Real environmental problems are being neglected: picking through the detritus left behind by Cyclone Haima at Manila Bay on Thursday.
Matt Ridley 22 Oct 2016 The Australian
After covering global warming debates as a journalist on and off for almost 30 years, with initial credulity, then growing scepticism, I have come to the conclusion that the risk of dangerous global warming, now and in the future, has been greatly exaggerated while the policies enacted to mitigate the risk have done more harm than good, both economically and environmentally, and will continue to do so. And I am treated as some kind of pariah for coming to this conclusion. Increasingly, many people would like to outlaw, suppress, prosecute and censor all discussion of what they call “the science” rather than engage in debate. We’re told that it’s impertinent to question “the science” and that we must think as we are told. But arguments from authority are the refuge of priests.
These days there is a legion of climate spin doctors. Their job is to keep the debate binary: either you believe climate change is real and dangerous or you’re a denier who thinks it’s a hoax. But there’s a third possibility they refuse to acknowledge: that it’s real but not dangerous. That’s what I mean by lukewarming, and I think it is by far the most likely prognosis.
I am not claiming that carbon dioxide is not a greenhouse gas; it is. I am not saying that its concentration in the atmosphere is not increasing; it is. I am not saying the main cause of that increase is not the burning of fossil fuels; it is. I am not saying the climate does not change; it does. I am not saying that the atmosphere is not warmer today than it was 50 or 100 years ago; it is. And I am not saying that carbon dioxide emissions are not likely to have caused some (probably more than half) of the warming since 1950. I agree with the consensus on all these points.
Some of my scientific friends accuse me of inconsistently agreeing with the scientific consensus that genetic modification of crops is safe and beneficial, but refusing to agree with the scientific consensus that climate change is dangerous. I agree with the scientific consensus on GM crops not because it is a consensus but because I’ve looked at sufficient evidence. There is no consensus that climate change is going to be dangerous. Even the UN Intergovernmental Panel on Climate Change says there is a range of possible outcomes, from harmless to catastrophic. I’m in that range: I think the top of that range is very unlikely. But the IPCC also thinks the top of its range is very unlikely.
Besides, consensus is a reasonable guide to data about the past but is no guide to the future and never has been. In non-linear systems with feedbacks, like economies or atmospheres, experts are notoriously bad at forecasting events. There is no such thing as an expert on the future.
It is undeniable that the climate models have failed to get global warming right. As the IPCC has confirmed, for the period since 1998, “111 of the 114 available climate-model simulations show a surface warming trend larger than the observations”. That is to say there is a consensus that the models are exaggerating the rate of global warming.
The warming has so far resulted in no significant or consistent change in the frequency or intensity of storms, tornadoes, floods, droughts or winter snow cover. The death toll from droughts, floods and storms has been going down dramatically. Not because weather has got safer, but because of technology and prosperity.
As two climate scientists, Richard McNider and John Christy, have put it, “We might forgive these modellers if their forecasts had not been so consistently and spectacularly wrong. From the beginning of climate modelling in the 1980s, these forecasts have, on average, always overstated the degree to which the Earth is warming compared with what we see in the real climate.”
In 1990, the first IPCC assessment predicted a temperature increase of 0.3C per decade (with an uncertainty range of 0.2C to 0.5C). In fact in the 2½ decades since, even though emissions have risen faster than in the business-as-usual scenario, the temperature has risen at an average rate of about 0.15C per decade based on surface measurements, or 0.12C per decade based on satellite data; that is, less than half as fast as expected and below the bottom of the uncertainty range!
What about 2015 and 2016 both being record hot years? Well, because of the massive El Nino, the HADCRUT4 surface temperature line just about inched up briefly in early 2016 into respectable territory in among the lower half of the model runs for a few months before dropping back out again. That’s all.
So why is the atmosphere not doing what it is told? Actually it is. These results are precisely in line with the physics of the greenhouse effect. A doubling of CO2 in the atmosphere cannot on its own produce dangerous warming. The sensitivity of the atmosphere to CO2 is about 1.2C per doubling. That is the consensus, spelled out clearly (if obscurely) by the IPCC several times over the years. And that’s what we are on course for at the moment.
So what is the problem? Well, the theory of dangerous climate change depends on a whole extra step in the argument — the supposed threefold amplification of carbon dioxide’s warming potential, principally by extra water vapour released into the atmosphere by a warming ocean, and accumulating at high altitudes. And the evidence for that is much more shaky.
Recent attempts to measure the sensitivity of the climate system to carbon dioxide using real data nearly all find that it is much lower than the models assume. So, if it’s consensus that floats your boat, there is an emerging consensus from observational estimates that climate sensitivity is low.
What’s more, all the high estimates of warming are based on an economic and demographic scenario called RCP 8.5, which is a very unrealistic one. It assumes that population growth stops decelerating and speeds up again.
It assumes that trade and innovation largely cease. It assumes that the ability of the oceans to absorb CO2 fails. It assumes that despite all this the income of the average person trebles. And most absurd of all, it assumes that we go back to using coal for almost everything, including to make motor fuel, so that by 2100 we are using 10 times as much coal as we are today. In short, it is a barking mad scenario.
It is beyond question that global warming has generated enormous research funds, measured in many billions, that this has stimulated all sorts of scientists, from botany to psychiatry, to link their work to climate change, and that almost none of this money flows to those with sceptical views.
As the distinguished NASA climate scientist Roy Spencer has written, “If you fund scientists to find evidence of something, they will be happy to find it for you. For over 20 years we have been funding them to find evidence of the human influence on climate. And they dutifully found it everywhere, hiding under every rock, glacier, ocean, and in every cloud, hurricane, tornado, raindrop, and snowflake. So, just tell scientists 20 per cent of their funds will be targeted for studying natural sources of climate change. They will find those, too.”
Suppose I am right and our grandchildren find that we were greatly exaggerating the risks, and underestimating the benefits of CO2. Suppose they do indeed experience carbon dioxide levels of 600 parts per million or more, but do not experience dangerous global warming, or more extreme weather, just a mild and decelerating increase in global average temperatures, especially at high latitudes, at night and in winter, accompanied by spectacular global greening and less water stress for both people and crops.
Does it matter that our politicians panicked in the early 2000s? Surely better safe than sorry? Here’s why it matters. Our current policy carries not just huge economic costs, which hit the poorest people hardest, but huge environmental costs too. We are encouraging forest destruction by burning wood, ethanol and biodiesel. We are denying poor people the cheapest forms of electricity, which forces them to continue relying on wood for fuel, at great cost to their health.
We are using the landscape, the rivers, the estuaries, the hills, the fields for making energy, when we could be handing land back to nature, and relying on forms of energy that nature does not compete for — fossil and nuclear.
But there is a further reason why it matters. Real environmental problems are being neglected. The emphasis on climate change as the pre-eminent environmental threat means that we pay too little attention to the genuine environmental problems in the world, things like overfishing and invasive species.
And here is the maddest thing of all. Current policy is not even achieving decarbonisation. In 2012 Bjorn Lomborg calculated that 20 years of climate policy had reduced global emissions by less than 1 per cent. During that time the world had spent more than a trillion dollars to subsidise wind and solar power, yet between them they had still not achieved 1 per cent of world energy provision, and had cut emissions by even less.
Original article here
Federal election 2016: How Labor’s Mediscare plot was hatched
THE AUSTRALIAN 4 JULY, 2016 Pamela Williams
Erinn Swan, 24, the daughter of former treasurer Wayne Swan, devised the Medicare fear campaign for the Labor Party. Picture: Nicholas Welsh
With the temperature outside fit to freeze, Malcolm Turnbull arrived at the Coalition’s campaign headquarters in Canberra at close to 1.45pm last Thursday. He had wrapped up a successful speech to the National Press Club and now he would thank excited campaign staff for their hard work.
They would win “with the luck of the gods”, he told the crowd as it gathered in a bland room adorned with a few posters on the wall. It was now up to the judgment of the Australian people. He added optimistically: “I think Labor’s lies have started to wear thin.”
Turnbull did not reveal the bad news he had just received. In a private office, party director Tony Nutt had walked the Prime Minister through the numbers. It was not a happy picture. The Coalition’s recovery in the polls had stalled. The advertising blackout had begun. They could not counter Labor’s ground campaign with mass union volunteers. And with seats up-ended by the exodus to independents, the outcome was unclear.
An hour later, on a RAAF jet back to Sydney, Turnbull was in a pensive mood. Seated in the forward cabin with its polished timber fittings and blue-leather seats he admitted to being tired. “I remain apprehensive,” he said. “It’s still pretty close. A whole bunch of seats are pretty close. What the net is, we don’t know.” Labor’s Medicare scare campaign was on his mind. “The Medicare lie is probably the worst … that’s obviously cost us some votes. It’s amazing how they got away with it.”
Three weeks earlier, Erinn Swan, head of digital at ALP campaign headquarters in Melbourne and the daughter of former treasurer Wayne Swan, had come up with a good idea. She could hardly have known that it would disrupt the Turnbull campaign’s economic mantra: “We have a plan.” Nor that it would help derail Turnbull’s smooth path to power. Or that it would expose weaknesses in the Liberal headquarters and suck almost two weeks out of the Prime Minister’s campaign.
In the end Swan’s good idea would become Labor’s campaign motif — right up to judgment day. Swan’s digital team had wanted to create a digital ad warning that the Coalition would wreck Medicare — after all, it was already looking to outsource some backroom functions. Protecting Medicare had already been on the grid of issues Labor deployed to attack Turnbull. But if it could get former prime minister Bob Hawke to front the ad, well, it just might fly.
Swan took her idea to ALP national secretary and campaign director George Wright: Let’s put Hawkie in an ad to warn the Liberals will privatise Medicare.
Wright liked it. The digital team managed a list of about 300,000 email addresses, plus social media and digital advertising. Through this large email network, Labor now received small online donations that totalled twice the size of the largest single contribution from any trade union. A digital Medicare ad with Hawkie was a good idea. Wright phoned Hawke. He agreed — happy to be involved with the campaign — and a team flew to Sydney to film in the ALP’s Sydney office. They made a 90-second spot to use online and with supporters.
The spot went so well online that Wright had it cut to a 30-second ad for TV and took it out to focus groups. Again, it worked so well that Wright flew to Sydney to see Hawke to discuss running it as an ad on TV. He wanted to walk through the potential aggression the old campaigner might strike if the Coalition decided to go after him — with all its weapons. Could Hawke cope with that? Hawke waved it through.
Bob Hawke’s ALP ad – video here
The Medicare campaign was based on a projection from a premise [lie]: that because the government was outsourcing [not privatising] a small corner [some administration] of Medicare, the whole lot could go. So far as Wright was concerned, this tapped a core weakness of the Coalition: that it did not support Medicare, or that it supported it only grudgingly while looking for ways around it. This was the fear to leverage.
The Hawke ad was launched on YouTube on June 11 and on TV on June 12. It ran as free as a rabbit in a field for nearly a week. “You don’t set up a Medicare privatisation taskforce unless you aim to privatise Medicare,” Hawke told viewers.
By June 16, fast-rising anxiety had gripped Victorian Liberal officials. Voters in marginal seats were responding to Hawke — and older voters, who pinned health as their top item, were raising concerns about Turnbull’s plans to privatise Medicare. Told it was not true, these voters still thought it sounded right. Turnbull had no such plans. But it was too late. The Hawke ad had bitten deeply.
The party’s activist Victorian president Michael Kroger and his state deputy, Simon Frost, decided to push Coalition campaign headquarters to act — they needed a rebuttal and it had to be fast. Some of the state directors were already concerned about whether the campaign was too lifeless, with its clinical jobs and growth message. Labor’s Medicare ad was biting in Victoria.
After warnings from the Victorian Liberals, Tony Nutt was pressed to react faster to Labor’s Medicare campaign. A back-room operator, he emerged from the shadows for the Liberal campaign launch.
