My speech at Sydney University's Great Hall

I’m too old to suffer from impostor syndrome, but the thought has occurred to me that, had the University of Sydney’s officials taken a look at my academic transcript at Newcastle University, and seen how much trouble I had persuading that uni to give me a pass degree, we’d be holding this gathering down at Ralph’s cafe in the women’s gym.

The truth is that I had a lot of trouble passing a subject called economics, which I couldn’t make any sense of – perhaps because it didn’t interest me greatly. I failed a subject called international economics but, since it was the last subject I had to go, my lecturer was prevailed upon to give me a conceded pass.

So I have to tell you I’m a bit bemused by a university, of all institutions, making such a fuss about me and my job. I’ve spent much of my time urging the people I’ve helped to hire and train as economic journalists not to write like an academic. Keep it simple, I’d say. Don’t try to impress people with big words. Try to be understood, not to mystify. Now, obviously, that’s not the right advice to be giving an academic.

In my job, I’m paid to have an opinion on everything. And I’m paid to give free advice to everyone, from the prime minister down. And I’m now so much older than my boss I’m allowed to give him – and sometimes her – free advice. She or he, of course, is paid to pretend she greatly values that advice.

So while I’m here in this hallowed hall of learning, let me give the academics two bits of free advice. Some years ago, the federal government’s chief scientist paid good money to get one of those now-infamous four firms of accountants-turned-consultants to fudge up a dollar figure for the value of science to the economy. One of my proteges, filling in for me while I was on holidays, Gareth Hutchens, these days a columnist at the ABC, wrote a piece saying the chief scientist had to be kidding. Anyone who wasn’t smart enough to know that our material prosperity was built on technological advance, and that technological advance rested on a bed of pure science, wasn’t someone who’d be impressed by any magic number. Gareth was right, of course.

The point is, academics should never yield to intimidation by those who can see no further than immediate income. Academics must never be ashamed to proclaim their belief in the value of knowledge for its own sake. Knowledge doesn’t have to have a monetary value to be of value. Humans are an inquisitive species. We’d like to know whether the universe is expanding for no better reason than that we’d like to know. And thanks to the material prosperity science has brought us, we can afford to pay some scientist to find out for us.

My second bit of free advice is that universities should never be ashamed of their preoccupation with theory rather than practice. Every profession needs its theory. We develop theories to help us make some order, some meaning, out of the seeming chaos we see around us.

If you look at what I write about the economy, I think you’ll find I write about economic theory a lot more than other economic commentators do. Why? Because I think theory is important. Academic economists will complain that I’m often very critical of economic theory. Why? Because I think theory is important. The great sin in academic economics is to stop seeking the truth because you think you’ve already found it.

I want to talk now about the little-discussed paradox of the commercial news media. On one hand, most news outlets are in the business of selling their news to make a profit, just like all businesses. On the other, the commercial news media play a vital role in our democracy, informing citizens about the actions of governments and holding governments to account. We rarely think about this paradox, but the truth is, it was ever thus. We had newspapers before we had democracy.

Today we talk about public-interest journalism, but I like to think of it as the commercial media’s “higher purpose”. Making enough profit to keep our shareholders happy is the obvious part, but we must keep our eyes focused on the more important part, our self-appointed duty to ensure our readers are kept fully informed about all the things our governments are doing – and not doing.

There’s an old saying in journalism: news is anything somebody somewhere doesn’t want you to know about. Governments have a lot of things they do want the public to know about what they’re doing. And their spin doctors are always trying to induce the news media to help them get the good news out to the voters. Governments have a near monopoly on news about their own doings. When they want something known, they can just put out a press release. Or, maybe a better idea would be for me to leak it to you exclusively – provided you give it a lot of prominence, and provided you run it uncritically. Why would the media agree to such a restriction on their freedom to fully inform their readers? Because if I play along today, you might give me another leak tomorrow. And that will make me look a lot more successful than my competitors.

Small problem: what about the reader? Is this the way to keep them fully informed and ensure they’re never misinformed? What if I’m so busy trying to be the best at extracting from the government news the government wants our readers to know about that I neglect my duty to dig out all the news the government doesn’t want our readers to know about?

Now, let me be clear. In saying this critical stuff, I don’t want you thinking I’m having a go at my own masthead. I’m giving my free advice to all mastheads. The mastheads formerly known as Fairfax aren’t perfect. No one knows that better than I do. But there are other outlets that have strayed a lot further from perfection than we have. Naturally, I won’t name those other Australian news outlets.

The digital revolution has hugely changed the news media. Once I’m retired, I’ll give in to the thought that it was all much better in my day. But while my day is still the present day, I can see the things that are better than they were. These days, the mastheads our envious competitors like to dismiss as “the Nine newspapers” devote more resources to investigative journalism than we ever have. Maybe because of the digital world we now inhabit, generating your own news makes more commercial sense. What I’d add is that we need to make all our ordinary news more investigative. More questioning of all the messages some interest group or another wants us to pass on to our readers.

Another thing that’s better than it used to be – one close to my heart – is much greater emphasis on explanatory journalism. The internet has hugely increased the blizzard of news that we must fight our way through each day. Our readers don’t need more news, they need more help figuring out what on earth it all means. This, of course, is a big part of what I’ve always seen as my role.

With the advent of the internet, social media, the greater scope for the spread of misinformation and disinformation, and now AI, it’s easy see all this as a huge threat to what’s now called the MSM – the mainstream media, of which the SMH is a prime example. We live in a media world where people are finding it harder and harder to know whose news to believe. Who to trust.

What I want to say is that, for the mainstream media, and the quality end of the MSM, all the extra doubt and uncertainty about who to believe is playing into our hands. We are still more trusted by our customers than other, less reputable sources of information. Provided we retain our readers’ trust, work to regain what trust we have lost, and make retaining the trust of our readers our highest priority, I think we’ll survive – maybe even prosper – in a world teeming with misinformation.

We must never knowingly mislead our readers. We must see quickly correcting any errors we’ve made inadvertently, not as an admission of failure, but as badge of honour. Proof that we can be trusted. It means no more “I’m not sure it’s true, but it’s a great yarn and the punters will love it” stories. No more dubious stories published to oblige a powerful source – usually a government – and keep it supplying us with exclusives. It means telling our readers what they need to know, not what they want to hear. It means being a good read the hard way, not the easy way.

I’m confident that, if we get the trust right, enough money will follow. I’m hoping to stay around doing my bit for a few years yet.

This is an edited version of the speech Ross Gittins gave at the event honouring his 50th anniversary at The Sydney Morning Herald. Held in the Great Hall of the University of Sydney and staged in partnership with the Faculty of Arts and Social Sciences.

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Speech in the Great Hall of Sydney University

I’m too old to suffer from impostor syndrome, but the thought has occurred to me that, had the University of Sydney’s officials taken a look at my academic transcript at Newcastle University, and seen how much trouble I had persuading that uni to give me a pass degree, we’d be holding this gathering down at Ralph’s cafe in the women’s gym.

The truth is that I had a lot of trouble passing a subject called economics, which I couldn’t make any sense of – perhaps because it didn’t interest me greatly. I failed a subject called international economics but, since it was the last subject I had to go, my lecturer was prevailed upon to give me a conceded pass.

So I have to tell you I’m a bit bemused by a university, of all institutions, making such a fuss about me and my job. I’ve spent much of my time urging the people I’ve helped to hire and train as economic journalists not to write like an academic. Keep it simple, I’d say. Don’t try to impress people with big words. Try to be understood, not to mystify. Now, obviously, that’s not the right advice to be giving an academic.

In my job, I’m paid to have an opinion on everything. And I’m paid to give free advice to everyone, from the prime minister down. And I’m now so much older than my boss I’m allowed to give him – and sometimes her – free advice. She or he, of course, is paid to pretend she greatly values that advice.

So while I’m here in this hallowed hall of learning, let me give the academics two bits of free advice. Some years ago, the federal government’s chief scientist paid good money to get one of those now-infamous four firms of accountants-turned-consultants to fudge up a dollar figure for the value of science to the economy. 

One of my proteges, filling in for me while I was on holidays, Gareth Hutchens, these days a columnist at the ABC, wrote a piece saying the chief scientist had to be kidding. Anyone who wasn’t smart enough to know that our material prosperity was built on technological advance, and that technological advance rested on a bed of pure science, wasn’t someone who’d be impressed by any magic number. Gareth was right, of course.

The point is, academics should never yield to intimidation by those who can see no further than immediate income. Academics must never be ashamed to proclaim their belief in the value of knowledge for its own sake. Knowledge doesn’t have to have a monetary value to be of value. Humans are an inquisitive species. We’d like to know whether the universe is expanding for no better reason than that we’d like to know. And thanks to the material prosperity science has brought us, we can afford to pay some scientist to find out for us.

My second bit of free advice is that universities should never be ashamed of their preoccupation with theory rather than practice. Every profession needs its theory. We develop theories to help us make some order, some meaning, out of the seeming chaos we see around us.

If you look at what I write about the economy, I think you’ll find I write about economic theory a lot more than other economic commentators do. Why? Because I think theory is important. Academic economists will complain that I’m often very critical of economic theory. Why? Because I think theory is important. The great sin in academic economics is to stop seeking the truth because you think you’ve already found it.

