Australia's Governance Crisis and the Need for Nation Building

Symptoms of this decline include perceptions about:

the adoption of a global perspective by elites who do not then act in the interests of their communities, or provide leadership in civic society (as suggested in the mid 1990s in The Revolt of the Elites and the Betrayal of Democracy by Christopher Lasch) [Similarly the adoption of a 'national' perspective, and indifference to local / regional issues undermines the effectiveness of local and state democratic processes] ;
reduced community confidence and participation in the party political process [1, 2];
growing indifference [1];
the emergence of a 'democratic deficit' (ie of a gap between expectations about the political system and day-to-day experience of it [1]);
dominance of the political process by insiders [1];
suppression of free expression of some ideas in the guise of anti-discrimination laws [1]
the political instability created by the One Nation phenomenon as a reflection of economic uncertainty [1]
- in the mid1990s the inept introduction of theoretically advantageous economic reforms (involving market-liberalisation) generated severe political instability across Australia (particularly in Queensland), as residents in many economically marginal regions had no way to understand those reforms or cope with with the social and economic stresses they suffered as a result (see also Assessing the Implications of Pauline Hanson's One Nation, 1998)
apparent deliberate political deception of the public [1, 2];
Australia's integration between Parliament and the executive allows abuse of power, because there is no independent investigation of such misdeeds [1]
propaganda, spin, overstatement which makes people inclined to disbelieve what they hear [1];
heavy public spending on advertising which has political implications [1];
an unwillingness by governments to provide access to information [1, 2, 3] - without which effective public policy debate, the cornerstone of democratic government, is impossible;
the weakness of machinery for developing public policy [as well illustrated by the 'republic' debate];
a lack of machinery to research and engage the public in debate about longer term policy issues [1];
erosion of political talent due to factionalism [1, 2];
minister's unwillingness to accepted responsibility for anything - and a tendency to blame staff [1]
populist government [1], which is seen to have been professionalised and mainstreamed in Australia;
a loss of public interest in substantial policy issues - and a tendency to be concerned only with the way policies affect themselves and whether politicians reflect their values [1];
the increasingly difficult questions governments have to deal with which require ever higher levels of technical information [1];
an unwillingness to impose fiscal discipline - because politicians have learned that surpluses are simply used by their successors to benefit their favoured interests [1];
the emergence of (so called) 'junk politics' - which reduce debate from substantive issues to distractions such as personal histories and moralizing, and prefer symbolism to substance [1];
extremists possibly holding the balance of power [1];
an increasing 'revolving door' between politics and business [1];
dysfunctional parliamentary debates, and institutional abuses [1, 2, 3, 4]; and
political leaders being good at winning elections - but at little else [1]
public cynicism about politicians because of: abuse of power which compromises rights; partisan public service appointments; and spending money for political advantage. Courts are little interested in democracy / justice. Parliamentary supremacy is critical to the rule of law. All parties continue to resist the constraints that real democracy would pose to unfettered use of power [1]

Within one party (the ALP) there has been extensive debate about the need for fundamental reform. It has also been suggested that solutions can not be found through internal reform - because the real problem may be that the national political process is losing its relevance to local and global arenas [1]

At an international level questions about the effectiveness of democratic institutions also include:

loss of power by parliament in the face of globalization and autocratic government, and the corruption of institutions for political advantage;
the effectiveness of democracy in managing a society's collective knowledge;
perceived conspiracies by elites;
suppression of rights; and
philosophical fashions which have made it difficult to challenge autocratic leaders

Challenges to the global dominance of Western-style democratic capitalism also arise overtly from Islamist extremists (see September 11: The First Test) and covertly from trends towards the creation of an international order based on East Asian traditions that would be incompatible with the post WWII global order promoted under US leadership (see Creating a New International 'Confucian' Economic and Political Order?)

Another area of challenge that has yet received limited attention is the tendency that some democratic governments have exhibited to incur large debts - because public demands for benefits from governments that exceed the ability of the economy to provide tax revenues have not been able to be effectively resisted. This is a fundamental challenge because broadly based democracy became the basis for government first in the UK at the time of the industrial revolution, when it provided a means to redistribute throughout society the wealth generated from the deployment of capital. If the capacity of an economy to generate income does not exceed a community's demands on that income through democratic government, then something has got to give.

First the increasing complexity of the issues which governments have to deal with since the 1970s has reduced their ability to generate effective solutions.

For example:

in the 1970s 'great society' ambitions to re-engineer societies to overcome disadvantage were generally frustrated - a problem which analysts often ascribed the limits to rationality ie to the counter-intuitive responses of complex social systems to simplistic state initiatives;

in the 1970s and 1980s the methods for managing the macro-economy which governments had used with apparent success in the post WWII era were no longer effective - arguably because strong feedback effects between price increases and wages led to stagflation;

environmental constraints emerged for which no realistic long term solutions have yet been able to be envisaged.

from the 1970s the pace of change in the natural, social and political environment has accelerated. One result of this has been a change in they way organisations are managed - specifically the emergence of techniques for strategic planning / management. However this pace of change has increased complexity in the issues that have to be dealt with by political debate - as not all perceive that familiar relationships and assumptions can quickly go out of date

globalization in the 1990s has introduced cultural differences as a factor in policy and debates - which raises almost insuperable problems because of the difficulty of effective communication across cultural boundaries and of developing a global order able to accommodate cultural differences (eg see The Second Failure of Globalization?);

poor individual behaviour resulting from a breakdown in morality has become an increasingly important factor in social outcomes which the state can do little that is effective to correct (see [1] and Moral Foundations (below) and comments in About Child Sex Abuse and in Competing Civilizations). This may be the origin of (a) so-called 'junk politics' which are said to reduce state action to moralizing and symbolic gestures [1] and (b) growing state pressure to define and enforce moral principles which would result in the loss of the political and economic benefits of individual liberty (see below);

difficulties have become obvious in planning transport options in traditional ways (ie one element at a time) not only because of the dependence of each element on the total transport network, but because there is a need to simultaneously and dynamically evaluate and manage (a) individual transport elements (b) the network (c) the effect of a crisis in the global financial system on project funding (d) a possible discontinuity in transport technologies and preferences related to the global peak oil event and (e) an associated shift in regional location choices.

Increased complexity has also made adequate public debate about some issues very difficult, and contributed to perceptions (or the reality) of deliberate deception of the public by political leaders [1].

For example:

politics is about deciding who gets what - but policy issues are now so complex, that it is very hard to understand the interaction between policies - so the results are unpredictable. [1];

there seems to have been a 'cover-up' by almost all community leaders in Australia of the extent of child sex abuse - presumably because they do not know what to do about it;

deception by political leaders has been alleged in relation to Australia's approach to unauthorized migration in a debate in which all parties presented overly-simplistic cases (see Complexities in the Refugee Problem);

the public debate about unilateral military action in Iraq was conducted on the pretence that the presence (or absence) of WMD was the key issue - though it was presumably at most a small part of the geopolitical strategic considerations involved about which the public remained uninformed (eg see The Second Failure of Globalization?);

in the public debate about the possibility of an Australian republic, it has apparently been in the interests of both advocates and opponents to ensure that the public remains ignorant of the fact that the option it favours (ie a direct-election presidency) is not practical with Australia's present constitution (see Australia's Republican Conspiracy?);

The problem is not confined to national politics as attempts to develop solutions to a global environmental challenge (climate change) appears also to in danger of over-simplifying the problem to the point where proposed solutions could be ineffectual and hazardous (see Climate Change; 'No time to lose' in doing exactly what?). Similar constraints applied to the G20's responses from 2009 to the global financial crisis (see Too Hard for the G20?).

Complexity also appears to contribute to perception of conspiracies by elites. Theories about 'conspiracies' seem to emerge from sources who do not understand how political and economic affairs are conducted in practice and thus can't say how those practices might be improved, and find it convenient to ascribe problems to elite 'conspiracies' (see About 'Grand Conspiracy' Theories).

Complexity poses fundamental challenges to democratic government and to Western societies in general, because complexity renders rationality ineffective (ie the assumption underpinning rationality that problems can be understood in terms of simple concepts is rendered invalid).

The strength of Western societies has arguably been based on the creation (through various means including democracy) of artificially simplified social spaces in which rationality can be a reasonably effective means of problem solving (see Cultural Foundations of Western Strength). Finding means to make the problems governments face less complex is likely to be critical to restoring effective government (eg as suggested in A Nation Building Agenda below).

The problem is like that facing central economic planners. Economists main justification for a market economy is that central authorities can never acquire the complex information required to make appropriate decisions, so it is better for governments to create a framework (ie a market economy) through which decentralised decisions can be made by businesses each of which face a simpler environment. The solution to the problem of complexity in 'governing' will probably involve something similar.

Second globalization, which has accelerated in recent decades, has increased the difficulties governments face. For example, economic activity has become harder for governments to constructively influence.

