AUSTRALIA DAY 2017 Sequel

 

Celebrating What
CELEBRATING WHAT??
(australiadental.com.au)

OBSERVATIONS FROM THE BARRICADES

On Australia Day morning I manned the barricades to keep vehicles out and merrymakers safe while participating in the Pearl Beach patriotic festivities. Celebrating  what? The character of our celebrations are far removed from those of other ex-colonial nations, Canada, United States, Brazil, Argentina and New Zealand, (Australia Day Prequel).

Returning to the barricades, there was a stark difference in celebratory effusion between people who passed across my checkpoint. Almost without exception, New Australians of Arabic, African and southern European extraction waved flags and enthusiastically greeted me  with “Happy Australia Day”. No doubt those from war torn, corrupt regimes would have much to celebrate. Conversely, almost without exception, long-domiciled Australians were less enthusiastic and a trifle reticent in their greeting. Perhaps a ‘life not meant to be easy’ is giving a lie to ‘Our Golden Soil and Wealth for Toil’ for too many of us. Question Time antics in the House does not inspire public confidence that Government policy will solve today’s problems.

 

PAYMENT OF RESPECT TO ALL AUSTRALIANS

First Australians
DESCENDANTS OF THE FIRST AUSTRALIANS
(buzzfeed.co)

It is right that at diverse meetings across this Land, Australians should pay respects to the First People to colonise Australia Felix, for example, the Gadigal people of the Sydney region and the Ngunnawal people around Canberra. Missing from these respects is a recognition that, wherever we are gathered, the Australian nation owes its prosperity, safety, freedom and culture to European settlers and pioneers who created the foundation for the Australia of today.

Australian Pioneers
AUSTRALIAN PIONEERS (beadsguru.blogspot.com)

It is concerning that too many younger Australians, in their comfortable surrounds, are unaware of the debt they owe their forebears and other early settlers. Payment of respects to all Australian Pioneers might provide an ethos for Australia and provide the  Nation with a focus for our National Day.

Young Australians
COMFORTABLE YOUNG AUSTRALIANS
(border.gov.au)

Australia is a nation of immigrants (convicts, settlers. Chinese miners, Ten Pound Poms, boat people). A pillar for social cohesion amongst the Australian nation can only be ‘One Law of the Land’, inviolate, absolute.  Australia Day, at whatever future date, must celebrate the achievements of Australia as an Immigrant Nation. This omission could be considered as evidence of a Cultural Cringe since we do not honour the toil, hardship  and achievement of the people who made Australia before the Second World War. Let us  remember them on Australia Day and pay our respects to them more often than we do. Without the energy of new immigrants Australia, as a Middle Power, will inevitably wilt and decline.

New Australians
NEW AUSTRALIANS, THE HOPE OF OUR SIDE (australiantimes.co.uk)

 

OVER TO THE POLITICIANS!

In an ideal world the Federal Parliament would grasp the initiative to ensure Opening Ceremonies would continue to pay respects to Traditional Owners and Pioneer Immigrants who collectively laid the foundation for the Australia of today. This policy would provide a focus for Australia Day rather than the vacuous “Enjoy Australia Day any way you like”.

 

 

 

 

 

AUSTRALIA DAY 2017 Prequel

THE SITUATION 

Australia Day
Another Face of Australia Day. GAZI – australiaday.vic.gov.au

For some weeks a Government Social Engineering Department has subjected Australians to the message “We may celebrate Australia Day any way we wish”. This supine edict provides no focus, no theme, no ethos, no sense of common unity or heritage, like children in a nursery school we are to enjoy ourselves for no apparent reason.

With in fortnight of our National Day two young Muslim girls wearing hijabs appeared on a Victorian bill board extending a message of warmth and harmony for Australia Day.  Following an objection by a member of the ‘public’ the Victorian Government apparently did not resist the removal of this image from the public domain. Enter Dee Madigan, creative director and author, who immediately crowd funded over $130,000 (The Guardian). This image will now appear round Australia. Like women leaders of yore and up to the present (Boudicca, Golda Meir, Thatcher and Merkel) Dee Madigan has ridden rough shod over the equivalent of Thatcher’s ‘vegetables’  to ensure this image of multicultural  Australia will encourage peace, good will and understanding.

Hopefully the image of these two immigrants (as we all are) will promote discussion on the wider significance of Australia Day, unless Australia verges more toward authoritarianism the hijab will become as unremarkable as the national foot ware , the thong.

NATIONAL HISTORIES

The Australian Government likes to define our place in the global order. Of the six nations that owe their origin to 18th and 19th century colonial powers, Australia is the outlier, the ugly duckling, the black sheep in terms of National Day origin. Nations with a comparable heritage are Canada, New Zealand, America , Brazil and Argentina.

Canada. On July 1st 1867 the embryonic Dominion of Canada came together to counter French influence  under a constitution that joined Nova Scotia, New Brunswick and the Province of Canada. This national holiday is one is one of festivity in Ottawa and the regions. There is occasional friction with French Canadians and the native people.

New Zealand. On the 6th February 1840 the British Colonial Government and the Maori tribes met at Waitangi, North Island, to produce a unifying constitutional document. New Zealand did not  commence celebrating Waitangi Day until 1934. Since that time there has been frequent Maori agitation for amendments to the Constitution.

America. On the 4th July 1776 the thirteen American colonies promulgated their independence from Great Britain  principally due to the restrictive   Mercantilist laws. July the Fourth is a National holiday. The Government  arranges patriotic displays along with the festivities.

Brazil. Brazil achieved independence from the United Kingdom of  Portugal following a twelve year war from 1808 – 1822. Each year  September 7th  is commemorated with festivities and celebrations.

Argentina. The Spanish colony of Rio de la Plata won independence after a bitter eight year war, 1810 – 1818. Independence was declared on 9th July 1816. Each year this National day is celebrated with patriotic events and family reunions.

Australia. The nation is the odd polity. Among the ex-colonial nations only New Zealand attempted an early integration of the indigenous people under a Constitution.  Canada sought to counter a French threat by closer ties of several territories.  America, `Argentina and Brazil fought bloody wars to earn  independence. All these nations fought ‘frontier wars’, this was normal. Australia, by contrast, celebrates its National Day to coincide with the establishment of a penal colony on Australia Felix, not Australia Nullius on the 26th January 1788.

The origin of Australia i Day is indeed curious. Before WW2 the 26th January was was celebrated as Anniversary Day with a Regatta on Pitt Water.  The rest of Australia was not involved. After WW2 the politicians considered it necessary to instil a sense of national unity into the new immigrants arriving from Europe. A pride was fostered in the in the arrival at Sydney Cove, the leadership of Captain Phillip and the achievement of the early settlers. Like topsy the Australia Day has finally been massaged into ‘Enjoy Australia Day any way you like’, with no sense of how this nation was created.

NEAR FUTURE 

The sensible option would be to consider a National Day commemorating Federation on the 1st January 1901 or Aboriginal suffrage on the 18th July 1962. Entrenched petty politics and commercial avarice would attempt to founder a logical alternative. In addition, there could be a reluctance for Australian people to ‘call Canberra Home’ untill respect for our political system improves.