I want to talk now about the little-discussed paradox of the commercial news media. On one hand, most news outlets are in the business of selling their news to make a profit, just like all businesses. On the other, the commercial news media play a vital role in our democracy, informing citizens about the actions of governments and holding governments to account. We rarely think about this paradox, but the truth is, it was ever thus. We had newspapers before we had democracy.

Today we talk about public-interest journalism, but I like to think of it as the commercial media’s “higher purpose”. Making enough profit to keep our shareholders happy is the obvious part, but we must keep our eyes focused on the more important part, our self-appointed duty to ensure our readers are kept fully informed about all the things our governments are doing – and not doing

There’s an old saying in journalism: news is anything somebody somewhere doesn’t want you to know about. Governments have a lot of things they do want the public to know about what they’re doing. And their spin doctors are always trying to induce the news media to help them get the good news out to the voters

Governments have a near monopoly on news about their own doings. When they want something known, they can just put out a press release. Or, maybe a better idea would be for me to leak it to you exclusively – provided you give it a lot of prominence, and provided you run it uncritically. Why would the media agree to such a restriction on their freedom to fully inform their readers? Because if I play along today, you might give me another leak tomorrow. And that will make me look a lot more successful than my competitors.

Small problem: what about the reader? Is this the way to keep them fully informed and ensure they’re never misinformed? What if I’m so busy trying to be the best at extracting from the government news the government wants our readers to know about that I neglect my duty to dig out all the news the government doesn’t want our readers to know about?

Now, let me be clear. In saying this critical stuff, I don’t want you thinking I’m having a go at my own masthead. I’m giving my free advice to all mastheads. The mastheads formerly known as Fairfax aren’t perfect. No one knows that better than I do. But there are other outlets that have strayed a lot further from perfection than we have. Naturally, I won’t name those other Australian news outlets.

The digital revolution has hugely changed the news media. Once I’m retired, I’ll give in to the thought that it was all much better in my day. But while my day is still the present day, I can see the things that are better than they were.

These days, the mastheads our envious competitors like to dismiss as “the Nine newspapers” devote more resources to investigative journalism than we ever have. Maybe because of the digital world we now inhabit, generating your own news makes more commercial sense. What I’d add is that we need to make all our ordinary news more investigative. More questioning of all the messages some interest group or another wants us to pass on to our readers.

Another thing that’s better than it used to be – one close to my heart – is much greater emphasis on explanatory journalism. The internet has hugely increased the blizzard of news that we must fight our way through each day. Our readers don’t need more news, they need more help figuring out what on earth it all means. This, of course, is a big part of what I’ve always seen as my role.

With the advent of the internet, social media, the greater scope for the spread of misinformation and disinformation, and now AI, it’s easy see all this as a huge threat to what’s now called the MSM – the mainstream media, of which the SMH is a prime example. We live in a media world where people are finding it harder and harder to know whose news to believe. Who to trust.

What I want to say is that, for the mainstream media, and the quality end of the MSM, all the extra doubt and uncertainty about who to believe is playing into our hands. We are still more trusted by our customers than other, less reputable sources of information. Provided we retain our readers’ trust, work to regain what trust we have lost, and make retaining the trust of our readers our highest priority, I think we’ll survive – maybe even prosper – in a world teeming with misinformation.

We must never knowingly mislead our readers. We must see quickly correcting any errors we’ve made inadvertently, not as an admission of failure, but as badge of honour. Proof that we can be trusted. It means no more “I’m not sure it’s true, but it’s a great yarn and the punters will love it” stories. No more dubious stories published to oblige a powerful source – usually a government – and keep it supplying us with exclusives. It means telling our readers what they need to know, not what they want to hear. It means being a good read the hard way, not the easy way.

I’m confident that, if we get the trust right, enough money will follow. I’m hoping to stay around doing my bit for a few years yet.

This is an edited version of the speech Ross Gittins gave at the event honouring his 50th anniversary at The Sydney Morning Herald. Held in the Great Hall of the University of Sydney and staged in partnership with the Faculty of Arts and Social Sciences.

Read more >>

Fifty years ago, I found my dream job – and I’m not done yet

If a genie ever sprang from a bottle and offered me one wish, it would be to have a job as a columnist on the biggest and best newspaper in the country, The Sydney Morning Herald. If he offered me a second wish, it would be to have my columns also published in the country’s other great newspaper, The Age.

For the first seven years after I left school, I worked to achieve my dream of becoming a chartered accountant. Not any old accountant, a chartered accountant. Unfortunately, by the time I achieved that exalted qualification, I’d realised I didn’t enjoy being an accountant and wasn’t particularly good at it.

I had a premature midlife crisis at the age of 24 and, after some casting around, on February 7, 1974, found myself as an over-aged cadet journalist on the Herald.

It took me only a few weeks to realise I’d stumbled into the only job I’d ever want. One I was good at and found greatly interesting and rewarding. I’d dropped a lot of money to become a mere cadet, but that didn’t matter. I was the square peg that had fallen into a square hole.

I wasn’t much good as a reporter, but the old boys who ran the Herald had the wit to steer me towards the feature and column writing I was good at. After three years, and having written many unsigned editorials, I got my first column. A year later, I was made economics editor, and by 1983, I had the three columns a week that I’m still writing, on the same day and in the same section of the Herald, 40 years later.

That’s all you need to know to see why I’ve stayed in my job at the Herald for 50 years, ignoring the usual retirement age when it flashed past 11 years ago. I’ve never been able to think of another paper I’d prefer to work for or another job I’d prefer to have.

Editor of the Herald? I have a lot more fun than he or she does, with much less responsibility.

Doing it my way

Perhaps because I was older and starting a second career, or perhaps because my upbringing in that strange uniformed Protestant sect, the Salvos, had made me a bit of a loner, I decided to join Frank Sinatra and do it my way.

I wouldn’t try to impress my peers, or even the editor, but would write a column that better met what I thought the readers were looking for. Later, I realised this could be my moral compass: Serve the Reader.

Because nature had intended me to be a teacher, I decided that, while all the others were off chasing scoops, I’d concentrate on explaining to the reader what on earth it all meant. I’d try to figure out how the economy worked, and when I’d got something figured, I’d tell all.

Because economics has so much potential to be boring, I’d pull every trick I could to make it simple and readable. I’d write in the first person, in an easy, conversational style. I’d even put myself and my doings in the story.

Because the world gets ever-more complex, I’d try to ensure the young people we hired to write about the economy had some formal education in the topic. Then I’d teach ’em the tricks of the trade. I’ve had the privilege to mentor a couple of dozen of the Herald’s ablest recruits.

An unrecognisable economy

Over 50 years, I’ve written well over 5000 columns, and worked for 16 editors – one of whom lasted for about 24 hours. I’ve covered 50 federal budgets, 19 federal elections, and seen 11 prime ministers and 16 treasurers come and go, starting with Gough Whitlam and Frank Crean, Simon’s dad.

In that time, I’ve seen huge changes in the economy, in politics and economic policy, not to mention – which I will – changes at the Herald. One of the latter is that, these days, newspapers prefer to refer to themselves as “mastheads”, in recognition that far more of our readers do so on our website than on dead trees.

I want to recall some of those changes, so let’s start with the shape of the economy. If a Rip Van Winkle fell asleep in 1974 and woke in 2024, I doubt he’d recognise our economy.

Every economy is changing continuously, partly because our customs and practices change and partly because government economic policies change. But the greatest source of change is advances in technology, and the past 50 years have seen the spread of computers, a revolution in telecommunications and the birth of the internet.

When I was first in the workforce, everyone was paid weekly, in notes and coins stuffed into little brown envelopes. Any money you didn’t want to spend immediately had to be taken to your particular branch of your bank, with your deposit recorded by hand in a little passbook.

City workers would go out in their lunch hours to pay their utility bills in cash at the company’s office. Bills came in the mail, and you’d write a cheque and post it back. In 1974, the banks combined to introduce the first credit card, Bankcard.

You had to beg your bank to lend you less than you really needed to buy a home. Until the Whitlam government’s Trade Practices Act of 1974, it was legal for businesses to collude in setting the prices they charged, or agree to carve up the territory between them, limiting competition.

The prices of bread, eggs and petrol were set by the state government. You bought your electricity from a government monopoly. Annual inflation of consumer prices averaged 10 per cent in the 1970s and 8 per cent in the ’80s.

People stay a lot longer in the education system than they used to, and emerge with higher qualifications. This is related to the much bigger role that women now play in the paid workforce. More girls are staying longer in education, doing better than boys academically, and getting a growing share of the good jobs.

Over the past 50 years, the size of Australia’s workforce has far more than doubled, to well over 14 million, while the industry structure of the economy has changed greatly. In round figures, agriculture’s share of total employment has fallen from 7 per cent to 2 per cent. Despite successive resource booms, mining’s share has risen only from 1 per cent to 2 per cent.

Manufacturing’s share has fallen markedly from 22 per cent to 6 per cent. With construction’s share unchanged at about 9 per cent, that means the services sector’s share has jumped from 61 per cent to 81 per cent – something that has favoured the increased employment of women.

The huge decline in the proportion of workers needed to grow, dig up or manufacture goods is explained by continuous advance in labour-saving technology. But where have the many additional jobs in the services sector come from? They’re mainly in health and aged care, education, and professional, scientific and technical services.