Globalization of economic activity through improved transport and communication and the raising of skills in previously under-developed states has:

increased the economic significance of international trade and investment and the need for compliance with international standards - and thus reduced the ability of elected governments to define rules and arrangements to suit domestic desires;

reduced the scope for higher tax rates on individuals or corporations (because of the need to compete with other regimes, some of whom have low environmental and social welfare expectations) - and thus reduced the scope for public spending without incurring fiscal deficits and increasing debts;

fundamentally challenged the broadly-based representative democracy which emerged in the UK in the mid 19th century as one means of ensuring a reasonable sharing of the wealth generated by capital intensive production in industrial society. Globalization has been associated with a general shift of capital-intensive production to lower wage economies increased the importance of specialized market and technological knowledge as the basis for economic competitive advantage in the post-industrial functions that advanced economies have diversified into. This has further reduced the ability of democratic institutions (who can never possess this specialized and constantly-changing information) to take a constructive lead in stimulating economic change (see Economic Solutions appear to be Beyond Politics);

Moreover there is no effective system of global governance and this reduces the influence of nation states relative to the global market by enabling 'jurisdiction shopping'. Also the current global order, which (though unsatisfactory) is compatible with Australia's traditional democratic capitalist institutions, could fail under some circumstances (see The Second Failure of Globalization? and comments below on the potential emergence regionally of an international order based on East Asian traditions).

Democratic governments have tried to respond to the consequences of economic globalization by:

reducing the role of the state [1]; or
undertaking what Robert Reich in the 1980s identified as The Work of Government - ie creating sound regulatory and taxation regimes to attract business, and providing quality economic inputs (eg an educated and skilled workforce, infrastructure, and technological infrastructure); or
'third way' governance arrangements - under which it is assumed that a global market will drive the economy and that government's should seek to compensate for the social costs and empower the community to compete.

However none of these options provide democratic institutions with much power to set overall directions for a community.

An equally significant, and universally ignored problem, is that globalization has encouraged political leaders to try to act in international arenas on the basis of domestic political paradigms in environments in which those paradigms are much less appropriate. US unilateralism in relation to the 'war on terror' is a notable example (see The Second Failure of Globalization?).

The problem is that:

cultural assumptions (and associated social institutions) are critical factors in the ability of a society to archive material prosperity - or to successfully adopt a system of (say) democratic capitalism (see Competing Civilizations);
this constraint is universally put in the 'too hard' basket and ignored - thus creating huge potential for conflicts

Third as governments experienced increasing difficulties changes to machinery of government (as outlined below) have been implemented. In particular:

governments tended to assume that when their policy ambitions were frustrated, the fault must lie in the administrative institutions; and
budget constraints were seen as best resolved by making public functions increasingly market, rather than policy, driven (eg by privatization or the adoption of 'commercial' goals).

Unfortunately, because 'reformers' were often driven by political or economic goals and apparently had little experience of the requirements for effective governance, such changes further reduced the effective influence of elected governments (eg efforts to overcome 'bureaucratic resistance' eroded the knowledge and skill base of key support institutions by often-inadvertently installing cronies and 'yes men' in dominant position).

The key challenge facing governments is their ability to handle complexity (see Governing is not just running a large business). Governments' core function is 'governing' (ie creating a framework, through a system of law and in other ways, for the social and economic activities undertaken by the community). Undertaking this successfully requires a huge amount of knowledge and experience. The secondary function of government is providing goods and services that are subject to significant market failures. The factors that lead to market failures (ie make it impossible to successfully manage such functions through market mechanisms) also give rise to complexity (ie to making the management of relationships between functions as important as managing individual elements).

Traditionally governments received support in managing complex relationships between functions through the consensus forming processes and collegiality of professional public services. However the latter capabilities were severely eroded by 'reforms' that were intended to promote efficiency in the production of individual elements (see Neglected Side Effects of national competition policies)

Fourth, changes in epistemology (ie in assumptions about the nature of knowledge) as reflected in (so-called) post-modern assumptions have become pervasive in many university arts' / humanities' faculties and influenced the way in which a generation of their students think about policy issues. This assumption effectively denies the existence of public truth (as claims about truth are seen to always reflect the assumptions which particular social groups make for their own political advantage).

In practice asserting that all claims about 'truth' are subjective leads to many real-world dysfunctions (eg practical knowledge and experience have been devalued resulting in reduced institutional capabilities and 'taboos' have emerged on the study of some critical, especially cross-cultural, issues - see Eroding the West's Foundations). Furthermore these assumptions imply that any statement of public policy or attempt to debate policy, which are foundational components of democratic governance, must be almost meaningless.

In the absence of agreement about 'public truth' real democratic governance is essentially impossible, and national cohesion probably requires some sort of social hierarchy (as has been the East Asian tradition because of adherence to 'truth-denying' epistemologies - see 'Asia' Literacy).

Finally in the absence of viable solutions, the democratic process has tended to install populist governments - those which speak of solutions which are:

trendy enough to bluff the media and other elites (who carry public opinion) though they lack practical substance (see Towards Good Government in Queensland and Queensland's Challenge which outlines the ongoing 'nightmare' that resulted from a lack of practical competence in attempting to implement the 'dreams' of Queensland elites); or
out-of-date but based on public understanding of what is believed to have worked in the past; or
focused on easy-to-understand 'projects' rather than the policies required for systemic solutions. Queensland has had a tradition of focusing on 'major projects' which: (a) reflects the lack of top management skills in its small business / branch office environment; (b) has been a key factor in its economic under-development and problems in public administration (see Management Gaps in Queensland). This 'major projects', rather than systematic policy, focus has extended to the Federal Government through programs such as Auslink - which essentially guarantees that critical problems in developing integrated transport systems will remain unresolved.

In turn, populist governments apparently tend to rely on 'experts' who tell them what they want to hear (ie that there are simple solutions). The politicisation of Public Services in Australia (ie ensuring dominance by cronies and 'yes men' illustrates this problem (see The Growing Case for a Professional Public Service; and Decay of Australian Public Administration).

An attempt to define a systematic view of the growing phenomenon of policy populism has been developed by Steve Dovers, while the chronic weakness of Queensland's political system can realistically be described in terms of populism resulting from a lack of institutional support.

Some specific examples of insubstantial populism in recent public policies include:

the superficial assessment of strategic issues involved in Australia's commitment to war in Iraq (see below)
the very poor quality of debate and analysis about the possibility of a fundamental change to the the central institution of Australia's constitution in the 'republic' debate. Despite popular support for changing Australia's head-of-state system. A model was presented to a referendum which did not meet public desired for a 'directly elected' presidential system. Moreover advocates of that model seemed unable to explain to the electorate why the popular model would be inconsistent with stability and effectiveness under Australia's system of government. Also a republican model for Australia based on a populist 'directly elected' president was reportedly advocated by a potential Prime Minister on the grounds that this was the only way to 'wedge' his political opponents [1];
methods envisaged to develop Australia's innovation capabilities by increasing the supply of 'smart' inputs (eg education and research) without seriously upgrading capabilities to profit from those inputs (see The Economic Futility of Backing Australia's Ability 2 and Commentary on Smart State). The application of those policies has accompanied the rapid decline in Australia's innovation ranking;
focusing on 'children overboard' or playing the 'racism card' in relation to problems in dealing with unauthorized migration which involved far more complex issues (see Complexities in the Refugee Problem);
the focus on greenhouse gas emissions as the source of climate change and the assumption that aggressive action to reduce this would have only minor costs (see Finding the Truth on Climate Change).

Other examples that arose in the context of Australia's 2007 federal election campaign are cited in On Populism while those that provided a backdrop to the 2010 federal election are mentioned below.

Traditionally political populism meant that governments could do little good, but the existence of a professional public service ensured that populists' wild imaginings were subject to a reality check which limited the damage that could be done . Now unfortunately, politicisation of public services means that populism can potentially be extremely damaging to the public interest - and scope has been created for the election of persons who might be, in effect, mere confidence tricksters.

An evaluation of the strategic environment related to the problem of dealing with the risk of terrorists with WMD strongly suggests that the US's strategic response linked to regime change in Iraq was based on very complex considerations (eg see speculations in The Second Failure of Globalization?).

In brief: key issues that apparently needed to be explored in the background to that situation include:

the political and economic failure of numerous states, a problem that has many causes and gives rise threats to neighbours and to global society;

the loss of confidence in multilateral action by the US, which had originally sponsored and long supported that system, and the emergence of proposals for unilateral US action

However in Australia there appear to be no governmental or independent institutions able to make and communicate such assessments to the public - or even to the government (though one observer pointed out that advice may have come behind the scenes from PM&C, DFAT and Defence Departments [1])

Prior to Australia's commitment to the campaign in Iraq, the public case for regime change was based only on its WMD programs - though this issue was probably only a 'marketing' tool (noting Paul Wolfowitz's remarks suggesting that it was the focus because it was the only thing everyone agreed about. And even after the event, the assessment of the case for participation (by a parliamentary committee and the media) focused only on weaknesses in intelligence about the WMD issue and those institutions proved entirely incapable of addressing Australia's strategic interests generally (see Strategic Assessment). This is particularly significant in that it appears that the strategy being pursued by the US administration, whose lead Australia has followed, was flawed (again see The Second Failure of Globalization?).

In brief: It seemed that the hidden-agenda of the 'Neo-Cons' (who held sway in determining the US's response to the 911 attacks, because they appeared to be the only ones with any serious proposals) was to take pre-emptive action to avert the risk of a major future war (ie one that could emerge following likely Islamist revolutions against bad governments throughout the Middle East) by creating in Iraq a successful model of political economy that might be emulated across the region. However that aspiration arguably involved unrealistic assumptions about the prospect of successfully creating such a regime in Iraq (because the cultural and institutional preconditions for such a regime could never be created through the use of 'hard power'). However this was never considered because the nominal goal of dealing with WMD was all that was publicly mentioned, and students of the humanities were off on a postmodern 'trip' involving the belief that cultural assumptions had no practical consequences.

