Doctor and activist

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Category: Personal

Submission to Senate Inquiry into Newstart 29/9/2019


This submission addresses the Terms of Reference in order. It is written from practical experience, economic knowledge and with some research. Areas in which the author does not have expertise are not mentioned. This does not mean that they are unimportant.  Comments on policy are made in relation to the term of reference, even if they are not directly asked in that term.

  1. An Acceptable Standard of Living including housing.

Two of the Four Freedoms in the UN Declaration of Human Rights are Freedom from Want and Freedom from Fear.  It is necessary that in Australia with a relatively high national income that people have enough money for food, shelter and some money to associated with others and enjoy some quality of life.  The amount of money needed for this last depends to a considerable extent on how much society’s resources are free, such as parks and health care, how much they cost such as transport, and this to some extent depends on the extent to which monopoly products, such as roads have been privatised.

The most critical item is usually accommodation. The widespread use of negatively geared real estate as an easy route to riches for those who have surplus income has led to property being seen as an asset class that cannot lose money and almost a national Ponzi scheme where everyone buys on the assumption that prices will continue to rise. This has been self-fulfilling[i], but the national private debt has grown enormously[ii], which economists have been concentrating on public debt.  The bottom line of this is that property has risen hugely in value, and in 2016 the median Sydney house price was 14 times the median income[1], but most of this value is in mortgage debt, which our banks have borrowed from foreign banks.  So those who have cashed out their capital gains have done so at the expense of those who bought, and as a nation, Australia still carries the debt, requires large interest repayments, creates a national vulnerability to a fall in our dollar and limits Australia’s ability to invest in more productive assets or industries[2].  The national obsession with real estate has been worst in Australia than other countries, and this must surely relate to the negative-gearing tax legislation.

At a practical level, rents have risen as property prices rise and this has been worst in Sydney.  People on fixed incomes simply cannot afford shelter, and this is compounded by the almost complete cessation of the building of public housing, which has resulted in housing stock being taken by those on welfare or with age and disability, creating a subculture of welfare dependency with few role models.

It is therefore an oversimplification to see the problems as just one of income.  But to address the problem requires pro-active policies in social structures and resources as well as infrastructure and education.

Given that many landlords see their properties as an investment, they are naturally keen to maximise returns. As prices rise the rental returns fall as a percentage of capital invested, even if that capital was not invested by the landlord, but is a function of the overall market price rise.  Since house prices are rising much faster than inflation, there is therefore pressure on rents to rise faster than inflation and faster than wages.  Unsurprisingly, landlords and agents often encounter resistance from tenants when they try to get rent rises greater than inflation. It is therefore easier simply to terminate the tenancy and start again with ‘market rent’. This leads to tenants being forced to move every year or so, and always having to take the rent rises.  This has meant that rents have been an ever-increasing share of incomes particularly in Sydney. The dislocati0on associated with forced moving is an ever-present reminder of the power structures in society and a significant demoralising factor for a considerable segment of the population. 

The changes in tax so that housing investment was seen as more long-term might begin to addresses these problems, but it requires some political courage as the idea of negative gearing is embedded in the society.  Property investors are aware that they are getting rich by borrowing but less aware that the selling to get rich relies on someone else’s borrowing and cannot be sustained at a nati0onal level.

  • the labour market, unemployment and under-employment in Australia, including the structural causes of long term unemployment and long term reliance on Newstart;

Governments in Australia need to face the fact that there are not enough jobs for the Australians who need them and that the price structure is moving in a direction that is worsening the situation. There are a number of reasons for this:

  1. The use of automation to replace labour, resulting in the closure of many offices and factories
    1. The mobility of information, capital and goods that has allowed competition from  cheap labour countries to replace Australian industries with a big competitive advantage in cost structures, so that more goods are imported.
    1. The weakening of unions and the rise of labour hire companies that has allowed for increasing sub award wages, cash payments and a reduction of job security.
    1. The use of work visas for unskilled labour, creating a sub-class of workers in the agricultural, cleaning services, hospitality and semi-skilled building industry where low wages are paid and Australian residents do not even compete for jobs.

It begs credibility that the Government is unaware of what is happening as they increase the number of unskilled workers to come to Australia on temporary visas, leave the unions emasculated and the Fair Work Tribunal under-resourced for any sort of policing role.  The large number of foreign students who are in Australia as paying University fees who also need work and are a significant pool working illegally, again for cash or sub-award wages. Naturally they are in no position to complain, so act to lower real paid wages, even if they have no direct effect on statutory rewards.  Australian government must face the reality that Australia’s cost and price structures are such that employers cannot compete on price in many cases and have therefore become importers.  Structurally there will a continuing and probably worsening problem that many Australians will be unable to get jobs, and there needs to be a national strategy to create industries that are world competitive in a balance of payments sense and which will create lasting employment. Failing that Australia could take a Middle Eastern or Norwegian solution that charges far more royalties to companies exporting our resources and invests these in long term assets to support our economy. The development of renewable energy has been suggested as an export industry to develop, but it appears that the influence of the coal lobby is undermining innovati0on in this area.  Those who chronically cannot find work remain on Newstart and the demeaning effect of continually applying for jobs that do not exist must demoralise even the most resourceful person. The ghettoization of poverty as outlined above compounds this, and it is surprising that there has been so little backlash from employers getting thousands of job application that they have no possible positions for. Presumably such correspondence is easy to ignore and dispose of. 

The policy that allows ‘choice’ in schools and subsidises bus fares for children of more upwardly mobile families to attend either private schools or schools in better locations also leads to a residualisation effect where those who have less choice are all together and social disadvantage tends to be concentrated, so that there is less social help available in terms of knowledge and resources in the neighbourhood.  Shortage of capital compounds this.

All this means that there are long-term structural problems in the Australian economy, which are compounded by the inequality of opportunity in the education sector.  Currently this effects disadvantaged people more, so can be ignored by the more privileged classes if governments choose to ignore the long-term implications for the society as a whole. There are some in government who think that they are only there to get a larger slice of the pie for their own voter segment and that they do not have an overall responsibility for the progress of the nation.  This approach must not be allowed to dominate, as a refusal to recognise the above structural issues will simply compound the difficultly as addressing them in the medium term.

Clearly those that are inappropriately trained or those who try to insist on an award wage where this has been allowed to be totally eroded, will be unable to find work and will need NewStart for a long time, particularly if there are not enough jobs.

