Friday, December 14, 2012

Australia’s 1996 gun law reforms: faster falls in firearm deaths, firearm suicides, and a decade without mass shootings

This story is on the back of the tragic shooting in  Connecticut yesterday. I want to make this very clear to everyone. I hunted as a kid shot Rifles and Shotguns I am not anti gun however, I have been at dinners where I have been told to take my foreign views and put them somewhere unpleasant. Here is a link to a study on what happened in Aussie after numerous mass shootings they banned certain types of weapons. I am not advocating the same approach here but something has to happen and we should look elsewhere for help on what to do. Aivars Lode


S Chapman, P Alpers, K Agho, M Jones ...............................................................................................................................


See end of article for authors’ affiliations ........................
Correspondence to: Professor S Chapman, School of Public Health, University of Sydney, Sydney, New South Wales, Australia 2006; sc@med.usyd.edu.au
Accepted 6 November 2006 ........................
Injury Prevention 2006;12:365–372. doi: 10.1136/ip.2006.013714
Background: After a 1996 firearm massacre in Tasmania in which 35 people died, Australian governments united to remove semi-automatic and pump-action shotguns and rifles from civilian possession, as a key component of gun law reforms. Objective: To determine whether Australia’s 1996 major gun law reforms were associated with changes in rates of mass firearm homicides, total firearm deaths, firearm homicides and firearm suicides, and whether there were any apparent method substitution effects for total homicides and suicides.
Design: Observational study using official statistics. Negative binomial regression analysis of changes in firearm death rates and comparison of trends in pre–post gun law reform firearm-related mass killings. Setting: Australia, 1979–2003. Main outcome measures: Changes in trends of total firearm death rates, mass fatal shooting incidents, rates of firearm homicide, suicide and unintentional firearm deaths, and of total homicides and suicides per 100 000 population.
Results: In the 18 years before the gun law reforms, there were 13 mass shootings in Australia, and none in the 10.5 years afterwards. Declines in firearm-related deaths before the law reforms accelerated after the reforms for total firearm deaths (p = 0.04), firearm suicides (p = 0.007) and firearm homicides (p = 0.15), but not for the smallest category of unintentional firearm deaths, which increased. No evidence of substitution effect for suicides or homicides was observed. The rates per 100 000 of total firearm deaths, firearm homicides and firearm suicides all at least doubled their existing rates of decline after the revised gun laws. Conclusions: Australia’s 1996 gun law reforms were followed by more than a decade free of fatal mass shootings, and accelerated declines in firearm deaths, particularly suicides. Total homicide rates followed the same pattern. Removing large numbers of rapid-firing firearms from civilians may be an effective way of reducing mass shootings, firearm homicides and firearm suicides.
On 10 May 1996, 12 days after 35 people were shot dead and 18 seriously wounded by a gunman at Port Arthur, Tasmania, Australia’s state and federal governments agreed to enact uniform gun control laws. Between June 1996 and August 1998, the new restrictions were progressively implemented in all six states and two territories. As the Port Arthur gunman and several other mass killers had used semi-automatic weapons, the new gun laws banned rapid-fire long guns, specifically to reduce their availability for mass shootings. Under the 1996–7 Australian Firearms Buyback, 643 726 newly prohibited semi-automatic and pump-action rifles and shotguns were purchased by the federal government from their civilian owners at market value, funded by a levy on income tax.1 Tens of thousands of gun owners also voluntarily surrendered additional, non- prohibited firearms without compensation.2 In total, more than 700 000 guns were removed and destroyed from an adult population of about 12 million. Australia’s revised gun laws also require that all firearms be individually registered to their licensed owners, that private firearm sales be prohibited and that each gun transfer through a licensed arms dealer be approved only after the police are satisfied of a genuine reason for ownership. In this context, possession of firearms for self-defence in Australia is specifically prohibited and few civilians are licensed to possess handguns. A detailed summary of the reforms can be found in Ozanne-Smith et al.3
In Australian federal law, firearm means ‘‘a device designed or adapted to discharge shot, bullets, or other projectiles by means of an explosive charge or a compressed
gas’’.4 Legislation in all Australian states and territories echoes this definition, and all include airguns and com-
5
pressed gas guns in their definition of a firearm. Using publicly available data, we examined Australian firearm death rates before and after the Port Arthur massacre and the gun law reforms it precipitated to explore the hypothesis that the introduction of the gun laws was associated with an accelerating decline in deaths caused by firearms. We also examine all-cause homicides and all- method suicides in order to assess the possibility that substitution effects may have occurred: that reduced access to firearms may have caused those with homicidal or suicidal
intent to use substitute methods.
