The Irish Comparison Reversed

I was amused to hear Peter Townsend, the Chief Executive of the Canterbury Chamber of Commerce, on Morning Report comparing New Zealand's economic position to Ireland's. In particular, he noted that while Treasury is predicting a peak unemployment rate of around 8%, Ireland's will apparently be north of 16%.

While we are all agreed that this is good news for New Zealand, those who spent years arguing that New Zealand was falling behind Ireland on account of failing to continue a neoliberal reform agenda may wish to ask themselves why we now find ourselves in a better position.

Let's hear it for public health

Sometimes DPF over at Kiwiblog does get a little carried away. I would have thought that what with this pig flu thing and everything we wouldn't have gotten this

If the public health workforce really do use a “scream test” then I think the Government should use a “scream test” on the public health workforce. This is a good start.

The historical record of the public health workforce is pretty good.

But then not many of us actually get polio, whooping cough, diphtheria, scarlet fever, AIDS, and so on so I suppose that public health really is a waste of money.

Vaclav Havel critical of human rights horse trading

Vaclav Havel has a timely op-ed in the New York times about the failings of the UN Human Rights Council.

It's called "A Table for Tyrants" but New Zealand still comes in for some criticism:

Now, it seems, principle has given way to expediency. Governments have resumed trading votes for membership in various other United Nations bodies, putting political considerations ahead of human rights. The absence of competition suggests that states that care about human rights simply don’t care enough. Latin America, a region of flourishing democracies, has allowed Cuba to bid to renew its membership. Asian countries have unconditionally endorsed the five candidates running for their region’s five seats — among them, China and Saudi Arabia.

In past years, Western countries encouraged rights-respecting states from other regions to compete for election. This year, they have ceded the high ground by presenting a non-competitive slate for the council elections. New Zealand withdrew when the United States declared its candidacy, leaving just three countries — Belgium, Norway and the United States — running for three seats.

Australian Government responds to Cutler Review on Innovation

So this budget is the first one to follow the Australian Government's review of the "National Innovation System".

The so-called Cutler report, which was released last year, and a Government response entitled "Powering Ideas", released along with the Budget, are both available here.

The main recommendations of that report were to fund research infrastructure, increase research funding, increase business research funding and improve collaboration between business and research institutions. The Government seems to have responded to many of the main recommendations of the report, with its simplification of reseach concessions in the tax code, various investments in research infrastructure (great stimulus of course) and several other measures.

One big message is that Australian expenditure on research has declined in recent years relative to GDP, while other nations have increased.

So the current budget includes a 25% increase in spending on science and innovation.

Commonwealth spending on science and innovation has fallen 22 per cent as a share of GDP since 1993–94. Business spending on research and development collapsed in the late 1990s, and while it has grown since then, we still lag many of the countries we compete with. The proportion of Australian firms introducing innovations has been stuck at one in three for years. A decade of policy neglect has hurt Australia’s innovation performance, making us less productive and competitive, and reducing our ability to meet the needs and aspirations of Australian families and communities.

Meanwhile, the bar keeps rising. China’s R&D spending has grown by 22 per cent a year since 1996, compared to 8 per cent a year in Australia. Australia spends 2 per cent of GDP on research and development. Austria, Denmark, Germany, Iceland, Switzerland, Taiwan, and the United States spend more than 2.5 per cent; Finland, Japan, South Korea, and Sweden spend more than 3 per cent; Israel spends more than 4 per cent.
While Commonwealth spending on science and innovation fell to 0.58 per cent of GDP in 2007–08, Denmark is steadily increasing government spending on R&D — from 0.89 per cent of GDP in 2008, to 0.94 per cent in 2009, with a target of 1 per cent in 2010. In the United States, President Obama has pledged to double funding for federal science agencies over the next decade.

One figure from the Budget Education overview struck me.



The Government should be happy that after years for rewarding Australian academics for every paper we write, our per capita publication rate is 20% above the OECD average. Don't inquire too closely into measures of impact of those papers!

Obviously we should be very much less happy that apparently the fraction of firms with "new products" is 30% below the OECD average. This despite very healthy levels of venture capital!

Research and Development Tax Credit

It's Budget night here in Australia.

Bill English might like to pay some attention to one of Wayne Swan's wackier new ideas: it's something called a Research and Development Tax Credit.

Wait! Perhaps someone in New Zealand has already thought of such a scheme?

(The eagle-eyed will want to look at the detail of the Australian proposal. Will it encourage new research? Or will businesses be able to use it to offset the costs of existing activities?)

Reaction to Australian Defence White Paper

Early reaction to the White Paper seems to be positive, the main criticism is with regard to the lack of budget planning. Budgetary questions are covered in one and a half pages of 140 or so.

The Minister says that more details of future funding will be in the budget the week after next.

But really, you can rely on Greg Sheridan to have the most entertaining account.

THE defence white paper is an almost incoherent blancmange of oddly unharmonised flavours.

It reads like a biblical commentary in which 50 Talmudic scholars, each representing an alternative school of thought, have been allowed to write alternative sentences.

The internal contradictions in the document are so staggering it looks like sentences have been bolted on almost at random, like pieces in a Meccano set manipulated by a two-year-old.

And yet, even he seems largely to agree with the decisions

For all that, the Government has mostly come up with the right decisions: 100 Joint Strike Fighters, 12 new submarines, the continuation of the army expansion program, new, big surface ships and so on.

