Australia
Australian grab for regional domination behind Tuvalu climate treaty
Labor is framing its new treaty with the tiny Pacific nation of Tuvalu, which will allow 280 people a year to move to Australia, as an act of climate change solidarity.
But the primary motivation is to strengthen Australian influence in the South Pacific and block China’s search for allies.
Behind the climate rhetoric, the new treaty gives Australia a veto over Tuvalu’s ability to make any “any partnership, arrangement or engagement with any other State or entity on security and defence-related matters.
“Such matters include but are not limited to defence, policing, border protection, cyber security and critical infrastructure, including ports, telecommunications and energy infrastructure.”
The treaty comes 19 months after China signed a security pact with the Solomon Islands—a move that sparked panic in the Australian ruling class, which regards the region as its own.
Prime Minister Anthony Albanese and Tuvaluan Prime Minister Kausea Natano announced the agreement at the Pacific Islands Forum meeting in the Cook Islands, with Australia making it clear the option was open for other countries in the region to sign similar agreements.
Falepili Union
Tuvalu, a British colony until 1978, consists of nine islands about halfway between Australia and Hawaii. It has a population of about 11,200 and, at its highest, is just 4.6 metres above sea level.
Albanese said that Tuvalu’s “very existence is threatened. I believe developed nations have a responsibility to provide assistance”.
Under the treaty or Falepili Union (based on a Tuvaluan word for neighbourliness), Australia will offer Tuvaluans a “human mobility pathway” to allow them to live, study and work in Australia, with access to education, health, and income and family support on arrival.
The two countries also commit “to work together in the face of the existential threat posed by climate change”. Australia will spend $16.9 million to expand land areas of Tuvalu’s main islands by 6 per cent.
But these are empty gestures while the Albanese government continues to approve new coal and gas projects.
As the Tuvalu Climate Action Network points out, Australia is failing “to effectively address the root cause of Tuvalu’s existential threat—the devastating impacts of climate change primarily driven by the combustion of fossil fuels …
“Offering residence or citizenship rights to Tuvaluans, though a compassionate response, does not halt the inexorable rise in sea levels.”
Academics Taukiei Kitara and Carol Farbotko report that many Tuvaluans have no interest in leaving their homes.
They write, “Research indicates that, with adaptation measures, the habitability of atolls can continue into the 21st century, despite rising sea levels … The treaty should not be interpreted as an indication that the worst-case scenario has arrived or is imminent.”
They add, “Our gravest concerns about the treaty are that it sidesteps the important question of Australia’s commitment to phasing out fossil fuels.”
While Australia should open its borders to climate refugees, the priority should be to stop global heating.
But Labor refuses to rule out new fossil fuel projects because of the massive role coal, gas and oil play in the Australian economy. In 2022, coal exports alone were worth a massive $142 billion.
Cold calculation
Behind Labor’s posturing about climate solidarity is a cold calculation about the importance of binding Tuvalu to Australia and preventing China extending its influence.
Tuvalu’s land mass is tiny but its exclusive economic zone is almost 750,000 square kilometres—similar in size to NSW.
It is currently one of the few countries in the Pacific that still maintains a diplomatic relationship with Taiwan, rather than China.
Nine countries have switched allegiance to China since 2016, leaving Taiwan with just 13 allies worldwide.
Now Australia wants to lock island nations into treaties in order to lock out China.
As Solidarity reported when the Solomon Islands signed a security agreement with China in April 2022, establishment commentators warned the deal “would give the People’s Liberation Army navy an operating base deep within Australia’s strategic hinterland” and “would signal a pretty significant failure of Australia’s long-term security policy”.
Albanese and Foreign Minister Penny Wong have been working hard since then to ensure China makes no further progress.
Vast areas of the globe are in play. Professor Jack Corbett from Monash University wrote in The Age, “The language of ‘union’ signals that the government hopes other countries, especially Kiribati and Nauru, might be open to a similar deal. If they are, then the map of the Pacific would suddenly look quite different.
“The US would maintain strategic denial in the North Pacific via Guam, its Commonwealth with the neighbouring Mariana Islands, and its Compacts of Free Association with Palau, Federated States of Micronesia and Marshall Islands.
