Kevin Rudd:

David Hand writes: Re. “So why is Kevin Rudd suddenly the problem?” (yesterday, item 3). Bernard Keane’s commentary on Rudd’s popularity slide was seems to be written from a sympathetic viewpoint, which is a view I would expect Bernard Keane to hold but nevertheless contained within it the truth of the matter.

Bernard’s observations in the latter part of the article, that Kevin’s spin doctors were attempting to present a conservative Rudd to the conservatives and a progressive Rudd to the progressives suggests, rather than “being canny” a breathtaking naivety on the part Rudd and the people around him.

He has landed himself with the worst possible outcome. All sides have identified him as a phony, which is a mistake that none of his predecessors in living memory have made. It betrays a disturbing contempt for the voting public and a view that people’s opinions can be easily manipulated as well as a supine regard for the power of the media.

The media now has a new drama to feed on and Kevin is in serious danger of being swallowed up by it. A senior ALP politician can’t even walk down to the shop to buy a litre of milk without some fool hack asking when Julia is taking over.

Though disrespecting media experts and spin doctors might have some merit, politicians disrespect the intelligence of the electorate at their peril.  People may not pay much attention to politics but they’re not stupid.

James Holyoake writes: Bernard Keane wrote: “News also employs several commentators whose entire job is to smear and attack Labor … The Coalition faces no such permanent media opposition.”

Goodness me, Bernard, does this mean that you and Guy Rundle et al have failed miserably and that Crikey has thrown in the towel?

We’re all ruined, I tell ya.

Mining companies and elections:

Alan Kennedy writes: The coming election is really a question of do we want elected people to govern us or do we want the mining industry to run our affairs? The mining industry is behaving in a manner reminiscent of the Chiquita Banana Company made famous by Marquez in 100 Years of Solitude.

It was an oppressor of workers in South American and funded paramilitary killing squads. It never saw a dictator or despot it didn’t like. Now we haven’t quite got that far yet but it is starting to feel like that. The mining industry is filling up its advertising bank with huge amounts of money to buy the next election for Abbott. He would be the PM for the mining industry if he got in and it would be a warning to any political party not to mess with the miners if you want to enjoy the trappings of office even though they will retain the real power.

Now I know the sight of Mr Palmer as the spokesman for the miners who are doing it tough is a visual gift that just keeps on giving, but he is just a useful idiot for the miners. The real work is going on behind the scenes. We had the dulcet tones of the BHP Billiton CEO Marius Kloppers on CNBC telling porkies about the new tax and basically canning Australia as a place to invest. Kloppers of course was silent of his company’s efforts to buy the Cambodian government with bribes quaintly called tea money. Does anyone believe Rio was ignorant of Stern Hu’s activities?

Mining companies are transnational parasites that have to be controlled not encouraged. It is good to see the trade union movement making the running on this and, as they were during WorkChoices election, they are more on message than the Government. It would be nice if the small exploration companies who will be offered a 40 percent tax break on money outlaid for exploration got on board as well.

Big mining such as BHP and Rio are not the friend of the small exploration companies and they should wake up before it is all too late. We should all get on message and expose the fraudulent bleatings of the  miners and their bum boys in the Liberal Party. While we are at it, could someone please ask Tony Abbott what he has in mind if the national broadband network is going to be cancelled? It is such a dopey policy it is like an Edwardian pollly campaigning on stopping the introduction of electricity.

The housing paradox explained:

Gavin R. Putland, Director, Land Values Research Group, writes: Re. “House prices still on the up while loans head down” (yesterday, item 22). Why do home prices keep rising while lending to buyers is falling? Because the fall in lending was anticipated and “priced in” more than a year ago.

Lending had to fall because of the phase-out of the First Home Owners’ Boost (FHOB), which ended on Dec.31. Thereafter, lending continued to fall because of a spillover effect (buyers failing to make the deadline for contracts, or signing contracts in December but not getting loans until January or February), a knock-on effect (owners borrowing to “trade up” after signing contracts to sell), and perhaps a counter-cultural effect (a minority of buyers waiting for the FHOB to end, thinking prices will fall).

A similar thing happened in the second half of 2002 due to the $7000 Commonwealth Additional Grant (CAG), which was introduced in March 2001, reduced to $3000 at the end of 2001, and withdrawn at the end of June 2002.  Then, as now, prices kept rising as if nothing had happened.


Withdrawals of buyers’ grants cause exceptions to the general rule that a large fall in home sales (or associated lending) is a leading indicator of a fall in prices.  Hence, for the purpose of forecasting price movements, we might wish to “tune out” the influence of grants.
A partial solution is to consider only *established* homes — because the CAG was available only for *new* homes, as was half of the FHOB. A more complete solution is to consider only investors, who do not qualify for the grants.

