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Tasmania

Feb 21, 2014

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The Tasmanian Labor government is almost certain to lose power in March, so blame the Greens. That seems to be the current strategy of the Labor Party, and one that might well perpetuate the party’s losses. Interviewed on ABC’s 7.30 after calling next month’s state election, Premier Lara Giddings said her Labor-Green coalition had been a good government, but because her voters didn’t like the Greens she would promise no more coalitions.

I wish Leigh Sales had followed up by asking her whether she would countenance a “grand coalition” with the Liberals if the Greens happened to end up with the balance of power (though this is unlikely given that the polls suggest an outright Liberal victory). But Giddings’ constant refrain that she stood for Labor values, without any explanation of which of those values her Greens ministers had not accepted, is a microcosm of the confusion within Labor about where the party now stands.

Giddings did say the Greens were too wedded to environmental concerns, but this is an awkward argument to sustain when federal Labor is attacking the Abbott government over climate and the environment. She came across as yet another desperate Labor leader trying to position herself as a sound economic manager without acknowledging that this is precisely to yield the ground of “Labor values” to those of narrow neoliberal economic doctrines.

Labor seeks to be a progressive party while running away from any policies that might actually challenge the orthodoxy of the conservative press. This was typified by the reaction to the re-election of the Greens MP Adam Bandt in Melbourne in September last year, which created great bitterness among many in the Labor Party. Despite Labor’s uneasy relationship with the Murdoch press, one of its state MPs, Jane Garrett, used The Australian to attack the Greens for undermining progressive politics. Nowhere in her article did she mention asylum seekers or climate change; apparently they don’t fit her concept of “progressive” politics. Yet thousands of Australians do see these as key issues, just as did Kevin Rudd when he made them central to his campaign in 2007.

Rudd’s victory back then should remind us that Labor wins when it appears clearly more progressive than its opponents: think Gough Whitlam in 1972, Bob Hawke in 1983 and Paul Keating in 1993. Attempts by Labor to position itself as a better manager of the status quo — Kim Beazley’s tactic in 2001 — are less successful because the party can’t outbid the Liberals on that ground unless the Liberals overreach (as Howard did with WorkChoices) or run out of steam. What’s different now is that Labor no longer has a monopoly of progressive views.

Yes, there are elements within the Greens who appear wedded either to single issue environmentalism or, in the case of some in New South Wales, carry the legacy of an old authoritarian Left. But most of the current generation of  Greens appear better social democrats than those in the Labor Party who support mild redistributive policies but are scared to acknowledge that these require major changes to taxation and an abandonment of the cult of the market and indiscriminate growth. Even former PM Julia Gillard was attacked by some of her own colleagues — one of whom seemed to think families with incomes of $150,000 were just scraping by — for promoting “class warfare”. The desire of the Labor Party to both reach out to the “aspirational middle class” and accept the need to provide a safety net for those worst off assumes that constant economic growth and low taxation can be maintained.

Labor has yet to find a convincing definition of progressive politics that is more than a wishlist of discrete policies. Any serious questioning of the mantra of growth and consumption is regarded as electoral suicide. The party is trapped in the legacy of economic rationalism, which leads to the contradictory position of its current leaders, who simultaneously talk about the need to focus on climate change while also increasing economic growth.

Because this is probably a necessary short term strategy for election, I doubt whether the Greens can seriously replace Labor as the alternative party of government in Australia. Indeed, the political commentariat seem agreed that the Greens are now insignificant; even as sensible a reporter as Jennifer Hewett has suggested that “we just politely ignore the Greens as irrelevant”. Like the Australian Democrats, it is argued, the Greens will dwindle away under the pressure of some apparently immutable need for a binary party divide.

I doubt, though, that Labor will ever again win a majority in its own right. The steady decline of both union members and a sense of working-class solidarity is eroding its base. More importantly, the language of social justice and egalitarianism is disappearing from the common language, to be replaced by a narrow conception of individual achievement.

*Read the rest of this article at Inside Story

Tasmania

Feb 4, 2014

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Australia is on track for wall-to-wall Liberal governments — in every state and at the federal level — in March, for the first time since 1970.

A poll released today shows the Liberals are likely to wrest power from Labor in Tasmania at the state election on March 15. South Australians go to the polls the same day, and analysts are tipping a change from Labor to the Liberals there too.

That would leave the ACT government (an overgrown territory / town council) as the Australian Labor Party’s feeble last stand. The tide has turned quickly; just six years ago Labor held government federally and in every state.

Before conservatives rejoice too loudly at the possible Liberal whitewash, it’s worth remembering that it doesn’t always help a prime minister if every state is on his or her team, because there’s no one else to blame. And voters can get skittish at such dominance by any party.

To Tasmania, where the besieged Labor minority government of Premier Lara Giddings is limping towards likely defeat. Labor has been in power since 1998 in Tasmania, which invented its own complex Hare-Clark electoral system based on proportional representation in the lower house. This lends itself to minority governments. Four years of governing with the Greens, the slow draining of talent from Labor, a poor state economy and anger in the north about Labor’s actions to restrict forestry have translated into toxic polls for the ALP for some time. Some ALP figures are publicly unloading on their own party.

