Click on the date below to see the corresponding issue of ideas@thecentre:

Friday, 30 October 2009
Friday, 23 October 2009
Friday, 16 October 2009
Friday, 9 October 2009
Friday, 2 October 2009

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Friday, 30 October 2009

Freedom quote of the week:

‘What has always made the state a hell on earth has been precisely that man has tried to make it his heaven.’.

—Friedrich Hölderlin

First steps towards 21st century rail  Oliver Marc Hartwich 
Prosperity Index suffers due to poor health Greg Lindsay and Roger Bate 
The ghosts of global warming John Humphreys

First steps towards 21st century rail
According to a Chinese proverb, every long journey begins with a first step. This holds true even for a train journey.

The Sydney metropolitan region is growing with population increases up to seven million people, bringing along transport issues. It is important that cities and areas like Newcastle, Blue Mountains and Wollongong are well connected to Sydney so they can absorb some of the population increase. More investment into faster and more frequent trains will be required.

Much has been written about the need to upgrade Australia’s infrastructure to meet the demands of its growing population. We tend to think about such upgrades in terms of big, capital intensive projects. This should not stop us from looking at gradual improvements to our existing infrastructure.

It is an embarrassment that in 1929, the railway connection between Sydney and Newcastle was seven minutes faster than it is today. It may be hard to believe, but passengers 80 years ago could even get a drink and a sandwich on board. Until 1974, NSW trains featured first class compartments that offered travellers more space and comfortable seats.

For Cityrail, the past may hold some ideas for its future. Today, Cityrail’s ageing intercity fleet does no longer meet the requirements of modern business travellers.

The company should consider reintroducing a premium service to win back those business customers it had long lost to the car. Small steps would make a big difference: Reclining seats, power sockets and tray tables for laptop computers, and some snacks and drinks offered on the journey. It’s not rocket science. In fact, even no-frills airlines offer similar services in economy.

Upgrading Australia’s infrastructure is the key policy challenge for the coming decades. It is high time to make the first step on this journey.

Dr Oliver Marc Hartwich is a Research Fellow at CIS. His paper On the Right Track: Why NSW needs Business Class Rail (co-authored with Jennifer Buckingham) was published this week.

Prosperity Index suffers due to poor health
The 2009 Legatum Prosperity Index rates Australia an impressive sixth out of 104 countries surveyed – the top five are all small Northern European countries with populations of less than 10 million.

However, inefficiencies in public hospitals are hurting Australia’s prosperity.

While Australia is very strong on the economic fundamentals required for long-term growth, the nation’s ailing health care system is keeping Australia from reaching its full potential, in terms of both economic progress and quality of life.

Legatum ranks Australia a lowly 21st in health care, behind countries like Singapore, Spain, and the Czech Republic; 28th in infant mortality; 47th for number of doctors per capita; and behind Slovakia and Hungary on available beds.

The Australian Medical Association recently found that waiting times far exceed acceptable levels. The median wait for hip surgery in Australian public hospitals is nearly three months. For cataract surgery, it’s more than two months. Major public hospitals throughout Australia are bursting at the seams with bed occupancy rates of well over 100% a daily occurrence.

Overcrowding and inefficiency have compromised patient safety. According to the Queensland University of Technology, $1 billion annually is lost in bed days because of hospital-acquired infections. Medical errors cost an estimated $1 billion–$2 billion annually, with half of these errors classified as ‘potentially preventable.’

These health care problems are draining billions from the Australian economy, both directly by taking money away from players in the health sector and indirectly by compromising worker health and undermining productivity.

Australians are among the most prosperous populations on the planet. But the country’s health sector is in need of significant improvement. Cutting away waste and improving quality in health care would go a long way toward making Australia even stronger.

Greg Lindsay is the Executive Director of The Centre for Independent Studies in Sydney. Roger Bate is the Legatum Fellow at the American Enterprise Institute in Washington, D.C. The 2009 Legatum Prosperity Index is now available.

The ghosts of global warming

In just over a month, world leaders will meet in Copenhagen to work out a plan of action to tackle climate change. But something spooky is happening in America that may get in the way of an agreement.

According to the latest Pew poll on climate change, only 36% of Americans agree that the Earth is warming and that humans are responsible.

By comparison, a Gallup poll has found that 37% of Americans believe that houses can be haunted.