  • the changing nature of work and insecure work in Australia

The changing nature of work as noted in b. above means that many jobs are either displaced by technology or ‘offshored’ where wages are cheaper.   There are also an increasing number of ‘guest workers’ on 457 Visa who are supposedly skilled and now there are provisions for unskilled workers[3] under designated area migration agreements (DAMAs). These people are supplemented by the large overseas student body who often also need work, but are legally restricted in how much or how long they can work, making them ripe for cash jobs, sub-award wages and exploitation.  With foreign workers at least 10% of the workforce, and union membership plummeting, there is very little enforcement of pay and conditions.  It also seems that governments want to turn a blind eye to the situation. Employers in the Northern Territory readily concede that DMA mainly are in the hospitality and tourist industries, which could presumably be done by native Australians. If native Australians are only to get ‘better jobs’ then the government which is allowing all these jobs to be taken by temporary workers ought either organise such jobs or stop blaming those in Australia who do not have jobs.  It may be that if fruit pickers were paid award wages the Australian fruit could not compete in the market, but with a consumer premium on Australian product and possible action to reinforce this, it is unlikely to be the case if a real effort were made at an all of government level.

As far as the 457 visa are concerned, many of the trades coming to Australia, such as tiling, gyprocking, cement rendering, plumbing and cooking could be done by Australians, but the educational emphasis on universities and training in the medical, legal and financial areas and the deliberate neglect of TAFE, technical skills and apprenticeships has meant that Australia has a huge oversupply of wannabe CEOs and a severe shortage of tradesmen.  What training our youth have is not actually appropriate for our long term needs. The two concepts of making education a for-profit exercise and letting ‘the market’ decide as if it has intrinsic wisdom, has made many young people do inappropriate training, before ‘the market’ teaches than the error of their plans.  Governments may not be able to predict exact numbers of each occupation needed in the next 20 years, but they should at least make an effort.  The absurd mismatch of skills needed and current training practices begs serious attention.

Employers, facing competition from imports with lower wages structures have lessened their cost by making work casual and only paying for workers when they are needed. From an employee’s point of view the casualisation of work means that they do not have  stable income, which has both immediate effects and also longer term ones in that they cannot get home loans or even rental properties on that they cannot show that they will be able to meet financial commitments reliably. This further marginalises many workers and adds to social inequality.

  • the appropriateness of current arrangements for supporting those experiencing insecure employment, inconsistent employment and precarious hours in the workforce

The Author does not fully understand the overall situation with regard to current arrangements but can make some observations and recount anecdotes that relate to experiences as a professional coming into contact with support systems.  The author currently works as a doctor treating Workers Compensation and Motor Vehicle accident injuries, so observes the action of insurers who act as private support for these people and also Centrelink in terms of people getting NewStart or the Disability Support Pension.

It might be noted that the NSW government has made legislative changes to reduce the time that workers compensation and third party insurance are paid to 5 years and to give insurers more discreti0on to deny payments to injury victims. This was in order to be able to lessen premiums and be able to claim that the State was ‘business friendly’.   The premiums have fallen and the private insurers have had a windfall, but this has been at the cost of payment to injured workers, both in terms of treatment denied and in terms of income benefits obtained.  The author wrote a detailed submission to the Hayne Royal Commission re this.

The effect of this legislation has been to force people who were on compensation to seek either NewStart of the Disability Support Pension from Centrelink.  I might be noted that the Workers Compensation legislation of 2012 gave long-term compensation patients another 5 years of support, but this came to an end in December 2017.  Most of these patients had been on compensation for more than 5 years, despite the funded rehabilitation and job training programmes.  It might be stated that his gave them a better chance of finding a job than others in the same physical condition who had not been injured at work.  Nevertheless Centrelink has resisted putting many of these people on the Disability Support Pension and insists on NewStart for many people.  A discontinued survey be SIRA (State Insurance Regulatory Agency of NSW) found that only 29-30% were on some sort of benefit.  8% had been declined by Centrelink, 12% were still being assessed by Centrelink, 18% had too many assets to get a benefit (and leaves 32% not mentioned)[4].  Prime Minister Morrison boasted that fewer people were being put on Disability Support Pensions, but this actually started under the Gillard Government. The author has a patient, a migrant illiterate in English, and probably his own language who was 61 years old, had been on Workers Compensation for a back injury, had Parkinson’s disease and was a carer for his sick wife and was refused a DSP. His chance of getting a job was negligible.  When the doctor took some time to write a detailed report to help the man, Centrelink stated that they would not pay more than $150 for the report, which took a couple of hours to do as his medical history was very complicated.  He was forced onto NewStart and given a provider and lot of literature on ‘mutual obligations’ that he was not even able to read.  Attempts to call Centrelink result in waiting times on the phone of up two hours. A computer eventually answers the call and cuts the person off if they cannot give the number and its suffix (which it may not have) in a very short time.  If complaints on the website are not filled in in a certain time, the site simply switches off, losing the draft complaint.  The systemic arrogance and indifference shown by Centrelink to its clients has to be experienced to be believed. 

The author recommends that all the Committee assessing this issue try to contact Centrelink by phone, attend an office and personally interview a few people in the situation. 

  • the current approach to setting income support payments in Australia

It would appear that the level of benefits is set historically and rises only when political pressure is applied to the system.  There does not appear to be any logical formula setting the level of benefits in relation to costs, inflation, rents or the poverty line.  If this is indeed so, it is no basis to run the welfare system of a country with systemic unemployment and the need for some degree of equity to maintain social harmony. If Australia has boom times it is fair that the success be shared, if there are bad times, it is fair that the pain also be shared and the effects of downturns not borne disproportionally by the most disadvantaged.

  • the impact of the current approach to setting income support payments on older unemployed workers, families, single parents, people with disability, jobseekers, students, First Nations peoples, people from culturally and linguistically diverse backgrounds, people living in regional and remote areas, and any others affected by the process;

The author does not have quantitative data on the impact of different groups, but has anecdotal evidence of patients utterly depressed about how they were treated by Centrelink, in despair about their ability to pay their bills and expressing a lack of hope for the future and suicidal ideation.  Older workers feel that they have no hope of ever getting a job.  Young unemployed complain that they cannot have a life as they have no money to get to job interviews, cannot join their friends for a drink or any social activity such as a coffee or a movie. This is very destructive of their self-esteem.