In brief: In East Asia abstract ideas are not regarded as reliable, so methods for problem solving and managing change have been created that do not depend on individual rationality or political debate.

For example, power in Asia is equated, not with making decisions as Australia's citizens and political elites expect to do, but rather with having social subordinates who make decisions for the powerful.

Such societies tend to act as a whole, rather than as a collection of individuals.

Dubious consequences of this arrangement are:

what amounts to centralised planning of complex government functions is attempted across the federal-state interface and is required also within states (see below). This faces the same fundamental obstacles as centralised economic planning (ie excluding relevant information / knowledge / experience / initiative / commitment, and thereby generating solutions that tend to be unrealistic, no matter how politically popular they are). The initiative of rational individuals is the primary source of strength in Western societies - but this is squeezed out by centralised controls. This appears to be a primary source of ineffectual government in Australia;
in particular the expansion in special purpose funding (especially in the 1970s) appeared to reduce the ability of states to perform their functions effectively because it: (a) reduced their ability to make decisions and funding commitments; (b) forced states to concentrate more on lobbying for federal approval than on the requirements of their functions; and (c) shifted internal decision making to central intergovernmental-relations and financial staffs and away from those with the tacit / technical knowledge of ehst is required and whose commitment / initiative is vital to producing effective / efficient outcomes. Using the 'power of the purse' to achieve 'national' strategic goals necessarily results in less efficiency and effectiveness, and (in effect) significantly reduces the value of that 'purse'. The overall effect has been somewhat like that of tariff protection on corporate managements, or welfare dependence on the disadvantaged. The weakening of state administrative capacities may have been a factor in the decline in public capital investment in the 1980s and 1990s to levels well below OECD norms - and the consequent backlogs which many observers now identify (see also Infrastructure Constraints on Australia's Economy);
there is a problem in accountability and political motivation because the federal government carries the political cost of raising revenue - while the states get many political benefits out of spending it. The federal government is now constantly forced to try to refute accusations of being a high taxing government (despite the fact that Australians overall tax burden is less than in many developed countries) because taxes collected on behalf of the states (eg GST) are labelled as federal taxes. Moreover one observer has suggested that very rapid growth in state spending has arisen because states are not responsible for revenue raising [1];
states, who have responsibility for economic development, have had limited financial incentive to take development of productive modern economies seriously - because Commonwealth payments are states' most important revenue sources and these tend to be distributed 'equitably' irrespective of the weakness or strength of a state's tax base (see Comment on Review of Grants Commission Arrangements and [1]). This disincentive has probably significantly lowered:
- Australia's overall economic performance (noting that Australia's per capita GDP had been in more-or-less constant decline relative to international standards ever since federation - though this trend changed in the 1990s);
- aggregate tax revenues available to Australia's public sector;
attempts by the federal government to micromanage nominally state functions have further eroded the effectiveness of Australia's overall system of government through reducing community access to understanding of complex public policy issues, and thus reducing the effectiveness of the democratic process (eg see TEQSA: Will Micromanagement Again Triumph over Government?);
public functions are not always performed effectively because of divided responsibility and conflicts. For example:
- coordination between land use and infrastructure is seen to be a major problem in planning SE Queensland. This problem must be exacerbated by the Commonwealth Auslink program (which envisages a leading role for the Commonwealth in coordinating the regulation of different transport modes and development of strategic infrastructure [1, 2, 3, 4, 5]) and the Roads to Recovery program (which would eliminate state involvement in local roads[1]). It has been noted that Auslink advocates national consistency in resources allocation - but that no benefit-cost analyses supported its project proposals [1]. Auslink arrangements would separate these critical infrastructure questions from the jurisdiction of states who are being expected to coordinate them with land use and other types of infrastructure (and thus prevent any attempt at optimization of resource allocation). Moreover:
  - the involvement of the Commonwealth Department of Transport in determining how the upgrading the Ipswich Motorway should proceed seems likely to be counterproductive [1, 2, 3, 4] - because (a) it may divert attention away from the need to address failures in Queensland's public administration which have led to the above-mentioned mismanagement of land use and infrastructure and focus attention on one symptom of that problem (b) conflict and confusion seem more likely than practical progress (see Focusing on projects is a bad way of developing infrastructure or the public sector); Initiatives that the federal government is willing to support are seen to suffer various practical weaknesses [1];
  - federal - state conflicts over the Tugun by-pass was seen to potentially cause years of delay [1]
  - under the Auslink program there is no longer a National Highway system that receives funding, but a National Network which includes whatever the federal government wants to fund - a judgment which others can not anticipate [1]
  - the federal government was criticized by state governments over the road projects it chose to fund in the 2006 budget [1]
- the federal Opposition argues that federal funding for certain types of roads merely provides states with an excuse for poor roads [1]
- present financial arrangements allow states to blame Commonwealth for all problems [1];
- the vertical fiscal imbalance is largely due to decision by states to reduce their own efficient taxes - as it suits them to gain credit for spending without responsibility for taxing [1].
- game-playing over shifting public health costs appears to dominate over public health considerations [1, 2]
- cost shifting has affected roads [1]
- hospital costs might be significantly reduced if this were the responsibility of only one level of government [1] -[though it is by no means certain that this would be the most effective way of reducing health system costs - see Commentary on Directions for Health Reform in Australia];
- it has been suggested that private schools may receive more favoured financial treatment than state schools due to Australia's vertical fiscal imbalance [1].
the federal government finds itself with too much revenue and hands back its large revenue surplus in the form of tax cuts, while the states struggle to provide essential services with limited income. [1]

There are increasing signs that these fundamental defects in the federal system are being recognized - and leading to power struggles which further debilitate Australia's governance. For example:

the problem of fiscal imbalance has been analysed [1];
disputes have emerged about the financing of state functions - see below;
the Commonwealth has adopted a coercive (rather than a cooperative) approach to Australia's federal system [1, 2, 3] (similar to that of the Whitlam government in the 1970s?). In particular:
- Austlink (and other transport programs) have sought to dictate federal priorities in primarily state functions - see above
- major education / training initiatives have been structured to bypass states [1, 2];
- the Commonwealth has sought to gain total control over universities [1, 2];
- road funding would be withheld unless federal industrial relations principle are adopted [1];
- uniform legislation would be enforced [1]
- the federal government will monitor the way in which states spend federal grants, and publicize any perceived poor decisions [1]
- conditions might be applied to GST grants. Commonwealth also has its sights on local government funding and a national workers compensation scheme [1]
- federal government will not release road funding unless Queensland accepts industrial relations system, and will deal directly with mining companies in resolving port constraint [1]
- federal efforts to reduce state influence over health funding were seen as a major focus of CoAG meeting [1]
- the federal government is seeking to prevent state-owned entities from participation in a tourism promotion program [1]
- the federal government is seeking to take over regulation of all export ports [1]
- Federal government is considering direct funding of regional health bodies - and bypassing states, as well as making funding subject to competition [1], a proposals which medical groups opposed [1]
- Federal government is seeking other areas to get uniform national laws or over-ride state laws and make them redundant in the cause of more effective micro-economic reform [1]
- Federal health minister has threatened to replace current funding agreement with untied general purpose payments, or to bypass states and directly fund private sector health organisations. [1]
- Federal education minister wants to increase national regulatory control over universities at the expense of states [1]
it has been suggested that the Commonwealth has adopted a highly centralist approach because it believes that the states (a) are incompetent and (b) have a role purely as service deliverers - which does not give them any role in development of policy [1]
the federal government is seen to be interfering in state areas of responsibility because it can make no progress in dealing with its own, and can thus avoid responsibility [1]
an end to commonwealth / state fighting has been seen as necessary to allow progress in dealing with key issues [1];
despite access to GST states have never had worse access to own-source revenues and community has yet to grasp the significance of this for state service delivery or state tax reform.[1]
the incompetence which state governments have demonstrated in performing their functions has led to community support for their abolition - though this would be constitutionally impossible and would not actually solve the problem [1]
federal prescriptive control over universities has been sought by extreme interpretation of the 'trading corporations' power, and seems likely to further reduce the already weak ability of Australia's universities to provide the substantial contribution to public affairs required for an effective political process [1];
proposals have been put forward for a federal government take-over of responsibility of all health services [1];
micro-economic reform has been increased national centralization of regulation. Now national bureaucrats impose penalties on state governments if they make electorally-endorsed decisions that are seen to be inappropriate. States have passed over responsibility to get someone to blame when things go wrong. There would be benefits in diversity - where outcomes would respond to local circumstances. [1]
reform of the federal system is seen to be vital to overcoming problems affecting the health system. [1]
Federal and state governments increasingly recognize the need for health systems to be operated by a single level of government [1]
attempts to erode the federal system have been seen to damage Australia's constitution which has provided a century of political stability that few other countries experienced by (a) removing a key balance of power and (b) preventing regional issues being dealt with mainly by affected regional communities [1]
proposals have emerged for changing financial arrangements and rationalizing functions [1, 2, 3, 4], resulting in no agreement [1];
some see solutions to confusion and duplication associated with federal system to lie in increasing Commonwealth regulatory authority. But it has shown an equal or greater ability to generate complex systems.[1]
there is a need to make states accountable by letting them raise their own revenue [1];
states have argued that the national competition agreement has been torn up, while health and education have not been able to be discussed in COAG [1];
the establishment of an effective national electricity market is at risk from intergovernmental tensions [1]
state's could respond by a High Court challenge in relation to industrial relations, and by simultaneously re-establishing their own income tax regime [1]
states threatened continuance of national agreement assigning corporations powers to the commonwealth if the Treasurer challenges their access to GST revenues [1]
the PM indicated an intention to pursue what he saw as the national interest - over-riding the states if this was necessary [1]
the federal government is seen as seeking to destroy the remaining functions of states - which would not be in its interest as it would then be held responsible for, and have to deal with, all problems that arise [1]
the federal government is seen to be ignoring the constitutional limits on its powers (using its financial dominance) on the grounds that states are inefficient - yet part of that problem arises from Commonwealth duplication of their functions [1]
federal government efforts to take control of ports could create a very complex regulatory and administrative environment, and disputes with the states about this would not be in the national interest [1]
Commonwealth attempts to control everything are seen to be a risk to the nation as a whole [1]
Australia's federal system now makes the states helpless - mainly because of centralized financial power. However this is quite contrary to the intent of the Constitution and was put in place by decisions of High Court - not by voters .[1]
Australia's dysfunctional federal state system needs to be overhauled - to allow greater integration of the health system. [1]
the federal system is a blockage to good government, and there is a need for a summit to decide how power and money should be divided [1]
highly centralised federal control of state grants was suggested to potentially result in 'set-up costs' equal to the grant [1]
NSW treasurer suggested that costs of greying population could create large funding problems - which required an overhaul of federal / state funding arrangements [1]
The division of responsibility for health between federal and state governments was seen as the biggest biggest obstacle to reforms [1]
Australia has one of the best systems of government in the democratic world, and its federal system is worth preserving [1]
NSW is to host a national summit on ways to reform Australia's fiscal system - to address report which identified a gap between states' revenue raising powers and spending responsibilities. [1]
a High Court decision, related to use of corporations power, appears to allow the Commonwealth to seek control of virtually anything [1], which must massively compounds the dysfunctions that have grown in Australia's system of government as a result initially of the removal of state income tax powers during WWII.
the federal system was seen to be 'broken' (noting duplication; inefficiency; unnecessary red tape; sub-standard services; and conflicts over control). A special constitutional convention could be the way to fix this [1]