Frost raised it at the 7.30 morning conference between state directors and Nutt, and pressed for action. The Victorians thought the feds should have been on to it instantly to crush Labor’s credibility before the Medicare story developed a life of its own. Kroger was understood to have raised his concerns with Foreign Minister Julie Bishop. She too, would take it up on a CHQ conference call.
The Coalition had not anticipated Shorten would turn Medicare into a giant privatisation scare. It was unprepared. Suddenly the challenge was to rebut it while not spending too much time on it — thus ending up fighting on Labor’s turf. It had to get back on to safe territory with its own message about the plan.
On Saturday, June 18, and clearly suffering from a cold or flu, Turnbull struck back, vehemently declaring the Medicare scare to be an outrageous, bizarre lie. But he revealed how far Labor had already bitten, announcing that he would dump plans to outsource Medicare’s back-office operations. Medicare would “never, ever” be privatised, he said.
Turnbull looked and sounded authentic, angry and honest, repudiating the Labor attack. But it was too late. He would be forced to fight the mirage of Medicare privatisation until the final breath of the campaign.
When Wright’s headquarters team saw Turnbull abandoning the taskforce they were stoked. They were in a fight and they had taken a major win. It would be a turning point in Labor’s campaign.
ALP national secretary George Wright at Labor campaign headquarters. He called Bob Hawke to ask him to front the Medicare ad.
The next day, Sunday, June 19, Shorten went after Turnbull again over Medicare at the Labor campaign launch. No mind that the Coalition had no plans to privatise Medicare, the story was now embedded with the public and Shorten intended to water it. Turnbull could not be trusted, he told the party faithful and TV viewers. There was already a taskforce and other inquiries into Medicare. “Piece by piece, brick by brick, the Libs want to tear it down,” Shorten roared.
One senior member of Turnbull’s team said later: “It wasn’t until someone got the AMA to come out, that we got any traction.” New AMA president Michael Gannon rejected the idea that the government had plans. But his impact as a supportive third party did not last long. Labor, after all, had the health unions.
On June 20, Wright fired up his “never, ever” ad with a quick cascade of grabs of former prime minister John Howard declaring he would not introduce a GST “never, ever, it’s dead”, followed by Tony Abbott promising “no cuts to education, no cuts to health” and concluding with Turnbull: “Medicare will never, ever be privatised.” It was honey for an adman. The voiceover rolled: “Now he wants to privatise Medicare.” The finale was simple: The Liberals say one thing and do another.
It rammed home the message succinctly.
On June 21, the ABC’s 7.30 ran the story, following the row between the parties. Presenter Leigh Sales told viewers that the Coalition had no plans to privatise Medicare, and yet Labor said it could not be believed — given past form on breaking promises. Two nights later Shorten appeared on the program when Sales pressed him to put his hand on his heart “and say the Coalition has a policy to privatise Medicare”.
Shorten responded that the election would determine the future of Medicare. And with that, Labor cemented its pitch.
Through to election day, “save Medicare” rallies would spring up at short notice with union volunteers, and Shorten’s “Bill Bus” would roll into marginal seats to “save Medicare”.
The pressures caused by the Medicare scare opened up a number of other fissures in the Coalition campaign, in particular concern over finances.
Money had become a sore point. The confusing manoeuvres between Turnbull and Treasurer Scott Morrison on economic policy in the months leading up to the election had disappointed and angered donors in the business community.
Many had been aghast at the on-off nature of debates, such as raising the goods and services tax and the overnight elevation and equally swift dumping of Turnbull’s proposal to overhaul federal-state taxes.
Turnbull had described this as the most fundamental reform to the Constitution in generations. It was gone in two days.
There had been evident strains between the Prime Minister and the Treasurer. There was speculation over Morrison’s future prime ministerial pretensions and ambitions, notwithstanding he was still attempting to come to grips with his Treasury portfolio. Some big donors had sat on their hands after this. Many disapproved of business tax cuts aimed eventually for the pockets of offshore conglomerates. And once the budget had cracked down on superannuation concessions, the list of aggrieved Coalition supporters only grew longer.
Money was still raised from some big donors but generational change in the wealthiest families had reduced this buffer. The younger generation was not so keen to give.
The Coalition campaign headquarters. Malcolm Turnbull heard the bad polling news in Tony Nutt’s office on June 30 as the campaign was wrapping up.
The party had a new federal treasurer, an honorary position, in Andrew Burnes, a travel industry businessman. His connections with the deep pockets of industry could never rival some of his predecessors, particularly given the deep disenchantment with politics, although party insiders felt he had made an excellent start. But they would need more than a good start.
In January, Turnbull contacted Ron Walker, the party’s greatest fundraiser, who had retired several years ago after a commitment of 15 years as treasurer. They met at the end of that month at Treasury Place in Melbourne.
Turnbull wanted everything possible in the saddlebags for the election and he asked Walker to open his legendary contact book to help Burnes where possible.
On March 7, Walker hosted a private lunch for Turnbull at the Athenaeum Club in Melbourne. The Prime Minister was re-establishing himself with a small group of businessmen with influence and connections. Moreover, they were closely connected to the party. They included Hugh Morgan, Charles Goode and John Calvert-Jones, all directors of the Liberal Party’s Cormack Foundation, a long-time investment vehicle that provides funds to the party.
Walker hosted another lunch for Nutt in the same vein later that month.
The Cormack Foundation would be closely watched by different divisions of the Liberal Party — keen for its cash. Cormack was established in the 1980s after the Liberal Party sold radio station 3XY and invested the $12 million proceeds in blue-chip stocks. It has earned multiple millions of dollars in dividends over the years, steered by a group of sharp-eyed directors. Chaired by former Western Mining boss Morgan, the board includes Goode, former chairman of ANZ and Woodside; stockbroker Calvert-Jones; Fred Grimwade, formerly at Western Mining and now a principal at Fawkner Capital; and Peter Hay, chairman of Newcrest Mining.
It includes a preponderance of lawyers, a handy defence during regular arguments with party officials over where the money should be directed.
As recently as two weeks ago, insiders at the Coalition CHQ in Canberra were complaining bitterly that Cormack had promised them more than $2m for the campaign but that this money had been slashed after Kroger insisted it belonged instead to the Victorian party, which was still trying to get itself out of the hole caused by a major fraud in the branch office.
Cormack, which is understood to have a policy of distributing only dividends, declined to comment. But close observers in the party say that the tradition has always been to provide strong support for the maintenance of the Victorian branch — and to occasionally make funds available to the federal party.
After substantial payments, disclosed under electoral laws, Cormack has expended most if its cash for now on the clutch of elections over recent years.
George Wright’s polling told him the Medicare fear campaign was biting deeply into Turnbull. Labor would push it all the way to the finishing line.
It is understood Kroger had already argued that any money available should go to the Victorian division, but was rebuffed by the board. The federal party argued for more. Nutt’s federal office wanted $2m, but the sum provided was closer to $1m.
Nutt was forced to go off-air with his TV advertising for two or three days in the third-last week of the campaign. One furious insider declared: “If we’d had the money it would have been about losing less than five seats at that time.” Instead there were 10 in play.
From the other side of the pond, there was no concession that the Coalition appeared to have financial troubles. By the last week of the campaign Wright believed Turnbull himself must be footing the bill given the scale of advertising running nightly.
Labor’s campaign, outside the Medicare fight, fell into its own hole after the release of the policy costings on June 26 which showed deeper and longer deficits than Turnbull had revealed. It fed into the argument, with shades of Tony Abbott, that Labor was all about debt and deficits, taxing and spending.
On the same day as the Labor costings bombshell almost halted Shorten’s campaign, Wright launched his “Out of Touch” ad. It was designed to attack Turnbull by implying that his personal wealth was a barrier to his ability to understand everyday worries. “Maybe it’s because he never had to rely on these services that Malcolm Turnbull would make a decision to cut health, education and Medicare, cuts to pensions and family payments, and talk up a GST. Malcolm Turnbull is just seriously out of touch.”
They had tested the ads with focus groups, finetuning, and the response had been excellent. But at one group, one member told the questioner, Turnbull’s not just out of touch, he’s seriously out of touch. Wright added the word to the mix and tested the ad again. This time it went off the charts.
Many had expected the Turnbull-versus-Shorten battle would be a bloodless affair. Even the calling of the election had no excitement, no fanfare. It dribbled in, like a light rain that had dried by noon. It was in line with Nutt’s strategy to portray Turnbull as a steady and competent manager of the nation in a time of uncertainty — but with a plan. No hoo-has and pompoms, as they expected Labor to turn on.
Still there was an undercurrent between the two men, a note of class war. Turnbull, the son of a single father, and Shorten, the son of a single mother, had worn their ambition like incandescent tattoos. Turnbull had reached the top of the business ladder, Shorten had reached the top of the labour ladder. With their broad foreheads, wide smiles and self-determination born of emotional fortitude, each had always intended to be prime minister one day. Turnbull had torn down predecessor Abbott to get there; Shorten had officiated at the political death of his own two predecessors. But he remained a step away from power — as far away as the heartbeat of a nation.
Neither man’s story bore the Shakespearean drama of the momentous clash of 1996 between Paul Keating and John Howard, two of the most talented politicians to stalk the stage. Labor’s 13 years of rule under Hawke and Keating had given way to the shock of Howard’s victory, which he in turn carried to 11 years as prime minister. That clash resounded with blows as they fought each other to the finish line.
The party president and the pollster. Richard Alston left, with pollster Mark Textor in a rare moment outside campaign HQ.
Turnbull visited the Governor-General on May 8. In truth, he had called the election three weeks earlier, on April 19, when he announced it — as a second order of business — during a photo op in Canberra. He was not actually calling an election, he said at the time, but Australia would go to the polls for a double-dissolution election on July 2. The budget would be delivered on May 3. Turnbull had committed the country to an eight-week campaign. Purists would call it a 10-week campaign, dating from Turnbull’s first announcement on April 19. Either way, and beyond the semantics, it was going to kill everyone involved. In a perspicacious comment, Peta Credlin, former chief of staff to Abbott, declared in her first newspaper column: “You are probably all sick of it and it’s barely started.”
Many eyes and ears would be tuned to Credlin and Abbott. Would they disrupt the campaign? Would Abbott white-ant Turnbull, transforming 2016 into a rerun of 2010 when Kevin Rudd had undercut Julia Gillard’s campaign. Each knifing had begat more future knifings. No one truly believed the cycle of bloodletting could stop.
Turnbull had begun a fall from grace with the electorate. After a political honeymoon with matchless poll numbers, Turnbull had appeared initially to be some kind of golden figure. But it was not to be sustained — it was a honeymoon, it was rose-coloured glasses, it was dreams, it was an illusion.
The Newspoll that signalled Turnbull’s sharp fall from public favour was a devastating blow to his supporters and all of those who had backed his tilt against Abbott. The front page of The Australian on April 5 had news that sent a shudder through the party: “Turnbull surrenders lead.”
In a bit over two months, Turnbull’s satisfaction rating had crashed 15 points from a post-honeymoon high. Far more ominous was the headline number: Labor was ahead 51-49 per cent in two-party terms, reversing the polls at the start of the year that had the Coalition ahead, 53 to 47 per cent. It was just seven months since Turnbull had challenged Abbott.
When finally Turnbull approached the Governor-General on May 8, Jacqui Lambie, the troublesome independent senator from Tasmania, declared that the Prime Minister had turned Mother’s Day into Turnbull Day.
To the myriad questions thrown by reporters through that day, Turnbull responded that it was an exciting time to be an Australian, that a double dissolution would mean rolling back lawless building unions with the restoration of the watchdog Australian Building and Construction Commission, and, on a positive note, that he looked forward to several campaign debates with Shorten.
Abbott, vanquished, seemed to stay mostly below the radar.
Tony Abbott chases every vote in the Sydney seat of Barton, while adviser Richard Dowdy, rear, searches for some answers.
