Saturday, March 30, 2013

Saturday Morning Musings - lessons from the Cyprus story

Today's Saturday Morning Musings focuses on Cyprus and bank regulation.

At times I find it hard to believe that I worked as a professional economist for more than twenty years before events took me in different directions. I make this point now because my knowledge of parts of economics sits frozen in the past until events force reactivation. A case in point was the onset of the Global Financial Crisis. This drew me back into macroeconomics as I sought to understand just what was happening and just what it might mean for Australia. Now the same thing has happened again.

Over at his place, Winton Bates began a discussion on bank regulation. This drew me in, and then when the Cyprus crisis broke I wrote two short posts on that. The discussion in comments reminded me just how little I knew and forced me to go searching for understanding. In doing so, I had to dust off my knowledge of the economic theories of money. Those theories sit frozen in time before the more sophisticated later analysis. Maybe, just maybe, they are not the worse for that. Australian Joint Stock Bank

This is a picture of a bank note issued by by the Sydney based Australian Joint Stock Bank for distribution in Queensland. When I was a child, old Mr Wallace used to come weekly to do our garden. He had been a young man during the depression of the 1890s. He remembered the crash clearly and talked about Bank failures.

This was a pretty big crash, the most severe in Australia's history. In a very good Australian Reserve Bank research report (A history of last resort lending and other support for troubled financial institutions in Australia) issued in October 2001, Bryan Fitz-Gibbon and Marianne Gizycki described it in this way:

The depression, which saw real GDP fall 17 per cent over 1892 and 1893, and the accompanying financial crisis, which reached a peak in 1893, were the most severe in Australia's history. The overextension of the 1880s property boom and its unravelling led to an abrupt collapse of private investment in the pastoral industry and urban development and a sharp pullback in public infrastructure investment. A fall-off in capital inflow from Britain, adverse movements in the terms of trade and drought in 1895 accentuated and prolonged the depression.

Sound familiar? Change dates and some of the detail and you could be talking of the Euro crisis. Australian history actually does have something relevant to say, for we have been through many of the challenges faced by the Euro.

The Role of Money

In the simpler world in which I first did economics, two key attributes of money were as a means of exchange and a store of value.

As a means of exchange, money replaced barter by providing a measure of value independent of relative exchange values. A pair of shoes or a sword or shield no longer had to be exchanged for, say, so much fish. Both sides of the exchange and of all exchanges could now be valued via a common denominator. Such a simple concept, but one that had profound results, for it is the basis of modern markets.

As a store of value, money further simplified things. Pre-money, your financial worth was measured by physical things, land or olive oil or cattle. That was fine, but it was complicated and limited. With money, and early money was still physical, you had a means to simplify things. Now you could hold some of your wealth in a form that was easily exchanged for other things.

With time, money as a store of value was further simplified by turning it into pieces of paper issued by a trader, a bank, or some other form of financial institution. Ultimately, the bank note was born, initially the issue of paper money was largely private, but it was sufficiently profitable that private money came to be replaced by Government money beginning in China. During this long transition, banks and bank deposits became money. The bank issued notes, but also accepted deposits on call that themselves became money. The idea of cash at bank was born.

Money's role as a means of exchange and a store of value facilitated both the creation of credit, lending, and commercial transactions. Banks became the key enabling device for both credit creation and commercial transactions. Most recently, developments in computing and communications technologies has further cemented that role. For all practical purposes, we have no choice but to hold our money at bank or some other deposit taking institution with electronic payment facilities. Technically, we have lent the bank our money, but for practical purposes that's our cash.  

This is not a lecture on the history of money. Rather, my focus is on the role of money and its links to the banking system. 

The Australian Experience

In the Australian experience outlined by Bryan Fitz-Gibbon and Marianne Gizycki, you will see clear recognition over time of the role of money as both a medium of exchange and a store of value. Prior to Federation, each colony had its own banking system that was central to the life of the colony. Each banking system was subject to periodic crises of which the depressions of the 1840s and 1890s were the most severe.

Both Colonial Governments and the note issuing banks themselves were involved in the management of these crises. If you look at the history, you will see that attention focused on protection of the value of the bank notes issued, on the protection of depositors and on the avoidance of bank runs and liquidity crises. Various techniques were used including lender of last resort facilities. However, there was also clear recognition of the risk of moral hazard; some banks were allowed to fail, others were reconstructed using a variety of mechanisms. Protection of the value of notes and of deposits was central to reconstruction. While note holders and depositors did sustain some losses, a remarkable number of the reconstructions actually resulted in note holders and depositors receiving a full return.

Cyprus vs Colonial Australia

To my mind, and unlike the Australian Colonial experience, those crafting the Cyprus response have somehow managed to attack every single element that I have talked about in both the role of money and that of the banking system. The results are likely to be profound and long-lasting, especially on Cyprus itself. 

You can get a feel for the difference between Colonial Australia and Cyprus from this Reuters quote from the German Finance Minister Wolfgang Schaeuble:

"Together in the Eurogroup we decided to have the owners and creditors take part in the costs of the rescue - in other words those who helped cause the crisis," said Schaeuble, one of the architects of the euro zone's response to a debt crisis now in its fourth year.

Note that all depositors are counted as creditors.This is a fundamental shift. 

Mr Schaeuble also said:  "Cyprus is and will remain a special one-off case,.....Savings accounts in Europe are safe."  Really? No, I don't believe him either. In practice, ordinary people have limited choices, but they will shift with time.    

A Single Currency?

The core concept in the Euro was the creation of a single currency that would help unite Europe and facilitate trade and other economic activity across a widening area. Consistent with this, the Wikipedia article on the Euro states:

Euro banknotes do not show which central bank issued them. Eurosystem NCBs (National Central Banks) are required to accept euro banknotes put into circulation by other Eurosystem members and these banknotes are not repatriated.

Well, it appears that this is is not quite right. It seems that individual Euro notes issued by individual central banks can be identified by a country code in the serial number. Now this shouldn't matter all that much. But it does. Here I want to quote from one of my commenters:

If you are travelling (and purchasing Euros in advance from an Australian bank), beware of any Euro note with a letter 'G' prefixing its serial number. These are Cyprian Euros. Best (if you can) to go for 'X', 'P', 'L', or 'N' prefixes - respectively denoting Germany, Holland, Finland and Austria as the country of issue.

In theory, this numbering system should not matter. After all, the system requires European NCB's to accept all Euro banknotes. In practice, Cypriot G Euros are likely to be discounted, as will  notes from other weak countries.

Impact of the Common Currency

Australia became a single currency zone with Federation, although it would be 1911 before the first Australian bank notes were issued. The combination of custom union with a common economic currency had significant redistributional effects, with economic activity and income redistributed from the country to the metropolitan centres, from the non-industrial states to the industrial states.

The introduction of the Euro in 1999 has had somewhat similar results, with  some shifts of income from the south to the north, although this was to a degree disguised by other effects. This includes revenue transfers to the peripheral economies. The problem is that unlike Australia where there were only six states that were relatively small economic units, the Euro covers many more states and a much larger economic zone. Further, the political decision making structures are far more complicated. In a way, the Euro needed more time to evolve than was allowed.

The Euro egg cannot easily be unscrambled. It really is just so much easier doing business or just travelling in Europe because of the Euro. The pains of exiting the Euro are also considerable. However, unless a way can be found of simplifying decision making systems, some break-up of the Euro would seem almost inevitable.