Though this issue has not been systematically evaluated, reasons to suspect that a problem is emerging in raising revenues to meet public service expectations include:

constraints and demands on federal revenues have increased, including:
- the reduced ability of governments generally to collect taxation due to globalization [1];
- international competition which seems to imply a need for tax rates to fall [1]. One factor in this may be the the traditional tendency of increasingly-economically-significant East Asian societies to fund only basic state welfare support because this is expected to be mainly a family responsibility;
- likely changes in the pattern of economic growth that would slow the rapid growth of GST revenues [1];
- as a result of population aging and the retirement of the baby boomers, economic growth must slow and prevent a repeat of past growth in public revenues [1];
- increasing federal expenditure demands related to matters such as:
  - welfare costs of an aging population [1] and substandard aged care facilities [1] - a situation which could be affected by potential increases in average lifespans [1]
  - environmental restoration;
  - security and
  - children damaged by family and social dysfunctions [1]
- the financial pressures facing younger workers (eg because of high housing costs and HECS debts) [1] must restrict their ability to pay high tax rates.
disputes have arisen about financing public expectations in key state functions such as:
- public health services [1, 2]. As a result concern has been expressed as the result of a Health Care Summit about the effect of overlapping responsibility on services effectiveness, and about cost-shifting between different levels of government [1]. An inability to address health system problems because of disputes over financing has also been identified [1];
- water supplies - where shortages are looming in many localities [1] ;
- tertiary education [1];
- roads [1];
- state taxes [1]
the federal government (it has been claimed) is seeking to force states to pay more of the cost of essential services generally [1];
signs are emerging (in spite of the revenue surge from a property boom) of a revenue / spending imbalance in the 'growth' state of Queensland which probably can not be reduced simply by tax rises (see Growing Pressure for Increased Taxation). NSW appears to be experiencing the start of a chronic financing problem [1]. And NSW and other major states have found it necessary to express concern about the revenues they lose because of Commonwealth transfer payments (see Comment on Review of Grants Commission Arrangements).

Implications? Adopting a US style system in Australia would seem likely to:

increases the intensity and sophistication of political debate because both the executive and legislature would presumably be well resourced to support policy research - which would seem highly desirable given the deplorable standards that have emerged as administrative machinery has been politicized; and
encourage a much 'smaller' role for governments - because (a) under British Law the state does not seek to represent the community as a whole as in European (Roman) Law traditions and (b) the separation of executive and legislature would inhibit the coordination required for governments to play a strong interventionist role.

Indicators of the decay of an ingrained put-other-first ethical ideal include:

self-centeredness as the defining characteristic of the (so-called) ‘me’ generation (the 'Baby boomers');
narcissistic (self-love) personality traits are increasing. 25% of students revealed such traits strongly in 2006 (up from 15% in 1982). 80% of people thought they were important in 1980s compared with 12% in 1952. An epidemic of poor parenting is seen as the cause [1]
virtual freedom from family responsibilities which men have had the potential to enjoy since the sexual revolution of the 1960s and 1970s - a freedom which now appears to be translating into (a) poor educational achievements by boys who lack of male role-models [1] and (b) low fertility rates as women find it increasingly difficult to find a man willing to commit to parenthood [1];
emphasis on self-fulfilment, sometimes including veneration of self as a fragment of the divine (which seem to be the core of 'New Age' and growing (pseudo) Buddhist traditions);
a perceived inability to make moral judgments [1]
- Morality? What were once seven deadly sins (that led to spiritual death and damnation) - namely lust, gluttony, avarice, sloth, anger, envy and pride - have all become behavioural problems requiring treatment, not punishment, except for pride that has become a virtue (as an antidote to the sense of low self-esteem that is seen as the source of many social and psychological problems). And what were once virtues (humility, kindness, abstinence, chastity, patience, liberality, diligence) are now also seen as requiring correction through counseling (Furedi F., 'The seven deadly ills', Australian, 2-3/2/02)
escalating drug abuse apparently expressing a desire to 'escape' from a unhappy lives [1];
weakening of ethics in:
- business [1] - which (a) erodes public confidence in commercial institutions that are essential to economic productivity (b) undermines the status that professionals gained by the ideal of putting community interests before one's own and (c) and requires significantly more complex and costly accountability procedures;
- government - associated with increasingly lying [1]
the breakdown of organized civil society (see Social capital);
the emergence of dysfunctional interpersonal relationships (including:
- general dysfunctions in families [1];
- breakup of up to 50% of marriages, and the consequent 'distressing' (in varying degrees) of anything up to 50% of children [1]. Children from divorced families are twice as likely to drop out of school, become parents while teenagers or be jobless as young adults [1]. Such children may do worse on measure of life welfare [1]. Boys lacking male role models are seen to develop anti-social behaviour [1]
- a substantial increase in the numbers of children living in one parent families, which is frequently associates with growing up in poverty and subsequent disadvantage throughout life [1];
- more extreme abuse in not-yet-legalized ways of smaller numbers of children (eg sexual abuse - which might impact 12% of boys and 25% of girls), women (domestic violence [1, 2] is said to affect around 23%) and geriatrics [1, 2];
- 250,000 children live in homes affected by domestic violence - which increases the risk of violence when they themselves form families [1];
- contract killings in extreme cases [1];
- formal contractual agreements for adult children to care for their aged parents because arrangements based on trust are too uncertain [1];
- the abuse of children in foster home - which is seen to indicate a loss of moral capital [1];
- attacks on ambulance officers attending to patients [1];
- a 'toxic' environment for children (related to family breakdown, rampant individualism and inequality) that has been seen to contribute to: youth suicides; ADHD; risk taking; depression; autism; cerebral palsy; crime; insecure neighbourhoods; and drug-taking [1]. Moreover:
  - Health professionals have suggested that the way babies brains are formed is significant. As they get positive stimulation they effectively tell baby “this is the way to interact with the world”. But if positive stimulation is replaced with constant neglect or abuse, then the connections formed tell the baby - “the world is an uncaring place”. Thus the kind of care parents deliver to their infants is vital and all the indicators are that something has gone wrong with the connection. Learning and behavioural problems have increased dramatically. One in four teenagers now has a significant mental health problem. Youth suicide, mainly boys, has quadrupled in the last 40 years. Teenage girls are five times more likely to commit acts of violent crime than thirty years ago. ('The Science of Raising Children: Pt 3', ABC, 21/10/01);
  - children's health generally has deteriorated - a situation which is seen to be associated with lack of support for working mothers, and the ending of public health initiatives related to maternal and child welfare [1]
  - a large blow-out in welfare costs is expected because of the numbers of young people from dysfunctional family / community situations who will depend on welfare, and perpetuate their problems with their own children [1];
  - a Queensland teacher has highlighted concerns about large numbers of children who are uninterested in education, disrespectful, engage in petty crime and willing to steal from society - and have parents who are passively support such behaviour [1]
- children have problems (obesity, diabetes, asthma, autism, Down Syndrome, high suicide rates; increased difficult to treat psychological problems; girls match boys in aggressive behaviour), many of which are seen to come from socio-economic disadvantage - though they are more likely due to social dysfunction [1]
- homosexual behaviour - which a plausible insider [1] suggested is often be an emotional / addictive disorder (as a reaction to childhood abuse and neglect) typically leading to unhappy / unstable lives, rather than a harmless alternative lifestyle option;
- increasingly serious racial abuse in schools [1]
- violent and bullying students in state schools [1]
- very large economic costs as a result of workplace bullying [1]
- bad neighbourhood relationships which have forced 20% of Queenslanders to move .[1]
official government acceptance of homosexual behaviour (eg in the areas of tax, superannuation, Medicare benefits, Centrelink payments, child support and immigration), though such acceptance seems to constitute endorsement of past child abuse and neglect, and to facilitate future sexual abuse of children (see Breaking Off the Long Engagement?);
deterioration in community health associated with increased obesity, because children's outdoor activities are constrained by fear of strangers [1]
Both Prime Minister and leader of the Opposition have expressed concern about the social consequences of changes in Australian values and culture [1]

