For good measure 57Dec08_7.pdf · digestive systems of animals). But measuring methane from animals is an imprecise science, to say the least. Including estimated emissions in an

For good measureHugh Saddler and Helen King

Reclaiming your time from thetelemarketers

Josh Fear

Comments on intrusivemarketing

Spare partsHilary Bambrick

Truth in advertisingLeigh Thomas

Making super work for allAustralians

Josh Fear

Accelerating renewable energyDavid Richardson

New top tax rateRichard Denniss

Great ideas for Christmas

Militarism or health servicesJohn Langmore

The floor in the ETSRichard Denniss

Channel Nine’s artifical campaignJosh Fear

Institute notes

No. 57 December 2008

In their paper, Agriculture and Emissions Trading: Theimpossible dream, Hugh Saddler and Helen King discuss thereasons why agriculture will not fit comfortably into anemissions trading scheme.

For good measure

The discussion paper by Dr HughSaddler and Helen King entitledAgriculture and Emissions Trading: theimpossible dream? was released by TheAustralia Institute in late October andgenerated a great deal of interest frommany different groups of stakeholders,both in Australia and overseas. Thefeedback only served to highlight thedisparate views about imposingemissions trading on to the agriculturesector.

The thrust of the paper refutes thesuitability of including agriculture inan emissions trading scheme (ETS) or,as it will be called in Australia, theCarbon Pollution Reduction Scheme(CPRS). There are several reasons forthis.

1. It is very difficult to measureagricultural emissions with anyreasonable degree of accuracy or cost-effectiveness. Yet, in order for an ETSto be robust and credible,measurement of the emissions tradedneeds to be accurate and cheap inorder to provide a level of comfortfor those operating in the market.Emissions need to be fungible, that iscommercially interchangeable, so thata tonne of carbon from one source(say coal-fired power) can be tradedfor a tonne of carbon from a different

source (say, methane from thedigestive systems of animals). Butmeasuring methane from animals isan imprecise science, to say the least.Including estimated emissions in anETS would not provide the level ofcertainty necessary for marketcredibility and would fail to send theright price signals.

2. The nature of agriculturalemissions themselves makes it difficultfor farmers to establish practicalabatement systems. The three maingases produced from agriculturalenterprises are carbon dioxide,methane from the digestion systemsof livestock and nitrous oxide fromchemical processes and microbialactivity in agricultural soils. They aregenerated, to a large extent, bynatural phenomena totally outsidemanagement control. The amount ofagricultural emissions depends on anumber of factors, many of them notanthropogenic (human-induced) innature. Under these circumstances,including agricultural emissions in anETS is effectively a tax on production,because farmers will find it difficultto lower their carbon emissions as aresult of price signals due to the factthat the options open to them fordoing so are limited.

3. In order to reduce theadministrative burden of the CPRS,the Government has elected toinclude only those polluters emittingmore than 25 kt CO2-e per year. Theagriculture sector is made up of130,000 predominantly smallbusinesses, which collectively emit 16per cent of total Australian emissions,

The amount ofagriculturalemissions depends ona number of factors,many of them nothuman-induced.

Continued on Page 13

THE AUSTRALIA INSTITUTE

2

Reclaiming your time from the telemar ketersEverybody has a story to tell about telemarketing. Sales calls at dinner time, often from overseas andsometimes using a recorded message, are infuriating. Josh Fear examines a modern scourge.

Telemarketing is one form of ‘directmarketing’, along with junk mail, spamand face-to-face marketing. Directmarketing differs from ‘traditional’advertising in making a much strongerclaim on our attention. We can switchoff the television or the radio if wefind an advertisement too annoying,but it is virtually impossible to avoidintrusive marketing altogether.

The direct marketing industry inAustralia is big business, spendingaround $12 billion per year—or morethan one per cent of GDP. Accordingto the Commercial EconomicAdvisory Service of Australia, in 2005695,430 people worked in directmarketing, including 229,000 intelemarketing, 184,000 in cataloguesand 217,000 as ‘stuffers’ (that is,envelope stuffers). If these figures arecorrect, there are more peopleworking in direct marketing thanthere are school teachers, nurses anddoctors combined.

Telemarketing is the target of a greatdeal of public criticism. More than onebillion telemarketing calls are madein Australia each year, andtelemarketing was identified as themost annoying ‘event or situation’ ina recent study by the AustralianPsychological Society.

Responding to community concerns,in May 2007 the AustralianGovernment established a Do NotCall (DNC) Register to enablemembers of the community to optout of unsolicited phone calls.However, under the new system someorganisations (including charities,political parties and companies with‘inferred consent’) can continue tomake such calls.

In fact, Australia’s response totelemarketing is more relaxed thanIndia’s, where exceptions to its DoNot Call regulations apply only tomessages ‘relating to charities,national campaigns or naturalcalamities transmitted on thedirections of the Government’, andmessages ‘in the interest of thesovereignty and integrity of India, thesecurity of the State, friendly relationswith foreign States, public order,decency or morality’.

A distinctive feature of telemarketingin the US is the use of prisoners toconduct telemarketing work. Onetelemarketing manager said he hiredprisoners because ‘I need people whoare there every day’, although the realreason seems to be that prison labouris cheap. Telemarketing earns inmatesless than $2 a day in the US.

Some people will go to great lengthsto avoid being ‘marketed’. They buyanswering machines or caller IDdevices, disconnect their phonealtogether, display ‘No Junk Mail’ signs,send junk mail back to its source, andcross the road when a marketer is intheir path. Millions of people havejoined the DNC Register, and many

take every opportunity to‘unsubscribe’ from mailing or emailinglists.

We asked some members of TheAustralia Institute to describe theirexperiences with direct marketing.Their comments (some of which arereproduced on Page 3) confirm thatthere is a great deal of negative feelingin the community about directmarketing. This resentment stemsfrom the invasion of personal space(including that most personal ofspaces—our homes), the use ofpersonal details without permission,the waste of precious time, and thesheer absurdity and futility of muchdirect marketing.

Member comments also revealedfrustration about other forms of directmarketing. Residential letterboxescontinue to receive massive amountsof junk mail, even where a ‘No JunkMail’ sign is displayed, and real estateagents are identified as commonculprits. In addition, the increasinguse of face-to-face marketingtechniques in public spaces, shoppingcentres and other busy areas ischanging the way that we perceiveand interact with other people outsideof home and work.

As well as talking to members abouttheir experiences with directmarketing, we conducted an onlinesurvey of 1,000 Australians to explorecommunity attitudes to telemarketingand to measure the impact of theDNC Register since its introduction.

