policy

Mar 162015
 
Hepatitis A
Typical of the confusion Australian consumers face

In the wake of the Hepatitis A scandal, which as at this point has infected some 26 people in Victoria, New South Wales, Western Australia, Queensland, South Australia and the ACT. There has been a great deal of debate about food labelling laws, protocols, and food safety.

A potential cause of the outbreak and a potential solution fall within what readers of this blog might be familiar with – water quality and market-based instruments.

At this stage, it looks likely that the source of the infection was and is imported frozen berries from China.

Sufferers of Hepatitis A are likely to suffer gastro-intestinal problems such as nausea, vomiting, diarrhoea and fever and in some cases may suffer acute liver failure.*

Hepatitis A is spread through the “oral – faecal route”. So, there are perhaps two mechanisms for which Hepatitis A can be passed onto another person through ingesting food. One, involves an infected person exhibiting poor hygiene practices (such as not washing hands), and then directly handling the food. The second is contaminated water being used to wash or prepare food.

The outbreak and the poor quality control standards for food production and packaging shouldn’t have come as a surprise. China has had a well documented, if not at times overblown record of food contamination. Ranging from contaminated milk formula, to poisonous pet food, and garlic sprayed with outdated and harmful (to human health) fertilisers and pesticides. Frozen berries were thought to be the cause of Hepatitis A infections in the United States and European Union. These are problems in practices that would not be allowed to occur in countries like Australia.

Calls for better food labelling laws as a result of the Hepatitis A outbreak have been made by consumer groups. It is often a battle for consumers to understand where their food is sourced. Confusing labels such as “Made in Australia from local and imported ingredients” make food labelling meaningless and devalue the system as a whole. The federal government initially rejected such calls and deemed them an unnecessary regulation. However, it appears that a proposal is going to be made to cabinet by the end of March.

I support such a move, but I argue that it is positive and productive regulation. As opposed to restrictive regulation. Companies that import food products would be well aware of their supply chain – meaning a low cost of implementation for the companies involved.

The benefits are obvious. Consumers would be able to make better choices as a result of the extra information. It is unusual in any given market, that a consumer is unaware and cannot know the source of the product purchased. For example, if an oil company is selling oil, it is graded and sold on an exchange, with the details of the product known. Some oil grades will command a premium over other oils.

It should be the same with food. But because of our food labelling regulations, this is not the case. It is what is known as a market “friction”.

Friction occurs in a market where the buyer – in this case, the consumer – has to make choices based on insufficient information. The gaps between information between the seller and consumer in the market lead to an inefficient transaction of goods. Meaning that products that should sell for less, may sell for more and products that should sell for more, sell for less. These are transaction costs.

This is where Friction Reduction market-based instruments, or as I prefer to call them: Information based market-based instruments become relevant.

Information based MBIs or Friction Reduction Instruments reduce the transaction costs by creating a more efficient market. These instruments might include certification, labelling, education campaigns or any number of other related schemes. Many of these schemes are voluntary, on the part of producers, in response to demand from consumers.

A classic example is “fair-trade” coffee. This resulted from ethical considerations of coffee drinkers towards the growers and workers on coffee plantations.

One might ask why if it such a good thing, that local producers don’t already label their products more specifically, or precisely. The answer is that many if not all, already do.

The efficient functioning of a market relies on the underlying regulation. In this case, Australian growers and producers have their products devalued as a result of the lack of information. Those already providing the information are having their products lowered in value by those who don’t have to accurately state the source of their products. The confusion in the labelling raises the value of imported product, and lowers the value of local product.

There is something being missed out on as a result of the lack of informative labelling. Australian food and locally sourced food fetch a premium overseas and at home. Yet, when these products are in supermarkets, the value is less.

With the explosion of local farmers markets in Australia and so on, it is obvious that there is high demand, and an expectation of locally sourced and grown product. And people don’t mind paying a premium for the assurance that that provides.

If Australia looks to increase the value of our agricultural exports, we could probably learn a thing or two about increasing the value of our domestic premium produce sales. All this would take, is a simple change on the label.

 

*This is not a medical blog, or recommended advice. Please seek other advice or treatment if concerned.

May 212014
 

StudentsFeeling useless is something I know a fair bit about. Being a philosophy major, you could say I’m an expert in uselessness. But these times are tough. In the immortal words of Kent Brockman, “Joblessness is no longer just for philosophy majors – useful people are starting to feel the pinch.” I’m going to ignore the absurdity in that sentence, but it’s really apt for now. The last week has been particularly hard on my students, following #budget2014. No doubt they feel personally insulted, aggrieved and bewildered, and as if society is rejecting them as a whole.

My students almost represent the entirety of the demographic that is under assault by our current politics: Under 30s, science students, Indigenous, mature age and single parents. But my students are fantastic people. If they weren’t, they’d be studying economics (apart from those who follow Steve Keen and the like); human resources (who have no other skill apart from liking feeling superior than everyone else); Accounting (but my students have a personality); Finance and commerce (parasites and sociopaths), or any other number of occupations that seem entitled to dictate what people do and how their value to society is measured.

All gross stereotypes aside, it is important for my students to know that they have valuable skills. These valuable skills are distinguished from those listed above. And just because the occupations ahead might tell them they have no worth to society – for employment or whatever, that they actually do have options about where to head in their future – that they are generating valuable knowledge and extremely worthwhile skills for society.

This semester, I’ve been teaching Oceanography, generally, to a group of Environmental Science students. Teaching at a small regional campus allows me to have my lectures and tutorials in a completely different format to what otherwise would be the case. And this session last Friday, I decided to do something different – aside from teaching them that a shelf is not just something that influences currents, but is also a quiet elf.

