Subsidies

Hack asks the right questions on agricultural handouts

I have been pretty critical of Triple J in the past but today on Hack, Tom Tilley really turned the screws onto Barnaby Joyce, Federal Agricultural Minister, about the recent announcement of handouts to farmers (listen from the 24min mark):

Tilley points out the truth – that farming isn’t anything special, that they aren’t the only business with long term time frames for revenue and that they need to plan more for the future. The paucity of Joyce’s arguments is exposed when Tilley pointed out the economic truth about farming, that maybe the future is in getting bigger – he falls back to a political argument (he can’t sell it), a cultural argument (that small family farms are inherently good) and a distraction (that the ABC is exposed to the same argument, which is true). In the end, Joyce has no credible economic argument for these handouts – it is a political fix for a favoured group of constituents.

Tilley would do well to interview LDP Senator-elect for NSW, David Leyonhjelm, who slays the arguments for agricultural subsidies.

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Letter to the Editor: Govt mismanagement kills education

My letter to the editor to the Busslton-Dunsborough Mail:

Adele Farina MLC is right to complain about the hike in fees at SWIT (“Cost kills learning, says MLC” 29/1) but she misidentifies the solution. If Ms Farina really wanted to make the cost of training easier to reach for poorer people, ending subsidies would be her primary goal, not extending them further. While politicians love the talk of subsidies, the economic reality behind subsidies is less loved by politicians and even less talked about. Subsidies artificially increase demand (because it is cheaper), while simultaneously obscuring price signals that would otherwise attract investment and innovation. Combined with government control and central planning in the sector, you have a guaranteed formula for lower quality, stagnation and endless price increases.

Despite this obvious reality, politicians are loathe to allow the end of subsidies because are unwilling face any political fallout from the inevitable adjustment in prices. But while the end of subsidies might resort in some sharp short-term hikes in some courses, genuine competition will encourage investment and innovation in courses of high demand, driving down prices.

If people are to really receive the training they need to get ahead in life, government control and subsidies of education needs to end and we need to let markets do their work – driving down prices through innovation.

Lee Herridge
Yalyalup