My career at the Herald has seen many major changes in government policies, though most of these presumed “reforms” occurred long ago under the Hawke and Keating governments. First came the decision in December 1983 to allow the Australian dollar to float, then the deregulation of the banks and, later, many other industries.

The removal of the high import duties protecting our manufacturing industries was begun under Bob Hawke, but completed under John Howard. But this does less to explain the declining employment in manufacturing than many imagine. Automation and the rise of China should get more of the blame – or, for consumers, the credit.

The privatisation of government-owned businesses began under Hawke-Keating, but continued under Howard and state governments of both colours. The outsourcing of government-provided services, a much more debatable “reform”, continues to this day.

For many of my early years as a commentator, our centralised wage-fixing system delivered pay rises of the same percentage and on the same day to virtually every worker in the country. People like me wrote unceasingly about the evils of excessive wage rises.

At the time, I thought Keating’s move to wage bargaining at the enterprise level a big improvement. Now, having seen the way employers have used the less regulated system to chisel workers’ wages, I’m less sure about that.

Do you realise that in 1974, all capital gains and employee fringe benefits were untaxed? Keating’s reforms in 1985 changed that. And Howard’s introduction of the goods and services tax in 2000 gave us the same sensible indirect-tax system most other rich countries had long had.

We had spent a quarter of a century trembling at the thought of such a tax since it was first proposed in the Asprey report of 1975. Today, it’s no big deal.

Labor gets the credit for introducing our first universal healthcare system, and compulsory employee superannuation which, more than 30 years later, ensures most couples will live more comfortably in retirement than they would under just the age pension.

Palace revolutions and digital disruption

But now, a remembrance of a topic no other people still working on the Herald can say they lived through at close quarters: the many changes at this august organ.

I’ve hung around long enough to see all the palace revolutions that have progressively turned this 193-year-old paper from being owned by the two branches of the Fairfax family – each led by cousins, Sir Warwick and Sir Vincent – to now making up about a third of the Nine Entertainment media conglomerate.

I wasn’t here long before, at the urging of management, the ageing Sir Warwick was replaced as company chairman by his elder son, James. James was far less interventionist, allowing the editors of the various papers to make their own decisions and leading, I believe, to Fairfax’s Golden Age.

But the retirement of a powerful general manager soon saw the Herald’s new editor-in-chief, David Bowman – who’d done most to advance my career – deposed and replaced by the former managing editor of The Australian Financial Review and The National Times, Vic Carroll.

Urged on by the new chief editorial executive, Max Suich, Carroll set about belatedly dragging the Herald into the modern age. I hate to admit it, but the great transformation of Australia’s broadsheet newspapers was spurred by the advent in 1964 of Rupert Murdoch’s startlingly clean, good-looking and energetic national broadsheet, The Australian, when I was still a schoolboy. Under its great reforming editor Graham Perkin, The Age was the first quality paper to take up the challenge.

When I joined in 1974, and until Carroll began his changes in 1980, the Herald’s failure to move with the times was reflected in its declining circulation. It saw its mission as ensuring news was reported the way it always had been.

Its language was very formal and its reporting largely devoid of explanation, context, interpretation or emotion. I concluded that the chief subeditor saw his job as taking a story and draining all the colour out of it, to make it fit for publication.

Most news stories were anonymous, being “by a staff correspondent”. We were committed to being “a paper of record”, which meant keeping stories short so as to cram in as many as possible. This produced a paper that was black and white in both senses and visually messy. It simply failed to match the competition coming from radio and, particularly, television.

Carroll changed all that. While he was at it, he reformed me – more with kicks than pats on the head. He freed me from my self-imposed duty to ensure my economics fitted with the proprietors’ commitment to endorsing conservative governments before elections.

Since Carroll, my opinion really is my opinion. He was, without doubt, the best of all the editors I’ve worked for.

Not many years later, we were hit by ructions within the Fairfaxes, as Sir Warwick’s other son by a different marriage, Young Warwick, sought to avenge his father and please his mother by borrowing heavily to buy up all the company’s shares, paying far more than they were worth.

His new managers closed our afternoon paper, The Sun, and sold off whatever assets they could, but it was no use and by 1991 the company was in receivership.

The business continued to trade as normal, and remained profitable, but not sufficiently profitable to cover all the money Young Warwick had borrowed to buy it.

Kerry Packer’s plans to buy the business failed to eventuate – thanks to the machinations of some financier called Malcolm Turnbull – and the Canadian media baron Conrad Black ended up with a minority but controlling interest.

Keating wouldn’t allow a foreigner to increase his interest in the company, so Black eventually sold out. Like so many Australian companies, Fairfax’s ownership ended up being shared between a host of superannuation funds and other “institutional investors”, making it a plaything of the stock exchange.

All this, however, was nothing compared with the challenge from the digital revolution. At first, the move from typewriters to screens, and from “hot metal” to digital offset printing was just a nice money-saver. We were able to greatly reduce the number of printers we employed, move our printing plant to the outer suburbs and escape all the “restrictive work practices” – lurks and perks – of the militant printers’ union.

But then we – like every newspaper – discovered that the rise of the internet had taken away most of our advertising revenue. Before the revolution, every big city had a broadsheet newspaper with a virtual monopoly over classified advertising. A monopoly it exploited to the full.

This “river of gold” kept Fairfax profitable, even though most of the money was used to employ more journalists and compete for the best journalists by paying them well.

But when it became obvious that people wanting to sell houses or cars, or fill job vacancies, could do much better by advertising on the net, the river of gold ran dry.

From the beginning, newspapers’ business plan had been strange but simple: use your news to gather an audience, then charge advertisers for access to your audience. To maximise the audience, keep the paper’s cover price nominal.

At first, we – and other newspapers around the world – just tried to move the same formula online. We put all our editorial content online and freely available, hoping to attract enough digital advertising. We tried using “clickbait” to get as many people momentarily clicking on our site as we could.

It didn’t work. Eventually, we realised that almost all the digital advertising revenue was being scooped up by Google and Facebook. Following the lead of The New York Times, we moved to putting much of our online content behind a paywall and charging readers a subscription for access to it.

Since the internet remains replete with free news, it’s a business model that works only if your news is different and better than the free stuff.

I was never confident a company as old as Fairfax could bring itself to make the radical changes necessary to survive in the strange new world of digital news. Without the classifieds’ river of gold, we had to lose a lot of journalists, cut a lot of costs and change a lot of practices.

I give much credit to former Fairfax chief executive Greg Hywood – a former editor-in-chief of the Herald, who I’ve known since we worked in adjoining offices in the Canberra press gallery in 1975 – for ensuring the survival of the Herald and other great mastheads.

Some other chief executive might have secured the company’s survival by ditching all those terrible old newspapers, but Fairfax without its mastheads was of no attraction to a life-long journo like Hywood.

Ably assisted by Antony Catalano, who belatedly established Domain to capture a large chunk of the online property classifieds market, Chris Janz, who devised the mastheads’ rescue plan, and Michael Stevens, whose one goal is to prolong the life of our print editions (and is the man to credit – or blame – for attracting all those Harvey Norman ads), Hywood secured the future of the Fairfax mastheads.

The digital subscription model is working – these days, the meaning of the word “subs” has changed from subeditors to subscriptions – and as we tighten our paywall, it works even better.

At one level, our valuable sources of non-news revenue, Domain, and our joint venture with Nine in the Stan streaming video business, helped ensure the company stayed profitable.

At another level, however, Hywood knew that, without a family with majority control, we were vulnerable to some sharemarket raider keen to buy our side assets and happy to dump our reason for being.

His last act was to find another, bigger company to which he could marry us off, and so protect us from hostile takeover. It needed to be another media company, one that was a good fit with the assets we brought to the marriage, and one that understood the need to preserve the independence and reputation of the classy dame it was acquiring.

Hywood chose well. It’s been a happy, respectful marriage. Our many media competitors have banished the word Fairfax and delight in demeaning us as “the Nine newspapers”.

Those more susceptible to conspiracy theories see us as controlled by daily talking points issued by the chairman of Nine Entertainment, Peter Costello.

Nothing of the sort. I guess I’ll have to retire some day, but I don’t expect unhappiness with our owners to be any part of my reason for hanging up my boots.

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How budget spin doctors manipulate our first impressions

These days, federal budgets are just as much marketing and media management exercises as they are financial and economic documents. That’s because the spin doctors’ role has become central to the way Canberra works. This is just as true under Labor as the Coalition. Media management is a characteristic of government by the two-party duopoly.

Budgets are actually the management plan for controling the government’s spending and tax-raising over the coming financial year. Because you can’t do a budget without first making guesses about what will be happening in the economy at the time, the budget documents contain detailed economic forecasts and commentary about what it has supposed will happen.

These forecasts are taken very seriously on budget night, but rarely referred to again. That’s because this era of dominant “monetary policy” (manipulation of interest rates), conducted by an independent central bank, means it’s the Reserve Bank’s forecasts that matter.

We’ve had those already, on Friday. The financial markets care more about the Reserve’s opinions than the government’s because they’re always trying to guess what the central bank will do to interest rates. What’s more, the RBA revises its forecasts quarterly, so the budget forecasts soon become outdated.

