Nov 29, 2013

Ignoring reform has too high a cost | The Australian

A FEW weeks ago, I gave a speech to the Committee for Economic Development of Australia entitled Working with Government to Drive Economic Growth and a Thriving Business Sector. It lamented the costly long-run consequences of the former government's policies and the mindless destruction of Australia's international competitiveness that ensued. Predictably, it drew a lot of criticism from supporters of the former Labor government and other free lunchers.
Fairfax journalists were prominent among the critics, with ad hominems and fabrications substituting for intellectual rigour. One referred to the speech as a "flashback to another era". Too right it was. It proposed policy prescriptions that would return Australia to a sustainable growth path, a path from which we departed after the election of the Rudd-Gillard governments. It was a flashback to the less regulated Howard era, when Australia was internationally competitive, when policy settings allowed us to capitalise on favourable global economic conditions and when gross domestic product per person grew faster, on average, than the OECD, raising Australia's GDP per person from the bottom third of OECD countries in the early 1990s to the top third in 2007. It was an era that bequeathed the Rudd government no net debt and a surplus of $20 billion.
Contrast this with the legacy inherited six years later by the Abbott government: federal deficits, which according to the Grattan Institute will average $60bn a year in today's terms, for a decade; and gross debt that is likely to peak at about $440bn. Instead of being internationally competitive, we have slipped, on the kindest measure, from 15th globally in 2009-10 to 21st in 2012-13. Today, that other era seems like paradise lost.
Much critical commentary was directed to my advocacy for lower wages.
This was of course an invention designed to create an image of the hard-hearted businessman cutting workers' rights.
What I did say was that Australian wages, before compulsory superannuation levies, workers' compensation, and other rigidities, are out of line with those in the rest of the world. Our minimum wage is more than 50 per cent higher than in Europe, Canada, Britain and New Zealand, and more than double the US. Clearly, something has to give. But over time. That is inarguable. Australia's relative labour costs will fall, through increased labour substitution, unemployment, currency devaluation, wage growth elsewhere or a combination.
When we add workplace costs to Australia's energy prices which, according to the Energy Users Association, are very near the highest in the world and set to reach the highest, it is unsurprising that we are slipping in the global competitiveness stakes. We clearly cannot afford both.
According to my critics, the solution to our budgetary and competition woes is not the reining in of government spending, or the cutting of red and green tape, let alone the repeal of expensive, inefficient, renewable energy policies, it is simply the devaluation of the currency, an improvement in productivity, and an incerase in taxes for mining companies. Plus, of course, taxing the rich.
A lower exchange rate has merit. However, whether it is achieved through market forces or Reserve Bank action, a devaluation, while improving competitiveness, is not costless.
Imported goods will go up in price and interest rates will rise. Many of the immediate benefits can be diminished through the build-up of domestic cost pressures. It is even possible Canada and Brazil would retaliate. Suffice to say, a weaker Australian dollar will assist, but it is not the panacea that advocates would have us believe. 
Neither is improving productivity. While it should be pursued relentlessly, the increase in productivity required to bridge the long-run average growth deficit is higher than we have ever achieved. Moreover, an ageing population and falling workforce participation make lifting productivity more difficult to achieve. Alone, it cannot fix our current predicament. 
And, tempting though it may be for some, with mining investment falling away and with declining terms of trade offsetting increasing export volumes, now is not the time to add to mining costs through higher taxes.
The truth is, there are no silver bullets. Not even soaking the rich. The problem is too big. The solution can come only from an orderly, broad-based and sequenced combination of policies, all of which are focused on making Australia internationally competitive again.
Yet, strangely, there seems to be little appreciation of the mountain we all have to climb. Certainly the opposition, sections of the media and many academics seem blissfully unaware of it, or, if they are aware, they refuse to acknowledge it. 
It is foolish for the opposition and its followers to keep up the pretence that the previous tenants left the house in top condition. As time goes by, the more hollow this proposition will appear.
However, the practical effect is to frustrate the urgent and necessary repair work the government must carry out. For example, the rejection of the carbon tax repeal bill may frustrate the government, but the economy is the real loser.
It is time for the unvarnished facts to be put on the table. If sacrifices are to be shared it is vital that we all understand why.
The mid-year economic and fiscal outlook will be a good starting point, followed later by the findings of the National Commission of Audit. These will be important reference points for all to see and should encourage voters to lend their support to government initiatives.
The quicker this happens, the faster confidence, international competitiveness and growth will be restored. That is as certain as the chicken is in the egg.
Maurice Newman is the chairman of the Prime Minister's Business Advisory Council.

