Monday, October 31, 2011

Power to the People

The Tamberlin Report has been released, and, suffice to say, it is a doozy.

It is long - some 264 pages, plus an executive summary, plus appendices.  I'm certainly not going to purport to summarise the whole thing.

What I do want to do is talking about a few of the issues that are or have been politically interesting:
  • The value for money of the sale
  • The resignation of the directors
  • The proroguing of parliament and
  • What happens next.
Value for money

It is incredibly hard to calculate the value for money that the state may or may not have received . Any conclusion rests on so many assumptions and caveats that there is no way there can be a definitive answer.

Do we include the cost of losing a AAA rating?  Do we factor in the future cost of upgrading the network?  And what exactly we comparing?

It's therefore unsurprising that we have seen parties with vested interests trying to push their perspective on a confused public. 

The goal of assessing the value for money was expressly listed in the terms of reference:

Indeed, an entire topic of the report is devoted to the issue:

The conclusion is that, broadly speaking, the deal was in the state's interests:

It is necessary to clarify a few of the issues above.

As you may recall, in 2008 the Iemma government decided to lease the power stations and sell the retailers.  This came after NSW Labor just about tore itself apart over the issue - so much so that it was one of the major causes of Morris Iemma's demise.

O'Farrell had tipped him over the edge by cannily/cynically (depending on your perspective) opposing the privatisation, despite the fact that most believed that it was what the Coalition actually wanted to do.

A privatisation as sought by Iemma would have required, as I understand it, legislative change.  This is why O'Farrell was able to stymie the move - Labor needed the Coalition's votes to get it through.  Without them, the sale as envisioned could not happen.

In those circumstances, if there was to be some privatisation then Labor needed another solution.  For various complicated reasons, what has been called the "GenTrader" option was this solution. 

It wasn't the ideal solution, but given the Coalition's position Labor's options were limited. The report has found that, in those circumstances, the price obtained was a fair one.


The resignation of a number of the directors of the electricity generation companies was a major scandal. It served to tar the transactions - it was seen as being proof that the deal was bad for NSW.

Having now read Tamberlin's report, I certainly did not, until tonight, understand the actual reasons why the directors had resigned. It certainly puts a different spin on exactly what occurred.

There are 3 major electricity generation companies in NSW - all wholly owned by the state.  They are Macquarie Generation, Delta Electricity and Eraring Energy. Those corporations sit under the State Owned Corporations Act 1989

The report explains how the Act characterises the role of a State Owned Corporation:

Section 20N of the Act is important:

Without getting too bogged down in the detail, the directors were compelled by the Minister (Eric Roozendaal) to approve the sale.  Given that the Minister is (for present purposes) speaking for the shareholders of the company, the Directors were obliged to comply.

The problem, as I read the statements of the directors of Delta and Eraring who resigned, as quoted in the report, they were all of the opinion that the deal was not a good deal. Many used the word "moral" rather than "legal" in describing their decision to resign.

Their individual reasons bear reading, if you are interested, and can be found on pages 135-166 of the report.

In any event, history shows that those directors were very promptly replaced the transaction proceeded as intended by the government.

Proroguing of Parliament

The report does not have a great deal to say about this, which is unsurprising given that it lies outside the general ambit of the inquiry.

Given what the directors who resigned have subsequently said about the sale, the fact that parliament was prorogued is entirely unsurprising.

The report helpfully summarises events leading up to the proroguing:

What the report is clear about is that the directors who resigned were within their rights in not attending the Committee's hearing, given that Parliament had been prorogued.  There can be little doubt that the fact that they did not attend and give evidence spared the Labor government significant embarrassment in the lead-up to the election.

What Happens Next

The report cavasses a number of different options. 

In a discussion of the adoption of the GenTrader model (page 213), the report makes it clear that the best option would have been the original scheme as proposed by the Iemma government. In those circumstances, it unsurprising that the report dismisses the status quo as being undesirable.

However, the report also does not approve of unravelling the GenTrader arrangement, not least of all because of the damage that would do to the State's reputation.

The report favours the sale or lease the generators of electricity to "encourage private investment in baseload electricity generation in NSW."