The findings show that Australians,on average, receive 8.5 unsolicitedtelemarketing calls per month, and the

Direct marketersspend around $12billion per year inAustralia.


Telemarketing wasrecently identified asthe most annoyingevent or situation bythe AustralianPsychological Society.


3

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There are people who enjoy having telemarketerscall because they’re lonely. I’m not one of those.

I am a bit ashamed to say but whenever there is alengthy delay after the phone rings and I pick up and asub-continental voice comes on, I hang up immediately.I feel guilty about this because sub-continental callcentres are relatively good jobs in these areas andthey are just trying to make a living.

One of the main reasons I gave up my landline wasthe intrusion of telemarketing. This strategyworked well and in the end saved me a lot ofheadaches and money. ... I hate telemarketing with avengeance.

Once I got so angry with repeated calls in one day thatI slammed down the phone and broke it. This obviously fixed the problem in the short term.

The worst but easiest to handle are the recorded voices, for example telling you that youhave a won a prize. Obviously some people fall for this nonsense, a depressing thought.

Telemarketing infuriates me. I hang up in their ear before they can get going. The only exception iswhen I find it is the Wilderness Society or Amnesty who are doing it—which tests my loyalty to thesewonderful organisations rather severely.

One way to combat junk mail is to send the stuff back in their own return envelopes—youchuck all the junk mail in there.

From an environmental and consumer perspective, I hate [junk mail]. In this age, when we should beconcerned about natural resources, I find it offensive that companies do this to me. I don’t even lookat it. It goes straight in the recycling.

My No Junk Mail sign works with everyone but real estate agents. They say it’s not junk, it’sinformation. I’ve had a lot of arguments with real estate agents over this.

With regard to public/street spruikers, I find that they present one of the rare situations when beingdisabled offers an advantage. I walk with a stick and need to watch the ground to maintain mybalance and movement. I thus completely ignore them and focus on the task of ambulating. If theyare particularly aggressive or insistent (which is very unusual), the accidental placement of the stickon a foot or instep tends to be useful.

I’m fed up with the government pretending they’re not in the business of regulating, andbowing to corporate pressure. They can find a way to generate business without ringing meup or spamming me or sticking things in my letterbox. They’re clever. They can figure it out.

They ask ‘How are you’ which annoys me as they could not care less. I do not answer but when theyask again, I reply ‘eighty and dying’ (which is nearly true) and they get off quite quickly.

Intrusive marketingThe Australia Institute conducted a survey of some of its members on the subject of telemarketing and junkmail to assist its research. Here are a selection of comments that were made during that survey.


4

Spare parts

In May this year, transplant specialistGavin Carney caused a media frenzyby suggesting that healthy youngpeople should be able to sell a kidney.There’s a serious shortage of donororgans in Australia, and Australia fallswell behind other countries.

In September, the FederalGovernment announced a $151million advertising and counsellingcampaign to boost organ donation; ifit works, it will increase donations by50 per cent to 15 donations permillion people. This is half the rateachieved in Spain.

The focus of the new approach hasbeen criticised as being too narrow

Research Fellow Hilary Bambrick is researching the attitudes of Australians towards the supplying of bodyparts for payment and asks: ‘Would you sell a kidney to save the life of a stranger?’

and too entrenched. It promotes only‘pure’ altruistic motivations fordonation and, in the case of livedonation, affords too little recognitionof the real physical and financial costs(six weeks off work, for example). Nordoes it allow enough room forrecognising wider motivations, inparticular financial incentives.

Dr Carney and other proponents ofpaid donation expect that offering asubstantial amount of money for akidney will decrease the waiting listand reduce the number of desperatepatients travelling overseas to obtaina transplant. These people alsoincrease their chances of infection andother complications. However, Ifpaying people for one of their kidneyswere to become legal in Australia,would it actually increase the numberof donors?

On the day after the original reportingof Dr Carney’s comments, there wasa large photo on Page 1 of the SydneyMorning Herald showing a dad on thebeach with his two-year-old daughter.The headline read: ‘Please, buy mykidney to secure her future’. The dadsaid he would readily sell a kidney topurchase ballet lessons for hisdaughter and considered that themoney would ‘help her to avoid

Sydney’s rental crisis when she’solder’.

For this dad, there was no questionabout either the dollar value of hiskidney or that money would motivatehim. But how many other Australiansfeel the same way and should it evenbe permitted?

We recently conducted an internetsurvey of 1,000 people (nationallyrepresentative by age, sex and state)about a whole range of social andeconomic issues. We includedquestions on the buying and sellingof organs in order to get a picture ofreal community attitudes to puttingbody parts on the Australian market.Half the respondents to the surveyreported that they were registeredorgan donors. Seventy percent wereagainst the idea that Australiansshould be able to sell an organ while20 per cent were in favour.

Although an overwhelming majorityof respondents thought thatintroducing a payment would enticeother people to become live organdonors of a kidney, nearly half thoughtthat they themselves would be lesslikely to donate if they could be paidfor doing so. Only 11 per cent thoughtthat a payment would make themmore likely to donate an organ.

Respondents were largely against theproposition that families should beable to sell the organs of relativeswho had died (80 per cent), while 20per cent were in favour. Malerespondents were more likely to be

0

5

10

15

20

25

30

<$40K $40-$80K $80-$150K >$150K

Household income

Per

cent

Per cent of respondents by household income who think itshould be acceptable to sell the organs of dead relatives

Seventy per cent ofrespondents rejectedthe idea thatAustralians shouldbe able to sell anorgan.

Continued on Page 6


5

Truth in advertising

On 2 July 2008, the LaborGovernment released its Guidelineson Campaign Advertising byAustralian Government Departmentsand Agencies. By doing this, it fulfilledan election promise to curb the moreegregious advertising practices thatoccurred under the HowardGovernment. The Opposition hasscoffed that, in fact, the newguidelines do nothing more thanpreserve the status quo, perhaps ahint that the status quo was somewhatless than desirable.

Traditionally, there have been twocategories of advertising wheregovernments are concerned:

• Political advertising, which singsthe praises of the advertiser, is partisanin nature, usually highly ‘emotive’ andmust be paid for by the political partyitself;

• Government advertising, alegitimate method of informing theelectorate about policies andinitiatives that it needs to be awareof. This sort of advertising should befactual, apolitical and is paid for outof taxpayer funds.