“Tokelau is a dependent territory of New Zealand, which also has a free association arrangement with Cook Islands and Niue, and longstanding links with Samoa. France retains French Polynesia and New Caledonia.
“If the Falepili Union were to include Kiribati and Nauru as well as Tuvalu, then the North, Central and South Pacific would all comprise territories friendly to Australia that protect our air and sea-lanes from a Chinese approach.”
Regional power
Australia has been the regional power in the South Pacific since the 19th century.
From the point of view of Australian capitalism, it is crucial to control the shipping lanes that run through the region.
Malcolm Fraser’s Coalition government quadrupled aid to island nations in 1976 as a direct response to the feelers the Soviet Union was extending to some of the newly-independent island nations.
Today, our rulers fear interference by China—ignoring, of course, the much more substantial stake in the Pacific held by the US and France.
The treaty with Tuvalu pays lip service to humanitarian aims but is, in reality, another step by Australia to shore up its power.
Ordinary people in Australia and Tuvalu have nothing to gain from this rivalry. Instead we need to unite for real action on climate change.
By David Glanz
The post Australian grab for regional domination behind Tuvalu climate treaty first appeared on Solidarity Online.
England Celebrate Their Cricket World Cup ‘Moral’ Victory
The English Cricket team have spent the weekend celebrating their cricket world cup ‘moral’ victory, with celebrations including a ticket tape parade where at least 3 people turned up.
”What a great tournament it was for English cricket,” said England’s number one cheer leader, professional flog Piers Morgan. ”Sure, Australia and India did play out the final, but both sides would be envious of how England played.”
”Surely it won’t be too long till we hear, arise Sir Johnny Bairstow.”
When asked why the English cricket team felt they were morally superior to other sides, given they didn’t even make the finals, professional flog Morgan said: ”Just look at Johny Bairstow, he is the embodiment of a professional athlete.”
”He’s always thinking, always walking.”
”Now, if you’ll excuse me, I’m off to sledge the Australian cricket team about the Ashes. They may hold them but most people who I talk to, like myself, agree that they really belong to us.
@MWChatShow
You can follow The (un)Australian on twitter @TheUnOz or like us on Facebook https://www.facebook.com/theunoz.
The (un)Australian Live At The Newsagency Recorded live, to purchase click here:
Sky News Encourages Their Viewers, All 6 Of Them, To Get Behind Dutton
Low rating news channel, Sky News Australia, has put out the rally cry for their viewers, all 6 of them, to get behind low-polling Opposition leader, the Dark Lord Peter Dutton.
”We need our viewers to muck in and get behind good ol’ Petey Dutton,” said Sky News host, convicted racist Andrew Bolt. ”I can’t wait for a country led by Pete.”
”The air will be crisper, the sun brighter and everything will be a comfortable shade of white.”
When asked why a news channel, admittedly a very low-rating one, would seemingly be barracking for one side of politics rather than remaining neutral, Mr Bolt said: ”We just want what’s best for Australia.”
”And by Australia, of course I mean our demographic, aging, predominantly white boomers,”
”Now, if you’ll excuse me, I’m having a little soiree for all my fans and must make sure the telephone booth down the road is free.”
@MWChatShow
You can follow The (un)Australian on twitter @TheUnOz or like us on Facebook https://www.facebook.com/theunoz.
The (un)Australian Live At The Newsagency Recorded live, to purchase click here:
a long hiatus - go well, folks…
Due to circumstances way beyond my control, Vanishing Sydney has been forced to go into a long hiatus until after Xmas. In the meantime, enjoy the back catalogue. You can find 2,800 original unique photographs of the Inner West of my beloved Emerald City - Sydney, Australia. The best resolution is seen in the Archive box on your desktop, or just keep scrolling back forever on your device. It contains just about every single landmark of any note in the Inner West and a helluva lot more besides. Hope to be back in 2023. The journey so far has been beyond fun; it started on a whim, but there’s been so much enjoyment and fulfillment in creating an amateur photographic record of the place I’ve called home for the past 35 years. In the meantime, go well, folks.
