Reconsidering the Origins of Kevin Rudd's Failure (email sent 29/5/10)

Joshua Frydenberg
Liberal Candidate for Kooyong

Re: 'The Origins of Kevin Rudd's Failure', Australian Financial Review, 25/5/10

I should like to both support and disagree with aspects of your analysis of Mr Rudd's policies and performance.

My interpretation of your article: ALP adopted 'New Leadership' as its campaign slogan in September 2007. Now it is clear that reality did not match the hype. Crisis of leadership can be traced to PM's maiden parliamentary speech in 1998 which started with 'Politics is about power. It is about the power of the state'. For him power is an end in itself. It is about centralization, rather than devolution. This is why government has had no policy consistency - and no other first term Australian government has been like this. Despite the PM's protestations he never was an economic reformer or fiscal conservative. His maiden speech rejected the notion of government in retreat. He did not accept markets are better than governments in determining efficiency and equity. He believes in activist government and government regulation of markets. His mission was described in terms of challenging the market-based orthodoxy emanating from treasuries across the nation. Despite his pre-election promise, he always believed in big interventionist government. For Rudd it was never about the individual or the market, but always about the state. He is overseeing a growing government sector (with budget deficits, indiscriminate new taxes and far reaching state-run programs). He undermines the role of the private sector (eg in health and education; and through RSPT proposal). He is deaf to the limits to what can be achieved efficiently and effectively by government (eg after home insulation disaster he wants to nationalise broadband). More attention should have been paid to the statements about power in his maiden speech.

As you suggest it has been obvious for a long time to anyone who bothered to look that the present federal government would not achieve much of practical relevance. For example:

• my prediction at the time of the 2007 election that the Rudd Government would fail in practice despite many opinion leaders' enthusiasm for Mr Rudd's rhetoric was in Populism Trumps Electoral Victory;
• some observations on the lack of substance in Mr Rudd's policy analyses are in and Restoring 'Faith in Politics' (being December 2006 comments on Mr Rudd's apparent simplistic assumption that problems could be solved if only leaders were more ethical) and A Social Democratic Alternative to 'Neo-Liberalism'? (being a February 2009 comment on Mr Rudd's writings on political economy);
• further comments on the lack of substance in various things that the federal government attempted are in Australia's New 'Cooperative' Federalism (December 2007); Infrastructure Magic? (January 2008); Apology Magic? (February 2008); Fixing Australia's Health and Hospital Systems? (March 2008); Productivity Magic? (April 2008); and Public Service Magic? (May 2008). The probability that recent reforms to the health and hospital system will tie administration in further knots and be seen in 3-5 years to have made a bad situation worse are in Making a Bad Situation Worse? (April 2010);

However the Rudd Government's initial popularity and subsequent poor performance are arguably symptoms of structural problems in Australia's system of government generally, rather than just a consequence of Mr Rudd's particular philosophy and policies. Australia's system of government has been struggling for many reasons. For example:

• political issues have become very complex (eg because of: economic globalization; concerns about environmental consequences; the desire to promote social goals; and increasingly centralised control). Thus it has become harder to avoid unintended side-effects from policy initiatives, or to present policy agendas that are both simple enough for the 'man in the street' to understand and likely to be effective;
• governments' ability to influence economic outcomes has been constrained in more advanced economies by competition from less-developed economies with lower wage rates. Maintaining both relatively high wages and high levels of employment was recognised in the 1980s to require constant market-driven changes, that would be impeded by economic regulations (though the latter might be needed to achieve non-economic goals).

Populist political styles (involving the expression of policies that sound impressive but are unlikely to be effective in practice) have have tended to be electorally successful as a consequence of such difficulties (see On Populism). While populism explains Mr Rudd's initial electoral success and his government' subsequent poor performance, it is by no means unique in this respect. Anyone who observed the disastrous results in the early 1990s of autocratic attempts by inexperienced 'reformers' to impose unrealistically simplistic solutions to complex problems under Queensland's Goss administration (in which Mr Rudd had a central role) would have had no difficulty anticipating the sort of problems that the present federal government has experienced (see Queensland's Worst Government?, 2005). And other state governments experienced similar disasters around that time.

However unrealistic promises by populist politicians is not the only reason that Australia's system of government is now in difficulties. For example, serious damage has been done to machinery of government in attempts to make unrealistic policies work (eg see Decay of Australian Public Administration, 2002 and Neglected Side Effects of National Competition Policies, 2004).

Australia's Governance Crisis (2003) was an attempt to paint a a broad picture of these, and the many other, challenges to re-creating an effective system of government in Australia. It also suggested options to both: (a) simplify what governments are expected to achieve (by democratically enabling apolitical institutions to promote economic / community development); and (b) increase support to elected politicians both within and outside the machinery of government.

I would be interested in your response to the above speculations.

John Craig

Political Fakery (email sent 27/4/10)

Phillip Adams
The Australian

Re: 'Faking It', The Australian, 24/4/10

Your article expressed concern about 'fake politics' - which perhaps prevents decent policy being formulated. Fakery was described in: patriotism; concern over non-issues; evidence; sincerity; authenticity; repentance - and was said to be illustrated particularly by fake questions and answers in Parliament.

Another way of describing political fakery is 'populism' - which involves trendy rhetoric that may appeal to the electorate though it might be neither practical nor beneficial if applied as government policy (see On Populism, from 2007).

Populism has arguably become Australia's political norm, because of structural obstacles to more realistic politics. Reasons for this are suggested in Challenges to Australia's Democratic Institutions, and may include:

• increasing complexity (ie issues have become more interconnected, so that simple answers are harder to find);
• the emphasis on competition policies (to increase efficiency in government operations) as the main means to boost the productivity of Australia's economy. This made government functions responsive to market forces rather than to political policies - and (as well as being economically inadequate) had many side-effects on governments' ability to govern (eg see Review of National Competition Reforms: A Commentary);
• elimination of independent professional Public Services. Given the weakness of Australia's civil institutions resulting from traditional dependence on imported capital and policy ideas, realism in Australian politics had always depended behind-the-scenes reality checks on wilder political ideas - but these have been casualties of the perceived priority of political 'responsiveness' (see also Decay of Australian Public Administration, 2002).

The structural causes of fakery / populism in Australia's political system will not be quickly or easily removed. However some suggestions about how this might be achieved (through stronger institutional support to the political system) are in Restoring 'Faith in Politics' (2006).

I would be interested in your response to the above speculations.

John Craig

Withstanding Bad Ideas: What a Good Idea! (email sent 15/4/10)

Gary Johns

Re: 'Brumby stands up to PM on health', Australian, 15/4/10

In raising concerns about federal government proposals for reform of Australia's health and hospitals system, your article noted that:

"Good politics is not redesigning political architecture to weaken the states, it is having sufficient countervailing force to withstand bad ideas whatever their origin".

You are spot on in identifying Australia's need to withstand bad ideas that are presented primarily for political advantage. Political populism has arguably become a major threat to Australia's system of government (see On Populism).

To improve Australia's ability to 'resist bad ideas' there seems to me to be a need for more competent external and internal support to the political system - see Weak Opposition which suggests developing such support in the context of the inability of federal and state oppositions to come up with ideas that are any better than those of governments. Other reforms that might improve the quality of decision making within the public sector are speculated in Fixing Australia's Federation.

I would be interested in your response to the above comments.

John Craig

Weak Opposition (email sent 14/4/10)

Peter Van Onselen

Re: Weak opposition throws governance out window, The Australian, 14/4/10

Well said.

In this regard some thoughts on weak political oppositions in Queensland may be of interest (see Another Strategic Option: Boosting Accountability through Enhancing Competence?).

In Brief: In the context of the inability of Queensland's Parliament to effectively constrain the Executive despite manifestly poor governance, it is argued that

• strong civil institutions are needed if oppositions are to have access to the raw material required to propose credible policy options; and
• internal reality checks on poor Executive policies are also vital to constrain purely populist governance - but such internal constraints are now limited by changes to public service career structures which favour 'yes men'.

Queensland is merely a more extreme version of deficiencies in these areas, which apply Australia wide. A somewhat 'bigger picture' view of these issues is in Restoring Faith in Politics (which commented on Mr Rudd's philosophy of politics).

John Craig

Initiatives to Enhance Productivity? (Email sent 31/3/10)

Paul Kelly
The Australian

RE: 'Election's economic narrative reveals real Rudd', The Australian,31/3/10)

I have a suspicion that you may be quite correct in suggesting that the 'Election's economic narrative reveals real Rudd' as (a) Mr Rudd (along with many others) certainly seems to have a history of insubstantial political populism; and (b) the suggested micro-economic initiatives certainly seem to reflect insubstantial populism.

My interpretation of your article: While the federal Opposition leader criticises prime minister as a spendthrift - who overestimated the impact of GFC and thus spent too much money, PM presents counter-cyclical spending as complementary to the microeconomic reforms that are government's long term efforts to boost productivity - and both as consistent with his underlying philosophy about the need for government economic initiative - as an alternative to 'market fundamentalism'. Rudd's productivity-enhancing agenda includes: increase in public infrastructure stock (especially involving transport and communications - including NBN); health and hospital reform; an extended education revolution; more university and training places; increasing workforce participation (via parental leave and preventative health measures); promoting more liveable cities (via several programs); and interventions to contain housing costs. All would hope to benefit working families.