Beijing in an aggressive mood | The Australian

CHINA'S highly provocative imposition of a vast new "air defence identification zone" over the disputed Senkaku/Diaoyu islands in the East China Sea significantly ratchets up already overheated tensions in the region.
Foreign Minister Julie Bishop is right to leave Beijing in do doubt about Australia's deep concern over a move that is both ill-timed and ill-judged. Chinese officialdom disingenuously avers otherwise, but in making a move that will require all aircraft entering the zone to submit flight plans or face unspecified "defensive emergency measures", Beijing has embarked on a belligerent strategy aimed at asserting its reach and power in the region and aggressively escalating its standoff with Japan over control of the islands and airspace that have been administered by Tokyo for more than 100 years.
Given that Japanese aircraft regularly patrol the area and Japanese Prime Minister Shinzo Abe has made it plain that he will defy Beijing's restrictions, the possibility of conflict over ownership of the tiny islands has escalated sharply and it is not without significance that the Chinese navy has deployed its only aircraft carrier towards the South China Sea while a US aircraft carrier is joining Japanese warships for naval exercises in the area.
To reinforce its unequivocal support for Japan, the US has also flown two giant B-52 bombers unhindered through the airspace now claimed by China. The symbolism of this should not be lost on Beijing since, as much as its move in declaring the identification zone poses a direct challenge to Tokyo, it is also a major test of the Obama administration's much-vaunted strategic pivot to our region. The US is clearly not prepared to submit to what its Defence Secretary Chuck Hagel has described as "a destabilising attempt to alter the status quo in the region" and is committed to fulfil its treaty obligations to defend Japan if attacked. That includes the Senkakus. China would be foolish to ignore these warnings.
In taking action that so comprehensively contradicts all its previous assertions that it wants a peaceful resolution of its dispute over the Senkakus, China has already gone too far. It is in nobody's interests to see the world's second- and third-largest economies in confrontation, and if Beijing seriously believes it has right on its side it should be prepared to submit its claims to international arbitration, not create circumstances in which a clash between the People's Liberation Army and patrolling Japanese forces in the Senkakus becomes inevitable, with potentially far-reaching consequences, including the US being drawn into any conflict. If Beijing has a case - and it may well have, given that it claims to be able to trace its ownership of the islands back to the 1300s before, it says, Japan annexed them in a war in 1895 - then it should set about proving that in international law, not provoking the aggression now being seen.
Beijing is doing itself no good and its belligerence will only serve to further reinforce perceptions of China as a bully in the host of other territorial disputes it has with countries in the region. It is imperative Washington makes good on the promise held out by the US pivot to unequivocally project its own power as a counter-weight to China and assure countries faced with intimidation and coercion by Beijing that it will stand by them.
Beijing must not be allowed to throw its weight around and US Vice-President Joe Biden, on his much-anticipated visit to China, must leave Chinese leaders in no doubt that aggression is not the best course for them to follow in any territorial dispute anywhere. A similar task awaits Ms Bishop on what will be her first visit to China since the Abbott government took office, and Beijing officialdom's rebuke to her over her allegedly "irresponsible remarks" in expressing Australia's legitimate concern are misplaced and misjudged. They come from a friendly country and should be seen as such. China's best interests would be served by realising that it will lose what support it has in the international community if it continues with its aggressive stance in territorial disputes, potentially with dire consequences. That is what Ms Bishop will need to impress on her hosts in Beijing. Confrontation is not the answer. Diplomacy and negotiation is.