Every now and then, he materialised suddenly on television, perhaps an interview with a true believer from his camp, or a bright wave from a candidate launch for the cameras.
But his followers in the party had barely kept their claws gloved as Turnbull walked on water in the months following the coup.
With the election imminent and Turnbull’s popularity dented after the messy economic debates over the GST and other matters, the party seemed poised for a secondary war between its two prime ministers in addition to the battle between Turnbull, the Prime Minister, and Shorten, the challenger. There could be three potential prime ministers in this fight if Abbott chose to argue his own policy positions from the sidelines.
Credlin, seen still by many as Abbott’s forward guard, rattled Turnbull’s cage early, referring to him as Mr Harbourside Mansion on Sky, where she had a new role as an election commentator.
Abbott mostly took to the road, attending campaign launches, helping candidates, shaking hands and smiling. In the final stretch of the election, he could be found wandering along the main street in Brighton-Le-Sands near Sydney airport.
Clad in navy, he strolled with Nick Varvaris, the federal member for Barton, who would go on to lose his seat to Labor’s Linda Burney four days later. “Hey, it’s Tony Abbott,” a couple of big guys said, rushing for a selfie with the former PM. “We’ll definitely be voting Liberal.”
Abbott found a baby to chat to, its enthralled owner happy to stop for a photo. Abbott, making small talk, trying out the fish and chips, walking alone without the entourage of prime ministerial office, looked strangely disconnected. He kept his thoughts to himself.
EXCLUSIVE | TOMORROW PART II: Both sides get down and dirty by Pamela Williams only in The Australian
Original article here
THE AUSTRALIAN 20 FEB, 2016 BY MICHAEL MCKENNA
A landmark finding disqualifying a claim of Aboriginality by a former senior NSW public servant has led to indigenous leaders calling for tougher identity checks amid warnings that “fake Aborigines’’ are involved in widespread rorting of benefits, government jobs and contracts.
The politically sensitive issue dominated a meeting of the Prime Minister’s Indigenous Advisory Council late last year to discuss a new commonwealth procurement policy that at least 3 per cent of all government contracts should be allocated to Aboriginal and Torres Strait Islander businesses.
A formal submission has since been made by the council to Malcolm Turnbull’s office to abolish the practice of local Aboriginal land councils signing off on claims — often on the basis of a single statutory declaration — with power given to native title groups to use certified genealogists.
Council chairman Warren Mundine and Queensland Aboriginal leader Stephen Hagan, who until recently headed a council of Australia’s Federal Court-vetted native title organisations, said the existing system to approve claims of Aboriginality was outdated and being rorted. “You can go to any town in the nation with a significant indigenous population and you’ll see not one, but numerous ‘white blackfellas’ falsely claiming Aboriginality to get jobs and benefits that should go to our people,’’ Mr Hagan said.
“We need a system that properly tests these claims so there is no chance of rorting and to ensure targeted taxpayer funds and jobs go to indigenous people.’’
The comments follow a decision this month of the registrar of the Land Rights Act 1983, Stephen Wright, to order the removal of former public servant Laurinne Campbell from membership of a NSW land council after a decade of indigenous community complaints.
Ms Campbell had relied on land council vetting to secure an “Aboriginal identified’’ position as the Dubbo-based regional manager of the NSW Aboriginal Housing Office and, later, set up an indigenous corporation with her family. In 2011, Mrs Campbell’s “Nigyanni Indigenous Corporation’’ reported securing almost $120,000 in government grants and private donations.
Two local Aborigines, elder Ray Peckham and Bernadette Riley, who investigated Mrs Campbell’s claim to Aboriginality — initially approved by the Pilliga Local Aboriginal Land Council — alleged she used Aboriginal names found in an Aboriginal magazine, Dawn, to match her family tree.
Aboriginal bus driver Rupert Williams, 60, is among those who featured in the 1960s Dawn articles, submitted by Mrs Campbell as part of her 2006 Aboriginality claim to the Pilliga council, and is named as grandfather on her Aboriginal family tree. “I don’t know her and I’m not her grandfather,’’ he said this week.
After years of complaints, the Independent Commission Against Corruption referred the matter back to Mr Wright, who commissioned two genealogists’ reports that concluded her claims could not be substantiated.
“My finding was that Laurinne Campbell could not demonstrate her right to membership of a LALC (Local Aboriginal Land Council) pursuant to the ALRA (Aboriginal Land Rights Act),’’ he said. “This finding was primarily based on analysis of a range of family history information provided to me by Laurinne Campbell and the analysis provided by my genealogical reports.’’
After making formal complaints, Mr Peckham and Ms Riley were each threatened with legal action. In 2011, solicitor Russell Booby, who wrote that he was acting for Laurinne Campbell and the NSW Department of Family and Community Services, sent letters to the pair accusing them of defamation and racism.
Mr Booby, who this week said it “was my understanding’’ that his bills were covered by taxpayers, cited the 2011 Federal Court decision against News Corp columnist Andrew Bolt and Section 18c of the Racial Discrimination Act in a bid to stop their calls for an official investigation.
“The allegations have left my client feeling humiliated and publicly derided, and because the allegations spoke to the issue of my client’s Aboriginality and raised some question around that, they have the effect of undermining my client’s professional credibility,’’ the letter said.
“The court’s decision in Eatock v Bolt is a timely warning to you that my client will not tolerate her Aboriginality and/or her reputation and good character being impugned.’’
Mr Peckham, now 86 and a former civil rights activist, said it was “too easy’’ for people to make claims of Aboriginality without proof. “We won’t stop it all happening in the future but we have to make people think twice,’’ he said.
When approached by The Weekend Australian, Mrs Campbell refused to discuss the findings of the investigation.
Asked if she was Aboriginal, Ms Campbell said: “I am not going to answer that. I am not going to play this game any more. This is a witch hunt that has been going on for years.’’
Mr Wright said he would now report to ICAC about her claim of being an Aborigine, but had not made formal findings about Mrs Campbell’s conduct.
“It is not within the jurisdiction of the registrar to make findings about a person such as Laurinne Campbell’s conduct,’’ he said.
Mr Wright said the question of who may claim legal rights as an Aboriginal person was a “very significant national issue’’.
“In my experience, the test for membership of Local Aboriginal Land Councils in NSW is the strongest non-judicial way of establishing that a person can claim to be an Aboriginal person in the Australian jurisdiction,’’ he said.
“A debate about what more should be done to ensure the legitimacy of claims to Aboriginal identity is long overdue.”
Mr Mundine said there was a need to toughen the vetting process to make a claim of Aboriginality, combining the use of certified genealogical investigators, a statutory declaration from the claimant to their identity and a supporting declaration from the indigenous community.
“We need to toughen the system to ensure that people accessing benefits or getting government jobs or contracts are legitimate,’’ he said. “People are reluctant to question someone else’s Aboriginality and that’s why we need a very clean open system so people can feel confident.’’
Original article here
Laurinne Campbell’s claim to Aboriginality sparks investigation
- THE AUSTRALIAN
- FEBRUARY 20, 2016 12:00AM
Rupert Williams couldn’t believe it when he was told he was grandfather of a woman just 11 years younger than him.
The bus driver, who grew up in the Murrin Bridge Aboriginal mission in regional NSW, prides himself on being a family man. He readily shows off a library of pictures of his children and five grandchildren on a smartphone, and keeps in contact with many of the 300 or so people from the “mission days’’.
But Williams, 60, had never heard of Laurinne Campbell — then in a senior “Aboriginal identified” management position in the NSW Aboriginal Housing Office — when shown a family tree bearing his name that she had submitted to gain membership of the Pilliga Local Aboriginal Land Council in 2006.
“I thought, ‘What’s going on here, who is this woman? I don’t know her and I’m not her grandfather,’ ” he told Inquirer this week after first seeing the document in 2011. “It really hit me when I saw that she had my sister, who turned 50 last year, dying at birth.”
Campbell, like tens of thousands of others across Australia, was relying on membership of a land council as proof of her Aboriginality.
It has become the iron-clad standard to claim specific benefits, Aboriginal government jobs and, in her case, to set up an indigenous corporation with her immediate family, securing more than $100,000 in taxpayer grants and donations — in just one year.
But almost as soon as Campbell and her sister, Lisa Montgomery, won membership of the Pilliga land council — in a vote of its members — rumblings began about whether, in fact, she was Aboriginal.
It took until this month, after years of complaints and an initial investigation by local Aborigines, for the regulator of the NSW land councils, Stephen Wright, to take action and disqualify Campbell’s claim to Aboriginality.
For Wright, the 14-year veteran registrar of the Aboriginal Land Rights Act 1983, it was the first time he had issued a notice for a person to be removed from the membership roll of an Aboriginal land council in NSW.
It followed a 2012 referral from the NSW Independent Commission Against Corruption and a rare genealogical investigation into Campbell’s claims of Aboriginal ancestry on both sides of her family, at the missions in Murrin Bridge and Caroona, also in regional NSW.
“My finding was that Laurinne Campbell could not demonstrate her right to membership of a LALC (local Aboriginal land council) pursuant to the ALRA (Aboriginal Land Rights Act),’’ he said in a statement to Inquirer.
“This finding was primarily based on analysis of a range of family history information provided to me by Laurinne Campbell and the analysis provided by my genealogical reports.’’
Unless Campbell takes legal action, she will be removed from the roll of the Baradine LALC — which covers land north of Dubbo — to which she moved her membership after initially being vetted by the Pilliga LALC.
In the face of the findings, Campbell refused this week to answer questions about her Aboriginality when approached by Inquirer outside her regional NSW home, claiming she was a victim of a “witch-hunt”.
But the two Aboriginal people — Ray Peckham and Bernadette Riley — who pushed for action, after conducting their own investigation into Campbell’s family tree, say they only wanted to get at the truth. The pair were only too aware they were “crossing a bridge” when they began questioning Campbell’s Aboriginality.
It is regarded as the worst insult among the Aboriginal community, with lighter-skinned Aborigines an easy target of malicious and false accusations.
The issue exploded in 2011 with a Federal Court judgment that columnist Andrew Bolt breached section 18c of the Racial Discrimination Act in several articles he penned in 2009. The nine “fair-skinned Aboriginal” complainants alleged the articles conveyed offensive messages by saying they were not genuinely Aboriginal and were pretending to be Aboriginal “so they could access benefits that are available to Aboriginal people”.
But for Peckham and Riley this wasn’t about skin colour.
It was in 2010, when Campbell, a trained nurse, successfully applied for an “Aboriginal identified position” — which requires the job go to an Aboriginal person — as the regional manager for the NSW Aboriginal Housing Office in Dubbo, that Riley became suspicious.
The great-granddaughter of William Ferguson, one of Australia’s first civil rights activists who founded the Aborigines Progressive Association in the 1930s, she recalled a conversation two years earlier when Campbell told her she was not Aboriginal.
“I met her in 2008, and at that time she was in another job which I thought was an identified position, and I asked if she was Aboriginal and she said she wasn’t,” Riley told Inquirer. “She explained that the position was only targeted and she got it as there were no other worthwhile Aboriginal applicants.’’
Riley, who in 1996 narrated the documentary Blacktracker, about her grandfather, police tracker Alexander Riley, decided to test whether any of her famous forebear’s skills had flowed down the generations. She soon learned that Campbell — who it is believed was on a salary of $126,000 with the Aboriginal Housing Office — had secured her confirmation from the Pilliga LALC in 2006.
It was then that Riley turned to Peckham for help. The Aboriginal elder, now 86, had ties across several generations with the Riley family and had been heavily involved in the civil rights movement in the 50s and 60s through the unions and later the Aboriginal-Australian Fellowship, which had grown out of the Aborigines Progressive Association. Peckham had lived at the Pilliga missions and “didn’t know of Laurinne or her family”.
