyFrankly itrsquos all just too depressing Theeconomyrsquos heading for trouble Busi-ness confidence is low investment in2002 was 92 per cent lower than theprevious year and manufacturing in-vestment was nearly 18 per cent downThe budget deficit is spiralling becauseour once lsquoprudentrsquo Chancellor (trea-surer) Gordon Brown made over-opti-mistic growth projections and startedthrowing money at problems
Therersquos a load of health-and-safetyand anti-discrimination measuresthatmdashto put it most politelymdashare ex-amples of letting the best be the en-emy of the good Every school tripneeds a formal risk assessment withthe result that many trips are simplynot taking place New trains orderedfor London commuter routes wonrsquothave toilets because the rules say thatat least one toilet in each four-car unitmust be wheelchair-accessible whichwould have cost ten or a dozen seatson every overcrowded train
Some of this is just insane Somelocal authorities say that safety at workrules mean that home-care workersmustnrsquot lift the disabled people theyare looking after Or therersquos rail safetyUntil recently we were seriously pro-posing to spend $10 billion on a bet-ter system to stop trains going throughred signals On average this would havesaved the lives of about three passen-gers every four years which is a lousybargain compared with other safety in-vestments Worse it would also havereduced the capacity of the networkby up to 15 per cent and forced morepeople onto the roads which are muchmore dangerous than even ourclapped-out railways The result was aprojected net increase of 13 to 21 deathsper year
Meanwhile in London the Cen-tral line of the Underground has been
Letter from LondonJOHN NURICK
API
closed for weeks after a train derailedwhen one of its motors fell off Therewere no deaths or major injuries in theaccidentmdashbut itrsquos a safe bet that someof the people who havenrsquot been ableto use the Central line have been in-jured or killed on the roads
What can one say If the authori-ties took the same attitude to the riskof fatal accidents in the health serviceevery hospital in the country wouldhave been closed for years
Despite all this the Conservativesare still hopeless Their leader IanDuncan Smith has a new wheezewhen a journalist asks him anythingdifficult he chortles merrily and saysitrsquos the most uninteresting questionimaginable and hersquos not going to wasteanyonersquos time by answering it His col-leagues have their knives out for him
Meanwhile in spite of the govern-mentrsquos problems with the economy andthe public services Tony Blair is grow-ing in stature having his waymdashandantagonising large sections of his ownparty in the process On several recentissues he has faced down the formi-dable Gordon Brown in a way that notlong ago was hard to imagine
Then he shocked everyone by com-ing out against having elected mem-bers in the reformed House of Lordswhen most voters want an all-elected
chamber and most MPs want a partly-elected one In the event Parliamentcouldnrsquot agree on any of the optionsfor reform so wersquore stuck with the sta-tus quomdashwhich is fine by Mr Blair
Then therersquos the war By the timeyou read this it may be over or we maystill be waiting or our lads may befighting Mr Blairrsquos strong line againstIraq has made him very unpopular Theanti-war march on 15 February was thebiggest demonstration London hasever seen A few days later 122 Labourbackbenchers voted against the gov-ernment and many more abstained
Mr Blair didnrsquot budge War is a se-rious thing he says lsquoBut in a situationsuch as this you have to do what youbelieve to be right because thatrsquos theprice of having responsibilityrsquo1
He has often been accused of gov-erning by focus group Certainly he hasseemed reluctant to antagonise anypowerful group That has clearlychanged In a sense his stand on Iraqmerely follows his action in sendingtroops to Sierra Leone and Kosovomdashbut it has stirred up far stronger domes-tic and international opposition
The irony is that now when he re-ally needs people to trust him wedonrsquot Even in the desperately seriousbusiness of justifying an unpopular warDowning Street canrsquot play it straightremember the dossier from lsquointelli-gence sourcesrsquo that turned out to belargely cribbed from a PhD thesis onthe Internet
NOTE1 The Guardian 1 March 2003
John Nurick is a management consultant based in theSouth of England From 1985 to 1990 he was
editorial director of the Australian Institute for PublicPolicy and later edited newsletters reporting on theUK Parliament and European Union institutions
28 MARCH 2003
E V I E WR
KEVIN DONNELLY
Private EducationEquals Public Good
When it comes to choosing be-tween government and non-gov-ernment schools Australian par-ents are lsquovoting with their feetrsquo Asshown by recent ABS figures(Schools Australia 2002) over thelast decade there has been a dra-matic increase in non-governmentschool enrolments
Approximately 30 per cent ofstudents now attend non-govern-ment schools compared with 22per cent in 1980 and 28 per centin 1990 Over the last decadewhile the number of governmentschools has fallen by 64 per centnon-government schools havegrown by 61 per cent
Of course not everybody valuesparentsrsquo right to choose and theAustralian Education Union(AEU) Labor governments andlsquoleft-wingrsquo academics in particularconsistently argue against non-government schools
One of the arguments put for-ward by those opposed to givingparents greater freedom of choiceis that government schools are bet-ter at promoting social cohesionand a strong sense of what KenBoston the ex-head of the NSWEducation Department terms lsquothebonds of civic friendshiprsquo
The assumption is that becausestudents attend non-governmentschools there will be greater socialdivisiveness and a breakdown inthe civic values needed to hold so-ciety together But there is no cred-ible evidence offered to support theclaim that government schools arebetter at promoting the commongood
In fact there is much to provethe opposite
First as anyone familiar withthe lsquoculture warsrsquo and politicallycorrect curricula will know insteadof government-controlled educa-tion promoting unity and cohe-sion it has led to public angst andparental complaints
Witness the very bitter debatein Queensland a year or two agowhen the government-mandatedStudies of Society and Environ-ment (SOSE) curriculum was in-troduced into schools Such was
the lsquoleft-wingrsquo bias in the curricu-lum in particular in the areas ofmulticulturalism and the environ-ment that many parents felt be-trayed
The Queensland debate is mir-rored by what is happening in theUnited States As noted by Ste-phen Arons in his book Short Routeto Chaos instead of promotingunity government control of thecurriculum leads to the opposite
What the school wars tell us isthat somehow we have been
Education Agenda
transforming a vital instrumentfor creating social cohesioninto a source of division andhostility that there is some-thing built into the structure ofpublic schooling that under-mines one of its most importantfunctionsAronrsquos argument that govern-
ment schools no longer transmit aviable sense of a common cultureor agreed civic values is reinforcedby another noted United Stateseducationalist Diane Ravitch
In a recent article in the jour-nal Education Next Ravitch be-moans the impact of cultural rela-tivism and the post-modern on theschool curriculum (where there areno commonly agreed values) andeven goes so far as to argue thatparents should be free to choosenon-government schools becausesuch schools have a better chanceof reflecting their values
In the current education sys-tem with the public schoolscommitted to multiculturalismbilingualism and other forms ofparticularism it is difficult toargue that parents should notbe able to choose schools thatmeet their cultural needsSecond if one accepts that lsquoso-
cial capitalrsquomdashthe networks volun-tary associations and civic bondsthat hold a community togethermdashis important for the health of ademocratic society then non-gov-ernment schools clearly have theadvantage
Unlike the government schoolsystem characterized by a heavy-handed centralized bureaucracyand teacher union control non-government schools are closer tothe communities they serve Bytheir very nature non-government
There is no credible
evidence offered to
support the claim
that government
schools are better
at promoting the
common good
29MARCH 2003
E V I E WR
ALAN MORAN
The lsquoRrsquo Files
Private propertyrights the key toachieving efficiency inrural water use
WATER IN AUSTRALIAWater has always been a definingissue in Australiarsquos prosperityAnd in recent decades irrigationhas grown rapidly Even so theproportion of Australia that is ir-rigated at two per cent of theland comprises a share that isamongst the lowest among OECDcountries Only Canada and therainiest countries New Zealandand the UK have lower sharesthat of the US is 11 per cent andin Japan it reaches 60 per cent
Modern agriculture is only 200years old in Australia and thoughin the first 100 years agriculturalproductivity was increased toequal that of anywhere in theworld gains continue to bemademdashoutput has doubled overthe past 50 years a growth thatcould not have taken place with-out a similar expansion of irriga-tion Irrigation in the MurrayndashDarling agricultural provincealone contributes $5 billion toAustralian agricultural outputand non-irrigated agriculture inthe region contributes a further $5billion This makes the areawhich comprises 14 per cent ofAustraliarsquos land mass responsiblefor a third of the nationrsquos $35 bil-lion agricultural output
Applying Property Rights to WaterMost of the uses of water involvechoices or compromisesmdashdrink-ing water versus irrigation versus
industrial and so on Some how-ever involve complementaritiesparticularly certain recreationaluses such as water sports that arefacilitated by storage and consis-tent availability
In many cases water will per-form sequential functionsmdashthesame water can be used and re-used for irrigation used for indus-trial cooling and finish as drink-ing water Water with differentsometimes competing productiveuses will be optimally used as longas two conditions are in placeThe first is that its ownership isclearly specified and the ownersrsquoobligations to other users (orclaims from other beneficiaries)are well understood The secondrequires each property right to betradable to enable acquisition bythose who value it most therebymaximizing its value
The rights specification andtherefore property ownership canrarely commence with a cleansheet of paper People acquire in-dividual rights to property ini-tially through a variety of routesOne of these is seizure of some-thing that was originally of littlevalue until it was acquired and im-proved Squatters assume rights inthis way However they are firstacquired they need to be tradableAPI
schools establish strong commu-nity networks and have a greaterreliance on the voluntary work ofparents
That non-government schoolsare more effective in this regard issupported by research into lsquoChar-ter schoolsrsquo in the United StatesAs noted by Chester Finn at theFordham Foundation giving localcommunities lsquoownershiprsquo overtheir school builds networks oftrust and reciprocity so vital forsocial cohesion
Social capital also relies on citi-zens being disciplined and orderedin their behaviour Selfishness vio-lent behaviour and rudeness act tofragment the community instead ofpromoting cohesion According toa number of Australian surveys itis here once again that non-gov-ernment schools are seen to bemore effective
As noted by the Centre for In-dependent Studies researcher Jen-nifer Buckingham in The Truthabout Private Schools in Australiawhen analysing why so many par-ents forsake the government schoolsystem
When comparing independentprivate schools with publicschools the major theme thatemerged was not differences inacademic standards and curri-culum but issues of disciplineand order The surveyed par-ents felt that the behaviour andattitudes of students in publicschools was unacceptablehellipAll accept that non-govern-
ment schools achieve better aca-demic results provide greater cur-riculum flexibility and save Aus-tralian taxpayers millions of dol-lars Equally as important is theargument that such schools streng-then Australiarsquos civic health andstock of lsquosocial capitalrsquo
Dr Kevin Donnelly is Director of EducationStrategies a Melbourne-based consulting group
E-mailkevindnetspacenetau
s
30 MARCH 2003
E V I E WR
and relatively inviolable Thisprovides the incentive for them tobe improved and for their ownersand others to search out ways inwhich the assets they representcan be used to provide increasedvalue or other benefits
If confidence in the exclusiv-ity an owner has over the prop-erty right is lost or was neverpresent the asset will be used lessproductively For example own-ers will milk them for their cur-rent-use value rather than trade-off present value for a future valuethat is less certain
Even without a total emascu-lation of individual rights (for ex-ample when title to the propertydepends on continuing govern-mental assent) lack of certaintybrings lower incomes and dimin-ished asset protection One out-come of this can be observed inthe MurrayndashDarling system Wa-ter rights on the Victorian side ofthe Murray are secure while thoseon the NSW side have been over-allocated and are subject to ad-ministrative discretion includinghaving a firm duration of only tenyears In Victoria high securitywater (available 95 per cent of thetime) comprises the great bulk ofentitlements In contrast in
NSW high security water is avail-able only 60-80 per cent of thetime The result is that farmers onthe Victorian side plant perennialcrops while those in NSW tendto focus on annual crops espe-cially rice
There are claims that Victoriarsquosmore robust property rights meanthat the State Government haslost lsquocapabilityrsquo to manage com-pared with NSW The flip side ofthis is the increased risk and as-sociated lower value of productionnorth of the Murray where prop-erty rights are attenuated Gov-ernments that give themselves in-creased capacity to direct produc-tion or to take individualrsquos prop-erty will need to accept lower lev-els of income and output
IRRIGATION ENVIRON-MENTAL BENEFITS AND SA-LINITY
The Types of IssuesIssues stemming from irrigationcomprise two types those impact-ing on the environment and thoseimpacting on private uses Theformer includes issues such as pre-venting loss of species ensuringthat certain sorts of species flourishand avoiding unattractive growths
such as blue-green algae which re-sult from fertilizer build-up
The second involves economicimpacts on different users
While environmental flows toensure species flourish are oftenhighlighted salinity is the mainfocus And while salinity has animpact on the environment itsimportance is in the conflict of in-terest between productive usersmdashthe complaint of lsquodamaged goodsrsquoby downstream users against thoseupstream
The MurrayndashDarling Basin Sa-linity Strategy 2001ndash2015 has es-timated that increased salinitybrings costs of $294 million perannum to the basin
Yet data on the salinity of theMurray Darling shows levels up-stream of South Australia arelower than they were in the early1980s and are only seriously abovethese levels as the river ap-proaches its mouth at the GoolwaBarrage
The Basin Salinity Manage-ment Strategy argues that progressachieved over the past decade willlsquobe cancelled within 20-50 yearsand median salinity levels wouldexceed the Australian DrinkingWater Guidelines for good waterquality within 50-100 yearsrsquo Thecause of this is said to be risinggroundwater tables due to land usechanges across the Basin
The disputes over salinizationare largely disputes between com-mercial parties Full specificationof rights and obligations will al-low these to be resolved as longas the impacts are measurabletheir causes identifiable and thevarious rights and obligations areknown and stable In this respecttechnology to measure salt in wa-ter and to trace increases to par-ticular locations is readily avail-able
Agreements about the alloca-tion of water rights between ju-risdictions and to the main irri-gation provinces have been inplace for over a century In the
Average Salinity in the River Murray (EC Units)1
3500
3000
2500
2000
1500
1000
500
0
January 2003
July 2002ndashJanuary 2003
July 1982ndashJanuary 2003
Hume D
am
Swan
Hill
Merbein
Morgan
Milang
Mening
ie
Goolw
a
Barra
ge
31MARCH 2003
E V I E WR
I
API
Musinghellipcase of the Murray the lsquocaprsquo onwater abstractions agreed betweenthe various jurisdictions in 1995largely validated agreements madeearly in the last century and be-fore Disturbing these agreementswould greatly undermine the trustin the sanctity of property rightsand seriously reduce agriculturalproductivity Hence increased al-locations for certain parties or forcertain uses (including environ-mental flows) would need to bepurchased at market prices
Developments in Australiaover recent decades have con-spired to make irrigation water farmore valuable This is exacer-bated by1 Activation of NSW lsquosleeperrsquo
and lsquodozerrsquo water rights as a re-sult of the increased scarcityvalue a change that bringseven greater pressure on theavailable supply
2 Increased scarcity leading tomeasures that more carefullyhusband the water Whilesome of these prevent evapo-ration loss and have thereforebrought a net increase in effec-tive availability others havereduced availability (these in-clude a more careful wateringwhich results in reduced run-off and re-use)
3 Increased capture of waterwithin the land on which itfalls once water is recognizedas scarce landowners will seekto ensure it does not leave theirland NSW and Victoria haveplaced limits (a strict 10 percent in NSW) of water fallingon property as entitlements ofthe owner Queensland has notyet enacted an equivalent tothis Such adaptations of thecommon law are essentialhowever if downstream usersare not to be expropriatedThere is likely to be constant
bickering over water rights espe-cially if State Governments seek toelevate sharing issues and to sanc-tify them with claims about promot-
Daniel Pipes in The New York Posthas a very cogent explanation forwhy the Left appears to be so happywith the likes of Osama bin Ladenand Saddam Hussein
To be clear about their attitudeshe quotes the renowned Germanelectronic music composer KarlHeinz Stockhausen who saidstraight after the attack on NewYork that it was lsquothe greatest workof art for the whole cosmosrsquo
As Pipes and many of us observedaily there is barely a bad word tosay about Saddam Hussein nor aniota of sympathy for thoseoppressed tortured and murderedby his reacutegime Instead they venttheir fury against the AmericanPresident and British Prime Minister
Why the nonchalancePipes draws our attention to Lee
Harris writing in a recent issue ofthe Hoover Institutionrsquos journalPolicy Review According to KarlMarxrsquos central thesis the demise ofcapitalism hangs on workersgrowing poorer over timemdashwhichof course did not happen Sorather than give up on cherishedexpectations of socialist revolutionHarris notes Marxists tweaked theirtheory and looked instead to theentire populations of poor countriesto carry out the revolution Classanalysis went out the windowreplaced by geography
The trouble is they have tooverlook militant Islamrsquos slightly un-socialist practicesmdashsuch as itsimposing religious law excludingwomen from the workplace andpersecuting atheists
As Pipes sums up September 11and the prospect of war againstSaddam Hussein have exposed theLeftrsquos political self-delusionintellectual bankruptcy and moralturpitude
The Loopy Leftby Andrew McIntyre
ing an improved environment Realsolutions require the issue be placedwithin a normal commercial frame-work which involves1 Clarifying the property rights2 Allowing water rights to be
fully detachable from propertyand able to be used howeverthe holder wishes subject toany damage this might imposeon others
3 Ensuring full rights to buy andsell the water
4 Defining rights so as not to re-duce the quality of other usersThis means ensuring that farm-ing practices that do not bringgreater salination than somestandard
5 Allowing rights holders tobank their water and ensureeven greater certaintyAllocating specific individual
ownership rights to water and al-lowing its trade is a well-foundedmeans of maximizing the usevalue It would also be likely tohave the beneficial side-effects ofreducing salinity and farm-basedpollutants caused by intensiveuse We should grasp such oppor-tunities But if the impending sa-linity problem is as great as someclaim other solutions might wellinclude buying out some allocatedirrigatorsrsquo rights However alter-natives may be to remove saltfrom the water by engineering so-lutions or simply to live withhigher salt
NOTE1 Human drinking water should
be less than 800 ECs (electri-cal conductivity one ECequals about 06 mglitre)while higher levels are accept-able for much farming activity
Dr Alan Moran is Director Deregulation Unitat the Institute of Public Affairs
32 MARCH 2003
E V I E WR
Reading FileDone
eral political systems worldwidehave consistently accretedpower to the centre often in theface of clear constitutional im-peratives to the contrary) Ifeared instead that a UN thathad been patently successful insomethingmdashanythingmdashmightbe granted greater powers to thepoint where it would kill truediversity and individualism (ortry to anyway) through inevi-table bureaucratic practices
Is such a fear unfounded Ap-parently not if many peopleshare the moral touchstone ofthe Opposition Leader SimonCrean He believes according tohis own words in Parliamentthat what the UN SecurityCouncil declares is moral whatit refuses is immoral
The latest manoeuvrings overIraq have therefore been heart-
ening It seems that the desiresof the powers small and largeto promote their own interestswill continue to hobble the UN
The problem with a unitedworld is that as the threateningimpasse over Iraq suggestedthere are very divergent viewsabout how that world ought tobe run on an international leveljust as there are at national and
sub-national levels The virtueof multi-layered levels of gov-ernments is that competing ju-risdictions give the individual adegree of choice
The greatest sin of totalitar-ian governments past and pres-ent is to deny their citizens theright to leave The greatest dan-ger that the United Nationsposes as far off as it now (hap-pily) seems is that leaving its ju-risdiction is for all practical pur-poses impossible
THE IMPASSE JUST PASSEDI listened to Prime MinisterHoward speaking to the motionbefore Parliament in relation tothe war It was a good speechbut neither he nor PresidentBush seems able to structure andlay out an argument with thestyle and content of BritishPrime Minister Blair His equi-valent speech before the BritishCommons provides a masterfulsummary of the reasons for thiswar and includes an immenselyreadable time-line of the utterineffectiveness of the UN pro-cesses in dealing with Iraq Henicely deals with allegations ofthe lsquorushrsquo to war lsquoOur fault hasnot been impatience The truth
UNITED OR DIVIDEDI write just hours after US Presi-dent George W Bush has deliv-ered his ultimatum to Iraqi Presi-dent Saddam Hussein leave Iraqwithin 48 hours or be removedBy the time this appears beforeyour eyes you will knowwhether Hussein has decided hischances of survival will be sig-nificantly greater by choosingexile or by remaining in IraqThe recent creation of the In-ternational Criminal Court ofcourse makes war more likelysince Hussein can have no guar-antee of a peaceful lsquoretirementrsquo
In the event that Hussein re-mains in Iraq you will also knowwhether Bush has kept his wordand most likely the outcome ofthis military venture
This matter is immensely im-portant for the people of Iraqand for the military personnelinvolved (including our ownAustralian soldiers sailors andaviators) But then so was theprevious Gulf War the US in-vasion of Grenada the Austra-lian intervention in East Timorand so on But a difference be-tween the current conflict andthose others could be the impactit has upon international insti-tutions Actually just one inter-national institution the UnitedNations
Prior to the first Gulf War Ifeared the coalitionrsquos success forthe reason that some of it mighthave rubbed off onto the UnitedNations I hasten to deny that Ifear the UN as some vast con-spiracy for world domination Ifeared instead that it couldstumble into a piecemeal cen-tralization of power (just as Fed-
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
E V I E WRs
33MARCH 2003
E V I E WR
Reading FileDone
ATTACKING THE GLOBALGOVERNORSThe Cato Institute is a whole-some body as demonstrated byits opposition to such interna-tional organizations as the Inter-national Criminal Court and forthat matter the United Nationsitself Ted Galen Carpenter forexample argues in lsquoPutting theUnited Nations on Noticersquo thatthe UN can and has done somemodest good occasionally It ishe says lsquoa good idea to have aplace where governments cangather to air grievancesrsquo But headds if it lsquoattempts to acquire ataxing authority [or] raise astanding armyrsquo then the USshould withdraw (as indeedshould Australia) Because thatwould turn it into an lsquoembryonicsuperstate that would menacelibertyrsquo
Go to
wwwcatoorgforeignpolicyunhtml
THE INTERNATIONALORGANIZATIONS THEM-SELVESThe United Nations has beenaccused of being often ineffec-tive and always slow Well ev-ery time Irsquove hit the UNrsquos Web-site even with my nifty broad-band Internet connection slow-ness rules Perhaps the site isbeing continually accessed bythe teeming masses Anyway goto
wwwunorg
With 15 members alreadyand 13 more on the way thereremain hopes that the EuropeanUnion will be a force for a stable
twenty-first century Equallywith 15 members already exhib-iting rather divergent views overthe issue of Iraq and most of theforthcoming members sidingwith the United States perhapsthis is overly hopeful Go to
europaeuintindex_enhtm
Then there is the WorldTrade Organization the organi-zation behind which protection-ist nations can hide from unilat-eral trade liberalization by pre-tending to support multilateraltrade liberalization Go to
wwwwtoorg
And we mustnrsquot forget the In-ternational Criminal Court fearof which was no doubt a featureof Saddam Husseinrsquos rejection ofexile as an option and the furyof which is promised by a num-ber of prominent lawyers to bevisited upon our very own PrimeMinister Go to
wwwicc-cpiint
FEEDBACKI would welcome advice fromreaders on any other sites of inter-est to IPA Review readers E-mailme on scdawsonbigpondnetau
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
is our patience should have beenexhausted weeks and monthsand years agorsquo
Go to
wwwnumber10govukoutputPage3294asp
THE STRUGGLE BETWEENTHE CONTINENTSIf you are patient you can readthat wonderful British rag TheSpectator for free Last weekrsquoscopy is available on-line One ofits regular columnists is MarkSteyn an Americo-phile Cana-dian who has a robust turn ofphrase and an abiding disdain formuch modern music (whichseems to place him very comfort-ably into The Spectatorrsquos culturalmatrix)
His piece on the future de-cline of Europe vis-agrave-vis Ame-rica makes for fascinating read-ing Go to
wwwspectatorcouk
then click on the lsquoBack Issuesrsquobutton and choose the edition of15 March 2003
E V I E WR
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
21MARCH 2003
E V I E WR
IN psychology behaviouris defined as irrational ifan action continues to berepeated despite its re-
peated failure to achieve the desiredoutcome On this definition our aidpolicy towards Papua New Guineahas been irrational
Despite over twelve billion dol-lars in Australian aid to PNG sincethat countryrsquos independence in 1975key development indicators such asliteracy rates infant mortality lifeexpectancy and real income percapita are either stagnating or dete-riorating Worse wersquove known forover a decade1
Today acknowledgement of thefailure of our aid policy in PNG hasgone well beyond the writings of in-dividual international policy analystssuch as myself to institution-spon-sored reports such as Beyond Baliwhich was released by the AustralianStrategic Policy Institute (the Aus-tralian Governmentrsquos own strategicpolicy adviser) and Papua NewGuinea on the Brink which was writ-ten by Susan Windybank and MikeManning for the Centre for Indepen-dent Studies Both reports confirmthe gross failure of Australian aidpolicy in PNG
Yet still our aid policy irrational-ity towards Papua New Guinea con-tinues While the ASPI and CIS re-ports acknowledge the gross failureof our aid policy in PNG they alsoargue that we need to continue ouraid to that country Indeed the ASPIreport argues that we should increaseour aid to Papua New Guinea Thepolicy saviour The ASPI report ar-gues that we should exert greater con-trol over our aid Not just over theform of our aid but direct interven-tion in policy and implementation inPNGmdashin essence for a return to pre-
Aid Detox for PNGPETER URBAN
independence days in PNG whereas UN-sanctioned administrator weran government in that country
Despite the mind-frame of secu-rity-focused strategists such as thoseat ASPI and the CIS (which en-dorses the aid approach advocated byASPI) the reality is that we canrsquotPNG is now independent and to ig-nore this reality would simply com-pound the problems of our past aidpolicy irrationality with irrationalityabout our political relationship withour nearest neighbour
A more interventionist aid policytowards PNG on our part as advo-cated in Beyond Bali and by HughWhite (the executive director ofASPSI) in the media might havepopulist appeal but it would haveserious adverse implications for ourrelationship with other Pacific islandcountries and even IndonesiaWorse it would give succour to theviews of our east Asian critics (suchas Malaysian PM Dr Mahathir) whoclaim that Australia continues toharbour colonial aspirations
We have to accept that to be suc-cessful aid policy must not just helpreduce mass poverty it also has to doso as a guest in the aid recipientcountry To do otherwise is not aidbut imperialismmdashwhether inten-tional or not
A more interventionist approachto aid policy in PNG would also givethe current corrupt political elite inPort Moresby a rallying point againstus and an excuse to delay changingtheir own policies Neither Austra-lia nor PNG can afford any furtherdelays to policy reform For us to givePNG politicians yet another excuseto delay reform would be not onlyirrational it would be inexcusableWhile our aid continues so will thecorrupt elite that is at the heart ofPNGrsquos problems Until we send themessage to the PNG political elitethat we are prepared to stop ouraidmdashto put them on aid detoxmdashwewill continue to waste our aid in thecorruption that is PNG politics Itmay be hard to accept but the sadreality we face in PNG is that no aidmay prove to be good aid at least inthe short to medium-term2
NOTES
1 Peter Urban lsquoOne Clear ObjectiveNo Clear Approachrsquo IPA Review1997 Vol 50 No 1
2 With Iraq also likely to require verysignificant Australian aid fundingover the next few years the Gov-ernment will need to review our aidprogram as part of the 2003-04 fed-eral Budget A decision to suspendaid to PNG could be taken as partof that review
Peter Urban is former chief economist with theDepartment of Foreign Affairs and Trade
We have to accept
that to be successful
aid policy must not
just help reduce
mass poverty it also
has to do so as a
guest in the aid
recipient country
API
22 MARCH 2003
E V I E WR
IN his speech to the Na-tional Press Club on theprospect of war with Iraqand the case for disarma-
ment Prime Minister Howard statedthat Australia will play a significant hu-manitarian role in Iraq
If so the Howard Government needsto evaluate carefully the foreign-aid non-government organizations (FANGOs)which it funds to carry-out this humani-tarian programme Many FANGOshave made it clear that they do not sharethe Australian Governmentrsquos objectivesand values in Iraq Moreover some donot agree with the Governmentrsquos over-all aid policies in general
THE COALITION OF THEUNWILLINGIn the lead-up to latest Gulf War some30 Australian aid agencies put theirnames to an Open Letter to the PrimeMinister organized by the AustralianCouncil of Foreign and Overseas Aid(ACFOA) The aim of the letter was tolsquospeak out against war in Iraqrsquo and it ex-pressed grave concerns about the hu-manitarian consequences of the war andthe effects of the existing sanctions1 TheFANGOs that signed the letter wereOxfam Community Aid Abroad WorldVision Australia TEAR AustraliaUnion Aid Australia - APHEDACaritas Australia National Council ofChurches Australian Council for For-eign and Overseas Aid Save the Chil-dren Australia CARE Australia OzGreen United Nations Association ofAustralia Family Planning AustraliaMercy Works Marist Mission CentreAustralia Every Home for Christ Bap-tist World Aid for Christ CCF Austra-lia Quaker Service Australia Austra-lian Lutheran World Service AustralianRelief and Mercy Services AnglicanBoard of Mission AUSTCARE Com-munity Development and Health
Irreconcilable DifferencesDON DrsquoCRUZ
Hussein have been virtually ignored isa searing indictment of the warped ide-ology feeble analysis and moral blind-ness of the sector For them now to re-discover the plight of the Iraqi peopleand to invoke their name in the mediais beyond contempt
THE OXFAM COMMUNITYAID ABROAD POSITIONOf the 30 FANGO signatories to theopen letter Oxfam Community AidAbroad (OCAA) has been perhaps themost outspoken It opposed military ac-tionmdasheven with UN Security Councilapproval4 In spite of all the evidence tothe contrary OCAA was comfortablewith Saddam Husseinrsquos assurances thathe did not have weapons of mass destruc-tion5 Adopting the common policyagreed to by the other Oxfam affiliatesOCAA stated that it will not take anymoney from the lsquobelligerentsrsquomdasha quaintterm used to the describe democraticnations planning to disarm a dictatorguilty of countless human rights abuses
OCAArsquos outrage against the so-called lsquobelligerentsrsquo appears to be geo-graphically confined to Iraq OCAAappears happy to take governmentmoney from the belligerents elsewherearound the world
According to OCAArsquos ExecutiveDirector Andrew Hewitt refusing totake money from the belligerents wasdone to lsquoprotect its impartialityrsquo6 Thisis a very curious position from Australiarsquosarguably most political FANGOOCAA has a long track-record of beinganything but impartial or reluctant totake sides in miliary action It wasnrsquotimpartial in East Timor where it sidedwith Fretlin in its quest for indepen-dence According to its own testimonyto a Senate committee OCAA wasgiven the choice by the IndonesianGovernment between lsquoplaying politicsrsquoor delivering aid projects in Indonesia7
Group Amnesty International Austra-lia AngliCORD Australian Aid forCambodia Fund Burnet InstituteRedR Friends of the Earth PLAN Aus-tralia and Australian Volunteers Inter-national2
This open letter highlighted a num-ber of problems with the FANGOs sec-tor First it highlighted the weak logicthat passes for advocacy in the sectorThe letter argued against military actionwas critical of sanctions and suggestedthat nations should settle issues only bydiplomatic means It is a viewpointwhich totally ignores the fact that theGovernment had to deal with SaddamHussein
The shallowness of their logic wasbest exposed by the Prime Minister inhis response to the open letter in whichhe stated that the humanitarian situa-tion in Iraq is best addressed by SaddamHusseinrsquos removal and perhaps morepointedly that Saddamrsquos manipulationof foreign aid had allowed him to main-tain and pursue his weapons of mass de-struction capability and human rightsabuses3
Second it also highlighted the factthat the so-called lsquohuman rights-basedapproachrsquo to development (embraced byseveral of the signatories) is not so muchabout realizing human rights (as its pro-ponents argue) but is more about pro-viding them with an excuse to lsquoplay poli-ticsrsquo According to the theory the hu-man rights-based approach to develop-ment allows FANGOs to tackle the rootcauses of poverty and injustice
Yet the root cause of the Iraqipeoplersquos suffering can be summed up intwo simple wordsmdashSaddam HusseinThe fact that the FANGOs who sub-scribe to this particular approach havebeen obsessed with imaginary humanrights abuses committed by Shell NikeRio Tinto BHP-Billiton and AuroraGold while the activities of Saddam
23MARCH 2003
E V I E WR
It chose the former thus making it per-sona non grata in Indonesia for almost adecade8 It wasnrsquot impartial inMozambique when it sided with Frelimoin the countryrsquos civil war9 It wasnrsquot im-partial in Ethiopia when it developedlinks to the Eritrean Peoplersquos LiberationFront during its war against the thengovernment10 It was not impartial oranti-war when it sided with the TigrayPeoplersquos Liberation Front in the neigh-bouring province to Eritrea when thatgroup was waging a guerrilla war againstthe government11 And recently therehave been claims that in the Middle Eastit was little more than an lsquoeager propa-gandistrsquo for the Palestinians12
In East Timor Ethiopia and Mozam-bique OCAA was linked with organi-zations which supported direct militaryaction that led to the deaths of thou-sands of civilians In none of these loca-tions were the enemies of their friendany worse than Saddam Hussein In-deed in many cases OCAArsquos friendswere arguably no better than their en-emies in terms of human rights
OCAArsquos decision not to accept Aus-tralian Government funding is the cor-rect one in the sense that it clearly doesnot share the Governmentrsquos values onthe question of Iraq and thereforeshouldnrsquot receive any governmentmoney
Hewitt went on to state in a pressrelease that lsquoWe will not take funds thatmight allow a government to use hu-manitarian efforts as an instrument offoreign policyhelliprsquo13
This is finemdashexcept the AustralianGovernmentrsquos foreign aid is an instru-ment of foreign policy And it always hasbeen This is spelt out quite clearly inthe Australian Governmentrsquos latest for-eign and trade policy White Paper Ad-vancing the National Interest14
FANGOs that cannot accept thisrather basic proposition should not begetting taxpayersrsquo money They areclearly unsuitable for the task at hand
The consequences of Australian tax-payersrsquo money falling into the wronghands were brought home to Prime Min-ister Howard when he met IndonesianPresident Megawati Sukarnoputri to dis-cuss the war against terrorism and
Australiarsquos involvement against Iraq Atthe top of the Indonesian agenda wasthe issue of Australian funding toFANGOs being used to support sepa-ratist movements in Indonesia15
Post-war Iraq will be a better placewithout Saddam Hussein and his thugsThis does not mean that it will be a safeplace or necessarily a stable place Afterall one of the reasons for Western tol-eration of Saddam Hussein for manyyears was his ability to hold the various
ethnic minorities in Iraq together albeitrather brutally thereby maintaining abalance of power in the Middle East Hisdeparture would see strains on Iraq fromthe various ethnic minorities that makeup Iraq There is a strong chance thatIraq will fragment
The last thing the Australian Gov-ernment or any of the so-called belli-gerents needs in a post-war Iraq is west-ern NGOs running around and becom-ing self-styled advocates for national self-determination for Iraqrsquos ethnic minori-ties and injecting themselves into Iraqrsquosinternal politics This is a real risk Thebehaviour of Australian foreign aidNGOs in Indonesia should make Aus-tralian decision-makers extremely waryof funding any NGOs with Australiantaxpayersrsquo money so that they can oper-ate in Iraq
As things stand now FANGOs facevery few restrictions on their actionsfrom government If they undertake ac-tivity that is inconsistent with being anagent of government they may losefunding for specific projects or in moredramatic circumstances lose funding ina country Nonetheless they are gener-
ally able to access Australian Govern-ment funding for other projects andcountries In other words the penaltiesfor becoming caught up in political ac-tivities are very light for NGOs and posethem no serious problems
Foreign aid NGOs that lsquoplay politicsrsquoare unsuitable contractors for the deliv-ery of aid That these overtly politicalorganizations have been allowed to gaingovernment accreditation and receivegovernment funding points to some se-rious problems at AusAID Australiarsquosofficial aid agency The time has comefor this to change
NOTES1 httpwwwacfoaasnaumedia_releases
2003_releases26_3_03PDF2 httpwwwacfoaasnauemergencies
openletterPDF3 httpwwwacfoaasnauemergencies
iraq_responsehtm4 Oxfam Horizons Vol 3 No 1 (Febru-
ary 2003) page 25 Oxfam Community Aid Abroad lsquoIraq
Overviewrsquo February 20036 Hewitt quoted in Liz Gooch lsquoOxfam
wersquoll say no cashrsquo The Age 16 March2003
7 Community Aid Abroad Submission tothe Senate Foreign Affairs Defence andTrade References Committee Inquiryinto East Timor Downloaded at httpwwwcaaorg aucampaignssubmissionstimorhtml
8 Ibid9 Susan Blackburn Practical Visionaries A
Study of Community Aid Abroad (Mel-bourne Melbourne University Press1993) page 313
10 Ibid pages 325-333 passim11 Ibid12 Gerald Steinberg lsquoPropaganda vs Hu-
manitarianismrsquo Australian Financial Re-view 7 June 2002 Downloaded at httpfacultybiuacil~steingconflictopedpropvshumanitarianismhtm
13 ht tp wwwcaa o rg au p r 2003 iraqfundshtml
14 httpwwwdfatgovauani15 Dennis Shanahan lsquoJakarta fears aid funds
for rebellionrsquo The Australian 17 Febru-ary 2003 page 2
Don DrsquoCruz is Research Fellow at the IPAand Director of IPArsquos NGOWatch
OCAA has a longtrack-record of
being anything butimpartial or
reluctant to takesides in miliary
action
API
24 MARCH 2003
E V I E WR
GEORGE Bush Tony Blairand John Howard haveprovided many reasons forsupporting military action
against Iraq One of those reasons hasbecome known as the lsquohumanitarianrsquojustification Put simply the lsquohu-manitarianrsquo justification for the US-led invasion of Iraq is that such ac-tion is necessary to free the Iraqipeople from their totalitariandictator
Such an argument is attractive tothose who believe that there aresome fundamental human rights thatall individuals possess regardless ofwhere and how they live Whatserves as the source of those rightshas been the subject of debate forcenturies One of the pre-eminentstatements on the subject was madeby John Locke who in The SecondTreatise of Government wrote thatmankind was lsquoequal and indepen-dentrsquo and that lsquono-one ought to harmanother in his life health liberty orpossessionsrsquo
Saddam Husseinrsquos mass murdertorture and terror are reasonablyclear breaches of human rightsTherefore some would ask why thereshould be opposition to the UnitedStates and its allies taking whatevermeasures might be necessary totopple the Iraqi regime Surely thesame standard of behaviour that ap-plies to individuals applies also tonation states If an individual walk-ing in the street witnessed a rapeoccurring wouldnrsquot that individualbe entitled to do everything in hispower to stop the crime and assistthe victim
The point is of course that in-ternational law and convention do
After IraqIs Sovereignty Dead
JOHN ROSKAM
not allow nation states to act in thesame way as individuals Countriescannot simply lsquotake the law into theirown handsrsquo To restrain lsquovigilantestatesrsquo (who might be acting fromeither lsquogoodrsquo or lsquobadrsquo motives) a num-ber of legal and political theorieshave been developed One of theseis the doctrine of lsquosovereigntyrsquo whichprovides that states should not inter-vene in the domestic affairs of otherstates
In relation to Iraq the lsquosover-eigntyrsquo question is perhaps the stron-gest argument against the US-ledCoalition Most of the other criti-cisms of lsquohumanitarianrsquo interventionin Iraq are either grounded in simpleanti-Americanism or are fallaciousFor example there is the claim thatbecause some of the countries in theCoalition have previously ignoredHusseinrsquos cruelties therefore it is il-legitimate to take action now Sucha view has been expressed by aMelbourne international relationsacademic
While there is no disputing thebrutal nature of Saddam Hus-seinrsquos regime the case for inter-vention made by those in Can-berra London and Washingtonis weakened by the fact that atthe peak of Saddamrsquos crimes inthe late 1980s they were eitherdirectly supporting him withweapons technology and intelli-gence or were entirely indifferentto his behaviour Even if theyhave belatedly recognised theerror of their ways how seriouslycan we take their concerns aboutweapons of mass destruction nowgiven they were his suppliersthen1
On the basis of this argument itcould be said that Britainrsquos (andAustraliarsquos) case for intervening toassist Poland upon the German in-vasion in 1939 was lsquoweakenedrsquo be-cause Britain had previously acqui-esced to Germanyrsquos rearmament theremilitarization of the Rhinelandand the annexation of both Austriaand parts of Czechoslovakia Fewpeople who chanted lsquoFreedom forEast Timorrsquo said that the HowardGovernment should not act becausea quarter of a century before theWhitlam Government had been lsquoin-differentrsquo to Indonesiarsquos occupationof the island
There is also the claim that al-though Hussein is bad he is not theworst dictator in the world and thatit is hypocritical for the Americansto attack only Iraq This is an as-tounding proposition It attempts toapply to the United States a standardof behaviour that is impossible to sat-isfy Should the police not attemptto solve any crimes because theycanrsquot solve all crimes If a crime iscommitted by two people and thepolice arrest one perpetrator unlessthe other is also caught must the firstperpetrator be released When indi-viduals donate money for famine re-lief in Africa very few believe thattheir donation is pointless becauseit might prevent the starvation ofonly one person rather than thou-sands Christian ethics sets down norequirement that we should help no-one unless we can help everyone
The issue about state sovereigntyhowever is one that deserves to betaken seriously Regardless of onersquosopinions on the extent and limits ofstate sovereignty it is true that our
25MARCH 2003
E V I E WR
international relations system is builtupon the principle and to modify oroverturn it is a matter of some con-sequence
Even those who are generally sup-portive of the United States andtheir allies see the problem As it wasput by a leading commentator whenanalysing the Australian PrimeMinisterrsquos lsquohumanitarianrsquo justifica-tion for war
Finally Howardrsquos argumentagainst Hussein on human rightsis correct So is his moral case forwanting to liberate the Iraqipeople from their torment Theproblem however is that youcanrsquot trip around the worldwanting to overthrow regimesbecause of human rights2
Some would askmdashlsquowhy notrsquo Be-cause to do so would overthrow theUnited Nations Charter comes therejoinder And in turn the responseto that might bemdashlsquogoodrsquo
If itrsquos a choice between the main-tenance of the UN Charter and free-dom from tyranny freedom wins ev-ery time (although an internationallawyer sitting in Sydney might havea different view on this question fromthat of a political prisoner manacledin a Baghdad jail cell)
When the interests of lsquointerna-tional lawrsquo are more important thanthe life and liberty of individuals itcould be concluded that lsquothe Em-peror has no clothesrsquo Would inter-national law have sanctioned inter-vention to stop the Holocaust hadHitler not waged war and proceededwith his methods entirely within theconfines of the German territorialstate
Many who argue that lsquohumanitar-ianrsquo intervention in Iraq is not justi-fied because it infringes on thatcountryrsquos lsquosovereigntyrsquo would happilyhave other countries cede their po-litical sovereignty to supra-nationalbodies Certain features of the Inter-national Criminal Court overridethe principles of sovereignty but thatdid not stop a phalanx of interna-tional law experts urging sovereigngovernments to join it so as to en-
able the prosecution of war criminalsBut when it comes to actually stop-ping war crimes not simply prosecut-ing them that phalanx is largely si-lent
Without the doctrine of state sov-ereignty and without an arbiter fordetermining when interference withthe principle is justified (the roleclaimed by the United Nations andits Security Council) it is said thatstates would be free to impose theirown will and intervene in other
countries whose standards did notmeet their own (In The Second Trea-tise of Government Locke argued thata characteristic of a lsquostate of warrsquo be-tween individuals was the absence ofa superior authority to adjudicatedisputes and prevent individualsfrom administering justice them-selves)
Iraq might be claimed as a rea-sonably clear-cut case for interven-tion but other situations are notlikely to be as simple In Culture andEquality first published in 2001Brian Barry explored a lsquoliberalrsquo per-spective on this question
The liberal position is clearNobody anywhere in the worldshould be denied liberal pro-tections against injustice andoppression However in exactlythe same way as liberals arepragmatic about what liberalismmeans in terms of boundaries sohere the move from principle tointervention has to be mediated bypractical considerationshellip
[L]iberals are not so simple-mindedas to imagine that the answer toall violations of liberal rights is tosend in the Marines or even aUnited Nations force As in anyjust war theory there must be somedoctrine of lsquoproportionalityrsquohellip[S]carcely anybody would be infavour of the western powersinvading Saudi Arabia so at to sortout the way in which it lsquounjustlydenies political rights to women ornon-Muslimsrsquomdashaccording to theirliberal idea of justicersquo3
The question remainsmdashafterIraq what remains of lsquostate sover-eigntyrsquo Should the doctrine applyonly to lsquoliberal democraticrsquo statesSuch a solution might be attractiveto some lsquoliberalsrsquo but it doesnrsquot avoidthe problem of what exactly a lsquolib-eral democraticrsquo state is
One irony arising from the argu-ments about the war in Iraq is thatmany of those who have urged astrict application of lsquostate sover-eigntyrsquo principles in the past havegenerally supported the US-led in-tervention while those who havebeen willing to abridge or even aban-don the doctrine have had to rely onit to counter the lsquohumanitarianrsquo jus-tification for war
There are not many certaintiesabout the nature of the world afterthe war in Iraq but it can be saidwith some assurance that one defi-nite outcome is going to be a morevigorous debate about state sover-eignty
NOTES1 Scott Burchill lsquoThe humanitar-
ian arguments for this war are spu-riousrsquo The Age 21 March 2003
2 Paul Kelly lsquoThe hapless per-suaderrsquo The Australian 15ndash16March 2003
3 Brian Barry Culture and Equal-ity An egalitarian critique ofmulticulturalism Harvard Uni-versity Press page 138
John Roskam is a Research Fellow with the IPA
The lsquosovereigntyrsquo
question is perhaps
the strongest
argument against
the US-led
Coalition
API
26 MARCH 2003
E V I E WR
Which Way for theDemocrats
The 2002 mid-term elections were adramatic victory for President GeorgeW Bush and the Republicans Insteadof the historical norm of the partycontrolling the White House losingBushrsquos party gained seats in the Sen-ate House Governorsrsquo races andState legislatures The result was abitter disappointment for the Demo-crats and has led to a fierce debatebetween the Left and Centrists aboutthe future policy direction of the partytowards the 2004 elections
The Leftrsquos analysis is that the ma-jority of Americans are natural Demo-crats Electoral defeat was due to thefailure to energize that base of Demo-crats The party failed to distinguishitself sufficiently from Bush and thusgive their voters a reason to turn outWhile the majority of Democrats op-posed Bush on tax cuts and the warwith Iraq a significant minority sup-ported him and campaigned on thatsupport The result the Left claimwas that the Democrats lacked a con-sistent message in contrast to Bush
Support for this argument can befound in the higher turnout amongstRepublicans than Democrats in 2002while in 2000 the combined vote forGore and Nader was 51 per cent Aninfluential book by John Judis andRuy Texeira identified lsquoThe Emerg-ing Democrat Majorityrsquo Theyclaimed that growing demographicgroups trended Democrat includingthe young socially liberal profession-als minorities and women
What policies would motivate thisnatural Democrat base The Left callfor rescinding the Bush tax cut a classwar against the corporate world amajor increase in lsquopublic investmentrsquoin schools childcare health care and
Letter from AmericaNIGEL ASHFORD
public transport and strong opposi-tion to the war
Centrists however have a verydifferent analysis of the Democratsrsquoproblems the public did not trustthem to pursue the war against ter-rorism vigorously to keep down taxesto spend their tax dollars wisely or toreflect their cultural values
