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    Resisting Centralist Power – Part 1

    By
    Bob Day
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    0

    In 1901, when six individual British colonies came together as a federation, it was in an environment of extensive and, at times, torrid debate. While there was widespread acceptance that the colonies could achieve together what they could not achieve alone, there was also apprehension about the extent to which the power to govern would become centralised.

    The enthusiasm and sense of expectation surrounding the birth of a nation was tempered by concerns about the future autonomy of individual colonies. The smaller colonies were also apprehensive about the power and influence the larger colonies might exercise.

    As a consequence, the process leading to the formation of the Australian Constitution was both painstaking and torturous.

    One can imagine how much this would have helped the fledgling Commonwealth-State relationship.

    During the first of the convention debates in 1891, Sir Samuel Griffith, who would later become the first Chief Justice of the High Court of Australia, captured the essence of concerns saying:

    “We must not lose sight of the essential condition that this is to be a federation of states and not a single government of Australia. The separate states are to continue as autonomous bodies, surrendering only so much of their power as is necessary for the establishment of a general government to do for them collectively what they cannot do individually for themselves.”

    In uniting as a nation, each colony agreed to cede a portion of its powers so that the nation might become “one indissoluble Federal Commonwealth under the Crown.” It is clear, both from the Constitution and from the record of the Convention debates, that the Federal government was to have significant but well-defined powers. All powers not defined in the Constitution, known as the residual powers, were to remain the province of the States. However, the ink was barely dry on the Constitution before a growing appetite for centralised power emerged.

    Foundations of Power

    The powers of the Commonwealth were set out in Section 51 of the Constitution, and their scope described in 39 subsections known as a head of power. While the States retained the right to legislate on these matters as well, the Constitution provided that where any inconsistency existed between Federal and State legislation, the Federal legislation prevailed.

    The powers ceded to the Federal government were very wide and included interstate trade and commerce, corporations, external affairs, taxation, defence, quarantine, currency, pensions, banking and many more.

    Centralisation of Power

    As one might expect, the first issue on which the boundaries of authority between the States and Commonwealth were tested related to tax, with the High Court becoming the arena for argument. The gloves came off, the lawyers were primed, and the fight over money began.

    The first tests came in 1904 in Peterwald v Bartley where the High Court examined whether the Constitution prohibited the States from imposing excise duty. This was followed the same year with D’Emden v Pedder, in which the power of the States to impose taxes on Commonwealth activities was rejected. 

    In 1908, in response to the Constitutional requirement that any surplus tax revenues in the first decade of Federation be returned to the States, the Commonwealth enacted legislation to pay these surpluses into a trust account thereby avoiding payment to the States. One can imagine how much this would have helped the fledgling Commonwealth-State relationship.

    In 1910, the Constitutional obligation that not less than 75 per cent of the Commonwealth’s customs and excise revenue be distributed to the States came to an end. While the arrangement was mandated for only the first decade of Federation, the Commonwealth terminated the arrangement as soon as it was legally able to do so, much to the ire of the States.

    In uniting as a nation, each colony agreed to cede a portion of its powers so that the nation might become “one indissoluble Federal Commonwealth under the Crown.”

    Commonwealth government activity and bureaucracy then began to grow rapidly, fed by its growing tax harvest. The years leading up to World War 1 (1910-1914) saw increases in Commonwealth control of the economy and in social services. In 1915, following the entry of Australia into the war, the Commonwealth introduced income tax which co-existed with income tax applied by the States.

    Over the next few decades, both in the High Court and through legislation, the Commonwealth and States battled for territory in a number of areas including tax, defence and welfare services. So extreme was the discontent with the way the federation was heading that some States, most notably Western Australia, South Australia and Tasmania, contemplated secession. In 1933 a referendum was held in Western Australia.

    At the time there was a Great Depression and every State was struggling. Some believed the problems were a result of Federal government policies and actions, particularly in respect of tariffs imposed to protect the manufacturing and sugar industries.

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    The result of the WA referendum sent shock waves through the rest of Australia with 68% of West Australians voting in favour of secession. This was about the same number who had voted to join the Federation only 33 years earlier. The desire of West Australians to separate from the Federation was not fulfilled as the British Imperial Parliament refused to act, claiming that such an action could only be taken with the consent of the Commonwealth Parliament of Australia.

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    Welcome to Borroloola Land

    By
    Gary Johns
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    0

    Every failure in Aboriginal affairs creates an opportunity to offer a shiny new bauble to public servants and the journalistic cheer squad. Last weekend, in light of the failure of the Voice referendum, there were three baubles – naming an Indigenous state, renewable self-determination, and a new economic development plan. 

    The cost of the baubles is to put off the day of reckoning for the children in hundreds of remote communities in northern Australia who fail to learn to read, write and speak English well enough to get a job. Until they do, nothing good will happen. Any plan that begins without these needs fulfilled is doomed.

    Senator Malarndirri McCarthy, the new Minister for Indigenous Australians, is from Borroloola in Arnhem land, south of the site of the Garma festival. That small community has three preschool centres: one run by a charity, one by an Aboriginal corporation, and another by the education department, competing for a handful of children. And yet, too many children still fail to move through sufficient years of school. Perhaps Senator McCarthy could explain how she made it when others could not.

    Borroloola land will also require the grace and favour of taxpayers

    Bernard Salt, the demographer, suggested that one of the Australian states should be given an Aboriginal name. Perhaps he was inspired by Naarm, an Aboriginal state in miniature. I recently travelled into that city, formerly known as Melbourne, on the Skybus and was regaled by the welcome and acknowledgment and sovereignty-never-ceded meme. My fellow travellers were Asian and Indian, all with earpieces and mobile devices, blissfully unaware of the Victorian disease of hating progress – welcome to the state of grunge.