  • the impact of geography, age and other characteristics on the number of people receiving payments, long term unemployment and poverty;

The author works in suburban Sydney where the effects are very significant as stated above.  Unemployed people have difficultly even getting to a doctor in suburban Sydney due to lack of funds and are frequently changing address as they have to couch-surf as they cannot afford rents.

  • the adequacy of income support payments in Australia and whether they allow people to maintain an acceptable standard of living in line with community expectations and fulfil job search activities (where relevant) and secure employment and training

The oncome support level is quite inadequate for any sort of quality of life, and there is insufficient money even to carry out job search activities.  Young people need computers, printers and stationery to write and send resumes to meet their ‘mutual obligation’ targets, and it is even difficult to get haircuts, reasonable clothes and transport to the interviews if any. The costs of mobile phones are also a significant expense.  If they do not have unlimited time on their mobile phone contracts they are likely to run out of credit before Centrelink even answers the phone. If they do not have unlimited time they cannot afford to call Centrelink.

  1. the economic cost of long-term unemployment, underemployment, poverty, inequality and inadequate income support payments;

It is difficult to quantify the long-term costs of unemployment. The loss of self-esteem and the behavioural changes that this may create may be very destructive but are also an opportunity cost; what may have been is lost.  The loss of experience means defects in a CV and those who have a current job are usually preferred over those who do not, creating a spiral of long-term unemployment as the longer the unemployment, the more likely it is to be prolonged. Eventually the long term unemployed form a subculture of demoralised and invisible people.  It is somewhat surprising that there has not been more street crime with muggings such as happens in the US, when the unemployed lose all faith that society will look after them, see the average person’s indifference and therefore target random employed people. What society decrees as ‘survival of the fittest ‘in the normal economic and social framework may become a far more basic ‘survival of the fittest’ in a back alley, as happens in the USA.

  • the economic benefits – including job creation, locally and nationally – of increasing and improving income support payments and supports, and decreasing poverty and inequality

It is likely that the fiscal stimulus of an increase in NewStart payments and the DSP are likely to be very beneficial . It must be noted that the governor of the Reserve Bank, Philip Lowe has called on the Federal government to provide fiscal stimulus[5] as the tax cuts and low interest rates have not been enough to increase consumer spending, which is the major engine of economic growth.  It is know that poor people spend a much greater percentage of their income, in that they are not able to save.  Hence money given as an increase in NewStart or the DSP is likely to have a better economic multiplier to the economy than either tax cuts or infrastructure spending as the tax cuts tends to go proportionally to higher income who have an increased propensity to save, and infrastructure spending also has corporate profits retained.  The RBA has noted that long term increases in income lead to a greater propensity to spend than one-off payments[6], an unsurprising conclusion.  It has been stated that poorer people spend close to 100% of extra income, and this is certainly likely to NewStart recipients, whereas wealthier people may save up to 30%, having a far lesser multiplier effect in stimulating the economy.

The social effect of raising the income of welfare recipients are likely to be a reversal of the problems detailed above in proportion to the magnitude of the increase.  It will reduce inequality, give some hope to those on welfare and as such it is very important to the social cohesion in Australia.

  • the relationship between income support payment levels, minimum wages and wage stagnation in Australia and other comparable economies

The level of income support needs to approach wage levels to achieve the ability of welfare recipients to have a reasonable life.  Some people assume that if the unemployment benefit level approaches that of a low wage that unemployed people will not strive to get work.  This assumes that work is only an economic activity.  It is far more than this; it is a route to social acceptance and feeling of participation. Those who take this highly economic view of work are usually very dry and have not spoken to those who are unemployed and would benefit from doing so.  There is only danger if the loss of transport and health concessions by virtue of being unemployed are lost as soon as work is started and then have a long lead time to be reinstated.  One of the more callous ‘reforms’ of the Morrison government was to only pay benefits when they were granted, rather than backdated to when the application was first made.  This has doubtlessly saved the government money, but people do not apply for benefit until they can demonstrate a need for them and they are able to demonstrate such need at the time that they apply.  Clearly they have difficulty surviving while their claim is processed and there should not be an incentive for Centrelink to delay processing application, which is currently the situation. 

It is unlikely that the level of welfare affects the level of wages. What is more important is that those who only have welfare are able to have a decent life.  There are too many policy makers who mix up their private moral prejudices with evidence-based policy. This leads to assumptions that those without jobs do not want them and they must be punished for not having a job.  A more cynical view is that blaming the victims encourages people not to look at the inadequacy of the elite who unable to govern for the whole of society, unable to provide enough jobs for those who need them, or even to have an honest examination of the problems in society that cause these problems.  As one humane person commented, ‘There is not a shortage of jobs.  Anyone could give you a laundry list of things that need to be done.  There is lack of structure that will pay the people who do not have jobs to do things that need to be done’.  A job as currently defined is a task that either makes a profit for the employer or the government is willing to subsidise with taxpayers funds.  With government shrinking, and international and technological competition restricting industry, and government following an ideology that it must become smaller, most industries are shedding labour, even when it would be better to have it, for both the workers and the society.

  • the interactions with other payments and services, including the loss of any increased payments through higher rents and costs

The cost of providing people with a basic income should not be surrounded by a paranoia that other costs may rise.  It is certainly possible that a rent subsidy as an isolated measure may raise rents if it increases the resources of the renters without changing the quantity of rental stock.  Presumably the only thing that would keep rents down is vacancy and people unable to pay the asking rent. So if the amount people can pay rises these properties will rise in rent. But to simply subsidise rent without a policy to provide affordable housing will inevitably have this effect. The problem is not the rent subsidy; it is the lack of provision of affordable housing.

  • the cost and fiscal sustainability of any changes

The cost of increasing Newstart can be calculated. The fact that this is of comparable magnitude and is almost discussed as an option illustrates how little care the government has for the welfare of people that they are unable to provide jobs for.  The price is the price of having a fair society.  If this requires a bit more tax this should be raised.  The permanent cutting of taxes when there is a temporary boom in commodity prices is extremely irresponsible policy, and it may have to be reversed. The achievement of a surplus at the expanse of giving poorer people the means to live says a lot about the priorities of government, the commodification of people, and how out of touch our leaders are with quite a large segment of society.  If they wish to take a moral stand, one might remind them that a society should be judged by how it treats its weakest members. Pious people shod remember the story of the Good Samaritan and the questions asked, ‘Who was this man’s neighbour?’