A Gallup opinion poll found that57 per cent of Americans askedthought that the Democrats were nottough enough on the war on terror-ism while 64 per cent thought theRepublicans were There was the per-ception that the Democrats were notserious on the issue and just playingpolitics Evidence for this was the de-bate over the new Department ofHomeland Security blocked becausethe Democrats wanted to protectunion rights while the President de-manded more flexibility to deploy theworkforce Many voters saw the issueas the national interest versus a spe-cial interestmdashin this case that of theunions The Democrats were seen asputting the interests of one of theirmajor constituencies before nationalsecurity
The Democratic LeadershipCouncil in lsquoThe Road Aheadrsquo by AlFrom and Bruce Reed presented theCentrist case lsquoStop pretending wecan win a majority simply by energiz-ing our basersquo The Democrats were
not trusted on the war against terror-ism were hostile to the cultural con-cerns of many working-class Demo-crats on abortion and guns and stillseen as the tax-and-spend party lsquoToomany Americans donrsquot trust us tokeep their taxes down or to spendtheir money wellrsquo
The Centrist agenda is to stronglyprosecute the war against terrorismwhether against al-Qarsquoeda Saddam orothers and to abandon knee-jerk iso-lationism arising from the experienceof the Vietnam War to defend capi-talism and support small investorsagainst irresponsible managers to cutpayroll taxes and to downplay thecultural issues that divide Democrats
Which path will the Democratstake The Left is in the ascendancyMost of the remaining Democrats inoffice come from left-wing districtsNancy Pelosi a left-liberal from SanFrancisco was easily elected the newleader of the House Democrats over-whelming her Centrist opponent andrising star African-American HaroldFord The early field of presidentialcandidates for 2004 is dominated bythe Left tendency including SenatorJohn Kerry Representative DickGephardt Governor Howard DeanRev Al Sharpton former SenatorCarol Moseley-Braun and Represen-tative Dennis Kucinich Only Sena-tor Joe Lieberman and Senator JohnEdwards represent the Centrist wing
The future of US politics may de-pend on which road the Democratsdecide to take The US is currently alsquo50ndash50rsquo nation evenly balanced be-tween the parties A left turn couldlead to Republican dominance farinto the future
Dr Nigel Ashford is at the Institute of Humane Studiesat George Mason University and is co-author of US
Politics Today (Manchester University Press)
API
27MARCH 2003
E V I E WR
Trusting TonyFrankly itrsquos all just too depressing Theeconomyrsquos heading for trouble Busi-ness confidence is low investment in2002 was 92 per cent lower than theprevious year and manufacturing in-vestment was nearly 18 per cent downThe budget deficit is spiralling becauseour once lsquoprudentrsquo Chancellor (trea-surer) Gordon Brown made over-opti-mistic growth projections and startedthrowing money at problems
Therersquos a load of health-and-safetyand anti-discrimination measuresthatmdashto put it most politelymdashare ex-amples of letting the best be the en-emy of the good Every school tripneeds a formal risk assessment withthe result that many trips are simplynot taking place New trains orderedfor London commuter routes wonrsquothave toilets because the rules say thatat least one toilet in each four-car unitmust be wheelchair-accessible whichwould have cost ten or a dozen seatson every overcrowded train
Some of this is just insane Somelocal authorities say that safety at workrules mean that home-care workersmustnrsquot lift the disabled people theyare looking after Or therersquos rail safetyUntil recently we were seriously pro-posing to spend $10 billion on a bet-ter system to stop trains going throughred signals On average this would havesaved the lives of about three passen-gers every four years which is a lousybargain compared with other safety in-vestments Worse it would also havereduced the capacity of the networkby up to 15 per cent and forced morepeople onto the roads which are muchmore dangerous than even ourclapped-out railways The result was aprojected net increase of 13 to 21 deathsper year
Meanwhile in London the Cen-tral line of the Underground has been
Letter from LondonJOHN NURICK
API
closed for weeks after a train derailedwhen one of its motors fell off Therewere no deaths or major injuries in theaccidentmdashbut itrsquos a safe bet that someof the people who havenrsquot been ableto use the Central line have been in-jured or killed on the roads
What can one say If the authori-ties took the same attitude to the riskof fatal accidents in the health serviceevery hospital in the country wouldhave been closed for years
Despite all this the Conservativesare still hopeless Their leader IanDuncan Smith has a new wheezewhen a journalist asks him anythingdifficult he chortles merrily and saysitrsquos the most uninteresting questionimaginable and hersquos not going to wasteanyonersquos time by answering it His col-leagues have their knives out for him
Meanwhile in spite of the govern-mentrsquos problems with the economy andthe public services Tony Blair is grow-ing in stature having his waymdashandantagonising large sections of his ownparty in the process On several recentissues he has faced down the formi-dable Gordon Brown in a way that notlong ago was hard to imagine
Then he shocked everyone by com-ing out against having elected mem-bers in the reformed House of Lordswhen most voters want an all-elected
chamber and most MPs want a partly-elected one In the event Parliamentcouldnrsquot agree on any of the optionsfor reform so wersquore stuck with the sta-tus quomdashwhich is fine by Mr Blair
Then therersquos the war By the timeyou read this it may be over or we maystill be waiting or our lads may befighting Mr Blairrsquos strong line againstIraq has made him very unpopular Theanti-war march on 15 February was thebiggest demonstration London hasever seen A few days later 122 Labourbackbenchers voted against the gov-ernment and many more abstained
Mr Blair didnrsquot budge War is a se-rious thing he says lsquoBut in a situationsuch as this you have to do what youbelieve to be right because thatrsquos theprice of having responsibilityrsquo1
He has often been accused of gov-erning by focus group Certainly he hasseemed reluctant to antagonise anypowerful group That has clearlychanged In a sense his stand on Iraqmerely follows his action in sendingtroops to Sierra Leone and Kosovomdashbut it has stirred up far stronger domes-tic and international opposition
The irony is that now when he re-ally needs people to trust him wedonrsquot Even in the desperately seriousbusiness of justifying an unpopular warDowning Street canrsquot play it straightremember the dossier from lsquointelli-gence sourcesrsquo that turned out to belargely cribbed from a PhD thesis onthe Internet
NOTE1 The Guardian 1 March 2003
John Nurick is a management consultant based in theSouth of England From 1985 to 1990 he was
editorial director of the Australian Institute for PublicPolicy and later edited newsletters reporting on theUK Parliament and European Union institutions
28 MARCH 2003
E V I E WR
KEVIN DONNELLY
Private EducationEquals Public Good
When it comes to choosing be-tween government and non-gov-ernment schools Australian par-ents are lsquovoting with their feetrsquo Asshown by recent ABS figures(Schools Australia 2002) over thelast decade there has been a dra-matic increase in non-governmentschool enrolments
Approximately 30 per cent ofstudents now attend non-govern-ment schools compared with 22per cent in 1980 and 28 per centin 1990 Over the last decadewhile the number of governmentschools has fallen by 64 per centnon-government schools havegrown by 61 per cent
Of course not everybody valuesparentsrsquo right to choose and theAustralian Education Union(AEU) Labor governments andlsquoleft-wingrsquo academics in particularconsistently argue against non-government schools
One of the arguments put for-ward by those opposed to givingparents greater freedom of choiceis that government schools are bet-ter at promoting social cohesionand a strong sense of what KenBoston the ex-head of the NSWEducation Department terms lsquothebonds of civic friendshiprsquo
The assumption is that becausestudents attend non-governmentschools there will be greater socialdivisiveness and a breakdown inthe civic values needed to hold so-ciety together But there is no cred-ible evidence offered to support theclaim that government schools arebetter at promoting the commongood
In fact there is much to provethe opposite
First as anyone familiar withthe lsquoculture warsrsquo and politicallycorrect curricula will know insteadof government-controlled educa-tion promoting unity and cohe-sion it has led to public angst andparental complaints
Witness the very bitter debatein Queensland a year or two agowhen the government-mandatedStudies of Society and Environ-ment (SOSE) curriculum was in-troduced into schools Such was
the lsquoleft-wingrsquo bias in the curricu-lum in particular in the areas ofmulticulturalism and the environ-ment that many parents felt be-trayed
The Queensland debate is mir-rored by what is happening in theUnited States As noted by Ste-phen Arons in his book Short Routeto Chaos instead of promotingunity government control of thecurriculum leads to the opposite
What the school wars tell us isthat somehow we have been
Education Agenda
transforming a vital instrumentfor creating social cohesioninto a source of division andhostility that there is some-thing built into the structure ofpublic schooling that under-mines one of its most importantfunctionsAronrsquos argument that govern-
ment schools no longer transmit aviable sense of a common cultureor agreed civic values is reinforcedby another noted United Stateseducationalist Diane Ravitch
In a recent article in the jour-nal Education Next Ravitch be-moans the impact of cultural rela-tivism and the post-modern on theschool curriculum (where there areno commonly agreed values) andeven goes so far as to argue thatparents should be free to choosenon-government schools becausesuch schools have a better chanceof reflecting their values
In the current education sys-tem with the public schoolscommitted to multiculturalismbilingualism and other forms ofparticularism it is difficult toargue that parents should notbe able to choose schools thatmeet their cultural needsSecond if one accepts that lsquoso-
cial capitalrsquomdashthe networks volun-tary associations and civic bondsthat hold a community togethermdashis important for the health of ademocratic society then non-gov-ernment schools clearly have theadvantage
Unlike the government schoolsystem characterized by a heavy-handed centralized bureaucracyand teacher union control non-government schools are closer tothe communities they serve Bytheir very nature non-government
There is no credible
evidence offered to
support the claim
that government
schools are better
at promoting the
common good
29MARCH 2003
E V I E WR
ALAN MORAN
The lsquoRrsquo Files
Private propertyrights the key toachieving efficiency inrural water use
WATER IN AUSTRALIAWater has always been a definingissue in Australiarsquos prosperityAnd in recent decades irrigationhas grown rapidly Even so theproportion of Australia that is ir-rigated at two per cent of theland comprises a share that isamongst the lowest among OECDcountries Only Canada and therainiest countries New Zealandand the UK have lower sharesthat of the US is 11 per cent andin Japan it reaches 60 per cent
Modern agriculture is only 200years old in Australia and thoughin the first 100 years agriculturalproductivity was increased toequal that of anywhere in theworld gains continue to bemademdashoutput has doubled overthe past 50 years a growth thatcould not have taken place with-out a similar expansion of irriga-tion Irrigation in the MurrayndashDarling agricultural provincealone contributes $5 billion toAustralian agricultural outputand non-irrigated agriculture inthe region contributes a further $5billion This makes the areawhich comprises 14 per cent ofAustraliarsquos land mass responsiblefor a third of the nationrsquos $35 bil-lion agricultural output
Applying Property Rights to WaterMost of the uses of water involvechoices or compromisesmdashdrink-ing water versus irrigation versus
industrial and so on Some how-ever involve complementaritiesparticularly certain recreationaluses such as water sports that arefacilitated by storage and consis-tent availability
In many cases water will per-form sequential functionsmdashthesame water can be used and re-used for irrigation used for indus-trial cooling and finish as drink-ing water Water with differentsometimes competing productiveuses will be optimally used as longas two conditions are in placeThe first is that its ownership isclearly specified and the ownersrsquoobligations to other users (orclaims from other beneficiaries)are well understood The secondrequires each property right to betradable to enable acquisition bythose who value it most therebymaximizing its value
The rights specification andtherefore property ownership canrarely commence with a cleansheet of paper People acquire in-dividual rights to property ini-tially through a variety of routesOne of these is seizure of some-thing that was originally of littlevalue until it was acquired and im-proved Squatters assume rights inthis way However they are firstacquired they need to be tradableAPI
schools establish strong commu-nity networks and have a greaterreliance on the voluntary work ofparents
That non-government schoolsare more effective in this regard issupported by research into lsquoChar-ter schoolsrsquo in the United StatesAs noted by Chester Finn at theFordham Foundation giving localcommunities lsquoownershiprsquo overtheir school builds networks oftrust and reciprocity so vital forsocial cohesion
Social capital also relies on citi-zens being disciplined and orderedin their behaviour Selfishness vio-lent behaviour and rudeness act tofragment the community instead ofpromoting cohesion According toa number of Australian surveys itis here once again that non-gov-ernment schools are seen to bemore effective
As noted by the Centre for In-dependent Studies researcher Jen-nifer Buckingham in The Truthabout Private Schools in Australiawhen analysing why so many par-ents forsake the government schoolsystem
When comparing independentprivate schools with publicschools the major theme thatemerged was not differences inacademic standards and curri-culum but issues of disciplineand order The surveyed par-ents felt that the behaviour andattitudes of students in publicschools was unacceptablehellipAll accept that non-govern-
ment schools achieve better aca-demic results provide greater cur-riculum flexibility and save Aus-tralian taxpayers millions of dol-lars Equally as important is theargument that such schools streng-then Australiarsquos civic health andstock of lsquosocial capitalrsquo
Dr Kevin Donnelly is Director of EducationStrategies a Melbourne-based consulting group
E-mailkevindnetspacenetau
s
30 MARCH 2003
E V I E WR
and relatively inviolable Thisprovides the incentive for them tobe improved and for their ownersand others to search out ways inwhich the assets they representcan be used to provide increasedvalue or other benefits
If confidence in the exclusiv-ity an owner has over the prop-erty right is lost or was neverpresent the asset will be used lessproductively For example own-ers will milk them for their cur-rent-use value rather than trade-off present value for a future valuethat is less certain
Even without a total emascu-lation of individual rights (for ex-ample when title to the propertydepends on continuing govern-mental assent) lack of certaintybrings lower incomes and dimin-ished asset protection One out-come of this can be observed inthe MurrayndashDarling system Wa-ter rights on the Victorian side ofthe Murray are secure while thoseon the NSW side have been over-allocated and are subject to ad-ministrative discretion includinghaving a firm duration of only tenyears In Victoria high securitywater (available 95 per cent of thetime) comprises the great bulk ofentitlements In contrast in
NSW high security water is avail-able only 60-80 per cent of thetime The result is that farmers onthe Victorian side plant perennialcrops while those in NSW tendto focus on annual crops espe-cially rice
There are claims that Victoriarsquosmore robust property rights meanthat the State Government haslost lsquocapabilityrsquo to manage com-pared with NSW The flip side ofthis is the increased risk and as-sociated lower value of productionnorth of the Murray where prop-erty rights are attenuated Gov-ernments that give themselves in-creased capacity to direct produc-tion or to take individualrsquos prop-erty will need to accept lower lev-els of income and output
IRRIGATION ENVIRON-MENTAL BENEFITS AND SA-LINITY
The Types of IssuesIssues stemming from irrigationcomprise two types those impact-ing on the environment and thoseimpacting on private uses Theformer includes issues such as pre-venting loss of species ensuringthat certain sorts of species flourishand avoiding unattractive growths
such as blue-green algae which re-sult from fertilizer build-up
The second involves economicimpacts on different users
While environmental flows toensure species flourish are oftenhighlighted salinity is the mainfocus And while salinity has animpact on the environment itsimportance is in the conflict of in-terest between productive usersmdashthe complaint of lsquodamaged goodsrsquoby downstream users against thoseupstream
The MurrayndashDarling Basin Sa-linity Strategy 2001ndash2015 has es-timated that increased salinitybrings costs of $294 million perannum to the basin
Yet data on the salinity of theMurray Darling shows levels up-stream of South Australia arelower than they were in the early1980s and are only seriously abovethese levels as the river ap-proaches its mouth at the GoolwaBarrage
The Basin Salinity Manage-ment Strategy argues that progressachieved over the past decade willlsquobe cancelled within 20-50 yearsand median salinity levels wouldexceed the Australian DrinkingWater Guidelines for good waterquality within 50-100 yearsrsquo Thecause of this is said to be risinggroundwater tables due to land usechanges across the Basin
The disputes over salinizationare largely disputes between com-mercial parties Full specificationof rights and obligations will al-low these to be resolved as longas the impacts are measurabletheir causes identifiable and thevarious rights and obligations areknown and stable In this respecttechnology to measure salt in wa-ter and to trace increases to par-ticular locations is readily avail-able
Agreements about the alloca-tion of water rights between ju-risdictions and to the main irri-gation provinces have been inplace for over a century In the
Average Salinity in the River Murray (EC Units)1
3500
3000
2500
2000
1500
1000
500
0
January 2003
July 2002ndashJanuary 2003
July 1982ndashJanuary 2003
Hume D
am
Swan
Hill
Merbein
Morgan
Milang
Mening
ie
Goolw
a
Barra
ge
31MARCH 2003
E V I E WR
I
API
Musinghellipcase of the Murray the lsquocaprsquo onwater abstractions agreed betweenthe various jurisdictions in 1995largely validated agreements madeearly in the last century and be-fore Disturbing these agreementswould greatly undermine the trustin the sanctity of property rightsand seriously reduce agriculturalproductivity Hence increased al-locations for certain parties or forcertain uses (including environ-mental flows) would need to bepurchased at market prices
Developments in Australiaover recent decades have con-spired to make irrigation water farmore valuable This is exacer-bated by1 Activation of NSW lsquosleeperrsquo
and lsquodozerrsquo water rights as a re-sult of the increased scarcityvalue a change that bringseven greater pressure on theavailable supply
2 Increased scarcity leading tomeasures that more carefullyhusband the water Whilesome of these prevent evapo-ration loss and have thereforebrought a net increase in effec-tive availability others havereduced availability (these in-clude a more careful wateringwhich results in reduced run-off and re-use)
3 Increased capture of waterwithin the land on which itfalls once water is recognizedas scarce landowners will seekto ensure it does not leave theirland NSW and Victoria haveplaced limits (a strict 10 percent in NSW) of water fallingon property as entitlements ofthe owner Queensland has notyet enacted an equivalent tothis Such adaptations of thecommon law are essentialhowever if downstream usersare not to be expropriatedThere is likely to be constant
bickering over water rights espe-cially if State Governments seek toelevate sharing issues and to sanc-tify them with claims about promot-
Daniel Pipes in The New York Posthas a very cogent explanation forwhy the Left appears to be so happywith the likes of Osama bin Ladenand Saddam Hussein
To be clear about their attitudeshe quotes the renowned Germanelectronic music composer KarlHeinz Stockhausen who saidstraight after the attack on NewYork that it was lsquothe greatest workof art for the whole cosmosrsquo
As Pipes and many of us observedaily there is barely a bad word tosay about Saddam Hussein nor aniota of sympathy for thoseoppressed tortured and murderedby his reacutegime Instead they venttheir fury against the AmericanPresident and British Prime Minister
Why the nonchalancePipes draws our attention to Lee
Harris writing in a recent issue ofthe Hoover Institutionrsquos journalPolicy Review According to KarlMarxrsquos central thesis the demise ofcapitalism hangs on workersgrowing poorer over timemdashwhichof course did not happen Sorather than give up on cherishedexpectations of socialist revolutionHarris notes Marxists tweaked theirtheory and looked instead to theentire populations of poor countriesto carry out the revolution Classanalysis went out the windowreplaced by geography
The trouble is they have tooverlook militant Islamrsquos slightly un-socialist practicesmdashsuch as itsimposing religious law excludingwomen from the workplace andpersecuting atheists
As Pipes sums up September 11and the prospect of war againstSaddam Hussein have exposed theLeftrsquos political self-delusionintellectual bankruptcy and moralturpitude
The Loopy Leftby Andrew McIntyre
ing an improved environment Realsolutions require the issue be placedwithin a normal commercial frame-work which involves1 Clarifying the property rights2 Allowing water rights to be
fully detachable from propertyand able to be used howeverthe holder wishes subject toany damage this might imposeon others
3 Ensuring full rights to buy andsell the water
4 Defining rights so as not to re-duce the quality of other usersThis means ensuring that farm-ing practices that do not bringgreater salination than somestandard
5 Allowing rights holders tobank their water and ensureeven greater certaintyAllocating specific individual
ownership rights to water and al-lowing its trade is a well-foundedmeans of maximizing the usevalue It would also be likely tohave the beneficial side-effects ofreducing salinity and farm-basedpollutants caused by intensiveuse We should grasp such oppor-tunities But if the impending sa-linity problem is as great as someclaim other solutions might wellinclude buying out some allocatedirrigatorsrsquo rights However alter-natives may be to remove saltfrom the water by engineering so-lutions or simply to live withhigher salt
NOTE1 Human drinking water should
be less than 800 ECs (electri-cal conductivity one ECequals about 06 mglitre)while higher levels are accept-able for much farming activity
Dr Alan Moran is Director Deregulation Unitat the Institute of Public Affairs
32 MARCH 2003
E V I E WR
Reading FileDone
eral political systems worldwidehave consistently accretedpower to the centre often in theface of clear constitutional im-peratives to the contrary) Ifeared instead that a UN thathad been patently successful insomethingmdashanythingmdashmightbe granted greater powers to thepoint where it would kill truediversity and individualism (ortry to anyway) through inevi-table bureaucratic practices
Is such a fear unfounded Ap-parently not if many peopleshare the moral touchstone ofthe Opposition Leader SimonCrean He believes according tohis own words in Parliamentthat what the UN SecurityCouncil declares is moral whatit refuses is immoral
The latest manoeuvrings overIraq have therefore been heart-
ening It seems that the desiresof the powers small and largeto promote their own interestswill continue to hobble the UN
The problem with a unitedworld is that as the threateningimpasse over Iraq suggestedthere are very divergent viewsabout how that world ought tobe run on an international leveljust as there are at national and
sub-national levels The virtueof multi-layered levels of gov-ernments is that competing ju-risdictions give the individual adegree of choice
The greatest sin of totalitar-ian governments past and pres-ent is to deny their citizens theright to leave The greatest dan-ger that the United Nationsposes as far off as it now (hap-pily) seems is that leaving its ju-risdiction is for all practical pur-poses impossible
THE IMPASSE JUST PASSEDI listened to Prime MinisterHoward speaking to the motionbefore Parliament in relation tothe war It was a good speechbut neither he nor PresidentBush seems able to structure andlay out an argument with thestyle and content of BritishPrime Minister Blair His equi-valent speech before the BritishCommons provides a masterfulsummary of the reasons for thiswar and includes an immenselyreadable time-line of the utterineffectiveness of the UN pro-cesses in dealing with Iraq Henicely deals with allegations ofthe lsquorushrsquo to war lsquoOur fault hasnot been impatience The truth
UNITED OR DIVIDEDI write just hours after US Presi-dent George W Bush has deliv-ered his ultimatum to Iraqi Presi-dent Saddam Hussein leave Iraqwithin 48 hours or be removedBy the time this appears beforeyour eyes you will knowwhether Hussein has decided hischances of survival will be sig-nificantly greater by choosingexile or by remaining in IraqThe recent creation of the In-ternational Criminal Court ofcourse makes war more likelysince Hussein can have no guar-antee of a peaceful lsquoretirementrsquo
In the event that Hussein re-mains in Iraq you will also knowwhether Bush has kept his wordand most likely the outcome ofthis military venture
This matter is immensely im-portant for the people of Iraqand for the military personnelinvolved (including our ownAustralian soldiers sailors andaviators) But then so was theprevious Gulf War the US in-vasion of Grenada the Austra-lian intervention in East Timorand so on But a difference be-tween the current conflict andthose others could be the impactit has upon international insti-tutions Actually just one inter-national institution the UnitedNations
Prior to the first Gulf War Ifeared the coalitionrsquos success forthe reason that some of it mighthave rubbed off onto the UnitedNations I hasten to deny that Ifear the UN as some vast con-spiracy for world domination Ifeared instead that it couldstumble into a piecemeal cen-tralization of power (just as Fed-
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
E V I E WRs
33MARCH 2003
E V I E WR
Reading FileDone
ATTACKING THE GLOBALGOVERNORSThe Cato Institute is a whole-some body as demonstrated byits opposition to such interna-tional organizations as the Inter-national Criminal Court and forthat matter the United Nationsitself Ted Galen Carpenter forexample argues in lsquoPutting theUnited Nations on Noticersquo thatthe UN can and has done somemodest good occasionally It ishe says lsquoa good idea to have aplace where governments cangather to air grievancesrsquo But headds if it lsquoattempts to acquire ataxing authority [or] raise astanding armyrsquo then the USshould withdraw (as indeedshould Australia) Because thatwould turn it into an lsquoembryonicsuperstate that would menacelibertyrsquo
Go to
wwwcatoorgforeignpolicyunhtml
THE INTERNATIONALORGANIZATIONS THEM-SELVESThe United Nations has beenaccused of being often ineffec-tive and always slow Well ev-ery time Irsquove hit the UNrsquos Web-site even with my nifty broad-band Internet connection slow-ness rules Perhaps the site isbeing continually accessed bythe teeming masses Anyway goto
wwwunorg
With 15 members alreadyand 13 more on the way thereremain hopes that the EuropeanUnion will be a force for a stable
twenty-first century Equallywith 15 members already exhib-iting rather divergent views overthe issue of Iraq and most of theforthcoming members sidingwith the United States perhapsthis is overly hopeful Go to
europaeuintindex_enhtm
Then there is the WorldTrade Organization the organi-zation behind which protection-ist nations can hide from unilat-eral trade liberalization by pre-tending to support multilateraltrade liberalization Go to
wwwwtoorg
And we mustnrsquot forget the In-ternational Criminal Court fearof which was no doubt a featureof Saddam Husseinrsquos rejection ofexile as an option and the furyof which is promised by a num-ber of prominent lawyers to bevisited upon our very own PrimeMinister Go to
wwwicc-cpiint
FEEDBACKI would welcome advice fromreaders on any other sites of inter-est to IPA Review readers E-mailme on scdawsonbigpondnetau
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
is our patience should have beenexhausted weeks and monthsand years agorsquo
Go to
wwwnumber10govukoutputPage3294asp
THE STRUGGLE BETWEENTHE CONTINENTSIf you are patient you can readthat wonderful British rag TheSpectator for free Last weekrsquoscopy is available on-line One ofits regular columnists is MarkSteyn an Americo-phile Cana-dian who has a robust turn ofphrase and an abiding disdain formuch modern music (whichseems to place him very comfort-ably into The Spectatorrsquos culturalmatrix)
His piece on the future de-cline of Europe vis-agrave-vis Ame-rica makes for fascinating read-ing Go to
wwwspectatorcouk
then click on the lsquoBack Issuesrsquobutton and choose the edition of15 March 2003
E V I E WR
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
22 MARCH 2003
E V I E WR
IN his speech to the Na-tional Press Club on theprospect of war with Iraqand the case for disarma-
ment Prime Minister Howard statedthat Australia will play a significant hu-manitarian role in Iraq
If so the Howard Government needsto evaluate carefully the foreign-aid non-government organizations (FANGOs)which it funds to carry-out this humani-tarian programme Many FANGOshave made it clear that they do not sharethe Australian Governmentrsquos objectivesand values in Iraq Moreover some donot agree with the Governmentrsquos over-all aid policies in general
THE COALITION OF THEUNWILLINGIn the lead-up to latest Gulf War some30 Australian aid agencies put theirnames to an Open Letter to the PrimeMinister organized by the AustralianCouncil of Foreign and Overseas Aid(ACFOA) The aim of the letter was tolsquospeak out against war in Iraqrsquo and it ex-pressed grave concerns about the hu-manitarian consequences of the war andthe effects of the existing sanctions1 TheFANGOs that signed the letter wereOxfam Community Aid Abroad WorldVision Australia TEAR AustraliaUnion Aid Australia - APHEDACaritas Australia National Council ofChurches Australian Council for For-eign and Overseas Aid Save the Chil-dren Australia CARE Australia OzGreen United Nations Association ofAustralia Family Planning AustraliaMercy Works Marist Mission CentreAustralia Every Home for Christ Bap-tist World Aid for Christ CCF Austra-lia Quaker Service Australia Austra-lian Lutheran World Service AustralianRelief and Mercy Services AnglicanBoard of Mission AUSTCARE Com-munity Development and Health
Irreconcilable DifferencesDON DrsquoCRUZ
Hussein have been virtually ignored isa searing indictment of the warped ide-ology feeble analysis and moral blind-ness of the sector For them now to re-discover the plight of the Iraqi peopleand to invoke their name in the mediais beyond contempt
THE OXFAM COMMUNITYAID ABROAD POSITIONOf the 30 FANGO signatories to theopen letter Oxfam Community AidAbroad (OCAA) has been perhaps themost outspoken It opposed military ac-tionmdasheven with UN Security Councilapproval4 In spite of all the evidence tothe contrary OCAA was comfortablewith Saddam Husseinrsquos assurances thathe did not have weapons of mass destruc-tion5 Adopting the common policyagreed to by the other Oxfam affiliatesOCAA stated that it will not take anymoney from the lsquobelligerentsrsquomdasha quaintterm used to the describe democraticnations planning to disarm a dictatorguilty of countless human rights abuses
OCAArsquos outrage against the so-called lsquobelligerentsrsquo appears to be geo-graphically confined to Iraq OCAAappears happy to take governmentmoney from the belligerents elsewherearound the world
According to OCAArsquos ExecutiveDirector Andrew Hewitt refusing totake money from the belligerents wasdone to lsquoprotect its impartialityrsquo6 Thisis a very curious position from Australiarsquosarguably most political FANGOOCAA has a long track-record of beinganything but impartial or reluctant totake sides in miliary action It wasnrsquotimpartial in East Timor where it sidedwith Fretlin in its quest for indepen-dence According to its own testimonyto a Senate committee OCAA wasgiven the choice by the IndonesianGovernment between lsquoplaying politicsrsquoor delivering aid projects in Indonesia7
Group Amnesty International Austra-lia AngliCORD Australian Aid forCambodia Fund Burnet InstituteRedR Friends of the Earth PLAN Aus-tralia and Australian Volunteers Inter-national2
This open letter highlighted a num-ber of problems with the FANGOs sec-tor First it highlighted the weak logicthat passes for advocacy in the sectorThe letter argued against military actionwas critical of sanctions and suggestedthat nations should settle issues only bydiplomatic means It is a viewpointwhich totally ignores the fact that theGovernment had to deal with SaddamHussein
The shallowness of their logic wasbest exposed by the Prime Minister inhis response to the open letter in whichhe stated that the humanitarian situa-tion in Iraq is best addressed by SaddamHusseinrsquos removal and perhaps morepointedly that Saddamrsquos manipulationof foreign aid had allowed him to main-tain and pursue his weapons of mass de-struction capability and human rightsabuses3
Second it also highlighted the factthat the so-called lsquohuman rights-basedapproachrsquo to development (embraced byseveral of the signatories) is not so muchabout realizing human rights (as its pro-ponents argue) but is more about pro-viding them with an excuse to lsquoplay poli-ticsrsquo According to the theory the hu-man rights-based approach to develop-ment allows FANGOs to tackle the rootcauses of poverty and injustice
Yet the root cause of the Iraqipeoplersquos suffering can be summed up intwo simple wordsmdashSaddam HusseinThe fact that the FANGOs who sub-scribe to this particular approach havebeen obsessed with imaginary humanrights abuses committed by Shell NikeRio Tinto BHP-Billiton and AuroraGold while the activities of Saddam
23MARCH 2003
E V I E WR
It chose the former thus making it per-sona non grata in Indonesia for almost adecade8 It wasnrsquot impartial inMozambique when it sided with Frelimoin the countryrsquos civil war9 It wasnrsquot im-partial in Ethiopia when it developedlinks to the Eritrean Peoplersquos LiberationFront during its war against the thengovernment10 It was not impartial oranti-war when it sided with the TigrayPeoplersquos Liberation Front in the neigh-bouring province to Eritrea when thatgroup was waging a guerrilla war againstthe government11 And recently therehave been claims that in the Middle Eastit was little more than an lsquoeager propa-gandistrsquo for the Palestinians12
In East Timor Ethiopia and Mozam-bique OCAA was linked with organi-zations which supported direct militaryaction that led to the deaths of thou-sands of civilians In none of these loca-tions were the enemies of their friendany worse than Saddam Hussein In-deed in many cases OCAArsquos friendswere arguably no better than their en-emies in terms of human rights
OCAArsquos decision not to accept Aus-tralian Government funding is the cor-rect one in the sense that it clearly doesnot share the Governmentrsquos values onthe question of Iraq and thereforeshouldnrsquot receive any governmentmoney
Hewitt went on to state in a pressrelease that lsquoWe will not take funds thatmight allow a government to use hu-manitarian efforts as an instrument offoreign policyhelliprsquo13
This is finemdashexcept the AustralianGovernmentrsquos foreign aid is an instru-ment of foreign policy And it always hasbeen This is spelt out quite clearly inthe Australian Governmentrsquos latest for-eign and trade policy White Paper Ad-vancing the National Interest14
FANGOs that cannot accept thisrather basic proposition should not begetting taxpayersrsquo money They areclearly unsuitable for the task at hand
The consequences of Australian tax-payersrsquo money falling into the wronghands were brought home to Prime Min-ister Howard when he met IndonesianPresident Megawati Sukarnoputri to dis-cuss the war against terrorism and
Australiarsquos involvement against Iraq Atthe top of the Indonesian agenda wasthe issue of Australian funding toFANGOs being used to support sepa-ratist movements in Indonesia15
Post-war Iraq will be a better placewithout Saddam Hussein and his thugsThis does not mean that it will be a safeplace or necessarily a stable place Afterall one of the reasons for Western tol-eration of Saddam Hussein for manyyears was his ability to hold the various
ethnic minorities in Iraq together albeitrather brutally thereby maintaining abalance of power in the Middle East Hisdeparture would see strains on Iraq fromthe various ethnic minorities that makeup Iraq There is a strong chance thatIraq will fragment
The last thing the Australian Gov-ernment or any of the so-called belli-gerents needs in a post-war Iraq is west-ern NGOs running around and becom-ing self-styled advocates for national self-determination for Iraqrsquos ethnic minori-ties and injecting themselves into Iraqrsquosinternal politics This is a real risk Thebehaviour of Australian foreign aidNGOs in Indonesia should make Aus-tralian decision-makers extremely waryof funding any NGOs with Australiantaxpayersrsquo money so that they can oper-ate in Iraq
As things stand now FANGOs facevery few restrictions on their actionsfrom government If they undertake ac-tivity that is inconsistent with being anagent of government they may losefunding for specific projects or in moredramatic circumstances lose funding ina country Nonetheless they are gener-
ally able to access Australian Govern-ment funding for other projects andcountries In other words the penaltiesfor becoming caught up in political ac-tivities are very light for NGOs and posethem no serious problems
Foreign aid NGOs that lsquoplay politicsrsquoare unsuitable contractors for the deliv-ery of aid That these overtly politicalorganizations have been allowed to gaingovernment accreditation and receivegovernment funding points to some se-rious problems at AusAID Australiarsquosofficial aid agency The time has comefor this to change
NOTES1 httpwwwacfoaasnaumedia_releases
2003_releases26_3_03PDF2 httpwwwacfoaasnauemergencies
openletterPDF3 httpwwwacfoaasnauemergencies
iraq_responsehtm4 Oxfam Horizons Vol 3 No 1 (Febru-
ary 2003) page 25 Oxfam Community Aid Abroad lsquoIraq
Overviewrsquo February 20036 Hewitt quoted in Liz Gooch lsquoOxfam
wersquoll say no cashrsquo The Age 16 March2003
7 Community Aid Abroad Submission tothe Senate Foreign Affairs Defence andTrade References Committee Inquiryinto East Timor Downloaded at httpwwwcaaorg aucampaignssubmissionstimorhtml
8 Ibid9 Susan Blackburn Practical Visionaries A
Study of Community Aid Abroad (Mel-bourne Melbourne University Press1993) page 313
10 Ibid pages 325-333 passim11 Ibid12 Gerald Steinberg lsquoPropaganda vs Hu-
manitarianismrsquo Australian Financial Re-view 7 June 2002 Downloaded at httpfacultybiuacil~steingconflictopedpropvshumanitarianismhtm
13 ht tp wwwcaa o rg au p r 2003 iraqfundshtml
14 httpwwwdfatgovauani15 Dennis Shanahan lsquoJakarta fears aid funds
for rebellionrsquo The Australian 17 Febru-ary 2003 page 2
Don DrsquoCruz is Research Fellow at the IPAand Director of IPArsquos NGOWatch
OCAA has a longtrack-record of
being anything butimpartial or
reluctant to takesides in miliary
action
API
24 MARCH 2003
E V I E WR
GEORGE Bush Tony Blairand John Howard haveprovided many reasons forsupporting military action
against Iraq One of those reasons hasbecome known as the lsquohumanitarianrsquojustification Put simply the lsquohu-manitarianrsquo justification for the US-led invasion of Iraq is that such ac-tion is necessary to free the Iraqipeople from their totalitariandictator
Such an argument is attractive tothose who believe that there aresome fundamental human rights thatall individuals possess regardless ofwhere and how they live Whatserves as the source of those rightshas been the subject of debate forcenturies One of the pre-eminentstatements on the subject was madeby John Locke who in The SecondTreatise of Government wrote thatmankind was lsquoequal and indepen-dentrsquo and that lsquono-one ought to harmanother in his life health liberty orpossessionsrsquo
Saddam Husseinrsquos mass murdertorture and terror are reasonablyclear breaches of human rightsTherefore some would ask why thereshould be opposition to the UnitedStates and its allies taking whatevermeasures might be necessary totopple the Iraqi regime Surely thesame standard of behaviour that ap-plies to individuals applies also tonation states If an individual walk-ing in the street witnessed a rapeoccurring wouldnrsquot that individualbe entitled to do everything in hispower to stop the crime and assistthe victim
The point is of course that in-ternational law and convention do
After IraqIs Sovereignty Dead
JOHN ROSKAM
not allow nation states to act in thesame way as individuals Countriescannot simply lsquotake the law into theirown handsrsquo To restrain lsquovigilantestatesrsquo (who might be acting fromeither lsquogoodrsquo or lsquobadrsquo motives) a num-ber of legal and political theorieshave been developed One of theseis the doctrine of lsquosovereigntyrsquo whichprovides that states should not inter-vene in the domestic affairs of otherstates
In relation to Iraq the lsquosover-eigntyrsquo question is perhaps the stron-gest argument against the US-ledCoalition Most of the other criti-cisms of lsquohumanitarianrsquo interventionin Iraq are either grounded in simpleanti-Americanism or are fallaciousFor example there is the claim thatbecause some of the countries in theCoalition have previously ignoredHusseinrsquos cruelties therefore it is il-legitimate to take action now Sucha view has been expressed by aMelbourne international relationsacademic
While there is no disputing thebrutal nature of Saddam Hus-seinrsquos regime the case for inter-vention made by those in Can-berra London and Washingtonis weakened by the fact that atthe peak of Saddamrsquos crimes inthe late 1980s they were eitherdirectly supporting him withweapons technology and intelli-gence or were entirely indifferentto his behaviour Even if theyhave belatedly recognised theerror of their ways how seriouslycan we take their concerns aboutweapons of mass destruction nowgiven they were his suppliersthen1
On the basis of this argument itcould be said that Britainrsquos (andAustraliarsquos) case for intervening toassist Poland upon the German in-vasion in 1939 was lsquoweakenedrsquo be-cause Britain had previously acqui-esced to Germanyrsquos rearmament theremilitarization of the Rhinelandand the annexation of both Austriaand parts of Czechoslovakia Fewpeople who chanted lsquoFreedom forEast Timorrsquo said that the HowardGovernment should not act becausea quarter of a century before theWhitlam Government had been lsquoin-differentrsquo to Indonesiarsquos occupationof the island
There is also the claim that al-though Hussein is bad he is not theworst dictator in the world and thatit is hypocritical for the Americansto attack only Iraq This is an as-tounding proposition It attempts toapply to the United States a standardof behaviour that is impossible to sat-isfy Should the police not attemptto solve any crimes because theycanrsquot solve all crimes If a crime iscommitted by two people and thepolice arrest one perpetrator unlessthe other is also caught must the firstperpetrator be released When indi-viduals donate money for famine re-lief in Africa very few believe thattheir donation is pointless becauseit might prevent the starvation ofonly one person rather than thou-sands Christian ethics sets down norequirement that we should help no-one unless we can help everyone
The issue about state sovereigntyhowever is one that deserves to betaken seriously Regardless of onersquosopinions on the extent and limits ofstate sovereignty it is true that our
25MARCH 2003
E V I E WR
international relations system is builtupon the principle and to modify oroverturn it is a matter of some con-sequence
Even those who are generally sup-portive of the United States andtheir allies see the problem As it wasput by a leading commentator whenanalysing the Australian PrimeMinisterrsquos lsquohumanitarianrsquo justifica-tion for war
Finally Howardrsquos argumentagainst Hussein on human rightsis correct So is his moral case forwanting to liberate the Iraqipeople from their torment Theproblem however is that youcanrsquot trip around the worldwanting to overthrow regimesbecause of human rights2
Some would askmdashlsquowhy notrsquo Be-cause to do so would overthrow theUnited Nations Charter comes therejoinder And in turn the responseto that might bemdashlsquogoodrsquo
If itrsquos a choice between the main-tenance of the UN Charter and free-dom from tyranny freedom wins ev-ery time (although an internationallawyer sitting in Sydney might havea different view on this question fromthat of a political prisoner manacledin a Baghdad jail cell)
When the interests of lsquointerna-tional lawrsquo are more important thanthe life and liberty of individuals itcould be concluded that lsquothe Em-peror has no clothesrsquo Would inter-national law have sanctioned inter-vention to stop the Holocaust hadHitler not waged war and proceededwith his methods entirely within theconfines of the German territorialstate
Many who argue that lsquohumanitar-ianrsquo intervention in Iraq is not justi-fied because it infringes on thatcountryrsquos lsquosovereigntyrsquo would happilyhave other countries cede their po-litical sovereignty to supra-nationalbodies Certain features of the Inter-national Criminal Court overridethe principles of sovereignty but thatdid not stop a phalanx of interna-tional law experts urging sovereigngovernments to join it so as to en-
able the prosecution of war criminalsBut when it comes to actually stop-ping war crimes not simply prosecut-ing them that phalanx is largely si-lent
Without the doctrine of state sov-ereignty and without an arbiter fordetermining when interference withthe principle is justified (the roleclaimed by the United Nations andits Security Council) it is said thatstates would be free to impose theirown will and intervene in other
countries whose standards did notmeet their own (In The Second Trea-tise of Government Locke argued thata characteristic of a lsquostate of warrsquo be-tween individuals was the absence ofa superior authority to adjudicatedisputes and prevent individualsfrom administering justice them-selves)
Iraq might be claimed as a rea-sonably clear-cut case for interven-tion but other situations are notlikely to be as simple In Culture andEquality first published in 2001Brian Barry explored a lsquoliberalrsquo per-spective on this question
The liberal position is clearNobody anywhere in the worldshould be denied liberal pro-tections against injustice andoppression However in exactlythe same way as liberals arepragmatic about what liberalismmeans in terms of boundaries sohere the move from principle tointervention has to be mediated bypractical considerationshellip
[L]iberals are not so simple-mindedas to imagine that the answer toall violations of liberal rights is tosend in the Marines or even aUnited Nations force As in anyjust war theory there must be somedoctrine of lsquoproportionalityrsquohellip[S]carcely anybody would be infavour of the western powersinvading Saudi Arabia so at to sortout the way in which it lsquounjustlydenies political rights to women ornon-Muslimsrsquomdashaccording to theirliberal idea of justicersquo3
The question remainsmdashafterIraq what remains of lsquostate sover-eigntyrsquo Should the doctrine applyonly to lsquoliberal democraticrsquo statesSuch a solution might be attractiveto some lsquoliberalsrsquo but it doesnrsquot avoidthe problem of what exactly a lsquolib-eral democraticrsquo state is
One irony arising from the argu-ments about the war in Iraq is thatmany of those who have urged astrict application of lsquostate sover-eigntyrsquo principles in the past havegenerally supported the US-led in-tervention while those who havebeen willing to abridge or even aban-don the doctrine have had to rely onit to counter the lsquohumanitarianrsquo jus-tification for war
There are not many certaintiesabout the nature of the world afterthe war in Iraq but it can be saidwith some assurance that one defi-nite outcome is going to be a morevigorous debate about state sover-eignty
NOTES1 Scott Burchill lsquoThe humanitar-
ian arguments for this war are spu-riousrsquo The Age 21 March 2003
2 Paul Kelly lsquoThe hapless per-suaderrsquo The Australian 15ndash16March 2003
3 Brian Barry Culture and Equal-ity An egalitarian critique ofmulticulturalism Harvard Uni-versity Press page 138
John Roskam is a Research Fellow with the IPA
The lsquosovereigntyrsquo
question is perhaps
the strongest
argument against
the US-led
Coalition
API
26 MARCH 2003
E V I E WR
Which Way for theDemocrats
The 2002 mid-term elections were adramatic victory for President GeorgeW Bush and the Republicans Insteadof the historical norm of the partycontrolling the White House losingBushrsquos party gained seats in the Sen-ate House Governorsrsquo races andState legislatures The result was abitter disappointment for the Demo-crats and has led to a fierce debatebetween the Left and Centrists aboutthe future policy direction of the partytowards the 2004 elections
The Leftrsquos analysis is that the ma-jority of Americans are natural Demo-crats Electoral defeat was due to thefailure to energize that base of Demo-crats The party failed to distinguishitself sufficiently from Bush and thusgive their voters a reason to turn outWhile the majority of Democrats op-posed Bush on tax cuts and the warwith Iraq a significant minority sup-ported him and campaigned on thatsupport The result the Left claimwas that the Democrats lacked a con-sistent message in contrast to Bush
Support for this argument can befound in the higher turnout amongstRepublicans than Democrats in 2002while in 2000 the combined vote forGore and Nader was 51 per cent Aninfluential book by John Judis andRuy Texeira identified lsquoThe Emerg-ing Democrat Majorityrsquo Theyclaimed that growing demographicgroups trended Democrat includingthe young socially liberal profession-als minorities and women
What policies would motivate thisnatural Democrat base The Left callfor rescinding the Bush tax cut a classwar against the corporate world amajor increase in lsquopublic investmentrsquoin schools childcare health care and
Letter from AmericaNIGEL ASHFORD
public transport and strong opposi-tion to the war
Centrists however have a verydifferent analysis of the Democratsrsquoproblems the public did not trustthem to pursue the war against ter-rorism vigorously to keep down taxesto spend their tax dollars wisely or toreflect their cultural values
A Gallup opinion poll found that57 per cent of Americans askedthought that the Democrats were nottough enough on the war on terror-ism while 64 per cent thought theRepublicans were There was the per-ception that the Democrats were notserious on the issue and just playingpolitics Evidence for this was the de-bate over the new Department ofHomeland Security blocked becausethe Democrats wanted to protectunion rights while the President de-manded more flexibility to deploy theworkforce Many voters saw the issueas the national interest versus a spe-cial interestmdashin this case that of theunions The Democrats were seen asputting the interests of one of theirmajor constituencies before nationalsecurity
The Democratic LeadershipCouncil in lsquoThe Road Aheadrsquo by AlFrom and Bruce Reed presented theCentrist case lsquoStop pretending wecan win a majority simply by energiz-ing our basersquo The Democrats were
not trusted on the war against terror-ism were hostile to the cultural con-cerns of many working-class Demo-crats on abortion and guns and stillseen as the tax-and-spend party lsquoToomany Americans donrsquot trust us tokeep their taxes down or to spendtheir money wellrsquo
The Centrist agenda is to stronglyprosecute the war against terrorismwhether against al-Qarsquoeda Saddam orothers and to abandon knee-jerk iso-lationism arising from the experienceof the Vietnam War to defend capi-talism and support small investorsagainst irresponsible managers to cutpayroll taxes and to downplay thecultural issues that divide Democrats
Which path will the Democratstake The Left is in the ascendancyMost of the remaining Democrats inoffice come from left-wing districtsNancy Pelosi a left-liberal from SanFrancisco was easily elected the newleader of the House Democrats over-whelming her Centrist opponent andrising star African-American HaroldFord The early field of presidentialcandidates for 2004 is dominated bythe Left tendency including SenatorJohn Kerry Representative DickGephardt Governor Howard DeanRev Al Sharpton former SenatorCarol Moseley-Braun and Represen-tative Dennis Kucinich Only Sena-tor Joe Lieberman and Senator JohnEdwards represent the Centrist wing
