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Working Draft Email Editor Re: Australia votes yes for competent government, editorial, The Australian, 9/9/13 I should like to belatedly submit that the return to competent government that your post-election editorial endorsed is unlikely in the foreseeable future.
The clearly dysfunctional government that Australia endured from 2007 to 2013 was mainly the result of inadequate institutional support to political leaders. Unless and until this is corrected whoever is elected will tend to pursue superficially plausible goals that often lack practical realism and thus produce instabilities, wastage and ongoing chaos. The ALP’s electoral victory in 2007 was based on a trendy policy agenda that, on close examination, seemed to contain major deficiencies (see Sorry to Spoil the Party – but Populism Trumps Electoral Victory, 2007). That agenda reflected the populist rhetoric that was increasing characterising public policy because weak civil institutions and politicised public services were inadequate in understanding / advising about / rasing public awareness of increasingly complex and unfamiliar challenges. The incoming Coalition Government’s policy agenda in 2013 seems to contain similar seeds of serious problems. For example:
Those points, and others, are developed further on my web-site (together with an outline of the incoming government’s policy agenda, Real Solutions for All Australians). The latter presents idealised goals built on a foundation of inadequate understanding, and is arguably a formula for more federal government like that over the past six years. Some suggestions about how institutional obstacles to competent government might be reduced are in Australia's Next Successful Prime Minister (2012). John Craig |
Detailed Comments |
Detailed Comments Looking to the Past? It is sometimes suggested that generals usually plan to fight the last war, and thus don't adequately prepare for the next one. There is some risk that this applies to Australia's political establishment in the absence of reliable and up-to-date sources of strategic intelligence and analysis. The incoming Coalition government in 2013 seemed to make much of experience gained prior to 2007 by the Howard Government as evidence of its likely future competence (see Section 21 of Real Solutions for All Australians in relation to (at that time) economic performance, reducing taxes, providing benefits to families and reducing debts) However Coalition Governments would probably have experienced problems equivalent to those the ALP faced if had they continued in power after 2007 as the favourable economic environment they had benefited from soon disappeared. As was suggested in 2007 (see Sorry to Spoil the Party – but Populism Trumps Electoral Victory):
It will be suggested below that rather than reliance on past experience there is a great deal more that needs to be considered if Australia's new government is to achieve its aspirations. Populism is still not good enough. Confronting Australia's Fiscal Problems? It is increasingly recognised that Australia's federal government faces a severe budgetary problem (see sources outlined in The Long Term Impact of the GFC, 2009), and the incoming administration has acknowledged and committed to addressing the structural deficits that it faces.
Unfortunately there is a lack of realism about these intentions because:
While the Coalition’s plan (Real Solutions for All Australians) recognises the need to address budgetary stresses, the method chosen (ie via a Commission of Audit) is anything but a satisfactory way of dealing with this for reasons outlined in relation to Queensland's recent experience (see Reforming State Governments: Does Queensland's Commission of Audit Have the Answer?). The latter notes, for example, that:
There is a need for a balanced approach to all aspects of government. Over-simplifying A Difficult International Environment As in 2007 there are looming international financial, economic and security difficulties that are likely to adversely impact Australia. However these don’t seem to be adequately taken into account in developing policy options.Real Solutions for All Australians makes frequent mention of issues that have international implications.