METHODS
Data on unintentional (accidental), and intentional (suicide and homicide) deaths caused by firearms were obtained from the National Injury Surveillance Unit,6i sourced from the Australian Bureau of Statistics (ABS) mortality data collec- tion 1979–2003, coded as International Classification of Diseases, 9th revision and 10th revision. This represents a census of all firearm deaths in Australia for those 25 years. In all Australian jurisdictions (state and territory Firearms Acts
iThese figures were updated in a private correspondence from NISU on 16 October 2006 (table 2).
Abbreviation: ABS, Australian Bureau of Statistics
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and Regulations), at federal level (the Customs Act and Regulations) and in the ABS mortality collection, ‘‘firearm’’ includes guns whose projectiles are propelled by compressed air or gas. Although we know of no such fatalities, any deaths from airguns or ball bearing guns would be included in this dataset.
Population data were obtained from the ABS for the same period. Firearm death rates per 100 000 were then calculated. The trend in these rates for the 18 years up to and including the year in which the new firearm laws were announced (1996) were compared with the corresponding trend for the next 7 years (1997–2003), to examine the hypothesis that the announcement and implementation of the gun laws were associated with an acceleration in the existing decline in firearm homicides, firearm suicides and total firearm deaths. Fatal ‘‘legal intervention’’ shootings by police, which averaged 4.5 per annum, were excluded as they were not targeted by the gun laws in question. For the post-Port Arthur period, rates of total all-cause (and non-gun) homicides and suicides were also examined, to consider whether perpetrators may have substituted other means of killing if the gun laws reduced their access to firearms.
Numbers of deaths by category (total and components) have been viewed as arising from an overdispersed Poisson process and analyzed using negative binomial regression, with annual Australian population estimates used as an offset. In practical terms, the model views deaths as a number of events per head of population, although for convenience we report rates per 100 000 heads of population. The model has been used to estimate the change in trend of the relative rate of firearm deaths associated with the introduction of uniform gun laws. Given that the rate of firearm deaths had been decreasing before the harmonization of gun laws, the statistical question addressed is not just whether death rates were lower after the laws were changed, as the pre-existing trend would predict this even in the absence of changed laws, but whether the rate of decrease in firearm deaths seems to be greater after the gun laws were announced. Given the observational nature of the data available, we can directly comment on the association of gun law harmonization and firearm-related death rates, but conclusions regarding causality of the association must remain interpretive rather than definitive. However, as it would be politically almost inconceivable that any govern- ment would conduct a randomized controlled trial of gun law effects, the evidence presented must be among the best that could ever be available to deal with the question of the effects of such law reform. As counts are of deaths, it is reasonable to assume that observations are independent across years. Three models have been fitted for each type of firearm death.
ln{deaths/population} = b00+b106year,year = 1979,...,1996 (a)
ln{deaths/population} = b01+b116year,year = 1997,...,2003 (b)
ln{deaths/population} = b02+b126year+b22 Lawj+b326year6Lawj, year = 1979,...,2003, j = 0,1 (c)
Models (a) and (b) are used to estimate the trend (measured as average annual change in rate/100000 population) in gun deaths before and after the introduction of gun laws, through the terms and respectively. Model (c) is used to estimate the effect on trends in firearm- related deaths associated with the introduction of gun laws through the interaction term ‘‘year6law’’. As the model is parameterized, b32 = b112b10 and therefore estimates the ratio of trend after introduction to that before the introduction of the gun laws. Trends and relative trends have been reported as relative rates (before and after 1996) and relative trends (comparing periods) with 95% confidence intervals. The statistical significance of the relative trends has
also been reported. Analysis has been undertaken separately in firearm-related and non-firearm-related deaths as well as total deaths for homicide and suicide to investigate possible substitution effects. If substitution occurred, we would expect an increasing downward trend in firearm deaths after the introduction of gun control laws but a compensatory lesser downward or even upward trend in non-firearm-related deaths over the same period. The extent of influence of mass shootings has been investigated by repeating firearm-related homicides excluding mass (>5 victims died) shootings.