The future of US politics may de-pend on which road the Democratsdecide to take The US is currently alsquo50ndash50rsquo nation evenly balanced be-tween the parties A left turn couldlead to Republican dominance farinto the future
Dr Nigel Ashford is at the Institute of Humane Studiesat George Mason University and is co-author of US
Politics Today (Manchester University Press)
API
27MARCH 2003
E V I E WR
Trusting TonyFrankly itrsquos all just too depressing Theeconomyrsquos heading for trouble Busi-ness confidence is low investment in2002 was 92 per cent lower than theprevious year and manufacturing in-vestment was nearly 18 per cent downThe budget deficit is spiralling becauseour once lsquoprudentrsquo Chancellor (trea-surer) Gordon Brown made over-opti-mistic growth projections and startedthrowing money at problems
Therersquos a load of health-and-safetyand anti-discrimination measuresthatmdashto put it most politelymdashare ex-amples of letting the best be the en-emy of the good Every school tripneeds a formal risk assessment withthe result that many trips are simplynot taking place New trains orderedfor London commuter routes wonrsquothave toilets because the rules say thatat least one toilet in each four-car unitmust be wheelchair-accessible whichwould have cost ten or a dozen seatson every overcrowded train
Some of this is just insane Somelocal authorities say that safety at workrules mean that home-care workersmustnrsquot lift the disabled people theyare looking after Or therersquos rail safetyUntil recently we were seriously pro-posing to spend $10 billion on a bet-ter system to stop trains going throughred signals On average this would havesaved the lives of about three passen-gers every four years which is a lousybargain compared with other safety in-vestments Worse it would also havereduced the capacity of the networkby up to 15 per cent and forced morepeople onto the roads which are muchmore dangerous than even ourclapped-out railways The result was aprojected net increase of 13 to 21 deathsper year
Meanwhile in London the Cen-tral line of the Underground has been
Letter from LondonJOHN NURICK
API
closed for weeks after a train derailedwhen one of its motors fell off Therewere no deaths or major injuries in theaccidentmdashbut itrsquos a safe bet that someof the people who havenrsquot been ableto use the Central line have been in-jured or killed on the roads
What can one say If the authori-ties took the same attitude to the riskof fatal accidents in the health serviceevery hospital in the country wouldhave been closed for years
Despite all this the Conservativesare still hopeless Their leader IanDuncan Smith has a new wheezewhen a journalist asks him anythingdifficult he chortles merrily and saysitrsquos the most uninteresting questionimaginable and hersquos not going to wasteanyonersquos time by answering it His col-leagues have their knives out for him
Meanwhile in spite of the govern-mentrsquos problems with the economy andthe public services Tony Blair is grow-ing in stature having his waymdashandantagonising large sections of his ownparty in the process On several recentissues he has faced down the formi-dable Gordon Brown in a way that notlong ago was hard to imagine
Then he shocked everyone by com-ing out against having elected mem-bers in the reformed House of Lordswhen most voters want an all-elected
chamber and most MPs want a partly-elected one In the event Parliamentcouldnrsquot agree on any of the optionsfor reform so wersquore stuck with the sta-tus quomdashwhich is fine by Mr Blair
Then therersquos the war By the timeyou read this it may be over or we maystill be waiting or our lads may befighting Mr Blairrsquos strong line againstIraq has made him very unpopular Theanti-war march on 15 February was thebiggest demonstration London hasever seen A few days later 122 Labourbackbenchers voted against the gov-ernment and many more abstained
Mr Blair didnrsquot budge War is a se-rious thing he says lsquoBut in a situationsuch as this you have to do what youbelieve to be right because thatrsquos theprice of having responsibilityrsquo1
He has often been accused of gov-erning by focus group Certainly he hasseemed reluctant to antagonise anypowerful group That has clearlychanged In a sense his stand on Iraqmerely follows his action in sendingtroops to Sierra Leone and Kosovomdashbut it has stirred up far stronger domes-tic and international opposition
The irony is that now when he re-ally needs people to trust him wedonrsquot Even in the desperately seriousbusiness of justifying an unpopular warDowning Street canrsquot play it straightremember the dossier from lsquointelli-gence sourcesrsquo that turned out to belargely cribbed from a PhD thesis onthe Internet
NOTE1 The Guardian 1 March 2003
John Nurick is a management consultant based in theSouth of England From 1985 to 1990 he was
editorial director of the Australian Institute for PublicPolicy and later edited newsletters reporting on theUK Parliament and European Union institutions
28 MARCH 2003
E V I E WR
KEVIN DONNELLY
Private EducationEquals Public Good
When it comes to choosing be-tween government and non-gov-ernment schools Australian par-ents are lsquovoting with their feetrsquo Asshown by recent ABS figures(Schools Australia 2002) over thelast decade there has been a dra-matic increase in non-governmentschool enrolments
Approximately 30 per cent ofstudents now attend non-govern-ment schools compared with 22per cent in 1980 and 28 per centin 1990 Over the last decadewhile the number of governmentschools has fallen by 64 per centnon-government schools havegrown by 61 per cent
Of course not everybody valuesparentsrsquo right to choose and theAustralian Education Union(AEU) Labor governments andlsquoleft-wingrsquo academics in particularconsistently argue against non-government schools
One of the arguments put for-ward by those opposed to givingparents greater freedom of choiceis that government schools are bet-ter at promoting social cohesionand a strong sense of what KenBoston the ex-head of the NSWEducation Department terms lsquothebonds of civic friendshiprsquo
The assumption is that becausestudents attend non-governmentschools there will be greater socialdivisiveness and a breakdown inthe civic values needed to hold so-ciety together But there is no cred-ible evidence offered to support theclaim that government schools arebetter at promoting the commongood
In fact there is much to provethe opposite
First as anyone familiar withthe lsquoculture warsrsquo and politicallycorrect curricula will know insteadof government-controlled educa-tion promoting unity and cohe-sion it has led to public angst andparental complaints
Witness the very bitter debatein Queensland a year or two agowhen the government-mandatedStudies of Society and Environ-ment (SOSE) curriculum was in-troduced into schools Such was
the lsquoleft-wingrsquo bias in the curricu-lum in particular in the areas ofmulticulturalism and the environ-ment that many parents felt be-trayed
The Queensland debate is mir-rored by what is happening in theUnited States As noted by Ste-phen Arons in his book Short Routeto Chaos instead of promotingunity government control of thecurriculum leads to the opposite
What the school wars tell us isthat somehow we have been
Education Agenda
transforming a vital instrumentfor creating social cohesioninto a source of division andhostility that there is some-thing built into the structure ofpublic schooling that under-mines one of its most importantfunctionsAronrsquos argument that govern-
ment schools no longer transmit aviable sense of a common cultureor agreed civic values is reinforcedby another noted United Stateseducationalist Diane Ravitch
In a recent article in the jour-nal Education Next Ravitch be-moans the impact of cultural rela-tivism and the post-modern on theschool curriculum (where there areno commonly agreed values) andeven goes so far as to argue thatparents should be free to choosenon-government schools becausesuch schools have a better chanceof reflecting their values
In the current education sys-tem with the public schoolscommitted to multiculturalismbilingualism and other forms ofparticularism it is difficult toargue that parents should notbe able to choose schools thatmeet their cultural needsSecond if one accepts that lsquoso-
cial capitalrsquomdashthe networks volun-tary associations and civic bondsthat hold a community togethermdashis important for the health of ademocratic society then non-gov-ernment schools clearly have theadvantage
Unlike the government schoolsystem characterized by a heavy-handed centralized bureaucracyand teacher union control non-government schools are closer tothe communities they serve Bytheir very nature non-government
There is no credible
evidence offered to
support the claim
that government
schools are better
at promoting the
common good
29MARCH 2003
E V I E WR
ALAN MORAN
The lsquoRrsquo Files
Private propertyrights the key toachieving efficiency inrural water use
WATER IN AUSTRALIAWater has always been a definingissue in Australiarsquos prosperityAnd in recent decades irrigationhas grown rapidly Even so theproportion of Australia that is ir-rigated at two per cent of theland comprises a share that isamongst the lowest among OECDcountries Only Canada and therainiest countries New Zealandand the UK have lower sharesthat of the US is 11 per cent andin Japan it reaches 60 per cent
Modern agriculture is only 200years old in Australia and thoughin the first 100 years agriculturalproductivity was increased toequal that of anywhere in theworld gains continue to bemademdashoutput has doubled overthe past 50 years a growth thatcould not have taken place with-out a similar expansion of irriga-tion Irrigation in the MurrayndashDarling agricultural provincealone contributes $5 billion toAustralian agricultural outputand non-irrigated agriculture inthe region contributes a further $5billion This makes the areawhich comprises 14 per cent ofAustraliarsquos land mass responsiblefor a third of the nationrsquos $35 bil-lion agricultural output
Applying Property Rights to WaterMost of the uses of water involvechoices or compromisesmdashdrink-ing water versus irrigation versus
industrial and so on Some how-ever involve complementaritiesparticularly certain recreationaluses such as water sports that arefacilitated by storage and consis-tent availability
In many cases water will per-form sequential functionsmdashthesame water can be used and re-used for irrigation used for indus-trial cooling and finish as drink-ing water Water with differentsometimes competing productiveuses will be optimally used as longas two conditions are in placeThe first is that its ownership isclearly specified and the ownersrsquoobligations to other users (orclaims from other beneficiaries)are well understood The secondrequires each property right to betradable to enable acquisition bythose who value it most therebymaximizing its value
The rights specification andtherefore property ownership canrarely commence with a cleansheet of paper People acquire in-dividual rights to property ini-tially through a variety of routesOne of these is seizure of some-thing that was originally of littlevalue until it was acquired and im-proved Squatters assume rights inthis way However they are firstacquired they need to be tradableAPI
schools establish strong commu-nity networks and have a greaterreliance on the voluntary work ofparents
That non-government schoolsare more effective in this regard issupported by research into lsquoChar-ter schoolsrsquo in the United StatesAs noted by Chester Finn at theFordham Foundation giving localcommunities lsquoownershiprsquo overtheir school builds networks oftrust and reciprocity so vital forsocial cohesion
Social capital also relies on citi-zens being disciplined and orderedin their behaviour Selfishness vio-lent behaviour and rudeness act tofragment the community instead ofpromoting cohesion According toa number of Australian surveys itis here once again that non-gov-ernment schools are seen to bemore effective
As noted by the Centre for In-dependent Studies researcher Jen-nifer Buckingham in The Truthabout Private Schools in Australiawhen analysing why so many par-ents forsake the government schoolsystem
When comparing independentprivate schools with publicschools the major theme thatemerged was not differences inacademic standards and curri-culum but issues of disciplineand order The surveyed par-ents felt that the behaviour andattitudes of students in publicschools was unacceptablehellipAll accept that non-govern-
ment schools achieve better aca-demic results provide greater cur-riculum flexibility and save Aus-tralian taxpayers millions of dol-lars Equally as important is theargument that such schools streng-then Australiarsquos civic health andstock of lsquosocial capitalrsquo
Dr Kevin Donnelly is Director of EducationStrategies a Melbourne-based consulting group
E-mailkevindnetspacenetau
s
30 MARCH 2003
E V I E WR
and relatively inviolable Thisprovides the incentive for them tobe improved and for their ownersand others to search out ways inwhich the assets they representcan be used to provide increasedvalue or other benefits
If confidence in the exclusiv-ity an owner has over the prop-erty right is lost or was neverpresent the asset will be used lessproductively For example own-ers will milk them for their cur-rent-use value rather than trade-off present value for a future valuethat is less certain
Even without a total emascu-lation of individual rights (for ex-ample when title to the propertydepends on continuing govern-mental assent) lack of certaintybrings lower incomes and dimin-ished asset protection One out-come of this can be observed inthe MurrayndashDarling system Wa-ter rights on the Victorian side ofthe Murray are secure while thoseon the NSW side have been over-allocated and are subject to ad-ministrative discretion includinghaving a firm duration of only tenyears In Victoria high securitywater (available 95 per cent of thetime) comprises the great bulk ofentitlements In contrast in
NSW high security water is avail-able only 60-80 per cent of thetime The result is that farmers onthe Victorian side plant perennialcrops while those in NSW tendto focus on annual crops espe-cially rice
There are claims that Victoriarsquosmore robust property rights meanthat the State Government haslost lsquocapabilityrsquo to manage com-pared with NSW The flip side ofthis is the increased risk and as-sociated lower value of productionnorth of the Murray where prop-erty rights are attenuated Gov-ernments that give themselves in-creased capacity to direct produc-tion or to take individualrsquos prop-erty will need to accept lower lev-els of income and output
IRRIGATION ENVIRON-MENTAL BENEFITS AND SA-LINITY
The Types of IssuesIssues stemming from irrigationcomprise two types those impact-ing on the environment and thoseimpacting on private uses Theformer includes issues such as pre-venting loss of species ensuringthat certain sorts of species flourishand avoiding unattractive growths
such as blue-green algae which re-sult from fertilizer build-up
The second involves economicimpacts on different users
While environmental flows toensure species flourish are oftenhighlighted salinity is the mainfocus And while salinity has animpact on the environment itsimportance is in the conflict of in-terest between productive usersmdashthe complaint of lsquodamaged goodsrsquoby downstream users against thoseupstream
The MurrayndashDarling Basin Sa-linity Strategy 2001ndash2015 has es-timated that increased salinitybrings costs of $294 million perannum to the basin
Yet data on the salinity of theMurray Darling shows levels up-stream of South Australia arelower than they were in the early1980s and are only seriously abovethese levels as the river ap-proaches its mouth at the GoolwaBarrage
The Basin Salinity Manage-ment Strategy argues that progressachieved over the past decade willlsquobe cancelled within 20-50 yearsand median salinity levels wouldexceed the Australian DrinkingWater Guidelines for good waterquality within 50-100 yearsrsquo Thecause of this is said to be risinggroundwater tables due to land usechanges across the Basin
The disputes over salinizationare largely disputes between com-mercial parties Full specificationof rights and obligations will al-low these to be resolved as longas the impacts are measurabletheir causes identifiable and thevarious rights and obligations areknown and stable In this respecttechnology to measure salt in wa-ter and to trace increases to par-ticular locations is readily avail-able
Agreements about the alloca-tion of water rights between ju-risdictions and to the main irri-gation provinces have been inplace for over a century In the
Average Salinity in the River Murray (EC Units)1
3500
3000
2500
2000
1500
1000
500
0
January 2003
July 2002ndashJanuary 2003
July 1982ndashJanuary 2003
Hume D
am
Swan
Hill
Merbein
Morgan
Milang
Mening
ie
Goolw
a
Barra
ge
31MARCH 2003
E V I E WR
I
API
Musinghellipcase of the Murray the lsquocaprsquo onwater abstractions agreed betweenthe various jurisdictions in 1995largely validated agreements madeearly in the last century and be-fore Disturbing these agreementswould greatly undermine the trustin the sanctity of property rightsand seriously reduce agriculturalproductivity Hence increased al-locations for certain parties or forcertain uses (including environ-mental flows) would need to bepurchased at market prices
Developments in Australiaover recent decades have con-spired to make irrigation water farmore valuable This is exacer-bated by1 Activation of NSW lsquosleeperrsquo
and lsquodozerrsquo water rights as a re-sult of the increased scarcityvalue a change that bringseven greater pressure on theavailable supply
2 Increased scarcity leading tomeasures that more carefullyhusband the water Whilesome of these prevent evapo-ration loss and have thereforebrought a net increase in effec-tive availability others havereduced availability (these in-clude a more careful wateringwhich results in reduced run-off and re-use)
3 Increased capture of waterwithin the land on which itfalls once water is recognizedas scarce landowners will seekto ensure it does not leave theirland NSW and Victoria haveplaced limits (a strict 10 percent in NSW) of water fallingon property as entitlements ofthe owner Queensland has notyet enacted an equivalent tothis Such adaptations of thecommon law are essentialhowever if downstream usersare not to be expropriatedThere is likely to be constant
bickering over water rights espe-cially if State Governments seek toelevate sharing issues and to sanc-tify them with claims about promot-
Daniel Pipes in The New York Posthas a very cogent explanation forwhy the Left appears to be so happywith the likes of Osama bin Ladenand Saddam Hussein
To be clear about their attitudeshe quotes the renowned Germanelectronic music composer KarlHeinz Stockhausen who saidstraight after the attack on NewYork that it was lsquothe greatest workof art for the whole cosmosrsquo
As Pipes and many of us observedaily there is barely a bad word tosay about Saddam Hussein nor aniota of sympathy for thoseoppressed tortured and murderedby his reacutegime Instead they venttheir fury against the AmericanPresident and British Prime Minister
Why the nonchalancePipes draws our attention to Lee
Harris writing in a recent issue ofthe Hoover Institutionrsquos journalPolicy Review According to KarlMarxrsquos central thesis the demise ofcapitalism hangs on workersgrowing poorer over timemdashwhichof course did not happen Sorather than give up on cherishedexpectations of socialist revolutionHarris notes Marxists tweaked theirtheory and looked instead to theentire populations of poor countriesto carry out the revolution Classanalysis went out the windowreplaced by geography
The trouble is they have tooverlook militant Islamrsquos slightly un-socialist practicesmdashsuch as itsimposing religious law excludingwomen from the workplace andpersecuting atheists
As Pipes sums up September 11and the prospect of war againstSaddam Hussein have exposed theLeftrsquos political self-delusionintellectual bankruptcy and moralturpitude
The Loopy Leftby Andrew McIntyre
ing an improved environment Realsolutions require the issue be placedwithin a normal commercial frame-work which involves1 Clarifying the property rights2 Allowing water rights to be
fully detachable from propertyand able to be used howeverthe holder wishes subject toany damage this might imposeon others
3 Ensuring full rights to buy andsell the water
4 Defining rights so as not to re-duce the quality of other usersThis means ensuring that farm-ing practices that do not bringgreater salination than somestandard
5 Allowing rights holders tobank their water and ensureeven greater certaintyAllocating specific individual
ownership rights to water and al-lowing its trade is a well-foundedmeans of maximizing the usevalue It would also be likely tohave the beneficial side-effects ofreducing salinity and farm-basedpollutants caused by intensiveuse We should grasp such oppor-tunities But if the impending sa-linity problem is as great as someclaim other solutions might wellinclude buying out some allocatedirrigatorsrsquo rights However alter-natives may be to remove saltfrom the water by engineering so-lutions or simply to live withhigher salt
NOTE1 Human drinking water should
be less than 800 ECs (electri-cal conductivity one ECequals about 06 mglitre)while higher levels are accept-able for much farming activity
Dr Alan Moran is Director Deregulation Unitat the Institute of Public Affairs
32 MARCH 2003
E V I E WR
Reading FileDone
eral political systems worldwidehave consistently accretedpower to the centre often in theface of clear constitutional im-peratives to the contrary) Ifeared instead that a UN thathad been patently successful insomethingmdashanythingmdashmightbe granted greater powers to thepoint where it would kill truediversity and individualism (ortry to anyway) through inevi-table bureaucratic practices
Is such a fear unfounded Ap-parently not if many peopleshare the moral touchstone ofthe Opposition Leader SimonCrean He believes according tohis own words in Parliamentthat what the UN SecurityCouncil declares is moral whatit refuses is immoral
The latest manoeuvrings overIraq have therefore been heart-
ening It seems that the desiresof the powers small and largeto promote their own interestswill continue to hobble the UN
The problem with a unitedworld is that as the threateningimpasse over Iraq suggestedthere are very divergent viewsabout how that world ought tobe run on an international leveljust as there are at national and
sub-national levels The virtueof multi-layered levels of gov-ernments is that competing ju-risdictions give the individual adegree of choice
The greatest sin of totalitar-ian governments past and pres-ent is to deny their citizens theright to leave The greatest dan-ger that the United Nationsposes as far off as it now (hap-pily) seems is that leaving its ju-risdiction is for all practical pur-poses impossible
THE IMPASSE JUST PASSEDI listened to Prime MinisterHoward speaking to the motionbefore Parliament in relation tothe war It was a good speechbut neither he nor PresidentBush seems able to structure andlay out an argument with thestyle and content of BritishPrime Minister Blair His equi-valent speech before the BritishCommons provides a masterfulsummary of the reasons for thiswar and includes an immenselyreadable time-line of the utterineffectiveness of the UN pro-cesses in dealing with Iraq Henicely deals with allegations ofthe lsquorushrsquo to war lsquoOur fault hasnot been impatience The truth
UNITED OR DIVIDEDI write just hours after US Presi-dent George W Bush has deliv-ered his ultimatum to Iraqi Presi-dent Saddam Hussein leave Iraqwithin 48 hours or be removedBy the time this appears beforeyour eyes you will knowwhether Hussein has decided hischances of survival will be sig-nificantly greater by choosingexile or by remaining in IraqThe recent creation of the In-ternational Criminal Court ofcourse makes war more likelysince Hussein can have no guar-antee of a peaceful lsquoretirementrsquo
In the event that Hussein re-mains in Iraq you will also knowwhether Bush has kept his wordand most likely the outcome ofthis military venture
This matter is immensely im-portant for the people of Iraqand for the military personnelinvolved (including our ownAustralian soldiers sailors andaviators) But then so was theprevious Gulf War the US in-vasion of Grenada the Austra-lian intervention in East Timorand so on But a difference be-tween the current conflict andthose others could be the impactit has upon international insti-tutions Actually just one inter-national institution the UnitedNations
Prior to the first Gulf War Ifeared the coalitionrsquos success forthe reason that some of it mighthave rubbed off onto the UnitedNations I hasten to deny that Ifear the UN as some vast con-spiracy for world domination Ifeared instead that it couldstumble into a piecemeal cen-tralization of power (just as Fed-
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
E V I E WRs
33MARCH 2003
E V I E WR
Reading FileDone
ATTACKING THE GLOBALGOVERNORSThe Cato Institute is a whole-some body as demonstrated byits opposition to such interna-tional organizations as the Inter-national Criminal Court and forthat matter the United Nationsitself Ted Galen Carpenter forexample argues in lsquoPutting theUnited Nations on Noticersquo thatthe UN can and has done somemodest good occasionally It ishe says lsquoa good idea to have aplace where governments cangather to air grievancesrsquo But headds if it lsquoattempts to acquire ataxing authority [or] raise astanding armyrsquo then the USshould withdraw (as indeedshould Australia) Because thatwould turn it into an lsquoembryonicsuperstate that would menacelibertyrsquo
Go to
wwwcatoorgforeignpolicyunhtml
THE INTERNATIONALORGANIZATIONS THEM-SELVESThe United Nations has beenaccused of being often ineffec-tive and always slow Well ev-ery time Irsquove hit the UNrsquos Web-site even with my nifty broad-band Internet connection slow-ness rules Perhaps the site isbeing continually accessed bythe teeming masses Anyway goto
wwwunorg
With 15 members alreadyand 13 more on the way thereremain hopes that the EuropeanUnion will be a force for a stable
twenty-first century Equallywith 15 members already exhib-iting rather divergent views overthe issue of Iraq and most of theforthcoming members sidingwith the United States perhapsthis is overly hopeful Go to
europaeuintindex_enhtm
Then there is the WorldTrade Organization the organi-zation behind which protection-ist nations can hide from unilat-eral trade liberalization by pre-tending to support multilateraltrade liberalization Go to
wwwwtoorg
And we mustnrsquot forget the In-ternational Criminal Court fearof which was no doubt a featureof Saddam Husseinrsquos rejection ofexile as an option and the furyof which is promised by a num-ber of prominent lawyers to bevisited upon our very own PrimeMinister Go to
wwwicc-cpiint
FEEDBACKI would welcome advice fromreaders on any other sites of inter-est to IPA Review readers E-mailme on scdawsonbigpondnetau
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
is our patience should have beenexhausted weeks and monthsand years agorsquo
Go to
wwwnumber10govukoutputPage3294asp
THE STRUGGLE BETWEENTHE CONTINENTSIf you are patient you can readthat wonderful British rag TheSpectator for free Last weekrsquoscopy is available on-line One ofits regular columnists is MarkSteyn an Americo-phile Cana-dian who has a robust turn ofphrase and an abiding disdain formuch modern music (whichseems to place him very comfort-ably into The Spectatorrsquos culturalmatrix)
His piece on the future de-cline of Europe vis-agrave-vis Ame-rica makes for fascinating read-ing Go to
wwwspectatorcouk
then click on the lsquoBack Issuesrsquobutton and choose the edition of15 March 2003
E V I E WR
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
23MARCH 2003
E V I E WR
It chose the former thus making it per-sona non grata in Indonesia for almost adecade8 It wasnrsquot impartial inMozambique when it sided with Frelimoin the countryrsquos civil war9 It wasnrsquot im-partial in Ethiopia when it developedlinks to the Eritrean Peoplersquos LiberationFront during its war against the thengovernment10 It was not impartial oranti-war when it sided with the TigrayPeoplersquos Liberation Front in the neigh-bouring province to Eritrea when thatgroup was waging a guerrilla war againstthe government11 And recently therehave been claims that in the Middle Eastit was little more than an lsquoeager propa-gandistrsquo for the Palestinians12
In East Timor Ethiopia and Mozam-bique OCAA was linked with organi-zations which supported direct militaryaction that led to the deaths of thou-sands of civilians In none of these loca-tions were the enemies of their friendany worse than Saddam Hussein In-deed in many cases OCAArsquos friendswere arguably no better than their en-emies in terms of human rights
OCAArsquos decision not to accept Aus-tralian Government funding is the cor-rect one in the sense that it clearly doesnot share the Governmentrsquos values onthe question of Iraq and thereforeshouldnrsquot receive any governmentmoney
Hewitt went on to state in a pressrelease that lsquoWe will not take funds thatmight allow a government to use hu-manitarian efforts as an instrument offoreign policyhelliprsquo13
This is finemdashexcept the AustralianGovernmentrsquos foreign aid is an instru-ment of foreign policy And it always hasbeen This is spelt out quite clearly inthe Australian Governmentrsquos latest for-eign and trade policy White Paper Ad-vancing the National Interest14
FANGOs that cannot accept thisrather basic proposition should not begetting taxpayersrsquo money They areclearly unsuitable for the task at hand
The consequences of Australian tax-payersrsquo money falling into the wronghands were brought home to Prime Min-ister Howard when he met IndonesianPresident Megawati Sukarnoputri to dis-cuss the war against terrorism and
Australiarsquos involvement against Iraq Atthe top of the Indonesian agenda wasthe issue of Australian funding toFANGOs being used to support sepa-ratist movements in Indonesia15
Post-war Iraq will be a better placewithout Saddam Hussein and his thugsThis does not mean that it will be a safeplace or necessarily a stable place Afterall one of the reasons for Western tol-eration of Saddam Hussein for manyyears was his ability to hold the various
ethnic minorities in Iraq together albeitrather brutally thereby maintaining abalance of power in the Middle East Hisdeparture would see strains on Iraq fromthe various ethnic minorities that makeup Iraq There is a strong chance thatIraq will fragment
The last thing the Australian Gov-ernment or any of the so-called belli-gerents needs in a post-war Iraq is west-ern NGOs running around and becom-ing self-styled advocates for national self-determination for Iraqrsquos ethnic minori-ties and injecting themselves into Iraqrsquosinternal politics This is a real risk Thebehaviour of Australian foreign aidNGOs in Indonesia should make Aus-tralian decision-makers extremely waryof funding any NGOs with Australiantaxpayersrsquo money so that they can oper-ate in Iraq
As things stand now FANGOs facevery few restrictions on their actionsfrom government If they undertake ac-tivity that is inconsistent with being anagent of government they may losefunding for specific projects or in moredramatic circumstances lose funding ina country Nonetheless they are gener-
ally able to access Australian Govern-ment funding for other projects andcountries In other words the penaltiesfor becoming caught up in political ac-tivities are very light for NGOs and posethem no serious problems
Foreign aid NGOs that lsquoplay politicsrsquoare unsuitable contractors for the deliv-ery of aid That these overtly politicalorganizations have been allowed to gaingovernment accreditation and receivegovernment funding points to some se-rious problems at AusAID Australiarsquosofficial aid agency The time has comefor this to change
NOTES1 httpwwwacfoaasnaumedia_releases
2003_releases26_3_03PDF2 httpwwwacfoaasnauemergencies
openletterPDF3 httpwwwacfoaasnauemergencies
iraq_responsehtm4 Oxfam Horizons Vol 3 No 1 (Febru-
ary 2003) page 25 Oxfam Community Aid Abroad lsquoIraq
Overviewrsquo February 20036 Hewitt quoted in Liz Gooch lsquoOxfam
wersquoll say no cashrsquo The Age 16 March2003
7 Community Aid Abroad Submission tothe Senate Foreign Affairs Defence andTrade References Committee Inquiryinto East Timor Downloaded at httpwwwcaaorg aucampaignssubmissionstimorhtml
8 Ibid9 Susan Blackburn Practical Visionaries A
Study of Community Aid Abroad (Mel-bourne Melbourne University Press1993) page 313
10 Ibid pages 325-333 passim11 Ibid12 Gerald Steinberg lsquoPropaganda vs Hu-
manitarianismrsquo Australian Financial Re-view 7 June 2002 Downloaded at httpfacultybiuacil~steingconflictopedpropvshumanitarianismhtm
13 ht tp wwwcaa o rg au p r 2003 iraqfundshtml
14 httpwwwdfatgovauani15 Dennis Shanahan lsquoJakarta fears aid funds
for rebellionrsquo The Australian 17 Febru-ary 2003 page 2
Don DrsquoCruz is Research Fellow at the IPAand Director of IPArsquos NGOWatch
OCAA has a longtrack-record of
being anything butimpartial or
reluctant to takesides in miliary
action
API
24 MARCH 2003
E V I E WR
GEORGE Bush Tony Blairand John Howard haveprovided many reasons forsupporting military action
against Iraq One of those reasons hasbecome known as the lsquohumanitarianrsquojustification Put simply the lsquohu-manitarianrsquo justification for the US-led invasion of Iraq is that such ac-tion is necessary to free the Iraqipeople from their totalitariandictator
Such an argument is attractive tothose who believe that there aresome fundamental human rights thatall individuals possess regardless ofwhere and how they live Whatserves as the source of those rightshas been the subject of debate forcenturies One of the pre-eminentstatements on the subject was madeby John Locke who in The SecondTreatise of Government wrote thatmankind was lsquoequal and indepen-dentrsquo and that lsquono-one ought to harmanother in his life health liberty orpossessionsrsquo
Saddam Husseinrsquos mass murdertorture and terror are reasonablyclear breaches of human rightsTherefore some would ask why thereshould be opposition to the UnitedStates and its allies taking whatevermeasures might be necessary totopple the Iraqi regime Surely thesame standard of behaviour that ap-plies to individuals applies also tonation states If an individual walk-ing in the street witnessed a rapeoccurring wouldnrsquot that individualbe entitled to do everything in hispower to stop the crime and assistthe victim
The point is of course that in-ternational law and convention do
After IraqIs Sovereignty Dead
JOHN ROSKAM
not allow nation states to act in thesame way as individuals Countriescannot simply lsquotake the law into theirown handsrsquo To restrain lsquovigilantestatesrsquo (who might be acting fromeither lsquogoodrsquo or lsquobadrsquo motives) a num-ber of legal and political theorieshave been developed One of theseis the doctrine of lsquosovereigntyrsquo whichprovides that states should not inter-vene in the domestic affairs of otherstates
In relation to Iraq the lsquosover-eigntyrsquo question is perhaps the stron-gest argument against the US-ledCoalition Most of the other criti-cisms of lsquohumanitarianrsquo interventionin Iraq are either grounded in simpleanti-Americanism or are fallaciousFor example there is the claim thatbecause some of the countries in theCoalition have previously ignoredHusseinrsquos cruelties therefore it is il-legitimate to take action now Sucha view has been expressed by aMelbourne international relationsacademic
While there is no disputing thebrutal nature of Saddam Hus-seinrsquos regime the case for inter-vention made by those in Can-berra London and Washingtonis weakened by the fact that atthe peak of Saddamrsquos crimes inthe late 1980s they were eitherdirectly supporting him withweapons technology and intelli-gence or were entirely indifferentto his behaviour Even if theyhave belatedly recognised theerror of their ways how seriouslycan we take their concerns aboutweapons of mass destruction nowgiven they were his suppliersthen1
On the basis of this argument itcould be said that Britainrsquos (andAustraliarsquos) case for intervening toassist Poland upon the German in-vasion in 1939 was lsquoweakenedrsquo be-cause Britain had previously acqui-esced to Germanyrsquos rearmament theremilitarization of the Rhinelandand the annexation of both Austriaand parts of Czechoslovakia Fewpeople who chanted lsquoFreedom forEast Timorrsquo said that the HowardGovernment should not act becausea quarter of a century before theWhitlam Government had been lsquoin-differentrsquo to Indonesiarsquos occupationof the island
There is also the claim that al-though Hussein is bad he is not theworst dictator in the world and thatit is hypocritical for the Americansto attack only Iraq This is an as-tounding proposition It attempts toapply to the United States a standardof behaviour that is impossible to sat-isfy Should the police not attemptto solve any crimes because theycanrsquot solve all crimes If a crime iscommitted by two people and thepolice arrest one perpetrator unlessthe other is also caught must the firstperpetrator be released When indi-viduals donate money for famine re-lief in Africa very few believe thattheir donation is pointless becauseit might prevent the starvation ofonly one person rather than thou-sands Christian ethics sets down norequirement that we should help no-one unless we can help everyone
The issue about state sovereigntyhowever is one that deserves to betaken seriously Regardless of onersquosopinions on the extent and limits ofstate sovereignty it is true that our
25MARCH 2003
E V I E WR
international relations system is builtupon the principle and to modify oroverturn it is a matter of some con-sequence
Even those who are generally sup-portive of the United States andtheir allies see the problem As it wasput by a leading commentator whenanalysing the Australian PrimeMinisterrsquos lsquohumanitarianrsquo justifica-tion for war
Finally Howardrsquos argumentagainst Hussein on human rightsis correct So is his moral case forwanting to liberate the Iraqipeople from their torment Theproblem however is that youcanrsquot trip around the worldwanting to overthrow regimesbecause of human rights2
Some would askmdashlsquowhy notrsquo Be-cause to do so would overthrow theUnited Nations Charter comes therejoinder And in turn the responseto that might bemdashlsquogoodrsquo
If itrsquos a choice between the main-tenance of the UN Charter and free-dom from tyranny freedom wins ev-ery time (although an internationallawyer sitting in Sydney might havea different view on this question fromthat of a political prisoner manacledin a Baghdad jail cell)
When the interests of lsquointerna-tional lawrsquo are more important thanthe life and liberty of individuals itcould be concluded that lsquothe Em-peror has no clothesrsquo Would inter-national law have sanctioned inter-vention to stop the Holocaust hadHitler not waged war and proceededwith his methods entirely within theconfines of the German territorialstate
Many who argue that lsquohumanitar-ianrsquo intervention in Iraq is not justi-fied because it infringes on thatcountryrsquos lsquosovereigntyrsquo would happilyhave other countries cede their po-litical sovereignty to supra-nationalbodies Certain features of the Inter-national Criminal Court overridethe principles of sovereignty but thatdid not stop a phalanx of interna-tional law experts urging sovereigngovernments to join it so as to en-
able the prosecution of war criminalsBut when it comes to actually stop-ping war crimes not simply prosecut-ing them that phalanx is largely si-lent
Without the doctrine of state sov-ereignty and without an arbiter fordetermining when interference withthe principle is justified (the roleclaimed by the United Nations andits Security Council) it is said thatstates would be free to impose theirown will and intervene in other
countries whose standards did notmeet their own (In The Second Trea-tise of Government Locke argued thata characteristic of a lsquostate of warrsquo be-tween individuals was the absence ofa superior authority to adjudicatedisputes and prevent individualsfrom administering justice them-selves)
Iraq might be claimed as a rea-sonably clear-cut case for interven-tion but other situations are notlikely to be as simple In Culture andEquality first published in 2001Brian Barry explored a lsquoliberalrsquo per-spective on this question
The liberal position is clearNobody anywhere in the worldshould be denied liberal pro-tections against injustice andoppression However in exactlythe same way as liberals arepragmatic about what liberalismmeans in terms of boundaries sohere the move from principle tointervention has to be mediated bypractical considerationshellip
[L]iberals are not so simple-mindedas to imagine that the answer toall violations of liberal rights is tosend in the Marines or even aUnited Nations force As in anyjust war theory there must be somedoctrine of lsquoproportionalityrsquohellip[S]carcely anybody would be infavour of the western powersinvading Saudi Arabia so at to sortout the way in which it lsquounjustlydenies political rights to women ornon-Muslimsrsquomdashaccording to theirliberal idea of justicersquo3
The question remainsmdashafterIraq what remains of lsquostate sover-eigntyrsquo Should the doctrine applyonly to lsquoliberal democraticrsquo statesSuch a solution might be attractiveto some lsquoliberalsrsquo but it doesnrsquot avoidthe problem of what exactly a lsquolib-eral democraticrsquo state is
One irony arising from the argu-ments about the war in Iraq is thatmany of those who have urged astrict application of lsquostate sover-eigntyrsquo principles in the past havegenerally supported the US-led in-tervention while those who havebeen willing to abridge or even aban-don the doctrine have had to rely onit to counter the lsquohumanitarianrsquo jus-tification for war
There are not many certaintiesabout the nature of the world afterthe war in Iraq but it can be saidwith some assurance that one defi-nite outcome is going to be a morevigorous debate about state sover-eignty
NOTES1 Scott Burchill lsquoThe humanitar-
ian arguments for this war are spu-riousrsquo The Age 21 March 2003
2 Paul Kelly lsquoThe hapless per-suaderrsquo The Australian 15ndash16March 2003
3 Brian Barry Culture and Equal-ity An egalitarian critique ofmulticulturalism Harvard Uni-versity Press page 138
John Roskam is a Research Fellow with the IPA
The lsquosovereigntyrsquo
question is perhaps
the strongest
argument against
the US-led
Coalition
API
26 MARCH 2003
E V I E WR
Which Way for theDemocrats
The 2002 mid-term elections were adramatic victory for President GeorgeW Bush and the Republicans Insteadof the historical norm of the partycontrolling the White House losingBushrsquos party gained seats in the Sen-ate House Governorsrsquo races andState legislatures The result was abitter disappointment for the Demo-crats and has led to a fierce debatebetween the Left and Centrists aboutthe future policy direction of the partytowards the 2004 elections
The Leftrsquos analysis is that the ma-jority of Americans are natural Demo-crats Electoral defeat was due to thefailure to energize that base of Demo-crats The party failed to distinguishitself sufficiently from Bush and thusgive their voters a reason to turn outWhile the majority of Democrats op-posed Bush on tax cuts and the warwith Iraq a significant minority sup-ported him and campaigned on thatsupport The result the Left claimwas that the Democrats lacked a con-sistent message in contrast to Bush
Support for this argument can befound in the higher turnout amongstRepublicans than Democrats in 2002while in 2000 the combined vote forGore and Nader was 51 per cent Aninfluential book by John Judis andRuy Texeira identified lsquoThe Emerg-ing Democrat Majorityrsquo Theyclaimed that growing demographicgroups trended Democrat includingthe young socially liberal profession-als minorities and women
What policies would motivate thisnatural Democrat base The Left callfor rescinding the Bush tax cut a classwar against the corporate world amajor increase in lsquopublic investmentrsquoin schools childcare health care and
Letter from AmericaNIGEL ASHFORD
public transport and strong opposi-tion to the war
Centrists however have a verydifferent analysis of the Democratsrsquoproblems the public did not trustthem to pursue the war against ter-rorism vigorously to keep down taxesto spend their tax dollars wisely or toreflect their cultural values
A Gallup opinion poll found that57 per cent of Americans askedthought that the Democrats were nottough enough on the war on terror-ism while 64 per cent thought theRepublicans were There was the per-ception that the Democrats were notserious on the issue and just playingpolitics Evidence for this was the de-bate over the new Department ofHomeland Security blocked becausethe Democrats wanted to protectunion rights while the President de-manded more flexibility to deploy theworkforce Many voters saw the issueas the national interest versus a spe-cial interestmdashin this case that of theunions The Democrats were seen asputting the interests of one of theirmajor constituencies before nationalsecurity
The Democratic LeadershipCouncil in lsquoThe Road Aheadrsquo by AlFrom and Bruce Reed presented theCentrist case lsquoStop pretending wecan win a majority simply by energiz-ing our basersquo The Democrats were
not trusted on the war against terror-ism were hostile to the cultural con-cerns of many working-class Demo-crats on abortion and guns and stillseen as the tax-and-spend party lsquoToomany Americans donrsquot trust us tokeep their taxes down or to spendtheir money wellrsquo
The Centrist agenda is to stronglyprosecute the war against terrorismwhether against al-Qarsquoeda Saddam orothers and to abandon knee-jerk iso-lationism arising from the experienceof the Vietnam War to defend capi-talism and support small investorsagainst irresponsible managers to cutpayroll taxes and to downplay thecultural issues that divide Democrats
Which path will the Democratstake The Left is in the ascendancyMost of the remaining Democrats inoffice come from left-wing districtsNancy Pelosi a left-liberal from SanFrancisco was easily elected the newleader of the House Democrats over-whelming her Centrist opponent andrising star African-American HaroldFord The early field of presidentialcandidates for 2004 is dominated bythe Left tendency including SenatorJohn Kerry Representative DickGephardt Governor Howard DeanRev Al Sharpton former SenatorCarol Moseley-Braun and Represen-tative Dennis Kucinich Only Sena-tor Joe Lieberman and Senator JohnEdwards represent the Centrist wing
The future of US politics may de-pend on which road the Democratsdecide to take The US is currently alsquo50ndash50rsquo nation evenly balanced be-tween the parties A left turn couldlead to Republican dominance farinto the future
Dr Nigel Ashford is at the Institute of Humane Studiesat George Mason University and is co-author of US
Politics Today (Manchester University Press)
API
27MARCH 2003
E V I E WR
Trusting TonyFrankly itrsquos all just too depressing Theeconomyrsquos heading for trouble Busi-ness confidence is low investment in2002 was 92 per cent lower than theprevious year and manufacturing in-vestment was nearly 18 per cent downThe budget deficit is spiralling becauseour once lsquoprudentrsquo Chancellor (trea-surer) Gordon Brown made over-opti-mistic growth projections and startedthrowing money at problems
Therersquos a load of health-and-safetyand anti-discrimination measuresthatmdashto put it most politelymdashare ex-amples of letting the best be the en-emy of the good Every school tripneeds a formal risk assessment withthe result that many trips are simplynot taking place New trains orderedfor London commuter routes wonrsquothave toilets because the rules say thatat least one toilet in each four-car unitmust be wheelchair-accessible whichwould have cost ten or a dozen seatson every overcrowded train
Some of this is just insane Somelocal authorities say that safety at workrules mean that home-care workersmustnrsquot lift the disabled people theyare looking after Or therersquos rail safetyUntil recently we were seriously pro-posing to spend $10 billion on a bet-ter system to stop trains going throughred signals On average this would havesaved the lives of about three passen-gers every four years which is a lousybargain compared with other safety in-vestments Worse it would also havereduced the capacity of the networkby up to 15 per cent and forced morepeople onto the roads which are muchmore dangerous than even ourclapped-out railways The result was aprojected net increase of 13 to 21 deathsper year
Meanwhile in London the Cen-tral line of the Underground has been
Letter from LondonJOHN NURICK
API
closed for weeks after a train derailedwhen one of its motors fell off Therewere no deaths or major injuries in theaccidentmdashbut itrsquos a safe bet that someof the people who havenrsquot been ableto use the Central line have been in-jured or killed on the roads
What can one say If the authori-ties took the same attitude to the riskof fatal accidents in the health serviceevery hospital in the country wouldhave been closed for years
Despite all this the Conservativesare still hopeless Their leader IanDuncan Smith has a new wheezewhen a journalist asks him anythingdifficult he chortles merrily and saysitrsquos the most uninteresting questionimaginable and hersquos not going to wasteanyonersquos time by answering it His col-leagues have their knives out for him
Meanwhile in spite of the govern-mentrsquos problems with the economy andthe public services Tony Blair is grow-ing in stature having his waymdashandantagonising large sections of his ownparty in the process On several recentissues he has faced down the formi-dable Gordon Brown in a way that notlong ago was hard to imagine
Then he shocked everyone by com-ing out against having elected mem-bers in the reformed House of Lordswhen most voters want an all-elected
chamber and most MPs want a partly-elected one In the event Parliamentcouldnrsquot agree on any of the optionsfor reform so wersquore stuck with the sta-tus quomdashwhich is fine by Mr Blair
Then therersquos the war By the timeyou read this it may be over or we maystill be waiting or our lads may befighting Mr Blairrsquos strong line againstIraq has made him very unpopular Theanti-war march on 15 February was thebiggest demonstration London hasever seen A few days later 122 Labourbackbenchers voted against the gov-ernment and many more abstained
Mr Blair didnrsquot budge War is a se-rious thing he says lsquoBut in a situationsuch as this you have to do what youbelieve to be right because thatrsquos theprice of having responsibilityrsquo1
He has often been accused of gov-erning by focus group Certainly he hasseemed reluctant to antagonise anypowerful group That has clearlychanged In a sense his stand on Iraqmerely follows his action in sendingtroops to Sierra Leone and Kosovomdashbut it has stirred up far stronger domes-tic and international opposition
The irony is that now when he re-ally needs people to trust him wedonrsquot Even in the desperately seriousbusiness of justifying an unpopular warDowning Street canrsquot play it straightremember the dossier from lsquointelli-gence sourcesrsquo that turned out to belargely cribbed from a PhD thesis onthe Internet
NOTE1 The Guardian 1 March 2003
John Nurick is a management consultant based in theSouth of England From 1985 to 1990 he was
editorial director of the Australian Institute for PublicPolicy and later edited newsletters reporting on theUK Parliament and European Union institutions
28 MARCH 2003
E V I E WR
KEVIN DONNELLY
Private EducationEquals Public Good
When it comes to choosing be-tween government and non-gov-ernment schools Australian par-ents are lsquovoting with their feetrsquo Asshown by recent ABS figures(Schools Australia 2002) over thelast decade there has been a dra-matic increase in non-governmentschool enrolments
Approximately 30 per cent ofstudents now attend non-govern-ment schools compared with 22per cent in 1980 and 28 per centin 1990 Over the last decadewhile the number of governmentschools has fallen by 64 per centnon-government schools havegrown by 61 per cent
Of course not everybody valuesparentsrsquo right to choose and theAustralian Education Union(AEU) Labor governments andlsquoleft-wingrsquo academics in particularconsistently argue against non-government schools
One of the arguments put for-ward by those opposed to givingparents greater freedom of choiceis that government schools are bet-ter at promoting social cohesionand a strong sense of what KenBoston the ex-head of the NSWEducation Department terms lsquothebonds of civic friendshiprsquo
The assumption is that becausestudents attend non-governmentschools there will be greater socialdivisiveness and a breakdown inthe civic values needed to hold so-ciety together But there is no cred-ible evidence offered to support theclaim that government schools arebetter at promoting the commongood
In fact there is much to provethe opposite