However, while major international developments (such as the transformations in Asia and the constraints imposed by high debt levels) were mentioned in Section 3, there does not seem to have been sufficient analysis or understanding of these (and other) current major trends and that conventional policy initiatives (such as those contained in Real Solutions for All Australians) quite probably inadequate. There seems, in particular, to be an urgent unmet need to consider the economic and security implications of cultural differences (eg those suggested in Competing Civilizations). For example:
International institutions established under US leadership after WWII (and which reflect Western political and economic preference ie democratic capitalism) have been proving increasingly ineffectual, and there has been a real risk of a breakdown of globalization like that at the end of the 19th century that preceded WW1 (as suggested in The Second Failure of Globalization). The latter refers to: (a) weaknesses in international institutions such as UN, World Bank and IMF that have arisen because of incompatibility between their founding principles and many of their members; (b) US's disengagement from those institutions as they became ineffectual - and shift towards unilateral action (with supportive allies) most notably in relation to the Cold War against Communism and the 'war against terror' that is mainly associated with Islamism extremism; (c) the inadequacy of 'hard power' methods for promoting 'Pax Americana - as illustrated in Vietnam, Iraq and Syria; (d) the establishment of new institutions such as the G20 to deal with financial instabilities - and it failures because cultural aspects cultural dimensions; (e) US 'pivot to Asia'; (f) US partnership with Russia as method for dealing with problems in Middle East Problems in the global economy are unlikely to favour ofr even allow significant improvement in Australia's economic performance Debt Denial: Stage 3 of the GFC?; Credit Bust First: 'Sixth Revolution' Later; China: Heading for a Crash or a Meltdown; ;
VERY ROUGH NOTES ONLY ...... Proposals in Real Solutions for All Australians seem overly simplistic in relation to:
As noted in Australia's Competitiveness: Some Suggestions there is a pressing need for better strategic intelligence Economic development and Diversification
Governing Preparing the Fight the Last War? That experience is of little current relevance because it primarily involved a long global boom based on easy credit which laid the basis for both the GFC and the heavy debt levels that currently constrain global growth because QE is again likely to be feeding asset bubbles. (see Debt Denial: Stage 3 of the GFC)
Reducing Red Tape
Improving Public Sector Operations in a Federal System Many of the proposals for improving public sector operations are likely to substantially worsen those functions - because they involved attempts by Australia's federal government to centrally plan / micromanage functions for which this is inappropriate.
There are significant problems with these intentions. For example roads and highway are not necessarily to ‘solution’ to improving transport in future (eg see Brisbane’s Transport Monster).– because:
Climate Change
Notes Alexander S., Peak oil is alive and well, and costing the earth', The Conversation, 9/9/13 US retail sales of gasoline have fallen 50% since the GFC [1] These Charts Better Not Reflect The True State Of The US Economy Why is US Oil Consumption Lower?, 31/1/13 Much of the policy agenda involves initiatives for which the Commonwealth has no constitutional power - and involves the assumption that centralised control rather than decentralized initiative improves government effectiveness – an assumption that is no more valid for government than is central economic planning; he creation of a PM’s Advisory Counicl to advise on economic development cannot support the apolitical initiatives that are needed to make a real difference;
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Coalition Policy Agenda |
Outline of Real
Solutions for All Australians Will deliver a strong, prosperous economy and a safe, secure Australia on the basis of stronger economy / communities; cleaner environment; stronger borders; and modern infrastructure (via: lower taxes; more efficient government; more productive businesses). Stronger economy will involve: competitive manufacturing, dynamic services sector, growing knowledge economy, strong agriculture / mining; and strong small business; 1. Top policy priorities: stronger / more productive economy; get budget under control (cut waste / debt / keep interest rates low to protect against shocks); eliminate carbon tax; grow small business by reducing business costs / taxes / red tape; build 5 pillar economy (manufacturing innovation; advanced services; agricultural exports; education / research and mining exports); generate 1m jobs from better economy; build more modern (especially road) infrastructure); improve health services by putting communities in charge of hospitals and improving cooperation with states / territories; deliver better education by putting communities in charge of improving local school performance; take direct action to cut carbon emissions – and establish Green Army to clean up environment; stop the boats; provide strong / stable / accountable government. 