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Monthly Archives: July 2012


‘So could the best of the resources boom really be behind us? The answer depends on how you choose to measure it.’….So, are we going to pay attention to the retreat from record sale prices, or are we going to pay attentuon to increased long-term sales volume? or the $AUD 500bn of investment currently being converted into new mining capacity and infrastructure? Perhaps some sections of the business community are using the fear of a slowdown in economic growth to soften the public policy debate about IR and tax reform…

July 24, 2012

Reports on the death of the resources sectors may have been exaggerated, writes Peter Ker.

Freight trains continued to roll along their lonely outback railways, and the shiploaders at Port Hedland continued to pour their rivers of rubble into the belly of giant ships bound for China.

Yet far from this scene of productivity and prosperity, Australia’s resources boom was having its eulogy prepared.

Auditing agency Deloitte predicted the resources sector was just two years away from irrelevance and Australian taxpayers would soon need to find another goose to lay golden eggs.

The comments lit a fire of debate across the nation, despite the fact Deloitte were far from first-movers on the idea.

The federal Resources Minister, Martin Ferguson, and BHP Billiton chairman, Jac Nasser, have both warned recently that certain aspects of the boom had seen their headiest days, and any punter watching the sharemarket in recent times will have twigged that something significant is going on.

So could the best of the resources boom really be behind us? The answer depends on how you choose to measure it.

The resources boom has manifested in many ways, from record commodity prices to extraordinary company profits, from huge export volumes to unprecedented job opportunities for Australian (and foreign) workers.

On some of those measures the boom is undoubtedly on the wane, but on others, the best is seemingly yet to come.

Those with fingers on financial pulses have been lamenting the decline of the boom for some time.

What began with weakness in the off-Broadway commodities like nickel and manganese has started to filter through to headline acts like coal and iron ore – the commodities that deliver the biggest revenue hits to the Australian government.

Benchmark iron ore prices famously topped $US180 per tonne in 2011, but have spent much of 2012 in a range between $US125 and $US150 per tonne, as Chinese demand for the steel-making ingredient has cooled.

Similar declines have struck benchmark prices for both thermal coal and coking coal, both of which are now 30 per cent cheaper than they were just months ago.

”From here on in, the premium prices are gone,” said Minister Ferguson on a recent trip to Perth.

The view is shared by mining companies and the analysts that cover them, with almost every major investment bank revising their commodity price forecasts downward in recent weeks.

In JPMorgan’s case, forecast iron ore prices are now typically 10 per cent lower than previous estimates, meaning prices are expected to remain close to $135 per tonne rather than test $US150 per tonne as previously thought.

Widespread agreement that commodity prices have passed their peak has convinced a bearish investment community that share prices should also bid farewell to their dizzy heights.

Despite the fact companies like BHP, Rio Tinto and Fortescue Metals Group plan to significantly increase export volumes, investors have sold them down to share prices not seen for three and four years.

”If you are judging the resources boom by the stockmarket you would be pretty depressed,” said mining industry veteran Warwick Grigor from Canaccord BGF.

”Certainly from the stockmarket’s point of view the curtains are coming down [on the resources boom], but the stockmarket always looks well into the future and it always overshoots.”

Suspicions the boom was past its peak were reinforced earlier this month when China reported a growth rate of 7.6 per cent: well below the double-digit growth rates of recent years.

The fact that China is forecast to import a bigger volume of iron ore – and several other commodities – every year for the next decade, seemed to gain less traction.

Grigor says Australians should remember the boom goes beyond iron ore and coal, with other commodity prices holding up better than the big two.

”You have still got gold going well, you’ve got copper which looks pretty strong and there is still a big boom in gas,” he said, referring to the LNG boom in WA and Queensland.

Out in the suburbs, average Australians with little direct involvement in financial markets might find it harder to believe claims the resources boom has passed its peak.

The Australian dollar remains well above parity, and the bout of ”Dutch disease” brought on by the strength of the resources sector continues to threaten the jobs of those who work in industries like retail, manufacturing and tourism.

An ever-increasing number of Australians are heading towards the mines and offshore rigs for work, and those that aren’t are being seduced in increasingly creative ways.

In April, Rio Tinto launched a campaign to recruit 6000 workers to its diversified operations, while other companies like OZ Minerals are promoting the concept of a mining career with an inner-city lifestyle: filling billboards with images of fly-in fly-out workers enjoying Melbourne’s laneway cafes.

According to the federal employment department, the number of Australians working in the mining sector is expected to grow by 7.5 per cent every year between now and 2017, when the sector is predicted to employ just under 343,000 people.

That forecast could prove overly optimistic if poor economic conditions prompt companies to abandon some of the $230 billion worth of proposed new projects.

Indeed, some cracks have already appeared, such as Rio Tinto flagging redundancies last week at a coal mine in Queensland, and warning that expansion at another is unlikely to proceed.

But with another $270 billion worth of new projects confirmed as going ahead, it’s clear that in terms of workforce participation, the peak of the mining boom is still ahead.

Amid the varying perspectives on whether the boom has passed its peak, what’s clear is that on every measure, the boom is not over.

Even at their newly lower benchmark prices, the major bulk commodities are fetching prices that are much higher than a decade ago.

BHP’s share price – lamented for hitting a three-year low last week – is still three times higher than it was a decade ago.

The boom may be cooling on some measures, but on every measure, it’s still pretty warm out there.

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July 23, 2012 – 5:15PM
Academics have come up with a new twist on the adage ‘more haste, less speed’ – speedy decisions can ruin careers, lose money and cost lives. William Leith on the art of procrastination

Mel Gibson ... if only he'd waited.

