January 2006 Archives

BCA member CEOs choked over their boardroom lunch while reading that low paid workers with kids may lose the incentive to work. It seems that welfare benefits will increase faster than low paid workers' wages once the effects of the new IR laws kick in.

THE new workplace laws will soon make work pointless for many low-skilled people with children - because they will be paid more on welfare - a market economist warns.

The new system is likely to slow the growth of minimum wages while holding sole parent pension rises at almost 5per cent a year - meaning after-tax wages could soon fall behind welfare benefits forgone for those who choose to work.

"It would not be long before the benefits from not working, which are indexed to either prices or average earnings, will exceed the benefits from working," says Professor Mark Wooden, deputy director of the Melbourne Institute, in the Journal of Political Economy.

The employer collective will see this as threat to ever increasing remuneration [see previous post]. They and their conservative government lackeys will soon move to ensure that there's no handouts if you can get a job, regardless of how low paid it is.

And so leads us into the second phase of the Americanisation of the Australian social landscape. The reform of welfare.

The middle class can expect to maintain their handouts due to voter numbers. The least well off minority are going to find welfare much harder to obtain as the authorities ensure they take those low paid positions.

The weakest in society will increasingly suffer to maintain the strong earnings growth of the most wealthy.

Makes you proud to be Australian, doesn't it?

Those who followed last year's debate regarding the "Work Choices" IR changes would know that the Business Council of Australia was one of the loudest proponents of the new laws. The BCA predicted dire consequences for the nation's economy if the government didn't move to create a new, easy-to-manipulate class of working poor.

One wonders if the BCA was overstating the case, as it seems they've done very nicely (pdf) in the existing system over the past 15 years. BCA's member CEO's salaries have risen 564% in that period, from an average $514k to $3.4M.

Ordinary workers incomes increased 85% during the same period.

It must be so nice to work in the big end of town.

I suspect the suppliers of carbon based energy feel a little threatened at the moment. Oil may or may not be getting scarce, but there's enough coal to last hundreds of years. It's a depressing prospect for 'Big Energy' (BE) that much of it will remain in the ground.

The era of cheap carbon based energy is coming to a close, but BE has no intention of going down without a fight.

If anyone doubts BE's influence, look no further than the Asia-Pacific Partnership on Clean Development and Climate meeting in Sydney this week. A casual observer would be forgiven for thinking it was an industry bash, rather than an inter-government meeting. The ministers toed the BE line, saying 'no' to emission targets, performance indicators and other inconvenient measures.

Alternative energy sources hardly rated a mention.

Instead, our brave government glove puppets officials bet the farm on Carbon Capture and Storage. (BCC)

BCC is the collection and processing of CO2 directly from the powerstation, then pumping it deep underground where hopefully it will remain out of harms way. The problem is, of course, that it's easier said than done.

Large coal fired power stations burn astonishing amounts of coal. The plants in NSW consume millions of tonnes per year. For every tonne of coal burnt, you get roughly two tonnes of CO2. The hot gas has to be collected, cooled and compressed on the fly, then transported to an area suitable for CO2 sequestration. Surprisingly, the areas where power stations are situated are not necessarily suitable for storage. The gas may need to be transported for hundreds of kilometers.

The capital costs and the energy it will take to process these amounts of CO2 are going to make a big dent in the cost effectiveness of coal fired power stations. Estimates are that the power will be between 43 and 90 percent more expensive. I wouldn't be surprised if that's conservative.

All of a sudden, those barely mentioned, costly energy alternatives have become a lot more attractive.

There's another group of sporting fans who fear access to their preferred sport on free-to-air TV. In today's Sun Herald (no link yet), Rugby Union fans are concerned that Seven's AFL broadcasting commitments will diminish the coverage of their sport on that network. This follows the concern of AFL followers, including yours truly, who feared the prospect of the Nine Network winning the AFL rights would see the code would play second fiddle to Rugby League in NSW and Qld.

The stupid thing about all this is that a technical solution exists to allow free-to-air networks simultaneously broadcast competing sports, and it's here right now. It's called digital TV multi-channelling and can be accessed simply by connecting an inexpensive set top box signal converter to a bog standard TV.

The only thing stopping multi-channelling is government regulation, and those regulations were introduced at the behest of the industry who saw digital TV as an entry point for competition, and to protect their investment in pay TV.

Thankfully, the government didn't mandate the 'Rolls Royce' High Definition Digital TV (HDTV) standard as some of the networks wanted. This would have taken up the full 7Mhz spectrum and allowed nothing else. Instead, the authorities mandated that Standard Definition TV (SDTV) and a cut down version of HDTV be transmitted simultaneously, with a future provision to allow sporting telecasts be multi-channelled to provide different camera angles at the same event.

In the mean time, the ABC and SBS were given the go ahead to multi-channel, albeit with tight content restrictions.

If the government relaxed the multi-channelling restrictions the commercial free-to-air networks could show, for example, the Rugby Union and the AFL at the same time, and let the viewer decide what to watch.

Who knows? This may even prompt the public to actually show in interest an the digital medium. There's been precious little to spark interest in the technology up till now, as shown by the small uptake rate.

The news that the Seven / Ten consortium has matched the Nine bid and won the AFL TV rights is a win for footy followers in the North Eastern states.

It may not be such good news for the TV stations involved. The financial punditry seem to think that $780 million is a tad too much to pay. KP's influence extends from beyond the grave.

What it will mean for long suffering NSW and Qld supporters is that after next year, AFL footy will be promoted at a similar level to Rugby League. Hopefully, (fingers crossed) we may even get to see a game on Friday night at a reasonable hour.

Roll on 2007.

Many thanks to those who replied to the previous post. It's nice to know that someone occasionally drops in to sample the swill. I hope you all had (are having) a good break.

Mine ended today. Having risen early to get to work I caught this gem on the ABC's AM program.

US pharmaceutical companies would like changes in the Aus / US Free Trade Agreement. Some would remember that Mark Latham forced amendments to the FTA to stop drug companies extending drug patents, known as 'evergreening,' to prevent the sale of cheap generic drugs.

It was a measure the Trade Minister and now Acting Prime Minister Mark Vaile never agreed was necessary, and he's been telling AM's Peta Donald it could now be revisited.

MARK VAILE: All I've said is that of course, in reviewing an agreement, all aspects of it are on the table for discussion.

Now, I'm sure that the American side, particularly industry in America, will like to have a discussion about the way those amendments and the provisions of those amendments are operating. But the point needs to be made that they would have to prove that those amendments are being commercially detrimental, which we don't believe they are.

PETA DONALD: It would be easy to argue, wouldn't it, that it would be commercially detrimental to a drug company if they were no longer able to stop a competitor from introducing a cheaper generic version of their drug? That would be commercially detrimental, wouldn't it?

MARK VAILE: Under the Australian system, innovative drug companies get a very liberal dose of protection under the patent arrangements. They do have opportunities for patent extensions, if there is a significant improvement in the benefits that flow from that drug.

But through our process of certification in the TGA (Therapeutic Goods Administration) we don't allow the abuse of the system, for example, changing the colour of a medication or changing some aspect of the labelling that is the subject of so-called evergreening. We don't allow those sorts of things to take place in Australia.

So the reality is that it didn't need this measure in the first place by the Labor Party.

Mark Vaile is not the only one who thinks the amendment is ineffective.

The head of Medicines Australia, Kieran Schneemann, says he can guarantee that if the clause is removed the cost of drugs will not rise.

Then why do they want to get rid of it?

Stay tuned for the 'Cheaper Drugs for All' advertising campaign to allay the population's misgivings before the amended act passes through parliament.