Part of the social breakdown mentioned above (eg child abuse) is overly associated with disadvantaged communities (eg those suffering high unemployment, low education etc) [1]. However:

the existence of a correlation between social breakdown and disadvantage does not show what has caused the correlation - though a key requirement for overcoming disadvantage for individuals is probably that they gain stronger support from responsible family and community members (see Commentary on Is the Smart State a Just State?).
some indicators of social breakdown (eg in family relationships) are more widespread than serious social disadvantage;
changes in attitudes which are likely to contribute have occurred, and the apparent scale of the social breakdown does not support the view that disadvantage is the major cause;

Part of the social stresses identified are also undoubtedly associated with pressure for harder work [3] - while it has also been suggested that the major cause lies in the failure of men to take on a larger share of household tasks as women have gained equality, and increasingly participate in the workforce [1]

Others have attempted to explain changes in the nature of relationships and the growth of 'rampant individualism' in terms of various consequences of globalization [1].

Others again have suggested that the worst of the problems are over and the situation is improving as a result of general economic prosperity [1]

Indicators of the growth of, and pressure for, 'social / ethical' regulation include:

the blurring of the line between individual and state responsibilities, and the predicted future increase in the use of formal agreements about behaviour that could be required in various circumstances (eg as has been done with indigenous communities) [1]
political activism by church-based organizations [1];
the reported loss of public interest in substantive policy issues - with concern only for personal impacts and whether politicians reflect their values [1];
proposals for legalization of gay marriage, which could provides a wedge for the state to interfere in traditionally-private family life (see Broader issues related to gay marriage);
defining a set of moral standards for politicians by setting down a code of conduct [1];
a perceived need to insert 'values' into public debates [1], and for the Deputy prime Minister to himself stress moral values [1]. And the ALP was said to believe that politics in future would be concerned solely with values - without concern for traditional political debates about programs and budgets [1];
- Comment: Determining 'values' through political authorities would break the separation of church and state
the perceived intent of an ALP leader to build an election campaign on religious values [1];
proposals for state funding of chaplains in schools [1];
'antidiscrimination' legislation which suppresses the free expression of some ideas [1] or protects some behavioural choices that are traditionally seen as immoral, and lead to (sometimes quite unforeseen) social dysfunctions [1];
the expressed concern that churches do not recognize professionally derived ethics, but have treated them as part of universal moral principles [1]. [An aside: The significance of 'professionally' derived ethics from the viewpoint of the churches (ie of eating the fruit of the tree of knowledge of good and evil) is presumably embodied in Genesis 2-3];
research by the Australian Computer Society into ethical standards that should be adopted in that industry [1];
a political debate about the values taught in state schools, and in particular:
- the adequacy of the values taught in state schools has been questioned by the Prime Minister and others [1], and provisions have been made for federal funding to be cut to university courses which the government objects to [1];
- a study was commissioned by the Federal education minister on the values which should be inculcated through the education system [1];
- it was suggested that state schools do not need religion to impart values like 'inclusiveness, respect for others, ethnic diversity and multiculturalism', and that religious education should be removed from the curriculum to make room for other subjects [1]
  - Comment on 'Clayton-ism': that writer's preferred alternative was not to regard any values as better than any others and treat all cultures equally - which would, in effect, constitute the core of a new official religion (which could perhaps be called 'Clayton-ism' - the religion you have when you are not having a religion). Superficially values included under Clayton-ism would be radically different to Australia's institutional traditions (and disruptive) because (a) many cultures that Clayton-ism would include do not endorse equality of individuals, (b) some regard racism as natural and (c) some are overtly intolerant of religious differences. However if it was then decided (on some arbitrary basis) that such features should be excluded, then Clayton-ism would be well on the way to becoming a prescriptive official state religion
- the federal government's efforts to promote values education can be seen as attempt by it to be regarded as having moral authority [1]
officially-sponsored proposals ("Religion, Cultural Diversity and Safeguarding Australia", 2004) to promote religious harmony in Australia through a government-driven process to: (a) shift both public institutions and the community generally towards officially being a 'multi-faith' (rather than a Christian) society; and (b) promote particular 'civil' values.
- Comment: This proposal seemed to constitute a version of the 'Clayton-ism' mentioned above and to emerge without consideration of: (a) the likely dependence of Australia's liberal legal and governance systems on having a community with 'Judeo-Christian' expectations about moral behaviour being controlled primarily by individual consciences responsible to God, rather than by social pressures which generally seems to be the alternative; and (c) the damage that would result from state efforts to control the community's religious practices or 'values' - given the importance for individual liberty of separating church and state, and the social, economic and political advantages of that liberty;
a stream of initiatives by government in the UK aimed at improving people's behaviour [1];
ALP proposals for government machinery for micro-supervision of the fairness of employee-employer relationships (see Fair Work Australia: Establishing the Machinery of a Socialist State?);
a perceived need for a Statement of National Values (focused on: democracy; equality of all people; religious tolerance; rule of law; mate-ship) [1]
advocacy of a Bill of Rights [1] as a means to establish moral rights [1] or national values [1], or because it can no longer be assumed that elected representatives will act in the general community interest [1]. Victoria is to follow ACT in establishing a statutory charter of rights and responsibilities [1]
- Comment: advocacy of a Bill / Charter of Rights seems very strong evidence that authorities have felt the need to constrain individual behaviour. However in practice a Bill of Rights would seem likely to compound those constraints by limiting rights in future to those which are prescribed. Traditionally under common law individuals have been able to do what is not prohibited, but a Bill of Rights would seem to reverse this presumption or freedom and guarantee only the right to do what is specifically permitted. When an issue arises in future that no one has previously considered, it would reasonably be argued that the right did not exist because it was not mentioned in the Bill of Rights
the establishment of Family Law, the Family Court and the Child Support Agency to enforce child support. In some respects the latter has raised the cost of 'free' love to a very high level.
- Family law, it may also be noted, has been seen as a source of many problems [1], and (in Queensland at least) the Families Department seems to experience considerable difficulties. Moreover the cost of child support (combined with the high incidence of family breakdown) seems likely to act as a real disincentive to marriage and parenthood - at an inconvenient time for an aging population;
legal action against institutions for the sexual misdeeds of their staff [1] - which creates a requirement for managements to try to control interpersonal relationships;
checks on teachers in relation to child abuse - a practice which was seen as likely to be inadequate [1];
proposals by ASCA for preventing child sex abuse (a phenomenon that was acknowledged to be widespread) which amount to promoting community morality. However it seemed to be expected that morality of individual behaviour would be promoted by government policies and programs, rather than independently of the state [1]
the suggested creation of special courts or other arrangements to deal with sexual abuse of children [1, 2] - which mainly occurs when children live with adults who are not their biological parents;
arguments by both state and commonwealth governments that the other needs to take responsibility for dealing with the massive problem of child sex abuse [1];
the perceived need for:
- restraining domestic violence [1] and violence in schools [1, 2];
- preventing parents from smacking their children [1];
- teaching school children to be nice to each other [1];
- remedial strategies to prevent bullying in schools and homes [1], and at work [1, 2];
- laws to ensure etiquette in people's behaviour on footpaths [1];
- authorities to remove a disruptive family from a neighbourhood [1];
- governments to force men to take more responsibility for household duties [1];
- governments to take a hands-on role in promoting and sustaining marriage [1]
- Aboriginal elders to be given legislative powers to order addicted persons into rehabilitation, mediate between groups and hold parents responsible for juvenile offenders [1]
the introduction of shared responsibility agreements designed to influence the actions of aboriginal parents [1]
the introduction of legislation to protect the disabled from abusive carers [1];
the creation in Queensland of machinery to 'keep government honest' in the era following the 1980s' Fitzgerald inquiry which:
- was described by one expert observer as creating the most complex system of government in the Western world [1]; and
- was seen 15 years later to require scaling back because the resulting 'red tape' made government ineffective [1]
federal government proposals to restrict the way in which welfare payments can be used by some households (eg those crippled by alcoholism or unable to manage their children) [1]
calls have been made for the adoption of Islamic Sharia Law in Australia, because of the social and environmental failure of Christianity and democratic capitalism Advantages were seen to lie in: (a) Islam being a total system for life which applies to both personal and governmental affairs; (b) Islam's similarity to the traditions of indigenous Australians; (c) the loss of values in Australian life; (d) prohibition under Islam of vices / interest / homosexuality / exploitation for money / immorality / wife beating / over-indulgence / rape / paedophilia; and (e) Islam's promotion of water conservation; and ethics in the workplace. [1] [Comment: see Sharia 4 Australia?].

