Entrepreneurial Cognition, is it really important?

13318435_10156885000485537_144220695_n[1]Armen Arakelian outlines how entrepreneurship contributes to a wider community, and the values that underpin it

The very definition of entrepreneurship is based on a broad range of personal background experiences such as education, social standing, income, political and geography; influential factors that shape the individual entrepreneur’s ideals, ambitions and psychological approach. Nevertheless, there are a series of collective traits that link the entrepreneurs’ business culture; a cohesive blueprint that forms the very genesis of entrepreneurial scope and success at any business or social level.


Entrepreneurs are ‘optimistic, hard-driving, committed individuals who drive great satisfaction from being independent’ (Frederick, Allan & Donald 2016, p. 43). By this definition, there is a level of consistency, motivation, perseverance, competitiveness and self-determination that entrepreneurs possess; characteristics that lead individuals to put into practice their personal business principles through innovation and intent on viable opportunities they’ve seized.


The assortment of factors is varied however opportunity, necessity and their pathway to freedom are the main drivers of the entrprenrial force. Within this drive there can be both existing entrprenrial characterises and characteristics that have been theoretically identified as entrepreneurial; that can develop over the course of their enterprising lives. This makes up the core functions of entrprenrial cognition. This is supported in principal that ‘entrepreneurship is a function of the entrepreneur’ (Frederick, Allan & Donald 2016, p. 43) and an ‘entrepreneurial function implies the discovery, assessment and exploitation of opportunities’ (Carland et al. 2007, p.1) that subsequently stimulate and grow the economy.


To help draw on entrprenrial conceptions case studies of two different entrepreneurs was conducted. An Australian of the year recipient Ronni Kahn and Business mogul and philanthropist Kirk Kerkorian. There was a commonality between the two in their early life experiences; both ethnic minorities living at a time where persecution and intolerance was rife. Their early life developed a fundamental trait of habitualness and self- efficacy; through necessity they evoked dreams and by determination they identified opportunities. Their pathway principals developed their lives in two very contrasting dimensions.


Ronni Kahn founder and CEO of OzHarvest Australia’s largest food rescue organisation was first exposed to entrepreneurship through her necessity-driven mother. When her father was hospitalised for 2 years her mother R. Kahn (personal interview, 15 March 2016) ‘had to become very entrepreneurial to manage the household’. She had grown up in South Africa during the apartheid era and made the best of every situation modelling off her mother’s ventures.

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To get rich is glorious!

Chris Rath


Chris Rath outlines how the rise of China came about as a result of market liberalisation and the move away from the Mao era policies.

When Chinese Leader Deng Xiaoping commenced liberalisation of the Chinese economy in 1978 neither he nor a single foreign policy analyst would have predicted four decades of remarkable economic growth.


Comments attributed to Deng Xiaoping, that “to get rich is glorious” was a clear break with the economic communism of Mao Zedong which left China weaker and more poverty stricken in 1978 than it had been at the time of the communist revolution in 1949. China has not experienced its recent huge economic growth in spite of Western capitalism but rather because it has appropriated Western capitalism.


I have recently been fortunate enough to participate in a bipartisan political delegation to China, selected by Federal Director Tony Nutt to represent the Liberal Party. The program was an endless saga of economic and political meetings and decadent banquets with high-ranking Government and Party officials in Beijing, collaboration with the Australian Embassy, and briefings by South China Sea foreign policy analysts and academics in Hainan. Needless to say that it was a jammed packed seven days and an amazing opportunity of which I am deeply honoured to have participated.


This article is a response to the unfair criticism China has received by certain quarters in Australia and America, especially in terms of trade and foreign investment. China is no longer an economically communist country. It’s not just that its shopping malls are bejeweled with the omnipresent glowing lights of Louis Vuitton, Apple, McDonalds, and Nike, but the fact that they have legalised Uber before most Australian states is a salutary reminder of how far they’ve come. The widespread competitive Chinese capitalism I viewed far exceeds that of Australia and would certainly leave Chairman Mao turning in his grave. Indeed perhaps the rampant materialism and consumerism in China has problematically become a substitute for religion and spirituality, the vacuum left behind from the communist era.


In any case “to get rich is glorious” and China has become very rich very quickly. Instead of admonishing China we should celebrate what I call the three cheers for China.


The first cheer for China is humanitarian; you know the things the left pretend they care about with their good intentions but never suggest anything practical. The positive humanitarian impact of capitalism on the Chinese economy is incredible. The World Bank argues it best:

Since initiating market reforms in 1978, China has shifted from a centrally-planned to a market-based economy and has experienced rapid economic and social development. GDP growth has averaged nearly 10 percent a year—the fastest sustained expansion by a major economy in history—and has lifted more than 800 million people out of poverty.”


When you put into perspective that Australia is only a nation of 23 million people, the fact that 800 million Chinese people have been lifted out of poverty as a result of economic globalisation and liberalisation since 1978 is unfathomable.