“It was the first time I had been involved in something like this, and for years the government people ignored us, told us to drop it — and we were even threatened with defamation and 18c — but we couldn’t,” he told Inquirer. “People are afraid to challenge, but this is about our identity as Aboriginals.”
In the 80s, the federal Department of Aboriginal Affairs came up with a three-part working definition for recognition of Aboriginality. It states: “An Aboriginal or Torres Strait Islander is a person of Aboriginal or Torres Strait Islander descent who identifies as an Aboriginal or Torres Strait Islander and is accepted as such by the community in which he (or she) lives.”
Only a few court cases have considered the definition, with arguably one of the more important decisions being that of Federal Court judge Ron Merkel in 1998 relating to a dispute about the Aboriginality of candidates in Tasmania’s election for the now defunct Aboriginal and Torres Strait Islander Commission.
Merkel said proof was often difficult because of lack of records and years of denial of Aboriginal descent in the face of racism.
“Accordingly oral histories and evidence as to the process leading to self-identification may, in a particular case, be sufficient evidence not only of descent but also of Aboriginal identity,’’ he said.
Merkel said the onus was on the Aboriginal community to establish who was Aboriginal.
In 2010, Riley and Peckham found that despite being approved for membership of the Pilliga LALC, there had always been concerns among the community about the claim to Aboriginality by Campbell and her sister.
A 2006 letter from Wright — as the regulator of NSW land councils — to the Pilliga LALC showed local Aborigines had sought to rescind the sister’s membership just months after it had been approved. It seems to have gone nowhere. The driving force for the push back, Mark Allen, later told Riley and Peckham he had known the sisters all his life as they had lived in the small town of Baradine, which is near Pilliga.
“Mark, who died in a car crash soon after we spoke, told us he had gone to school with Laurinne and that the whole time they had grown up she had never said she was Aboriginal,” Riley said.
Pilliga LALC handed over the sister’s application for membership, which included the family tree, a 1995 approval certificate for Abstudy — the commonwealth support payment for indigenous students — and extracts from Dawn magazine.
Produced by the NSW Aborigines Welfare Board between 1952 and 1975, the magazine covered life — including school and sports events, birth and death notices — on the Aboriginal communities. The magazines are now digitally archived and freely available for anyone to search by “the name of a person and specific dates”.
In the application to Pilliga, Campbell submitted copies of the articles that included pictures of her purported grandfather, Williams — shown in a tug of war with other children and teachers — and handwritten notes, citing references to people on her family tree.
Riley and Peckham trawled electoral rolls and birth, death and marriage public records — checking the family tree on both sides “back nine generations” — before tracking down people from the missions and questioning them.
They came to the conclusion that Campbell had used her legitimate family tree of European-descended ancestors and found the same or similar names among the Aboriginal communities.
“We interviewed people in the Dawn magazine, which was used to substantiate her claims to Aboriginality and took statutory declarations,” Riley says. “It was then that we put it all together and sent off our evidence to the Aboriginal Housing Office, the registrar and every funding body or statutory body that had anything to do with them. We just wanted the authorities to investigate, but I think people didn’t take it seriously. They thought it was just a squabble between blackfellas.”
Among the recipients was the Office of the Registrar of Indigenous Corporations, which regulates corporations set up with a majority indigenous membership and has access to certain benefits and exemptions.
In June 2008 — about two years after winning membership to the Pilliga LALC — Campbell, her two sisters and parents established the Nigyanni Indigenous Corporation, which at various times listed its business as running shops, art and education services.
According to documents, in 2011 the corporation reported receiving almost $120,000 in government grants and donations.
It was voluntarily deregistered in December 2012 — soon after authorities began to properly investigate.
Campbell’s involvement with the corporation, while overseeing Aboriginal housing across much of regional NSW, was among the issues initially raised by Riley and Peckham to her bosses.
In June 2011 — according to correspondence seen by Inquirer — the then acting chief executive of the NSW Aboriginal Housing Office, Mike Allen, wrote to Peckham to say the pair’s “extensive documentation” had led to a review of Campbell’s recruitment for the job in 2010, which she held until last year.
“I can confirm that the AHO has information about Ms Campbell’s Aboriginality that adequately meets government requirements for staff who occupy Aboriginal identified positions,” Allen wrote.
Later that year, the pair each received legal letters from solicitor Russell Booby — who wrote that he was acting for Campbell and the NSW Department of Family and Community Services — accusing them of defamation and racism.
Booby — who said this week it “was my understanding” that his bills were covered by the taxpayer — even cited the Bolt case and section 18c of the Racial Discrimination Act in calling for the pair to stop their complaints and calls for an investigation.
“The allegations have left my client feeling humiliated and publicly derided, and because the allegations spoke to the issue of my client’s Aboriginality and raised some question around that, they have the effect of undermining my client’s professional credibility,” the letter said.
“The court’s decision in Eatock v Bolt is a timely warning to you that my client will not tolerate her Aboriginality and/or her reputation and good character being impugned.”
It didn’t work.
The pair continued to push for an official investigation and in early 2012 ICAC referred the complaint to Wright — the registrar of NSW land councils — who then ordered an independent genealogical assessment of Campbell’s claims to Aboriginality.
During the next two years, several genealogical reports were authored — which cast doubt on the bona fides of Campbell’s evidence — and she was given the right to respond.
On March 17 last year, Wright wrote to Peckham informing him that “there is no current basis, on the evidence provided to me, which supports Ms Campbell’s claim that she is Aboriginal”.
In April, Peckham wrote to the AHO informing them of Wright’s findings.
But it was not until October that AHO boss Shane Hamilton responded, saying he had asked Campbell on March 27 for evidence of her Aboriginality and that the subsequent material she supplied met the threshold of the NSW Public Service Commission’s Confirming Aboriginality Guidelines for NSW Public Sector Agencies.
Hamilton said Campbell had been made redundant in June.
Regardless, Riley and Peckham feel vindicated in their investigation and await what action ICAC will take when it receives a report from Wright.
For them, the saga has been as much about the reluctance of government agencies and regulators to act on concerns about people’s claim to Aboriginality than about Campbell herself.
“We were fighting about a principle, about the right to call yourself Aboriginal,” Riley says.
Original article here
7 October 2015 WA Business News
The Nationals may have corralled Malcolm Turnbull on some of his pet issues, but the new PM has a clear infrastructure agenda.
Not long after Malcolm Turnbull prised the prime ministership from Tony Abbott’s grasp, reports emerged that the Nationals sought (and secured) a written agreement setting out policy areas that would be legislative no-go zones for the new coalition leader.
That stricture led me to contact one of my best Canberra sources, who said there were, in fact, two agreements between the Nationals and Mr Turnbull.
The first was the standard one the Nationals present all new Liberal prime ministers, which ensures their leader is designated deputy prime minister.
In the deal with Mr Turnbull, however, a second was presented for concurrence, which sought undertakings covering such matters as a tax on CO2, a gay marriage plebiscite, and so on.
My contact stressed this shouldn’t be seen as the Nationals setting out to totally inhibit the man who’d lost Liberal leadership in 2009, in part because of his proclivity to stray from the conservative form guide.
“True, the Nats have erected a fence around Malcolm, but there’s plenty of room in the paddock for him to trot around,” the informant added.
And it wasn’t long before that was confirmed, with Mr Turnbull’s decision to create a Ministry for Cities and the Built Environment, which one observer said meant the “ending of Abbott’s focus on roads and reluctance to invest in rail”.
Those dozen words mean that, as time passes, we’ll see billions of Canberra dollars directed at state capitals, with most of the cash earmarked for Sydney, especially, and Melbourne, since they have most of the seats in the House of Representatives.
Strangely, there’s been hardly any comment about this potentially big-spending new bureaucracy.
And no-one has yet outlined what Mr Turnbull’s new ministry plans to achieve, and where the money will come from in what’s likely to be a constrained fiscal period ahead.
That prompted me to speak to another knowledgeable east coast contact, who immediately drew my attention to the fact that multi-millionaire Mr Turnbull is going to great lengths to ensure he’s regularly photographed standing either by stationary tram or train carriages, or actually travelling in one.
“That’s a crucial part of his cities game plan,” the contact stressed.
This and the marrying of the words ‘cities’ and ‘built environment’ suggests the actual focus will be not so much on cities, but rather on
What could be the origin of this inner-cities focus?
And who, if anyone, is Mr Turnbull’s inspiration for this agenda?
My contact suggested it is American academic Richard Florida, who teaches at the University of Toronto’s Rotman School of Management.
He’s viewed as a big-picture man, someone best known for defining and popularising the idea of the so-called ‘creative class’, and how those within its ranks impact upon regeneration, that is, gentrify, inner-city suburbs.
If that’s so the new ministry will be focusing not on cities but rather on the inner suburbs of Australia’s capitals – most especially Sydney and Melbourne.
In others words, the very suburbs presently dominated by Labor and Greens voters who are generally bigger earning professionals with little interest in outer suburban or inland Australia.
Could this perhaps also be a ploy to out-Labor Labor and out-Green the Greens in their urban heartlands?
“Turnbull’s focus has been on innovation, science, technology, infrastructure and cities – themes Labor has pursued,” commentator Phillip Hudson wrote in The Australian (September 28 2015).
Not surprisingly, Professor Florida’s best-known books all have his signature phrase, ‘creative class’, in their title: The Rise of the Creative Class, Cities and the Creative Class, and The Flight of the Creative Class.
His brief Wikipedia entry says: “Florida’s theory asserts that metropolitan regions with high concentrations of technology workers, artists, musicians, lesbians and gay men, and a group he describes as ‘high bohemians’, exhibit a higher level of economic development.
“Florida refers to these groups collectively as the ‘creative class’.
“He posits that the creative class fosters an open, dynamic, personal and professional urban environment.
“This environment, in turn, attracts more creative people, as well as businesses and capital.
“He suggests that attracting and retaining high-quality talent versus a singular focus on projects such as sports stadiums, iconic buildings, and shopping centres, would be a better primary use of a city’s regeneration of resources for long-term prosperity.
“He has devised his own ranking systems that rate cities by a ‘Bohemian index’, a ‘Gay index’, a ‘diversity index’, and similar criteria.”
Mr Turnbull fits the ‘creative class’ mould to a t, having been a lawyer, journalist, IT company director, Goldman Sachs banker, campaigner for marginal causes like scrapping Australia’s flag, and wishing to transform Australia into a republic.
It’s among inner suburbanites that causes including gay marriage, taxing CO2, and, of course, building light rail transportation, are more ardently embraced.
But where will the money come from?
I’d be surprised if the piggy bank for these inner-city projects isn’t filled to some degree with trimmings from the defence budget that Tony Abbott’s first defence minister, David Johnston, fought so doggedly to have boosted following those drastic Rudd-Gillard defence spending cuts.
Original article here
Why Richard Florida’s honeymoon is over
Uzma Shakir scanned the crowd, tapping her pen on the table. It was her turn. It was hot – too hot, an early-summer evening scorcher. All the chairs were filled. Latecomers spilled out the back and on to the gritty sidewalks on Bloor St. W. near Lansdowne.
RICHARD LAUTENS / TORONTO STAR Order this photo
Richard Florida in his office at U of T’s Rotman School of Management, June 24, 2009.
Uzma Shakir scanned the crowd, tapping her pen on the table. It was her turn. It was hot – too hot, an early-summer evening scorcher. All the chairs were filled. Latecomers spilled out the back and on to the gritty sidewalks on Bloor St. W. near Lansdowne.
She stood. “I am the creative city,” she said. Laughter. “That’s what Richard Florida says. I make it really exotic.”
But the laughing stopped quickly. “Richard Florida’s exotic city, his creative city, depends on ghost people, working behind the scenes. Immigrants, people of colour. You want to know what his version of creative is? He’s the relocation agent for the global bourgeoisie. And the rest of us don’t matter.”
Honeymoons, typically, are short. For Florida, who arrived in Toronto just over two years ago to head the Martin Prosperity Institute, a University of Toronto think-tank created just for him, it’s officially over.