First as anyone familiar withthe lsquoculture warsrsquo and politicallycorrect curricula will know insteadof government-controlled educa-tion promoting unity and cohe-sion it has led to public angst andparental complaints
Witness the very bitter debatein Queensland a year or two agowhen the government-mandatedStudies of Society and Environ-ment (SOSE) curriculum was in-troduced into schools Such was
the lsquoleft-wingrsquo bias in the curricu-lum in particular in the areas ofmulticulturalism and the environ-ment that many parents felt be-trayed
The Queensland debate is mir-rored by what is happening in theUnited States As noted by Ste-phen Arons in his book Short Routeto Chaos instead of promotingunity government control of thecurriculum leads to the opposite
What the school wars tell us isthat somehow we have been
Education Agenda
transforming a vital instrumentfor creating social cohesioninto a source of division andhostility that there is some-thing built into the structure ofpublic schooling that under-mines one of its most importantfunctionsAronrsquos argument that govern-
ment schools no longer transmit aviable sense of a common cultureor agreed civic values is reinforcedby another noted United Stateseducationalist Diane Ravitch
In a recent article in the jour-nal Education Next Ravitch be-moans the impact of cultural rela-tivism and the post-modern on theschool curriculum (where there areno commonly agreed values) andeven goes so far as to argue thatparents should be free to choosenon-government schools becausesuch schools have a better chanceof reflecting their values
In the current education sys-tem with the public schoolscommitted to multiculturalismbilingualism and other forms ofparticularism it is difficult toargue that parents should notbe able to choose schools thatmeet their cultural needsSecond if one accepts that lsquoso-
cial capitalrsquomdashthe networks volun-tary associations and civic bondsthat hold a community togethermdashis important for the health of ademocratic society then non-gov-ernment schools clearly have theadvantage
Unlike the government schoolsystem characterized by a heavy-handed centralized bureaucracyand teacher union control non-government schools are closer tothe communities they serve Bytheir very nature non-government
There is no credible
evidence offered to
support the claim
that government
schools are better
at promoting the
common good
29MARCH 2003
E V I E WR
ALAN MORAN
The lsquoRrsquo Files
Private propertyrights the key toachieving efficiency inrural water use
WATER IN AUSTRALIAWater has always been a definingissue in Australiarsquos prosperityAnd in recent decades irrigationhas grown rapidly Even so theproportion of Australia that is ir-rigated at two per cent of theland comprises a share that isamongst the lowest among OECDcountries Only Canada and therainiest countries New Zealandand the UK have lower sharesthat of the US is 11 per cent andin Japan it reaches 60 per cent
Modern agriculture is only 200years old in Australia and thoughin the first 100 years agriculturalproductivity was increased toequal that of anywhere in theworld gains continue to bemademdashoutput has doubled overthe past 50 years a growth thatcould not have taken place with-out a similar expansion of irriga-tion Irrigation in the MurrayndashDarling agricultural provincealone contributes $5 billion toAustralian agricultural outputand non-irrigated agriculture inthe region contributes a further $5billion This makes the areawhich comprises 14 per cent ofAustraliarsquos land mass responsiblefor a third of the nationrsquos $35 bil-lion agricultural output
Applying Property Rights to WaterMost of the uses of water involvechoices or compromisesmdashdrink-ing water versus irrigation versus
industrial and so on Some how-ever involve complementaritiesparticularly certain recreationaluses such as water sports that arefacilitated by storage and consis-tent availability
In many cases water will per-form sequential functionsmdashthesame water can be used and re-used for irrigation used for indus-trial cooling and finish as drink-ing water Water with differentsometimes competing productiveuses will be optimally used as longas two conditions are in placeThe first is that its ownership isclearly specified and the ownersrsquoobligations to other users (orclaims from other beneficiaries)are well understood The secondrequires each property right to betradable to enable acquisition bythose who value it most therebymaximizing its value
The rights specification andtherefore property ownership canrarely commence with a cleansheet of paper People acquire in-dividual rights to property ini-tially through a variety of routesOne of these is seizure of some-thing that was originally of littlevalue until it was acquired and im-proved Squatters assume rights inthis way However they are firstacquired they need to be tradableAPI
schools establish strong commu-nity networks and have a greaterreliance on the voluntary work ofparents
That non-government schoolsare more effective in this regard issupported by research into lsquoChar-ter schoolsrsquo in the United StatesAs noted by Chester Finn at theFordham Foundation giving localcommunities lsquoownershiprsquo overtheir school builds networks oftrust and reciprocity so vital forsocial cohesion
Social capital also relies on citi-zens being disciplined and orderedin their behaviour Selfishness vio-lent behaviour and rudeness act tofragment the community instead ofpromoting cohesion According toa number of Australian surveys itis here once again that non-gov-ernment schools are seen to bemore effective
As noted by the Centre for In-dependent Studies researcher Jen-nifer Buckingham in The Truthabout Private Schools in Australiawhen analysing why so many par-ents forsake the government schoolsystem
When comparing independentprivate schools with publicschools the major theme thatemerged was not differences inacademic standards and curri-culum but issues of disciplineand order The surveyed par-ents felt that the behaviour andattitudes of students in publicschools was unacceptablehellipAll accept that non-govern-
ment schools achieve better aca-demic results provide greater cur-riculum flexibility and save Aus-tralian taxpayers millions of dol-lars Equally as important is theargument that such schools streng-then Australiarsquos civic health andstock of lsquosocial capitalrsquo
Dr Kevin Donnelly is Director of EducationStrategies a Melbourne-based consulting group
E-mailkevindnetspacenetau
s
30 MARCH 2003
E V I E WR
and relatively inviolable Thisprovides the incentive for them tobe improved and for their ownersand others to search out ways inwhich the assets they representcan be used to provide increasedvalue or other benefits
If confidence in the exclusiv-ity an owner has over the prop-erty right is lost or was neverpresent the asset will be used lessproductively For example own-ers will milk them for their cur-rent-use value rather than trade-off present value for a future valuethat is less certain
Even without a total emascu-lation of individual rights (for ex-ample when title to the propertydepends on continuing govern-mental assent) lack of certaintybrings lower incomes and dimin-ished asset protection One out-come of this can be observed inthe MurrayndashDarling system Wa-ter rights on the Victorian side ofthe Murray are secure while thoseon the NSW side have been over-allocated and are subject to ad-ministrative discretion includinghaving a firm duration of only tenyears In Victoria high securitywater (available 95 per cent of thetime) comprises the great bulk ofentitlements In contrast in
NSW high security water is avail-able only 60-80 per cent of thetime The result is that farmers onthe Victorian side plant perennialcrops while those in NSW tendto focus on annual crops espe-cially rice
There are claims that Victoriarsquosmore robust property rights meanthat the State Government haslost lsquocapabilityrsquo to manage com-pared with NSW The flip side ofthis is the increased risk and as-sociated lower value of productionnorth of the Murray where prop-erty rights are attenuated Gov-ernments that give themselves in-creased capacity to direct produc-tion or to take individualrsquos prop-erty will need to accept lower lev-els of income and output
IRRIGATION ENVIRON-MENTAL BENEFITS AND SA-LINITY
The Types of IssuesIssues stemming from irrigationcomprise two types those impact-ing on the environment and thoseimpacting on private uses Theformer includes issues such as pre-venting loss of species ensuringthat certain sorts of species flourishand avoiding unattractive growths
such as blue-green algae which re-sult from fertilizer build-up
The second involves economicimpacts on different users
While environmental flows toensure species flourish are oftenhighlighted salinity is the mainfocus And while salinity has animpact on the environment itsimportance is in the conflict of in-terest between productive usersmdashthe complaint of lsquodamaged goodsrsquoby downstream users against thoseupstream
The MurrayndashDarling Basin Sa-linity Strategy 2001ndash2015 has es-timated that increased salinitybrings costs of $294 million perannum to the basin
Yet data on the salinity of theMurray Darling shows levels up-stream of South Australia arelower than they were in the early1980s and are only seriously abovethese levels as the river ap-proaches its mouth at the GoolwaBarrage
The Basin Salinity Manage-ment Strategy argues that progressachieved over the past decade willlsquobe cancelled within 20-50 yearsand median salinity levels wouldexceed the Australian DrinkingWater Guidelines for good waterquality within 50-100 yearsrsquo Thecause of this is said to be risinggroundwater tables due to land usechanges across the Basin
The disputes over salinizationare largely disputes between com-mercial parties Full specificationof rights and obligations will al-low these to be resolved as longas the impacts are measurabletheir causes identifiable and thevarious rights and obligations areknown and stable In this respecttechnology to measure salt in wa-ter and to trace increases to par-ticular locations is readily avail-able
Agreements about the alloca-tion of water rights between ju-risdictions and to the main irri-gation provinces have been inplace for over a century In the
Average Salinity in the River Murray (EC Units)1
3500
3000
2500
2000
1500
1000
500
0
January 2003
July 2002ndashJanuary 2003
July 1982ndashJanuary 2003
Hume D
am
Swan
Hill
Merbein
Morgan
Milang
Mening
ie
Goolw
a
Barra
ge
31MARCH 2003
E V I E WR
I
API
Musinghellipcase of the Murray the lsquocaprsquo onwater abstractions agreed betweenthe various jurisdictions in 1995largely validated agreements madeearly in the last century and be-fore Disturbing these agreementswould greatly undermine the trustin the sanctity of property rightsand seriously reduce agriculturalproductivity Hence increased al-locations for certain parties or forcertain uses (including environ-mental flows) would need to bepurchased at market prices
Developments in Australiaover recent decades have con-spired to make irrigation water farmore valuable This is exacer-bated by1 Activation of NSW lsquosleeperrsquo
and lsquodozerrsquo water rights as a re-sult of the increased scarcityvalue a change that bringseven greater pressure on theavailable supply
2 Increased scarcity leading tomeasures that more carefullyhusband the water Whilesome of these prevent evapo-ration loss and have thereforebrought a net increase in effec-tive availability others havereduced availability (these in-clude a more careful wateringwhich results in reduced run-off and re-use)
3 Increased capture of waterwithin the land on which itfalls once water is recognizedas scarce landowners will seekto ensure it does not leave theirland NSW and Victoria haveplaced limits (a strict 10 percent in NSW) of water fallingon property as entitlements ofthe owner Queensland has notyet enacted an equivalent tothis Such adaptations of thecommon law are essentialhowever if downstream usersare not to be expropriatedThere is likely to be constant
bickering over water rights espe-cially if State Governments seek toelevate sharing issues and to sanc-tify them with claims about promot-
Daniel Pipes in The New York Posthas a very cogent explanation forwhy the Left appears to be so happywith the likes of Osama bin Ladenand Saddam Hussein
To be clear about their attitudeshe quotes the renowned Germanelectronic music composer KarlHeinz Stockhausen who saidstraight after the attack on NewYork that it was lsquothe greatest workof art for the whole cosmosrsquo
As Pipes and many of us observedaily there is barely a bad word tosay about Saddam Hussein nor aniota of sympathy for thoseoppressed tortured and murderedby his reacutegime Instead they venttheir fury against the AmericanPresident and British Prime Minister
Why the nonchalancePipes draws our attention to Lee
Harris writing in a recent issue ofthe Hoover Institutionrsquos journalPolicy Review According to KarlMarxrsquos central thesis the demise ofcapitalism hangs on workersgrowing poorer over timemdashwhichof course did not happen Sorather than give up on cherishedexpectations of socialist revolutionHarris notes Marxists tweaked theirtheory and looked instead to theentire populations of poor countriesto carry out the revolution Classanalysis went out the windowreplaced by geography
The trouble is they have tooverlook militant Islamrsquos slightly un-socialist practicesmdashsuch as itsimposing religious law excludingwomen from the workplace andpersecuting atheists
As Pipes sums up September 11and the prospect of war againstSaddam Hussein have exposed theLeftrsquos political self-delusionintellectual bankruptcy and moralturpitude
The Loopy Leftby Andrew McIntyre
ing an improved environment Realsolutions require the issue be placedwithin a normal commercial frame-work which involves1 Clarifying the property rights2 Allowing water rights to be
fully detachable from propertyand able to be used howeverthe holder wishes subject toany damage this might imposeon others
3 Ensuring full rights to buy andsell the water
4 Defining rights so as not to re-duce the quality of other usersThis means ensuring that farm-ing practices that do not bringgreater salination than somestandard
5 Allowing rights holders tobank their water and ensureeven greater certaintyAllocating specific individual
ownership rights to water and al-lowing its trade is a well-foundedmeans of maximizing the usevalue It would also be likely tohave the beneficial side-effects ofreducing salinity and farm-basedpollutants caused by intensiveuse We should grasp such oppor-tunities But if the impending sa-linity problem is as great as someclaim other solutions might wellinclude buying out some allocatedirrigatorsrsquo rights However alter-natives may be to remove saltfrom the water by engineering so-lutions or simply to live withhigher salt
NOTE1 Human drinking water should
be less than 800 ECs (electri-cal conductivity one ECequals about 06 mglitre)while higher levels are accept-able for much farming activity
Dr Alan Moran is Director Deregulation Unitat the Institute of Public Affairs
32 MARCH 2003
E V I E WR
Reading FileDone
eral political systems worldwidehave consistently accretedpower to the centre often in theface of clear constitutional im-peratives to the contrary) Ifeared instead that a UN thathad been patently successful insomethingmdashanythingmdashmightbe granted greater powers to thepoint where it would kill truediversity and individualism (ortry to anyway) through inevi-table bureaucratic practices
Is such a fear unfounded Ap-parently not if many peopleshare the moral touchstone ofthe Opposition Leader SimonCrean He believes according tohis own words in Parliamentthat what the UN SecurityCouncil declares is moral whatit refuses is immoral
The latest manoeuvrings overIraq have therefore been heart-
ening It seems that the desiresof the powers small and largeto promote their own interestswill continue to hobble the UN
The problem with a unitedworld is that as the threateningimpasse over Iraq suggestedthere are very divergent viewsabout how that world ought tobe run on an international leveljust as there are at national and
sub-national levels The virtueof multi-layered levels of gov-ernments is that competing ju-risdictions give the individual adegree of choice
The greatest sin of totalitar-ian governments past and pres-ent is to deny their citizens theright to leave The greatest dan-ger that the United Nationsposes as far off as it now (hap-pily) seems is that leaving its ju-risdiction is for all practical pur-poses impossible
THE IMPASSE JUST PASSEDI listened to Prime MinisterHoward speaking to the motionbefore Parliament in relation tothe war It was a good speechbut neither he nor PresidentBush seems able to structure andlay out an argument with thestyle and content of BritishPrime Minister Blair His equi-valent speech before the BritishCommons provides a masterfulsummary of the reasons for thiswar and includes an immenselyreadable time-line of the utterineffectiveness of the UN pro-cesses in dealing with Iraq Henicely deals with allegations ofthe lsquorushrsquo to war lsquoOur fault hasnot been impatience The truth
UNITED OR DIVIDEDI write just hours after US Presi-dent George W Bush has deliv-ered his ultimatum to Iraqi Presi-dent Saddam Hussein leave Iraqwithin 48 hours or be removedBy the time this appears beforeyour eyes you will knowwhether Hussein has decided hischances of survival will be sig-nificantly greater by choosingexile or by remaining in IraqThe recent creation of the In-ternational Criminal Court ofcourse makes war more likelysince Hussein can have no guar-antee of a peaceful lsquoretirementrsquo
In the event that Hussein re-mains in Iraq you will also knowwhether Bush has kept his wordand most likely the outcome ofthis military venture
This matter is immensely im-portant for the people of Iraqand for the military personnelinvolved (including our ownAustralian soldiers sailors andaviators) But then so was theprevious Gulf War the US in-vasion of Grenada the Austra-lian intervention in East Timorand so on But a difference be-tween the current conflict andthose others could be the impactit has upon international insti-tutions Actually just one inter-national institution the UnitedNations
Prior to the first Gulf War Ifeared the coalitionrsquos success forthe reason that some of it mighthave rubbed off onto the UnitedNations I hasten to deny that Ifear the UN as some vast con-spiracy for world domination Ifeared instead that it couldstumble into a piecemeal cen-tralization of power (just as Fed-
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
E V I E WRs
33MARCH 2003
E V I E WR
Reading FileDone
ATTACKING THE GLOBALGOVERNORSThe Cato Institute is a whole-some body as demonstrated byits opposition to such interna-tional organizations as the Inter-national Criminal Court and forthat matter the United Nationsitself Ted Galen Carpenter forexample argues in lsquoPutting theUnited Nations on Noticersquo thatthe UN can and has done somemodest good occasionally It ishe says lsquoa good idea to have aplace where governments cangather to air grievancesrsquo But headds if it lsquoattempts to acquire ataxing authority [or] raise astanding armyrsquo then the USshould withdraw (as indeedshould Australia) Because thatwould turn it into an lsquoembryonicsuperstate that would menacelibertyrsquo
Go to
wwwcatoorgforeignpolicyunhtml
THE INTERNATIONALORGANIZATIONS THEM-SELVESThe United Nations has beenaccused of being often ineffec-tive and always slow Well ev-ery time Irsquove hit the UNrsquos Web-site even with my nifty broad-band Internet connection slow-ness rules Perhaps the site isbeing continually accessed bythe teeming masses Anyway goto
wwwunorg
With 15 members alreadyand 13 more on the way thereremain hopes that the EuropeanUnion will be a force for a stable
twenty-first century Equallywith 15 members already exhib-iting rather divergent views overthe issue of Iraq and most of theforthcoming members sidingwith the United States perhapsthis is overly hopeful Go to
europaeuintindex_enhtm
Then there is the WorldTrade Organization the organi-zation behind which protection-ist nations can hide from unilat-eral trade liberalization by pre-tending to support multilateraltrade liberalization Go to
wwwwtoorg
And we mustnrsquot forget the In-ternational Criminal Court fearof which was no doubt a featureof Saddam Husseinrsquos rejection ofexile as an option and the furyof which is promised by a num-ber of prominent lawyers to bevisited upon our very own PrimeMinister Go to
wwwicc-cpiint
FEEDBACKI would welcome advice fromreaders on any other sites of inter-est to IPA Review readers E-mailme on scdawsonbigpondnetau
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
is our patience should have beenexhausted weeks and monthsand years agorsquo
Go to
wwwnumber10govukoutputPage3294asp
THE STRUGGLE BETWEENTHE CONTINENTSIf you are patient you can readthat wonderful British rag TheSpectator for free Last weekrsquoscopy is available on-line One ofits regular columnists is MarkSteyn an Americo-phile Cana-dian who has a robust turn ofphrase and an abiding disdain formuch modern music (whichseems to place him very comfort-ably into The Spectatorrsquos culturalmatrix)
His piece on the future de-cline of Europe vis-agrave-vis Ame-rica makes for fascinating read-ing Go to
wwwspectatorcouk
then click on the lsquoBack Issuesrsquobutton and choose the edition of15 March 2003
E V I E WR
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
24 MARCH 2003
E V I E WR
GEORGE Bush Tony Blairand John Howard haveprovided many reasons forsupporting military action
against Iraq One of those reasons hasbecome known as the lsquohumanitarianrsquojustification Put simply the lsquohu-manitarianrsquo justification for the US-led invasion of Iraq is that such ac-tion is necessary to free the Iraqipeople from their totalitariandictator
Such an argument is attractive tothose who believe that there aresome fundamental human rights thatall individuals possess regardless ofwhere and how they live Whatserves as the source of those rightshas been the subject of debate forcenturies One of the pre-eminentstatements on the subject was madeby John Locke who in The SecondTreatise of Government wrote thatmankind was lsquoequal and indepen-dentrsquo and that lsquono-one ought to harmanother in his life health liberty orpossessionsrsquo
Saddam Husseinrsquos mass murdertorture and terror are reasonablyclear breaches of human rightsTherefore some would ask why thereshould be opposition to the UnitedStates and its allies taking whatevermeasures might be necessary totopple the Iraqi regime Surely thesame standard of behaviour that ap-plies to individuals applies also tonation states If an individual walk-ing in the street witnessed a rapeoccurring wouldnrsquot that individualbe entitled to do everything in hispower to stop the crime and assistthe victim
The point is of course that in-ternational law and convention do
After IraqIs Sovereignty Dead
JOHN ROSKAM
not allow nation states to act in thesame way as individuals Countriescannot simply lsquotake the law into theirown handsrsquo To restrain lsquovigilantestatesrsquo (who might be acting fromeither lsquogoodrsquo or lsquobadrsquo motives) a num-ber of legal and political theorieshave been developed One of theseis the doctrine of lsquosovereigntyrsquo whichprovides that states should not inter-vene in the domestic affairs of otherstates
In relation to Iraq the lsquosover-eigntyrsquo question is perhaps the stron-gest argument against the US-ledCoalition Most of the other criti-cisms of lsquohumanitarianrsquo interventionin Iraq are either grounded in simpleanti-Americanism or are fallaciousFor example there is the claim thatbecause some of the countries in theCoalition have previously ignoredHusseinrsquos cruelties therefore it is il-legitimate to take action now Sucha view has been expressed by aMelbourne international relationsacademic
While there is no disputing thebrutal nature of Saddam Hus-seinrsquos regime the case for inter-vention made by those in Can-berra London and Washingtonis weakened by the fact that atthe peak of Saddamrsquos crimes inthe late 1980s they were eitherdirectly supporting him withweapons technology and intelli-gence or were entirely indifferentto his behaviour Even if theyhave belatedly recognised theerror of their ways how seriouslycan we take their concerns aboutweapons of mass destruction nowgiven they were his suppliersthen1
On the basis of this argument itcould be said that Britainrsquos (andAustraliarsquos) case for intervening toassist Poland upon the German in-vasion in 1939 was lsquoweakenedrsquo be-cause Britain had previously acqui-esced to Germanyrsquos rearmament theremilitarization of the Rhinelandand the annexation of both Austriaand parts of Czechoslovakia Fewpeople who chanted lsquoFreedom forEast Timorrsquo said that the HowardGovernment should not act becausea quarter of a century before theWhitlam Government had been lsquoin-differentrsquo to Indonesiarsquos occupationof the island
There is also the claim that al-though Hussein is bad he is not theworst dictator in the world and thatit is hypocritical for the Americansto attack only Iraq This is an as-tounding proposition It attempts toapply to the United States a standardof behaviour that is impossible to sat-isfy Should the police not attemptto solve any crimes because theycanrsquot solve all crimes If a crime iscommitted by two people and thepolice arrest one perpetrator unlessthe other is also caught must the firstperpetrator be released When indi-viduals donate money for famine re-lief in Africa very few believe thattheir donation is pointless becauseit might prevent the starvation ofonly one person rather than thou-sands Christian ethics sets down norequirement that we should help no-one unless we can help everyone
The issue about state sovereigntyhowever is one that deserves to betaken seriously Regardless of onersquosopinions on the extent and limits ofstate sovereignty it is true that our
25MARCH 2003
E V I E WR
international relations system is builtupon the principle and to modify oroverturn it is a matter of some con-sequence
Even those who are generally sup-portive of the United States andtheir allies see the problem As it wasput by a leading commentator whenanalysing the Australian PrimeMinisterrsquos lsquohumanitarianrsquo justifica-tion for war
Finally Howardrsquos argumentagainst Hussein on human rightsis correct So is his moral case forwanting to liberate the Iraqipeople from their torment Theproblem however is that youcanrsquot trip around the worldwanting to overthrow regimesbecause of human rights2
Some would askmdashlsquowhy notrsquo Be-cause to do so would overthrow theUnited Nations Charter comes therejoinder And in turn the responseto that might bemdashlsquogoodrsquo
If itrsquos a choice between the main-tenance of the UN Charter and free-dom from tyranny freedom wins ev-ery time (although an internationallawyer sitting in Sydney might havea different view on this question fromthat of a political prisoner manacledin a Baghdad jail cell)
When the interests of lsquointerna-tional lawrsquo are more important thanthe life and liberty of individuals itcould be concluded that lsquothe Em-peror has no clothesrsquo Would inter-national law have sanctioned inter-vention to stop the Holocaust hadHitler not waged war and proceededwith his methods entirely within theconfines of the German territorialstate
Many who argue that lsquohumanitar-ianrsquo intervention in Iraq is not justi-fied because it infringes on thatcountryrsquos lsquosovereigntyrsquo would happilyhave other countries cede their po-litical sovereignty to supra-nationalbodies Certain features of the Inter-national Criminal Court overridethe principles of sovereignty but thatdid not stop a phalanx of interna-tional law experts urging sovereigngovernments to join it so as to en-
able the prosecution of war criminalsBut when it comes to actually stop-ping war crimes not simply prosecut-ing them that phalanx is largely si-lent
Without the doctrine of state sov-ereignty and without an arbiter fordetermining when interference withthe principle is justified (the roleclaimed by the United Nations andits Security Council) it is said thatstates would be free to impose theirown will and intervene in other
countries whose standards did notmeet their own (In The Second Trea-tise of Government Locke argued thata characteristic of a lsquostate of warrsquo be-tween individuals was the absence ofa superior authority to adjudicatedisputes and prevent individualsfrom administering justice them-selves)
Iraq might be claimed as a rea-sonably clear-cut case for interven-tion but other situations are notlikely to be as simple In Culture andEquality first published in 2001Brian Barry explored a lsquoliberalrsquo per-spective on this question
The liberal position is clearNobody anywhere in the worldshould be denied liberal pro-tections against injustice andoppression However in exactlythe same way as liberals arepragmatic about what liberalismmeans in terms of boundaries sohere the move from principle tointervention has to be mediated bypractical considerationshellip
[L]iberals are not so simple-mindedas to imagine that the answer toall violations of liberal rights is tosend in the Marines or even aUnited Nations force As in anyjust war theory there must be somedoctrine of lsquoproportionalityrsquohellip[S]carcely anybody would be infavour of the western powersinvading Saudi Arabia so at to sortout the way in which it lsquounjustlydenies political rights to women ornon-Muslimsrsquomdashaccording to theirliberal idea of justicersquo3
The question remainsmdashafterIraq what remains of lsquostate sover-eigntyrsquo Should the doctrine applyonly to lsquoliberal democraticrsquo statesSuch a solution might be attractiveto some lsquoliberalsrsquo but it doesnrsquot avoidthe problem of what exactly a lsquolib-eral democraticrsquo state is
One irony arising from the argu-ments about the war in Iraq is thatmany of those who have urged astrict application of lsquostate sover-eigntyrsquo principles in the past havegenerally supported the US-led in-tervention while those who havebeen willing to abridge or even aban-don the doctrine have had to rely onit to counter the lsquohumanitarianrsquo jus-tification for war
There are not many certaintiesabout the nature of the world afterthe war in Iraq but it can be saidwith some assurance that one defi-nite outcome is going to be a morevigorous debate about state sover-eignty
NOTES1 Scott Burchill lsquoThe humanitar-
ian arguments for this war are spu-riousrsquo The Age 21 March 2003
2 Paul Kelly lsquoThe hapless per-suaderrsquo The Australian 15ndash16March 2003
3 Brian Barry Culture and Equal-ity An egalitarian critique ofmulticulturalism Harvard Uni-versity Press page 138
John Roskam is a Research Fellow with the IPA
The lsquosovereigntyrsquo
question is perhaps
the strongest
argument against
the US-led
Coalition
API
26 MARCH 2003
E V I E WR
Which Way for theDemocrats
The 2002 mid-term elections were adramatic victory for President GeorgeW Bush and the Republicans Insteadof the historical norm of the partycontrolling the White House losingBushrsquos party gained seats in the Sen-ate House Governorsrsquo races andState legislatures The result was abitter disappointment for the Demo-crats and has led to a fierce debatebetween the Left and Centrists aboutthe future policy direction of the partytowards the 2004 elections
The Leftrsquos analysis is that the ma-jority of Americans are natural Demo-crats Electoral defeat was due to thefailure to energize that base of Demo-crats The party failed to distinguishitself sufficiently from Bush and thusgive their voters a reason to turn outWhile the majority of Democrats op-posed Bush on tax cuts and the warwith Iraq a significant minority sup-ported him and campaigned on thatsupport The result the Left claimwas that the Democrats lacked a con-sistent message in contrast to Bush
Support for this argument can befound in the higher turnout amongstRepublicans than Democrats in 2002while in 2000 the combined vote forGore and Nader was 51 per cent Aninfluential book by John Judis andRuy Texeira identified lsquoThe Emerg-ing Democrat Majorityrsquo Theyclaimed that growing demographicgroups trended Democrat includingthe young socially liberal profession-als minorities and women
What policies would motivate thisnatural Democrat base The Left callfor rescinding the Bush tax cut a classwar against the corporate world amajor increase in lsquopublic investmentrsquoin schools childcare health care and
Letter from AmericaNIGEL ASHFORD
public transport and strong opposi-tion to the war
Centrists however have a verydifferent analysis of the Democratsrsquoproblems the public did not trustthem to pursue the war against ter-rorism vigorously to keep down taxesto spend their tax dollars wisely or toreflect their cultural values
A Gallup opinion poll found that57 per cent of Americans askedthought that the Democrats were nottough enough on the war on terror-ism while 64 per cent thought theRepublicans were There was the per-ception that the Democrats were notserious on the issue and just playingpolitics Evidence for this was the de-bate over the new Department ofHomeland Security blocked becausethe Democrats wanted to protectunion rights while the President de-manded more flexibility to deploy theworkforce Many voters saw the issueas the national interest versus a spe-cial interestmdashin this case that of theunions The Democrats were seen asputting the interests of one of theirmajor constituencies before nationalsecurity
The Democratic LeadershipCouncil in lsquoThe Road Aheadrsquo by AlFrom and Bruce Reed presented theCentrist case lsquoStop pretending wecan win a majority simply by energiz-ing our basersquo The Democrats were
not trusted on the war against terror-ism were hostile to the cultural con-cerns of many working-class Demo-crats on abortion and guns and stillseen as the tax-and-spend party lsquoToomany Americans donrsquot trust us tokeep their taxes down or to spendtheir money wellrsquo
The Centrist agenda is to stronglyprosecute the war against terrorismwhether against al-Qarsquoeda Saddam orothers and to abandon knee-jerk iso-lationism arising from the experienceof the Vietnam War to defend capi-talism and support small investorsagainst irresponsible managers to cutpayroll taxes and to downplay thecultural issues that divide Democrats
Which path will the Democratstake The Left is in the ascendancyMost of the remaining Democrats inoffice come from left-wing districtsNancy Pelosi a left-liberal from SanFrancisco was easily elected the newleader of the House Democrats over-whelming her Centrist opponent andrising star African-American HaroldFord The early field of presidentialcandidates for 2004 is dominated bythe Left tendency including SenatorJohn Kerry Representative DickGephardt Governor Howard DeanRev Al Sharpton former SenatorCarol Moseley-Braun and Represen-tative Dennis Kucinich Only Sena-tor Joe Lieberman and Senator JohnEdwards represent the Centrist wing
The future of US politics may de-pend on which road the Democratsdecide to take The US is currently alsquo50ndash50rsquo nation evenly balanced be-tween the parties A left turn couldlead to Republican dominance farinto the future
Dr Nigel Ashford is at the Institute of Humane Studiesat George Mason University and is co-author of US
Politics Today (Manchester University Press)
API
27MARCH 2003
E V I E WR
Trusting TonyFrankly itrsquos all just too depressing Theeconomyrsquos heading for trouble Busi-ness confidence is low investment in2002 was 92 per cent lower than theprevious year and manufacturing in-vestment was nearly 18 per cent downThe budget deficit is spiralling becauseour once lsquoprudentrsquo Chancellor (trea-surer) Gordon Brown made over-opti-mistic growth projections and startedthrowing money at problems
Therersquos a load of health-and-safetyand anti-discrimination measuresthatmdashto put it most politelymdashare ex-amples of letting the best be the en-emy of the good Every school tripneeds a formal risk assessment withthe result that many trips are simplynot taking place New trains orderedfor London commuter routes wonrsquothave toilets because the rules say thatat least one toilet in each four-car unitmust be wheelchair-accessible whichwould have cost ten or a dozen seatson every overcrowded train
Some of this is just insane Somelocal authorities say that safety at workrules mean that home-care workersmustnrsquot lift the disabled people theyare looking after Or therersquos rail safetyUntil recently we were seriously pro-posing to spend $10 billion on a bet-ter system to stop trains going throughred signals On average this would havesaved the lives of about three passen-gers every four years which is a lousybargain compared with other safety in-vestments Worse it would also havereduced the capacity of the networkby up to 15 per cent and forced morepeople onto the roads which are muchmore dangerous than even ourclapped-out railways The result was aprojected net increase of 13 to 21 deathsper year
Meanwhile in London the Cen-tral line of the Underground has been
Letter from LondonJOHN NURICK
API
closed for weeks after a train derailedwhen one of its motors fell off Therewere no deaths or major injuries in theaccidentmdashbut itrsquos a safe bet that someof the people who havenrsquot been ableto use the Central line have been in-jured or killed on the roads
What can one say If the authori-ties took the same attitude to the riskof fatal accidents in the health serviceevery hospital in the country wouldhave been closed for years
Despite all this the Conservativesare still hopeless Their leader IanDuncan Smith has a new wheezewhen a journalist asks him anythingdifficult he chortles merrily and saysitrsquos the most uninteresting questionimaginable and hersquos not going to wasteanyonersquos time by answering it His col-leagues have their knives out for him
Meanwhile in spite of the govern-mentrsquos problems with the economy andthe public services Tony Blair is grow-ing in stature having his waymdashandantagonising large sections of his ownparty in the process On several recentissues he has faced down the formi-dable Gordon Brown in a way that notlong ago was hard to imagine
Then he shocked everyone by com-ing out against having elected mem-bers in the reformed House of Lordswhen most voters want an all-elected
chamber and most MPs want a partly-elected one In the event Parliamentcouldnrsquot agree on any of the optionsfor reform so wersquore stuck with the sta-tus quomdashwhich is fine by Mr Blair
Then therersquos the war By the timeyou read this it may be over or we maystill be waiting or our lads may befighting Mr Blairrsquos strong line againstIraq has made him very unpopular Theanti-war march on 15 February was thebiggest demonstration London hasever seen A few days later 122 Labourbackbenchers voted against the gov-ernment and many more abstained
Mr Blair didnrsquot budge War is a se-rious thing he says lsquoBut in a situationsuch as this you have to do what youbelieve to be right because thatrsquos theprice of having responsibilityrsquo1
He has often been accused of gov-erning by focus group Certainly he hasseemed reluctant to antagonise anypowerful group That has clearlychanged In a sense his stand on Iraqmerely follows his action in sendingtroops to Sierra Leone and Kosovomdashbut it has stirred up far stronger domes-tic and international opposition
The irony is that now when he re-ally needs people to trust him wedonrsquot Even in the desperately seriousbusiness of justifying an unpopular warDowning Street canrsquot play it straightremember the dossier from lsquointelli-gence sourcesrsquo that turned out to belargely cribbed from a PhD thesis onthe Internet
NOTE1 The Guardian 1 March 2003
John Nurick is a management consultant based in theSouth of England From 1985 to 1990 he was
editorial director of the Australian Institute for PublicPolicy and later edited newsletters reporting on theUK Parliament and European Union institutions
28 MARCH 2003
E V I E WR
KEVIN DONNELLY
Private EducationEquals Public Good
When it comes to choosing be-tween government and non-gov-ernment schools Australian par-ents are lsquovoting with their feetrsquo Asshown by recent ABS figures(Schools Australia 2002) over thelast decade there has been a dra-matic increase in non-governmentschool enrolments
Approximately 30 per cent ofstudents now attend non-govern-ment schools compared with 22per cent in 1980 and 28 per centin 1990 Over the last decadewhile the number of governmentschools has fallen by 64 per centnon-government schools havegrown by 61 per cent
Of course not everybody valuesparentsrsquo right to choose and theAustralian Education Union(AEU) Labor governments andlsquoleft-wingrsquo academics in particularconsistently argue against non-government schools
One of the arguments put for-ward by those opposed to givingparents greater freedom of choiceis that government schools are bet-ter at promoting social cohesionand a strong sense of what KenBoston the ex-head of the NSWEducation Department terms lsquothebonds of civic friendshiprsquo
The assumption is that becausestudents attend non-governmentschools there will be greater socialdivisiveness and a breakdown inthe civic values needed to hold so-ciety together But there is no cred-ible evidence offered to support theclaim that government schools arebetter at promoting the commongood
In fact there is much to provethe opposite
First as anyone familiar withthe lsquoculture warsrsquo and politicallycorrect curricula will know insteadof government-controlled educa-tion promoting unity and cohe-sion it has led to public angst andparental complaints
Witness the very bitter debatein Queensland a year or two agowhen the government-mandatedStudies of Society and Environ-ment (SOSE) curriculum was in-troduced into schools Such was
the lsquoleft-wingrsquo bias in the curricu-lum in particular in the areas ofmulticulturalism and the environ-ment that many parents felt be-trayed
The Queensland debate is mir-rored by what is happening in theUnited States As noted by Ste-phen Arons in his book Short Routeto Chaos instead of promotingunity government control of thecurriculum leads to the opposite
What the school wars tell us isthat somehow we have been
Education Agenda
transforming a vital instrumentfor creating social cohesioninto a source of division andhostility that there is some-thing built into the structure ofpublic schooling that under-mines one of its most importantfunctionsAronrsquos argument that govern-
ment schools no longer transmit aviable sense of a common cultureor agreed civic values is reinforcedby another noted United Stateseducationalist Diane Ravitch
In a recent article in the jour-nal Education Next Ravitch be-moans the impact of cultural rela-tivism and the post-modern on theschool curriculum (where there areno commonly agreed values) andeven goes so far as to argue thatparents should be free to choosenon-government schools becausesuch schools have a better chanceof reflecting their values
In the current education sys-tem with the public schoolscommitted to multiculturalismbilingualism and other forms ofparticularism it is difficult toargue that parents should notbe able to choose schools thatmeet their cultural needsSecond if one accepts that lsquoso-
cial capitalrsquomdashthe networks volun-tary associations and civic bondsthat hold a community togethermdashis important for the health of ademocratic society then non-gov-ernment schools clearly have theadvantage
Unlike the government schoolsystem characterized by a heavy-handed centralized bureaucracyand teacher union control non-government schools are closer tothe communities they serve Bytheir very nature non-government
There is no credible
evidence offered to
support the claim
that government
schools are better
at promoting the
common good
29MARCH 2003
E V I E WR
ALAN MORAN
The lsquoRrsquo Files
Private propertyrights the key toachieving efficiency inrural water use
WATER IN AUSTRALIAWater has always been a definingissue in Australiarsquos prosperityAnd in recent decades irrigationhas grown rapidly Even so theproportion of Australia that is ir-rigated at two per cent of theland comprises a share that isamongst the lowest among OECDcountries Only Canada and therainiest countries New Zealandand the UK have lower sharesthat of the US is 11 per cent andin Japan it reaches 60 per cent
Modern agriculture is only 200years old in Australia and thoughin the first 100 years agriculturalproductivity was increased toequal that of anywhere in theworld gains continue to bemademdashoutput has doubled overthe past 50 years a growth thatcould not have taken place with-out a similar expansion of irriga-tion Irrigation in the MurrayndashDarling agricultural provincealone contributes $5 billion toAustralian agricultural outputand non-irrigated agriculture inthe region contributes a further $5billion This makes the areawhich comprises 14 per cent ofAustraliarsquos land mass responsiblefor a third of the nationrsquos $35 bil-lion agricultural output
Applying Property Rights to WaterMost of the uses of water involvechoices or compromisesmdashdrink-ing water versus irrigation versus
industrial and so on Some how-ever involve complementaritiesparticularly certain recreationaluses such as water sports that arefacilitated by storage and consis-tent availability
In many cases water will per-form sequential functionsmdashthesame water can be used and re-used for irrigation used for indus-trial cooling and finish as drink-ing water Water with differentsometimes competing productiveuses will be optimally used as longas two conditions are in placeThe first is that its ownership isclearly specified and the ownersrsquoobligations to other users (orclaims from other beneficiaries)are well understood The secondrequires each property right to betradable to enable acquisition bythose who value it most therebymaximizing its value
The rights specification andtherefore property ownership canrarely commence with a cleansheet of paper People acquire in-dividual rights to property ini-tially through a variety of routesOne of these is seizure of some-thing that was originally of littlevalue until it was acquired and im-proved Squatters assume rights inthis way However they are firstacquired they need to be tradableAPI
schools establish strong commu-nity networks and have a greaterreliance on the voluntary work ofparents
That non-government schoolsare more effective in this regard issupported by research into lsquoChar-ter schoolsrsquo in the United StatesAs noted by Chester Finn at theFordham Foundation giving localcommunities lsquoownershiprsquo overtheir school builds networks oftrust and reciprocity so vital forsocial cohesion
Social capital also relies on citi-zens being disciplined and orderedin their behaviour Selfishness vio-lent behaviour and rudeness act tofragment the community instead ofpromoting cohesion According toa number of Australian surveys itis here once again that non-gov-ernment schools are seen to bemore effective
As noted by the Centre for In-dependent Studies researcher Jen-nifer Buckingham in The Truthabout Private Schools in Australiawhen analysing why so many par-ents forsake the government schoolsystem
When comparing independentprivate schools with publicschools the major theme thatemerged was not differences inacademic standards and curri-culum but issues of disciplineand order The surveyed par-ents felt that the behaviour andattitudes of students in publicschools was unacceptablehellipAll accept that non-govern-
ment schools achieve better aca-demic results provide greater cur-riculum flexibility and save Aus-tralian taxpayers millions of dol-lars Equally as important is theargument that such schools streng-then Australiarsquos civic health andstock of lsquosocial capitalrsquo
Dr Kevin Donnelly is Director of EducationStrategies a Melbourne-based consulting group
E-mailkevindnetspacenetau
s
30 MARCH 2003
E V I E WR
and relatively inviolable Thisprovides the incentive for them tobe improved and for their ownersand others to search out ways inwhich the assets they representcan be used to provide increasedvalue or other benefits
If confidence in the exclusiv-ity an owner has over the prop-erty right is lost or was neverpresent the asset will be used lessproductively For example own-ers will milk them for their cur-rent-use value rather than trade-off present value for a future valuethat is less certain
Even without a total emascu-lation of individual rights (for ex-ample when title to the propertydepends on continuing govern-mental assent) lack of certaintybrings lower incomes and dimin-ished asset protection One out-come of this can be observed inthe MurrayndashDarling system Wa-ter rights on the Victorian side ofthe Murray are secure while thoseon the NSW side have been over-allocated and are subject to ad-ministrative discretion includinghaving a firm duration of only tenyears In Victoria high securitywater (available 95 per cent of thetime) comprises the great bulk ofentitlements In contrast in
NSW high security water is avail-able only 60-80 per cent of thetime The result is that farmers onthe Victorian side plant perennialcrops while those in NSW tendto focus on annual crops espe-cially rice
There are claims that Victoriarsquosmore robust property rights meanthat the State Government haslost lsquocapabilityrsquo to manage com-pared with NSW The flip side ofthis is the increased risk and as-sociated lower value of productionnorth of the Murray where prop-erty rights are attenuated Gov-ernments that give themselves in-creased capacity to direct produc-tion or to take individualrsquos prop-erty will need to accept lower lev-els of income and output
IRRIGATION ENVIRON-MENTAL BENEFITS AND SA-LINITY
The Types of IssuesIssues stemming from irrigationcomprise two types those impact-ing on the environment and thoseimpacting on private uses Theformer includes issues such as pre-venting loss of species ensuringthat certain sorts of species flourishand avoiding unattractive growths
such as blue-green algae which re-sult from fertilizer build-up
The second involves economicimpacts on different users
While environmental flows toensure species flourish are oftenhighlighted salinity is the mainfocus And while salinity has animpact on the environment itsimportance is in the conflict of in-terest between productive usersmdashthe complaint of lsquodamaged goodsrsquoby downstream users against thoseupstream
The MurrayndashDarling Basin Sa-linity Strategy 2001ndash2015 has es-timated that increased salinitybrings costs of $294 million perannum to the basin
Yet data on the salinity of theMurray Darling shows levels up-stream of South Australia arelower than they were in the early1980s and are only seriously abovethese levels as the river ap-proaches its mouth at the GoolwaBarrage
The Basin Salinity Manage-ment Strategy argues that progressachieved over the past decade willlsquobe cancelled within 20-50 yearsand median salinity levels wouldexceed the Australian DrinkingWater Guidelines for good waterquality within 50-100 yearsrsquo Thecause of this is said to be risinggroundwater tables due to land usechanges across the Basin
The disputes over salinizationare largely disputes between com-mercial parties Full specificationof rights and obligations will al-low these to be resolved as longas the impacts are measurabletheir causes identifiable and thevarious rights and obligations areknown and stable In this respecttechnology to measure salt in wa-ter and to trace increases to par-ticular locations is readily avail-able
Agreements about the alloca-tion of water rights between ju-risdictions and to the main irri-gation provinces have been inplace for over a century In the
Average Salinity in the River Murray (EC Units)1
3500
3000
2500
2000
1500
1000
500
0
January 2003
July 2002ndashJanuary 2003
July 1982ndashJanuary 2003
Hume D
am
Swan
Hill
Merbein
Morgan
Milang
Mening
ie
Goolw
a
Barra
ge
31MARCH 2003
E V I E WR
I
API
Musinghellipcase of the Murray the lsquocaprsquo onwater abstractions agreed betweenthe various jurisdictions in 1995largely validated agreements madeearly in the last century and be-fore Disturbing these agreementswould greatly undermine the trustin the sanctity of property rightsand seriously reduce agriculturalproductivity Hence increased al-locations for certain parties or forcertain uses (including environ-mental flows) would need to bepurchased at market prices
Developments in Australiaover recent decades have con-spired to make irrigation water farmore valuable This is exacer-bated by1 Activation of NSW lsquosleeperrsquo
and lsquodozerrsquo water rights as a re-sult of the increased scarcityvalue a change that bringseven greater pressure on theavailable supply
2 Increased scarcity leading tomeasures that more carefullyhusband the water Whilesome of these prevent evapo-ration loss and have thereforebrought a net increase in effec-tive availability others havereduced availability (these in-clude a more careful wateringwhich results in reduced run-off and re-use)
3 Increased capture of waterwithin the land on which itfalls once water is recognizedas scarce landowners will seekto ensure it does not leave theirland NSW and Victoria haveplaced limits (a strict 10 percent in NSW) of water fallingon property as entitlements ofthe owner Queensland has notyet enacted an equivalent tothis Such adaptations of thecommon law are essentialhowever if downstream usersare not to be expropriatedThere is likely to be constant
bickering over water rights espe-cially if State Governments seek toelevate sharing issues and to sanc-tify them with claims about promot-