In relation to the proposed 'productivity enhancing' initiatives it might be considered (for example) whether:

• serious problems associated with past microeconomic reform initiatives remain to be corrected - and if corrected would boost productivity;
• some current proposals for infrastructure development are suspect;
• federal intervention in state functions (eg education, infrastructure, health) may be more the problem than a solution;
• current health and hospital reform proposals might not really solve anything; and
• changes to Australia's tax system might revolutionize states' motivation to be effective in developing a productive modern economy.

These points are developed in more detail following this email.

John Craig

Detailed Argument

• past microeconomic reform initiatives contain serious limitations which require remedies (see Review of National Competition Reforms: A Commentary, 2004):
  • Firstly, those mainly-market-liberalization reforms created an environment in which individuals, enterprises and regions were required to compete, but did little to boost their ability to compete successfully in high productivity endeavours (as the latter ability depends heavily on the effective integration of various elements within the economy - ie so that different types of enterprises effectively support each others efforts). For example, innovation is an important tactic in boosting productivity, yet available indicators suggest that Australia's innovation systems are not well integrated or effective. Methods to overcome such problems (through apolitical market-oriented strategic leadership) are available (eg see A Case for Innovative Economic Leadership, April 2009) and arguably these need to be given priority in any serious effort to boost productivity because expensive government economic inputs (eg better education / training / infrastructure) are likely to be of much less benefit if they are introduced into an economy that (like Australia's) remains unnecessarily poorly developed, and thus unable to use them productively;
  • Secondly, the application of competitive methods to government functions seriously compromised governments' ability to perform their functions effectively. In particular this added to difficulties in the planning and delivery of infrastructure (see Infrastructure Constraints on Australia's Economy, March 2005). Any efforts to boost productivity in relation to infrastructure need to start by reconsidering what is required for governments to provide this effectively, as current machinery is highly dysfunctional;
• there is considerable doubt about some current proposals for infrastructure development. Concerns about the lack of any clear case for the proposed $43bn National Broadband Network (NBN) are common. Less well recognised is that transport planning seems to be something of a mess (eg consider Brisbane's Transportation Monster, May 2008). The latter highlights the fact that uneconomically-expensive freeways are being built through tunnels to complete the city's freeway network, though it seems likely that this can not be the basis of the sort of transport systems that cities will require in a post-peak-oil world;
• federal intervention in functions that were constitutionally assigned to state governments are arguably a major reason for the lack of states' effectiveness in the performance of their roles in the provision of infrastructure (see Fixing Australia's Federation ). Moreover increasingly centralised efforts to manage these issues simply results in separation of decision making responsibility from those who have the information / experience required to do so successfully;
• the majority of analysts seem to view federal proposals for health and hospital reform as unlikely to be effective (see Is a National Health and Hospitals Network Progress?), just as the vast majority of analysts viewed Mr Rudd's 'post-market-fundamentalism' economic philosophy as insubstantial (see A Social Democratic Alternative to 'Neo-Liberalism'?, February 2009);
• quite apart from the dubious character of the present government's 'education revolution', improving education is not in itself likely to boost economic performance (ie it might in the absence of a well developed economy capable of employing the new human resources, merely result in a brain drain - see Is Education Spending the Key to Raising Economic Productivity?, January 2007);

Moreover there is arguably a very substantial prospect for accelerating the development of a productive modern economic in Australia through increasing the financial incentives that state governments (who have the lead government role in economic development) have to seek such an outcome (see Providing Incentives for Effective Economic Development). At present, their narrow tax bases encourages an emphasis on the development of industries with high turnover, but low value-added - which is quite different to the outcomes that would benefit the community more generally

It has been obvious for a long time that efforts to boost to productive capacity of Australia's economy would be a desirable part of any response to the global financial crisis (see Suggestions in Defending Australia From the Financial Crisis and The Long Term Impact of the Global Financial Crisis) particularly because there is no reason to believe that that crisis is yet simply part of history (see Unresolved Problems and Coming Crises?).

Testing the ALP's Patience? (Email sent 3/3/10)

Paul Kelly,
The Australian

RE: 'Rudd's deeds need to be as bold as his ambitions', The Australian, 3/3/10

Various observers have noted the parallel between what is now known as Mr Rudd's 'mea-culpa' (saying sorry for government foul-ups) and the tactic used by Mr Peter Beattie as premier of Queensland.

Queensland's Government has long been crisis prone - arguably as a consequence of the impractical machinery of government created by the reformist Goss administration. For many years Mr Beattie's politically-successful response to failures was to apologize for them, and then throw money at the latest disaster - arguing that the responsibility of political leaders was merely to fix problems. One of the results was that the deterioration in Queensland's financial position accelerated.

Another result was that eventually the Queensland ALP moved Mr Beattie to North America, and replaced him as Premier with Anna Bligh, who promised to prevent foul-ups occurring, rather than merely 'fixing them' (see Queensland's Next Successful Premier, 16/9/2007).

Your article indicated that Mr Rudd has bold ambitions, and that achieving them is proving more difficult than expected. Another way of say this is that Mr Rudd was elected on the basis of unrealistic policy claims (see Sorry to Spoil the Party - but Populism Trumps Electoral Victory, 24/11/07).

One must wonder whether the ALP will be as patient with Mr Rudd as it was with Mr Beattie.

John Craig

Looking for a Better Federal Public Service: Intellectual Populism?
(email sent 8/9/09)

Ms Louise Dodson
Australian Financial Review

Re: "Wanted: a better public service", Australian Financial Review, 4/9/09

In your article you noted that the Prime Minister has ordered a comprehensive review of the federal public service to build a more open US-style bureaucracy with strong links to universities, business and other expertise.

The question that needs to be asked is whether this is a good idea, or just another example of 'intellectual populism' (ie of ideas that sound 'trendy' to academics, business leaders and the media, but lack realism and are likely to prove disastrous in practice).

There is good reason to suspect (for example) that an 'open' US-style public service model would be undesirable under Australia's quite different government structures (ie it would probably escalate the incidence of crony capitalism and corruption, which has already increased because of politicisation in recent years).

This is argued in more detail below, together with other reasons for suspecting 'intellectual populism' as the foundation of the proposed federal public service review,

John Craig

A Comprehensive Public Service Review to Build a more Open US Style Bureaucracy: An Example of 'Intellectual Populism'?

It is noted for example that:

• US governments are structurally different to those in Australia, and thus require a quite different style of public service. In Australia, the government executive is drawn from the party that controls the legislature, whereas in the US the 'presidential' executive is elected separately from the legislature. The US 'president' then nominates a 'cabinet' of (hopefully) experts and the latter in turn appoint senior officials who are supposed to have both appropriate expertise and political alignment with the executive. However the US executive is then counter-balanced by an independent and well-resourced legislature. Under the system Australia inherited from Britain, by contrast, constraints on the abuse of executive power rely less on the legislature (as Australian executives dominate in parliament) and depend more on: (a) an apolitical head of state to ensure that the executive complies with the rules of the game; and (b) a politically independent and professional career public service to provide balanced advice and internally monitor suspect dealings. There is little doubt that the politicisation of public services in Australia in recent years (as governments sought expert / compliant senior staff from universities, business and elsewhere) has had a significant role in the increasing incidence of 'crony capitalism' that is now plaguing government administration (eg see "Nip corruption in the bud": Good idea, but Fitzgerald didn't go far enough). Implementing a US-style public service system in Australia (under which there would be a constant and politically-controlled interchange between the public service and external sources of 'expertise') would be a formula for removing virtually all on-line constraints on the dispensation of patronage to political cronies;
• comprehensive reviews are not necessarily a way of creating a better public service. The comprehensive review of the Queensland public service by the Goss Government (in which Mr Rudd had a central role) was counter-productive. It pursued idealistic goals under the control of individuals with little knowledge or experience of the real nature and functions of government, and managed thereby to: (a) politicise administration; (b) seriously erode the public service's knowledge and skill base; (c) create unworkable machinery of government; (d) lay the basis for the many dysfunctions and crises that have plagued subsequent Queensland administrations; and (e) undermine the Fitzgerald Inquiry's goal of reforming Queensland's democratic institutions which had been the main rationale for undertaking a 'comprehensive review' in the first place (see various analyses of that classic example of reform failure);
• experience suggests that alternative means for 'creating a better public service' (involving building on existing capabilities by seeking internally for responses to new strategic challenges) could have achieved superior outcomes, because they would not have risked eliminating skills and dislocating functions that external 'reviewers' had no way to properly understand (see Outline of Changing the Queensland Public Sector, 1990).

The phenomenon of 'populism' (ie half-baked ideas that have dysfunctional consequences that are not immediately obvious to the 'man in the street') have become a real threat to Australia's system of government due to the lack now of professional public services to provide a 'reality check' on wilder ideas (see On Populism).