    If not Victoria, how about granting the Northern Territory statehood and naming it Borroloola land?

    One big man would get all the money and hand it out in envelopes in order of family preferment, the big man’s family first and so on. It sounds perfect, very post-colonial, and very Papua New Guinea.

    When he arrived at the Garma festival, the Prime Minister was undoubtedly busting to announce his brilliant initiative. Having disappointed the great and the good at Garma last time with a resounding loss in the 2023 referendum, he combined two precious icons of the left: saving the world with renewables, and Aboriginal collectivisation. 

    The Prime Minister’s renewables plan is for solar panel and wind turbine-led ‘self determination’. Gas would be better; the Northern Territory is floating on it, but that seems to disturb the green spirits. Imagine shiny rows of solar panels on ‘country’ and turbines on ‘sea’ as far as the eye can see. I guess Albo had to bung something in the speech.

    However, for the sake of his adoring audience and faithful journalists, here is what it takes to make a solar panel. Manufacturing is really about silicon production. Most of the energy required to make solar panels is consumed during silicon production, purification, and wafering. Silicon is produced from high-purity quartz, which is exceedingly rare. It has to be chemically reduced.

    Solar panels can only be produced with coal, oil, gas and hardwood. Coal is required as a reducing agent for making silicon and as a source of heat and electricity for the industrial process required to manufacture solar panels. These processes need a continuous supply of electricity, which renewables cannot provide.

    Australian states should be given an Aboriginal name

    The Prime Minister might also like to brief the First Minister of Borroloola land that the vast array of renewables must be decommissioned and disposed of. Fortunately, there is plenty of space in Arnhem Land for solar panel dumps. Wind turbines at sea can just be left to join the underwater songlines. But the average lifespan of the newest utility-scale solar panels is a fraction of the 25 years marketed. It is more like 15 years. Older solar panels used to ‘live’ longer but newer ones are optimised for the lowest raw materials and energy use so that after about 10 years, serious failures occur. Renewables are not renewable.

    Borroloola land will also require the grace and favour of taxpayers even though every skerrick of land outside the major settlements is owned or controlled by Aboriginal interests under various Land Acts or related agreements. To this ‘vast terrestrial estate’ and the Prime Minister’s renewables power delusion may be added Australian National University’s Professor Peter Yu’s dream of economic empowerment.

    Let me explain the Peter Yu economic development plan. There is no economics. The ‘plan’ is based on human rights rent-seeking. It recommends public servants be indoctrinated in the ways of the United Nations Declaration on the Rights of Indigenous Peoples. It promotes ‘cultural mapping’, presumably writing what Aborigines have carried in their heads for thousands of years. The reason is simple: to monetise that ‘knowledge’.

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    They plan to get their hands on ‘sea and water interests’ by extending the native title regime to get a bigger slice of what others produce. They recommend the same with ‘intellectual property’. They recommend ratifying the Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization. The upshot would be that if access is sought to genetic resources on Aboriginal land, which is almost the entire state of Borroloola land, the terms of access would be negotiated with the big men. Any benefits from the subsequent use go to the community ‘according to the mutually agreed terms’ – rent-seeking.

    These wonderous rent-seeking developments in Borroloola land come wrapped in a nice bow with treaties supervised by, according to Peter Yu, the Makarrata Commission. McCarthy succeeded without these baubles. She should tell the children.

    Gary Johns is Chairman of Close the Gap Research

    This article was first published in The Spectator.

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    the economic and social spectrum through the publication of more than 300 quality articles.

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    A Nation of Takers

    By
    David Leyonhjelm
    -
    1

    One of the many inequities of Australia’s welfare system is the exclusion of family homes from the means test. Recipients of age or disability pensions can own houses worth millions of dollars while remaining eligible for pensions funded by the taxes of people who cannot afford to buy a house at all. 

    In private, many politicians agree that excluding the family home leads to unfair consequences. However, neither side of politics is willing to change it. There are simply too many Australians who insist they are entitled to a pension. 

    It is much the same with the National Disability Insurance Scheme (NDIS). It is widely known to be extensively rorted, with scheme providers charging participants several times what they charge non-participants for the same service. It is also well known that many people on the scheme are only mildly disabled, if at all. And yet, even as the cost threatens to bankrupt the country, even minor reforms prompt screams of protest. 

    Australia relies more heavily on individual income taxes than other developed countries

    Also threatening the national budget is the cost of childcare. It is no longer sufficient to keep small children happy while their parents are at work; it is now early education. Advocates have created a narrative that children who remain home with their mothers are somehow deprived. Childcare is rapidly becoming yet another entitlement to be funded by the government.  

    There was a time when Australians liked to think of themselves as self-reliant and quick to help each other, while receiving welfare was an embarrassment and an indication of failure. 

    This has been replaced by a culture of entitlement in which there is absolutely no compunction about receiving money from the government. Many people insist they have a right to a pension simply because they have paid taxes, despite that never having been the situation in Australia. Even those who have never paid tax (apart from GST), or who frittered their savings away on gambling and ‘substance abuse’, demand it. 

    Some of this thinking is attributable to the fact that a proportion of immigrants originate from countries which have contributory pension schemes. They assume it is no different in Australia. But a far bigger factor is the entitlement mentality. If someone else can get a pension, I should also get it. If someone else is receiving benefits via the NDIS, it’s only fair that I obtain them too. In fact, if there is money being handed out for anything, I’m entitled to it. 

    There is no longer any disgrace in receiving government benefits. Indeed, a thriving industry of accountants and Financial Planners specialises in rearranging their client’s affairs to meet eligibility requirements for government benefits, especially pensions and the Commonwealth Seniors Health Card. 