Today, the Hobart Mercury carries the first publicly available poll of state voting intentions since November, and the first since the election date was named. It was commissioned by the Liberals, taken on January 20 and dropped to the Merc, so it should be taken with a grain of salt. However, it is a fairly respectable ReachTEL poll of almost 2000 people, so it tells us something. The results are up on local psephologist Kevin Bonham’s blog.

The poll shows the Liberals are likely to win 13 or 14 seats in Tasmania’s lower house of 25 members (13 is a majority), while Labor would be cut back to seven or eight, and the Greens might win four. It shows a slight softening in the Liberal vote, while Labor’s woeful vote has picked up a bit. It’s closer than the polls have been for some time, but not that close.

Tasmania has five electorates, which each elect five members (upper house elections are held at a different time). This election will be won or lost in the north (Bass and Braddon are the northern electorates and Lyons is in the centre), where anti-Labor sentiment is much stronger. Here are the ReachTEL results.

Question: at the upcoming state election to be held on the 15th of March, which of the following will receive your first preference vote? If you are undecided to which do you have even a slight leaning?

Dr Bonham told Crikey: “I think the Liberals can win majority government, and they have a very good chance of doing so, but this poll is not as good for them as some of the others, it does cast more doubt.” One point of caution for Will Hodgman’s Liberals, according to Dr Bonham, is that ReachTEL has a record of significantly understating the Labor vote in Tasmania. If the results are just a few points lower in Bass and Franklin, the Liberals could miss out on majority.

In the unlikely but possible event that the Liberals don’t win majority, Tasmanian politics will get very interesting indeed. Hodgman has vowed to govern in majority or not at all. The Liberals may try to poach renegade Labor MP Brenton Best as Speaker, or they could jettison Hodgman and govern with the Greens. Or the Liberals could go it alone and try their luck on the floor of Parliament. Another option is for Labor and the Greens to band together for another term in government. At any rate, the governor would be called away from his duties opening Rotary book fetes in Oatlands to make interesting legal decisions about who should be asked to govern.

A Liberal insider told Crikey the mood within the party was “cautious optimism”. “The campaign is well set and well structured, it’s more the left-field stuff that comes from outside,” he said. “Clive [Palmer] is a real wildcard … Palmer could blow it open for everybody, the only difference is that we know they’re there this time.”

The Palmer United Party is running at the state election and surprised many last year by winning a Tasmanian Senate seat (that of Jacqui Lambie) from the Liberals. The Liberals are worried the PUP and the Nationals could win just enough of the conservative vote to deny the Liberals the quotas they need. On this ReachTEL poll, PUP is unlikely to win a seat, but the party hasn’t started any cashed-up advertising campaign yet. It could win a seat in Franklin or Braddon.

Labor insiders are adamant they will not govern with the Greens. They claim they’re picking up feedback that “it’s going to be closer than people think”. However, some privately say they are sensing strong personal sentiment against Giddings, seen by some as being too young, too female, too Hobart, too Green-friendly and too much like former prime minister Julia Gillard. Giddings has thrown the Greens out of cabinet.

Former independent upper house MP Sue Smith, who is based in the state’s north and is conservative leaning, told Crikey “the first mood is majority”. “We could see a Queensland episode in Tasmania as a whole,” she said, referring to LNP Premier Campbell Newman’s thumping win. Smith says northern voters are worried about jobs and do not want to experiment with government. They want “someone they can blame”.

The current make-up of the Parliament is 10 Liberal, 10 Labor and five Green. This graph shows voting intention as measured by Enterprise Marketing and Research Services (EMRS) since the last election in 2010.

Tasmanian state voting intentions, polls by EMRS (excludes undecided voters).

Tasmania

Jan 17, 2014

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Tasmanians will go to the polls on March 15, Premier Lara Giddings yesterday confirmed, setting up a super Saturday of simultaneous state elections in Tasmania and South Australia. In both cases, the hopes of Labor — the last remaining Labor governments at a state or federal level — look grim.

Labor’s prospects look particularly bleak in Tasmania, where the party has been in power since 1998. That makes the Bacon-Lennon-Bartlett-Giddings government the same age as Kristina Keneally’s in New South Wales and two years older than Anna Bligh’s in Queensland at the time of their respective massacres in 2011 and 2012. In each case, a strong sense prevailed that all concerned would have been better off if the governments had gone down to more honourable defeats a term sooner.

However, Tasmania offers one sharp distinction with NSW and Queensland: the Hare-Clark electoral system, in which each of the state’s five electorates return five lower house members through a brand of proportional representation much beloved by election watchers. This has traditionally made life for the Liberals very difficult indeed, given their position on the Right of a three-party system in which the centre is occupied by Labor.

The 2010 election result had the Liberals clear winners in terms of votes cast, with Labor reduced from 14 seats to 10 and the ALP vote crashing by 12.7%. As then-premier David Bartlett had spent the campaign talking up his party’s determination not to govern with the support of the Greens, the talk on election night was of an imminent change of government. But with the Liberals likewise finishing the count stranded on 10 seats and the Greens standing firm in their refusal to do business with them, Labor remained in office by default.