There has also been:

a suggestion that a breakdown in civil society due to loss of trust is interfering with the effectiveness of economic transactions, and that this might need to be resolved by the churches [1].
recognition by Christian leaders of the effects on Australia's values and institutions if its religious foundations are shifted [1].

A Chinese writer (whose work the author can no longer locate) commented on the difference between doing the right thing when others were watching - or all of the time when conscience was the guide. Islamic legalism seems to require threats of horrendous punishment.

New testament writers commented on the fact that 'no one could ever live under the Mosaic law'. In earlier eras, blood sacrifice was one 'solution' that was found to the failure of moral legalism to prevent what leaders saw as rampant sin in a nation. Knowing how widely the moral law was abused, but powerless to do anything about it, community leaders could show how seriously they viewed the problem by arranging to sacrifice an innocent scapegoat. An interesting parallel may be drawn with the official blind eye that was turned to the problem of child sexual abuse in Australian families and the political 'assassination' of the G-G in 2003.

Even at the time of its election, the Rudd Government showed signs of likely incompetence (see Populism Trumps Electoral Victory) and there were many examples of futile or counterproductive actions in addition to those which finally achieved public recognition in mid 2010 (see Reconsidering the Origins of Kevin Rudd's Failure).

Kevin Rudd's subversion of federal cabinet was not just the work of a rogue individual. The ease with which this was done for 2 years exposes a dangerous flaw in Australia's system of governance that has merely been papered over by eliminating Rudd. Bypassing cabinet resulted in serious consequences - ie the dreadful RSPT, which caused significant damage to the country. It should not be assumed that this could not happen again (eg suppose a terrorist incident had allowed Rudd to reinforce his autocratic style). Or what if he had been a more competent / malevolent demagogue able to manipulate public opinion and remain popular. Most government decisions over the past two years were made by the 'gang of four' not by cabinet. Companies now have to publish corporate governance statements - but these don't exist for government. Canberra elites are telling themselves that the flaws in the system do not need to be addressed, because Rudd was brought down. But there is a need for a constitutional change that recognises the authority / responsibility of ministers, or perhaps a 'Statement of Governance Practice'. The policy mistakes of the past six months should never be allowed to happen again. (Kohler A Ending Australian Autocracy, BusinessSpectator, 2/7/10

A somewhat related view was expressed by Peter Botsman in Empty Rightousness – the Real Problem of Modern Labor (July 2010).

For most of 2010 the Rudd Government had been a flying logjam - with ministers and public servants chasing the PM and his kitchen cabinet around the country hoping for decisions on the policy dilemmas that were piling up. Instead of decisions there were constant requests for more information / analyses / options. Advirors were not relied upon to present the best available options. The government won the daily new cycle, but lost the battle in terms of the need for a clear strategic direction. [1]

International efforts to reduce GHG emissions have been very costly and produced no benefits. Claims that reductions can be achieved at minimal costs were based on insane assumptions about the value of yet undeveloped technologies. Such claims were part of a general patter whereby Western leaders were not willing to tell the electorate the truth about the high cost of shifting to a low-carbon economy . The grotesque misuse of the Treasury, the politicisation of its advice, and its entry into direct political combat, with Ken Henry acting like an unelected cabinet minister proposing policy and defending it in parliament and in the community, is one of the very worst and most institutionally damaging results of the Rudd interregnum. [1]

The most serious of these for the future arguably involved 'reforming' Australia's health and hospital system by increasing centralised control (see Making a Bad Situation Worse?). That 'reform' seemed to assume that service delivery could be centrally managed by defining 'efficient prices' for health services - though (as shown by Soviet economic failures) central authorities can not define prices that will lead to the production of goods and services that meet real needs.

Overcoming Australia's Government Paralysis (email sent 12/12/10)

John Durie,
The Australian,

Re: ‘CEOs decry policy vacuum’, The Australian, 11-12/12/10

Your article recorded the concerns of various business leaders about a lack of progress in addressing important policy issues. However there is a need to look beyond those particular issues at the causes of political and institutional paralysis. Until structural obstacles also receive attention, little progress is likely.

My interpretation of your article: Australia’s business leaders are concerned by policy inaction, Carbon pricing, tax and infrastructure are key issues. But bold decisions are being hampered by a hung parliament. Terry Davis (Coco-Cola Amatil) sees a policy vacuum resulting. Bernie Brooks (Myer) is concerned with protracted decision making / waste. Graham Twartz (Hills Holdings) sees the need for decisive / accountable government. None saw the NBN as a major issue, through Telstra (David Thodey) and Hills saw it as an opportunity.Leaders (eg James Fazzino, Incitec Pivot) were concerned with hard infrastructure to take advantage of industrialisation / urbanisation in Asia. IAG (Mike Wilkins) was concerned with complacency about current economic strength, and the unfinished tax reform agenda. Leaders saw a need for business tax cuts, and were concerned about skills shortages. Richard Goyder (Wesfarmers) saw the need for increased labour mobility. A need for early decisions about responding to climate change and energy efficiency was perceived by David Thody, Grant King (Origin Energy), Mark Selway (Boral), Alan Joyce (Qantas) and Marius Kloppers (BHP). Resolution of issues related to mining taxes was perceived to be critical by Tom Albanese (Rio Tinto) and Andrew Forrest (Fortescue), and a taskforce led by Don Argus will report to government on this soon.

At present business leaders seem to have unrealistically simplistic views of what is required to achieve the outcomes they seek (see comments on ‘Seeking Magic Solutions’ below). Policy and practical paralysis must continue, unless and until community leaders:

start to consider not only desired policy outcomes but also the obstacles to good government that have emerged naturally or from unwise advice; and
put in place the supporting machinery now required for Australia’s system of government to again become effective.

Some suggestions about institutional reforms that might be required are in A Nation Building Agenda. This refers to addressing challenges such as:

Weak policy development capacity due to the lucky-country’s traditional dependence on natural resources, and copying others’ policy initiatives;
The increasing complexity (eg interconnection) of issues, which facilitates electoral support for ‘populist’ (ie simplistic but unrealistic) policy;
Dependence on political leadership in addressing system-wide social and economic challenges, thus often increasing controls rather than opportunities;
The adverse effect of centralised control and revenues on the grass-roots initiative and responsibility needed to deal effectively with many challenges;
The lack of real Asia-literacy (ie ability to understand that increasingly significant region from an ‘East Asian’ viewpoint); and
Politicisation of government machinery (often inadvertently), thereby further depriving elected governments of practical and realistic support.

The speculations in that document may be of interest, though they are are at best a starting point.

John Craig

Seeking Magic Solutions

Some formal submissions by business leaders have been unrealistically simplistic. For example, the Business Council of Australia (in Bradley G., Parliament must focus on reform where there is broad agreement, BCA, 16/9/10) suggested a policy agenda for the federal government that would not only focus on issues about which there was already broad agreement (such as parliamentary reform and improving indigenous Australians’ life opportunities) but also provide leadership in: (a) formulating a national infrastructure plan (involving both regulatory / pricing policies and priority projects to boost national productivity); (b) tax reforms; (c) national energy security; (d) focusing COAG on fewer more-important issues; and (e) promoting integrity in federal budgets.

The BCA’s proposals seem unrealistic because they demand outcomes of shambolic machinery of government.

For example, the key to effective development of infrastructure arguably lies in overcoming artificial institutional obstacles to effective action by (mainly) state governments. The main problems are arguably: (a) fiscal imbalances within Australia’s federal system; (b) politicisation / deskilling of government machinery because of a desire to ensure unquestioning compliance; and (c) attempts to develop functions subject to market failures through market processes, or to apply business-like methods in undertaking non-business-like government functions (eg see Infrastructure Constraints on Australia's Economy, 2005). The BCA’s ‘solution’ involves central planning (eg devising a list of projects suitable for federal government or private funding) and this would simply compound problems created in Australia’s system of government generally over the last few decades. Likewise:

tax reform which does not give specific attention to the capacity of state and local governments to independently fund their primary functions and bear financial consequences from the success or failure of their effectiveness (or otherwise) in enabling the development of productive modern economies is inadequate (see Australia's Future Tax System: The Cost of the Financial Crisis and the Opportunity to Fix Government). There is however no serious attention to the effect on the operational effectiveness of governments in major proposals for tax reform (such as the Henry Review);
the problems in Australia’s overly-complex machinery of government can’t be resolved by limiting the Commonwealth to micro-managing a smaller number of state functions through COAG. There is rather a need for fundamental reform of the federal system, to end the suppression of grass roots competencies and initiative (eg see Fixing Australia's Federation as well as specific examples of counter-productive outcomes from attempts to develop idealistic ‘national’ solutions Making a Bad Situation Worse and Proposed National History Curriculum: Information without Understanding?);
there is no point in simply promoting integrity in federal budgets when there are serious problems in the integrity of state budgets (eg see CPDS Comments on Queensland’s 2009-10 Budget). Money wasted by state governments due to the lack of independent policy capacity and internal competence is just as serious as wastage by the federal government.

