Pollbludger Bandwidth Refugee Cafe Thread

Billbowe has eaten his bandwidth, a problem which will no doubt be fixed shortly.

When it happens, someone will inevitably let us all know.

UPDATE: Billbowes Back

FuelWatch – ACCC Econometrics

When the ACCC releases their econometric modelling of FW, we’ll update and whack it in here.

But as a bit of a warm up we’ll run a basic test to to show that there was price change when FuelWatch was introduced.

The series we’ll be using is Price Difference which equals the difference between the Perth price and the 3 State average (Melbourne, Adelaide and Sydney – again, Brissy is excluded because of the rebate we get up here) price for unleaded petrol. We’ll use the quarterly data from the Australian Automobile Association.

We’ll run a very simple regression. We’ll regress the Price Difference on a constant and a dummy variable that has the value of zero for the period before FuelWatch in WA and a value of 1 after FW was introduced.

Yes, serial correlation I know , see comments.

The constant tells us that before FW in WA, the Perth price was, on average, 1.38 cents per litre more expensive than the 3 State average. It also tells us that after FW, the price difference reduced by an average of 1.57 cents per litre – leading Perth petrol being, on average, 0.2 cents per litre cheaper than the 3 State average price (1.38-1.57). That’s around what our non regression results told us earlier which it should be.

That’s a statistically significant structural break. potentially statistically significant structural break – see comments regarding serial correlation.

This is part of the weekly series the ACCC uses rather than our quarterly data:

It comes from Appendix S of the ACCC inquiry into the price of unleaded petrol

What we’ll be looking for in ACCC work is talk of the volatility changes that resulted from FuelWatch in WA since we already know that there was clearly a structural change in the price.

UPDATE

The ACCC has now released a paltry little document over here:

http://www.accc.gov.au/content/index.phtml/itemId/829429

The first thing to note is they did the same simple test that we did earlier, apparently in the previous report, but on weekly and monthly measurements. Their results showed the existence of a structural break in the price at the implementation of FW.

They found reductions in the price of petrol in Perth compared to the eastern capital city average of:

1.92 cents per litre as a weekly average

1.86 cents per litre as a monthly average

0.9 cents per litre as a weekly average based on the lowest price point from week to week.

The important thing was always going to be about the volatility, in terms of whether the price on the cheapest day of the week in Perth increased or decreased relative to what they were pre-FuelWatch

Importantly here, the ACCC measured the week to week price changes from the lowest price point of the week, the highest price point of the week and the remaining five days. They found:

prices decreased an average of 3.5cpl for the highest price day of the week prices decreased an average of 0.7 cpl for the lowest price day of the week prices decreased an average of 1.8 cpl for the remaining middle five days of the week.

So the volatility post FW still enables motorists which buy fuel on the cheapest days to benefit from those cheapest days, but it’s had the effect of slightly compressing the bottom end of the variance of Perth petrol prices.

While Perth petrol consumers that buy on the cheapest day still save money compared to pre-FuelWatch – around 0.7cents per litre, the real area of pricing change is at the top end of the weekly price cycle, with that top reducing by an average of 3.5cpl with the other 5 days being in the middle at 1.8cpl.

The ACCC also performed some more advanced tests on whether FuelWatch induced a structural break in the price of Perth fuel and found that it had.

We can conclude that there is an extremely high probability that FW reduced overall prices in Perth that the biggest price reduction occurred at the top of the weekly cycle (making the most expensive days of the week cheaper), that the smallest price reduction occurred at the bottom of the weekly cycle (making the cheapest day of the week slightly cheaper) and the other 5 days fell in the middle.

And we can also conclude that FuelWatch, based on the WA experience, had zero evidence of increasing prices anywhere, at anytime in the weekly price cycle.

It would have been nice to see the modelling itself – and the data.

UPDATE 2

Sinclair Davidson crunches numbers on the original ACCC modelling HERE:

It confirms the importance of the ACCC releasing the data and all of their modelling.

At the moment, the more you look at the ACCC work, the more uncertainty it seems to contain. Without all of their work and data, it’s almost impossible to make a definitive independent conclusion.