Australia’s early Colonial history is no different the other nations, the difference now is that these other nations have relegated to history their ‘Frontier Wars’ while Australia still celebrates a period prior to their commencement, namely the possession of Terra Nullius for King George and Empire.  We are not accountable for the past but we have inherited the aftermath. In the words of L P Hartley “The past is a foreign country, they do things differently there”. (The Go-Between )

 

 

 

 

.

AUSTRALIAN EDUCATION January 2017

 

TOO EASY – NO WORRIES – SHE’LL BE RIGHT

A poor education
RESULTS OF A POOR EDUCATION
(linkedin.com)

PISA EDUCATION RANKINGS and AUSTRALIA.

OZ Students
AUSTRALIAN STUDENT ACHIEVERS
(dailyexaminer.com.au)  .

Education of Australian youth is veering towards crisis. Catalysts for this opinion are the poor position of Australia in the OECD Program for International Student Assessment (PISA) and the observation by the Human Rights Commissioner, Dr Gillian Triggs, to the effect that “Our parliamentarians are usually seriously ill-informed and under- educated”. (Age, 23 April, 2016)  Australian politicians are the product of a failing Australian education system as illustrated by the following data. The parlous state  of Australian education is revealed  in the PISA rankings below. Top ranked are Singapore, Hong Kong, South Korea and Taiwan.

  • Australian ranking is 14 – below Poland 11, Vietnam 12 and Germany 13.
  • Australia ranks19 for secondary school enrolments behind USA, UK and UAE.
  • Australia  ranks 17 for having the highest share of students who lack basic skills.
  • Concerning the science, technology, engineering and maths (STEM) subjects,  Australian standards are falling.

The PISA test results for 2000 and 2012 are:

OECD PISA RANKINGS for AUSTRALIA 2000 and 2012

SUBJECT20002012
Maths619
Science816
Reading413

The OECD report suggests that if PISA results improved by 25 points Australian GDP would improve by 7.2% by2095. (Education Policy in Australia , OECD, June 2013) Clearly, Australian education policy must improve – but how? Examples of education policy in South Korea (PISA 3) and Finland (PISA 6) should be a guide. The OECD makes the point that it is not the wealthiest countries that perform best but it is those nations that value education the most.

SOUTH KOREA, EAST ASIA, Ranking 3.

Asian Education
EXCELLENT EAST ASIAN EDUCATION
(utube.com)

The driving imperative for East Asians is for educational excellence as a means of improving ‘their lot’ in the harsh competitive reality of their lives. The quality of this education system depends upon the expectation and demands of the parents. The national culture of Korea has produced an ingrained drive for intense study with the objective of improving socio-economic status and mobility. Students acquire q clear objective and a sense of purpose at an early age. South Korean parents arrange after-school tuition as a matter of common practice; in this context Koreans prize effort above an inherently high IQ. East Asian children have about fifteen hours of homework each week while  Australia students apparently have around nine hours. This pressure  in South Korea produces suicide among the fifteen to thirty year olds but, despite this lurking danger, students persist with a vigorous education to improve their prospects. (South Korean Education, The Conversation, March, 2015)

FINLAND, EUROPE, Ranking 6 (Leads Europe) 

Finland
FINNISH EDUCATIONAL EXCELLENCE
(theguardian.com)

The successful Finnish system is totally different from the East Asian model and from Australia.
Summarised, the Finnish model results are:

  • PISA rankings for maths and science are 1 Singapore, 5 Taiwan,
    6 Finland, 7 Estonia, 14 Australia.
  • In 2000, Finland’s PISA ranking for reading was the best in the world.
  • In 2003, Finland lead in maths.
  • By 2006, Finland’s rankings were science second, reading third and maths sixth
  • The end product is that 93% of Finnish youth graduate to professional or vocational careers.

Reasons for Finland’s educational success,  in an approximation to importance, are:

  • The nation values education such that teachers have the same social status as lawyers and doctors.
  • Professional staff have progressed to a five year Masters degree or higher.
  • Teaching staff are selected from the top 10% of the nation’s graduates.
  • The teaching profession is totally dedicated to education.
  • Education is about education, not tests.
  • Teachers spend coaching time with students outside school hours – human interaction is the key.
  •  Set homework is minimal.
  • In sixth grade students may sit for district-wide exams (with teacher approval). Results are not published, but are discussed between student and teacher.
  • During school years there is only one final exam for for university entrance.
  • Finland has a single unified State school system.
  • There are no comparisons between schools or regions and the education system is not run on statistics.
  • Education inspectors have been abolished and the schools are run by academic staff. Politicians are banned from oversight.

By contrast, nearby Norway follows the United States education system –its PISA rankings have stagnated whereas Australia’s have declined.

 

AUSTRALIA AND THE TYRANNY OF CULTURE DISTANCE

Separation
CULTURES FAR APART
((slideshare.net)

 Culturally and historically Australia differs from South Korea and Finland. Australia enters 2017 with an education problem. Australia, dangling off the southern extremity of south-east Asia, is the poor country cousin in terms of PISA rankings compared to its northern neighbours.

The East Asian nations, due to population pressure, have struggled hard for their livelihoods, By contrast, the few in sparsely populated  Australia where ‘Our lands abound with nature’s gifts and boundless plains to share’ Australians have never had to fight and struggle for survival as have peasant communities to our north. The East Asians peasant poverty has generated an iron will to improve their lives, to generate an income or starve. Australians, en masse, have never suffered the same problems. For far too long it has been ‘Too Easy – No Worries – She’ll be Right’. This observation does not denigrate the hardship and achievement of our early settlers.

It is clear Australia does not value education to the same degree as East Asians or Northern Europeans. Australia’s PISA rankings are 14 and falling further away from our Asian trading partners. The 3, 5, 7 and 9 NAPLAN test results were described by the Federal Education Minister in August 2016 as ‘flat lining’ over the past three years. Combined, the PISA and NAPLAN results constitute a serious problem.

The Gonski Review Report (2012) identified concerning trends in Australian education – performance has declined over the past decade. Gonski stressed the need for equitable school funding with extra funding to disadvantaged students (a move toward the Finnish model). The original funding program was subsequently reduced by $30 billion by the Abbott Government (SMH 2 Dec. 2014). Subsequently, the Turnbull Government announced it will ‘re-invest’ $1.2 billion into education, this apparently still leaves a shortfall of $28.8 billion. As announced by Treasurer Morrison the Federal education  package over the forward estimates is $73.6 billion.

 

THE FUTURE.

Australia alone
THE HEAT IS ON FOR THE ASIAN CENTURY
(YUMPU)

Under the current situation, Australian youth are in a public  education system that leaves them trailing students in East Asia and Northern Europe. Initial suggestions to remedy this situation are:

  • Australia must change its culture and value education more highly. Our political elite will have to set an example.
  • The status of teachers must be raised.
  • Academic teacher levels must be improved to Masters qualification.
  • Teachers to spend more time with students after school hours.
  • There must be a single unified Federal education system.

