Simon asked:

Housing, housing … yes

A spin off side effect is that there is so much debt .. in mortgages … im reading the term “economic rent”

… add the number of bills that are recurring rents … multiple insurances, mobile phone, electricity …

My reading (and admittedly a lot of listening on youtube) on this leads me to believe that this is not the way the early fan boys of capitalism wanted it (eg Adam Smith)

So, with all these rents sucking money out of the economy … Is this a good version of our economic system? 

Who has policies for privatising yet more of our state infrastructure?

Dave Richardson, our senior research fellow answered this one for you:

Dear Simon

You raise interesting points about economic rent and privatisation.

In the sort of economy Adam Smith seems to have had in mind competition was supposed to keep profits down to modest levels. If a business is just making normal returns economists say there are no “economic rents”. However, if a business is making huge profits due to some special attribute, say the best location on high street, we say they are making economic rents due to some scarcity factor.

While Smith thought the market would work for the benefit of consumers, the so-called “invisible hand”, he also warned that two or more businessmen (his word) in the same industry would rarely meet without discussing ways of jointly ripping off their customers. Fast forward around 250 years and most countries have actually outlawed those businesspeople from meeting and colluding against the public. Nevertheless, Australia’s industrial landscape is now dominated by uncompetitive markets.

Supermarkets are a duopoly, energy is dominated by 3 retailers, telecommunications has 3 players, the miners each have their own exclusive claims and monopolise the use of the resources, we have 2 main airlines, each capital city has a monopoly airport, there are only a few main importers of motor vehicles, drugs, books and other products are protected by patents, copyrights etc that gives the producer monopoly rights, the wharves are monopolized…. We could go on for a long time.  But a lot of the industries on this list are utilities; electricity, gas, transport and so on, that have been privatised.

There are lots of strict conditions that have to be met before we can be assured that a privatised business will end up in a market environment that fits the Smith model. We published some work on those conditions here.

You also could argue public housing has been privatised. The stock of public housing has fallen while some of those on government income support are now offered rental subsidies to assist them in the private market. 

You mentioned banking which we have long argued is an industry generating huge economic rents. This is now recognized with the tax on the big five banks in Australia (ANZ, Commonwealth Bank, Macquarie Bank, National Australia Bank, and Westpac). The Commonwealth Bank was originally established as a publicly-owned bank to offer a choice to customers and trustworthy alternative to keep the rapacious private banks in check.

All of this means the Australian economy is riddled with uncompetitive industries.

Privatization was once popular among some economists and politicians but that seems to have changed following the Queensland people rejecting the Campbell Newman Government’s privatization agenda and voting it out of office. It is also worth noting that at the Commonwealth level there is little left to sell. 

You asked if what we have is a good version of our economic system. Our system is a mixed economy with a combination of goods and services provided by the private sector and that is buttressed with the government provision of some goods and services. Some argue that the market is best so we should continue to privatise. Others suggest the market has failed in many respects and needs either stiff regulation or a return to public ownership. Better competition is advocated for many sectors that tend to be privately owned and operated. Banking policy has involved governments fostering more competition from publicly-owned alternatives, building societies, credit unions and foreign banks. 

Another aspect of our society is the apparent random allocation of incomes generated in the process of producing goods and services. Gina Rinehart might be mentioned. Many people miss out altogether and that has to be addressed by government. There are literally millions of comparisons we could make about the fairness of the different rewards people get for their efforts. Nurses versus film stars, footballers versus teachers etc. 

In the discussion of foreign relations Dutton pointed out that previous Coalition governments had negotiated 11 free trade agreements.

In previous election campaigns, the Coalition has talked a lot more about this achievement. This election they haven’t been mentioned nearly as much. This might be because the 2 biggest free trade agreements that they signed was the Abbott government’s free trade agreement with China and the Howard government’s free trade agreement with the US.

Recent history shows how worthless these agreements are. When China became upset with Australia over what they thought were claims by the Morrison government that China was responsible for COVID-19, they put up lots of trade restrictions. This included banning Australian exports of barley, wine, and crayfish. This was in violation of the free trade agreement. Yet there seemed to be no consequences for doing so.

More recently the US has imposed 10% tariffs on Australian exports to the US, and 25% tariffs on exports of steel and aluminum. There are talks of further tariffs on pharmaceutical goods. These are also in violation of the free trade agreement. Again, there seems to be no consequences for this.

Free trade agreements are only useful if both sides want to stick to them. This seemingly makes them little more than fancy informal agreements.

Sorry for the delay there – bit of a confluence of events. Let’s catch you up!

Our very own Richard Denniss was on Q&A this week.

Responding to a question from a young would-be home buyer, he talked about the cruel hoax of property prices rising much faster than wages … thus exposing the dishonesty of politicians who promise to restore the dream of home ownership.

In the latest edition of Follow The Money, we take a deeper look at the housing hoax with Bill Browne and Stephen Long.