Other lecturers such as Lee Skallerup talk about the importance of caring for their students. I’ve written previously about the problems facing us as graduates after university. For mine, they are almost one and the same. I can’t care for my students without looking out for their futures, and what they require. But that doesn’t happen without knowing the drives behind my students, and my students being aware of them. This shaped my latest lecture and tute.

I was sure my students were sick of hearing that their lecturers and whatnot are negative about the budget and the government etc. So before we got started, I asked my students to get into groups of three, and discuss what brought them here – to this unit, to this course, and what about them fundamentally has led them to be doing what they are doing (none of this, it’s a mandatory unit and so on…).

I also asked them to discuss a skill that they have brought, that they can develop at university, which they can use once they leave university.

It was an interesting process. My students are really passionate about what they want, and about why they are doing what they are doing. I have students that want to change what they have done all their working lives, those that wont to make a better world for their kids. Those that want to teach science and environmental issues to students, those that love being outdoors.

What I did not expect was the blank that occurred when I asked the students how they could use their passions into the workforce. I suspect it’s the reverse in the case of the students I’ve lambasted above (no passions but an idea of how to use their skills in employment).

But the fact is, my students do have incredibly valuable skills and knowledge. Many are great with numbers. We need more mathematically inclined people in the workplace. And it really doesn’t matter how you get there. A really good friend of mine and a personal mentor as got into health research through developing skills in ecological statistics.

There are a lot of visual learners in my class. But being science students, I suspect they’re also data interested. I suggested that if this was so, to tailor their studies to GIS and the spatial sciences. You might not be working in an environmental field, but you will likely be working outdoors, with data and in a visual way.

Most of my students are people people. I suggested maybe that they consider teaching. If they’re outdoorsy types, consider youth work or support services. There are ways to use your passions like surfing to do something that is going to utilise your passions, as well as your knowledge and skills that you’ve acquired.

Just because you are doing a science, where people think you are useless, doesn’t mean you are.

We have a problem with valuing intellect and knowledge in Australia. I implored any of my students to look overseas. Go somewhere where you feel wanted, because places overseas do value your skills, your knowledge and your passions. If it wasn’t for personal circumstances, I would be heading overseas to live, myself.

It is important for my students to understand that the small minded society Australia has become, is not a reflection on themselves, or their skills. We shouldn’t be taking societal and employment advice from people who have been given a free tertiary education, only then to be taking a wage directly from the taxpayer. That’s cretinous.

We also shouldn’t be taking employment and education advice from people who measure their worth to society by the amount of tax that they pay/ or don’t pay. Because if we did, there would be no beans for the bean counters to count, no money for financiers to be parasitic of, no ideas for the idea quashers to quash, and no occupations where HR types would be able to feel more secure than.

Apr 232014
 

Tess Lea’s Darwin is an approachable cultural critique and explanation of Darwin’s history and present. Entwined in the Darwin narrative is Lea’s own cultural heritage and with it, some of the ‘frontier’ history of the Northern Territory.

Maintaining the intellectual complexity of many of her previous works, Darwin is the most accessible of her publications to date, retaining the charm of depth and pointedness which are so apparent in her more academic works but freighting theory within narratives and old fashioned yarns. To me, it seemed the first third of the book was hardest to write, in the fashion it often is when something is clearly close to your heart. But the second half opens up into an easily readable and entertaining if challenging exposition of Darwin which will inform and be of interest to both who know Darwin and those to whom it remains an unknown place.

While it claims to be focussed on Darwin since the Second World War, Lea weaves the narrative of selected histories of Darwin to give context and justification and an explanatory power for current events and issues in Darwin. Sometimes challenging, sometimes apologetic, it is an honest appraisal of Darwin’s culture and its distinctiveness on the Australian continent.

Darwin demonstrates the indelible mark that immigration and racial conflict has had on Darwin, and the sometimes paradoxical relationships between racial groups that confound intruders or other Australians coming to live in Darwin. Yet, although this a major theme that Lea extracts from the many contributors she spoke to for the work, it is perhaps not followed through as much as it could be in certain parts.

Darwin is an incredibly metropolitan city, which is surprising to a lot of visitors and those who have not visited Darwin. With this comes the physical characteristics of multiple cultures. It also dominates the politics of space in Darwin, a fact of policing and racial confrontations which is alluded to but not fully expressed. A shame given this is a part of Lea’s own academic work.

What is expressed and emphasised is the “social amnesia” and “numbed indifference” which runs as a consistent line from foundation to the present day in Darwin and the Northern Territory. Such a social and cultural phenomenon is one anecdotal reason given for the flux and constant movement of the Darwin population. Priests, nurses, teachers, doctors and others working on the frontline of social problems in Darwin are frequently cited in the local rag, the NT News, as fleeing Darwin for various reasons such as burnout. But as Darwin residents are likely to already know, this is more of a code word for combat fatigue. Those who stay learn to deal with the myriad of social problems in a number of ways, which weaves a path through the history of Darwin, as it does in Lea’s book.

Military build up is a constant point of discussion in Darwin, and is a feature in the book. The perceived necessity of the military, the history of Darwin as a military town, and the current and future decisions in relation to the military provide the sign posts for an analysis of the wider numbed indifference and social amnesia that abounds in Darwin. The inevitable cases of sexual assault and aggression are presented as a narrative for the possible future of the city, as it has marked the recent past, given the way Darwin features one of the highest sexual assault rates against women in the country. Against this, the economic case for military expansion  and reliance of the Darwin economy on the military – provide the basis of the kind of bind that so many polarising policy issues in Darwin also encounter.

The bind that Darwin faces itself – between the military and the negative consequences and the inevitability and helplessness of Darwin is almost a metaphor for how Darwin and the Northern Territory views itself: somehow fiercely independent, different, unique and set aside from the rest of Australia – yet wholly dependent on the outside for its sustenance, continuance and direction in almost all areas.