    There is even intergenerational welfare, with extended families living on welfare their entire lives. This is particularly the case with certain indigenous communities, while “Lebanese back” is apparently sufficient to qualify for a disability support pension.

    Some admit that ‘government money’ originates with taxpayers, but it makes little difference. The sense of entitlement defies guilt, facts and reason, hence the reluctance of politicians to make changes for fear of losing votes. Even worse, many politicians use taxpayers’ money to buy votes. 

    The sense of entitlement owes it origins to the growth of the welfare state over the last half century, together with the rise in taxation that accompanied it. Although Australia has had an age pension for more than a century, disability assistance, childcare subsidies, unemployment benefits, medical benefits and many other handouts and subsidies are far more recent. 

    It has led to the perception of an all-pervasive government with unlimited resources. Moreover, if you go about it the right way, money can be extracted from it. 

    Also a factor is the level of income tax. Getting something back from the government to compensate for the amount of tax paid makes sense. Australia relies more heavily on individual income taxes than other developed countries, on average taking 25% of earnings. Plenty of people see little benefit for themselves. 

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    Obviously, this situation is unsustainable in the long term. As Margaret Thatcher once said, “The problem with socialism is that you eventually run out of other people’s money.” 

    Australia is already living beyond its means, with budget deficits year after year. It is also actively discouraging industries that support the economy – think coal exports, gas exports, sheep exports – while increasing energy costs. It obviously cannot last. 

    What the country needs is a government that encourages self-reliance rather than dependence on the state. Unfortunately, there is no sign of that.

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    Liberty Itch is Australia’s leading libertarian media outlet.

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    the economic and social spectrum through the publication of more than 300 quality articles.

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    Olympic Dam’s Gold Medal Performance

    By
    Bob Day
    -
    0

    It is exactly 50 years since Western Mining first discovered the massive gold, silver, copper and uranium ore body at the aptly-named Olympic Dam in South Australia. A golden anniversary indeed!

    But discovering the ore was just the beginning. 

    The fight to allow uranium mining at Olympic Dam was brutal. 

    The ruling Labor Party, under then Premier Don Dunstan, was vehemently opposed to uranium mining and particularly opposed to uranium mining at Olympic Dam.

    One of the key opponents of Olympic Dam, calling it a ‘a mirage in the desert’, was one Mike Rann, an anti-uranium campaigner from New Zealand who had come to South Australia to work for Dunstan. Rann eventually became Premier of South Australia in 2002.

    The Liberal Party, led by David Tonkin and his deputy Roger Goldsworthy, won the next election and in 1980 set about implementing their proposed ‘Olympic Dam Indenture Agreement’, building both the mine and nearby township of Roxby Downs.

    Its final passage, through the SA parliament’s Upper House in 1982, came down to a single vote – Labor’s Norm Foster. A former wharf worker, Foster had sat on the select committee into Olympic Dam and did not agree with Labor’s position that uranium mining was an environmental or ethical scourge. 

    On the day before the final vote on the project Foster resigned from the Labor Party and, the following day, crossed the floor of parliament to give his vote to the Tonkin government thereby clearing the way for the new mine.

    For years following his actions, Foster was vilified by the ALP. However, his role in establishing one of South Australia’s most successful projects (and biggest earners!) was later acknowledged by the Labor Party and his membership restored.

    Fast forward to 2024, and Australia is experiencing a similar political challenge closely related to uranium mining – nuclear energy.

    The case for nuclear power has been well argued, but there are more than just economic and energy reliability reasons for embracing nuclear power. There could also be significant strategic benefits.

    First, if there’s one thing we learned from the pandemic, it’s the importance of self-reliance. 

    Australia has for too long been dependent on overseas supply chains – fuel and energy being no exception.

    Australia’s future energy needs are currently being assessed against three criteria – reliability, affordability, and emissions intensity. 

    Unfortunately, the laws of physics and economics do not allow all three. Two out of three yes, three out of three no. 

    As emissions intensity has pretty much been mandated, this leaves only reliability and affordability to choose from. Clearly, reliability has to win.

    No form of renewable energy generation yet invented or discovered is reliable enough to meet Australia’s base-load demand.

    Nuclear power is both reliable and emissions-free. 

    It is, however, expensive to build. Again, two out of three.  

    In addition, there is a fourth aspect worthy of consideration – regional security.  

    South Korea, Japan, India and Pakistan all have nuclear power. Indonesia, Thailand, Bangladesh and the Philippines are looking to develop it. 

    All have, or will have, spent nuclear fuel.  

    As Australia engages more with Asia, we bring a unique perspective and relationship devoid of the centuries-old enmities and history that exists between some of these countries.  

    We could be the Switzerland of the South.

    Australia could establish an Asia-Pacific office for the International Atomic Energy Agency (IAEA).  We could host conferences and bring the world’s best nuclear minds here.  

    We could bring together expertise on the ways in which other nations are storing their spent nuclear fuel.  We could, as the 2015 SA Nuclear Fuel Cycle Royal Commission heard, store that fuel in South Australia, and not have it stored within the borders of nations with fractious relations and/or unstable geology.  

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    “The International Atomic Energy Agency (the IAEA) could establish an Asia-Pacific office in Australia. We could host conferences and bring the world’s best nuclear minds here.”

    The countries whose spent fuel was stored here would have an interest in our security.

    And as well as the multi-billion-dollar economic benefits – abolishing Stamp Duty, Payroll Tax, Occupational Licencing charges and many other taxes, charges and levies – with the latest technology we may even be able to extract more recycled power from the spent fuel in the future.  

    The more we engage with the nuclear question, the more positive the opportunities arise.  

    But first we must remove the regulatory obstacles and legislated bans blocking Australia’s economic and energy independence. 

    Got something to say?