Daniel Pipes in The New York Posthas a very cogent explanation forwhy the Left appears to be so happywith the likes of Osama bin Ladenand Saddam Hussein
To be clear about their attitudeshe quotes the renowned Germanelectronic music composer KarlHeinz Stockhausen who saidstraight after the attack on NewYork that it was lsquothe greatest workof art for the whole cosmosrsquo
As Pipes and many of us observedaily there is barely a bad word tosay about Saddam Hussein nor aniota of sympathy for thoseoppressed tortured and murderedby his reacutegime Instead they venttheir fury against the AmericanPresident and British Prime Minister
Why the nonchalancePipes draws our attention to Lee
Harris writing in a recent issue ofthe Hoover Institutionrsquos journalPolicy Review According to KarlMarxrsquos central thesis the demise ofcapitalism hangs on workersgrowing poorer over timemdashwhichof course did not happen Sorather than give up on cherishedexpectations of socialist revolutionHarris notes Marxists tweaked theirtheory and looked instead to theentire populations of poor countriesto carry out the revolution Classanalysis went out the windowreplaced by geography
The trouble is they have tooverlook militant Islamrsquos slightly un-socialist practicesmdashsuch as itsimposing religious law excludingwomen from the workplace andpersecuting atheists
As Pipes sums up September 11and the prospect of war againstSaddam Hussein have exposed theLeftrsquos political self-delusionintellectual bankruptcy and moralturpitude
The Loopy Leftby Andrew McIntyre
ing an improved environment Realsolutions require the issue be placedwithin a normal commercial frame-work which involves1 Clarifying the property rights2 Allowing water rights to be
fully detachable from propertyand able to be used howeverthe holder wishes subject toany damage this might imposeon others
3 Ensuring full rights to buy andsell the water
4 Defining rights so as not to re-duce the quality of other usersThis means ensuring that farm-ing practices that do not bringgreater salination than somestandard
5 Allowing rights holders tobank their water and ensureeven greater certaintyAllocating specific individual
ownership rights to water and al-lowing its trade is a well-foundedmeans of maximizing the usevalue It would also be likely tohave the beneficial side-effects ofreducing salinity and farm-basedpollutants caused by intensiveuse We should grasp such oppor-tunities But if the impending sa-linity problem is as great as someclaim other solutions might wellinclude buying out some allocatedirrigatorsrsquo rights However alter-natives may be to remove saltfrom the water by engineering so-lutions or simply to live withhigher salt
NOTE1 Human drinking water should
be less than 800 ECs (electri-cal conductivity one ECequals about 06 mglitre)while higher levels are accept-able for much farming activity
Dr Alan Moran is Director Deregulation Unitat the Institute of Public Affairs
32 MARCH 2003
E V I E WR
Reading FileDone
eral political systems worldwidehave consistently accretedpower to the centre often in theface of clear constitutional im-peratives to the contrary) Ifeared instead that a UN thathad been patently successful insomethingmdashanythingmdashmightbe granted greater powers to thepoint where it would kill truediversity and individualism (ortry to anyway) through inevi-table bureaucratic practices
Is such a fear unfounded Ap-parently not if many peopleshare the moral touchstone ofthe Opposition Leader SimonCrean He believes according tohis own words in Parliamentthat what the UN SecurityCouncil declares is moral whatit refuses is immoral
The latest manoeuvrings overIraq have therefore been heart-
ening It seems that the desiresof the powers small and largeto promote their own interestswill continue to hobble the UN
The problem with a unitedworld is that as the threateningimpasse over Iraq suggestedthere are very divergent viewsabout how that world ought tobe run on an international leveljust as there are at national and
sub-national levels The virtueof multi-layered levels of gov-ernments is that competing ju-risdictions give the individual adegree of choice
The greatest sin of totalitar-ian governments past and pres-ent is to deny their citizens theright to leave The greatest dan-ger that the United Nationsposes as far off as it now (hap-pily) seems is that leaving its ju-risdiction is for all practical pur-poses impossible
THE IMPASSE JUST PASSEDI listened to Prime MinisterHoward speaking to the motionbefore Parliament in relation tothe war It was a good speechbut neither he nor PresidentBush seems able to structure andlay out an argument with thestyle and content of BritishPrime Minister Blair His equi-valent speech before the BritishCommons provides a masterfulsummary of the reasons for thiswar and includes an immenselyreadable time-line of the utterineffectiveness of the UN pro-cesses in dealing with Iraq Henicely deals with allegations ofthe lsquorushrsquo to war lsquoOur fault hasnot been impatience The truth
UNITED OR DIVIDEDI write just hours after US Presi-dent George W Bush has deliv-ered his ultimatum to Iraqi Presi-dent Saddam Hussein leave Iraqwithin 48 hours or be removedBy the time this appears beforeyour eyes you will knowwhether Hussein has decided hischances of survival will be sig-nificantly greater by choosingexile or by remaining in IraqThe recent creation of the In-ternational Criminal Court ofcourse makes war more likelysince Hussein can have no guar-antee of a peaceful lsquoretirementrsquo
In the event that Hussein re-mains in Iraq you will also knowwhether Bush has kept his wordand most likely the outcome ofthis military venture
This matter is immensely im-portant for the people of Iraqand for the military personnelinvolved (including our ownAustralian soldiers sailors andaviators) But then so was theprevious Gulf War the US in-vasion of Grenada the Austra-lian intervention in East Timorand so on But a difference be-tween the current conflict andthose others could be the impactit has upon international insti-tutions Actually just one inter-national institution the UnitedNations
Prior to the first Gulf War Ifeared the coalitionrsquos success forthe reason that some of it mighthave rubbed off onto the UnitedNations I hasten to deny that Ifear the UN as some vast con-spiracy for world domination Ifeared instead that it couldstumble into a piecemeal cen-tralization of power (just as Fed-
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
E V I E WRs
33MARCH 2003
E V I E WR
Reading FileDone
ATTACKING THE GLOBALGOVERNORSThe Cato Institute is a whole-some body as demonstrated byits opposition to such interna-tional organizations as the Inter-national Criminal Court and forthat matter the United Nationsitself Ted Galen Carpenter forexample argues in lsquoPutting theUnited Nations on Noticersquo thatthe UN can and has done somemodest good occasionally It ishe says lsquoa good idea to have aplace where governments cangather to air grievancesrsquo But headds if it lsquoattempts to acquire ataxing authority [or] raise astanding armyrsquo then the USshould withdraw (as indeedshould Australia) Because thatwould turn it into an lsquoembryonicsuperstate that would menacelibertyrsquo
Go to
wwwcatoorgforeignpolicyunhtml
THE INTERNATIONALORGANIZATIONS THEM-SELVESThe United Nations has beenaccused of being often ineffec-tive and always slow Well ev-ery time Irsquove hit the UNrsquos Web-site even with my nifty broad-band Internet connection slow-ness rules Perhaps the site isbeing continually accessed bythe teeming masses Anyway goto
wwwunorg
With 15 members alreadyand 13 more on the way thereremain hopes that the EuropeanUnion will be a force for a stable
twenty-first century Equallywith 15 members already exhib-iting rather divergent views overthe issue of Iraq and most of theforthcoming members sidingwith the United States perhapsthis is overly hopeful Go to
europaeuintindex_enhtm
Then there is the WorldTrade Organization the organi-zation behind which protection-ist nations can hide from unilat-eral trade liberalization by pre-tending to support multilateraltrade liberalization Go to
wwwwtoorg
And we mustnrsquot forget the In-ternational Criminal Court fearof which was no doubt a featureof Saddam Husseinrsquos rejection ofexile as an option and the furyof which is promised by a num-ber of prominent lawyers to bevisited upon our very own PrimeMinister Go to
wwwicc-cpiint
FEEDBACKI would welcome advice fromreaders on any other sites of inter-est to IPA Review readers E-mailme on scdawsonbigpondnetau
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
is our patience should have beenexhausted weeks and monthsand years agorsquo
Go to
wwwnumber10govukoutputPage3294asp
THE STRUGGLE BETWEENTHE CONTINENTSIf you are patient you can readthat wonderful British rag TheSpectator for free Last weekrsquoscopy is available on-line One ofits regular columnists is MarkSteyn an Americo-phile Cana-dian who has a robust turn ofphrase and an abiding disdain formuch modern music (whichseems to place him very comfort-ably into The Spectatorrsquos culturalmatrix)
His piece on the future de-cline of Europe vis-agrave-vis Ame-rica makes for fascinating read-ing Go to
wwwspectatorcouk
then click on the lsquoBack Issuesrsquobutton and choose the edition of15 March 2003
E V I E WR
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
25MARCH 2003
E V I E WR
international relations system is builtupon the principle and to modify oroverturn it is a matter of some con-sequence
Even those who are generally sup-portive of the United States andtheir allies see the problem As it wasput by a leading commentator whenanalysing the Australian PrimeMinisterrsquos lsquohumanitarianrsquo justifica-tion for war
Finally Howardrsquos argumentagainst Hussein on human rightsis correct So is his moral case forwanting to liberate the Iraqipeople from their torment Theproblem however is that youcanrsquot trip around the worldwanting to overthrow regimesbecause of human rights2
Some would askmdashlsquowhy notrsquo Be-cause to do so would overthrow theUnited Nations Charter comes therejoinder And in turn the responseto that might bemdashlsquogoodrsquo
If itrsquos a choice between the main-tenance of the UN Charter and free-dom from tyranny freedom wins ev-ery time (although an internationallawyer sitting in Sydney might havea different view on this question fromthat of a political prisoner manacledin a Baghdad jail cell)
When the interests of lsquointerna-tional lawrsquo are more important thanthe life and liberty of individuals itcould be concluded that lsquothe Em-peror has no clothesrsquo Would inter-national law have sanctioned inter-vention to stop the Holocaust hadHitler not waged war and proceededwith his methods entirely within theconfines of the German territorialstate
Many who argue that lsquohumanitar-ianrsquo intervention in Iraq is not justi-fied because it infringes on thatcountryrsquos lsquosovereigntyrsquo would happilyhave other countries cede their po-litical sovereignty to supra-nationalbodies Certain features of the Inter-national Criminal Court overridethe principles of sovereignty but thatdid not stop a phalanx of interna-tional law experts urging sovereigngovernments to join it so as to en-
able the prosecution of war criminalsBut when it comes to actually stop-ping war crimes not simply prosecut-ing them that phalanx is largely si-lent
Without the doctrine of state sov-ereignty and without an arbiter fordetermining when interference withthe principle is justified (the roleclaimed by the United Nations andits Security Council) it is said thatstates would be free to impose theirown will and intervene in other
countries whose standards did notmeet their own (In The Second Trea-tise of Government Locke argued thata characteristic of a lsquostate of warrsquo be-tween individuals was the absence ofa superior authority to adjudicatedisputes and prevent individualsfrom administering justice them-selves)
Iraq might be claimed as a rea-sonably clear-cut case for interven-tion but other situations are notlikely to be as simple In Culture andEquality first published in 2001Brian Barry explored a lsquoliberalrsquo per-spective on this question
The liberal position is clearNobody anywhere in the worldshould be denied liberal pro-tections against injustice andoppression However in exactlythe same way as liberals arepragmatic about what liberalismmeans in terms of boundaries sohere the move from principle tointervention has to be mediated bypractical considerationshellip
[L]iberals are not so simple-mindedas to imagine that the answer toall violations of liberal rights is tosend in the Marines or even aUnited Nations force As in anyjust war theory there must be somedoctrine of lsquoproportionalityrsquohellip[S]carcely anybody would be infavour of the western powersinvading Saudi Arabia so at to sortout the way in which it lsquounjustlydenies political rights to women ornon-Muslimsrsquomdashaccording to theirliberal idea of justicersquo3
The question remainsmdashafterIraq what remains of lsquostate sover-eigntyrsquo Should the doctrine applyonly to lsquoliberal democraticrsquo statesSuch a solution might be attractiveto some lsquoliberalsrsquo but it doesnrsquot avoidthe problem of what exactly a lsquolib-eral democraticrsquo state is
One irony arising from the argu-ments about the war in Iraq is thatmany of those who have urged astrict application of lsquostate sover-eigntyrsquo principles in the past havegenerally supported the US-led in-tervention while those who havebeen willing to abridge or even aban-don the doctrine have had to rely onit to counter the lsquohumanitarianrsquo jus-tification for war
There are not many certaintiesabout the nature of the world afterthe war in Iraq but it can be saidwith some assurance that one defi-nite outcome is going to be a morevigorous debate about state sover-eignty
NOTES1 Scott Burchill lsquoThe humanitar-
ian arguments for this war are spu-riousrsquo The Age 21 March 2003
2 Paul Kelly lsquoThe hapless per-suaderrsquo The Australian 15ndash16March 2003
3 Brian Barry Culture and Equal-ity An egalitarian critique ofmulticulturalism Harvard Uni-versity Press page 138
John Roskam is a Research Fellow with the IPA
The lsquosovereigntyrsquo
question is perhaps
the strongest
argument against
the US-led
Coalition
API
26 MARCH 2003
E V I E WR
Which Way for theDemocrats
The 2002 mid-term elections were adramatic victory for President GeorgeW Bush and the Republicans Insteadof the historical norm of the partycontrolling the White House losingBushrsquos party gained seats in the Sen-ate House Governorsrsquo races andState legislatures The result was abitter disappointment for the Demo-crats and has led to a fierce debatebetween the Left and Centrists aboutthe future policy direction of the partytowards the 2004 elections
The Leftrsquos analysis is that the ma-jority of Americans are natural Demo-crats Electoral defeat was due to thefailure to energize that base of Demo-crats The party failed to distinguishitself sufficiently from Bush and thusgive their voters a reason to turn outWhile the majority of Democrats op-posed Bush on tax cuts and the warwith Iraq a significant minority sup-ported him and campaigned on thatsupport The result the Left claimwas that the Democrats lacked a con-sistent message in contrast to Bush
Support for this argument can befound in the higher turnout amongstRepublicans than Democrats in 2002while in 2000 the combined vote forGore and Nader was 51 per cent Aninfluential book by John Judis andRuy Texeira identified lsquoThe Emerg-ing Democrat Majorityrsquo Theyclaimed that growing demographicgroups trended Democrat includingthe young socially liberal profession-als minorities and women
What policies would motivate thisnatural Democrat base The Left callfor rescinding the Bush tax cut a classwar against the corporate world amajor increase in lsquopublic investmentrsquoin schools childcare health care and
Letter from AmericaNIGEL ASHFORD
public transport and strong opposi-tion to the war
Centrists however have a verydifferent analysis of the Democratsrsquoproblems the public did not trustthem to pursue the war against ter-rorism vigorously to keep down taxesto spend their tax dollars wisely or toreflect their cultural values
A Gallup opinion poll found that57 per cent of Americans askedthought that the Democrats were nottough enough on the war on terror-ism while 64 per cent thought theRepublicans were There was the per-ception that the Democrats were notserious on the issue and just playingpolitics Evidence for this was the de-bate over the new Department ofHomeland Security blocked becausethe Democrats wanted to protectunion rights while the President de-manded more flexibility to deploy theworkforce Many voters saw the issueas the national interest versus a spe-cial interestmdashin this case that of theunions The Democrats were seen asputting the interests of one of theirmajor constituencies before nationalsecurity
The Democratic LeadershipCouncil in lsquoThe Road Aheadrsquo by AlFrom and Bruce Reed presented theCentrist case lsquoStop pretending wecan win a majority simply by energiz-ing our basersquo The Democrats were
not trusted on the war against terror-ism were hostile to the cultural con-cerns of many working-class Demo-crats on abortion and guns and stillseen as the tax-and-spend party lsquoToomany Americans donrsquot trust us tokeep their taxes down or to spendtheir money wellrsquo
The Centrist agenda is to stronglyprosecute the war against terrorismwhether against al-Qarsquoeda Saddam orothers and to abandon knee-jerk iso-lationism arising from the experienceof the Vietnam War to defend capi-talism and support small investorsagainst irresponsible managers to cutpayroll taxes and to downplay thecultural issues that divide Democrats
Which path will the Democratstake The Left is in the ascendancyMost of the remaining Democrats inoffice come from left-wing districtsNancy Pelosi a left-liberal from SanFrancisco was easily elected the newleader of the House Democrats over-whelming her Centrist opponent andrising star African-American HaroldFord The early field of presidentialcandidates for 2004 is dominated bythe Left tendency including SenatorJohn Kerry Representative DickGephardt Governor Howard DeanRev Al Sharpton former SenatorCarol Moseley-Braun and Represen-tative Dennis Kucinich Only Sena-tor Joe Lieberman and Senator JohnEdwards represent the Centrist wing
The future of US politics may de-pend on which road the Democratsdecide to take The US is currently alsquo50ndash50rsquo nation evenly balanced be-tween the parties A left turn couldlead to Republican dominance farinto the future
Dr Nigel Ashford is at the Institute of Humane Studiesat George Mason University and is co-author of US
Politics Today (Manchester University Press)
API
27MARCH 2003
E V I E WR
Trusting TonyFrankly itrsquos all just too depressing Theeconomyrsquos heading for trouble Busi-ness confidence is low investment in2002 was 92 per cent lower than theprevious year and manufacturing in-vestment was nearly 18 per cent downThe budget deficit is spiralling becauseour once lsquoprudentrsquo Chancellor (trea-surer) Gordon Brown made over-opti-mistic growth projections and startedthrowing money at problems
Therersquos a load of health-and-safetyand anti-discrimination measuresthatmdashto put it most politelymdashare ex-amples of letting the best be the en-emy of the good Every school tripneeds a formal risk assessment withthe result that many trips are simplynot taking place New trains orderedfor London commuter routes wonrsquothave toilets because the rules say thatat least one toilet in each four-car unitmust be wheelchair-accessible whichwould have cost ten or a dozen seatson every overcrowded train
Some of this is just insane Somelocal authorities say that safety at workrules mean that home-care workersmustnrsquot lift the disabled people theyare looking after Or therersquos rail safetyUntil recently we were seriously pro-posing to spend $10 billion on a bet-ter system to stop trains going throughred signals On average this would havesaved the lives of about three passen-gers every four years which is a lousybargain compared with other safety in-vestments Worse it would also havereduced the capacity of the networkby up to 15 per cent and forced morepeople onto the roads which are muchmore dangerous than even ourclapped-out railways The result was aprojected net increase of 13 to 21 deathsper year
Meanwhile in London the Cen-tral line of the Underground has been
Letter from LondonJOHN NURICK
API
closed for weeks after a train derailedwhen one of its motors fell off Therewere no deaths or major injuries in theaccidentmdashbut itrsquos a safe bet that someof the people who havenrsquot been ableto use the Central line have been in-jured or killed on the roads
What can one say If the authori-ties took the same attitude to the riskof fatal accidents in the health serviceevery hospital in the country wouldhave been closed for years
Despite all this the Conservativesare still hopeless Their leader IanDuncan Smith has a new wheezewhen a journalist asks him anythingdifficult he chortles merrily and saysitrsquos the most uninteresting questionimaginable and hersquos not going to wasteanyonersquos time by answering it His col-leagues have their knives out for him
Meanwhile in spite of the govern-mentrsquos problems with the economy andthe public services Tony Blair is grow-ing in stature having his waymdashandantagonising large sections of his ownparty in the process On several recentissues he has faced down the formi-dable Gordon Brown in a way that notlong ago was hard to imagine
Then he shocked everyone by com-ing out against having elected mem-bers in the reformed House of Lordswhen most voters want an all-elected
chamber and most MPs want a partly-elected one In the event Parliamentcouldnrsquot agree on any of the optionsfor reform so wersquore stuck with the sta-tus quomdashwhich is fine by Mr Blair
Then therersquos the war By the timeyou read this it may be over or we maystill be waiting or our lads may befighting Mr Blairrsquos strong line againstIraq has made him very unpopular Theanti-war march on 15 February was thebiggest demonstration London hasever seen A few days later 122 Labourbackbenchers voted against the gov-ernment and many more abstained
Mr Blair didnrsquot budge War is a se-rious thing he says lsquoBut in a situationsuch as this you have to do what youbelieve to be right because thatrsquos theprice of having responsibilityrsquo1
He has often been accused of gov-erning by focus group Certainly he hasseemed reluctant to antagonise anypowerful group That has clearlychanged In a sense his stand on Iraqmerely follows his action in sendingtroops to Sierra Leone and Kosovomdashbut it has stirred up far stronger domes-tic and international opposition
The irony is that now when he re-ally needs people to trust him wedonrsquot Even in the desperately seriousbusiness of justifying an unpopular warDowning Street canrsquot play it straightremember the dossier from lsquointelli-gence sourcesrsquo that turned out to belargely cribbed from a PhD thesis onthe Internet
NOTE1 The Guardian 1 March 2003
John Nurick is a management consultant based in theSouth of England From 1985 to 1990 he was
editorial director of the Australian Institute for PublicPolicy and later edited newsletters reporting on theUK Parliament and European Union institutions
28 MARCH 2003
E V I E WR
KEVIN DONNELLY
Private EducationEquals Public Good
When it comes to choosing be-tween government and non-gov-ernment schools Australian par-ents are lsquovoting with their feetrsquo Asshown by recent ABS figures(Schools Australia 2002) over thelast decade there has been a dra-matic increase in non-governmentschool enrolments
Approximately 30 per cent ofstudents now attend non-govern-ment schools compared with 22per cent in 1980 and 28 per centin 1990 Over the last decadewhile the number of governmentschools has fallen by 64 per centnon-government schools havegrown by 61 per cent
Of course not everybody valuesparentsrsquo right to choose and theAustralian Education Union(AEU) Labor governments andlsquoleft-wingrsquo academics in particularconsistently argue against non-government schools
One of the arguments put for-ward by those opposed to givingparents greater freedom of choiceis that government schools are bet-ter at promoting social cohesionand a strong sense of what KenBoston the ex-head of the NSWEducation Department terms lsquothebonds of civic friendshiprsquo
The assumption is that becausestudents attend non-governmentschools there will be greater socialdivisiveness and a breakdown inthe civic values needed to hold so-ciety together But there is no cred-ible evidence offered to support theclaim that government schools arebetter at promoting the commongood
In fact there is much to provethe opposite
First as anyone familiar withthe lsquoculture warsrsquo and politicallycorrect curricula will know insteadof government-controlled educa-tion promoting unity and cohe-sion it has led to public angst andparental complaints
Witness the very bitter debatein Queensland a year or two agowhen the government-mandatedStudies of Society and Environ-ment (SOSE) curriculum was in-troduced into schools Such was
the lsquoleft-wingrsquo bias in the curricu-lum in particular in the areas ofmulticulturalism and the environ-ment that many parents felt be-trayed
The Queensland debate is mir-rored by what is happening in theUnited States As noted by Ste-phen Arons in his book Short Routeto Chaos instead of promotingunity government control of thecurriculum leads to the opposite
What the school wars tell us isthat somehow we have been
Education Agenda
transforming a vital instrumentfor creating social cohesioninto a source of division andhostility that there is some-thing built into the structure ofpublic schooling that under-mines one of its most importantfunctionsAronrsquos argument that govern-
ment schools no longer transmit aviable sense of a common cultureor agreed civic values is reinforcedby another noted United Stateseducationalist Diane Ravitch
In a recent article in the jour-nal Education Next Ravitch be-moans the impact of cultural rela-tivism and the post-modern on theschool curriculum (where there areno commonly agreed values) andeven goes so far as to argue thatparents should be free to choosenon-government schools becausesuch schools have a better chanceof reflecting their values
In the current education sys-tem with the public schoolscommitted to multiculturalismbilingualism and other forms ofparticularism it is difficult toargue that parents should notbe able to choose schools thatmeet their cultural needsSecond if one accepts that lsquoso-
cial capitalrsquomdashthe networks volun-tary associations and civic bondsthat hold a community togethermdashis important for the health of ademocratic society then non-gov-ernment schools clearly have theadvantage
Unlike the government schoolsystem characterized by a heavy-handed centralized bureaucracyand teacher union control non-government schools are closer tothe communities they serve Bytheir very nature non-government
There is no credible
evidence offered to
support the claim
that government
schools are better
at promoting the
common good
29MARCH 2003
E V I E WR
ALAN MORAN
The lsquoRrsquo Files
Private propertyrights the key toachieving efficiency inrural water use
WATER IN AUSTRALIAWater has always been a definingissue in Australiarsquos prosperityAnd in recent decades irrigationhas grown rapidly Even so theproportion of Australia that is ir-rigated at two per cent of theland comprises a share that isamongst the lowest among OECDcountries Only Canada and therainiest countries New Zealandand the UK have lower sharesthat of the US is 11 per cent andin Japan it reaches 60 per cent
Modern agriculture is only 200years old in Australia and thoughin the first 100 years agriculturalproductivity was increased toequal that of anywhere in theworld gains continue to bemademdashoutput has doubled overthe past 50 years a growth thatcould not have taken place with-out a similar expansion of irriga-tion Irrigation in the MurrayndashDarling agricultural provincealone contributes $5 billion toAustralian agricultural outputand non-irrigated agriculture inthe region contributes a further $5billion This makes the areawhich comprises 14 per cent ofAustraliarsquos land mass responsiblefor a third of the nationrsquos $35 bil-lion agricultural output
Applying Property Rights to WaterMost of the uses of water involvechoices or compromisesmdashdrink-ing water versus irrigation versus
industrial and so on Some how-ever involve complementaritiesparticularly certain recreationaluses such as water sports that arefacilitated by storage and consis-tent availability
In many cases water will per-form sequential functionsmdashthesame water can be used and re-used for irrigation used for indus-trial cooling and finish as drink-ing water Water with differentsometimes competing productiveuses will be optimally used as longas two conditions are in placeThe first is that its ownership isclearly specified and the ownersrsquoobligations to other users (orclaims from other beneficiaries)are well understood The secondrequires each property right to betradable to enable acquisition bythose who value it most therebymaximizing its value
The rights specification andtherefore property ownership canrarely commence with a cleansheet of paper People acquire in-dividual rights to property ini-tially through a variety of routesOne of these is seizure of some-thing that was originally of littlevalue until it was acquired and im-proved Squatters assume rights inthis way However they are firstacquired they need to be tradableAPI
schools establish strong commu-nity networks and have a greaterreliance on the voluntary work ofparents
That non-government schoolsare more effective in this regard issupported by research into lsquoChar-ter schoolsrsquo in the United StatesAs noted by Chester Finn at theFordham Foundation giving localcommunities lsquoownershiprsquo overtheir school builds networks oftrust and reciprocity so vital forsocial cohesion
Social capital also relies on citi-zens being disciplined and orderedin their behaviour Selfishness vio-lent behaviour and rudeness act tofragment the community instead ofpromoting cohesion According toa number of Australian surveys itis here once again that non-gov-ernment schools are seen to bemore effective
As noted by the Centre for In-dependent Studies researcher Jen-nifer Buckingham in The Truthabout Private Schools in Australiawhen analysing why so many par-ents forsake the government schoolsystem
When comparing independentprivate schools with publicschools the major theme thatemerged was not differences inacademic standards and curri-culum but issues of disciplineand order The surveyed par-ents felt that the behaviour andattitudes of students in publicschools was unacceptablehellipAll accept that non-govern-
ment schools achieve better aca-demic results provide greater cur-riculum flexibility and save Aus-tralian taxpayers millions of dol-lars Equally as important is theargument that such schools streng-then Australiarsquos civic health andstock of lsquosocial capitalrsquo
Dr Kevin Donnelly is Director of EducationStrategies a Melbourne-based consulting group
E-mailkevindnetspacenetau
s
30 MARCH 2003
E V I E WR
and relatively inviolable Thisprovides the incentive for them tobe improved and for their ownersand others to search out ways inwhich the assets they representcan be used to provide increasedvalue or other benefits
If confidence in the exclusiv-ity an owner has over the prop-erty right is lost or was neverpresent the asset will be used lessproductively For example own-ers will milk them for their cur-rent-use value rather than trade-off present value for a future valuethat is less certain
Even without a total emascu-lation of individual rights (for ex-ample when title to the propertydepends on continuing govern-mental assent) lack of certaintybrings lower incomes and dimin-ished asset protection One out-come of this can be observed inthe MurrayndashDarling system Wa-ter rights on the Victorian side ofthe Murray are secure while thoseon the NSW side have been over-allocated and are subject to ad-ministrative discretion includinghaving a firm duration of only tenyears In Victoria high securitywater (available 95 per cent of thetime) comprises the great bulk ofentitlements In contrast in
NSW high security water is avail-able only 60-80 per cent of thetime The result is that farmers onthe Victorian side plant perennialcrops while those in NSW tendto focus on annual crops espe-cially rice
There are claims that Victoriarsquosmore robust property rights meanthat the State Government haslost lsquocapabilityrsquo to manage com-pared with NSW The flip side ofthis is the increased risk and as-sociated lower value of productionnorth of the Murray where prop-erty rights are attenuated Gov-ernments that give themselves in-creased capacity to direct produc-tion or to take individualrsquos prop-erty will need to accept lower lev-els of income and output
IRRIGATION ENVIRON-MENTAL BENEFITS AND SA-LINITY
The Types of IssuesIssues stemming from irrigationcomprise two types those impact-ing on the environment and thoseimpacting on private uses Theformer includes issues such as pre-venting loss of species ensuringthat certain sorts of species flourishand avoiding unattractive growths
such as blue-green algae which re-sult from fertilizer build-up
The second involves economicimpacts on different users
While environmental flows toensure species flourish are oftenhighlighted salinity is the mainfocus And while salinity has animpact on the environment itsimportance is in the conflict of in-terest between productive usersmdashthe complaint of lsquodamaged goodsrsquoby downstream users against thoseupstream
The MurrayndashDarling Basin Sa-linity Strategy 2001ndash2015 has es-timated that increased salinitybrings costs of $294 million perannum to the basin
Yet data on the salinity of theMurray Darling shows levels up-stream of South Australia arelower than they were in the early1980s and are only seriously abovethese levels as the river ap-proaches its mouth at the GoolwaBarrage
The Basin Salinity Manage-ment Strategy argues that progressachieved over the past decade willlsquobe cancelled within 20-50 yearsand median salinity levels wouldexceed the Australian DrinkingWater Guidelines for good waterquality within 50-100 yearsrsquo Thecause of this is said to be risinggroundwater tables due to land usechanges across the Basin
The disputes over salinizationare largely disputes between com-mercial parties Full specificationof rights and obligations will al-low these to be resolved as longas the impacts are measurabletheir causes identifiable and thevarious rights and obligations areknown and stable In this respecttechnology to measure salt in wa-ter and to trace increases to par-ticular locations is readily avail-able
Agreements about the alloca-tion of water rights between ju-risdictions and to the main irri-gation provinces have been inplace for over a century In the
Average Salinity in the River Murray (EC Units)1
3500
3000
2500
2000
1500
1000
500
0
January 2003
July 2002ndashJanuary 2003
July 1982ndashJanuary 2003
Hume D
am
Swan
Hill
Merbein
Morgan
Milang
Mening
ie
Goolw
a
Barra
ge
31MARCH 2003
E V I E WR
I
API
Musinghellipcase of the Murray the lsquocaprsquo onwater abstractions agreed betweenthe various jurisdictions in 1995largely validated agreements madeearly in the last century and be-fore Disturbing these agreementswould greatly undermine the trustin the sanctity of property rightsand seriously reduce agriculturalproductivity Hence increased al-locations for certain parties or forcertain uses (including environ-mental flows) would need to bepurchased at market prices
Developments in Australiaover recent decades have con-spired to make irrigation water farmore valuable This is exacer-bated by1 Activation of NSW lsquosleeperrsquo
and lsquodozerrsquo water rights as a re-sult of the increased scarcityvalue a change that bringseven greater pressure on theavailable supply
2 Increased scarcity leading tomeasures that more carefullyhusband the water Whilesome of these prevent evapo-ration loss and have thereforebrought a net increase in effec-tive availability others havereduced availability (these in-clude a more careful wateringwhich results in reduced run-off and re-use)
3 Increased capture of waterwithin the land on which itfalls once water is recognizedas scarce landowners will seekto ensure it does not leave theirland NSW and Victoria haveplaced limits (a strict 10 percent in NSW) of water fallingon property as entitlements ofthe owner Queensland has notyet enacted an equivalent tothis Such adaptations of thecommon law are essentialhowever if downstream usersare not to be expropriatedThere is likely to be constant
bickering over water rights espe-cially if State Governments seek toelevate sharing issues and to sanc-tify them with claims about promot-
Daniel Pipes in The New York Posthas a very cogent explanation forwhy the Left appears to be so happywith the likes of Osama bin Ladenand Saddam Hussein
To be clear about their attitudeshe quotes the renowned Germanelectronic music composer KarlHeinz Stockhausen who saidstraight after the attack on NewYork that it was lsquothe greatest workof art for the whole cosmosrsquo
As Pipes and many of us observedaily there is barely a bad word tosay about Saddam Hussein nor aniota of sympathy for thoseoppressed tortured and murderedby his reacutegime Instead they venttheir fury against the AmericanPresident and British Prime Minister
Why the nonchalancePipes draws our attention to Lee
Harris writing in a recent issue ofthe Hoover Institutionrsquos journalPolicy Review According to KarlMarxrsquos central thesis the demise ofcapitalism hangs on workersgrowing poorer over timemdashwhichof course did not happen Sorather than give up on cherishedexpectations of socialist revolutionHarris notes Marxists tweaked theirtheory and looked instead to theentire populations of poor countriesto carry out the revolution Classanalysis went out the windowreplaced by geography
The trouble is they have tooverlook militant Islamrsquos slightly un-socialist practicesmdashsuch as itsimposing religious law excludingwomen from the workplace andpersecuting atheists
As Pipes sums up September 11and the prospect of war againstSaddam Hussein have exposed theLeftrsquos political self-delusionintellectual bankruptcy and moralturpitude
The Loopy Leftby Andrew McIntyre
ing an improved environment Realsolutions require the issue be placedwithin a normal commercial frame-work which involves1 Clarifying the property rights2 Allowing water rights to be
fully detachable from propertyand able to be used howeverthe holder wishes subject toany damage this might imposeon others
3 Ensuring full rights to buy andsell the water
4 Defining rights so as not to re-duce the quality of other usersThis means ensuring that farm-ing practices that do not bringgreater salination than somestandard
5 Allowing rights holders tobank their water and ensureeven greater certaintyAllocating specific individual
ownership rights to water and al-lowing its trade is a well-foundedmeans of maximizing the usevalue It would also be likely tohave the beneficial side-effects ofreducing salinity and farm-basedpollutants caused by intensiveuse We should grasp such oppor-tunities But if the impending sa-linity problem is as great as someclaim other solutions might wellinclude buying out some allocatedirrigatorsrsquo rights However alter-natives may be to remove saltfrom the water by engineering so-lutions or simply to live withhigher salt
NOTE1 Human drinking water should
be less than 800 ECs (electri-cal conductivity one ECequals about 06 mglitre)while higher levels are accept-able for much farming activity
Dr Alan Moran is Director Deregulation Unitat the Institute of Public Affairs
32 MARCH 2003
E V I E WR
Reading FileDone
eral political systems worldwidehave consistently accretedpower to the centre often in theface of clear constitutional im-peratives to the contrary) Ifeared instead that a UN thathad been patently successful insomethingmdashanythingmdashmightbe granted greater powers to thepoint where it would kill truediversity and individualism (ortry to anyway) through inevi-table bureaucratic practices
Is such a fear unfounded Ap-parently not if many peopleshare the moral touchstone ofthe Opposition Leader SimonCrean He believes according tohis own words in Parliamentthat what the UN SecurityCouncil declares is moral whatit refuses is immoral
The latest manoeuvrings overIraq have therefore been heart-
ening It seems that the desiresof the powers small and largeto promote their own interestswill continue to hobble the UN
The problem with a unitedworld is that as the threateningimpasse over Iraq suggestedthere are very divergent viewsabout how that world ought tobe run on an international leveljust as there are at national and
sub-national levels The virtueof multi-layered levels of gov-ernments is that competing ju-risdictions give the individual adegree of choice
The greatest sin of totalitar-ian governments past and pres-ent is to deny their citizens theright to leave The greatest dan-ger that the United Nationsposes as far off as it now (hap-pily) seems is that leaving its ju-risdiction is for all practical pur-poses impossible
THE IMPASSE JUST PASSEDI listened to Prime MinisterHoward speaking to the motionbefore Parliament in relation tothe war It was a good speechbut neither he nor PresidentBush seems able to structure andlay out an argument with thestyle and content of BritishPrime Minister Blair His equi-valent speech before the BritishCommons provides a masterfulsummary of the reasons for thiswar and includes an immenselyreadable time-line of the utterineffectiveness of the UN pro-cesses in dealing with Iraq Henicely deals with allegations ofthe lsquorushrsquo to war lsquoOur fault hasnot been impatience The truth
UNITED OR DIVIDEDI write just hours after US Presi-dent George W Bush has deliv-ered his ultimatum to Iraqi Presi-dent Saddam Hussein leave Iraqwithin 48 hours or be removedBy the time this appears beforeyour eyes you will knowwhether Hussein has decided hischances of survival will be sig-nificantly greater by choosingexile or by remaining in IraqThe recent creation of the In-ternational Criminal Court ofcourse makes war more likelysince Hussein can have no guar-antee of a peaceful lsquoretirementrsquo
In the event that Hussein re-mains in Iraq you will also knowwhether Bush has kept his wordand most likely the outcome ofthis military venture
This matter is immensely im-portant for the people of Iraqand for the military personnelinvolved (including our ownAustralian soldiers sailors andaviators) But then so was theprevious Gulf War the US in-vasion of Grenada the Austra-lian intervention in East Timorand so on But a difference be-tween the current conflict andthose others could be the impactit has upon international insti-tutions Actually just one inter-national institution the UnitedNations
Prior to the first Gulf War Ifeared the coalitionrsquos success forthe reason that some of it mighthave rubbed off onto the UnitedNations I hasten to deny that Ifear the UN as some vast con-spiracy for world domination Ifeared instead that it couldstumble into a piecemeal cen-tralization of power (just as Fed-
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
E V I E WRs
33MARCH 2003
E V I E WR
Reading FileDone
ATTACKING THE GLOBALGOVERNORSThe Cato Institute is a whole-some body as demonstrated byits opposition to such interna-tional organizations as the Inter-national Criminal Court and forthat matter the United Nationsitself Ted Galen Carpenter forexample argues in lsquoPutting theUnited Nations on Noticersquo thatthe UN can and has done somemodest good occasionally It ishe says lsquoa good idea to have aplace where governments cangather to air grievancesrsquo But headds if it lsquoattempts to acquire ataxing authority [or] raise astanding armyrsquo then the USshould withdraw (as indeedshould Australia) Because thatwould turn it into an lsquoembryonicsuperstate that would menacelibertyrsquo
Go to
wwwcatoorgforeignpolicyunhtml
THE INTERNATIONALORGANIZATIONS THEM-SELVESThe United Nations has beenaccused of being often ineffec-tive and always slow Well ev-ery time Irsquove hit the UNrsquos Web-site even with my nifty broad-band Internet connection slow-ness rules Perhaps the site isbeing continually accessed bythe teeming masses Anyway goto
wwwunorg
With 15 members alreadyand 13 more on the way thereremain hopes that the EuropeanUnion will be a force for a stable
twenty-first century Equallywith 15 members already exhib-iting rather divergent views overthe issue of Iraq and most of theforthcoming members sidingwith the United States perhapsthis is overly hopeful Go to
europaeuintindex_enhtm
Then there is the WorldTrade Organization the organi-zation behind which protection-ist nations can hide from unilat-eral trade liberalization by pre-tending to support multilateraltrade liberalization Go to
wwwwtoorg
And we mustnrsquot forget the In-ternational Criminal Court fearof which was no doubt a featureof Saddam Husseinrsquos rejection ofexile as an option and the furyof which is promised by a num-ber of prominent lawyers to bevisited upon our very own PrimeMinister Go to
wwwicc-cpiint
FEEDBACKI would welcome advice fromreaders on any other sites of inter-est to IPA Review readers E-mailme on scdawsonbigpondnetau
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
is our patience should have beenexhausted weeks and monthsand years agorsquo
Go to
wwwnumber10govukoutputPage3294asp
THE STRUGGLE BETWEENTHE CONTINENTSIf you are patient you can readthat wonderful British rag TheSpectator for free Last weekrsquoscopy is available on-line One ofits regular columnists is MarkSteyn an Americo-phile Cana-dian who has a robust turn ofphrase and an abiding disdain formuch modern music (whichseems to place him very comfort-ably into The Spectatorrsquos culturalmatrix)
His piece on the future de-cline of Europe vis-agrave-vis Ame-rica makes for fascinating read-ing Go to
wwwspectatorcouk
then click on the lsquoBack Issuesrsquobutton and choose the edition of15 March 2003
E V I E WR
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
26 MARCH 2003
E V I E WR
Which Way for theDemocrats
The 2002 mid-term elections were adramatic victory for President GeorgeW Bush and the Republicans Insteadof the historical norm of the partycontrolling the White House losingBushrsquos party gained seats in the Sen-ate House Governorsrsquo races andState legislatures The result was abitter disappointment for the Demo-crats and has led to a fierce debatebetween the Left and Centrists aboutthe future policy direction of the partytowards the 2004 elections
The Leftrsquos analysis is that the ma-jority of Americans are natural Demo-crats Electoral defeat was due to thefailure to energize that base of Demo-crats The party failed to distinguishitself sufficiently from Bush and thusgive their voters a reason to turn outWhile the majority of Democrats op-posed Bush on tax cuts and the warwith Iraq a significant minority sup-ported him and campaigned on thatsupport The result the Left claimwas that the Democrats lacked a con-sistent message in contrast to Bush
Support for this argument can befound in the higher turnout amongstRepublicans than Democrats in 2002while in 2000 the combined vote forGore and Nader was 51 per cent Aninfluential book by John Judis andRuy Texeira identified lsquoThe Emerg-ing Democrat Majorityrsquo Theyclaimed that growing demographicgroups trended Democrat includingthe young socially liberal profession-als minorities and women
What policies would motivate thisnatural Democrat base The Left callfor rescinding the Bush tax cut a classwar against the corporate world amajor increase in lsquopublic investmentrsquoin schools childcare health care and
Letter from AmericaNIGEL ASHFORD
public transport and strong opposi-tion to the war
Centrists however have a verydifferent analysis of the Democratsrsquoproblems the public did not trustthem to pursue the war against ter-rorism vigorously to keep down taxesto spend their tax dollars wisely or toreflect their cultural values
A Gallup opinion poll found that57 per cent of Americans askedthought that the Democrats were nottough enough on the war on terror-ism while 64 per cent thought theRepublicans were There was the per-ception that the Democrats were notserious on the issue and just playingpolitics Evidence for this was the de-bate over the new Department ofHomeland Security blocked becausethe Democrats wanted to protectunion rights while the President de-manded more flexibility to deploy theworkforce Many voters saw the issueas the national interest versus a spe-cial interestmdashin this case that of theunions The Democrats were seen asputting the interests of one of theirmajor constituencies before nationalsecurity
The Democratic LeadershipCouncil in lsquoThe Road Aheadrsquo by AlFrom and Bruce Reed presented theCentrist case lsquoStop pretending wecan win a majority simply by energiz-ing our basersquo The Democrats were
not trusted on the war against terror-ism were hostile to the cultural con-cerns of many working-class Demo-crats on abortion and guns and stillseen as the tax-and-spend party lsquoToomany Americans donrsquot trust us tokeep their taxes down or to spendtheir money wellrsquo
The Centrist agenda is to stronglyprosecute the war against terrorismwhether against al-Qarsquoeda Saddam orothers and to abandon knee-jerk iso-lationism arising from the experienceof the Vietnam War to defend capi-talism and support small investorsagainst irresponsible managers to cutpayroll taxes and to downplay thecultural issues that divide Democrats
Which path will the Democratstake The Left is in the ascendancyMost of the remaining Democrats inoffice come from left-wing districtsNancy Pelosi a left-liberal from SanFrancisco was easily elected the newleader of the House Democrats over-whelming her Centrist opponent andrising star African-American HaroldFord The early field of presidentialcandidates for 2004 is dominated bythe Left tendency including SenatorJohn Kerry Representative DickGephardt Governor Howard DeanRev Al Sharpton former SenatorCarol Moseley-Braun and Represen-tative Dennis Kucinich Only Sena-tor Joe Lieberman and Senator JohnEdwards represent the Centrist wing
The future of US politics may de-pend on which road the Democratsdecide to take The US is currently alsquo50ndash50rsquo nation evenly balanced be-tween the parties A left turn couldlead to Republican dominance farinto the future
Dr Nigel Ashford is at the Institute of Humane Studiesat George Mason University and is co-author of US
Politics Today (Manchester University Press)
API
27MARCH 2003
E V I E WR
Trusting TonyFrankly itrsquos all just too depressing Theeconomyrsquos heading for trouble Busi-ness confidence is low investment in2002 was 92 per cent lower than theprevious year and manufacturing in-vestment was nearly 18 per cent downThe budget deficit is spiralling becauseour once lsquoprudentrsquo Chancellor (trea-surer) Gordon Brown made over-opti-mistic growth projections and startedthrowing money at problems
Therersquos a load of health-and-safetyand anti-discrimination measuresthatmdashto put it most politelymdashare ex-amples of letting the best be the en-emy of the good Every school tripneeds a formal risk assessment withthe result that many trips are simplynot taking place New trains orderedfor London commuter routes wonrsquothave toilets because the rules say thatat least one toilet in each four-car unitmust be wheelchair-accessible whichwould have cost ten or a dozen seatson every overcrowded train
Some of this is just insane Somelocal authorities say that safety at workrules mean that home-care workersmustnrsquot lift the disabled people theyare looking after Or therersquos rail safetyUntil recently we were seriously pro-posing to spend $10 billion on a bet-ter system to stop trains going throughred signals On average this would havesaved the lives of about three passen-gers every four years which is a lousybargain compared with other safety in-vestments Worse it would also havereduced the capacity of the networkby up to 15 per cent and forced morepeople onto the roads which are muchmore dangerous than even ourclapped-out railways The result was aprojected net increase of 13 to 21 deathsper year
Meanwhile in London the Cen-tral line of the Underground has been
Letter from LondonJOHN NURICK
API
closed for weeks after a train derailedwhen one of its motors fell off Therewere no deaths or major injuries in theaccidentmdashbut itrsquos a safe bet that someof the people who havenrsquot been ableto use the Central line have been in-jured or killed on the roads
What can one say If the authori-ties took the same attitude to the riskof fatal accidents in the health serviceevery hospital in the country wouldhave been closed for years
Despite all this the Conservativesare still hopeless Their leader IanDuncan Smith has a new wheezewhen a journalist asks him anythingdifficult he chortles merrily and saysitrsquos the most uninteresting questionimaginable and hersquos not going to wasteanyonersquos time by answering it His col-leagues have their knives out for him
Meanwhile in spite of the govern-mentrsquos problems with the economy andthe public services Tony Blair is grow-ing in stature having his waymdashandantagonising large sections of his ownparty in the process On several recentissues he has faced down the formi-dable Gordon Brown in a way that notlong ago was hard to imagine