2. Building a strong 21st Century Australia: Have been listening to people’s / small business's concerns and consulting experts. There is now a need to foster productivity, competitiveness and growth - particularly in the context of the great transformations occurring in Asia and the challenges of a debt-challenged world. The plan is to build a stronger economy and chart a long term course for Australia. 3. A time for decision: Australia’s key economic challenge is to compete successfully in a more competitive world. Government needs to equip the economy to compete, not just point out the opportunities available from Asia’s rising middle class. Asia offers massive opportunities. Tax and labour reforms are vital to achieve this. Australia’s real challenge is lower / simpler / fairer taxes to promote productivity and industries to take advantage of opportunities. There is a need for: improved productivity / growth; better sovereign risk profile; workplace reforms; eliminate carbon tax and mining taxes; streamlined environmental approvals; reduce cost base for mining; increase economic flexibility; address infrastructure blockages; and support small business. Responsible economic management is vital. The structural budget position is currently poor given: $120bn in unfunded promises; government has been in deficit for 4 years; last yeas deficit blew out $30bn; accounting tricks are being used to make budget look better. Government has focused on spending side of economy, not on productivity. Productivity growth has been very poor. Investment in resource projects have been cancelled – raising concerns about new taxes; sovereign risk; poor productivity; and high costs. GDP is growing too slowly, and monetary policy is being used to prop this up. Problems include: over-regulation, inflexible work practices, poor jobs growth. Without strong economy other challenges can’t be addressed. Bad government interested only in its own survival has been part of the problem. 4. Delivering a strong prosperous economy: Key elements of economic plan are: live within means / control budget; lower taxes; boost productivity; deeper Asian engagement; help small business; diversify to 5 pillar economy. Less debt is desirable. 5. Living within our means:. Net debt of $160bn is too high – so budget must be brought under control. A Commission of Audit will be established to identify savings and efficiencies. Savings will be achieved by reducing overlap between different levels of government, and reducing bloated Commonwealth public service (by natural attrition) 6. Lowering taxes: This will include: reduced income tax; reduced company tax; eliminate carbon tax (repealing tax / taking direct action to achieve 5% reduction in carbon emissions by 2020); abolish mining tax (to attract more mining investment). Lower taxes and a reduced sovereign risk profile will attract more investment 7. Boosting productivity: A Productivity Priorities Working Group has been established to consult with business. Better Productivity Plan involves:
8. Gaining more growth from Asia: – by stronger trade relationships, welcoming investment, boosting exports and deepening knowledge of / engagement with Asia. Australia’s economy will be modernised. People-to-people skills / mind-sets and skills will be improved. Emergence of India and Indonesia will be recognised as well as China. Free Trade Agreements will be sought with China, Indonesia, Japan, India and others. Focusing on Asian opportunities and diversified economy will boost exports. Diplomatic and trade ties with India will be boosted. More Asia-capable talent will be developed (via study / work experience / relationships / learning to adapt behaviour to Asian contexts / working with Asian governments / developing ‘Asia literacy’ beyond languages. A two way Colombo Plan will be developed. 40% of high school students encouraged to study foreign (hopefully Asian) language 9. Helping small business: who are the main job creators by: lowering taxes / costs (abolish carbon taxes / modest company tax cuts); cut red/ green tape (eg by parliament spending 2 days pa removing legislation / regulations); simplifying superannuation payments via ATO; opt-in options for paid parental leave scheme; reviewing competition laws; extending unfair contract protection to small business. Goal is to double rate of small business growth 10. Building a five pillar economy: to guard against having all eggs in mining basket. PM's Business Advisory Council will be established to advise on economic development. Manufacturing innovation will be supported by: repealing carbon tax; cutting red tape; good R&D incentives; creating environment to support international competitiveness; more effective anti-dumping measures; and building on strengths in manufacturing innovation. Strengths in agricultural exports will be enhanced by: building on existing food production strengths and better managing water resources; supporting fishing industry and reviewing Marine protected Areas; and provide stability / certainty to live exports trade. Strengths in advanced services will be increased by: cutting red-tape; emphasising financial services; health services; engineering / architectural services; encouraging IT services; expanding skills into Asian region; give priority to Johnson Report on growing financial services. World class education and research will be enhanced by: encouraging its modernisation and use of IT; and expand education exports in Asia and online. Mining / energy / resource sector will be enhanced by: building on rich resource base; abolishing mining and carbon taxes; one-stop shops for environmental approvals; and encourage international investment. 