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'Post-war reconstruction' is only one of many Challenges (email sent 14/1/11)

Courier Mail

Re: ‘We will bounce back’, Courier Mail, editorial, 14/1/11

Your editorial noted that Queensland’s challenge in recovering from recent and current flooding has been likened to ‘post-war reconstruction’.

“The sheer scope of the devastation, loss of life and the daunting task of rebuilding are numbing, which is why it is so important that we, as Queenslanders, unite - as never before - to address the innumerable challenges ahead. Premier Anna Bligh reminded us most eloquently yesterday that we Queenslanders were "the ones that they knock down and we get up again". Plenty of Queenslanders have been knocked down by these floods and they will need every bit of our collective help to get up again. We will need "every single person to be a part of this", Ms Bligh says of the work ahead, which she describes as a reconstruction of post-war proportions.”

It is worth recognising that governments facing troubles at home are sometimes alleged to seek involvement in foreign wars, so as to divert attention from domestic woes and unify people behind them.

Such a suggestion in relation to Queensland’s current predicament may seem inappropriate. There is no doubt that the floods that have devastated Queensland require immense and unified effort and that the ‘war’ that now requires reconstruction was started by nature. Moreover political leaders are entitled to benefit from the way they cope with unfolding events, as observers have suggested that some are likely to do (eg see Parnell S. ‘Premier Anna Bligh a shining light amid the storm’, The Australian, 14/1/11; and Drysdale A., ‘ Flood brings bounty for Bligh’, BusinessSpectator, 14/1/11).

However severe problems existed before this particular ‘war’, and there is a need to look beyond the destruction and disruption caused by nature if recovery is not to be disrupted by other pressures and constraints. Paul Syvret made a reasonable case for doing this in recent Courier Mail articles.

Queensland’s floods are a metaphor for the rebuilding and repair Australians face in many other areas. Fixing infrastructure is only part of the problem, because 2010 was a difficult year in many respects (eg in terms of political upheaval, economic challenges and natural disaster). The federal government faces a hung parliament and policy conflicts (eg in terms of tax, climate change, hospital reforms, NBN). There is a need to rebuild public trust of governments. Queensland’s Government also desperately needs renewal – while the state Opposition lacks credibility. Both federal and state governments face economic challenges (eg in terms of budgets – where Queensland’s position will be worsened by floods). Asset sales won’t fully solve the problem, so reduced recurrent spending seems necessary (Syvret P., ‘Under reconstruction’, Courier Mail, 1-2/1/11)

Australia’s economic well-being is subject to external forces. While domestic economic conditions are reasonable, the global environment is precarious. Australia’s dependence on China’s growth leaves us exposed (eg because of risk of inflation in China, US’s anaemic recovery, worse situation in Europe, rising oil prices). Key issues requiring attention include: China; Europe; inflation; interest rates; housing market; and fiscal policy (Syvret P. ‘If things go bad there is very little we can do’, Courier Mail, 1-2/1/11)

Some reasons to endorse Paul Syvret’s arguments are outlined below. This refers to:

  • the emergence of dysfunctional machinery of government in Australia generally (and Queensland in particular), as a result of a changing (eg more complex) environment and past ‘reforms’ that have been implemented without sufficient understanding of the nature and functions of government; and to
  • potential economic risks in the international environment, which inadequate past economic ‘reforms’ have left Australia ill-equipped to cope with.

Dealing with such challenges in the face of the need to recover from natural disasters will be difficult. However, this might be achieved by: (a) giving operational priority to disaster recovery; (b) focusing apolitical study groups (comprising those with relevant operational responsibilities) on the bigger picture challenges; (c) disseminating information about those study groups and their conclusions widely; and (d) inviting proposals to elected governments about appropriate responses.

John Craig

The Need to Look Beyond Disaster Recovery

In articles outlined above, Paul Syvret made a case for considering more fundamental requirements for reform of governments, and for attention to economic risks that may potentially emerge from the international environment.

More on Governance Risks

Emerging problems in Australia’s system of government generally were suggested in Australia's Governance Crisis and the Need for Nation Building (from May 2003). This included reference to: the complexities that governments are now trying to deal with that defy simple ‘rational’ solutions; and dysfunctions created by ill-advised reforms. Some preliminary speculations about how those defects might be remedied are in A Nation Building Agenda. This suggests, for example, that:

  • increased complexity might best be managed by decentralization of control, and increased reliance on incremental adjustments; and
  • Australia’s democratic system of government is unlikely to regain effectiveness without stronger apolitical support both within and outside government.

It is worth considering the possibility that:

In Queensland’s case, in particular, the emergence of a dysfunctional and crisis prone administration has been increasingly obvious for two decades (eg as outlined in comments on ‘Is our system of Government in Queensland Working?’, 2007). The latter includes reference to suggestions about the sorts of reforms that have been needed to re-create an effective system of public administration – suggestions that have been put forward regularly by the present writer since the early 1990s.

It may also be worth considering the possibility that problems in Queensland’s budget position may be more serious than officially reported (see About the 2009-10 Budget – which, amongst other things, noted a worrying lack of transparency about Queensland’s capital accounts generally, and about the rationale for asset sales that presumably generated large fees for those who arranged them).

More on Economic Risks

There are reasons to suspect that the external economic risks that Paul Syvret mentioned could translate into real difficulties for Queensland / Australia. For example:

  • Risks to the steady (though unbalanced) global economic recovery that is now officially expected include: lack of structural changes to eliminate the growth constraint imposed by international financial imbalances; high government debts in many major economies; limited global capacity to provide credit; structural obstacles to international rebalancing of demand to ‘Asia’ and emerging economies; the likely global ‘peak oil’ event; lack of effective methods for macroeconomic management; and the increasing need for ‘austerity’ in many economies (see Heading for the Grip of a Great Depression?);
  • China in particular, on whose commodity demand Queensland / Australia increasingly depends, faces serious difficulties (see Heading for a Crash? and Future of the World: Again?);
  • The virtual complete absence of real ‘Asia-literacy’ (eg any official understanding of how East Asian systems of socio-political-economy actually work) makes it hazardous for Australia to be dependent on that region (see Babes in the Asian Woods).

However Queensland’s / Australia’s economic risks do not only lie in the economic environment, but also in inadequate economic strategies which have left the community with few options in the face of external instabilities (eg see Queensland's Economic Strategy, 2002; Impact of Economic Liberalism in Australia, 2002; and Fixing Australia: Do the Econocrats have the Right Answers?, 2010). One key point is that economic liberalisation (the basis of dominant microeconomic reform agendas since the 1980s) requires the community to compete, but does not ensure the emergence of the systemic supports that are needed for individuals / enterprises to compete successfully in high value added activities. Some suggestions about an alternative were outlined in A Case for Innovative Economic Leadership (2009).

In Queensland’s case, in particular, the effect of dislocating the rapid interstate migration which had put the icing on the cake of economic prosperity in SE Queensland seems to need attention that has not yet been officially given to it (see Speculations about Queensland's Economic Predicament, 2010)