  • the relative merits of alternative investments in health, education, housing and other programs to improve outcomes;

One of the key needs is affordable housing. Without housing it is very difficult to organise a life. Currently unemployed people in Sydney have great difficulty finding accommodation and rely on friends or relatives, sharing rooms, couch surfing and moving relatively frequently.  Money put into affordable housing would be money well spent, and is frankly a disgrace that housing has become an asset class for investors who build for the aspiring middle class rather than affordable housing and the government seems content merely to watch as inappropriate housing is built for much of the need. Indeed government housing is now largely confined to more and more disadvantaged groups, creating ghettos of social problems.  The provision of affordable social housing should be a major priority as shelter is a major human right.

The provision of access to health is also a human right.  The word ‘health’ has been appropriated and now in common political parlance refers to ‘access to insurance to pay for treatment of sickness.’  Health is actually the absence of sickness and it is far cheaper and better to maintain it than to merely pay for treatment of those already sick. Access to good food and housing are far more cost-effective than medical programmes, particularly private health insurance, which has an increasingly elective nature in terms of what is done, and the degree of luxury in which it is done.  A retiring US Surgeon-General was asked ‘what was the greatest medical advance in your time?’ and to the surprise of the questioner replied, ‘The introduction of Food Stamps’.  He recognised the importance of nutrition in the maintenance of health. In the US, with its niggardly attitude to welfare there are increasing problems with nutrition for r poor people and controversy over the payment for this such that there is a discussion of the need for better nutrition[7].  Australia with its poor levels of NewStart and its controversy over the cashless welfare card probably has a similar problem which is as yet not recognised.  It might be noted that there was free milk at schools in former times in Australia, and more recently there is a ‘National School Lunch Program’ in the US for children in lower socioeconomic areas[8] as they recognised that students were undernourished and this was affecting their education.  In terms of alternatives to raising NewStart, Australia may want to consider such programmes as it may increase equality of opportunity and school attendance in disadvantaged communities.  New Zealand makes use a school nurses with a wide range of functions[9]. This may a better way of delivering welfare to areas of disadvantage, especially if parents are dysfunctional.

In terms of preventive health, as opposed to treatment programmes such as school-based dental care, vaccination, or learn to swim classes may help improve health and save lives in disadvantaged communities and improve equality of opportunity. 

In terms of the cost-effectiveness of education spending, two features stand out. The first is that Australia is falling down the league tables of world school education at a serious rate and a serious level[10].  The second is that the Gonski Model of education funding has not occurred and there continues to be very high levels of subsidy to the private sector, with corresponding neglect of public school education[11].  Education is like health in that it is more important that those at the bottom get a reasonable basic standard than that those at the top get everything that can be offered.  Yet the political imperatives work the other way. ‘Choice’ in education has a  very detrimental effect in that subsidies, such as free travel and private school subsidies allow more privileged children to move to be with similar privileged children. There is then residualisation.  All those with disadvantage are congregated together with lesser resources and a lack of role models.  Clearly the poor results achieved in this situation drag Australia’s average down, as well as condemning children from disadvantaged areas to perpetuate their parents’ disadvantaged situation. Funding equality of opportunity would give these children a better start in terms of education, hopes, and employment, and as such would be an investment in reducing longer term unemployment.

It might be noted that universal health insurance is also very important.  Medicare is being undermined in that the Medicare rebate to doctors, which was set at 85% of the AMA fee in order to get doctor support for the concept, has been totally undermined. The government has not raised the rebate with inflation for over 30 years, so that the real value of the Medicare rebate has declined form 85% of the AMA rate to 46%. This s an almost 50% cut from a doctor’s point of view and is a demonstration of very bad faith by successive governments. Treatment of Medicare patients has thus returned to the status of ‘charity’ in the minds of many doctors.  Almost all specialists and many GPs will not take Medicare without a co-payment, so the ‘bulk-billing’ rates as trumpeted by the government are based on the GP habits, where quicker and more consultations have been used to make up the income deficit. But these bulk-billing figures also neglect to mention the fact that a co-payment exists for many services in addition to the Medicare bulk-bill.  Many patients go to the Emergency Departments (EDs), rather than a GP because these are free. This tends to be discouraged by the EDs so patient present later and sicker. ED visits are far more expensive than GPs, so it is false economy to save money on GPs and to push patients to EDs. It is also a cost transfer from Federal to State payments system and the overall cost to Government is greater.

  • other countries’ approaches to setting income support payments, minimum wages and awards

The level of payments depends to a considerable extent on the supply of shared or public resources. If there was universal access to affordable housing, free education, free health care and cheap public transport, income support needed would be less. Similarly if there is poor public transport, car dependency, privatised toll roads, education and health with many co-payments for doctors’ visits, school excursions and sports, more money is needed in welfare payments if there is to be any hope of equality of opportunity for children and a reasonable life for welfare-dependent adults.  Yet usually these aspects of social policy are seen in isolation.  Though the private sector is assumed to be highly efficient, the countries with the highest standard of living such as Denmark and Sweden often have very large public sectors. The point is that natural monopolies can deliver goods more cheaply than private organisations as they do not have to factor profits into their operations, so if both private and public systems were run with the same efficiency, the public one would be cheaper because of the lack of need to generate a profit.  The need for public good also needs to be calculated.  A public transport system that loses money might have huge benefits that could be costed, such as the savings o roads and parking, better air quality and making central city jobs available to people from the outer suburbs. Parents in inner city locations are familiar with problems such as difficultly staffing their child care centres as the lowly-paid staff cannot afford transport costs from the outer suburbs and either seek jobs closer to home, or do not work.  Making each element in society pay its own way without looking at an overall picture of spending and benefits amounts to having policy options confined by a very simplistic accounting system.