All this means the government’s forecasts can’t be very different from the Reserve’s. Differ by more than half a percentage point, and you get headlines about a split between Treasury and the central bank. Nothing the econocrats hate more (even though there’s unceasing rivalry between the two outfits).

A separate question is what effect the budget, and particularly the new measures it contains, will have on the economy: on gross domestic product, inflation and unemployment. Now that the macroeconomic fashion (aka “best practice”) dictates that the management of demand be left to the central bank – except in emergencies, such as the pandemic – the budget papers will contain little discussion of this.

But the inescapable fact remains that, the federal budget being so big relative to the economy, everything it does affects economic growth. That’s true whether the economic effects were intended or are the unintended consequence of politically driven decisions. All budget measures are political but, equally, all have economic consequences.

At this time of year, many people say they don’t know why the government is bothering to hold a budget when it has already announced the changes it’s making. Well, not quite.

What’s true is that, these days, budgets – and the days leading up to them – are highly stage-managed by the spin doctors. These people are based in the PMO – prime minister’s office – with extension into every minister’s office, via the minister’s press secretary. All paid for by the taxpayer, naturally.

The spin doctors’ job is to use the “mainstream media” to convey to voters an unduly favourable view of the government and the things it’s doing. They do this by exploiting the foibles of journalists and their editors.

Hence, the common trick of releasing potentially embarrassing information late on a Friday, when it’s less likely to make the bulletin. The hope is that, by Monday, the under-reported story is passed over as “old”.

The spinners have the great advantage of a near monopoly over news about what the government is doing. Much of this news is put into press releases, but much is held for selective release to journalists and outlets that are in favour with the government. Write a piece like this one and don’t expect to be popular.

In the olden days, many budget “leaks” really were leaks, the product of journalists talking to bureaucrats and putting two and one together to make four. These days, bureaucrats are forbidden to speak to journos, so most budget leaks have come from the spin doctors, intended to soften us up for what’s to come.

Sometimes, something – say, that the government has decided to increase the JobKeeper payment only for the over-55s – is leaked to just one or two news outlets to “run it up the flagpole and see who salutes”. If it goes over well enough, it will happen. If there’s a big adverse reaction it may never be heard of again.

Any bad news is usually officially announced ahead of the budget, so it won’t spoil the budget’s reception on the night. Lots of small but nice decisions will be announced early, so they don’t get overlooked on the night.

But, particularly if there has been a big pre-announced unpopular measure, the spinners will save some nice, un-foreshadowed hip-pocket measure for unveiling on the night. This, being the only major budget measure that’s “new”, will dominate the media’s reporting. I call it the cherry on top.

As a former treasurer, John Kerin, demonstrated in 1991 – much to the disapproval of Paul Keating - there is no genuine need for reporters to be locked up and allowed to see the budget papers well before the treasurer delivers his speech at 7.30pm, immediately after the ABC evening news.

But the budget “lockup” persists to this day because of its great media-management advantages. It’s of much benefit to have the treasurer’s made-for-telly (that is, full of spin) budget speech broadcast in prime time, rather than after lunch. (The smaller disadvantage is that the ABC gives the leader of the opposition – not the shadow treasurer – right of reply, at the same time on Thursday night.)

The other advantage of a lockup is that letting journalists out so late in the day gives them little time to ask independent experts what they thought of the budget. Rather, they’ve spent six hours locked up with Treasury heavies. (I remember one saying to me, long ago: “Not much there to criticise, eh?” )

This media manipulation usually ensures the media’s first impressions are more favourable to the government than they should be, getting the budget off to a good start with the voters. Only on day two do the interest groups finish combing through the fine print and finding the carefully hidden nasties.

All pretty grubby, but true.

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This isn't America, so please stop acting like a Yank

If there’s one thing that annoyed me about 2021, it’s the way people have been aping all things American. Our financial markets copped a bad dose of it, the media got carried away, we looked to the Yanks – the smart ones and the crazies - to know what we should think and do about the coronavirus, and many on the Right of politics took their lead from Trump’s Republicans.

One on one, I like the Americans I know. But put them together as a nation, and they seem to have lost their way. We’ve long imagined the US to be the wellspring of everything new and better, but these days it seems to be racing headlong towards dystopia.

Who’d want to be an American? Who’d want to live there?

There’s nothing new, of course, about American cultural imperialism. You’ve long been able to buy a Coke in almost any country. Or, these days, a Big Mac or KFC.

But globalisation has hugely increased America’s influence in the world. Wall Street dominates the world’s now highly integrated financial markets. What’s less well appreciated is the way advances in telecommunications and information processing have globalised the news media. Call it the internet.

These days, news of a major occurrence in any part of the world spreads almost in real time. One thing this means is that you can read the latest from The Age or The Sydney Morning Herald in almost any country.

But another thing is that we get saturation coverage of all things America. These days, America’s greatest export is “intellectual property” – patents and copyright covering machines, medicines and software, but also books, films, TV shows, videos and recorded music, and news and commentary from all of America’s great “mastheads”.

Of course, the little sister syndrome applies. Just as Kiwis know more about us than we know about them, so we and people in every other country know more about the Americans than they know about us. Just ask John Fraser, Malcolm Trumble and “that fella from Down Under”.

And remember this: when you’re as big and as rich as America, you’re the best in the world at most things – but also the worst in the world. These guys win the Nobel Prize in economics almost every year but, no doubt, have the biggest and best Flat Earth Society. They have loads of the super-smart, but even more of the really dumb.

Back to this year’s Yankophile annoyances, as soon as Wall Street decided America had an inflation problem and would soon be putting up interest rates, our local geniuses decided we’d soon be doing the same.

Small problem – we don’t have a problem with inflation. Our money market dealers know more about the US economy than they know about their own. To them, we’re just a smaller, carbon copy of America. If you’ve seen America, you’ve seen ’em all.

The Americans have a lot of people withdrawing from the workforce – leaving jobs and not looking for another – which they’re calling the Great Resignation. Wow. Great new story. So, some people in our media are seizing any example they can find to show we have our own Great Resignation.

Small problem. Ain’t true. Following the rebound from the first, nationwide lockdown in 2020, our “participation rate” – the proportion of the working-age population participating in the labour force by having a job or actively looking for one – hit a record high. With the rebound from this year’s lockdowns well under way, the rate’s almost back to the peak.

A lot of America’s problems arise from the “hyperpolarisation” of its politics. Its two political tribes have become more tribal, more us-versus-them, more you’re-for-us-or-against-us. The two have come to hate each other, are less willing to compromise for the greater good, and more willing to damage the nation rather than give the other side a win. More willing to throw aside long-held conventions; more winner-takes-all.

The people who see themselves as the world’s great beacon of democracy are realising they are in the process of destroying their democracy, brick by brick – fiddling with electoral boundaries and voting arrangements, and stacking the Supreme Court with social conservatives.

Donald Trump continues to claim the presidential election was rigged, and many Republicans are still supporting him.

It’s not nearly that bad in Australia, but there are some on the Right trying to learn from the Republicans’ authoritarian populism playbook.

When your Prime Minister starts wearing a baseball cap it’s not hard to guess where the idea came from. Or when the government wants to require people to show ID before they can vote, or starts stacking the Fair Work Commission with people from the employers’ side only. Enough.

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My love letter to The Sydney Morning Herald

It’s not something any hard-bitten journalist should admit, but I’m in love with The Sydney Morning Herald. Have been since, at the age of 26, I quit chartered accounting in disillusionment and stumbled into a cadetship at the Herald. I quickly realised I’d found the only place I wanted to be.

After four years they gave me the title of economics editor and sat me in an armchair with a licence to air my opinions about anything economic. It’s probably the only job I’m capable of doing with any competence. I’ve been so fulfilled by my work that, in 47 years, I’ve never wanted another job on the paper and, certainly, never wanted to move to another paper.

I suspect that by now I’m actually addicted to column-writing and to staying one of the Herald‘s roosters rather than one of its many feather-dusters. When my designated retirement date arrived, I had no desire to hang up my boots and luxuriate on the Herald’s more-than-generous super scheme. And, apart from Jessica Irvine, detected no desire by my colleagues to wave me off.

But I promise you (and Jessica) this: I’ll be out of here the moment I find I’ve worn out my welcome with our readers or my bosses, or realise I’m starting to lose my marbles. That I’m still keen to learn more about the economy and to work rather than play, I credit mainly to three gym sessions a week with my physio trainer, Martin Doyle. Exercise is good for mental as well as physical fitness.

I did feel I should at least stay on to do my bit in helping the Herald make the seemingly improbable “transition” – what a fashionable word that’s become – from “legacy asset” to successful digital “masthead”. Fortunately – and touch wood – we’ve passed that test now we’ve switched from chasing clicks to seeking digital subscriptions.

The thought of the Herald ceasing to be appalled me. As Australia’s oldest metropolitan daily newspaper, for 190 years it’s been one of the pillars on which Sydney rests. I get an enormous kick from being a tiny part of that grand history – for, I realise to my amazement, almost a quarter of its existence. It tickles me that, in the days when governors of NSW and Anglican archbishops of Sydney were recruited from England, so were editors of the Herald.