Over the past couple of decades,however, the distinction betweenthese two categories has becomedecidedly blurred. Both the Hawkeand Keating governments were guiltyof contributing to the generalinterpretative fuzziness but it reachedthe level of high art under theHoward Government, especially

On 2 July this year, the Rudd Government released new guidelines, which will govern the practice andcontent of government campaign advertising. Recently, Kathy MacDermott’s study for the Democratic Auditof Australia, Marketing Government: The public service and the permanent campaign, was publishedprompting Leigh Thomas to look at the old regime and the new.

during the latter years of itsincumbency. Taxpayers contributed tocampaigns that were ostensiblygovernment advertising, for exampleon the GST and industrial relationscampaigns, but in reality smackedrather seriously of party politicaladvertising.

This distortion was assisted by anastonishing lack of regulation in theareas of both government and politicaladvertising. Countries such as the US,the UK, Canada and New Zealandregulate such advertising far morestringently than does Australia.Politicians here enjoy a great deal oflatitude in how much they spend,where the funding comes from andwhat they can actually say in theiradvertisements.

Despite the lack of formal regulation,however, there used to be anunderstanding that a line separatedpolitical advertising and governmentadvertising and directed how eachshould be managed and paid for. It isestimated that the HowardGovernment spent over $1 billion onadvertising during the years it heldoffice and for many of its campaignsthis line was not observed. Australiantaxpayers kindly contributed to theCoalition’s ‘permanent campaign’,which generally went into overdriveas elections neared. In fact, Kathy

MacDermott’s study for theDemocratic Audit of Australia,Marketing Government: The publicservice and the permanent campaign,finds that in the 2007 election year,the Australian Government outspentColes, Telstra, Harvey Holdings andNestlé Australia/l’Oreal to becomethe highest-spending advertiser inAustralia.

A further failure to observe traditionoccurred in the way the CoalitionGovernment involved the publicservice in its advertising campaigns.According to the APS Values, publicservants are responsible for helpingto explain the implementation andoperation of the policies andprograms undertaken by thegovernment but they should avoidany involvement in policy publicitycampaigns. They are to remainapolitical and impartial; they are notto ‘sell’ government policy.

‘The public service is alot more conscious nowof the need to explain,the need to justify, theneed to defend’ (JohnHoward).

Continued on Page 6

Cartoon by Nicholson from “The Australian” newspaper: www.nicholsoncartoons.com.au

There has been anastonishing lack ofregulation in the areasof both governmentand politicaladvertising.


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However, in the words of JohnHoward: ‘[The] public service is a lotmore conscious now of the need toexplain, the need to justify, the needto defend’. While the need to explainmay fit snugly into the APS guidelines,the need to justify and the need todefend do not. Nevertheless, duringthe Howard Government’sincumbency, public servantsincreasingly became involved injustifying and defending governmentpolicy and were even expected toappear in advertisements extolling thevirtues of the IR laws and theorganisations put in place to regulatethem.

It is to be hoped that the new LaborGuidelines on Campaign Advertisingby Australian GovernmentDepartments and Agencies willredress some of these transgressions.The guidelines are based on thosedeveloped by the Auditor-General in1998 and salient features include:

• The Ministerial Committee forGovernment Communications and

in favour of selling the organs ofrelatives than female respondents (25per cent versus 16 per cent), and theacceptability of this propositionincreased with household income (seethe graph on Page 4).

This preliminary look at communityattitudes in Australia suggests thatthe notion that introducing paymentfor blood and organs would increasecontribution rates might be nothingmore than a fantasy; it seems thatpeople tend to perceive others asbeing motivated more by financialincentives than they think themselvesto be.

Spare parts from Page 4

Truth in advertising from Page 5

Also of particular interest is thedifferential motivation for donatingblood and organs displayed byincome groups when contemplating

payment. Contrary to past assertions,it seems that those on lower incomesmight be less motivated by financialreward than those on higherincomes.

The buying and selling of blood andorgans is highly contentious. Inaddition to looking at the effectfinancial incentives might have onincreasing the supply of blood andorgans, The Australia Institute will beexamining the public health,economic, social and equityimplications of selling body parts inits ongoing research.

the Government CommunicationsUnit, which ran the advertisingprogram for the HowardGovernment, have been abolished.

• Coordination of procurementcontracts and development andimplementation of governmentadvertising campaigns will be theresponsibility of the Department ofFinance and Deregulation, therebyincreasing accountability andtransparency and encouraginggreater efficiency and savings.

• Responsibility for campaigndevelopment will be undertaken bythe commissioning department withassistance from the Department ofFinance and Deregulation andministers will be briefed on progress.

• Campaign expenditures will bepublished twice a year.

• Government advertising andinformation campaigns will provideobjective, factual and explanatoryinformation free from partisanpromotion of government policy andpolitical argument. Political imageryand slogans are banned.

• Politicians and staffers will nolonger be able to influence taxpayer-funded ad campaigns.

• Government cannot advertise aproposed election policy as‘government policy’.

The guidelines arebased on thosedeveloped by theAuditor-General in1998.

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• Campaigns over $250,000 will bescrutinised by the Auditor-General.

Unfortunately, these are guidelinesonly; they have not been legislated.And while the aspirations are worthy,incumbent governments, once theyhit their stride, are apt to lose sightof their initial idealism and lapse intopragmatism.

HAPPY CHRISTMAS

FROM

THE AUSTRALIAINSTITUTE


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How did you decide whichsuperannuation fund was best for you?Chances are someone else did it foryou—either your employer or theaward that covers your occupation.While some people make activechoices about their super, most dolittle or nothing about it until theprospect of retirement begins to loomlarge.

Since July 2005, the great majority ofAustralia’s ten million workers havebeen able to choose their super fund.When it was introduced, theCoalition Government representedthe Choice of Fund policy as a majorvictory for consumers. In reality, themajority of Australians have derivedlittle benefit from greater choice andcompetition in the superannuationsector.

Instead, recent changes have benefitedonly some sections of the community,such as the financial services industryand highly-engaged consumers.

The fact that fewer than ten per centof workers actively choose their fundshould not come as a surprise. Thesuperannuation system is enormouslycomplicated, and people a long wayfrom retirement usually have morepressing things to think about.

The key economic rationale for theChoice of Fund policy was to increasecompetition for the benefit of fundmembers. Unfortunately, low rates ofswitching between funds raise seriousdoubts about the policy’s effectivenessin stimulating competition.

Widespread disengagement on thepart of many fund members means

Making super work for all AustraliansThe Choice of Superannuation Fund policy was introduced in 2005 but it has confused people more than ithas helped them. Josh Fear explains how greater choice has been bad for the superannuation system.

that consumer-driven competition inthe super sector is deficient. Insteadof competing to attract individualmembers, funds compete for theattention of intermediaries such asfinancial planners.

This ‘distribution-side’ competitionimposes additional costs on the supersystem and explains why Choice ofFund has not resulted in lower feesand better performance.