Then he shocked everyone by com-ing out against having elected mem-bers in the reformed House of Lordswhen most voters want an all-elected
chamber and most MPs want a partly-elected one In the event Parliamentcouldnrsquot agree on any of the optionsfor reform so wersquore stuck with the sta-tus quomdashwhich is fine by Mr Blair
Then therersquos the war By the timeyou read this it may be over or we maystill be waiting or our lads may befighting Mr Blairrsquos strong line againstIraq has made him very unpopular Theanti-war march on 15 February was thebiggest demonstration London hasever seen A few days later 122 Labourbackbenchers voted against the gov-ernment and many more abstained
Mr Blair didnrsquot budge War is a se-rious thing he says lsquoBut in a situationsuch as this you have to do what youbelieve to be right because thatrsquos theprice of having responsibilityrsquo1
He has often been accused of gov-erning by focus group Certainly he hasseemed reluctant to antagonise anypowerful group That has clearlychanged In a sense his stand on Iraqmerely follows his action in sendingtroops to Sierra Leone and Kosovomdashbut it has stirred up far stronger domes-tic and international opposition
The irony is that now when he re-ally needs people to trust him wedonrsquot Even in the desperately seriousbusiness of justifying an unpopular warDowning Street canrsquot play it straightremember the dossier from lsquointelli-gence sourcesrsquo that turned out to belargely cribbed from a PhD thesis onthe Internet
NOTE1 The Guardian 1 March 2003
John Nurick is a management consultant based in theSouth of England From 1985 to 1990 he was
editorial director of the Australian Institute for PublicPolicy and later edited newsletters reporting on theUK Parliament and European Union institutions
28 MARCH 2003
E V I E WR
KEVIN DONNELLY
Private EducationEquals Public Good
When it comes to choosing be-tween government and non-gov-ernment schools Australian par-ents are lsquovoting with their feetrsquo Asshown by recent ABS figures(Schools Australia 2002) over thelast decade there has been a dra-matic increase in non-governmentschool enrolments
Approximately 30 per cent ofstudents now attend non-govern-ment schools compared with 22per cent in 1980 and 28 per centin 1990 Over the last decadewhile the number of governmentschools has fallen by 64 per centnon-government schools havegrown by 61 per cent
Of course not everybody valuesparentsrsquo right to choose and theAustralian Education Union(AEU) Labor governments andlsquoleft-wingrsquo academics in particularconsistently argue against non-government schools
One of the arguments put for-ward by those opposed to givingparents greater freedom of choiceis that government schools are bet-ter at promoting social cohesionand a strong sense of what KenBoston the ex-head of the NSWEducation Department terms lsquothebonds of civic friendshiprsquo
The assumption is that becausestudents attend non-governmentschools there will be greater socialdivisiveness and a breakdown inthe civic values needed to hold so-ciety together But there is no cred-ible evidence offered to support theclaim that government schools arebetter at promoting the commongood
In fact there is much to provethe opposite
First as anyone familiar withthe lsquoculture warsrsquo and politicallycorrect curricula will know insteadof government-controlled educa-tion promoting unity and cohe-sion it has led to public angst andparental complaints
Witness the very bitter debatein Queensland a year or two agowhen the government-mandatedStudies of Society and Environ-ment (SOSE) curriculum was in-troduced into schools Such was
the lsquoleft-wingrsquo bias in the curricu-lum in particular in the areas ofmulticulturalism and the environ-ment that many parents felt be-trayed
The Queensland debate is mir-rored by what is happening in theUnited States As noted by Ste-phen Arons in his book Short Routeto Chaos instead of promotingunity government control of thecurriculum leads to the opposite
What the school wars tell us isthat somehow we have been
Education Agenda
transforming a vital instrumentfor creating social cohesioninto a source of division andhostility that there is some-thing built into the structure ofpublic schooling that under-mines one of its most importantfunctionsAronrsquos argument that govern-
ment schools no longer transmit aviable sense of a common cultureor agreed civic values is reinforcedby another noted United Stateseducationalist Diane Ravitch
In a recent article in the jour-nal Education Next Ravitch be-moans the impact of cultural rela-tivism and the post-modern on theschool curriculum (where there areno commonly agreed values) andeven goes so far as to argue thatparents should be free to choosenon-government schools becausesuch schools have a better chanceof reflecting their values
In the current education sys-tem with the public schoolscommitted to multiculturalismbilingualism and other forms ofparticularism it is difficult toargue that parents should notbe able to choose schools thatmeet their cultural needsSecond if one accepts that lsquoso-
cial capitalrsquomdashthe networks volun-tary associations and civic bondsthat hold a community togethermdashis important for the health of ademocratic society then non-gov-ernment schools clearly have theadvantage
Unlike the government schoolsystem characterized by a heavy-handed centralized bureaucracyand teacher union control non-government schools are closer tothe communities they serve Bytheir very nature non-government
There is no credible
evidence offered to
support the claim
that government
schools are better
at promoting the
common good
29MARCH 2003
E V I E WR
ALAN MORAN
The lsquoRrsquo Files
Private propertyrights the key toachieving efficiency inrural water use
WATER IN AUSTRALIAWater has always been a definingissue in Australiarsquos prosperityAnd in recent decades irrigationhas grown rapidly Even so theproportion of Australia that is ir-rigated at two per cent of theland comprises a share that isamongst the lowest among OECDcountries Only Canada and therainiest countries New Zealandand the UK have lower sharesthat of the US is 11 per cent andin Japan it reaches 60 per cent
Modern agriculture is only 200years old in Australia and thoughin the first 100 years agriculturalproductivity was increased toequal that of anywhere in theworld gains continue to bemademdashoutput has doubled overthe past 50 years a growth thatcould not have taken place with-out a similar expansion of irriga-tion Irrigation in the MurrayndashDarling agricultural provincealone contributes $5 billion toAustralian agricultural outputand non-irrigated agriculture inthe region contributes a further $5billion This makes the areawhich comprises 14 per cent ofAustraliarsquos land mass responsiblefor a third of the nationrsquos $35 bil-lion agricultural output
Applying Property Rights to WaterMost of the uses of water involvechoices or compromisesmdashdrink-ing water versus irrigation versus
industrial and so on Some how-ever involve complementaritiesparticularly certain recreationaluses such as water sports that arefacilitated by storage and consis-tent availability
In many cases water will per-form sequential functionsmdashthesame water can be used and re-used for irrigation used for indus-trial cooling and finish as drink-ing water Water with differentsometimes competing productiveuses will be optimally used as longas two conditions are in placeThe first is that its ownership isclearly specified and the ownersrsquoobligations to other users (orclaims from other beneficiaries)are well understood The secondrequires each property right to betradable to enable acquisition bythose who value it most therebymaximizing its value
The rights specification andtherefore property ownership canrarely commence with a cleansheet of paper People acquire in-dividual rights to property ini-tially through a variety of routesOne of these is seizure of some-thing that was originally of littlevalue until it was acquired and im-proved Squatters assume rights inthis way However they are firstacquired they need to be tradableAPI
schools establish strong commu-nity networks and have a greaterreliance on the voluntary work ofparents
That non-government schoolsare more effective in this regard issupported by research into lsquoChar-ter schoolsrsquo in the United StatesAs noted by Chester Finn at theFordham Foundation giving localcommunities lsquoownershiprsquo overtheir school builds networks oftrust and reciprocity so vital forsocial cohesion
Social capital also relies on citi-zens being disciplined and orderedin their behaviour Selfishness vio-lent behaviour and rudeness act tofragment the community instead ofpromoting cohesion According toa number of Australian surveys itis here once again that non-gov-ernment schools are seen to bemore effective
As noted by the Centre for In-dependent Studies researcher Jen-nifer Buckingham in The Truthabout Private Schools in Australiawhen analysing why so many par-ents forsake the government schoolsystem
When comparing independentprivate schools with publicschools the major theme thatemerged was not differences inacademic standards and curri-culum but issues of disciplineand order The surveyed par-ents felt that the behaviour andattitudes of students in publicschools was unacceptablehellipAll accept that non-govern-
ment schools achieve better aca-demic results provide greater cur-riculum flexibility and save Aus-tralian taxpayers millions of dol-lars Equally as important is theargument that such schools streng-then Australiarsquos civic health andstock of lsquosocial capitalrsquo
Dr Kevin Donnelly is Director of EducationStrategies a Melbourne-based consulting group
E-mailkevindnetspacenetau
s
30 MARCH 2003
E V I E WR
and relatively inviolable Thisprovides the incentive for them tobe improved and for their ownersand others to search out ways inwhich the assets they representcan be used to provide increasedvalue or other benefits
If confidence in the exclusiv-ity an owner has over the prop-erty right is lost or was neverpresent the asset will be used lessproductively For example own-ers will milk them for their cur-rent-use value rather than trade-off present value for a future valuethat is less certain
Even without a total emascu-lation of individual rights (for ex-ample when title to the propertydepends on continuing govern-mental assent) lack of certaintybrings lower incomes and dimin-ished asset protection One out-come of this can be observed inthe MurrayndashDarling system Wa-ter rights on the Victorian side ofthe Murray are secure while thoseon the NSW side have been over-allocated and are subject to ad-ministrative discretion includinghaving a firm duration of only tenyears In Victoria high securitywater (available 95 per cent of thetime) comprises the great bulk ofentitlements In contrast in
NSW high security water is avail-able only 60-80 per cent of thetime The result is that farmers onthe Victorian side plant perennialcrops while those in NSW tendto focus on annual crops espe-cially rice
There are claims that Victoriarsquosmore robust property rights meanthat the State Government haslost lsquocapabilityrsquo to manage com-pared with NSW The flip side ofthis is the increased risk and as-sociated lower value of productionnorth of the Murray where prop-erty rights are attenuated Gov-ernments that give themselves in-creased capacity to direct produc-tion or to take individualrsquos prop-erty will need to accept lower lev-els of income and output
IRRIGATION ENVIRON-MENTAL BENEFITS AND SA-LINITY
The Types of IssuesIssues stemming from irrigationcomprise two types those impact-ing on the environment and thoseimpacting on private uses Theformer includes issues such as pre-venting loss of species ensuringthat certain sorts of species flourishand avoiding unattractive growths
such as blue-green algae which re-sult from fertilizer build-up
The second involves economicimpacts on different users
While environmental flows toensure species flourish are oftenhighlighted salinity is the mainfocus And while salinity has animpact on the environment itsimportance is in the conflict of in-terest between productive usersmdashthe complaint of lsquodamaged goodsrsquoby downstream users against thoseupstream
The MurrayndashDarling Basin Sa-linity Strategy 2001ndash2015 has es-timated that increased salinitybrings costs of $294 million perannum to the basin
Yet data on the salinity of theMurray Darling shows levels up-stream of South Australia arelower than they were in the early1980s and are only seriously abovethese levels as the river ap-proaches its mouth at the GoolwaBarrage
The Basin Salinity Manage-ment Strategy argues that progressachieved over the past decade willlsquobe cancelled within 20-50 yearsand median salinity levels wouldexceed the Australian DrinkingWater Guidelines for good waterquality within 50-100 yearsrsquo Thecause of this is said to be risinggroundwater tables due to land usechanges across the Basin
The disputes over salinizationare largely disputes between com-mercial parties Full specificationof rights and obligations will al-low these to be resolved as longas the impacts are measurabletheir causes identifiable and thevarious rights and obligations areknown and stable In this respecttechnology to measure salt in wa-ter and to trace increases to par-ticular locations is readily avail-able
Agreements about the alloca-tion of water rights between ju-risdictions and to the main irri-gation provinces have been inplace for over a century In the
Average Salinity in the River Murray (EC Units)1
3500
3000
2500
2000
1500
1000
500
0
January 2003
July 2002ndashJanuary 2003
July 1982ndashJanuary 2003
Hume D
am
Swan
Hill
Merbein
Morgan
Milang
Mening
ie
Goolw
a
Barra
ge
31MARCH 2003
E V I E WR
I
API
Musinghellipcase of the Murray the lsquocaprsquo onwater abstractions agreed betweenthe various jurisdictions in 1995largely validated agreements madeearly in the last century and be-fore Disturbing these agreementswould greatly undermine the trustin the sanctity of property rightsand seriously reduce agriculturalproductivity Hence increased al-locations for certain parties or forcertain uses (including environ-mental flows) would need to bepurchased at market prices
Developments in Australiaover recent decades have con-spired to make irrigation water farmore valuable This is exacer-bated by1 Activation of NSW lsquosleeperrsquo
and lsquodozerrsquo water rights as a re-sult of the increased scarcityvalue a change that bringseven greater pressure on theavailable supply
2 Increased scarcity leading tomeasures that more carefullyhusband the water Whilesome of these prevent evapo-ration loss and have thereforebrought a net increase in effec-tive availability others havereduced availability (these in-clude a more careful wateringwhich results in reduced run-off and re-use)
3 Increased capture of waterwithin the land on which itfalls once water is recognizedas scarce landowners will seekto ensure it does not leave theirland NSW and Victoria haveplaced limits (a strict 10 percent in NSW) of water fallingon property as entitlements ofthe owner Queensland has notyet enacted an equivalent tothis Such adaptations of thecommon law are essentialhowever if downstream usersare not to be expropriatedThere is likely to be constant
bickering over water rights espe-cially if State Governments seek toelevate sharing issues and to sanc-tify them with claims about promot-
Daniel Pipes in The New York Posthas a very cogent explanation forwhy the Left appears to be so happywith the likes of Osama bin Ladenand Saddam Hussein
To be clear about their attitudeshe quotes the renowned Germanelectronic music composer KarlHeinz Stockhausen who saidstraight after the attack on NewYork that it was lsquothe greatest workof art for the whole cosmosrsquo
As Pipes and many of us observedaily there is barely a bad word tosay about Saddam Hussein nor aniota of sympathy for thoseoppressed tortured and murderedby his reacutegime Instead they venttheir fury against the AmericanPresident and British Prime Minister
Why the nonchalancePipes draws our attention to Lee
Harris writing in a recent issue ofthe Hoover Institutionrsquos journalPolicy Review According to KarlMarxrsquos central thesis the demise ofcapitalism hangs on workersgrowing poorer over timemdashwhichof course did not happen Sorather than give up on cherishedexpectations of socialist revolutionHarris notes Marxists tweaked theirtheory and looked instead to theentire populations of poor countriesto carry out the revolution Classanalysis went out the windowreplaced by geography
The trouble is they have tooverlook militant Islamrsquos slightly un-socialist practicesmdashsuch as itsimposing religious law excludingwomen from the workplace andpersecuting atheists
As Pipes sums up September 11and the prospect of war againstSaddam Hussein have exposed theLeftrsquos political self-delusionintellectual bankruptcy and moralturpitude
The Loopy Leftby Andrew McIntyre
ing an improved environment Realsolutions require the issue be placedwithin a normal commercial frame-work which involves1 Clarifying the property rights2 Allowing water rights to be
fully detachable from propertyand able to be used howeverthe holder wishes subject toany damage this might imposeon others
3 Ensuring full rights to buy andsell the water
4 Defining rights so as not to re-duce the quality of other usersThis means ensuring that farm-ing practices that do not bringgreater salination than somestandard
5 Allowing rights holders tobank their water and ensureeven greater certaintyAllocating specific individual
ownership rights to water and al-lowing its trade is a well-foundedmeans of maximizing the usevalue It would also be likely tohave the beneficial side-effects ofreducing salinity and farm-basedpollutants caused by intensiveuse We should grasp such oppor-tunities But if the impending sa-linity problem is as great as someclaim other solutions might wellinclude buying out some allocatedirrigatorsrsquo rights However alter-natives may be to remove saltfrom the water by engineering so-lutions or simply to live withhigher salt
NOTE1 Human drinking water should
be less than 800 ECs (electri-cal conductivity one ECequals about 06 mglitre)while higher levels are accept-able for much farming activity
Dr Alan Moran is Director Deregulation Unitat the Institute of Public Affairs
32 MARCH 2003
E V I E WR
Reading FileDone
eral political systems worldwidehave consistently accretedpower to the centre often in theface of clear constitutional im-peratives to the contrary) Ifeared instead that a UN thathad been patently successful insomethingmdashanythingmdashmightbe granted greater powers to thepoint where it would kill truediversity and individualism (ortry to anyway) through inevi-table bureaucratic practices
Is such a fear unfounded Ap-parently not if many peopleshare the moral touchstone ofthe Opposition Leader SimonCrean He believes according tohis own words in Parliamentthat what the UN SecurityCouncil declares is moral whatit refuses is immoral
The latest manoeuvrings overIraq have therefore been heart-
ening It seems that the desiresof the powers small and largeto promote their own interestswill continue to hobble the UN
The problem with a unitedworld is that as the threateningimpasse over Iraq suggestedthere are very divergent viewsabout how that world ought tobe run on an international leveljust as there are at national and
sub-national levels The virtueof multi-layered levels of gov-ernments is that competing ju-risdictions give the individual adegree of choice
The greatest sin of totalitar-ian governments past and pres-ent is to deny their citizens theright to leave The greatest dan-ger that the United Nationsposes as far off as it now (hap-pily) seems is that leaving its ju-risdiction is for all practical pur-poses impossible
THE IMPASSE JUST PASSEDI listened to Prime MinisterHoward speaking to the motionbefore Parliament in relation tothe war It was a good speechbut neither he nor PresidentBush seems able to structure andlay out an argument with thestyle and content of BritishPrime Minister Blair His equi-valent speech before the BritishCommons provides a masterfulsummary of the reasons for thiswar and includes an immenselyreadable time-line of the utterineffectiveness of the UN pro-cesses in dealing with Iraq Henicely deals with allegations ofthe lsquorushrsquo to war lsquoOur fault hasnot been impatience The truth
UNITED OR DIVIDEDI write just hours after US Presi-dent George W Bush has deliv-ered his ultimatum to Iraqi Presi-dent Saddam Hussein leave Iraqwithin 48 hours or be removedBy the time this appears beforeyour eyes you will knowwhether Hussein has decided hischances of survival will be sig-nificantly greater by choosingexile or by remaining in IraqThe recent creation of the In-ternational Criminal Court ofcourse makes war more likelysince Hussein can have no guar-antee of a peaceful lsquoretirementrsquo
In the event that Hussein re-mains in Iraq you will also knowwhether Bush has kept his wordand most likely the outcome ofthis military venture
This matter is immensely im-portant for the people of Iraqand for the military personnelinvolved (including our ownAustralian soldiers sailors andaviators) But then so was theprevious Gulf War the US in-vasion of Grenada the Austra-lian intervention in East Timorand so on But a difference be-tween the current conflict andthose others could be the impactit has upon international insti-tutions Actually just one inter-national institution the UnitedNations
Prior to the first Gulf War Ifeared the coalitionrsquos success forthe reason that some of it mighthave rubbed off onto the UnitedNations I hasten to deny that Ifear the UN as some vast con-spiracy for world domination Ifeared instead that it couldstumble into a piecemeal cen-tralization of power (just as Fed-
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
E V I E WRs
33MARCH 2003
E V I E WR
Reading FileDone
ATTACKING THE GLOBALGOVERNORSThe Cato Institute is a whole-some body as demonstrated byits opposition to such interna-tional organizations as the Inter-national Criminal Court and forthat matter the United Nationsitself Ted Galen Carpenter forexample argues in lsquoPutting theUnited Nations on Noticersquo thatthe UN can and has done somemodest good occasionally It ishe says lsquoa good idea to have aplace where governments cangather to air grievancesrsquo But headds if it lsquoattempts to acquire ataxing authority [or] raise astanding armyrsquo then the USshould withdraw (as indeedshould Australia) Because thatwould turn it into an lsquoembryonicsuperstate that would menacelibertyrsquo
Go to
wwwcatoorgforeignpolicyunhtml
THE INTERNATIONALORGANIZATIONS THEM-SELVESThe United Nations has beenaccused of being often ineffec-tive and always slow Well ev-ery time Irsquove hit the UNrsquos Web-site even with my nifty broad-band Internet connection slow-ness rules Perhaps the site isbeing continually accessed bythe teeming masses Anyway goto
wwwunorg
With 15 members alreadyand 13 more on the way thereremain hopes that the EuropeanUnion will be a force for a stable
twenty-first century Equallywith 15 members already exhib-iting rather divergent views overthe issue of Iraq and most of theforthcoming members sidingwith the United States perhapsthis is overly hopeful Go to
europaeuintindex_enhtm
Then there is the WorldTrade Organization the organi-zation behind which protection-ist nations can hide from unilat-eral trade liberalization by pre-tending to support multilateraltrade liberalization Go to
wwwwtoorg
And we mustnrsquot forget the In-ternational Criminal Court fearof which was no doubt a featureof Saddam Husseinrsquos rejection ofexile as an option and the furyof which is promised by a num-ber of prominent lawyers to bevisited upon our very own PrimeMinister Go to
wwwicc-cpiint
FEEDBACKI would welcome advice fromreaders on any other sites of inter-est to IPA Review readers E-mailme on scdawsonbigpondnetau
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
is our patience should have beenexhausted weeks and monthsand years agorsquo
Go to
wwwnumber10govukoutputPage3294asp
THE STRUGGLE BETWEENTHE CONTINENTSIf you are patient you can readthat wonderful British rag TheSpectator for free Last weekrsquoscopy is available on-line One ofits regular columnists is MarkSteyn an Americo-phile Cana-dian who has a robust turn ofphrase and an abiding disdain formuch modern music (whichseems to place him very comfort-ably into The Spectatorrsquos culturalmatrix)
His piece on the future de-cline of Europe vis-agrave-vis Ame-rica makes for fascinating read-ing Go to
wwwspectatorcouk
then click on the lsquoBack Issuesrsquobutton and choose the edition of15 March 2003
E V I E WR
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
27MARCH 2003
E V I E WR
Trusting TonyFrankly itrsquos all just too depressing Theeconomyrsquos heading for trouble Busi-ness confidence is low investment in2002 was 92 per cent lower than theprevious year and manufacturing in-vestment was nearly 18 per cent downThe budget deficit is spiralling becauseour once lsquoprudentrsquo Chancellor (trea-surer) Gordon Brown made over-opti-mistic growth projections and startedthrowing money at problems
Therersquos a load of health-and-safetyand anti-discrimination measuresthatmdashto put it most politelymdashare ex-amples of letting the best be the en-emy of the good Every school tripneeds a formal risk assessment withthe result that many trips are simplynot taking place New trains orderedfor London commuter routes wonrsquothave toilets because the rules say thatat least one toilet in each four-car unitmust be wheelchair-accessible whichwould have cost ten or a dozen seatson every overcrowded train
Some of this is just insane Somelocal authorities say that safety at workrules mean that home-care workersmustnrsquot lift the disabled people theyare looking after Or therersquos rail safetyUntil recently we were seriously pro-posing to spend $10 billion on a bet-ter system to stop trains going throughred signals On average this would havesaved the lives of about three passen-gers every four years which is a lousybargain compared with other safety in-vestments Worse it would also havereduced the capacity of the networkby up to 15 per cent and forced morepeople onto the roads which are muchmore dangerous than even ourclapped-out railways The result was aprojected net increase of 13 to 21 deathsper year
Meanwhile in London the Cen-tral line of the Underground has been
Letter from LondonJOHN NURICK
API
closed for weeks after a train derailedwhen one of its motors fell off Therewere no deaths or major injuries in theaccidentmdashbut itrsquos a safe bet that someof the people who havenrsquot been ableto use the Central line have been in-jured or killed on the roads
What can one say If the authori-ties took the same attitude to the riskof fatal accidents in the health serviceevery hospital in the country wouldhave been closed for years
Despite all this the Conservativesare still hopeless Their leader IanDuncan Smith has a new wheezewhen a journalist asks him anythingdifficult he chortles merrily and saysitrsquos the most uninteresting questionimaginable and hersquos not going to wasteanyonersquos time by answering it His col-leagues have their knives out for him
Meanwhile in spite of the govern-mentrsquos problems with the economy andthe public services Tony Blair is grow-ing in stature having his waymdashandantagonising large sections of his ownparty in the process On several recentissues he has faced down the formi-dable Gordon Brown in a way that notlong ago was hard to imagine
Then he shocked everyone by com-ing out against having elected mem-bers in the reformed House of Lordswhen most voters want an all-elected
chamber and most MPs want a partly-elected one In the event Parliamentcouldnrsquot agree on any of the optionsfor reform so wersquore stuck with the sta-tus quomdashwhich is fine by Mr Blair
Then therersquos the war By the timeyou read this it may be over or we maystill be waiting or our lads may befighting Mr Blairrsquos strong line againstIraq has made him very unpopular Theanti-war march on 15 February was thebiggest demonstration London hasever seen A few days later 122 Labourbackbenchers voted against the gov-ernment and many more abstained
Mr Blair didnrsquot budge War is a se-rious thing he says lsquoBut in a situationsuch as this you have to do what youbelieve to be right because thatrsquos theprice of having responsibilityrsquo1
He has often been accused of gov-erning by focus group Certainly he hasseemed reluctant to antagonise anypowerful group That has clearlychanged In a sense his stand on Iraqmerely follows his action in sendingtroops to Sierra Leone and Kosovomdashbut it has stirred up far stronger domes-tic and international opposition
The irony is that now when he re-ally needs people to trust him wedonrsquot Even in the desperately seriousbusiness of justifying an unpopular warDowning Street canrsquot play it straightremember the dossier from lsquointelli-gence sourcesrsquo that turned out to belargely cribbed from a PhD thesis onthe Internet
NOTE1 The Guardian 1 March 2003
John Nurick is a management consultant based in theSouth of England From 1985 to 1990 he was
editorial director of the Australian Institute for PublicPolicy and later edited newsletters reporting on theUK Parliament and European Union institutions
28 MARCH 2003
E V I E WR
KEVIN DONNELLY
Private EducationEquals Public Good
When it comes to choosing be-tween government and non-gov-ernment schools Australian par-ents are lsquovoting with their feetrsquo Asshown by recent ABS figures(Schools Australia 2002) over thelast decade there has been a dra-matic increase in non-governmentschool enrolments
Approximately 30 per cent ofstudents now attend non-govern-ment schools compared with 22per cent in 1980 and 28 per centin 1990 Over the last decadewhile the number of governmentschools has fallen by 64 per centnon-government schools havegrown by 61 per cent
Of course not everybody valuesparentsrsquo right to choose and theAustralian Education Union(AEU) Labor governments andlsquoleft-wingrsquo academics in particularconsistently argue against non-government schools
One of the arguments put for-ward by those opposed to givingparents greater freedom of choiceis that government schools are bet-ter at promoting social cohesionand a strong sense of what KenBoston the ex-head of the NSWEducation Department terms lsquothebonds of civic friendshiprsquo
The assumption is that becausestudents attend non-governmentschools there will be greater socialdivisiveness and a breakdown inthe civic values needed to hold so-ciety together But there is no cred-ible evidence offered to support theclaim that government schools arebetter at promoting the commongood
In fact there is much to provethe opposite
First as anyone familiar withthe lsquoculture warsrsquo and politicallycorrect curricula will know insteadof government-controlled educa-tion promoting unity and cohe-sion it has led to public angst andparental complaints
Witness the very bitter debatein Queensland a year or two agowhen the government-mandatedStudies of Society and Environ-ment (SOSE) curriculum was in-troduced into schools Such was
the lsquoleft-wingrsquo bias in the curricu-lum in particular in the areas ofmulticulturalism and the environ-ment that many parents felt be-trayed
The Queensland debate is mir-rored by what is happening in theUnited States As noted by Ste-phen Arons in his book Short Routeto Chaos instead of promotingunity government control of thecurriculum leads to the opposite
What the school wars tell us isthat somehow we have been
Education Agenda
transforming a vital instrumentfor creating social cohesioninto a source of division andhostility that there is some-thing built into the structure ofpublic schooling that under-mines one of its most importantfunctionsAronrsquos argument that govern-
ment schools no longer transmit aviable sense of a common cultureor agreed civic values is reinforcedby another noted United Stateseducationalist Diane Ravitch
In a recent article in the jour-nal Education Next Ravitch be-moans the impact of cultural rela-tivism and the post-modern on theschool curriculum (where there areno commonly agreed values) andeven goes so far as to argue thatparents should be free to choosenon-government schools becausesuch schools have a better chanceof reflecting their values
In the current education sys-tem with the public schoolscommitted to multiculturalismbilingualism and other forms ofparticularism it is difficult toargue that parents should notbe able to choose schools thatmeet their cultural needsSecond if one accepts that lsquoso-
cial capitalrsquomdashthe networks volun-tary associations and civic bondsthat hold a community togethermdashis important for the health of ademocratic society then non-gov-ernment schools clearly have theadvantage
Unlike the government schoolsystem characterized by a heavy-handed centralized bureaucracyand teacher union control non-government schools are closer tothe communities they serve Bytheir very nature non-government
There is no credible
evidence offered to
support the claim
that government
schools are better
at promoting the
common good
29MARCH 2003
E V I E WR
ALAN MORAN
The lsquoRrsquo Files
Private propertyrights the key toachieving efficiency inrural water use
WATER IN AUSTRALIAWater has always been a definingissue in Australiarsquos prosperityAnd in recent decades irrigationhas grown rapidly Even so theproportion of Australia that is ir-rigated at two per cent of theland comprises a share that isamongst the lowest among OECDcountries Only Canada and therainiest countries New Zealandand the UK have lower sharesthat of the US is 11 per cent andin Japan it reaches 60 per cent
Modern agriculture is only 200years old in Australia and thoughin the first 100 years agriculturalproductivity was increased toequal that of anywhere in theworld gains continue to bemademdashoutput has doubled overthe past 50 years a growth thatcould not have taken place with-out a similar expansion of irriga-tion Irrigation in the MurrayndashDarling agricultural provincealone contributes $5 billion toAustralian agricultural outputand non-irrigated agriculture inthe region contributes a further $5billion This makes the areawhich comprises 14 per cent ofAustraliarsquos land mass responsiblefor a third of the nationrsquos $35 bil-lion agricultural output
Applying Property Rights to WaterMost of the uses of water involvechoices or compromisesmdashdrink-ing water versus irrigation versus
industrial and so on Some how-ever involve complementaritiesparticularly certain recreationaluses such as water sports that arefacilitated by storage and consis-tent availability
In many cases water will per-form sequential functionsmdashthesame water can be used and re-used for irrigation used for indus-trial cooling and finish as drink-ing water Water with differentsometimes competing productiveuses will be optimally used as longas two conditions are in placeThe first is that its ownership isclearly specified and the ownersrsquoobligations to other users (orclaims from other beneficiaries)are well understood The secondrequires each property right to betradable to enable acquisition bythose who value it most therebymaximizing its value
The rights specification andtherefore property ownership canrarely commence with a cleansheet of paper People acquire in-dividual rights to property ini-tially through a variety of routesOne of these is seizure of some-thing that was originally of littlevalue until it was acquired and im-proved Squatters assume rights inthis way However they are firstacquired they need to be tradableAPI
schools establish strong commu-nity networks and have a greaterreliance on the voluntary work ofparents
That non-government schoolsare more effective in this regard issupported by research into lsquoChar-ter schoolsrsquo in the United StatesAs noted by Chester Finn at theFordham Foundation giving localcommunities lsquoownershiprsquo overtheir school builds networks oftrust and reciprocity so vital forsocial cohesion
Social capital also relies on citi-zens being disciplined and orderedin their behaviour Selfishness vio-lent behaviour and rudeness act tofragment the community instead ofpromoting cohesion According toa number of Australian surveys itis here once again that non-gov-ernment schools are seen to bemore effective
As noted by the Centre for In-dependent Studies researcher Jen-nifer Buckingham in The Truthabout Private Schools in Australiawhen analysing why so many par-ents forsake the government schoolsystem
When comparing independentprivate schools with publicschools the major theme thatemerged was not differences inacademic standards and curri-culum but issues of disciplineand order The surveyed par-ents felt that the behaviour andattitudes of students in publicschools was unacceptablehellipAll accept that non-govern-
ment schools achieve better aca-demic results provide greater cur-riculum flexibility and save Aus-tralian taxpayers millions of dol-lars Equally as important is theargument that such schools streng-then Australiarsquos civic health andstock of lsquosocial capitalrsquo
Dr Kevin Donnelly is Director of EducationStrategies a Melbourne-based consulting group
E-mailkevindnetspacenetau
s
30 MARCH 2003
E V I E WR
and relatively inviolable Thisprovides the incentive for them tobe improved and for their ownersand others to search out ways inwhich the assets they representcan be used to provide increasedvalue or other benefits
If confidence in the exclusiv-ity an owner has over the prop-erty right is lost or was neverpresent the asset will be used lessproductively For example own-ers will milk them for their cur-rent-use value rather than trade-off present value for a future valuethat is less certain
Even without a total emascu-lation of individual rights (for ex-ample when title to the propertydepends on continuing govern-mental assent) lack of certaintybrings lower incomes and dimin-ished asset protection One out-come of this can be observed inthe MurrayndashDarling system Wa-ter rights on the Victorian side ofthe Murray are secure while thoseon the NSW side have been over-allocated and are subject to ad-ministrative discretion includinghaving a firm duration of only tenyears In Victoria high securitywater (available 95 per cent of thetime) comprises the great bulk ofentitlements In contrast in
NSW high security water is avail-able only 60-80 per cent of thetime The result is that farmers onthe Victorian side plant perennialcrops while those in NSW tendto focus on annual crops espe-cially rice
There are claims that Victoriarsquosmore robust property rights meanthat the State Government haslost lsquocapabilityrsquo to manage com-pared with NSW The flip side ofthis is the increased risk and as-sociated lower value of productionnorth of the Murray where prop-erty rights are attenuated Gov-ernments that give themselves in-creased capacity to direct produc-tion or to take individualrsquos prop-erty will need to accept lower lev-els of income and output
IRRIGATION ENVIRON-MENTAL BENEFITS AND SA-LINITY
The Types of IssuesIssues stemming from irrigationcomprise two types those impact-ing on the environment and thoseimpacting on private uses Theformer includes issues such as pre-venting loss of species ensuringthat certain sorts of species flourishand avoiding unattractive growths
such as blue-green algae which re-sult from fertilizer build-up
The second involves economicimpacts on different users
While environmental flows toensure species flourish are oftenhighlighted salinity is the mainfocus And while salinity has animpact on the environment itsimportance is in the conflict of in-terest between productive usersmdashthe complaint of lsquodamaged goodsrsquoby downstream users against thoseupstream
The MurrayndashDarling Basin Sa-linity Strategy 2001ndash2015 has es-timated that increased salinitybrings costs of $294 million perannum to the basin
Yet data on the salinity of theMurray Darling shows levels up-stream of South Australia arelower than they were in the early1980s and are only seriously abovethese levels as the river ap-proaches its mouth at the GoolwaBarrage
The Basin Salinity Manage-ment Strategy argues that progressachieved over the past decade willlsquobe cancelled within 20-50 yearsand median salinity levels wouldexceed the Australian DrinkingWater Guidelines for good waterquality within 50-100 yearsrsquo Thecause of this is said to be risinggroundwater tables due to land usechanges across the Basin
The disputes over salinizationare largely disputes between com-mercial parties Full specificationof rights and obligations will al-low these to be resolved as longas the impacts are measurabletheir causes identifiable and thevarious rights and obligations areknown and stable In this respecttechnology to measure salt in wa-ter and to trace increases to par-ticular locations is readily avail-able
Agreements about the alloca-tion of water rights between ju-risdictions and to the main irri-gation provinces have been inplace for over a century In the
Average Salinity in the River Murray (EC Units)1
3500
3000
2500
2000
1500
1000
500
0
January 2003
July 2002ndashJanuary 2003
July 1982ndashJanuary 2003
Hume D
am
Swan
Hill
Merbein
Morgan
Milang
Mening
ie
Goolw
a
Barra
ge
31MARCH 2003
E V I E WR
I
API
Musinghellipcase of the Murray the lsquocaprsquo onwater abstractions agreed betweenthe various jurisdictions in 1995largely validated agreements madeearly in the last century and be-fore Disturbing these agreementswould greatly undermine the trustin the sanctity of property rightsand seriously reduce agriculturalproductivity Hence increased al-locations for certain parties or forcertain uses (including environ-mental flows) would need to bepurchased at market prices
Developments in Australiaover recent decades have con-spired to make irrigation water farmore valuable This is exacer-bated by1 Activation of NSW lsquosleeperrsquo
and lsquodozerrsquo water rights as a re-sult of the increased scarcityvalue a change that bringseven greater pressure on theavailable supply
2 Increased scarcity leading tomeasures that more carefullyhusband the water Whilesome of these prevent evapo-ration loss and have thereforebrought a net increase in effec-tive availability others havereduced availability (these in-clude a more careful wateringwhich results in reduced run-off and re-use)
3 Increased capture of waterwithin the land on which itfalls once water is recognizedas scarce landowners will seekto ensure it does not leave theirland NSW and Victoria haveplaced limits (a strict 10 percent in NSW) of water fallingon property as entitlements ofthe owner Queensland has notyet enacted an equivalent tothis Such adaptations of thecommon law are essentialhowever if downstream usersare not to be expropriatedThere is likely to be constant
bickering over water rights espe-cially if State Governments seek toelevate sharing issues and to sanc-tify them with claims about promot-
Daniel Pipes in The New York Posthas a very cogent explanation forwhy the Left appears to be so happywith the likes of Osama bin Ladenand Saddam Hussein
To be clear about their attitudeshe quotes the renowned Germanelectronic music composer KarlHeinz Stockhausen who saidstraight after the attack on NewYork that it was lsquothe greatest workof art for the whole cosmosrsquo
As Pipes and many of us observedaily there is barely a bad word tosay about Saddam Hussein nor aniota of sympathy for thoseoppressed tortured and murderedby his reacutegime Instead they venttheir fury against the AmericanPresident and British Prime Minister
Why the nonchalancePipes draws our attention to Lee
Harris writing in a recent issue ofthe Hoover Institutionrsquos journalPolicy Review According to KarlMarxrsquos central thesis the demise ofcapitalism hangs on workersgrowing poorer over timemdashwhichof course did not happen Sorather than give up on cherishedexpectations of socialist revolutionHarris notes Marxists tweaked theirtheory and looked instead to theentire populations of poor countriesto carry out the revolution Classanalysis went out the windowreplaced by geography
The trouble is they have tooverlook militant Islamrsquos slightly un-socialist practicesmdashsuch as itsimposing religious law excludingwomen from the workplace andpersecuting atheists
As Pipes sums up September 11and the prospect of war againstSaddam Hussein have exposed theLeftrsquos political self-delusionintellectual bankruptcy and moralturpitude
The Loopy Leftby Andrew McIntyre
ing an improved environment Realsolutions require the issue be placedwithin a normal commercial frame-work which involves1 Clarifying the property rights2 Allowing water rights to be
fully detachable from propertyand able to be used howeverthe holder wishes subject toany damage this might imposeon others
3 Ensuring full rights to buy andsell the water
4 Defining rights so as not to re-duce the quality of other usersThis means ensuring that farm-ing practices that do not bringgreater salination than somestandard
5 Allowing rights holders tobank their water and ensureeven greater certaintyAllocating specific individual
ownership rights to water and al-lowing its trade is a well-foundedmeans of maximizing the usevalue It would also be likely tohave the beneficial side-effects ofreducing salinity and farm-basedpollutants caused by intensiveuse We should grasp such oppor-tunities But if the impending sa-linity problem is as great as someclaim other solutions might wellinclude buying out some allocatedirrigatorsrsquo rights However alter-natives may be to remove saltfrom the water by engineering so-lutions or simply to live withhigher salt
NOTE1 Human drinking water should
be less than 800 ECs (electri-cal conductivity one ECequals about 06 mglitre)while higher levels are accept-able for much farming activity
Dr Alan Moran is Director Deregulation Unitat the Institute of Public Affairs
32 MARCH 2003
E V I E WR
Reading FileDone
eral political systems worldwidehave consistently accretedpower to the centre often in theface of clear constitutional im-peratives to the contrary) Ifeared instead that a UN thathad been patently successful insomethingmdashanythingmdashmightbe granted greater powers to thepoint where it would kill truediversity and individualism (ortry to anyway) through inevi-table bureaucratic practices
Is such a fear unfounded Ap-parently not if many peopleshare the moral touchstone ofthe Opposition Leader SimonCrean He believes according tohis own words in Parliamentthat what the UN SecurityCouncil declares is moral whatit refuses is immoral
The latest manoeuvrings overIraq have therefore been heart-
ening It seems that the desiresof the powers small and largeto promote their own interestswill continue to hobble the UN
The problem with a unitedworld is that as the threateningimpasse over Iraq suggestedthere are very divergent viewsabout how that world ought tobe run on an international leveljust as there are at national and
sub-national levels The virtueof multi-layered levels of gov-ernments is that competing ju-risdictions give the individual adegree of choice
The greatest sin of totalitar-ian governments past and pres-ent is to deny their citizens theright to leave The greatest dan-ger that the United Nationsposes as far off as it now (hap-pily) seems is that leaving its ju-risdiction is for all practical pur-poses impossible
THE IMPASSE JUST PASSEDI listened to Prime MinisterHoward speaking to the motionbefore Parliament in relation tothe war It was a good speechbut neither he nor PresidentBush seems able to structure andlay out an argument with thestyle and content of BritishPrime Minister Blair His equi-valent speech before the BritishCommons provides a masterfulsummary of the reasons for thiswar and includes an immenselyreadable time-line of the utterineffectiveness of the UN pro-cesses in dealing with Iraq Henicely deals with allegations ofthe lsquorushrsquo to war lsquoOur fault hasnot been impatience The truth
UNITED OR DIVIDEDI write just hours after US Presi-dent George W Bush has deliv-ered his ultimatum to Iraqi Presi-dent Saddam Hussein leave Iraqwithin 48 hours or be removedBy the time this appears beforeyour eyes you will knowwhether Hussein has decided hischances of survival will be sig-nificantly greater by choosingexile or by remaining in IraqThe recent creation of the In-ternational Criminal Court ofcourse makes war more likelysince Hussein can have no guar-antee of a peaceful lsquoretirementrsquo
In the event that Hussein re-mains in Iraq you will also knowwhether Bush has kept his wordand most likely the outcome ofthis military venture
This matter is immensely im-portant for the people of Iraqand for the military personnelinvolved (including our ownAustralian soldiers sailors andaviators) But then so was theprevious Gulf War the US in-vasion of Grenada the Austra-lian intervention in East Timorand so on But a difference be-tween the current conflict andthose others could be the impactit has upon international insti-tutions Actually just one inter-national institution the UnitedNations
Prior to the first Gulf War Ifeared the coalitionrsquos success forthe reason that some of it mighthave rubbed off onto the UnitedNations I hasten to deny that Ifear the UN as some vast con-spiracy for world domination Ifeared instead that it couldstumble into a piecemeal cen-tralization of power (just as Fed-
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
E V I E WRs
33MARCH 2003
E V I E WR
Reading FileDone
ATTACKING THE GLOBALGOVERNORSThe Cato Institute is a whole-some body as demonstrated byits opposition to such interna-tional organizations as the Inter-national Criminal Court and forthat matter the United Nationsitself Ted Galen Carpenter forexample argues in lsquoPutting theUnited Nations on Noticersquo thatthe UN can and has done somemodest good occasionally It ishe says lsquoa good idea to have aplace where governments cangather to air grievancesrsquo But headds if it lsquoattempts to acquire ataxing authority [or] raise astanding armyrsquo then the USshould withdraw (as indeedshould Australia) Because thatwould turn it into an lsquoembryonicsuperstate that would menacelibertyrsquo
Go to
wwwcatoorgforeignpolicyunhtml
THE INTERNATIONALORGANIZATIONS THEM-SELVESThe United Nations has beenaccused of being often ineffec-tive and always slow Well ev-ery time Irsquove hit the UNrsquos Web-site even with my nifty broad-band Internet connection slow-ness rules Perhaps the site isbeing continually accessed bythe teeming masses Anyway goto
wwwunorg
With 15 members alreadyand 13 more on the way thereremain hopes that the EuropeanUnion will be a force for a stable
twenty-first century Equallywith 15 members already exhib-iting rather divergent views overthe issue of Iraq and most of theforthcoming members sidingwith the United States perhapsthis is overly hopeful Go to
europaeuintindex_enhtm
Then there is the WorldTrade Organization the organi-zation behind which protection-ist nations can hide from unilat-eral trade liberalization by pre-tending to support multilateraltrade liberalization Go to
wwwwtoorg
And we mustnrsquot forget the In-ternational Criminal Court fearof which was no doubt a featureof Saddam Husseinrsquos rejection ofexile as an option and the furyof which is promised by a num-ber of prominent lawyers to bevisited upon our very own PrimeMinister Go to
wwwicc-cpiint
FEEDBACKI would welcome advice fromreaders on any other sites of inter-est to IPA Review readers E-mailme on scdawsonbigpondnetau
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
is our patience should have beenexhausted weeks and monthsand years agorsquo
Go to
wwwnumber10govukoutputPage3294asp
THE STRUGGLE BETWEENTHE CONTINENTSIf you are patient you can readthat wonderful British rag TheSpectator for free Last weekrsquoscopy is available on-line One ofits regular columnists is MarkSteyn an Americo-phile Cana-dian who has a robust turn ofphrase and an abiding disdain formuch modern music (whichseems to place him very comfort-ably into The Spectatorrsquos culturalmatrix)
His piece on the future de-cline of Europe vis-agrave-vis Ame-rica makes for fascinating read-ing Go to
wwwspectatorcouk
then click on the lsquoBack Issuesrsquobutton and choose the edition of15 March 2003
E V I E WR
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
28 MARCH 2003
E V I E WR
KEVIN DONNELLY
Private EducationEquals Public Good
When it comes to choosing be-tween government and non-gov-ernment schools Australian par-ents are lsquovoting with their feetrsquo Asshown by recent ABS figures(Schools Australia 2002) over thelast decade there has been a dra-matic increase in non-governmentschool enrolments
Approximately 30 per cent ofstudents now attend non-govern-ment schools compared with 22per cent in 1980 and 28 per centin 1990 Over the last decadewhile the number of governmentschools has fallen by 64 per centnon-government schools havegrown by 61 per cent
Of course not everybody valuesparentsrsquo right to choose and theAustralian Education Union(AEU) Labor governments andlsquoleft-wingrsquo academics in particularconsistently argue against non-government schools
One of the arguments put for-ward by those opposed to givingparents greater freedom of choiceis that government schools are bet-ter at promoting social cohesionand a strong sense of what KenBoston the ex-head of the NSWEducation Department terms lsquothebonds of civic friendshiprsquo
The assumption is that becausestudents attend non-governmentschools there will be greater socialdivisiveness and a breakdown inthe civic values needed to hold so-ciety together But there is no cred-ible evidence offered to support theclaim that government schools arebetter at promoting the commongood