I’m proud of the many big names to have worked for the Herald at some point in their career. Banjo Paterson was our correspondent covering the Boer War. C.E.W. Bean was a Herald writer before becoming the federal government’s official war correspondent in World War I. Angus Maude, one of our last English-export editors, became Maggie Thatcher’s Paymaster General. I remember Thatcher’s daughter Carol working for a few months in our newsroom.

The playwright and speech writer Bob Ellis’ Herald career lasted 11 days. Columnist and poet Clive James lasted longer before he went off to England to make his name. I remember author Geraldine Brooks cutting a swathe through our feature writers’ room before she went off to New York to make her name. The others wrote one feature a week; she wrote one a day.

Together with her journalist husband George Johnston, Charmian Clift was a celebrity in 1960s Sydney before the word had been invented. This was explained by the years they’d spent living on a Greek island, where (we’ve learnt only recently) they were friendly with some Canadian singer named Leonard and his girlfriend Marianne. Charmian wrote a highly popular weekly column in the Herald, before ending her life.

William Stanley Jevons, a celebrated English neo-classical economist and polymath of the 19th century, discoverer of the Jevons paradox, spent part of his early career working at the Sydney Mint. He didn’t work for the Herald, but he did write letters to the editor. Hearing that made me proud to work where I did.

The Herald has changed greatly over the years I’ve been here and, leaving aside the many journalists we lost as we made our painful adjustment to the digital revolution, mainly for the better. Some years ago, someone got the idea of honouring our longest-serving journos by presenting them with a framed copy of our front page from the day they joined the paper. I was shocked by how dreary mine was. We were busy sticking to traditional standards as the world around us was changing without us noticing.

These days we cover a wider range of subjects – crime and lifestyle interests – all in a livelier, brighter, cleaner, more cleverly written way. I like to think I’ve been part of our move to a less formal, more relaxed and conversational writing style. The old-timers would be appalled to see us saying “kids” rather than “children”.

The Herald is far from perfect – no “first draft of history” ever is – but I value being at the more careful, intellectually respectable and, dare I say, gentlepersonly end of the news media. I feel privileged to write for such a well-educated audience.

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Who pays for Google and Facebook's free lunch?

There may be banks that are too big to be allowed to fail, but don’t fear that the behemoths of the digital revolution are too big to be regulated. It won’t be long before Google and Facebook cease to be laws unto themselves.

It’s the old story: the lawmakers always take a while to catch up with the innovators. But there are growing signs that governments around the developed world – particularly in Europe and Britain - are closing in on the digital giants.

And here in Australia, the Australian Competition and Consumer Commission is busy with the world’s most wide-ranging inquiry so far, which will report to the newly elected federal government in June. The commission’s boss, Rod Sims, gave a speech about it a few weeks ago, and another this week.

Sims says the commission’s purpose is “making markets work” by promoting competition and achieving well-informed consumers, so as to deliver good outcomes for consumers and the economy.

With this inquiry into the operations of “digital platforms”, he acknowledges that they have brought huge benefits to both our lives as individuals and our society more broadly.

“They are rightly regarded as impressive and successful, and very focused, commercial businesses. Google and Facebook are rapidly transforming the way consumers communicate, access news, and view advertising,” Sims says.

Each month, he says, about 19 million Australians use Google to search the internet, 17 million access Facebook, 17 million watch content on YouTube (owned by Google), and 11 million double tap on Instagram (owned by Facebook, along with WhatsApp).

The inquiry has satisfied itself that this huge size gives the two companies considerable “market power” – ability to influence the prices charged in certain markets.

“However,” Sims says, “being big is not a sin. Australian competition law does not prohibit a business from possessing substantial market power or using its efficiencies or skills to outperform its rivals.”

But the dominance of Google and Facebook does mean their behaviour should be scrutinised to see if it is harming competition or consumers.

To this end, the inquiry is focused on three potential areas of harm. First, the well-publicised issues of privacy and the collection and sale of users’ data.

Second, the digital platforms’ role in the advertising market, which is moving increasingly on line, where it’s estimated that 68¢ in every digital advertising dollar is going to Google (47¢) and Facebook (21¢).

And that’s not including classified advertising, the loss of which has been the biggest single blow to this august organ.

Sims says Google sells "search advertising", aimed at making an immediate sale, whereas Facebook sells "display advertising", aimed a making consumers aware of the product.

The pair sell ad space in their own right while also facilitating the advertising space sold by others, particularly the media companies. But the opacity of their algorithms and arrangements make it hard to know whether they favour their own ads over other people’s.

Advertisers say they don’t know what they’re paying for, where their ads are being displayed or to whom. This makes it harder for media companies to capture their share of advertising moving online.

Of course, higher costs for advertisers translate to higher prices for consumers.

Third is the digital platforms’ effect on the supply of news and journalism, the primary issue given to the inquiry.

Sims says newspapers and free-to-air radio and television are a classic example of a “two-sided market”. They serve consumers but, rather than charging them directly for the service as other businesses do, they cover their costs and profits by charging advertisers for access to their audience. (Newspaper subscriptions and cover prices accounted for only a fraction of their costs.)

Digital platforms aren’t just two-sided, they’re multi-sided. They, too, provide their services free, and charge advertisers, but also collect and sell to advertisers information about their users’ habits.

Google and Facebook select, curate, evaluate, rank, arrange and disseminate news stories. But they use stories created by others; they don’t create any news stories of their own. If they did, we could see this as no more than tough luck for the existing news media.

But as well as using the existing media’s stories to attract consumers and advertisers, about half the traffic on the Australian news media’s websites comes via Google and Facebook. So they have “a significant influence over what news and journalism Australians do and don’t see,” Sims says.

With the existing media having lost so much of its advertising revenue to the platforms, it’s not surprising they’ve had to get rid of at least a quarter of their journalists. There are a few new digital-only news outlets, but even they are having trouble making it pay.

Trouble is, news and journalism aren’t like most commercial products. They not only benefit the individual consumer, they benefit society as a whole. “Society clearly benefits from having citizens who are able to make well-informed economic, social and political decisions,” Sim says.

So news and journalism is a “public good” – if left to the profit-making private sector, not as much news and journalism will be supplied as is in the interests of society.

Public goods are usually paid for or subsidised by governments using taxpayers’ funds. If we want the benefits of Google and Facebook without losing the benefits of active, independent and challenging news media, taxpayers will have to help out.

Sims is canvassing several proposals before completing his final report. Since the former newspaper companies have realised they’ll never get much of a share of digital advertising, they’re now putting more hope in persuading their regular users to pay directly by buying subscriptions.

With the long-established attitude that everything on the internet should be free (or, at least, seem free), they’re finding it hard going.

That’s why I think Sims’ best suggestion is making personal subscriptions to the news media tax deductible, provided the outlet is bound by an acceptable code of conduct.

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Our bulldust detectors are on the blink

The world has always been full of bulldust, which is why everyone should come equipped with a bulldust detector.

Trouble is, we're living in a time of bulldust inflation. Some of the things we're being told are harder and harder to believe. But a lot of people's detectors seem to be on the blink.

Part of the reason for the step-up may be that there are so many people shouting that anyone else hoping to be heard has to start shouting too.

These thoughts are prompted by the runaway success of the claim that 40 per cent of jobs in Australia are likely to be automated in the next 10 to 15 years.

This is a fantastic claim in the original, dictionary sense: imaginative or fanciful; remote from reality.

And yet it seems many thousands of people have accepted its likelihood without question.

Similar predictions have been made about America, and are just as widely believed.

As I've written before, two economists, Jeff Borland and Michael Coelli, of Melbourne University, who didn't believe it – because they could find no evidence to support it – traced the origins of the claim and the flimsy assumptions on which it was based.

Which led them to ask the question I'm asking: why do people so readily believe propositions they should find hard to believe?

The authors found a quote from a leading American economist, Alan Blinder, of Princeton University, in his book, After the Music Stopped.

"The consequences of adverse economic events are typically exaggerated by the Armageddonists​ – a sensation-seeking herd of pundits, seers and journalists who make a living by predicting the worst.

"Prognostications of impending doom draw lots of attention, get you on TV, and sometimes even lead to best-selling books . . .

"But the Armageddonists are almost always wrong," Blinder concludes.

What? Journalists? Bad news?

Blinder is right in concluding we take a lot more notice of bad news than good. Borland and Coelli observe that "You are likely to sell a lot more books writing about the future of work if your title is 'The end of work' rather than 'Everything is the same'.

"If you are a not-for-profit organisation wanting to attract funds to support programs for the unemployed, it helps to be able to argue that the problems you are facing are on a different scale to what has been experienced before.

"Or if you are a consulting firm, suggesting that there are new problems that businesses need to address, might be seen as a way to attract extra clients.

"For politicians as well, it makes good sense to inflate the difficulty of the task faced in policy-making; or to be able to say that there are new problems that only you have identified and can solve," the authors say.

I'd add that if you're a think tank churning out earnest reports you hope will be noticed – if only so your generous funders see you making an impact – it's tempting to lay it on a bit thicker than you should.

By now, however, it's better known that there are evolutionary reasons why the human animal – maybe all animals – takes more interest in bad news than good news.

It's because we've evolved to be continually searching our environment for signs of threat to our wellbeing.