Nov 27, 2013

A modest proposal on how to deal with traitors in modern times

MARK Scott should resign. When the managing director of the ABC chose to publish information criminally obtained by Edward Snowden about Australia's signals intelligence operations in Indonesia, he also chose to undermine Australia's relationship with our most important neighbour.
He chose to fuel tensions and nationalist sentiments in a fledgling democracy. He also chose to undermine an immigration policy aimed at preventing deaths at sea.
These consequences were entirely foreseeable. Despite Scott's flimsy arguments to the contrary, in the end, the ABC - and Scott - were willing to risk Australia's national interest for no discernible public interest.
The call for Scott to resign is not made lightly. Moreover, I am not the only former ABC board member who believes the managing director of the ABC ought to go or be relieved of his duties for failing to lead the ABC as a responsible editor-in-chief.
When Scott applied for, and was given, the job as MD, he was touted as an effective editor-in-chief, something the national broadcaster had lacked under earlier managing directors.
There are now serious questions about Scott's prudence as an editor-in-chief - whether or not it was his decision to publish.
If the decision were his, he got it badly wrong. By deciding to team up with the left-leaning Guardian Australia, the ABC effectively aided and abetted an online newspaper with minimal reach so the spying allegations would receive maximum reach using the resources of the taxpayer-funded giant.
If the decision to team up with the Guardian to get out in front and air the spying allegations did not come to Scott, it should have. A failure to bring such a serious matter to its managing director would suggest the ABC is run by the staff, not by management.
To be sure, the story about Australia's intelligence operations would have broken and caused damage without the ABC joining up with the Guardian. But that's not the point. The ABC willingly chose to go out in front - and to draw the ABC into a debate the national broadcaster didn't need to be drawn into.
Importantly, the ABC did not even have a genuine scoop or exclusive access to this story. If it had, Scott might have had to agonise over whether to be first to go public. But by acting as a free public megaphone for a commercial outfit, the ABC plainly made a political rather than an editorial decision.
The timing of the leak was also a highly political matter. The Guardian has had this information since May. Its decision not to publish the information before the election when it would have harmed Kevin Rudd, but to sit on it until after the election, when it was designed to damage Tony Abbott, is something the ABC must have considered. Its decision to go ahead showed a blatant political preference.
The seriousness of the ABC's decision to publish criminally obtained information that involved such profoundly damaging and entirely foreseeable risks also raises questions about the ABC board.
Did Scott raise the issue with the board, to whom he is responsible? If not, why not? What about ABC chairman Jim Spigelman? Was he included in the decision? If not, why not? If yes, did he consider the ramifications for the public interest?
What is Spigelman's view about Scott's response to questions in senate estimates last week that it was in the public interest to reveal information about Australian intelligence gathering in Indonesia even though he knew that it would "cause some difficulties with the Australian-Indonesian relationship in the short term". Or did Spigelman do what former ABC chairmen lacking spine have too often done - let the MD and therefore the staff - run the show without prudent board oversight?
So far, the only public comment Spigelman has made has been a letter to The Australian about the "considerable personal distress" this newspaper caused to his executive assistant by publishing an incorrect salary figure. Compared with the breach of national security perpetrated by the ABC, his focus on a matter of staff welfare is a disappointing demonstration of where the chairman's priorities lie. A responsible board must surely have concerns about Scott's stewardship of the ABC on this matter. Scott is appointed by and subject to removal by the board.
As section 13 of the Australian Broadcasting Corporation Act sets out, the managing director holds office subject to terms and conditions determined by the board. The reckless publication of criminally obtained information with the predictable and escalating consequences now unfolding make his position untenable. In short, the ABC board needs to look at its responsibilities here - and its culpability in this matter.
As a member of the ABC board for five years between 2005 and 2010, I can attest to the fact that it has a disappointing history of being ineffective. I can attest to the fact that information that ought to have been provided to the board was not.
And I can attest to the fact that, unlike commercial boards that work together, the ABC board is too often a numbers game. If you don't have the board numbers then the status quo at the ABC becomes untouchable. Moreover, if the chairman's main aim is to be loved by staff, then the MD is untouchable.
Instead of providing genuine oversight and counsel to management, the board gets bogged down drafting policies, codes of conduct and other fine-sounding documents. It's a management driven make-work gig for board members to make them feel important. It justifies them jumping on planes, travelling business class, checking into nice hotels and turning up for a fine lunch at Ultimo - all at taxpayer expense. Meanwhile the focus is taken off what really matters - the output of the ABC. The output this past week by the ABC has let taxpayers down. Badly. While questions have been raised about the curious timing of this dump of information, consider what we do know about the ABC. The orthodoxy at the ABC has long been to oppose strong border policy and offshore processing as lacking compassion and human decency. You only need to sit on the Q&A panel - as I have done on many occasions - to witness the strength and persistence of that orthodoxy. Never mind that these policies will stop deaths at sea as they did from the time of the Tampa standoff in 2001 until Rudd started to dismantle the immigration policy in 2008.
Just as Abbott's boat policy appeared to deliver results with a 75 per cent decline in arrivals in the past eight weeks, the ABC's handiwork as an activist media organisation has seen Indonesia suspend co-operation.
Just as 300 terrorists are about to be released from Indonesian prisons in the next 12 months - including some involved in bomb attacks against Australians in Jakarta and Bali between 2002 and 2009 - intelligence co-operation between the two countries has been derailed by the spying revelations. Is that in the public interest? Remember, it was joint co-operation between Indonesia and Australia that led to the arrests of the Bali bombers and the dismantling of the Jemaah Islamiah terror network.
In senate estimates last week, Scott likened the ABC's disclosure of Snowden's revelations about Australian intelligence operations in Indonesia to the Australian Wheat Board scandal.
Scott could not be more wrong.
The AWB scandal involved criminal kickbacks to the Saddam Hussein regime. By contrast, as Michael Bohm, the opinion page editor of The Moscow Times, wrote back in August when Russians were hyperventilating about news that the US gathers intelligence in Russia, spying is a sovereign right. All responsible countries spy on friends and foes alike.
Snowden is not a whistleblower. "The type of spying on foreigners that Snowden revealed is not in violation of any international law, treaty or convention," wrote Bohm. The only criminal activity here was Snowden stealing information from the National Security Agency.
Scott also said there would be short-term consequences for Australia; the revelations would "cause some difficulties". Not only was this a reckless understatement, the truth is that Scott cannot know where this will end.
Will the latest reports about spying further inflame hatred of Australia and Westerners? Will terrorists retaliate? Will Australia's ability to use intelligence gathered in Indonesia to identify terrorists and likely terrorist attacks be hampered? Will a critical immigration policy collapse? That is the wish of left-wing Abbott-haters.
Moreover, the ABC's decision has brought into question the propriety of the ABC receiving $223 million to provide Australia with what Scott himself calls "soft diplomacy" in the Asia-Pacific through the government-funded Australia Network.
As another former board member, Keith Windschuttle, tells The Australian, "by publicising illegally obtained information that patently works against Australian interests in the region, the ABC appears to have abrogated its claim to be acting in the spirit of its original submission".
Scott appears to consider it appropriate to take these risks, using taxpayer dollars to indulge his staff in the publication of criminally obtained information.
All week, the ABC has pursued the line that Abbott ought to apologise for actions of the former PM, Rudd. Where is the apology from the ABC for its reckless, irresponsible actions? How can the managing director of the ABC claim with a straight face that the leak of ABC salaries was a serious matter that should not have happened and yet in the same week, publish illegally obtained leaks about Australia's intelligence operations overseas when the known consequences were far more serious to an entire nation?
These are grave questions not only for the ABC board but also for all Australians whose taxes fund the national broadcaster. This dark stain on the professionalism and ethics of the ABC, the managing director and the board will only serve to raise questions about the appropriateness of taxpayers continuing to fund - to the tune of $1.2 billion annually - an organisation that is reckless in its duties as a responsible media organisation.
As former foreign minister Alexander Downer said on Sky News's Australian Agenda on Sunday, you may be free to publish, but you also have an obligation to act responsibly. The ABC, under Scott, has failed to do that. He should go.
Janet Albrechtsen was on the ABC board from 2005 to 2010. Mark Scott was appointed during her tenure in July 2006