UPDATE 3

Competition or Fuelwatch? – that’s the big question when it comes to determining what reduced the difference in petrol prices between Perth and the eastern capitals.

Sinclair reckons it was competition – and it’s hard to argue with, the evidence is compelling.

To show how compelling we’ll do three regressions; the first one again (but this time adjusting for serial correlation in the errors since we have Buckleys and none of getting the actual ACCC data ), then we’ll replace the Fuelwatch dummy variable with a Coles dummy variable (which has a value of 1 in 2004 onwards after Caltex and Coles Express moved into the Perth market, and zero at all other times), and we’ll finally run a regression with both of them.

FuelWatch

Competition

Combined

This final regression is compelling – it would suggest that, using quarterly data, the extra competition that the introduction of Caltex and Coles Express had on lowering the difference in prices between Perth and the eastern capitals was more powerful than Fuelwatch.

So much so that Fuelwatch became statistically insignificant when the increase in competition was controlled for.

Even if we limit the time period to 1992 onwards, nothing much changes.

If FuelWatch really did decrease prices – we’ll need a lot more evidence than the ACCC has thus far provided. At best we could say that FuelWatch combined with higher levels of competition reduced the price difference between Perth and the eastern States, but looking at Sinclair’s data (which uses a higher resolution of data, monthly rather than quarterly) – even that might be a bit of a stretch.

Advertisement

Possums big adventure

This will teach me to follow Qld Liberal Party politics wherever they may lead.

Thanks to a heads up from Classified .

PART 1

PART 2

PART 3

PART 4

THE RESCUE

Unfortunately it wont embed

http://www.youtube.com/watch?v=PskasaHz5Qs

Fuelwatch – Raining windfalls on working families everywhere

This was me earlier in Crikey today.

The problem with petrol politics is that the numbers involved are simply enormous. A small cut in excise – that’ll will be a few billion thanks. A large cut in excise – pick a number and add nine zeroes. The debate revolves around numbers so large that economists hide in the cupboard muttering in the foetal position just thinking about the fiscal carnage that could be unleashed.

But there is one area of the fuel pricing melodrama that is at the opposite end of the spectrum – where the amounts involved are so small that we could call it microeconomics if the word hadn’t already been pinched.

We are talking, or course, about FuelWatch.

To get an idea of how the FuelWatch scheme might play out in practice nationally, we have our own natural experiment to look at in WA where FuelWatch has been running for 8 years. Using data supplied by the Australia Automobile Association on average quarterly petrol prices in capital cities, we can plot the Perth price since 1980 against the combined average price of Melbourne, Sydney and Adelaide (Brisbane has been excluded because of the State government subsidy that drivers north of the Rio Tweed enjoy).

As we can see, the difference is minute between the two measures, with prices moving together through time, obviously being driven by far larger things than geography or programs like FuelWatch.

However, if we dig down a little deeper and plot the average cents per litre difference between Perth prices and the 3 State Average over the same period, a slightly different picture emerges.

Throughout the 1980’s and 90’s, petrol was an average of 1.4 cents per litre more expensive in Perth than the 3 State Average (or 2.45%), whereas over the period since the introduction of FuelWatch, Perth has enjoyed a petrol price that is, on average, 0.2 cents per litre cheaper (or 0.11%) than the 3 State Average.

While the cause and effect of FuelWatch in WA can be debated, the glorious savings for Sandgropers simply cannot be ignored. A typical Commodore driving family in Perth would have saved an average of 14.4 cents every time they filled the tank over the last 8 years compared to their Eastern working family brethren.

That’s nearly a saving of $7.50 per year if the car gets a weekly fill! We’re talking serious kitchen table Working Family economics here.

If the ALP government wants to start spruiking the benefits of this one, they’ll need to get in touch with the North Korean Newsagency, because I just don’t think that Australian PR firms could deliver the necessary hype.

However nervous economists can rejoice and leave their cupboards, for we need not be worried about those 10 figure sums with FuelWatch. We only have to worry about whether our software goes to enough decimal places to measure the benefits.

