Riots:

Les Heimann  writes: Re. “Them and us: why we need a fair society” (Friday, item 12). Eva Cox quotes The Guardian‘s view that in Britain the super rich and the have nots are more sharply divided than 10 years ago. The Guardian is right, Eva Cox is right and Australia is leaping, lemming-like, in the same direction — it’s really about when, not if.

Are we ignorant of social history such that we are condemned to repeat it? This time the rampant march of capitalism is partnered with  technological change causing massive shifts in social and economic well-being.  While myriad new jobs in technology have been created, all this has done is stave off the immediacy of the march of the unpossessed. The “unskilled” — an awful word — become more and more un or under employed.

With the rise and rise of un/underemployment,  markets shrink and then the whole system starts breaking down. The British riots are not just because of the global financial crisis.

Here, in the Lucky Country, we see the last job figures show about22,000 less full-time jobs and about 22,000 more part-time jobs. Retailers complain. Retailers are not protecting their markets by lowering weekly hours by 50%. How do you buy a house with that level of income? Manufacturers are not protecting their markets by putting people out of work.

In the middle of all this are our politicians, all of whom have long ago sold out to useful capitalist tools such as user pays, lower taxes, privatisation and just getting right out of the way of the capitalist herd stampeding over everything that binds a community. And yet the answer is simple; in theory anyway. A “mixed economy” is the answer. Where the people (through those whom they elect) keep ownership and control of the country’s assets and infrastructure.  Where wages are fair and prices are controlled, at least to a degree.

Where education is free and available to all. Where infrastructure is paid by all, owned by all and available to all.  Where taxes are paid fairly and according to means. Where social services are provided to those who need same and paid through taxes from those who do well. Where working conditions are fair and recompense is commensurate with effort for all — workers and capitalists. Where markets are protected through government competition or intervention. Where we invest in ourselves.

We used to have such a country and, unless we actually work to regain it, we will allow the flag of Karl Marx to stream strongly across the world some time soon.

Gavin Greenoak writes: Re. “Back to the future with Cameron’s digital Riot Act” (Friday, item 9). Bernard Keane does well to connect the history of “authorities” in the UK and their response to civil disobedience and violence. Bernard elaborates a legacy relationship and while he asserts that Cameron’s proposed lockdown on social networking gadgetry will not work, in another sense it will work: to maintain this legacy relationship, which in view of the history cited should surely be up for review. It is almost a truism, that the world has changed more in the past 50 years than in the previous 500.

Literacy, if not education, has vastly increased and with it the question of legitimacy, and in particular the legitimacy of the relationship of command and obedience.  Cameron’s identification of digitally mediated violence as a legitimate target for the forces of law and order (in other words, control), should work, to push this question further into urgency. And not merely maintain the legacy political relationships.

More of the same just won’t do, and violence will be the increasing response to the mere dismissal or moral judgment of this question.

Prime ministers:

Joe Boswell writes: In your announcement of the new Power Index series on Friday Paul Barry wrote “In June 2010 the factional bosses of the Labor Party helped bring down the Prime Minister that the majority of Australians elected.”

That’s a serious basic misunderstanding and it undermines the credibility of whatever is going to be written in this series.

It is constitutionally impossible to elect a Prime Minister. The incumbent is always appointed by the Crown. No ordinary voter has ever been given a ballot paper to vote for the position of Prime Minister.

The widespread erroneous belief that the Prime Minister, or any other minister, is elected is confusing and unhelpful when trying to understand the relationship between the branches of government, their sources of legitimacy, their functions and their problems. It might be more healthy for the parliamentary system if voters followed the logic of its design and concentrated on the quality of candidates to represent their constituency, rather than treating each candidate as a faceless proxy for a party leader.