Four years on, Labor finds the burdens of long-term incumbency weighing more heavily than ever, having spent the last term governing from a position of political weakness through a coalition arrangement with the Greens (which Giddings pointedly brought to an end yesterday).

High as the Hare-Clark hurdle may be, the Liberals — who remain under the leadership of Will Hodgman, as they were in 2010 — will go into the campaign with every confidence of clearing it.

Parallels between the federal and state spheres are misleading more often than not, but the present situation in Tasmania looks very much like an exception. The period of Labor-Greens rule has mostly coincided with Labor being in minority government federally, and both opinion polls and the federal election result have offered a strong impression that the unpopularity of each was feeding into the other.

In particular, the Liberals’ success in poaching Bass, Braddon and Lyons from Labor at the federal election — with respective swings of 10.7%, 10.1% and 13.5% — suggests a path to majority government has opened in the state’s north.

“To crudely simplify the maths of Hare-Clark, the Liberals can expect to gain the three seats they need …”

To crudely simplify the maths of Hare-Clark, the Liberals can expect to gain the three seats they need if their vote improves by 2% in Braddon, 5% in Lyons and 6% in Bass (or by 4% in the Hobart fringe electorate of Franklin, where the federal election swing was only half as big).  That happens to be roughly the difference between the Liberal vote at the 2010 state and 2013 federal elections in the case of Bass and Braddon, and at least 3% less in the case of Lyons.

The Liberals have two reasons to hope they can do quite a bit better than that, the first being the polls. Large-sample polls conducted by ReachTEL over the past six months have consistently found the Liberals to be doing at least 5% better at state than federal level, and Labor doing correspondingly worse.

The second is the rhetorical trump card the Liberals have in being the only party that can credibly claim to be a potential majority government, an asset that greatly boosted Labor as it powered to its landslide wins in 2002 and 2006.

There is, however, a fly in the ointment in the shape of the Palmer United Party, which succeeded in winning a Tasmanian Senate seat and stands poised once again to blitz the airwaves with television advertising. An encouraging development for the new party is the decline in support for the Greens, whose vote in Tasmania fell by half at the federal election. That raises the possibility of PUP candidates emerging as piggies in the middle of 2-2-1 results of the kind that have traditionally delivered seats to the Greens.

A particularly promising prospect is the north-western electorate of Braddon, where a Greens candidate was elected by a razor-thin margin in 2010. The PUP’s lead candidate in the electorate is Kevin Morgan, whom Clive Palmer has proclaimed with characteristic reserve to be “the next premier of Tasmania”.

In one sense, the Palmer insurgency presents the Liberals with a potentially substantial obstacle on their path to majority government. But it also promises to sharpen their message that they and they alone offer an alternative to four years of parliamentary chaos.

Tips and rumours

Sep 27, 2013

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From the Crikey grapevine, the latest tips and rumours …

Changes at Australian Jewish News. A tipster told us there had been a “change of senior management at Australian Jewish News”, which runs weekly print editions and a website. Unsure about calling on the Jewish rest day of shabbat (until we worked out that starts at sundown Friday), we put the tip to a company spokesman. It’s true; former group general manager Peter Matthews has left the company. Rod Kenning has been promoted from operations manager to GM. Joshua Levi, who was the senior journalist in the Sydney office, has been made manager of that office. The changes were decided upon at 10am yesterday.

Piracy is everywhere. Here is News Corp’s CEO Robert Thomson railing against piracy in The Australian yesterday:

Now, why is it that some managers at Foxtel (half-owned by News Corp) and at a Foxtel subsidiary seem to have signed up to a prominent US site that offers pirated TV shows? One of them lists Breaking Bad among his faves. So he’d be one of the 16%, then? We name no names …

ABC gossip. There’s some musical chairs at the ABC, with Annabel Crabb to fill in for Leigh Sales as 7.30 chief next month (it’s not yet clear who’s filling in for Sales when she goes on maternity leave next year) and Chris Uhlmann leaving the show. Respected chief political reporter for ABC radio current affairs Sabra Lane will take Uhlmann’s gig. An update from within Aunty …

“Still no word on who will replace Sabra Lane at radio current affairs at ABC. But its been a big week for Martin Cuddihy filling in in Kenya just as he applies for a full-time job in Bangkok. Peter Lloyd is scoring big accolades in a presenting role in The World Today and PM so there may be a role for him front of mike …”

We checked in with ABC HQ, who told us Lane would start at 7.30 “in the next couple of weeks. Her ongoing replacement in radio current affairs has not yet been decided.” The ABC confirmed Cuddihy was filling in temporarily in Kenya. Thrown into the deep end with the Nairobi siege, Cuddihy has impressed with his calm, informed reporting while tanks rolled past and bullets whistled not far away. You might have seen Cuddihy as 7.30’s Tasmanian reporter, then heard him at AM and PM. One to watch?