An alternate view of these data might have been as a time series of mortality rates, as was done by gun lobby affiliated researchers Baker and McPhedran.7 However, we saw two disadvantages to this approach. One is that calculating mortality rates and then treating them as a number in a time series ignores the natural variability inherent in the counts that make up the numerator of the rate. Another is that the Box–Jenkins class of models, including the auto- regressive integrated moving average model used by Baker and McPhedran,7 is unable to explicitly address the effect of an intervention such as the introduction of gun laws. Interpretation of these models is reduced to comparing the mortality rates expected under a model assuming no effect of the intervention with that observed, both in the post- intervention period. This is however an insensitive approach, and its interpretation is not based on formal statistical inference but rather on visual inspection and qualitative interpretation of graphs, which may be prone to selectivity.
The second author has archived reports of all mass shooting incidents in Australia (defined here as when >5 victims died; table 1). These were used to compare the incidence of such shootings before and after the introduction of the new gun laws.
RESULTS
In the 18 years up to and including 1996, the year of the massacre at Port Arthur, Australia experienced 13 mass shootings. In these events alone, 112 people were shot dead and at least another 52 wounded (table 1).8 In the 10.5 years since Port Arthur and the revised gun laws, no mass shootings have occurred in Australia. Figure 1 comprises seven graphs plotting both pre-law and post-law data and trends for (a) firearm homicide death rate, (b) non-firearm homicide death rate, (c) firearm homicide minus mass shootings death rate, (d) unintentional firearm death rate, (e) firearm suicide death rate, (f) non-firearm suicide death rate and (g) total firearm death rate.
Each graph presents the observed annual death rate (triangles) and the expected death rate under the hypothesis of an effect of gun laws (dots) estimated from a negative binomial model. The vertical line on the horizontal axis indicates the revision of gun laws commencing in 1996.
An interpretive note that applies to all the graphs in fig 1 is that the shape of fitted lines (trend pre-law and trend post- law) involves two components. The first is that the post-law trend line is shifted upward or downward according to the underlying rates of mortality in the pre-gun law and post-gun law periods. Where there is a pre-existing downward trend in mortality, such a shift would occur regardless of the effect of gun laws. The more interesting component is how much the slopes of the pre-gun law and post-gun law trends differ. Although it can be difficult to judge the magnitude from the graph itself, this is quantified in the final column of table 3, which provides estimates of the relative slopes of the post- to pre-law trends.
Total firearm deaths
Table 2 shows that gun-related deaths (both in numbers and as a rate per 100 000) had been steadily falling throughout
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*Definitions of ‘‘mass shooting’’ and ‘‘mass homicide’’ have ranged from 3 to 5 victims killed.28 29 To exclude most of the more common firearm-related spousal and family violence killings, ‘‘mass shooting’’ is defined here as one in which >5 firearm-related homicides are committed by one or two perpetrators in proximate events in a civilian setting, not counting any perpetrators killed by their own hand or otherwise. Details of each case were collected from police and coroners’ files, by personal communication with police and counsel involved, or as a last resort from corroborating newspaper reports.
the years before the new gun laws were announced. In the 18 years (1979–96), there were 11 299 firearm deaths (annual average 627.7). In the 7 years for which reliable data are available after the announcement of the new gun laws, there were 2328 firearm deaths, (annual average 332.6). Figure 1G and table 3 indicate that although the rate per 100 000 of total firearm deaths was reducing by an average of 3% per year, this rate doubled to 6% after the introduction of gun laws. The ratio of trend estimates differed statistically from 1 (no effect; p = 0.03). The decline in total firearm deaths thus accelerated after the introduction of the gun laws.
Firearm suicides
Firearm suicides represent the largest component cause of total firearm deaths in Australia (more than three in four of all firearm deaths). In the 18 years (1979–96), there were 8850 firearm suicides (annual average 491.7). In the 7 years for which reliable data are available after the announcement of the new gun laws, there were 1726 firearm suicides, an annual average of 246.6. Figure 1E and table 3 indicate that while the rate of firearm suicide was reducing by an average of 3% per year, this more than doubled to 7.4% per year after the introduction of gun laws. The ratio of trend estimates differed statistically from 1 (no effect; p = 0.007). Again, we conclude that the decline in total firearm suicides accelerated after the introduction of the gun laws.