US Election –Introducing Intrade

As the US elections inch closer, it’s probably about time we pulled our finger out and started to have a look at it.

There are two big problems with the US election when it comes to getting a psephological grip on it. Firstly, the Republicans and the Democrats have yet to appoint an official nominee – meaning that the system hasn’t properly been switched “ON” yet. As a result the polling and betting market data is polluted – however small – by multiple candidates being the focus. The head to clash hasn’t precipitated out fully yet and wont until each party holds their convention.

The second big problem is US polling. Due to the US having voluntary voting, polling results have a big extra dollop of uncertainty added to them. People that say they will vote a certain way not only produce the uncertainty that they might not actually vote that way in practice (the universal problem political pollsters have), but that they might not end up voting at all. Many firms use lists of registered voters in an attempt to overcome this problem, but with a candidate like Obama that is driving massive new turnout, and with parts of the Republican base getting apathetic and not bothering to turn up – this all gets a little problematic.

The other part of the polling problem in the US is that there are far too many shithouse polling organisations that couldn’t successfully poll what a family of 4 wants for dinner, let alone what the political intentions of 300 odd million people are at any given time. If you remember back to last years election, we poured big buckets of the smelly stuff over pollsters that used small sample sizes.

In the US, sample sizes of less than 500 are a regular feature.

At a later date we’ll whittle down the polling organisations to those that can be trusted and we’ll ignore these small sample tossers that give polling a bad name – that way we might be able to get ourselves some credible US polling goodness.

But in the mean time, I’ll introduce you to the data that we’ll be using most for the upcoming US election – a betting market called Intrade. Betting markets in the US have outperformed polls at every election since 1988 when the Iowa Electronic Markets came on-line. One of the reasons is pretty simple – polls aren’t predictive, they simply measure a snapshot of opinion at any given time. To make them predictive we have to take all those snapshots and build a forecasting model to project ahead into the future. Prediction markets like Intrade on the other hand are predictive by design – people bet on who they think the eventual winner will be.

Intrade isn’t quite like the betting markets we have in Australia which more closely represent laying a bet with a bookie – at Intrade, people buy and sell contracts based on what they believe will happen, so it removes any house manipulation and lets the market find it’s own natural equilibrium based on nothing more the price people offer to sell a contract and the price people are willing to pay to buy such a contract.

The beauty of this type of market, especially the way Intrade is designed in terms of the price limits they place on any single contract, is that implied probabilities of an event occurring like a Democrat becoming president for instance, is simply the Democrat “last price” divided by 100.

I used a start date of April 1^st 2008 as the beginning of my Intrade data set, so to give an example of what the probabilities currently look like for the Democrats winning the presidential election, well use the contract value at the end of each day since April 1^st right through to yesterday.

As you can see, at the moment, the Democrats have a probability of winning the US presidential election of 62%. Worth mentioning is that this result also has a built in implied probability of Obama becoming the Democrat nominee of 92%, as that’s what his current probability to get the Dem nomination is currently running at over at Intrade.

What’s noticeable here is the small surge that happened after the 6^th May. Maybe someone could fill me in on the why’s of that?

Intrade have a whole lot of things they run contract markets on, Senate races, VP nominations, House election etc, including a market for the presidential winner of each US State. Because the US election winner is ultimately decided by who can get the magical 270 of the 538 Electoral College votes that are available, where each State has a set number of Electoral College votes to give, it’s worthwhile looking at the presidential election as a collective of 51 separate elections.

When we total up the current projected Intrade winner in each of those 50 State elections (plus the District of Columbia) and tally up the electoral votes associated with those States, we get a measure of how many electoral votes the Intrade market currently has each Party on.

We’ll call this figure “Intrade EV Win Tally” for it tells us who is actually ahead in the electoral vote contest and by how much – we’ll graph it in a minute.

The other thing we’ll regularly use here is a measure of how the broader support levels of each political party are changing through time . To do this we simply multiply the electoral votes that each state has to give with the current probability that a party will win that State.