Katter pings Bieber. Any day that we see a Bob Katter-themed meme is a good day (yes, that’s really him). According to Katter, he saw the meme and asked “has this gone feral?” His staffer replied “don’t you mean viral?”

Giddings has bumpy flight. Nervous fliers might feel some sympathy for Tasmanian Premier Lara Giddings, who had an interesting landing on a flight this morning. At least she wasn’t on the notorious flight into Melaleuca (* loses breakfast).

Women at the top. This anecdote, written by Liberal Party member Sandra Brewer in our sister publication Women’s Agenda today, might ring true to some other Liberal women. Brewer is writing on why there are so few women among senior Liberals:

“I attended a divisional meeting and met a state president of the party. I happened to be standing next to another chap who was attending his very first Liberal Party meeting. The state president, making small talk, asked me, ‘do you have any children?’ I told him about my three children and we shared anecdotes about the rascally escapades of boys. He turned to the chap [next to me], and asked him what he did for work. The conversation moved to business, then public policy, and the current issues of the day. Despite my long career in the Liberal Party as a branch president, divisional committee member, chair of a state campaign and my own career as a business owner, the state president likely left with an impression of me as nice mum and of the newbie chap as an interesting business man.”

Of course, there are also women who have felt patronised or ignored at ALP meetings because of their gender — but perhaps this is a thing of the past? If you have first-hand experience of whether a political party embraces its female members, send us an email.

AFL tough love. Is the 3AW rumour correct that a senior AFL journo has been refused media accreditation for tomorrow’s grand final (go Hawks) because he got certain people’s hackles up for his reporting on ASADA’s investigation into the Bombers?

Species excitement. Tips was thrilled yesterday to unveil a new species of vine-like shrub in Queensland (we have tentatively named the tuckeroo-like plant the Cupaniopsis crikeyacea). Another reader has rather burst our bubble by pointing out that about 50 new species are discovered in Queensland each year (new species last year included a bladderwort and a croton).

However, another reader praised our research, “As far as I know, Crikey has managed to uncover two new species. Tuckeroo I’m very familiar with but a Queensland ‘science department’? Whatever will the Newman government come up with next?”

*Heard anything that might interest Crikey? Send your tips to boss@crikey.com.au or use our guaranteed anonymous form

Politics

May 1, 2013

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A tax increase by any other name. I am sure that most Australians agree with the ideas behind a plan to give people with disabilities a better life by governments spending more. I am equally convinced that most Australians object to having their taxes increased.

Which sentiment wins out is to be tested at the ballot box on September 14, and I am backing selfishness over altruism.

Today’s announcement of a 0.5% “levy” on incomes to pay for a National Disability Insurance Scheme looks like a political suicide note to me.

Peace in her time. Tasmanian Premier Lara Giddings must be the political optimist of all times if she believes what she said yesterday after the state parliament finally passed legislation described as a peace deal between the forestry industry and environmentalists.

Giddings might have got most of her state Green coalition partners to support the deal, but federal Greens leader Christine Milne was having none of it. She declared the deal “dead.”

And on the other side of the political divide the Liberal Opposition leader Will Hodgman vowed to change things if and when he formed a government.

Peace in her time? Not likely.

No interest rate relief. The odds are still favouring the Reserve Bank board leaving official interest rates unchanged when it meets next Tuesday. The Crikey Interest Rate Indicator this morning:

A message from Craig Thomson. It is easy to sneer at the request from the now independent member of the House of Representatives Craig Thomson for donations to help him pay his legal fees, and I’m sure many people today are doing so. I am not one of them.

Having had a few experiences of court appearances over the years I know about the staggeringly high cost of the justice system. An MP’s salary might be $190,000 or so a year, but at the rate decent lawyers charge that amount is eaten up in no time.

Proper access to justice these days is only for the very, very rich.

News and views noted along the way.

Companies

Mar 5, 2013

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The federal election scheduled for September means it’s a double header over the next 12 months for Tasmanian voters, with a state election due in March 2014. That means lots of Canberra visitors, lots of promises and at least a few presents, and this might be one: according to The Weekend Australian, Julia Gillard is yet to rule out assistance to get the Tamar Valley pulp mill off the ground.

Coincidentally, Gunns’ voluntary administrator also recently circulated his detailed report to creditors (Gunns planned to build the original pulp mill).

The pattern of behaviour of the Gunns Group over its last 12 months suggests it was insolvent for a while. Maybe it was insolvent as far back as August 2011, when Gillard and Premier Lara Giddings signed the inter-government agreement on forestry, promising $276 million in funding — some of which was used to save Gunns.

Unsurprisingly, the administrator has recommended liquidating the Gunns Group. A further period of administration won’t revive the patient. Even before the administrator was appointed, Gunns had disclosed that  liabilities exceeded assets. But it gets worse.

Employees’ benefits of $10 million will be paid, but secured creditors won’t be paid the full $636 million they are owed — including $446 million owed to the banks. Unsecured creditors, collectively owed $135 million, will remain penniless.