A Regulatory Mess

Cypriot banks operate in a multi layered regulatory system. They were subject to Government policy and Central Bank supervision on Cyprus. Then you had the EU and the European Central Bank. Beyond that were global changes to regulation including Basel III. Each layer had different approaches and rules. Further, regulatory approaches were overlaid by other policy approaches including the responses to the Greek debt crisis.    

Keeping things very simple, Cyprus is a nation. It's Government is responsible to the Cypriot people. The buck starts there. This includes crafting responses based on the Cypriot national interest independent of other layers. This isn't easy. It includes making compromises, and this bail-out was a compromise, where immediate pain is suffered for hopefully longer term gains.

Then at the next level we have the EU. The EU has to look after what it perceives to be the interests of the Eurozone as a whole. But in doing so, it needs to take into account the impact on its constituent parts. How does it manage the conflict between minorities (in this case Cyprus) and the broader whole?

Then we have the broader regulatory frame work. How do you manage the conflict that might arise between the need to make a global system work and European interests and then, within that, Cypriot interests?

The short answer is that you cannot! All you can do is to be very clear on the principles that you are using and the consequent implications. And that, to my mind, is where the Cyprus "solution" failed. It just wasn't thought through.                               

Friday, March 29, 2013

Easter and the sense of redemption

Today, Good Friday, marks the start of the Easter holidays here in Australia. Sitting here in the early morning in the kitchen where I do much of my present writing, I found my thoughts drifting through apparently disconnected threads.     

Back in November 2007, I wrote Was Australia a Christian country - and what comes now. The post was part of a broader discussion. and a piece of its time. But the central idea that Australia was a Christian country remains true; not Christian in a formal sense, but Christian in its ethos and beliefs.

One aspect of the Christian tradition especially relevant to Good Friday is the idea of redemption, the belief that no matter what our failings, we can be forgiven for our sins and rise again. Not all Christian groups shared this ideal. To my mind, the belief in predestination that some groups hold is especially repulsive for it seems to deny both the concept of free will and the idea of forgiveness, of redemption.

You don't have to be Christian to believe in the idea of redemption. It is actually central to that steady stream of self-help books, magazines and shows. The range is quite remarkable. Over-weight? You can fix that. Want success? This is how to achieve it. Want to improve your performance in bed? Here are 13 ways to rev her sex drive. In all cases, you can be redeemed if you just follow the recipe. However, there is a problem.

To illustrate this, here are a few of the teasers from the March edition of Australian Men's Health: lose double the flab in half the time; 10% stronger in thirty seconds; muscle-boosting French stew; hard muscle fast - no gym required. The reference to 13 ways to rev her sex drive comes from the same front cover. This is all redemption, but channeled in a very particular way.

The Christian concept of redemption recognises failure and human frailty. We are all imperfect, we will all fail, none of us can be perfect. But we can be forgiven, we can do better. The Christian faith goes further.

The Lord's Prayer says in the old wording: "And forgive us our trespasses, As we forgive them that trespass against us." The Bible also says in Mark: "Thou shalt love thy neighbour as thyself. There is none other commandment greater than these". These are pretty powerful words. To be forgiven, you must forgive. If you don't love yourself, how can you love your neighbour?

None of us can achieve the particular models of redemption presented to us all the time. I don't know about you, but I get tired of the constant demand that I be perfect, that I must fit with models as presented. It means that I must always fail, and I don't like failure. I am a tad too old to acquire the male body presented on the cover of Australian Men's Health, or attract the female cuddling up to his back in somewhat submissive mode.

Mind you, I don't want too, for I don't find her at all sexy. As presented, she is not a woman, but a presentation of someone that I am meant to find sexy. I don't, although I might if I met her outside the cover stereotype. Still, probably not, My tastes are different. A woman is not just a body, but a person who sits within a body. It's the combination that's important. 

I digress. Still, so far as bodies go, I prefer plump, voluptuous!

I said that my mind had drifted along through apparently disconnected threads. One of the really big social changes that has occurred in Australia, one that affects all religious events, is changes in the way we work.  Further comments follow this photograph. Stack of Wheat  This photo placed on line by Pelle the Poet shows a wheat stack from around 1910. Up until very recently, life in agrarian and industrial societies involved constant hard labour. In the case of the photo, every one of those bags had to be individually shifted.

Religious days whether Easter or Sunday were not just religious celebrations, but also a forced rest. They were a chance to recover, as well as reflect in an uncertain world. To a degree, we have lost that perspective.

I have no desire to return to that past. But on Easter, perhaps we might reflect on what we have gained, forgive ourselves for personal failings, and think of redemption in the sense that we might do better in the future.    

Thursday, March 28, 2013

Cyprus and Warrnambool - the individual dangers of system dependence

I will return to the discussion on the Cyprus issue, but for the moment my attention was caught by another apparently disconnected story.

In the Cypriot case, all those living in the island republic found themselves caught up in a catastrophic economic system failure. They couldn't access money, they couldn't use credit cards, they couldn't be paid or pay bills. A national disaster became a personal catastrophe.

At 5.30 am on the morning of 22 November 2012, Warrnambool farm manager Greg Walsh went to check on his emails and to send instructions to staff. He then found that both his mobile and fixed line phone were also down. Listening to the radio, he learned that there had been a fire at the local Telstra exchange.

Driving the twenty minutes into town, he realised that he was short of petrol. Calling into a service station, he found that they were only accepting cash because their EFTPOS was down and he had only $5 in his pocket. Navigating that difficulty, upon arrival in town he found queues at all the banks. With systems down, staff were handing out up to $100 in cash to customers who could prove their identity, writing the transactions down on pieces of paper.

It took Telstra nearly three weeks to get the district fully back online. While mobile and some emergency telephone services were back within days, internet services took longer. During that time businesses lost thousands of dollars through being cut off from their systems and customers. To date Telstra has paid out up to $1000 to nearly 2000 businesses, and is assessing a smaller number of larger claims.

You can read the fuller story in this piece by Brad Howarth, What if they pulled the plug?. There Brad muses on the impact of a larger scale internet crash.

Both Cyprus and Warrnambool illustrate the dangers associated with our dependence on large, complex, systems.  Both are individual warnings

Wednesday, March 27, 2013

Cypriot dominos

Following up yesterday's post, Musings on the Cyprus bail-out, Students protest in Cyprus the New York Times had a fascinating article yesterday, Europeans Planted Seeds of Crisis in Cyprus, that provided more on the detail of a crisis that I had not properly. The photo from the Times shows students demonstrating to protest the arrangements.

One key thing that I learned was the way that the forced cuts in the value of Greek Government bonds meant that those holding the bonds — notably the then-cash-rich Cypriot banks — would lose at least half the money they thought they had. Eventual losses came close to 75 percent of the bonds’ face value. Of course more was involved, but that level of loss seems to have ultimately doomed the Cypriot banking system. It's also interesting that the Cypriot Finance Minister apparently did not spot the danger at the meeting.

I was going to comment further tonight on regulatory issues, but this short post is all I have time for.

Postscript

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Tuesday, March 26, 2013

Musings on the Cyprus bail-out

I fear that just when I should have been doing my writing tonight, I ended up watching Oman play Australia in the soccer. It was an exciting match, beginning with some disastrous Australia v Oman Cahill scoresplay and then ending with great excitement when Australia seemed to be returning from the dead. In the end it was a 2-2 draw, a fair result.     

On matters economic, I have watched events unfold in Cyprus with interest and a degree of befuddlement. There were several things I didn't understand. 