Shakir, a community advocate, was speaking at a public forum organized recently by the art magazine Fuse, and the group, Creative Class Struggle. Its website leaves little to the imagination: “We are a Toronto-based collective who are organizing a campaign challenging the presence of Richard Florida and the Martin Prosperity Institute at the University of Toronto, as well as the wider policies and practices they represent.”
The forum was its coming-out party – the beginning, they say, of a wider campaign, as the site explains, “to reclaim our institutions, our city, and our elected governments” from Florida’s best-known pitch: That future economic health for cities relies on broad-brushstroke boosterism of creative professionals, bohemianism, cosmopolitanism and diversity, and the warning that cities that don’t embrace it will be left in a death-spiral of post-industrial decay.
There have been snipes, of course. Fellow U of T professor Mark Kingwell, writing in the Walrus this year, described Florida’s public academic career as “oddly hucksterish;” R.M. Vaughn, a columnist at The Globe and Mail, handed out buttons with the slogan “can we please stop talking about Richard Florida?” Critics love to publicize his salary, which, by his own admission, is generous (and public; it’s $346,041.48). Of course, Florida has endured critics throughout his career. But an activist group that exists only to defy him? This is something new.
Part of it may come from the the uniquely Canadian impulse to resent success. With a handful of best-selling books – the freshly released Who’s Your City?, The Rise of the Creative Class and The Flight of the Creative Class – and an enviable position in a brand-new institution tailored to him, Florida is a prime target. And then there’s the hype factor. When Florida and his wife, Rana, who manages their joint consulting business, Creative Class Group, first arrived in the city, the response was breathless: Finally, he was here, the A-list celebrity intellectual the city’s ruling elite so desperately coveted.
The Globe and Mail immediately signed him as a columnist (“He has inspired cities to realize their potential,” its ad campaign went. “He has developed a global following among the creative class … and now he is writing for us.”) He got the celebrity treatment, from a glossy video feature on his Rosedale home by Style at Homemagazine to the chronicling of his cocktail parties (“With Richard and Rana Florida as hosts, the evening sparkled like Veuve Cliquot,” went one Globe headline).
At a dinner held by Mayor David Miller at Grano, the Davisville restaurant famous for its exclusive affairs, the usually laconic mayor gushed: “Richard is one of the leading thinkers on cities, and his choice to live in Toronto shows that we can compete with any city in the world,” he said. The two men embraced, at least with one arm. Think of the last time Miller did that.
In activist and academic circles, though, a different version of Florida reigns. Shakir’s is one; that night, at the Toronto Free Gallery, smack in the middle of the kind of quasi-bohemian neighbourhoods “in transition” that Florida is supposed to celebrate, the audience contributed many more.
To them, Florida is a pitchman, an opportunist, an elitist, a sham. Worse, he’s here, in our city that works. And our city is listening. And now the province is, too. He was commissioned by Queen’s Park to write an exhaustive report, “Ontario in the Creative Age,” released earlier this year. His rhetoric is already institutionalized in Toronto’s “Plan for a Creative City,” spawning short-term fireworks displays like Luminato and Nuit Blanche that critics argue are magnetic for tourists but leave little behind. His ideas are exclusive, divisive, and naïve. He is dangerous, they say. And he needs to go.
The activist is a little nervous. Is it a battle? “I guess so,” she says, a verbal shrug. Her name is Heather McLean, one of the Creative Class Struggle group. She wears the activist label a little uneasily. Now a Ph.D. student in environmental studies at York University, McLean lists a life before all this – five years in urban planning and consulting, both privately and with the city of Toronto.
She remembers, in her professional life of not so long ago, the creative class notion gaining traction. “I watched how, in consulting, these ideas took off and became trends,” she said. They suggested an easy fix to increasing urban ills, served with a smile. “It’s palatable, interesting and fun. It’s hard to compete with that.”
But its implications for the majority aren’t much fun at all. She points to one of Florida’s research pillars, the bohemian index, which suggests that cities and neighbourhoods with high concentrations of artists and gays and lesbians tend to attract investment to a much greater degree than those that don’t.
It suggests, on the surface, at least, a new era of socially tolerant capitalism. “But really, it’s a very celebratory and safe way of looking at capital accumulation,” she says. “People like cool places, sure; they’re positive stories. But there are people that get dispossessed, or removed, or erased in these narratives.”
And if you’re not “creative,” best of luck. “If you’re a hospital worker, or a child care worker, you’re just erased completely,” she says. “We need to cut each other’s hair, take care of each other’s kids. We don’t need a creative city – can we not just have a socially just city?”
The academic knows the history. He remembers a young Florida’s work, as a Ph.D. student on urban policy in post-war America, as solid, useful and true. “It’s the kind of work a lot of us like,” he says. “Work that attempts to understand, and attempts to explain.”
Stefan Kipfer teaches theories of society, politics and the city at York University’s Faculty of Environmental Studies. He still uses Florida’s early work as reference in his own research.
This is not the work that Florida does now, Kipfer says. “It’s very different, of course. It’s research designed to sell. This is no secret; Florida makes money as a consultant, so his fame is really based on his ability to convince a client to buy his product.”
Kipfer recites the litany: That his ideas, about investing in skills and training, are nothing new; that his numbers – the indices that he bases his work on – are statistically suspect; and that his work conveniently leaves out obvious trends as the rich/poor gap grows constantly wider.
Innovation as the catalyst for economic growth is as old as the idea of an economy itself, though Edward Glaeser, in his review of Rise of the Creative Class, gives Florida some credit for cross-pollinating it with creative bohemia.
But in the same breath, Glaeser takes on its statistical basis, Florida’s bohemian index. Using data from 242 cities provided by Florida, Glaeser, an economic geographer, found that the overall “bohemian effect” on economic growth in America was driven by two of the 242: Las Vegas and Sarasota, Fla. “Excluding those cities,” he wrote, meant that “bohemianism becomes irrelevant.
“Given that I will never believe that either Las Vegas or Sarasota stand as stellar examples of bohemianism, I will draw another conclusion,” he wrote: “skilled people” – not artists, by any measure – “are key to urban success.”
For Kipfer, it points out research aimed at a pre-conceived goal. “That’s the thing about salesmanship and research that is consultant-oriented: It develops not concepts, but catch-all terms that work differently in different contexts,” he says.
“What does Richard Florida do: He goes from city to city, be it Albuquerque or New York City, and tells them: You, too, can win. But there’s an internal contradiction. Florida ranks cities – it’s part of what he does, and not everyone can win.”
But the base criticism for Kipfer is less about economy, and more about people. “All of a sudden, you’ve got a situation that seems to allow usually marginalized people – artists, gays, lesbians, immigrants – to finally think that `Hey! There’s some economic value to our existence!'” he says. “But the danger in this is that it reduces them to economic inputs: As long as you see immigration as a way to benefit Canadian capitalism, or culture and sexual orientation as tourism and economic development tools – you’re in. But don’t tell us about questioning racism, don’t tell us about wanting to re-organize the family, don’t tell us about most of your history. We don’t want to hear it.”
The pitchman smiles, but wearily. A brave face. “In the states, 99 per cent of my critics were socially conservative, right-wing people, who said I had a gay agenda, or that cities couldn’t be built by `yuppies, sophistos, trendoids and gays,'” says Richard Florida. “And I said before I came here, `I think in Toronto, my critics will come from the left.'”
How true. Florida sits in an artfully dishevelled conference room – exposed brick, extruded industrial window frames – at the MPI’s headquarters in the MaRS complex at University Ave. and College St. It is, in many ways, an embodiment of his gospel: A state-of-the-art “centre of excellence,” repurposing an old building for a new life – in this case, scientific and medical research. And, of course, him.
Florida embodies the off-the-rack American dream, the immigrant kid made good. He grew up in a blue-collar Italian neighbourhood in Newark; his father worked in a factory and made enough to put the kids through school.
He worked his way to the Ivy Leagues, finishing his Ph.D. at Columbia; Neil Smith, the famous Marxist urban theorist, was on his dissertation committee. His work, and books, found a niche in the culture early on, making him famous, mobile, and conversant in a breadth of material, from economics to culture to politics. They also made him sought after, and at the apex of his fame, he chose to come here.
He makes a point of his fast-growing local roots. Florida name-checks local cultural figures like AGO curator David Moos, and artists like Daniel Borins and Jennifer Marman, who have made work for the space (“we thought we owed it to them,” he says); one work he loved so much he bought for his home.
But he’s here to defend himself. Of course. Again. “I’m an open book,” he says. “Be candid.”
He’s been here before. Creative Class Struggle says his work is based on social division. “It is,” he says. “That’s one thing my work points out – that class is becoming a more important category.”
They say he glorifies his creative class, and hang the rest. “The decline in manufacturing – it’s not like I want that to happen,” he says. “But it’s the reality. I think that’s where people get confused. I was posing that 30 per cent of us have the great good fortune to be part of this professional, technical, artistic, entertainment, creative class, but the real goal in society should be to expand those borders.”
They say he’s a huckster. He shrugs. “I made the decision to build my dialogue around economic growth and prosperity,” he says. “It worked … better than I expected,” he smiles. “But it’s developed some interesting critiques.”
They say he advocates free-market remaking of so-called bohemian neighbourhoods, that he rolls out the carpet to gentrification. “I find gentrification devastating – New York, it’s tragic,” he says. “What we were trying to point out is that these neighbourhoods – and we measured it, we didn’t just make it up – were the places, for a variety of reasons, that had really raised housing values.”
It was an objective measure, he says, like everything he does. “There are lots of people who say, in order to attract the creative class, we need to build latte bars, and music venues, and stadiums,” he says. “In critical theory, that’s what happens to a text. People have been very effective on both sides in framing my work.”
They say he ignores marginal workers, precarious workers, the service economy and the dead-end it represents. “Those are the equivalent of the point-of-entry jobs my dad had, in a factory. And those jobs pay horribly. They’re horribly insecure.” He pushed the mayor on it, he says; council agreed to have a summit on improving service work, which Florida hosted this week.
He knows that he’s been a little too public, maybe a little too sunny. “When I first came here, there was a lot of public attention,” he says. “I was new in town, and when you’re new, the first thing you want to do is emphasize the positive.”
That positivity, he says, might have been taken as salesmanship. “I wish folks, particularly in geography, would have come to me first – and I wish that heartfeltly, because I think there’s a lot of points of engagement,” he says. “I also wish I had gotten to know them earlier, but our life here has been such a freakin’ whirlwind that it’s been hard to get to know everybody.”
But the invitation is open, Florida says. “I’d love to engage these groups, because I think what they have to say is important, and actually, I find myself…” he pauses, and smiles. “I find myself agreeing, intuitively agreeing, with much of their critique.”
They say they want a more holistic city, a city that includes all classes, races and sexual orientations. Not a creative city. Just a city that works. For everyone.
The pitchman smiles. “Me, too.”
He leaves the door open when he goes.
Original article here
Research shows that everyone cheats a little—right up to the point where they lose their sense of integrity.
Research shows that nearly everyone cheats a little if given the opportunity. Dan Ariely, author of the new book, “The (Honest) Truth About Dishonesty,” explains why. (Photo courtesy Shutterstock)
We like to believe that a few bad apples spoil the virtuous bunch. But research shows that everyone cheats a little—right up to the point where they lose their sense of integrity.
Not too long ago, one of my students, named Peter, told me a story that captures rather nicely our society’s misguided efforts to deal with dishonesty. One day, Peter locked himself out of his house. After a spell, the locksmith pulled up in his truck and picked the lock in about a minute.
“I was amazed at how quickly and easily this guy was able to open the door,” Peter said. The locksmith told him that locks are on doors only to keep honest people honest. One percent of people will always be honest and never steal. Another 1% will always be dishonest and always try to pick your lock and steal your television; locks won’t do much to protect you from the hardened thieves, who can get into your house if they really want to. The purpose of locks, the locksmith said, is to protect you from the 98% of mostly honest people who might be tempted to try your door if it had no lock.