Once liquidation is the chosen path, voluntary administrators often produce a perfunctory report to discharge their statutory obligation. The task of pursuing miscreant directors is one for the liquidator. In this instance the administrator has shone the torch in a few dark corners requiring closer inspection by a liquidator.

Gunns, true to form for any company trying to scrape up enough to keep the wolves at bay, managed to mix up its own funds with funds belonging to others, possibly as much as $50 million.

As responsible entity for 18 managed investment schemes, the Gunns Group receives growers’ harvest proceeds and also insurance amounts from growers that need to be remitted to the relevant insurer.  The Gunns Group used these amounts as working capital.

But more significant was the use by Gunns of funds from the sale of Green Triangle land and trees. Some of the trees belonged to others and were secured by a covenant. Covenant holders have already obtained a preliminary court judgment that certain amounts belong to them and shouldn’t form part of Gunns’ kitty to be split between creditors. At this stage the list of unsecured creditors contains an amount of $39 million owing to Australian Executor Trustees, the trustees for the covenant holders.

The voluntary administrator also identified a number of voidable transactions, or payments by Gunns that might be reversible depending on the crucial date of insolvency.

“The cavalier way Tasmania begs for federal funds then absolutely wastes so much without the slightest concern for due diligence is an embarrassment.”

Clearly Gunns was insolvent when it approached the banks in September 2012 on bended knees and asked to be able to retain a little more from asset sales and also “that a debt compromise of a material portion of their debt was required to remain viable”, to quote the administrator.

Gunns was probably insolvent when it received a significant downward revaluation of plantation assets early in July 2012, making asset sales pointless and raising capital almost impossible. And it might have been insolvent in March 2012 when white knight Richard Chandler Corporation exited the data lock-up after half an hour and headed back to Singapore.

But Gunns might have been insolvent as early as September 2011, when it received $23 million of inter-government agreement cash. There was $23 million earmarked in the agreement to compensate Gunns, even though it had previously relinquished its contracts, a decision it quickly reversed when a bucket of money loomed as a possibility. The original plan was to pay Gunns $23 million provided the company agreed to pay half to state-owned Forestry Tasmania for amounts owing, as Forestry Tasmania was also insolvent.

Gunns dug its heels in, knowing it was in a good bargaining position as the IGA might fall over, and demanded the full $23 million. Funds for Forestry Tasmania had to be found from elsewhere.

Gunns needed the money pronto to make a $10 million loan repayment to banks and to start pulp mill earthworks, or else the mill permit would become null and void. It couldn’t borrow or raise more equity, asset sales were slow with prices continually falling and bank loans of $340 million were repayable in a few months.

If Tom Waterhouse was running a book on the date of insolvency, August 2011 would be well in the market.

Gillard and Giddings bailed out an insolvent company. Industry policy is indeed quite accommodating. It proved to be a postponement of the inevitable.

The postponement has meant a delay in the restructure of the forest industry and a continuation of mutual mistrust, as inevitably many see the inter-government agreement as simply a front for getting the pulp mill started.

Even now the state’s upper house is still deciding whether to pass the Tasmanian Forests Agreement Bill, 18 months after the first tranche of cash disappeared into a sinkhole.

The cavalier way Tasmania begs for federal funds then absolutely wastes so much without the slightest concern for due diligence is an embarrassment. Hinting that pie-in-the-sky projects are still possible when the Tasmanian forest industry has just suffered balance sheet losses in excess of $2.5 billion — and 150,000 hectares of plantations are looking for new owners after existing owners have lost 90% — is mischievous stupidity.

*This article was first published at Tasmanian Times

Tasmania

Oct 4, 2012

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Imagine: you visit your bank manager to explain you would like a loan to continue to run the family farm but you have chosen to excise half of your land and forests for their intrinsic biological values. That, of course, impacts your ability to develop fully the business potential of your property so you are only earning half what you might. As a result you have a fantastic lifestyle, many want to come and stay at your place for the weekend (but not forever) and play in your forests, you’re as poor as a church mouse and you’re getting deeper in debt.

The manager tells you that your loan interest rate will have to go up substantially unless you maximise the potential of your property to run the business profitably. “I might like to do that,” you respond, “but I own the property in partnership with some colleagues who actually want to lock more of it up.”

The bank manager, Moody’s, downgrades your creditworthiness and you have to pay more for your loan. Another bank manager, Standard & Poor’s, offers the same rate. It’s higher than the neighbouring farms have to pay, but then they are running real businesses.

This is the position in which Tasmania finds itself today. The Giddings government, reliant on the Greens for its survival, gives every impression of trying to run the state like a commune and the banks are jacking up, the credit rating agencies are jacking up and the neighbours, the other states in the federation, shake their heads.

They are disbelieving because, through the Grants Commission’s repayment to the states of GST collected, they underwrite the budget of the commune.

Under the concept of horizontal fiscal equalisation, which means an equal share for equal effort, the Tasmanian government receives 160% of the GST that Tasmanians pay. About $1.8 billion a year, it forms about 30% of the state budget. Meanwhile WA gets back only 55% of the GST that its taxpayers fork out in GST. WA and Queensland lead the rich states’ campaign to end the subsidised lifestyle in the Tasmanian mendicant commune.

