Monthly Archives: February 2017

Malcolm Turnbull and Francois-Philippe Champagne at the opening of the Australia-Canada Economic Leadership Forum.

Prime Minister Malcolm Turnbull's address to the Australia-Canada Economic Leadership Forum was typically enthusiastic about how much the two countries have in common and how well they can co-operate in promoting open economies and increased trade.

He can only wonder quietly at the difference in their governments' political fortunes. Canadian Prime Minister Justin Trudeau has managed to extend his political honeymoon while Australian voters are already contemplating a quickie divorce from the Coalition.

Trudeau unexpectedly won government in November 2015, a couple of months after Turnbull surprised Tony Abbott with a successful challenge. Trudeau also leads the Liberal Party, although in Canada that translates into a centre-left rather than a centre-right coalition.

Yet despite Turnbull's reference to coming from different sides of the political spectrum, both men represented a return to the centre from what was regarded as the hard right under Tony Abbott and former Conservative prime minister Stephen Harper.

Both men were seen as progressive, socially liberal leaders with pro-trade and pro-immigration credentials and softer edges, including on climate change. They attracted voters wanting change for the better and a more positive, optimistic agenda. Trudeau exudes rock star appeal in an environment made for celebrity style. Even in cynical Australia there was a brief sense of political euphoria that there would be a coming together of the country under the personable, popular Turnbull.

Yet that's where the similarities start to weaken. Despite the same loss of manufacturing jobs, sluggish growth, growing deficits and a resource-based economy, Trudeau remains popular if with a few more dints on his shiny image. He has managed to deliver agreement with the states on some contentious issues including energy policy. And Canada can't help but show a little smugness about its ability to espouse the virtues of immigration, trade and openness without attracting much domestic blowback. The upsurge in populism has a different hue in Canada.

In Australia, the Turnbull gloss tarnished more quickly, and well ahead of the resurgence of One Nation's Pauline Hanson.

In part that is because of the government's difficulties in the Senate due to the power of wayward crossbenchers combined with the opportunism of Labor. Still, Turnbull's problem goes deeper.

It is also because he has been mostly unable to articulate his own beliefs and clear policies in a way that sounds persuasive to voters. That compounds the image of drift, with disappointed Australian voters confused about what their Prime Minister stands for. He is left looking dangerously like a man without a mission.

And the weaker his position in the polls, the weaker his position in a party riven by the open antagonism between conservatives like Abbott and the more liberal positions traditionally taken by Turnbull.

Add in a Labor party that has moved further to the left on economic and social issues, including on free trade, and that votes against all significant government bills as a matter of course. While Labor and Bill Shorten may not be popular, they are able to keep the focus on the government's lack of momentum rather than their own.

The embers of protectionism, anti-immigration and anti-politics as usual are being stoked into a decent-sized fire as evidenced by the renewed popularity of One Nation, tapping into a vein of sentiment similar to that driving Donald Trump. Australia's system of proportional representation in the Senate means an ability to constant leverage a minority vote.

Trudeau has no such problem given Canada has an appointed upper house with no real power. The two opposition parties, left and right, are still voting for their new leaders, meaning there is no alternative leader criticising government.

Trudeau also has a much clearer policy definition, including his willingness to go into deficit spending and negotiating with the states for a national carbon tax. The question is whether Trudeau's ability to keep campaign promises will protect him or whether he too will eventually share in the fallout from the lack of faith in major parties.

The costs of Trudeau's energy policy have yet to bite politically, for example, although rising electricity bills have started to stir community resistance. The impact of a national carbon tax with sharply increasing rates over the next few years at the same time US energy policy is heading in the opposite direction under Trump risks turning that into a blunt political weapon for the conservative party. That would be especially potent if business investment flees south of the border attracted by lower US energy costs and business taxes.

The timing of that reality check in Canada may be delayed but the dilemma seems inevitable.