The report also examines whether the transmission network and distribution networks should be sold.  Those two terms are defined in the executive summary:

The report reaches the following conclusion:


The final recommendations of the report are as follows:

Unsurprisingly, the report doesn't particularly assist either Labor or the Coalition.  It (at least partially) vindicates Labor actions and the GenTrader option by indicating that the only better option was blocked by the Coalition.

It suggests that privitisation of further elements of the electricity network would be a good thing.  This is good for the Coalition because I think most people believe that this is what the Coalition wants to do.  It is an awkward position for the Coalition because there will be a massive campaign against it - perhaps even a campaign to match the NSWinconsin protests earlier this year.

It would reinforce the perception that the Coalition is the party of big business, not the party of the individual. I'm not sure how many times the Coalition can reinforce that view without doing serious damage to their chances at the next election.

Having said that, the Coalition needs the cash from this sale.  They made a lot of infrastructure promises, and they need to fund them somehow.  This would seem like the most sensible source for those funds.

O'Farrell repeatedly (some might say famously) refused to rule out privatisation before the election.  It looks like this report might be the excuse he has been hoping for, and the route to the cash injection his promises desperately need.

Wednesday, October 26, 2011

Solaring into Trouble

The Andrew Stoner Solar Panel "scandal" has been resurrected once again.  This displeased me greatly, and not just because I needed to come up with a new solar panel based pun for the title of this blogpost.
Full story on SMH
These attacks on Stoner shows an odd desperation on the part of Labor - an unbecoming fervour to splash the mud around in the hope that it sticks.

That worked for the NSW Coalition when Labor were in power.  To be fair, there were so many corrupt Labor members and ministers that the public didn't need any help from the Coalition to reach that conclusion. 

Things have been different since March.  Steve Cansdell's descent was as rapid as it was unexpected, but he was sacked before the issue could really do much damage to the Coalition's brand.

We then had the mystery unnamed senior Liberal minister who was alleged to have been involved in what I'll call some "fairly graphic situations."  I should say, in fairness, that his identity has not yet been revealed, despite my view in this post that it was inevitable. It remains to be seen whether that remains the case.

The consequence is that the old "stink of corruption" that hung over the Labor government has, to date, eluded the Coalition. This makes Robertson's fervour over Andrew Stoner look disingenuous rather than compelling.

In any event, in August it was alleged that Stoner had raced to take advantage of the Solar Panel scheme at the last possible minute.  In fact, there was even the (superficially) damaging allegation that he had skipped out on parliament that final afternoon to sign up.  

As if that wasn't enough, Labor then took the frankly incredible step of having the matter referred to ICAC.  It appeared that the installer was a National's member.  Further, it was alleged that Stoner's deposit arrived after the deadline for people to sign up for the deal and receive the 60c tariff, meaning that he had potentially received some sort of favourable treatment.

From there, the issue thankfully faded from sight for a period, until I saw this tweet from Sean Nicholls:
It appeared that during estimates this week there was an exchange involving Andrew Stoner where the issue of the solar panels was raised.  It was revealed that a report had been prepared by Keith Mason AC QC and provided to the Coalition.  The report was duly provided to the committee. 

The relevant document was produced and is available here (part 1) and here (part 2).

It bears a careful reading.

As a starting point, I thought it was pretty funny, in light of the topic, that the date on the document is clearly incorrect.
The report helpfully sets out 4 requirements for Stoner to have complied with law. They are as follows:
The report goes on to detail the times at which the relevant arrangements were made, which was assisted by the fact that Stoner had made many of the arrangements on email.  

The important part (for present purposes) is here:
What those emails unambiguously show is that Stoner had entered an agreement to purchase the system well before the date at which he was alleged to have snuck out of parliament to sign up.  That allegation was plain incorrect, and Labor owes him an apology for an allegation that is clearly wrong.

In any event, when the changes were announced the provider sent what I have no doubt was a quickly composed and semi-panicked email out to a large number of people - most likely anyone who has shown an interest but not yet had their system installed. Stoner received that bulk email asking for a deposit of $100.

In accordance with their email, Stoner transferred the funds to the provider.