The first was the delay in action. I have the strong impression, it may be an unfair impression, that authorities in Cyprus and elsewhere were to some degree sitting on their hands hoping that things would get better. If you have to take nasty medicine, and this is nasty medicine, then it is often better sooner rather than later.

The second was the initial decision to attempt to inflict cuts on those with smaller deposits below the level covered, as I understand it, by the guarantee on bank deposits. That sent a shudder through Europe since it said that the guarantee was worthless. I thought that was a bit silly.

The third was the failure of the Russian Government to provide any form of support. This was actually one case where Russia could have exercised real sway for the outlay of a relatively small sum of money.

But perhaps the most the most important thing of all was what the whole episode said about bank regulation at national level. This is the third recent case after Iceland and Ireland where failures in the banking system effectively brought a country to its knees.

Cyprus benefited in immediate economic terms through the growth of its banking system. Yet the risks in that growth should have been obvious from a risk management perspective and especially after the lessons from other countries.

To go back to a recent discussion between Winton Bates and myself, this was not a case of market failure as such. Rather, it is a case where particular failures have profound local impacts. The Government of Cyprus could have avoided the failure through the application of rigid rules, but then it would not have got the immediate gains. So we have a different type of regulatory problem.

What approach might the Government have followed to optimise the gains while reducing the risks? Unlike general regulatory approaches with their universal rules, Cyprus' small size and limited number of financial institutions probably required a far more hands on, targeted interventionist approach. Therein lies the failure. 

Postscript

Listening to the news reports overnight, my very brief comment on regulatory failure is a tad simplistic. Part of the difficulty lies in the different roles that have banks have in local and international contexts. Just noting at this point.

Monday, March 25, 2013

Snippets

Very short post tonight.

The official administrative arrangements following the Australian PM's cabinet reshuffle haven't been posted yet, but the Armidale Express has the list. I suspect that most Australian bloggers, at least those who follow economics or public policy,  will be pleased to see Andrew Leigh become Parliamentary Secretary to the Prime Minister.

I updated my post on Richard Torbay, Thank you Richard Torbay. At the moment I'm just recording stuff as it comes up. I will do a proper evaluation later.

Still trying to get thirty likes for my public Facebook page. Go on, you know you want too!

Well, that's all folks. I said that it would be a short post!

Sunday, March 24, 2013

Introducing the Berry Island and Balls Head Walk

I don't have a lot of luck with digital cameras. My first, a birthday present, was damaged beyond repair in a fall.  It was one of those silly things. I was trying to take a shot from an angle and wasn't watching properly. I stumbled on uneven pavement and in trying to save myself jammed the camera against a wall. Sigh!

I can't be without a camera, it's a key tool of trade, so I bought a new one. Then the day before my birthday, eldest took me shopping to buy some new cloP1000022(1)thes. I took the camera with me as I so often do, getting a very good shot of Federal MP Peter Garrett on electoral duties. At Bondi Junction, the camera somehow slipped out of my pocket while I was trying on clothes. We searched, but failed to find it. Sigh! 

Friday afternoon, I finally bought a replacement because I was going on a group walk Sunday morning and wanted to take some shots for a story.

We gathered at Wollstonecraft Railway Station at 10 am. Max aka Adrian (red shirt) organises these walks for both Facetime and Meetup. In recent years the number of singles without current partners seems to have exploded in Australian cities.

It's not easy to meet new people in our now very fragmented cities. One result has been a rapid growth in dating sites. However, that leaves a growing gap for people who do not or may not want a partner, but in any case are put off by the dating game and just want to do things they like doing with other people. Facetime and Meetup, among others, emerged to fill that gap.     

Our group wasn't a big group, nP1000023one of us had met before, but as it turned out we had interests in common. We were also different, so there was the element of the new.

The walk we were going on was described as the Berry Island and Balls Head Walk. I knew nothing about it, I just wanted to do something different.

From the railway station we walked down the hill towards Berry Island named after Alexander Berry. Berry Island is no longer an island, really a small headland, but is still called that. The area is covered by a reserve.

The path we followed, the gaydan track, runs around the perimeter with varying views of Sydney as well as the remains of Aboriginal art works. Its actually a very pleasant spot and obviously popular with locals as well as visitors. Now it was here that I struck a problem.

I mentioned that I had a new camera. In the haste to get away, I just unpacked the camera, put it on the charger while I gathered stuff, and then just left camera inP1000026(1) hand. In doing so, I totally forgot to put in the memory card!  This was one of the few shots on Berry Island before the memory ran out.

From Berry Island we walked towards Balls Head. While very hot, it was a glorious day with the water sparkling on Sydney Harbour. Now this is where I really started to miss my camera.

While I could fit the history into context as I walked along, I had no idea of the variety crammed into such a short walk. I use my camera not just for the photos, but as an aide memoir to help me remember things that look interesting and that I might be able to use to tell a story. Without the camera, I struggled. It's one thing to remember and to be able to look up later, my memory is not that bad!, but without the photo to show what I'm talking about it becomes just words.

By the time we reached Sawmillers, or should that be Sawmiller?, reserve at McMahon's Point, the Berry Island Balls Head Walk heat was telling on every one. We stood in the shade and talked for a while. Then it was time to move on, climbing the hill on the other side then up Blues Pont Road till we found the pub. Then we collapsed down and had lunch.

It had been a fun walk, one of the prettiest in Sydney, but I am going to have to do it again with camera in hand to give you the full story. I promise you, it is an interesting storyI 

We broke up a bit after two. I had been going to play tennis in the afternoon, but after such a long walk I fear that I decided not to.

My thanks to Adrian (Max) for his efforts in organising the walk.           

Saturday, March 23, 2013

Saturday Morning Musings - chaos in Australian politics, the NSW disease with a dash of academic writing

What a strange chaotic week here in Australia. Don Aitkin has a useful description of the day of wooden clubs in The meaning of an extraordinary day in Australian politics, if with one error that I also made; more on that later.

In Australia's coup culture, the BBC's Nick Bryant takes a rather bemused look at the recent pattern of political executions. The story begins:

Australia has one of the most brutal political cultures in the democratic world, in which party leaders are dispatched with abandon. As yet another prime minister faces down a threat from her own side, has the country become the "coup capital" of the world?

In the piece, Mr Bryant makes a passing reference to the NSW disease. I first wondered back in June 2008 whether then Prime Minister Rudd was in danger of being New South Walesed. My focus then was on what I saw as the transfer to Canberra of bad decision making approaches.  By May 2010, I was convinced that the process had occurred.

In the 2008 post, I said in part:

Now, or so it seems to me, Mr Rudd is in danger of becoming a somewhat up-market version of NSW. There are the same tendencies to try to do too much, to moralise, to be reactive, to respond to problems with yet another strategy. If this continues, the Rudd Government will fail.

With time, other aspects of the NSW disease transferred to Canberra including political ill-discipline although not, I believe, quite the type of problem we have seen in the Obeid matter.

One of the things that puzzles international observers is just why there is such political instability when Australia is, by international standards, doing so well. I am not sure that I can answer that question. I think that it's partly because Australia is doing so well that other games can play out.

During the week, I avoided commenting on the detail of events. I really had nothing to add. However, I was drawn to comment on two thing in my most recent posts.

