Health, Science and Continuing to Answer the Wrong Questions

The head of the Australian Medical Association helped launch a new report this morning from the Academy of Science about climate change and health. I ended up at the event in Parliament House. Lots of good, important stuff that we already knew about what we should already be doing. I asked about how the medical community might lead, given the British Medical Association has already divested from fossil fuels. The head of the AMA went on an extended response to another question. This was the only time we heard anything about power, fossil fuels and moral leadership. If you talk about climate and you don’t frame it in these terms, you’re just fiddling around the edges.

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Students will pay more for research – they already are.

This is an edited transcript of a presentation to the Australia Needs a Brighter Future conference on 13 March 2015 — a few days before Deregulation Mark II was voted down.  It is based on my submission for The Australia Institute to the non-government Senate committee inquiry into the Bill. The committee report is a good read and it lays out a way forward, starting with a review into alternatives to full deregulation and a rerun of the 2011 Base Funding Review.

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Presentation to A Brighter Future for Australia Forum

13 march

How did the government and vice chancellors get their deregulation pitch so wrong? It’s as though they’ve tried to sell a new product by letting the customer become anxious about its price, instead of explaining how good it is.

After ten months of controversy about how high fees will go, we’ve had remarkably little attention to a more fundamental question.  When fees go up, what will students be paying for?

Surely this deserves greater focus, from critics and proponents alike? Surely the vice chancellors should be explaining how much of the fee increases will actually be spent on teaching students. Either they’ve missed one of their strongest arguments, or they are trying to avoid explaining what deregulation is actually for.

Deregulation is not just about students splitting the bill “50:50 with the taxpayer”– as the government still insists, and still no one believes. It’s about getting students to boost university cash flows. Why?

Universities have been bringing in bigger surpluses: 8 per cent in 2013, up from 4 per cent in 2002. Per-student funding is stable, notwithstanding threats of cuts. Universities have voluntarily enrolled more students under the demand driven system. Yet we hear about cost-cutting, over-stressed staff and very large courses. This should have meant fees have fallen, but they haven’t. Why?

Look to the incentives. Universities face very strong incentives to use student revenue to pay for research. Concerns about this have now been voiced by Brian Schmidt, Stephen Parker, Bruce Chapman, ex Kim Carr advisor John Byron, even Ian Young.

As late as October 2013, Ian Young was asking “is it appropriate for students to pay for research?” Less than a year later he argued deregulation would make our universities “brilliant” in global rankings. Whatever the wisdom of the rankings obsession, why should students pay for it? Rankings are overwhelmingly based on research.

The reality is students have already been paying more for research– universities ‘profiting’ from students, as Andrew Norton has put it.

This is clear from ABS and government data.

  • Research was 41 per cent of university spending in 2012, up from 31 per cent in 2002.
  • This was during a period of increased surpluses and increased student enrollments.
  • While direct research funding increased, there was much faster growth in research funded out of ‘general university funds’, including student revenue. The cross-subsidy amounted to 16 per cent of all university spending in 2012, up from 9 per cent in 2002.
  • In 2012, across the sector, revenue for or from students delivered more than $2.8 billion towards research. That is, 1 in 6 student dollars went towards research, equivalent to three quarters of research cross-subsidy.
  • This assumes no investment or donation income went to teaching, and assumes universities did nothing other than teach and research. The real amount is surely higher.

International and domestic full-fee paying students provide the biggest profits.  Victoria’s Auditor General says international students pay double what they cost. Deregulation would encourage universities to treat domestic undergraduates in a similar way.

But domestic undergraduates are already a source of research funding. The Base Funding Review claimed that 6 per cent of per-student funding– grants and fees—went towards research on average in 2010. They said it would be reasonable up to 10 per cent.

This seems modest, but even this is a cross-subsidy of around one billion a year. That is how much fees would be reduced or teaching spending increased, if universities prioritised teaching over research. What’s more, the study is out of date. Since the demand driven system, unis have packed out lectures and tutes, as new students bring the same revenue but have low marginal costs. So the cross-subsidy will have increased.

Of course averages mask variation between institutions and courses. University of Adelaide Vice Chancellor Warren Bebbington recently warned: “no-one should think that the current system is fair; some students pay as much as 400% of the cost of their education, others as little as 8%”.Yet this claim, while astonishing, is not an argument for deregulation. If what Bebbington describes is true and is as he says unfair, it would surely be even less fair to shift even more of the costs of research onto student debt.