One point is emphasized:
Additionally, confusion was created by the fact that the provider provided the invoices to everyone dated the same day as the email, as opposed to the date they received the funds.  It remains unclear why that was done, but, as far as Andrew Stoner is concerned, nothing turns on it.

The report is more than a little refreshing, because it is a report that looks beyond the stupidity of politics to the actual issue: has Andrew Stoner done anything wrong?

Unambiguously, the answer is no.  I don't suppose he is holding his breath for an apology.

Saturday, October 22, 2011

An Eggcellent Bill

Today I want to write about eggs.

That's not some sort of metaphor about the hatching of a new policy, or the neat encapsulating of an idea - I mean those things that come out chickens that are just so yummy.

The reason you're hearing about eggs on a politics blog is this story:s

Original story on SMH
As the person in our house who does the shopping, I think the number of egg options is pretty bewildering.  There are cage eggs, free range eggs, barn eggs and then of course there are the eggs with the smiley face stamped on them.

I always buy the smiley face ones because the missus likes free range eggs, and because I like to talk to eggs when I crack them and say things like "This oughta wipe the smile off your face!"

Getting back on point, there is little understanding amongst the public as to what exactly the different descriptions mean.

I don't intend to get stuck into the precise legal framework for this area - there are national standards, state standards, cross-border issues, and heaven knows what else.

It was interesting, however, to come across this PDF that purports to define the present labelling rules:

Full size version here
Suffice to say, the Greens introduced a bill to standardise the labelling for Free Range.  The full text can be seen here.

The overview explains things quite nicely, and the requirements are very detailed. On that, one that is worth picking out is the following:

Have a look at a square metre next chance you get, and imagine 10 chickens per square metre.  It's not exactly spacious, but there you go.

The debate ran over two days in the Legislative Council, and luckily for us the speakers (and interjectors) took the chance to have a bit of fun:

There was some disagreement as the bill progressed through.  Labor amended the bill and, as I mentioned earlier, the government initially opposed the bill.

Interestingly, the Shooters and Fishers agreed to support the Green's bill, despite the Government's opposition.  As much was noted by their leader Robert Brown:

In those circumstances, the Government would in fact have lost the vote had they maintained their opposition, so it is likely that their vote in support was merely a tactical retreat, or, as I like to call these things, an advance in a different direction.

The fact that the Shooters supported the Greens bill is not the only surprising part. A minor party lead the charge on a bill and got it passed, which is no small triumph. Not just any bill as well, but a bill that will no doubt piss off a lot of people.

Additionally, there is something to be said for the way this brands the Greens in NSW.

Federally, the Greens are perceived (at least in some quarters) as being the party really running the country.  Moreover, the Greens campaign for action on Climate Change is probably the only reason that Labor has stuck with the Carbon Tax.

At the State level their brand is not as well defined.  People seem to know what the Greens stand for generally, but aren't necessarily as clear on what that means in practice. This bill seem to be right in their wheelhouse - it will appear to the younger, environmentally conscious voters and annoy many rural voters who will see it as hurting an already struggling industry.

Wins are often hard to come by for a minor party, and no doubt the Greens are feeling pretty good about themselves this weekend.

Monday, October 17, 2011

Tax is not a four letter word

I recall a tweet from a friend a while ago complaining about the Tax Office being credited with a special 20c coin celebrating the 100 year anniversary of the Australian Tax Office.

Photo from here
The reason for her complaint (if I can be so bold as to put words in her mouth) was that tax is at best a necessary evil, and at worst a horrifying example of governmental encroachment upon our lives.

This was a girl that would find a very happy home with the Republican Party in the US (especially their Tea Party colleagues) - governments should be small, spending should always be the absolute minimum (except of course for defence) and taxes should be cut, cut and then cut again.

This view is far less common in Australia.  Whilst the Federal Coalition has shown a new-found enthusiasm for small government of late (no doubt in part due to the happy synergy this has with opposing the Carbon Tax) their efforts on this front are positively lacklustre in comparison.

With that in mind, it is surprising (at least to me) how strident opposition can be to new taxes.  I've already mentioned the Carbon Tax, but we need only think back to the GST for an example of how easy it can be to oppose a tax.