Email sent 31/3/09

Henry Ergas
Concept Economics

On a Populist Road to Disaster?

Your recent article suggested that the present Federal Government is good at politics but bad at policy - and that this combination (populism) will cost Australia dearly.

My interpretation of your article: Governments rarely have the intellectual rigor to adapt to changed circumstances - and half-baked populism can be the result. Kevin Rudd has made mistakes that affect the core of Australia's prospects. Reducing labour market flexibility (eg with unfair dismissal laws) will condemn many to unemployment. An emissions trading scheme will impose large costs for purely symbolic benefits. The Government seems determined to wreck Australia's broadband network - by seeking to revamp the incumbent provider's network in the face of its active opposition. The Government's Building Australia Fund seems likely to provide billions for projects that would fail any serious cost-benefit test. The best outcome from its car plan would be for US car industry to collapse before it can access Australian government funds. Spending on stimulus packages does not appear well targeted. All government spending must be paid for by taxes with high economic costs. Keynesian multipliers don't compensate for mis-spending. Employment created by wasteful spending could have been created elsewhere if funds were used productively. Lack of disclosure of what is going on, makes the situation worse. The Federal Government (like Roosevelt's administration in the 1930s) is far better at politics that at policy. Public policies that are poorly conceived and wasteful will hurt the country (Ergas H. 'Rudd on the road to disaster', The Australian, 30/3/09).

Populism

While I have not studied many of the examples you cite (and so can't judge the quality of many policies), there seems little doubt that the phenomenon you describe (populism) has become a real source of weakness in Australia's system of government (see On Populism), and that the present Federal Government is an extreme example (see Populism Trumps Electoral Victory).

Response to Global Financial Crisis

However one of the issues that you raised does resonate - namely the cost of spending on stimulating the economy to reduce the risk of recession. Government actions in response to the global financial crisis (GFC) seem to be based on an assumption that it will only result in a short-term even-if-severe economic downturn.

There are however reasons to suspect that this is wrong and that the GFC will lead to major changes in the workings of the global economy that will require structural changes in Australia's economy and seriously affect government revenues (see The Long Term Impact of the Global Financial Crisis). There is, for example, no way that world economic growth can be restarted and sustained without correcting the financial imbalances that have become a blight on the global economic environment.

Yet there is not even any serious discussion of how such imbalances could be corrected. Moreover, despite the coming G20 Summit, the world seems to be headed down much the same path as it did in the 1930s because countries (such as the US and Australia) who have large current account deficits probably can't borrow enough to reflate their economies, while surplus countries refuse to do so.

Ignoring such practical problems seems to be as much a feature of Mr Rudd's proposed 'solutions' to the GFC, as does the neglect of 90% of the factors which caused the crisis in Mr Rudd's populist critique of neo-liberalism (see A Social Democratic Alternative to 'Neo-Liberalism'? ).

John Craig

[PS: added later - see also Wolf M. Why G20 leaders will fail to deal with the big challenge', Financial Times, 31/3/09]

Email sent 21/2/08

Ms Laura Tingle
Financial Review

Rising to the Occasion and the Job?

In a recent article you gave a very positive assessment of Australians' current outlook on the basis of the apparent competent purpose of the new federal government.

My interpretation of your article: There has been growing surprise about Kevin Rudd since his election - leading to a change of mood across Australia towards one of hope and pride. Even public servants (and others who look for signs of competence / incompetence) are happy. There is an expectation of a good and talented government. The Prime Minister (who presented as 'me too' before the election) has transformed and showed a sure touch in relation to the apology. This appealed to stolen generation audience, yet contained an attack on coalition's failure to act. Talented people are being appointed. There has been no change for change's sake in public service. Rudd is often portrayed as a control freak - yet is taking risks by opening up issues he can't control. Government emits a sense of competence and purpose. Even some opposition members are impressed. (Tingle L 'Rudd rises to the occasion, and the job', Financial Review, 15/2/08).

But just precisely where is the sense of competent purpose being demonstrated?

Having observed Queensland's Goss Government (in which Mr Rudd apparently played a central role), recent national events bring a sense of deja vu. Its press releases in the early 1990s were fantastic, and certainly gave a sense of competence and purpose. The media swooned - and never seemed to understand why its performance was so poor that it suffered a massive electoral reversal after a very few years. There was a gap between its high-flying rhetoric and practical competence which such observers had no way to understand. This emerged because the Public Service, which under Australia's system of government must contain the talent to give effect to a political agenda if anything is actually to happen, had been torn to pieces to ensure its dominance by 'yes men' (eg see Queensland's Worst Government?) .

A significant difference now is that the ALP's pre-election threat to 'take an axe' to the Public Service has not been carried out. However doing so would be unlikely to have made much difference, as previous federal governments have already done the damage (see Decay of Australian Public Administration). Public Services who have been biased to favour 'yes men' for many years will not really care (as your article hoped that they might) about the competence or incompetence in an incoming government.

Your article correctly noted that Mr Rudd has opened up many issues and has raised great hopes. Unfortunately your concern that he may be unable to control those issues or achieve the promised results is likely to be very real (eg see Talkfest Magic?, Infrastructure Magic?, Apology Magic?). The national mood in another year or two may be somewhat chastened, if the Goss Government's dismal practical performance is anything to go by. Australians may, very belatedly, wake up to the fact that populist politics do not ensure good government.

John Craig

Email sent 4/13/07

Dr Clive Hamilton,
Australia Institute

Was the Rudd Government 'Trapped' by John Howard?

I noted your accurate assessment (reproduced below) of the presumably-impossible challenge that Australia would face if a commitment were made in Bali to a 25-40% reduction below 1990 greenhouse gas emission levels by 2020. As you noted Australia's challenge could be worse than other countries would face because of the special (ie 8% increase by 2010) deal that Australia was offered in Kyoto in recognition of its energy intensive export industries.

It is interesting that you believe that Mr Rudd is now 'trapped' - and that the trap was set by Australia's former Prime Minister.

It seems that Mr Rudd must now tell Australians that (despite his pre-election statements) either:

• they will still be tail-enders in reducing greenhouse emissions; or
• they will face massive costs and lifestyle changes - to deal with a politically-perceived threat that they will eventually realize may or may not be real (see Telling the Truth on Climate Change)?

However the trap was not set by the former government. Finding oneself 'trapped' is the price one must expect to pay for seeking electoral support for a populist agenda (ie one that the electorate thinks sounds great, though it is probably impractical). For reasons suggested in Populism Trumps Electoral Victory the Rudd Government is likely the find itself 'trapped' in relation to much of the policy agenda for which it gained an electoral mandate in 2007.

If Australia were to take seriously the sorts of greenhouse gas emission cuts that your article speculated about, then (for example) the energy-intensive resource processing industries which have been a significant feature of Australia's recent economic prosperity might need to be aborted. In this respect it can be noted that:

• there is currently a massive increase in the number of committed and under-consideration resource projects (Mitchell A., 'Growth: there's plenty more where that came from', Financial Review, 10-11/11/07). Compensation costs could be huge;
• the federal government's 'education revolution' strategy for boosting Australia's productivity and competitiveness in a post-resource-dependent economy is also a formula for becoming 'trapped' - see Is Education Spending the Key to Raising Economic Productivity?.

If Mr Rudd is indeed 'trapped', then the trap was actually set by those institutions which purport to provide informed inputs to public policy debates, but do so in an idealistic, rather than a realistic, manner.

Regards

John Craig

Mr Christian Kerr
Crikey

I should like to offer suggestions in relation to the questions you recently posed about giving direction to government in Australia.

Winners. Losers. And what next? (Crikey 25/11/07) ...... public language is another loser from this election. Howard’s and Rudd’s speeches were both utterly pedestrian – our incoming prime minister’s in particular. It contained no eloquence. Is that a sign of the real winner of this election? Will that be process? Kevin Rudd is very much the cautious bureaucrat. He is a bureaucrat who has only sketched the barest details of the direction he has planned for the nation and dressed it up with clichés and catchphrases. Popular and populist oversimplification and government by mission statement and media unit drives our dismal state Labor government. Their best and brightest will soon be moving to the Ming Wing in Canberra. If Kevin Rudd can’t give them better direction that their current bosses, we will all be losers.

The following comments are based on some study of both the dismal performance of Queensland's Goss Government (in which Mr Rudd had a central role) and of the East Asian neo-Confucian style of governance (ie autocratic rule by a bureaucratic elite) which has some relationship with Mr Rudd's leadership style.

In relation to the specific questions you posed, it is noted that:

• 'public language' was the loser long before this election - as the growing complexity of policy issues has made it very difficult to discuss them in a simple way, and populism has risen as a consequence (see Challenges to Australia's Democratic Institutions);
• Mr Rudd has been described as anything but a cautious bureaucrat. For example, he was seen as highly political and dissatisfied with the constraints of public service (see Paul Kelly's comments outlined in Smart Casual Kevin: 'Learning' in and 'Outgrowing' the Queensland Public Service?);
• process was certainly the winner in the machinery of Government established by the Goss Government. For example one credible observer described it as the most complex system of government in the Western world (see Comments). However it was badly corrupted process in that it involved: autocratic enforcement of the opinions of political cronies; widespread bullying of staff and other abuses of power; and a general failure of the institutional reforms that were nominally being undertaken as a result of a prior inquiry into deficiencies and corruption in Queensland's political system;
• populist oversimplification (which appeared to be a feature of the Goss Government) is no less apparent in Mr Rudd's current policy agenda than in whatever 'dismal state government' you were referring to - see Populism Trumps Electoral Victory. The implications of Mr Rudd's apparent belief that government activities can be successfully managed by measuring outputs further illustrates the problem (see Mr Impractical?).