The duality of Darwin, between opposing policy options, and opposing social groups is a feature of many of the stories explored in the book. In some of these stories there are examples of mutual understandings, and truces, particularly between kids. I am left wondering if this is somehow an epithet for potential future ways forward in Darwin’s social sphere.

There is much that is missed in this book, particularly in regard to the sporting organisation of Darwin, and with it, the Northern Territory. Australian Rules Football has shaped Darwin both physically and socially. However, in this work only the socio-political aspects of AFL are brushed upon. The fact that the Esplanade – as Lea notes, Darwin’s only public space in the CBD – was once reserved for and had Football played there, is I think quite an important historic and cultural point. The entire geography and cultural history of the city is shaped by Football.

With this, the other important cultural point is the football season itself. Once played exclusively in the ‘Dry’ season in indigenous communities, football has gradually been moved to the ‘Wet’ season. Indigenous communities once only played Football in the Dry season – and some still do. As Lea does note, the change of Aussie Rules Football to the Wet season could be seen as another case of organised sport (by whitefellas) asserting power over unorganised sport (by blackfellas), and inserting a colonial sport in cricket (amongst others), in its place.

It could equally be argued that Football is one of the few sports that could be played in the Wet season, and thus, it allows other sport and recreation activities – so much loved by Territorians – to be enjoyed to their maximum extent.

Despite the various interpretations that the history of football in Darwin might elicit, it does give rise to one of the most elegant descriptions of Australian Rules Football in the Northern Territory, or anywhere as a matter of fact:

The season starts in the build-up, before the monsoon breaks, when the air is so saturated with moisture, the body’s own secretions give no relief at all. Under the football guernsey, the body glows. Tiny beads of sweat form miniature bubble-wraps on the forehead, above the lip, below the eyelashes, on the sternum, between legs and toes. […] But everyone sweats, the heat remaining the great equaliser. The game rewards agility, sprightliness, accuracy, the ability to catch a ball on the tip of a finger. It’s the guy who scrambles up the back of another, arms outstretched, snatching the ball out of air; the player who spins the ball end over end, high and long, the crowd’s breath held… it’s there.

Of course, football is just one of the many confounding elements of Darwin; one of the many paradoxes that could be interpreted multiple ways. There are decisions and actions in the social-political sphere that appear to have good intentions, but lead to unintended consequences, or look retrospectively like harsh and inappropriate decisions and actions.

Darwin largely sets aside the role of social pressures and sports as a planning instrument in shaping Darwin – rather the physical elements of tidal marshes, mosquitoes, drainage and political/ bureaucratic decisions such as military acquisition of land – are given the predominant weighting. And with this, the social distinctions are analysed through the placement of and contents of suburbs adjacent to these areas.

The physical distinctions are apparent to the keen observer in Darwin. And this exposition is one of the strengths of the book. The history of the division in social advantage and disadvantage is made apparent for the reader. What may appear to be a perfectly legitimate place for development in southern Australia, becomes a cesspool of festering disease and sickness. The battle lines are drawn, the community splits like tectonic plates that can’t be seen by the untrained observer, and Darwin is a place where nothing is as it seems – or should seem. But such is Darwin, and such is Darwin.

It is a book people should read, not just to find out about Darwin, but to think on the policy issues that are being worked out in this still-frontier town, on Australia’s behalf. Darwin, and Darwin, is good to think with.

 

Apr 162014
 

Market Based InstrumentsIn a previous post I explained that the Carbon Price is not a Carbon Tax. That it was an Effluent Charge with a Tax Differential component. Regardless of this, they are all examples of Market Based Instruments. What they are is actually known as Price Based Market Based Instruments or just Price Based Instruments. There are generally three kinds of Market Based Instruments: Price Based Instruments, Quantity Based Instruments (or Rights Based Instruments) and Information Based Instruments.

You may have heard the Minister for the Environment explain that they will replace the “Carbon Tax” with a market based mechanism, insinuating that the Carbon Price is not a market based instrument. He is quite wrong; my master’s thesis was entitled ‘Market Based Instruments for Reducing Pollution Loads Entering Darwin Harbour’ and I will explain in basic terms what these actually are.

Price Based Instruments

Market based instruments that set a price, a charge or a fixed unit cost are known as Price Based Instruments. As previously discussed, Price Based Instruments might include policy mechanisms and instruments such as effluent charges and taxes. But they may also include:

Full Cost Pricing (and include different pricing structures)

Tax Rebates and Tax Differentiation

Insurance Premium Charges

Reverse Deposit Schemes (Container Deposit Schemes)

Subsidies, Rebates and Grants

User Charges

Performance Bonds

Covenants

These are what is known as Pigouvian Taxes. And I think the term Pigouvian Tax is where a lot of the confusion has entered the debate. However, all this term means is that the polluter absorbs the full cost of the production (or consumption) process. How this is done most efficiently and effectively is to be determined by the policy maker, and will be the subject of a later post. How price based instruments act as a market based instrument will also be discussed at a later stage, because it isn’t necessarily intuitively apparent – which is partly the problem that gives rise to comments and purchase in the population that pricing is not a market mechanism.

Quantity and Rights-Based Instruments

Quantity and rights-based Market Based Instruments are what most people think about when they think of ‘Market Based Instruments’. There really only a few types of instruments in this category and it is probably the narrowest policy set for Market Based Instruments. There really are only two types of Market Based Instruments in this category:

Cap and Trade Schemes, Permits and Tradeable Permits

Total Maximum Daily Load Schemes (including accounting and budgeting schemes)

These Market Based Instruments contain a strong regulatory basis as well as frequent market transactions. Offsets can be created and in this sense they operate both as a futures exchange and also a quasi options exchange, with regulatory bodies acting as market-makers. The exchange’s effectiveness is successful or not successful depending on the interaction of these elements.

