Tuesday, April 15, 2014

Clean for Gene: Strong Choices or Weak Leadership?

Economic issue du jour in Queensland has obviously been the weekend launch of Strong Choices where you can 'interactively' contribute to solving our 'debt crisis'. Problem is .... not quite so interactive ..... and really an online version of push polling which could actually have some quite negative consequences for genuine political leadership and policy reform.

It is clearly designed to achieve a specific outcome. I started to wander through but then gave up when it was obvious the explanatory information was severely biased on specific options. It is simply not possible for anybody to make an informed opinion on cutting programs or asset sales on the information provided.

Sadly, there was no interactive option which allowed me to play with abolishing stamp duties on insurance and property transactions in return for a broad based land tax. More sadly the responses they are likely to receive on the info provided could well lock out any such reform. The explanatory information provided on land taxes will inevitably skew a more negative response.

John Quiggin has weighed in hard and early with a negative response most of which is predictable but also coherent with valid aguments. Some of the justifications being used for privatisations just don't work and never have particularly in relation to revenue from the government corporations, which also carry a good chunk of the debt.

However Prof Q has also previously to my recollection argued that assets must be considered on an individual basis. When the Bligh privatisations were announced he went through the list: Queensland privatisations: good, bad and ugly.

This is the problem I have with those totally opposed to any and all asset sales. Such a policy would mean the State of Queensland would still run the butcher shops once owned. There is a clear difference in electricity between generation and transmission assets with the latter a natural monopoly. This is sort of rather vaguely referenced in the survey with a different form of private funding not adequately explained. You can argue for and against the privatisation of both these assets but the argument can never be the same for both if it is to remain rational.

Anyway I think Gene Tunny at Queensland Economy Watch has pretty much nailed it on this: Qld Treasury needs to explain logic of asset sales much more clearly
It’s not too late for the Government to win the debate on asset sales, but it needs to present more compelling logic. The Government’s current arguments for asset sales are too simplistic and probably won’t persuade the public. The Government should ask the Treasury to produce a solid report presenting the pros and cons of privatisation – analysing in detail the merits of selling particular assets such as energy businesses and ports, directly addressing the question of whether they would be better run by the private sector. The Government should then present this analysis to the public in speeches and informative publications and websites.
I think Gene also gets this right that debt reduction may be desirable but is not a life-or-death issue as is being portrayed. Gene has also apparently appeared on ABC radio on this although haven't had a chance to listen to check the veracity of the headline: Economist labels "Strong Choices" a joke

Note: "Clean for Gene" was the campaign slogan for Gene McCarthy in the volatile 1968 US presidential campaign.

Update: Gene has posted further on this: Strong Choices poorly received by public; There is also a withering and entertaining response from columnist John Birmingham at the Brisbane Times: Mr Strong Choices thinks you're an idiot. John Quiggin has also now weighed in again: Tim Nicholls makes a little progress in thinking about privatisation

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