Choice of Fund is the most recentinitiative in a long-term shift towardsgreater individual choice in a largelycompulsory system, yet the principlesof choice and compulsion situncomfortably together.

Choice of Fund was based on theassumption that consumers areinterested in and able to makesensible decisions about theirretirement. Compulsion, on the otherhand, assumes that most individualsneed help to save adequately forretirement. What has been missingis a set of policy arrangements thatpromote the interests of disengagedconsumers.

If workers decline to choose a fund,the choice is made for them. Smallbusinesses in particular find it difficultto nominate the default fund for theiremployees and often need help in

doing so. Since Choice of Fund wasintroduced, employers haveincreasingly seen the selection of anappropriate fund as the responsibilityof individual workers.

If an employer chooses the wrongfund—one that has high fees and lowreturns—workers who are notengaged with their superarrangements may never realise thattheir retirement savings are not whatthey could be, at least until it is toolate.

Our financial systems have been builton the assumption that consumersare utterly rational creatures whoalways make decisions in their ownbest interests. But a new discussionpaper from The Australia Institutewritten in collaboration with theIndustry Super Network, Choosing Notto Choose, suggests that more realisticbehavioural traits such as apathy,procrastination and profounddisinterest in financial matters needto play a greater role in determininghow the superannuation systemoperates.

Default arrangements are a highlyeffective policy option because theycan improve financial outcomes forthose who decline to make an activechoice, while retaining flexibility forthose who want it.

On a practical level, this means thatsuper funds should be required tomeet certain standards before theycan be nominated as eligible defaultfunds for workers who choose not tochoose.

Recent changes havebenefited only somesections ... such as thefinancial servicesindustry and highly-engaged consumers.

Continued on Page 8

Low rates of switchingbetween funds raiseserious doubts aboutthe effectiveness of theChoice of Fund policy.


8

The AustraliaInstitute

Members of the Institutereceive our quarterly

newsletter, our e-bulletin,updates on all new

research and free hardcopies of recent

publications uponrequest.

If you would like tobecome a member of theInstitute please go to our

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For example, ongoing fees andcharges for default funds should becapped at a level determined by anindependent body such as theAustralian Prudential RegulationAuthority.

Entry and exit fees should beprohibited, since these act as a majorbarrier to consumer choice anddistort competition.

Ongoing fees and commissions forfinancial advice should be prohibited.If workers are placed in a default

Making super work from Page 7

fund, by definition they have not madean active decision about their fund. Itis therefore unlikely that they havereceived any formal financial adviceand they should not have to pay forit.

These standards would benefitemployees by lowering fees andprotecting savings, and would benefitemployers by reducing the costsassociated with administration andselecting an appropriate default fund.

Maximising choice remains at theheart of superannuation policy inAustralia. Yet choice is only beneficialwhere people want more flexibilityand where they have clear notions ofwhat they want. This is evidently notthe case for many Australians.Governments therefore have aresponsibility to examine how peoplereally behave and to structure policyaccordingly.

Accelerating renewable energy

Choice is onlybeneficial where peoplewant more flexibilityand where they haveclear notions of whatthey want.

Over the next ten to 20 years, a largeinvestment in renewable energyinfrastructure is going to benecessary in Australia. Governmentsneed to think about ways to facilitatethis investment, as it will beexpensive and will take place againsta background of rapidly developingtechnology and changing coststructures. The research paper,entitled The tax treatment of capitalinvestments in renewable energy,examines some of the ways thegovernment might help to addressthis state of affairs.

Allowing organisations to depreciatetheir assets more quickly thancurrent ATO rules allow is one ofthe ways discussed. Whereinvestment in renewable energy isconcerned, there are several verygood reasons for introducingaccelerated depreciation of the assetspurchased, especially in the initialstages. And with the government

contemplating the introduction of theCarbon Pollution Reduction Scheme(CPRS) in 2010, there will be an addedincentive for organisations to switchto renewable energy if they can and acorresponding increase in demand forthe infrastructure to provide it.

Depreciation is the process by whichthe ATO taxes the acquisition ofassets. When a company buys aservice, the ATO assumes that it willuse that service immediately and it willbe able to claim the complete cost asa tax deduction at the end of thefinancial year. However, i f thecompany were to buy a wind turbine,for example, the ATO assumes thatthe turbine will have an effective lifeof 20 years. Under current ATO rules,the company will only be able to claima depreciation expense of onetwentieth of the cost each year overthat time. So if the wind turbine ispriced at $1 million, the company isable to depreciate $50,000 each year

until the cost of the asset iscompletely used up.

Accelerated depreciation wouldallow the company to expense thecomplete cost in, say, the first five orten years rather than over the life ofthe asset. Organisations would behappy to do this because the morecost that can be written off each yearin the early stages of an investment,the greater their after-tax profits willbe .

Renewable energy infrastructure is going to be expensive and Australia is going to need it soon. In his paperentitled The tax treatment of capital investments in renewable energy, David Richardson argues thataccelerated depreciation will help to get it moving.



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How much do you have to earn tostop being a ‘working family’ and startbeing rich? Is it $100,000 per year or$150,000 per year?

The Rudd Government has workedhard to avoid answering this question.Such questions are never easy,especially when people start askingfollow up questions like ‘How manychildren do they have?’ and ‘What doyou mean by family?’

At the upper end of the spectrum,however, things get a bit easier. Whilemany may have heard that Sol Trujillowas paid more than $13 million lastyear, few people probably realise thatthat means he earns $250,000 perweek, or $50,000 per day. Not manypeople have difficulty concluding thatsuch an income is sufficient to makeyou rich.

While executive salaries have grownspectacularly in recent years, theAustralian taxation system has notkept up. The top tax rate of 45 percent now kicks in at $180,000 peryear, which means that Sol Trujillo isinto the top tax rate fewer than fourdays after the beginning of thefinancial year.

According to the ATO only 5,605Australians earned more than $1million in 2005–06, the latest year forwhich detailed data is available. Whilesmall in number, these annualmillionaires collectively earned morethan $10.7 billion in that same year.

New top tax rate

Much is made of the fact thatAustralia is an egalitarian nation inwhich everyone deserves a fair go—so much so that we are supposed tobe prone to cutting down our ‘tallpoppies’. This may still be true forthose ‘elites’ so despised by theHoward boosters past and present,but it certainly does not seem to applyto our ‘captains of industry’. Whenit comes to income levels, and incomegrowth, there is nothing egalitarianabout the way Australia rewards itsCEOs.