Mr Rudd's 'new leadership' style involves engaging the public in consideration of 'strategic' policy questions - ie emerging issues with important implications (eg climate change) without adequate understanding of how to give practical effect to these. This is a 'progressive' style of political populism.

It is worth considering the relationship between this technique and the leadership style of the neo-Confucian elites who hold power in East Asia. The latter traditionally involves bureaucratic elites exerting power through the information flows they provide to social subordinates. In other words elites (selected through the education system on the basis of ability to manipulate knowledge) provide ideas about 'strategic issues' to which their subordinates are obliged to develop a practical response.

There tends to be something like a 15 year gap between expert opinion and general public understanding. Thus it is always possible to influence change in society by delving into issues that are in that gap - and this is the area in which bureaucracies traditionally operate behind the scenes. In particular the process of accelerating economic development (ie achieving economic miracles) in East Asia involved exactly such methods (ie consider the 'vision development' and administrative guidance which was the basis industry policy run by Japan's bureaucracy).

The process of social learning (ie responding to strategic issues) is quite different under Australia's democratic traditions, whereby elected governments tend to reflect ideas that are well known and widely accepted. This is the reason that governments subject to democratic mandates can never accelerate economic development in the way that is possible when power is held by bureaucratic elites (see Economic solutions are beyond politics). Under this tradition 'strategic issues' tend to be evaluated and practical options developed to some extent before political debate develops about them. Bureaucracies who may understand those issues are restrained under the Westminster tradition by their accountability to the community's elected representative. It was this constraint that Mr Rudd was unwilling to accept.

Mr Rudd's 'new leadership' style seems to be exploring the application of neo-Confucian-style techniques for exerting power in a Western society. He is drawing upon the sorts of knowledge traditionally available to bureaucracies to gain political power, while populists right across the political spectrum have been disabling (through politicisation) the ability of Public Services to provide any realistic alternative view.

Thus the question you posed of where the sense of direction for the ALP's 'best and brightest' who will soon flood into Canberra will come from is indeed important. If that sense of direction is to be developed through anything like the machinery which the Goss Government created, then Australia will go backwards as fast as Queensland did in the early 1990s.

In practice this means Australia would remain a client state of those who are globally dominant (ie responsive to whatever practical policy options they promulgate).

In order to achieve any other outcome, there is a need for fundamental institutional reform to: (a) improve public access to realistic understanding of complex issues; (b) ensure a reality check on populist politicians; and (c) simplify the issues that governments actually have to deal with by creating new institutions - see Australia's 'me too' electoral system.

Regards

John Craig

Ms Laura Tingle,
Financial Review

Your article last Friday gave a useful indication of why Mr Rudd's Government is likely to fail in terms of practical accomplishments.

My interpretation of your article: Kevin Rudd argues that government should be honest and open - and should establish measures by which its performance can be assessed. He objects to grand rhetorical statements lacking a substantive dimensions. Quantification is needed. There is also a need to deal with the mechanics of implementation (Tingle L. 'A nation in the image of Mr Practical', Financial Review, 23/11/07)

The problem is that government's main role involves functions that are complex and primarily involve 'relationships' between things, rather than 'things' as such (see Governing is not just running a large business). Relationships can't be measured - only described - and attempts to quantify everything government does distorts its activities fatally. Over-simplification (eg by idealised attempts to establish machinery which emphasised measured outputs) was one of the reasons that the Goss Government in Queensland (in which Mr Rudd had a major role) was so unsuccessful.

This problem was already apparent to professionals ten years ago (see Evaluation of Managing for Outcomes - especially the detailed references in Attachment C).

Elaboration added later: When measurable outputs are defined there is a natural tendency for organisations to try to maximize those outputs at the expense of others - and the importance of the 'other' outputs soon becomes apparent.

For governments this problem is particularly severe because their goal is not bottom-line profit but meeting diverse, interacting, changing and often incompatible community aspirations. When output measures of efficiency are adopted, there will be dissatisfaction about service 'quality'. When service quality measures are added, performance failures will emerge somewhere else.

As ideas about reform of Australia's federal system appear to be based on requiring states to meet agreed outcomes but allowing freedom in means used to achieve those ends, it seems that a similar attempt to measure the unmeasurable would be made in this arena also,

While Mr Rudd's rhetoric about quantification may have populist appeal to those who don't really understand government, acting on it must lead to practical failure. Forcing square pegs into round holes is never a good idea.

Regards

John Craig

Sorry to Spoil the Party - but Populism Trumps Electoral Victory - Email 24/11/07

Editor
Crikey

How Crikey saw it on 23/11/07

"We see it like this:

A vote to return the Government is a vote for maximum risk. The risk of more-of-the-same policies when policy flourish is badly needed. The risk of a bitter leadership bunfight within a year or less as senior ministers attempt to get even with John Howard for inflicting on them the unnecessary pain of the past few months. The increasing risk of overweening moments from ministers like Abbott, Downer, Ruddock and Minchin (and Howard) on their last laps. And the risk of more hubris-infected decisions as the culture wars are fought to their denouement by an ideologically-driven government heading towards its 14th year under the same tired leadership.

A vote for Labor is a vote for least risk. Economic policy will be cautious, industrial relations policy will be benign, foreign policy will be prudent and social change will be incremental but interesting. This will be a pragmatic government setting out to establish the platform for 14 years in power, not the other way round. The biggest risk in electing a Rudd government is that they don't unveil some flair and foresight.

Because you're a politically savvy lot, we don't see Crikey as being in the endorsement business. If we were though, we'd say that the risk to Australia of returning a Howard government is far greater than the risk of giving the other mob a go. "

How I see it on 24/11/07.

Crikey is in for a shock. When political populism reigns, winning elections means little.

Crikey's optimism about the 'risk of giving the other mob a go' would not be shared by anyone knowing the requirements for running a successful government who observed the performance of Queensland's unfortunate Goss Government (of which Mr Rudd appeared to be the principal architect). Its understanding of power seemed to have been derived from the exploits of Sun Tzu - who famously showed the emperor of China how to ensure disciple by asking the emperor's favourite concubine to get a crowd of giggling women to march, and having her executed on the spot when the women didn't take his pointless demands seriously. However, while putting the fear of death into others may encourage them to march in step, the tasks that governments have to perform require many different centres of initiative and goals that reflect a realistic understanding of the world. Thus the Goss Government was a classic case of reform failure.

There is no doubt that Crikey is right that the Howard Government would have produced a dismal ongoing performance. Over the past decade it made some changes that boosted Australia's economic performance but the economy gained far more from the 'tail-wind' of an unprecedented global economic boom. Many of the benefits of the boom were squandered on populist middle class transfer payments - which went far beyond compensating those who were disadvantaged by economic change. Machinery of government was further damaged by both eroding the professional independence of the Public Service and trying to micro-manage state functions. The machinery needed to enable the community to cope with a rapidly changing world was seldom established. Australia was committed to a war for reasons that were never really discussed. Complex industrial relations machinery was created

Unfortunately Queensland's experience of the Goss Government showed that no matter how bad a situation is, autocratic idealism can make it worse. The federal ALP under Mr Rudd now appears just like the Goss Government did in the early 1990s (ie advancing policy options that sound 'sexy' but are professionally substandard, and ideas about governing that must make practical progress in any area virtually impossible). Mr Rudd's core philosophy on political economy is 'hot air. Intrusion of religion into politics also seems to be a core philosophy - which must have severe adverse political and social implications. An education revolution won't overcome the real commercial-competency obstacles to improving Australia's economic productivity. There are limits to the benefits of (and adverse consequences from) National Competition Policies as a basis for reforming governments and public private partnerships in the delivery of goods and services. Fair Work Australia seems more dysfunctional than Work Choices. Australia would disengage from a war without ever seriously debating the issues involved. Radical commitments on climate change could be made on the basis of uncertain scientific and economic assumptions. Attempting to improve federal-state relationships,while maintaining central control, would be futile. Proposals to improve housing affordability, which ignore the causes of the global credit bubble that has driven house prices to unprecedented levels, must fail. Taking an axe to the Public Service (while spouting rhetoric about the Westminster tradition and professionalism), centralising control and trying to manage government's intrinsically complex functions by measuring outputs (as was done in Queensland) will further devastate its already-impaired capabilities.

At the same time the prospects are looming of a global financial / economic crisis and international analysts (such as the Bank of International Settlements and the Economist Intelligence Unit) suggest that Australia will be one of the worst affected countries (eg because of its economic dependence on huge capital inflows to fund property speculation). For this, and possibly other reasons, Australia could easily be in a political crisis by mid 2008.