First, in Thank you Richard Torbay I looked at the sudden political and public demise of a prominent New England politician apparently caught in the wash of the Obeid matter. Then in An odd post - why the ALP will, must, recover I responded to the despair expressed by a loyal ALP supporter at the events in Canberra. Both were slightly unusual posts for me, the second more so, in that I am neither a Torbay nor an ALP supporter. In both cases I wanted to do something simple; in Richard's case recognise certain achievements, in the second case assert the importance of what one might call a longer term perspective in the face of immediate problems.

Ten days ago, Confusions over Minister Conroy's media changes reflected my own confusion about Minister Conroy's attempts at media reform. Well, in the midst of all the other chaos, they went down with only two of the four Bills passing. I another post, The NBN, Tony Windsor and a case of shifting priorities, I reported on problems with the NBN roll-out. To add to Senator Conroy's current woes, the NBNCo has now confirmed that it will not meet its roll-out targets.

On a more pleasant note, last Sunday's Snippet's post dealt in part with awful academic writing. Not that there is anything pleasant about awful academic writing, but it drew a useful comment from blogging friend and colleague, Legal Eagle. She wrote:

Jim, with my specialist book which is likely to be only read by specialists, I went down the specialist route. Same if I were writing for a specialist journal. If I ever wanted to write a more "for the public" book or article, I'd write it quite differently, hopefully such that family members could understand it! So you're right, it's horses for courses. But it does make it a bit hard if an interested lay person wants to get a handle on the topic.

In one of the areas in which I write, there's an inordinate amount of jargon (it really irritates me). I believe it is in part an indicator of whether you're in the "in group" (all of whom are totally au fait with all this stuff). Even experienced legal academics have problems with it, which to my mind indicates that it's really gone too far.

That being said, sometimes I forget that some of the words I use are not in common parlance. A friend of mine wrote something in "plain English" the other day (for a lay audience). He tested it on me first, and I thought it looked very simple and good, but the lay audience member he then tested it on didn't know what "reading down" the statute was, which hadn't even occurred to he or I as something we'd have to explain! Heh, probably good for us both to get reminded of this. And it's a reason why I blogged - to practice writing more plainly.

Note the past tense of blogged. Both Legal Eagle and fellow group blogger skepticlawyer are taking a break from blogging and I miss them! At least repeating LE's comment places her back in the bloggosphere. I know from my own experience how hard it is maintaining consistent posting, harder still maintaining quality in posting.

There seems to be a momentum issue involved. Sometimes you get into a run, one where one post leads to another constantly refreshed by background thinking and related events. At other times, the ideas have to be dragged from a stagnant pond with the hope that there will be something there.

Personally, I find that it is my commenters and correspondents who increasingly keep me going.   

Postscript

In the the first version of this post I wrote: "The only thing that I would add is that in the voting on the no confidence motion moved by Opposition Leader Abbott, New England independents Windsor and Oakshott voted for; the Government survived because Bob Katter abstained." 

In an important factual correction, kvd wrote in comments:

Hi Jim
Both you and DA say that a 'vote of no confidence' was lost, whereas I understood it to be a 'vote for the suspension of Standing Orders' SO THAT such a motion could then be debated and voted upon.

And I seem to remember Tony Windsor making that point in explaining why he'd voted for the suspension of Standing Orders - i.e. that this might then be properly considered.

It's interesting to see just how quickly history can be miswritten. Here's the Hansard:

Mr ABBOTT (Warringah — Leader of the Opposition)(14:09):
I move:
That so much of standing and sessional orders be suspended as would prevent the Leader of the Opposition from moving the following motion forthwith:

That this House declares no confidence in the Prime Minister.

kvd was correct. At 14:09 on Thursday 21 March In the House of Representatives, Mr Abbott sought leave to move that this House has no confidence in the Prime Minister. When leave was denied, he then moved the motion outlined above.  That motion was carried 73 votes to 71. Messrs Windsor and Oakshott voted yes; Mr Katter was absent from the House, The Speaker declared the vote lost: "The question is not carried by an absolute majority of members as required under standing order 47."

The PM appeared quite pleased:

Ms Gillard: I asked the Leader of the Opposition to
take his best shot and we got that damp squib, so they
obviously do not want question time.

I hate making factual errors, so it's good to have them corrected.

Postscript Two

Just a further note. In a piece on the ABC's The Drum, Dr Peter Chen appears to have made something of the same error of interpretation that I made in regard to the votes of the independents when he wrote:   

But occasionally, just rarely, this ancient institution comes back into focus as a key political arena. The current period of minority government is a good example of this. While Canberra's "insideratti" were having conniptions of pleasure over the abortive spill, and today's tabloids (sorry, "compacts") are awash with wasted ink dissecting yesterday's ballot in minute detail, it was the Opposition's proposal to hold a vote of no confidence in the Government that was the takeout headline of yesterday's festival of political self-immolation.

With her uncontested re-election to the leadership, Julia Gillard has certainly fended off a challenge from Kevin Rudd, until at least after the ALP's election defeat later in the year. But there's no relief to be had in this victory. What might have been a possibility for creating clear air from consistent - and often malicious - media speculation about her position was potentially derailed by Tony Abbott's parliamentary move.

By gaining the support of three "untainted" independents to hold this motion, the political legitimacy of the Prime Minister is considerably damaged.

Unlike my earlier comment, Dr Chen recognises the distinction between a no confidence vote and the vote to suspend standing orders to allow a no confidence motion to be debated. However, his last sentence fails to recognise one of kvd's points, the distinction between a procedural vote and the subsequent vote on the no confidence motion. Both the New England independents voted for the procedural motion to allow the substantive motion to be discussed. We don't actually know how they would have voted on the subsequent motion.

On a different matter, Neil's post What happened yesterday reminds us that the leadership imbroglio was not the only thing that happened that day. 

Friday, March 22, 2013

An odd post - why the ALP will, must, recover

I didn't post yesterday, in part because I was updating Thank you Richard Torbay with later events.

What strange world we have seen in Canberra this last few days. This is a UK perspective - Australia's coup culture. On Facebook, a friend wrote:

Everything I thought I knew about politics flew out the window yesterday. As a true believer it is truly distressing.

I responded:

As you know, as a New England popularist I am hardly a true believer, or at least of the same type! But if I can offer a ray of hope. As best I can work out, I was the first one to refer to the New South Walesing of Federal Labor, what is now called the NSW disease. But when you have have an evil humour in the body, it takes time to expel it. And I am not referring just to ICAC, but to deeper systemic problems.

The thing about Labor is that there are people in the Party like you who care greatly. That is why the Party will bounce back. In an earlier comment, I made it clear that if you ran I would support you regardless of political differences. So long as you and others continue to care, then recovery will come and it will be a better Labor Party. Now is the time to think of the future.

I think that all this is pretty correct, Labor will recover because there are sufficient Labor people who do care.

I note, again, that am not a natural Labor supporter. I just think it important that the ALPP recover and deliver. I think that it can, if not immediately.

I must say that this is one of the oddest posts I have ever written.

Wednesday, March 20, 2013

Thank you Richard Torbay

Note to readers: While this post was first published on 20 March, I have continued adding links at the end on the unfolding story. By clicking on those links, you can follow the story as it unfolds.  

The news broke in the twitterverse last night, Tuesday 19 March: Richard Torbay, the independent member for the Northern Tablelands seat in the NSW Parliament and the National Party candidate for the Federal seat of New England had been dumped as candidate and had resigned from the Party. Richard Torbay

The Armidale Express went live with the story at 8.27 pm. The paper reported that NSW Nationals chairman Niall Blair said in a statement that the party had asked Mr Torbay to withdraw his candidacy.