Barack Obama's no-show at Gettysburg simply removes all doubt | The Australian

SEVEN score and 10 years ago, Abraham Lincoln delivered his sacred speech on the meaning of free government. Edward Everett, a former secretary of state and the principal speaker for the consecration of the Gettysburg cemetery, instantly recognised the power of the US president's 272 words.
"I should be glad, if I could flatter myself," Everett wrote to Lincoln the next day, "that I came as near to the central idea of the occasion, in two hours, as you did in two minutes."
Barack Obama was not at Gettysburg yesterday to commemorate the 150th anniversary of the address. Maybe he figured the world would little note, nor long remember, what he said there. Maybe he thought the comparisons with the original were bound to be invidious, and rightly so. If that's the case, it would be the beginning of wisdom for this presidency. Better late than never.
Obama's political career has always and naturally inspired thoughts about the 16th president: the lawyer from Illinois, blazing a sudden trail from obscurity to eminence; the first black president, redeeming the deep promise of the new birth of freedom. The associations create a reservoir of pride in the 44th president even among his political opponents.
But, then, has there ever been a president who so completely over-salted his own brand as Barack Obama?
"I never compare myself to Lincoln," the President told NBC's David Gregory last year. Except that he announced his presidential candidacy from the Old State Capitol building in Springfield. And that he travelled by train to Washington from Philadelphia for his first inauguration along the same route Lincoln took in the spring of 1861. And that he twice swore his oaths of office on the Lincoln Bible. "Lincoln - they used to talk about him almost as bad as they talk about me," he said in Iowa in 2011.
No, this has not been a president who has ever shied from grandiose historical comparisons. If George W. Bush revelled in being misunder-estimated, Obama aims to be self-hyperadulated. "I would put our legislative and foreign policy accomplishments in our first two years against any president - with the possible exceptions of Johnson, FDR and Lincoln," the President told 60 Minutes in 2011. Note the word possible.
But now that has started to change. The President has been humbled; he's pleading incompetence against charges of dishonesty; the media, mainstream as well as alternative, smell blood in the water.
And his problems on that score are just beginning: ObamaCare is really a political self-punching machine, slugging itself with every botched rollout, missed deadline, postponed mandate, higher deductible, cancelled insurance policy and jury-rigged administrative fix. John Roberts, we hardly knew you: your ObamaCare swing vote last year may yet turn out to be best gift Republicans have had in a decade.
All this will force even liberals to reappraise the Obama presidency. Lincoln's political reputation went from being "the original gorilla" (as Edwin Stanton, his future secretary of war, once called him) to being celebrated, in the words of Ulysses Grant, as "incontestably the greatest man I have ever known". Obama's political trajectory, and reputation, are headed in the opposite direction: from Candidate Cool to President Callow.
That reappraisal is going to take many forms, not least in the international goodwill Obama's presidency was supposed to have brought us. But since the occasion of this column is the Gettysburg sesquicentennial, it's worth turning to the question of the President's prose.
Lincoln spoke greatly because he read wisely and thought deeply. He turned to Shakespeare, he once said, "perhaps as frequently as any unprofessional reader". "It matters not to me whether Shakespeare be well or ill acted," he added. "With him the thought suffices."
Maybe Obama has similar literary tastes. It doesn't show. "An economy built to last," the refrain from his State of the Union last year, borrows from an ad slogan once used to sell the Ford Edsel. "Nation-building at home," another favourite presidential trope, was born in a Tom Friedman column. "We are the ones we have been waiting for" is the title of a volume of essays by Alice Walker. "The audacity of hope" is adapted from a Jeremiah Wright sermon. "Yes We Can!" is the anthem from Bob the Builder, a TV cartoon.
There is a common view that good policy and good rhetoric have little intrinsic connection. Not so. Obama's stupendously shallow rhetoric betrays a remarkably superficial mind. Superficial minds designed ObamaCare. Superficial minds are now astounded by its elementary failures, and will continue to be astounded by the failures to come.
Is there a remedy? Probably not. Then again, the President's no-show at Gettysburg suggests he might be trying to follow Old Abe's counsel in a fruitful way: "Better to remain silent and be thought a fool," the Great Emancipator is reported to have said, "than to speak and to remove all doubt."

Nervous winners and clear losers in modest deal with Iran | The Australian

WINNERS and losers, half-losers and nervous victors: rarely has such a modest piece of statecraft reshuffled so many geopolitical cards as the Geneva deal on the Iranian nuclear program.
Two clear losers were emerging yesterday. The leaders of Israel and Saudi Arabia have been rudely reminded of their dependence on the US; reminded, too, of how unreliable that support could be as the Obama team rushes towards a settlement with Iran.
For Israeli Prime Minister Benjamin Netanyahu, the blow is palpable. The deal - a symbolic curb on Iranian uranium enrichment in return for the easing of some economic sanctions - makes it almost impossible to threaten Iran with a unilateral Israeli attack. For the time being at least, the military option has been removed. To Netanyahu it has suddenly become frighteningly clear that US President Barack Obama was almost more concerned with containing Israel than Iran.
Saudi Arabia, too, has been bruised. It seems that its arch-enemy has been given carte blanche to flex its muscles in the region in return for its concessions on nuclear power.
President Hasan Rowhani will need to appease the Iranian Revolutionary Guard, Riyadh suspects, meaning stronger Iranian backing for the Assad government in Syria.
"Saudi Arabia will likely respond by significantly stepping up arms shipments of anti-tank and potentially anti-aircraft weapons to the Syrian opposition through Jordan," said Firas Abi Ali, head of Middle East analysis at IHS Country Risk.
One loser could thus be the Syrian people. Fighting could intensify before the peace talks now due, after nine months' delay, for January 22.
In Iran, the Rowhani team plainly sees itself as a winner, but must persuade deeply sceptical hardliners. Hossein Shariatmadari, editor of the conservative Kayhan newspaper, said the deal "was not a big event". It was, he said, using a Persian parable, as if a thief had stolen Iran's jacket and hat, and after a tussle, Iran got back its hat and forgot about the jacket.
The Iranian people were enthusiastic yesterday - the exchange rate immediately improved, but the limited sanctions relief will not be life-changing. The pressure on Rowhani's negotiators to bring back more will soon build up, adding new tension to domestic politics.
Reinforcing Saudi Arabia's sense of isolation, many Gulf states gave the deal a cautious blessing. Qatar, Kuwait, Bahrain and the United Arab Emirates considered it a useful first step in the restraint of Iran.
Underpinning their reaction was the sense that loosening sanctions would be good for business. Dubai's ports were once full of goods bound for Iran; those times could return.
Oman, which played host to secret US and Iranian negotiations over the past year, has earned thanks from Washington, but could be considered a loser rather than a winner. The Saudis, in particular, are irritated by the Omani clandestine dealings and detected the back-channel only through intelligence monitoring. The Gulf Co-operation Council does not come out of the Iranian deal looking very co-operative. Energy-hungry economies China, India and Japan have been rooting for a deal that opens up Iranian oil, but it is too early to talk of them as winners. They do now have a strong vested interest in the success of a second follow-up pact with Iran. As does the EU.
Catherine Ashton, head of the EU's foreign policy machine, was hailed as one of the great victors of the negotiations. European soft power, it seemed, could make an impact in the Middle East.
Yet celebrations could be premature if, as many expect, Iran and the six world powers fail to clinch a lasting nuclear settlement in six months.
That also holds for the US. The Obama administration, already under heavy fire from congress for pusillanimity on Iran, may have set itself up for failure.
It now bears the onus of implementing the interim agreement - difficult if Iran plays hide and seek - with the clinching of a more fundamental Grand Bargain in six months.
A more likely outcome is a series of piecemeal deals, lasting perhaps until the end of Obama's term - with more and more sanctions lifted, in return for fewer and fewer concessions from Tehran.
Everywhere - except Israel and Saudi Arabia - Obama may be seen today as a winner.
The laurels, however, may wilt quickly.