Theoretically, such Market Based Instruments are most suited to environmental policies where there are a large number of diffuse polluters, and the impacts of pollution are not isolated. That is, a reduction in pollution in one area will benefit the whole, not just the local environment. I will discuss this dynamic at a later date. But in short, it is why Australia’s carbon pollution reduction policies have favoured a cap and trade scheme.

Information-Based Market Based Instruments

Information based Market Based Instruments are also known in the literature as Friction Reduction Schemes, or Friction Reduction Market Based Instruments.

You may ask why these are included as Market Based Instruments. The simple answer is that markets function on the basis of information. There are two things that move a market – noise, and information. Companies listed on stock exchanges are regularly releasing information. It is a legal requirement. There is legal recourse for some buyers when they have been sold something under false pretences in many different kinds of transactions.

These Market Based Instruments are said to reduce friction because they are designed to provide the user or the transacting parties with the available information. Available information is an important component of rational choice making in decision theory in classical economics, and I have some level of qualms with this philosophical position. But for the purposes of policy making, it is at least a worthy aspiring goal for policy.

Information based Market Based Instruments include:

Right to Know legislation

Eco-labelling

Public Information Campaigns

Accreditation

Summary

I hope that I have had some success in helping shed light on what actually Market Based Instruments actually are in environmental policy. There is a broad range of policy options at the hands of decision makers. The pros and cons of each and in what circumstances each market based instrument is likely to be effective will be discussed over time in this blog. But don’t be fooled by politicians and their use of jargon when discussing Market Based Instruments and the underlying philosophy for addressing environmental problems.

If you have any questions or queries, leave a comment, or suggestion. Or if you want me to go over anything in detail, let me know!

Apr 162014
 

PrecariatA few weeks ago whilst driving down to Yallingup for a field trip with my Oceanography students, I was amazed by and at the same time greatly irritated by Radio National’s Life Matter Program ‘What Did You Do With Your Degree’. Being a member of the Precariat, it repeated many of the rubbish, meaningless and glib phrases that I’ve heard all of my life about education.

It latched onto the now common debate about whether university degrees are still worth doing. And the answer from those working for Universities was a resounding, “yes”. The problem of graduates finding it hard to gain employment is still all someone else’s problem. It was an extraordinarily self serving debate and got me more than a little riled up.

Following your passions, your interests etc is still the mantra of university marketers. Well, passions don’t pay your bills. And unless you have wealthy parents, your passions aren’t going to save you from poverty if you’re overqualified with useless skills and an education that makes you overqualified for everything you try to apply for.

The debate conveniently ignored many of the factors that impact upon recent graduates and those of my generation. Or the hosts blithely glided over them and put them in the same basket as the “casualisation” of entry level jobs.

I am without a doubt a card carrying member of our generation known as the Precariat. Since graduating in 2009, I’ve had one interview. Since completing my Master of Science last year, I’ve had none.

I exist on using personal contacts (none of which have been developed from study) and casual insecure contracts. Although I have a good work history, I probably live in borderline poverty from time to time, and without family I would already be homeless.

But recently (and it took me a long time to realise this), is that of course we are producing too many university graduates. That much is obvious, despite the answers given by the panellists. But this is a function of a society that is task focussed, vocationally focussed and exceptionally removed from a world of self critique and self examination, cohesion and social betterment.

The real discussion, which wasn’t overtly set out was why we might want to have a society where we have a lot of graduates that are performing valuable roles in society. And this is the argument that needs to be made and needs to be carried if employers are actually going to take on more local graduates.

There is an implicit message sent with Australia’s policy settings regarding graduates, immigrants and skilled workers. In my field, I have to compete with workers on 457 visas, who have already been trained elsewhere, and are cherry picked by companies who don’t want to have to invest the minimum investment required to skill me in what I need to do. Despite the fact that I have valuable skills and knowledge that I deliberately targeted because of what I thought would be desired (if you want to hire me, get in touch by the way).

It’s also the case that 457 workers are working illegal hours, and then signing legal documents to say that they aren’t working those illegal hours – knowing full well if they don’t do those hours or sign the documents, their 457 sponsorship will be jeopardised. It is really another example of a disadvantage that local workers are facing.

I have friends who have graduated in Nursing; a skill in high demand, as we are frequently told. But they have not been able to secure any ongoing employment apart from casual, agency type work. Yet, we are still employing nurses on 457 visas. It does not make any sense. Unless there is an implied assumption that our own graduates are not up to standard.

The real issue is what we do with so many graduates facing insecure or few job prospects, whilst competing with policy that is actively working against them.

But it is not just policy that is working against graduates and members of the Precariat. HR departments and HR workers have become notorious and synonymous with misunderstanding the skills that graduates have. They are themselves a parody of what employment and education in Australia has become.

However, this is not exclusively the fault of those in the HR industry. Given that many companies are completely outsourcing their recruitment functions, HR consultants are constrained by the types of employees they are willing to recommend for positions. Gone are the days where employers would understand the translatable nature of the skills that people have in different positions. Instead, many skills are frowned upon.

I myself have had this happen with one HR consultant. After looking at my resume, he informed me that he didn’t have any work going in the education field. Well, if you’re in HR and think that I’m in education because I work for a university and not in education because I have specific skills and knowledge related to particular fields of expertise, then it is a problem.

Or an argument I had with one who concluded that academics and those in Higher Ed were completely unaccountable for the public funding they received. I had to remind her that she did not have to gain ethics approval to do her job, nor have to acquit her funding on the basis of performance or outcomes. Nor was a failure to understand what constituted accountability by way of production of research and inability to cognise academic production the fault of the academic, but a symptom of the problem of HR types and their interaction with the Higher Ed sector.

And don’t get me started on HR in Higher Ed! Often the most obstructive and counterproductive people in Universities to research production and outcomes within the University!

