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.

Amnesty on truth

10 February 2012

I’m ashamed to admit I was a member of Amnesty International in high school. Back then I proudly wore an Amnesty badge on a black beret. Now I cringe at the memory of my naive self lapping up their hyperbole.

The Sydney Morning Herald recently reported that Amnesty International is urging a parliamentary human rights watchdog to investigate the federal government’s plan to crack down on school truancy by linking welfare payments to school attendance. The article claimed that a recent evaluation of SEAM (Improving School Enrolment and Attendance through Welfare Reform Measure) found that suspending welfare payments did not improve school attendance.

However, that is not what the evaluation actually found. According to the report, attendance rates improved in the two communities where SEAM was trialled – from 74.4% to 79.9% in the Northern Territory and from 84.7% to 88.7% in Queensland.

Where an enrolment notice was sent, 82% of families in the Northern Territory and 84% in Queensland provided enrolment details without the need for a welfare suspension. Of the 4,688 parents in the SEAM communities, only 85 had their welfare payments suspended under the enrolment component and seven under the attendance component.

When critics complain about government’s actions to improve remote Indigenous school attendance, what is it that they expect government to do? Let parents get away with not sending their children to school?

Quarantining people’s welfare because their kids don’t attend school may seem heavy handed, but the consequences of not enforcing school attendance are worse. Already there are tens of thousands of young people in remote communities who are unable to read and write. Do we want this cohort to grow exponentially, or do we want to nip it in the bud?

A recent ad campaign by the Australian Literacy and Numeracy Foundation (ALNF) asked the question: ‘If 80% of kids in Sydney couldn’t read would you lend a hand?’ The same question could be asked about school attendance.

Granted, low school attendance is not the only reason for educational failure in remote Indigenous schools. Education departments across the country, with their separate curricula for Indigenous children, are also to blame.

In one Homeland School, an activity book based on a children’s picture book by Mem Fox is used for all the children aged 5 to 18 (or whatever age children decide that school is boring and stop going altogether).

Instead of complaining about government’s efforts to improve Indigenous school attendance, Amnesty should be complaining about what Indigenous children are being taught when they are at school!

Sara Hudson is a Research Fellow at The Centre for Independent Studies.

‘Building a new economy’ – really, Prime Minister?

10 February 2012

Throughout economic history, people have fretted about where the jobs will come from to replace those lost in declining firms and industries. We never seem to learn the lesson that they have always come from somewhere, as long as the private economy was allowed to get on with doing what it does best.

At times, concerns about declining industries are heightened by the general economic climate or the high profile of the firms or industries in decline. Australia is going through one such episode of heightened public concern as a result of the pressure that the strong Australian dollar is putting on industries such as motor vehicle manufacturing.

At its peak in the 1960s, Australian manufacturing – sheltering behind a high tariff wall – employed upwards of 1.35 million people, or more than one in every four in the workforce.

If someone in authority had announced in 1970 that manufacturing was destined to shed 400,000 of those jobs over the next 40 years, there would have been panic. How could the labour market replace 400,000 jobs and absorb the normal growth of the labour force?

Yet that is exactly what happened. Since 1984, for example, manufacturing shed 150,000 jobs (and agriculture another 70,000), while ‘health care and social assistance’ generated 800,000 more jobs; ‘professional, scientific and technical’ 600,000; construction another 600,000; retail trade 500,000; education and training 400,000; and so on.

The structure of the economy is always changing. This reality makes nonsense of the recent discovery by politicians of a ‘multi-speed economy’ – as if it has ever been anything else – and of Julia Gillard’s speech last week about ‘building a new economy’ – as if the one we’ve got is in ruins. What we are witnessing is structural change around the edges, albeit at an accelerated pace due to the high exchange rate, the high terms of trade, and the mining boom. To describe it as ‘building a new economy’ is just self-serving hype from a government that wants to be seen as thinking big and firmly in charge.

If there ever really was a need to build a new economy, God help us if we had to rely on government to do it. The only contribution government should make is to apply consistent macroeconomic, trade, competition and regulatory policies that give the private sector the best shot at maintaining high employment at high levels of productivity and low levels of inflation. This framework has no room for policies that shelter declining industries. Resources must be allowed to move to their most productive uses, and failing firms must be allowed to fail. But those employed in declining industries should not just be thrown on the labour market scrapheap. There is a case for structural adjustment assistance so that a 50-year-old car industry worker, for example, can be retrained and work happily and productively for another 15 or 20 years rather than spend the rest of his life as a dependant of the state.

Robert Carling is a Senior Fellow at The Centre for Independent Studies.

Foreigners are not going to take our food

10 February 2012

The debate over foreign investment in Australian agricultural land has seen the merger of capital xenophobia with the age-old myth that the world is going to run out of food. The suggestion is that we need to lock down our agricultural land to secure future food supplies.

The merger of food security and xenophobia as an issue has a long history. Sir William Crookes’ 1898 ‘The Wheat Problem’ predicted not only that the world would run out of grain but that ‘the great Caucasian race will cease to be foremost in the world, and will be squeezed out of existence by races to whom wheaten bread is not the staff of life.’

Crookes would have been astounded to know that the world’s population would quadruple in the following century, that world incomes would increase by a factor of 20 and yet real commodity prices, the ultimate measure of resource scarcity, would decline. This was in part due to a tripling of agricultural productivity during the twentieth century.

This increase in productivity has seen a decline in land under cultivation, not least because of the shift from carbohydrates to hydrocarbons as a source of fuel. Even since 1960, almost all of the increase in demand for grains has been met through increased yields rather than land under cultivation. It is productivity growth and global free trade and investment that underpins food production, not ownership of land.

Capital intensity is the key to agricultural productivity, and foreign investors have capital in abundance. Much of the foreign interest in Australian agriculture is in agribusiness rather than land. Foreign investors see Australian agribusiness as an ideal way to gain exposure to growing Asian markets via Australian exports. Foreign investors want Australia to become an even bigger food producer and exporter.

It is not hard to imagine extreme scenarios such as war, natural disasters, or a collapse in world trade that could threaten food security. In extreme circumstances, the Australian government could impose export controls on food, subsidise domestic consumers and producers to buy food in world markets, and expropriate foreign investors. Even the most strategic and mercantilist of foreign powers would find their investments in Australian agricultural land of little use in such circumstances.

Dr Stephen Kirchner is a Research Fellow at The Centre for Independent Studies and a Senior Lecturer in Economics at the University of Technology Sydney Business School.