At first the two issues don’t seem linked – but there are some similarities between global warming and ghost stories. Both are supposed to be dangerous. Both are hard to see. Both are used to frighten children and simple-minded people.

Stephen King has made a fortune writing about haunted houses while Al Gore has made a fortune talking about global warming.

But there is a very important difference.

Belief in ghosts is silly but harmless. There is no Copenhagen ghost conference, with more than 15,000 officials discussing ways to introduce a ghost trading system and arranging multi-trillion dollar compensation for ghost victims.

The Intergovernmental Panel on Climate Change (IPCC) suggests that higher concentrations of greenhouse gases are going to warm up the world. Temperatures haven’t changed much in recent years, but many climate watchers expect the upward trend to continue eventually.

When that happens, there will be costs and benefits. William Nordhaus and Joseph Boyer estimated that 2.5 degrees of warming may cost America 0.5% of GDP. Richard Toll has a higher estimate of 1.5% of GDP, while Robert Mendelsohn and James Newmann predict a net benefit from warming of 0.1% of GDP, primarily due to benefits to agriculture.

So climate change is a potential threat. But the bigger threat comes from what politicians are going to do to ‘save’ us.

The movies tell us that if a meteor is going to hit Earth, all we need to do is shoot Hollywood actors at the inbound rock while we listen to emotional music. In the same vein, when the Earth is threatened with climate change, all we need to do is to send our politicians to a conference and have them agree to global treaties.

But the Copenhagen conference is almost guaranteed to fail. The developing world is not going to agree to give up cheap energy, and the developed countries are going to find ways to look busy while not doing too much. The Copenhagen agreement will be as useful as the Kyoto Protocol.

Unfortunately, while a global treaty may not achieve much, it will still be costly. If an emissions trading system (ETS) wasn’t bad enough, we’re also facing suggestions of massive compensation payments and even a global tax.

Belief in ghosts is much less costly.

John Humphreys is a Research Fellow at The Centre for Independent Studies.

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Friday, 23 October 2009

Freedom quote of the week:

The dreadful truth is that when people come to see their MP, they have run out of better ideas.

—Boris Johnson

The next financial crisis is around the corner Robert Carling
Counting the costs of the GFC and the revenge of the political economy nerds Jeremy Sammut
Moore Hypocrisy and Hype Meegan Cornforth

The next financial crisis is around the corner

Even as the current global financial crisis loosens its grip, the seeds of the next crisis are to be found in the developed world’s government finances. The US federal government has just run up an astonishing budget deficit of $US1,400 billion or 10% of GDP, the biggest since the World War II.

The Congressional Budget Office (CBO), using realistic assumptions, has projected that the deficit will contract modestly over the next few years but remain high. In the longer term, beyond 2019, the CBO foresees a widening deficit under current policies, as population ageing and health care inflation combine to drive up the cost of social programs. By 2035, it is estimated that accumulated US government debt will be 180% of GDP, rising further to 320% by 2050. The CBO has warned that if this trend is allowed to develop, there will be a risk of debt default, capital flight from the United States, an exchange rate crisis, and hyperinflation.

Whether such a crisis eventuates depends on whether and how public policy in the United States deals with the fiscal problem over the next few years. Policy changes are needed to reduce prospective government spending or increase tax revenue. The longer such policy action is delayed, the bigger and more difficult the task becomes. The more it is done through tax increases rather than spending cuts, the more government expansion will be locked in at the expense of the more productive private sector.

History suggests that while politicians will do enough to avoid the disaster scenarios painted by the CBO, their action will be gradual, sporadic and incomplete. They will try to muddle through as they have for the last four decades of chronic budget deficits. The continuing chronic deficit is likely to drain capital from the private sector, dragging down productivity and the US economy’s potential growth rate. This will have implications for the global economy and Australia.

Robert Carling is a Senior Fellow at The Centre for Independent Studies. His report Fiscal Shock and Awe in the United States was released this week.

Counting the costs of the GFC and the revenge of the political economy nerds

From the outset, the social democrats said they would not waste the financial crisis. The Prime Minister has always wanted to be Australia’s (and the world’s?) bureaucrat-in-chief, and the GFC created a pretext to throw out the so-called ‘neo-liberal’ handbook in favour of the political economy tomes that were outdated in the 1970s.