But it is a problem partly of the making of Universities and the higher education sector as well. Those working in HR are “skilled”, rather than “educated” and really probably don’t have enough grounding in alternative fields to understand what particular potential workers can bring to a workplace. It’s all well and good to say that architects and arts graduates can work in banks advising on different scenarios (as the radio programme did), but if you have a HR department that doesn’t understand different attributes, then it is a pointless discussion.

I could go on for hours and hours about my frustrations with employment following graduation, about the lack of understanding of my generation’s skills; the precariousness of employment that my Dad’s generation simply does not understand. I guess the important thing to take out of this is that the problem is known. What we need to do is actually talk about the problem that exists. It isn’t going to be helped by increasing student enrolments, which is what one of the pushes is on for. Nor do we need 457 visa workers in a lot of the areas we have them. Employers and those in the HR have to be more aware of the skills that are actually out there – and be prepared to train people up. Unlike previous generations it is not something that is being provided for my Precariat generation.

Mar 262014
 

Environmental PolicyEnvironmental policy development can be a mystery to many, but it is generally not that difficult to understand. Most environmental policy is developed based on the “extrinsic values” that we place on them. This is a materialist approach, based on human uses, as opposed to “intrinsic values” which are the value of the ecosystem in and of itself.

I’d argue that over the long term, they are actually one and the same. And that it is only over the short term where the immediate extraction and exploitation value are highest that it actually has any tangible meaning. Long term policy is not an area where economics covers itself in glory when it comes to the environment, but I guess that is another debate for another day.

Despite its philosophical failings, valuing human uses of an environment gives us a starting point to be able to develop environmental policy in the most pressing areas. To explain the rationale for environmental policy development, I’ll be using the ‘Securing Western Australia’s Marine Future’s’ report: ‘How We Use and Understand the Marine Environment’ as an example. Hopefully this will illustrate how environmental policy is developed, and the factors that go into making informed environmental policy decisions.

The Requirement for Environmental Policy

The marine environment is an ecosystem, in particular in Australia that is under pressure from multiple uses. These include fishing and boating, recreation activities like surfing and even on shore development for housing, pollution runoff and so on.

As such, human use reports and evaluations at least allow policy makers the option of prioritising the highest value human use above other uses. This does have its own problems however, and if the highest value human use is not sustainable, then it is not good policy.

Methods and Data Collection

Human use reports can assess whether the human activities are sustainable over the long term, what impact they are having and have had, and how use interacts with other activities. Typically, these reports synthesise a substantial amount of pre-existing data – qualitative and quantitative, scientific and social. The range of data used to form conclusions is why these reports and studies are useful for environmental policy formulation. The Marine Futures report collates a substantial amount of data from WA State Government departments to form the basis of many of its topics of investigation.

Through interviews with recreational and commercial fishers, as well as quantitative data from various departments it was concluded that changes in the South West fishery have occurred. These changes led the interviewees to conclude that the current use of the environment was unsustainable. It was only through the collection of both the qualitative and quantitative data that the conclusion that fishing in the South West and Southern zones was unsustainable.

Outcomes in Environmental Policy

The biggest advantage of human use reports for the formulation of environmental policy is that they often provide reasoning behind changes in the environment. In the Marine Futures report, the explanation of changes in technology, demographic changes and policy changes are able to be put together to form a coherent “story” as to why things are the way they are, and what needs to be done.

For environmental policy, a coherent narrative for why something is the case is important (as I have explained previously), when the public requires a full explanation of why something is being done, or is required to be done. If the public is not informed then misinformation is likely to run rife, and interest groups will dominate any policy discussion. But if the public is fully informed, and provided with the available data, it is much less likely to face opposition.

The Economics of Environmental Policy

Economic considerations are also able to be evaluated and this is where the highest value user can be given priority in a policy discussion. But it is also where the greatest rub and greatest debate lies. As I pointed out earlier, it largely depends on what time frame is being analysed. Over the long term, activities and users that are least extractive will produce the greatest economic benefit. But this disregards economic imperatives over the short term. It is another area where human use reports are valuable to try and make decisions which balance these factors. A prime example of policy decisions being out of kilter with human uses and sustainability in favour of a narrow economic and political interest is the shutting out of commercial fishers in the Perth region, without restrictions being applied on recreational fishers.

Education and Social Policy Recommendations

The report also makes clear why an education campaign for certain activities is needed for the sustainable use of the Western Australian environment. According to the report, recreational fishers who were new to fishing attributed environmental changes that were inconsistent with the views of long term users and the available science on these topics. When frictions are occurring in the use of the environment such as these, it is of maximum benefit to provide accurate information to inform this section of the public.

Promoting Environmental Policy

Some human uses and interactions with the environment can actually enhance human amenity, environmental productivity and value. This is the gold standard in environmental policy and protection, and should be the aim of policy makers when making decisions. One such example of this is the Busselton Jetty, where physical infrastructure – the jetty – provides habitat for the surrounding ecosystem (an artificial reef), but also provides a site for human recreation and education which would otherwise not be in place if it weren’t for human intervention.

So What?

As you can see, human use studies and reports provide the basis for developing environmental policy. By matching science with human use and the interaction between people and the environment, environmental policy can be enacted that is least harmful to the environment, or most beneficial to the community. In many parts of the country, Marine Parks have been set aside on the basis of human use studies. Without acknowledging the human uses of the environment, observations and community wishes are often excluded in the environmental policy development process. It is why any policy, such as those looking at pollution reduction, is much harder to justify and provide emphasis without human use studies. It is why one of the policy recommendations in my thesis was to conduct a human use study in the Darwin Harbour region.

If you have any thoughts on the development of environmental policy, or this brief explanation, feel free to let me know below. Point out any of the obvious problems inherent in this approach and I’ll take the time to look at examining these problems down the track.