The Gabba As Field Of Dreams
All sports fans are sustained by fantasies. They are our white ravens, the sights we imagine we will never see, because they are ruled out by improbabilities, but they still sustain us. For they bring us back to the ‘action’ again and again, hoping against hope and empirical plausibility, letting their associated dreams and wonderings live and flower within us, because it is they, and not anything else, that grants meaning to an essentially meaningless activity. In my soon-to-released ‘cricket fan memoir,’ I wrote the following about the ‘great, epic, unbelievable’ 2001 Indian win in Chennai over Steve Waugh’s Australians:
I had never imagined such a turn of affairs: Victory was possible after suffering the humiliation of following on, after facing almost certain defeat against the world’s strongest team, an unbeatable one reckoned among the greatest in cricket’s history. Several beers later that night, I stumbled home and fell into bed, unable to comprehend the scale of the cricketing event that had just transpired. I was shaken. Nothing like this had seemed remotely possible in the years I had watched and followed cricket. I thought of the 1983 World Cup, so long ago—another life, another place, another improbability. This Test was in those same precincts of implausibility. I had never spun out a cricketing fantasy so exotic, so schoolboyish. Never had I dreamed of a comeback so over the top, so back from the edge, so against the wall. Even as a youngster, hopelessly mired in daydreams, I had never, ever, dreamed up something like this.
I’ve been watching cricket for over forty years now. Many are my cricketing fantasies, created and sustained over decades of cricket spectatorship and its interactions with the events in my inner and outer lives. Beating Australia, arguably the greatest cricketing nation of all in Test cricket’s history, in Australia in a Test series, has always been one of them; it was the greatest of all because it represented such an implausible achievement. Over the years that fantasy had morphed and grown new forms and shapes and contours, reflecting my changing self. It wasn’t just enough to beat old foes. They had to be beaten in a particular way and manner. Beating England, Australia, the West Indies, Pakistan at home, in India, was not good enough; they had to be beaten ‘away.’ Beating them in facile fashion, by innings defeats or 10 wickets or boatloads of runs, was not good enough either; cricketing adversity had to be overcome along the way. That adversity could be of match situations, ground conditions, injuries, hostile opponents; whatever it was, it had to be overcome before victory could be claimed and celebrated.
A win after following-on checked those boxes for sure. But the 2001 win at Kolkata had come at home. And India had after all, had an Indian umpire officiating on the final day at Kolkata. (There is no doubt in my mind that on that fateful day, had India been pressing for a win with an English or Australian or South African umpire, they would not have won; not because those umpires would have been biased, but because they simply would not have known how to adjudge those crucial LBWs – off offspinners and legspinners – on the final day.)
I have had, for a painfully long time, a very particular fantastic scenario played out in my head about how I wanted India to win in Australia. Ideally, a feisty Indian batsman would be chasing an improbable target on the final day, in the company of tailenders, all the while relentlessly sledged by the Australians along the way. His response to these manifold adversities would be to talk back – with both bat and mouth- and continue to take his team onwards and upwards. It should be clear that in my mind, this fantasy was going to be fulfilled by Virat Kohli, who in 2014 had taken Indian to the brink of one of the greatest Indian Test wins of all time at Adelaide in 2014. But both India and Kohli collapsed that day, and India collected its usual ‘brave loser’ award. India did win in Australia in 2018/19, thus marching across ‘the final frontier’; but the win, in retrospect, wasn’t an adequate satisfaction of the daydreaming impulses that underwrote my fantasies. The Australian team was weakened; the Indians lost at Perth, supposedly the fastest wicket in Australia when they tried to out-pace the Australians; and of course, Virat Kohli lost the battle of the big mouths to Tim Paine, the Australian captain.
But India’s win at Brisbane over Australia on the 19th of January 2021 did it all. India won in the last few overs of the last session of the last day of the last Test of a series which had begun with them losing the first Test after collapsing to their lowest score in Test cricket. They lost their captain, their first XI; they put up with, and mastered, the usual Australian three-pronged barrage of witless player sledging, press sniping, and fan abuse. They came back in the second Test to win; they drew the third Test after batting out the final day (and threatening to win along the way); they won the fourth Test on the last day by three wickets with a young opening batsman and wicketkeeper leading the way. Along the way, they sledged right back, reported fan abuse from the stands, and kept their mouths shut when it came to addressing mysteriously sourced reports about their being ‘sooks’ and ‘whingers.’ My fantasy didn’t all come to fruition in one Test or one day; instead, cumulatively, over the course of a series, this particular fantasy was prepared and simmered, finally all coming to a head on that glorious afternoon in Brisbane as a young, feisty, chatty wicketkeeper from Delhi (my old hometown) – with a tailender at the other end- slammed an aggressive, bigmouthed Australian pace bowler (an archetype of sorts) for four to win the Test and series. (That the march had been led by a young, exquisite strokeplaying star from the Punjab was the icing on the cake.)