All of us are this way because we've descended from members of our species who were pretty nervy, cautious, suspicious types. We know that must be true because those of our species who weren't so cautious didn't survive long enough to have offspring.

In ancient days, the threats we were most conscious of were to life and limb – being eaten by a wild animal. These days we keep well away from wild animals, but there are still plenty of less spectacular, more psychological threats – real or imagined – to our wellbeing.

This instinctive concern for our own safety is no bad thing. It helps keep us safe. It's an example of the scientists' "precautionary principle" – the dire prediction may not come to pass, but better to be on the safe side and take out some insurance, so to speak.

By contrast, failing to take notice of good news is less likely to carry a cost.

Except that, like many good things, it can be overdone. If we're too jumpy, reacting to every little thing that comes along, we're unlikely to be terribly happy. And unremitting stress can take its toll on our health.

Which brings us to the media. Journalists didn't need evolutionary psychologists to tell them the customers find bad news more interesting. Bad news has always received a higher weighting in the assessment of "newsworthiness".

But I have a theory that the news media have responded to greater competition – not just between them but, more importantly, with the ever-increasing number of other ways of spending leisure time – by turning up the volume on bad news.

This can create a feedback loop. People wanting their messages to be broadcast by a media that's become ever-more obsessed by bad news respond by making those messages more terrible.

I'm not sure the media have done themselves a favour by making the news they're trying to sell more depressing, BTW.

But Borland and Coelli offer a further possible explanation of why we're inclined to believe that the technological change which has been reshaping the jobs market for two centuries without great conflagration is about to turn disastrous: the cognitive bias that causes people to feel "we live in special times" – also known as "this time is different".

"An absence of knowledge of history, the greater intensity of feeling about events which we experience first-hand, and perhaps a desire to attribute significance to the times in which we live, all contribute to this bias," they say.

If so, a lot of people will continue believing stuff they should doubt.

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How to unspin the budget

You can't look hard at the budget and its glitzy packaging without being reminded of Rob Sitch's highly educational TV show, Utopia.

My colleague Peter Martin has detected that the Turnbull government, as distinct from its Coalition predecessor, is less ideological and more evidence-based in its policy making. Its reforms to superannuation and Work for the Dole are prime examples.

That's good news. Even so, the more intelligent and articulate Malcolm Turnbull hasn't been able to withstand the pressure to use spin doctors to massage his messages to the electorate.

A better term for that dubious profession is "perception manipulators". They "operationalise" one of modern politicians' core beliefs: the perception is the reality.

The world of government is such a complicated place that reality is seen only in glimpses - which is hugely fortunate for our pollies because the reality is usually much harder and more costly to fix. It's a lot easier to manipulate the punters' perceptions of that reality.

Scott Morrison has been relentless in insisting that the budget is not just another budget, but an economic plan for jobs and growth.

Really? Name the budget that hasn't been a plan for jobs and growth.

So why the fuss this year? Because, to quote Morrison, "Australians have clearly said we must have an economic plan". How does he know what Australians have clearly said? Because that's what a few of them said to the Liberal Party's focus groups.

Feeding back to voters the sentiments they've expressed in your focus-group research is a standard perception manipulators' trick.

My guess is the government had a collection of end-of-term and pre-election bits and pieces it wanted to get up, but felt it should package them as an "overarching narrative" by saying they were a plan.

A plan about what? The usual: jobs and growth. Just about everything you do - raise the tax on cigarettes, stop wealthy people like me saving too much in tax-sheltered super accounts - can be portrayed as helping to promote jobs and growth. And they were.

Every non-plan plan needs to come in impressive packaging. The plain and earnest budget papers prepared by Treasury and Finance have long been accompanied by an overview booklet prepared by the spin doctors and disparagingly referred to by the econocrats as "the glossy".

This year there are four glossy documents, not one. And whereas the original majored in fancy graphs and tables, the extras add a lot of colour pics of good looking punters. It's fiscal bling.

Even the budget website has had the interior decorators in. You now have to click through a host of pretty fluff to find what you need.

Key to the success of perception manipulation is the use of magic words - words with strong positive or negative connotations, words that arouse emotions.

What words are guaranteed to frighten punters? Try "debt" and "deficit". What word gladdens the hearts of business people? "Growth".

And of the punters? "Jobs". They may not claim to know anything much about economics, but one thing they do know: there can never be enough jobs. Claim to be creating them and you're well on the way to the punters' tick.

This time the magic-word workhorse is "middle". Almost all Australians believe themselves to be middle class, on incomes near the middle. The higher your income, the less your ability to know where the middle is.

Morrison never actually said his tiny tax cut for people earning more than $80,000 a year was aimed at middle-income earners, all he said (correctly) was that the threshold had been set just above the average full-time wage.

That was enough to have innumerate political journalists - particularly at the ABC - saying it for him.

Trouble is, almost a third of wage-earners are part-time, not full-time. And plenty of taxpayers aren't employees. What's more, the relatively small number of people on super-high incomes means that the "average" or mean taxpayer's income is well above the middle (or median) taxpayer's income.

All this explains why the tax cut will go to only about the top quarter of taxpayers. That's the middle?

These days, no self-respecting perception manipulator fails to pull some "modelling" out of his bag of tricks. The results of the modelling are almost invariably misrepresented, being made to sound more significant than they are.

The spin meisters​ pray the media won't actually look at the modelling, and their prayers are almost always answered.

You can blame it all on ever-declining standards of political behaviour - which Turnbull's arrival has failed to arrest - or you can share the blame with a media that allows itself to be manipulated.

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Blame pollies and media for low political standards

As intensified personal ambition has heightened competition between the parties, unwritten rules that certain subjects were off limits to the political contest have gone by the board.

The obvious example is immigration, Asian immigration in particular, and boat people.

For many years, both sides knew there was an ugly, xenophobic side of the Australian character and tacitly agreed not to do or say anything that would give it air.

Howard was part of the breakdown of that taboo, but perhaps a bigger cause was the arrival of radio shock-jocks who didn't care what demons they unleashed.

As politics has become more of a job for life, it's also become more of a science and less of an art, as parties have made more use of sample-based polling and the techniques of marketing, including sophisticated advertising and focus groups.

There was a time when politicians relied on their own contact with voters and their gut feelings to assess how their policies and performance were being received by the electorate.

These days, their polling and reports of focus group discussions leave them in no doubt about what voters are thinking on all topics.

Or, at least, leave them imagining there's no doubt. In truth, even quantitative polling can be misunderstood and qualitative  research from focus groups is so subjective it's notorious for the bum steers it can give.

Even so, it does seem the parties get very similar messages from their rival efforts.

When focus groups were introduced, the rationale was they would inform the parties on how to frame the policies they wanted to pursue in ways that made them more attractive to voters.

But when you are – or imagine yourself to be – fully informed on what the punters like and dislike, the temptation to let those preferences determine what policies you pursue must be almost irresistible.

What this seemingly less amateur and more scientific approach to politicking overlooks is the often paradoxical quality of human nature.

Tell me only what I want to hear and I begin to wonder whether I can trust you.

What exactly do you believe? Keep it wishy-washy and I wonder if you really believe anything.

Only ever tell me nice stuff and I wonder whether you're tough enough for the job.

Become a slave of focus group approval and you risk forgetting that, though I don't like the sound of your plan, I could be persuaded it's what the country needs.

In the old days, a politician like Fraser won elections because he was seen as a stern father the times called for, not because he was popular.

Another drawback of the more calculated approach to politics is governments' ever-increasing superficiality.

If, as all politicians believe, "the perception is the reality", why not focus on perceptions and appearances and let reality slide?

If the trains aren't running on time or people are waiting too long for elective surgery, why not measure these things in ways that are more favourable?

Why not favour responses to problems that are flashy or emotionally gratifying rather than boring but effective?

Why waste scarce resources on repairs and maintenance or renovation when you can build something new and be seen cutting the ribbon and making great progress?

When the number of problems or worthy causes far exceeds the revenue you've got to spend, why concentrate on those where your spending is likely to be most effective rather than slinging an inadequate sum to as many as possible and so mollify as many potential critics as possible?

Why give much to people such as the unemployed or single mothers for whom there's so little public sympathy?

When the public takes an irrational set against outsiders such as boat people, why not gratify their prejudices rather than defend the needy?

When people convince themselves they're struggling to keep up with the cost of living but the objective indicators say wages are rising faster than prices, why try to set them straight when it's so much easier to pretend to be sympathetic?

In short, why not reinforce prejudices and misperceptions rather than educate?

Why not follow the voters rather than lead them?

"There go the people. I must follow them for I am their leader." When memories and political terms are so short and punters so ungrateful, why not be short-sighted and risk averse?

All those temptations are reinforced by the media. It's the media that are overly preoccupied with and impressed by the new rather than the old, by the flashy and the emotionally gratifying, by what's on the surface rather than what's underneath, by the immediate rather than the prospective, by the irrational rather than the rational, by the sympathy-rousing case study rather than the systemic failure.

Politics has changed over the years but so, too, have the media. And they've both changed in ways that are mutually supportive. The two institutions have become more symbiotic.

There's no doubt the speeding up of the 24-hour news cycle is essentially the product of the media's ever-shortening attention span as part of the intensifying competition between the media's ever-proliferating mediums, including the advent of 24-hour news radio and TV channels.