As I said on twitter today, it is just too easy for a lazy journalist to find someone worse off under the tax, and publish a double page spread of the family in front of their McMansion weeping over $15 a week.

Every business failure is blamed on the new tax - even those businesses that haven't turned a profit since walkmans were the next big thing.

This is the reason why O'Farrell's suggestion that the GST be increased is probably never going to see the light of day.

The story was brought to my attention by O'Farrell's exchange today with ABC journalist Latika Bourke:

I had a look at Oakeshotte's piece.  His Private Member's Bill seems pretty outlandish, and I imagine I'll return to it another time.

I'm more interested in the NSW Government's submission to the Tax Forum, a document I'm ashamed to say I had not read before today. It can be found here, and it worth a gander - it is shortish and written in fairly plain English.

There is a bit of commentary about the imbalance between Federal and State governments when it comes to Revenue and Expenses - in short, the Federal government holds the purse-strings for the states.  There is a lot of talk about the Spirit of the Constitution (which, for me, is a short step from discussing "the vibe").

There is also an interesting proposal regarding the treatment of fuel excise - essentially NSW wants her share of the fuel excise sent straight over to be spent on road infrastructure.

It is the proposal on GST that has got people talking today though.

What the paper calls for is this: 

Why are they more efficient?  These two tables explain why:

To understand those tables, it is essential to grasp the concept of "Excess Burden".  Wikipedia says the following:

The average burden is the average at the present rate.  The marginal burden is the additional burden for the next $1 - a marginal burden of 10% means that $1 extra of tax will mean $0.1 of burden.

Looking closely at the numbers, it can be seen that some taxes actually have negative burdens.  Presumably Tobacco excise is negative because of the saved health costs, meaning that for every $1 we tax cigarettes there is a positive effect elsewhere.

The numbers that we are interested in are the numbers for GST compared to some of the State taxes.  The differences are stark, and clearly show the benefit of eliminating these State taxes in favour of more GST.

There are other benefits as well.  Eliminating one of those taxes in favour of a higher GST-rate would save huge amounts of money on administration (for government and business). 

If the Federal government was really smart what they would do is remove GST's food exemption. With some carefully targeted income tax cuts and/or welfare increases the lowest earners would not be worse off, and we would have a tax system that is simpler, cheaper to administer, less prone to fluctuations and, above all fairer.

Will it happen?  Of course not.

Even for a popular government, an increase in the GST-rate is politically disastrous.  We all remember how hard it was for Howard to convince us the GST was a good idea (and even then it probably hurt him at the 1998 election). For the present Federal government?  Fuggeddaboudit.

Moreover, where is the benefit for a Federal Government?  The State Governments will score big as some hugely unpopular taxes are eliminated (I'm thinking especially of land tax or payroll tax) but the Federal government will be the big bad guy.

How do I know?  Read this awful piece on the NSW Labor website.

The writing in this piece (especially the quotes) is so awful I want to poke my eyes out, but I can also acknowledge that it is effective. The image of Barry's hand in your pocket - it's awful, horrible writing, but even this piece would do the job.  Imagine a slick, well crafted, intelligent campaign. It could actually make the next NSW election competitive.

O'Farrell's proposal isn't going to happen.  What is more likely is that the GST issue is a feint to win a share of income somewhere else so that the Coalition has the funding room to reduce payroll tax a little more.

Another good idea that will never see daylight. A shame - but certainly not a surprise.

Thursday, October 13, 2011

Fishing for Votes

*apologies for the lack of visuals.  Once again, Blogger is not co-operating*

The events surrounding the closure of the Cronulla Fisheries Research Centre are a odd and rather disconcerting example of the inner workings of the NSW Government today. It was politics, pure and simple - the ugly underbelly that they would rather you not see.

By way of background - the Coalition recently announced that the centre would be closed.  

I don't want to discuss the decision itself - what I am more interested in is the actions of Mark Speakman, Lee Evans, Graham Annesley and Mark Coure.

The above are all Liberal members, and as such you would ordinarily expect them to be prompty falling into line behind their leader's decision.

Not so.