Wrong to claim ABC won network tender; it lost on merit

KATE Torney ("Criticism of ABC's spying scoop reeks of sour grapes", yesterday) exposes a central reason the ABC repeatedly failed to legitimately win the open tender to provide the international Australia Network on behalf of the Australian government: the ABC cannot accept that the Australia Network is not just another arm of the ABC.
The ABC's conflicted and inept handling of the Indonesian spying crisis has highlighted the folly of the extraordinary political intervention that handed the ABC the Australia Network contract against two findings of the tender board.
Let's start with the founding rationale for the Australia Network, and the more than $20 million a year of taxpayers' funds that is allocated to it.
The network was created as a service to be commissioned by the Department of Foreign Affairs and Trade to promote our trade, cultural and related interests, with an independent budget and objective. It was only the extraordinary intervention in the tender of the former communications minister Stephen Conroy that enabled the ABC to continue treating the Australia Network as its vanity project on the international stage, just another branch of the ABC, and the source of an extra $223m in funding from taxpayers to subsidise the ABC's hobbyhorses.
Torney misunderstands, misleads or blurs this fact. The ABC's managing director Mark Scott is similarly blind.
It says much about the ABC's view of itself for Torney to write that - after failing to win on merit and having to fall back on the intervention of Conroy - "the ABC's reputation as a trusted, independent source of news and information is one of the reasons the ABC was awarded the Australia Network".
Our company, which produces the Sky News channels through a joint venture of Australia's two most watched free-to-air networks and the most successful pay-TV company in the world, bid to supply the Australia Network to DFAT in 2011.
We had a global vision with programming to be sourced from all networks - including the ABC and SBS - and every taxpayer dollar would be spent solely on the service.
Even though the tender rules were changed midstream to assist the ABC, the tender board preferred the Sky News proposals. The auditor-general's findings are on the public record.
The Australia Network should, as we successfully argued to DFAT, operate as a separate entity with its own management to support the commonwealth objectives.
In her opinion piece, Torney tries to draw Sky News into the ABC's spying crisis by suggesting we would not run dead on reporting an issue that reflected badly on Australia. Of course Sky News would not run dead. But unlike the ABC's confused news management, we do understand the critical difference between a Sky News channel and the DFAT-funded Australia Network.
What the ABC does with its dedicated news and current affairs services on TV, radio and online is its call.
But what the ABC and The Guardian have done is join the Australia Network in a diplomatic situation with unintended consequences. DFAT staff in Jakarta have spent hours in lockdown, tear gas has been fired and Australian flags are being burned in the streets.
Let's come back to the founding rationale for the Australia Network and get this important tool of diplomacy right. It should be supporting Australia's international missions, championing the nation's business and trade, and playing a central role to foster understanding of Australia and its people across the region.
ABC management professed its expertise in delivering soft diplomacy to secure the Australia Network contract in perpetuity. In practice it has failed.
A full review of the Australia Network should be undertaken to explore all options and I mean all options, including shutting the Australia Network for failing in its purpose.
Angelos Frangopoulos is chief executive of Australian News Channel, a joint venture of Seven West Media, Nine Entertainment Co and British Sky Broadcasting, which is 39 per cent owned by 21st Century Fo

Nov 25, 2013

Wrong for Abbott to follow Obama and add lying to spying

ACCORDING to the ABC, Australian taxpayers aren't entitled to know how much it pays its executives. But while shrouding itself in secrecy the national broadcaster did not hesitate to divulge highly classified information about Australia's intelligence programs, worsening the crisis unleashed by the US traitor Edward Snowden.
Unfortunately, that crisis still has a way to run. And its long-term implications may prove even more challenging than the immediate pain. By highlighting the fault lines in our region, the hysterical reaction to Snowden's revelations shows we need more intelligence about our closest neighbours, not less; yet the crisis also risks compromising that goal.
In themselves, Snowden's revelations are not surprising. Apes in the forest spy on each other; it would be remarkable if humans did not. That states do is hardly news. Nor should it be news that the world is a better place for it.
No one understood the case for spying more clearly than the legendary diplomat Talleyrand. "Speech," he observed, "was given to man to hide his thoughts." And in a world in which "ruling and lying are synonyms" the facts never speak for themselves.
But what cannot be verified, cannot be trusted. Hence the importance of penetrating beyond surface appearances: for the greater states' ability to peek behind the veil, the fewer the costly precautions they need to take against each other and the more they could rely on fences rather than force. In Machiavelli's words, the deceitful tactics of the fox thus helped avoid the violent ones of the lion.
Nothing better illustrates that proposition than the 19th century's Pax Brittanica. That long peace was built on a solid technological foundation: Britain's control of global telegraphy. As late as 1890, 80 per cent of the world's submarine cables were British; Britain ruled the wires even more decisively than she ruled the waves.
And with British companies being required to employ British telegram clerks, Her Majesty's agents at ports from Dakar to Hong Kong read the cables while the Imperial Defence Committee monitored traffic at London's imposing Central Telegraph Office. It was therefore understandable that the French diplomat Maxime de Margerie complained "electricity was the ally of English diplomacy". But the unravelling of British control as France and Germany built systems of their own contributed to the distrust that pushed the world towards war.
The sophistication of today's communications networks is obviously many orders of magnitude that of Britain's global telegraph system. In 2012, daily internet traffic was in the order of 1.1 exabytes, one billion times more every day than the 19th century system could carry in a year. And the growth rates remain breathtaking: wireless traffic alone is now eight times larger than the entire internet in 2000.
Never has such a field of observation been available to states; but the internet is also the infrastructure of choice for terrorism, fraud and crime. Policing the electronic commons is therefore as vital as exploiting the intelligence opportunity it provides. And our location, combined with our dependence on communications, means few countries have a greater stake in those goals.
But the challenges they involve are difficult to overstate. Detecting and deterring cyber attacks requires continuous surveillance of many million active nodes. Equally, while traffic within terrorist groups displays distinctive patterns, those patterns need to be identified against a constant maze of "false positives".
As for intercepting the mobile communications of a foreign leader, it is dauntingly complex in technical and operational terms; to believe such intercepts can be turned on and off as circumstances change is dangerously naive.
Ensuring our national security therefore entails a constant commitment of costly resources, including to inevitably risky activities such as putting in place the means to eavesdrop on presidents and prime ministers. But even with our security-related spending growing at nearly 10 per cent annually since 2001, the scale economies inherent in electronic intelligence make close co-operation with allies indispensable. Particularly crucial is our ability to rely on the US, which spends $110 on intelligence for each $1 spent by Australia.
Yet, as the Snowden debacle demonstrates, vast scale brings the vulnerabilities economists term the "rotten apple theorem": the larger an organisation, the higher the probability it will eventually recruit a rotten apple, and the lower the probability it will detect him or her in time to prevent serious harm.
Now we must cope with the fallout. And, with further revelations likely, the pressures could become ever more intense. There are no magic bullets; but what is clear is that Barack Obama's strategy of publicly apologising to Angela Merkel while also promising not to "monitor" her communications in future was absurd.
Obama's promise is scarcely credible. After all, other documents Snowden released show the US intelligence agencies employ more than 500 fluent German speakers; with continuing tensions between the US and Germany, it seems implausible those agents will now devote themselves to reading Goethe and watching re-runs of Inspector Rex.
Obama's apology, therefore, merely added lying to spying while setting a poor precedent along the way. And so it would be for our relationship with Indonesia. Julia Gillard's call for Tony Abbott to follow Obama's lead consequently only reconfirms her lack of judgment. Instead, Abbott must stick by the policy of not commenting on security matters while strengthening our signals intelligence capabilities and our ability to project and protect them. And he should demand, and properly expect, that Labor back him unconditionally.
That won't, of course, stop the ABC. But, then again, stupidity has its heavyweights, like everything else. The pity is that you and I have to pick up their tab. No wonder they don't want us to know how much it is.