And how was this colossal humanitarian feat achieved? It wasn’t through foreign aid or twitter hashtags. It wasn’t through the United Nations or NGOs. Nope, it was almost entirely the result of Western multinational corporations acting out of their self interest by lowering their business costs and maximising profit through employing cheap Chinese labour. It’s a shame the supposed guardians of equality and human rights on the left have not embraced this undeniable fact. It is also a win-win situation as western corporations have become more profitable meaning higher dividends and higher returns on our superannuation.


The second cheer for China is that consumer goods are now relatively cheaper for all Australians, resulting in a better quality of life and higher disposable incomes in real terms. We should celebrate rather than recoil when we see ‘made in China’ as we may not have been able to afford a comparable item in the 1950s when such consumer goods were made in high cost developed economies. Unsurprisingly, Australia’s main imports from China are telecommunications, electronics, computers, furniture, prams, toys, games, sporting goods, textiles, clothing and footwear. The Institute of Public Affairs published research in 2014 outlining how consumer goods are bigger, better and cheaper today than in the 1970s, a direct result of capitalism and trade with low cost economies like China. The average Australian would have to work 194.9 hours to buy a television in the 1970s but now a mere 9.7 hours. A microwave would have cost you 83.8 hours of hard earned cash back then and now only 2.7 hours, and a refrigerator 86.4 hours in the 1970s but today only 21.8 hours of labour. Indeed if China has become rich then certainly as a result so have we.


The third cheer for China is that Australia more so than any other Western nation has directly benefited from its huge economic growth due to its purchase of our exports. Australia has a comparative advantage in our largest exports such as iron ore, coal, natural gas, education, gold, copper, wool, wine, beef, dairy, and tourism. We’re not just the quarry and the food bowl for China but we’re now also its university and its holiday destination. Australian exports to China now account for over $98bn per year, making China not only our largest export market but also larger than our next three highest ranking markets combined- Japan, the USA and South Korea. We were weathered from the global financial crisis in part because of China. We have experienced 25 years of continuous unbroken economic growth in part because of China. No doubt those Australians who attack Chinese trade and investment must either be mislead by shock jocks or are happy to see a poorer Australia if it means their xenophobic concerns are alleviated. Figures from the Foreign Investment Review Board (FIRB) show that contrary to the view that Chinese investment is taking over our farms, the largest investment sources in agriculture in Australia are from developed Western nations. However, we should want more Chinese investment in agriculture, not less, because more investment means capital flowing to Australia, it means jobs, growth, productivity and economic development.


The trade unions are wrong to attack the free trade agreement with China. Donald Trump is wrong to argue for a 45% tariff on China. Faux conservatives who support Trump and the CFMEU are wrong. Indeed you could easily argue that the most important reform and achievement of this Government has been the free trade agreements with China, Japan and Korea together with the transpacific partnership, brokered by Andrew Robb and never delivered under Labor. Certainly it is a huge motivating factor behind my zeal to campaign this election.


However, this article shouldn’t be viewed as hyperbolic praise for China. As a staunch Anglophile and a defender of Western Civilisation I’m still very concerned about several issues facing China. Of course China is an authoritarian single party state which still has a lot of work to do in improving its basic freedoms and liberties. Too often we hear of human rights abuses, censorship, and political prisoners. Similarly China’s position on the South China Sea and disputed “islands” is aggressive, inflexible and nonsensical. Furthermore, the 1,600 missiles pointed at Taiwan does not play well on the world stage.


But again the solution here is more trade, more globalisation, more economic integration and more capitalism. The statement ‘nations that trade together don’t go to war together’ might not be a truism, but it’s pretty close. Similarly remarkably close to being a truism is the golden arches theory that ‘no two countries with McDonald’s have ever fought a war against each other’. China of course has 2,200 McDonalds restaurants and recently announced plans to add a further 1,300 restaurants over the next five years, a positive sign for the future.


There are indeed many positive signs for China in the future. It is upon us to embrace the huge economic opportunities ahead and to educate Australians of these opportunities. The best days for China and Australia are still ahead of us. Together we can get rich and it will be glorious!


Christopher Rath is a member of the State Executive of the NSW Liberal Party and a Young Liberal Branch President. He has a Bachelor of Economics and a Master of Management from the University of Sydney and currently works as the Government Relations Manager at IAG, Australia’s largest general insurance company.

The Moral Case for Economic Freedom

Kerrod Gream

Kerrod Gream analyses the effects of economic freedom and the positive benefits for those poorest in society.

“The rich are getting richer and the poor are getting poorer” is the catch cry of the left, but this statement is hardly based in reality. With Australia’s income statistics showing that the lowest income households had an increase of 5% between 2009-2010 and 2011-12, with middle income households having an increase of 4% in disposable income.   This in addition to total share of household income between 2007-08 and 2011-12 increased for low and middle income households, and decreased for high income households. This holds true against the argument from the left.