Mel Gibson … if only he’d waited.

On a hot summer evening in 2006, and over the next few days, Mel Gibson, the actor and film director, did several things that were impulsive. If he’d given himself a moment, and thought about it, he wouldn’t have had that first drink.

Having begun to drink, he would not have continued. Having become drunk, he would not have got into his car. Once arrested, for drunk driving, he would not have made sexist remarks to a female police officer.

We’re always being told to be quicker, or else – to communicate, cook, learn, buy and sell in double-quick time. But Partnoy tells us to slow down. Waiters can be winners

And, having begun to shout abuse, he would have reined himself in before making a series of anti-Semitic slurs. If only he hadn’t done the first thing that came into his head, over and over again. If only he’d thought. If only he’d waited.

In his new book Wait, Frank Partnoy, the American academic, examines the benefits of delay in all sorts of circumstances, and comes up with a new take on an old-fashioned idea: it’s good to wait.

Of course, in today’s world, this feels counter-intuitive. We’re always being told to be quicker, or else – to communicate, cook, learn, buy and sell in double-quick time. But Partnoy tells us to slow down. Waiters can be winners. If you have a day, he says, make your decision at the end of it. If you have five minutes, take four minutes and 59 seconds. And if you have a split second, wait until the very end of that split second; this is likely to result in the best possible outcome. It might even mean the difference between life and death.

Why is it so good to wait? I ask Partnoy, via email, to explain his argument. He’s a professor of law and finance at the University of California, San Diego, and a world authority on financial regulation. He replies the next day. “Given the crush of technology, email, social media and 24-hour news, most of us react and decide too quickly. We’re hard-wired to snap respond to fast, salient stimulus even when it is to our disadvantage.”

In other words, the world has become too fast for us. In his influential 1968 book The Peter Principle, Dr Laurence Peter claimed that corporate employees were always promoted beyond their level of competence, which explains why so many bad business decisions are made. If there were a Partnoy Principle, it might be that the speedy modern world pushes us beyond our natural reaction time; we’re always trying to do things too quickly, which explains why we often make mistakes.

In Wait, Partnoy describes an experiment conducted in 1992 at Stanford University, in which four-year-old children were given a choice. A marshmallow was put in front of them; they could either eat the marshmallow now, or wait 15 minutes, after which they would be given two marshmallows. Researchers met the kids again as teenagers. What do you think happened? Those who waited turned out to be better in various ways: they got better marks, “were less prone to impulsive behaviour” and, according to tests, were “more likely” to be well-adjusted.

After the marshmallow test came a deluge of other, similar tests, with similar results. Patient children don’t often become impulsive teenagers. Which means they don’t often turn into fat teenagers, or drug-addicted teenagers.

Now think of the adults who drink too much, who get arrested for assault, who binge on fast food, who make poor investment decisions, who blow all their money. As children, they would have scarfed down that marshmallow.

The world expert on impulsive behaviour, and decision-making in general, is the Nobel laureate Daniel Kahneman. In his book, Thinking, Fast and Slow, he explains that the brain has two basic decision-making systems: System 1 and System 2. To demonstrate, he shows us a picture of a woman’s angry face. When we see this, he says, we interpret it automatically. We can see, instantly, that the woman is angry. When our brains perform this function, it’s as if we’re not thinking; it’s as if the thought is happening to us. This is what he calls System 1. This is the way impulses work.

Next, Kahneman asks us to do a sum: 17 x 24. To do it, your brain must perform a sequence of actions. These actions feel “deliberate”. You must do complicated things simultaneously; hold one bit of information in your head while you’re calculating another. This is System 2. The answer is 408. How long did you take to get it?

Of course, we need our impulsive thoughts. We hear a bang, and we duck. We run from snakes, fear heights and make snap judgments about distances between objects.

But System 1 is simple, because it evolved in a simpler world – a world without complicated maths, without investment decisions to make, without interest rates to calculate. Also a world without many marshmallows. Or chocolate bars. And this is why, unless you’re an expert, unless you’re the grandmaster playing blitz chess whose gut instinct on a move is likely to be right, System 1 can come a cropper.

A lot of this is down to “anchoring”. If you ask one group of people whether Gandhi was more or less than 114 when he died, and another group whether he was more or less than 35, and then ask both groups to estimate his actual age when he died, the first group will always guess a higher number. System 1 searches for an anchor, and uses it. It can be crude. It can lead you astray. And that’s how illusionists such as Derren Brown are able to perform their tricks. Because, sometimes, our brains can’t bear to wait.

Stephen Macknik is a neuroscientist; he runs the Laboratory of Behavioral Neurophysiology in Phoenix, Arizona. He believes that consciousness, as we call it, is a simulation – a brilliant illusion. One day, as he was driving through Las Vegas, along the Strip, past billboards advertising various illusionists, such as Penn and Teller, Mac King and David Copperfield, he had a eureka moment. Illusionists, he realised, are, in a way, practising neuroscientists. They know, better than anyone, how our impulsive brains work. The result of this epiphany was his brilliant study of illusionists, Sleights of Mind, written with his wife, Susana Martinez-Conde, also a neuroscientist.

Speaking from Arizona, Macknik told me how easy System 1 is to fool. Take the red dress trick, as performed by the Polish-American illusionist The Great Tomsoni. The illusionist’s assistant appears on stage in a white dress.

Tomsoni tells the audience he’s going to make the dress change colour. He waves his wand. A red light is projected onto the assistant, making her dress appear red. But it’s clearly not a red dress. It’s just a white dress with a red light shining on it. The audience groans. The stage lights are dimmed, and switched on again. The assistant’s dress still looks red. Then she walks across the stage. You expect her dress to become white again. But it stays red.