Crikey is in for a shock. Electoral victory is hollow when populism rules.

Regards

John Craig

Australia's 'me too' electoral system - Email sent 23/11/07

Mr Jeremy Sammut,
Centre for Independent Studies

I noted with interest, and would like to comment on, your recent opinion piece which seemed to suggest the need to support Australia's political system (by voting) even though there may be few (if any) substantive policy issues to vote on in a 'me too' election.

Not voting is a vote against the electoral system (Crikey 22/11/07)

The old joke is that no matter whom you vote for, a politician wins. In the era of "me too" elections this is truer than ever ......

However voting is not what is now most required to support Australia's electoral system - as there seems to be a need for massive institutional redevelopment before it is likely that effective government will be ensured by merely voting.

The unfortunate fact is that the electorate is being offered a choice between 'populists' (ie politicians who propose superficial and probably-ineffectual options to address society's challenges) - see On Populism in 2007.

An attempt to diagnose why the electoral process is now no longer likely to lead to effective government is presented in Challenges to Australia's Democratic Institutions. One key conclusion is that, as governments' challenges have become too complex for simple solutions to be identified, democratic societies have tended to support political elites who unrealistically promise simple solutions and who re-engineer government machinery and other institutions to ensure that tame 'experts' tell them what they want to hear.

Some suggestions about the types of institutional reform needed to overcome this problem are outlined in Restoring 'Faith in Politics' . This includes (a) institutional arrangements outside government to ensure that the community (and their elected representatives) are better able to understand what realistic options are available to deal with complex problems; (b) protection against political manipulation by Public Services; and (c) new apolitical machinery to accelerate economic and community development and thus enhance support for enterprises and individuals that is independent of the state.

Regards

John Craig

Saving political 'con artists' from themselves: Email 26/10/07

Mr Mike Steketee
c/- Australian

In your recent article ('Clock ticking on both con artists', Australian, 25/10/07) you suggested that the Prime Minister has lost credibility because of exaggerated claims, and that the Opposition leader is heading in the same direction.

Might I respectfully suggest that the phenomenon should best be described in terms of 'populism' - and that there are structural / institutional reasons why Australia's political leaders are now essentially forced to become 'con artists'. Populism refers to putting forward policies that sound plausible to the under-informed, though they could not work in practice (see On Populism in 2007). This has become a problem because of inadequate institutional support to the political system (even from those generally considered experts) to develop anything better.

There is a need to go beyond criticism of political leaders for being 'con artists', and consider what is required to overcome the problem. Some suggestions about this are in Restoring 'Faith in Politics' .

Regards

John Craig

Circumstantial Evidence - Email 10/9/07

Mr Andrew Clark,
Australian Financial Review

While I have no way to judge whether Mr Rudd is "genuinely conservative or sincerely expedient", I should like to comment on issues that you mentioned in discussing that question. This may provide circumstantial evidence that helps you reach a conclusion..

My interpretation of your article: Is Rudd a conservative Labor leader or opportunist politician or both? Rudd started work at the time that the Hawke Government started a series of pro-market reforms, and Rudd had a role in continuing this process. A series of special premier's conference resulted in major changes to commonwealth-state regulation, elimination of duplication and competition policy. These reforms led to large increases in productivity. Rudd (then head of Goss's cabinet office) joined forces with Sturgess (head of Greiner's cabinet office) to develop a national policy consensus and alliance between Liberal and Labor governments. Rudd is determined to continue and enlarge such bipartisan processes if he wins office. Rudd was linked with Glyn Davis (who succeeded him as head of Goss's Cabinet Office) and Mike Keating. All share a moderate socio-democrat Blairite view of government. Keating (who developed Rudd's hospital policy) argues that governments have not lost power - as some claim - but need to manage conflicts arising from the effects of policy on competing groups. Rudd proposes ideas of cooperative federalism to reduce conflict. A carrot and stick approach will be used to hospital reform - where the Commonwealth with most revenue has the upper hand. Elsewhere benchmarks will be agreed by Commonwealth and states, and Commonwealth will audit the results. Rudd calls this partnerships, though the Commonwealth will hold the whip hand. Similar models are envisaged for dealing with troubled nations in Australia's vicinity. (Clark A., 'Kevin Rudd - genuinely conservative or sincerely expedient?', Financial Review, 1-2/9/07).

Firstly there is some uncertainty about the productivity gains that resulted from implementation of the national reform agenda on which your article suggested that Mr Rudd and Gary Sturgess had roles in negotiating bipartisan agreement (see Impact of Economic Liberalism in Australia, 2002). The latter raised issues such as:

• technical disputes about what productivity gains were achieved;
• the fact that competition does not in itself ensure the ability to compete successfully in high productivity activities; and
• other simultaneous changes that affected outcomes (eg changes in exchange rates and an unusually sustained global economic boom).

Secondly, the National Competition Policy (which was part of the national reform agenda) did a great deal of unanticipated damage to the effectiveness of governments generally (see Neglected Side Effects). The latter notes, for example, that governments' core functions involve 'governing' (not producing goods and services), and that methods to promote efficiency in services' delivery were devised and imposed without considering the effect on the knowledge and experience needed for 'governing'.

Thirdly, it appears that the present Prime Minister also shares a Blairite (ie 'third way') view of government, and that this view is not a problem-free solution to anything (see Aspirational Nationalism: 'Third Way' politics by Another Name?). The often-noted similarities between Mr Rudd and the current Prime Minister may not be limited to Mr Rudd's emulation of the Prime Minister's conservatism, but may extend to Mr Howard's adaptation of some 'new Labor' ideas.

Fourthly, the worst example I know of a government's failure to manage the implementation of policy changes involved the poorly conceived and incompetently executed 'reform' of Queensland's distressed government under the Goss administration in which Mr Rudd had a key role in the early 1990s (see Queensland's Worst Government?). The latter document highlights the abuses, dysfunctions and crises that occurred both at the time and as a delayed consequence of the unworkable machinery established by that regime (eg see Structural Incompetence and SE Queensland's Water Crisis).

Fifthly, the whip-wielding approach to reducing federal-state conflicts that you ascribe to Mr Rudd is very similar to the philosophy that appeared to underpin the Goss Government's 'reforms' of Queensland's public sector. Some problems with such methods are outlined in Federalism: Why Control Freaks don't Achieve Much.

Finally, those who espouse trendy (but often insubstantial) policy rhetoric in order to gain electoral support should probably be labelled 'populist', rather than 'expedient' - and weaknesses in Australia's institutions have now virtually forced all political leaders to resort to this (see On Populism in 2007 and Restoring 'Faith in Politics').

Regards

John Craig

Federalism: Why 'Control Freaks' Don't Achieve Real Results - Email 17/8/07

Mr Dennis Shanahan,
Australian

Your recent article on Australia's federal system was depressing, Both the federal Government and Opposition seem content with populist options that have not the slightest chance of fixing the costly defects in that system.

My interpretation of your article: The ALP set out agenda for federal system reform - specifically looking at federal funding of states. This built on Kevin Rudd's speech in 2005 - which spoke of cooperative rather than coercive federalism. The PM by contrast is using power of incumbency to by-pass state governments. Rudd argues that PM is using coercive federalism to destroy / discredit Labor states that resist his radical conservative agenda. Given disaffection with state services, it is not hard to see which approach will be most politically appealing. ALP aim (according to federal-state relations spokesman - Bob McMullan) is to get reform through cooperation with the states - while requiring the states to meet agreed outcomes but allowing freedom in means used to achieve those goals. This should end the blame game, while continuing to achieve important national goals. ALP argues that subsidiarily principle requires that higher level of government supplies the funding - while level closest to the people delivers the services. There is seen to be more need for emphasis on outcomes than inputs. Rudd's 2005 speech mirrored a 1999 speech by former Queensland premier, Wayne Goss - who spoke of the need for a new federal compact which defines who is responsible for what. PM argues that ALP proposal represents a retreat by federal government at a time when people want federal government to take a strong leadership role (Shanahan D., 'It's all about results', Australian, 3/8/07).

There are severe dysfunctions in Australia's federal system, which various governments have tried to correct for many decades - and generally succeeded in making worse by being 'control freaks' (ie trying to achieve 'results' themselves, rather than making it possible for others to do so).

A coercive approach (such as that of the Whitlam Government in the 1970s, and the present federal Government), when combined with Australia's extreme imbalance between state and federal taxing powers and spending responsibilities, is one of the main reasons that state performance in infrastructure and service delivery has been deteriorating for decades (see Federal State Fiscal Imbalances in Australia's Governance Crisis, 2003).

Other factors in states' deteriorating performance probably include (see Decay of Australian Public Administration: A Diagnosis, 2002):

• centralised strategic planning by state-level 'control freaks';
• Public Service politicization to ensure that populists' half-baked theories can't be questioned; and
• application of business-like methods to governments' fundamentally non-business-like functions.