Under the rubric of stimulus and economic security, the role of government has been significantly expanded across a range of sectors, including education, banking and finance. This new era of regulation and micromanagement threatens to crowd out private enterprise and civil society for a generation.

It is therefore timely to ponder Australia’s last great leap backwards towards socialism in 1984, right at the start of the long period of economic reform of the ’80s, ’90s, and the 2000s.

This year marks the 25th anniversary of the establishment of Medicare. This year, the CIS has published a trilogy of papers cataloguing the damage Medicare has done to the Australian hospital system.

The short version of the story is that the era of ‘free’ public hospital care has led to the misallocation of huge amounts of taxpayer’s money to pay for massive and unnecessary growth in the size and cost of the health bureaucracy. The massive government expansion into the health sector has resulted in fewer and fewer health dollars out of ever-increasing hospital budgets reaching the frontline to pay for the health care the community wants and needs.

The decline of public hospitals into their present state of waste and inefficiency is proof, if further proof is needed, of what happens when dynamic and independent parts of our society become subject to the dead hand of statist domination and bureaucratic command-and-control.

We should remember the anniversary of Medicare when we calculate the cost of the GFC. The impact on the national bottom-line won’t only appear on the balance sheets for 2008–09. I fear we will be paying the price for the revenge of the political economy nerds for many years to come.

In 2009, the CIS published Radical Surgery by Professor Wolfgang Kasper (February); Why Public Hospitals are Overcrowded by Dr Jeremy Sammut (August); and The Past is the Future for Public Hospitals by Dr John Graham (October).

Dr Jeremy Sammut is a Research Fellow at the CIS.

Moore Hypocrisy and Hype

In his latest celluloid uppercut to the upper crust, documentary filmmaker Michael Moore examines the Home of the Brave to find it has been repossessed and its occupants turfed heartlessly out onto squalid Main Street USA.

Capitalism: A Love Story looks at America’s affair with capitalism and suggests that the global financial crisis should be the catalyst to end this relationship once and for all. Moore even concludes the film with the defining statement: Capitalism is evil! (In case there was any doubt, Moore’s family priest makes the same hellfire and brimstone pronouncement earlier in the film. How impartial!)

While Capitalism makes some good points about the inconsistency and incompatibility of free market philosophy with government bailouts of industry, and the need for greater transparency and accountability of the financial industry, it offers an unashamedly biased and inaccurate view of capitalism.

For example, it raises but fails to properly address the issue of greed. Moore chooses easy targets to focus on: fat cats in power with little concern or empathy for Joe Average. Exposed are mercenaries such as the Condo Vulture who profit from home foreclosures, and the judge who receives kickbacks from a privately run youth detention centre for reaching inmate quotas. These real-life snapshots of wicked, caricature capitalists are indeed obscene, but they are not examples of true capitalism. Corporatism and abuse of power are not consistent with the principles of free and fair trade. Moore was recently challenged and flummoxed on this very point by a libertarian college student.

What Moore does not acknowledge is the individual greed that is endemic in Western society – the greed that caused countless sub-primers to buy McMansions they couldn’t afford – the greed that has driven a credit-backed spending spree on status consumer goods. Moore chooses to skirt the issue of personal responsibility and the film is the poorer for it.

While railing against capitalist ‘brainwashing,’ Moore has the hypocrisy to cheer for socialism in an extremely blinkered fashion, effectively turning his film into an instrument of socialist propaganda.

However, the most alarming aspect of the film is a throwaway line – hidden in emotive words about the right to universal health care, education and housing – about the state’s right to seize control of property and the means of production. This from a filmmaker supposedly championing democracy.

Perhaps Moore’s next film should be set behind the Iron Curtain – Socialism: A Love Story Gone Wrong.

Meegan Cornforth is Events Manager at The Centre for Independent Studies.

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Friday, 16 October 2009

Freedom quote of the week:

Liberty is not a means to a higher political end. It is the highest political end.

—Lord Acton

Welfare reforms show glimmer of hope Jessica Brown
The bankers at least got something right Helen Hughes
Government’s love-hate relationship with lawyers Elise Parham

Welfare reforms show glimmer of hope

Over the past few decades, a bipartisan consensus has emerged about the need to reduce the number of working age Australians reliant on welfare. While the aging population means that large-scale welfare programs will become increasingly unsustainable, there is also a growing appreciation of the pernicious effects of long-term welfare dependence on individuals and communities.