This is how the trick works. When somebody flashes a red light on an object in front of your eyes, and then switches it off, your eyes “see” a red afterimage a fraction of a second after the red beam has gone. So when the stage lights are dimmed, your eyes tell you there is a field of red light in the shape of a dress in front of you. But there isn’t.

In fact, in this half-second, hidden wires pull the assistant’s white dress off her body and through a trapdoor in the stage. Of course, she’s wearing a red dress underneath. The lights come on again. You think you have haven’t been fooled. You think the apparent red dress is still a beam of red light. And then she moves. That’s when you gasp.

“Your brain,” Macknik tells me, “is a prediction machine. It’s always jumping to conclusions.” Mostly, these conclusions are correct. But sometimes they’re wrong.

Macknik has analysed countless card tricks, and cup-and-ball illusions; he’s also made a study of pickpockets. He knows how easy it is to confound System 1.

Partnoy points out that, in the fast-paced world of the 21st century, we often betray ourselves by being too impulsive. You might say that the modern world is our Derren Brown. We see this every day on Twitter; people have an impulsive thought, and tweet it, there and then. Five years ago, they might have walked to their desk, pondered a bit more, and put the thought in a blog, by which time they would have edited out the dodgy bits – the parts that were sexist, for instance, or the parts that might be open to misinterpretation. Diane Abbott, the Labour MP, fell foul of her tweeting impulses last year when she made a generalisation about white people. We could see what she meant. If she’d waited for a few hours – or even for five minutes – she might have been fine.

Then there are the instances in which just a moment’s delay would have averted a tragedy. In his book Blink, Malcolm Gladwell brilliantly analyses the seven seconds leading up to the death of a New York street peddler called Amadou Diallo. He was standing outside the door of his apartment building when he was spotted by four cops. They thought he might be a burglar. As the cops approached, Diallo put his hand in his pocket. He started to pull something out. It was black. One cop started shooting, and within moments, all four had fired. Diallo died instantly. If the first cop had waited half a second longer, he would have seen what Diallo was taking out of his pocket. It was a wallet.

As Partnoy argues, panic can turn experts into amateurs. It can make us think we have less time than we actually do. And, as Partnoy notes, our environment also alters our perception of time. As consumers, we respond more quickly to bright lighting, for example, which is the reason why shopping centres are so well lit. And research has shown people who live in a city with a population of over one million move, speak and react on average twice as quickly as those who live in a small town, so a pause seems twice as long to you if you’re the former than if you’re the latter.

Luckily, we can train our impulses. Partnoy tells us how tennis players, who have half a second to return a serve, can improve their game by teaching their impulsive side to wait until the very end of that split second before reacting; the longer they delay their return, the more information they have about the trajectory of the ball. He explains how, in 1988, the naval captain, William C. Rogers III, averted disaster when he elected not to shoot at two Iranian F-4s during the Iran-Iraq war, even though they had locked their radar onto his ship. Knowing that pilots were perfectly capable of making idle threats during military exercises, he quickly decided they weren’t really preparing to attack. He was right and the skirmish passed without incident. (Tragically, just three months later, Rogers would inadvertently cause the deaths of 290 people when, in a far more complex and high-pressure situation, he mistook a descending passenger liner for an enemy plane.)

Counter-intuitively, waiting can also be a trader’s greatest asset in the financial markets. As the economy heated up during the last decade, hundreds of traders bought into the housing market. But a few, including John Paulson, the hedge fund manager, decided to wait, reasoning that the market was bound to overheat. Paulson chose the correct moment to bet against the market. He waited and made $15?billion for his fund.

I ask Partnoy if he is a procrastinator. “I am an inveterate procrastinator,” he tells me. He’s been this way since he was a child. The theories in Wait, he says, “came from arguments with my mother about making my bed”. In a fascinating analysis, he explains that procrastination is merely another form of impulsiveness; when you put something off, you are impulsively not doing it. But, since you can only do one thing at a time, you must always be procrastinating. Life is about procrastination. The trick is to do it right.

It’s a lesson for Mel Gibson. According to Partnoy, Gibson’s impulsiveness defined, and ruined, his apology. “It was a disaster,” writes Partnoy. He apologised the next day. He was brisk and cold. It didn’t work. Partnoy says that Eliot Spitzer, the governor of New York, who was caught using prostitutes, got his apology just right.

Unlike Gibson, he waited for two full days, while the media storm raged. Then he apologised. Spitzer’s delay meant that his apology was not seen as an attempt to shut down the reaction to his bad behaviour. The public believed he meant it; it was generally agreed that he had been forgiven. All because he had waited.

Sunday Telegraph, London

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July 23, 2012 – 2:53PM
Michael Pascoe

Michael Pascoe

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 The week ahead with Michael Pascoe

Update It’s 15 years since the Reserve Bank’s core inflation measures fell below the bank’s target range. It’s highly likely we’ll find out on Wednesday that inflation is again too low.

The June consumer price index hasn’t had the same media build up as the March figure as the RBA hasn’t signalled that this Wednesday’s announcement will have any particular bearing on its next board meeting. Three months ago, the CPI was anticipated as the final plank in the platform for RBA to cut rates. This time, the latest board minutes as good as promised monetary policy will be held steady.

It took the Asian financial crisis in 1997 to push the RBA’s trimmed mean, weighted median and the CPI-excluding-volatile-items below two per cent. This time round it’s the European financial crisis. (The American financial crisis, the GFC, didn’t get a look in as inflation has been running away from the RBA, heading towards 5 per cent, before Lehman Brothers went under – the GFC just gave us a soft landing.)