    Liberty Itch is Australia’s leading libertarian media outlet.

    Its stable of writers has promoted the cause of liberty and freedom across

    the economic and social spectrum through the publication of more than 300 quality articles.

    Do you have something you’d like to say? If so, please send your contribution to editor@libertyitch.com

    More Political Competition

    By
    Dimitri Burshtein
    -
    0

    According to Treasurer Jim Chalmers, increasing competition among supermarket giants will help deliver lower grocery prices: “If it is more competitive, more transparent and people are getting a fair go, better outcomes will be seen at the supermarket checkout“.  

    The ACCC also notes that competition encourages innovation.  

    But where enhanced market competition can lead to improved consumer outcomes, enhanced political competition can lead to improved citizen outcomes: the former through lower prices and better quality, and the latter through lower taxes and better services.

    And just as those in the commercial sector prefer less competition, so too do the players in the political sector; the dominant political parties frequently colluding to modify electoral laws to defend their incumbency.  

    The Albanese government, while pursuing a business competition reform agenda, is also surreptitiously running an electoral reform agenda which will have the opposite effect, reducing political competition.

    Australian states and territories used to compete on policy and tax rates, acting as “laboratories of democracy”

    In his 1776 magnum opus The Wealth of Nations, the father of economics Adam Smith wrote, “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

    This quote is often used to describe the potential for anti-competitive behaviour within business.  However, with politics now more of a trade than a calling, Smith’s description equally applies to our elected class—a group that regularly meets, often for merriment, in a well-appointed building, to conspire against the Australian public.

    While Chalmers and Assistant Treasurer Andrew Leigh pursue new competition law amendments claimed to “make our economy more productive, more dynamic, and more competitive”, Special Minister of State Don Farrell is developing plans to make it more difficult for small parties and independent candidates to compete in the political marketplace.  Farrell even recently stated that “the Westminster system provides for a two-party operation.”  A duopoly that is.

    Recently also South Australian Premier Peter Malinauskas proposed to ban electoral donations.  Were such a reform implemented, it would further privilege and embed the major parties by making it exceptionally difficult for new parties to emerge.  Raised barriers to entry lead to reduced competition.

    Political parties are exempted from many important laws including privacy and the proposed mis- and dis- information laws.  This makes their perpetual assault on political competition and concentration of political power even more nefarious.

    At a time of declining support for the major parties as measured by first preference voting and polling, the major parties continue to work together to maintain their political duopoly.

    Although the latest electoral proposals are being driven by a Labor Government, the Coalition also has dirty hands.  In 2021, the Coalition government passed laws, with Labor’s support, to shorten pre-polling periods and force the deregistration of some minor parties.  As part of this the major parties confiscated the words “liberal” and “labor” from the political lexicon, perpetually vesting these terms in themselves.

    Even Gough Whitlam’s grand dream of fixed four-year electoral terms has received bipartisan support with both John Howard and Peter Dutton offering endorsement. Extended terms transfer power from the people to the elected with no recourse, such as binding citizen-initiated referenda (as occur in Switzerland) or recall elections (as occur in the US).

    It was not always thus.  Over recent years, our neo-professional political class has increasingly and incrementally colluded to raise the barriers to entry for alternative parties and candidates.  This has contributed to a homogenization of personnel and policy, making the differences between the average Labor and Coalition candidate barely discernible to the average voter.

    For all the talk of diversity, this homogenization has led to much reduced experiential, cognitive and policy differentiation among politicians.  Many members of our parliaments, irrespective of party, gender, race, sexual preference or religion, follow similar educational and pre-parliamentary career paths.  While elected governments may change, there is a consistent trajectory of permanent government expansion and price rises through ever higher taxes.

    Since the turn of the millennium, it has been bipartisan policy and practice to increase spending, taxes, and the volume of regulations to ever greater levels.  The assaults on civil liberties and the crowding out of civil society similarly continue unabated.

    But where enhanced market competition can lead to improved consumer outcomes, enhanced political competition can lead to improved citizen outcomes

    It is not just a reduction of competition at the political level.  There has been a long-term de-federalisation project to aggregate power in Canberra; a manifestation of the French “disease” described by Alexis de Tocqueville as the tendency to concentrate authority in central government; something Tocqueville believed to be detrimental to political and social health.

    Australian states and territories used to compete on policy and tax rates, acting as “laboratories of democracy”, a term coined by US Supreme Court Justice Louis Brandeis.  Death duties in Australia were abolished not through some fiat from Canberra but because of competition between the states and territories.

    However, today some 81 percent of total tax revenue is collected by the Commonwealth, leading to policy centralisation and standardisation.  Matters constitutionally the provenance of the states, such as health and education, are now increasingly directed out of Canberra; fidelity to the intent of the Australian constitution and of tax and policy competition be damned.  

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    Just recently, the United States celebrated 248 years of the signing of the Declaration of Independence.  Drafted by Thomas Jefferson, it included this famous sentence: “… Governments are instituted among Men, deriving their just powers from the consent of the governed, –That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government”.

    Just as politics is downstream from culture, policy is downstream from politics.  It’s time to change the way politics is done in Australia.

    Childcare – Why should you pay for it?

    By
    David Leyonhjelm
    -
    0

    Starting before they are born, our governments spend a lot of money on children. 

    The Commonwealth budget for education alone is $67 billion, and in NSW $24 billion. Add the other states and territories, plus health care, and as the saying goes, pretty soon you’re talking real money. 

    While our society obviously values children highly, it is rare that anyone questions why so much of their cost is socialised. Having children is, after all, a choice. Other lifestyle choices do not attract such taxpayer generosity.

    Among the taxpayers who provide the funds are many who do not have children themselves. Some are yet to start a family, while others have chosen not to have them. But there are also those who, for various reasons, would very much like to become parents but cannot. 