Firearm homicides
In the 18 years (1979–96), there were 1672 firearm homicides (annual average 92.9). In the 7 years for which reliable data are available after the announcement of the new gun laws, there were 389 firearm homicides, an annual average of 55.6. Figure 1A and table 3 show that while the rate of firearm homicide was reducing by an average of 3% per year, this increased to 7.5% per year after the introduction of gun laws. However, the ratio of trend estimates failed to reach statistical significance (p = 0.15) because of the low power inherent in the small numbers involved.
When all firearm mass homicides (>5 victims shot dead per incident) were removed from the data (fig 1C and table 3), the conclusions were only slightly altered. The reason for this slight change is that all mass shootings in Australia in the years studied occurred before the introduction of gun laws (table 1). This increases the apparent downward trend in the pre-gun law period (0.971 when all homicides are considered,
v 0.961 when mass shootings are removed, table 3). The trend in the post-gun law period is unaffected.
Unintentional firearm deaths
Unintentional (accidental) firearm deaths have always been the smallest component of the total firearm deaths in Australia, representing around 6% of all firearm deaths. Figure 1D and table 2 indicate that although the rate of total gun deaths reduced by an average of 7.6% per year, the rate of unintentional gun deaths actually increased by 8.5% per year after the introduction of the gun laws. We discuss this finding below.
Total homicides
Figure 1B and table 3 indicate that the rate of total non- firearm homicides increased by an average of 1.1% per year before the introduction of the gun law and reduced by an average of 2.4% per year after the introduction of the gun laws (see row 3, columns 2 and 3, respectively, in table 3). The ratio of the pre-law to post-law trends differ to a significant extent (p = 0.05).
Table 2 also shows the total homicides (by all methods) for the period 1979–2003. In the pre-gun law period, total non- firearm homicides were essentially stable and did not differ from steady state to a statistically significant extent (table 3). After the introduction of gun laws, a significant downward trend was evident in total homicides, and the ratio of pre-law to post-law trends differed statistically from ‘‘no effect’’ (p = 0.01, table 3). We conclude that the data do not support any homicide method substitution hypothesis.
Totalsuicides
Figure 1F and table 3 indicate that the rate of total non- firearm suicides increased by an average of 2.3% per year before the introduction of the gun law and reduced by an average of 4.1% per year after the introduction of the gun laws (see row 6, columns 2 and 3, respectively in table 3). The ratio of the pre-law to-post-law trends differs statistically (p,0.001).
Table 2 also shows total suicides for the period under review. Total suicides follow a similar pattern as total non-firearm homicides. In the pre-gun law period, total suicides were essentially stable (table 3). After the introduc- tion of gun laws a significant downward trend was evident in total suicides and the ratio of pre-law to post-law trends differs statistically from ‘‘no effect’’ (p,0.001; table 3). We
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conclude that the data do not support any suicide method substitution hypothesis.
In all, total suicide (all methods including firearms) increased by an average of 1% per year before the introduc- tion of the gun laws and decreased by an average of 4.4% per year after the introduction of the gun laws, whereas, total homicide (all methods including firearm) was essentially steady (decreasing by an average of 0.1% per year) before the introduction of the gun law and decreased further by 3.3% per year after the introduction of the gun law. The ratio of the pre-law to post-law trends reaches statistical significance for
DISCUSSION
both total suicide (p,0.001) and total homicide table 3).
(p = 0.01;
After 11 mass shootings in a decade and 13 in the 18 years before the introduction of the new gun control laws, Australia collected and destroyed categories of firearms designed to kill many people quickly. In his immediate reaction to the Port Arthur massacre, Australian Prime Minister John Howard said of semi-automatic long guns: ‘‘There is no legitimate interest served in my view by the free availability in this country of weapons of this kind... Every effort should be made to ensure such an incident does not occur again. That is why we have proposed a comprehensive package of reforms designed to implement tougher, more effective and uniform gun laws.’’9 10
Figure 1 (A–G) Total firearm deaths (excluding ‘‘legal intervention’’ (police shootings)), firearm homicides and suicides, unintentional firearm deaths, total homicides and suicides; rates per 100 000, Australia 1979–2003. Note that the total firearm deaths include deaths of undetermined intent as shown in table 2.