The “headline” year-to CPI dropped to 1.6 per cent in March, but the smoothed nature of the RBA’s core measures held over 2 – and that was something of an illusion, relying on the rather old June and September quarters. Annualising the most recent six months showed inflation was running at 1.8 per cent and that’s about what the annual figure will prove to be on Wednesday.

Over-utilised coverage

Public inflationary perceptions, egged on by tabloid media and self-serving politicians, remain fixated with utility bills and blind to the areas where prices have come down, even “down, down”. The forecast contribution by the carbon tax of an extra 0.7 points on the CPI will help fuel those perceptions.

The RBA has already stated it’s ignoring the carbon price impact, as it did the GST. With most people compensated for the rise, it’s of little moment to the genuine cost of living. Yet just this once, our central bank might be happy to include the carbon count.

The RBA’s job is to keep inflation within the 2 to 3 per cent range “over the cycle” so it’s hardly going to panic and dramatically slash rates on a couple of quarters’ figures, but the core inflation rate starting with a one should give RBA board meetings a different tone to what we’ve generally been used to.

For a start, it removes one defence against the chorus always calling for interest rate cuts. The strong March quarter national accounts changed some of the chorus’ rhetoric from “the RBA will cut rates” to “the RBA should cut rates”. After Wednesday, the chorus could be asking: “Why not cut rates?”

And, on the monetary doves’ side of the argument, a closer reading of the last board minutes seems to show a little more scepticism about those national accounts than most initial interpretations.

Tame inflation

Last Tuesday’s minutes were generally taken as strong indeed – inflation’s tame, the economy on the up and therefore interest rates steady unless or until something worse happens – but the RBA was also warning that the June quarter scorecard won’t be so flash.

After noting the March quarter stats, the minutes sound cautious: “However, consumer and business sentiment and other timely indicators of activity suggested that the economy was likely to record slower growth in the June quarter.”

And the RBA doesn’t seem entirely convinced the ABS was counting correctly in March: “The strength in goods consumption was somewhat at odds with a range of partial indicators and the Bank’s retail liaison over the same period, though more recent liaison had a stronger tone.”

As for housing: “… indicators suggested that the housing market remained subdued. Dwelling activity was likely to have fallen further in recent months and indicators generally suggested that activity would remain relatively weak in the near term.”

The glass is indeed half full. The statistics say we don’t need further stimulation right now and it’s nice to have plenty of ammunition at the ready while Europe remains so precarious. If low inflation persists, we should see a central banker. Setting monetary policy remains an interesting pastime.


P.S. For those who continue to believe groceries are more expensive, try this paragraph from Woolworth’s annual sales figures released this morning:

“Average prices continued to experience deflation for the second half of 4.4% (first half deflation of 3.7%) and for the fourth quarter of 4.3% when the effects of promotions and volumes are included. The higher deflation in the second half reflects the impact of produce deflation.”

According to Woolworths, the significant produce deflation – 5.7% for the year – came from the high prices caused by the previous year’s natural disasters cycling out of the equation.

By another measure, the “standard shelf price movement index” which excludes specials and promotions, prices were flat for the year. The big difference with average prices indicates just how much effort goes into those specials and promotions, which Woolworths’ suppliers tend to pay for.

Whoever’s footing the bill, it’s simply a nonsense or very poor shopping in the wrong place at the wrong time ignoring the specials, to continue to claim groceries are more expensive.

More likely, it’s a manifestation of the negative group think displayed by a large part of the nation.

Michael Pascoe is a BusinessDay contributing editor.

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by Kyle Wiens | 8:02 AM July 20, 2012

If you think an apostrophe was one of the 12 disciples of Jesus, you will never work for me. If you think a semicolon is a regular colon with an identity crisis, I will not hire you. If you scatter commas into a sentence with all the discrimination of a shotgun, you might make it to the foyer before we politely escort you from the building.

Some might call my approach to grammar extreme, but I prefer Lynne Truss’s more cuddly phraseology: I am a grammar “stickler.” And, like Truss — author of Eats, Shoots & Leaves — I have a “zero tolerance approach” to grammar mistakes that make people look stupid.

Now, Truss and I disagree on what it means to have “zero tolerance.” She thinks that people who mix up their itses “deserve to be struck by lightning, hacked up on the spot and buried in an unmarked grave,” while I just think they deserve to be passed over for a job — even if they are otherwise qualified for the position.

Everyone who applies for a position at either of my companies, iFixit or Dozuki, takes a mandatory grammar test. Extenuating circumstances aside (dyslexia, English language learners, etc.), if job hopefuls can’t distinguish between “to” and “too,” their applications go into the bin.

Of course, we write for a living. is the world’s largest online repair manual, and Dozuki helps companies write their own technical documentation, like paperless work instructions and step-by-step user manuals. So, it makes sense that we’ve made a preemptive strike against groan-worthy grammar errors.

But grammar is relevant for all companies. Yes, language is constantly changing, but that doesn’t make grammar unimportant. Good grammar is credibility, especially on the internet. In blog posts, on Facebook statuses, in e-mails, and on company websites, your words are all you have. They are a projection of you in your physical absence. And, for better or worse, people judge you if you can’t tell the difference between their, there, and they’re.

Good grammar makes good business sense — and not just when it comes to hiring writers. Writing isn’t in the official job description of most people in our office. Still, we give our grammar test to everybody, including our salespeople, our operations staff, and our programmers.