Changes in Mean Real Equivaliesed Disposable Income


It’s common to just look at home for the overall quality of life, but of course being a first world nation even our poorest are well off comparatively to underdeveloped nations. It is however a problem of today that we don’t grant those nations the same benefit we had while developing, with calls to remove cheap energy sources such as coal and force them to use inefficient sources such as solar, and to only continue to buy goods from those of us better off. Economic freedom overall is something that should be looked at and the benefits to the poorest not only in first world nations, but in the most impoverish as well. It does have a casual link between economic freedom and the overall wealth the poorest in society hold.

With this being the case it’d be best to look at the relevant cases as to the effects of income when looking at economic freedom. The Fraser Institute does a yearly analysis of economic freedom based on a variety of factors, these being: size of government, legal structure and private property rights, access to sound money, freedom to trade internationally, and regulation of credit, labour and business.  Australia regularly scores well on this metric having scored between 7.9-8/10 between 2005-2010, and scoring 7.88, and 7.87 in 2011 and 2012 respectively. Having been ranked 5th in the world in 2009-10, in 2012 we had dropped to 8th.

But these statistics are best looked at as a global analysis. Nations that are in the top quartile of economic freedom had higher GDP Per Capita; with the top nations having an average per capita GDP of $38,601 in 2013, compared to $6,986 for those nations in the lowest quartile.[ii] While GDP Per Capita does give a good overview we are best to look at the situation for the poorest 10% in each quartile.

In the top quartile of nations the average income of the bottom 10% was $9,881, with the bottom quartile’s bottom 10% of earners having just $1,629 on average in 2013.[iii] This however has improved since 2008, with the bottom 10% in the nations in the highest quartile having an average $8,474 yearly earnings, compared to $910 for those in the bottom quartile of nations with economic freedom. [iv]

Economic Freedom and the Income Earned by the Poorest 10%


These benefits of higher income levels result in higher life expectancy, with the average life expectancy in the top quartile nations at 80.1, and the lowest quartile sits at 63.1 years.[vi] Those in more economically free nations report a higher life satisfaction, averaging 7.5 out of 10, compared to 4.7 in those in the least free quartiles.[vii]

This is all before addressing income share, this is the share of income between different sets of people. Income share of the poorest 10% is generally pretty consistent across all quartiles of nations based on economic freedom. With those in the highest quartile of economic freedom having the largest share of income at 2.64% this however isn’t reflected in the second highest quartile with the poorest 10% in those nations having the lowest income share. What this effectively shows is that the income share of the poorest isn’t highly affected by different government policies, and redistribution, but rather that it’s fairly consistent across the quartiles of economic freedom. This also shows that the poorest in society have a slightly greater share of the economic pie in economically free nations.  With the best overall result in not redistributing produced wealth, but by increasing the size of the economic pie, as it were.

Economic Freedom and the Income Share of the Poorest 10%


Economic Freedom and Economic Growth


Looking on this basis the only moral argument to help the poorest in society is not by centralised government control, as that harms economic growth and income levels of the poor. We should continue to strive towards market solutions, rather than centralised solutions, and increase the overall share of wealth not just redistributing the wealth that we have. While the rich may be getting richer, the poor are also getting richer and the best way to help those in the poorest is to encourage economic growth with greater economic freedom, and less government intervention.


Kerrod is President of the University of Sydney Economics Society, and also serves as the chairperson of Australia and New Zealand Students for Liberty.

[i] http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/6523.0Main+Features22011-12

[ii] Fraser Institute, “Economic Freedom of the World 2015 Report”

[iii] Ibid

[iv] Fraser Institute, “Economic Freedom of the World 2010 Report”

[v] Fraser Institute, “Economic Freedom of the World 2015 Report” pg 24

[vi] Ibid

[vii] Fraser Institute, “Economic Freedom of the World 2010 Report”

[viii] Fraser Institute, “Economic Freedom of the World 2015 Report” pg 24

[ix] Fraser Institute, “Economic Freedom of the World 2015 Report” pg 23

The Left’s Smear Campaign on Business Revenue is Nothing but a Dishonest Lie

Kerrod GreamKerrod Gream takes on the perception that companies should be taxed on revenue that the left have been pushing since the ATO’s Corporate Tax Transparency Report for the 2013-14 Financial Year.

Following the release of the ATO’s Corporate Tax Transparency Report for the 2013-14 Financial Year there has been a spewing of memes, and distaste from those of the left about how businesses aren’t paying their fair share. These go along the line of “This company made x amount of revenue in 2013/14 but paid almost 0% tax” ignoring that revenue does not equal profit. Their 0% tax figures comes from comparing total revenue to the tax paid, rather than comparing taxable income(aka profit) to tax paid.

The CFMEU's dishonest attack on Boral, who paid their fair share of tax on taxable income.

The CFMEU’s dishonest attack on Boral, who paid their fair share of tax on taxable income.