But it is not just the distribution ofwages and salaries that are sounevenly distributed. In recent years,Australia has been described as the‘greatest shareholder democracy inthe world’ by those who seek to implythat the benefits of economic growthand, until recently, the growth in thevalue of the Australian share market,were shared somewhat evenly acrosssociety. As the table below from theCommonwealth Treasury shows, thefacts are quite different.

To summarise, the table shows that:

• the top one per cent of incomeearners earns more than twice asmuch from wages and salaries as thebottom 20 per cent combined

• the top one per cent of incomeearners earns more than a third (35.7per cent) of all dividend income inAustralia

• the top one per cent of incomeearners earns 38.6 per cent of allcapital gains income in Australia.

While the extreme inequity of theincome and wealth distributionshown in the table should be ofconcern, what is of greater concernis the way that the tax system haschanged over time to exacerbate it.

For example, the top marginal tax rate,which by definition is paid by thehighest income earners, has shownthe most rapid rate of decline overthe past decades, falling from over 60per cent in the late 1980s to 45 percent today.

The impact of the reductions in thetax rate for high earners is even moresignificant where the distribution ofincome is concerned. The figures inthe table show that for every $1bil l ion spent on reducing thecorporate tax rate, $357 million endsup in the bank accounts of thewealthiest one percent of Australians,$644 mill ion ends up with the

The top income earners in Australia pay the same level of tax as those on relatively modestincomes. Richard Denniss advocates a change.

While executivesalaries have grownspectacularly inrecent years, theAustralian taxationsystem has not keptu p .


Estimated distribution of income, by source, 2006–07

Bottom 20% Bottom 50% Top 20% Top 10% Top 1%Salary and wages 2.4 17.6 45.9 28 5.3Gross interest 8.4 34.7 39.4 28.2 9.4Dividend income 3.2 11.7 75.2 64.4 35.7Net capital gain 4.2 13.3 73.7 64.2 38.6Source: Treasury (2008)


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Great ideas for Christmas

Struggling to find presents for friends and family? Dreadinganother trip to the shopping mall?

Why not give the gift of great ideas this Christmas?

Included in our Newsletter is a gift certificate for six months of freemembership to the Institute for you to give to a friend or family member.

Simply pass on the certificate and let us know the details of the person youhave nominated.

Thank you for your support this year and your dedication to progressivethinking in Australia.

All of us at The Australia Institute wish you a safe and relaxing festiveseason.

The renewable energy industry iscapital intensive. It will need vast sumsof money to create the infrastructurethat is going to be needed forAustralia to become more reliant onclean energy into the future. But,unlike current fossil-fuel-driven energysystems, its running costs will be verylow. Apart from maintenance, therewill be, by definition, no ongoing fuelcosts required to power renewableenergy sources. Therefore theeconomics of the renewable energysector will be driven by capital costs,making depreciation an importantcomponent for organisationalplanning.

Accelerated depreciation would gosome way towards providing some

comfort to organisations planning toinvest in renewable energyinfrastructure. To begin with, as moreenergy is derived from the renewableenergy sector, it is logical to assumethat the initial cost of theinfrastructure will diminish. Theimportance of this lies in the fact thatno organisation will, under thesecircumstances, want to be the first‘cab off the rank’. The situation willbe subject to a ‘f irst moverdisadvantage’ as organisations waitand see. But, with global warmingaccelerating, this situation constitutesmarket failure and it should not bepermitted to endure.

Secondly, technology too will play itspart in reducing the cost of renewableenergy infrastructure. As thetechnology develops, more efficientplant will be produced at increasinglylower cost, again creating a situationwhere organisations will deem itprudent to wait and see whathappens. Accelerated depreciationcan help in this situation as well. Itwill make it more attractive forinnovative companies to get in firstand capture as much of the market

as they can in the initial stages. This iswhat the government should beaiming for and benign taxationregimes will assist it to get there.

Policy-makers need to recognise thatinvestors in renewable energy will befacing quite profound andunpredictable changes in the value oftheir assets, changes that are muchlarger than the expected physical lifeof their assets would suggest. Theintroduction of accelerateddepreciation provisions would bothrecognise the problem and encourageincreased investment in renewableenergy sources.

Of course, unless the governmentimposes a science-based target as partof the CPRS or finds some way ofproviding a trading nexus between the1,000 organisations covered by thescheme and those not covered by it,it will be immaterial how muchrenewable energy infrastructure isbuilt, because emissions will not fallbelow the cap imposed by the CPRS.This problem is explained on Page 12of the Newsletter.

Accelerating renewable energy from Page 8

The renewable energyindustry will needvast sums of money tocreate theinfrastructure that isgoing to be needed.


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A side effect of the global financialcrisis is that developed as well asdeveloping countries will be forcedto review much more sceptically theclaims of their military for increasedfunding. This should apply toAustralia as well where theAustralian Government is alreadyspending more on defence than iswarranted.

The Australian Strategic PolicyInstitute Special Report, Public opinionin Australia towards defence, securityand terrorism, published in August2008, concludes that ‘support formore defence spending has droppedto its lowest level since the end ofthe Cold War’. The reason is that‘[t]he proportion of voters seeing asecurity threat to Australia hasdeclined consistently since the late1960s’.

When, after the 2007 federal election,respondents were asked which issuewas most important to them, theenvironment (including globalwarming and management of water)was identified as most important by21.7 per cent; health and Medicareby 20.5 per cent; industrial relationsby 16.3 per cent; taxation by 11 percent; education by 10.5 per cent;interest rates by seven per cent;immigration by 2.9 per cent; anddefence and national security byonly 2.7 per cent, closely followedby the war in Iraq at 2.4 per cent.

Terrorism was the greatest concernfor only 1.8 per cent. It is thereforereasonable to conclude that mostvoters are far more concerned withimprovements in environmental

The effect ofexaggerating militarythreats to Australiahas been to justifyincreases in defenceexpenditure that arelarger than necessary.

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policies, health services, fair industrialrelations and education than withdefence. Australia’s future securityand prosperity is more seriouslythreatened by climate change, theglobal financial crisis and potentialdisease pandemics than by possiblemilitary action. As a parliamentarycommittee concluded some yearsago, there is only one country withthe capacity to invade Australia, theUS, and it has no reason to do so.

The effect of exaggerating militarythreats to Australia has been tojustify increases in defenceexpenditure larger than arenecessary, to the level of over $60million a day. What external threatjustifies spending $60 billion on thepurchase of sophisticated weaponssuch as Joint Strike Fighters,destroyers and other militaryhardware? Does Australia really needfar higher military spending perperson than Japan, Germany orCanada?