11. Delivering modern infrastructure: Main emphasis will be on reducing road / highway bottlenecks. A 15 year plan of national projects will be developed with Infrastructure Australia- as a Commonwealth / State plan revised every 5 years. Better value for money will come from working closely with Infrastructure Australia. Its governance will be improved; projects over $100m will require IA cost-benefit analysis; IA will publish project justifications; projects will be priorities on the basis of cost benefit analyses; and project priorities / timetable will be announced in consultation with states in 12 months. Private infrastructure investment will be encouraged - perhaps through Infrastructure Partnership Bonds. Specific major road and highway projects will be prioritiesed. Affordble broadband will be accelerated (with: transparent cost-benefit analysis; use of best available technologies; accelerated progress in priority areas; and end NBN waste). Attention will also be given to building more dams 12. Delivering more jobs, higher wages and higher living standards: Jobs will be created and wages raised by pursuing Better Productivity Plan; getting unemployed young people back into workforce; giving women and families options through paid parental leave and affordable / flexible childcare 13. Reducing cost of living pressures: Families are society's bedrock. Governments role if to support and increase choices available to families. Cost-of-living pressures will be reduced by abolishing carbon tax; lowering taxes; keeping interest rates low; restoring Private Health Insurance rebate; delivering more affordable childcare (following Productivity Commission review); delivering genuine paid parental leave; tackling cyber safety; delivering better local roads and modern infrastructure (especially roads) 14. A more secure retirement: The goal posts on superannuation won't be moved. Structured incentives will be provided for employing the over 50s. Living costs will be reduced by ending carbon tax. Benefits for veterans will be indexed. An Aged Care Provider Agreement will be negotiated with aged care sector. 15. Better services / society: A strong economy will be sought to allow investments in government services (eg NDIS, health, aged care, education). Close cooperation will be sought with states through COAG as they are mainly responsible for service delivery. COAG will be reformed - rather than being used as a parking lot for difficult problems. The backlog of its agenda will be cleared. The NDIS will be implemented as recommended by the Productivity Commission. In collaboration with the states management of hospitals will be sought through local community-controlled boards - so communities and exerts rather than bureaucrats will be in charge of improving performance. A patient-care first staff culture will be sought and better health outcomes for patients sought at the local level. Mental health services will be boosted with Early Psychosis and Intervention Centres; research, headspace sites; improved employment options. Diabetes research will be supported. PBS listing of medications will be based on independent advice. Private health insurance rebate will be restored. Dental services will be brought under Medicare when possible. 16. Better health services: In collaboration with states hospitals will be managed by local boards, with CEO to manage budgets - so that communities and experts (not bureaucrats) are in charge of improving hospitals. Patient first culture will be created in staff. Mental health services will be improved by Early Psychosis Prevention and Intervention centres; boosting research; new headspace sites; better employment options. Diabetes reasearch will be supported. Medicines available through PBS will be determined by independent committee. private health insurance rebate will be restored. Dental care will be brought under Medicare when possible., 17. Better education: Parents, principles and communities (not unaccountable bureaucrats) will be put in charge of schools - and 'students come first' culture will be sought. In cooperation with sates, schools will be encouraged to be come independent - thus providing simpler budgeting and resource allocation. Teachers ill be supported by ensuring rigorous curriculum - without being too rigorous / prescriptive. Current school funding will be indexed to costs. Science education in primary schools will be