March 16, 1999

Ms Libi Coyer,
Marsden State High School.

I am writing to you as the teacher who reportedly accompanied a group of Marsden State High students, who were 'shocked, stunned and disillusioned' by the behaviour of Members of Parliament (Lawrence E., 'They're like a bunch of kids!', Sunday Mail, 14/3/99).

Members don't take Themselves Seriously: The behaviour which your students saw as 'childish' (and which I understand is not unusual) is probably a reflection of the limited relevance to community welfare which Members see Parliament to have. If Parliament was seen to make much real difference, then 'childish' behaviour would not be tolerated.

Reasons for Parliament's Limited Relevance: There are two obvious reasons for Members to see Parliament as having limited relevance. The first is the dominant role that the Executive (ie Cabinet, Ministers, and government agencies) has in governing Queensland. Thus the Legislature (Parliament) is comparatively unimportant. The second reason is the limited number of research institutions which Queensland has to put forward policy 'raw material', which Members could use to develop realistic proposals for better government.

For example: there are few capable independent economic or public policy 'think tanks' in Queensland (though a 'Brisbane Institute' is now reportedly being established); the economy is populated by small firms and branch offices; research and development spending by business and Government is well below the national average - which is below that of developed countries; political parties tend to use ad hoc policy machinery; and public agencies often lack access to strategic information (the latter according to a state Interdepartmental Committee, Initiating the Preparing the Future Project, (unpublished), March 1998).

These problems are closely related. Where the government Executive is the best available (but still a weak) source of information, then Parliament can do virtually nothing to guide government's activities. So if Members engage in 'childish' antics .... Who really cares?

The Economic Context to an Ineffective Parliament: Both the above problems are arguably a result of Queensland's economic reliance on natural resource strengths, and the secondary importance of the economic contribution of the community (including government).

Economically Queensland has relied on its 'comparative advantages' in natural resources (ie in industries such agriculture, mining and tourism) rather than developing 'competitive advantages' through the knowledge, skills and positioning of its organizations. For success in resource based industries, the major requirement has often been for the community to 'follow instructions' from external investors interested in those resources. [Note: Queensland has the highest dependence on foreign investment of any Australian state, and Australia's dependence is the highest of all OECD countries]. Prominence in politics and public administration (and business) has thus traditionally been gained by those who were most willing to 'follow orders' and to mobilize public agencies (and the community) to also do so - through a strong (often authoritarian) Executive.

Where 'success' is based on 'following orders', few will value independent research institutions even though the latter might: allow competitive advantages to emerge in Queensland's organizations; and provide 'raw material' to Members of the Legislative Assembly (and others) for meaningful public policy debate.

The Old Ways are no Longer Good Enough: Unfortunately Queensland's resource based economic strategy (and the system of 'strong' Executive government which emerged as a consequence) has been increasingly ineffective in promoting the welfare of the community.

For example:

• industries based on 'comparative advantages' (the natural advantages of regions) are now recognized by business strategists to be often relatively un-productive (ie incapable of sustaining high value added). This is because all producers tend to have the same advantages and (in a competitive environment) find prices bid down to near their costs (eg see Carter C, Determining Industry Policy, AGSM Conference on 'Creating the New Australian Economy', 1992; and Critique of the Productivity Commission's Approach to Microeconomic Reform, prepared by Australian Economic Analysis for Australian Business Chamber, 1996). High value added is needed to sustain high community incomes. Emphasis is increasingly placed on the need for 'competitive advantages' if high value added is to be captured
• Queensland's per capita incomes have remained significantly below the Australian average - which has been in long term relative decline by international standards. Yet official publications traditionally provide the community with a misleading impression about Queensland's economic performance. [A 1997 state economic development strategy, which specifically highlighted the need to reverse the long term relative decline in the productivity of Queensland's economy, was an exception].

Concern has been expressed for around 15 years about the need to diversify Australia's economy away from resource based (commodity) production - eg because the latter suffers poor terms of trade (ie prices of exports fall relative to the prices of imports). This occurs for reasons like those outlined above.

A Weak Position: Queensland is very poorly positioned for diversification into higher value added economic activities, because diversification into knowledge (not capital) intensive production is now essential.

Why? After the industrial revolution, the most highly productive industries were capital intensive (based on mechanization until the 1920s, then mass production). Since the 1960s, however, capital intensive mass production has migrated (often with the aid of multinationals) to low wage countries - due to improved transport and communications and aggressive economic strategies in developing countries with skilled workforces and low labour costs (especially in Asia). The latter's competition prevented high value added being maintained in primarily capital intensive production. This had previously supported high wage levels in developed economies (in North America and Europe), and the shift led to de-industrialization in developed economies, and to the search for new sources of competitive advantage to support high wage levels (ie knowledge intensive industries). This raised the standards to be met in diversification of Australia's economy. Australia's performance in the 1980s was criticized because its diversification had mainly been into capital intensive production (Access Economic and Allen Consulting, Developing Australia's National Competitiveness, at Business Council of Australia summit on 'Our Competitive Future', 1991)

Queensland's position is weak because of the lack of institutional capability to handle knowledge - which was highlighted above as a major factor in the 'childish' behaviour that your students saw in Parliament. This weakness can be illustrated by reported intentions of the present State Government (see A Weak Agenda for Queensland?, enclosed).

Relevance for Students: A few years ago the behaviour which your students observed in Parliament might have made little difference to their life prospects. However I submit that it is now symptomatic of a real threat to their future employment and income prospects.

[Signed John Craig]