Further Reading

Davies, A., Tonts, M., Pelusey, H., & Niedzwiadek, M. (2008). Securing Western Australia’s Marine Futures: How We Use and Understand the Marine Environment. Perth, Western Australia: University of Western Australia.

Mar 252014
 

I came to Steve Keen’s Debunking Economics after dabbling in reading what I would call “alternative economics”. I’m not someone involved in economics as a profession, but pointing out flaws in economic theory has become a personal hobby of mine. I have read much of Joseph Stiglitz and Nicolas Nassim Taleb’s work, and although I adore reading Taleb’s work, I have not found something I could completely relate to. That is until I found Debunking Economics.

Ever since I studied first year economics, I have been a strident critic of the way economics is taught. I guess this is perhaps the product of teaching myself Marxian theory during year 12 maths, and having studied philosophy at university. I remember telling a lecturer, who had commented that I should continue with economics (after a good paper on environmental externalities), that an idiot could spot the logical flaws in what was being presented. It is perhaps somewhat ironic that I now find myself grappling with what could be deemed an “alternative economics” field, in environmental economics or some such.

I was a little reluctant to read Steve Keen’s work, given his partiality to public nudity and attention grabbing statements. But I shouldn’t have been. I found Debunking Economics almost completely sums up the way I feel about how economics is taught at university level. How it has been elevated to a science, and how it holds sway over the other social sciences of which it is most certainly a part, has me scratching my head.

Keen does an excellent job of explaining how the rise of economics in academia has come about. The exploration of the history of economics is enlightening, as well as frightening. Keen’s natural ability to outline historical progression in economics allows him to critique the brain washing tactics initiated by economics departments in a similar fashion to what faith based institutions invoke on their subjects. By providing evidence and tested and defended hypotheses, he contrasts his own positions against those which hold sway in the academic world and amongst central banks.

But mostly, this book is an attack on the prevailing paradigm of neo-classical economics and its sway in the political arena.

Keen invokes a common sense approach to economic critique which will appeal to the layperson. Terms such as “efficient markets” are attacked, as they mean something completely different to those in finance and economics to the layperson. Which Keen quite rightly emphasises is problematic, because economists actually play on this gap in knowledge to manipulate those on the outside to follow what is actually a falsity.

For mine, Keen’s book is a must read for anyone interested in economics, or economic policy. It is a truly enlightening read on the likely future of economics as a worthwhile intellectual endeavour. Anyone that has a natural inclination to be sceptical of economists, or even those that don’t, would be well advised to read this book. I think it’s also a must read for those studying or have studied economics.

I don’t think I can do Debunking Economics justice in such a short space of time. It is actually quite a dense read for something that is actually very accessible. It definitely does add to the appeal of his positions. From time to time I will have to look at individual arguments in Debunking Economics to further the arguments being made in my exploration of market-based instruments.

Mar 192014
 

Ben Elton’s Gasping is a satirical and poignant play looking at the world of business and free-market economics. It is brilliantly crafted and constructed, analysing what happens when the provision of an environmental service is taken to its extreme.

A fictional company, ‘Lockheart  Corporation’ has invented a product which sucks the oxygen out of buildings, ‘Suck and Blow’, and provides privatised air to the inhabitants of these buildings. The benefits of such for private consumers of air are not made explicit, aside from the marketing of “deserving your own air”.

Inevitably, problems occur. The atmosphere is sucked of its oxygen, and sudden winds result in the suffocation of people as the thin oxygen is removed from the area. In the end, local authorities have to provide oxygen for the local environment, which is conveniently provided by Lockheart.

Africa is pillaged for its natural resource, oxygen, and that is where the greatest hardships occur, as locals begin to run out of their own oxygen. This is contrasted with the African famines that regularly occur, whilst the excess of the west and the wastage of food goes on. It provides a striking comparison with today’s world, in particular the protection of natural and environmental services, and how the burden for this falls on the most disadvantaged in the world, whilst at the same time facing the most pressing, immediate concerns that place the most amount of pressure on the natural environment.

Gasping is just as relevant today as when it was written nearly 25 years ago. With the ongoing policy debate surrounding climate change and global warming, Gasping gives an example of what might happen into the future, if the ownership of carbon sequestration, carbon sinks and other public goods become privatised and monetised.

Unfortunately, property rights over environmental services are a double edged sword. On the one hand, the “the tragedy of the commons” is a problem which results in the pollution and over-fishing of our oceans, for example. On the other, exclusive and unfettered use and rights to the environment can lead to over-exploitation and other serious negative environmental impacts, penalising the societies that rely on them.

More specifically it has relevance to the controversy generated by the former CEO and current Chairman of Nestle Peter Brabeck-Letmathe when he said that “access to water is not a public right” or a human right. It’s a classic case of life imitating art. The problem being, that at some level there is a distinct logic to it. It’s not a basic human right to water the garden with fresh drinking water, but taken to its extreme, it becomes absurd. And policy that interacts with free-markets, finance, the environment and the business world invariably ends up being somewhere in the middle.

I am thrilled that Gasping is being updated and performed later this year. I think it is extremely timely, especially for Australia with current political debates. One theme that I hope is reinvestigated is the reduction in demand of oxygen (in the original Gasping), and the business decisions that result from this. I would like to see the producers of carbon credits and offsets satirised and analysed in a similar way.

Unfortunately, I don’t think it is. In its new iteration Gasp will be taking a crack at mining and excess in the contemporary Australian life. Never the less, I am looking forward to seeing Gasp when it is performed by the Black Swan State Theatre Company later this year. In the meantime, if you are interested in a light hearted humorous read, poking fun at business, I highly recommend Gasping.

Mar 112014
 

Carbon Tax/ Price ModelUnless you’ve been living under a rock it has been impossible not to hear of the “Carbon Tax” debate in Australian politics. Given my knowledge of market-based instruments for environmental purposes, I feel compelled to explain many of the issues that confound the Australian public. If you require further detail, you can consult my thesis on the topic.