In the wake of the South Australian blackouts and growing business concern, Turnbull is now attacking the Labor party over its rush to renewable energy without paying enough attention to cost or security of supply. Yet this issue hardly rated a mention in the election campaign, with Turnbull deciding not to fight on it given the popular appeal of renewable energy and his own previous strong support for carbon pricing.

The implication of Trump's lower corporate tax policies will also reach deep into both countries' competitiveness given their relatively high tax rates. Turnbull's reluctance a year ago to take on comprehensive tax reform means he is left arguing for corporate tax cuts over a decade while voters complain about unfairness right now. So far, Trudeau's key measure has been to raise taxes on the highest income earners to symbolically help fund a tax cut for the middle class. That's unlikely to be sufficient ahead of the next election.

But right now, despite Canada and Australia having so much in common, it's the difference in the domestic political balance that is most striking. Trudeau should hope any greater convergence remains limited.

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The difference between Malcolm Turnbull and Justin Trudeau - The Australian Financial Review

By Steve Robitaille Special to The Sun

As president of Florida Defenders of the Environment, whose history includes stopping the completion of the Cross Florida Barge Canal and advocating for restoration of a free-flowing Ocklawaha River, I am no doubt identified as someone inherently hostile to bass-fishing interests and tournaments at the Rodman Dam pool.

As someone who likes to fish and who recently took his sons for a fishing adventure in the Everglades, I would like to clear up some misconceptions as to why I wish to set the Ocklawaha free again.

First, I want to see a return to the greater numbers and diversity of fish species that were once available in the river. There is a great photo of the late Lester Teuton, who was baptized on the Ocklawaha. Hes holding a string of fish the likes and size of which had virtually disappeared by the time he died in 2014 at age 95.

I know there is considerable satisfaction in pulling a prize-winning largemouth bass out of the Rodman pool. But I know trophy bass are being caught in the St. Johns River. It just seems wrong to deny folks up and down the Ocklawaha the opportunity for a good catch in return for the impoundment of a single species of trophy fish.

I know the annual Rodman fishing tournament has long been associated with a boost in the local economy, but a drive through Palatka and Putnam County reveals that the economic vitality of the region still suffers. It is in need of a more diversified ecotourism industry.

Paddle-boats once took tourists up the river to Silver Springs. Visitors fell under the spell of manatee, teaming pools of large fish and a crystal-clear Silver Springs. Now only the rare manatee gets past the dam, unable to find the warm springs they counted on for survival and that are now submerged except when draw-downs occur. And Silver Springs, the jewel of Floridas natural wonders, now suffers from reduced flow. Where once black clouds of fish were seen suspended in the crystal-clear depths below, their diminished numbers now swim in a cloudy, water-starved spring.

A survey that the University of Florida food and resource economics department is conducting suggests the promise that a restored river would significantly increase the numbers of canoe and kayak paddlers. Pontoon-boat tours would replace the tourist steamboats of years gone by, and hikers, bikers, birders and myriad others outdoor recreationalists would be attracted to the region and support an ever-expanding number of businesses who would cater to their needs.

Millennials hold the promise to a revitalized recreationally based economy in Putnam County and along the Ocklawaha watershed. They like to fish too, but are more likely to be found in a kayak than in a bass boat. Their increased numbers are also likely to spend more money at local businesses.

Finally, if youve been watching the news, dams have a way of wreaking havoc on the watersheds they are intended to manage. For example, the Orville Dam near Sacramento, California, is experiencing serious engineering problems with age. Dams are expensive to maintain and upset the natural ecology everywhere they have been constructed. The days of dams are numbered. Between 1915 and 1975, 46 dams in the U.S. came down. Between 1976 and 2014, that number jumped to 1,040. Not a single dam was built after 2014.

A dam was removed on the Suwannee River near the Florida border after upsetting the pattern of natural fires and the hydrologic health of the Okefenokee Swamp. The use of structural water control has nearly destroyed the Florida Everglades and will cost taxpayers billions of dollars in wetlands restoration.