On the face of it, my zero tolerance approach to grammar errors might seem a little unfair. After all, grammar has nothing to do with job performance, or creativity, or intelligence, right?

Wrong. If it takes someone more than 20 years to notice how to properly use “it’s,” then that’s not a learning curve I’m comfortable with. So, even in this hyper-competitive market, I will pass on a great programmer who cannot write.

Grammar signifies more than just a person’s ability to remember high school English. I’ve found that people who make fewer mistakes on a grammar test also make fewer mistakes when they are doing something completely unrelated to writing — like stocking shelves or labeling parts.

In the same vein, programmers who pay attention to how they construct written language also tend to pay a lot more attention to how they code. You see, at its core, code is prose. Great programmers are more than just code monkeys; according to Stanford programming legend Donald Knuth they are “essayists who work with traditional aesthetic and literary forms.” The point: programming should be easily understood by real human beings — not just computers.

And just like good writing and good grammar, when it comes to programming, the devil’s in the details. In fact, when it comes to my whole business, details are everything.

I hire people who care about those details. Applicants who don’t think writing is important are likely to think lots of other (important) things also aren’t important. And I guarantee that even if other companies aren’t issuing grammar tests, they pay attention to sloppy mistakes on résumés. After all, sloppy is as sloppy does.

That’s why I grammar test people who walk in the door looking for a job. Grammar is my litmus test. All applicants say they’re detail-oriented; I just make my employees prove it.


Again, the legal framework is way behind the development of new technology and the implementation of that technology…

July 23, 2012

Kim Arlington

Opportunity ... Educators want more relaxed copyright rules so that students can take full advantage of the latest technology. Opportunity … educators want more relaxed copyright rules so that students can take full advantage of the latest technology. Photo: Virginia Star

SCHOOLS are paying millions of dollars to use freely available internet resources under ”draconian” copyright laws that have failed to keep pace with digital learning.

Schools spend almost $56 million a year under a compulsory licence to copy material such as books and journals without permission from the copyright owner. But an unintended consequence of the licence means schools also pay millions for internet material that the website owners never intended to charge for, according to the National Copyright Unit, which provides specialist copyright advice to the schools and TAFE sector.

While it was difficult to calculate the exact amount paid for freely available internet material, the best estimate suggested it was about $8 million, said Delia Browne, the unit’s national copyright director.

Schools also pay millions of dollars so teachers can copy classroom material from books, something individuals can do free.

”Australian schools pay copyright fees every time a teacher prints from the internet, saves a document from a website or asks a student to print a webpage for a homework assignment,” Ms Browne said.

These costs were likely to increase as the national broadband network was rolled out and might ”eventually become prohibitive”, she said.

The unit will make submissions on schools’ behalf to the Australian Law Reform Commission, which is holding an inquiry into copyright and the digital economy.

Educators want more relaxed copyright rules so that students can take full advantage of the latest technology. Many schools are also struggling to navigate the complexity of the copyright system, which was established before the rise of e-books and digital resources and demands different payments depending on the type of material and how it is used.

Uncertainty over copyright and licensing obligations forced Monte Sant’ Angelo Mercy College in North Sydney to cancel its second-hand book sales.

Every student has her own Mac computer but electronic versions of textbooks are usually available only when a new hard copy is bought.

”We were told [by publishers] that if a student purchases a book second hand, the digital licence doesn’t transfer across from the original owner,” Sue Boudakin, co-president of the school’s parents association, said.

”You can’t even pass a textbook down from one sibling to another [or] gift it to another family, so you’ve got this incredible waste of money and resources.

”It’s crazy; we’re in the midst of this digital revolution and we’ve got publishers … failing to evolve and keep up with the times.”

The director of learning and technology at Monte, Maurice Cummins, said copyright licensing was ”draconian” and was preventing teachers making the best use of interactive new media to educate students.

”Some teachers look at copyright and say, ‘It’s too hard’. If these resources are truly being used to help students learn … licensing needs to be relaxed.” Mr Cummins suggested publishers should set up “an iTunes store equivalent for textbooks – one central repository [where] schools pay a fee for basic use and then their students get automatic access to it”.

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July 21, 2012
Ross Gittins

Ross Gittins

The Sydney Morning Herald’s Economics Editor

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At last instead of jumping to conclusions and riding hobby horses we’re making good progress in analysing the causes and cures of the slowdown in our economy’s productivity improvement. There’s more to it than you may think.

Following the analysis by Saul Eslake for the Grattan Institute we’ve had a contribution from the Productivity Commission’s great productivity expert, Dean Parham, and a synthesis of the state of our knowledge by Patrick D’Arcy and Linus Gustafsson in the latest Reserve Bank Bulletin. Let me tell you what they find.

Productivity refers to the efficiency with which an economy employs resources (inputs) to produce economic output (goods and services). It matters because improvement in productivity is the key driver of growth in income per person – and hence, our material standard of living – in the long run.

The trend in productivity improvement is determined by the development of new technologies and by how efficiently resources – the ”factors” of production: land, labour and capital – are organised in the production process.

The commonest and easiest way to measure productivity is to measure the productivity of labour. You take the total quantity of goods and services produced in a period and divide it by the total number hours of labour used to produce it, thus giving output per unit of labour input.

Figures for the market economy show labour productivity improved at the annual rate of 1.8 per cent over the 20 years to 1994, then by 3.1 per cent over the 10 years to 2004, then by 1.4 per cent over the seven years to 2011.

You see there how productivity surged during the second half of the 1990s, but has since slowed to a rate of improvement ever lower than during the lacklustre ’70s and ’80s. That’s what the fuss is about.

