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.

Get used to tighter budgets

15 November 2013

alex-philipatos All government agencies, even our most important ones, will need to learn to live on a tight budget as the government moves to reduce costs associated with the public sector.

Tony Abbott promised to cut 12,000 public sector workers (through attrition) prior to the election. His government has taken its first steps in this direction, recently issuing a briefing on a hiring freeze.

In a move that could cut an estimated $5.2 billion off the commonwealth public service budget, agencies have been ordered to withdraw unfilled job advertisements and not renew temporary contracts when they expire. The briefing does not require all temporary workers to be cut. Instead it asks agencies to control engagements very tightly.

At Australia's premier science and industry research centre, the CSIRO, there are 6,500 employees, of which 1,400 are temporary employees. Up to 600 of these temporary positions could be scrapped, a prospect that has provoked predictable outrage and hyperbole, and cries that all 1,400 temporary positions will be cut.

But some concern over the CSIRO's research capability is justified.

CSIRO is an important engine for medical and scientific research and a key source of innovation in the Australian economy.

Its role is important because it conducts research that often has no foreseeable commercial benefit. If private firms cannot reasonably expect a profit from a new innovation there is little incentive to invest. Since much of this research has widespread public benefit, such as medical benefits from vaccinations, there is a case for public funding.

But that does not mean CSIRO's budget ought to avoid scrutiny. Even important agencies can, and often do, accumulate waste.

That is why Australians should not panic over the CSIRO's job cuts.

In the words of Craig Roy, CSIRO's deputy chief executive, 'some of the back office roles will get far greater scrutiny than some of the frontline scientific roles because we're a scientific organisation.' CSIRO will be forced to look more closely at the composition of its staff, and ask which positions are necessary to the primary functions of the organisation, and which they can do without.

The mature approach the CSIRO has taken to budget scarcity is the sort of approach many departments in the state and commonwealth governments should apply to their own workforces, particularly as the government looks to rein in spending and pay down debt.

Should this attitude be heeded, Australians will get a more efficient government, and far better value for their taxes.

Alexander Philipatos is a Policy Analyst at The Centre for Independent Studies.

China's communist party liberalises to defer democracy

15 November 2013

benjamin-herscovitch With little fanfare, the elite powerbrokers of the Chinese Communist Party (CCP) have outlined the reform agenda that will define Xi Jinping's 10-year presidency.

At the conclusion of the Third Plenary Session of the 18th Central Committee on Tuesday, the CCP issued a communiqué pledging to pursue 'comprehensively deepening reform' in the name of 'social harmony,' 'environmental protection,' and the development of a 'socialist market economy.'

Although the details of the Xi administration's reform agenda remain hidden for the moment, its rationale is clear: Securing the CCP's monopoly on power with pragmatic reforms to mitigate China's staggering social, economic, environmental and institutional strains.

The CCP knows that its political survival depends on addressing the grievances that fuel China's 90,000 annual cases of social unrest and protest. These range from chronic air and water contamination to severe inequality, and endemic corruption, as well as forced land seizures that have expropriated the property and destroyed the homes of as many as 64 million Chinese families.

Pew polling shows that 53% of Chinese consider corruption a 'very big problem,' while 52% and 47% feel that way about inequality and air pollution, respectively. And with 80% of Chinese expecting the nation's economic situation to improve in the next 12 months – the highest percentage among 39 countries polled by Pew this year – CCP rule will be jeopardised if the party is unable to engineer a rise in domestic consumption to offset cooling investment activity.

Aware that the stability of the one-party state is at stake, the CCP's Third Plenum communiqué shrewdly stressed plans to give farmers more property rights, better manage state-owned enterprises, spur consumption-driven economic expansion, address environmental degradation, and establish the rule of law.

At this stage, these undertakings are vague policy intentions rather than concrete initiatives. However, as the most effective means of staving off widespread discontent and pre-empting calls for regime change, the Xi administration is likely to actively pursue the reform agenda sketched by the Third Plenum.

Liberal reforms are partly motivated by the CCP's self-interested pursuit of power: Keeping its end of the grand bargain between people and party that promises rising wealth in exchange for acceptance of authoritarian rule.

Nevertheless, by using liberal reforms to minimise popular dissatisfaction, the CCP has taken yet another step away from its intellectually, morally and economically bankrupt Maoist past towards greater prosperity and expanded personal freedoms.

Benjamin Herscovitch is a Beijing-based Policy Analyst at The Centre for Independent Studies and author of Accountable Authoritarianism: Why China's Democratic Deficit Will Last, released on 31 October 2013.

Sea Shepherd defeat highlights pointless regulator

15 November 2013

helen-rittelmeyer The High Court of Australia has refused to hear an appeal from Sea Shepherd Australia, which had been suing the Australian Tax Office over its decision not to award the organisation deductible gift recipient (DGR) status under Commonwealth charity law. This marks the end of a long legal battle for the controversial marine conservation group, whose aggressive harassment of Japanese whaling ships was earlier this year condemned by a U.S. court as 'the very embodiment of piracy.'

Sea Shepherd had based its appeal on a clause in the Income Tax Assessment Act which says a charity qualifies for tax-deductible donations if its principal activity is 'providing short-term direct care to animals…that have been lost, mistreated, or are without owners.'

This clause is usually applied to shelters that find homes for unwanted pets, or rescue hospitals for pets and wild animals that have been hit by cars or injured in natural disasters.

Three years after the ATO ruled that Sea Shepherd's harrying of Japanese ships did not qualify it for this tax exemption, the courts have now conclusively affirmed that decision. Fortunately, this appeal will not cost the taxpayer anything, since Sea Shepherd has been ordered to pay the ATO's legal costs.

In late 2012, the Gillard government established the Australian Charities and Not-for-Profits Commission (with an annual budget of $15 million) as a new federal regulator for the not-for-profit sector. Its responsibilities include determining which organisations qualify for charitable status, a task formerly handled by the ATO.

During the last election campaign the Coalition pledged to abolish the ACNC as an unnecessary addition to the charity sector's regulatory burden, but abolition will require an act of Parliament. The ACNC's commissioner has been assuring the public that it will be 'business as usual' for the organisation until such an act is passed. Last month, the charity-watchers at the law firm Makinson d'Apice speculated that 'the ACNC is likely to survive due to the complexity in unwinding the legislation connected with it.'

The ATO's sound decision on Sea Shepherd's DGR status and its successful defence of this decision in the courts prove that it is perfectly ready to resume responsibility for determining which organisations should receive charity tax exemptions in the event the ACNC is abolished.

The Coalition should use the occasion of Sea Shepherd's legal defeat to trumpet the ATO's record as a responsible and conscientious adjudicator of charitable status, and press ahead with its plan to abolish the ACNC.

Helen Rittelmeyer is an intern at The Centre for Independent Studies.