In my mind, it is all quite clear now: this was the greatest Test series of all time. No other team in cricket’s history has overcome so many adversities away from home to win in a former domain of subjugation. The usual Anglo-Australian cabal of writers, ex-players, and fans can continue to wallow in glorious tales of Ashes long past; those glories have long been displaced from my formerly colonized mind. A new cricketing order – mental, aesthetic, and performative – is in place.
The white ravens we will seek from now on will be of an entirely different plumage. I look forward to their sightings.
The coronavirus response calls into question the future of super
Warwick Smith, University of Melbourne
This article was first published in The Conversation.
Understandably, given we are in a crisis, the government has baulked at including superannuation contributions in the A$140 billion worth of $1,500 per fortnight wage top-ups it will be directing to six million Australians.
As the JobKeeper fact sheet puts it:
It will be up to the employer if they want to pay superannuation on any additional wage paid because of the JobKeeper Payment.
This is in the middle of a treasury led Retirement Income Review that is considering, among other things, whether the current 9.5% of salary contribution should be increased to 10% and then to 10.5% and then in a series of annual steps to 12% by 2025.
In considering the idea (it is actually leglislated – if the government decided not to go ahead it would need to unleglislate it) it helps to go back to basiscs.
The blinding power of money
The trouble with money is most people are so busy looking at it they are blind to what’s going on in the real economy – by which I mean the production and distribution of goods and services.
Our current material standard of living depends almost entirely on our current ability to produce goods and services (assuming for a moment imports are funded by exports).
Similarly, our standard of living in 2050 will depend almost entirely on our capacity to produce goods at that time. This means it has little to do with how much money is in our superannuation accounts.
Part of the justification for superannuation is to get us more resources in retirement, and it will for those who have big super balances, but it won’t do much to change the total amount of resources available at the time.
The limits to saving
Often it’s put another way. We are told baby boomers need to fund themselves in retirement, instead of relying on pensions paid for by those who are still in the workforce.
But imagine a perfect scenario where every retired baby boomer has $1 million in super, freeing those still working from the tax burden of funding the pension.
When the boomers are using their super to buy services and goods, who are they going to take them away from?
You guessed it, those still working.
They’ll be giving up resources to support the retirement of boomers, whoever supplies the cash.
In the main, saving can’t create resources
If there was no superannuation and the government instead taxed current workers in order to fund retiree consumption, the real cost to workers would be the same. That cost is the provision of goods and services to retired people instead of workers.
Individuals can indeed save for the future by foregoing some goods and services today in order to have more of them later. Financial planners refer to it as consumption smoothing.
But an entire society can’t save for the future through consumption smoothing.
If Australia as a whole consumes fewer goods and services in one year, it is likely to reduce rather than increase its future wealth because it is fully utilised labour and capital that drives investment and productivity.
That’s what lies at the core of misunderstandings about the superannuation system. Foreign investment aside, it can’t allow an entire society to save for the future to support itself in retirement.
It can skew the distribution of resources in future years, away from those of working age and those with low super balances towards those with (tax concession subsidised) high super balances.
Boosting productivity can help
If our goal is an adequate and sustainable income in retirement for all Australians, our main priority ought to be ensuring that those remaining in the workforce are productive enough to support themselves, their children, those without work and those who have retired.
In other words, if you’re worried about the economic impact of our ageing population on our material standard of living (and there are reasons not to be worried) you would want our focus to be on productivity, rather than retirement savings.
To the extent retirement savings are used for productivity enhancing investment, that’s good. The reality is much of our retirement savings are funnelled relatively unthinkingly into an already bloated financial system where they expand speculative bubbles.
Elsewhere I’ve referred to it as Australia’s first compulsory Ponzi scheme.
Like most important economic questions, the best retirement income system is not, at its core, solely an economic question, it is also a moral and political question about distribution and inequality.