Chapman and Schmidt have called this unreasonable and unfair. It seems the public agrees. In a national survey held before the 2014-15 Budget, The Australia Institute asked whether people agreed that uni fees should not increase beyond what it cost to teach students. 3 in 4 agreed and only 1 in 20 disagreed.  That was despite an ambivalent response at the time about deregulation—since hardened into broad opposition.

So if students should pay for research, the public needs to hear the argument. If the argument is that students should be happy to pay for research simply because they may earn more as a result of their degrees, surely we should do this fairly. Higher income graduates should pay more, rather than pay off their loans quicker, while lower income graduates pay less. This is like paying dividends, public returns for public investment in human capital.

But if deregulation advocates want to stay with the current pretext that fees are sensibly linked to teaching costs, they need to up their game to explain why deregulation is fair. We need more disclosure of how student revenue is and will be spent, and we need safeguards. If that is too hard, we should not run the deregulation experiment.

The government says the ACCC should stop “unfair” fees or “gouging”. But there’s no mention in the Bill. Indeed, the ACCC lost 7 per cent of its staff last year. Really the ACCC will just monitor fees – to watch them rise. As an ex ACCC commissioner says, this is a “waste of time”.

To play any real role in limiting profiteering, a regulator would need new powers to intervene on fees. Alternatively, constraints could become part of funding compacts. But any such arrangement would also need much greater disclosure of university finances.

We also need to address the perverse incentives. In particular, research is not fully funded: every new dollar of project funding leaves the university looking for more money elsewhere in the budget. This makes little sense. Increasing research funding, or at the very least re-organising existing funding, would limit this perverse incentive.

But more fundamentally, we need to challenge the dominant narratives about a well-functioning sector. We need to challenge the obsession with research rankings. And we need to put much greater focus on educational quality. That’s the only way to have a real debate about what funding reform is for.

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“Art is a waste of time” – second affirmative, at Art Not Apart debate

Well, my eminent colleagues and I here on the affirmative, we have certainly stumbled into something here haven’t we. What a waste of time. It is after all a debate at a popular arts festival — on whether art is a waste of time.

Not only is it certain that everyone here will already disagree with us. But should we succeed in our argument, and convince you of the indeed deep and sublime truth that art really is a waste of time, what will we have given you? A smug sense of satisfaction? More like, a bad end to your day. For if we succeed, you’ll all leave think you’re wasting your time here today. Yay for us. At least you’re not paying for it.

But it’s also painfully obvious if you think about it for half a moment: what we’ll be doing is itself an act of art — in the broadest sense. So it is by its very nature, a waste of time.

this is art, and art is a waste of time. See what I did there?

But that’s the sort of the sort of atrocious logic I have to use today. But you know what? That’s art. It’s not bound by logic. It’s a waste of time. And so I can scarcely argue, from within art, using logic to argue about art. That would be a waste of time.

Indeed to attempt to try and even argue this point is a performative contradiction. It’s like saying: “I don’t believe what I’m saying”. And much of what I’m about to say I don’t believe. if you don’t really follow me, that’s fine, because this is art and art is a waste of time.

Now of course, I agree in full with my eminent colleague Angus. The whole point of art is to be a pleasant and sometimes glorious waste of time. OF COURSE.

Indeed more than this. Art makes us feel like there is value in our lives. It lifts us up. At its limit, it reflects back to us the inner essence of what we most truly are as conscious beings who find ourselves here and now. Or at the very least, stops us from being bored.

And what an amazing privilege that we live in one of the richest cities in the richest country on earth at the richest moment in history that we can afford to enjoy it – and seen from this perspective, we should enjoy it more.

That’s how things look from the perspective of art. Let’s look at it from another, more critical perspective.

Art takes some of the world’s most creative, passionate people, and ensares them and everyone around them in a trap of vacuuity and vanity and banality and trivial activity dressed up as profundity or style. This is true both at the elite and the popular end of things. Art takes up time, energy and in particular money, to promote what are in essence polite modern versions of the circuses, of our bread and circuses.
This is true of whoever designed this t shirt I am wearing today, letting me signal a certain fashionably ironic non-fashion, to the furthest crevices of conceptual art where an object becomes and comment about a movement about a person about a movement about a comment on a movement about another object and so on turtles all the way down.
It’s true of mass exhibitions were bazillions of people walk past what is supposed to be congealed genius and think “oh that’s nice” or “I don’t get it” or think about the drive home – and it is true of this sort of event where property developers invest in keeping their patch a happening place — and that’s a very nice thing to do, thanks very much for having me, I’ve always enjoyed coming to this festival — and the CBR marketing team try to make CBR not the sort of place that hipsters keep badmouthing to their friends back home.