Nov 21, 2013

Anger Is Expensive - Joys and Challenges

Anger Is Expensive - Joys and Challenges

Team Abbott in an early strain | The Australian

JOE Hockey's early supremacy in parliament may or may not endure. The Treasurer is acutely aware he is only as good as his last answer, or his last question time, as is everyone else in that place, including Tony Abbott.
Apart from providing business and himself with a much-needed confidence boost, Hockey's performance so far in the chamber has provided the Prime Minister with something Kevin Rudd and Julia Gillard permanently lacked: a strong economic voice beside them.
Whatever the flaws or failings of Rudd and Gillard, and there were plenty, Wayne Swan never compensated for any of them, including the critical task of communicating an economic message.
When this view was put to people recently, they readily agreed, then almost instantly wondered if the Abbott-Hockey relationship would end up the same as other famous pairings where even competent prime ministers were upstaged by forceful treasurers, igniting jealousies and worse. The answer is almost certainly, inevitably, yes, even taking into account the very competitive field now on the government side: Julie Bishop, Malcolm Turnbull, Scott Morrison. Market forces will eventually sort it.
Despite the early stages, it's the nature of political beasts to watch and judge with a critical eye. They are especially watchful now as the Prime Minister is forced to deal with an almighty tempest with Indonesia that has thrown the government off its methodically prepared course.
Abbott would much rather be rubbing Labor's nose in carbon and deficit instead of confronting another mess dating back to Rudd's prime ministership, particularly one that requires surgical precision rather than a blunt instrument, and that threatens to inflict substantial economic and political damage.
Abbott has remained low-key and unapologetic, apart from expressing regret - more deeply as each difficult day passes - for the embarrassment caused to Susilo Bambang Yudhoyono.
Labor has urged Abbott to follow Barack Obama's script with Angela Merkel, which sounds simple, except it didn't go the way many are now claiming it went. Merkel rang Obama herself to berate him, then the White House released a carefully worded statement, saying: "The President assured the Chancellor that the United States is not monitoring and will not monitor the communications of Chancellor Merkel."
Note the present and future tense and the specific reference to Merkel. The official statement did not refer to any apology. That sprang from leaks from one of the two participants or whoever else was listening in.
Abbott has firmly resisted publicly giving Yudhoyono the same assurances Merkel received. If he did he would be asked if it applied to future Indonesian presidents and other leaders in the region. It is a diabolical situation for any government, especially a new one, and especially after Indonesia had shown an earlier propensity for bloody mindedness.
Abbott and Bishop will have to spend considerable time and capital trying to repair the damage and deal with the repercussions, which they rightly expect will be considerable. There is no end to the damage caused by former National Security Agency contractor Edward Snowden's treachery and we are yet to know the full measure of it.
Bishop is, at least as far as her department is concerned, properly equipping herself to deal with it. She reads her briefs, is smart, disciplined, polite to staff and hard working. The common complaint about Bob Carr, who must have known it was happening while he was serving, was that he regarded briefs as superfluous and was preoccupied with collecting anecdotes for his next book.
The other complex issue that will test the government's internal and external relationships is the Archer Daniels Midland takeover bid for GrainCorp. History shows the seeds of discontent are sown early in the prime minister-treasurer relationship.
The scuttling of the tax reform option, including a consumption tax, did it for Bob Hawke and Paul Keating, who never forgot or forgave. For John Howard and Peter Costello, it was the planned imposition of a wholesale sales tax on the states, which resisted it. Howard pulled back and left Costello hanging. Costello also never forgot or forgave.
The Graincorp fight has laid down early markers, as the Nationals pile equal pressure on the Treasurer to deny ADM and on the PM to support them. Whatever transpired between Warren Truss and Abbott before the Nationals leader laid out his opposition to the sale on Insiders (one newspaper reported Abbott had OKed Truss's comments), Abbott is staying publicly neutral, insisting it is Hockey's decision. 
Hockey was not surprised by the Nationals' aggression. What has surprised him is the ferocity of lobbying from some corporations. He also had them clearly in mind when he said he would not be bullied or intimidated by anyone.
In 2001 Costello rejected Shell's bid for Woodside after the Foreign Investment Review Board split. Angst over whether Australia was open for business soon passed, after Costello gave assurances policy had not changed. "But we also have to have an eye with the national interest to the maximum exploitation of our resources and the maximising of Australia's exports revenues and these are some of the matters that I considered in making my decision," Costello said then.
Costello did not want Woodside or Australian resources to be beholden to any conflicts of interest posed by Shell's global empire. It is open to Hockey to copy those arguments. Business will get over it, so long as it doesn't become a habit and he follows up with a tough budget. The Nationals will calm down, at least temporarily. Compared with the Indonesian conflict, Graincorp looks relatively uncomplicated.