Attempts to reform Australia's federal system are likely to achieve little until a balance is created between taxing powers and spending needs, so that each level of government can take responsibility for its functions and be held accountable by its electorate (rather than the federal government trying to hold the states accountable).

An aside: In the mid 1970s I observed that the coercive centralism of the Whitlam Government resulted in influence within Queensland's administration shifting from those with technical skills (ie those able to deal with infrastructure) to central agencies responsible for financing and intergovernmental relations. Overall government's emphasis shifted from 'doing the job' to lobbying for funding. This effect seemed similar to the impact of tariff protection on the competence of manufacturers' management, and was probably a key contributor to the many infrastructure backlogs that have now belatedly gained public attention.

Your article suggested that the ALP is proposing to liberalize the conditions under which states would use federal taxation money. HOWEVER they still propose setting strict performance conditions that states would have to meet - and this would continue to defeat the purpose of having a federal system of government.

The centralization of 'strategic' control, while expecting others to manage implementation only (which is implied by the 'new' proposal to retain federal control over critical aspects of state performance), was one of the key reasons for the disastrous practical failures of the Goss administration in Queensland (in which Mr Rudd had a key role). Centralisation of strategic planning disempowered and suppressed those who had the practical knowledge and experience needed to identify realistic strategic directions (see Toward Good Government in Queensland, 1995 and Strategy Development in Business and Government, 1997). That government demonstrated yet again that central 'control freaks' can seldom achieve real results (see Queensland's Worst Government?, 2005).

As I understand it, the original intent of the subsidiarily principle was that the lowest level of government has responsibility for ALL functions, but can delegate upwards those which are believed to be better managed centrally.

Regards

John Craig

PS: Your article suggested that Mr Rudd believes that the Prime Minister has a 'radical conservative' agenda. Surely that is meaningless - as I would have thought that a conservative is, by definition, someone who is not radical.

Mr Michael Madigan
Courier Mail

I should like to offer some feedback on a recent article in which you speculated about whether the Opposition leader is "Kevin 07", or simply a "load of crap" ('Everyone's talking about Kevin-mania', Courier Mail, 8/8/07).

Last November, I reviewed "Kevin 07's" address to the Centre for Independent Studies which presented a case for social democracy as an alternative to 'market fundamentalism'. Media commentators had suggested that his CIS address showed that he was a true intellectual, while my review (An Alternative to Market Fundamentalism?) suggested that this was more a pretence than a reality.

In response to my review, a respected senior ALP supporter suggested that "Kevin 07's" critique of the political Right in that address had been just 'hot air' .... a polite way of saying "a load of crap".

Other readily identifiable examples of pseudo-intellectual "hot air" from the "Kevin 07" camp include (but are by no means limited to):

• suggestions that an education revolution would be the key to economic improvement (see Is Education Spending the Key to Raising Economic Productivity?);
• proposals for reform of Australia's industrial relations system (see Fair Work Australia: Establishing the Machinery of a Socialist State?);
• proposals to improve housing affordability (see Some Thoughts on Housing Affordability).

However, Australia's core problem is that there is nothing but such political populism on offer - and it makes little difference to the effectiveness of government whether populism has a right or a left wing bias (see On Populism in 2007).

To get political representatives who are not "full of it", the community itself needs to get off its backside and ensure that its political system gets the support required to generate realistic policy proposals (see Restoring 'Faith in Politics').

Regards

John Craig

'Same older ... same younger?' - email dated 14/5/07

Mr Clinton Porteous
Courier Mail

Might I suggest that an expression you could appropriately have used in a recent article to describe Australia's national political contest is 'populism'.

My interpretation of your article: Policy differences between Kevin Rudd and John Howard are narrowing. The race is on to claim the middle ground. Both sides are pursuing an education revolution, planning for reduced carbon emissions and making industrial relations systems fairer. Focus groups see Rudd as a younger version of Howard. There was minimal difference in budget plans. (Porteous C., 'Same old, same old?' Courier Mail, 12-13/5/07).

Both sides seem to be consulting the oracles (ie public opinion polls) and expressing their commitment to whatever the public thinks sounds 'trendy'.

Because Australia is a branch-office environment and has long relied on its economic 'luck' and on copying the policies of other nations, political leaders lack the domestic institutional support needed to put forward policies that are both new and likely to be strategically significant in the present rapidly changing economic, political and natural environment (see On Populism in 2007).

If you were interested in strengthening Australia's political system then you might like to consider posing questions that are relevant to the future for which there are no widely accepted answers - so that political leaders can't simply rely on public opinion polls in developing a response.

I have attempted to formulate a possible list of such questions in More 'Questions for Kevin', This list was developed as a follow-on the Crikey's 'Questions for Kevin' series in early April, and might (with appropriate variations) be directed to any political aspirant.

Regards

John Craig

Mr Darrel Giles
Sunday Mail

I noted your conclusion in a recent article that 'Maybe, just maybe, Kevin from Queensland can help Australia' ('Kev's master of the occasion', Sunday Mail, 29/4/07). Your article implied that an ability to 'help Australia' was evidenced by the fact that 'Kevin from Queensland':

• was criticized by his political opponents;
• had wide approval within his own party;
• spent a lot of time on stage at a party conference;
• was not aloof but rather a man of the people able to talk about any issue; and
• had avoided public embarrassment by stage-managing a party conference.

Might I respectfully suggest that almost any serious politician could probably meet the undemanding criteria implied by your article. Surely somewhat more meaty evidence of who can best 'help Australia' should be sought, given that:

• Australia appears to face rapid transformations in its political, economic and natural environment; and that
• governments in Australia are often not competently dealing with their responsibilities (eg see many observers' comments in The Growing Case for a Professional Public Service, and suggestions about systemic factors likely to give rise to those problems in Decay of Australian Public Administration).

Political leaders should not be assessed by whether they can merely 'talk about any issue', but rather by whether what they say about the real challenges the community faces makes sense and is likely to be implemented competently if they gain the support of the electorate.

A way in which this might be evaluated is outlined in More 'Questions for Kevin'. The latter is a follow-on to the 'Questions for Kevin' series begun by Crikey in early April 2007 and could (with appropriate variations) be directed to any political aspirant.

Regards

John Craig

A Different Kind of Political Leadership - email 27/2/06

Ms Maxine McKew,
Prospective ALP Candidate for Bennelong

Dear Ms McKew

There is no doubt that you were correct (in your nomination for ALP pre-selection for Bennelong) in arguing for a better style of political leadership for Australia.

"I sense that Australians are hungry for a different kind of political leadership.

It’s a style of leadership that understands Australia’s future challenges require long-term solutions, not short term political fixes. It’s a style of leadership that is focused on the future, not the past".

However I should like to respectfully suggest that what you are seeking requires much more than different political leadership. Rather it requires stronger institutional support to the political system generally so that:

• in a very complex environment potential political leaders have a better chance of identifying relevant policy options; and
• once adopted those policy options have a real prospect of generating practical outcomes.

The case for such reforms (and what might be required in practice) is outlined in Restoring 'Faith in Politics' (December 2006) which draws upon an earlier attempt to identify institutional factors that have led to fairly poor quality government in Australia in recent years (Australia's Governance Crisis, May 2003).

Unfortunately the only type of political leadership that currently appears to be on offer involves various forms of populism (see On Populism in 2007, February 2007).

Populists (on either the Right or Left) can never do much good, but under Australia's traditional system of public administration they were at least prevented by a professional public service from doing a lot of harm.

Unfortunately the politicization of public services in recent years has changed that and rendered populists hazardous to the public interest - as illustrated by accounts of the practical failures of an earlier populist regime in the attached emails ('The Illusionist' and 'Strolling Down Memory Lane').

I would be interested in your views about these matters.

Regards

John Craig

-----Original Message-----
From: John Craig - CPDS
 Sent: Friday, 13 July 2001 2:26 PM
To: Maxine McKew (c/- Editor, Bulletin)
Subject: 'The Illusionist'

Dear Ms McKew

I should like to comment on your interview with Glyn Davis reported in The Bulletin of 17 July. In effect I will suggest that:

• Dr Davis is quite right that the process of applying business models to government during the 1990s 'missed the boat'. In fact, in Queensland the people who politicians permitted to carry out this 'reform' did a massive amount of quite predictable damage to public administration; and
• there is considerably more to running an organisation successfully than creating an 'illusion of direction' - which you quoted Dr Davis as identifying as the key to running a university. The belief that 'illusion' is all that is involved was a major factor in the massive problems which have arisen - and are continuing to arise - in Queensland's public sector.

The Origin and Spread of the 'Queensland Effect'

As you may be aware, the so-called 'Queensland effect' (where a government unexpectedly loses an election on a protest vote) referred originally to the failure of the Goss Government. This expression has now apparently entered the language - and is something that politicians fear. For example, this phenomenon was reportedly of real concern to the Blair government in the UK (eg see Walker J. 'Blair pitch project: a sequel shapes up', The Australian, 24-25/3/00, and Taylor L. 'Blair just bubbles along', Financial Review of 4/6/01).