The main way we improve the productivity of workers is to give them more machines to work with. Economists call this ”capital deepening”. Another way to think of it is that we’ve increased the ratio of (physical) capital to labour.

The part of the improvement in labour productivity that can’t be explained by capital deepening is referred to as ”multi-factor productivity” – the quantity of output produced from a given quantity of both labour and capital.

It turns out that capital deepening accounts for 1.3 percentage points of the annual improvement in labour productivity during both the 20 years to 1994 and the 10 years to 2004, and then an amazing 1.8 percentage points over the seven years to 2011.

The first conclusion from this is that the slowdown in labour productivity can’t be explained by any decline in business investment in more machines. It’s thus fully explained by a deterioration in multi-factor productivity.

Multi-factor productivity improved at an annual rate of 0.6 per cent over the 20 years to 1994, by 1.8 per cent over the 10 years to 2004 and by – get this – minus 0.4 per cent over the seven years to 2011.

Fortunately, the position isn’t as bad as that looks. The decline in multi-factor productivity is more than fully explained by the special circumstances of just two industries: mining and ”utilities” (electricity, gas and water).

Mining has seen huge investment in new production capacity that has yet to come on line. And the sky-high prices for coal and iron ore have justified the exploitation of more inaccessible deposits. Utilities have seen much investment in electricity and water infrastructure to improve the reliability of supply.

When you exclude mining and utilities you find, first, that over the past seven years capital deepening has proceeded at the same 1.3 per cent annual rate as experienced in the previous 30 years. Second, although the annual rate of multi-factor productivity improvement has slowed from 1.9 per cent over the 10 years to 2004 to plus 0.4 per cent over the latest period, that’s only a bit slower than the 0.6 per cent we experienced during the 20 years to 1994.

In other words, the main thing we have to explain is not an abysmal performance at present (after you allow for the special factors in mining and utilities) but why the unprecedented rate of improvement in multi-factor productivity during the 1990s wasn’t sustained.

The authors’ calculations confirm the recent slowdown in multi-factor productivity has occurred across virtually all market industries. So it’s a general phenomenon.

The explanation favoured by many economists is that the surge in productivity was caused by all the microeconomic reform in the 1980s and early ’90s. The subsequent fall-off, they say, is caused by the absence of further reform.

But the authors’ examine other, alternative or complementary explanations. They note that ”at a fundamental level, productivity is determined by the available technology (including the knowledge of production processes help by firms and individuals) and the way production is organised within firms and industries”.

So a possible explanation for the surge and subsequent decline in multi-factor productivity improvement, they say, is the pattern of adoption of information and communications technologies.

Then there’s the contribution to productivity from improved ”human capital” – the education, training and skills of the workforce. One indicator of education and experience is the Bureau of Statistics measure of ”quality-adjusted hours worked”.

This has been growing at a consistently faster pace than the standard measure of hours worked since the 1980s, indicating that education and experience are likely to have made positive contributions to multi-factor productivity over this period.

However, the pace of growth of this measure has slowed, suggesting a smaller contribution from improving labour quality has played some role in the productivity slowdown.

Another, possibly contributory explanation for the slowdown in productivity improvement is that, over the course of the long economic expansion between the early ’90s recession and the mild recession of 2008-09, the incentives for firms, workers and governments to implement productivity-enhancing changes gradually weakened. So broad-based economic prosperity has probably eased the pressures driving productivity improvements.

Most productivity-enhancing changes involve a degree of reorganisation than can be difficult for firms and workers. So without clear incentives for change there is unlikely to be a strong focus on enhancing productivity.

My conclusion from this thorough analysis of the problem is that we don’t have a lot to worry about. That’s because, first, when you dig into the figures you discover they’re not nearly as bad as they look.

Second, the structural change now hitting so many of our industries is just the thing to (painfully) oblige them to lift their productivity.

Twitter: @1RossGittins

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So the Federal Court’s broader interpretation of the scope of ‘in the course of employment’ in relation to activies arising out of work-related obligations (ie, stuff you do in your free time when you are away from home on a work assignment) is to be appealled to the Full Bench.

July 19, 2012 – 12:48PM
Paul Bibby

A public servant who fought for and won workers’ compensation for an injury sustained while having sex in a motel room on a work trip could have the money taken away after the Commonwealth appealed to a full bench of the Federal Court.

In November 2007, the woman – who cannot be named – had been sent by her government employer to a country town for a departmental meeting and put up in a hotel.

The night before the meeting she suffered facial and psychological injuries when a glass light fitting came away from the wall above the bed as she was having sex with a male friend.

The Commonwealth workers compensation agency Comcare originally rejected her application for compensation – a decision upheld by the Administrative Appeals Tribunal.


But this year Justice John Nicholas of the Federal Court overturned that decision, finding that the woman was entitled to compensation on the grounds that she was ”in the course of her employment” when the injury occurred.

However, Comcare has now appealed against this decision. Court documents show that Comcare will claim that having sex on a work trip was not an activity that was “expressly or impliedly induced or encouraged” by the woman’s employer.

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August 18, 2011

Conservative white men ... (from top left) Cardinal George Pell, Andrew Bolt, Alan Jones and Christopher Monckton.Conservative white men … (from top left) Cardinal George Pell, Andrew Bolt, Alan Jones and Christopher Monckton.

When it comes to climate change, most people have heard of the greenhouse effect, but what about the “conservative white male” effect?

A US-based study has found that white men with politically conservative views are far more likely than the rest of the population to doubt the science of human-caused climate change.