In 2006, the Howard government introduced ‘Welfare to Work’: a reform package that tightened eligibility for Disability Support Pension and Parenting Payment (mostly single mothers or women whose partners are not working). The reforms, which had been advocated by the CIS, required Parenting Payment recipients to look for part-time work once their children reached school age. Disability Support Pensioners who were able to work at least 15 hours a week were compelled to look for a part-time job. 

These were significant reforms. They were also controversial, with some commentators suggesting that they contributed to the Howard government’s 2007 election defeat. Yet, there has been no evaluation or analysis of their impact published by either the Howard or Rudd governments.

The CIS this week released its own evaluation by piecing together data from various government sources. The results are quite astonishing.

Since the reforms were introduced, the number of people claiming Parenting Payment has dropped by around 20%: a fall of more than 100,000 people. This happened at the same time that unemployment was dropping, suggesting that rather than simply leaving Parenting Payment for unemployment benefits, many recipients left welfare altogether.

The remarkable success of the Parenting Payment reforms is however tempered by the relative lack of progress in reducing Disability Support Pension numbers.

Since the reforms were introduced, the number of people claiming Disability Support Pension has increased by more than 4%: an extra 35,000 people. There are now 750,000 people claiming DSP. While we don’t know the counterfactual—perhaps the number would have increased even more in the absence of any reform—it is clear that if DSP numbers are to be significantly reduced, more needs to be done.

The bankers at least got something right

The Nobel Prize in economics by the Swedish central bank has been controversial since at least 1974 when it was awarded to socialist Gunnar Myrdal jointly with classical liberal Friedrich Hayek.

Ever since, commentators could joke that economics was the only discipline in which two people could share a Nobel Prize for contradicting each other. In truth, it only showed that the award committee can make both great and poor choices. While Hayek’s work continues to inspire economists until the present day, Myrdal’s studies are only useful to show students how failing to analyse development problems leads to absurd predictions.

Among the many recipients of the economics Nobel Prize are both economists who made serious contributions as well as the ones that the Swedish bankers considered politically correct. And there was real embarrassment when the winners of 1997 (Robert Merton and Myron Scholes) received the Prize ‘for a new method to determine the value of derivatives,’ which only one year later led to a loss of $4billion on Wall Street and nearly triggered a recession.

Another oddity of the Nobel Prize in economics is the fact that since its inception in 1969, no woman was deemed worthy of the prize. If we only think of outstanding economists like Anna Schwartz and Anne Krueger, this omission is even more remarkable.

In 2009, the pressure to recognise that women were also people evidently became too strong even for the Swedish central bank. In awarding the Prize to Elinor Ostrom (jointly with Oliver E. Williamson), the bank could also weave into the award a narrative of a post-financial crisis critique of capitalism. After all, Ostrom’s work seems to demonstrate the triumph of cooperation over competition.

But such an interpretation would misunderstand Ostrom’s work. Her excellent empirical research actually shows is that in a world with secure private property rights, efficient outcomes can be achieved without the need for government intervention.

Private cooperation mechanisms can be found in the preservation of deep sea fish. They also appear in the extremely efficient international freight industry where costs were lowered through logistical innovations. Think of the development of standard containers that can be used interchangeably anywhere in the world. This happened not without government intervention but thanks to private cooperation.

Through her work, Ostrom has not only strengthened the case for stronger property rights and less government. She has also given the Swedish central bank the perfect opportunity to pick a truly deserving female Nobel Prize winner.

Emeritus Professor Helen Hughes is a Senior Fellow at CIS.

Government’s love-hate relationship with lawyers

The release of a report on human rights last week sparked another flurry of commentary on the possibility of the Rudd government introducing a national bill of rights.

What seems to have dropped off the commentary radar is the government’s recent dissatisfaction with those who would defend rights under such a bill. Only weeks ago, Attorney General Robert McClelland announced his plan to overhaul the regulatory framework of the legal profession.

The central problem that the government identified is that lawyers, not clients, control cases and therefore costs. There is no reason this would be any different in human rights cases.

Clients will have little control over whether their case fits within the lawyer-driven definition of ‘rights.’ Despite the Australian Human Rights Commission (AHRC) promoting universal human rights education, lawyers will be tasked with unravelling the web of legalese used to define generally worded rights.