So, with that in mind, here’s what my personal moral (plus economic) analysis tells me would be the best retirement income system.
We could give the money back, slowly
The best way would be to get rid of compulsory superannuation, give all the money back to account holders (slowly to avoid too much inflation), mandate a 9.5% pay rise in its place and redirect the tens of billions of dollars we currently spend on superannuation tax concessions toward rent assistance, a higher Newstart allowance and a higher pension.
With retired renters better looked after, a moderate (say 20%) increase in the pension, and continued indexation of the pension to wages, no retired Australian would be living in poverty.
It’d be sustainable so long as we ensured sufficient worker productivity, primarily through full employment, appropriate infrastructure investment and well-supported education, training and research.
There, problem solved.
Warwick Smith, Research economist, University of Melbourne
This article is republished from The Conversation under a Creative Commons license. Read the original article.
Australia Tour 2019
Fitzy and Cara are thrilled to announce the imminent release of their much-anticipated 5th studio album ‘Hand It Over’, featuring lead track ‘Hold On’, and they’re headed out on an extensive Australian tour this Summer to get everyone’s blood flowing.
January 2019:
26 Jan Rye Australia Day, Rye, Victoria 6pm (Free)
31 Jan Heritage Hotel, Wollongong, NSW 7pm
February 2019:
01 Feb Milton Theatre, Milton, NSW 7.30pm
02 Feb Harmonie German Club, Canberra, ACT 8pm
08 Feb The J Theatre, Noosa, QLD 7.30pm
09 Feb Old Museum, Brisbane, QLD 7pm
10 Feb Mo’s Dessert Clubhouse, Gold Coast, QLD 3pm
14 Feb Stag and Hunter, Newcastle, NSW 8pm
15 Feb Leadbelly, Newtown, NSW 8pm
16 Feb The Metropole, Katoomba, NSW 6pm + Vanessa Caspersz
21 Feb Old Church on the Hill, Bendigo, VIC 7pm + Luke Watt
22 Feb Memo Music Hall, Melbourne, VIC 7.30pm
23 Feb Matinee NSC, Melbourne, VIC 2pm
24 Feb Way Out West, Newport, VIC 2pm
March 2019:
01 Mar Nannup Festival, Nannup, WA
02 Mar Nannup Festival, Nannup, WA
03 Mar Nannup Festival, Nannup, WA
14 Mar Mojo’s Bar, Fremantle, WA 8pm
15 Mar Four5Nine, Perth, WA 8pm
16n Mar Nukara Festival, Geraldton, WA
30 Mar Cubadupa Festival, Wellington, NZ
31 Mar Cubadupa Festival, Wellington, NZ
April 2019:
12 Apr Coffs Ex Services Club, Coffs Harbour, NSW
13 Apr Wauchope Arts Hall, Wauchope, NSW
Inland Sea of Sound Festival
The much-anticipated Inland Sea of Sound festival is back bigger than ever with Bathurst’s iconic Wahluu-Mount Panorama set to play host to the two-day music and arts festival from 30th November – 1st December 2018. Hat Fitz and Cara will be playing on 1st December. Grab your tickets here.
Now in its eighth year, Inland Sea of Sound began with small concerts in private backyards and has evolved into an iconic celebration attracting thousands of music and art lovers. The festival brings together the best-established music acts from around the country with home-grown local talent spanning a wide range of genres including classic and alternate rock, folk, jazz, electronic and more.
Keep the date, and Vote
James Glover is back with another guest post, this time digging into some poll figures ahead of the postal plebiscite on same sex marriage.
Hey, there is a survey/plebiscite/referendum on, in case you haven’t heard. It’s on same sex marriage or marriage equality. Leaving aside the fact that this is a survey and not at all binding on MPs, this post is not about the rights and wrongs of SSM but about how to interpret the results of a recent Newspoll. Unlike most Western democracies voting in Australian elections is compulsory but as this is voluntary we are left with the additional problem for psephologists of determining not just how people would vote but whether they feel strongly enough to vote. The Newspoll produced two sets of results. The familiar one of whether people supported SSM or not, but also whether they intended to send in their postal surveys. Strangely enough they didn’t include information on the voting intentions of those who actually intend to vote.