    A strong case is always necessary to justify spending other people’s money, but a particularly convincing case is required to justify compelling those who cannot have children to pay for other people’s children. It’s like obliging paraplegics to pay for the running shoes of the able bodied. 

    The government thinks there is a strong case for childcare. It wants women to return to the workforce as soon as possible, so they resume paying tax and contributing to government revenue. With state and federal governments all addicted to spending more than they collect, they have a strong incentive to increase taxpayer numbers. 

    The government also argues that the less time women are out of the workforce, the more they retain their work skills. This is presented as a benefit to the women, as women who return to work more quickly typically earn higher incomes. However, they also pay more tax. 

    For the mothers of the children, the case is not so clear. Some women are obviously career oriented and anxious to return to the workforce as soon as possible. However, there are many who would prefer to care for their children themselves, especially while they are small, rather than entrust them to strangers in childcare facilities. Motherhood is a powerful instinct, and most jobs are rarely more engaging than raising a child. 

    The government also argues that the less time women are out of the workforce.

    The key reason most do not remain at home is economic: single income families with children typically struggle to pay a mortgage or rent plus general living expenses, vehicle expenses and the rest. 

    The underlying cause of this is government policies, particularly high income taxes, excise on essentials such as fuel, and the regulation and taxes that lead to expensive housing. Remove these and it would be a lot easier to live on one income. 

    From the point of view of the children, the case for childcare is even less compelling. Mothers have been caring for their children for thousands of years and have not recently become incompetent. 

    But we are told that it is no longer sufficient to simply keep children safe, happy and entertained while their parents are at work; the children must now be educated by qualified early childhood educators. It is now known as early childhood education and care (ECEC).

    Moreover, whereas childcare workers were once just sensible, caring people, most with children or grandchildren of their own, they must now hold post-school – and sometimes even university-level – qualifications. Mothers who have successfully raised four children of their own cannot become childcare workers unless they have obtained the appropriate qualification, while those who have a qualification but no prior childminding experience are fine.

    There has also been a ratcheting up of regulation of the physical environment, the programs and routines offered, plus the ratio of staff to children in childcare centres. 

    For the most part this has been driven by middle-class parental guilt. That is, parents seeking to justify the decision to place their children in childcare are demanding standards that allow them to believe their offspring are receiving a better start in life than if they stayed at home. It makes them feel better about leaving the kids with someone else. 

    Unfortunately, there is no evidence to show that these standards are enhancing children’s outcomes. This was conceded in the Productivity Commission Inquiry Report into Childcare and Early Childhood Learning. The evidence indicates that the only children who benefit from ECEC are from dysfunctional households, such as those where substance abuse is an issue. 

    Furthermore, the ramped-up regulation and credentialism have made childcare seriously expensive. Even moderately well-paid parents baulk when the cost is almost as much as they can earn by going to work. For the poorest parents, especially single mothers who have a strong need to return to work, it is simply out of reach.  

    A strong case is always necessary to justify spending other people’s money,

    Childcare advocates, especially those with a pecuniary interest, are seeking to convince the government to implement a universal ECEC system, based on recognising early childhood education as a fundamental need. Naturally they claim this should be provided at minimal cost to parents, arguing it would give children the support they need to thrive into adulthood, while parents, particularly women, would be better able to balance work and care responsibilities.

    This is a profoundly elitist view, based on the assumption that virtually all women prefer to return to work, and that virtually all children benefit from early childcare education. As previously discussed, neither is true. Moreover, the cost of such a system, tens of billions of dollars, would be borne by taxpayers.

    What is never considered is changing the incentives so mothers do not feel so pressured to return to work. If income taxes were significantly reduced by, for example, allowing single income households to split their income between working and non-working parents, the pressure would ease. If the cost of childcare was tax deductible, it would help. If fuel excise plus GST did not take over half the cost of fuel, households would have more money for other purposes. If housing was not so heavily taxed and regulated by local, state and federal governments, there would be more houses at affordable prices. 

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    And if childcare was less regulated, with only those opting for early childhood education paying for it, the cost of ordinary childcare to mothers who genuinely need it would be more affordable. 

    As it stands, ECEC is a taxpayer-funded elite middle-class racket. Rather than hit taxpayers for ever increasing subsidies, the sector needs to be substantially deregulated.  Middle and upper-middle class families who expect gold-plated, diamond-encrusted childcare – with its university educated workers and low staff ratios – should pay for it themselves.

    Smoke ‘Em If You Got ‘Em

    By
    James Hol
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    0

    For those of us who still occasionally like to check in on what the mainstream media is doing, there has been a topic that has got chins wagging and jowls flapping lately: “the tobacco wars”. 

    While the mainstream media, in typical fashion, has sensationalised the story, it is true that black and grey market tobacco is abundant in the community.

    BLACK, WHITE AND GREY

    As a (recently quit) smoker, I see it everywhere. My smoker friends brag about the newest place they discovered, with even cheaper prices, while they pull a cigarette out of their fully branded pack. In fact, I can’t remember the last time I saw a drab-brown (plain packaging) pack of cigarettes. And I wouldn’t be much of a libertarian if I didn’t confess that I haven’t bought a pack of cigarettes through a shop compelled to display a “retail tobacco merchant license” in well over a year.

    The obvious appeal of black and grey market tobacco is the near-two-thirds savings. I can buy a 20-pack of Marlboro Reds for under $20, while an authorised tobacco merchant is selling the same pack for over $50 (which I had to look up because it has been that long). And as more shopfronts pop up, the price is pushed down – a testament to the free market. 