Also, your article recorded calls by many business leaders for firm policy decisions in relation to climate change, so as to facilitate investment. However until there is a serious effort to reduce uncertainties in the associated science, it is simply not realistic to ask for a policy position to be defined that will not be susceptible to unpredictable change in a few years time (see Carbon Certainty is a Long Way Off).

S-L-O-W Learners (email sent 16/12/10)

Paul Kelly
The Australian

Re: ‘No time to rest on our laurels’, The Australian, 15/12/10

Your article, which I have outlined below, drew attention to frustrations which ‘outsiders’ (eg business leaders and economic policy experts) have about the complacency that ‘political-media insiders’ now exhibit in relation to Australia’s economic prospects.

However, those ‘outsiders’ are themselves partly to blame. Some past ‘reform’ initiatives they advocated have contributed to making Australian governments ineffectual, because those who led in developing and selling radical changes that were hoped to boost economic efficiency had little experience or knowledge of the nature and functions of government. The fact that the risk of making governments ineffectual still seems to elude those who advocate continuation of Australia’s past approach to economic reform implies that they are S-L-O-W learners.

My reasons for suggesting this are outlined below, together with observations about:

Apparent defects in the theoretical foundations of conventional ideas about improving Australia’s economic prospects; and
Whether ‘Asian values’ might be more relevant to Australia’s future, as your article implied, than those embodied in (say) European-style social democracy.

Regards

John Craig

Outline of Article and Detailed Comments

My interpretation of your article: Australia is at risk because of complacency. Political-media ‘insiders’ are more complacent than ‘outsiders’. Insiders see the 2010 political compromise as workable with economic success assured. Business executives are very frustrated. Kim Williams (Foxtel) sees ‘blanding out’ that can only lead to failure. Monday’s AFR reported on BCA forum’s doubts about ALP’s ability to set strong policy agenda – with concerns related to: minority government; NBN; skill shortages; infrastructure; red tape; and lack of federal-state collaboration. Gary Banks (Productivity Commission) warned that rising national income from resources boom was concealing poor productivity performance. Government must both deliver fiscal restraint and manage structural pressures associated with mining boom. Banks argues there is a need for: labour mobility; less industry assistance; reform of defence procurement; and less anti-competitive regulation and regulation that adds to business costs. Also industrial relations reform is needed, as well as carbon pricing rather than more expensive alternatives. Ross Garnaut continues to warn about complacency. Judith Sloan (for CIS) warns that Fair Work Act poses distinct economic risks. An OECD report shows problems in students’ attainment in maths and sciences. The ALP seems confused and divided over such issues. In the past OECD praised ‘Australian model’ of pro-market reform based on: leadership; identifying and selling reforms that promote both productivity and equity. But this model has faded. Treasurer argues that Australia is well placed to benefit from Asian economic power. But Australia’s values are more at home with declining Europe. Asian values are: personal improvement; economic competition; educational excellence; national pride; strong family ties; cultural traditionalism and rising religious faith. Are these Australia’s values? Many seem opposed to social-democratic and green progressivism that shape ALP. GFC has delivered a shattering intellectual and moral message to the world. US is wounded but European model is crippled. Europe’s system of government debt, entrenched welfare, extensive regulation and tolerance of all as unifying values is broken. ALP needs to put steel into its economic thinking. The requirements for success have never been more obvious, yet they are not mentioned by insiders to Canberra’s political-media culture.

There is no doubt about the need to end complacency.

However complacency about the causes of governmental paralysis is as damaging as complacency about new productivity-enhancing initiatives (see Overcoming Australia’s Government Paralysis). The latter suggests that some past productivity-oriented reforms have contributed to seriously eroding the effectiveness of governments – though they were, by no means, the only factor.

Dysfunctional government has become the norm in Australia’s recent history. The lack of substance in the Rudd Government’s policy agenda should have been obvious in 2007 (see Populism Trumps Electoral Victory), rather than in mid 2010. Other Australian governments had been publicly perceived to be ineffectual for years (see Failure was not Confined to the Rudd Government).

One reason was that, starting in the 1980s, all Australian governments had progressively been through a similar process of managerialist / new-public-management ‘reform’ (see Decay of Australian Public Administration, 2002). Radical reforms intended to promote efficiency and effectiveness, often proved dysfunctional in practice because:

those advising about ‘reform’ (often with business or economic backgrounds) tended to lack realistic understanding of the nature and functions of government. Success with governments’ core roles (ie creating a legal framework for social and economic transactions in the community; and providing goods and services that are complicated by serious market failures) depends ultimately on experience and knowledge (see Governing is not just Running a Large Business, 2002). However efficiency-oriented ‘reformers’, who often advocated business-like practices, were unaware of this. In particular microeconomic ‘reforms’ undertaken under National Competition Policy sometimes had the unintended effect of eroding the abilities required for effective government (see Neglected Side Effects, 2004); and.
politicians took advantage of the ‘managerialist’ assumption that management was a generalist activity (which implied that managers did not need to know much about the functions they were ‘managing’). As experience and knowledge were derided, governments agencies tended to be stacked with cronies and ‘yes men’.

[Note added later: Ignoring the existing body of experience and knowledge to achieve a particular reform agenda is hazardous, because governments' established institutions will embody the results of (say) 1000 prior reform agendas, most of which those concerned with the (say) 10 latest trendy issues will be unaware of. And once everything has been 'torn down to start again' so that their 10 goals are facilitated, failures must escalate because of the necessarily-limited knowledge of the latest batch of reformers].

Damage was done because of the lack of understanding or consideration of the requirements for effective government (or concern with the side effects of ‘reform’) by those who advocated radical changes to promote efficiency. A parallel with recent observations about the source of problems in Europe is apt.

There is a fundamental flaw in the European project. Europe’s economic crisis resulted in part from reckless spending. Also common interest rates were set that were too low in some countries and too high in others, while the Euro blocked devaluation as a relief valve for struggling economies. However these are bye- products of constructivist roots of the European project. EU is example of constructivist hubris Hayek described. He defined this as the belief that all social and cultural institutions were not only created by man but could be easily changed according to man’s wishes and beliefs. This follows from the rationalist view of society (of Descartes and Voltaire) and contrasts with the British empiricist tradition (of Locke, Hume and Smith). Constructivists believe that anything in society can be altered / improved, while empiricists believe that such attempts can be dangerous. Later Hayek turned the empiricist tradition into his theory about social and economic structures depending on dispersed knowledge which is too complex to be centralised in any one mind. This is why disregarding grown institutions is bound to fail. EU was a project imposed top-down on people of Europe. It was driven by intellectuals and politicians on the basis of their conclusions about what was needed for peace and prosperity. The EU did not start as a popular movement, but as a political / academic ideal. ‘Europe’ remains an artificial construct. Europe’s crisis shows what happens when economic and social structures are wilfully ignored and replaced by systems designed in academic ivory towers and the backrooms of power. Putting design over experience and planning over evolution contains the seeds of disaster (Hartwich O. ‘A fundamental Euro flaw’, Business Spectator, 16/12/10)

Furthermore Australia’s ‘ideal’ pro-market reform process involved advocacy of conventional economic theories that seem no longer adequate. Reasons for this are speculated in The Advantages and Limitations of Financial Criteria (2010). For example:

Economic theory emphasises the role of financial systems in economic coordination. However the GFC showed that they can also be a source of instability. Money ordinarily plays a virtuous role (as a store of value and means of exchange) in simplifying individuals’ economic environment and thus facilitating rational decision making. However its role can turn ‘vicious’ if money ceases to be simply a means of measuring economic activities and becomes rather the primary focus of economic activity. Complex financial systems can reduce individuals’ ability to make rational decisions;
It is no longer appropriate to treat fiscal and monetary policy as the main tools for economic management, because: (a) neither fiscal nor monetary policy is adequate for macroeconomic management; and (b) strategic information management can potentially have valuable economic impacts.

Finally your question about whether Asian ‘values’ are better than the values underpinning Europe’s social democracy is more complex than your article suggested.

Firstly ‘Asia’ (if this is taken to refer to societies with an ancient Chinese cultural heritage) tends not to have values in the way this would be understood in Europe (ie ideas / ideals people believe in). Rather ‘Asia’ tends to have traditions (ie things people do). Such societies lack the West’s classical Greek heritage, that gave rise to an emphasis on abstract ideas, universal values and the notion of a rule of law (see East Asia in Competing Civilizations, 2001). Thus government under ‘Asian’ traditions is by man (social elites) rather than by law, and ‘laws’ can be selectively enforced to discipline those who don’t comply with the [supposedly] whole-of-society consensus that elites have facilitated (rather than enforced on the basis of respect for abstract values such as ‘justice’ for individuals). ‘East Asian’ traditions create obligations between individuals with particular relationships. Universal values (ie those which apply in relationships with ALL people) are not the norm.