On 24 March 2015, the Australian Financial Review resurrected a warning by  the Singapore Prime Minister, Lee Kuan Yew. In 1980, Australia was warned “It could become the white trash of Asia if it did not reform”. That comment was taken on board by the then Labor Shadow Minister Hawke who concurred with the observation. Unless Australia improves its education system perhaps another Asian leader will repeat the epithet.  Already, Australia is at a disadvantage. Both the Federal Minister for Education (Hon. Simon Birmingham) and the NSW Minister for Education (Hon. Adrian Piccoli) have no hands-on education experience; culture change must start at the top.

Is Australia prepared to fully participate in the Asian century or will indifferent education condemn future generations to education rankings below our neighbourhood nations? If our Australian children do not improve their education levels then responsibility can fall squarely on National culture and on politicians that are not prepared to enforce change.

Returning to the opening comment by Commissioner Triggs, she is not alone in her opinion on Parliamentary educational levels. Mr Barry Jones, polymath and ex-MP (Australian Inspiration) has opined that “much of Australian leadership has been and continues to be mediocre”. In a swingeing comment (ABC RN, 16 Dec. 2016), Dr Ric Charlesworth, AO, indicated “meritocracy in our political system is in short supply, it is diluted by party hacks”.

Australian youth will continue to be disadvantaged unless we, the people, improve our culture, Our new mantra should be:

DIFFICULT – CONCERNING – MAKE IT HAPPEN

.

 

 

 

CHRISTMAS DAY or BIG DAY December 2016

 

The Birth
BIRTH OF CHRISTIAN FAITH
((dreamstime.com)

The Conundrum of Christmas. Christianity could be considered a monumental oxymoron. The global message ‘Peace on Earth, Goodwill to all Mankind’ sits uneasily alongside the battle cry of a Christian nation ‘In God we Trust’ and with that of Islam’s  ‘Allah Akbar – Allah is Great’. Peace and war come together in Oliver Cromwell’s dictum “He that prays and preaches best fights best”. Logically, this should equally apply to Christian and Muslim soldiers. Using the theme  ‘Peace on Earth’, this festival kangaroo-hops round the globe looking at non-Christian cultures and their accommodation of Christmas. Christian numbers in the Arab and East Asian nations tend to be vanishingly small as a percent of population.

 

Christmas in the Islamic World.

Overfly
PERMISSION TO LAND DENIED IN SAUDI ARABIA
(shutterstock.com)

Indonesia. Christmas Day or Hari Natal is celebrated in Indonesia in keeping with the Principles of Pancasila. This ensures an accommodating policy on faiths other than Sunni Islam. The National Islamic Council has approved Christian church services and fosters inter-faith harmony. Over the Christmas period, shopping malls radiate festive cheer and decorations to the repeated strains of ‘Silent Night’ – ‘Malaam Kudus’. December 25th is a gazetted religious holiday. To enforce government policy, tens of thousands of security guards move around churches and shopping malls.

Saudi Arabia. Not even the birthday of the Prophet Mohammed is recognised. To acknowledge the birth of Jesus is a crime. This Sunni kingdom is dominated by the strict Wahhabi doctrine. Clandestine Christmas celebrations are a punishable offence.

Iran. A Shiite republic with a history of Zoroastrianism and Armenian Christian faith. The Christmas period is holiday a season with the ‘Virgin Birth’ celebrated on the 24th and Epiphany on the 8th January. The malls are ablaze  of merchandise, Christmas trees, music and colour. In Iran Jesus is recognised as one of God’s messengers.  Ayatollah Kohamenei, spiritual leader, has stated “it is time for caring Muslims, Christians and Jews to obey the prophets and honour Jesus’ birthday”.

Pakistan. This is a Sunni dominated republic. The 25th is a public holiday. It is also Jinnah’s birthday, the founding father of this nation. On Christmas Eve there are services to promote peace between Muslims and Christians. The Big Day or Wadda Din is one of feasting and merry making- it includes exchange of gifts with Muslim friends. Despite an apparent relaxed mingling, Christians must be ever vigilant not to transgress blasphemy laws; mob violence is responsible for assaults and death of Christians.

Bangladesh. Another Sunni republic that permits freedom of religion however sectarian violence is common. The Big Day or Barra Din is celebrated with midnight services – observance is more a shopping spree enlivened by decorations and frivolity involving all faiths.

 

Christmas with the Mongoloids.

Christmas Day
CHRISTMAS IN CHINA
(whydyoueatthat.wordpress)

China. Freedom of religion is suppressed however tightly controlled faiths are permitted. There is no holiday on the 25th but the Chinese have welcomed the festival of Christmas with gusto and an explosion of consumerism. It is a shopping frenzy among coloured lights and uncountable Santa Claus’. Christmas Eve is for romantic dining or raucous parties with friends not family.

Japan. Among the Shinto and Taoist faiths Christianity is almost non-existent. The Christmas period is one of rampant consumerism buried beneath a crescendo of lights, colour, glitz and bling. There is no public holiday on the 25th.

 

The Africans.

Christmas
CHRISTMAS DAY – GHANA (ghanaculturepolitics.com)

Democratic Republic of Congo. A country wracked by civil war, corruption and under the thrall of missionaries. The religious significance of Christmas is important and the churches explode with music and song. Christmas is for the children who receive new or recycled clothes from street kiosks. For some adults special Western foods are imported to spice up the monotonous cassava based diet.

 

Quo Vadis, Christmas Day or Big Day. 

According to the Ontario Consultants on Religious Tolerance, there are 2.0 billion Christians and decreasing, and 1.6 billion Muslims and increasing, on this planet. It is recognised that the fertility rate of the Christian West is below replacement level while for the Islamic East, the converse is true. Over the next century Africa with its high fertility rate might save Christianity for the West

Across the Islamic world the celebration of Christmas will become more difficult. Concurrently, the hedonistic festivities of the Big Day will become evermore garish and consumerist. It must not be forgotten that Christ’s birthday has been assigned to the Winter Solstice, a date shared by many extinct faiths. It was a date of major significance for societies in the Northern hemisphere. If you cannot beat them, join them!

Charles Darwin’s axiom, ‘It is the survival of the most adaptable not the fittest’ is relevant to Christian and Muslim ethos. In times of adversity, the Christian mantra is ‘God help us’ while the Muslim intones  ‘It is the will of Allah’. The former represents a plea for assistance while the latter  encourages a devout Muslim to assist Allah to ‘make it happen’. This is a core difference between these two  cultures.

In the century ahead  Christianity is forecast to decline in the West causing festivities to veer more towards a ‘Big Day’, rather than a ‘Christmas Day’. The spirit of ‘good will to all men’ should survive but ‘peace on Earth’ will remain a pipe dream. A Quo Vadis issue for the Christian West has emerged from left field. With the rise of women pari passu men in the Christian West the fertility rate has declined below replacement level. This is a profound issue with, currently, no rational solution and yet one must be formulated!!

May we all enjoy some spiritual contemplation and time with Family and Friends.