So I made a spreadsheet model to try to determine some possible outcomes and what were the real drivers of the result based on what we gleaned from Newpoll but with some possibilities of one side or the other getting more people out to vote and the underlying vote being skewed towards the “Yes” vote. We know from dozens of polls going back 10 years that the majority of people, when asked, support the general notion of SSM. The results are usually in the range 60-70% in favour, 15-25% against and about 15% undecided. Newspoll has the overall level of support at 65%, about in the middle of that range. And if the ABS, who are conducting the survey, were to conduct a statistically significant poll they would almost certainly (the probability theorists technical get out statement) say a clear majority support it. Game over. Surely?
But there are other factors coming into play here. Here is a table of the Newspoll results by age, probably the most significant determinant, outside political views, of whether they support, or not, SSM.
Support for SSM by Age18-3435-4950-6465+Overall
Yes7064644962
No2228304732
Undecided88646
AEC enrolled population 4,271,2894,271,2904,271,2914,271,29217,085,162
To determine the ”overall” figure, and what I will refer to as the “voting population”, I am using the AEC’s own figures on people enrolled to vote, as of June 2017, which is the last line.
As has been noted support for SSM decreases with age. But the number of people in each age cohort is about the same. The overall figure for support of 62% is towards the bottom end of most surveys but let’s leave it at that.
The Newspoll also provide figures on whether people actually intend to return their surveys.
Intention to vote18-3435-4950-6465+Overall
Definitely will vote5864737668
Probably will1916111114
May or may not129889
Probably won't45323
Definitely won't35323
Uncommitted41212
One obvious thing to note is that older people, who are also more likely to vote “No” are more likely to vote. That will skew the results towards the “No” case.
But polls two months out may not reflect the final vote as happened in the recent US and UK elections, and support for the “Yes” case may soften. And the “No” case is probably doing a lot more to ensure they get as high a turnout as possible. So, in my model, on a spreadsheet of course, I included some assumptions and variable inputs which are:
- I assume all people who say they definitely will vote is 100%.
- “Probably will vote” is an input
- “May or may not vote” is an input
- Probably won’t, definitely won’t and uncommitted is set at 0%
- Turnout for the “No vote”. Based on the polulation figures the turnout, overall should be about 83%. So one input is the turnout for “No vote” assuming they make more of an effort to get their supporters out to vote. The turnout for the “Yes” vote is then deducted from this number to match the overall turnout, 83%, by age group so higher turnout for “No” automatically leads to a lower turnout for “Yes”.
- For people who will claim that the “Yes” poll result is exaggerated and is actually lower, or will soften closer to the closing date I have included an adjustment term. So “-5” means I have reduced the polled support for “Yes” by 5% making it 57% rather than 62%.
- Splitting the “undecided” vote between “Yes” and “No”. “P” means I have allocated it proportionally to the level of support, but there is a parameter which splits it, say, 25% to “Yes” and therefore 75% to “No”.
So the results? Well here they are:
SummaryBCSExp SRWCSWCS
% "probably will vote" who do vote75%75%50%25%
% "may or may not" who vote50%50%32%0%
"No" vote turnoutP95%95%100%
undecided split to "Yes" votePP30%0%
adjust yes vote00-5-5
Vote Yes66%62%50%40%
Vote No34%38%50%60%
Support Yes67%67%59%57%
Support No33%33%41%43%
Overall turnout84%84%78%71%
Yes turnout83%78%67%50%
No turnout85%95%95%100%
Population Yes vote56%52%39%28%
Population No vote28%32%39%43%
There is good news, and bad news, depending on your viewpoint. My own view is a “Yes” vote is a good thing but if you feel otherwise feel free to substitute “Best” for “Worst” in the above table. So here are the 5 scenarios. Note that once you fix the “No vote” intention to vote at, say, 95%, you remove people who intend to vote “Yes” in order to keep the Newspoll and AEC derived figure of 83% intending to vote.
- BCS – Best Case Scenario. Based on the Newspoll numbers I have split the intention to vote and undecided vote equally among “Yes” and “No” voters. I have also assumed 75% of the “Probably will vote” and 50%” of the May or may not” voters will vote. The result is a clear win 66:34 for the “Yes case”. Also the overall number of people voting “Yes” is 56% of the voting eligible population so hard to argue this isn’t a decisive result.