So if, for instance, we take Colorado as an example – Colorado has 9 Electoral Votes to give. The current probability of the Democrats winning Colorado is running at 62.4% or 0.624. So we multiply the 9 Electoral college votes by 0.624 to get a figure of 5.616. When we do that for all the States and add them up, what we get is a probabilistically weighted estimate of the broad level of support for the Democrat party based in terms of hypothetical Electoral College Votes. We’ll call this “Total EV probability Sum” – shitty name I know, but I’m stuck for something better at the moment.

This might not seem that important today – but it will come in extraordinarily handy as the election progresses for all sorts of reasons that we’ll get to as the need arises.

So we can now graph these two things – the projected Electoral College votes using the State based markets which tells us who is currently leading and by how much, as well as the Total EV Probability sum which for now gives us a measure of broad support change.

We’ll just do this for the Democrats rather than for both parties as the Republican chart is just a mirror image of the Democrat chart, and we’ll use weeks rather than days just to knock out some of the volatility – again starting from the 1^st April.

So what we can see is that currently, Intrade has the projected Electoral College Votes for the Democrats standing at 293, down 5 from early April when the probability of the Democrats winning Nevada and their 5 Electoral College votes fell from 51.5% to the 48.5% probability that the Dems have today of winning that State.

The magical number is 270 – so the Democrats are projected by Intrade at the moment to win the election by 23 Electoral College Votes.

The EV Probability Sum shows us that the broad level of support for the Dems in the combined State markets is slowly increasing. Doesnt mean much now, but it certainly will a little later on.

If you want to have a browse around Intrade, you can pop over HERE and have a squiz. Just follow the politics links.

UPDATE: There’s a new button at the top of the site called “Intrade Data”. “US Election”

It has time series charts of the three Intrade measurements that I’ll mainly be using for the US election, among a few other things and a spiffy map. They’ll be updated every Tuesday.

UPDATE 2:

Two new bits added to the Intrade page – a chart that shows where each state stands on the probability spectrum along with the Electoral College votes they provide:

And probabilities done as a map – with blue for Dem and red for Republican (the darker the colour the higher the probability that the respective party will win it, 0.5 is white)

Heads up to all – What The People Want

Just a quick heads up to readers, Graham Young of Online Opinion fame (among many other things), also runs qualitative polling research and is releasing some of the results from his latest round of polling on the budget

http://whatthepeoplewant.nationalforum.com.au/

It’s worth a squiz.

Nielsen vs Newspoll – budget deathmatch edition

This was me in Crikey earlier today.

The two things you can guarantee from any federal budget are whinging special interest pleaders and, of course, polls – no budget is complete without a poll or three. Yet, as is generally the case with these things, the noise level of the complaining parties is often a world removed from the underlying electoral reality the polls attempt to measure.

Newspoll and Nielsen Budget Editions, those surveys that tell us who thought what about all things budgetary, were both released today in a head to head clash that produced nearly identical results.

Around 30% of the electorate believes that the budget will make them better off; around 30% believes it will make them worse off and the rest thought it would either make no difference, didn’t know or couldn’t give a toss.

Which makes me wonder what the answer would be should a pollster ever have the courage to ask “How much attention did you pay to the budget” – I suspect the answer would be heart breaking to us commentators everywhere.

After you waded through the “Don’t remove the carriages from our gravy train” pleas by the Australian Health Insurance Association, there were essentially two big gripes that came out of the budget reaction wash-up as it was reported; pensioners were miffed and $150K households were staring down the barrel of economic destitution because of means tested welfare.

On the former, neither Nielsen nor Newspoll specifically measure budget opinion amongst pensioners with both preferring to use age cohorts instead. Newspoll tells us that of the folks aged 50+, 17% thought the budget would make them better off, 43% believe they’d be worse off and 33% neither. This compares to Nielsen’s 55+ cohort where 19% believed they’d be better off, 30% would be worse off and around half thought it wouldn’t make a difference.

Interestingly, the proportion of all people in the country over the age of 18 that are aged 50+ is 40.8% according to the census, whereas the same proportion of people aged 55+ is only 32%. Taking these numbers at face value, that 8.8% of the voting aged population between 50 and 54 would seem to be extremely depressed about the impact of the budget on their well being. Maybe they’re luxury car buyers.