    Anybody serious about removing the illicit tobacco market

    Even your poorest friends can afford to smoke chop-chop, illegally grown roll-your-own tobacco, at 50c per gram – a sixth of the price compared to roll-your-own tobacco in the authorised market.

    ALL IS FAIR IN LOVE AND WAR

    Despite the fact that, I would guess, most smokers are paying less for cigarettes than they have in over a decade, there are serious concerns that accompany a rising illicit market for an addictive product. Bikies and organised crime groups are starting to muscle in on the market, aggressively extorting tobacco merchants (as opposed to the more passive extortion of tobacco tax) and violently vandalising competitors.

    Stories of tobacco shops being vandalised and torched are becoming a near-weekly occurrence. And while I have little sympathy for organised criminals, it is not only criminals being affected: legitimate tobacco merchants are in their crosshairs and innocent victims are inevitably caught in the blaze. So week-in and week-out, the mainstream media trots out some new “expert” on the matter who declares another hair-brained measure will solve this problem once and for all.

    One of the more popular new measures being touted is to implement a licensing system to regulate tobacco merchants, similar to booze. The one problem with that is it already exists and has done precisely nothing to stem the flow of illicit tobacco. In South Australia, where I live, we have a had a tobacco merchant licensing system for as long as I have been a smoker (15 years) and illegal tobacco – and the organised crime that comes with it – is thriving.

    Even your poorest friends can afford to smoke chop-chop, illegally grown roll-your-own tobacco

    STATING THE OBVIOUS

    At the risk of sounding like another idiot who has the solution for this problem once and for all, there is actually an incredibly obvious solution to this problem: lower the price of cigarettes. There is only one way for those “evil”, “scary” big tobacco companies to sell their products at a loss and for merchants to make pennies on the dollar: abolish (or at least significantly reduce) tobacco tax. Well over half the price of the average pack of cigarettes or pouch of roll-your-own tobacco goes to the government in tobacco excise alone. Tobacco, like petrol, is also double-dipped on tax with an additional 10 per cent of GST.

    So while even someone with a cursory understanding of economics knows the only way to combat this problem is to compete on price – especially in a market where almost all forms of non-price competition have been outlawed – the obvious remains unspoken. To even suggest we use the only realistic solution to combat the illicit tobacco market, while also removing the most regressive tax in Australian history, is complete heresy.

    UP IN SMOKE

    Instead, we’ll pile on more regulations, evaporating the few legitimate tobacco merchants left, and “crackdown” on illicit tobacco, as governments continuously claim to do for no avail. We have known for a long time now that prohibition never works, and now we know that a surreptitious prohibition, via ever-increasing prices, achieves the same result.

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    Anybody serious about removing the illicit tobacco market, preventing organised crime from gaining a foothold in another industry and legitimately saving the lives of those caught in the collateral damage, knows the answer to this problem. Now it’s time to say it out loud.

    GST is Better than Income Tax

    By
    Duncan Spender
    -
    0

    In my last article I argued that a flat and broad-based income tax is much the same as a broad-based GST, so we have little reason to hate the concept of income tax more than the concept of GST. I argued this by setting out an imaginary scenario with five citizens, one business, and no government.

    But there is an inherent difference between income tax and GST that makes GST better. I will argue this by adding an additional year to the imaginary scenario, and by honing in on three of the citizens – the three employees.

    Year 1

    In year 1 each employee earns a salary of $100,000, enough to buy 100,000 products at $1 each. 

    One employee is short-sighted and borrows $100,000 from another employee, who we will call the long-sighted employee. So in year 1 the short-sighted employee buys 200,000 products while the long-sighted employee buys nothing.

    Year 1 with no government

    Citizen…receives…and pays…
    The short-sighted employee$100,000 of salary, plus $100,000 borrowed from the long-sighted employee$200,000 for 200,000 products
    The long-sighted employee$100,000 of salary, less $100,000 lent to the short-sighted employeeNothing for no products
    The take-it-as-it-comes employee$100,000 of salary$100,000 for 100,000 products

    To extract the money it demands, the government imposes an income tax rate of 19.8 per cent.

    Year 2

    In year 2 each salary is $104,030, but this amount now buys only 101,000 products because the product price has risen from $1 to $1.03.

    The salary of the short-sighted employee is transferred to the long-sighted employee to pay off the previous year’s debt. As such, the long-sighted employee buys 202,000 products in year 2, while the short-sighted employee buys nothing.

    Year 2 with no government

    Citizen…receives…and pays…
    The short-sighted employee$104,030 of salary, less $104,030 paid to the long-sighted employeeNothing for no products
    The long-sighted employee$104,030 of salary, plus $104,030 paid by the short-sighted employee$208,060 for 202,000 products
    The take-it-as-it-comes employee$104,030 of salary$104,030 for 101,000 products

    Bring Out The Government

    Now imagine instead a scenario where there is a government, and let us assume the government’s taxation does not discourage the citizens from producing as much as in the absence of government.

    In year 1 the government demands enough money from the three employees to buy 60,000 products. The government could get the money via a 20 per cent income tax on the salaries of the employees.

    Year 1 with income tax

    Citizen…receives…and pays…
    The short-sighted employee$80,000 of after-tax salary, and $80,000 borrowed from the long-sighted employee$160,000 for 160,000 products
    The long-sighted employee$80,000 of after-tax salary, less $80,000 lent to the short-sighted employeeNothing for no products
    The take-it-as-it-comes employee$80,000 of after-tax salary$80,000 for 80,000 products
    Government$60,000 in tax$60,000 for 60,000 products

    In year 2, the government ups its demand, and now seeks enough money from the three employees to buy 60,600 products.

    If the government gets the money via income tax, it ends up taking more from savers compared to the amount taken from borrowers, and compared to the amount taken from those who neither save nor borrow.