  • other bodies that set payments, minimum wages and awards in Australia

The setting of award wages in Australia has been traditionally done in the Courts which has in theory prevented political interference, but the destruction of unions by both changes in the concentration of workers and by deliberate political action has allowed the forces of both a global market and a large ununionised and unsupervised pool of temporary visa workers and students needing income has allowed the eroding of wages, particularly in the lower socioeconomic groups.  This has allowed the growth of an increasing ‘cash economy’.  This has created a US-style ‘working poor and underemployment, who may not be actually unemployed, but have the same problems as if they were, at times exacerbated by the lack of benefits such as a Health Care card or transport concessions that may be available to those officially on welfare.  In the mid-1980s the Australian Bureau of Statistics defined ‘unemployment’ as having less than 25 hours per week of work.  The US definition was that anyone with regular work, even an hour a week was ‘employed’.  Commentators such as Maximilian Walsh even compared the US rate to Australia’s, concluding that Australia was doing very poorly!  Political pressure soon made Australia adopt the ‘international definition’ and our unemployment rate plummeted. The calculation of index had been consistent, but the number has been relatively meaningless ever since. 

  • the role of independent and expert decision–making in setting payments

The principle that wage setting must be kept separate from government should be extended to unemployment relief.  The politicisation of welfare, the moral judgements that go with it and the relative political powerlessness of those on welfare means that a neutral and evidence-based approach to welfare needs to be established.  This may appear a radical proposition given the relatively large cost of welfare. But the danger of political interference has been recognised in having the Reserve Bank as an independent entity, and this principle is endorsed by all leading economies.   The Boilermaker’s principle in law upheld the need for an independent wage arbiter. There are also pricing tribunals that set electricity prices.  While it is true that a higher welfare payout may cause government inconvenience in that thy will have to budget for this, the current practice to grant tax cuts which are electorally popular, favour wealthy people and are granted when the economy is enjoying high commodity prices for exports also makes for budget pressures later[12].  It is an irony that governments concerned about the effect of welfare expenditures are the same ones that grant tax cuts, and are keen on privatisation deliberately undermining long term government revenue.  An independently-determined, reasonable level of welfare would create a cost obligation that would have to be managed by future governments, but this might make them less cavalier about giving away their revenue sources and make them recognise that they must manage the country for all Australians, not merely the demographic that voted for them.

Murphy, Jason, ‘Viral Graph shows House Price Danger’ 16 November 2018


[2] Walters, Stephen ‘The Risks in Rising Australian Household Debt’ 1 August 2018


[4] NSW Parliamentary Estimate Portfolio Committee 6 Transcript of hearing 12/9/19 p 35 – 12 September 19 – UNCORRECTED – PC 6 – Customer Service – Dominello.pdf





[9] /



[12] Seccombe Mike, ‘How John Howard’s Tax Cuts undid his protégé, Tony Abbott’ The Saturday Paper 20/12/14

[i]Pash, Chris ‘Here’s a look at the widening gap between wages and house prices’ 6 March 2018 Image result for Sydney Rents v median income


Kryger, Tony ‘Australia s foreign debt data and trends’ Research Paper no. 30 2008–09, 7 May 2009

Note that this graph only goes to 2011

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Mental Illness and Stupidity 3/6/20

Quite early in my Parliamentary career I was approached and discovered 4 problems with mental health in NSW. A fellow medical student, now psychiatrist approached me and said that the system was far worse than formerly.

I had worked as an after hours call doctor in 1977 and 1983 and found that mental hospitals did not want patients sent to them, and would try to talk referring doctors out of sending them. At first they would say it was not in their catchment area, then that the patients were not really mentally ill and I did not actually know what I was talking about. Eventually I tired of this game, so I would call and tell them a brief history, my diagnosis and that the ambulance with or without police escort was on its way.

So when my psychiatrist friend said it was a lot worse I was surprised. She explained that Nick Greiner closed all the long-stay mental hospitals for a supposedly community-based service with supported accommodation, but the alternative was never funded, and the system had staggered on ever since.

Then I was in an inquiry into the rise in the NSW prison population and a government prison psychiatrist had found large numbers of mentally ill and developmentally delayed people falling foul of the law. He explained that if they became dysfunctional they could not pay for the electricity and rent so became homeless. They had no chance of getting through the complexities of Centrelink and getting money, so eventually they were caught shoplifting in order to eat and ended up in the Magistrate’s court, where, if he did not divert them, they went off to gaol. He had a pilot scheme in Sydney and ?Port Macquarie to divert them to supported accommodation at hugely reduced cost.

I went for a long weekend near Port Macquarie and met an older lady on the beach, who, hearing I was a politician said that this made me a cad and a bounder who was of no use in the major social problem which was mental health. Accustomed to this assumption about politicians, I remonstrated mildly, and she told me her story of her schizophrenic son, who had gone in and out of supported accommodation and prison for 30 years without getting much help.

Finally I want to a conference on homelessness where I met a community mental health nurse who described how after long weekends she would go to the parks and under the bridges to look for her homeless patients, to see if they were alive to take their medication. I asked that she write a summary in point form of the problems of NSW mental health. She did so, and her excellent report formed the terms of reference of the NSW Mental Health inquiry which I initiated. I asked Brian Pezutti to chair it. He was a Liberal, and had the credibility of having been an Assistant Health Minister. He was also a very thorough and meticulous anaesthetist, retiring at the next election, and keen to do something useful before he went.

The Labor government agreed to the Inquiry because I had the numbers in the upper house. The Inquiry came out in 2002 (NSW Health System Worst in Aust SMH 10/12/2002).

It resulted in a number of things. The budget the following year in NSW rose by $320 million, but mental health money was also quarantined so that it could not be siphoned off to fund Emergency Depts or ICUs further down the budget allocation tree. Most significantly it triggered a Democrat-initiated Federal Mental Health inquiry which put psychologists on Medicare and hugely increased the mental health workforce.

Needless to say, diversionary schemes were part of the recommendations, as without support, mentally ill and developmentally delayed people cannot do the functions that are needed to manage a life in society. There appeared to be some progress and the complaints from mental health workers for some time changed from, ‘we cannot afford staff’ to ‘we cannot fill our positions’.

As the time has passed, it seems that the situation has slipped back. The history of these inquiries is that there is a fuss, things improve for a while, then go back until another inquiry finds the same problems.

So I was discouraged to read that a program to divert mentally ill people from Gaol is to be axed, because some bean counter thinks it is too expensive. According to the Dept of Corrective Services it cost $181.85 per day to keep a prisoner in NSW gaols, which is $1,273 a week, or $66,375 a year. It is dubious that a support scheme could not be organised for less than this, but the idea that the only thing that matters is whether it saves money seems an appalling way to run society. Surely we should figure out what we want to do, workshop how to do it efficiently, and then work out how to fund it.

