Tuesday, June 15, 2010

West Australian families and the environment pay for the market's excesses

image courtesy of the Conservation Council

This excellent piece by Piers Verstegen the Director of the Conservation Council of WA appeared recently in the West Australian and can be found on Piers's excellent blog site Numbat News. There is also a Facebook site to keep up with latest activities of Piers and the Conservation Council.
State Budget rewards polluters but punishes environment and families

By Piers Verstegen

In a closed briefing to business and community groups on the State budget, Premier and Treasurer Colin Barnett said that this budget strongly reflects the policy agenda of the Liberal-National Government. Sadly, an examination of the budget reveals this agenda as one that places the environment as one of the Government’s lowest priorities.

The second budget produced by the Liberal-National Government continues the established trend of running our environmental regulators on the smell of an oily rag. Much less than 2% of the overall State budget is dedicated to the increasingly impossible tasks of reducing carbon pollution, managing waste, regulating polluting industries, controlling land clearing, managing national parks, reducing air pollution, protecting the marine environment and all the other functions of the State environment portfolio.

When you consider that environmental protection is the responsibility of States under the Australian Constitution, this is grossly inadequate. The inevitable consequence of this budget frugality will be increasing impacts on our environment, increased threats to our biodiversity and health, and carbon pollution skyrocketing out of control in WA.

For a realistic assessment of the environmental consequences of this year’s budget, one must look beyond the environment portfolio. On the other side of the ecological balance sheet, the budget increases the already very significant taxpayer subsidies for polluting and destructive industries in Western Australia.

For example, the budget earmarks over $100 million towards assisting the development of a polluting LNG processing plant on the Kimberley coast – in the middle of the southern hemisphere’s most important hump-back whale calving ground. If it goes ahead, this development would be responsible for increasing WA’s greenhouse emission by 25% on its own.

Premier Barnett has stated that the Kimberley is the Government’s number one environmental priority, and a small allocation has been made to allow for the creation of a new marine park at Camden Sound, North of Broome. This funding is welcome; however the government’s environmental credentials in the Kimberley must be weighed against the heavy taxpayer investment in opening up the north for damaging and unsustainable industries.

Expenditure in the energy portfolio, which could hold the key to a clean renewable energy future, is even more alarming. The budget reveals that more than 99% of capital expenditure by the government’s energy utility will fund polluting fossil-fuel generation; less than 1% will be spent on renewable energy.

And if this is not bad enough, the budget totally fails to account for the massive economic liability that will be passed on to future Western Australians as a consequence of Western Australia’s rapidly increasing carbon pollution.

The Rudd government have delayed the introduction of an Emissions Trading Scheme for the moment, but some price on carbon will inevitably be introduced in some form in the future. Failing to disclose this cost to householders who will be forced to bear that cost because of decisions made to subsidise polluting industries today is duplicitous.

The EPA have advised that WA carbon pollution is likely to increase by an alarming 75% in the next few years. Decisions made today will determine whether Western Australia unlocks its clean energy potential, or locks into a future where Western Australian’s will be forced to pay higher and higher carbon polluting costs.

The disparity between the government’s treatment of the environment and polluting industries is echoed just about everywhere you look in the budget papers.

For example, water charges for households will be increased, but Collies rapidly expanding coal-fired power industry will continue enjoy huge volumes of water almost totally free of charge.

Mining companies receive even more handouts as part of the State Governments $80 million mining exploration incentives package (they already receive generous tax concessions for expolration activities from the Commonwealth), but taxpayers will have to pick up the bill for environmental damage caused by mining as the government continues it’s policy to exempt miners from paying bonds to cover the cost of rehabilitation.

And while families pay more for power, the budget continues the generous energy subsidies enjoyed by mining and other industries supplied from the grid in regional areas.

Financially this budget is in surplus, but that fails to account for the massive environmental and economic liability that will be transferred to future generations as a consequence of the Barnett Government’s overwhelming focus on expanding and subsidising unsustainable and polluting industries in WA.