In defence, to some extent equipment and budget are real policy, the rest window-dressing. Australia's neighbours in the Asia-Pacific will look at the equipment commitments more than anything else. They will see the air force, the navy and the army getting bigger and more capable. That's all that really counts. The white paper will reinforce Australia's reputation as a formidable defence power.

In New Zealand Defence Minister Wayne Mapp is not anticipating a matching increase in New Zealand funding.

Dr Mapp believes New Zealand's current defence budget is about right, and is confident the two countries will continue working closely together.

Neither does he seem to believe that Chinese growth poses much danger to the regional order.

Dr Mapp says China's military capacity has increased as its economic capacity has grown, but over the past 30 years the country has focused on trade and good relationships with its neighbours.

I hope a more considered response will emerge over the next few months. Not just Australia but also Japan have now announced significant increases in military spending in response to growing Chinese military capabilities. The point of a strategic review like our White Paper process would be to give this at least some thought, and to allow a public discussion that goes some way beyond just questions of trade.

Oh and there is an interesting discussion of the Australian White paper here, with an even more intriguing discussion of the possibilities for an invasion of New Zealand here. (Hint: still not very likely.)

Australian Defence White Paper released

So the Australian Defence White paper has finally been released, on a Saturday.

It's available here.

There will be a significant build up in Australian defence spending.

The Government says it will keep its pledge to have 3 per cent real growth in defence spending until 2018. It says there will then be 2.2 per cent real growth in spending from 2018 to 2030 as well as 2.5 per cent fixed indexation to the defence budget during this period.

The Australian's account gives a summary of the conclusions in terms of future capabilities.

It seeks to defend the nation by creating a navy by 2030 with the teeth to deny even a sizeable enemy from dominating the northern air-sea approaches to Australia. This new navy will cost many tens of billions of dollars, easily the largest single investment since Federation. Yet it does so without broad agreement inside Canberra's defence establishment about the strategic rationale underpinning this build-up and with grave doubts hanging over the Government's ability to fund and manage this vast project or find enough crew to sail its new armada.

It also requires Australians to accept permanent real growth in defence spending for the next two decades regardless of economic circumstances. This amounts to a fundamental long-term shift in Australia's public spending priorities, a difficult proposition for any government to sell to voters, much less at a time of global recession.

The plan to double the submarine fleet from six to 12, acquire three powerful new air warfare destroyers, eight new well-armed and larger frigates, 24 new naval combat helicopters, a bigger fleet of more muscular patrol craft and to develop a serious anti-submarine warfare capability, represents a quantum leap in naval power for a mid-sized country such as Australia.

This, coupled with plans to purchase 100, rather than a smaller number, of the Joint Strike Fighters will create a formidable deterrent to any aggressor and will allow Australia to project power more deeply into the region than ever.

Of course I immediately searched for all references to New Zealand, here is the key paragraph.

As the ADF incorporates new systems and capabilities, maintaining the current level of interoperability between our separate defence forces will require a concerted effort on the part of both countries. With this in mind, Australia and New Zealand should look for opportunities to rebuild our historical capacity to integrate Australian and New Zealand force elements in the Anzac tradition. This operational integration would of course be without prejudice to our respective policy choices. It could be as modest as integrating our air transport logistics support to operations, or as ambitious as an Anzac task force capable of deploying seamlessly at short notice into our immediate region. To be effective, any integrated force elements would need to exercise regularly together as a unified capability.

There is also a mention of working with New Zealand on issues like Fiji and East Timor.

As foreshadowed by the Australian, there are indeed some sharp comments on the stategic consequences of China's rise, and more particularly its military buildup.

This from Rudd at the launch

"It's as plain as day that there is a significant military and naval build-up across the Asia-Pacific region - that's a reality, it's a truth, it's there.

"Either you can simply choose to ignore that fact, or to incorporate that into a realistic component of Australia's strategic assumptions about what this region will look like over the next two decades."

So for example this on China from the White Paper

China will also be the strongest Asian military power, by a considerable margin. Its military modernisation will be increasingly characterised by the development of power projection capabilities. A major power of China's stature can be expected to develop a globally significant military capability befitting its size. But the pace, scope and structure of China's military modernisation have the potential to give its neighbours cause for concern if not carefully explained, and if China does not reach out to others to build confidence regarding its military plans.

China has begun to do this in recent years, but needs to do more. If it does not, there is likely to be a question in the minds of regional states about the long-term strategic purpose of its force development plans, particularly as the modernisation appears potentially to be beyond the scope of what would be required for a conflict over Taiwan.

On the question of Taiwan there are two interesting comments. This in the White Paper

Taiwan will remain a source of potential strategic miscalculation, and all parties will need to work hard to ensure that developments in relation to Taiwan over the years ahead are peaceful ones. The Government reaffirms Australia's longstanding 'One China' policy.

Secondly, at the press conference Rudd was asked about Taiwan and replied with a strong emphasis on the importance of the US alliance. I've looked online for a transcript of these remarks with no success, but they were commented on by Gerard Henderson on Insiders this morning.

Updated: Here is the exchange in question, I can't for the life of me see it as anything other than a reiteration of the status quo.

JOURANLIST: Prime Minister if China attacks Taiwan in any way, will Australia help defend it?

PM: Thank you for that question. Australia’s policy in relation to the Taiwan Straits has been one of a bipartisan consensus going back a long, long time and will be into the future. It contains two elements. One is that we do not speculate on any future contingencies concerning what may or may not happen in the Taiwan Strait. The second part of my response to your question is that Australia takes seriously its alliance responsibilities to the United States.