If a diversion plan is to be axed, let the NSW government tell us that there are good diversion schemes already working and prove it by having an independent body affirm that there is not an excess of mentally ill or developmentally delayed people in prisons. If such schemes existed, why was there this new one set up? There is a long history of ‘pilot schemes’ being set up to deal with a political problem, and then quietly dying when the political heat goes off.

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Submission to Senate Inquiry into Adequacy of Newstart, 30 May 2019

Author’s CV I am a medical doctor and retired NSW MLC with some practical experience of the welfare systems and some knowledge of economics. Currently I am working with injured people who receive (or do not receive) Workers Compensation or CTP insurance benefits and who transfer to or are rejected by Centrelink for the DSP […]

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How the US does Spying

29 March 2020

Some years ago, I had lunch with an acquaintance of mine who was a reasonably successful manager, with a slightly less successful relationship history with men.  She was keen that I meet her latest beau, so we had a small group lunch.

The man in question was a fit-looking American in his early 50s who was keen to talk about himself, so we let him.  He was an ex-US Navy Seal. He would not quite admit that he was down on his luck, but he had a lot of training that the US needed to use, but they would not hire him in the Navy, though he could get ‘contract work’.  He would not be quite specific about this, and he assured us that if the missions went well, no one noticed anything.  That was the ideal outcome.  His life was at risk and he was well paid for each mission, but there was no ongoing commitment or pension if he was injured or had other misadventure.   As the dinner went on he said that he had recently been on a mission in Asia where he had done something and been caught at it.  He was chased by an angry mob up to the first storey of a building.  He was trapped and jumped out a window onto the canvas roof of a fruit truck. He had gone straight through the roof of the truck and landed amongst the fruit, spraining his ankle, but nothing further.  He was very lucky because just as he landed the truck drove away from the angry crowd while he lay low in the fruit.  When he got to the destination not far away, a number of people lined up and formed a human chain to unload the truck and he, being disguised and made up joined the line passing the fruit boxes and got a few coins for his efforts when the unloading finished, before slipping away into the crowd.  All very James Bond stuff.

Asked how he knew who the goodies and baddies were in all this and he said that this was defined in his brief.  In short, he was an agent acting for the US government but they were in a position to disown him if he got into trouble.  He was a pleasant enough fellow, and more interesting than many dinner companions, but I have not seen him again.

So I was interested to read the article below about how ‘an ex-FBI agent had died in Iranian custody’, having ‘disappeared in murky circumstances in March 2007’, ‘during an unauthorised trip for the CIA to gather intelligence on Iran’s nuclear program’.  Iran had ‘kidnapped a foreign citizen and denied him any basic human rights’.   He was ‘a gentleman’ and ‘outstanding’ said President Trump.  Perhaps.  And I like to think of myself as a champion of human rights.  But people do not go on spying missions for personal curiosity and this is a deadly game, ruthlessly played.  The story in the SMH is sourced from Reuters and the Washington Post but does not quite make this clear.

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Farm Update: Bushfire Time Day 3, 2/1/20

The air is better today, with the wind from the north-east, so we spent the day on the roof cleaning out the gutters. 

It terrifies me especially climbing up the slope to do the dormer window gutters, which were the most full of tiny pine needles.  Zincalum (Colorbond) is much more slippery than the old galvanised iron was as you are reminded with every step.  I always resolve that ‘This is the last time I go on a roof’, but it seems resolutions are easier to make than to keep. There is always some circumstance. 

I had always suspected that gutter guards were more trouble than they are worth, but today proved it for me. There was a more material under the gutter guard than on top of it, and it made the gutters much harder to clean.  Jan was cross, and having had the gutter guard installed at great cost ripped it off to make it easier to clean next time.  The object was to have the gutters so clean that no ember can find sustenance there, but obviously a few days of wind before a fire will undermine our efforts.  Gutters are dangerous in that they do allow a point for fires to attack houses and my brother says that in Western Australia, gutters are illegal in fire-prone areas.  This is logical, but the gutters are needed to collect water, and fortunately we still have enough of that at present- it is very expensive to buy it by the tanker load.

I had not realised how much material is blown up under the corrugations of a roof. Even with a 35 degree slope there are quite a lot of pine needles under both the ridge cap and where the roofing iron meets the valleys.  It is hard to get out, so we banged the tin to dislodge them.  I am not sure if it is a way that fire gets into the roof space, but it seems logical to try to remove them.

So that is the rant about roofs. Tomorrow I have to teach Jan how to use the chain saw, as the dead tree is still not removed, and persuade her that the pergola needs a more severe pruning.  We are going to get a real fire pump, which John says manage a higher flow.  Proper fire pumps, give a large volume quickly, so you can turn them off and not waste water. The one we managed to fix yesterday just gives a modest even flow.  John was a Fire Education Officer before his accident and was just a little offended that I raced off to be briefed by the fire team that he used to work with, but I assured him that prophets are never recognised in their own homes, so he took it in good part.

Tomorrow will hopefully be a quiet day and I may return to Sydney. My son, Mike and nephew Nick will come down as the relief team as Saturday expects heat and southerly winds, so the danger will be on again.  The fire is still 35 km away, so hopefully it will still be OK.

Everything is relative.  As we were on the roof a couple drove in with a double horse float. Jan went down and spoke to them.  They run a resort with 14 horses.  Jan has two of theirs already and they had brought 2 more. He said that he had done a google risk analysis and said that we were the safest farm for horses in the Southern Highlands because of the amount of open space between the trees on the road and the house and stables.  He has National Parks on all sides of his resort, which is mainly native eucalypt forest and he has only one access road.  He brought food for his horses seeking asylum.  The Moss Vale showground will take horses, but is very crowded and the rule is that you have to stay with the animals, which of course mostly means abandoning your property.

Time will tell. It is likely to be a long summer.

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Drug Testing and Strip Searching 7/11/19

7 November 2019

I have some experience in this area, though I would not seek to overstate it.

In 1985 I won a public service fellowship to look at workplace absence and I looked at the evidence of whether drug testing in the workplace worked. The main place it was suggested was at pre-employment medicals. The idea was that if you tested them and they were OK, they could have the job. It was a pretty silly idea as only a really serious addict would come to job medical interview with drugs on board so the pick up rate was low, the costs high, and the impression on the workers quite negative.