These four Liberal MP's have "broken ranks" in the full knowledge that their actions would attract media attention.

Why have they done this, and who was it that said it would be OK? That is a difficult question to answer.

On one hand, the powers that be know that these four votes are hardly going to swing any decision.  The majority commanded by the Coalition is such that they could suffer three times as many deserters and still not be in any danger of a loss.

Moreover, this may be one of the few issues where the deserters don't do any real damage.

The Cronulla Fisheries Research Centre is aomething that 99% of the state did not even know existed.  Certainly unless you lived in the Cronulla area or were directly engaged in the work the centre was doing, it is unlikely that you would have any clue about the Centre's existence, let along care enough to take notice of this decision.

The four MP's who have been opposing the decision are, as you might expect, four MP's whose electorates are in close prosimity to the Centre.

Now, it goes without saying that I have no idea what discussions may have taken place between these MP's and O'Farrell's office.  Suffice to say, we can assume that these MP's have expressed concern abou their job security if the closure was to proceed.

This is the kind of "local issue" that can sink a local member - communities have a habit of remembering this kind of betrayal for years, and executing revenge that the next election.

Further, it seems likely that these members were given permission to oppose the reforms publically.  It would seem odd that they were acting off their own bat, in defiance of their leader.

Thing is, with the enormous majority that the Coalition has, they can afford to lose a few votes each time round.  Obviously it is not advisable that it occur too often, and the Coalition would want to ensure that it does not become endemic. But in circumstances such as these where the decision is such that severe consequences could flow for the local member, it may well be in the best interests of the party as a whole to allow the affected local members to "defy" the party.

Obviously there is no danger of the Coalition losing the vote.  The local member gets to make a big show of standing up for their local area, and will be picked up in the local press (such as the St George and Sutherland Shire Leader).  And only politics nerds like myself actually notice the way the vote actually goes in parliament.

Now, at the time of writing I don't know whether a vote on the substantive issues has been moved.  I also don't know how these 4 members voted.  

But the odd situation is that almost no one would notice how they voted.  At best there might be a story or two about how they defied their party - which is just fine for the Coalition given that they will not lose any votes, but may well give those members something to defend themselves with next time they visit their electorate. 

No journalist is likely to write a story about how these members voted in actuality, because if one was to follow the media reports you could be forgiven for thinking that i am the only person in the state who ever reads the Hansard reports.

Apparently it is possible to have your cake and eat it too.

Thursday, October 6, 2011

Teach our Children Well

Teachers have a bloody tough job.  I don't envy them, and I think most people in the community celebrate and even venerate the work they do.

Being a teacher has, however, become far more difficult in recent years.  Part of the reason is the incredible sensitivity to allegations of child abuse, meaning that teachers have all sorts of restrictions on what is appropriate in their interactions with children to shield them from accusation.

One of the biggest burdens that teachers bear is the fact that they are "mandatory reporters" - if a teacher has reason to believe that a child is being abused or neglected then they are required to report it.

I have no doubt that this obligation rests heavily on the shoulders of teachers.

It is in this environment that I saw this story this afternoon on the Daily Telegraph website:

In order to make sense of any of this, it is important to get our head around the details. To do this, it's essential to carefully read the judge's reasons for the decision.  They are available online here. Having read the media's commentary on the decision today, it is worth speculating how many of the reporters actually took the 10 minutes it took me to track down the decision and read it.

It's also interesting to wonder why it is NOW that the story has broken.  The judgment has been available for 4 months - I assume that either the jury came back with their verdict this week, or perhaps someone issued a press release - perhaps the NSW Teacher's Federation who was quoted in the Daily Telegraph article.

The 14 year old was accused of Armed Robbery in Company. Sometime after being charged, he started at a new school.

The Year Advisor at the new school approached the boy not long after he started and spoke to him.  The conversation was detailed in the judgment ("The accused" is the 14 year old boy):

The issue at trial was whether this evidence was admissable to prove (in part) that the boy had committed he offence.

The judge ruled that the evidence was not admissable.  In due course, the trial proceeded and the boy was found not guilty.  Not having access to the full transcript of the trial we can have no real idea as to why, but of course even the lawyers who sat through the trial can only guess the reasons that the jury had to finding him not guilty.