The clock on the Rodman dam is ticking, and the inevitable cost of needed upkeep and repairs will not be covered by proceeds from bass-fishing tournaments. Also lost to the people of Florida is a large amount of freshwater that evaporates every day the Rodman pool remains in place. With freshwater supplies ever more strained in North Florida, a net loss of 5 to 10 million gallons per day for the sole purpose of fishing is an extravagance we can no longer afford. Its simply not in the public interest of the people in our region.

So lets find a better location for a bass-fishing tournament in Putnam County. There are potential locations along the St. Johns and Ocklawaha where some of the largest bass have been caught, and not at the expense of damming the states most unique river.

Florida Defenders of the Environment is committed to working with area residents, businesses and community organizations to tell our elected representatives that money misspent on barge canals and dams would now be better invested in the flow of green ecotourism dollars that a free-flowing Ocklawaha would help release.

Steve Robitaille lives in Gainesville and is president of Florida Defenders of the Environment.

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Steve Robitaille: Removing dam would revitalize economy - Gainesville Sun

The Singapore economy seems to have entered a new normal of low and slow growth. There are more out-of-work residents and, last year, those jobless for at least 25 weeks took longer to find work as compared with the previous year. Business sentiment has softened and small and medium-sized enterprises (SMEs) have quite understandably been more adversely affected than multinational corporations (MNCs).

The cause of such a subdued economy is more structural than cyclical in nature as the Government has painstakingly engineered a productivity-driven revamp of the labour market, but old habits die hard and it takes time to change human resource management and work behaviour.

Meanwhile, in the Budget statement on Monday, Finance Minister Heng Swee Keat made clear the Government's intent to lend financial support to seven broad strategies tabled by the Committee for the Future Economy(CFE) to improve the longer-term resilience of Singapore's highly open city-state economy. This is taking place amid a challenging external environment of rising protectionism against global trade, disruptive change due to rapid technological progress, and heightened geopolitical tension.

BUDGET'S THREE PRONGS This year's Budget can be said to have three prongs: ease companies' and workers' shorter-term pains and hardships, build capacity for the longer term so the economy can adapt and stay competitive, and further commit to keeping society inclusive and caring.

ST ILLUSTRATION : MANNY FRANCISCO

With companies finding it hard to cope with higher business costs due to wages, rentals, government fees and charges, the Budget sought to ease hardship for companies suffering due to a cyclical downturn in their sector by, among other things, deferring foreign- worker levy hikes, enhancing and extending the corporate income tax (CIT) rebate for the years of assessment 2017 and 2018.

The Budget also includes help and incentives to cushion firms, especially SMEs, going through painful sectoral transformation. The schemes include Wage Credit amounting to $600 million, of which 70 per cent will be for SMEs; extension of Special Employment Credit amounting to $300 million that will benefit 370,000 workers, and the continuation of the SME Working Capital Loan scheme for the next two years.

In terms of capacity building and skills upgrading, the Government has committed up to $600 million in capital for a new International Partnership Fund with Global Innovation Alliance for Singaporeans to gain overseas experiences, build networks and collaborate with their counterparts.

It is reassuring to see consistent effort to address income disparity despite it having become more difficult to find the financial resources to do so, given lower economic growth. Last year, the Gini Coefficient - a measure of income inequality - fell to 0.402 from 0.458 due to the redistributive effect of government transfers. Income disparity in Singapore has fallen to a decade low, partly due to slower growth in incomes at the top. But what is worth noting is that generous funds for the Workfare Income Supplement (WIS) scheme, heavy subsidies for public housing, especially for households in one- and two-room flats, and subsidised childcare for lower-income households can be sustained only if the economy continues to grow. And higher wages can be justified only by higher worker productivity and production management efficiency.