The unions, all of which they themselves pay no tax, have been some of the worst on the smear campaign on business. Australian Unions are calling for Spotless to pay tax on their $2.2billion of revenue despite the fact that they made an operating loss in the previous financial year and are perfectly entitled to deduct that from their total tax paid. The CFMEU has quite possibly been the worst of the spread of misinformation, providing the image above but also attacking News Corp  and Brickworks(the offending image as of writing this article has been removed) over revenue and not profit. The left wing lobby group GetUp also continued to spread the misconception. Ignoring that 0.2% of companies pay 58.2% of company tax, as reported by Commonwealth Treasury Papers.

The top 0.2% of companies pay 58.2% of company tax.

The top 0.2% of companies pay 58.2% of company tax.

This adds in to various media sources playing into this game of taxing revenue with the ABC attacking companies claiming they paid effectively zero tax on their income. The Guardian creating a calculator to determine which companies you paid more tax than despite having taxable income viewable hoping the reader will conflate revenue and profit. To add to this Buzzfeed jumped on the bandwagon of business ignorance with an outline of companies’ revenue and tax paid, with no reference to actual profit. This intellectual dishonesty either screams of an intentional smear campaign on the productive sector; that is businesses that provide jobs and investment in Australia, or just an abysmal understanding of how businesses operate.  To add into this the Twittersphere has been attacking these companies all over, and openly advocating that revenue is the important figure, and arguing that the only reason they minimise their taxes is because of offshore funnelling of profits.

Michael West

And then Ben Eltham; a reporter for the leftist rag, New Matilda; openly admits that he doesn’t understand how a business operates by not realising that income coming in doesn’t take into account the actual costs of running a business. This includes investment, staff costs, financial costs, and the day to day costs of running a business. Revenue is only useful for looking at turnover compares to previous years, and not in looking at how much money a company actually made, as different sectors have different methods of markups.

Ben Eltham

These people and organisations keep conflating revenue and profit, not seeming to understand that they are two separate things. With revenue being total amount of incomings prior to any expenses being paid. Profits however are what taxes are placed on, because had Boral in the example above paid the 20% that the CFMEU are calling for them to pay on revenue that $855million in tax would turn a $173.3million profit into a $681.7 million loss. These people have no idea how to run a business, and would send every single business bankrupt if they got their way. The best part of the irony in all this is tax exempt organisations calling for organisations that pay far more than they do in tax to be taxed more.

All these organisations and people are the same people that are opposed to a broad based consumption tax in the form of the GST. They don’t get the mental gymnastics to oppose a revenue tax(the GST) while calling for revenue to be taxed. It seems that they don’t understand that costs get passed onto the consumer, and taxing revenue after the fact is just going to destroy business. Any attempt to attack the big end of town will inevitably hit smaller businesses harder, as they don’t have the structural base to bring about easy compliance with new tax and regulation.

Those on the left calling for taxing of revenue obviously haven’t read what was contained in the ATO report. The ATO even admits that low tax in relation to taxable income and revenue doesn’t necessarily mean that the company is dodging tax in that year, and there may be deductions from previous year’s losses that haven’t been accounted for and a range of other factors not outlined in the report. Had they actually read it, they’d understand why they’re just making themselves look incredibly uneducated. The transparency list is quite possibly going to be a mistake that the left use to prey on the ignorance of the masses.

These people wanting to tax revenue instead of profit clearly have no experience running a business, and even if they do understand want to see nothing but destruction of our industries, and jobs in Australia. The only saving grace of this is all the top comments on the memes being put out are correcting the difference between profit and revenue.


Kerrod Gream is Chairperson of Australia and New Zealand Students for Liberty, Deputy Director for NSW of The Australian Taxpayers’ Alliance, President of the University of Sydney Economics Society, and a branch Vice President in the Liberal Party.

A Conservative Vision for a Richer Liberalism

ChanegChaneg Torres outlines how conservatism can add to the Liberal Tradition.

‘But what is liberty without wisdom and without virtue? It is the greatest of all possible evils; for it is folly, vice, and madness, without tuition or restraint.’ 
– Edmund Burke


What place does conservatism have in the classical liberal tradition? For many, conservatism is seen as merely reactionary; a liability to the electoral success of the liberal tradition, only capable of opposing progress and impotent to provide compelling vision for the challenges of today and the future. I argue that ‘conservatism’ is a disposition toward certain truth claims regarding the nature and end of the individual, the individual’s need for voluntary community and the individual’s relationship to political community. This disposition is necessary for a robust liberalism. It provides liberalism with presuppositions and a vocabulary that has a vision of inherent human dignity at its center and thus gives liberalism sufficient moral grounding and capability to present a compelling vision of the common good.