In fact there is much to provethe opposite
First as anyone familiar withthe lsquoculture warsrsquo and politicallycorrect curricula will know insteadof government-controlled educa-tion promoting unity and cohe-sion it has led to public angst andparental complaints
Witness the very bitter debatein Queensland a year or two agowhen the government-mandatedStudies of Society and Environ-ment (SOSE) curriculum was in-troduced into schools Such was
the lsquoleft-wingrsquo bias in the curricu-lum in particular in the areas ofmulticulturalism and the environ-ment that many parents felt be-trayed
The Queensland debate is mir-rored by what is happening in theUnited States As noted by Ste-phen Arons in his book Short Routeto Chaos instead of promotingunity government control of thecurriculum leads to the opposite
What the school wars tell us isthat somehow we have been
Education Agenda
transforming a vital instrumentfor creating social cohesioninto a source of division andhostility that there is some-thing built into the structure ofpublic schooling that under-mines one of its most importantfunctionsAronrsquos argument that govern-
ment schools no longer transmit aviable sense of a common cultureor agreed civic values is reinforcedby another noted United Stateseducationalist Diane Ravitch
In a recent article in the jour-nal Education Next Ravitch be-moans the impact of cultural rela-tivism and the post-modern on theschool curriculum (where there areno commonly agreed values) andeven goes so far as to argue thatparents should be free to choosenon-government schools becausesuch schools have a better chanceof reflecting their values
In the current education sys-tem with the public schoolscommitted to multiculturalismbilingualism and other forms ofparticularism it is difficult toargue that parents should notbe able to choose schools thatmeet their cultural needsSecond if one accepts that lsquoso-
cial capitalrsquomdashthe networks volun-tary associations and civic bondsthat hold a community togethermdashis important for the health of ademocratic society then non-gov-ernment schools clearly have theadvantage
Unlike the government schoolsystem characterized by a heavy-handed centralized bureaucracyand teacher union control non-government schools are closer tothe communities they serve Bytheir very nature non-government
There is no credible
evidence offered to
support the claim
that government
schools are better
at promoting the
common good
29MARCH 2003
E V I E WR
ALAN MORAN
The lsquoRrsquo Files
Private propertyrights the key toachieving efficiency inrural water use
WATER IN AUSTRALIAWater has always been a definingissue in Australiarsquos prosperityAnd in recent decades irrigationhas grown rapidly Even so theproportion of Australia that is ir-rigated at two per cent of theland comprises a share that isamongst the lowest among OECDcountries Only Canada and therainiest countries New Zealandand the UK have lower sharesthat of the US is 11 per cent andin Japan it reaches 60 per cent
Modern agriculture is only 200years old in Australia and thoughin the first 100 years agriculturalproductivity was increased toequal that of anywhere in theworld gains continue to bemademdashoutput has doubled overthe past 50 years a growth thatcould not have taken place with-out a similar expansion of irriga-tion Irrigation in the MurrayndashDarling agricultural provincealone contributes $5 billion toAustralian agricultural outputand non-irrigated agriculture inthe region contributes a further $5billion This makes the areawhich comprises 14 per cent ofAustraliarsquos land mass responsiblefor a third of the nationrsquos $35 bil-lion agricultural output
Applying Property Rights to WaterMost of the uses of water involvechoices or compromisesmdashdrink-ing water versus irrigation versus
industrial and so on Some how-ever involve complementaritiesparticularly certain recreationaluses such as water sports that arefacilitated by storage and consis-tent availability
In many cases water will per-form sequential functionsmdashthesame water can be used and re-used for irrigation used for indus-trial cooling and finish as drink-ing water Water with differentsometimes competing productiveuses will be optimally used as longas two conditions are in placeThe first is that its ownership isclearly specified and the ownersrsquoobligations to other users (orclaims from other beneficiaries)are well understood The secondrequires each property right to betradable to enable acquisition bythose who value it most therebymaximizing its value
The rights specification andtherefore property ownership canrarely commence with a cleansheet of paper People acquire in-dividual rights to property ini-tially through a variety of routesOne of these is seizure of some-thing that was originally of littlevalue until it was acquired and im-proved Squatters assume rights inthis way However they are firstacquired they need to be tradableAPI
schools establish strong commu-nity networks and have a greaterreliance on the voluntary work ofparents
That non-government schoolsare more effective in this regard issupported by research into lsquoChar-ter schoolsrsquo in the United StatesAs noted by Chester Finn at theFordham Foundation giving localcommunities lsquoownershiprsquo overtheir school builds networks oftrust and reciprocity so vital forsocial cohesion
Social capital also relies on citi-zens being disciplined and orderedin their behaviour Selfishness vio-lent behaviour and rudeness act tofragment the community instead ofpromoting cohesion According toa number of Australian surveys itis here once again that non-gov-ernment schools are seen to bemore effective
As noted by the Centre for In-dependent Studies researcher Jen-nifer Buckingham in The Truthabout Private Schools in Australiawhen analysing why so many par-ents forsake the government schoolsystem
When comparing independentprivate schools with publicschools the major theme thatemerged was not differences inacademic standards and curri-culum but issues of disciplineand order The surveyed par-ents felt that the behaviour andattitudes of students in publicschools was unacceptablehellipAll accept that non-govern-
ment schools achieve better aca-demic results provide greater cur-riculum flexibility and save Aus-tralian taxpayers millions of dol-lars Equally as important is theargument that such schools streng-then Australiarsquos civic health andstock of lsquosocial capitalrsquo
Dr Kevin Donnelly is Director of EducationStrategies a Melbourne-based consulting group
E-mailkevindnetspacenetau
s
30 MARCH 2003
E V I E WR
and relatively inviolable Thisprovides the incentive for them tobe improved and for their ownersand others to search out ways inwhich the assets they representcan be used to provide increasedvalue or other benefits
If confidence in the exclusiv-ity an owner has over the prop-erty right is lost or was neverpresent the asset will be used lessproductively For example own-ers will milk them for their cur-rent-use value rather than trade-off present value for a future valuethat is less certain
Even without a total emascu-lation of individual rights (for ex-ample when title to the propertydepends on continuing govern-mental assent) lack of certaintybrings lower incomes and dimin-ished asset protection One out-come of this can be observed inthe MurrayndashDarling system Wa-ter rights on the Victorian side ofthe Murray are secure while thoseon the NSW side have been over-allocated and are subject to ad-ministrative discretion includinghaving a firm duration of only tenyears In Victoria high securitywater (available 95 per cent of thetime) comprises the great bulk ofentitlements In contrast in
NSW high security water is avail-able only 60-80 per cent of thetime The result is that farmers onthe Victorian side plant perennialcrops while those in NSW tendto focus on annual crops espe-cially rice
There are claims that Victoriarsquosmore robust property rights meanthat the State Government haslost lsquocapabilityrsquo to manage com-pared with NSW The flip side ofthis is the increased risk and as-sociated lower value of productionnorth of the Murray where prop-erty rights are attenuated Gov-ernments that give themselves in-creased capacity to direct produc-tion or to take individualrsquos prop-erty will need to accept lower lev-els of income and output
IRRIGATION ENVIRON-MENTAL BENEFITS AND SA-LINITY
The Types of IssuesIssues stemming from irrigationcomprise two types those impact-ing on the environment and thoseimpacting on private uses Theformer includes issues such as pre-venting loss of species ensuringthat certain sorts of species flourishand avoiding unattractive growths
such as blue-green algae which re-sult from fertilizer build-up
The second involves economicimpacts on different users
While environmental flows toensure species flourish are oftenhighlighted salinity is the mainfocus And while salinity has animpact on the environment itsimportance is in the conflict of in-terest between productive usersmdashthe complaint of lsquodamaged goodsrsquoby downstream users against thoseupstream
The MurrayndashDarling Basin Sa-linity Strategy 2001ndash2015 has es-timated that increased salinitybrings costs of $294 million perannum to the basin
Yet data on the salinity of theMurray Darling shows levels up-stream of South Australia arelower than they were in the early1980s and are only seriously abovethese levels as the river ap-proaches its mouth at the GoolwaBarrage
The Basin Salinity Manage-ment Strategy argues that progressachieved over the past decade willlsquobe cancelled within 20-50 yearsand median salinity levels wouldexceed the Australian DrinkingWater Guidelines for good waterquality within 50-100 yearsrsquo Thecause of this is said to be risinggroundwater tables due to land usechanges across the Basin
The disputes over salinizationare largely disputes between com-mercial parties Full specificationof rights and obligations will al-low these to be resolved as longas the impacts are measurabletheir causes identifiable and thevarious rights and obligations areknown and stable In this respecttechnology to measure salt in wa-ter and to trace increases to par-ticular locations is readily avail-able
Agreements about the alloca-tion of water rights between ju-risdictions and to the main irri-gation provinces have been inplace for over a century In the
Average Salinity in the River Murray (EC Units)1
3500
3000
2500
2000
1500
1000
500
0
January 2003
July 2002ndashJanuary 2003
July 1982ndashJanuary 2003
Hume D
am
Swan
Hill
Merbein
Morgan
Milang
Mening
ie
Goolw
a
Barra
ge
31MARCH 2003
E V I E WR
I
API
Musinghellipcase of the Murray the lsquocaprsquo onwater abstractions agreed betweenthe various jurisdictions in 1995largely validated agreements madeearly in the last century and be-fore Disturbing these agreementswould greatly undermine the trustin the sanctity of property rightsand seriously reduce agriculturalproductivity Hence increased al-locations for certain parties or forcertain uses (including environ-mental flows) would need to bepurchased at market prices
Developments in Australiaover recent decades have con-spired to make irrigation water farmore valuable This is exacer-bated by1 Activation of NSW lsquosleeperrsquo
and lsquodozerrsquo water rights as a re-sult of the increased scarcityvalue a change that bringseven greater pressure on theavailable supply
2 Increased scarcity leading tomeasures that more carefullyhusband the water Whilesome of these prevent evapo-ration loss and have thereforebrought a net increase in effec-tive availability others havereduced availability (these in-clude a more careful wateringwhich results in reduced run-off and re-use)
3 Increased capture of waterwithin the land on which itfalls once water is recognizedas scarce landowners will seekto ensure it does not leave theirland NSW and Victoria haveplaced limits (a strict 10 percent in NSW) of water fallingon property as entitlements ofthe owner Queensland has notyet enacted an equivalent tothis Such adaptations of thecommon law are essentialhowever if downstream usersare not to be expropriatedThere is likely to be constant
bickering over water rights espe-cially if State Governments seek toelevate sharing issues and to sanc-tify them with claims about promot-
Daniel Pipes in The New York Posthas a very cogent explanation forwhy the Left appears to be so happywith the likes of Osama bin Ladenand Saddam Hussein
To be clear about their attitudeshe quotes the renowned Germanelectronic music composer KarlHeinz Stockhausen who saidstraight after the attack on NewYork that it was lsquothe greatest workof art for the whole cosmosrsquo
As Pipes and many of us observedaily there is barely a bad word tosay about Saddam Hussein nor aniota of sympathy for thoseoppressed tortured and murderedby his reacutegime Instead they venttheir fury against the AmericanPresident and British Prime Minister
Why the nonchalancePipes draws our attention to Lee
Harris writing in a recent issue ofthe Hoover Institutionrsquos journalPolicy Review According to KarlMarxrsquos central thesis the demise ofcapitalism hangs on workersgrowing poorer over timemdashwhichof course did not happen Sorather than give up on cherishedexpectations of socialist revolutionHarris notes Marxists tweaked theirtheory and looked instead to theentire populations of poor countriesto carry out the revolution Classanalysis went out the windowreplaced by geography
The trouble is they have tooverlook militant Islamrsquos slightly un-socialist practicesmdashsuch as itsimposing religious law excludingwomen from the workplace andpersecuting atheists
As Pipes sums up September 11and the prospect of war againstSaddam Hussein have exposed theLeftrsquos political self-delusionintellectual bankruptcy and moralturpitude
The Loopy Leftby Andrew McIntyre
ing an improved environment Realsolutions require the issue be placedwithin a normal commercial frame-work which involves1 Clarifying the property rights2 Allowing water rights to be
fully detachable from propertyand able to be used howeverthe holder wishes subject toany damage this might imposeon others
3 Ensuring full rights to buy andsell the water
4 Defining rights so as not to re-duce the quality of other usersThis means ensuring that farm-ing practices that do not bringgreater salination than somestandard
5 Allowing rights holders tobank their water and ensureeven greater certaintyAllocating specific individual
ownership rights to water and al-lowing its trade is a well-foundedmeans of maximizing the usevalue It would also be likely tohave the beneficial side-effects ofreducing salinity and farm-basedpollutants caused by intensiveuse We should grasp such oppor-tunities But if the impending sa-linity problem is as great as someclaim other solutions might wellinclude buying out some allocatedirrigatorsrsquo rights However alter-natives may be to remove saltfrom the water by engineering so-lutions or simply to live withhigher salt
NOTE1 Human drinking water should
be less than 800 ECs (electri-cal conductivity one ECequals about 06 mglitre)while higher levels are accept-able for much farming activity
Dr Alan Moran is Director Deregulation Unitat the Institute of Public Affairs
32 MARCH 2003
E V I E WR
Reading FileDone
eral political systems worldwidehave consistently accretedpower to the centre often in theface of clear constitutional im-peratives to the contrary) Ifeared instead that a UN thathad been patently successful insomethingmdashanythingmdashmightbe granted greater powers to thepoint where it would kill truediversity and individualism (ortry to anyway) through inevi-table bureaucratic practices
Is such a fear unfounded Ap-parently not if many peopleshare the moral touchstone ofthe Opposition Leader SimonCrean He believes according tohis own words in Parliamentthat what the UN SecurityCouncil declares is moral whatit refuses is immoral
The latest manoeuvrings overIraq have therefore been heart-
ening It seems that the desiresof the powers small and largeto promote their own interestswill continue to hobble the UN
The problem with a unitedworld is that as the threateningimpasse over Iraq suggestedthere are very divergent viewsabout how that world ought tobe run on an international leveljust as there are at national and
sub-national levels The virtueof multi-layered levels of gov-ernments is that competing ju-risdictions give the individual adegree of choice
The greatest sin of totalitar-ian governments past and pres-ent is to deny their citizens theright to leave The greatest dan-ger that the United Nationsposes as far off as it now (hap-pily) seems is that leaving its ju-risdiction is for all practical pur-poses impossible
THE IMPASSE JUST PASSEDI listened to Prime MinisterHoward speaking to the motionbefore Parliament in relation tothe war It was a good speechbut neither he nor PresidentBush seems able to structure andlay out an argument with thestyle and content of BritishPrime Minister Blair His equi-valent speech before the BritishCommons provides a masterfulsummary of the reasons for thiswar and includes an immenselyreadable time-line of the utterineffectiveness of the UN pro-cesses in dealing with Iraq Henicely deals with allegations ofthe lsquorushrsquo to war lsquoOur fault hasnot been impatience The truth
UNITED OR DIVIDEDI write just hours after US Presi-dent George W Bush has deliv-ered his ultimatum to Iraqi Presi-dent Saddam Hussein leave Iraqwithin 48 hours or be removedBy the time this appears beforeyour eyes you will knowwhether Hussein has decided hischances of survival will be sig-nificantly greater by choosingexile or by remaining in IraqThe recent creation of the In-ternational Criminal Court ofcourse makes war more likelysince Hussein can have no guar-antee of a peaceful lsquoretirementrsquo
In the event that Hussein re-mains in Iraq you will also knowwhether Bush has kept his wordand most likely the outcome ofthis military venture
This matter is immensely im-portant for the people of Iraqand for the military personnelinvolved (including our ownAustralian soldiers sailors andaviators) But then so was theprevious Gulf War the US in-vasion of Grenada the Austra-lian intervention in East Timorand so on But a difference be-tween the current conflict andthose others could be the impactit has upon international insti-tutions Actually just one inter-national institution the UnitedNations
Prior to the first Gulf War Ifeared the coalitionrsquos success forthe reason that some of it mighthave rubbed off onto the UnitedNations I hasten to deny that Ifear the UN as some vast con-spiracy for world domination Ifeared instead that it couldstumble into a piecemeal cen-tralization of power (just as Fed-
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
E V I E WRs
33MARCH 2003
E V I E WR
Reading FileDone
ATTACKING THE GLOBALGOVERNORSThe Cato Institute is a whole-some body as demonstrated byits opposition to such interna-tional organizations as the Inter-national Criminal Court and forthat matter the United Nationsitself Ted Galen Carpenter forexample argues in lsquoPutting theUnited Nations on Noticersquo thatthe UN can and has done somemodest good occasionally It ishe says lsquoa good idea to have aplace where governments cangather to air grievancesrsquo But headds if it lsquoattempts to acquire ataxing authority [or] raise astanding armyrsquo then the USshould withdraw (as indeedshould Australia) Because thatwould turn it into an lsquoembryonicsuperstate that would menacelibertyrsquo
Go to
wwwcatoorgforeignpolicyunhtml
THE INTERNATIONALORGANIZATIONS THEM-SELVESThe United Nations has beenaccused of being often ineffec-tive and always slow Well ev-ery time Irsquove hit the UNrsquos Web-site even with my nifty broad-band Internet connection slow-ness rules Perhaps the site isbeing continually accessed bythe teeming masses Anyway goto
wwwunorg
With 15 members alreadyand 13 more on the way thereremain hopes that the EuropeanUnion will be a force for a stable
twenty-first century Equallywith 15 members already exhib-iting rather divergent views overthe issue of Iraq and most of theforthcoming members sidingwith the United States perhapsthis is overly hopeful Go to
europaeuintindex_enhtm
Then there is the WorldTrade Organization the organi-zation behind which protection-ist nations can hide from unilat-eral trade liberalization by pre-tending to support multilateraltrade liberalization Go to
wwwwtoorg
And we mustnrsquot forget the In-ternational Criminal Court fearof which was no doubt a featureof Saddam Husseinrsquos rejection ofexile as an option and the furyof which is promised by a num-ber of prominent lawyers to bevisited upon our very own PrimeMinister Go to
wwwicc-cpiint
FEEDBACKI would welcome advice fromreaders on any other sites of inter-est to IPA Review readers E-mailme on scdawsonbigpondnetau
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
is our patience should have beenexhausted weeks and monthsand years agorsquo
Go to
wwwnumber10govukoutputPage3294asp
THE STRUGGLE BETWEENTHE CONTINENTSIf you are patient you can readthat wonderful British rag TheSpectator for free Last weekrsquoscopy is available on-line One ofits regular columnists is MarkSteyn an Americo-phile Cana-dian who has a robust turn ofphrase and an abiding disdain formuch modern music (whichseems to place him very comfort-ably into The Spectatorrsquos culturalmatrix)
His piece on the future de-cline of Europe vis-agrave-vis Ame-rica makes for fascinating read-ing Go to
wwwspectatorcouk
then click on the lsquoBack Issuesrsquobutton and choose the edition of15 March 2003
E V I E WR
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
29MARCH 2003
E V I E WR
ALAN MORAN
The lsquoRrsquo Files
Private propertyrights the key toachieving efficiency inrural water use
WATER IN AUSTRALIAWater has always been a definingissue in Australiarsquos prosperityAnd in recent decades irrigationhas grown rapidly Even so theproportion of Australia that is ir-rigated at two per cent of theland comprises a share that isamongst the lowest among OECDcountries Only Canada and therainiest countries New Zealandand the UK have lower sharesthat of the US is 11 per cent andin Japan it reaches 60 per cent
Modern agriculture is only 200years old in Australia and thoughin the first 100 years agriculturalproductivity was increased toequal that of anywhere in theworld gains continue to bemademdashoutput has doubled overthe past 50 years a growth thatcould not have taken place with-out a similar expansion of irriga-tion Irrigation in the MurrayndashDarling agricultural provincealone contributes $5 billion toAustralian agricultural outputand non-irrigated agriculture inthe region contributes a further $5billion This makes the areawhich comprises 14 per cent ofAustraliarsquos land mass responsiblefor a third of the nationrsquos $35 bil-lion agricultural output
Applying Property Rights to WaterMost of the uses of water involvechoices or compromisesmdashdrink-ing water versus irrigation versus
industrial and so on Some how-ever involve complementaritiesparticularly certain recreationaluses such as water sports that arefacilitated by storage and consis-tent availability
In many cases water will per-form sequential functionsmdashthesame water can be used and re-used for irrigation used for indus-trial cooling and finish as drink-ing water Water with differentsometimes competing productiveuses will be optimally used as longas two conditions are in placeThe first is that its ownership isclearly specified and the ownersrsquoobligations to other users (orclaims from other beneficiaries)are well understood The secondrequires each property right to betradable to enable acquisition bythose who value it most therebymaximizing its value
The rights specification andtherefore property ownership canrarely commence with a cleansheet of paper People acquire in-dividual rights to property ini-tially through a variety of routesOne of these is seizure of some-thing that was originally of littlevalue until it was acquired and im-proved Squatters assume rights inthis way However they are firstacquired they need to be tradableAPI
schools establish strong commu-nity networks and have a greaterreliance on the voluntary work ofparents
That non-government schoolsare more effective in this regard issupported by research into lsquoChar-ter schoolsrsquo in the United StatesAs noted by Chester Finn at theFordham Foundation giving localcommunities lsquoownershiprsquo overtheir school builds networks oftrust and reciprocity so vital forsocial cohesion
Social capital also relies on citi-zens being disciplined and orderedin their behaviour Selfishness vio-lent behaviour and rudeness act tofragment the community instead ofpromoting cohesion According toa number of Australian surveys itis here once again that non-gov-ernment schools are seen to bemore effective
As noted by the Centre for In-dependent Studies researcher Jen-nifer Buckingham in The Truthabout Private Schools in Australiawhen analysing why so many par-ents forsake the government schoolsystem
When comparing independentprivate schools with publicschools the major theme thatemerged was not differences inacademic standards and curri-culum but issues of disciplineand order The surveyed par-ents felt that the behaviour andattitudes of students in publicschools was unacceptablehellipAll accept that non-govern-
ment schools achieve better aca-demic results provide greater cur-riculum flexibility and save Aus-tralian taxpayers millions of dol-lars Equally as important is theargument that such schools streng-then Australiarsquos civic health andstock of lsquosocial capitalrsquo
Dr Kevin Donnelly is Director of EducationStrategies a Melbourne-based consulting group
E-mailkevindnetspacenetau
s
30 MARCH 2003
E V I E WR
and relatively inviolable Thisprovides the incentive for them tobe improved and for their ownersand others to search out ways inwhich the assets they representcan be used to provide increasedvalue or other benefits
If confidence in the exclusiv-ity an owner has over the prop-erty right is lost or was neverpresent the asset will be used lessproductively For example own-ers will milk them for their cur-rent-use value rather than trade-off present value for a future valuethat is less certain
Even without a total emascu-lation of individual rights (for ex-ample when title to the propertydepends on continuing govern-mental assent) lack of certaintybrings lower incomes and dimin-ished asset protection One out-come of this can be observed inthe MurrayndashDarling system Wa-ter rights on the Victorian side ofthe Murray are secure while thoseon the NSW side have been over-allocated and are subject to ad-ministrative discretion includinghaving a firm duration of only tenyears In Victoria high securitywater (available 95 per cent of thetime) comprises the great bulk ofentitlements In contrast in
NSW high security water is avail-able only 60-80 per cent of thetime The result is that farmers onthe Victorian side plant perennialcrops while those in NSW tendto focus on annual crops espe-cially rice
There are claims that Victoriarsquosmore robust property rights meanthat the State Government haslost lsquocapabilityrsquo to manage com-pared with NSW The flip side ofthis is the increased risk and as-sociated lower value of productionnorth of the Murray where prop-erty rights are attenuated Gov-ernments that give themselves in-creased capacity to direct produc-tion or to take individualrsquos prop-erty will need to accept lower lev-els of income and output
IRRIGATION ENVIRON-MENTAL BENEFITS AND SA-LINITY
The Types of IssuesIssues stemming from irrigationcomprise two types those impact-ing on the environment and thoseimpacting on private uses Theformer includes issues such as pre-venting loss of species ensuringthat certain sorts of species flourishand avoiding unattractive growths
such as blue-green algae which re-sult from fertilizer build-up
The second involves economicimpacts on different users
While environmental flows toensure species flourish are oftenhighlighted salinity is the mainfocus And while salinity has animpact on the environment itsimportance is in the conflict of in-terest between productive usersmdashthe complaint of lsquodamaged goodsrsquoby downstream users against thoseupstream
The MurrayndashDarling Basin Sa-linity Strategy 2001ndash2015 has es-timated that increased salinitybrings costs of $294 million perannum to the basin
Yet data on the salinity of theMurray Darling shows levels up-stream of South Australia arelower than they were in the early1980s and are only seriously abovethese levels as the river ap-proaches its mouth at the GoolwaBarrage
The Basin Salinity Manage-ment Strategy argues that progressachieved over the past decade willlsquobe cancelled within 20-50 yearsand median salinity levels wouldexceed the Australian DrinkingWater Guidelines for good waterquality within 50-100 yearsrsquo Thecause of this is said to be risinggroundwater tables due to land usechanges across the Basin
The disputes over salinizationare largely disputes between com-mercial parties Full specificationof rights and obligations will al-low these to be resolved as longas the impacts are measurabletheir causes identifiable and thevarious rights and obligations areknown and stable In this respecttechnology to measure salt in wa-ter and to trace increases to par-ticular locations is readily avail-able
Agreements about the alloca-tion of water rights between ju-risdictions and to the main irri-gation provinces have been inplace for over a century In the
Average Salinity in the River Murray (EC Units)1
3500
3000
2500
2000
1500
1000
500
0
January 2003
July 2002ndashJanuary 2003
July 1982ndashJanuary 2003
Hume D
am
Swan
Hill
Merbein
Morgan
Milang
Mening
ie
Goolw
a
Barra
ge
31MARCH 2003
E V I E WR
I
API
Musinghellipcase of the Murray the lsquocaprsquo onwater abstractions agreed betweenthe various jurisdictions in 1995largely validated agreements madeearly in the last century and be-fore Disturbing these agreementswould greatly undermine the trustin the sanctity of property rightsand seriously reduce agriculturalproductivity Hence increased al-locations for certain parties or forcertain uses (including environ-mental flows) would need to bepurchased at market prices
Developments in Australiaover recent decades have con-spired to make irrigation water farmore valuable This is exacer-bated by1 Activation of NSW lsquosleeperrsquo
and lsquodozerrsquo water rights as a re-sult of the increased scarcityvalue a change that bringseven greater pressure on theavailable supply
2 Increased scarcity leading tomeasures that more carefullyhusband the water Whilesome of these prevent evapo-ration loss and have thereforebrought a net increase in effec-tive availability others havereduced availability (these in-clude a more careful wateringwhich results in reduced run-off and re-use)
3 Increased capture of waterwithin the land on which itfalls once water is recognizedas scarce landowners will seekto ensure it does not leave theirland NSW and Victoria haveplaced limits (a strict 10 percent in NSW) of water fallingon property as entitlements ofthe owner Queensland has notyet enacted an equivalent tothis Such adaptations of thecommon law are essentialhowever if downstream usersare not to be expropriatedThere is likely to be constant
bickering over water rights espe-cially if State Governments seek toelevate sharing issues and to sanc-tify them with claims about promot-
Daniel Pipes in The New York Posthas a very cogent explanation forwhy the Left appears to be so happywith the likes of Osama bin Ladenand Saddam Hussein
To be clear about their attitudeshe quotes the renowned Germanelectronic music composer KarlHeinz Stockhausen who saidstraight after the attack on NewYork that it was lsquothe greatest workof art for the whole cosmosrsquo
As Pipes and many of us observedaily there is barely a bad word tosay about Saddam Hussein nor aniota of sympathy for thoseoppressed tortured and murderedby his reacutegime Instead they venttheir fury against the AmericanPresident and British Prime Minister
Why the nonchalancePipes draws our attention to Lee
Harris writing in a recent issue ofthe Hoover Institutionrsquos journalPolicy Review According to KarlMarxrsquos central thesis the demise ofcapitalism hangs on workersgrowing poorer over timemdashwhichof course did not happen Sorather than give up on cherishedexpectations of socialist revolutionHarris notes Marxists tweaked theirtheory and looked instead to theentire populations of poor countriesto carry out the revolution Classanalysis went out the windowreplaced by geography
The trouble is they have tooverlook militant Islamrsquos slightly un-socialist practicesmdashsuch as itsimposing religious law excludingwomen from the workplace andpersecuting atheists
As Pipes sums up September 11and the prospect of war againstSaddam Hussein have exposed theLeftrsquos political self-delusionintellectual bankruptcy and moralturpitude
The Loopy Leftby Andrew McIntyre
ing an improved environment Realsolutions require the issue be placedwithin a normal commercial frame-work which involves1 Clarifying the property rights2 Allowing water rights to be
fully detachable from propertyand able to be used howeverthe holder wishes subject toany damage this might imposeon others
3 Ensuring full rights to buy andsell the water
4 Defining rights so as not to re-duce the quality of other usersThis means ensuring that farm-ing practices that do not bringgreater salination than somestandard
5 Allowing rights holders tobank their water and ensureeven greater certaintyAllocating specific individual
ownership rights to water and al-lowing its trade is a well-foundedmeans of maximizing the usevalue It would also be likely tohave the beneficial side-effects ofreducing salinity and farm-basedpollutants caused by intensiveuse We should grasp such oppor-tunities But if the impending sa-linity problem is as great as someclaim other solutions might wellinclude buying out some allocatedirrigatorsrsquo rights However alter-natives may be to remove saltfrom the water by engineering so-lutions or simply to live withhigher salt
NOTE1 Human drinking water should
be less than 800 ECs (electri-cal conductivity one ECequals about 06 mglitre)while higher levels are accept-able for much farming activity
Dr Alan Moran is Director Deregulation Unitat the Institute of Public Affairs
32 MARCH 2003
E V I E WR
Reading FileDone
eral political systems worldwidehave consistently accretedpower to the centre often in theface of clear constitutional im-peratives to the contrary) Ifeared instead that a UN thathad been patently successful insomethingmdashanythingmdashmightbe granted greater powers to thepoint where it would kill truediversity and individualism (ortry to anyway) through inevi-table bureaucratic practices
Is such a fear unfounded Ap-parently not if many peopleshare the moral touchstone ofthe Opposition Leader SimonCrean He believes according tohis own words in Parliamentthat what the UN SecurityCouncil declares is moral whatit refuses is immoral
The latest manoeuvrings overIraq have therefore been heart-
ening It seems that the desiresof the powers small and largeto promote their own interestswill continue to hobble the UN
The problem with a unitedworld is that as the threateningimpasse over Iraq suggestedthere are very divergent viewsabout how that world ought tobe run on an international leveljust as there are at national and
sub-national levels The virtueof multi-layered levels of gov-ernments is that competing ju-risdictions give the individual adegree of choice
The greatest sin of totalitar-ian governments past and pres-ent is to deny their citizens theright to leave The greatest dan-ger that the United Nationsposes as far off as it now (hap-pily) seems is that leaving its ju-risdiction is for all practical pur-poses impossible
THE IMPASSE JUST PASSEDI listened to Prime MinisterHoward speaking to the motionbefore Parliament in relation tothe war It was a good speechbut neither he nor PresidentBush seems able to structure andlay out an argument with thestyle and content of BritishPrime Minister Blair His equi-valent speech before the BritishCommons provides a masterfulsummary of the reasons for thiswar and includes an immenselyreadable time-line of the utterineffectiveness of the UN pro-cesses in dealing with Iraq Henicely deals with allegations ofthe lsquorushrsquo to war lsquoOur fault hasnot been impatience The truth
UNITED OR DIVIDEDI write just hours after US Presi-dent George W Bush has deliv-ered his ultimatum to Iraqi Presi-dent Saddam Hussein leave Iraqwithin 48 hours or be removedBy the time this appears beforeyour eyes you will knowwhether Hussein has decided hischances of survival will be sig-nificantly greater by choosingexile or by remaining in IraqThe recent creation of the In-ternational Criminal Court ofcourse makes war more likelysince Hussein can have no guar-antee of a peaceful lsquoretirementrsquo
In the event that Hussein re-mains in Iraq you will also knowwhether Bush has kept his wordand most likely the outcome ofthis military venture
This matter is immensely im-portant for the people of Iraqand for the military personnelinvolved (including our ownAustralian soldiers sailors andaviators) But then so was theprevious Gulf War the US in-vasion of Grenada the Austra-lian intervention in East Timorand so on But a difference be-tween the current conflict andthose others could be the impactit has upon international insti-tutions Actually just one inter-national institution the UnitedNations
Prior to the first Gulf War Ifeared the coalitionrsquos success forthe reason that some of it mighthave rubbed off onto the UnitedNations I hasten to deny that Ifear the UN as some vast con-spiracy for world domination Ifeared instead that it couldstumble into a piecemeal cen-tralization of power (just as Fed-
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
E V I E WRs
33MARCH 2003
E V I E WR
Reading FileDone
ATTACKING THE GLOBALGOVERNORSThe Cato Institute is a whole-some body as demonstrated byits opposition to such interna-tional organizations as the Inter-national Criminal Court and forthat matter the United Nationsitself Ted Galen Carpenter forexample argues in lsquoPutting theUnited Nations on Noticersquo thatthe UN can and has done somemodest good occasionally It ishe says lsquoa good idea to have aplace where governments cangather to air grievancesrsquo But headds if it lsquoattempts to acquire ataxing authority [or] raise astanding armyrsquo then the USshould withdraw (as indeedshould Australia) Because thatwould turn it into an lsquoembryonicsuperstate that would menacelibertyrsquo
Go to
wwwcatoorgforeignpolicyunhtml
THE INTERNATIONALORGANIZATIONS THEM-SELVESThe United Nations has beenaccused of being often ineffec-tive and always slow Well ev-ery time Irsquove hit the UNrsquos Web-site even with my nifty broad-band Internet connection slow-ness rules Perhaps the site isbeing continually accessed bythe teeming masses Anyway goto
wwwunorg
With 15 members alreadyand 13 more on the way thereremain hopes that the EuropeanUnion will be a force for a stable
twenty-first century Equallywith 15 members already exhib-iting rather divergent views overthe issue of Iraq and most of theforthcoming members sidingwith the United States perhapsthis is overly hopeful Go to
europaeuintindex_enhtm
Then there is the WorldTrade Organization the organi-zation behind which protection-ist nations can hide from unilat-eral trade liberalization by pre-tending to support multilateraltrade liberalization Go to
wwwwtoorg
And we mustnrsquot forget the In-ternational Criminal Court fearof which was no doubt a featureof Saddam Husseinrsquos rejection ofexile as an option and the furyof which is promised by a num-ber of prominent lawyers to bevisited upon our very own PrimeMinister Go to
wwwicc-cpiint
FEEDBACKI would welcome advice fromreaders on any other sites of inter-est to IPA Review readers E-mailme on scdawsonbigpondnetau
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
is our patience should have beenexhausted weeks and monthsand years agorsquo
Go to
wwwnumber10govukoutputPage3294asp
THE STRUGGLE BETWEENTHE CONTINENTSIf you are patient you can readthat wonderful British rag TheSpectator for free Last weekrsquoscopy is available on-line One ofits regular columnists is MarkSteyn an Americo-phile Cana-dian who has a robust turn ofphrase and an abiding disdain formuch modern music (whichseems to place him very comfort-ably into The Spectatorrsquos culturalmatrix)
His piece on the future de-cline of Europe vis-agrave-vis Ame-rica makes for fascinating read-ing Go to
wwwspectatorcouk
then click on the lsquoBack Issuesrsquobutton and choose the edition of15 March 2003
E V I E WR
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
30 MARCH 2003
E V I E WR
and relatively inviolable Thisprovides the incentive for them tobe improved and for their ownersand others to search out ways inwhich the assets they representcan be used to provide increasedvalue or other benefits
If confidence in the exclusiv-ity an owner has over the prop-erty right is lost or was neverpresent the asset will be used lessproductively For example own-ers will milk them for their cur-rent-use value rather than trade-off present value for a future valuethat is less certain
Even without a total emascu-lation of individual rights (for ex-ample when title to the propertydepends on continuing govern-mental assent) lack of certaintybrings lower incomes and dimin-ished asset protection One out-come of this can be observed inthe MurrayndashDarling system Wa-ter rights on the Victorian side ofthe Murray are secure while thoseon the NSW side have been over-allocated and are subject to ad-ministrative discretion includinghaving a firm duration of only tenyears In Victoria high securitywater (available 95 per cent of thetime) comprises the great bulk ofentitlements In contrast in
NSW high security water is avail-able only 60-80 per cent of thetime The result is that farmers onthe Victorian side plant perennialcrops while those in NSW tendto focus on annual crops espe-cially rice
There are claims that Victoriarsquosmore robust property rights meanthat the State Government haslost lsquocapabilityrsquo to manage com-pared with NSW The flip side ofthis is the increased risk and as-sociated lower value of productionnorth of the Murray where prop-erty rights are attenuated Gov-ernments that give themselves in-creased capacity to direct produc-tion or to take individualrsquos prop-erty will need to accept lower lev-els of income and output
IRRIGATION ENVIRON-MENTAL BENEFITS AND SA-LINITY
The Types of IssuesIssues stemming from irrigationcomprise two types those impact-ing on the environment and thoseimpacting on private uses Theformer includes issues such as pre-venting loss of species ensuringthat certain sorts of species flourishand avoiding unattractive growths
such as blue-green algae which re-sult from fertilizer build-up
The second involves economicimpacts on different users
While environmental flows toensure species flourish are oftenhighlighted salinity is the mainfocus And while salinity has animpact on the environment itsimportance is in the conflict of in-terest between productive usersmdashthe complaint of lsquodamaged goodsrsquoby downstream users against thoseupstream
The MurrayndashDarling Basin Sa-linity Strategy 2001ndash2015 has es-timated that increased salinitybrings costs of $294 million perannum to the basin
Yet data on the salinity of theMurray Darling shows levels up-stream of South Australia arelower than they were in the early1980s and are only seriously abovethese levels as the river ap-proaches its mouth at the GoolwaBarrage
The Basin Salinity Manage-ment Strategy argues that progressachieved over the past decade willlsquobe cancelled within 20-50 yearsand median salinity levels wouldexceed the Australian DrinkingWater Guidelines for good waterquality within 50-100 yearsrsquo Thecause of this is said to be risinggroundwater tables due to land usechanges across the Basin
The disputes over salinizationare largely disputes between com-mercial parties Full specificationof rights and obligations will al-low these to be resolved as longas the impacts are measurabletheir causes identifiable and thevarious rights and obligations areknown and stable In this respecttechnology to measure salt in wa-ter and to trace increases to par-ticular locations is readily avail-able
Agreements about the alloca-tion of water rights between ju-risdictions and to the main irri-gation provinces have been inplace for over a century In the
Average Salinity in the River Murray (EC Units)1
3500
3000
2500
2000
1500
1000
500
0
January 2003
July 2002ndashJanuary 2003
July 1982ndashJanuary 2003
Hume D
am
Swan
Hill
Merbein
Morgan
Milang
Mening
ie
Goolw
a
Barra
ge
31MARCH 2003
E V I E WR
I
API
Musinghellipcase of the Murray the lsquocaprsquo onwater abstractions agreed betweenthe various jurisdictions in 1995largely validated agreements madeearly in the last century and be-fore Disturbing these agreementswould greatly undermine the trustin the sanctity of property rightsand seriously reduce agriculturalproductivity Hence increased al-locations for certain parties or forcertain uses (including environ-mental flows) would need to bepurchased at market prices
Developments in Australiaover recent decades have con-spired to make irrigation water farmore valuable This is exacer-bated by1 Activation of NSW lsquosleeperrsquo
and lsquodozerrsquo water rights as a re-sult of the increased scarcityvalue a change that bringseven greater pressure on theavailable supply
2 Increased scarcity leading tomeasures that more carefullyhusband the water Whilesome of these prevent evapo-ration loss and have thereforebrought a net increase in effec-tive availability others havereduced availability (these in-clude a more careful wateringwhich results in reduced run-off and re-use)
3 Increased capture of waterwithin the land on which itfalls once water is recognizedas scarce landowners will seekto ensure it does not leave theirland NSW and Victoria haveplaced limits (a strict 10 percent in NSW) of water fallingon property as entitlements ofthe owner Queensland has notyet enacted an equivalent tothis Such adaptations of thecommon law are essentialhowever if downstream usersare not to be expropriatedThere is likely to be constant
bickering over water rights espe-cially if State Governments seek toelevate sharing issues and to sanc-tify them with claims about promot-
Daniel Pipes in The New York Posthas a very cogent explanation forwhy the Left appears to be so happywith the likes of Osama bin Ladenand Saddam Hussein
To be clear about their attitudeshe quotes the renowned Germanelectronic music composer KarlHeinz Stockhausen who saidstraight after the attack on NewYork that it was lsquothe greatest workof art for the whole cosmosrsquo
As Pipes and many of us observedaily there is barely a bad word tosay about Saddam Hussein nor aniota of sympathy for thoseoppressed tortured and murderedby his reacutegime Instead they venttheir fury against the AmericanPresident and British Prime Minister
Why the nonchalancePipes draws our attention to Lee
Harris writing in a recent issue ofthe Hoover Institutionrsquos journalPolicy Review According to KarlMarxrsquos central thesis the demise ofcapitalism hangs on workersgrowing poorer over timemdashwhichof course did not happen Sorather than give up on cherishedexpectations of socialist revolutionHarris notes Marxists tweaked theirtheory and looked instead to theentire populations of poor countriesto carry out the revolution Classanalysis went out the windowreplaced by geography
The trouble is they have tooverlook militant Islamrsquos slightly un-socialist practicesmdashsuch as itsimposing religious law excludingwomen from the workplace andpersecuting atheists
As Pipes sums up September 11and the prospect of war againstSaddam Hussein have exposed theLeftrsquos political self-delusionintellectual bankruptcy and moralturpitude
The Loopy Leftby Andrew McIntyre
ing an improved environment Realsolutions require the issue be placedwithin a normal commercial frame-work which involves1 Clarifying the property rights2 Allowing water rights to be
fully detachable from propertyand able to be used howeverthe holder wishes subject toany damage this might imposeon others
3 Ensuring full rights to buy andsell the water
4 Defining rights so as not to re-duce the quality of other usersThis means ensuring that farm-ing practices that do not bringgreater salination than somestandard
5 Allowing rights holders tobank their water and ensureeven greater certaintyAllocating specific individual
ownership rights to water and al-lowing its trade is a well-foundedmeans of maximizing the usevalue It would also be likely tohave the beneficial side-effects ofreducing salinity and farm-basedpollutants caused by intensiveuse We should grasp such oppor-tunities But if the impending sa-linity problem is as great as someclaim other solutions might wellinclude buying out some allocatedirrigatorsrsquo rights However alter-natives may be to remove saltfrom the water by engineering so-lutions or simply to live withhigher salt
NOTE1 Human drinking water should
be less than 800 ECs (electri-cal conductivity one ECequals about 06 mglitre)while higher levels are accept-able for much farming activity
Dr Alan Moran is Director Deregulation Unitat the Institute of Public Affairs
32 MARCH 2003
E V I E WR
Reading FileDone
eral political systems worldwidehave consistently accretedpower to the centre often in theface of clear constitutional im-peratives to the contrary) Ifeared instead that a UN thathad been patently successful insomethingmdashanythingmdashmightbe granted greater powers to thepoint where it would kill truediversity and individualism (ortry to anyway) through inevi-table bureaucratic practices
Is such a fear unfounded Ap-parently not if many peopleshare the moral touchstone ofthe Opposition Leader SimonCrean He believes according tohis own words in Parliamentthat what the UN SecurityCouncil declares is moral whatit refuses is immoral
The latest manoeuvrings overIraq have therefore been heart-
ening It seems that the desiresof the powers small and largeto promote their own interestswill continue to hobble the UN
The problem with a unitedworld is that as the threateningimpasse over Iraq suggestedthere are very divergent viewsabout how that world ought tobe run on an international leveljust as there are at national and
sub-national levels The virtueof multi-layered levels of gov-ernments is that competing ju-risdictions give the individual adegree of choice
The greatest sin of totalitar-ian governments past and pres-ent is to deny their citizens theright to leave The greatest dan-ger that the United Nationsposes as far off as it now (hap-pily) seems is that leaving its ju-risdiction is for all practical pur-poses impossible
THE IMPASSE JUST PASSEDI listened to Prime MinisterHoward speaking to the motionbefore Parliament in relation tothe war It was a good speechbut neither he nor PresidentBush seems able to structure andlay out an argument with thestyle and content of BritishPrime Minister Blair His equi-valent speech before the BritishCommons provides a masterfulsummary of the reasons for thiswar and includes an immenselyreadable time-line of the utterineffectiveness of the UN pro-cesses in dealing with Iraq Henicely deals with allegations ofthe lsquorushrsquo to war lsquoOur fault hasnot been impatience The truth
UNITED OR DIVIDEDI write just hours after US Presi-dent George W Bush has deliv-ered his ultimatum to Iraqi Presi-dent Saddam Hussein leave Iraqwithin 48 hours or be removedBy the time this appears beforeyour eyes you will knowwhether Hussein has decided hischances of survival will be sig-nificantly greater by choosingexile or by remaining in IraqThe recent creation of the In-ternational Criminal Court ofcourse makes war more likelysince Hussein can have no guar-antee of a peaceful lsquoretirementrsquo
In the event that Hussein re-mains in Iraq you will also knowwhether Bush has kept his wordand most likely the outcome ofthis military venture
This matter is immensely im-portant for the people of Iraqand for the military personnelinvolved (including our ownAustralian soldiers sailors andaviators) But then so was theprevious Gulf War the US in-vasion of Grenada the Austra-lian intervention in East Timorand so on But a difference be-tween the current conflict andthose others could be the impactit has upon international insti-tutions Actually just one inter-national institution the UnitedNations
Prior to the first Gulf War Ifeared the coalitionrsquos success forthe reason that some of it mighthave rubbed off onto the UnitedNations I hasten to deny that Ifear the UN as some vast con-spiracy for world domination Ifeared instead that it couldstumble into a piecemeal cen-tralization of power (just as Fed-
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
E V I E WRs
33MARCH 2003
E V I E WR
Reading FileDone
ATTACKING THE GLOBALGOVERNORSThe Cato Institute is a whole-some body as demonstrated byits opposition to such interna-tional organizations as the Inter-national Criminal Court and forthat matter the United Nationsitself Ted Galen Carpenter forexample argues in lsquoPutting theUnited Nations on Noticersquo thatthe UN can and has done somemodest good occasionally It ishe says lsquoa good idea to have aplace where governments cangather to air grievancesrsquo But headds if it lsquoattempts to acquire ataxing authority [or] raise astanding armyrsquo then the USshould withdraw (as indeedshould Australia) Because thatwould turn it into an lsquoembryonicsuperstate that would menacelibertyrsquo