Nov 18, 2013

Plenty for Labor to be ashamed of in NBN report | The Australian

IN April 2009, The Australian urged the Rudd government to produce the business case for what taxpayers could expect from their investment in fast broadband.
Despite repeated urging, Labor refused to subject the nation's largest infrastructure project to a Productivity Commission cost-benefit analysis. As did the Gillard government. The obvious reason they didn't want the numbers crunched for public scrutiny was the extravagance of their "Rolls-Royce" fibre-to-the-premises model. The Gillard government had another reason for its secrecy, however, that was exposed on Saturday's front page.
As Chris Kenny and Annabel Hepworth revealed, Labor commissioned a review of the project by investment bank Lazard almost three years ago. The review, which was never released, warned of major risks in the plan and concluded it would leave the public up to $31 billion worse off . Telstra's involvement under a multi-billion-dollar deal transferring many risks associated with the project from Telstra's books to NBN Co was highlighted as a major problem. The deal gave Telstra the option of competing against the NBN after 20 years, while still receiving funds from it.
In view of the scope and cost of the NBN and the Coalition's strategic review, Bill Shorten should agree to Communications Minister Malcolm Turnbull's call to release all advice the previous government received in relation to the project, including any contained in cabinet papers.
The Lazard report covered many of the problems inherent in the business model reported by The Australian over the past four years. Key planks of the business case, it noted, were plagued by uncertainty. And the fact "no investor group other than the government" would provide equity finance underlined the risk to public money. The likely competition from wireless internet, which could limit take-up - an issue raised on these pages in February 2010 - was also noted by Lazard.
Politically, it was not surprising Julia Gillard and former communications minister Stephen Conroy concealed the report. Out of concern for the national economic interest, however, they should have heeded the alarm bells and overhauled the NBN to make it viable. They were more intent on "shooting the messenger", with Senator Conroy accusing this newspaper of "an absolute smear campaign" in May 2011 for scrutinising the project.
We were not alone. In 2011, The Economist's intelligence unit warned that the NBN was the most expensive of all countries' rollouts it surveyed, including Greece, and involved less competition than comparable schemes in China. Rather than engaging in some investigative reporting of their own, many ABC, Fairfax and other online commentators were content to spruik the project's benefits as fed to them by government spinmeisters and regurgitate Labor's baseless claim that The Australian and other News Corporation papers were biased against the project for commercial reasons. To the contrary, as a communications company we supported the concept of cost-effective fast broadband but from the outset questioned its high-cost state monopoly model.
We would like to see fast broadband delivered efficiently, sooner rather than later, which is why Mr Turnbull's review of the project is a good idea. When it reports next month, the review should help the Coalition claw back ground on behalf of taxpayers by pinpointing the real costs of the NBN, how long it will take to complete and what savings can be made by using Telstra's existing copper-wire network for connections to many homes and other modifications. It should also take note of the brief prepared by Tasmania's state-owned power company Aurora Energy suggesting rolling out the NBN via overhead poles would be at least four to six times cheaper than the current underground method. Ziggy Switkowski, the NBN Co's new executive chairman, and Mr Turnbull are right. There can be no "no-go" areas in reviewing and overhauling the NBN.
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Keating's Remembrance Day speech echoed Leninist nihilism | The Australian