In the graph, the blue (middle) curve shows lending for acquisition of owner-occupied established homes (ABS 5609.0, Table 11), seasonally adjusted, aggregated quarterly, and divided by GDP (assuming that GDP in Q1 of 2010 was the same as in Q4 of 2009).  Lending to individuals for acquisition of investment homes, similarly processed, is plotted in purple (bottom curve).  The ABS “8 capital cities” price index, “spliced” due to the change in methodology, is plotted in red (top curve).  As this price index is not inflation-adjusted, a flattening of the curve indicates a decline in *real* prices.

Notice that the combination of trends in early 2010 is the same as in mid 2002.  Also notice that a sufficiently large fall in investment lending is accompanied by a similar fall in lending for owner-occupation, and predicts a retreat in real prices.  When lending to investors falls sharply, expect prices to slump within six months.

That forecast will be self-falsifying if the Federal Government, in its determination to stop prices from falling, responds to the early warning by offering yet another subsidy for buyers.  That will keep the music going a bit longer.  It might even happen more than once.

In the end, however, price/income and price/rent ratios can rise only so high before the financial system breaks; and the higher they rise, the further they fall.

The Construction, Forestry, Mining and Energy Union and bombs:

John Burke writes: Re. “When is a car bomb not worthy of condemnation? When the target is the CFMEU”  (yesterday, item 11). It is indeed unacceptable that we should have car bombs going off, and the lack of mention in the media is very strange. Seems it was just luck that people, including those with no CFMEU connections, were not hurt or killed.

If, however, you were one of the people or firms subject to the thuggery of the Builders Labourers Federation and its successors, the Building Workers Industrial Union and the CFMEU, for part of the last 50 years you would certainly agree that if anyone was to become unhinged enough to plant a bomb then the CFMEU would be one of the organisations most likely to cause that unhinging.

This is the organisation that has sent good firms broke, that has done cosy deals with builders and developers to the detriment of its members. Few organisations in Australia have been so lawless and struck such fear into ordinary people going about their ordinary jobs.

Stephan Mayne in Crikey on 1 June 2007 and 16 July 2006 gave a tiny hint as to the thuggery and corruption afoot.

Julia Gillard, back in mid 2009, undertook to maintain the Australian Building and Construction Commission. Let’s hope that she has the strength to do just that.

Sport and the Budget:

Peter Lloyd writes: Arley Moulton (yesterday, comments) asks for less funding for “obscure” sports in favour of “local community sports”.  Laudable enough, but why imply sports should be funded on the basis of popularity (kayaking and discus bad, the undisciplined and low-skilled melee called “AFL” good).  As for the wider point about the need for funding of community sport, I couldn’t agree more.

Although I have a pretty limited interest in being a spectator, I have taken to playing futsal, international rules indoor soccer. Every Sunday I tramp down to the local sports complex and play against participants aged between about 10 and over 60, with a very strong female representation. But despite its popularity, the fellow who runs it is constantly battling: the lavish private school facilities, built at taxpayer expense, where we used to play became untenable because the booking could be cancelled whenever the school wanted the court. The arena where we play now, with basic facilities, is still expensive enough that a couple of teams forfeiting on a given night represent a severe financial setback.

I feel finding for elite sports and especially the Australian Institute of Sport should be linked to data representing actual participation levels in the community sports they supposedly inspire, and more pressure should be put on private schools to make their facilities available to those who paid for them.


Nicholas Browne, Director of Curriculum & Professional Learning, Trinity Grammar School, Kew, writes: Marcus L’Estrange’s suggestion (yesterday, comments) that student literacy problems could be remediated by having students ‘repeat’ rather than be automatically promoted sounds like a good idea. Except for the demonstrated fact that it doesn’t work. I refer Mr L’Estrange to John Hattie’s magisterial survey of educational interventions ‘Visible Learning’.

In this synthesis of over 700 meta-analytical studies of impacts on student learning, only one intervention could be seen to actually LOWER student outcomes. And that was getting students to repeat a year. Hattie’s work challenges a lot of the preconceptions of both ‘left’ and ‘right’ in education and can be uncomfortable reading for those wedded to some ‘progressive’ orthodoxies — which often have a much lower strike rate of student success than some more focused didactic approaches.

But in this case, the progressives are right. Making kids repeat achieves nothing — indeed can actually lower their performance.

Dr Tom Lewis writes: Marcus L’Estrange makes a good point in his comments on students passing on through school grades regardless of ability. In two decades I have seen plenty of examples of this crazy thinking, and sadly experienced many of these students at close hand. Students in say, Year 9, who really only have an eight year old’s command of literacy may as well not be there — in fact it would be a lot quieter if they weren’t. Bad behaviour often is their mask of their incompetence, for to admit this would be a “shame job”.

This is the legacy of some decades of ensuring students don’t suffer from “low self esteem”. Rather than single out a child who can’t read they are simply given an automatic pass into the next year – and the next year of lesson difficulty. Maybe NAPLAN is the beginning of ensuring students don’t pass from primary to secondary without passing national benchmark standards. Better to have their self-esteem harmed by this process than by inability to succeed at anything in later life except collecting unemployment benefits.  Or, as one of my students once put it, “Living off the doll.”

Peter Fray

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