But a lot of the dumbing down has been initiated by the politicians and their party machines for their own reasons. There is plenty of blame to be shared between the two institutions.

This edited extract from Gittins by Ross Gittins, published by Allen & Unwin, is out this week.

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Job prospects not as gloomy as you may think

I can always tell when people are getting anxious about unemployment - including their own. It's when a journalist thinks they'll be increasing the sum of human knowledge by adding up the number of redundancies announced in recent weeks.

The latest list is Qantas 5000, Holden 2900 (by 2017), Toyota 2500 (by 2017), Forge Group 1470, Alcoa 980, Sensis 800, WA hospitals 250 and BHP Billiton Mitsubishi Alliance 230.

That's more than 14,000, we're told, and doesn't count the expected job loss among the makers of car parts, which "experts" put at between 25,000 and 50,000. To this you can add declining job opportunities among public servants - though no one seems to worry much about them.

There are two tricks in exercises such as this. The first is that although 14,000 or even 64,000 may seem huge numbers, they're not. Most people have no feel for just how big our economy is. Those figures have to be seen in the context of a total workforce of 11.5 million people, which grows by 170,000 in an average year, or more that 14,000 a month.

Most people have no idea how much turnover there is in the jobs market. Every month tens of thousands of people leave their jobs and a similar or bigger number take up new jobs. The economy is in a continuous state of flux.

The second trick is that the media only ever show us the tip of the iceberg. We're told about only a fraction of the things that happen. Only a fraction of them are announced to the media, so most of what happens goes unreported. And among all the things that are announced, the media select just a few of the juicier items to tell us about.

The items they select tend to be the bigger and badder ones. News that a new business has just hired 100 workers may get reported somewhere - probably in the local rag - but it won't get the trumpeting Qantas' announcement did.

So we're told about the big job losses but not the small losses and almost nothing about the job gains, big or small - even though we know from the official statistics that the gains usually outnumber the losses.

When people hear news reports about redundancies at this factory and that, many conclude we must be heading for recession. This time it ain't that simple. After a record 21 years since the severe recession of the early 1990s, we're overdue for another one and, with the economy quite weak at present, it wouldn't be impossible for us to slide into recession this year.

But the explanation for the planned job losses we're hearing so much about isn't a downturn in the economy, it's continuing change in the structure of the economy - the size of some industries relative to others.

Much of the pressure for structural change is coming from advances in technology, particularly the digital revolution. It's this that's turning the newspaper industry inside out - no one seems to shed many tears over us - and is in the early stages of cutting a swath through retailing.

In Qantas' case, it's still making the painful adjustment to the deregulation of airlines initiated by Jimmy Carter in the 1970s, combined with management incompetence and union intransigence.

But the biggest source of structural change is the resources boom and the likely permanent rise in the dollar it has brought about. People tell you it's all behind us, but when the mining industry's share of the economy doubles to 10 per cent in the space of a decade, the adjustment this imposes on the rest of the economy is profound and protracted.

Clearly, these forces for structural change are beyond the control of any federal government, Labor or Coalition. The truth so many people find so hard to accept is that there isn't a lot we can do about them except ride them out.

In its impotence, the Abbott government is claiming its plans to remove the mining and carbon taxes will be a great help. Only the one-eyed would believe that. Labor has sunk to the depths of attacking the government for its failure to protect Australian jobs and demands to see its "jobs plan". What's Labor's jobs plan? Maintain the handouts to crumbling industries.

It's seeking to exploit the fears of people who are uncertain about where it's all going to end. Well, last week Dr David Gruen, of Treasury, published projections of the various industries' shares of total employment in 16 years' time, 2030.

I must warn you these figures come with zero guarantee. Just because you're smart enough to turn the handle of an incomprehensible econometric model doesn't mean you know any more about what the future holds than the rest of us.

Surprisingly, the projections suggest manufacturing's share of total employment will decline by only a further 1 percentage point. Similar declines are projected in transport and warehousing, construction and (thankfully) financial services. The biggest relative employment decline would be in wholesale and retail trade.

Utilities, media and telecommunications, and, surprisingly, mining are projected to experience minor declines in their shares of total employment. Agriculture's share may rise by a percentage point, while that of education and health may rise by more than 1.5 points, and professional and administrative services by almost 3 percentage points.

We won't all be dead.

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Why voters seen the economy as in bad shape

Despite last week's excitement, Julia Gillard's early announcement of the election date is unlikely to change much. It's certainly unlikely to change many voters' perceptions on a key election issue: her ability as an economic manager.

It's long been clear from polling that the electorate doesn't regard the government as good at managing the economy.

Why this should be so is a puzzle. As Gillard rightly claimed last week: "As the global economy still splutters, unlike the rest of the world we have managed our economy so we have low inflation, low interest rates, low unemployment, solid growth, strong public finances and a triple-A rating with a stable outlook from all three of the major ratings agencies."

I've said elsewhere that part of the reason for this yawning gap between perception and reality is that many people's perception of how well the economy's being managed proceeds not from independent observation but from their political alignment. Once I know who I'm voting for I then know whether or not the economy's travelling well.

But there's another part of the explanation: the public's inability to distinguish between cyclical and structural factors. Most of the bad news we heard last year was structural in nature, meaning it changed the shape of the economy rather than its overall size, adversely affecting some parts but favourably affecting others and having little effect on most.

But such analysis is too subtle for most punters. To them, all news is cyclical: good news means the economy's on the up and up; bad news means it's going down and downer.

Add the media's inevitable predilection for trumpeting bad news, underplaying good news and totally ignoring anything that doesn't change, and structural change can't help but be perceived as an economy in trouble.

The resources boom is the classic case of structural change. It's in the process of giving us a bigger mining sector and bigger non-tradeable services sector, but a relatively smaller manufacturing sector and internationally tradeable services sector.

The mechanism that brings much of this about is the high dollar. It harms all export- and import-competing industries, but benefits everyone who buys imports (which is all of us). It marginally benefits three-quarters of our industries, which are non-tradeable (they neither export nor compete against imports) but do buy imported supplies and equipment.

Now consider the recent performance of unemployment. Over the year to December, the unemployment rate rose from 5.2 to 5.4 per cent.

Admittedly, the rate at which people of working age were participating in the labour force by holding a job or actively seeking one fell from 65.3 to 65.1 per cent. This decline in participation is probably explained mainly by some people becoming discouraged in their search for a job.

Even so, it's surprising people became a lot more worried about unemployment last year. Why did they? Because they get their impressions about the state of the labour market not from the official statistics but from stories on the TV news about people being laid off from factories.

If voters were more economically literate they'd respond to this news by thinking, "Gosh, isn't manufacturing being hit hard by the high dollar - but fortunately I don't work in manufacturing and only 8 per cent of workers do." What many actually thought was: "Gosh, maybe I could lose my job, too."

Thus was a structural problem affecting only a small part of the economy taken to be a cyclical, economy-wide problem.

It's a similar story with the much-publicised tribulations of the retailers, which arise from their need to adjust to various structural problems, such as the inevitable end to the period in which household spending grew faster than household income, and the rise of internet shopping.

With all the silly talk about "the cautious consumer" and with punters blissfully unaware that retailing accounts for only about a third of consumer spending, all the highly publicised complaints of the Gerry Harveys helped convince the public not that the retailers have their own troubles but that the economy must be going down the tube.

Then there's the contribution of the unending fuss about "debt and deficit", in which the government has been completely outfoxed by the Liberals.

Although every economically literate person knows Australia doesn't have a significant level of public debt, the opposition has had great success exploiting the public's ignorance of public finance and of just how big the economy is ($1.5 trillion a year) by quoting seemingly mind-boggling levels of gross public debt.

With much of this argy bargy being reported by political rather than economic journalists - how many times have you heard talk of "the economy's deficit"? - it's hardly surprising the public has acquired an exaggerated impression of the economic significance of the budget deficit.

Ironically, the budget deficit is a case where a cyclical (temporary) problem has been taken to be a structural (long-lasting) one.

But Labor has to accept much of the blame for this bum rap. Rather than standing up to the nonsense the Libs were talking, it took the path of least resistance, purporting to be just as manic as they were. Then came Gillard's foolhardy decision to take a mere Treasury projection of the budget outcome in three years' time and elevate it to the status of a solemn promise.

By now, the voters' majority perception that the economy's in bad shape and Labor isn't good at managing it is deeply ingrained.

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Don't let on, but property crime is down

Wow. Did you see the latest figures for the falling crime rate? Pretty good, eh? What's that, you didn't see the figures? No one told you, eh.

It's true. Despite the best efforts of the federal Minister for Justice, Jason Clare, on Sunday, the Australian Institute of Criminology's latest compilation of statistics got remarkably little attention.

Why? One reason could be that it's old news. Levels of property crime have been falling for a decade. You've long known that, right? If you have, congratulations: you're much better informed than most.

A survey conducted in NSW in 2007 found that more than 80 per cent of respondents believed property crime had been increasing or had remained stable over the past five years. Only 11 per cent said it had been falling.

So why were the media so uninterested? Because they didn't think you'd be interested. They presumed you'd prefer to have your existing beliefs reinforced rather than up-ended. But I prefer to write for the minority who want to be informed rather than humoured.