The IMF and World Bank haverepeatedly emphasised theimportance of minimising militaryspending so as to maximise outlaysthat do more to stimulate economicand social development. UnitedNations summits and globalconferences have repeatedly cometo the same conclusion.

‘Experience has repeatedly shownthat the emphasis of the worldconferences on minimizing militaryexpenditures is completely justifiedbecause of the implications of suchspending on the availability of financefor desperately needed humanservices and infrastructure’ (TheUnited Nations Development Agenda,ST/ESA/316, New York 2007).Restraining military spending also hasthe benefit of avoiding provokingretaliatory increases, in the form ofan arms-race, by countries in theregion.

Additionally, increases in militaryspending contribute little to thecampaign against terrorism. In fact,they may add to the dangers.

Militarism or health services

Collaboration with the US in the illegaland misjudged invasion of Iraqincreased the motivation for terroristinterest in Australia. There are far morecost-effective ways of reducing suchrisks by contributing to reducingdespair, alienation and povertythrough the pursuit of equitabledevelopment. Restraint of militaryexpenditure would release funds fordesperately needed increases in aid aswell as for high priority economic andsocial programs in Australia.

The global financial crisis provides anideal opportunity to review currentdefence strategy, starting with athorough assessment of externalthreats. This might lead to identifyingways of cutting military outlays, makingway for more cost-effective means ofdefending ourselves, reducinginternational conflict and releasingresources for constraining greenhousegas emissions and improvements inhigher priority health and educationservices. What do the majority ofAustralians really want when the choiceis between spending $22 billion a yearon the military or improving the qualityof health and education?

John Langmore is a Professorial Fellow in theSocial and Political Sciences Department ofthe University of Melbourne and President ofthe UN Association of Australia.

The global financialcrisis provides an idealopportunity to reviewcurrent defencestrategy.

By John Langmore


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The most poorly misunderstoodfeature of the Rudd Government’sCarbon Pollution Reduction Scheme(CPRS) is this: once the governmentsets a national emissions reductiontarget it will mean that no matterwhat action individuals, householdsor community groups take, the levelof Australia’s emissions will remainexactly the same.

To restate, once the CPRS comes in,every tonne of CO2 that householdssave by installing solar hot watersystems, riding bikes or avoiding airtravel will simply free up an extrapermit, which will enable thealuminium industry, the steel industryor the cement industry to increasetheir levels of pollution.

It works like this. After emissionstrading begins, a family decides toinstall a solar hot water system ontheir roof, pack some insulation intheir ceil ing and use their airconditioner less during the summer.As a result of their efforts, theirelectricity consumption falls by 30 percent.

Because of their reduced demand forelectricity, the power station thatsupplies their electricity needs toburn slightly less coal. As the powerstation has to buy permits for everytonne of coal it burns, if it burns a bitless coal it doesn’t have to buy somany permits. This means that, as aresult of the household reduction inenergy use, there are now some spare

permits that can be sold to anotherpolluter who wants to pollute more.

Unfortunately it gets worse. Not onlydoes a household’s reduction inenergy use fail to result in acorresponding reduction in totalemissions, the main beneficiaries ofthe household ‘doing the right thing’are the big polluters. This is becausethe price of pollution permits isdetermined by the level of demandfor them; just as prawns get dearer atChristmas time when everyone wantsto buy them, permits also get dearerat times when everyone wants to buythem.

So if households all ‘do their bit’ andreduce demand for energy, thedemand for pollution permits will falland the price of the permits purchasedby the big polluters will fall as well.Under the CPRS, households arepresumed to spend summer sweatingit out without their air conditionersin order to keep the price of pollutionpermits down.

There is much confusion about howan emissions trading scheme willwork, and it is not generallyunderstood that the emissions targetset by the Government acts not justas a ‘cap’, above which emissionscannot rise, but also as a ‘floor’, below

which emissions cannot fall. Once thegovernment decides to allocate a fixednumber of permits to pollute, that isthe amount of pollution we will get.

Households can, however, dosomething to reduce Australia’semissions but it has nothing to dowith catching the bus or flying less—households will be able to buy permitsand rip them up.

An emissions trading scheme worksby issuing a fixed number of permitsto pollute, which companies can thenbuy and sell. Under such a scheme,households, community groups oreven companies who want to becarbon neutral can purchasepollution permits and put them in adrawer, rip them up or mount themin a frame on the wall. If people buypermits to pollute and then choosenot to use them, there will be fewerpermits available for the realpolluters. And because, under

A national emissionsreduction target willmean that no matterwhat individuals do,the level of emissionsin Australia willremain exactly thesame.

The floor in the ETSIt is probably true to say that the majority of people do not understand in any great detail how an emissionstrading scheme will work. Richard Denniss discusses a major flaw that is not immediately apparent, the floorin the ETS.


Households will beable to do somethingto reduce Australia’semissions—they willbe able to buy permitsand rip them up.


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emissions trading it is illegal to pollutewithout a permit, fewer permits meanless pollution.

But buying permits and ripping themup is a bad idea for three reasons.First, it is absurd that the governmentis preparing to introduce a schemethat says to people willing to spendthousands of dollars on reducing theirdemand for energy, ‘Don’t waste yourmoney on that, buy some permits andrip them up instead’.

Second, and more technically, the‘marginal abatement cost’ in thehousehold and small business sectoris likely to be much lower than theprice of CPRS permits. The result isthat, as well as being demotivating,telling people to buy permits meansthat they will actually be ‘buying’ asmaller reduction in greenhousegases than if they spent the sameamount of money around their homesor in their communities.

The third problem is one of equity—why should households have to paypolluters not to pollute? Over the pastten years we have watched thedisaster of the Murray River unfoldas, year after year, too much waterwas extracted. Now the taxpayer is n

The floor in the ETS from Page 12

busy trying to buy back the so-called‘right’ to extract water. To avoidhaving to buy permits back frompolluters in the future, we should becareful not to hand out too many inthe first place.

Demand for large cars is declining,demand for solar hot water systemsis growing and Carbon Cops was a toprating TV show. Clearly, millions ofAustralians want to be a part ofreducing Australia’s emissions andclearly, millions of Australians will bedisappointed when they learn thatemissions trading does notsupplement their individual efforts—it replaces them.

Fortunately the solution isstraightforward. Step 1 is to make surethat the Government goes for anambitious target based on science,not the five or ten per cent targetbeing pushed by the big polluters.

The second step is to make sure theCPRS is designed in such a way thatthe efforts of households deliveradditional reductions to Australia’sgreenhouse emissions rather thanjust freeing up permits for bigpolluters. This can be done bycreating a ‘secondary market’ for

energy efficiency credits in whichindividuals, small businesses, schoolsor community groups who want to‘do their bit extra’ are able to capturethe benefits of their actions for theenvironment rather than just freeingup more permits for the big polluters.