These CWMs tend to stand out and do well in many social, work, and political organisations, they align themselves with those sharing similar views

And the “conservative white male effect” has been linked to Australia, with one prominent researcher citing the existence of a successful, politically engaged and outspoken coterie operating in high-profile positions that attract wide media coverage.

In the US researchers’ paper published in the journal Global Environmental Change, Dr Aaron McCright and Dr Riley Dunlap analysed data from 10 annual US opinion polls on environmental issues.

They found 58 per cent of conservative white males – or CWMs for short – thought recent global temperature rises were not caused mainly from human activities, such as burning fossil fuels. This compared with 31 per cent of other adults.

Some 29 per cent of CWMs thought the effects of global warming would “never happen” compared with only seven per cent of other adults.

The paper, titled Cool dudes: The denial of climate change among conservative white males in the United States, found CWMs who claimed they understood the global warming issue “very well” were even more convinced that global warming wasn’t happening.

The researchers concluded that “organised climate change denial” had spread from US conservative think-tanks to other nations, including New Zealand and Australia.

They wrote: “Throughought these Anglo countries organised denial seems to be dominated by politically conservative white males, and this suggests that a similar conservative white male effect might be emerging in the general publics of these nations with regard to climate change denial.”

Professor Joseph Reser, a Research Fellow with Griffith University’s Climate Change Response Program in Queensland, agreed broadly with the findings, but said his own research and other comparable studies from the US and Europe suggested the proportion of true climate change sceptics was much smaller.

“If you look at this group of conservative white males, less than 30% are characterised as denialists – they are not a majority even within this grouping,” Professer Reser said.

“But these CWMs tend to stand out and do well in many social, work, and political organisations; they align themselves with those sharing similar views; and they are also more likely to be outspoken in their views and politically engaged, and to work and operate in sectors where their views get aired more.”

He said the fact conservatives were unduly confident about their own views on climate change “also makes them less open to differing views or able to accept that they might be wrong”.

Dr Kelly Fielding, a senior researcher at the University of Queensland’s Institute for Social Science Research, said political affiliation was strongly linked to climate change beliefs.

Dr Fielding was part of a research project which last year surveyed more than 300 Australian political leaders.

Only 38 per cent of Liberal-National politicians thought humans were causing global warming, compared to 89 per cent from Labor.

“We’ve shown results that are consistent with the US results,’’ she said. “Political ordination is the strongest predictor for what people believe about climate change.”

But she added that political conservatism wasn’t linked to climate scepticism everywhere, pointing to Germany and the UK as examples.

Dr Reser led a national survey last year of more than 3000 Australians which found 90 per cent of respondents accepted humans were “playing a causal role” in climate change. Less than six per cent could really be classified as strong disbelievers, he said. There was also a distinct gender divide, with more women willing to accept the scientific evidence.

“I don’t accept – nor does the evidence support – that there’s a high level of denial in Australia or North America,’’ he said. “It’s something of a cultivated urban myth – and a substantial misreading of where the public is at. There has been a small but strident group of climate sceptic lobbyists pushing that argument for a long time.”

Criticising the current political debate around climate change, Dr Reser added: “What’s happening with the Coalition and their prominent spokespersons is that they are playing on public concerns and worries about not only the profound threat of climate change, but multiple and interacting social, political, and environmental issues, both national and global.

“People in turn want to hear that things are not as bad as they appear to be. This might be an effective political strategy, but it is also a rather crass exploitation of very genuine public concerns for the sake of political point scoring – rather than seriously acknowledging or addressing these genuine concerns – or indeed the core challenges of climate change.

“This cynical political rhetoric is really unfortunate, it undermines well-founded public belief, scientific credibility, and political will, and it is part of the reason that this urban myth exists.”

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July 18, 2012 – 10:08AM

Graham Readfearn

Anyone who places any stock in safeguarding the current and future climate (and for that matter anyone who doesn’t) should prepare themselves for the risk that very soon, climate science deniers, contrarians and sceptics will be running the show.

All the polls suggest that the Liberal-led Coalition will sweep to power at next year’s Federal election. Current Liberal leader Tony Abbott, if we care to remember, once described climate change as “crap“.

Our descent into the deluded world of pseudo-science occupied by astrology, creationism, crystal healing and homeopathy is almost complete.

Views shared among Abbott’s parliamentary coalition ranks are that climate science is a “leftist fad” and a “work of fiction”.

The Liberal-National Party’s new Queensland Premier Campbell Newman and his environment minister Andrew Powell have both said they’re unable to accept the evidence of human-caused climate change, going against the scientific findings of the CSIRO and Bureau of Meteorology and every major science academy on the planet.

Instead the Newmans and Abbotts of this world would rather stake the future of their constituents, our economies, our food supplies and our coastlines on the ideologically-blinkered pseudo-science of narrow vested interests and free market fundamentalists.

The latest snapshot on this inglorious race to the bottom came last week during the Queensland LNP state conference with a motion proposed by the Noosa LNP member Richard Pearson.

Pearson’s motion called on the state’s education minister John-Paul Langbroek to “remove environmental propaganda material, in particular post-normal science about ‘climate change’, from the curriculum and as adjunct material at exam time”. The motion was passed with party members overwhelmingly in favour.

LNP state representative Glen Elmes recently thanked Pearson in parliament for helping him win his Noosa seat at the state election earlier this year (perhaps those visits to Noosa by fake experts Christopher Monckton and Professor Bob Carter have rubbed off on the Sunshine Coast community).

As reported on Brisbane Times, Pearson said: “Few people understand that the so called science of climate change is really what can be defined as ‘post-normal’ science,” before apparently arguing that climate change went beyond traditional understanding of science based on experimentation and falsifiable theories.

