Ideas@TheCentre – The Centre for Independent Studies


Ideas@TheCentre brings you ammunition for conversations around the table.  3 short articles from CIS researchers emailed every Friday on the issues of the week.

Government declares war on cheap prices

Simon Cowan

18 March 2016 | Ideas@TheCentre

Simon Cowan-Government declares war on cheap pricesThe Harper Competition review describes the debate around the need for an effects test as “one of the enduring controversies of competition policy in Australia.” The report helpfully provides a table that actually better summarises the position: despite 11 previous competition reviews over 40 years, only one found in favour of adding an ‘effects test’ to the misuse of market power prohibition.

The report proposes reshaping the regulation to prohibit “a corporation with a substantial degree of market power from engaging in conduct if the conduct has the purpose, effect or likely effect of substantially lessening competition.”

Despite both the Abbott government and the Turnbull government initially rejecting this recommendation, it will now become law. That this was pushed by the Nationals, no friends of free markets, should warn you there are problems with this proposal. Of the many, two are important.

First, the very idea that government can create, corral and control competition is a farce. The more government tries to regulate market behaviour, the more it distorts the market with intervention and legal uncertainty, the less true competition there is — especially since so much competition policy is based on the fallacy that companies can enter a market, force the competition out of business and then jack up the price forever. In a free and open economy this is basically impossible. There are always other competitors.

Second, the effect of this change is to protect smaller, inefficient businesses from larger, more efficient ones (there is no need to protect efficient small businesses from anyone). While there are a number of industries where this may be relevant, the most obvious targets are the major supermarket chains, hence the interests of the Nationals.

The purpose is to force the supermarkets to pay more at the farm gate, and prevent them trying to rationalise their supply chains by dealing only with larger farmers and companies. This can mean only one thing: food prices are going to rise. What a win for competition.

Whatever people like to say about supporting small business, the truth is consumers almost always go for the cheapest or best option. They would never vote with their dollars in favour of these changes. If only the Australian Competition and Consumer Commission took the second ‘C’ as seriously as the first.

Self-determination dream has turned into nightmare

Jeremy Sammut

18 March 2016 | Ideas@TheCentre

Jeremy Sammut-Self-determination dream has turned into nightmareStan Grant’s much-publicised new book, Talking to My Country claims the nation is yet to be held properly to account for its historic crimes and injustices against Indigenous people.

He argues Indigenous Australians experience different outcomes in life to other Australians because the history of colonial oppression.

This is a questionable explanation for contemporary Indigenous disadvantage.

The original sins of Australia’s founding were acknowledged in the 1970s when they formed the basis of the policy of Aboriginal self-determination, which was specifically intended to right the wrongs of history by allowing Aboriginal people to live in traditional ways on their traditional country.

Ironically, the most disastrous event that has caused the greatest suffering for Indigenous people has been the implementation of the policy of Aboriginal self-determination to address the legacies of racism, imperialism, and colonialism.

The dysfunction that blights Indigenous communities is not due to the nation having done too little to address history’s sins, but due to having addressed these sins in a way that has ultimately condemned too many Indigenous Australians to poverty.

Grant does not see it that way. Instead he writes, that due to colonisation, Indigenous people are “without land” and “people with no land are poor.”

This is profoundly untrue. Aboriginal self-determination has meant that the poorest Indigenous Australians, who live in the remote homeland communities with the worst problems, are those who have continued to live closest to a traditional manner and on their traditional country.

The richest Indigenous Australians might not own their ancestor’s country, but they are healthy and wealthy because they have seized the opportunities of education and employment in mainstream Australia. They have escaped the ‘dream’ of self-determination — a dream that has long turned into a nightmare.

Three ways politics will change, whether Trump wins or not

Helen Andrews

18 March 2016 | Ideas@TheCentre

Helen Andrews-Three ways politics will change, whether Trump wins or notWith Marco Rubio out of the race, the anti-Trump forces within the Republican Party are now more united than ever. Whether or not they prove able to stop Trump before he wins the nomination, here are three ways the 2016 primaries will change politics.

1. Politicians will be emboldened to trust their instincts. Every politician is surrounded by a team of people — staffers, pollsters, PR consultants — whose job it is to keep their boss from taking risks. Each of these industries has a standard playbook, and Trump has thrown these playbooks out the window and still kept winning. This is going to make a decisive marginal difference in a thousand little instances when politicians need to choose between doing what their handlers tell them and going with their instincts.

2. Immigration is on the table. No need to plumb the depths of the American psyche to find an explanation for the Trump phenomenon. Skeptics of illegal immigration have been completely neglected by both major parties, and this left Trump an open path. Now that the intensity of public feeling against amnesty is clear, politicians will try to replicate Trump’s maverick success by taking up the banner of immigration enforcement.

3. Celebrity candidates are in. Commentators assumed Trump’s celebrity status would eventually limit his appeal. Once the novelty wore off, no one would take his candidacy seriously, they said — and they have been proven wrong. Now that Trump has shown how successful celebrity candidates can be, not just at the state level but nationally, look for both parties to start combing Hollywood for the politicians of the future.