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In the 10.5 years which followed the gun buy-back announcement (May 1996–October 2006), no mass shootings have occurred in Australia. As one study on the Australian firearm buy-back notes: ‘‘Given that mass murders cause so much community fear, it is appropriate to choose this as an evaluation outcome separate from homicide rates gener- ally.’’11 Yet, in a recent paper examining the same dataset,7 two authors with declared affiliations with firearm advocacy groups failed entirely to report on this fundamental outcome, and issued press releases headlined Gun Laws Failed to Improve Safety and New Research Vindicates Gun Owners.12 13 Given that the banning of semi-automatic rifles and pump-action shotguns was premised on the explicit objective of reducing the likelihood of mass shootings, such a flagrant omission from their analysis is extraordinary.
We suggest an analogy here. If a government addressed a recurrent incidence of level crossing car/train collisions by mandating alarmed barrier gates, it would be appropriate to ask two questions when later evaluating the effect of such a measure. One could ask ‘‘Have there been fewer level crossing car/train collisions and fatalities?’’ and ‘‘Have there been fewer road toll deaths from any cause?’’. The outlawing of rapid-fire rifles and shotguns in the revised Australian gun laws was the equivalent of level crossing barrier gate legislation: its primary intention was to reduce mass shootings, a national concern after the Port Arthur massacre. Accelerating the reduction in overall firearm deaths—as occurred—is a bonus, particularly as the data show that there is no evidence of method substitution for either suicide or homicide.
Three categories dominate firearm death data in Australia: suicide, homicide and unintentional (accidental) shootings. Suicide is the leading category, with an average of 79% of all firearm deaths each year. Firearms have a high lethality index (or ‘‘completion rate’’) in both homicide and suicide.14 Had the gun law reforms not occurred, more Australians contemplating suicide—in particular, impulsive young peo- ple—might have more easily found a method of instant completion. Reliable national data on suicide attempts are not available in Australia to examine whether suicide completion rates changed after Port Arthur. However, the data show that the declining rate of suicide by firearms accelerated significantly after the 1996 gun laws, with there being no apparent substitution by other methods.
As only a single shot is involved in most firearm suicides, it might be argued that reduced access to rapid-firing semi-automatic weapons would be irrelevant in policies designed to reduce suicide: a person intending suicide with a firearm need use only a single-shot gun. However, a person attempting suicide might just as easily use any available gun, including one capable of firing rapidly. The removal of more than 700 000 guns from an adult population of around 12 million therefore may have reduced access to guns among potential suicide attempters.
However, many gun owners own .1 firearm and may well have handed in the newly prohibited weapons after the new laws required this, but retained their non-prohibited weap- ons. This means that although 700 000 firearms were removed from the community, the number of persons (and households) with access to (still legal) firearms is unlikely to have reduced significantly. What can be said with certainty though is that 700 000 fewer guns were available to be stolen or otherwise leaked from lawful owners to criminals.
The finding that there was a significant increase in unintentional (accidental) firearm deaths after the new gun laws is perplexing, although it should be emphasized that the numbers involved in this increase are small. The average annual increase in unintentional firearm deaths in the 7 years since 1996 was just 1.4 deaths. We can conceive of no plausible hypothesis as to why the removal of more than 700 000 guns from the population, the introduction of firearm registration and the tightening of shooter licensing procedures would be associated with an increase in uninten- tional fatal shootings, however small in number.
There are considerable problems in accurately estimating the number of gun owners and guns in a community. Given the political volatility of gun control, and the widespread and virulent opposition of many firearm owners to gun laws, which is often manifested in statements of open defiance on gun lobby websites and publications, under-reporting of gun ownership is common in both survey research and in police registers of licensed gun owners. In 1992, Kellerman et al reported that owners of registered handguns were much more likely to be prepared to answer questions about gun ownership than about their income.15 However, licensed firearm owners are those who self-select to obey shooter licensing requirements. Before the 1996 gun law reforms, there was no national system of firearm registration in Australia, so there is no way of accurately comparing the estimated number of guns in the Australian community before the 1996 gun laws with the known number of registered guns after the introduction of the laws. Notwithstanding these uncertainties, in a trend that preceded the Australian Firearms Buyback but seems to have been greatly accelerated by it, the reported private gun ownership fell by 45% between 1989 and 2000, leaving a three times less likelihood of an Australian household reporting owning a firearm compared with a US household.16 By destroying an estimated one fifth of their country’s estimated stock of firearms—the equivalent figure in the US would be 40 million guns17—Australians have chosen to significantly shrink their private arsenal. All remaining guns must now be individually registered to their licensed owners, private (owner-to-owner) firearm sales are no longer permitted, and each gun purchase through a licensed arms dealer is scrutinized by the police to establish a ‘‘genuine reason’’ for ownership. Possession of firearms for self-defence is speci- fically prohibited, and very few civilians are permitted to own
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Key points
N A radical gun law reform occurred in Australia after a gun massacre (35 dead and 18 seriously injured) in April 1996. Semi-automatic and pump-action shotguns and rifles were banned; a tax-funded firearm buyback and amnesties saw over 700 000 guns surrendered from an adult population of about 12 million.