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Wednesday, June 9, 2010

Corporate control of Health care

The Corporatization of Health By Gavin Mooney

As a health economist one ceases to be shocked by the quite disgusting behaviour of the pharmaceutical industry. It happen so often. But every now and then Big Pharma manages to find yet more offensive ways of trying to corrupt research, clinicians and the WHO.

At the same time I note how willing some in health services – doctors and others – are to take the Big Pharma shilling and without any recognition often of the conflicts of interests involved. A couple of examples from my own experience. Nearly 20 years ago, a leading Australian clinician was keen to do a study with me which would have involved bringing a colleague out from the UK. He said he’d get the money for the airfare from a drug company. I indicated that if there were any drug company money involved then I would not be. He was amazed at this response and said: ”I can’t remember when I last paid for an airfare.”

More recently I suggested to a very senior university administrator that the university should not accept drug company money when evaluating drugs since there was good evidence that such funding resulted in bias in favour of the company’s drug. “Studies sponsored by pharmaceutical companies were more likely to have outcomes favouring the sponsor than were studies with other sponsors” (1). The university administrator’s response? “But if we say no Gavin, the company will just go down the road to another university!”

There are countless such stories and on a much bigger scale. One is the recent case of WHO and the swine flu pandemic. The Guardian of June 4 (2) reported: “An investigation by the British Medical Journal and the Bureau of Investigative Journalism … shows that WHO guidance [on stockpiling drugs in the event of a flu pandemic] issued in 2004 was authored by three scientists who had previously received payment for other work from Roche …and GlaxoSmitKline (GSK)” the companies which make the drugs which were to be stockpiled. The guidance led to drug companies making billions of dollars from the stockpiling.

According to the Guardian, one of the main authors (Professor Fred Hayden) was being paid by Roche for lectures and consultancy work at the very time he was writing the guidance! And he had previously received payment from GSK.

What I find most worrying in all of this is that there are so many stories of the nastiness of drug companies in funding unethical practices, arranging ghost written articles for clinicians to sign on to (yes that is true! (3), etc. ... and nothing changes. Nothing.

Can this sort of corruption be stopped? Well there seems not much point in trying to stop individual clinical researchers and individual universities accepting payment and kickbacks from the drug companies. It’s been tried. It does not work. Policing it is just impossible and the climate and culture of clinical research would need a revolution. It will not happen.

The place to tackle this is in the incentive structures that the industry faces. So state ownership of companies is one option. Those who worry that investment in new drugs would dry up need to note that currently only 14% of the industry’s budgets goes on developing drugs (4). Another attractive option is one that the economist Joseph Stiglitz (5) has come up. He suggests that there be a massive multi-billion dollar prize set up by governments which would be won on the basis of drug inventions which did the most to improve health – instead of profits. I would suggest that rather than have governments pay for the prize as Stiglitz proposes, that this is funded by taxing the drug companies’ marketing budgets.

The majority of health problems in this world are in very poor countries where there are very limited monies available from governments and from people to pay for drugs. So the chances currently of Big Pharma seeking to develop drugs for developing countries is remote – the prospect of making profits is just not there. So the R&D on malaria drugs for example is inevitably tiny. And the extent to which the world gets on top of malaria is … tiny.

Currently the world’s poor struggle to pay for their drugs. When they succeed they often push themselves deeper into poverty. When they fail, they die.

There has to be a better way but it starts with outrage that this profit driven enterprise that could do so much good gets away with doing so little - except making big profits.


1. Lexchin J, Bero L, Djulbegovic B and Clark O, Pharmaceutical industry sponsorship and research outcome and quality: systematic review British Medical Journal 2003;326:1167-1170

2. Report condemns swine flu experts' ties to big pharma http://www.guardian.co.uk/business/2010/jun/04/swine-flu-experts-big-pharmaceutical

3. Medical editors push for ghostwriting crackdown http://www.nytimes.com/2009/09/18/business/18ghost.html

4. Angell M (2004) The Truth about the Drug Companies. New York: Random House.

5. J Stiglitz Scrooge and intellectual property rights http://www.bmj.com/cgi/content/full

Thursday, June 3, 2010

A public health case for the super profits resources tax

The Resources Super Profits Tax – a public health initiative

by Luke Slawomirski*

Amidst all the hysteria surrounding the proposed RSPT, not a single person has made a key argument in its favour…. That it will benefit the health of all Australians.