Later in my OHS job a worker was sent in for a medical as he was said to be using hard drugs in the portable toilet (thunderbox). He was taunting and arrogant, saying that I could not prove anything, and could not do anything as he would not give permission for the test. He was right of course, but he soon proved his accusers right as well by falling out the door of the thunderbox with a needle stuck in his arm.

When I worked in private OHS, the NSW State government saved money by sending people on parole to be drug urine tested on Medicare by local GPs. I was stuck with it in our practice which was one of the few that still agreed to do the testing. A man came in, angry and abusive, demanding immediate service, which he was granted to stop him terrorising the waiting room. He brought in a jar of very cold urine for testing. I said that I wanted a fresh specimen, gave him a jar and pointed to the toilet, ten paces away. He left to ‘get a new specimen’ and came back some time later. I said that I wanted to see him pass it, so he pulled his undies down saying, ‘There it is, are you happy now?’ No I wasn’t, as he had another small vial of urine in his hand as he held his undies. ‘You are a hard bastard’, he said as he eventually passed the urine, which unsurprisingly showed he was still using narcotics. The Parole people were pleased. They said, ‘We knew he was using but could not get a GP to get us a specimen’. I was not surprised that GPs were reluctant. At $15.20 for a Medicare visit that involved a terrified waiting room, half an hour of time, a threat to have your head punched in and the disruption of a whole afternoon for a whole medial practice, I told them that we were not going to continue testing either. Presumably he went back to gaol, and one might wonder how much good that did.

My next encounter was a female friend who had been very traumatised by a previous serious rape attempt that she had fought off. She was going through Central Station on her way to work, when a sniffer dog made the Police insist on searching her bag and ‘patting her down’. She had an empty plastic bag in her handbag that she had had a small amount of marijuana in some weeks before. But she was very traumatised by the experience because of the memories that were stirred and by the idea that she could not even walk around without people assuming that they had the right to touch her body.

The NSW Government will not allow pill testing at concerts, but wants to try to stop the drugs entering. Presumably there is a risk that younger people will bring them in if they are exempt from searches. Where will this end? Body cavity searches? MRIs outside concerts?

Prohibition will generally not work in the workplace, let alone the rock concerts. We need harm minimisation policies. This is not easy and it is not perfect, but it is better than prohibition.

Here is the NSW story in the NY Times, presumably with the unstated subheading, ‘Look what these mad Australians are doing now.’

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Lest We Remember

4 November 2018

My grandfather was wounded at Passchendaele.  My grandmother was the Army nurse who  looked after him in hospital.  He was one a five brothers all of whom went to the war. Three came back, one a respiratory invalid from chlorine gas.  He did not speak much about the war and rarely went to any of the commemorations.  He had a lot of medals in the drawer when he died.  I pressed him once on what it was like and he said cryptically, ‘You had to shoot them or they would shoot you’.  He did not elaborate.  Perhaps he knew that the stories about the glories were to hide the realities but he could not say so.

Much is written about what it was like in the trenches, but ‘All Quiet on the Western Front[1]’ documents it well, a German description, translated by an Australian.  He describes the misery in the trenches, killing a man with his bare hands and the mental stress that would never go.

The British were ill-led at Gallipoli, landing on the wrong beach.  The ANZACs managed to occupy a hill that they then were ordered off and never managed to take in the next 10 months.  They were ill-led in France, with an anti-Semitic prejudice and personal jealousies hindering the emergence of a more innovative Australian General, John Monash.  The Battle of Passchendaele was hurried up despite the fact that neither the men nor the tanks could move in the muddy conditions because Kitchener, the British general, was in danger of being sacked and needed a battle, at whatever cost, to retain his position.  Prime Minster Billy Hughes was happy for the Australian forces to be used as shock troops as it increased Australia’s prestige, ignoring the excessive casualty rate.

It was not the war to end all wars and as Germany’s industrialisation continued to increase their strength.  A dictator capitalized on the injustice of the peace to start again.

After the blitzkrieg of Poland, Britain declared war on Germany to start the Second World War and our Prime Minister Menzies announced that ‘as a result, Australia is also at war[2]’, following the Brits without question.  Our troops went over to North Africa and when the Japanese landed in Papua the few soldiers on the Kokoda Track with uniforms coloured for the desert fought with minimal resources as the American Commander, General Douglas Macarthur, who had moved from Melbourne to Brisbane to be closer to the action did not think them very important.

Vietnam  showed on our TV screens what war was really like and this was blamed for the loss, but no invader who has come and gone has ever won against the people who live there.  Lives were wasted; the lack of thanks and respect for the Vietnam veterans has caused immense suffering ever since.  ‘If any question why we died, tell them because our fathers lied’ written in WW1[3] was ever true.

The largest protest march since the Vietnam war with 74% of Australians opposing our entry into the Iraq war was not enough.  John Howard followed the US into the war anyway, then on to Afghanistan and the deaths and refugees in their millions continue to this day.  Post-traumatic stress is rife in the Australian army but hushed up.  Foolish wars with people dying for nothing.  John Cantwell, the Australian commander retired with post-traumatic stress and explained this in his moving book, ‘Exit Wounds’.

An ex-US Marine from Iraq lectures on how he tried to keep his men alive but could not get the armoured vehicles he needed to protect them from the roadside bombs.  He believed the US government did not actually care about the troops.  It was ever thus.

Last week I drove back from Western Sydney.  There was a big billboard recruiting for the Army and a much smaller one in the supermarket asking for donations for discharged veterans with post-traumatic stress.  There was a lot of excitement over the Invictus Games as maimed soldiers tried to overcome their injuries.  No one asked why they were injured and the Games were generously sponsored by the arms manufacturers who are on steroids of late as Trump demands countries spend 2% of their GDP on weapons to help the US balance of payments and Australia decides it will become an arms exporter, starting with a big order to our friends the Saudis who are famous for beheading journalists not to mention millions of Yemenis.

This week will have massive speeches and commemorations of our heroic soldiers.  The War Memorial will be upgraded to bigger than any cathedral as our new shrine, generously sponsored by the arms manufacturers again.  And the politicians will make fine speeches and improve their electoral prospects. 