In June 2010 factional bosses of the Labor Party arranged for a change of leader of their party. That is entirely and properly their business, between them and the rest of the Labor Party. There are no grounds for complaining that the elected Prime Minister was brought down because no such creature exists. If the wider consequences of a party changing its leader are not acceptable the constitution of Australia must be changed, presumably to a presidential system, so that the leader of the government has legitimacy that depends on something other than being a party leader. Do those who complain about Gillard replacing Rudd actually understand the implications?

Private Health Insurance subsidies:

Helen Keleher, Peter Sainsbury, Stephen Leeder, Fran Baum and Michael Moore write: Re. “Give me a rebate, public hospitals need private health insurance” (Friday, item 13). Michael Roff has responded to our piece, Time to support changes to private health insurance subsidy in a partisan position that lacks both credibility and the level of analysis which he assets is lacking in our article. We respond with references!

  1. Roff has no evidence that the means-testing of PHI is a “big lie”. The Minister has not committed to how the funds that would be freed-up will be spent, as Roff admits.
  2. Roff is wrong to claim that the Productivity Commission found that private hospitals are 30% more efficient than public hospitals. What they found is a 3% difference in costs.
  3. Roff is correct that we do not have a publicly funded dental scheme and we share his regret about that. Ancilliary cover means is that the less-well off majority of Australians who do not have PHI pay full price for dental and other ancillary cover, while the better-off are subsidised. This is an even more regressive effect than the financial support for PHI.
  4. Since July 2000, PHI coverage has been relatively stable at between 43% and 45%. The rebate has had very little effect on PHI coverage, and effectively redistributed public funds away from the area of greatest need towards those who were already members of PHI funds, generally the most well to do in the community, 94% of whom were already members of PHI funds anyway. Allocating that money to health is a significant investment.
  5. There does appear to be an association between rates of PHI cover and separations per 100,000 population in private hospitals. Whether this has reduced the load on public hospitals is a debatable. Certainly increasing the rate of private health insurance (PHI) coverage is likely to increase activity, giving rise to “moral hazard”: the likelihood that people paying for insurance will be likely to use private hospitals services, and make claims.
  6. Roff asserts that “no pressure has been taken off the public system” which is not surprising given population increases, an ageing population, increases in chronic disease and inequalities in health.
  7. The price of PHI is relatively ‘price inelastic’ (relatively unresponsive to changes in price) whilst also being ‘income elastic’ (relatively responsive to relative income levels), so changes in the price of PHI tend to have little effect on decisions by people on whether they will take out PHI cover.
  8. The relatively affluent benefit most from both private health insurance and the ‘Medicare plus’ safety net.  Electorates with high SEIFA scores received a disproportionate amount of the safety net rebates, whereas the most disadvantaged electorates (those with low SEIFA scores) tend to receive much lower average payment.
  9. If the incentives are arranged to make private practice more rewarding and less onerous then doctors will prefer to perform more of their work in the private system, reducing their availability to the public sector.  This is the opposite of what is claimed as a benefit by those who argue for continued PHI subsidies.

As a postscript to our original article, we reiterate the point that the rebate is a poor strategy for supporting private health care if that’s what government wants to do.  The government would be better subsidising private health care providers in return for contracted outcomes in volume and quality. Seldom is the point made that the subsidy costs the government money but they are not actually putting public money into total PHI premiums. This is illustrated in the simplified case below:

Before the rebate was introduced: X people paid $Y each in PHI premiums. Total premiums = $XY

After the introduction of the subsidy and lifetime rating: 1.5X people (ie 45% of pop vs 30% of pop) paid $0.7Y each in premiums. Total premiums = 1.5X  x  $0.7Y  = $1.05XY

So, all that happened after the introduction of subsidies and lifetime rating, was that more people paid lower premiums (with the overall public contribution staying the same) while the govt gave an uncapped handout to the PHI funds with no strings attached. The subsidies did nothing; the jump in membership came with the “run for cover” campaign and lifetime rating, which occurred at the same time. This is shocking health policy and shocking financial policy.

Peter Fray

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