Those to whom this may seem preposterous overlook a key underpinning philosophy for the tax, which Lindsay Tanner eloquently outlined in Parliament a couple of weeks ago. This is to prevent the (further) development and embedding of a two-tier economy driven by extreme commodity prices and a largely oligopolised market.

By extension, this situation naturally leads to some individuals growing wealthier while others are left behind, an effect compounded by inflationary pressures induced by super profits (anybody living and paying their rent/mortgage in WA will attest to this).
This is bad for our health.
Surely not! A rising tide lifts all boats; there’s a trickle down effect; more money coming in means people are happier and give more to charity; jobs are created; the tax will push cost of living up even further!

The last argument was comprehensively debunked by Ken Henry in front of a Senate Committee. A recent study by the Australia Institute dispelled the ‘rising tide’ myth. It is well known that charity contribution has nothing to do with wealth. An there’s no need to even speak of the tenuous link between wealth and life satisfaction.

More and more empirical evidence is emerging to show that the more unequal or economically stratified a society, the less healthy all its citizens are.

Let me be clear. We’ve know for a long time that being poor is bad for your health. What we are learning now is that being rich in itself is not enough if you live in a country with a steep socio-economic gradient (where the gap between rich and poor is large).

The work of epidemiologists such as Sir Michael Marmot and Richard Wilkinson is showing that, beyond a certain threshold of GDP per capita termed the ‘epidemiological transition’, absolute wealth ceases to exert any significant influence of health and wellbeing. Rather, it is how the wealth is distributed that counts.

Nations which consistently outperform their counterparts on a range of health and wellbeing indicators (such as life expectancy, coronary disease, obesity, smoking, depression, drug abuse, homicide, incarceration rates, suicide and so on) are ones where the wealth gap is narrower. These tend to be the Scandinavian countries like Norway (which, as it happens, has a functioning tax on its oil reserves very similar to the one proposed here).

Japan also stands out (no it’s not their diet or culture… the rise has only been apparent since WW2). It is a low-taxing country but the income gradient is relatively flat – the CEO of a company will earn maybe 20-30 times what the janitor earns.

Even some developing countries like Costa Rica outperform much more affluent ones on a range of measures. Kerala, a state in southern India, has lower infant mortality rates and comparable life expectancy to the USA, despite being much much ‘poorer’.

The USA, in spite of its wealth and tremendous spend on health care (12-13% of GDP), languishes around the middle of the table that includes developing as well as developed nations.

This same can be observed when comparing states within the USA, neutralising the argument that the differences are cultural and measurement related. Adjoining states with homogenous populations can exhibit considerable differences in population health.

Differences that are largely attributable to the levels economic (in)equality within them. These reductions in health manifest at both ends of the social spectrum.

So how does Australia rate?

Overall not too bad but slipping. We also have inordinately high rates of mental illness and drug abuse.

The point is that, based on the epidemiological research into inequality, permitting a 2-speed boom/bust economy to develop will be to the detriment of social cohesion and consequently bad for our health…of everyone.

So back to ‘the tax’.

The economic arguments for the RSPT are sound (almost all reputable economists in Australia endorse it) not least because it is coupled with a lowering of company tax. The environmental case is strong, as is the moral argument. And, as we can see, there is also a for public health case for instituting it.

So what’s the problem?

Firstly, I think the population is so strongly inculcated with the ‘more is more’ mantra that mounting any argument for wealth redistribution is extremely difficult. Anybody raising this as an issue is branded a communist. Tax is un-Australian and anti-freedom.

There is also the strong mythology around mining and wealth creation built into our national narrative. People like Andrew Forrest and Clive Palmer are seen as heroes not only because they have managed to become extremely wealthy (let’s remember that Kerry Packer got a state funeral here) but their image taps squarely into the mystique of Aussie machismo.