“The party has received information over the past 24 hours of which we were not previously aware regarding Mr Torbay,” Mr Blair said. “The matters in question pre-date Mr Torbay’s membership of The Nationals.

“The party has asked Mr Torbay to withdraw his candidacy for New England and to resign from the NSW National Party, which he has done."

The NSW Nationals is seeking legal advice on the information received, Mr Niall said.

The story had begun the day before with a story in the Australian Financial Review. According to a report in the Sydney Morning Herald, the Labor strategist Shane Easson told The Australian Financial Review he had received a call from Mr Obeid in late 1998.

''I've got Richard Torbay with me and he wants to know whether he should run for Northern Tablelands as either a Labor candidate or as an independent. I'll put him on','' Mr Easson said he was told by Mr Obeid. Mr Easson said he advised Mr Torbay, then a Labor Party member, to tear up his party membership to run as an independent as he stood a better chance of winning.

Richard entered the NSW Parliament the following year as an independent in Northern Tablelands, defeating the Nationals' Ray Chappell. In May 2007 he was appointed independent speaker of the NSW Parliament by then premier Morris Iemma.

The news that Richard had been an ALP member and received support from that Party would not have come as a surprise to anyone Armidale. It was widely known. However, the reference to Eddie Obeid gave it a particular sizzle given Mr Obeid's present public prominence. Further, there were apparently other references to Richard in Mr Obeid's diaries.

Richard told the Financial Review that he had had dealings with Mr Obeid because Mr Obeid was the duty officer in the NSW Legislative Council for the Northern Tablelands, but it left open the question as to what other discussions might have taken place. Indeed, such discussions would not have been surprising. Eddie Obeid was born in Lebanon, Richard's parents came from Lebanon, so you had a common Lebanese inheritance. Further, both men had a common drive for success and a capacity for hard work. Richard's support from the Lebanese community was also widely discussed in Armidale.

I must emphasise here that this is not guilt by association. I am telling a story, trying to understand. 

In responding the Financial Review queries, Tony Windsor called on Richard to explain himself following the reports Mr Obeid had helped him kickstart his political career. While there are differences between them, both men had been colleagues, fellow New England independents, who crystallised the independent cause as a new New England political movement. Now they were in serious rivalry with Richard joining the Nationals and becoming their candidate for Tony's seat. 

In Canberra, National Party Leader Warren Truss called members of his Party to his office about 7pm. News of the shock decision had been delivered to some Federal Nationals MPs via a text message. Mr Truss had strongly backed Richard's nomination and had campaigned for him. Now he announced the resignation; no details were provided.

“I was shocked, totally shocked,“ Fairfax reports New England based Senator John Williams as saying.

After returning to his office and speaking to his staff about the resignation, Senator Williams received a text message from NSW Nationals director Ben Franklin telling him Mr Torbay had resigned and there would be no further comment on the matter. The senator immediately sent a message to Mr Franklin asking for more information, but received no response.

At 11:18 on the Tuesday night , Mr Torbay released this short statement. As reported in the Express:

A number of claims have been made today by the Labor Party and Tony Windsor’s office," Mr Torbay said.

"I have decided in the interests of the people of the New England electorate and the National Party to withdraw my candidacy for the forthcoming federal election."

"Given the current toxic political environment I do not want to put my family, the community or myself through an ongoing smear campaign."

"In relation to this speculation I have taken legal advice and shall be acting on that advice."

This morning, Wednesday 20 March, Richard resigned from the NSW Parliament with immediate effect. He also resigned as Chancellor of the University of New England. In a message to staff, Vice Chancellor Jim Barber wrote:

Colleagues,

Chancellor Richard Torbay has announced he is standing down from his position,  effective immediately.

Earlier this year the Chancellor announced he would step down on the 19th of April, 2013, but he has decided to bring that date forward.

I am grateful for his efforts as Chancellor over the past four and a half years and I know many of you have had favorable dealings with him during his time at UNE, which dates back to 1980.

I want to thank Richard for his counsel during my time as Vice-Chancellor and for his strong leadership of Council, which has guided UNE into the healthy financial position it which it finds itself today.

Richard has served on the UNE Council with distinction since 1996 before being elected Chancellor in 2008.

UNE Council will vote on the next Chancellor at their meeting on the 18th April, 2013.

I wish Richard all the best in his  future endeavors.

Regards

Jim Barber

This afternoon, the Sydney Morning Herald reported that the information that led to Richard Torbay's dumping as a federal Nationals candidate and his resignation from the NSW Parliament over links to the Labor powerbroker Eddie Obeid has been referred to the Independent Commission Against Corruption. The NSW Nationals confirmed on Wednesday afternoon they had provided the information to ICAC on a confidential basis but would make no further comment.

I have no idea what will come from here. I will discuss the political and historical significance of all this in a post at another place. Here I want to make a purely personal comment.

I have known Richard for many years. As Richard himself knows, I am not a died in the wool Torbay supporter. I did not support his first run, and also indicated my reservations about his proposed move into Federal politics in Why I support Tony Windsor. All that said, I want to make few personal observations on Richard before it all gets submerged.

He was a remarkably good local member. I followed him on Twitter, and he followed my grandfather's practice (he was another local member for the same area); say that you are going, say that you are there, say that you have left! But it wasn't just that he was indefatigable, he had a genuine interest and delivered at a personal level. I don't think that there is a local organisation on the Northern Tablelands that would deny this. That's why his personal vote was so high, the highest in NSW.

He also had considerable skills as a negotiator and facilitator. When my old university. the University of New England, was being torn by another round of internecine strife, Richard became Chancellor and stabilised the position.

I am sure that Richard could point to other public achievements. But for these two alone, he has my thanks and gratitude. I wanted to place this thanks on the record now for he and his family. It's a pretty good record. Richard, we will miss you!

Postscript

In crafting this post, I did so in haste and with the conscious intent of doing so before everything got submerged in the aftermath. I was also very careful about just what I said. My reasons for doing so I amply illustrated by this piece by Kate McClymont and Sean Nicholls in this morning's STony Windsor Peter Torbay happier daysydney Morning Herald, Revealed: Torbay's close links to Obeid.

Before going on, this photo from the Armidale Express shows Tony Windsor and Richard in happier days. 

I now want to dissect the SMH piece. It begins:

Dumped Nationals' candidate Richard Torbay has family and political links to the former Labor powerbroker Eddie Obeid and an extensive property portfolio, some of which does not appear on his pecuniary interest declarations to the NSW Parliament.

Mr Torbay resigned from the NSW Parliament on Wednesday in dramatic circumstances after being forced to quit as the Nationals' candidate for New England to take on independent MP Tony Windsor.

While the precise reason for Mr Torbay's resignation from Parliament remains unclear, it is serious enough to have been referred by the Nationals to the Independent Commission Against Corruption.

All this is fair enough, although I will come back to the property register question in a moment. The piece continues:

It is understood the decision of the Nationals to remove Mr Torbay as their candidate is related to Labor funding of Mr Torbay's campaigns against their candidates.

Fairfax Media can reveal that one of the largest property developers in the Northern Tablelands, Phil Hanna, is a first cousin of Mr Obeid's wife, Judy.

Mr Hanna was previously Mr Torbay's campaign manager and, leading up to the 2007 state election, Mr Hanna and his wife were the largest donors to Mr Torbay's campaign, giving more than $6200.