To Pearson and others, the experiments of John Tyndall in 1859 which established the warming properties of what we now know to be greenhouse gases just didn’t happen. Not in existence either, are the reams of scientific papers over many decades which have attempted but failed to falsify the “theory” that burning fossil fuels is causing the world’s average temperature to rise, the oceans to become more acidic, the sea levels to rise and the ice at the poles to melt.

Also not in existence is last week’s study by almost 400 scientists (they’re everywhere) which showed that greenhouse gas emissions were increasing the likelihood of extreme weather events.

So far, Premier Newman has clarified that while Pearson’s motion has been passed by the party, this doesn’t mean it will be adopted by the parliamentary group which he leads.

“We will always do the right thing by Queenslanders ahead of the LNP,” he said, forgetting that just a few weeks ago he told Queenslanders the state was actually “in the coal business”.

Regardless, reaction to the motion has been damning. Anna-Maria Arabia, the chief executive of Science & Technology Australia, which represents almost 70,000 scientists and technology experts in Australia, described it as “extremely harmful”.

The secretary of the Queensland Teachers’ Union Kevin Bates told The Australian that it was important schools taught children to have an “open mind” (but presumably not so open that your brain falls out). “Our greatest concern is that this is a government that is going to interfere in the education process,” he said.

One blogging research scientist wrote that the motion was “preparing our children for future ridicule“.

Helping in this process is the Institute for Public Affairs, which has been sending out a discredited book on climate change to Australian schools. The book How To Get Expelled From School, written by Professor Ian Plimer, a member of the board of two of Gina Rinehart’s mining companies, was launched by former Prime Minister John Howard.

At the launch, Professor Plimer said “one of the aims of this book is to maintain the rage, because we have an election coming”. Clearly, Professor Plimer sees his book as a political tool.

While consistently claiming that school children are being brainwashed by climate change “propoganda”, those who push this line rarely (if ever) produce any actual evidence. Pearson didn’t define what he meant by “propaganda” or “post normal science”.

Plimer’s genuine piece of propaganda was described by the Commonwealth Department of Climate Change, which analysed his book, as “misleading” and based on “inaccurate or selective interpretation of the science”.

It should not be forgotten that Tony Abbott isn’t afraid of pushing his own misinformed climate dogma on young schoolkids when given the chance.

In 2010, he told a class of five and six year olds in Adelaide: “OK, so the climate has changed over the eons and we know from history, at the time of Julius Caesar and Jesus of Nazareth the climate was considerably warmer than it is now.”

Nobody should be surprised that conservative politicians are unable to accept climate change science. A survey of political representatives at local, state and federal level carried out in late 2009 found that acceptance of climate change science was divided along political lines.

The University of Queensland survey found only about one third of Liberal/National politicians accepted the world was warming because of human activity. This compared to nine out of 10 Labor politicians and practically all Greens.

Then there’s the “conservative white male effect” discovered by scientists (yes, them again) in the US linking the described demographic to the denial of human-caused climate change.

The Australian conservative political movement’s lurch towards the denial of human-caused climate science is like a mirror-image of the same enlightenment-crushing ideas of many US Republicans.

None of the recent candidates for the Republican presidential nomination (excusing possibly John Huntsman) were able to publicly back climate change science, with some reverting to scepticism after previously accepting the issue.

Also in common with the US is the existence of Tea Party-style “grassroots” activism in Australia, helped along by free market think tanks that claim regulating greenhouse gas emissions is an attack on our freedom.

But rather than have an honest debate about a policy response to a real world risk, they sink to trying to discredit climate science while telling the public that carbon dioxide from burning coal is just “food for plants”.

Earlier this week the climate sceptic organisation the Galileo Movement, founded by two retired Noosa (!) businessmen, tweeted a link to a document written by Viv Forbes claiming coal was not dirty and CO2 was plant food. No mention anywhere in the document that Forbes is a director of Stanmore Coal.

Galileo’s patron is Sydney radio host Alan Jones, who recently told a crowd that climate science was “witchcraft” and a “hoax”.

Our descent into the deluded world of pseudo-science occupied by astrology, creationism, crystal healing and homeopathy is almost complete. It’s a place where progress dies and business-as-usual thrives.

Graham Readfearn is a member of the BT Blog Army. He blogs at

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The 6 People You Need in Your Corner

 Nothing incredible is accomplished alone. You need others to help you, and you need to help others. With the right team, you can form a web of connections to make the seemingly impossible practically inevitable.

The Instigater:

Someone who pushes you, who makes you think. Who motivates you to get up and go, and try, and make things happen. You want to keep this person energized, and enthusiastic. This is the voice of inspiration.


The Cheerleader:

 This person is a huge fan, a strong supporter, and a rabid evangelist for you and your work. Work to make this person rewarded, to keep them engaged. This is the voice of motivation.

The Doubter:

This is the devil’s advocate, who asks the hard questions and sees problems before they arise. You need this person’s perspective. They are looking out for you, and want you to be as safe as you are successful. This is the voice of reason.

The Taskmaster:

This is the loud and belligerent voice that demands you gets things done. This person is the steward of momentum, making sure deadlines are met and goals are reached. This is the voice of progress. 

The Connector:

This person can help you find new avenues and new allies. This person breaks through roadblocks into finds ways to make magic happen. You need this person to reach people and places you can’t. This is the voice of cooperation and community. 

The Example:

This is your mentor, you hero, your North Star. This is the person who you seek to emulate. This is your guiding entity, someone whose presence acts as a constant reminder that you, too, can do amazing things. You want to make this person proud. This is the voice of true authority.