Moreover despite rhetoric to the contrary, the original 'Queensland effect' (the debacle the Goss Government experienced in 1995) was simply the result of a 'bubble' (ie of illusions that were created about reform and progressive policies that were actually quite insubstantial). This situation is documented in some detail on-line in Toward Good Government in Queensland (1995) - and in other papers on the same web-site. A brief account of this phenomenon is included as a note at the end of this email.

It can also be noted that the Blair Government in the UK has been centrally influenced by persons who previously had a key role in Queensland's Goss Government (Walker op cit). Furthermore the Blair Government was portrayed by the conservatives in the recent UK election as a 'bubble' which could be pricked (Taylor op cit). And there seems to be general concensus that the 'bubble' label is factually justified (ie that the Blair Government is insubstantial)

Consider for example (a) articles which point out across-the-board problems such as Bagwell S. 'Cruel Britannia', The Bulletin, 15/5/01, and Quiggin J. 'Blair's third way is dead', Financial Review, 7/6/01 and also (b) concerns about administrative failures resulting from the breakdown of the technical competence of the UK Public Service that were recently highlighted by the architect of the ALP's recent Knowledge Nation proposal - see Jones B. 'Can we make Australia a Knowledge Nation?', Address at Macquarie University, 27/4/01).

The Continuation of 'The Queensland Effect'

There is an increasing chance that the 'Queensland effect' could strike Queensland again - because the Beattie Government has also been limited to giving an 'illusion' of progress by deficiencies in its Public Service .

Evidence that Queensland is not being effectively governed in 2001 is on-line in the detailed / evidence version of Queensland's Challenge (see Note 1 and Sections 6 and 7 in particular), as well as in the Continuation. And a file attached to this email details indications concerning the loss of professionalism which has increasingly plagued Queensland's (and other) Public Services.

Queensland’s Challenge addresses severe current problems in: society generally; economic competitiveness and strategy; the political system; the Public Service; and public finance. In particular this refers to steps which Queensland's administration has recently taken to boost innovation (part of the Smart State initiative) and to plan Strategic Infrastructure for Queensland's Growth, which are both critically important functions that are being addressed through creating mere 'illusions of direction'.

'Illusions' (the standard fare of magicians and confidence tricksters) are not enough. Directions that are pursued must be realistic and effective.

Regards

John Craig

Note on 'The illusionist':

An analysis of how the poorly conceived and incompetently managed process of public service 'reform' ignorantly and invisibly eroded the professional capabilities needed to implement the Goss Government's widely supported policy agenda is available on-line in Toward Good Government in Queensland.

Toward Good Government explains the problem in terms of: the effect of Wilinski’s mis-understanding of the causes of the Whitlam Government’s reform problems; the effect of the ‘Yes Minister’ school of populist public administration theory; managerialism; the adoption of a 'commercial' focus which undermined government's ability to really 'govern; and the inability of starry-eyed ‘reformers’ to understand that reality is more complex than their political rhetoric - and that, without the tacit knowledge that experience brings, ‘reform’ could not lead to practical outcomes. However other factors involved included: the bi-partisan support for Public Service politicisation that emerged in Queensland during the 1990s; and influence of the 'rorting' culture of the ALP's AWU faction that dominated under the Goss Government (see Section 5 of Detailed Discussion of Queensland's Challenge). The nature of real Public Service professionalism (which includes experience and practical competence as well as theory) - and why politicisation is likely to erode essential (tacit) capabilities - is further considered in Note 3 on the detailed version of a proposal for Renewal of Queensland's Public Service on a professional basis.

The loss of practical administrative and policy competence resulting from politicisation led to the numerous failures (eg in health, education and infrastructure) that were associated with the Goss regime. However most significantly, in the face of a major requirement for economic change, the emerging competencies required to successfully manage that change were largely eliminated. The result was: economic under-performance - especially in marginal rural, coastal and metropolitan regions; the growth of social symptoms; and the political instability that was ultimately given expression through the One Nation phenomenon. An attempt to explain what went wrong with Queensland's (Australia's) attempt to deal with economic change is presented on-line in Defects in Economic Tactics, Strategy and Outcomes. In simple terms what Defects argues is that (a) Queensland (Australia) has to move to a knowledge economy and (b) industrial era methods for economic management which were continued in the 1990s, because the Public Service's skill base had been damaged by politicisation, were not adequate for such an economy.

-----Original Message-----
From: John Craig
Sent: Saturday, 6 December 2003 1:11 PM
To: Maxine McKew (c/- Editor, Bulletin)
Subject: Strolling down memory lane

Maxine McKew
c/- The Bulletin

I was amused by an assertion in your recent report on lunch with Mr Kevin Rudd (The Bulletin, 2/12/03) to the effect that:

Précis: The Howard Government’s ruthless purging of anything approaching free-thinking has led to problems in Canberra (eg in the Foreign Service). There is a total absence of professionalism. The Howard government shoots people who don't give them the right answers. The one key virtue of a Labor Government is that it actually likes engaging with the permanent bureaucracy - as some have more brains.

The problem with this claim is that it does not seem to be true. According the reports which I received, the first interview in 1989 between some senior Queensland public servants and a senior minister in the new Goss Labor Government (for whom Mr Rudd was then the Premier's Chief of Staff) ended quickly when it was stated that the public servants were not needed because the Labor Government had its own advisers.

Moreover:

• legislation that was passed through Parliament prevented appeals (on the basis of professional merit or any other basis) against senior Public Service appointments. And I personally encountered a situation in which the Queensland's Premier's Department in 1992 grossly abused natural justice by refusing to allow professional merit to be considered in a dispute about a senior policy R&D appointment; and
• the Chairman of the Public Sector Management Commission reportedly stated in 1995 that: `There will be no more forced redundancies in the Queensland Public Service. And the days of Public Sector Management Commission `policing and bullying' the public service are over .. (radical change) was in the past and had been completed, and there were now different priorities facing the overseeing organisation' (Koch T., `No More Bullying of Queensland Public Service', Courier Mail, 29/7/95)

Now it may well be that Mr Rudd (being only the Premier's Chief of Staff, and subsequently Director General of the Cabinet Office) was professionally divorced from such abuses. However it appears that not everyone believes this to be the case:

Précis: As Chief of Staff to Wayne Goss Kevin Rudd was nicknamed 'Dr Death' for his brutal manner of dealing with difficult issues and difficult staff. (Cole M. 'Talking the talk', Courier Mail, 29/11/03)

Perhaps a brutal approach to 'difficult issues and staff' can be seen as some kind of virtue if the result is that long over-due reform is then successfully achieved. Unfortunately this was not the case with the Goss administration - as shown by the evidence outlined below.

Regards

John Craig

Attachment to 'Strolling Down memory Lane'

Did the Ends Justify the Means? - There are many indicators that the 'reform' of the Queensland Public Service by the Goss administration was a practical disaster behind a public-relations smokescreen of high-sounding rhetoric. In particular:

An enthusiastic Labor supporter in the Premier’s Department had concluded by early 1990 that ‘Joh was better’ (personal communication).

Many other observers saw problems in what was done in the name of making government more accountable and business-like (see Attachment A to Towards Good Government in Queensland).

For example, Ken Wiltshire (Professor of Government, University of Queensland) described what was done as creating the most complex system of government in the Western world. And in 2003, it was argued by a later Labor government that the accountability machinery required scaling back because the resulting 'red tape' made government ineffective [1]

By 1995 government was virtually ineffective (eg in dealing with health, education, and infrastructure), almost every interest group was complaining about something, and staff were generally alienated (ie 70% voted for a change in government) - see Towards Good Government in Queensland.

This outcome, it may be noted, was to be expected as other state governments had previously rendered public administration dysfunctional using similar methods for 'reform' (eg see The Fall of the House of Cain)

The Public Service was seriously de-skilled (in a process which gave many senior positions to cronies and ‘yes men’) - see The Growing Case for a Professional Public Service and The Decay of Australian Public Administration.

The latter document indicates that the present federal government must have seen this as such an admirable political outcome that it has copied the states' examples ever more enthusiastically - and can thus be expected to experience obvious administrative failures by 2005 or 2006.

Mismanagement of the urgent need for economic change eventually generated an extremist political reaction in the form of One Nation - which reflected the dis-satisfaction of those in marginal rural, coastal and metropolitan regions who were (a) left behind by economic change and (b) ignored by elites (see Defects in Economic Tactics, Strategy and Outcomes and Assessing the Implications of Pauline Hanson's One Nation).

The inability of subsequent governments to fix the problem has placed Queensland’s public administration in long term decline. Queensland's state administration now: (a) appears ‘constipated’ by impractical machinery of government (eg see Growth Management In SE Queensland) and (b) in serious and growing financial difficulties (see Pressure for Tax Increases in 2003).

Debating Iraq: A Nil-All Draw (email 19/2/07)

Mr Glenn Milne,
c/- Sunday Mail

I noted your reasonable conclusion in a recent article that neither the Prime Minister nor the Opposition Leader held a sustainable position in their recent 'debate' about the future of troop deployment in Iraq.