When Mr Hanna was charged with the attempted murder of his business partner in 2007, he was represented - successfully - by Sydney barrister Steven Stanton.

Mr Stanton has previously appeared for associates of the Obeid family, the most recent being for Strathfield real estate agent Joey Georges at the recent ICAC inquiry, which is investigating the $30 million windfall the Obeid family made from an allegedly corrupt government coal tender.

What can we say from this? Well, the story states:

  1. That a key in the National Party decision to remove Mr Torbay related to Labor funding of Mr Torbay's election campaigns.
  2. That one of the largest property developers on the Northern Tablelands is linked by marriage to Mr Obeid.
  3. Mr Hanna was previously Mr Torbay's campaign manager and, with his wife , were the largest donators to Richard's 2007 election campaign.
  4. Mr Hanna was accused of murder. The barrister that defended him also appeared for associates of the Obeid family.

The first point is simply factual; only the NSW Nationals could confirm or deny this. The next three are a smear by association where the poison lies in the combination. The story continues.   

In 2010 Mr Torbay received a $100,000 donation from a Sydney family only two months after then planning minister Tony Kelly dropped a heritage listing on this family's north shore home.

Greens MP John Kaye said: ''In the corruption hothouse of the dying days of the NSW Labor government, a $100,000 donation from a surprising source raises serious concerns.''

Apart from his links to Mr Obeid, Mr Torbay has interests in a raft of property development companies. He also has an extensive property portfolio, including commercial buildings in Armidale, which he has failed to disclose in his pecuniary interest declarations.

Last week Fairfax Media revealed that Mr Torbay featured extensively in the 2007-09 parliamentary diaries of Mr Obeid. In one 2009 entry Mr Obeid made reference to Mr Torbay and a new mobile phone.

This again is smear by association. Let's deconstruct it:

  1. The significance of that $100,000 donation, if correct, has to be established on the facts, not by innuendo. Who was the Sydney family? What form did the donation take? Was there any link between the donation and Mr Kelly's decision.
  2. "Apart from his links to Mr Obeid" establishes an apparent link between Mr Obeid and Mr Torbay's property interests. Richard's property interests are well known; he bought his first house in Armidale when he was young. There is some local dispute about this. But the critical issue, the one that has to be tested, is whether or not he failed to disclose when he should have.
  3. I have no idea of the meaning of the apparently significant frequent references to Richard in Mr Obeid's diaries.

The story continues:

Mr Torbay held the seat of Northern Tablelands with a margin of more than 39 per cent. It was this popularity which led the state director of the NSW Nationals, Ben Franklin, to orchestrate Mr Torbay's candidacy for the Nationals, largely in a bid to block the ambitions of Barnaby Joyce.

Senator Joyce is viewed as a threat to the Nationals leader Warren Truss if he moves to the House of Representatives.

But some Nationals questioned Mr Franklin's judgment in drafting Mr Torbay, arguing his links to Mr Obeid were well known.

The MP for Coffs Harbour, Andrew Fraser, a senior party figure, said his warnings were ignored.

''I advised them about how close he was to Eddie and [Labor powerbroker] Joe Tripodi and was ignored,'' he said. ''I was the lone voice. I think the judgment of a number of people was poor. Their 'clever' tactics have now failed.''

I have no idea whether or not that was Mr Franklin's motive, nor was I aware of any specific connection with Mr Obeid; I was aware of the Lebanese connection. I was surprised when the Nationals jumped at Richard.  His previous Labor connections were well known, and his nomination divided the local Nationals who had stayed loyal to the Party.

I am thinking here especially of my old friends Peter and Jenny Bailey. Peter ran for the Nationals in hopeless circumstances in 2003, scoring just 15.4% of the primary vote. Jenny, a former organiser for the Young County Party (the Nationals) resigned from the Party in protest. To give you a very local feel here, I want to quote from a post I wrote back in August of last year, Saturday Morning Musings - UNE alumni dinner.

I mentioned that Richard was challenging Tony Windsor for the New England seat. I have written before about the New England independents who for a time threatened to destroy the once dominant hold that the National Party held across Northern New South Wales outside the Labor dominated Lower Hunter. The decision by Tony Windsor and Rob Oakeshott to back the Gillard Government and that Government's  subsequent problems polarised local opinion; one result was a resurgent National Party; a second was the decision by Richard Torbay to join the National Party and seek preselection for New England. Richard was quite up front about his motives: the independents were on the nose because of their decision to support the Gillard Government; if he wanted to do things nationally, the Nationals were the logical choice.

For his part, Tony Windsor is not backing down from his choices. In all the talk about the problems of minority Government, it is easy to forget that Tony has been absolutely straight in his position, providing the Government with consistent but not uncritical support. Labor's problems have been of its own making to the point that Tony has in fact been the most stable figure of all!

Tony is not going out without a fight. The day of the dinner in a debate on the Coalition's 64th attempt to suspend standing orders he rained on Opposition Leader Abbott's party in no uncertain fashion. Watch this ABC 24 video and you will see what I mean.

At one level, I can't help taking a very malicious pleasure in all this. As someone committed to the New England dream who writes a lot about New England issues, as someone who focuses on the complexity of Australian life with a particular regional focus, I found that my writing created a degree of amusement. I was dismissed as a quaint irrelevancy in the public conversation. Then when New England issues moved back towards that centre stage position they had once occupied, suddenly the chattering classes of which I am a member struggled to understand and interpret. Yet while I do take a malicious pleasure. I am also saddened.

In the words that follow you have to remember that, despite its size and population, Australia is made up of a series of very small gold fish bowls.  The fish in those bowls know each other. Sometimes when one bowl or a combination of related bowls achieve dominance, an apparent national or state pattern is created. Yet the individual bowls are still there. When you drop down to that level, everything is personal.

Chatting to those at the dinner who had come down from Armidale I was saddened by the nature of the personal divides. When speaking about people, I don't want to use names, just initials. Obviously anybody who knows the area or is prepared to dig will find out who I am talking about. It's not that I'm saying anything bad, just that I am providing some small veil of privacy.

RL, a National Party stalwart whose husband beat me in preselection and became member for Armidale, was distressed by the divides. "JB has resigned from the Party", she said. "The strong independents also won't support the switch. But it's the best thing to do."

RL was clearly very uncomfortable, for she has been campaigning against Richard for a long time. So far as JB is concerned, she was a Young Country Party (the previous name for the Nationals) organiser. I recruited her husband to the Country Party when she I was campaigning for preselection for Eden Monaro, and then introduced them. After marriage, they went to Tamworth and then to Armidale. Later, husband PB put up his hand to run against Richard even though he knew that his chances of winning were small. I became involved in the campaign in a small way. By then, PB was involved in campaigning for a particular regional development initiative and had recruited me!

On the other side of the fence, I know of one strong independent Torbay supporter whose dislike of the National Party is such that he is planning to vote Labor or almost anything to avoid voting for Richard. The public opinion polls suggest at this point that Richard will win by a huge margin. For my part, I set out my position in April in  Why I support Tony Windsor. This holds even though I know that Richard has been an outstanding local member.

I apologise for quoting at such length, but it actually (I think) illustrates some of the personal complexities involved. The point is that there were risks with Richard.

The story finishes:

Mr Torbay is known for assisting independents to run against Liberal and Nationals candidates.

The Lake Macquarie MP, Greg Piper, is close to Mr Torbay, but he is also understood to have assisted the former Dubbo MP, Dawn Fardell and Peter Draper, the former member for Tamworth.