N The total firearm deaths, firearm homicides and firearm suicides had been falling in the 18 years preceding the new gun laws. In all, 13 mass shootings were noticed in the 18 years preceding the new gun laws.
N In the 10.5 years after the gun law reforms, there have been no mass shootings, but accelerated declines in annual total gun deaths and firearm suicides and a non-significant accelerated decline in firearm homi- cides. No substitution effects occurred for suicides or homicides.
handguns. Australia’s state governments, police forces and police unions all supported the tightened gun laws. In 2002– 3, Australia’s rate of 0.27 firearm-related homicides per 100 000 population was one fifteenth that of the US.18 19
It would also be negligent to omit what seemed plain to Australians, but could be less easy to measure in empirical terms. After the death and serious injury of 54 people at Port Arthur, facilitated by firearms then openly marketed by licensed gun dealers as ‘‘assault weapons’’, a national upwelling of grief and revulsion saw pollsters reporting 90– 95% public approval for stringent new gun laws.20 21 Resistance to gun control was roundly condemned in virtually all news media,22 and governments’ 12 days of resolve deprived the firearm lobby of crucial delay time. Announcing the law changes, Prime Minister John Howard invoked the majority will of Australians when he said ‘‘This represents an enormous shift in the culture of this country towards the possession, the use and the ownership of guns. It is an historic agreement. It means that this country, through its governments, has decided not to go down the American path ... Ours is not a gun culture, ours is a culture of peaceful cooperation.’’23 24 Later opinion polling ranked Howard’s new gun laws as by far the most popular decision in the first year of his conservative government.25 In the opinion of the authors, the 1996 sea change in Australian attitudes—and perhaps also a significant component of the public health benefits of lower rates of firearm-related mass shootings, suicide and homicide reported here—is best described as a national change of attitude to gun owners and their firearms.
Limitations
Table 2 shows that across the 25 years, there were 200 firearm deaths classified as being of undetermined intent. Of these, 157 (80.1%) occurred before 1991, and only 15–23 after 1996. (To preserve victims’ privacy, publicly released data for years in which there are >3 firearm deaths of undetermined intent are recorded as NA. This was the case for 4 of 7 years between 1997 and 2003, meaning that there could have been a maximum of 12 and a minimum of 4 undetermined cases in this time.) Across the study period, firearm deaths of unknown intent comprised 1.3% of all firearm deaths, falling to 0.8% after 1990 and 0.4% after 1996. The decrease in ‘‘unknowns’’ is attributed to improved reporting practices. These ‘‘missing data’’ from the component analyses of firearm suicide, homicides and unintentional deaths may account for small variations in the results shown, were their status able to be known.
Although ABS mortality data were also available for 2004, the National Injury Surveillance Unit warned of significant questions of accuracy due to the number of coroners’ cases not closed at the time, and potential miscoding of suicide, homicide and unintentional firearm-related death in that year.26 Accordingly, this study ends with 2003, the most recent year of reliable data.
Implications for prevention
The data swings shown are so obvious that if one were given the data in table 2 and were asked to guess the date of a major firearm intervention, it would be clear that it happened between 1996 and 1998. The Australian Firearms Buyback remains the world’s most sweeping gun collection and destruction program.27 A combination of laws making semi- automatic and pump-action shotguns and rifles illegal, paying market price for surrendered weapons, and registering the remainder were the central ingredients. The Australian example provides evidence that removing large numbers of firearms from a community can be associated with a sudden and ongoing decline in mass shootings and accelerating
declines in total firearm-related deaths, firearm homicides and firearm suicides.