Billing in these cases would be controlled by lawyers and a clique of litigators but largely borne by working Australians, who have no control over costs. Publicly-funded litigation by legal aid, human rights commissions, and welfare rights centres against government would take the bulk of claims, making rights litigation almost entirely taxpayer funded.

True, there has not been a financially devastating wave of human rights litigation in the Australian jurisdictions that have adopted bills of rights. Yet some influential human rights lawyers are aiming to change that. The AHRC has made the high utilisation of its complaints mechanism a Strategic Aim for 2008–11, while the lawyers reviewing the operation of the ACT’s bill of rights are seeking an amendment to ‘turn the trickle of human rights case law into a stream.’

The idea that a vaguely worded bill of rights would promote the interests of the vulnerable is admirable but unlikely. It clashes with the reality of client abuse that the Attorney General has promised to address. There is no reason why the culture amongst corporate lawyers that he seeks to reform will be any different to the culture amongst human rights lawyers that a bill of rights would spawn.

Elise Parham is a Policy Analyst at CIS.

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Friday, 9 October 2009

Freedom quote of the week:

The state is that great fiction by which everyone tries to live at the expense of everyone else.

Frédéric Bastiat

The easy way to cut tax John Humphreys
Blinding trachoma still plagues Australian outback Sara Hudson
Upsetting greenies is fine, but you can’t dig up living standards Luke Malpass

The easy way to cut tax

The difficulty with cutting tax is that the government also needs to reduce its spending, and few people are willing to give up their government benefits. But there is a way to cut tax and spending by $80 billion, while leaving nobody worse off.

The trick is to cut middle-class welfare and link it to a matching cut in income taxes for the same people.

The total welfare budget in Australia is more than $250 billion per year, and about half of this goes to people who paid the tax in the first place.

We can reduce this pointless churn by means-testing welfare benefits, including health and school benefits, so that middle- and high-income earners pay for themselves.

There are two obvious objections to means-testing government benefits – that it is unfair to people with higher incomes and it creates a disincentive to work. But both of these problems are solved by linking the means-test to matching income tax cuts.

At first, a tax-welfare swap may not seem like a big change. There would still be the same amount of redistribution and there would still be universal health care and schooling. However, by reducing the pointless churn in the system, we could save billions of dollars of wasted administration, compliance, and efficiency costs. Removing the churn will also encourage more individual responsibility, provide greater transparency in the tax-transfer system, and make our welfare system more sustainable.

This is a policy that should appeal to all sides of politics. Free-market advocates should applaud the tax cuts and smaller government. On the other side, social democrats should be pleased with the removal of middle-class welfare and creating a more sustainable welfare system.

The only benefit from the current system is that it allows politicians to score political points by giving people back their own money. The billions of dollars of churn that flows from taxpayer to government to the same taxpayer is pointless, and provides a golden opportunity for the government to cut tax and cut spending without hurting anybody.

Blinding trachoma still plagues Australian outback

Australia has the unenviable distinction of being the only developed country in the world to still have trachoma.

Trachoma is a nasty bacterial eye infection that left untreated can cause a painful form of permanent blindness. The eyelids turn inwards causing the eyelashes to scratch the cornea.

The recent National Indigenous Eye Health Survey found that 60% of remote Indigenous communities have children with trachoma. In some very remote inland communities, almost 23% of the children have trachoma.

The depressing thing about the prevalence of trachoma in Australia is that it is totally preventable. Basic personal hygiene, such as washing faces, can prevent trachoma, and antibiotics can treat active infection.

Trachoma disappeared from mainstream Australia more than 100 years ago. Blinding, endemic trachoma now only occurs in areas with poor personal and family hygiene and is linked to a lack of hot water, the absence of toilets, flies, overcrowding, and poverty in general. It is a Third-World disease and should not occur in a country as wealthy as Australia.

That it does speaks volumes about the state of dysfunction in remote communities and the health care delivered to them. Over the years, numerous government programs have tried to combat trachoma and other infectious diseases in Indigenous communities. But, while rates of trachoma and blindness have fallen nationally, these programs have failed to make a difference in some outback communities.

Thirty years of welfare dependency have infantilised these communities to such a degree that they no longer take personal responsibility for their own hygiene. Government programs cannot be expected to work when people are too apathetic to wash their own faces! What’s more, programs promoting basic hygiene practices have rarely worked because they don’t address the underlying causes.