    Consider the long-sighted employee, who lent $80,000 to the short-sighted employee in year 1, and who receives $83,452 from the short-sighted employee in year 2. 

    Year 2 with income tax

    Citizen…receives…and pays…
    The short-sighted employee$83,452 of after-tax salary, less $83,452 paid to the long-sighted employeeNothing for no products
    The long-sighted employee$83,452 of after-tax salary, plus $83,452 paid by the short-sighted employee, less $683 of tax on interest $166,221 for 161,379 products
    The take-it-as-it-comes employee$83,452 of after-tax salary$83,452 for 81,021 products
    Government$62,418 in tax$62,418 for 60,600 products

    The pre-tax income of the long-sighted employee in year 2 is $104,030 of salary plus $3,452 of interest, summing to $107,482. So the long-sighted employee has higher pre-tax income than the other employees, simply because of a deal struck between peers.

    There is an inherent difference between income tax and GST that makes GST better.

    To extract the money it demands, the government imposes an income tax rate of 19.8 per cent. The rate is lower than in year 1 because the government has dreamt up more income to tax than just salary income.

    The long-sighted employee pays more tax in year 2 than any other citizen ($21,261 compared to $20,578). The long-sighted employee ends up purchasing less than double what the take-it-as-it comes employee purchases, despite the long-sighted employee having gone without all purchases in year 1.

    This intrusion into the deal struck between the long-sighted employee and the short-sighted employee is how income tax punishes saving.

    Even if the long-sighted and short-sighted employees respond to the imposition of income tax by negotiating a change in the interest payment involved in their arrangement, this would just mean they share the punishment of deal-making meted out by income tax, a punishment that the take-it-as-it-comes employee avoids.

    As income tax penalises deal-making between savers and borrowers, while GST does not, income is inherently inferior to GST.

    The Myth of Speed

    By
    David Leyonhjelm
    -
    8

    We are constantly told that Australia has a huge road toll. Every holiday break and long weekend there are reports of how many people were killed, amid inferences that this is a major and growing tragedy.  

    Equally constant is the assertion that the underlying cause is speeding. There is a never-ending campaign, complete with gory advertisements warning of lifelong injuries, telling us to slow down. The message never varies – below the speed limit is safe, above the limit is not. Indeed, we are told that even 1km/hr above the speed limit increases the likelihood of serious injury and death. Vacuous journalists blame speed for almost every accident they cover. 

    And should we fail to heed the message there are speed cameras, aerial monitoring, highway patrols and double demerit periods to remind us.  

    In reality, driving on Australian roads is safer than it has been for over fifty years. Road fatalities, both absolute and relative to the population, have been steadily falling.  Whereas in 1970 there were 3,798 road fatalities, equal to 30.4 fatalities per 100,000 people, in 2022 there were just 1,194 fatalities, a rate of 4.6 per 100,000. 

    Nobody wants to increase deaths and injuries on the roads

    Most of the decline occurred prior to 2000 following the introduction of seat belts, improved road design, vehicle safety upgrades such as disc brakes and impact resistance, and limits on drink-driving. 

    But it has continued up to the present time: in the decade to 2012 the rate of deaths relative to population decreased by an annual average of 4.2%. In the ten years to 2022 it fell by an annual average of 1.9%. 

    The bottom line is, Australia’s road toll is a fraction of what it once was and continues to fall. Fewer people die in road accidents than from the flu or Covid. And yet, rather than celebrate this success, government perpetuates the fiction that things are bad and getting worse. Moreover, despite quite minor changes to speed limits over the period (slight increase on highways and slight reduction in the suburbs), it insists that excessive speed is the primary culprit.   

    All this while most of Europe, which has overall higher speed limits than Australia, has lower road death rates. That includes Germany, where there are no speed limits on major autobahns. 

    Responsibility for this myth lies with the National Road Safety Strategy, prepared every few years by transport and infrastructure bureaucrats from the Commonwealth, State and Territory governments. For many years it has led a crusade with the broad aim of significantly reducing road trauma, resulting ultimately in zero deaths and serious injuries (which it defines as anyone admitted to hospital, irrespective of seriousness or the length of stay), by 2050. 

    It argues speed is a key element in all crashes, and that this necessitates lower speed limits and additional enforcement. State governments, which collect tens of millions in speeding fines, dutifully go along with it. 

    Equally constant is the assertion that the underlying cause is speeding.

    While very high speeds can obviously lead to more serious accidents, the data shows that deaths occur at any speed. Indeed, achieving zero deaths and injuries from road accidents is only feasible if everyone walks (even then, some would die of heart attacks). That would clearly be unacceptable to the community, which implicitly accepts a certain level of deaths and injuries as the price of convenient travel.

    The elevation of speed limits to icon status is both dishonest and absurd. Those responsible for setting limits, road safety experts and traffic engineers in the public service, are determining the trade-off between convenient travel times and the road toll for the entire community. If speed is truly the demon we are led to believe, they are essentially deciding how many people should die.  

    If this all sounds familiar, with memories of recent events during the Covid epidemic, that is not surprising. The gross overstating of a public health risk; a determination to mitigate that risk without regard for economic or social consequences; an assumption that the public are not competent to make their own decisions about bearing that risk. It’s all the same. 

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    As with Covid, it amounts to a classic case of gross bureaucratic overreach. It is the public, not bureaucrats, who ought to determine the trade-off between travel convenience and the road toll. (There is even an internationally recognised method of achieving this, known as the 85th percentile formula.) It is the public, not public health bureaucrats, who should decide whether the road toll warrants greater priority than other causes of death and disease. 

    Nobody wants to increase deaths and injuries on the roads, but a risk-free society is not a rational public health objective. Road users are not sinful children and should not be viewed as a source of government revenue, and public health bureaucrats should not be allowed to play God.