The ONLY issue that the judge looked at in the above decision was whether the evidence was admissible; that is to say, whether the jury should be able to consider it.

Questions of admissability are considered in just about every contested legal hearing.  Evidence is excluded for all sorted of reasons - it might be because it was irrelevant, because it was hearsay, because it was illegally obtained, or because it was prejudicial.

There are all manner of tests that have been established in the law as to whether evidence is admissable.

In this case, the relevant test is in section 90 of the NSW Evidence Act,  It reads as follows:

The discretion this gives the court is broad.  An obvious example would be where the admission is extracted through torture, or where a person was offered some sort of reward for confessing.  In those cases, it would be unfair to allow the admission into evidence because, plainly, it would be an unreliable admission.

This case was different.  Was it unfair to allow a court to rely on this admission?

The court firstly observed that there was no useful precedent for this kind of decision. The court also noted 4 reasons that could convince the court that the admission of the evidence was unfair:

For those reasons, the court found that it was unfair to allow the Crown to rely upon the evidence, and excluded the evidence.

It is a difficult decision - the fact that there is no precedent is perhaps not surprising given that the unusual circumstances.

I don't propose to engage in a detailed discussion as to whether the decision was correct, excepting to say that I do have some reservations.  I do agree with this statement from the Judge:

I do not imagine that this scenario is one that any teacher would expect, let alone have received training for.

The important issue I want to clear up initially is this: no one here is criticising the teacher.  The teacher is not "in trouble" - he/she is not been counselled and has not been stood down.  No one is suing him/her/the department, and no one is suggesting that he/she has done the wrong thing.

The ONLY issue is whether the teacher's statement detailing the conversation is admissable evidence against the boy.

That point appears to have been lost in the discussions I've followed today.

No one is suggesting that teachers now have to warn every child before they speak to them - the court is merely saying that if the Crown wants to rely on these admissions, then it is appropriate that before discussing such issues with a child then a teacher should follow what this teacher said was his/her usual practice of "cautioning students in relation to the disclosure of criminal offences."

That's it. If a teacher doesn't want to ensure that he/she can report any disclosures to police, then he/she can chat to a student in whatever fashion he/she likes. It is only if the teacher plans on reporting any admissions to police that he/she needs to warn the student.

Now, as I have said, I'm not myself certain that the decision was correct.  Given the outcry today, the DPP may well appeal the decision to clarify the law.  It is curious that the DPP did not appeal the decision before the conclusion of the trial so that the decision could have been (potentially) overturned before this boy was acquitted. Now that the jury has reached a decision, the ship has sailed on this prosecution.

Greg Smith's reaction, as quoted in the Herald was fair and measured.

Barry O'Farrell's reaction was not:

Further on in the article:

His reaction also betrays a misunderstanding of the decision.  Nothing stopped the teacher reporting anything, and no one is criticising him/her for what was done.  The only issue is whether the evidence is admissable.

O'Farrell's comment reveals the danger of making comments about legal decisions when you don't actually understand the issue being discussed. 

O'Farrell in jumped into a twitter conversation I had this afternoon with two teachers who I have a great deal of respect for.  We were in the middle of discussing the decision and the media reports when O'Farrell said the following:

It is exactly these kinds of statements that fan the flames of community outrage.  The comments are based upon an incorrect understanding of what has actually happened. O'Farrell has either not read the decision or doesn't care, because it is politically convenient to make an argument based on "common sense".

Greg Smith has done exactly what an Attorney General should do - respectfully suggested that he disagreed with the decision, set out an appropriate path to dispute the decision and left it there.

In preparing this BlogPost I did what I normally refuse to do, and subjected myself to some comments on the Daily Telegraph article. Suffice to say that almost without exception the comments were a cascade of the most aggressive and unpleasant criticism of the judge, the court system and lawyers generally.

Climbing on board that bandwagon is easy politics for O'Farrell - it is simple to agree with an angry, poorly informed mob.

Greg Smith has done the right thing and respectfully disagreed with the judge.  It's a shame that our Premier could not take the same approach.