Before the 2011 election Mr Torbay is believed to have aided the former Liberal mayor of Hornsby, Nick Berman, in his unsuccessful bid against Liberal Matt Kean.

Mr Tripodi was spotted having coffee with Mr Berman during the campaign.

Well, bloody hell, what a surprise and what does it mean? As I have written, the New England independents formed a different political movement. And yes, in this role they did support other independents in an organised way. That's not a secret. But it has absolutely nothing to do with the main theme of the story beyond adding to doubts about the wisdom of Richard's endorsement.

Now I want to return to the main theme of my original post. There I wanted to record two things.

The first was Richard's record as a local member. Here I want to quote in full from an Armidale Express story today:   

New England Local Area Command police Superintendent Bruce Lyons contacted Fairfax Regional Digital today and wished to express his support and thanks to former Northern Tablelands MP Richard Torbay for what he had done for the region.

We publish his comments below in full:

"I know I can speak on behalf of many people in the community across the New England region when I say that it is sad that Richard Torbay will no longer be our state member for Northern Tablelands.

"It’s important I make no public comment about any ongoing issue that may or may not have had any anything to do with Richard's resignation.

It would be unfair to the process and unfair to Richard.

As a senior police officer of many years I’ve worked with many community leaders who do their best for their community. However I regard Richard Torbay as rare.

"I have met no other person who has won the heart and souls of the great majority of community members. His integrity and compassion to those who he has served I believe is unparalleled.

"I have been touched on many occasions by when I have witnessed Richard Torbay helped those in communities who are doing it tough.

"So many of these dealings with these people would never be publicly known, but I know that by helping these people it was Richard's greatest gift from him being a member of parliament.

"I recall some years ago when it became apparent that Armidale was to lose its rail line and I saw Richard Torbay at his best, he saved our rail line against all odds it was a wonderful lesson to many community leaders to see the determination in him in succeeding to keep the Armidale train.

"I know there are countless legacies left behind by Richard I know that the people of the northern tablelands will continue to be thankful for his hard work and dedication for many years to come.

"We have indeed lost a special man to public life."

The second point I made was Richard's contribution to the University of New England. This attracted some flack in comments. I had in mind here a very particular place and time. Because this update has taken me so long to write, I am going to have to leave it here.

None of what I said relates to the very specific questions of Richard's relations with Mr Obeid. Those matters will need to be explored. But I do think that his contribution should be recognised.

Postscript 2

Today The Armidale Express carried a story that confirmed what I had heard but couldn't source properly. I usually just quote excerpts, but in this case I will quote the story in a full:

The former state MP Richard Torbay disclosed information to the NSW Nationals that the party has referred to corruption authorities after learning Labor was preparing to leak it to help Tony Windsor defeat him in the federal election.

It is understood Mr Torbay contacted the state director of the NSW Nationals, Ben Franklin, to request an urgent meeting after learning about Labor's plans.

During the meeting Mr Torbay, who was the independent state MP for Northern Tablelands, outlined the allegations, which are understood to relate to Labor funding Mr Torbay's past election campaigns.

Mr Torbay is believed to have made the disclosure as a ''heads up'' to the Nationals, who had selected him to run for them against Mr Windsor in New England in September.

But Mr Franklin regarded them as serious enough to demand Mr Torbay resign as the Nationals candidate for New England and from the party.

The NSW Nationals referred the information to the Independent Commission Against Corruption last week before Mr Torbay announced his shock resignation from State Parliament.

Mr Franklin has refused to disclose the nature of the information, based on legal advice.

Then earlier, on 22 March, Express editor Lydia Roberts reported and again I quote in full:

FRESH claims have emerged over a $100,000 cheque donated to Richard Torbay’s election campaign.

The Armidale Express first reported on the donation, the second biggest in NSW given in the lead up to the 2011 election, in November last year.

Then, Cameron McCullagh, who lives with his wife Georgina in Sydney,  told The Express he donated the one-off cheque to Mr Torbay because “Richard is the sort of man I want in politics. He is effective.”

Ms McCullagh owns the private investment company GEGM Investments, a private company investing in firms such as White Outsourcing, an accounting and investment service and Employers Mutual.

Yesterday, Fairfax Media reported Mr Torbay received the donation just two months after then NSW planning minister Tony Kelly “dropped a heritage listing on this family’s north shore home’’.

The donation pushed Mr Torbay’s election campaign war-chest to $114,415 from July 2010 to June 2011.

Comparatively,  over the same period fellow NSW independents Peter Besseling and Peter Draper declared just $14,602 and $33,000 respectively.

At the time, Mr Torbay said the donation was “much appreciated”.

He reported to the Election Funding Authority that he used $64,633 to promote his election campaign.

He spent a total of $41,103 on television advertisements, $1489 on catering for a meeting in November 2010 and $5839 on “food, refreshments, decorations and gifts”.

Mr Torbay was dumped as NSW Nationals candidate for the federal seat of New England earlier this week. He subsequently resigned as State MP for Northern Tablelands and brought forward by one month his resignation as Chancellor of the University of New England.

Late yesterday, the NSW Nationals confirmed they had referred Mr Torbay to the Independent Commission Against Corruption

ICAC is currently hearing claims made against former powerbroker Eddie Obeid, whose wife is a cousin of Armidale property developer Phil Hanna.

Fairfax Media reported Mr Hanna was Mr Torbay’s campaign manager in the lead up to the 2007 state election. Mr Hanna and his wife Jenny were also the largest donors to Mr Torbay’s 2007 campaign, donating more than $6200 between them.

Mr Hanna told The Express on Wednesday he had not heard from Mr Torbay.

He said he had tried to phone him on his mobile, however, Mr Torbay did not return his calls.

Meanwhile, Fairfax Media reported yesterday Mr Torbay had assisted independents in the Parliament to run against Liberal and National MPs.

I am  not going to comment at this point. There has been too much comment and innuendo. I will just report as news crosses my horizon.

Follow Up

From this point, I am just recording stories for later use. ICAC officials search Richard Torbay's house

Monday, March 18, 2013

Belshaw's public Facebook page

As anybody who follows the blog will have gathered, I'm fairly active in the on-line world. In doing so, I work across multiple platforms. I also follow on-line developments reasonably closely, including shifts between platforms, as well as my role on each platform.

My approach to the on-line world is not always as structured as it should be. It becomes difficult to balance and indeed keep up to date my various on-line presences from the blogs through Linked in, Twitter, Panoramio, sribd, my personal Facebook page and many others. Some don't get updates, and just hang there in the internet world a bit like bad smells. So I have been looking at rationalising, taking into account the strengths of various platforms.

Take Twitter as an example. Here I follow 81 people, are followed by 146 including a number of media outlets, have tweeted 2,454 times. I find it a useful vehicle, especially as a source of stories. However, increasingly Twitter is dominated by what we might think of as conversational tweets. This is a problem for me.

At the moment, I don't have access to Twitter during the day, it's blocked by the firewalls, so I can't participate actively in the way required to build followers and traffic. I also find the tweet limit frustrating, especially in conversation. I have watched Twitter suck people in, detracting from other writing that I value more.