We tend to think that people are either honest or dishonest. In the age of Bernie Madoff and Mark McGwire, James Frey and John Edwards, we like to believe that most people are virtuous, but a few bad apples spoil the bunch. If this were true, society might easily remedy its problems with cheating and dishonesty. Human-resources departments could screen for cheaters when hiring. Dishonest financial advisers or building contractors could be flagged quickly and shunned. Cheaters in sports and other arenas would be easy to spot before they rose to the tops of their professions.
But that is not how dishonesty works. Over the past decade or so, my colleagues and I have taken a close look at why people cheat, using a variety of experiments and looking at a panoply of unique data sets—from insurance claims to employment histories to the treatment records of doctors and dentists. What we have found, in a nutshell: Everybody has the capacity to be dishonest, and almost everybody cheats—just by a little. Except for a few outliers at the top and bottom, the behavior of almost everyone is driven by two opposing motivations. On the one hand, we want to benefit from cheating and get as much money and glory as possible; on the other hand, we want to view ourselves as honest, honorable people. Sadly, it is this kind of small-scale mass cheating, not the high-profile cases, that is most corrosive to society.
Which two numbers in this matrix add up to 10? Asked to solve a batch of these problems, most people cheated (claiming to have solved more of them than they had) when given the chance.
Much of what we have learned about the causes of dishonesty comes from a simple little experiment that we call the “matrix task,” which we have been using in many variations. It has shown rather conclusively that cheating does not correspond to the traditional, rational model of human behavior—that is, the idea that people simply weigh the benefits (say, money) against the costs (the possibility of getting caught and punished) and act accordingly.
The basic matrix task goes as follows: Test subjects (usually college students) are given a sheet of paper containing a series of 20 different matrices (structured like the example you can see above) and are told to find in each of the matrices two numbers that add up to 10. They have five minutes to solve as many of the matrices as possible, and they get paid based on how many they solve correctly. When we want to make it possible for subjects to cheat on the matrix task, we introduce what we call the “shredder condition.” The subjects are told to count their correct answers on their own and then put their work sheets through a paper shredder at the back of the room. They then tell us how many matrices they solved correctly and get paid accordingly.
The Forces That Shape Dishonesty
In a variety of experiments, Dan Ariely and his colleague have identified many factors that can make people behave in a more or less honest fashion.
What happens when we put people through the control condition and the shredder condition and then compare their scores? In the control condition, it turns out that most people can solve about four matrices in five minutes. But in the shredder condition, something funny happens: Everyone suddenly and miraculously gets a little smarter. Participants in the shredder condition claim to solve an average of six matrices—two more than in the control condition. This overall increase results not from a few individuals who claim to solve a lot more matrices but from lots of people who cheat just by a little.
Would putting more money on the line make people cheat more? We tried varying the amount that we paid for a solved matrix, from 50 cents to $10, but more money did not lead to more cheating. In fact, the amount of cheating was slightly lower when we promised our participants the highest amount for each correct answer. (Why? I suspect that at $10 per solved matrix, it was harder for participants to cheat and still feel good about their own sense of integrity.)
Would a higher probability of getting caught cause people to cheat less? We tried conditions for the experiment in which people shredded only half their answer sheet, in which they paid themselves money from a bowl in the hallway, even one in which a noticeably blind research assistant administered the experiment. Once again, lots of people cheated, though just by a bit. But the level of cheating was unaffected by the probability of getting caught.
Knowing that most people cheat—but just by a little—the next logical question is what makes us cheat more or less.
One thing that increased cheating in our experiments was making the prospect of a monetary payoff more “distant,” in psychological terms. In one variation of the matrix task, we tempted students to cheat for tokens (which would immediately be traded in for cash). Subjects in this token condition cheated twice as much as those lying directly for money.
Another thing that boosted cheating: Having another student in the room who was clearly cheating. In this version of the matrix task, we had an acting student named David get up about a minute into the experiment (the participants in the study didn’t know he was an actor) and implausibly claim that he had solved all the matrices. Watching this mini-Madoff clearly cheat—and waltz away with a wad of cash—the remaining students claimed they had solved double the number of matrices as the control group. Cheating, it seems, is infectious.
Other factors that increased the dishonesty of our test subjects included knowingly wearing knockoff fashions, being drained from the demands of a mentally difficult task and thinking that “teammates” would benefit from one’s cheating in a group version of the matrix task. These factors have little to do with cost-benefit analysis and everything to do with the balancing act that we are constantly performing in our heads. If I am already wearing fake Gucci sunglasses, then maybe I am more comfortable pushing some other ethical limits (we call this the “What the hell” effect). If I am mentally depleted from sticking to a tough diet, how can you expect me to be scrupulously honest? (It’s a lot of effort!) If it is my teammates who benefit from my fudging the numbers, surely that makes me a virtuous person!
The results of these experiments should leave you wondering about the ways that we currently try to keep people honest. Does the prospect of heavy fines or increased enforcement really make someone less likely to cheat on their taxes, to fill out a fraudulent insurance claim, to recommend a bum investment or to steal from his or her company? It may have a small effect on our behavior, but it is probably going to be of little consequence when it comes up against the brute psychological force of “I’m only fudging a little” or “Everyone does it” or “It’s for a greater good.”
What, then—if anything—pushes people toward greater honesty?
There’s a joke about a man who loses his bike outside his synagogue and goes to his rabbi for advice. “Next week come to services, sit in the front row,” the rabbi tells the man, “and when we recite the Ten Commandments, turn around and look at the people behind you. When we get to ‘Thou shalt not steal,’ see who can’t look you in the eyes. That’s your guy.” After the next service, the rabbi is curious to learn whether his advice panned out. “So, did it work?” he asks the man. “Like a charm,” the man answers. “The moment we got to ‘Thou shalt not commit adultery,’ I remembered where I left my bike.”
What this little joke suggests is that simply being reminded of moral codes has a significant effect on how we view our own behavior.
Inspired by the thought, my colleagues and I ran an experiment at the University of California, Los Angeles. We took a group of 450 participants, split them into two groups and set them loose on our usual matrix task. We asked half of them to recall the Ten Commandments and the other half to recall 10 books that they had read in high school. Among the group who recalled the 10 books, we saw the typical widespread but moderate cheating. But in the group that was asked to recall the Ten Commandments, we observed no cheating whatsoever. We reran the experiment, reminding students of their schools’ honor codes instead of the Ten Commandments, and we got the same result. We even reran the experiment on a group of self-declared atheists, asking them to swear on a Bible, and got the same no-cheating results yet again.
This experiment has obvious implications for the real world. While ethics lectures and training seem to have little to no effect on people, reminders of morality—right at the point where people are making a decision—appear to have an outsize effect on behavior.
Another set of our experiments, conducted with mock tax forms, convinced us that it would be better to have people put their signature at the top of the forms (before they filled in false information) rather than at the bottom (after the lying was done). Unable to get the IRS to give our theory a go in the real world, we tested it out with automobile-insurance forms. An insurance company gave us 20,000 forms with which to play. For half of them, we kept the usual arrangement, with the signature line at the bottom of the page along with the statement: “I promise that the information I am providing is true.” For the other half, we moved the statement and signature line to the top. We mailed the forms to 20,000 customers, and when we got the forms back, we compared the amount of driving reported on the two types of forms.
People filling out such forms have an incentive to underreport how many miles they drive, so as to be charged a lower premium. What did we find? Those who signed the form at the top said, on average, that they had driven 26,100 miles, while those who signed at the bottom said, on average, that they had driven 23,700 miles—a difference of about 2,400 miles. We don’t know, of course, how much those who signed at the top really drove, so we don’t know if they were perfectly honest—but we do know that they cheated a good deal less than our control group.
Such tricks aren’t going to save us from the next big Ponzi scheme or doping athlete or thieving politician. But they could rein in the vast majority of people who cheat “just by a little.” Across all of our experiments, we have tested thousands of people, and from time to time, we did see aggressive cheaters who kept as much money as possible. In the matrix experiments, for example, we have never seen anyone claim to solve 18 or 19 out of the 20 matrices. But once in a while, a participant claimed to have solved all 20. Fortunately, we did not encounter many of these people, and because they seemed to be the exception and not the rule, we lost only a few hundred dollars to these big cheaters. At the same time, we had thousands and thousands of participants who cheated by “just” a few matrices, but because there were so many of them, we lost thousands and thousands of dollars to them.
In short, very few people steal to a maximal degree, but many good people cheat just a little here and there. We fib to round up our billable hours, claim higher losses on our insurance claims, recommend unnecessary treatments and so on.
Companies also find many ways to game the system just a little. Think about credit-card companies that raise interest rates ever so slightly for no apparent reason and invent all kinds of hidden fees and penalties (which are often referred to, within companies, as “revenue enhancements”). Think about banks that slow down check processing so that they can hold on to our money for an extra day or two or charge exorbitant fees for overdraft protection and for using ATMs.
All of this means that, although it is obviously important to pay attention to flagrant misbehaviors, it is probably even more important to discourage the small and more ubiquitous forms of dishonesty—the misbehavior that affects all of us, as both perpetrators and victims. This is especially true given what we know about the contagious nature of cheating and the way that small transgressions can grease the psychological skids to larger ones.
We want to install locks to stop the next Bernie Madoff, the next Enron, the next steroid-enhanced all-star, the next serial plagiarist, the next self-dealing political miscreant. But locking our doors against the dishonest monsters will not keep them out; they will always cheat their way in. It is the woman down the hallway—the sweet one who could not even carry away your flat-screen TV if she wanted to—who needs to be reminded constantly that, even if the door is open, she cannot just walk in and “borrow” a cup of sugar without asking.
—Mr. Ariely is the James B. Duke Professor of Behavior Economics at Duke University. This piece is adapted from his forthcoming book, “The (Honest) Truth About Dishonesty: How We Lie to Everyone—Especially Ourselves,” to be published by HarperCollins on June 5.
A version of this article appeared May 26, 2012, on page C1 in the U.S. edition of The Wall Street Journal, with the headline: Why We Lie.
Original article here
Carbon trading will fail because property rights cannot exist for gases
Carbon trading will fail because property rights cannot exist for gases
By Tim Wilson The Australian 18 Oct. 2011
ECONOMICALLY sustainable markets are built on the back of secure property rights, but because secure property rights cannot exist for greenhouse gases, emissions trading has a structural flaw that will ultimately unravel.
In a speech to the Liberal Party’s Menzies Research Centre think tank, Tony Abbott has warned businesses not to buy auctioned emissions permits to participate in the Gillard government’s planned emissions trading scheme operating after 2015.
Abbott is correct to warn business, but not for the reasons he outlined. His motivation is to remove the stumbling block of compensation to companies that purchase emissions permits if he is in a position to scrap the carbon tax legislation after the next election.
The Gillard government argues that if the permits are diminished the property right paid for by permit holders will trigger compensation under the Constitution on the grounds that the government has acquired their property.
Ironically, it’s precisely the same argument tobacco companies are running against the government’s plain packaging plan.
In both cases the relevant legislation treats the property right as akin to physical property rights. In both cases the government isn’t seeking to use the property for their own purposes, which has been a core argument of those who argue that plain packaging doesn’t amount to acquisition.
But Abbott’s instinct is accurate on a much deeper level.
Emissions trading is a beautiful idea in economic theory. However, it fails the practicality test.
Markets are built on credible, tradable property rights. Physical property rights are definable and can be isolated for the purposes of ownership.
These dimensions enable them to be traded.
Even intangible intellectual property rights meet these criteria through their design, but greenhouse gas emissions cannot meet them.
One person’s emissions cannot be differentiated from another’s. They are the same chemical compounds, whether emitted by another or created naturally.
As a consequence, imposing a local price in the absence of a global price, when the externality of greenhouses gases is also global, fails the test of economic logic.