- Expected – I am assuming that the people on the “No” case will be better at getting people out to vote than the “Yes” case, 95% of them. Here there is still a clear win for “Yes” at 62%. And overall that represents 52% of the population. A clear win for “Yes” on the vote and over 50% of the population vote “Yes” as well.
- RWSC – Reasonable Worst Case Scenario. This is a term that I (and the Mule) picked up in our early days at DB to describe a scenario which assumes negative (from my point of view) parameters that could nonetheless be possible. Here I am assuming only 50% of probably wills and 33% of may or may not’s vote. Because I have fixed the “No” voting rate at 95% this leads to less “Yes” votes” to keep the overall participation rate at 83%. Here the result is a line ball at 50:50. It could go either way. The population “Yes” vote is close to 40% so people might argue that less than 50% vote “Yes” and hence conservative MPs shouldn’t take the result as definitive.
- WCS – Worst case scenario. Only 25% of the maybe votes and none of the may or may nots vote and 100% of the “No” votes do. I’ve reduced the support for the “Yes” case by 5%. All undecideds get allocated to “No”. Despite the overall support being 57:43 in favour of “Yes” the actual vote goes 40:60 in favour of “No”. And the overall population vote is 43:28 in “No”s favour. Under these circumstances the PM has said the vote for SSM won’t come to parliament. Largely this is driven by the 100% turnout for “No” and only 50% turnout for “Yes” as well as softening of support for “Yes” and undecideds voting “No”. This is the result the “No” campaign will be, literally in some cases, praying for as it will be difficult for the Opposition and proponents of SSM to argue the issue hasn’t been settled for the time being.
My own guess? It will be 55:45 in favour of “Yes” with overall support at 65:35. That will be enough for the anti SSM lobby to say support was never as high as the “Yes” camp claimed. But a win is a win and only the most devout glitter sellers won’t be running out of stock by Xmas.
Extra: How do I think the ABS should actually conduct this poll? Not by post for a start. There are 150 electorates and one of the arguments against using results from 1,400 people is that it barely samples many of those, less than 10 people is some cases. In actual fact the mathematical 95% margin of error for sampling N people is (approximately) 1/sqrt(N) or for N=1400, 2.67%. So the overall sample size is sufficient if the result is 60:40. But to give everyone the feeling their voice and their neighbour’s voice is being heard how about sampling 150,000 people? That is 800 people in Australia’s smallest electorate, Kalgoorlie. The MoE by individual electorates would be better than +-3.5% and over the whole Australian voting population 0.25%. And it would only cost $10m. It might even become a regular thing.
'Straya: Basically, she's rooted mate
Charts! Nobody asked for them, but I have them anyway! Over the last few years the Bank for International Settlements have been publishing a fab set of statistics that are not usually brought to bear in the tea leaf reading of mainstream economists. This is a shame, as they are exactly the sort of statistics which would indicate the risk of imminent financial crisis. Last month the BIS updated the data to the end of (calendar year) 2016. Here's an illustration (courtesy of LibreOffice) of where Australia is, relative to some comparable and/or interesting countries (click to embiggen):
As the BIS explains, the Debt Service Ratio (DSR):
"reflects the share of income used to service debt and has been found to provide important information about financial-real interactions. For one, the DSR is a reliable early warning indicator for systemic banking crises. Furthermore, a high DSR has a strong negative impact on consumption and investment."
So as a measure of Australia's ability to pay at least the interest on our private sector debts, if not pay down the principal, you might think this is not a bad result. We clearly substantially delevered after the GFC, thanks in large part to the Rudd stimulus pouring public money into the private sector, then levered up a bit since, but we've ended up between Canada and Sweden, which is a pretty congenial neighbourhood. But this is total private sector debt; what happens when we take business out of the equation and just look at households (and non-profit institutions serving households - NPISHs)?
Woah! Suddenly we're in a league of our own. Canada's flatlined here since the GFC, meaning the subsequent increase in their total private debt burden has largely come from investment in business capital. In such a case, provided this investment is directed at increasing productive capacity, and is accompanied by public sector spending to proportionally increase demand, this is sustainable debt. Australia has been doing the opposite.