Classical liberalism has traditionally been understood as the belief in individual liberty. The individual for a liberal possesses natural, inviolable rights prior to any political association, articulated by Locke as ‘life, liberty and property’. Milton Friedman understood it to be ‘the intellectual movement that…emphasized freedom as the ultimate goal and the individual as the ultimate entity in the society. It supported laissez faire at home as a means of reducing the role of the state in economic affairs and thereby enlarging the role of the individual…(the) reduction in the arbitrary power of the state and protection of the civil freedoms of the individual.’ Thus the classical liberal claims that in order to flourish, individuals must be free to associate, voice their opinions and engage in enterprise. Inherent then is a preference for smaller government that gives room for the exercise of individual initiative and exists to protect, rather than to curtail, the liberties of individuals. Smaller government is less capable of coercing individuals into conformity, allowing individuals to pursue their own beliefs and happiness. Indeed, government must be small, because government is made up of flawed individuals who, despite the greatest of benevolence, have the propensity to miscalculate at best, or at worst use the coercive power of the state to impose what they deem to be their anointed vision on those who may find their vision unconscionable. Greater political and economic freedom, then, leads to greater material prosperity and individual wellbeing.

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In Defence of the Establishment

971753_10151574401276107_283040900_nChristopher Rath outlines why the establishment of the Liberal Party exists, and why change from within is the obvious choice for Classical Liberals, Libertarians, and Small Government Conservatives.

The Liberal Party of Australia today is still the John Howard party. The majority of Federal Liberal MPs and Senators served in his Government, most advisers and apparatchiks worked for his Government, and most Young Liberals were inspired to join the Party because of his Government.


I joined the Young Liberals in 2006 at the very young age of 16 because I believed in the economic reform being pursued by the Howard/Costello era. I was a “dry” before I knew what the term meant. I was also a “dry” before I knew that there were “wets” in the Party. I thought that “dry” was the only game in town and Party divisions only existed on social issues.


This is because by the time the 2000s came along the Liberal Party establishment had become “dry”, with the “wets” a minority of outsiders. The “wets” had been the establishment in the 1970s under Fraser but they lost the long bitter war that was waged in the 1980s and 90s. In fact you could say that Fightback! was the final nail in the “wets” coffin; certainly Howard led a thoroughly “dry” government for over eleven years. If the Party establishment was not “dry” perhaps I would have never joined. After all it was Hawke and Keating rather than Fraser who reduced tariff protection, floated the dollar, and began privatising government assets.


I love the Liberal Party establishment because I am bone dry, not in spite of it. My critics in the Young Liberals may call me an “establicon” or establishment conservative as a pejorative, but I wear it as a badge of honour. Being an “establicon” means being “dry”, it means supporting the Premier and Prime Minister, campaigning, raising money, supporting branches to grow, pre-selecting talented men and women, and fostering our best future leaders. It means loving the Liberal Party and our greatest living Australian, John Howard.


Howard was also an “establicon”, from being NSW Young Liberal President in the 1960s to seeking a parliamentary career as quickly as possible. He loved the Party and the establishment more than anyone, perhaps even more than his mentor John Carrick. When he lost the 2007 election and his seat of Bennelong he could have blamed his Treasurer, Cabinet, Parliamentary colleagues or Party machine. Instead, even after he had given 40 years of his life to the Party, 16 years as leader and over eleven years as Prime Minister, he humbly took complete blame for the election loss. In fact he defended and praised the Party on election night 2007- “I owe more to the Liberal Party than the Liberal Party owes to me”.


The people I’ll never understand are those who attack the Party or threaten to resign or somehow think that they’re above the Party. They are not. Not even a Prime Minister of eleven and a half years is above the Party. Similarly I’ll never understand those who claim ideological purity as a reason for preventing their party membership. If you don’t like the Party leadership or policies, you should join the party and make a difference or contribution towards promoting your deeply held beliefs. You’re going to have more influence inside the Party than from the sidelines. You’re not going to change the fact that the Liberal Party is the natural Party of government, being in power two thirds of the time since WWII.


The Liberal Party establishment is not perfect. Not every Liberal Party policy is perfect. But isn’t it better to get 80% of something than 100% of nothing? Isn’t it better to be pragmatic and win an election than being a purist and let Bill Shorten and the trade unions run the nation? All great right-wing leaders understand the importance of pragmatism and the broad church, but again Howard is the master:

“The Liberal Party of Australia is not a party of the hard Right, nor does it occupy the soft centre of Australian politics. It is a party of the centre Right. It is the custodian of two great traditions in Australia’s political experience. It represents both the classical liberal tradition and the conservative tradition.”


Ronald Reagan and Margaret Thatcher understood this and similarly they turned their parties into “dry” pragmatic parties built in their own image. Even Turnbull understands the importance of pragmatism and has neutralised the issues of climate change and same sex marriage early on. But he also understands that the establishment today, unlike the establishment under the other Malcolm in the 1970s, is inherently “dry”. This is why he went out of his way in his victory speech to prove his “dry” credentials, careful not to scare away people like me- “This will be a thoroughly liberal government. It will be a thoroughly liberal government committed to freedom, the individual and the market.”