    Hate income tax? You shouldn’t

    By
    Duncan Spender
    -
    3

    Some taxes are more damaging than others. But when working out which taxes are more damaging than others, you should not judge a tax by its name.

    The impacts of income tax and GST can be much the same, because income tax and GST largely tax the same thing.

    So a special hatred for the idea of income tax relative to GST is unjustified.

    Let me explain with a simplified scenario.

    First, imagine a country with five citizens and no government.

    One of the citizens, ‘the entrepreneur’, establishes a business by borrowing money from one of the other citizens, ‘the capitalist’. In the first year the entrepreneur pays the capitalist $100,000 in interest. 

    The business imports 500,000 raw inputs at $1 each, and employs three citizens at a salary of $100,000 each. 

    The business produces 1,000,000 products and sells half of them to foreigners and the other half to the five citizens of the country, all at $1 each. So the business makes $1,000,000. 

    The business pays $100,000 of dividends to the entrepreneur.

    Australia’s income tax and GST do not have identical impacts on purchasing power and do not have identical discouragement effects. 

    A scenario with no government

    ReceivesPays
    Citizen 1 – the entrepreneur$100,000 of dividends$100,000 for 100,000 products
    Citizen 2 – the capitalist$100,000 of interest$100,000 for 100,000 products
    Citizen 3 – an employee$100,000 of salary$100,000 for 100,000 products
    Citizen 4 – an employee$100,000 of salary$100,000 for 100,000 products
    Citizen 5 – an employee$100,000 of salary$100,000 for 100,000 products
    The rest of the world$500,000 for 500,000 inputs$500,000 for 500,000 products

    Now imagine instead that this scenario includes a government. The government demands enough money to buy 100,000 products. And for now, let us assume that this taxation does not discourage the citizens from producing as much as they would in the absence of government.

    The government could get the money it demands via a 20 per cent income tax on the salaries, interest, and dividend received by the citizens. In year 1 this would leave the five citizens with $400,000 instead of $500,000 in their pockets, and with the capacity to buy only 400,000 rather than 500,000 of the business’s products. The government would have $100,000 and the capacity to buy 100,000 of the business’s products.

    A scenario with income tax

    ReceivesPays
    Citizen 1 – the entrepreneur$80,000 of after-tax dividends$80,000 for 80,000 products
    Citizen 2 – the capitalist$80,000 of after-tax interest$80,000 for 80,000 products
    Citizen 3 – an employee$80,000 of after-tax salary$80,000 for 80,000 products
    Citizen 4 – an employee$80,000 of after-tax salary$80,000 for 80,000 products
    Citizen 5 – an employee$80,000 of after-tax salary$80,000 for 80,000 products
    The rest of the world$500,000 for raw inputs$500,000 for 500,000 products
    Government$100,000 in tax$100,000 for 100,000 products

    Alternatively, the government could get enough money to buy 100,000 products via a 25 per cent GST.

    The foreign supplier of 500,000 raw inputs would charge the business $625,000, send $125,000 of GST to the government, and, just like in the scenario without government, would end up with $500,000.

    The business would continue to sell half of its products to foreigners for $500,000, at $1 each, given that no GST applies to exports.

    The business would sell the other half of its products domestically for $625,000, at $1.25 each. The business would pay $125,000 of GST on these domestic sales, but would claim a $125,000 input tax credit, so overall the business would send nothing to the government.

    The government’s overall receipts from both the business and the foreign supplier of raw inputs would be $125,000, enough to buy 100,000 products.

    The business would continue to provide $500,000 as salaries, interest, and dividends to the five citizens, but this $500,000 would now only be enough to buy 400,000 products.

    The impacts of income tax and GST can be much the same, because income tax and GST largely tax the same thing.

    A scenario with GST

    ReceivesPays
    Citizen 1 – the entrepreneur$100,000 of dividends$100,000 for 80,000 products at $1.25
    Citizen 2 – the capitalist$100,000 of interest$100,000 for 80,000 products at $1.25
    Citizen 3 – an employee$100,000 of salary$100,000 for 80,000 products at $1.25
    Citizen 4 – an employee$100,000 of salary$100,000 for 80,000 products at $1.25
    Citizen 5 – an employee$100,000 of salary$100,000 for 80,000 products at $1.25
    The rest of the world$500,000 for inputs$500,000 for 500,000 products at $1
    Government$125,000 in tax$125,000 for 100,000 products

    Under these income tax and GST scenarios, the dollar outcomes differ but the real outcomes are identical. 

    In the income tax scenario, each citizen receives $80,000 that enables the purchase of 80,000 products.

    Regardless of which tax is imposed, foreigners are unaffected, and the purchasing power of each of the citizens is hurt to the same degree.

    The reason for this is as follows. In the GST scenario, the tax base is the difference between the business’s domestic receipts and its outlays on imported raw inputs. Yet this tax base is also the money the business pays to the citizenry as income. So the tax base for GST is also the tax base for income tax.

    Because the citizens’ purchasing power is hurt to the same degree under both scenarios, the discouragement effect of tax would be the same in both scenarios. Contrary to popular belief, there is no great difference in the discouragement effect of income tax compared to the discouragement effect of GST.

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    Now, in the real world, Australia’s income tax and GST do not have identical impacts on purchasing power and do not have identical discouragement effects. 

    This is partly because of inherently different impacts on savings, that I will discuss in a later article.

    But the main reason why our income tax and GST have different impacts is that they each have odd exemptions, and our income tax has various rates unlike the flat-rate GST. 

    In other words, a broad-based, single rate income tax would have much the same impact as a broad-based, single rate GST. 

    So the special hatred many feel for the concept of income tax seems unwarranted.

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