 

 

 

Free Trade Agreements & Australia. November 2016

 

 

Free Trade Agreements
Globalisation & Free Trade Agreements – What a mess!
(ssc.wise.edu)

History  In recent times Australian Government Ministers and media have commented upon problems and benefits with Australia’s Free Trade Agreements (FTA). There appears to have been little clarification on the pros and cons of these far reaching agreements. This essay seeks to throw light on some of the issues and how they may affect Australia.

In the age of modern empire (16th to 19th centuries) world trade was constrained  by the Mercantilist theory by which governments regulated the empire’s economy such that state power was augmented at the expense of rival maritime powers. The policy reduced imports from rival nations and maximised exports which, in part, fuelled the Industrial Revolution. The effect was to remove subject peoples and colonists from foreign products; this policy was a trigger for the American War of Independence.

Prior to the Second World War, European and American industry imported raw materials from colonies and exported manufactured goods to tied markets round the globe – it was a closed trading loop.

Due to the two ‘World Wars’ in the first fifty years of the 20th century, global trade was severely disrupted. The European empires and Mercantilist trade vanished and trading patterns were ad hoc. The mid-century post-war reconstruction boom generated unprecedented factory growth across the Western world that generated high labour costs and this has sown the seeds of serious labour pains in the industrialised West in the closing years of the 20th century and the opening years of the 21st century.

From mid-20th century, Western world companies commenced a slide towards low-cost labour in Asia and South America causing closure of many Western world factories. This resulted in an inexorable under-employment or job losses that is now bedevilling the working class of the Industrialised world. The flood of cheap imports to the West from industrialising Third World countries has skewed world trade, created trading surpluses, particularly in China. This situation has contributed to low global inflation, deflation, low interest rates and under employment This global situation has contributed to the rise of European Right Wing parties: the popularity  of Mr Trump, the Brexit vote and the phenomena of Bernie Saunders (Democrat,USA) and Jeremy Corben  (Labour, UK).

Free Trade Agreements  Economic theory suggests free trade agreements are the best way to proceed to raise global living standards, particularly in the Third World.  However, not all in the Industrial West benefit. In effect, the practice is producing interconnected global trading blocks with reduced tariffs and quotas. With increasing complexity of trading blocks, the process might spawn the rise of mercantilist groups by another name. Negotiations by nations are complex as each participant endeavours to maximise trade benefits. Currently the advantages of free trade  over mercantilism are:

  • nations benefit from a greater source of goods at lowest prices
  • mercantilism restricts imports resulting in high prices
  • the free trade system makes the nation, not necessarily  the individual, more prosperous
  • mercantilism forces nations to fight over resources – under free trade goods and services are peacefully traded. Since globalisation is not a homogenous process, rival free-trade blocks could have designs on the same resources.

World Economy  The world economy has been moving towards an interconnected globalisation. In today’s world no national economy is completely immune to the health or sickness of other national economies:

  • Globalisation ensures a majority of people benefit through new investment, but high labour costs in outdated industries can create unemployment. The Brexit ‘leave’ vote was lead by those who were ‘left behind’. Mr Trump’s support is, in part, from the disaffected working class.
  • Globalisation can produce lopsided unstable capitalism. There is, within Western World, unease that infrastructure and industrial projects  will proceed in Third World countries where labour costs and tax rates are low.
  • Since Britain’s Brexit vote in June to leave the EU, five industrialised European nations anti-establishment parties are clamouring to erect trade barriers (tariffs) and close borders to immigrants.
  • Increasing globalisation has established that the real incomes of 66% of households in advanced economies have fallen between 2005 and 2014. The few gains have gone to the ‘salaried gentry’. (McKinsey Global Investments)
  • There is growing belief that globalisation benefits elites but much less so for the broader population in advanced economies.
  • China’s integration into global trade, by joining the the WTO, has caused lasting damage to workers in the Industrialised Economies.
  • China’s global penetration of low cost goods has risen from 2% (1991) to 20% (2013).
  • Of the six million American job losses in recent years, 29% are directly related to the import of Chinese goods.
  • With globalisation and increasing free trade, there is clear evidence in the Advanced Economies that wage inequality is growing with growing risk for low and mid-skilled workers.
  • Advocates for free trade admit gains come from greater manufacturing and productivity efficiency not from additional jobs. However, imports are cheaper.
Imports and Exports
Hidden Agendas.  Cheaper Imports – Fewer Jobs
(behindtheline.com)

American Trade Agreements  As a backdrop to Australian trade agreements, the American experience is reviewed. Since 1985, fifteen separate free-trade agreements with twenty countries involved the export of high-value products. Note that these were one-to-one trade agreements not an international consortium master-minded by an American panjandrum. Employees benefited as wage premiums of up to 18% were paid compared to those in non-export industries who were unable to compete with cheaper imports.

In 1998, the United States and China signed a trade pact whereby American export tariffs were reduced from 24% to 9% while import quotas were abolished. Subsequently there were huge job losses in the American industrial heartland, but millions of Americans benefited from cheaper products. Bernie Saunders, a Democrat Presidential aspirant, noted that trade deals are a disaster for American workers.

Trans Pacific Partnership (TPP) Twelve countries have been co-opted and others are being cajoled to join. Negotiations have continued over five years. It was hoped to sign a binding document in 2016 but Partners have delayed until 2017. The TPP was the initiative of President Obama to counter the growing economic might of China. The current membership represents approximately 40% of global GDP and is summarised in the table along with some critical  economic indicators. The Philippines, South Korea, Thailand and Taiwan have expressed an interest in joining. China is specifically excluded as its financial controls and social issues are not considered acceptable. (geopolitical futures.com, 8 August, 2016)

TABLE 1 Trans Pacific Partnership. Members Economic Indicators.

CountryPopulation (m)
GDP (tr) & RankingBudget as % of GDPAverage Wage $'000Unemployment %
United States32418,561----1-3.258.74.9
Australia241,256----13-2.350.25.6
New Zealand5 179-----53-27.737.85.7
Canada361,532----10 -2.643.27.0
Chile18 234-----45 -2.513.47.1
Peru32 180-----52 -2.16.16.5
Mexico1241,063----15-3.09.03.7
Brunei0.4 10---134-16.036.66.9
Malaysia31 302-----38-3.49.83.5
Singapore6 296-----40+0.752.92.1
Vietnam94 200-----48-6.42.12.1
Japan1264,730-----3-5.032.53.0
The table provides an insight into market potential, economic health and probable wage transfer from industrialised to developing economies. (World Bank, International Monetary Fund, The Economist)

Clouds on the horizon are an antagonistic American Congress that is required to enact the TPP into law, while both Trump and Clinton are opposed to this trade deal. Malaysia, Canada and New Zealand have delayed ratification until 2017.

The Roosevelt Institute has poured cold water on the proposed Partnership (DrJ Stiglitz, Columbia University):

  • middle incomes will be suppressed
  • tariffs are already low (average 2.7%) so a strong American dollar will swamp benefits
  • the World Bank opinion is that the proposed Partnership will have zero effect on the American economy
  • the inequality jeopardising the American middle class is a defining challenge to social instability.