Turnbull’s Ministry is also packed to the rafters with establishment dries, including Mathias Cormann, Paul Fletcher, Arthur Sinodinos, Andrew Robb and Josh Frydenberg. Andrew Robb, the archetypical establishment dry, was an economist, staffer, government relations professional, and the federal director of the Liberal Party responsible for the 1996 campaign that brought the Howard Government to power. As Minister for Trade and Investment he has successfully negotiated three free trade agreements. Similarly Josh Frydenberg is an establishment dry, securing the safe seat of Kooyong after being an adviser to Alexander Downer and John Howard and a Director of Global Banking with Deutsche Bank.


So to all of the libertarians, classical liberals and small government conservatives out there, my plea to you is to join the Liberal Party, support the inherently “dry” establishment which now exists, try to make a difference by pushing for your agenda and philosophy within the natural party of government, and understand that in politics a level of pragmatism is required.


“Politics is the art of the possible, the attainable — the art of the next best.” (Otto Von Bismarck)

Christopher Rath is a Young Liberal Branch President and currently works in the private sector. He previously worked as an adviser to state and federal Liberal Parliamentarians and has degrees in economics and management.

The case for Fee Deregulation: A Lesson in Real Sustainability

Alex Bedwany

Alex Bedwany argues that fee deregulation is actually about sustainability of our education and that the misinformation spread by the left needs to be countered with stronger conviction.

The past few years have seen left wing students around the country engage in intimidating, disruptive and sometimes violent action in protest of the Government’s attempts to reform the tertiary system.

It seems romantic doesn’t it; rallying students to fight in the trenches against perceived injustices towards them? The issue seems so black and white: a Government hell bent on narrowing opportunity to the rich and shutting out the poor. Of course, as with most policy issues, it isn’t as black and white as it seems.

Unfortunately, the government has failed to prosecute its case with the gusto it deserves. So the issue has been roundly seized upon by those who are intent on destroying any chance of the senate passing any meaningful reform.

The fact is that, under the Education Minister’s proposal, students will be secure in their pursuit of higher education. Their fees will still be subsidised heavily and the costs deferred until they earn a wage fitting of their effort. This is the line that has been pushed by the Abbott Government, albeit unconvincingly in the face a misinformation presented by those too blind to see the already proven benefits of reform.

Reason for Deregulation: Credit Bites Back

What leftist proponents of ‘heavily subsidised education at all costs’ don’t realise is, the tuition incurred over the course of a student’s time at university will be paid, in full, long after they have retired their HECS debt. Nothing is free. As taxpayers, the graduates will eventually be paying for the subsidies received by the succeeding generations. Some may not take issue with this “left hand owes it to the right” mentality, but several problems arise.

The first is fiscal sustainability. When differences occur across generations, such as an ageing population or a rise in the number of claimants on a program, the burden becomes fiscally unsustainable. This is not a ‘slight’ risk in the case of Commonwealth Supported Places, it is a guarantee.

Successive Federal Governments have committed to ensuring that, by 2025, 40% of those aged 25-34 years have a Bachelor’s degree or higher. Given the explosion in distance learning and the number of students now completing year 12, this is a target that is sure to be met, leading to higher costs if the Government continues to subsidise at current levels.

The government currently subsidises students on Commonwealth Supported Places to the tune of 60%, with students only having to pay 40% back though HECS, and even then, only when they earn over $50,000 a year. The Government’s plan would see government subsidy decreased to 50%. In the interests of fiscal sustainability as well as fairness, it is very reasonable to ask university students to contribute more to their education, as university students tend to earn 75% more than those without a university degree over their lifetime. And the facility to borrow from the government through the HECS system will still be there, providing students with an even better loan than what they will take out for a car, house or any other significant purchase.

The second problem, with the fact that government subsidises degrees heavily and sets caps on university degree costs, arises because of the misalignment of incentives that come naturally when a third party is footing the bill for the decisions of others. When the responsibility for fees is localised with the student, awareness of the consequences of not putting in an effort become stark. They are borne by the person responsible for making the decision.

Similarly, for those who switch in and out of courses, leaving behind credit that doesn’t go toward their final award (assuming they end up completing one), the cost is passed on to the taxpayer. While it is inevitable that there will be a significant portion of student who switch (it’s hardly fair to expect an 18 year old to make the right decision in every instance), it seems a strange idea to pass the cost of being indecisive on to those who are certain about their future.

Here’s one we prepared earlier: Full Fee Postgraduate Places

A system of deregulated fees, where universities are free to set fees and students can borrow from the Government and pay it back once reaching above a certain threshold, is in place within Australia’s postgraduate coursework system, and provides a great example of the potential for dynamism in the undergraduate tertiary market.