The Australian, in its editorials back to the days when Frank Devine was its editor, describes Tasmania as Arcadia, a reference to a wilderness region in Greece, with quite deliberate overtones of fairies, glades, streams and waterfalls, a lack of reality and Nicolas Poussin’s depiction of simple life, Et in Arcadia ego.

In a recent editorial, The Sydney Morning Herald took a different view, posing the question whether Tasmania is, in fact, Australia’s version of Greece in the federation, non-performing and in danger of going belly up.

Meanwhile, the government here concerns itself with matters of greater moment to the commune, matters such as same-s-x marriage, doomed to defeat if not declared unconstitutional by the High Court. It was only ever a distraction, a diversion, from the more important matters at hand.

The Australian’s George Megalogenis has been the latest of a string of sages to visit the island in recent times to pore over the same entrails as Moody’s did to diagnose the problem, if not to offer a cure.

Megalogenis brought the news that Tasmania is, effectively, a culture removed from the rest of the nation. Where about 26% of today’s Australians were born overseas, the Tasmanian figure is 13%; where nearly half of Australian families had at least one parent born overseas, the Tasmanian figure is half that. Unlike the rest of Australia, the British still form the greatest migrant component on the island. We are not getting fresh blood and therefore fresh ideas.

If you sense I am coming to a conclusion that Tasmania has to start pulling its weight, you are wrong. Rather, Tasmania has to work out its identity, what its future is. If it wants to continue to appeal as an Arcadian wonderland where industrial development, mining and forestry are deterred rather than encouraged, but where it can well be argued that here is how life was meant to be, then it must be prepared to pay the cost of having this lifestyle. The other states will not continue to subsidise it and the banks and credit rating agencies will increase the relative cost of money here. Tasmanians will have to do it for themselves.

If they do want to change, a fundamental issue is whether the electoral system that delivered the partnership that runs the commune is sustainable in the 21st century. Most say Hare-Clark has had its day, that it was not intended for three-party systems, that it will regularly deliver hung parliaments that give undue prominence to minorities holding the balance of power.

That is simplistic. Hare-Clark is the world’s most democratic voting system. If voters can see harm in hung parliaments it is within their power to ensure that an election does not return hung parliaments. The only problem with Hare-Clark at the moment is that 25 members in the house of government is too few. Cabinet government does not work without a backbench. A House of Assembly of 35 has to be reinstated after the 2014 election.

Most bank managers will tell you that before they can help you, you should get your mind and your house in order. It’s not happening here yet.

*Bruce Montgomery, formerly with The Australian, is a freelance journalist in Hobart

Companies

Sep 28, 2012

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Tasmanian Premier Lara Giddings and Deputy Premier Bryan Green are probably the only two people in Tasmania who say they believe the pulp mill floated by doomed timber company Gunns is still a goer. Whether Giddings and Green actually believe what they say is doubtful.

The tarnished development permit that Gunns holds for the $2 billion mill still sits in the safe at company headquarters in Launceston. The company’s administrators properly regard it as an asset, even a bankable asset, for sale to the highest bidder, should there be one.

That bidder has to be sufficiently foolhardy to want to run the same gauntlet of public opinion that Gunns did to fulfill the Gunns’ dream of a mill. “Social licence” is not a term that was in general use when former Gunns’ boss John Gay and former premier Paul Lennon first hatched their plan for the mill across the dining table at a restaurant on the Hobart waterfront. Their waiter that day spotted the document and blabbed to the Greens, lending credence to the adage that in Tasmania there can be no secrets.

Of course, some here look to China for the mill’s salvation since, they believe, the phrase “social licence” is of no import to the Chinese.

The problem facing any would-be pulp mill developer using the Gunns’ permit is that they would be handling soiled goods. While attention has always focused, understandably, on the environmental impact of a mill at Bell Bay in terms of its resource inputs and pollutant outputs, the broader and deep-seated resentment to the project is the lack of due process involved in Gunns gaining the permit.

When Lennon and Gay knew that the independent assessor, the Resource Planning and Development Commission (RPDC), had strong reservations about the mill, they took the permit out of its hands and directly into the paws of Tasmania’s 40 state MPs. In effect, politics rather than science would determine the fate of the application. The result was never in doubt.

Yet, Lennon had committed a cardinal sin. Following the similar Wesley Vale pulp mill experience in the late ’80s (a campaign that brought the Australian Greens’ leader Christine Milne into public view) Lennon knew that the Tasmanian electorate was highly sceptical about the technology of pulp mills and if this one was to succeed where Wesley Vale failed it had to stand the tests of science.

Lennon promised the electorate that the independent umpire, the RPDC, would determine whether Gunns’ pulp mill proposal met those standards. I was working with the Tasmanian forest industry and the government at the time. My own research convinced me that pulping technology had advanced considerably since the days of Wesley Vale. What I could not know was whether I could trust Gunns to embrace world’s best practice. The RPDC would be the judge of that. When Lennon and Gay contrived to take the approval process out of the RPDC’s hands, the project lost me and thousands of others because the independent evaluation was gone.