The Australia-China Trade Agreement  Before commenting on the TPP, a smidgin of history. This agreement came into force in June 2014. It is a contentious document as revealed on ABC News, October 2015.  (abc.net.au/news) Benefits are summarised as:

  • Benefits
  • Australians will enjoy cheap Chinese Imports, a 5% tariff will apply.
  • Within 2-4 years, Chinese tariffs of between 3-10% will be eliminated on imports of coal and aluminium.
  • Within 9 years, Chinese tariffs of up to 30% will be eliminated on dairy and animal goods.
  • Australian aged-care homes and some hospitals can be established.
  • Improved access to legal and financial partnerships will be expedited.
  • The Foreign Investment review Board will scrutinise all investments by Chinese State owned companies.
  • Problems
  • There is excessive leeway for years and tariff adjustments.
  • No tariff reduction for sugar, rice, wool, cotton, wheat, maize, canola.
  • Customs duties will apply on beef and milk powder if quotas are exceeded.
  • For Chinese investment projects exceeding $150 million temporary workers will be permitted.
  • Under ISDS legislation, the Australian government can be sued if Chinese interests are damaged by subsequent legislation.
  • Acquisition/investment limits  have been raised from $252 million to $1,094 million – excluded are investments in media, telecoms and defence.

 

Hidden Agendas
TPP The Role of Corporate Objectives?
(herinst.org)

Trans Pacific Partnership  (TPP)  The Prime Minister spoke briefly, in glowing terms, on the benefits accruing to Australia from its membership of the TPP. (ABC rn, 7 November 2016) There is growing unease in Australia and among other participants on the conditions of and fall-out from the TPP once it is possibly ratified in early 2017. This concern is a realisation that the trade initiative may be  politically designed to corral Pacific rim nations to further the corporate interests (hidden agendas) of United States industry. (The Drum, June 2015) The twelve nations involved, but not all irrevocably committed, account for 40% of global GDP. (geopolitical futures.com) For Australia, this Partnership does appear to be a lifeline for its economic growth and stability since 70% of its trade passes through the east Asian region. The long-term growth projections based on the TPP for participating countries have been assembled by the World Bank. (June 2016), Table below:

TABLE 2 Modelling Projection under Trans Pacific Partnership to 2030

CountryGDP Growth %Exports %
United States
0.48.0
Australia0.85.0
New Zealand2.912.0
Canada1.66.0
Chile1.35.0
Peru2.39.0
Mexico1.83.0
Brunei4.47.0
Malaysia7.719.0
Singapore2.86.0
Vietnam9.830.0
Japan2.723.0
Modelling Projection of Trans Pacific Partnership to 2030.
World Bank, 10 June 2016
Australia and Mexico appear to have similar disappointing growth projections.

Reports favouring the TPP from the Australian perspective have been issued by the Department of Foreign Affairs and Trade (16 July 2016 ) and the Parliamentary Joint Standing Committee on Treaties (2016). Summarised, their conclusions are:

  • there is a great potential to drive job-creating growth across the Australian economy
  • there is new market access for Australian exporters and investors
  • there will be transparency of regulations of the twelve participating nations, hidden agendas excepted
  • there will be certainty for business, cost reductions and consolidation of supply chains
  • tariff elimination
  • Australian competitiveness will be enhanced which will promote Australia as an investment destination.

Government agencies, being politically controlled, have painted a soft rosy glow on the advantages of the TPP. Disadvantages of the TPP have been expressed in unequivocal terms. Dr M Rimmer, ANU College of Law, states “Australian consumers have been deluded. The intellectual property chapter of the TPP is a monster. The proposals in regard to copyright law, trademark law, patent law and data protection would hit Australian consumers hard.”

Getup (getup.org.au), the Australian political commentator, noted in 2016:

  • the TPP represent a ‘closed door’ deal driven by big business, pharmaceuticals and tobacco
  • foreign companies will be able to sue the Australian government for loss of earnings under the Investor-State Disputes Settlements (ISDS) scheme
  • significantly, the proposal deals extensively with investment not trade.

The Drum (29 June 2015) noted: ‘preferential trade deals, not free trade, add to the complexity of international trade. In this, the Productivity Commission and the Australian Chamber of Commerce agree. It is the opinion of the World Bank that the TPP will have zero effect on the American economy.’

The last round of the TPP talks were concluded in New Zealand during August 2016 with 98% of the deal agreed to. Sticking points are monopolies demanded by the pharmaceutical companies requiring twelve years exclusivity on their products, while other members require only a five year period. This issue has significant ramifications for Australian health costs. The next TPP meeting is scheduled for November in the Philippines.

Apples upsetting the Cart  Recently, four potential Partners and/or angry citizens have had second thoughts or condemned the TPP document:

  • New Zealand. The New Zealand Herald (July 2016) reported wide-spread opposition to pharmaceutical and sovereignty issues, It was reported over 170,000 citizens were involved in the rallies.
  • Canada. The Council of Canadians (November 2016) has held a number of protest rallies that has delayed a Government decision on the TPP until January 2017.
  • Malaysia. Officials have announced that the Government has delayed a formal decision until sometime in 2017.
  • Australia. In May 2014, unions, church groups and community organisations endorsed a letter prepared by the Australian Fair Trade Network to Trade Minister Robb warning of draconian and unfair clauses dealing with public health costs, ISDS provisions, workers rights, environmental protection, copyright provisions and Australian media content. Currently, cyber space across Australia is clogged with damming reports on a poor outcome for Australia if the Trans Pacific Partnership is ratified. The latest word from the Government, risking repetition, was on the 7th November (ABC rn) when the Prime Minister extolled the virtues of the TPP but none of its iniquities.

What to think. What to do.  There are very clear messages of concern coming from across the globe; the Australian government is publicly studiously ignoring them. There are two factors to the TPP. Firstly, it is a political construct to counter the growing might of China and secondly, it is perceived  by the Australian government as a life-line for the nation’s future prosperity.

The attached tables can generate some uncomfortable deductions. From Table 1 the average wage ratio to GDP is instructive. Results are United States 316, Japan 145, Canada 35 and Australia 25. Australia’s productivity has been a concern; this data supports that contention. Table 2 provides an uncomfortable World Bank projection to 2030 of Australia’s growth compared to other members of the TPP.  Australia’s GDP growth % and exports % are among the lowest among the industrialised cohort. Australia’s salvation has to to lie with high-tech exports on the back of its existing exports.

For Australia, there will be further job losses as GDP increases with the development of high-tech industries in the years to come. Is the TPP, with associated noxious clauses but associated with 40% of world trade, the real issue or is there an advantage in developing comfortable individual trading agreements with many nations?

The United States Election. November 2016 – 1

American Election. News Travels Fast.  (MATT)
THE AMERICAN ELECTION.   NEWS TRAVELS FAST.   (MATT)

The Situation.  The result of this election will reverberate with Western developed economies for some time to come. In one way the election result can be partly attributable to the Judaeo-Christian practice of capitalism.

Senator Clinton secured the East and West coast urbanised better educated and more fully employed states (41.7% popular vote) while Mr Trump prevailed in the less educated Central and Southern states with higher unemployment (41.5% popular vote). The Electoral votes were Trump 279 and Clinton 228. (nor.com, 9 Nov.)