Close to the bone ironic criticism – CBR brand values, yeah?

And it wouldn’t be me on a stage with a microphone without some political real talk. Our world is falling apart. Let me name just one, just one of the ways. We know full well that that in my lifetime, most of your lifetimes, and unfortunately for anyone who has kids, most certainly in their lifetimes, that the world is going to cook itself unless we take very very serious action pretty much yesterday to keep the world’s carbon underground.

yet we keep ploughing our money into the fossil fuel companies that cause it — including, I am sorry to say, the ACT government’s money on our behalf. 6 Australian councils and last week the capital of Norway have voted to divest some part of the sector. We can’t be the first capital, but we could be second. Hey Andrew (Barr, ACT Chief Minister – who was adjudicating), what do you reckon?

Now, given the calamities we are knowingly perpetrating on ourselves and our future, can we really justify our passion and pretension in art? Can we really justify all this pleasant stuffing around? We should be hitting the emergency buttons.

The negative spoke about the power of art to bring people together. But look at how we are together now. Passive and tranquilised. And nothing brings people together like an emergency and nothing is more urgent right now.

Perhaps we could justify art if it were helping us to internalise the despair we ought to feel and build the hope and political agency we need to feel to get us out of this mess. But I look at art – high art and popular art – and I don’t see much of this description. instead I see inward looking games, empty hedonism, narratives of denial. and too often I see patronage by the very companies whose interests should be at issue.

where is the relevant political valence now in the world of art – high or popular? where is the laconic aussie movie, the sequel of the castle, wherein the farmers and the hippies band together to tell the coal or coal seam gas company to go and “get stuffed”?

But to finish on a metaphysical note, I fear that the reality is that art is a waste of time for a perfectly general reason.

Art pretends at its best to be an expression of the point and purpose of life. It helps us make sense of life, its point and meaning. But to suppose that makes it not a waste of time is to beg the question at issue. For that is how things look like from within the perspective of art. yet that perspective is delusional.

we are alone in the universe with no guide and no way to know where we are going, much less if it’s the right way. Sorry kids – there may indeed be a santa, an easter bunny, a tooth fairy, a chance of stopping runaway climate change – but the meaning of life? point and purpose? That’s a fantasy, the sort of nonsense that art helps us tell ourselves so we carry on, the sort of nonsense that evolution has made us want and thereby helped us to evolve the many varied, colourful, complex forms of artistic expression. Like a new way for an amoeba to consume some food.

if the value is supposed to be instrumental, then I do not see it doing much for the species right now,
If art’s value is in the supposition of meaning, then given that art’s projections are clearly delusional, it is in that sense a waste of time.

Of course, on this scorched earth of nihilism, art can’t be a waste, nor can it be not a waste. neither side of this argument can be right.

And that doesn’t make sense. But this a debate at an arts festival about whether art is a waste of time. and given that art is a waste of time, that’s what you should expect.

I’ll stop wasting your time…

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The debate went to the negative – unsurprisingly!

Andrew Barr dismissed my lobbying on divestment by saying it would mean he’d have to sell the ACT government’s half share, that is, privatise, the local energy retailer and distributer.

Divestment is an act of climate leadership and the ACT says it is a leader. The half owner of the local energy system can probably do a lot more to lead by continuing to own it. ActewAGL should be supporting the government’s own position and supporting the current Renewable Energy Target, not undermining it. Owning ActewAGL is not an excuse for owning shares in thermal coal production. And if divestment is not the way the ACT wants to approach this issue, there are many other portfolio and engagement strategies to lead on the issue of carbon risk and fossil fuel investments.

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How dereg could be “the worst of both worlds”

Peter Macleod brings attention to the sorry experience of the recent UK experiment in higher education ‘reform’ that Christopher Pyne wants to rerun in Australia.

