Ideas@TheCentre – The Centre for Independent Studies

Ideas@TheCentre

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.

Let legal tender stay legal

Robert Carling

07 February 2020 | Ideas@TheCentre

When does the end justify the means? One answer to that question comes in legislation currently snaking its way through the federal parliament that will, if enacted, ban the use of cash to pay bills of $10,000 or more.

As is so often the case, this is a draconian measure that sacrifices our economic freedom on the altar of some high-minded regulatory goal. This time it’s to make the black economy, money laundering and tax evasion more difficult.

The details of the plan are not quite as lurid as some ‘fake news’ reports suggest. You will still be able to withdraw any amount from a bank account (or deposit it), and the ban will only apply to transactions with businesses – it will not apply, for example, to a cash gift from one person to another.

But wherever the ban applies, it will unquestionably encroach on economic freedom. Many people still prefer to use cash even when online bank transfers, direct debits, BPay, eftpos, PayPal and so on have made non-cash means of payment much more convenient and efficient (and sometimes unavoidable). An innocent preference for cash should not be put in the same bucket of illegality as money laundering and tax evasion.

It takes a certain absolutist way of thinking to conclude that cash’s potential to facilitate unacceptable practices justifies government in banning it regardless of the collateral damage to economic freedom. The same kind of thinking has led to plastic bag bans, cumbersome bottle deposit/refund schemes, minimum prices for alcoholic drinks and a recent suggestion that the blood alcohol limit for drivers be lowered to zero.

It is not even clear that the cash ban will contribute much to its stated objective.

At least the cap — at $10,000 — is being set high enough that it will not be an inconvenience for many bona fide transactions. However, is this just the beginning of a slippery slope to lower and lower caps and ultimately a cashless economy… a ‘big brother’ world in which the anonymity and privacy of cash are lost forever?

It would be best not to even start down that path. The authorities have enough tools to tackle money laundering and tax evasion without doing so.

Every note in your pocket carries the declaration “legal tender throughout Australia.” Let that continue to mean exactly what it says, without a caveat that says “unless too many of them are bundled together.”

 

Coronavirus shock

Salvatore Babones

07 February 2020 | Ideas@TheCentre

China’s coronavirus outbreak has disrupted travel plans for millions of people — and could cost Australian universities millions of dollars. For students threatened by a deadly and fast-spreading virus, school may be the last thing on their minds. But university administrators are running scared.

But it’s not necessarily the virus they’re afraid of. More than 30,000 Chinese students were due to arrive at Sydney and UNSW this month, and another 8000 or so at UTS (none of the universities publish exact numbers), but the Australian government’s China travel ban seems to have put paid to that.

Chinese students account for more than 10% of total revenue at many Australian universities, and more than 20% at Sydney and UNSW, according to estimates published by the Centre for Independent Studies (CIS) last August. Revenue losses on that scale could be catastrophic.

When the CIS sounded its warning about The China Student Boom and the Risks It Poses to Australian Universities, it seemed like the key triggers of a potential drop in Chinese enrolments might be economic or political. No one anticipated an epidemic. Yet here we are.

In 2019, Australian higher education institutions enrolled nearly half a million international students, more than 150,000 of them from the People’s Republic of China. There is no alternative to this Chinese pot of gold. Many Australian universities hope to switch to India, but the numbers just aren’t there: India has only about one-eighth as many middle-class families as China.

The immediate concerns raised by the coronavirus are of course health and safety. But looking long-term, the epidemic exposes the poor planning of Australian universities, which aggressively chased Chinese student numbers without taking proper account of the risks. The coronavirus epidemic has brought those risks into sharp focus. Unfortunately, it is now too late to mitigate them.

This is an extract of an opinion piece published in the Sydney Morning Herald as Our China-dependent universities cannot escape the financial shock of coronavirus

 

Brexit lessons

Simon Cowan

07 February 2020 | Ideas@TheCentre

After voting 52% to 48% to leave, the United Kingdom has finally, officially, departed from the European Union — following three and a half years of uncertainty, confusion and delay.

There are a number of lessons for Australia from the whole shemozzle.

The first is that the appalling process around the referendum, Brexit, and the functioning of parliament turned a political challenge into an ongoing circus.

Once the vote was in motion, it unleashed political forces that tore down the orthodoxy in relatively short order. This political miscalculation cost Cameron his job.

However, Cameron’s resignation solved nothing. Neither major party had anticipated the referendum result, and neither any plan to achieve Brexit once the voters supported it.

Supporters of the Indigenous Voice, or an Australian Republic, who wish to rush to a referendum would do well to invest more time in implementation planning rather than assuring the public that such concerns are in fact minor issues.

Yet the politics of Brexit are far from the most important lesson from the past three and a half years.

The bigger point we need to understand is that local and national identity means more to the ordinary person than just cheering for your national football team, or your country’s entry in the Eurovision song contest.

The lesson from successful federations is precisely not to attempt to centralise power. It is the principle of subsidiarity — the idea that political decisions should be taken at the local level wherever it is possible — that makes federalism work. The EU is the opposite to this: it’s a vehicle for elite experts, not empowering communities.

The removal of power over one’s circumstances, together with the creation of ongoing financial dependence, is poisonous for a body politic. It saps motivation and breeds resentment.

Australia will do well to remember this lesson too. Co-operative federalism, especially where more and more power is vested in Canberra at the expense of state and local government, might seem like a good idea to the radicals. But it can create mendicancy and dependency in some communities, and resentment at having to always pick up the tab in others.

Australia is in many ways fortunate to have avoided the political and social upheaval caused by a Brexit-style event; but this does not mean we can ignore Britain’s Brexit lessons.

Political upheavals are often unexpected, sudden, and devastating.

 

This is an edited extract from an opinion piece published by the Canberra Times as There are lessons for Australia in Brexit – but not the ones we think