This election result has resonance  for the UK Brexit where 51% of the Leave vote was centred round the disadvantaged industrial Midlands while the southern British literati were left spluttering into warm beer with 49% of the Remain vote.

The recent election in Australia produced a comparable knife edge result, whereby better educated and more fully employed urbanites, by the narrowest margin, prevailed over urban and regional centres suffering under employment and unemployment

Painful History.  Once again, history warns but never repeats itself identically. The Great Unrest (1910-14) in the United Kingdom is instructive. From the mid 1800s, the Industrial Revolution powered along.  A depression in the mid-1890s dented progress but then manufacturing growth continued into the first decade of the 20th century. To increase profits, the industrial elite reduced operating costs by cutting wages and replacing workers with more efficient machines. The working class revolted. there was mayhem on the streets until the First World War was declared when thousands of workers were sent to the trenches to be slaughtered. In passing, it is curious to note that the painful 1929 Crash and the turbulent later years were ended in 1939 by the Second World War when thousands of men were called up.

Fast Forward. One hundred years later there is a cracked mirror reflection of a comparable situation. The  boom years of the later 20th century were interrupted by the GFC hiccup and a hesitant recovery which evaporated around the turn of this century. For the past decade, blue collar workers and the middle class has been squeezed by stagnant wages, employer exploitation, declining living standards, unemployment and under-employment. Machines – robots – are fast replacing workers as in 1910. One situation has made this situation worse,  Western industrialists have established manufacturing companies in the Developing World which has meant unemployment for millions of Americans and others. Meanwhile, the wealth gap widens for Americans and Australians who are developing increasing contempt and distrust for the established political elite. This problem is facing the Western democracies; it is unsurprising Mr Trump has prevailed.

 

UnEmployed
Under Employed or Unemployed
(huffingtonpost.com)

A New Order?  Perhaps the Western brand of capitalism was only able to flourish utilising a low-cost working class in a world dominated by empire and colonies; a prerequisite was an inexhaustible supply of cheap raw material and a ready market with little manufacturing capacity.  This situation no longer exists, perhaps this is the Achilles Heel of Western commerce.

The more philosophical might ponder on today’s economic conditions where chronic under-employment and flash points around the globe resemble  the situations in 1914 and 1939.

 

 

The Plebiscite & Marriage Equality. October 2016-2

Australian Politician?
AN AUSTRALIAN POLITICIAN?
(fantasticpixcool.com)
This Promise will win Votes
THIS PROMISE WILL WIN VOTES!
(abc.net.au)

PREAMBLE  It must be rare in the annals of democracy that a political elite abrogates its right to govern the people. With those with whom I have discussed the plebiscite issue this constitutes a serious dereliction of parliamentary responsibility.

BACKGROUND  It appears likely the plebiscite was intended to protect Liberal party figures from a public affirmation of their faith and/or their opposition to marriage equality. The trumpeted upside was the  ‘people’ would decide. For a minority of Liberal conservatives the plebiscite would remove the embarrassment of a parliamentary debate and the possibility, that like the Disciple Peter, they would dishonour their faith before the ‘cock crowed twice’. (The Drum, 28January 2016)

Within the Australian electorate there is majority support for marriage reform as illustrated by a survey that showed Coalition 58%, Labor79% and Greens 97%. (SMH, 3 July 2016) Quoting this majority opinion the Australian Marriage Council has excoriated the plan to spend $160 million on a  plebiscite. In view of these survey results, it is inexplicable why a rump of Liberal parliamentarians oppose a parliamentary vote unless it is by reason of their faith or conservative dogma to the detriment of sectarian democracy.

BROKEN PROMISES  Much has been made by Government Ministers that an election promise of the Liberal party was a plebiscite. Honour is all unless there is a darker reason.

Below is an incomplete list of broken promises or identified untruthful statements attributed to Liberal party spokespersons since 2013. These are:–no cuts to disability pensions, monitoring Indigenous school attendance, no deals with the Greens to raise debt ceiling, funding cuts to ABC and SBS, no subsidies to coal or agriculture industries, cancellation of whaling/customs vessel, funding  to NGOs, tow back of asylum boats, ensuring open and accountable government and the list goes on. (Alan Austin, Independent Australia, 8 February 2016)

A recent broken promise and an example of smoke and mirrors are:– (The Australian, 9 May 2016)

  • changes to superannuation arrangements
  • a dissimulation to the South Australian electorate on submarine construction. Until 2019 at the earliest work will only involve design and planning not construction jobs.

There must be something special about this promise for a plebiscite. Either there is a desire to keep faith with the electorate – unlikely, review the above – or, the Australian people are witnessing a small number of conservative Liberal party members absolve themselves of their parliamentary responsibility because of faith in an imagined reality and/or dogma. Many of the above broken promises involve budget constraints or electoral ‘pork barreling’, strangely despite the worsening national debt, there is no desire to cancel an unnecessary $160 million plebiscite expenditure, admittedly only an incremental amount in the overall national debt.  This is not helping the trend in the light of a recent  warning by the Credit Rating Agency, Standard and Poor, who have placed Australia on a downgrade watch. (AFR, 7 July 2016)

REQUIEM  Australia aspires to be a modern open secular democracy. By not permitting a parliamentary debate and jeopardising the AAA credit rating, is it possible the religious inhibitions of a few are being forced onto the many?

Are we worthy of the anthem?

ADVANCE  AUSTRALIA  FAIR

 

The South China Sea & Australia. October 2016-1

Piracy on the South China Sea
Piracy on the South China Sea
(projectszi.org)
China in the South China Sea
China basking in the South China Sea
(adelaidenow.com.au)

Times they are a-changing.

The rapprochement (October 2016) between the Philippines President Duterte and Chinese President Xi Jinping, if consummated, will have immense ramifications. The apparent lack of resolve by the United States and Australia to curtail China’s creeping hegemony in the South China Sea may not be unrelated to Duterte’s decision.

In mid-October, the Australian Government (quietly) confirmed that the Australian navy will not conduct ‘freedom of navigation’ patrols within twelve miles of disputed territory. This policy was decided despite the findings of the International Tribunal (July 2016) that China is in violation of international law and, significantly, that 60% of Australian trade transits this waterway. Foreign Minister Bishop has declared that naval patrols in territory illegally claimed by China would ‘escalate tension’. (Wall Street Journal, 17 October 2016)

The reported attempt to de-escalate tension is at odds with a quote by Foreign Minister Bishop to the effect that ‘Australia will continue to exercise its international rights to Freedom of Navigation and Overflight. (Sky News Australia, 13 July 2016)

Chinese Whispers

Chinese officials and Chinese media have not been oblique in their warning  that Australia must ‘carefully talk and cautiously behave’. Does this constitute a threat to trade with China? The Chinese Global Times has warned ‘If Australia enters the South China Sea——-it will become a target for China to warn and strike. (Wall Street Journal, 17 October 2016)

Sitting on the Fence or not

The Australian dilemma has, in part, been created by the Obama Administration which is reported to have authorised only three naval patrols defined in appeasing jargon as one of ‘innocent passage’.