Much will be written about the CPRSin the coming months, but little ofclarity will be said. For those who areinterested in reducing Australia’semissions, the main question theyneed to ask when evaluating whatothers are saying is: ‘How will thatreduce the number of permits incirculation?’ If you want to avoid allthe pea and thimble tricks, just keepyour eye on the number of permits.

but individually emit far less than 25kt CO 2-e per annum. The CPRSproposes to ‘upstream’ responsibilityfor carbon emissions from individualdrivers, for example, to the oilcompanies that initially supply thefuel. But there is nowhere to‘upstream’ responsibility for carbonemissions from the small businessesthat make up the agriculture sector.‘Downstreaming’ has been suggested,perhaps to the abattoir or the grainterminal, but the administrative costsinvolved in taking account of thedifferent practices and emissionspatterns of individual farms would besubstantial.

The government wants to includeagriculture in the CPRS because it seesthe market as being the lowest-costmethod of reducing emissions. Further,

it considers that the exclusion ofagriculture will place a larger burdenon those sectors that are included.

Although the authors cast doubtupon the wisdom of believing thatagricultural emissions will ever bemeasured accurately enough for anETS, they do not suggest that thesector should be exempt from otherprocesses aimed at reducingemissions. The paper explores anumber of options for achievingemissions abatement outside an ETS,including:

1. herd management and nutritionwhere methane is concerned2. soil and fertiliser managementwhere nitrous oxide is concerned3. carbon sequestration in bothplants and soil and the ways toincrease this4. alternative policy instrumentssuch as levy and incentive payments,

Agriculture and emissions trading from Page 1

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accreditation standards and voluntarymarkets.

While the Government is eager toinclude agriculture, but not before2015, the sector’s position reflectsits diversity; some sub-sectorsconsider their inclusion to be self-defeating and are lobbying to beexempted from having to abateemissions at all while others arelobbying for the inclusion ofagriculture from the start of the CPRS.

This paper suggests that both sidesof the debate are inaccurate: while itmight prove counter-productive toinclude agriculture in a formal ETS,it is imperative that the sector beencouraged to adopt best-practicemethods of emissions abatement assoon as practicable.


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wealthiest ten per cent, and more thanthree quarters, $752 million, iscaptured by the wealthiest 20 per centof citizens.

It gets worse. Despite decades oftrying to simplify the tax system andremove incentives for taxpayers tostructure their finances in waysdesigned to reduce their tax bills, theHoward Government introduced a 50per cent discount for tax payable oncapital gains. What that means is thatif you buy some shares for $1 millionand sell them for $2 million you don’thave to pay capital gains tax on yourentire $1 million profit; instead youonly have to pay tax on $500,000 ofit.

Again, the Treasury figures in the tableshow just how much this taxconcession benefits the very wealthy,with 38.6 per cent of all income fromcapital gains being received by thewealthiest one per cent of thepopulation. The decision to halvethe profits paid on capital gains, apolicy that has the support of thecurrent Rudd Government, costs anestimated $7.83 billion per annum.Of this, $3 billion goes directly to thewealthiest one per cent.

As luck would have it, the Secretaryof the Commonwealth Treasury, DrKen Henry, is currently undertakinga review into the Australian taxsystem. It is unclear, however,whether the disparities listed aboveare seen by government as a problemthat needs to be fixed or as

mechanisms that create an ‘incentive’for the rest of us to join the top oneper cent.

Dr Henry has made it clear thatreducing the complexity of the taxsystem is a high priority. While mostpeople interpret this as a rationalefor abolishing taxes, a more equitableand efficient way forward would beto remove the wide range of taxexemptions, including the capital gainstax concessions discussed above. Theabolition of tax concessions would,by definition, simplify the taxationsystem while simultaneouslygenerating billions of dollars inadditional revenue and increasingequity—all without having tointroduce any new taxes!

The next step should be to make theincome tax system more progressiveby introducing a new top tax rate forthose earning more than $1 millionper year. The Institute recently madethe case for such a threshold in apaper entitled The case for a new toptax rate.

The paper found that the introductionof a 50 per cent tax rate on incomesover $1 million would raise morethan $435 million in 2008–09. Therapid rate of growth in CEO salarieswould also ensure that a new top taxrate would provide a rapidly growingsource of revenue into the future.

It is inevitable that the RuddGovernment will announce changesto the Australian taxation system n

New top tax rate from Page 9

average telemarketing call lasts for1.45 minutes. Based on these figures,we estimate that the value of timewasted on unsolicited telemarketingcalls across Australia is $1.58 billionper year. Two in three surveyrespondents said that telemarketingshould be prohibited in Australia.

People whose number is on the DNCRegister said they received fewer callson average than those not on theRegister (seven calls per monthcompared to ten calls). In other words,the Register appears to have reduced

telemarketing call volumes by around30 per cent.

This would be an indication of successif it were a ‘Call Me Less’ Register, butas a ‘Do Not Call’ Register it signalsthe partial failure of current measuresto mitigate the impact of intrusivemarketing, which operates almostexclusively on an ‘opt-out’ approach.

Currently, members of the public haveto take deliberate action if they wishto avoid direct marketing, but ourresearch indicates that an ‘opt-in’system would be more effective in

Telemarketers from Page 2

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The value of time wastedon tele-marketing callsacross Australia is$1.58 billion per year.

after the Henry Tax Review makes itsrecommendations and in the lead upto the 2010 federal election. What isnot inevitable, however, is that anyproposed changes will help addressthe growing gap between the verywealthy and the most disadvantaged.Nor is it inevitable that the taxconcessions and exemptions grantedto the most wealthy will be removedin order to fund higher qualityservices for those most in need.

However, although genuine reformis not inevitable, it is possible. To thatend the Institute has made a numberof submissions to the Henry TaxReview and has assisted severalcommunity organisations, includingUniting Care, to prepare their ownsubmissions. We will continue toconduct and disseminate ourresearch in order to inform debatearound this most important area ofgovernment policy.

reducing the social costs of directmarketing. Such a system wouldassume that most people do not wishto receive direct marketing, andwould prohibit unsolicitedtelemarketing calls to anyone who hasnot indicated their desire to receivesuch calls.


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Channel Nine viewers may havenoticed A Current Affair’s recent ‘FuelFightback’ campaign, which involvedseveral independent petrol stations inSydney, Melbourne and Brisbaneslashing their prices below $1 per litrefor a number of hours each day.