We also discuss the Australian electoral system and the need for truth in political advertising laws.

The ACT candidates are being largely ignored because the ACT is pretty much a lock – but that doesn’t mean it’s not interesting to tune in to see what some of the Liberal candidates are saying (mostly because there is not much attention on them)

Cutting the public service is obviously a big issue in Canberra, which is why the ACT candidates are always asked about the Liberals plan. And despite Peter Dutton and Barnaby Joyce saying there would be no cuts to front line services, or the department of Veteran Affairs (the example used by Labor of how cuts led to terrible service outcomes) the ACT candidate for Bean, David Lamerton says he would consider DVA was up for staff cuts.

Lamerton told ABC Canberra:

I don’t have the specifics on which departments. The example that was used earlier this year was DVA. I have gone through the DVA process myself and I know how hard those workers do and what they go through but there was a backlog that they willingly brought staff in to clear which by most accounts has now been cleared. And those positions have gone onto an ongoing basis. I don’t understand why that is the case. There is an example of that sort of 41,000 – it’s the highest per capita in the western world and we need to spend money appropriately.

Also, it is not the highest per capita. As Matt Grudnoff shows:

Fact Check: Do we have one of the highest per capita number of public servants?

Here are the other developed (OECD) countries. We are not one of the highest. We’re not even above average.

You can hear Richard Denniss speak more on the gas industry here:

The ABS has released the March unemployment figures:

The seasonally adjusted unemployment rate increased slightly to 4.1 per cent in March, according to data released today by the Australian Bureau of Statistics (ABS).

Sean Crick, ABS head of labour statistics, said: ‘With employment increasing by 32,000 people and the number of unemployed increasing by 3,000 people, the unemployment rate rose slightly to 4.1 per cent for March.’

Employment has grown by 308,000 people, or 2.2 per cent, over the last 12 months. This annual growth rate is slightly higher than the 20-year pre-pandemic average of 2.0 per cent.

‘The employment-to-population ratio remained at 64.1 per cent in March, while the participation rate increased slightly to 66.8 per cent,’ Mr Crick said.

Thank you to Glenn for his stewardship – you have Amy Remeikis back with you. The Australia Institute is enjoying its first ever ‘Bun off’ – everyone brings in their favourite hot cross bun and then we eat a lot of hot cross buns and decide what is our favourite.

Amy is back, but it’s time for our hot cross bun off, so sit tight for a few minutes.

No sign of Peter Dutton yet.

When he does finally emerge, Amy will take you through it.

Will he pop up in a rainforest, declaring his deep belief in climate change and the need for stronger environmental laws?

Will he be in a hard hat and high viz?

I’ll bet a choc-filled hot cross bun he’s back at a servo – making it 11 in less than a fortnight.

Happy Easter to all.

Skye Predavec

Every Australian parliament – federal, state and territory – has had a speaker from a party other than the one in government at some point.

ABC News reports that both the Government and Opposition have sounded out independent MP Andrew Wilkie and Centre Alliance MP Rebekha Sharkie as potential speakers in the next parliament.

If it is a minority government, losing a government MP to the speaker position could hurt – giving a crossbencher the role helps the government numbers.

But it would also be consistent with longstanding practice in the UK, and more recently in South Australia.

Every Australian parliament – federal, state and territory – has had a speaker from a party other than the one in government at some point.

The speaker is responsible for keeping order in the lower house and defending the house’s rights and privileges. They also share responsibility for the security, upkeep and functioning of the parliament.

The first speaker of the House of Representatives, Sir Frederick Holder, resigned his party membership upon election to the role in 1901, following the British tradition of an independent speakership.

After he died in office, that tradition was abandoned until 2011 when the Gillard government elected Coalition MP Peter Slipper to the speaker’s chair.

Intending to revive the independent tradition, he resigned his party membership – but was replaced as speaker by Labor’s Anna Burke a year later.

Independent and minor party speakers are more common in the states and territories. The ACT’s first speaker was from the “No Self Government” party, and Shane Rattenbury became the world’s first speaker from a green party in 2008. In South Australia the constitution was changed in 2021 to require the speaker to be independent.

Just as the House has a speaker and deputy speaker, the Senate has a president and deputy president.

Normally, the deputy president is chosen from and by the Opposition but, in 1996, Prime Minister John Howard offered the position to Senator Mal Colston, who was not favoured by the Labor Party for the role, as an inducement for him to defect from Labor. Senator Colston became the first and so far the only independent deputy president of the Senate.

Sometimes speakers are chosen from the opposition party, such as the incumbent Mark Parton in the ACT, a Liberal MLA in a territory with a Labor government. After the 2018 election in Tasmania, the Liberal Government’s preferred choice for speaker was defeated by another Liberal, Sue Hickey, with support from the opposition.

Since the speaker makes a variety of decisions on how the parliament conducts its business, having them not be aligned with the government can make things fairer for the opposition and crossbench.