My interpretation of your article: Both the Prime Minister and Opposition leader have been hurt over Iraq - which had caused them to trade blows. This contest was both issue based, and personal. Whether troops ought to stay or be withdrawn, became both a test of their grasp of foreign policy and a test of character. Rudd portrayed Howard as stubbornly clinging to a crippled US president and unable to admit that war in Iraq had been a mistake. Howard portrayed Rudd as weak - a leader who would cut and run in the face of adversity - ignoring both the national security implications and the consequences for Iraq and the Middle East. Both made mistakes. Howard's was to attack a US presidential candidate over his proposals for troop withdrawal - which Rudd argued risks future damage to relationships with a Democrat White House. This was hypocrital as the ALP constantly criticizes US president Bush. Rudd also argued that it was wrong for him to comment on the consequences of withdrawal - though he has always been available to comment on anything. The position of both was unsustainable. (Milne G., 'Political foes take a breather', Sunday Mail, 18/2/07)

May I respectfully suggest that your criticism could have gone further - because the reality of the matter is that neither the Prime Minister nor the Opposition Leader seems to have any real 'position' at all.

The US-led military action in Iraq was almost certainly an attempt to transform the political character and economic prospects of the Middle East by creating a 'model' regime in the region. The logic of such a step is complex (eg see The Second Failure of Globalization? (October 2003) for a speculation about that logic), yet the debate about the issue in Australia has been vacuous. This long focused on nothing but whether Iraq had weapons of mass destruction, which was apparently merely the issue that was selected in 'marketing' the campaign because it was one thing that 'everyone' agreed about (see Inadequate Intelligence and Strategic Assessment in Australia's Governance Crisis).

And now that the plan has run off the rails (so that the issues and risks involved have become even more complex), both the Government and the Opposition 'debate' what should be done in terms of second and third order aspects (eg relationships with the US and personalities) while continuing to completely ignore the substantive geopolitical issues involved.

This seems pathetic. The 'debate' can only be described as a 'nil all draw'.

Regards

John Craig

Mr Glenn Milne,
c/- Sunday Mail

I should like to provide feedback in relation your suggestions in a recent article ("PM shapes up for a real stoush", Sunday Mail, 28/1/08) to the effect that:

• the coming federal election campaign will be hard fought, because the prime Minister recognizes that he faces a credible contender - one who brings 'intellectual rigor to the task';
• the federal ALP made its position stronger by nominating education as the engine room of economic growth;
• the Prime Minister then cleverly 'wedged' the Opposition by unveiling a plan for takeover of the national water system (because the states are blamed for the existing malaise and the current system is seen to be not working); and
• the Opposition leader is experienced in the art of governance because of his years as a senior bureaucrat in Queensland.

However the reality seems to be anything but the clash between 'Heavyweights' that your article implied. For example:

• an earlier email ("Rise and rise of Kevin Rudd, the man they dubbed Harry Potter', 6/12/06, copy below) highlighted the pedantic and improbable nature of one of the now Opposition Leader's attempts to claim 'intellectual rigor' (which a respected and experienced ALP supporter agreed was simply 'hot air');
• education reform may (or may not) be needed, but this can't sensibly be rationalized on the grounds that this will reinvigorate Australia's productivity performance - because there are strong indications that the economy is insufficiently developed to productively employ the high quality human resources that are already available (see Is Education Spending the Key to Raising Economic Productivity?). Overcoming this constraint requires effective state, not federal, action;
• the states are ineffectual and the existing federal system is not working (in relation to almost everything, not just water) primarily because of the imbalance between responsibility and power / financial capability compounded by (a) the irresponsible further distortion of the system by successive federal governments (eg see Federal-State Fiscal Imbalances); and (b) attempts over the past decade to 'fix' the public sector by politicization and the application of business-like methods to non-business-like functions (see Decay of Australian Public Administration). It is hard to find evidence of 'Heavyweights' anywhere in this fiasco;
• very limited credibility can be attached to experience as a 'senior' bureaucrat in the Goss Government in Queensland - which has to be a strong contender for being Queensland's worst (see What is the Value of 'High Level Public Service Experience' in a Bad Government?).

Australians do need leadership by political Heavyweights, but will presumably only get Lightweights until there is much stronger institutional support to their political system (see Restoring 'Faith in Politics' ).

Regards

John Craig

Attached - email dated 6/12/06

I noted that in your article (Sunday Mail, 3/12/06) you argued that Kevin Rudd is 'ferociously bright'.

I should like to suggest that his 'ferocious brightness' might be a bit superficial. Mr Rudd's recent presentation of a rationale for Social Democracy as a solution to what ails Australia seemed anything but impressive (see An Alternative to 'Market Fundamentalism'?). The core point on which his argument was built was pedantic (and probably irrelevant), and his implication that more 'altruism' by government would be the solution to incredibly complex problems and dysfunctional government machinery is improbable.

Regards

John Craig

 Populism Rules: Copy of email 'How Labor can make the grade with Rudd'. (17/1/07)

Dr James McConvill,
Principal,
Corporate Research Group

I should like to comment on your suggestion (Online Opinion, 16/1/07) that political victory in Australia does not depend on elegant policy, but rather that:

"the general public are, for better or worse (probably better), junkies to a different cause. Instead of Left and Right, Hayek and Chomsky, they are focused on the cricket, the mortgage, and the weekend barbeque with the family. It is in this world, what we might call the real world, that Rudd looks in trouble, and Howard looks invincible. In Australia, high-brow policy debate is an indulgence which a political leader must save until they are protected by incumbency.

Rudd would be best served by ignoring the suggestions of the removed elite, putting away the books, and learning a new discipline: communicating with the general Australian public. He has the potential for an A+ grade in this respect, but continuing to cite Hayek may earn him a fail."

The problem is that while you are right that populism wins election, it does not ensure effective government - and the consequences can be very severe.

Wayne Swan has argued (probably validly) that the Howard Government is driven by 'right-wing populism'. However, as suggested in the attached email to a Crikey writer, 'left-wing populism' is not likely to produce significantly better outcomes (see "No rest for ideological warriors").

And unfortunately populism from both left and right is all that is possible unless far better informed and competent support is provided to Australia's political system. For example, an experienced and prominent ALP supporter agreed that Rudd's Hayekian comments were just 'hot air' - in response to my argument that they were pedantic and simplistic (see An Alternative to Market Fundamentalism?).

Some suggestions about the types of institutional supports that would be required to bridge the currently-widening gap between political popularity and effective government are suggested in Restoring 'Faith in Politics'.

I would be interested in your views about these matters.

Regards

John Craig

Attached: No rest for ideological warriors - email dated 8/1/07

Christian Kerr
National Affairs Editor
Crikey

I fear that your hope that 'decent policy' might emerge from the developing 'ideological war' is likely to be over-optimistic.

5. No rest for ideological warriors (Crikey, 8/1/07) Christian Kerr writes:

 Politics hasn’t gone away during the silly season. Indeed, the election year has got off to a promising start with the string of intellectual-sounding name-calling on the op-ed pages of The Australian running on and on. Parliamentary Secretary Greg Hunt has set himself up as the Government’s attack terrier, taking a sharp nip at Kevin Rudd’s heels. It’s interesting to see that the young members of Camp Costello have nothing to say. Presumably – just like their hero – they have absolutely no policy ideas at all. They have nothing but the same sullen sense of entitlement. And if we’re having an ideological war, Labor frontbenchers have had some deft replies. "Taxation and welfare spending are at record levels, with even millionaires receiving welfare cheques. So much for the champions of small government and free markets," Lindsay Tanner said to The Oz. Even a rooster has been able to crow. Wayne Swan was spot on in his description of what drives the Howard Government. "Radical right wing populism," he called it. "[A]n utter distortion of the idea of free markets. It's not only unfair and unsustainable but is keeping taxes high, reducing incentive and holding the nation back... "The competition for ideas in Australia isn't, as Hunt has it, between some post-war European socialist monolith and 'liberal democracy'. It is between a vibrant, pro-market social democracy that simultaneously promotes higher productivity, equality of opportunity and environmental sustainability, and John Howard and Peter Costello's over-regulated and reactionary-populist 'mates' rates capitalism'." If Labor keeps this up, we may even see some decent policy.

There seems little doubt that (as Wayne Swan and you have suggested) 'right wing populism' is what is driving the Howard Government - though it can't be 'radical' as policy that is 'populist' (ie widely seen by the electorate to be a 'good thing' even though it lacks substance) must be somewhere near the 'middle'.

However all that can possibly emerge from Labour is 'left wing populism', because it will suffer from the same inadequate institutional support as the Coalition (eg see Decay of Australian Public Administration). And 'left wing populism' is not likely to be a significant improvement on the right wing variety.

Unless support to the political system is dramatically enhanced (including, but not only, by recreating a competent apolitical Public Service) all that can emerge from ideological warfare is more 'populism' (ie policy that the electorate believes to be a 'good thing', though it lacks substance), and a steady slide in Australia's position in the same way that political populists achieved for Argentina.

Restoring 'Faith in Politics' suggests the type of supports that probably need to be enhanced before 'decent policies' (ie those that not only seem like a 'good thing', but might make a real difference in practice) are really likely to emerge.

Regards

John Craig