Here's another way of looking at the coming Australian debt crisis, private sector credit to GDP:
This ratio will rise whether the level of debt rises, GDP falls, or both, so it's another good indicator of unsustainable debt levels. The current total level (in blue) of over 200% is at about the ratio Japan was at when its real estate bubble burst in the early 1990s. Breaking this down again into household and corporate sectors, we see that over the mid-1990s Australia switched the majority of its private sector borrowing from business investment to sustaining households. What happened in the mid-90s? Data here from the OECD:
From the mid-1990s to 2007 Australia experienced the celebrated run of Howard/Costello government fiscal (or "budget") surpluses. We all know, or should know, thanks to Godley's sectoral balances framework, what happens when the public sector runs a surplus: the private sector must run a corresponding deficit, equal to the last penny. There is nowhere else, net of private sector bank credit creation (which zeroes out because every financial asset created in the private sector has a corresponding private sector liability), for money to come from. When the government taxes more than it spends, it is withdrawing money from the private sector. Mainstream economics calls this "sustainable", and "sound finance", meaning of course it is nothing of the sort.
How did the private sector, and the household sector in particular, continue to spend from that point onward, behaving as though losing money (not to mention public infrastructure and services) down the fiscal plughole was not merely benign but quite wonderful? It chose to Nimble it and move on, going on a massive credit binge. The banks were happy to provide all the credit demanded, because the bulk of the lending was ulitimately secured by residential real estate prices, and these were clearly going to keep rising without limit (thank heavens, because if they were to fall like they did in the US in 2007…).
The Global Financial Crisis put a dent in the demand for credit, but as subsequent government fiscal policy has tightened, under the rubric of "budget repair", it is rising again. We are already in a state of debt deflation: Australia's household debt service ratio (as above), at between 15 and 20 percent of household income for over a decade, has dampened domestic demand, leading to rising unemployment and underemployment, leading to more easy credit as a quick fix for income shortfalls ("debtfare"). More of what income remains is redirected to debt servicing rather than consumption, and so we spiral downwards, our incomes purchasing less and less with each turn. [I will post more about some of the social and microeconomic consequences in (over-)due course.]
The Australian government needs to spend much, much more - and quickly. Modern Monetary Theory, drawing on an understanding of the nature of money that goes back a century, shows us that government spending (contrary to conventional wisdom) is not revenue-constrained; a currency-issuing government can always buy anything available for sale in the currency it issues. There is nothing about our collective "budget" that needs repairing before we can do so. The same data from the OECD shows that most currency-issuing governments with advanced industrial economies run fiscal deficits almost all the time:
In fact, under all but exceptional conditions, government fiscal surpluses (i.e. private sector fiscal deficits) are a recipe for recession or depression. The greater the surplus, the greater the subsequent government spending required to lift the private sector out of crisis, as can be seen above in the wild swings in neoliberal governments' fiscal position from the mid-90s on. The fiscal balance over any given period is nothing more than a measurement of the flow of public investment into the private sector. What guarantees meaningful sustainability is a government's effective use of functional finance to manage the real (as opposed to financial) economy in pursuit of public policy objectives. Refusing to mobilise idle resources (including, crucially, labour) for needed public goods and services is not "sound finance"; it is the very definition of economic mismanagement, as was once widely recognised:
"It is true that war-time full employment has been accompanied by efforts and sacrifices and a curtailment of individual liberties which only the supreme emergency of war could justify; but it has shown up the wastes of unemployment in pre-war years, and it has taught us valuable lessons which we can apply to the problems of peace-time, when full employment must be achieved in ways consistent with a free society.
"In peace-time the responsibility of Commonwealth and State Governments is to provide the general framework of a full employment economy, within which the operations of individuals and businesses can be carried on.
"Improved nutrition, rural amenities and social services, more houses, factories and other capital equipment and higher standards of living generally are objectives on which we can all agree. Governments can promote the achievement of these objectives to the limit set by available resources.
"The policy outlined in this paper is that governments should accept the responsibility for stimulating spending on goods and services to the extent necessary to sustain full employment. To prevent the waste of resources which results from [un]employment is the first and greatest step to higher living standards."
We chose to forget all this from the 1980s onward. We can choose to remember it at any time.