Go to
wwwcatoorgforeignpolicyunhtml
THE INTERNATIONALORGANIZATIONS THEM-SELVESThe United Nations has beenaccused of being often ineffec-tive and always slow Well ev-ery time Irsquove hit the UNrsquos Web-site even with my nifty broad-band Internet connection slow-ness rules Perhaps the site isbeing continually accessed bythe teeming masses Anyway goto
wwwunorg
With 15 members alreadyand 13 more on the way thereremain hopes that the EuropeanUnion will be a force for a stable
twenty-first century Equallywith 15 members already exhib-iting rather divergent views overthe issue of Iraq and most of theforthcoming members sidingwith the United States perhapsthis is overly hopeful Go to
europaeuintindex_enhtm
Then there is the WorldTrade Organization the organi-zation behind which protection-ist nations can hide from unilat-eral trade liberalization by pre-tending to support multilateraltrade liberalization Go to
wwwwtoorg
And we mustnrsquot forget the In-ternational Criminal Court fearof which was no doubt a featureof Saddam Husseinrsquos rejection ofexile as an option and the furyof which is promised by a num-ber of prominent lawyers to bevisited upon our very own PrimeMinister Go to
wwwicc-cpiint
FEEDBACKI would welcome advice fromreaders on any other sites of inter-est to IPA Review readers E-mailme on scdawsonbigpondnetau
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
is our patience should have beenexhausted weeks and monthsand years agorsquo
Go to
wwwnumber10govukoutputPage3294asp
THE STRUGGLE BETWEENTHE CONTINENTSIf you are patient you can readthat wonderful British rag TheSpectator for free Last weekrsquoscopy is available on-line One ofits regular columnists is MarkSteyn an Americo-phile Cana-dian who has a robust turn ofphrase and an abiding disdain formuch modern music (whichseems to place him very comfort-ably into The Spectatorrsquos culturalmatrix)
His piece on the future de-cline of Europe vis-agrave-vis Ame-rica makes for fascinating read-ing Go to
wwwspectatorcouk
then click on the lsquoBack Issuesrsquobutton and choose the edition of15 March 2003
E V I E WR
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
31MARCH 2003
E V I E WR
I
API
Musinghellipcase of the Murray the lsquocaprsquo onwater abstractions agreed betweenthe various jurisdictions in 1995largely validated agreements madeearly in the last century and be-fore Disturbing these agreementswould greatly undermine the trustin the sanctity of property rightsand seriously reduce agriculturalproductivity Hence increased al-locations for certain parties or forcertain uses (including environ-mental flows) would need to bepurchased at market prices
Developments in Australiaover recent decades have con-spired to make irrigation water farmore valuable This is exacer-bated by1 Activation of NSW lsquosleeperrsquo
and lsquodozerrsquo water rights as a re-sult of the increased scarcityvalue a change that bringseven greater pressure on theavailable supply
2 Increased scarcity leading tomeasures that more carefullyhusband the water Whilesome of these prevent evapo-ration loss and have thereforebrought a net increase in effec-tive availability others havereduced availability (these in-clude a more careful wateringwhich results in reduced run-off and re-use)
3 Increased capture of waterwithin the land on which itfalls once water is recognizedas scarce landowners will seekto ensure it does not leave theirland NSW and Victoria haveplaced limits (a strict 10 percent in NSW) of water fallingon property as entitlements ofthe owner Queensland has notyet enacted an equivalent tothis Such adaptations of thecommon law are essentialhowever if downstream usersare not to be expropriatedThere is likely to be constant
bickering over water rights espe-cially if State Governments seek toelevate sharing issues and to sanc-tify them with claims about promot-
Daniel Pipes in The New York Posthas a very cogent explanation forwhy the Left appears to be so happywith the likes of Osama bin Ladenand Saddam Hussein
To be clear about their attitudeshe quotes the renowned Germanelectronic music composer KarlHeinz Stockhausen who saidstraight after the attack on NewYork that it was lsquothe greatest workof art for the whole cosmosrsquo
As Pipes and many of us observedaily there is barely a bad word tosay about Saddam Hussein nor aniota of sympathy for thoseoppressed tortured and murderedby his reacutegime Instead they venttheir fury against the AmericanPresident and British Prime Minister
Why the nonchalancePipes draws our attention to Lee
Harris writing in a recent issue ofthe Hoover Institutionrsquos journalPolicy Review According to KarlMarxrsquos central thesis the demise ofcapitalism hangs on workersgrowing poorer over timemdashwhichof course did not happen Sorather than give up on cherishedexpectations of socialist revolutionHarris notes Marxists tweaked theirtheory and looked instead to theentire populations of poor countriesto carry out the revolution Classanalysis went out the windowreplaced by geography
The trouble is they have tooverlook militant Islamrsquos slightly un-socialist practicesmdashsuch as itsimposing religious law excludingwomen from the workplace andpersecuting atheists
As Pipes sums up September 11and the prospect of war againstSaddam Hussein have exposed theLeftrsquos political self-delusionintellectual bankruptcy and moralturpitude
The Loopy Leftby Andrew McIntyre
ing an improved environment Realsolutions require the issue be placedwithin a normal commercial frame-work which involves1 Clarifying the property rights2 Allowing water rights to be
fully detachable from propertyand able to be used howeverthe holder wishes subject toany damage this might imposeon others
3 Ensuring full rights to buy andsell the water
4 Defining rights so as not to re-duce the quality of other usersThis means ensuring that farm-ing practices that do not bringgreater salination than somestandard
5 Allowing rights holders tobank their water and ensureeven greater certaintyAllocating specific individual
ownership rights to water and al-lowing its trade is a well-foundedmeans of maximizing the usevalue It would also be likely tohave the beneficial side-effects ofreducing salinity and farm-basedpollutants caused by intensiveuse We should grasp such oppor-tunities But if the impending sa-linity problem is as great as someclaim other solutions might wellinclude buying out some allocatedirrigatorsrsquo rights However alter-natives may be to remove saltfrom the water by engineering so-lutions or simply to live withhigher salt
NOTE1 Human drinking water should
be less than 800 ECs (electri-cal conductivity one ECequals about 06 mglitre)while higher levels are accept-able for much farming activity
Dr Alan Moran is Director Deregulation Unitat the Institute of Public Affairs
32 MARCH 2003
E V I E WR
Reading FileDone
eral political systems worldwidehave consistently accretedpower to the centre often in theface of clear constitutional im-peratives to the contrary) Ifeared instead that a UN thathad been patently successful insomethingmdashanythingmdashmightbe granted greater powers to thepoint where it would kill truediversity and individualism (ortry to anyway) through inevi-table bureaucratic practices
Is such a fear unfounded Ap-parently not if many peopleshare the moral touchstone ofthe Opposition Leader SimonCrean He believes according tohis own words in Parliamentthat what the UN SecurityCouncil declares is moral whatit refuses is immoral
The latest manoeuvrings overIraq have therefore been heart-
ening It seems that the desiresof the powers small and largeto promote their own interestswill continue to hobble the UN
The problem with a unitedworld is that as the threateningimpasse over Iraq suggestedthere are very divergent viewsabout how that world ought tobe run on an international leveljust as there are at national and
sub-national levels The virtueof multi-layered levels of gov-ernments is that competing ju-risdictions give the individual adegree of choice
The greatest sin of totalitar-ian governments past and pres-ent is to deny their citizens theright to leave The greatest dan-ger that the United Nationsposes as far off as it now (hap-pily) seems is that leaving its ju-risdiction is for all practical pur-poses impossible
THE IMPASSE JUST PASSEDI listened to Prime MinisterHoward speaking to the motionbefore Parliament in relation tothe war It was a good speechbut neither he nor PresidentBush seems able to structure andlay out an argument with thestyle and content of BritishPrime Minister Blair His equi-valent speech before the BritishCommons provides a masterfulsummary of the reasons for thiswar and includes an immenselyreadable time-line of the utterineffectiveness of the UN pro-cesses in dealing with Iraq Henicely deals with allegations ofthe lsquorushrsquo to war lsquoOur fault hasnot been impatience The truth
UNITED OR DIVIDEDI write just hours after US Presi-dent George W Bush has deliv-ered his ultimatum to Iraqi Presi-dent Saddam Hussein leave Iraqwithin 48 hours or be removedBy the time this appears beforeyour eyes you will knowwhether Hussein has decided hischances of survival will be sig-nificantly greater by choosingexile or by remaining in IraqThe recent creation of the In-ternational Criminal Court ofcourse makes war more likelysince Hussein can have no guar-antee of a peaceful lsquoretirementrsquo
In the event that Hussein re-mains in Iraq you will also knowwhether Bush has kept his wordand most likely the outcome ofthis military venture
This matter is immensely im-portant for the people of Iraqand for the military personnelinvolved (including our ownAustralian soldiers sailors andaviators) But then so was theprevious Gulf War the US in-vasion of Grenada the Austra-lian intervention in East Timorand so on But a difference be-tween the current conflict andthose others could be the impactit has upon international insti-tutions Actually just one inter-national institution the UnitedNations
Prior to the first Gulf War Ifeared the coalitionrsquos success forthe reason that some of it mighthave rubbed off onto the UnitedNations I hasten to deny that Ifear the UN as some vast con-spiracy for world domination Ifeared instead that it couldstumble into a piecemeal cen-tralization of power (just as Fed-
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
E V I E WRs
33MARCH 2003
E V I E WR
Reading FileDone
ATTACKING THE GLOBALGOVERNORSThe Cato Institute is a whole-some body as demonstrated byits opposition to such interna-tional organizations as the Inter-national Criminal Court and forthat matter the United Nationsitself Ted Galen Carpenter forexample argues in lsquoPutting theUnited Nations on Noticersquo thatthe UN can and has done somemodest good occasionally It ishe says lsquoa good idea to have aplace where governments cangather to air grievancesrsquo But headds if it lsquoattempts to acquire ataxing authority [or] raise astanding armyrsquo then the USshould withdraw (as indeedshould Australia) Because thatwould turn it into an lsquoembryonicsuperstate that would menacelibertyrsquo
Go to
wwwcatoorgforeignpolicyunhtml
THE INTERNATIONALORGANIZATIONS THEM-SELVESThe United Nations has beenaccused of being often ineffec-tive and always slow Well ev-ery time Irsquove hit the UNrsquos Web-site even with my nifty broad-band Internet connection slow-ness rules Perhaps the site isbeing continually accessed bythe teeming masses Anyway goto
wwwunorg
With 15 members alreadyand 13 more on the way thereremain hopes that the EuropeanUnion will be a force for a stable
twenty-first century Equallywith 15 members already exhib-iting rather divergent views overthe issue of Iraq and most of theforthcoming members sidingwith the United States perhapsthis is overly hopeful Go to
europaeuintindex_enhtm
Then there is the WorldTrade Organization the organi-zation behind which protection-ist nations can hide from unilat-eral trade liberalization by pre-tending to support multilateraltrade liberalization Go to
wwwwtoorg
And we mustnrsquot forget the In-ternational Criminal Court fearof which was no doubt a featureof Saddam Husseinrsquos rejection ofexile as an option and the furyof which is promised by a num-ber of prominent lawyers to bevisited upon our very own PrimeMinister Go to
wwwicc-cpiint
FEEDBACKI would welcome advice fromreaders on any other sites of inter-est to IPA Review readers E-mailme on scdawsonbigpondnetau
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
is our patience should have beenexhausted weeks and monthsand years agorsquo
Go to
wwwnumber10govukoutputPage3294asp
THE STRUGGLE BETWEENTHE CONTINENTSIf you are patient you can readthat wonderful British rag TheSpectator for free Last weekrsquoscopy is available on-line One ofits regular columnists is MarkSteyn an Americo-phile Cana-dian who has a robust turn ofphrase and an abiding disdain formuch modern music (whichseems to place him very comfort-ably into The Spectatorrsquos culturalmatrix)
His piece on the future de-cline of Europe vis-agrave-vis Ame-rica makes for fascinating read-ing Go to
wwwspectatorcouk
then click on the lsquoBack Issuesrsquobutton and choose the edition of15 March 2003
E V I E WR
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
32 MARCH 2003
E V I E WR
Reading FileDone
eral political systems worldwidehave consistently accretedpower to the centre often in theface of clear constitutional im-peratives to the contrary) Ifeared instead that a UN thathad been patently successful insomethingmdashanythingmdashmightbe granted greater powers to thepoint where it would kill truediversity and individualism (ortry to anyway) through inevi-table bureaucratic practices
Is such a fear unfounded Ap-parently not if many peopleshare the moral touchstone ofthe Opposition Leader SimonCrean He believes according tohis own words in Parliamentthat what the UN SecurityCouncil declares is moral whatit refuses is immoral
The latest manoeuvrings overIraq have therefore been heart-
ening It seems that the desiresof the powers small and largeto promote their own interestswill continue to hobble the UN
The problem with a unitedworld is that as the threateningimpasse over Iraq suggestedthere are very divergent viewsabout how that world ought tobe run on an international leveljust as there are at national and
sub-national levels The virtueof multi-layered levels of gov-ernments is that competing ju-risdictions give the individual adegree of choice
The greatest sin of totalitar-ian governments past and pres-ent is to deny their citizens theright to leave The greatest dan-ger that the United Nationsposes as far off as it now (hap-pily) seems is that leaving its ju-risdiction is for all practical pur-poses impossible
THE IMPASSE JUST PASSEDI listened to Prime MinisterHoward speaking to the motionbefore Parliament in relation tothe war It was a good speechbut neither he nor PresidentBush seems able to structure andlay out an argument with thestyle and content of BritishPrime Minister Blair His equi-valent speech before the BritishCommons provides a masterfulsummary of the reasons for thiswar and includes an immenselyreadable time-line of the utterineffectiveness of the UN pro-cesses in dealing with Iraq Henicely deals with allegations ofthe lsquorushrsquo to war lsquoOur fault hasnot been impatience The truth
UNITED OR DIVIDEDI write just hours after US Presi-dent George W Bush has deliv-ered his ultimatum to Iraqi Presi-dent Saddam Hussein leave Iraqwithin 48 hours or be removedBy the time this appears beforeyour eyes you will knowwhether Hussein has decided hischances of survival will be sig-nificantly greater by choosingexile or by remaining in IraqThe recent creation of the In-ternational Criminal Court ofcourse makes war more likelysince Hussein can have no guar-antee of a peaceful lsquoretirementrsquo
In the event that Hussein re-mains in Iraq you will also knowwhether Bush has kept his wordand most likely the outcome ofthis military venture
This matter is immensely im-portant for the people of Iraqand for the military personnelinvolved (including our ownAustralian soldiers sailors andaviators) But then so was theprevious Gulf War the US in-vasion of Grenada the Austra-lian intervention in East Timorand so on But a difference be-tween the current conflict andthose others could be the impactit has upon international insti-tutions Actually just one inter-national institution the UnitedNations
Prior to the first Gulf War Ifeared the coalitionrsquos success forthe reason that some of it mighthave rubbed off onto the UnitedNations I hasten to deny that Ifear the UN as some vast con-spiracy for world domination Ifeared instead that it couldstumble into a piecemeal cen-tralization of power (just as Fed-
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
E V I E WRs
33MARCH 2003
E V I E WR
Reading FileDone
ATTACKING THE GLOBALGOVERNORSThe Cato Institute is a whole-some body as demonstrated byits opposition to such interna-tional organizations as the Inter-national Criminal Court and forthat matter the United Nationsitself Ted Galen Carpenter forexample argues in lsquoPutting theUnited Nations on Noticersquo thatthe UN can and has done somemodest good occasionally It ishe says lsquoa good idea to have aplace where governments cangather to air grievancesrsquo But headds if it lsquoattempts to acquire ataxing authority [or] raise astanding armyrsquo then the USshould withdraw (as indeedshould Australia) Because thatwould turn it into an lsquoembryonicsuperstate that would menacelibertyrsquo
Go to
wwwcatoorgforeignpolicyunhtml
THE INTERNATIONALORGANIZATIONS THEM-SELVESThe United Nations has beenaccused of being often ineffec-tive and always slow Well ev-ery time Irsquove hit the UNrsquos Web-site even with my nifty broad-band Internet connection slow-ness rules Perhaps the site isbeing continually accessed bythe teeming masses Anyway goto
wwwunorg
With 15 members alreadyand 13 more on the way thereremain hopes that the EuropeanUnion will be a force for a stable
twenty-first century Equallywith 15 members already exhib-iting rather divergent views overthe issue of Iraq and most of theforthcoming members sidingwith the United States perhapsthis is overly hopeful Go to
europaeuintindex_enhtm
Then there is the WorldTrade Organization the organi-zation behind which protection-ist nations can hide from unilat-eral trade liberalization by pre-tending to support multilateraltrade liberalization Go to
wwwwtoorg
And we mustnrsquot forget the In-ternational Criminal Court fearof which was no doubt a featureof Saddam Husseinrsquos rejection ofexile as an option and the furyof which is promised by a num-ber of prominent lawyers to bevisited upon our very own PrimeMinister Go to
wwwicc-cpiint
FEEDBACKI would welcome advice fromreaders on any other sites of inter-est to IPA Review readers E-mailme on scdawsonbigpondnetau
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
is our patience should have beenexhausted weeks and monthsand years agorsquo
Go to
wwwnumber10govukoutputPage3294asp
THE STRUGGLE BETWEENTHE CONTINENTSIf you are patient you can readthat wonderful British rag TheSpectator for free Last weekrsquoscopy is available on-line One ofits regular columnists is MarkSteyn an Americo-phile Cana-dian who has a robust turn ofphrase and an abiding disdain formuch modern music (whichseems to place him very comfort-ably into The Spectatorrsquos culturalmatrix)
His piece on the future de-cline of Europe vis-agrave-vis Ame-rica makes for fascinating read-ing Go to
wwwspectatorcouk
then click on the lsquoBack Issuesrsquobutton and choose the edition of15 March 2003
E V I E WR
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
33MARCH 2003
E V I E WR
Reading FileDone
ATTACKING THE GLOBALGOVERNORSThe Cato Institute is a whole-some body as demonstrated byits opposition to such interna-tional organizations as the Inter-national Criminal Court and forthat matter the United Nationsitself Ted Galen Carpenter forexample argues in lsquoPutting theUnited Nations on Noticersquo thatthe UN can and has done somemodest good occasionally It ishe says lsquoa good idea to have aplace where governments cangather to air grievancesrsquo But headds if it lsquoattempts to acquire ataxing authority [or] raise astanding armyrsquo then the USshould withdraw (as indeedshould Australia) Because thatwould turn it into an lsquoembryonicsuperstate that would menacelibertyrsquo
Go to
wwwcatoorgforeignpolicyunhtml
THE INTERNATIONALORGANIZATIONS THEM-SELVESThe United Nations has beenaccused of being often ineffec-tive and always slow Well ev-ery time Irsquove hit the UNrsquos Web-site even with my nifty broad-band Internet connection slow-ness rules Perhaps the site isbeing continually accessed bythe teeming masses Anyway goto
wwwunorg
With 15 members alreadyand 13 more on the way thereremain hopes that the EuropeanUnion will be a force for a stable
twenty-first century Equallywith 15 members already exhib-iting rather divergent views overthe issue of Iraq and most of theforthcoming members sidingwith the United States perhapsthis is overly hopeful Go to
europaeuintindex_enhtm
Then there is the WorldTrade Organization the organi-zation behind which protection-ist nations can hide from unilat-eral trade liberalization by pre-tending to support multilateraltrade liberalization Go to
wwwwtoorg
And we mustnrsquot forget the In-ternational Criminal Court fearof which was no doubt a featureof Saddam Husseinrsquos rejection ofexile as an option and the furyof which is promised by a num-ber of prominent lawyers to bevisited upon our very own PrimeMinister Go to
wwwicc-cpiint
FEEDBACKI would welcome advice fromreaders on any other sites of inter-est to IPA Review readers E-mailme on scdawsonbigpondnetau
Free_Enterprisecom by Stephen DawsonFile View Go Bookmarks Options Directory Window Help
is our patience should have beenexhausted weeks and monthsand years agorsquo
Go to
wwwnumber10govukoutputPage3294asp
THE STRUGGLE BETWEENTHE CONTINENTSIf you are patient you can readthat wonderful British rag TheSpectator for free Last weekrsquoscopy is available on-line One ofits regular columnists is MarkSteyn an Americo-phile Cana-dian who has a robust turn ofphrase and an abiding disdain formuch modern music (whichseems to place him very comfort-ably into The Spectatorrsquos culturalmatrix)
His piece on the future de-cline of Europe vis-agrave-vis Ame-rica makes for fascinating read-ing Go to
wwwspectatorcouk
then click on the lsquoBack Issuesrsquobutton and choose the edition of15 March 2003
E V I E WR
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
34 MARCH 2003
E V I E WR
API
S T R A N G E T I M E S
FARM NANNYSLast month Great Britain enacteda new European Union law thatforces hog farmers to give their ani-mals lsquoenvironmental enrichmentrsquounder penalty of stiff fines andthree months in jail
A British spokesman told theTimes of London lsquoWe mean foot-balls and basketballs Farmers mayalso need to change the balls so thepigs donrsquot get tired with the sameonersquo
One UK farmer chuckled to aReuters reporter lsquoIt really is unbe-lievable Every farmer Irsquove spokento thinks itrsquos hilariousrsquo Anothertold the BBC lsquoIrsquom just looking ata calendar to see if itrsquos 1 Aprilrsquo
The laws will not stop with pigsPeople for the Ethical Treatment ofAnimalsmdashthe lobbyists behind theActmdashhave broiler hens in thesights demanding that farmersspruce up their coops with hang-ing toys golf balls and bottle tops
I wonder if the pigs and chick-ens will be forced to clean-up theirtoys before bed
THE AUSTRALIANCONSUMERS ASSOCIATIONIS AGAINST CHOICEIt now officialmdashthe AustralianConsumers Association (ACA) isagainst choice
Last month Louise SylvanmdashtheDirector of the ACAmdashannouncedthat her organization no longersupported peoplesrsquo right to choosetheir own superannuation fund
Now this may surprise somepeople as choice is supposedly thecornerstone of ACArsquos philosophyand few choices are more crucial toindividuals than superannuationClearly the ACArsquos stance hadnothing to do with the desire of real
consumers because as a recent RoyMorgan survey indicated a solid 70per cent of consumers surveyed arein favour of choice of super fund(importantly only 14 per cent re-mained against choice of fund)
The ACArsquos decision was sup-posedly based on a study they un-dertook which found that muchadvice from financial advisers wasnot up to scratch Logically how-ever such a finding re-enforcesrather than undermines the needfor choice After all how else areconsumersmdashforced by law to havea financial advisermdashto avoidbeing ripped-off by their advisersACArsquos solution is to leave it up tothem and their friends in the Aus-tralian Securities InvestmentCommissionmdashthey not the con-sumer know best
For her contribution to limitingthe choice of consumers Ms Sylvanis set to be elevated to Deputy Headof the Australian Competition andConsumer Commission or ACCC
FORESTRY-FIRE INQUIRYOver the last few months forestfires have ravaged the State ofVictoria destroying over 1 millionhectares of forest thousands of ani-mals hundreds of farms and housesand the livelihoods of many ruralfamilies
What is the concern of the De-partment of Sustainability and En-vironment (now known locally asthe Department of ScorchedEarth) That foresters might havea job to come back to after they putout the fires
The Government has convenedan inquiry into reports that logs cutto make a firebreak on the edge ofthe Snowy River National Parkwere sent to a local sawmill to be
Compiled by IPA staff columnists and consultants hellip
made into timber rather than be-ing chipped and burnt
A local mill admitted receivingtimber from fire breaks but onlythose that were of no use to thePark Service and destined for de-struction It also states that with-out these logs the mill would beforced to close as it has no stockbecause its workforce and equip-ment have been busy saving theState from the fires
The demands by the communityfor an open anf full inquiry into thecauses of the fires are unansweredwhile demonization of forestryworkers continues
HUMAN SHIELDS GET COLDFEETMost peace activists who went toIraq to serve as human shields re-turned home before the fightingstarted fearing for their safety
The human shields were mostlyEuropean activists who drove fromLondon to Baghdad in two double-decker party buses in FebruaryTheir aim was to spawn a mass mi-gration of human shields Alasthey only got a few hundred
Aside from their numbers therewere also a few problems with theirfriend Saddam Hussein While hewas kind enough to arrange trans-portation accommodation andnews conferences for the humanshields he only let them protectmilitary installations Hospitalsschools and community centreswere out of bounds
As a result most of the humanshields have now left Baghdad be-fore the bombing starts decidingthat their commitment to peaceand Saddam comes second to theirlives
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
35MARCH 2003
E V I E WR
KEN PHILLIPS
Building choices
Recently a friend was silly enoughto think she could renovate herhouse without the use of a builderBravely she set out to organize allthe tradespeople needed She re-quired separate skilled tradespeoplefor carpentry plumbing electricalwork waterproofing the bathroomguttering roof tiling plasteringbathroom tiling and bricklaying toname just some She organized anarchitect for drawings arrangedbuilding permits and gathered quo-tations for work
To her delight the tradespeoplewere generally prompt and profes-sional but she discovered she hadto spend nearly four hours a day forfour months coordinating the workShe knew nothing about build-ingmdashbut quickly learnt The tilercouldnrsquot do the bathroom until thecarpenter had levelled the floor andthe waterproofer had done his jobNone of this could happen until theplumber and electrician had doneparts of their jobs which in part de-pended on the needs of the plas-terer She found she had to becomea professional manager of contractsif everything was to fit together inthis complex jigsaw The work isnow finished She is happy with theoutcome and is only twelve per centover budget (She changed hermind on a few items during con-struction)
The marvel in the whole exer-cise was that she had a wide choiceof tradespeople who all wanted toplease if the price was right No-one told her what she had to payPrice was determined by competi-tive bids and her assessment of whocould do the job to her satisfaction
It wasnrsquot easy but somehow it allcame together She had in effectexperienced the miracle of an opencompetitive market economy inthe building industry How differ-ent this is to reports coming fromthe Cole Royal Commission intothe commercial construction indus-try
That sector is proving to be anindustry of systemic institutional-ized rorting and destruction of com-petitive market systems Choice oflabour is controlled Prices are fixedwithin certain parameters andphysical and commercial thuggeryis rampant lsquoInsidersquo players seek tocontrol the game through alliancesof building contractors sub-con-tractors and unions Itrsquos dirty nastyinefficient and ultimately costs theAustralian consumer a bundle
Why there is such a stark differ-ence between the two building in-dustries is explained by many fac-tors but from a policy perspectivethe commercial construction sec-tor suffers from systemic failure inthe application of competition lawThe Australian Consumer andCompetition Commission robustlyapplies trade practices law to thedomestic housing industry but failsto apply the full law to the com-mercial construction industry Thisfailure originates from provisions inthe Trade Practices Act which pre-vent the ACCC from interfering inlsquoemploymentrsquo matters And unionsin conjunction with employers playthis technicality to its maximum toavoid competition requirementsDucking competition in this way isseen by some employers as the un-derpinning of business in Austra-lia
In a late submission to the ColeCommission from the Australian
Whatrsquos A Job
Industry Group the AIG expressesconcern that the Commissionshould contemplate suggestions toremove or change lsquoemploymentrsquoexemptions from the Trade PracticeAct AIG claims that these exemp-tions are lsquothe very foundations uponwhich Australiarsquos industrial rela-tions system is builtrsquo
The AIG seems to suggest thatAustralian business could not func-tion if it had to apply commerciallaw to labour areas and states thatthe removal of the employment ex-emptions would lsquocripple a privateemployerrsquos human resources activi-tiesrsquo and lsquoprevent employer associa-tions and unions effectively repre-senting the collective interests oftheir membersrsquo
But this is a lsquobig businessrsquo viewthat does not explain how the 20per cent of the private sectorworkforce who work but are notlsquoemployedrsquo manage to earn a liv-ing while subject to the full provi-sions of the TPA It does not ex-plain how my friend managed torenovate her house through the useof independent contractors who areall subject to the full responsibili-ties and protections available un-der the Trade Practices Act
The differences between the twobuilding sectors challenge the myththat Australia is a fully open andcompetitive economy It is in factmulti-tiered where some levels aresubject to competition regimes andothers receive institutionalized pro-tection from competition Thechallenge for government is to cre-ate competitive consistency for allAustralians
Ken Phillips is a workplace reform practitioner whopromotes the principles of lsquomarkets in the firmrsquo
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
36 MARCH 2003
E V I E WR
Critics say that misuse of theAlien Tort Claims Act constitutesbad law bad economics and badforeign policy and that Congressshould pass legislation to close theloophole
Source Daniel T Griswold(Cato Institute) lsquoForeigners UseObscure Law to Go After USCompaniesrsquo Investorrsquos BusinessDaily 5 February 2003
SINGLE-PARENT HOMESFACTOR IN CHILDRENrsquoS
MENTAL HEALTHChildren growing up in single-par-ent homes are at twice the risk ofdeveloping serious psychiatric ill-nesses and addictions later in lifeaccording to a comprehensive newSwedish study in the British medi-cal journal Lancet
Tracking about a million Swed-ish children for a decade into theirmid-20s the study found thatbull Children with single parents
were twice as likely as othersto develop a psychiatric illnesssuch as severe depression orschizophrenia to kill them-selves or attempt suicide andto develop an alcohol-relateddisease
bull Girls were three times morelikely to become drug addictsif they lived with a sole parentand boys were four times morelikely
bull Financial hardship which theresearchers defined as rentingrather than owning a home andas being on welfare made a bigdifference Other researchersquestion whether poverty is thecausemdashnoting that mothers inSweden are not typically poor
compared with those in othercountries In fact outcomes inSweden are similar to outcomesfor single-parent households inother countries
Source Associated Press lsquoChild-ren in Single-Parent HomesFound at Risk of Mental IllnessrsquoNew York Times 24 January 2003
WAR AGAINST FURCANADA HASTENS
DECLINE OFENVIRONMENT
The unintended consequences ofthe war against fur have hurt thelivelihoods of thousands of Cana-dian Indians and have enticedthem to replace their lost incomesby welcoming into unspoiled ar-eas the oil gas and mining inter-ests they once opposed
The collapse of the fur tradewas a disaster for people who areguardians of the environment sayobserversbull Trappers who once used to re-
port to environmental groupswhen logging companies wereclear-cutting forests or to theCanadian military when low-flying jets were disrupting cari-bou herds are no longer in aposition to perform those cus-todial roles
bull Populations of wolves oncekilled by trappers to protect theskins of animals caught in theirtraps have soared to the detri-ment of buffalo and caribouherds
bull An explosion in the populationof beavers which were almostextinct a century ago but nownumber an estimated 20 mil-lion in Canada has caused the
F U R T H E R A F I E L D
Summaries and excerpts from interesting reports
ABUSIVE USE OF THEALIEN TORT CLAIMS ACT
Through an obscure legal loop-hole the United States is beingturned into the worldrsquos catch-allcivil claims court to the detrimentof the US economy and its inter-ests abroad The loophole is theAlien Tort Claims Act passed in1789
The Act gives federal districtcourts sole jurisdiction over civil ac-tions brought by non-US residentsfor torts or wrongful acts lsquocommit-ted in violation of the law of nationsor a treaty of the United Statesrsquo
The law was originally in-tended to clarify jurisdiction incases involving such matters aspiracy and the actions of diplo-matsmdashand was never intended tobe used against Americans en-gaged in commerce abroad
Yet in the last two decadescritics of global capitalism haveturned the law against US corpo-rations doing business in countrieswhose governments have been ac-cused of human rights and envi-ronmental abuses
For example in Doe et al vsUnocal Corp et al the Americanenergy company stands accused ofbenefiting from forced relocationsand other human rights abusescommitted by the government ofBurma during the construction ofa pipeline
Since 1980 two dozen caseshave been filed seeking damagesfrom US-based corporations ac-cused of being lsquovicariously liablersquofor the alleged actions of govern-ment agents in countries wherethey operate
Another group of suits targetsmore than 100 western multina-tional companies that operated inSouth Africa during apartheid
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
37MARCH 2003
E V I E WR
flooding of farmland as the ani-mals eagerly pursue their dam-buildinglsquoIrsquom still bitter about what was
done to usrsquo said Stephen Kakfwithe premier of the Northwest Ter-ritories lsquoWe pleaded with Green-peace and the others We toldthem we would have to turn to oiland gas and mining for jobs if theytook such a hard stance againstthe import of wild furs to Europersquo
Hunting seals was central to away of life for the 45000 Inuitwho used blubber for fuel andskins for clothing and tents andinsulation for their igloos andwooden huts That way of life isnow almost gone replaced by anemerging urban landscape on thetundra Seal meat has been re-placed largely by a modern diethigh in unsaturated fats and sugarraising local rates of diabetes
Source Clifford Krauss lsquoTheWar Against the Fur Trade Back-fires Endangering a Way of LifersquoNew York Times 4 February 2003
TRADE POLICY ISOLATESMUSLIM STATES
US trade policy risks isolating theMuslim states on the front linesin the war on terrorism accord-ing to a new study Due largely tointernal conditions most of thelarge Muslim countries have be-come increasingly isolated fromthe global economy over the pasttwo decades and US trade poli-cies have added to the problembull The Middle Eastrsquos share of glo-
bal foreign direct investmentfor example has fallen fromnearly 5 per cent in 1985 to just14 per cent last year
bull Its share of global exports also
fell from 135 per cent to 46per cent between 1980 and2001
bull The fall in trade is mostly aconsequence of oil-dominatedeconomies high barriers totrade and investment and po-litical tensions
bull Seven of the ten largest ArabLeague members includingSyria and Saudi Arabia remainoutside the World Trade Orga-nization as does IranBut US trade policies have
worsened the Muslim worldrsquos iso-lation say analysts Although theUnited States is conducting nego-tiations to establish a free tradearea with Latin America amongMuslim nations it has signedagreements lowering tariffs andother trade barriers with only Jor-dan and Morocco However thefive largest Muslim countriesmdashBangladesh Egypt Indonesia Pa-kistan and Turkeymdashface some ofthe highest tariffs on exports tothe United States
Source Edward Alden lsquoUS tradepolicy isolates Muslim statesstudy saysrsquo Financial Times 4February 2003 based on EdwardGresser lsquoBlank Spot on the MapHow Trade Policy is WorkingAgainst the War on TerrorrsquoProgressive Policy Institute 4February 2003
YOUTHFUL DEMOGRAPHICS OF
DEVELOPING COUNTRIESMAY BE THEIR
ECONOMIC SALVATIONMany western industrialized coun-tries are experiencing an ageing oftheir workforce while poor devel-oping countries enjoy a much
F U R T H E R A F I E L D
API
younger work force Demogra-phers suggest that this may givethem a one-time-only window tocatch up with the more affluentcountries
But to seize that opportunitythey would have to emphasizeeducation job creation and im-proved health care experts pointoutbull According to a new United
Nations population reportless-developed countries havea median age of only 241yearsmdashprojected to rise to 357years by mid-century
bull By contrast the median age ofthe developed world two yearsago was 375mdashprojected to riseto 452 years by 2050
bull The favourable age structure ofpopulations in China IndiaBrazil Mexico and other coun-tries will allow them to surgeeconomically while westernEuropean countries and Japanare trying to cope with an on-slaught of pensionersAustralia is somewhat better
off than other advanced countriesthanks to a higher birth rate anda more open immigration policyAnd by raising the age for retire-ment and encouraging people tofund their own pensions Austra-lia may be constructing a more re-alistic policy
Source Gautam Naik LeslieChang and Joanne Slater lsquoLaborLower Costs for Pensions HealthCarersquo Wall Street Journal 27February 2003
For text (WSJ subscription required)httponlinewsjcomarticle0 SB104629702862877943-search00html
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
38 MARCH 2003
E V I E WR
Y LAST column talkedabout RMITrsquos leadershiprole (as an expensive gov-ernment-funded tertiary
educational institution) in its sup-port of anti-globalization protestsand activist training for its studentsin agitprop and its drive to encour-age non-rational economic prin-ciples [aka triple bottom line] Theaim of it all is to make the uni lsquoethi-cally sustainablersquo The sort of placeparents would love to pay for theirchildren to attend
Given that the IPA received arare complaint to our column froma researcher at the Globalism Insti-tute over our allegations and giventhat the RMIT has been in the head-lines for some weeks now over mas-sive haemorrhaging of both itsmoney and its board we thought weshould revisit the institution to seeexactly what is happening Therejust may be some lessons to learnfrom it all
Crikey dot com has been runningsome pretty harsh words on the ad-ministration of RMIT and wethought it worth repeating some ofthem especially since The Age news-paper which has been regularly re-porting on the vicissitudes of theVice-Chancellor and her sinkingship seems to have been loathe togive all the background
RMIT has gone from an interna-tionally outstanding technology uni-versity with foreign students earn-ing it about $100 million per year in2000 to a loss of over $50 millionthrough managerial incompe-tencemdashindeed they are even tryingto sell some of their land to stayafloat
M
API
hellip By Their Fruits Ye ShallKnow Them
ANDREW MCINTYRE
The most striking element in thecrisis is that over the last few weeksno fewer than seven board membershave resigned or been sackedmdashall ofthem outsiders to the University Inany normally accountable corpora-tion one would have reasonably ex-pected the Vice-Chancellor RuthDunkin to fall on her sword But shehasnrsquot
It appears that the pattern of po-litical patronage allows her to rideout the storms raging around her Butit does seem to confirm the worstfears anyone might have had aboutthe connection between ideologymoral posturing and economic man-agement
Dunkin was warned privatelythat things were going badly wrongover a year ago but has done noth-ing since to arrest the decline ex-cept as Crikey observes to conductlsquoruthless purges of those critical ofher managementrsquo According toCrikey Finance Director Ian Raineswas sacked recently as he had con-sistently and fearlessly told theunpalatable truth about where thefinances were going It was for thisreason they allege that out of frus-tration the high profile and repu-table former ANZ Bank chief DonMercer resigned from his position asChancellor
The union covering most aca-demics at the university the NTEUhas sided with Dunkin Why TheUniversity conveniently funds halfthe salary of the union presidentThe only people complaining of thesituation are the student union andsome of the staff
If it is really as bad as reportedhow does she survive Crikey tells
us Itrsquos all to do with Labor matesALP Minister Kosky clearly supportsDunkin over the Kennett appointeeMercer It turns out that they areWilliamstown neighbours alongwith Joan Kirner and Joan is (guesswhat) in line for the Chancellorrsquosjob Joanrsquos qualification Well shehad the Victoria Universityrsquos Busi-ness School building named afterher so she must be sharp with fig-ures As Crikey concludes RMITwill become a one-party state (ornarrower than that a one-factionKoskyndashDunkinndashKirner Williams-town Labor state)
So the second obvious questionis how did she get there in the firstplace With the help of her matesshe was succession planned into thetop job It was felt that she needed aPhD Dunkin had never been anacademic taught or researchedThrough a long and sordid path thatCrikey goes into in considerable de-tailmdashlsquosoft markingrsquo lsquospecial treat-mentrsquo and lots of lsquooutside helprsquomdashshewas awarded a PhD in 1999 just be-fore slipping into the top job
One could go on about the eco-nomic fantasies that led to a lsquostag-gering 53 per cent of the universityrsquoscosts being taken up by the admin-istrationrsquo including the Vice-Chan-cellorrsquos nice little $120k salary in-crease But we wouldnrsquot want an-other letter complaining of lsquoblindbarrackingrsquo or that we had confusedeconomics with ethics
We recommend our readers visitwwwcrikeycom for details
Andrew McIntyre is Public Relations Manager atthe Institute of Public Affairs
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
39MARCH 2003
E V I E WR
Book ReviewsSkewering the
DogmaStephen Dawson reviews
The Blank Slate TheModern Denial of
Human Nature
by Steven Pinker
(Allen Lane 2002 $2995)
When I was a lad at school my En-glish teacher defined for the class themeaning of lsquodogmaticrsquo By way of il-lustration she intoned lsquothe dogmaticscientistrsquo I was silently outragedScientists are seekers after truthlsquoThe dogmatic English teacherrsquowould be more apt
Sorry teacher You were right Iwas wrong
My disillusionment with scien-tists has been long in building andis now complete thanks to StevenPinkerrsquos new book The Blank SlateThe Modern Denial of Human Nature
While it has destroyed the re-maining illusions I had about scien-tists it has offset this by affirming mybelief in science Not I hasten toadd that sciencersquos current answersare right but that science is a self-correcting system
The principle purpose of thisbook is to refute a set of assumptionsabout humanity that inform and ar-guably do great damage to studiesof humanity These he says havebeen made obsolete by advances instudies of the mind Those assump-tions are the Blank Slate the NobleSavage and the Ghost in the Ma-chine
The Blank Slate is the notionthat out minds are infinitely mal-leable especially as children Theconcept of the Noble Savage is that
the horrid aspects of life are due tothat malleability being misemployedto pervert us when compared to na-tive persons who are not so twistedand thus live happy lives The Ghostin the Machine is a pithy term forCartesian dualism that our mindsare lsquoentirely differentrsquo to the bodieswhich house them
Pinker comprehensively demol-ishes all three He approaches theissue from the perspective of an evo-lutionary psychologist the capabili-ties (including the mental capabili-ties) of people were evolved as de-scribed by Darwinian models in or-der to meet their survival and repro-ductive requirements The evolu-tionary variation that distinguisheshumanity as a species virtually alltook place during the relativelylengthy period in which humans andtheir precursors lived as hunter-gath-erer bands not the mere ten millen-nia of settlement and large-scale so-cial organization
This means that we are not bornwith minds that are ready to absorbwhatever culture cares to imprintwithout limit but are equipped witha wide range of mental mechanisms(or an impetus to develop thosemechanisms during the first years oflife) that proved useful for our ear-lier hunter-gatherer lifestyle Someof these mechanisms have beenadapted for our more complex mod-ern societies but that does not de-tract from their importance
Pinker assembles a strong empiri-cal case from the neurological sci-ences to prove his point and ties thisin with other scholarly fields suchas anthropology In doing this heengages in the dangerous task ofchoosing will he go with the main-stream social scientists or those dis-sidents who are roundly condemnedby their colleagues He has chosenthe latter rightly recognizing that
much anthropology has been cor-rupted by a post-modern theoreticalfoundation that renders it useless Hedraws on Napoleon Chagnonrsquos stud-ies of the South American Yano-mamouml tribes as a window into howhumans related to each other beforethe development of more widely or-ganized societies in a word appall-ingly Rousseau was wrong By ourmodern sensibilities the savageswere anything but noble
Along the way he takes on thosescientists who oppose the concept ofa human nature highlighting theway some resorted to dreadful mis-quoting so that for instance geneti-cist Richard Lewontin and neurosci-entist Steven Rose could mutate Ri-chard Dawkinrsquos lsquo[genes] created usbody and mindrsquo into lsquo[genes] controlus body and mindrsquo Quite a differ-ence
I suppose scientists can indeedbe dogmatic
Pinker also defends the fact thatour brains have a set of built-inmodes of operation and certainbuilt-in limitations from attacks bythe religious and cultural right
This is not the end of the matterHe persuasively argues not only thatthis lsquomechanisticrsquo view of humansdoes not justify any abdication ofpersonal responsibility for uncivilizedbehaviour but that it provides astronger basis for morality than ei-ther Marxist atheism or any of thevarious faiths
The reason is that for all practi-cal purposes it leaves our conceptionof freewill undamaged The mindwhich forms our nature may bemechanistic as indeed may be theprocesses of Darwinian evolutionwhich formed the mind but it is alsoan lsquoopen-ended combinatorial sys-temrsquo which yields infinite varietywithin the bounds of what it is to behuman s
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API
40 MARCH 2003
E V I E WR
This book is a powerful additionto the popular exposition of scienceFor me it also provides a powerfulunderpinning to FA Hayekrsquos TheFatal Conceit Hayek assumes a hu-man nature and a state of nature inwhich humanity operated throughmost of its past Pinker proves it
Stephen Dawson is a Canberra-based freelancewriter who specialises in Hi-fi computer and IT
matters His Free_Enterprisecom column is aregular feature of the IPA Review
Why Aid to PoorCountries Has Failed
Gary Johns reviews
The Elusive Quest forGrowth Economistsrsquo
Adventures andMisadventures in the
Tropics
by William Easterly
(The MIT Press Cambridge Mass 2002)
API
William Easterly is an Americaneconomist from the World Bank Inthis book he reflects on the mistakesmade by the World Bank and theInternational Monetary Fund overaid funding to poor countries sinceWorld War II It is thick with realinsights It relates a string of aid anddevelopment policy fashions overthe period and tests them againsttheir outcomes The answer ofcourse is a string of policy failuresEasterly seeks the answers
Take one very prominent ex-ample the Jubilee 2000 campaign toforgive the debt of poor countriesThe churches with prominent fig-ures such as the Pope and the DalaiLama and the usual motley lot of do-gooders with their stars such as Bonoof rock group U2 pressed Westerngovernments to forgive the debt ofthe poorest countries Let them startafresh without this burden placed on
them by the West and all will be wellwas the argument As a true econo-mist Easterly tested the incentivesin this policy of debt forgiveness Inthe first instance the big problem isthat debt forgiveness is not new TheWorld BankIMF Highly IndebtedPoor Countries Initiative now run-ning at $27 billion stands on theshoulders of decades of previousrounds of debt forgiveness
The promise of Jubilee 2000 is nodifferent to all of those that havegone before lsquoThe debt campaignerstreated debt as a natural disaster thatjust happened to strike poor coun-triesrsquo The truth is not so charitableCountries that borrowed heavily didso because they were willing to mort-gage their future They were irre-sponsible they sold productive assetsinto unproductive hands they builtunproductive infrastructure theyfavoured one ethnic group over an-other or one region over anotherthey ran inflated economies theywere corrupt they waged war theyallowed black markets to developbecause they controlled exchangerates and interest rates And all therest of the sordid details
Data for 41 highly indebted coun-triesmdashAngola Benin Bolivia hellipZambiamdashshow that total debt for-giveness from 1989 to1997 was $33billion while their new borrowing inthe same period was $41 billionMoreover new borrowing was high-est in the countries that received themost debt relief In other words thesystem rewarded debt the incentiveswere terribly wrong Clearly therewere irresponsible lenders as well asirresponsible borrowers
What to doEasterlyrsquos insightsmdashbased on and
learning from his own and hisprofessionrsquos readily admitted mis-takesmdashare those of an obviously bril-liant economist An economistbrought to book by experience or asone commentator remarked lsquoa life-time idealist mugged at last by real-ityrsquo These insights are conceptuallysimple first growth helps the poorand second people rich and poor
governments and donors respond toincentives
First he asksDoes the government of eachnation face incentives to createprivate-sector growth or does itface incentives to steal fromprivate business In a polarizedand undemocratic society whereclass-based or ethnically basedinterest groups are in a viciouscompetition for loot the answeris probably the latter hellip In ademocratic society with inst-itutions that protect the right ofminority interest groups insti-tutions that protect the right ofprivate property and individualeconomic freedoms govern-ments face the right incentivesto create private sector growth
SecondDoes each donor give a vestedamount of aid to each countryso as to justify next yearrsquos aidbudget hellip Do the World Bankand the IMF give loans to theMobutus of the world or supportaid to governments that canpresent credible intentions tobuild national infrastructure andhelp the poorThird individuals and businesses
may face poor incentives from badgovernments but additionally theyface low incentives to grow becausetheir productivity depends on thatof other poor people Aid thatmatches grants to the poor with in-creases in their own income as op-posed to penalties which is standardin welfare systems can help correctpoor incentives
Easterlyrsquos contribution whenmatched with Hernando De SotorsquosMystery of Capital which brilliantlyargues the case for property rights forthe poor as the path to wealth in theThird World provide a welcome in-tellectual fillip to those who viewthemselves as both on the right andin the right It is a splendid book
Dr Gary Johns is a Senior Fellow with theInstitute of Public Affairs
API