“Unfair, unethical, reckless”

  1. “Unfair, unethical, reckless” – education reform in 2014
  2. Threatened tax increases another impact on equality
  3. Community and environment or big mining?
  4. TAI in the media
  5. Infographic

“Unfair, unethical, reckless” – education reform in 2014

Education Minister Christopher Pyne’s sweeping higher education reforms have stirred a hornet’s nest of controversy. So far Labor, the Greens, and the Palmer United Party all say they will oppose the package, as have others on the crossbench, but Minister Pyne is adamant he can reach a compromise. Pyne’s now turning up the heat, arguing the changes must be in place by December – for the good of the students – and says there may be  greater cuts to research funding if he can’t cut student funding. (Labor says that’s an empty threat). Pyne has said if his reforms don’t go through, our universities will go the way of manufacturing.

In all of this, the government is after two things: budget savings and a deregulated market in fees.

The government wants to move costs from the budget onto student loans. Costs keep growing as student numbers increase – never mind that these ‘costs’ are really an investment in ‘human capital’. If the senate remains opposed to the cuts, they will not go through. That’s a big ‘if’ (Pyne might be able to cut various smaller  payments without legislation). A drawn out senate inquiry looms.

Unsurprisingly the universities, the union and students all oppose cuts to funding. Almost everyone is opposing the regressive increase in interest rates on student loans. There are ways to spread the costs of student debt more progressively across graduates, and this seems a likely point of compromise

But the sector is fighting over fee deregulation. The government says letting universities charge whatever they want will create “competition”, “diversity” and “excellence”. The Group of 8 have been putting in a last-minute lobby effort in strenuous support. The peak lobby group, Universities Australia, says this support is the consensus view. That would be news to many students, the staff union and at least one VC, Stephen Parker from the University of Canberra, who has described the proposals as “unfair, unethical, reckless, poor economic policy, contrary to the international evidence and being woefully explained, raising suspicions about how much thought has actually gone into them”.

Confirming what many suspected, modelling from the Group of 8 leaked this week shows deregulation would lead to windfall gains for the elite unis. Universities already spend large amounts of what earn through education on research, a ‘cross subsidy’ which a number of high profile commentators have said is unfair. With deregulated fees, the Group of 8 would be able to boost its research rankings and its prestige, and so further raise fees. Little wonder why student fee reform is the solution to our apparent need to get Australian unis into the top tiers of global research rankings.

As Nobel Laureate Joseph Stiglitz argues, markets for education do not work like markets for steel. Look to the US, where tuition fees have inflated 1200% in the last 30 years, twice as fast as their notoriously expensive health care. Our HECS-HELP system may protect students in important respects, but it’s not clear how it would prevent fee-gouging to fund research or executive salaries. What’s more, it’s not true that Australia needs deregulated fees to ensure diversity and excellence. The German system is diverse, excellent, and entirely publicly funded.

Just as there is no budget crisis requiring urgent and drastic austerity (it is after all a revenue problem), so too is there little need to rush through risky changes before the end of the year.

WATCH Stephen Parker at Politics in the Pub

Threatened tax increases another impact on equality

Earlier this week, the Coalition threatened the senate with a tax increase if the budget is held up any longer. Maybe people know that and don’t mind. Everyone fully supported the National Disability Insurance Scheme and part of that package was an increase in the Medicare levy. That increase of 0.5 per cent of income for most taxpayers started on 1 July 2014.

The furious public reaction against the budget has been in reaction to cuts that will punish the poor and make it much more expensive for everyone when they visit the doctor, when they go on to higher education, or when young people find themselves out of work. Polling by The Australia Institute shows that government provision of world class health, education and other programs has overwhelming support in the community. Stripping them back, even under the guise of a fictional “budget emergency,” was never going to be popular.

Making patients and students pay more is increasing the burden on the poor at a time when inequality is steadily worsening in Australia. And there is more than enough revenue in addressing the perks in the system for the rich. There is after all a revenue problem, not a spending one.

We need to seriously address the fact that many of the tens of billions going in superannuation tax concessions are wasted because tax concessions have encouraged the well off to use super as a preferred means of tax avoidance.

Tax increased massively under Menzies (to 25 per cent of GDP) in order to fund his expansion of higher education and other nation building programs. Similar increases happened under other reforming governments who expanded big ticket items such as health, education and defence.

Our capital gains taxation once preserved the integrity of the  tax system, and blocked many of the tax avoidance measures of the past. However, the Howard Government watered down the capital gains tax to the extent that capital tax concessions worth over $4 billion per annum are now utilized by high income earners.

The misalignment of the corporate and company tax rate means those running a business can now park their spare income in their private companies at a lower tax rate. And so it goes.

Rather than tackle those lurks on the part of those who can afford it, the Abbott Government has focussed its cuts on those who can’t. If these cuts are to go ahead, it will have the effect of worsening inequality and worsening the life chances of the children of lower income groups. ​

Community and environment or big mining?

Whilst we don’t usually cover mining in the equity-themed email, we understand many of you have been following the efforts of the people of Camberwell and were hoping to hear of the outcome of the case.

There has been very strong community opposition to the Ashton mine expansion, which The Australia Institute has assisted, but that hasn’t yet managed to cut through to a positive decision for them.

On Wednesday, the NSW Land and Environment Court handed down its decision on the Ashton coal mine….sort of.

Unfortunately for the people of Camberwell in the Hunter Valley, Justice Pain approved the mine with conditions, but didn’t specify the conditions, so the parties will now go back to court and fight over them.

While the fight goes on for Camberwell and the Hunter Environment Lobby, TAI’s role in the case has been another victory over dodgy economic modelling.

The mine’s economist, Jerome Fahrer, director of major consultancy ACIL Allen, had claimed financial benefits to NSW of $477 million. Richard and Rod strongly contested this and yesterday the judge decided the project was worth ‘markedly less than predicted’, some ‘tens of millions of dollars’.

Her Honour said it was ‘regrettable’ that Dr Fahrer had ‘failed to comply’ with NSW guidelines on economic assessment which resulted in such an overstatement.

The mine’s economist, Jerome Fahrer, director of major consultancy ACIL Allen, had claimed financial benefits to NSW of $477 million. TAI strongly contested this and yesterday the judge decided the project was worth ‘markedly less than predicted’, actually just ‘tens of millions of dollars’.

Her Honour said it was ‘regrettable’ that Dr Fahrer had ‘failed to comply’ with NSW guidelines on economic assessment which resulted in such an overstatement.

As usual, jobs figures had been wildly overstated by the mine. The mine’s initial claim of nearly 700 jobs was dismissed early in the case and Her Honour noted ‘an overall increase of 78 jobs is predicted, now relatively modest compared to original forecasts’.

Interestingly, 78 jobs is less than the number of people that would work in the mine, estimated at 160. This means that while the mine increases employment at its site, it reduces employment in other industries. We’re pleased that Her Honour accepted our argument on this point.

Overall, we’re disappointed the court did not reject the project outright. We argued that the economic benefits are small and do not outweigh the impacts on the people of Camberwell, the environment and Aboriginal heritage.

Her Honour found that these impacts can be mitigated and the case will go on over how this might be achieved. The question now is can the conditions imposed be sufficient to allow life to go on in Camberwell and will the mine be able to comply with them and still be financially viable?

TAI in the media

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