As far back as 1987, a study identified a range of healthy ‘living practices’ and the ‘health hardware’ such as hot water, sinks and showers needed to carry out these practices. But many houses in Indigenous communities don’t have functioning ‘health hardware,’ and water and sewerage systems frequently break down.

The latest government initiative to build new houses and address overcrowding in Northern Territory Indigenous communities has wasted millions of dollars of taxpayers’ money on bureaucracy and to date not one house has been built.

The World Health Organization has set a goal of eliminating blinding trachoma by 2020. If Australia is to meet this target, it cannot continue to throw money into a black hole. The National Indigenous Eye Health Survey has shown where incidents of trachoma are highest. Government should be responsible for providing health care and proper infrastructure, such as water and sewerage systems to these communities. Residents also need to also take responsibility for their own personal hygiene. It is a paradox, but someone needs to teach them to be independent. Perhaps it is time for government to step back and let someone else take over this role, as clearly it has failed.

Upsetting greenies is fine, but you can’t dig up living standards

How many governments around the western world are suggesting turning national parks into mines? New Zealand’s Minister of Energy Gerry Brownlee has done just that, announcing that the government will be exploring whether parts of the national conservation estate can unlock mineral resource potential.

On the one hand this is an excellent move. Most our conservation estate can already legally be mined, and if valuable minerals can be extracted profitably and for little damage and fuss, then why not? The government is also to be applauded for challenging New Zealand’s abundance of fuzzy, simplistic ‘green’ thinking.

On the other hand, this move is worrisome as it reflects the continued thinking in New Zealand that a country’s economic prospects are largely determined by what mineral resources it has to exploit. This is widely believed to have been the key to Australia’s prosperity.

This ‘resources narrative’ was largely created and prodded along by former Deputy Prime Minister Dr Michael Cullen, whose favourite repartee to gripes about Australia’s higher wages and growth was that Aussies ‘dig up what’s under their country.’

It is disappointing that Mr Brownlee has bought into this narrative. As Dr Don Brash recently pointed out, there is a good case for arguing that New Zealand is ‘resource richer’ than Australia per head of population, yet has inferior economic performance.

A quick glance at resource rich countries such as China and South Africa, and resource poor countries such as Singapore and Hong Kong, shows that it’s not minerals that matter.
In the long run, all economists argue that productivity raises living standards, not an abundance of minerals.

So it seems New Zealand’s productivity malaise must be addressed. In any case, opening some of the national estate to mining is essentially picking at ‘low hanging fruit.’ It is easy to do, and doesn’t require any of the politically tough decisions New Zealand will need to improve its growth performance.

Mining certain parts of the national estate might be a good idea. On principle, it is not particularly objectionable, and challenging ‘green’ anti-progress attitudes is worthwhile. However, it will do little to raise the living standards of New Zealanders.

Luke Malpass is a Policy Analyst with the New Zealand Policy Unit at The Centre for Independent Studies.

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Friday 2nd October 2009

Freedom quote of the week:

The greatest danger to liberty today comes from the men who are most needed and most powerful in modern government, namely, the efficient expert administrators exclusively concerned with what they regard as the public good.

Friedrich August von Hayek

Overcoming socio-economic disadvantage in education Jennifer Buckingham
Long-term welfare detrimental to kids, says new report Jessica Brown
Car socialism alive and well Helen Hughes and Oliver Marc Hartwich

Overcoming socio-economic disadvantage in education

Literacy and numeracy are not everything, but they are almost everything. Somewhere between one in five and one in six students are barely literate and numerate, according to recent national literacy and numeracy results. These children are concentrated in particular schools and in particular areas, especially where there are high levels of socio-economic disadvantage.

Although the relationship between socio-economic status and school performance is undeniable, it doesn’t have to be inevitable. As the late, great Australian education expert Professor Ken Rowe showed, family background may establish where children start in life, but it doesn’t have to determine where they end up.

Participants at the CIS’s annual conference Consiliumin August this year heard the stories of two extraordinary schools that have defied the odds of socio-economic disadvantage. Bellfield Primary School is a public school in one of the most disadvantaged urban areas in Australia. Yet in the space of 10 years, during which time social disadvantage intensified, Melbourne educator John Fleming transformed the school performance from chronic failure to one of the best in the state.