The UK government substantially raised student fee caps (while cutting government funding), only to see fees shoot up to that cap in a few years. MacLeod points out this has not made access less equal, contrary to the arguments from anti-deregulation advocates. But he also points out that a study for the Institute of Fiscal Studies estimates three in four UK students will not pay off their loans until their fifties (when, in the UK system, it is written off). Although protected from the worst financial hardship by a loans system like our own, such life-time debt burden will have a large impact on life choices and the economy.

But unrepaid debt is also debt that the government doesn’t recover. That IFS report also shows that the reduced repayment has eroded most of the intended savings to government. Something in the order of 45 per cent of loan volume will not be repaid. As put in the recent UK Higher Education Commission report:

The current funding system represents the worst of both worlds. The Government is funding HE by writing off student debt, as opposed to directly investing in teaching grants.”

One difference with the Australian proposal is that our fees will not be capped. The government argues this will stop fees converging on the fee cap, as they currently do under our much lower caps or as they did in the UK when the caps were raised. But at least as plausible, and what the government did not consider in its modeling, is the sort of fee inflation of the US system, where fees have increased at ferocious rates, faster than even their notoriously expensive health care.

(Image from Bloomberg)

Translated into the Australian system, universities would find huge new pipelines of cash, students would face long-term debt (insured at low incomes by the HELP system) while the government would make little saving, and could end up worst off.

You’d think the government would look at this? Especially since this is supposed to be a ‘savings’ measure. Yet the problem here is not simply negligence, more like incoherence, for the government clearly intends fees to rise. The Minister’s been banging on about how we need dereg to boost uni rankings, lest we fall behind the Asian unis — which are riding a wave of public funding. Boosting rankings through dereg means using student fees to ‘co-pay’ for research. This make a mockery of the proposal to get the ACCC to regulate the deregulated market to prevent any price-gouging. We already do this, and the intention clearly is to do much more of it.

But this all is nowhere in its shiny new propaganda, which instead comforts us with the claim “The Australian Government will continue to pay a big share, around half, of your undergraduate course fees.” That makes sense only if you assume fees don’t rise. But everyone else thinks they are likely to rise, indeed already have risen massively in prospective fees from UWA, and in that case the government contribution will be much less than half. If the government isn’t assuming fees will rise, no wonder it’s not worried about unrepaid debt blowing out.

Meanwhile, a lead proponent of deregulation argues “history suggests students are not overly responsive to prices“. Depending on your economics, you could see that as a good reason to deregulate, and shift as much debt onto students as possible knowing the public benefits will still be supplied. Or you could see it as a reason not to.

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Letter to AFR on its coverage of Alan Oxley, divestment – unpublished

The AFR reports Alan Oxley as saying “The reality is fossil fuel companies make such an important contribution to the earnings to our stock exchange, so any investor who drops them out will not be able to deliver the proper return to investors.”

The AFR did not report that Alan Oxley has been paid by the Minerals Council of Australia to try to slow the divestment movement. Nor did the AFR mention the ongoing plunge in coal company market capitalisation and rising risks to all fossil fuel assets.

There are a growing number of fossil fuel free indexes that provide comparable risk-return characteristics to the baseline index. Many have in fact outperformed in recent years.

For investors who decide they cannot divest in full, there are other serious ways to mitigate risks from stranding fossil fuel assets.

It is a shame the AFR did not report on a recent well attended investor briefing in Sydney that explained options available to investors for dealing with fossil fuel risk. One wonders if the AFR is really reporting what its readers want to read.

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Letter to the AFR about its campaign on ANU’s divestment decision.

Numerous stories in the AFR recently have lambasted ANU’s decision to divest from 7 miners on ESG grounds. One even claimed that it lacked courage.

Given this sort of reaction, surely the truly courageous thing is to have acted at all.

The ANU has not divested from fossil fuels. It will probably reinvest in other mining companies. But it has tried to take an evidenced based, reasoned approach to a complex issue. It has that right, and obligation under law. Yet the critics seem to think the sheer idea is reprehensible.

ANU has for decades not invested in tobacco. It has already divested from Metgasco. Its decision on Santos and Oil Search will be the first of many fossil fuel divestments at Australian universities.

The reaction to this seems premised on the idea that mining is a golden goose for Australia’s economy. Let us remember that mining represents 2% of Australian employment, less than 5% of government revenue, and 85% of profits go overseas.