Since assuming office in early 2016, President Duterte must have been a bemused observer to the absence of strong pushback by the United States armed forces as Chinese hegemony cemented itself into the South China Sea.

With China an unchallenged rising power apparently facing down a ‘global power’,  President Duterte appears to have jumped off the fence to ‘change horses in mid-stream’. China’s difficult financial state and its inferior military power compared to America has apparently not deterred the President.

Pivot to Asia

Recent historical events prior to the Philippines closer ties with China, are germane to this situation. In 2015, the United States provided the Philippines Government with $80 million to upgrade military hardware. Early in 2016, the Philippine Supreme Court, under a ten year agreement, granted America leave to upgrade and construct military bases.. (Military Times, March 2016) It was agreed the work would proceed at a slow rate in order not to antagonise the Chinese. (New York Times, January 2015)

President Duterte agreed to the construction of five army and airforce bases, one sited close to Manila and not far distant from the contested Spratley Islands. In a recent development  (September 2016) President Duterte now requires American forces to withdraw from the Islamic southern Philippines and ?cancel construction of a proposed airforce base.

Through a Glass Darkly 

There are serious implications should a China-Philippine union be consummated. The American Administration fears a domino effect and that other Asian nations might follow suit perceiving a safer future with the Chinese dragon rather than with the American pivot. The concept of US military bases in the Philippines could become untenable. There would be an impact on the ANZUS Alliance. Depending on any domino effect, there could be a problem for Trans Pacific Partnership negotiations.

Thinking ahead, the US Chief of Navy Operations, Admiral Greenert, in Canberra, indicated America is considering a naval base in Australia. No doubt ADF plans to construct a $125 million logistics facility in Darwin will reinforce US navy aspirations. Would Darwin port become a sophisticated Chinese listening post? (ABC News.February 2015)

In summary, geopolitical trends in the South China Sea have been unidirectional for more than a decade. Only a major intervention can now change the course of future history.

The Australian Economy, Stupid. September 2016

Terms of Trade
Terms of Trade over 15 Years (ABS/Comsec}

PREAMBLE

  • A Pleasing set of Numbers (Hockey – September 2014)
  • A Terrific set of Numbers  (Hockey – June 2015)
  • The Best Growth Rate since 2012 ( Morrison – September 2016)
  • Then why oh why are:–
  • Australian living standards falling?
  • Young Australians unable to afford to buy a home?
  • Interest rates at 1,5%, the lowest ever?
  •  Salvation lies in consistent positive Terms of Trade.

What is the proper message we should hear from Australian Government Treasurers? Below is a potted summary of the Australian financial situation from mid-2014 to mid-2016. It will be shown that the above adjectives tend to disguise the situation. This is a call  aux armes citoyens to drive up our Terms of Trade and  to ensure we are not bamboozled by misleading commentaries from  our ruling elite.

The catalyst for this offering is Treasurer Morrison’s embrace of Australia’s mid-2016 accounts. To place his enthusiasm into context, we start with Treasurer Hockey in mid-2014.

DISCUSSION

In September, 2014 Mr Hockey indicated the National Accounts were “a pleasing set of numbers” which confirmed a consolidating economic momentum. As Mr Hockey was speaking, the Reserve Bank Governor, Mr Stevens, was warning of a dangerous bubble in the housing markets. It was ingenuous of Mr Hockey to indicate the GDP figure had risen by 0.5% in the June quarter but he had omitted to indicate that the real GDP had fallen by 0.3% due to the unfavourable Terms of Trade. The Reserve Bank of Australia considers the real GDP is a more meaningful measure of economic health. Treasurer Hockey knew this well. Was this deliberate omission or a senior ministerial moment? (SMH, September 2014)

Now forward to June 2015. The National Accounts for the the quarter ending June 2015 indicated GDP rose by 0.1% with an annual growth of 2.3%. (ABS) Treasurer Hockey enthused “a terrific set of numbers”. He indicated the Australian economy was among the fastest growing in the world. What Mr Hockey did not mention was that this period constituted the fifth quarterly drop in the Terms of Trade which was squeezing company profits, taxes and wages and that real net disposable incomes was now less than that in the September quarter 2008. (GFC) Australian living standards were falling for the first time in fifty years – and this is not a short-term trend. People are now spendings savings to make ends meet. This reduces domestic demand which knocks on to fewer job opportunities. (Financial Review, 3 June 2016)

Concurrent with Treasurer Hockey’s  upbeat comments the Boston Consulting Group, Sydney, opined that Australia’s low interest rates (then 1.75%) and Government spending was producing a potential spiralling national debt burden. Compounding this fragile transition away from resources investment, the non-dwelling construction activity declined by 4.9%. What is happening in the economy is that national productivity is falling as growth moves away  from low labour profitable  mining to low paid  intensive labour in  tourism and hospitality. These are issues lurking behind the Treasurer’s enthusiasm. (Financial Review, 3 June  2015)

Forward again to September 2016. Treasurer Morrison has commented with gusto on the National Accounts for the June quarter. We are told there is no sign of a downturn in the economy which has grown by 3.3% – the best growth since 2012. There was also fulsome comment that the growth rate is a tribute to hard working Australians. No where, apparently, was there reference to a need to encourage exports and thus improve the Terms of Trade. Mr Morrison noted that the Terms of Trade for July showed a $285 m reduction on the June figure (ABS 5368.0) due to slightly increased exports and decreased imports which might indicate  less disposable income was available for overseas goods.

  • Exports.  June $25,706m. July $26,425m
  • Imports. June $28.957m. July $28,835m

What was not made clear by the Treasurer was that the 3.3% GDP growth was boosted by pre-election Government spending and, curiously,  on increased expenditure on hepatitis C drugs. (SMH, 7 September 2016) Currently brakes on the economy are weak household spending, weak wages growth and a decline in the national hours worked. Irrespective of encouraging statements by the Treasurer, the historic low interest rate, now 1.5%,  and low inflation rate of 1.0% (RBA band 2 – 3 %) is indicative of a sluggish economy.

 

CONCLUSION

The tentative conclusion, is that statements by recent Australian Treasurers cannot be accepted at face value. Their statements must be evaluated within the wider picture of the Australian financial situation.  The driver for the future is a positive Terms of Trade that, initially, balances the  budget from this jobs and growth  and other benefits will follow.

 

 

JOBS and GROWTH August 2016

 

Future Employment
Future Employment
(Dave Granlunp, politicalcartoon.com)

JOBS AND GROWTH

Prologue This offering attempts to place the ‘Jobs and Growth’ song line into Australia’s current and projected economic situation. Background is Australia’s terms of trade,  past innovations,  the imperative for export  income and closes with comment on poor academic achievement and Government funding as drivers for growth into the 21st century.

Preamble The slogan, ‘Jobs and Growth’ generates two issues:

  • If Australia is to prosper ‘growth’ must be directed toward generating export income.
  • In an expanding 21st century, economy improving education is necessary but unemployment is still forecast.