Mr Heng followed tradition in emphasising the need to manage Singapore's precious resources prudently. He also said "growing our economy is the first and foremost important step to increasing our revenues sustainably", and such revenue is critical to implementing the CFE strategies.

Despite the uncertain outlook, ministries' expenditures are 5.2 per cent higher than in the financial year of 2016 - up an estimated $3.7 billion. Together with higher infrastructure spending to expand the mass rapid transit system and construct Changi Airport's Terminal 5, it means that the overall budget surplus in the financial year of 2017 is estimated to be $1.9 billion or 0.4 per cent of GDP - much smaller than the $5.2 billion or 1.3 per cent of the GDP in the previous financial year.

Budget 2017 does provide strong financial resources amounting to $2.4 billion over the next four years to implement the seven broad, mutually reinforcing strategies of the CFE Report, which, unlike the reports of previous review committees, is best viewed as a "work in progress".

It is unrealistic to expect the seven strategies of the CFE to depart radically from past strategies unless one is of the view that the direction of the past was wrong.

It is also unwise to expect the CFE, which sat for just 12 months, to come up with detailed policy recommendations without evidence-based assessments of public policies - especially given the recent fluid state of globalisation, potential disruptive change brought about by technology, regional infrastructure developments and ongoing geopolitical realignment.

For those who hope to see more specific policy recommendations, perhaps under CFE version 2.0, going forward, we can expect ministries and statutory boards to "review, formulate and implement" detailed policies to deepen the skills of Singaporeans, increase internationalisation of local companies and identify clusters for creating new sources of growth for the economy, as some older clusters may have matured. Efforts to further narrow income disparity as measured by the Gini Coefficient will remain high on the agenda.

Taken together, this year's Budget statement and the CFE Vision Statement are significant as the former lends financial support to enable the latter's vision of a government that is "coordinated, inclusive and responsive", three words used in the CFE report executive summary.

The Government has clearly recognised the danger of failing to coordinate policies and has, since 2011, made changes in how policies are to be funded. These include the funding of public housing, healthcare, transport and education in ways that reflect continuity and consistency.

The CFE has also declared, albeit cautiously, that collective efforts by all stakeholders will allow the Singaporean economy to grow by 2 to 3 per cent per year on average over the next 10 years.That is clearly lower than the more ambitious 3 to 5 per cent growth per year on average, which was articulated by the 2010 Economic Strategies Committee.

Yet, even at the lower GDP growth target range, the Singapore economy must expand by 25 per cent in 10 years from now. That would require the Government to be responsive when the external environment turns favourable and nimble enough to seize opportunities to grow well above the upper range of the CFE growth target to make up for GDP growth falling below the lower end of the target range during global downturns.

QUESTIONS ON THE FUTURE After 50 years of economic growth that far exceeded expectations, Singapore now has to aim higher to reap dividends for the future and that takes courage. The Government has long employed a strategy of picking and hosting winners in manufacturing clusters such as electronics, oil refinery, chemical engineering, and pharmaceutical and life sciences. These clusters are now integral components of the manufacturing sector, with spillover effects on service sectors.

Mr Philip Yeo, former chairman of the Economic Development Board, has a 5-5-5 rule on how "every industry struggles through its first five years, grows and stabilises in the next five and then matures in the last five". Some of the future clusters envisaged by him for Singapore could well include robotics, artificial intelligence, digital science, big data centres and driverless transport.

As we look a decade ahead, what we need to forge is a consensus on the broad direction for the economy and the strategies to bring that about, and secure buy-in from a majority of stakeholders. For that to happen, unpopular issues need to be tackled and conventional wisdom challenged. We may well need to revisit Singapore's growth potential, reshape its economic structure, rethink the sustainability of current welfare policies and review its openness to the foreign workforce with a clear-eyed assessment of the optimal population mix over the longer term.

Here are the questions that we believe need to be grappled with as we contemplate the future of the Singapore economy:

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Forging a new consensus for the future economy - The Straits Times