So, the permit sitting in the Gunns’ safe bears that soiled legacy. It may be bankable in law but it has no social licence in its present form.

Undoubtedly, the demise of Gunns is the third notch in the bedpost for the Greens, after the Franklin River and Wesley Vale campaigns. However, Gunns is but one battle in a war of many fronts being waged in the Tasmanian forests and those fronts are all about to reach their moments of truth.

The flight of confidence from Gunns and its own flight from native forest harvesting helped to trigger negotiations between major conservation groups and the timber industry to effect a peace. It was a putative olive branch that the Tasmanian and Australian governments seized upon to formulate an intergovernmental agreement to secure the peace through more agreed forest reserves and a reduced saw-log yield from remaining usable forests.

The olive branch is broken. The talks have broken down. The government, through pressure of the Greens in cabinet, has also just decided to dismember Forestry Tasmania, the government enterprise responsible for conserving forests and managing the commercial zones. Forestry Tasmania had been given the responsibility of determining whether the proposed reduced commercial zones of public forest could deliver the industry the saw-logs it required to remain viable.

In short, it’s a mess. We might end up back at square one.

Some of the innocent victims in all of this are the people with whom I work these days, Tasmanian farmers.

Thousands of farmers have private forests and they have patches of forest plantation that Gunns planted on the farmers’ land on a lease arrangement. On maturity, these fast-growing eucalypts were to be fed into Gunns’ woodchip plants and then into the pulp mill.

Throughout the demise of Gunns and the forest peace talks, these farmers have been sidelined. They were not invited to participate in the talks despite the impact of contraction on the public and private forest sectors. Now the administrator expresses his doubts about the farmers continuing to receive lease payments. Notionally, ownership of the trees will transfer to the farmers if lease payments are in default, but what are they supposed to do with them? With Gunns gone, the only woodchip plant that could handle them is owned by Green supporters, managed by former Wilderness Society director Alec Marr and he’s keeping the gate locked.

So for the farmers the hope of a pulp mill to process their pulpwood trees is forlorn and they are about to hit a government-imposed ban on any more land clearing for pastures.

The Greens tread a fine line in claiming their third victory in Tasmania. There will be a reaction to it and the Labor government, which shares the bed with the Greens, is compromised, but that’s another story.

*Bruce Montgomery is a former journalist with The Australian, a former adviser to the Forests and Forest Industry Council and now consults to the Tasmanian Farmers and Graziers Association.

Companies

Sep 26, 2012

5 comments

The story of Gunns is a parable of corporate hubris. You can, as they did, corrupt the polity, cow the media, poison public life and seek to persecute those who disagree with you. You can r-pe the land, exterminate protected species, exploit your workers and you can even poison your neighbours.

But the naked pursuit of greed at all costs will in the end destroy your public legitimacy and thus ensure your doom. Gunns was a rogue corporation and its death was a chronicle long ago foretold. The sadness is in the legacy they leave to Tasmania — the immense damage to its people, its wildlands, and its economy.

Opposition to Gunns long ago outgrew any conservation group and Gunns was in the end undone by the many, many people who refused to give in to its threats, lies and intimidation. It was the small victories of the little people that ended up delaying the project until it disappeared into the fantastical realms of commercial impossibility.

Yet for a decade the only policy either major party has had has been Gunns and Gunns’ pulp mill. The former premier Jim Bacon, near his death, confessed to Peter Cundall that “the forestry industry were too strong” for him to take on. Of the latter, Premier Lara Giddings observed not so long ago that “the pulp mill was no longer the icing on the cake for Tasmania, but the cake itself”.

In consequence of this non-policy, the prosperous years of the early 2000s, when Tasmania should have been reinventing itself to ensure it had a prosperous future, were instead lost as government identified state interest as Gunns’ profit margins. The Tasmanian government mortgaged the island’s future to Gunns and squandered the good years pursuing the chimera of the pulp mill. The result is the wretched economy and impoverished society that is Tasmania today.

It appeared foolish for Premier Giddings to seek to keep the myth of the pulp mill alive in her statement to Parliament yesterday. These comments offer only false comfort to the mill’s supporters and uncertainty to its opponents. Yet the mill is dead — legally in limbo, socially unacceptable, politically impossible, and commercially fantastical. Its end ought to mark the possibility of a new beginning for Tasmania when the state can seek to address its many problems with many solutions free of the bitter divisions Gunns promoted and prospered from. The death of the mill should be a source of hope, not despair.

There was always about Gunns a distinctly personal and political flavour that sometimes smacked more of vendetta than of sound commerce. The demise of Gunns brings to an end a tumultous three decades of Tasmanian history that began with Robin Gray losing the Franklin Dam battle to the Bob Brown-led environmental movement in 1983, continued with Robin Gray losing  the Wesley Vale pulp mill battle and government to a Labor-Green government in 1989, and now the loss of Gunns and Gray’s third white elephant, the Gunns pulp mill.