Monday, December 10, 2012

Deficits loom for next two years

We have predicted a slowing in commodity process over a year ago. Aivars Lode


Federal government modelling ­suggests that the bigger than expected fall in commodity export prices will produce a multibillion-dollar budget hole that could keep it in deficit over the next two years.
The Business Council of Australia yesterday called on Labor to spell out a medium-term strategy to get the budget firmly back into the black amid signals that the government is prepared to dump its promise to deliver a small surplus this year.
The federal Treasury modelling suggests this year’s projected $1.1 billion surplus could turn into a $4.5 billion deficit, while next year’s projected $2.8 billion surplus could end up $11 billion in the red if the latest unexpected slowdown in nominal gross domestic product growth persists.
The Australian Financial Review reported on Friday that the government would dump its long-held commitment to a budget surplus this financial year if economic growth slipped below the trend rate of growth, considered to be about 3 per cent growth in real GDP.
Business Council of Australia chairman Tony Shepherd called on the government to “have a clear plan on how to return to surplus, not based on the optimistic forecast but based on a realistic forecast”.
The recent weakness in the terms of trade was putting company profits and taxation revenues under pressure. “We all wish the economy to grow at trend. But you have to prepare for the contingency that it will be below trend, and one would have to be ­concerned at the moment that it won’t.”
GOVERNMENT NEEDS A MEDIUM-TERM STRATEGY
Mr Shepherd said the business ­community would forgive the government if it failed to achieve its long-anticipated first surplus since coming to power next May, provided it had a well articulated medium-term strategy.
“If we can see the discipline and a strategy that is workable then [a def­icit] would be acceptable to business. A goal of a surplus is a worthy one, but you have got to have a plan on how to get there,” he said.
The government would need to look at restoring its revenue base and adopting a disciplined set of rules on spending through the cycle, such as headcount targets on government and limiting government as a percentage of the economy to 23.7 per cent, he said.
It would also need to lay out a plan over the medium-term cycle of 10 to 12 years to return the economy to surplus on a sustainable basis, and pay down debt and build reserves.
Mr Shepherd also called on the opposition to commit to a set of rules. But shadow Treasurer Joe Hockey ­yesterday said the Coalition would ­outline its rules once it was elected because he did not believe the current fiscal position being presented by Treasurer Wayne Swan.
“The fact is they are engaged in deceit and we don’t know what the starting position is,” Mr Hockey said.
The government was “crab walking away from the surplus so they can do what they do best”, he said.
“Once the shackles of any surplus are off, Labor will engage in reckless spending, especially given their $120 billion of unfunded promises,” Mr Hockey said.
The government is relying on nominal growth of 4 per cent in order to raise enough taxation revenues to meet its $1.1 billion surplus in 2012-13 contained in the Mid-Year Economic and Fiscal Outlook.
But last week Mr Swan blamed a “savage reduction” in commodity prices leading to nominal income running growing at 0.5 per cent in the quarter or an annual pace of just 1.9 per cent in the September quarter, according to the Australian Bureau of Statistics national accounts.
A commodity price index calculated by the Reserve Bank of Australia points to further falls in prices this quarter, down between 3.5 and 4.8 per cent in the first two months of current quarter.
A scenario produced by Treasury in the MYEFO statement predicted a one percentage point fall from the ­government’s forecast of 4 per cent nominal growth this year would weaken the budget bottom line by $2.8 billion this year and about $6.7 billion in 2013-14.
Mr Swan has wound back his rhetoric on the surplus as commodity prices have fallen making it conditional on jobs.
“While weaker revenues will make it more difficult, we’re committed to returning the budget to surplus in 2012-13,” Mr Swan said last week.
“As I’ve said before, we’ll always ensure our budget is appropriate for the economy and jobs and these figures don’t change our consistent approach.”
But in the May budget, the Treasurer said the surplus was vital for the strength of the economy.
“Returning to surplus also locks in confidence, and is Australia’s best defence at a time when the global economy is changing dramatically,” he said in May.
“It creates a buffer in uncertain times and is a very clear sign of our strong economy.”
Minister for Regional Development Simon Crean said the budget surplus was still achievable.
“We are committed to the budget surplus and I still believe we can get there,” he said from the Southern Chinese city of Guangzhou.
“What we put out in the mid year economic forecasts shows the surplus is still achievable.”