Australia’s postgraduate education sector has become an incredibly dynamic place, with programs evolving to cater for people who wish to change careers, further their existing knowledge or take advantage of new trends in the marketplace. This is contrasted with the undergraduate system which has coasted along with the same programs, where universities ride on the coattails of a good reputation (hardly an indicator of the ability to adapt to a changing workplace) or the fact it was established a long time ago. By deregulating fees, we allow universities to capitalise on their strength areas and compete on price to bolster their weaker subject areas.

Competitive pressures will ensure that prices aren’t unreasonable: which is why the left’s claim of $100,000 undergraduate degrees across the board is absurd. It’s precisely these competitive pressures that keep prices from going through the roof – just as they do for any of the products we buy (Personally, I’ve never seen toilet paper for $100k a roll – does it have some sort of price ceiling on it?). The fact is, most degrees will not cost anywhere near that, at most reaching between $35k and $60k. Where degrees reach $60k, people would be free to evaluate whether this investment will pay off in the future, and again have the facility to borrow from the government and pay it back once reaching a threshold, meaning no one is left disadvantaged.

Whenever consumers have choice they stand to benefit from a competitive marketplace – why wouldn’t we inject the same dynamism into education?

Originally published in the University of Sydney Conservative Club’s “The Sydney Tory”

Alex Bedwany is a vocal supporter of intelligent economic reform that slows the growth rate in Government expenditure and thus, taxation.
He holds degrees in Commerce and Economics from the University of New South Wales and is currently a Graduate student from the University of Sydney.

The Time for VSU is Now


11825642_480027035490598_4756637646190208338_n[1]Will Joseph addresses the need for VSU following the recent protests of Chris Pyne’s book launch by NUS and Socialist Alternative Students.

Prior to Christopher Pyne’s book launch in Melbourne starting, we saw some sickening behaviour from the National Union of Students & Socialist Alternative. These people injured police & damaged private property on our student fees; they do not care about students, all they care about is their unrepresentative socialist agenda.
These people also blocked people from going into the event; this is not their event to host. The sad reality of all of this is that every student from all three academic sectors at every campus at every TAFE & University associates with these people involuntarily. At the end of the day, the Student Services & Amenities Fee (aka the student tax) finds its way to the National Union of Students.


Students should feel angry about the way part of their fees are being used. Even though this is an involuntary tax, the policy specifically & strictly states that it cannot be used for political purposes. The majority of students aren’t on the extreme-left philosophies & they aren’t statists. The majority of students are simply trying to get a good education so that they can get ahead in life; students are not on campus to violently riot against politicians. These people take our money involuntarily & they still have deficits.

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Australia again at risk of becoming the “poor white trash of Asia”


Christopher Rath outlines Australia’s dangerous economic position and the reform that needs to be undertaken to avoid Australia’s economy falling.

This week an alliance of the nation’s leading industry and business groups gave their sternest warning yet to our political leaders- neglecting reform “will set us on a path to economic despair”. This isn’t hyperbole as a quick glance at our nation’s economic indicators illustrate that Australia has rising unemployment, low economic growth, low productivity and is wallowing in government debt.


A mining boom coupled with the bold economic reforms of Hawke/Keating & Howard/Costello ensured that Australia enjoyed a quarter of a century of unbroken economic growth. We were the miracle economy, defying the widely held assumption that Australia would go into recession every 10 years or so. Against all the odds we avoided plunging into recession during the 1997 Asian Financial Crisis, the 2000/01 Dotcom bubble burst and of course the 2008/09 GFC.


Unfortunately Australia’s dream run is likely to come to an end in the next year or two and we are at risk once again of becoming “the poor white trash of Asia”. Monetary policy can only go so far to address these issues as a historically very low cash rate of 2.25% means that the Reserve Bank has little wriggle room left in terms of slashing interest rates. Reducing the cash rate is also a blunt instrument, likely to help an already booming property market, and there is often a long and variable lag before the benefits are noticed to the economy.


Microeconomic reforms generally incur an even longer lag with the benefits not felt for years. No doubt part of the reason that we’re facing these economic challenges now is because of the mass exodus of economic reform during the 6 years of Rudd/Gillard/Rudd. They would no doubt claim reforms such as the carbon tax, mining tax, abolishing Work Choices and counter cyclical stimulus payments. But reform implies improvement and these policies have left Australia poorer, uncompetitive and less free.


The Coalition is also somewhat to blame, since the zeal for economic reform was far greater under Howard/Costello than it is today under Abbott/Hockey. They have taken workplace relations reform off the table and budget trims haven’t gone far enough to address our fiscal crisis. There are however some achievements to celebrate such as scrapping the carbon tax and mining tax, privatisation of Medibank Private, $2.45bn of red tape slashed, and most resoundingly, three historic free trade agreements delivered in just over a year. It is also extremely encouraging that Premier Baird was re-elected on a reform agenda.


However the problem remains that Australia has low productivity and eroding international competitiveness. This is where economic reform is needed most, not only because investment can leave Australia with the press of a button, but also because productivity is the main driver of economic growth and better living standards. Yet we are faced with the fact that Australia’s multifactor productivity fell a concerning 1.3% from 2007 to 2013 and for the first time ever Australia is no longer amongst the 20 most globally competitive nations.