It doesn’t compare with previously trialled sulphur dioxide emissions trading, which created a local price mainly to address the localised externality of acid rain. And sulphur dioxide isn’t a by-product of the energy engine of our entire economy.
The impossibility of identifying local greenhouse gas emissions in isolation to attach a technical property right provides the basis for the right being attached to the process of emitting.
But emissions permits carry the same structural flaw because carbon accounting standards aren’t as accurate as traditional financial accounting.
In traditional accounting practices, dollars can be traced and accounted for retrospectively, but retrospectively calculating profiles for exhausted emissions relies heavily on manipulable assumptions.
Only a small number of centralised emissions can be calculated with a high degree of accuracy, such as electricity generation, which is based on the profile of fuels burned, and output.
So can air flights, by breaking down the share by passenger seat of the emissions calculated from the distance and height the plane travelled and the fuel consumed.
That’s why they’ve both been big-ticket items in the European Union’s emissions trading scheme.
But even then their exact emissions profile cannot be perfectly calculated.
The EU’s planned carbon tariff on purchased tickets for inbound international flights will be based on assumptions for a plane’s expected activity, but as soon as a plane is stuck in an extended holding pattern the cost will no longer reflect the emissions.
Because of the deep inaccuracy of carbon accounting standards, the government requires carbon taxpaying companies only to attain 95 per cent accuracy in their records.
The carbon cops exist because the opportunities for fraud are extensive, and the incentive for engaging in that behaviour by using generous assumptions in calculating emissions profiles increases as the carbon price rises.
Worse, if a long-fabled comprehensive international emissions trading emerges, made possible by governments establishing schemes equivalent to that proposed for Australia, they have a substantial incentive to cheat in their emissions reduction reporting to boost international competitiveness.
That’s why international external monitoring, reporting and verification of emissions reduction has been a stumbling block in negotiations for a new international climate change pact.
A tonne of emissions in Beijing, Bendigo or Boston cannot be distinguished once it is in the atmosphere, and claimed reductions cannot be verified.
That’s why emissions trading will unravel.
Buying and trading emissions permits requires an extremely high level of trust that participants are reporting accurately, under standards that don’t require them to do so, because it is basically impossible.
Of most concern is that we are redesigning our entire economy on the basis of a known house of cards.
Tim Wilson is director of the intellectual property and free trade unit, and of climatechange policy, at the Institute of Public Affairs and a trained carbon accountant.
Original article here
E.A.'s area at the Electronic Entertainment Expo in June
Rich Tax Breaks Bolster Makers of Video Games
By DAVID KOCIENIEWSKI
Published: September 10, 2011
The United States government offers tax incentives to companies pursuing medical breakthroughs, urban redevelopment and alternatives to fossil fuels.
It also provides tax breaks for a company whose hit video game this year was the gory Dead Space 2, which challenges players to advance through an apocalyptic battlefield by killing space zombies.
Those tax incentives — a collection of deductions, write-offs and credits mostly devised for other industries in other eras — now make video game production one of the most highly subsidized businesses in the United States, says Calvin H. Johnson, who has worked at the Treasury Department and is now a tax professor at the University of Texas at Austin.
Because video game makers straddle the lines between software development, the entertainment industry and online retailing, they can combine tax breaks in ways that companies like Netflix and Adobe cannot. Video game developers receive such a rich assortment of incentives that even oil companies have questioned why the government should subsidize such a mature and profitable industry whose main contribution is to create amusing and sometimes antisocial entertainment.
For example, Electronic Arts of Redwood City, Calif., shipped more than two million copies of Dead Space 2 in the game’s first week on the market this year. It shows a total of $1.2 billion in global profits the last five years using an accounting method that management says captures its operating profits.
But largely because of deferred revenue, deductions for executive stock options and a variety of accounting requirements, the company officially reports a net loss for the period. And the company reports that it paid out $98 million in cash for taxes worldwide in those years.
Neither corporations nor the government make tax returns public, and the information most companies disclose in their regulatory filings is insufficient to determine how much they pay in federal taxes and how that compares to the official United States corporate rate of 35 percent.
All told, the federal government gave $123 billion in tax incentives to corporations in 2010, according to the Joint Committee on Taxation, with breaks for groups and people as diverse as Nascar track owners, mohair producers, hedge fund managers, chicken farmers, automakers and oil companies.
Many tax policy analysts say the breaks for the video game industry — whose domestic sales of $15 billion a year now exceed those of the music business — are a vivid example of a tax system that defies common sense. Most times, subsidies begin as a way to nurture a fledgling industry that will not be profitable for years or to encourage a business activity deemed to have a broad benefit to society, like reducing pollution or improving public health.
But it’s a lot easier to create a tax break than to eliminate it. That leaves a generous assortment of tax incentives available to all types of companies, like Electronic Arts, with skilled accounting departments.
Electronic Arts has also lobbied successfully for more tax assistance. The architect of the company’s strategies in recent years was Glen A. Kohl, a tax lawyer colorful enough to publicly compare himself to Bruce Springsteen and to joke in the pages of The Wall Street Journal that his dog, Rubin, shared the name of the Treasury secretary under whom he served (Robert E. Rubin).
After working in the Treasury Department during the Clinton administration, Mr. Kohl entered the private sector and became head of E.A.’s tax department in 2004, leading the company as it aggressively lobbied for a federal tax break on domestic production and set up a matrix of offshore subsidiaries, many in low-tax countries.
As a result, the company with the defiant sales slogan, “Your Mom Hates Dead Space 2,” in effect gets financial help from moms and other United States taxpayers to reduce its federal tax bill.
Company officials say they have no qualms about taking all the tax breaks legally available to them. To do otherwise would be like a consumer “insisting on paying full price during a store sale,” wrote Jeff Brown, a company spokesman. Even E.A.’s competitors acknowledge that its tax strategies aren’t particularly aggressive compared with others in the industry.
Furthermore, Electronic Arts officials say that in recent years the company has paid a substantial portion of its profits in taxes, but declined to discuss details of its financial reports.
Several tax experts noted that one of the company’s biggest tax advantages is a tool available to all companies, a deduction related to the stock gains on options exercised by its executives. (Tax practitioners also said that the company’s losses, under generally accepted accounting principles, provided the most meaningful picture and reflected the standard approach used by other companies.)
Industry advocates say that without these incentives the United States would forfeit its technological edge — and the 32,000 direct jobs in the gaming industry — to countries like Canada, which offers video game developers even greater tax subsidies.
“Software and high-tech industries are the brain trust of the U.S.,” said Shane T. Frank, chief operating officer of Alliantgroup, a consulting firm that helps video game companies and other businesses take advantage of the tax credit for research and development. “We can’t afford to lose that knowledge and those high-paying jobs to India or anywhere else.”
Trying to Lure Jobs
One reason Electronic Arts and other video game companies have a bounty of tax incentives that other industries envy is that elected officials from across the political spectrum find it hard to resist offering incentives to encourage technological research — and jobs.
When the tax code was rewritten in 1954 — nearly 20 years before the first commercially successful video game was released — Congress included a new break allowing companies to deduct all laboratory-based research and experimentation costs immediately. Part of the intention was to simplify the tax code. But with the cold war and nuclear arms race making Americans fearful that the country’s technological edge was eroding, Daniel Reed, chairman of the House Ways and Means committee, also promised the tax break would indirectly bolster national security by stimulating “the search for new products and new inventions upon which the future economic and military strength of our nation depends.”
In 1969, the I.R.S. expanded that tax break to allow companies to deduct the cost of software development, which was a small part of a business that was then dominated by bulky mainframe computers. When the video game industry sprouted in the early 1970s, game developers reaped substantial tax savings because most of their costs were for software development.
Electronic Arts, founded in 1982, has since become one of the world’s dominant video game companies — producing popular titles like SimCity, FIFA soccer, Harry Potter and Madden NFL — and has benefited mightily from that tax incentive.
The company’s software development costs — including salaries for the designers — have totaled nearly $6 billion over the last five years, and the company says it deducted all but a small amount of those expenses immediately. Companies that produce movies or compact discs, by contrast, face tighter restrictions which often require them to spread out the deduction on most production costs over a number of years. While video game makers have often compared themselves to movie companies when seeking tax incentives, the game developers’ ability to write off the vast majority of their development costs immediately gives them a substantial financial advantage over other entertainment companies in taxes and cash flow.
Video game companies also get other research-related breaks. In 1981, as Americans worried that Japan’s growing dominance in the auto business would be followed by a decline of the high-tech industry in the United States, Congress added another research and development credit, this time specifically for companies that increased their R.& D. spending from the previous year. The hope was that by encouraging companies to invest more in research, the private sector might create the next Bell Laboratories and inspire the kind of technological breakthroughs that benefit society as a whole.
Within a few years, the credit was being claimed by businesses with little technological background — fast-food restaurants, hair stylists and fashion designers. So Congress tried to restrict what research would qualify. The credit was denied for social science research and marketing. The narrowest definition, proposed by the Clinton administration, was to allow the credit only for research that produced an actual innovation, but that measure met determined opposition from business lobbyists. By the time the Treasury Department ruled in 2002, an appointee of President George W. Bush decided to drop it.
“It seemed as though it would be impossible to enforce,” said Pamela F. Olson, then the assistant secretary for tax policy, and now a tax lawyer at Skadden, Arps, Slate, Meagher & Flom. “Because you couldn’t be certain that someone wouldn’t come back later and challenge things, by saying that what seemed like an innovation at the time had actually been discovered before.”
The failed attempts to restrict the R.& D. credit to basic research have been a boon for video game companies. Even when companies are merely creating new versions of existing games — conducting research that would have little value to anyone but themselves — their development processes usually involve enough experimental uncertainty to qualify for the tax break.
During the last five years, Electronic Arts has claimed tens of millions in tax savings from research and development credits for its various games, according to the company’s regulatory filings. (Company officials declined to specify how much of that total came from the federal government.)
At the same time, the I.R.S. and the United States Tax Court have denied the credit for some projects that would have benefited the community as well as the companies receiving it. In 2009, for instance, the federal tax court denied Union Carbide’s attempt to claim a research and development credit for its project to reduce the pollutants released from the smokestacks of a refinery in Louisiana. Union Carbide failed to meet the experimental threshold for the credit, though video game makers often seem to have little trouble meeting the requirement.
Video game industry officials say that by improving technology, they are indirectly helping society at large.
Dean Zerbe, national managing director at Alliantgroup, said that the military had used some video game technology to train soldiers and pilots. Electronic Arts said it donated some games to the military, schools and charities.
Even those who support subsidies for technological research complain that the current research and development credit is woefully designed — favoring big companies over start-ups and often subsidizing businesses for research they would have done anyway.
Michael D. Rashkin, author of “Practical Guide to Research and Development Tax Incentives,” said that the video game industry had failed to name a technological breakthrough that had helped anyone beyond its shareholders, employees or customers.
“The research credit benefits the wrong companies and encourages the wrong kind of research,” said Mr. Rashkin, a tax expert and executive at Marvell Technology, a company based in Santa Clara, Calif. “By diverting funding and attention from where it could be most useful, the credit is hobbling American innovation.”
Yet, given the sharp decline in American manufacturing jobs over the last half century, subsidies for research and development still have wide support. The Obama administration has proposed making the research and development tax credit permanent (it has been renewed every two years since 1981), and expanding it, at a cost of more than $100 billion over the next decade.
Looking for More
Electronic Arts has not been content to merely collect the many benefits from existing tax breaks. Mr. Kohl, who had an extensive background in mergers and acquisitions law, arrived at the company in 2004, the same year Congress passed a domestic production deduction that was intended to cut taxes on companies that export. When President George W. Bush signed the law in October, it listed an assortment of industries eligible for the break, including sound recordings and computer software, but did not specify video games.