emphasised. Cyber bullying will be addressed. National Schools Chaplaincy program will be supported. All Australians will be encouraged to seek higher education. Current university funding arrangements will be maintained. Reduced red tape / regulation / reporting will be sort. Research funding will be reviewed. Stable infrastructure funding will be ensured. Higher education as export industry will be encouraged. Advanced skills job training will be encouraged. Incentives ill be provided for giving jobs to young unemployed. Immigration will focus on skilled migrants. Will work with states to encourage 40% of year 12 student studying foreign (preferable Asian) language. Intend to develop people to people relationships in Asia - via two-way Columbo Plan and fostering 'Asia-capable' learning 18. Stronger / better communities: Regional Australia should receive 'fair share' of support. Certainty for 'live exports' trade will be sought. Water resources will be used to develop regions as Asian 'food bowl'. New land development in north Australia will be emphasised. Economic strength wll be promoted. Rules related foreign sale of agricultural land will be strengthened. Housing affordability / home ownership will be improved - by encouraging states to reduce red tape. Population, citizenship and settlement will emphasise economic growth and enhancing Australia's social fabric. Immigration will be non-discriminatory and serve national interest. Refugee intake will emphasise those most in need. Migration will emphasise skilled migrants. To promote safety and fight crime a new national safe-streets program will be established - with expanded use of CCTV. A new Commonwealth / State Standing Council on Law, Crime and Community Safety will be established. Funds will be provided to surf clubs. Community-Business Partnerships will be established to encourage philanthropy. Indigenous Australians will be encouraged to get ahead. Programs will be streamlined. Funding will be directed away from bureaucracies to local communities. Families will be encouraged to ensure that children attend school daily. The Australian Employment Covenant will be supported. Training for training's sake will be ended. PM will spend a week each year in remote community. Freedom of speech and open media will be protected - by rejecting media regulation, encouraging media to lift standards, reject 'public interest tests' for media mergers, and support freedom of speech by prohibiting incitement of racial hatred, but not prohibiting causing offence. 19. Cleaner / more sustainable environment: Direct action to reduce carbon emissions (by 5% by 2020) will be taken involving: Emissions Reduction Fund - which will be spent on domestic action, not offshore credits; supporting specific projects. A 15,000 green army will be promoted. Australia natural water resources will be enhanced (eg by Howard Government's 10 point plan for Murray Darling and planning for new dams). Environmental approval process will be streamlined - including one-stop shop for approvals. Balance will be sought between environmental protection and community needs (eg in relation to fishing and Marine Protected areas). ; 20. Stronger borders and more national security: National interest will come first, strong borders and defence capability will be sought. Strong border will be sought via: seeking cooperation with Indonesia; reintroducing temporary protection visas; instructing navy to 'tun back' boats where safe; give priority to offshore special humanitarian visa applications - and give them priority also in obtaining permanent residency; boost offshore processing; presumption against refugees status will be established for those arriving by boat without papers; jail sentences of people smugglers will be increased; and reserve 11,000 of 13,750 refugee places for offshore applicants; a single case officer appeal process will be restored. Defence force will be boosted - with 3% pa increase in spending; shift from spending on defence bureaucracy to military capacity; acquire state-of-art unmanned aircraft; produce new Defence White Paper; and ensure that there is no submarine capability gap. Counter-terrorism measures in Australia will be strengthened. Stronger focus will be placed on Australia's region in foreign affairs (eg reassigning diplomatic representatives, build relationships with neighbours, enhance US access to bases in Australia, set performance benchmarks for foreign aid, and establish two-way 'Colombo Plan'. 21. Strong, stable and accountable government: Accountability and transparency will be restored. Government will be for all, not special interests. Class war will end. Tony Abbot is a strong leader with a good track record. Coalition team includes experienced ministers. Under Howard Government they helped: turn Australia's economy around, reform tax system, delivered 2m new jobs, delivered more than 20% increase in real wages and doubled net wealth per person; delivered tax cuts and benefits for families; and delivered a budget surplus in10 out of 12 years - paid back $96bn in debt and put away $70bn in net assets; secured Australia's borders and stopped the boats |