So while it seems that pensioners in general weren’t particularly impressed with the budget in terms of self-interest, there doesn’t appear to be the widespread level of pensioner rage that talk-back radio and the tabloids would have us all believe. Especially since Nielsen, with their older cohort that more closely resembles the demographic of the aged pension, had a substantially reduced negative reaction to the budget compared to the younger Newspoll cohort.

But the real test of political grievance is always the vote estimate – and that didn’t move over the budget period with the ALP still leading the Coalition 57/43 in two party preferred terms according to both pollsters, coming off the back of primaries running the ALP’s way 47/37 with Newspoll and 46/38 with Nielsen.

If there was political grief out there over the budget in Voterland, it wasn’t substantial enough to move political support an inch – which puts all the budget commentary into perspective. Also makes you wonder about some of the silly headlines floating around today.

Pollytrack, Week 25

In an act of fortuitous timing coinciding with the first anniversary of this blog, Nielsen emerges from polling exile after their less than spiffy performance in their final poll estimate of the last election campaign.

Now having three pollsters to play with – Newspoll, Morgan Phone Poll (I chose to exclude Morgan face to face polls as they behave quite differently to the phone polls of the three pollsters) and now Nielsen, we can construct a rolling average of the three pollsters weighted by sample size to give us what should be the most accurate estimate of Australian federal voting intention.

The Pollytrack series is born.

The way it works is simple, each observation in the Pollytrack series will consist of the average of the most current polls from each of the three pollsters, weighted by sample size. So, for instance, as a new Newspoll gets released, it will replace the previous Newspoll in the three pollster weighted average.

The larger the sample size that a given poll has relative to the other polls that make up Pollytrack, the greater the influence that poll with have on the actual Pollytrack number.

So for the first Pollytrack observation, which is Week 25 of the governments’ term, the three polls are Morgan Phone with a sample size of 618, Newspoll with a sample size of 1141 and Nielsen with a sample size of 1400.

Crunching the numbers gives us a weighted average of primary votes being 46.5 to the ALP and 37.4 to the Coalition with a two party preferred weighted average of 57.2% to the ALP and 42.8% for the Coalition off a broad supersample of 3159.

At the end of each week, Pollytrack will be updated to accommodate whatever new polls get released. As time goes on, we’ll end up with a charted weekly series which I’ll stick up the top under a link called Pollytrack, as well as place the current Pollytrack estimate in the right sidebar at the top. That sidebar number should be updated on the day a new poll comes out (where possible), so if the situation arises where there are a few polls released during a given week, that number in the sidebar will change as each poll comes out. The number at the end of the week is the one we’ll use as our permanent Pollytrack value.

UPDATE:

People have asked what the MoE on this thing is – that depends on the sample sizes of the three pollsters, but will nearly always be between about 1.6% and 2%.

Nelson’s Tarago too far

This was me in Crikey earlier today.

“Labor is giving with one hand and taking back with the other – and not just through knee-jerk measures such as the new Tarago Tax on cars” – raged Brendan Nelson in his budget reply.

The idea of calling the luxury car tax increase a “Tarago Tax” sounds like a clever bit of politicking, projecting the image of some poor working family getting slugged for simply having the audacity to need a people mover. With five rugrats – the choice becomes limited in the car market. But the problem with these cute little clichés is that they invariably turn out to be bollocks.

Toyota has five Tarago models available in Australia, with only one model – the top of the range Ultima model (described by Toyota as “Business class travel”) qualifying for the new proposed tax increase with a price of $72 490. The cheaper models start from $49 750, well under the luxury car tax threshold.

Toyota Australia confirmed some numbers- Brendan Nelson might be a little surprised to learn that of all Tarago’s sold in the country, the Ultima edition makes up 20 units, on average, a month.

Once fleet and commercial buyers are removed such as taxis, rentals and whatnot, that number reduces to 10 units, on average, per month.

It’s not quite the suffering army of Tarago buying families that Nelson would have us believe.