This post is the first in a series of posts explaining why the “carbon tax” is actually good policy and a different mechanism to what most pundits and voters think it is.

 

What is a Tax?

A tax is an enforced and unavoidable contribution to an authority.

Income tax for example (unless illegally manipulated) is a fixed contribution, or equivalent to, as a rate of money earned. $100,000 will be taxed the same (accounting for adjustments) as any other $100,000 earned from any other work. The tax is collected regardless of the outcomes of your work or the manner in which your work is done.

Tax revenue is consolidated into a revenue pool and is not set aside for specific purposes or programmes, such as 3rd party insurance.

For environmental purposes, a tax is usually applied to inputs. For example, fertiliser taxes apply a charge as a rate of a specific active ingredient. The resultant outputs and impacts of the fertiliser use are irrelevant to the way the tax is charged and collected.

Environmental taxes apply to what would be considered as the front end rather than to the emissions – or the back end. For this reason, an environmental tax is a blunt instrument and isn’t regarded as an effective policy choice for improved environmental outcomes due to the lack of consideration of outputs, limited influence on changing behaviour and or negative environmental impacts – known as externalities.

However, the “Carbon Tax” does not work in this manner and it has been shown to influence behaviour.

 

The “Carbon Tax”

Under the Clean Energy Plan the “Carbon Price” or the “Carbon Tax” was set.

This is where the confusion is allowed to reign supreme. The carbon price is a direct pricing instrument (more about this later, or see my thesis). Under which, by definition it is what is known as an Emissions Charge, or an effluent charge.

An emissions charge is a direct pricing mechanism for the outputs – the emissions. Not on the inputs. Not on the coal going to power stations, but on the estimated or measured emissions.

If we refer to the previous example regarding income and income tax, we can use the example of electricity generation to show the difference in how the Carbon Price works. The energy output is equivalent to income earned. And the CO2 emissions are equivalent to the work performed. The price is levied against the work performed – not on energy output.

The charge will vary depending upon the work performed, regardless of energy output. In this way it is avoidable.

And that’s how polluter behaviour is changed. Input choices are left to the polluter; however, it is the outputs and the emissions that are the important component and that which is assessed. So polluters can either reduce their emissions by changing the inputs, or end of pipe emissions reductions. That decision can be based on what achieves the most cost effective outcome, and at the same time, achieving an improved environmental outcome.

The revenue generated from the carbon price, or emissions charge, is recycled to compound emissions reductions. In Australia this is going to various grant schemes, offsets and renewable energy initiatives. It is designed to be an encapsulated system that will continually reduce carbon emissions.

Income tax reduction (tax differentiation) with the estimated revenue generated is directed to those who have a relatively inelastic demand for electricity consumption. I will write about this at another point. But there are multiple elements to the carbon price as a policy and as a mechanism.

 

What does it mean?

When broken down, and the topic is discussed with correct terminology, the rationale behind the carbon price becomes a lot clearer and the mechanism behind changing behaviour makes much more sense. What people think of as a Carbon Tax is actually at this time a hybrid Emissions Charge and Tax Differentiation Scheme.

I’m not sure why the debate was allowed to be manipulated without an actual understanding of the underlying mechanisms at work. Granted, they appear to be quite complicated policy instruments. But they are not at a fundamental level.

It is similar to the way car registration operates, but not how income tax is collected. It is another failure of our political leaders to get to grips with policy explanation and education of the public in the process, because these mechanisms are not foreign to us.

 

But now that you are with me, and over the first hurdle, we can progress further into other areas of the policy.

Feb 272014
 
Los/ Las Parados/as in Malaga
Los/ Las Parados/as in Malaga*

 I’ve been to Spain twice and absolutely loved it. I have found the crisis in Spain to be horrible, but absolutely fascinating. The political graffiti is amazing and the level of discontent and level of unemployment in Spain is something completely foreign to my generation. I wrote about it after travelling most of the country in 2011. But I have not had a place to publish it until now.


On the other side of the world, a unique situation is unfolding – being played out, unravelling – all behind the veil of another culture, another language. It is not apparent to our Australian eyes through the presentation of the media outlets of choice. The magnitude and the scale is not even entirely apparent to those most affected – the Spanish citizenry. One of Europe’s largest economies is in serious trouble, yet serious trouble in a different form to what we are presented with. Away from the glib, catch-all phrases we are occasionally given, more troubling issues are afoot that have semblance to underlying issues within the Australia economy, and society in general. It is almost a parallel universe that Australia has narrowly avoided, which Australia has the ability to avoid into the future. “La Crisis” (as it is known in Spain) is ongoing; whereas for Australia, it has passed. But it could have been so much different.

When you visit Spain, you encounter a country that is European, yet vastly different – proudly different. It is almost scornful of its position within European society, fighting to be a recluse from outsiders and perceived threats to the Spanish way of life. This has a long tradition in Spain, which it is fighting to overcome. Franco took Spain into a hermit’s lodging and it has been trying to come down the mountain ever since; except that outsiders love Spain: its culture, its food, its sights and its landscape give visitors a smorgasbord of options for reasons to go there and to come back. Spain has failed to make the most of these links beyond the superficial, thereby paying a horrible price that will certainly hinder any recovery.

The failings in regards to the lack of forged links are fundamentally responsible for the problems the Spanish economy and society now find themselves in. The reclusiveness and lack of inquisitiveness into other cultures strikes you as bizarre when you encounter it. Compared to other countries in Europe, their understanding of language (apart from Spanish and the regional language) is poor and there does not seem to be an emphasis on changing this. Other countries in the north of Europe have excellent multi-lingual capacity and, for the most part, their economies have rebounded since the first GFC. Their societies do not remain closed and the adaptability of their role in the context of the European situation is backed by their ability to generate business connections, which are largely due to their education, language skills and the type of global citizenry that creates.