The policy of encouraging domestic employment will not increase the national wealth in an expanding population –  it will merely churn the money supply. This activity will encourage quantitative easing, a devalued currency, deflation and more expensive imports – as experienced in Europe today.

‘Growth’ for Australia must be directed to generating export income. Much has been made of a ‘transitioning economy’ but the Government has apparently not articulated a specific sense of direction, although small business has been given a boost – but how much product is export oriented?

For Australia to prosper, the monthly terms of trade must be returned to positive, such that the national budget at least returns to break-even; this will stabilise the national debt. The flip side is that high tech export industries do not require a large relatively unskilled work force. Canada found transitioning toward a high tech economy does not substantially reduce unemployment but it does increase GDP.

Australian Exports, Imports and Terms of Trade  In 2013, Australia produced a positive terms of trade (DFAT April 2016, dfat.gov.au/trade):

  • Top Exports – $329 billion. Iron ore, Coal-Gas-Petroleum, Wheat, Copper, Aluminium, Cotton, Wool, Gold, Financial services.
  • Top Imports – $318 billion. Travel-Freight-Transport services, Motor vehicles, Computers, Refined petroleum, Furniture, Telecommunication equipment, Heating/Cooling equipment, Iron-Steel-Aluminium structures, Professional services.
  • Terms of Trade + $11 billion. Additional impost is the interest on National Debt – $16 billion.

Since 2013 the terms of trade have moved into deficit. In the first half of 2016, the terms of trade ($ billion ) were:  January 3.42, February 3.41, March 2.16, April 1.58, May 2.22, June 3.19 – that is around $15 billion. (tradingeconomics.com)

 

Terms of Trade
Terms of Trade and Iron Ore Price
(ampcapital.com.au)

The budget deficit for 2016-17 is $37.1 billion which is forecast to decrease to $6 billion in 2019-20. (Australian Government Budget 2016-17) It is these deficits, among other factors, that provoked a warning from the Ratings Agencies on Australia’s AAA credit rating.

Jobs and Growth  Australians cannot maintain their living standard by creating domestic jobs thereby churning the money supply. Our Nation must export more to improve the terms of trade. Government policy appears to be promoting any jobs rather than export oriented jobs – possibly a hidden agenda to reduce unemployment and maintain social stability. The main game is jobs that create export income. It is a sad fact that successive Australian governments have presided over the closing down of labour- intensive manufacturing industries, in part due to thin internal markets, high production costs and a strong currency boosted by a vibrant natural resources industry. To illustrate past, current and probably future closures, below is an incomplete list;
Ford-Toyota-Holden car plants, SA/Vic; Electrolux, NSW; Smiths Crisps, WA; Amcor, Vic/Qld; Buizen Yachts, NSW; Arrium, SA; Blue Scope Steel, NSW/WA and food producers Rosella, Windsor Farm Foods, Dairy Bell.

The picture is concerning despite, during 2015, over 300,000 jobs were created. Unfortunately, many were part-time and there was a trend for monthly hours worked to decrease. (Fact Check March 2016 and ABS June 2016) Critical missing information is the distribution of labour between domestic and export oriented jobs. ABS should collect this information.

Export industries up and running and with scope for immediate  expansion are tourism and education:

  • Tourism, year ended June 2016. Recorded 7.85 million visitors – conservative income $6 billion.
  • Education for 2015. School/University students 270,000, Vocational students 70,000. (AFR December 2015)

To promote export industries, Australia has a rich gene pool of scientists, engineers and lively minds to draw upon. Examples of Australian brilliance are:

  • Science and Engineering.  Aircraft Black Box, Electric Drill, Winged Keel, Frazier Lens, Racecam, Refrigerator, Splayds, Triton Work Centre, Atomic Absorption Spectrometer, Permaculture, WiFi, Underwater Torpedo, Photo Lithography, Stump Jump Plough, Mitchell Thrust Block Bearing, Humespun Pipes, Dethridge Wheel, Self Propelled Hoe, Coupé Ute, Froth Flotation, Quantum Bit, Anti-hacking Software, Blast Glass.
  • Medical. Spray-on Skin, Pacemaker, Cochlear Implants, Ultrasound, Plastic Lenses, Zinc Cream, Gene Silencing, Pollilight Forensic Lamp, Blood Test for Still -borns.
  • Commercial. Polymer Bank Notes, Feature Films, Si-Ro-Set Creasing, Tank-bred Tuna, Wine Casks, Coolgardie Safe, Automatic Totalisator, Surf Ski.

Australians are innovative and growth should be directed towards universities, research establishments and selected ‘garage’ entrepreneurs in a bid to improve Australia’s terms of trade. Despite the Turnbull quote “Innovation is the critical aim of the Administration”,  both the Abbott and Turnbull Governments have reduced the influence of the CSIRO by budget cuts and retrenchments. Recently however, the CSIRO has been boosted with a $300 million Innovation Fund to promote a data driven economy, co-investment and an acceleration program.

Universities have also endured funding cuts in the 2016 Budget. A recent Vice-Chancellors’ meeting recorded “a deep disappointment at the proposal to reduce public investments”. Among the reductions was a $2.5 billion cut over the forward estimates to 2019-20 and a withdrawal of an efficiency dividend of $1.2 billion. These cuts are inexplicable in the light of a statement by Professor Ian Jacobs, Vice-Chancellor, UNSW who indicated on ABC RN (18 August) that in 2014 Australian universities contributed $60 billion to the Australian economy by way of innovation and commercial research.

The dilemma for the Australian Government’s  ‘stairway to the stars’ is financially compromised by the competing requirements of Health, Social Security, NDIS and Education,; the latter, perversely, being critical.

Another brake on Australia’s drive toward an innovative future (jobs and growth) is the poor uptake by Australia’s youth in the STEM subjects. The OECD global education ranking for Australian fifteen year olds in maths and sciences was 14th. Rankings are: 1 Singapore, 2 Hong Kong, 3 South Korea, 4 Japan, 5 Taiwan——- —11 Poland, 12 Vietnam, 13 Germany, 14 Australia. As if on cue, there has recently been disappointing comment on NAPLAN tests in Australia.

In transitioning to a 21st Century high-tech industrial economy, Canada announced in 2015 their GDP increased but  with little opportunity for increased employment.

 

Modern Car Plant
21st Century Vehicle Plant (cis.org.au)

A critical driver in the 2016 Budget to promote ‘jobs and growth’ is the reduction of tax rates from 30% to 25% over the forward estimates such that by 2026-27 cost to the taxpayer will aggregate $48.2  billion. (theaustralian.com.au/budget, 6 May: Smart Company, 3 May 2016) If the principal outcome of this initiative is to boost domestic employment supplying a domestic market, it will increase GDP but the terms of trade will deteriorate as business imports will increase, it is vital these tax benefits promote export growth. To round out this policy, the Government must actively encourage Australian industry to establish export markets and reward successful companies for this. This must become the mantra for ‘jobs and growth’ otherwise living standards will continue to fall.

Epilogue  This opinion piece has attempted to examine issues lurking behind the Government’s song line ‘jobs and growth’.