So when the leader of the Opposition next says “For Gods sake, think of the Tarago drivers” – it really is pretty easy to think about them, in fact you could almost remember their individual faces – all two and half of them a week.

Chairman Sniff and the quokka – on a serious note

This was me earlier in Crikey today.

After the column miles of faux-gravitas written about the budget, trust the WA political scene to change the national tone and take us to a new low in Australian politics.

The WA Opposition leader was asked, seemingly in all seriousness, whether he’d ever done anything inappropriate to a quokka, those small, furry little marsupials that call Rottenest Island home -you can see the interview over here. While this sad little episode will no doubt fuel mountains of jokes, and some pretty funny ones at that, it does show something a little more serious going on.

Troy Buswell might not be a perfect individual, he might have had a robust past, he may well be a bit of a goose not fit for public office into the bargain – but while those things are all problematic for a political leader, he has a far bigger problem; his past behaviour – the bra flicking, the chair snorting and general stupidity, has put him on the wrong side of the credibility threshold.

When a public figure is found to have acted in a breathtakingly ridiculous fashion – like sniffing a staffers chair before cavorting with it around the office for instance, then the presumption of normality gets suspended. If he did the ridiculous before, then other ridiculous allegations cease to sound, well… ridiculous.

Who could imagine this same question being asked to any other political figure in the country? But to Buswell, it’s now fair game regardless of the fact that it’s a completely fabricated rumour that started from a blog. The damage gets done by the simple existence of the story – by the simple act of Buswell being forced to deny the ridiculous because he’s no longer protected by a cloak of normal human behaviour.

The fact that he was in a position where he had to deny the allegation is what makes Buswell’s leadership pretty untenable.

But the question that needs to be asked here is what type of journalism sees it as acceptable to substitute smear and innuendo that has no credible source, for proper reporting and analysis on the news and events of the day? What sort of journalism is it that uses rumours, knowingly or not, to create a story that doesn’t actually exist but will inevitably damage the person it’s aimed at?

Well, we know the answer to that – the type of reporting popularised far too often in the Sunday papers political columns by people that should know better. This is where that sort of piffle leads to, the widespread adoption of tabloid sleaze as a news substitute.

Charming, isn’t it?

Snorting the furniture is one thing, but leave my cousins alone!

Just when we thought the WA Opposition fiasco couldn’t get any more bizarre or perverted, now there’s accusations that Chairman Sniff* was molesting my cousins – the poor old quokka. No, I shit you not:

http://www.theage.com.au/news/national/chairsniffer-denies-quokka-rumours/2008/05/14/1210444508751.html

Which makes you wonder – who was more embarrassed, the journo that asked Sniff if he’s done anything inappropriate with a quokka or Buswell for having to answer it!

I’m speechless – a new low in Australian politics.

*Can anyone remember who it was that called Buswell Chairman Sniff over the last few days?

UPDATE:

Here’s the presser:

http://news.ninemsn.com.au/article.aspx?id=562803

And here’s Oz Informant in comments:

West Australian Opposition Leader Troy Buswell says there is “absolutely no substance” to reports he once did something inappropriate to a quokka.

Asked if he had done anything inappropriate to a quokka, Mr Buswell replied: “No. I’m not being backward in saying that I’m not a perfect individual and you know I’ve had a robust past and there may be elements of that that have proved offensive to people. I don’t shy away away from that at all, but I’m not aware that I’ve caused any offence to a quokka.”

A spokesperson for the International and National Association for the Protection and Preservation of Rottnest’s Old People, Rabbits, Indigenous Animals and The Environment (INAPPROPRIATE), commented today. “Troy Buswell has been a long supporter of our society and it’s acronym, and I’m shocked to hear these allegations,” said small marsupial Bryan, who asked that we blur his face.

“I can tell you that a large majority of Quokkas are behind Buswell on this one. Some of my best friends are chair sniffers, and I think the way he has been treated is appalling. Troy’s support of human-quokka relations, not to mention his deep love for scratch ‘n’ sniff office equipment, should not be underestimated.”