Yet, Spain is a country that is in Europe. Like Australia, it has not recently been towed by tug boat into the region it now finds itself. But the behaviour of both countries, and both cultures, seems particularly alike in that both want to be a part of their region only to enjoy the successes, yet not be fundamentally involved in the drivers of the underlying culture that provide the benefits. How many Australians actively attempt to understand cultures in our greater region? How many Australians know any words of the languages that surround us in our region? What relevance over the long term do we provide to our region? What is the relevance of Australia in our region? Are we just the net cord in a game of tennis, or will we decide as a nation to pick up a racquet? What are we doing strategically to make sure we are relevant in our own region – aside from those strategies which are easiest and convenient?

An example of the plentiful political graffiti

An example of the plentiful political graffiti

One of the most striking examples of what can go wrong when you do not develop answers to these questions is in Andalucía. El Andalus, literally ‘The Paradise’ in Arabic, is one of Spain’s autonomous regions. It is in serious financial and social trouble. With an unemployment rate of 28 percent and a youth unemployment rate well above 50 percent, there is growing discontent and a huge build-up of anger. Protests in each of the large cities are a daily occurrence, and the dislocation of young people from their places of origin is a massive concern. The most educated and most talented young people are moving in large numbers to Madrid, or to Barcelona, or overseas from places such as Malaga that will, in the future, need these brains. As was seen in Perth in the late 1990s and early 2000s, and has been seen in South Australia over a longer period of time, these future leaders of society return in often vastly reduced numbers.

What is left is the parados – quite literally, the do-nothing people – the unemployed without work and without the ability to work.

This failure also stinks. In Seville, a plenitude of horse-drawn carriages moves about the city taking tourists on scenic tours; except that the local authority does not have the money to adequately clean the resulting faecal material up. Nothing says the current crisis in Spain quite like Seville – if you look.  Sure, there might be endless empty apartments and dilapidated construction sites on the Costa del Sol; although Seville does have that as well – on the river front, which you cannot access because of building sites which have long since been abandoned. But Seville faces a crisis, different to how we envisage it. It is a crisis of relevance. It is a crisis of xenophobia, of introverted regionalism and the paralysis that that causes. An annoyance to longer term visitors or migrants to the area is the lack of choices in the food. This city of one million people has only two Japanese restaurants. Sure, it sounds trivial, but it is emblematic of the problem that Andalucía has: A complete inability to explore outside their narrow culture, to embrace outside influences and to shun the rest of the world entirely.  And now, because of ‘la crisis’, outsiders will wield influence and power over the region’s fate, and what was most at risk in the minds of Andalucians – the loss of identity and culture – may become a self-fulfilling prophecy.

Madrid Protest, Unemployment, Euro, Spain

One of the many large protests in Madrid in 2011

The incredible despair being experienced has given rise to a political movement amongst students, the youth and generally anyone disaffected by the political structure of Spain – the ‘Indignados’ (literally the “unhappy people” or “people with indignation”).  Holding local meetings to take to broader meetings, they hope to form a type of self-government which is a throwback to elements of anarchist Spain in the 1930s. We have come to know these types as the 99%. But the 99% lack the basis for a large groundswell, unlike the Indignados. Unfortunately for them, the same problems that inflicted anarchists in the 1930s are likely to come out in droves this time around as well. Petty squabbling amongst the regions, amongst small areas of the country, is the problem and not the solution. Consensus politics is not an easy task when the starting point is myopic, removing the larger context. This is a slightly different situation to the Catalan independence movement which has its origins in political, economic, social, cultural and linguistic repression from other parts of Spain.

So what can Australia learn from a country that has failed so comprehensively to make the connections with the culture that surrounds it? Put simply, a lot. Australia is already a multicultural country. Despite the framing of the recent white paper (the Asian Century), which puts Australia alongside Asia and not inherently within it, we are a part of Asia and not apart from it. Australia already has many successful business and cultural links with Asia, and so Australia has an advantageous starting point to build from.

So what are the risks to Australia if we turn away from the culture that we are a part of? The greatest risk is that Australia fails to make the cultural connections to establish long and lasting economic links. We should not think for a moment that a one-sector economy will see us on a never-ending path to prosperity. The Spanish property market is a prime example of what can happen when that happens. We must use our resources to leverage greater cultural and economic links with the region we are a part of – and language is the key to doing so. But I don’t see this happening and we are falling into the same trap that the Spanish have, in regards to property speculation and reliance on construction.

The learning of languages is where the problem lies. We have not yet found a way to successfully teach indigenous languages whilst engaging students to learn English. It is reported that when a bilingual Australia was proposed to Kevin Rudd at the 2020 summit in 2008, he said: ‘Cost too much money.’ The problems of learning languages and culture in Australia are a mirror of our internal policy and politics, which is then reflected into the region around us. We do not have a way of demonstrating cultural understanding internally to be used as a model to then learn cultures outside of our own.

The solution is in the hands of our leaders, both politically and institutionally. Educators have a role to play in the development of our kids to be citizens of the region, and of the world. Business must demand that politicians ensure that the teaching of culture and Asian languages is continuous in our school system. In the face of political change and policy upheaval with cultural connections, it is up to school leaders to fill the void. It is not simply an education, foreign affairs or economics policy issue, it is one and the same. Our failure to understand it is such, is a blight on our country.

After all, what relevance do we have in the region once the mining boom has finished? Are our next generation going to be parados? Or will they inherit their own paradise?

 

*Thanks to Ester from Villa Alicia Guest House in Malaga for use of this image. If you are in southern Spain, drop by. She was great to talk to about these things, and gave me some wonderful travelling tips. (I haven’t received any payment for this promotion, just want to reward a good experience.)