Latte-belt pinkos can squawk all they like about equality. Twiggy and Clive are the real men who turn the wheel of the Australian economy, put 4WDs in our driveways and jest skis on our waterways. This perception has been very astutely exploited by the pro-mining lobby in the RSPT debate.

The mining mythology makes it politically very hard to argue for the tax, but I think the Government has also made an absolute hash of selling it. Also, the lack of consultation has been astoundingly short sighted and arrogant. Meanwhile the Opposition, true to form, have trained the crosshairs squarely on the lowest common denominator, braded it a ‘great big new tax’ and prophesised impending economic doom.

On the grounds of this tax and the Coalition’s declaration to dump it, one can only hope that the Government scrapes in at the next election and commences the necessary reform to make this a more cohesive, progressive and ‘healthy’ nation.

*Luke Slawomirski is a public servant working for a Western Australian Government Department. He has a clinical background and a Masters Degree in Health Economics. He has strong interest in health policy, and, in particular, the social determinants of health. The opinions expressed in his piece are personal and not reflective of the view of the Government agency for which he works.

Tuesday, June 1, 2010

The mining tax is good news for Australia's health

The Mining Tax is good for Australia's Health
by Gavin Mooney

(This piece first appeared on Crikey, May 27, 2010)

The proposed new tax on super profits has clear health effects. Some are negative and are the result of the apoplexy that its announcement has caused among the ‘big miners’.

But there are potentially some substantial positive health effects as well. What is noteworthy is that while there has been concern expressed by the super prophets of doom for the health of the goose that has in the past, they tell us, laid the golden egg (of mining booms), the positive impact on human health seems to have been ignored.

While several aspects of the tax remain to be sorted, one thing is clear. It is a tax on the rich which is redistributive to the poor or at least to the rest of us. The best evidence for this is that it is those on high incomes who are leading the charge against this impost.

Twiggy Forrest and his big miner mates are not the downtrodden of Australia. Their shareholders are also relatively well heeled. So among Australians, it is those on above average incomes who will be hit by this tax.

On whom will the benefits be bestowed? Well like all such tax gathering exercises we never quite know and probably never will.

But we can be clear that not all of the monies will be returned to the top end. There will be some redistribution. There are for example noises about it going to pensioners who overall are not the richest gang in town. It has been suggested that hospitals will benefit and since we can assume that means public hospitals, the benefits of that will go more to the poor – who tend to use public hospitals more than the rich and who tend to be more sick anyway. And Ken Henry has endorsed the idea that Aboriginal people should benefit.

But the big health news is simply that the tax will reduce income inequalities in this country. These have been growing in recent years – so a shift back to a more egalitarian Australia would be good. A ‘fairer go’ in itself would be welcome but as Wilkinson and Pickett* have so ably shown recently, inequality kills – and their concern has not been geese but people.

But just imagine if this idea of redistribution were to catch on in a major (as opposed to a big miner) way?

Imagine if the people (that forgotten breed) were to think: ‘this is a good idea, we like the notion of a fairer Australia and we buy this idea that these public health gurus tell us that inequality is bad for our health. We can relate to that. It’s not that we are envious – we are not into this ‘politics of envy’ stuff. But we do believe in a fair go.’

Where might this all end, good heavens? Well in economic theory (sorry, but yes there is such a thing) the excess profits tax is relevant in any industry where there are big profits and barriers to entry.

That is not socialism or communism (as big miners have claimed). It is straight textbook economics.

So who or what is next in line? Surely the banks … here again there are excess profits and barriers to entry. Beyond the banks? Well readers can draw up their own list.

The excess profits tax on mining might just be a start to redistribution through taxation and a move to a more egalitarian society. The government in the wake of the “Preventative” Task Force Report is beginning to buy into the idea of using the social determinants of health as the road to better population health. It’s easier anyway than trying to take on the AMA.

So there are major health issues at stake here and not just big miner ones.”

* The Spirit Level: Why More Equal Societies Almost Always Do Better, Richard Wilkinson and Kate Pickett, Allen Lane: London.