Channel Nine cameras dutifullyarrived on the scene to document thetraffic snarls caused by the lengthyqueues of motorists waiting to fill up.

A Current Affair represented thecampaign as a grassroots movementagainst the big oil companies, which,they argued, kept petrol prices higheven as the global oil price was indecline. According to presenterTracey Grimshaw, the campaign‘sends a blunt but very clear messageto the oil giants to stop milkingdrivers and finally give them a fair go’.

Punters at the bowser seemed toagree. ‘Join in. Do something forAustralia’, said one. ‘Keep thebastards honest and let’s get the pricesdown’, said another.

A Current Affair’s ‘grassroots’ campaignis, in fact, reminiscent of another kindof movement. ‘Astroturfing’ refers toapparently grassroots communitycampaigns or groups that areprimarily conceived, created orfunded by corporations, industryassociations, political interests orpublic relations firms.

In this case it was Channel Nine thatfunded the campaign. ReporterHoward Gipps acknowledged on airthat ‘A Current Affair picked up thetab for today’s fightback’.

Channel Nine’s artificial campaign

This case of astroturfing was moreovert and less harmful than most.Picking on big oil touches a nerve withmany people, and it is safe to assumethat the primary motivation for ‘FuelFightback’ was to attract a largershare of the TV audience.

The motives for astroturf campaignsare not always so benign. Forexample, during the 2006 Tasmanianstate election, it was reported thatbusiness interests had created a frontgroup called Tasmanians For a BetterFuture, which undertook a majoradvertising campaign aimed atundermining support for the Greens.The campaign was organised bypublic relations firm CorporateCommunications Tasmania, whichrevealed only that funding came from‘a group of concerned Tasmanianbusiness and community people’.

It was later reported that MichaelKent, a prominent Tasmanianbusinessman (and Chairman of theTasmanian Chamber of Commerceand Industry), provided some of thefunding for Tasmanians for a BetterFuture. Timber company GunnsLimited refused to comment on itsinvolvement in the campaign.

More dangerous again has been thework of the Australian EnvironmentFoundation. The AEF describes itselfas a ‘not-for-profit, membership-based environmental organisation

having no political affiliation’ whichtakes ‘an evidence-based, solutionfocused approach to environmentalissues’. It represents itself as amovement of ‘practicalenvironmentalists—people whoactively use and also care for theenvironment’.

In reality, the AEF is a collection ofclimate change denialists and sceptics.Its founders include Jennifer Marohasyfrom the Institute of Public Affairs (aright-wing think tank which, accordingto SourceWatch, has accepted moneyfrom BHP Billiton, Western Mining,Telstra, Philip Morris, British AmericanTobacco, Monsanto and GunnsLimited), Tom Bostok from theLavoisier Group (an organisationknown for lobbying government toignore the scientific evidence onclimate change), and Mike Nahan,also from the IPA. Nahan has calledAEF’s stance ‘pro-biotechnology, pro-nuclear power, pro-modern farming,pro-economic growth, pro-businessand pro-environment’. When theAEF’s website was registered it sharedan address and phone number withTimber Communities Australia, apro-logging industry group withstrong links to Gunns Limited. Theinaugural chair of the AEF, formertelevision presenter Don Burke,recently left to work as an‘environmental adviser’ for Gunns.

In the September 2005 issue of thisnewsletter, Katherine Wilson wrote

The motives forastroturf campaignsare not alwaysbenign.

A particularly effective tactic in the corporatepublic relations war is astroturfing (RossIrvine).

Channel Nine’s recent stunt to bring down petrol prices is a benign example of the insidious phenomenon of‘astroturfing’. Josh Fear explains.

All participants in our democracy must questionthe real motivation behind any person or groupthat purports to speak on behalf of the community.



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Institute notesNew PublicationsS Harris Rimmer, The Dangers of Character Tests, Discussion Paper 101, October 2008.

H Saddler and H King, Agriculture and Emissions Trading: The impossible dream? Discussion Paper 102, October 2008.

J Fear, Choosing Not to Choose: Making superannuation work by default, Discussion Paper 103, November 2008.

J Fear, Go Away, Please: The social and economic impact of intrusive marketing, Discussion Paper 104, December 2008.

R Denniss and J Fear, The role of a higher age pension in stimulating the economy, Research Paper 56, October 2008.

D Richardson, The tax treatment of capital investments in renewable energy, Research Paper 57, October 2008.

R Denniss, The case for a new top tax rate, Research Paper 58, October 2008.

E Denniss, Fixing the Floor in the ETS, Research Paper 59, November 2008.

Forthcoming Publications* Superannuation tax concessions * How emissions trading works

* Equine influenza * Buying and selling blood and organs

The Australia Institute welcomes David Ingles as a part-time researcher. David is an economistwhose career has been spent in the public service working within various departments. Hewill research and write on economic subjects of interest to the Institute, particularly tax andsuperannuation.

In October 2008, the Institute also welcomed Leigh Thomas back as Business Manager. Leighwas the Office Manager for the Institute from 2002 until early 2006. She says she is delightedto be back and we are all very happy to be working with her again.

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of her experiences at a Melbourneworkshop given by Canadian publicrelations consultant Ross Irvine andsponsored by the IPA.

Irvine, well known for his hostility tocommunity groups and NGOs,briefed attendees on the best ways toderail community campaigns thatthreaten commercial interests. Mostof those at the workshop werecorporate representatives, althoughadvisers to then Treasurer PeterCostello and then Minister of StateEric Abetz were also in attendance.

According to Irvine, one particularlyeffective tactic in the corporate publicrelations war is astroturfing. The IPAappears to have taken his advice toheart.

For the record, the Public RelationsInstitute of Australia ‘strongly

opposes astro-turfing practices’ andinsists that its members ‘adhere tothe highest standards of ethicalpractice’.

Fortunately, astroturfing is a new andrelatively rare phenomenon inAustralia. In the US, by contrast, thepublic relations war over theresponse to climate change has foryears been distorted by theinvolvement of front groups withlinks to big oil and other commercialinterests.

The creation of fake communitygroups means that all participants inour democracy, including citizens,governments, non-governmentorganisations and the media, mustquestion the real motivation behindany person or group that purportsto speak on behalf of the community.

Channel Nine’s artificial campaign from Page 15

Ironically, it is exactly such mistrustof community groups thatorganisations such as the IPA haveencouraged. The Australia Institutehas a long-held interest in how vestedinterests attempt to silence dissent,and the practice of astroturfing is anemerging battleground in this area.

Documents

For good measure 57Dec08_7.pdf · digestive systems of animals). But measuring methane from animals is an imprecise science, to say the least. Including estimated emissions in an