These extraordinary results were not achieved through increased spending. There was no increase in teacher pay. There were no major capital works or new technologies. Fleming attributes the success of the school to three changes in school policy: implementing a research-based pedagogy; introducing performance-based accountability for students and teachers; and changing the school culture to reflect traditional values and discipline.

The same ‘tough love’ strategy was applied at Djarragun College in Gordonvale in far north Queensland, once a crumbling school with low attendance. Educator Jean Illingworth oversaw its incredible transformation into a well-maintained, high functioning school where children from indigenous communities in Cape York and the Torres Strait are achieving outstanding results.

For many students across Australia, social disadvantage is being translated ineluctably into educational disadvantage year after year. The evidence from Australia and elsewhere is that this need not be the case.

Jennifer Buckingham is a Research Fellow at The Centre for Independent Studies and editor of a collection of essays based on the 2009 Consilium presentations titled Educating the Disadvantaged, released yesterday.

Long-term welfare detrimental to kids, says new report

Welfare campaigners this week lobbied the government to lift unemployment benefits, after the OECD revealed that more than half the jobless households in Australia are ‘poor’: with incomes less than half of the median.

But acting Prime Minister Julia Gillard did not take the bait, standing by the government’s decision not to increase unemployment benefits and payments for sole parents in this year’s budget.

Gillard was right to stay firm. More work, not more welfare, is what these families need to improve their economic situation and the well-being of their children.

One in eight kids now lives in a jobless household. Most of us instinctively appreciate that the striking disadvantage they face extends well beyond the purely economic.

Fairfax’s Adele Horin reported yesterday on new research from the Youth in Focus study released at the Australian Conference of Economists this week. It highlights just how destructive welfare and parental joblessness is for these kids.

By 18, 65% of kids whose parents have never been on welfare are studying, with about 30% at university. Just over 25% suffer from asthma.

In comparison, only 40% of the kids whose parents had a spell on welfare were in education, with just 12% attending university. Almost 45% suffer asthma.

This chasm in health and education outcomes is mirrored by differences in school attendance, drug use, and mental illnesses such as depression, with kids from the welfare families doing worse on each score.

Noel Pearson has long argued that the pernicious effects of welfare dependence go well beyond having a low income. ‘Unemployment has other, more serious, effects that cannot be ameliorated, and indeed may be exacerbated, by long-term income support. These effects include psychological harm, loss of motivation, skills and self-confidence, an increase in sickness and the disruption of family and social life,’ he says.

We now have an abundance of evidence of the devastating effect of long-term welfare dependence. If welfare rights campaigners who this week attacked the government really want to improve the lives of those they claim to help, they could start by recognising that making welfare more attractive will only intensify their problems.

Jessica Brown is a Policy Analyst at CIS and author of Breaking the Cycle of Family Joblessness.

Car socialism alive and well

Once upon a time, there was a country whose government had decided in all its wisdom that it was going to be good at making cars. It designed precisely one model and started producing it. And it kept building this car for three decades. There was so much demand for the car that people added their children’s names to the waiting lists at birth. Or was it just that production was so inefficient?

The car in question was, of course, the infamous East German Trabant. Notoriously unreliable, uncomfortable, and hopelessly out of date even at the time it was introduced, it became the clearest demonstration that governments should stay out of the car industry.

The sort of communism that brought the world cars like the Trabant has long gone, the Soviet bloc has disappeared, but we still have politicians who think they are the better car managers. The latest politician is none other than US President Barack Obama.

This week the US government announced its support for little-known car manufacturer Fisker. The company will receive more than half a billion US dollars in subsidised loans to build a hybrid sports car.

Never mind that at a retail price of US$89,000 the car will be out of reach of most consumers. Ignore the fact that sports cars are not really green cars. And forget that Fisker does not have much experience in building cars anyway.

What matters more than a viable business plan in these days of reborn socialism are your political connections. Or was it just a strange coincidence that one of Fisker’s top investors is former US Vice President Al Gore? It doesn’t hurt that his quest to save the world from climate change is incidentally helping fill his coffers with taxpayer cash.

The socialism of times past we have buried, but its flawed ideas are still haunting us from its grave.

Professor Helen Hughes is a Senior Fellow and Dr Oliver Marc Hartwich is a Research Fellow at CIS.

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