And the reason for this?


“The main area of concern for Australia is the rigidity of its labor market (54th, down 12), where the situation has deteriorated further. Australia ranks 137th (of 148 countries) for the rigidity of the hiring and firing practices and 135th for the rigidity of wage setting. The quality of Australia’s public institutions is excellent except when it comes to the burden of government regulation, where the country ranks a poor 128th. Indeed, the business community cites labor regulations and bureaucratic red tape as being, respectively, the first and second most problematic factor for doing business in their country.” (The Global Competitiveness Report 2013-14).


To avoid becoming the “poor white trash of Asia”, Australia should:


  1. Reform our workplace system to at least a comparable level as Howard’s first wave of changes with the Workplace Relations Act 1996. Work Choices amended this act in 2005 but the Fair Work Act 2009 has taken Australia back to pre-1996 levels of workplace inflexibility.
  2. Drastic budget cuts and not the trims we’ve seen are required to achieve a surplus and start paying off government debt much sooner than the 10-year prediction. Of course the Labor Party and the Senate are mostly to blame for our budget woes, but expensive programmes like Paid Parental Leave and Gonski funding should also be shelved. The Centre for Independent Studies and Institute of Public Affairs have proposed savings measures that could be easily adopted.
  3. A serious attempt at tax reform that must involve overall reductions in taxation. Broadening the base of the GST and increasing the rate to 20% could be offset with income tax and company tax reductions. The states also need to be part of the discussion, especially in terms of abolishing two of our nation’s most hideously inefficient taxes- payroll and land tax. A reduction or even abolition of capital gains tax could also be offset by reforming our negative gearing loophole.
  4. Ongoing privatisation and asset recycling as a means of addressing our infrastructure backlog. State governments in particular have a vast array of inefficient utilities, service providers and infrastructure assets that they can put up for lease or sale. Asset recycling can also serve as an important reform in improving state-federal relations.
  5. Build on this renewed era of Australian free trade by seeking new opportunities (India has already been flagged) and also adopting the Commission of Audit’s recommendation to crack down on industry assistance. This will ensure that Australia focuses on areas where it has a comparative advantage, such as finance, agriculture, tourism and of course mining (Australia’s three largest exports are now iron ore, coal and natural gas). Manufacturing is no longer part of this mix, making up 9% of the economy but receiving 70% of the industry assistance. 


These five suggestions may weather Australia from future economic crises even if it is too late to avoid a possible imminent recession. Indeed it may take an economic crisis for Australia’s political leaders to wake up and get serious about reform. No doubt many would see these five suggestions as ‘controversial’ or ‘radical’ and opposition from Labor and a hostile Senate would almost certainly ensure their failure. But our nation’s economy is too important for populism and Labor should support economic reform in much the same way as Howard adopted a bi-partisan approach to floating the dollar, financial sector reform and tariff reductions under Hawke and Keating.


The business community should also grow a spine and not leave the task of selling reform solely to the Coalition. Scott Morrison and Joe Hockey were completely correct in labeling many in the business community as “armchair critics”.


So brace yourself, without either a much more assertive Coalition and business community or an economic crisis that leads to bipartisan action, Australia could indeed have many decades of economic despair to come.



Christopher Rath is a consultant in the mining industry. He previously worked as an adviser to state and federal Liberal Parliamentarians and has degrees in economics and management.  

Hunting knives seized, scores of Christians murdered, citizenship doled out like candy: the stakes couldn’t be higher

RachelRachel Bailes dissects the Greens’ response to Abbott’s pledge to end the ‘benefit of the doubt’ in the light of recent escalations of Islamist extremism at home and abroad.

As the Australian Coptic Movement prepares to rally in Sydney this weekend after the Mediterranean ocean ran with the blood of 21 Coptic Christians, the stakes for action on terrorism couldn’t be higher.

Meanwhile, a week after the arrests of Fairfield residents Omar al-Katobi and Mohammad Kiad on the verge of another lone-wolf style terrorist attack, Leader of the Greens Christine Milne has branded Prime Minister Tony Abbott ‘desperate’ and ‘divisive’ for his claim that Australians have been ‘taken for mugs’ by terrorists.

Ms Milne has called for Prime Minister Abbott to turn from his clamping-down rhetoric of ending the ‘benefit of the doubt’ within the immigration and welfare system and urged him instead to support her recently introduced ‘Social Cohesion Bill’ to quell the threat of terrorism.

If passed, the Social Cohesion Bill to which Milne refers would establish a taxpayer-funded Centre for Social Cohesion, complete with Director, Deputy-Director and research staff, whose role it would be to “foster dialogue”, “distribute emerging knowledge” and “coordinate programs”. The Bill pledges to bring together “government, law enforcement agencies, academics, researchers, and former extremists” in a national, centralised body to build “resilient communities”.

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