Electronic Arts paid $60,000 early the next year to hire a prominent Washington tax lobbying firm. Soon after the law was signed, its lobbyist, Jonathan Talisman of Capitol Tax Partners, was granted a meeting with the Treasury Department’s deputy assistant secretary of tax policy — the same office Mr. Kohl once held — to ask that the deduction be extended to video game companies and the revenues they earned from online subscriptions. When the I.R.S. issued its final regulations, video games and their online revenues were specifically cited as qualifying for the deduction. That deduction last year equaled 9 percent of its production costs, offering E.A. significant tax savings.
Company officials point out that the deduction is available to a wide range of industries. “The credit is not specific to video games,” said Mr. Brown, the spokesman. “It’s designed to encourage any domestic manufacturing in the United States — from soft drinks to steel, to movies, music and newspapers.” During Mr. Kohl’s seven years at the company, Electronic Arts also became more aggressive about assigning its intellectual property offshore, a move that often reduces a company’s tax bill. Mr. Kohl, who declined to be interviewed, is now running the tax department at Amazon, which is leading the legal battle by Internet retailers who want to avoid collecting state sales taxes from customers.
In 2003, before joining Electronic Arts, Mr. Kohl co-authored a widely-cited proposal urging the federal government to crack down on corporate tax avoidance, warning that “the tax shelter problem is simply too detrimental to the tax system not to act.” As head of tax at Electronic Arts, he became a noted expert in using foreign subsidiaries to legally, and sharply, cut a corporation’s United States tax bill. As a co-chairman of the Silicon Valley Tax Directors Group, he also moderated a seminar in 2010 that showed technology companies how to use offshore subsidiaries to reassign the licensing of their intellectual property and, in some cases, reduce their effective federal tax rate substantially from 35 percent.
Electronic Arts has more than 50 overseas subsidiaries, according to its recent regulatory filings, many in low-tax countries like Bermuda, Singapore and Mauritius. The company has also accumulated more than $1.3 billion in profits offshore, where it will not be taxed by the United States unless it is brought back into the country.
Company officials say its overseas activities are not an attempt to avoid United States taxes and instead reflect how much of its business takes place in other countries. “E.A. is a global company with a majority of our customers and roughly 50 percent of our revenue generated outside of the United States,” Mr. Brown said. “Naturally we hire, build facilities, copyright our trademarks, invest and pay taxes in countries outside of the U.S.”
Jockeying for Developers
As Congress and the Obama administration wrestle with the next round of budget cuts this fall, and a possible overhaul of the tax code, they will determine whether the types of subsidies offered to E.A. and other corporations are worth the billions in forgone revenue annually to the Treasury. While Britain and some nations in the European Union have been paring back their tax subsidies for game developers, Canada has been trying to lure them and their jobs from below the border. In 2008, Ontario paid one game company a subsidy of more than $321,000 for each job to relocate from the United States. More recently, Montreal persuaded the game company THQ to relocate 800 production jobs there, closing studios in New York and Phoenix, with a rich package of incentives.
E.A. has 750 employees in Montreal, where all video game companies receive a tax credit equal to 37.5 percent of their payroll, and has announced plans to hire more there. Over all, 4,500 of Electronic Arts’ 7,600 employees are in the United States.
There are signs that more tax breaks may be in store for game manufacturers. States have been offering an escalating collection of incentives to try to attract the companies — more than 20 states now offer video game developers tax breaks to cover their wages, development and manufacturing costs.
Several recent studies have raised doubts about the effectiveness of subsidies offered by state and local governments, and Michigan this year reduced its breaks for game developers. But Texas officials say its tax breaks for game developers are more beneficial than those given other businesses, in part because the average salaries in the industry exceed $80,000 a year.
Game developers are pushing for more. John S. Riccitiello, the chief executive of Electronic Arts, was among the business leaders who successfully lobbied the City of San Francisco to drop its payroll tax last year to help retain social media companies like Zynga, maker of FarmVille and other games. The video game industry’s trade group, the Entertainment Software Association, this year recruited 39 members of Congress to form the E-caucus, which will advocate for legislation to benefit game developers. Representative Kevin Brady, a Republican from Texas who sits on the tax-writing Ways and Means Committee, said that the caucus has not asked for tax breaks.
But industry officials say they eventually hope to persuade Congress to make video game companies eligible for the federal tax breaks now available to film and television producers. Michael D. Gallagher, chief executive of the software group, said that the industry would not push for the breaks now, given the nation’s budget problems, but might do so later.
“It certainly is a worthwhile policy goal,” Mr. Gallagher said.
Original article here
When you take the “demos” out of democracy.
Writer and journalist, and Conservative MEP for South East England since 1999
Daniel Hannan is a writer and journalist. He has been a Conservative MEP for South East England since 1999, winning re-election in the top slot in 2004 and 2009. In the European Parliament, he led the campaign for a referendum on the European Constitution. He was also the first MEP to write in detail about the allowances and expenses available in Brussels.
But few Australians know that on these lands Aborigines and Torres Strait Islanders cannot own their homes
Helen Hughes, Sara Hudson and Mark Hughes, From: The Australian 25 June 2011
OVER the past 50 years, 20 per cent of Australia has been returned to Aborigines and Torres Strait Islanders. These indigenous owned and controlled lands are equivalent to the 20th largest country on Earth. But few Australians know that on these lands Aborigines and Torres Strait Islanders cannot own their homes. Russia, China, and even Cuba encourage home ownership.
When lands were returned, individual owners were not identified and land councils became the communal owners. Indigenous communities became communist economies with drab communally owned supermarkets but no cafes, motels, caravan parks, retail shops, hairdressers or the other services found in mainstream country towns. There are no suburbs of prosperous homes. Access is guarded by permits.
Traditional owners were deprived of ownership benefits and ownership responsibilities. The result: you need a permit to visit because indigenous lands are private property, but it’s the government’s job to build houses, roads, and control feral animals.
In the rest of Australia, private property exists side by side with communal ownership. Most of us work in the private sector and own our own homes, but we drive on public roads, send our kids to public schools and picnic in public parks. Public sectors are funded by taxes provided by the much larger private sectors. Utopians dream, but nowhere in the world has a high level of prosperity been achieved without a mix of private and public ownership. Without it, remote Aborigines and Torres Strait Islanders are land rich but the poorest people in Australia.
Most royalties go to land councils rather than to individuals. The Northern Territory Aboriginals Benefit Account has $380 million in the bank and income of $200m a year over the past two years. Distributed to individual landowners, this would fund mortgages for every remote indigenous family in the NT. Royalties could be sequestered in individual accounts, say superannuation. Land councils own extensive property in Darwin and Alice Springs while their landowners live in hovels.
Not identifying individual landowners contributes to social breakdown. Townships where most remote Aborigines and Torres Strait Islanders live grew from missions and government stations. Land that traditionally belonged to one clan now houses people from several. Traditional clan members look for ways to assert their authority and entitlements over other residents. It is not surprising that disputes and violence are endemic.
Much has been written about cultural determinants of remote indigenous poverty and dysfunction. But poverty and dysfunction are not cultural. They are the product of 40 years of counterproductive government policies. Anywhere in the world, communities deprived of individual property rights and education, showered with welfare and denied civic norms, would become poor and dysfunctional.
Most – 85 per cent – of the 550,000 indigenous Australians live in capital cities and regional towns. While some 140,000 are welfare dependent, the majority – 330,000 – live and work with other Australians. Their children attend public and private schools, TAFE and university, and go on to meaningful jobs. Nearly 70 per cent are home owners. It is the remaining 75,000 on remote indigenous lands – 15 per cent of the total indigenous population – that account for most of the poverty and dysfunction.
By the mid-2000s, the Howard government realised that existing policies had failed. They identified the absence of individual property rights as a major cause of disadvantage. The Home Ownership on Indigenous Land fund and amendments to the Aboriginal Land Rights (Northern Territory) Act were intended to facilitate home ownership.
Mal Brough, then minister for indigenous affairs, was offended by the state of remote communities. Brough understood that the failure to enforce civic norms contributed to the collapse of remote communities. Hence the NT intervention. Queensland, South Australia and Western Australia took complementary measures. Jenny Macklin, the Labor Minister for Indigenous Affairs, continued the intervention and extended welfare quarantining to mainstream Australia.
Because the intervention only targeted “community norms”, it could not lead to mainstream prosperity. For that, communities also need individual property rights, education, and employment. The Remote Service Delivery program, intended to turn remote townships into mainstream country towns, will also fail without individual property rights.
Vast expenditures on remote communities – $7.5 billion or $100,000 per person per year – are wasted on programs that do not work. Money is available for a procession of initiatives, engagements, agreements, pathways, overarching architectures and consultations, but not for all-weather roads. Governments build expectations that everyone will receive public housing. People who once took responsibility for their lives now sit under trees, drink and smoke, play cards, and wait for the government to provide. Only on Cape York, with Noel Pearson’s leadership, has a Family Responsibility Commission mustered elders to restore community norms.
Although the right to own your home is fundamental to other Australians, on indigenous lands public housing is the only option. It has failed. By 2007, public housing had provided only 13,000 dwellings for more than 22,000 remote households. Most houses are sub-standard, dilapidated and crowded. The Remote Indigenous Housing Program is spending $5.5bn over 10 years on remote public housing. The average cost – refurbishments and new construction – is more than $600,000 per house. Private houses of similar quality are delivered in remote locations for $300,000. When this program is complete there will be 17,000 houses for 23,000 households; 12,000 indigenous families will still be sharing houses.
Denied home ownership, remote Aborigines are unable to build assets like other Australians. They are deprived of home-owner grants and tax-free capital gains on the family home. The Territory government has recently announced a “grant of $10,000 for homebuyers who build or purchase a new home”. As they say in the bush; “when a white man dies his family gets the house, when a black man dies, the government gets it”.
To ensure that indigenous land ownership is retained, long-term housing leases are a practical option. Bob Katter, when Queensland minister for Aboriginal and Islander affairs, introduced long-term leases. Only a few hundred were issued before a change of government brought “Katter leases” to a halt. In the NT, the commonwealth’s head leases over Aboriginal lands are flawed. Only the Tiwi and Anindilyakwa (Groote Eylandt and Bickerton Island) Land Councils have given head leases over their communities to the commonwealth’s Office of Township Leasing. Although these permit housing sub-leases, just 16 housing leases have been issued on the Tiwi Islands since 2007. This was the high point of private housing. Jenny Macklin reduced head lease terms from 99 to 40 + 40 years.
If a Groote Eylandt landowner takes a loan today, builds a house and pays off his mortgage over 30 years, seven years later the commonwealth government could take ownership of his house on payment of $1.
In contrast, the Australian Capital Territory’s private housing on renewable 99-year leases provides secure individual titles.
Three current discussion papers (the Commonwealth’s Indigenous Economic Development and Indigenous Home Ownership and Queensland’s Indigenous Home Ownership) fail to identify pathways to private housing and private business. The commonwealth and Queensland governments show no urgency. The commonwealth’s Indigenous Home Ownership paper was issued in May 2010. Responses closed last December. They have yet to be posted online.
Housing lease terms should be at least equal to ACT leases. To ensure communities retain control over their land, “accepted by the community in which they live” should be the criterion for applicants for housing leases and conditions of sale and inheritance.
In small communities, individual traditional landowners are known. They can create landowner lists and apply for leases, subject to community approval. In townships, conflicts between the traditional landowning clan and other residents must be resolved.
Housing on indigenous lands is dire. There is no land shortage. Existing income flows are sufficient for mortgage funding. Introducing individual property rights side by side with communal ownership is essential for prosperity in remote communities. Other policies – mainstream education, civil society norms, reduction of excessive welfare – are also necessary. But individual property rights receive the least attention.
Helen Hughes is a senior fellow and Sara Hudson is a research fellow at the Centre for Independent Studies. Mark Hughes is an independent researcher. Their Private Housing on Indigenous Lands is available at http://www.cis.org.au
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