In each case, the same arguments were run and shown to be nonsense; in each case the island changed regardless. It’s time now we began to honour those changes and seek to build on them, rather than repeat the mistake of searching for the one great project solution and the social conflict their political carriage inevitably demands. Let us hope the days of the cargo cult are over.

Whatever happens next, yesterday was in its way as historic a day as that of the High Court decision in July 1983 that ensured the Franklin River would not be dammed. Australian corporations will in the future ignore public sentiment at their peril.

A great darkness has lifted from Tasmania. The last remnants of the fear that so pervaded and paralysed Tasmanian life are now gone.  But whether Tasmanians have the courage, the wit and the passion to seize the great opportunities that now present themselves remains an open question.

*This article was originally published at Tasmanian Times

Economy

May 29, 2012

5 comments

“Prime Minister, Lara Giddings is on line two. She’s babbling something about wanting to leave the Aussiezone.”

“Hi Lara, it’s Julia. What’s up?”

“Listen, Julia, we’ve been thinking… the only way we can kick start the Tasmanian economy and have at least one Labor Party with a pulse in this country, is to devalue our currency. We need to leave the Aussiezone. It’ll work, I’m sure of it!”

“Jesus Lara, you’re such an idiot.”

“Seriously Julia, unemployment here is 8.3% and rising. I’m borrowing $6 million a week and I’ve got no hope of getting the budget back above zero. The banks are shouting at me. I’ve had to sack 250 nurses for Christ’s sake! They’ll vote in the anti-austerity Greens!”

“Calm down Lara, you’re getting hysterical. Look, economics is all Greek to me, but I’ve been reading Karen Maley and I know that if you bring back the Tasmanian peso and devalue it, that’ll wipe out everyone’s savings and make everything they buy from the mainland – which is everything – really expensive.”

“At least the poor buggers will have a job cutting down trees and making toys, and we’d have lots of tourism. And I could flog cheap power across Bass Strait and get the budget back into surplus. Honestly Julia I’m at my wits end. Please let us do it. Either that or get Colin Barnett to give me a bailout.”

“Oh God, I can’t talk to that appalling man, and anyway he’d have to ask Gina Rinehart’s permission and look what she’s just done to her kids. Think what she’d do to you! Look, I’ll talk to Wayne about it. He knows about these things. Maybe he can cook up an acronym for you, as cover for a handout. I’ll get back to you.”

“Thanks Julia, you’re a pal.” Hangs up. “Wayne!”

The fact that the pro-austerity, pro-euro parties are now on top in the polls in Greece buoyed markets last night, but the options for Europe remain limited and difficult — especially if Greece stays in.

The immediate, core problem in Europe is the banking system, which has been rendered under-capitalised and dysfunctional as a result of cross-border euro lending since 1993, as well as real estate bubbles in Spain and Ireland. As a result of that, the money transmission mechanism across Europe is broken.

Longer term, of course, the problem is the same as Tasmania’s: the lack of competitiveness of smaller states within the monetary union. But the first step for Europe’s leaders is to fix the banking system and get the banks lending again.

Step one: they need to be recapitalised from the centre. The equity markets won’t do it, not for a long time at least. The European Central Bank is advocating completing the European Banking Resolution Fund, possible using money from the European Stability Mechanism. If the banks can be recapitalised, as America’s were in 2008-09, then lending can start flowing again.

Getting deposits to stay put is more difficult. Some are advocating a deposit insurance scheme to prevent bank runs, but it’s not clear how that would work against losses caused by currency devaluations following an exit from the eurozone. That sort of scheme would amount to massive fiscal risk transfers between European nations, which Germany is dead against.

The ECB could do another long term refinancing operation, but the banks’ problem is not liquidity, it’s solvency. In fact the banks are awash with cash from the last LTRO – it’s just been deposited back with the ECB.

In the meantime, until the banks can be recapitalised, there probably needs to be a new lender of first resort created. Some are suggesting that the ESM be granted a banking licence, others reckon it should be done by the creation of eurobonds.

Meanwhile, the EU needs to do more to boost growth in periphery. So far the European Investment Bank’s capital has been boosted by €10 billion, which is expected to result in €15 billion per year in new infrastructure projects to boost employment, but that merely injects about the same amount across Europe as the Spanish fiscal consolidation alone withdraws.

Whatever, Germany is against it, on the basis that it would represent monetary financing of fiscal deficits.

To produce a sustained recovery in global markets the overriding need in Europe is not to persuade Greece to stay in, but to persuade Germany to allow the pace of fiscal adjustment to slow down, and perhaps even reverse for a while.

Greece, Spain, Portugal and Italy need to be given longer to return their budget deficits to 3% of GDP, by both the EU and the bond market. That comes back to Germany, since the bond markets won’t support those countries on their own.

What Germany is ignoring is that banks and sovereigns are being forced to deleverage simultaneously. That is is producing a vicious downward spiral as fiscal multipliers fall to one-to-one (a dollar of budget reduction is a dollar off GDP) and debt reduction by both the governments and the banks becomes a moving target because the economy is shrinking.

Somehow the periphery countries need growth, and they won’t get through austerity. Just ask Lara Giddings.

*This article was originally published at Business Spectator