New South Wales elections and carbon taxation

Employment impacts are wider than the politically defined employment level. Both unemployment and underemployment will rise as industry restructures. At this stage no time frame for industry structural reform is discussed. It is more likely to take years rather than months.

A labour force measure not palatable to politicians and industry leaders is the underutilisation rate. Underutilisation of the labour force consolidates both the unemployed and underemployed into one figure. For NSW, the Premier proudly boasted of an unemployment rate of 4.8% for February. However, the underutilisation rate for NSW in February was 13.1 % unadjusted and 12.5% seasonally adjusted. NSW sits in middle place across Australia in the underutilisation stakes. Tasmania has the highest rate of 14.5% unadjusted with Queensland and South Australia on 14.1%. Western Australia has 10.5% underutilisation rate with the ACT on 8.8% and NT 6.6%. It is interesting to note that the underutilisation rate in the US at the height of the GFC was 16.9%. For Australia, in February 2010, it was 13.8% and 14.1% in NSW. For the political process, the electoral distribution of underutilised labour becomes a critical issue for political stability.

What the underutilisation rate implies is a mal-distribution of income and associated rising levels of poverty. Political instability flows unless both unemployment and underemployment are addressed. The income safety net or social wage concept from the 1980's can be rejected as a solution. The numbers involved and associated rising poverty in Australia identify these political fixes have failed. Income distribution and living standards for the community are driven primarily by industry profitability and wage rates. The inability of Australia to deliver an adequate wage and living standard to a growing proportion of the labour force has at its centre the gutting of Australia's industrial base and arbitration system over the 1980's-90's. Neither candidate for the NSW premier's job recognised this significant political and economic issue.

Food security is also under threat by the carbon tax and the wider environmental movement. A carbon tax will increase costs both on farm and off farm. Exemption for actual farming will not prevent input costs such as energy and fertiliser from rising. Transport costs both to and from the farm rise also. Service industry costs will rise from the carbon tax impacting upon their inputs. Currently there is serious international concern over rising food costs and prospect of increasing food shortages. Violence in less developed nations is being linked to food inflation and food availability. Yet here is Australia with a population density of 2.5 per Kilometre square we are saying agricultural costs must rise to meet some questionable model projection on carbon levels. What must places like Singapore with a population density in excess of 6000 per kilometre square think of this let alone the less developed peoples facing rising food shortages, inflation, and starvation

The international food crisis is not some new phenomenon. It is the consequence of decades of low investment in agriculture. This comes down to cheap food policies in mature economies like Australia and the ideological pursuit of "market based agriculture". Engle's Law known to economists for over a century, explains why market based policy cannot deliver food security. Engel's Law says that as economies mature, smaller and smaller proportions of income are spent on food. Consequently, under cheap food policies farm incomes decline in both absolute and relative terms. Investment in agriculture necessary to grow food production seeks alternate and more profitable investment destinations.

Environmental policy negatively impacts upon food production. This was not recognised in the carbon tax debate by either participant in the debate. Australia's Kyoto target was achieved through the Australia clause (Article 3.7, Kyoto Protocols) . This allowed land clearing emissions to be included in 1990 based targets. Once Queensland stopped land clearing, Australia's 1990 Kyoto target was assured. The environmental movement misrepresented what was happening. As the farm sector paid the Kyoto price, the environmental movement vigorously promoted the false hood that environmental policy could be achieved without cost to urban voters. Once Kevin Rudd bluntly exposed this false hood, urban voter came to understand that environmental policy was not costless. Urban voters are now questioning the carbon policy simply through hip pocket reasons. It appears compensation will be offered to "buy" these votes; but, in so doing the policy itself becomes weaker and compromised

I wish the NSW electors good luck. From what I saw they will need it whichever candidate wins on the 26^th.