Or consider Facebook. My Facebook personal page is just that, a personal page. I do put some posts up, for example, but I am cautious in so doing. Others are more open. One of our blogging friends has 730 friends; she uses Facebook as a semi-public platform. I don't object to that, indeed I enjoy her Facebook posts. Yet it's not what I want to do. On Facebook, I want to present some broader stuff, but find some discomfort in juggling what I perceive to be a conflict between the personal and the more professional. I am more comfortable keeping my Facebook posts to the personal,

My friends span the political spectrum from well to the left to well on the right, to use those ideological cliches. I have also noticed that they have a not unreasonable tendency to assume that their friendship network shares their views! My public writing crosses ideological divides. On a personal basis, I don't especially want to get caught in political debates, although I sometimes suffer from the unworthy desire to hit like on some posts just I know that the posts would infuriate other of my friends!

All this is a long winded way of saying that I have established a public Facebook page as a single access point for some of my writing and short comments. Why Facebook? It's simply a better platform at this stage than the alternatives. That's all.

If you would like to find out more and have access to Facebook, simply click on this link, Facebook page. On a selfish note, I need 30 likes to get access to stats on visits. Do feel free to visit and click on like!                   

Sunday, March 17, 2013

Sunday Snippets - on the awfulness of academic writing, governance, M├ętin, pragmatism & the rise of the Australian underclass

This Sunday Snippets provides another somewhat eclectic round-up of things discussed or at least noticed in my electronic travels.

Written by Thomas B. Pepinsky, Indolaysia is a Cornell blog that describes its focus this way: "Indonesia, Malaysia, Politics, Food, Music–and now research too." The blog began in September 2004, so its been going for a while. I came across it via the Lowy Institute blog.  This time, my attention was caught by a post that had nothing to do with South East Asia, On Academic Writing.

The post addresses an issue that has concerned many of us who either write in an academic context or at least have to plough through such writing. A lot of it is dreadful. Professor Pepinsky makes two main points. First, most social scientists don't consider themselves writers; prose is just a rather inefficient and cumbersome technology that serves the purpose of transmitting their thoughts to other people. Secondly, the only way to learn to write is to write. I would add reading, reading of all types.

I know that this sounds simple, but its true. Writing as a craft requires constant practice. This can be hard to do in our busy lives. One difficulties are compounded by the changes that have taken place in what we might loosely call professional writing, the writing we do in a work context. In a world of spread sheets, emails, power points and bullet points, the work space actually occupied by writing has shrunk. A skill not practiced is a skill lost. You can see this in many of the documents produced.

One strength of the blogging world is the presence of some very good writers who can write with clarity and force. I admire them. 

Another blog that I have just come across, again via the Lowy blog, is The GOVERNANCE blog. Personally, I have problems with the increasing obsession with governance because it lacks clarity. It's one of those trend words that conceals and confuses. Still, the blog itself looks to have some interesting material.  

In his latest post, Is the regulatory problem in banking similar to that in the nuclear power industry?, Winton Bates refers in a postscript to a discussion between us on the concept of market failure. Market failure is an important concept in economics, one that spread to public policy discussions many years ago.

The discussion reflected my own confusion with the term. I realised that Winton and I were using the term in different ways. When I checked the Wikipedia definition, I found that it was closer to Winton's. I should explain the discussion in more detail at some point because it's quite important. Like governance, the word market failure now carries a lot of baggage, enough to make it very dangerous. In essence, the difficulty lies in deciding just where to place the boundaries in defining what market failure means.

In a post on Club Troppo, Mark Latham and the return of the underclass, Don Arthur discusses Mr Latham's recent essay in The Quarterly. I haven't read the full essay, only the edited version Mr Latham published in the Australian Financial Review. I read Mr Latham's remarks in a different context to Don, something that I will come to in a minute.

So far as Don's piece is concerned, while I accept that the class of poor people includes those who were not poor when they were born and think that it's a useful point, it also ignores what I see to be an undeniable fact that the current Australian system has entrenched intergenerational poverty in a way not seen before in this country. I don't accept Mr Latham's arguments, but I don't accept Don's either.

I have written on some of these interconnected issues because I consider them to be important. Sometimes I write in code, generalising. I do so because some of my contract work in recent years has actually been in the social housing arena and I cannot write as frankly as I would like because that would breach professional confidence, so I have to generalise.

Bluntly, the approach adopted to social housing has been stupid, counter productive and has contributed to intergenerational poverty. This is not a criticism of either ministers or officials. It's just that the judgements made for the best reasons at the time were, in retrospect, silly. Now good people are trying to redress problems created, but continuing systemic problems make their task incredibly difficult.

I said that I didn't accept Mr Latham's arguments.

In 1901, French writer and socialist Albert Métin  published a book entitled (in English) Socialism with no doctrine. Written before the rise of the Labor Party, the book suggested that then political parties in Australia and New Zealand had created something of a workers' paradise in which the proletariat had become absorbed in the middle class. Many of Métin's arguments are mirrored in Mr Latham's writing; the current term aspirational voter directly reflects Métin's views. And yet, Mr Latham's solutions fly in the face of that earlier analysis.

Métin suggested that Australian political attitudes were fundamentally pragmatic. What was important was what worked. Oddly, Australian politics and public policy are far more ideological than they were in 1901. We cannot do things because they breach ideology. Still, perhaps that should be the subject of another post!

Saturday, March 16, 2013

Saturday Morning Musings - Tiwi Islands, GDP with a dash of of managerial failure

Tiwi Carved poles The Tiwi Islands lie just to the north of the Australian mainland. The illustration shows Tiwi decorated carvings from 2005.

This is a very different world. You can see it from the Wikipedia article (link above) and also from this post by Will Owen, Tiwi: Art, History, Culture.

Meantime, in one the strangest and messiest political transitions in Australian political history, Adam Giles has become Northern Territory Chief Minister, making him the first indigenous person to lead an Australian government.

I don't pretend to understand Northern Territory politics. These posts by Bob Gosford will give you a feel for the reason why:

Bob has his own political biases, don't we all, but its still interesting.

Changing tracks entirely, Ross Gittins had an interesting piece in the Sydney Morning Herald, Rising damp: why nominal GDP is so flat. I would summarise it this way. Normally, nominal GDP, GDP expressed in now dollars, rises faster than real GDP because of inflation. The economy grows at 4%, inflation is 2%, so real economic growth is 2%. Rarely, and this is happening at the moment, real growth is higher than nominal growth.

Sounds odd, doesn't it? The explanation lies in the combination of shifts in the terms of trade combined with the continued high exchange rate. Since Government tax revenues depend significantly on changes in income in now dollars, they are growing at a slower rate than real growth, and hence the immediate deficit problem. I have put that a bit simplistically; see Mr Gittins for more.

Earlier in the week, in Eddie Obeid - a case of media failure? I reflected briefly on what I saw as the failure of the media in identifying and responding to the underlying problems that emerged well before the Obied matter broke in such a spectacular way. Last night on Stateline, former New South Wales Premier Kristina Keneally reflected on the whole matter. She was clearly uncomfortable about and angry at the mess NSW Labor had got itself into.     

My post was a short one and drew some challenges in comments. These forced me to clarify my views - where would we be without our commenters? In essence, part of my argument was that the problems experienced in NSW in this particular case dated back a number of years and related to systemic problems; the media's failure lay in its failure to address or comment on those problems.

I mean to come back to this issue properly, using the comments and responses as a device to amplify my underlying argument. In the meantime, I forgot during the discussion that I had written a post on another blog in January, Policy, programs, control and complexity - ICAC on problems in NSW public policy and administration, that was directly relevant to the discussion.

Part of the problem, I would suggest now, lies in the way that we have replaced the old model of an independent public service with a managerial model and it just isn't working.