PAUL Keating's assertions about the nature of World War I demand a response if the memory of all those who served and died is not to be betrayed. His speech at the Australian War Memorial on Remembrance Day is a lamentable example of the nihilist view of that epoch-defining conflict.
The nihilist perspective has long been the default historical interpretation on the Left and it has its roots in V. I. Lenin's communist polemic, Imperialism, the Highest Stage of Capitalism (1917). According to this view the war was a murderous spasm of a racist, patriarchal, and imperialist civilisation, which should have been avoided and ultimately achieved nothing. In Keating's words, it was "a war devoid of any virtue".
Such a view is often dismissed derisively by professional historians as the Blackadder version of the war, fought, as TV's doomed Captain Edmund Blackadder put it, so that General Haig could "move his drinks cabinet six inches closer to Berlin". It has its roots in the anti-war propaganda of the 60s. 
In fact, this nihilist view of the war is quite unhistorical. German expansionism under the Prussian military caste was a pressing military imperative that had to be confronted and Australia had no choice but to enter the war once Great Britain was committed. Moreover, as the war unfolded the necessity for us to see the task through to the end became only more obvious.
Keating's suggestion that statecraft should have resolved the issues is laughable, given the absolutely irreconcilable demands that Germany was making on the other European nations. Germany's ruling elite was committed to the creation of a German empire that would dominate the world. According to Germany's clearly stated war aims, its victory would see an enfeebled Britain confronted by Mitteleuropa, a massive reich of some 1.8 million square kilometres, five times the size of present-day Germany and encompassing all of central and eastern Europe.
Belgium and The Netherlands were to be reduced to powerless satellite states hosting German military and naval bases in a strategically dominant position just across the English Channel. France would be particularly hard hit as it was to be crippled by colossal indemnity payments, and lose vital regions including the major steel-producing area of Briey, and a coastal strip between Dunkirk and Boulogne-sur-Mer, which would provide further harbour facilities for the German Imperial Navy as it policed the sea lanes of the world.
It was planned Britain would forfeit her navy and be crippled by massive indemnities. And like the other defeated European nations she would lose her empire, with India being absorbed into the new reich via railways stretching from Europe through the Middle East and Iran. Her African colonies, along with those of the other defeated powers, were to be absorbed into a massive new empire dominating sub-Saharan Africa, including South Africa.
Australia may well have been forfeited to Germany as part of its new global imperium. At the very least, we would have been forced into negotiations with the reich as a defeated foe that could have expected no mercy from a newly victorious and hyper-aggressive superpower.
We would have been left gutted by wartime manpower losses, military expenditures, and reparations. As a trading nation we would have been commercially crippled by the loss of our most important markets and sources of capital investment in Europe. The appropriation of both our agricultural and manufacturing industries would have left us economically ruined.
Germany would have controlled all the sea lanes upon which our access to the outside world depended. It would also have extended its control over German New Guinea to encompass the rest of New Guinea, and the Dutch and British colonial possessions in present-day Indonesia, Malaysia, Singapore, Hong Kong, and China. Germany would have dominated every aspect of our lives.
Such would have been the immediate outcomes of a German victory, according to Germany's own war aims. If anyone harbours any doubt about its intentions they need only consider what happened to Russia after her war effort collapsed in 1917 - the punitive Treaty of Brest-Litovsk, under which Russia lost a third of its population, half of its industry, and 90 per cent of its coal mines to German control.
But what of the longer term future of the post-war world under the new German reich, led by an unstable, megalomaniacal Kaiser? Fresh from the victory of autocracy over democracy, Germany's military elite would have been supported and driven forward by a triumphalist coterie of fawning acolytes, a triumphant officer caste and aristocracy, an all-encompassing imperial bureaucracy, Prussian Junkers, ultra-nationalist fanatics, and pan-German imperialists. Surrounding them would have been the rabid anti-Semites, Slavophobes and the other racist groups that infested central Europe, along with millions of demobbed, brutalised, war-hardened veterans determined to enjoy the spoils of victory. To this potent brew would have been added the desires of the militaristic ruling elites of Germany's allies, particularly the Austro-Hungarian Empire and a newly empowered Turkey.
What would have happened to the world if this mass force of evil had been unleashed upon it? Perhaps Keating should have given some thought to that. That he didn't only exposes the superficiality of the nihilist view of the war of which he has become the spokesman. 
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Terror fight returns as A-G's focus

THE Attorney-General, George Brandis, has declared himself the "minister for national security", placing the threat of terrorist attacks and the challenges posed by returning foreign fighters in Syria at the centre of Australia's security agenda.
In a wide-ranging interview, Senator Brandis also accused the previous government of downgrading national security concerns and said Julia Gillard had committed a "serious error of judgment" by suggesting the 9/11 decade had come to an end.
Referring to the former prime minister's national security statement, in which she said Australia was entering a period dominated by traditional, state-based threats, Senator Brandis said the terror menace had become more, not less, sophisticated.
"That was a mistake," Senator Brandis said. "That was a very big mistake and although there was so much noise, so much political noise at the time on a variety of issues, I think the magnitude of that political error of judgment escaped the public attention and criticism it deserved."
In January, Ms Gillard predicted power plays in the Asia-Pacific region would dominate the concerns of security planners, rather than the activities of non-state actors such as al-Qa'ida.
But Ms Gillard warned against assuming terrorism had been defeated.
Senator Brandis said that although it was true to say terrorism had evolved in the years since 2001, the threat itself remained constant. "It has changed in a way that has become more sophisticated and certainly no less a threat," he said.
Senator Brandis has employed as his chief-of-staff former ASIO director-general Paul O'Sullivan, an appointment he said underscored the centrality of national security issues in the Attorney-General's portfolio.
"Mr Abbott gave a speech a few weeks ago in which he described (the office of) the Attorney-General as Australia's minister for national security. That is very much the way I see the role.
"I find that . . . I spend more of my time dealing with national security issues than with anything else -- by a very wide margin, in fact," Senator Brandis said.
Among the most serious issues confronting security and law enforcement agencies was the rising number of Australians travelling to Syria to take part in the fighting.
"It's been increasing quite sharply," he said. "And it is a greater number of citizens than travelled to participate in civil conflict in Iraq or Afghanistan."
About 110 Australians are thought to be assisting the rebels in Syria. About 50 are thought to be fighting, with the rest performing other roles.
The al-Qa'ida-affiliated group Jabhat al Nusra is the main Islamist group attracting their interest. Other groups, such as the Islamic State of Iraq and Syria, also an al-Qa'ida-linked group, are also said to be drawing Australians.
Senator Brandis said there was a "nebulousness" to the groups that made strict classifications impossible. But he was satisfied that the powers available to the Australian Federal Police and ASIO were sufficient to manage the threat posed by fighters who returned to Australia battle-hardened and radicalised.
"That having been said, anti-terrorism laws are kept constantly under review," he said.
Senator Brandis declined to discuss specific cases, including the emergence last Tuesday of a nine-minute martyrdom video purporting to show the final moments of a Brisbane man known as "Abu Asma al Australi" who blew himself up in Syria in September. But he became the first official to confirm publicly the common belief within security agencies that the man was an Australian. "It is the government's belief that the man is Australian," Senator Brandis said. "So far as I'm aware it is (the first time an Australian has conducted a suicide attack)."
The video could be used to spur others to similar acts, he said.
Evidence was emerging that the passage to Syria was becoming more organised and hard-core radicals and "novices" were among those travelling.
He said that, in line with the rest of the world, Australia was experiencing a steep spike in cyber attacks, particularly those perpetrated by states, and against governments and commerce.
China is widely thought the most energetic in its cyber attacks.