Having recently departed from the WA shadow Cabinet, Paul Omodei said today “I’m staying in Parliament, regardless of what happens. Buswell can smell it all he wants – this is my seat and I’m sticking with it.” Mr Omodei also declined to elaborate on the birth of a tailed marsupial in Northern WA. The single mother, an unemployed rock wallaby is claiming Omodei is the father.

A spokesperson from the Society for the Nasal Enjoyment of Derrieres, Garters and Expansive Rump Support (SNEDGERS) declined to comment until consulting with Mr Buswell. “I would not want to impute his olfactory integrity.”

Elsewhere:

Tokblog

The OC – of course!

Blogocracy

The Real Rudd Unveiled

This was me in Crikey earlier today.

Hands up who’s thoroughly sick and tired of reading about how Kevin Rudd is John Howard lite, a bloke that substitutes spin for government activity in those times when he’s not actually doing the big “Me-Too”?

Finally, hopefully, we can all now put that piffle to bed.

The real Kevin Rudd has always been the Goss technocrat, the strategic policy wonk, the careful, cautious planner ad-infinitum that draws policy threads together in a coherent broader tapestry, whom melds electoral politics around concrete policy goals rather than wrapping convenient policy goals around base electoral politics. Last night the real Kevin Rudd became so obvious that even the laziest journalist should be able to see it.

The future direction of health policy is a classic case in point. By doubling the threshold for the Medicare levy surcharge, not only will it start to dismantle the private health insurance gravy train as fewer people get penalised for not taking out private health insurance (becoming an effective tax break for those middle income working families to boot – the electoral politics), but it will to some extent increase the demand on public health resources in the future as a result, particularly the resources of the public hospital system. Yet Rudd has been banging on about reforming Commonwealth-State relations over health since he first achieved the Labor leadership. There’s the explicit threat for constitutional change to allow the Feds to take over hospitals if the States aren’t up to the job to implement reform, there’s the COAG health reform agenda and a bucket of upfront money being made available before the budget and now there’s a $10 billion health fund.

It’s not rocket science to see how it’s playing out – for those that say the budget lacked reform, open your eyes and stop looking at the world through a Howardian prism.

Rudd knows the demand shift consequences of moving the Medicare levy surcharge up the income ladder, he’s banking on at least the first tranches of reform – be it the increase in aged care beds to free up hospital beds, the construction of GP clinics to take weight off hospital emergency departments and the dozens of smaller front line reforms scattered through a dozen documents – to provide the hospital system with the increased capacity to absorb the consequences of this initial reshaping of how private health insurance works in practice. As time moves on, private health insurance will be further reformed with the broader health system as a whole – the scene has been set and the trajectory pretty much laid out.

Too often we all seem to expect reform to come in some big-bang document titled ‘Reforming Policy X” where we can all follow the flow chart. A sort of idiots guide to policy change where winners are easily determined and losers are identified in bright red circles.

Undoubtedly there will be some of those in the future – the not quite so root and branch tax review springs to mind, but there’s a whole lot more going on in this budget below the headlines and the PR management. We might all need to start thinking in more complex ways on how government initiatives interact with one another if we are to get to the bottom of the broader sweep of government policy direction – because Kevin Rudd and his government certainly are.

UPDATE:

And another thing that’s been shitting me to tears this morning goes like this:

Random commentator: “history tells us that the first budget is always the toughest”

[Like history, or fabricated notions of political orthodoxy are a good guide to judge anything about Rudd Labor – one would have thought that people would have learned that lesson by now]

Random commentator continues: “… but because this budget wasn’t as tough as I wanted it to be, the chances of there being good budgets in the future is seriously diminished”.

Follow this piffle if you can – because the budget didn’t follow the political orthodoxy i.e. “some rule that some knob decided to invent at some point in the past to explain something”, therefore by those same rules of orthodoxy (Those rules that haven’t actually explained anything yet about the budget), future budgets will be miserable.

Good grief – these people are going to be confused for a long time.

UPDATE 2:

But the award for the most outstanding contribution to silly budget commentary definitely goes to Ms Fiona Connolly over at News with her rant “Yet again, Generation X gets screwed“.

The mind boggles

UPDATE 3:

Crossposted over at LP