If there are socially responsible miners, let ANU invest in them. Sure, let their investment decisions be scrutinised. But with ESG investing going mainstream and a climate catastrophe bearing down on us, ANU is merely starting to do — very cautiously — what any leading university ought to do.

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Speech at March Canberra in August

“Safeguard Creation, Because if we destroy Creation, Creation will destroy us! Never forget this!”

That was one of the great climate activists of our time – the Pope! And another quote from another great moral leader:

Our future depends on what we as a nation do today. … This challenge is not of our making, but we… accept responsibility to fix it.

That was Joe Hockey, talking about the sustainability of our budget, sustainability of health, of pensions … everything but actual sustainability! Hockey talks about the budget crisis. But what about the crisis in our atmospheric carbon budget?

We want to forget, but we must never forget the huge calamities bearing down on us. This is a moral crisis of the highest order and history is judging us.

Science has known about climate change for decades. The scientists are now freaking out. If you were born in 1978 or later, you will see the world breach the 2 degree safety limit before you retire. Your kids are likely to see downright catastrophe.

That is, if we let fossil fuel companies burn their reserves as they intend.

What fortune then to know that the clean energy transition is well under way. What fortune we know the clean energy transition wont cost us the earth. That is of course the point.

But you don’t really understand the problem until you see that avoiding catastrophe means keeping most carbon unburnt and in the ground, wiping out trillions in fossil fuel assets. If that is radical, then so is the world bank, the IMF, the OECD, the UN.

That is why these companies have spent billions lobbying ferociously, corrupting our public debates to promote denial and delay.

They would rather us crash the planet than pay the modest insurance premium of some halfway rational public policy.

Seeing this with clear eyes, what then can we really hope for?

Well, renewables costs are falling, while environmental regulation is rising — nearly everywhere else in the world.

But business will only move fast enough if governments force it. Governments will only force it if the people demand it.

Our hope can really now come only from social movements.

Here I must mention the Lock the Gate movement – surely one of the most important social phenomena of our time, with greenies and farmers coming together to protect our land and water from coal mining and gas fracking.

I should also mention global events that help us imagine and create a global community of action, like the People’s Climate Mobilisation, 21st September. This will be the biggest global climate event ever. GetUp and Avaaz will send you the details. Get involved.

But I want to talk most about fossil fuel divestment.

If you have a bank account with the big four banks, if you have a standard super fund, they are using your money to mine and burn coal, to frack our farmland, to lobby governments to kill the renewables industry, and to wreck our future.

Say no – move to any of the other banks, move to an ethical super option. And of course, read the fine print. There is a lot of greenwash out there.

Our local community leaders face a choice. do they endorse the hypocrisy that will tank our planet, our say no and divest? Get behind the campaigns targeting the ACT government and the ANU.

ANU students just voted in a referendum last week. We don’t yet have formal results but it looks like overwhelming in support of divestment.  

Victories in the divestment movement already include:

World Council of Churches – representing 500m Christians;

the British Medical Association;

Stanford University — which Chancellor said was the gold standard on responsible investing;

Uniting Church National Assembly, just this week followed the leadership of the ACT/NSW synod

And USYD has announced also this week it will freeze its coal investment. ANU should be ashamed that it is now being left behind.

History shows divestment works, and the fossil fuel divestment movement is the fastest growing in history.

Divestment is about about retracting the social license of these industries. Ultimately it’s about strengthening the arm of government as they battle the rent seekers. Or should we say, twisting their arm.

That brings me to this government.

We are here today because to reject this government’s offensive vision for our country. It is so disgustingly obvious that they are not governing in the long term interest of the many, but in the short term interest of the few. We need to discredit not the people, need to discredit their ideas, the very idea that they can get elected by putting us all in such outrageous danger.

But in fact, we give them too much credit, we misunderstand this situation if we think of them as merely ideological warriors out on a crusade. This government has been bought. We have let our government be bought, but we can make this right.

Better government means learning the skills of democracy. It’s not just a sausage sizzle and a how to vote card every three years. It means  conversations in community halls, conversations with friends, conversations with people you don’t agree with, building petitions, calling strangers, writing letters, writing press releases, pressuring on your community leaders, divesting your bank and super, coming to rallies, going to trainings, and above all being proud about giving a shit about your country.

If you want better government, you have to get together and work for it.

If you want an alternative, you have to build it.

If you love this country, you have to fight for it,

so let’s go and fight for it.

 

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