The figures show falls in all the main categories of recorded property crime - burglary, motor vehicle theft and "other theft" (pickpocketing, bag snatching and shoplifting) - across Australia in 2010.

They also show falls in all the main categories of recorded violent crime - homicide, assault, sexual assault and robbery - other than kidnapping/abduction in 2010. For the latter, the number of cases rose by 39 to 603.

But levels of crime can rise or fall from one year to the next without that proving much. What really matters is whether the longer-run trend is up or down.

The clearest evidence is of a long-run decline in recorded property crime. The number of burglaries reached a national peak of almost 440,000 in 2000, and has since halved to fewer than 220,000 a year.

The number of motor vehicle thefts reached a peak of 140,000 a year in 2001, and has now fallen by 61 per cent to below 55,000 a year. Other thefts peaked at 700,000 a year in 2001, but are now down by a third to almost 460,000 a year.

If you allow for our rising population - up by a per cent or so a year - the decline in the rate of property crime is even greater.

So, as I say, it's clear property crime has been declining for a decade. For violent crime the trend isn't as clear - except for robbery, the property crime with violence. Robberies reached a peak of almost 27,000 in 2001, but have since fallen by 44 per cent to below 15,000 a year.

It's hard to detect any trend in the level of kidnapping and abduction, though the rate is very low: 2.7 incidents per 100,000 population. You wouldn't expect to see a trend in homicide, the rate of which is also very low: 1.2 incidents per 100,000 population. But after being well above 300 a year until 2006, it's been below 300 a year since then.

No trend in the number of assaults is visible to the naked eye, but the rate of assault seemed to peak in 2007 at 840 victims per 100,000, and is now down to 770 per 100,000. If this trend is confirmed, it will be because police have begun targeting the worst-offending licensed premises.

It's estimated only about half of all sexual assaults are reported to police. The number of recorded sexual assaults rose markedly between 1996 and 2008 to 20,000 victims a year - perhaps because of growing willingness to report offences - but though the arithmetic says the rate of sexual assault has been falling modestly since 2006, I'm not sure I believe it.

So why has property crime been falling? When the decline was first observed in the early noughties, much of it was attributed to a shortage of heroin, which led to a decline in its use and, hence, a fall in thefts by heroin addicts.

That seems true enough, but though heroin prices and purity stabilised in about 2004, the fall in property crime continued. Obviously, there must be more to it.

Most criminologists believe the amount of property crime is linked to the state of the economy. Unemployment has fallen and average weekly earnings have risen in real terms since the start of the noughties, so this may well help explain why people have been less inclined to take stuff that doesn't belong to them.

Another part of the explanation for which there's solid evidence is an increase in the proportion of property offenders who are imprisoned. The story here is not so much that tougher sentences are a greater deterrent, but that the more time you spend behind bars, the less time you're able to practise your nefarious profession.

And there are other possible explanations which, though untested by researchers, seem plausible. One is increased police effectiveness. They've been pushing hard on repeat offenders and also shifting their resources to crime hot spots at "hot" times of the day or night. Their crackdown on pubs and clubs with the worst records of assaults is a case in point.

A further possibility is that success breeds success. The more the incidence of crime falls while the number of coppers remains stable or rises, the easier it ought to be to catch offenders. As for motor vehicle theft, it's likely improvements have made cars harder to pinch than they used to be.

I finish with an appeal: you may prefer to know the truth, but keep it to yourself. Please don't spoil the fun of those who like to imagine they could be swept away at any moment by the rising tide of crime.

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Talk to Fairfax employment group, Sydney, 6.2.12

I want to say a few words about the outlook for the economy in general and employment in particular, but before I do I have to issue a standard consumer warning: economists have a very bad record in forecasting what will happen in the economy, so you’d be wise not to take a blind bit of notice of anything I say.

But let me give you my prediction: the economy’s performance this year is likely to be just a fraction below average, but it will feel a lot worse than average - particularly when it comes to employment. Why? Because the media will be making it sound worse than it is.

Let’s start by talking briefly about the overseas situation. We’ve heard a lot about the troubles of the euro area - and those troubles are very real - but the forecast I’m about to give and all the forecasts we’ve been hearing lately are based on the assumption the Europeans muddle thru: they go through a period of significant weakness, where they’re a drag on the rest of the world economy, but they don’t implode and become a major restraint on world growth. In recent days the situation in Europe has been looking a bit better - a bit less like it’s about to implode - which is nice, and may it continue. Even so, the risk of things in Europe turning really bad is still uncomfortably high.

Around the middle of last year there was a lot of concern about the weakness of the US economy, but it’s been looking a bit better in recent times - not brilliant, but growing fast enough to slowly reduce unemployment. So that’s good.

In such a world - but, of course, with China and the rest of developing Asia still growing quite strongly - the outlook for us, which the Reserve Bank is likely to announce later this week, is for the economy - real gross domestic product - to grow by 3.25 per cent this year. This is the economy’s long-run rate of growth. Where will the growth come from? Particularly from the huge surge in business investment spending on the construction of new mines and, especially, natural gas facilities. But also - and contrary to anything you might have heard - from reasonably strong consumer spending. It used to be true that households were increasing their rate of saving, but it hasn’t been true for some time. The rate of household saving has been steady at 10 pc of disposable income for about a year, meaning consumer spending must being growing at the same rate as disposable income is growing. If you find that surprising, it may be because you’re confusing consumer spending with retail sales. Retail sales have been very weak, but they account for only about a third of consumer spending.

The labour force grows by a percent or so every year thanks to natural increase and immigration, so employment has to grow by that much just to hold unemployment steady. Normally growth at the average rate of 3.25 per cent a year would be sufficient to hold unemployment steady, but employment grew unusually strongly in 2010, and since then a lot of employers seem to have been holding off hiring more workers, allowing their existing workers to work more hours, but waiting to see what happens to the economy. If they keep thinking this way it seems likely the unemployment rate will slowly creep up, from its present 5.2 pc to about 5.5 pc in June and maybe 6 pc by December. That wouldn’t be good, but remember that an unemployment rate of between 5 and 6 pc is still a lot better than we experienced for most of the past 20 years. And 5 pc is getting towards the lowest point the Reserve Bank will allow unemployment to fall to because of its concern to keep inflation under control. As the unemployment rate falls close to 5 pc or lower, the Reserve starts to raise interest rates; if it starts rising towards 6 pc the Reserve starts cutting interest rates. It did that twice towards the end of last year, and if it doesn’t cut them again tomorrow, most economists are confident we’ll get more cuts this year.

Just because unemployment is likely to rise a bit doesn’t mean no new jobs will be created. For a start, and as we’ve just seen, total employment can still grow modestly even though unemployment is drifting up. Only if unemployment is shooting up is it likely that total employment is unchanged or falling. But, in any case, there’s a further point to understand - one that’s very important to the job you guys are doing. The figures the media quote each month for employment and unemployment are figures for the net change between this month and last month. If total employment around Australia is up by, say, 35,000, it’s easy to jump to the conclusion that only 35,000 positions were filled during the month; every existing worker stayed in their job, and they were joined by 35,000 more workers, presumably coming from being unemployed. Fortunately, it’s not like that. The truth is that, on average, every month about 370,000 people leave their employers and about the same number take up jobs with a new employer. So when the figures tell you employment rose by 35,000 last month, what this actually means is that the number of people taking up new jobs exceeded the number leaving jobs by 35,000. In other words, there’s huge turnover in the job market every month - even in the depths of a recession - even if the net change in total employment isn’t very big - in either direction. If you think that figure of 370,000 is so huge it’s hard to believe, you’re forgetting how big the workforce is. It’s almost 11.5 million, meaning about 3 per cent of workers leave their jobs every month - to get a better one, to have a baby, to retire, to go on an extended overseas trip, or whatever. My point is, don’t think just because employment is likely to be growing only slowly and unemployment to be creeping up, there won’t be many potential customers for you. There should be.

Finally, I said the economy wouldn’t be too bad this year, but the media will be making it sound worse than it is. Why do I say that? Because the media, knowing we regard bad news as a lot more interesting than good news, will be doing what it always does: emphasising the bad news about the economy and not saying much about things that are going OK. But I suspect there’ll be a special reason this year. The very high dollar is making life particularly tough for manufacturers, the tourist industry and overseas-student education. Some employers have been laying off workers, and it’s a safe there’ll be more. It’s an equally safe bet those lay-offs will be highly publicised by the media. This is likely to create the impression in people’s minds that the jobs market is a lot weaker than it actually is - for three reasons. First, people don’t realise how big our economy is, so they’re more impressed by relatively small numbers than they should be. Last week Toyota announced its intention to reduce its numbers by 350. That seems a lot, but beside the third of a million workers who leave their jobs every month it’s a fleabite. Second, you wouldn’t know it from the way the media talk, but the high dollar isn’t destroying Australian jobs so much as reducing them in some industries and increasing them in others. People may be losing jobs in manufacturing, but employment will be rising in other industries. Such as? Mining and construction, as the obvious ones, but also many parts of the services sector: health care, finance and insurance, public administration, various professions and arts and recreation. Finally, people tend to lose their jobs in bulk, whereas employment tends to increase in dribs and drabs. We get to hear about the big layoffs, but not the individuals being taken on.

All up, it should be too bad this year.

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