It is the glorification of folly.

Lest We Remember.


Arthur Chesterfield-Evans is a medical doctor who started as a surgeon but saw that preventive health was more important and went into the anti-tobacco campaign, including time with the activist group, BUGA UP (Billboard Utilising Graffitists Against Unhealthy Promotions).  He spend some time  in NSW Parliament and was for time CEO of the Sydney Peace Foundation.


Lest We Remember traces the history of how Australia was drawn into wars by the British and the Americans, and looks at how poorly the strategies had been thought out and how poorly the troops themselves have been treated.  The hype and hoopla of the centenary of the end of the First World War will be used by the arms manufacturers and the politicians to cover the folly and indeed to perpetuate it.

[1] Remarque, Erich Maria, Translated by Wheen, Arthur Wesley 1928


[3] Kipling Rudyard, Epitaphs of War 1914-18.  He had encouraged his son to join up and his son was killed just after his 18th birthday.

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Swiss Democracy. 9/9/18

I visited Switzerland to see the Swiss Parliament and to try to get a feel for how their direct Democracy works. Their basic system is more like Australia’s than might be imagined.  They have two houses of Parliament. The lower one has members elected by a first post the post from individual electorates, and the […]

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Energy Plan- why it is bad, and why there is not much protest.

19 October 2017

No one quite understands the new energy policy, (National Energy Guarantee -NEG) which is why there is not much protest. But I suspect it is very silly. Here is why.

The National Electricity Market worked because suppliers put in bids for a price on 5min supplies. But big producers could withhold creating a shortage, then put in a late bid at a high price. That segment would then go out at that highest price with every supplier getting the higher price. Logically then,the cheaper producers simply made more money. I have heard that a wind turbine in a good location could be paid off in 18 months, and that the price will settle at about $87 a megawatt hr.

The new plan puts big stress on reliability, so the solar and wind people are disadvantaged, but can still make a lot of money. The coal technology is still not much use, as they cannot compete with renewables when the sun shines and the wind blows, and they cannot ramp up supply quickly. They are, as everyone keeps saying, better for base (=constant) load. Added to this they are obsolete as the pipes in the boilers get stress fractures after a certain time and maintenance becomes uneconomic.

Gas is good at turning on and off quickly, but as we know, gas contracts for export has left us short, so Malcolm will create some problems there.

So a system that has been rorted by a few inside players who get supernormal profits will be given a licence to continue. The price of electricity will not fall much, and the consumer will continue to be gouged, with vulnerable industries simply going broke to allow the energy players to get profits that they really should not have. But there is not much protest because either people do not understand what is happening, or they are beneficiaries of a little understood rort that will continue because they have cleverly used fear of blackouts to get a cushy system.

And I suspect Labor will support it, as it has support from the energy industry, and they can claim bipartisanship, and they have been too lazy to get a better plan.

See also the Post ‘A Response to the Libs’ Energy Plan 19/10/17′

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Limits to the Market? A New Paradigm Needed!

15 May 2017

Since the last two world wars were over markets, it was assumed at the conference at Bretton Woods that if there were free markets everywhere there would be no wars and countries who did well would prosper. It worked.  Germany and Japan traded in markets that had been denied to them pre-war and ‘won the peace’. The dogma was that because there was efficiency in production we would all be better off as goods would be available all over the world quickly and cheaply. And, helped by the overwhelming dominance of Milton Friedman’s economic theories the market has spread into every aspect of life. The fact that when Friedman’s theories were actually implemented in South America that they failed miserably was merely a blip ignored. 

Now the market is assumed to be better than anything else as a way of allocating resources efficiently. It is better than government, better than planning, hey it is infallible, and probably inevitable as well!

Governments do not have to manage anything; they can sell it, even if they do not need the money. Inner city buses are the latest. 

If you read Chapter One of most economics books, it tells you about competition and how you cannot charge too much or a competitor will uncut you, so prices are kept down.

The rest of the economics book tells about monopolies or oligopolies, where there is poor competition and you can charge what you like, or there are high set up costs as barriers to competition, or regulatory hurdles, artificial training or registration requirements, geographical limitation, existing facilities, impractical duplication costs etc etc, which make monopoly or ‘supernormal’ profits a certainty.  Yet Governments plough on creating private monopolies and compliant political parties are rewarded by campaign funding to keep on winning elections.

What I am writing is not new or original and is known by anyone with even the most basic grasp of economic theory.  Do the politicians not read past Chapter One?  Do they never think that they are creating uncontrolled monopolies as they transfer assets from ownership by all the society to ownership by a moneyed elite?  Are they so ideologically committed to privatisation that they no longer think at all?  Do they not care, or will they do anything for their own short-term interest? It seems that the answer to all these questions is YES!

They have sold the airport, the sea port, the water supply (an endless subsidy to an unused desalination plant), the railways, the electricity, the road network and easements under it, the world standard database of land titles registration, the small councils power to control development, the list goes on and on.  The health system is being sold by stealth. Medicare is being starved to death, as private health insurance is just subsidised inefficiency, and NDIS disability services will go the same way, no government services, oligopolies for profit paid for by the ‘Medicare’ levy rise, which is not even committed to Medicare.  The education system no longer produces tradesmen to do the job and private education rip offs abound from dodgy day cares to non-Gonski funding to schools to post-TAFE colleges selling dubious certificates to phantom colleges ripping off visa-seeking migrant students.

The public service is being ‘hollowed out’. It no longer retains centres of expertise as it can always buy ‘consultants’ who carry briefcases and impressive CVs and have no interest except the public good.  It closes offices, hires short term workers, relies on PR driven websites and replaces people with knowledge by ‘Services NSW’ which has someone who might know which department might do what you might want.

Our existing political system seems unable to govern in our interest. The interest of the political parties no longer coincide with the public interest. Our governments’ decisions have been bought like everything else.  I do not think that money can be held at bay by electoral funding law reform. When we fought the tobacco industry, it sponsored sport and culture to get political allies. When that was banned, it sponsored ethnic groups, rescue boats and helicopters, any worthy cause that could lobby for it, and that was without gifts in kind, dodgy ‘foundations’ or other less visible influence-buying. 

The only answer that I can think of is Swiss-style democracy where major decisions are taken by referenda of the people, and Parliaments merely implement decisions that the people have made. Any other suggestions?

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