Secondly, there is no doubt that ‘Europe’ is currently suffering crippling economic stresses and that some models of social democracy are part of the problem (eg by creating unsustainable debts because of demands for redistribution of resources that are not available). However, it can also be noted that:

broadly based democracy emerged (initially in the UK) at the time of the industrial revolution partly as a means for redistributing the wealth generated by mobilizing capital (which had facilitated mechanisation and later mass production) in industrial economies;
low-wage competition from emerging economies in capital intensive ‘industrial-era’ functions has been a widely-recognised challenge to previously advanced economies since the 1960s;
market liberalization was seen in the 1980s as enabling advanced economies to sustain high levels of economic productivity in the face of that competition. However this was inadequate – because competitive pressure alone does not ensure that the systemic requirements for successful competition exist (see The Inadequacy of Market Liberalization, 2004). Moreover democratic governments are structurally incapable (because of the pressures they respond to) of providing effective leadership in overcoming those constraints (see Economic Solutions Appear to be Beyond Politics, 1995)
there are none-less: (a) considerable advantages in democratic political systems (see Effective Democracy in Competing Civilizations, 2001); and (b) means to promote their economic viability (see A Case for Innovative Economic Leadership, 2009);
though the GFC has had particularly severe effects in the US and Europe, the non-capitalistic characteristics of ‘Asian’ models of socio-political-economy have been a factor in the emergence of the GFC (see GFC Causes). Moreover those models contain vulnerabilities (see Heading for a Crash?) and might prove unsustainable in the global economic environment that emerges when / if the GFC ends (see Are East Asian Economic Models Sustainable?).

For example:

political leaders had become content to present opinion leaders and the electorate with populist policies that had little prospect of practical outcomes (see On Populism). As noted above this apparently emerged because the increased complexity of the issues governments address has made it impossible at times to express realistic policy simplistically;
simultaneously elected officials turned their backs on the 'reality check' on their policy ideas once provided by professional, independent and experienced public services as a result of:
- widespread acceptance of public service politicisation. The result was that political leaders (deliberately or accidentally) surrounded themselves with 'yes men' and as a result suffered a loss of contact with reality and of the fact that not everyone shared their assumptions (see Decay of Australian Public Administration). Ironically even political reformers who sincerely tried to 'reform' bureaucracies to ensure that they had access to competent advice, were likely to surround themselves with 'yes men' - as they (predictably) were unable to tell what they didn't know (see Turning a Blind Eye to Incompetence and Abuse of Power);
- applying 'business-like' methods theoretically to lift the efficiency of governments' often 'non-business-like' functions (see Governing is Not just Running a Large Business). Business success is measured by the bottom-line (ie profit), whereas most government functions suffer market failures that make them too complex to be assessed in terms of pseudo-commercial outcomes. Attempting to do so resulted in oversimplification in managing many functions, and fragmentation that prevented collaboration and the development of the broad perspective needed to advice properly on broad policy issue. In particular the application of National Competition Policies arguably had adverse effects on the ability of government agencies to provide practical policy advice and support to governments that its economic and academic architects did not anticipate (see Neglected Side Effects)
federal governments generally presumed that they had Rudd-like wisdom in relation to functions constitutionally allocated to state governments. Increasing centralisation of control (made possible mainly by imbalances in the allocation of responsibilities and access to tax revenues in Australia's federal system) has led to costly duplication, blame shifting and serious erosion of the ability of other governments to perform, or be held democratically accountable, for their nominal functions (see Federal State Fiscal Imbalances and Large doses of (federal) medicine have been making states sicker). The notion of 'subsidiarity', (ie that public functions should be allocated to the lowest level of government able to undertake them in order to ensure community engagement and effective linkages between functions at a local / regional level) was ignored. National political leaders increasing sought to micro-manage functions such as education, health, infrastructure, regional development without any consideration of the organisational chaos, wastage, breakdown in coordination; and suppression of initiative that resulted;
political leaders increasingly sought to present themselves as moral authorities, the logical end point of which would be to break down the separation of church and state and put individual liberty (and its political and economic advantages) at risk (see above)

As other observers noted, there was nothing significantly different about what Mr Rudd was doing as Prime Minister and what was done by the Goss Government in Queensland almost 20 years previously.

Centralised decision making, contempt for cabinet processes, poor communication and an office run by 'young men in suits' with no real world experience. This criticism could apply equally to Kevin Rudd's 2 1/2 years as prime minister and to an earlier stage in his career. Similar concerns existed about the state Labor government of Wayne Goss in the mid 1990s in which Mr Rudd was a central player. A review of the Goss Government's loss of power in 1995 by Mick Young is strikingly similar to the criticisms directed against Mr Rudd when he was dumped as prime minister. Others have criticised Mr Rudd's reliance on young, inexperienced advisers. Young spoke of government being run by Labor loyalists who knew little about other people. This involved a party in which a chosen few ruled over the alienated majority. Queensland Labor sources note that while Mr Rudd played a limited public role in the Goss Government, he was at the centre of government affairs. Young found that decision making was too centralised, and that communication with the electorate was poor. (Franklin M. Rudd reprised errors of Goss Government (The Australian, 2/7/10)

Refusing to listen to advice or the voices of experience ultimately caused the Goss Government to snatch political defeat from the jaws of expected victory (see Queensland's Worst Government which draws upon the present writer's 1995 submission to the ALP's review of its electoral failure, Toward Good Government in Queensland, 1995).

Some claim that Mr Rudd was exceptional in this respect.

Kevin Rudd was viewed as most influential person in Queensland in 1992 - even though he was not publicly known or elected. At the time he was head of Cabinet Office, but had total control of government. This problem of control by un-elected officials was not new as as a federal minister the power of political advisers had become very obvious (Cohen B 'Don't vest all power in either PM or the factions', Australian, 28/6/10)

Kevin Rudd never listened. This ensured that when he was eventually challenged, he would quickly lose (Richardson G., 'Fear and loathing of Rudd was all his own doing', The Australian, 29/6/10)

Presumably it was memory of this electoral debacle in Queensland that led to the speedy mid 2010 dispatch of the then prime minister (Mr Rudd) by the federal ALP caucus

Consider, for example:

Failure in Queensland's Electricity Distribution Network (2004) with dealt with official 'forgetfulness' about the need for investments in network upgrading;
Intended Submission to Health System Royal Commission (2005) related to the likely adverse effect of excessive centralization on competencies in health management, that were revealed at Bundaberg Hospital; and
Structural Incompetence and SE Queensland's Water Crisis (2007) with dealt with the massive cost of official 'amnesia' about the professionally-well-known limitations on SE Queensland water infrastructure..

Queensland's government has suffered ongoing crises leading to levels of public dissatisfaction that not even the appointment of the state's first female premier (Anna Bligh) could prevent (eg see Ballough S etal 'Bligh's battling a toxic poll shock', Courier Mail, 21/6/10)

In 2010, observers started suggesting that Queensland's institutions had become seriously dysfunctional - ie that the way Queensland was governed and managed (its governance infrastructure) needed urgent overhaul [1]

For example the Cain Government in Victoria introduced 'reforms' in the 1980s that were apparently copied by the Goss Government in Queensland in the early 1990s even though Victoria experienced organisational chaos (see Review of The Fall of the House of Cain, 1995) which eventually resulted in an electoral wipe-out that not even the appointment of Victoria's first female premier (Joan Kirner) could prevent.

The Greiner Government in NSW and the Kennett Government in Victoria also experienced unexpected electoral backlashes similar to that which affected the Goss Government - arguably because their theoretically-sound policy ideas did not translate into practical benefits.

Example: Ultimately it is the electorate that is to blame for the poor electoral campaign (though media and business also have responsibility). While the media covers a flawed political culture they do not create it. Economics is critical, and dependent on expert opinion - yet this is much less presented in media than 'spin'. Business contributes by providing self-interested rather than realistic economic policy options. There is no serious public policy debate - and this is what cause problems in political system [1]

Australia has suffered a failure in its political culture and economic policy over the past decade. Productivity has gone backwards since 2005 - and living standards would decline if governments were inefficient / wasteful [1]

Optimistic Views

There is an excellent chance that the new parliamentary make-up will produce three years of good government. Vested interests will be crushed and important debates will proceed [1]

The gridlock of the election result has delivered a road map to a more open Parliament, a less dominant executive and a framework to tackle climate change, tax reform and the divide between city and country Australia. That is the potential upside of the election no one won. It must be weighed against the inherent instability of a minority government without a clear mandate - and an opposition that believes to its core that it has the greater claim to legitimacy. [1]

Pessimistic Views

The ALP is broken culturally and philosophically and so would benefit from not being in government. Australian politics is dominated by trans-national corporations (eg those who forced Rudd's removal). [1]

Commentators generally believe that it will be hard to govern [1]

Decision about which party should government was reached in way that is inherently unstable [1 ]

ALP gained power with support of outsiders, while large segments of its electoral base walk away [1]

The task of governing will be very difficult, and no one knows if it will last. Problem would have been the same for Coalition [1]

There is concern that funds committed for spending in rural areas to gain the support of independents could delay spending needed elsewhere [1]

The election result "merely marks the beginning of what will become a long festival of delusion, conspiracy and outright lies – where its hysteria will only be surpassed by its grubby bitterness and its commercial exploitation" [1].

A hung parliament has been seen as a 'new paradigm', but it is just pork barrelling by another name [1]

A 'new paradigm' has been proclaimed - but it is so vague it could mean anything [1]

Bob Brown raised the potentially destabilising prospect of the Greens working with the Coalition on some legislation [1]

Election outcome produced a government but no guarantee of stability. This is particularly of concern because of the need for tax reform [1]

Suggestions about a return to tariffs and protectionism make a mockery of those who have led economic reform in Australia [1]

Because the modern practice of aiming election campaigns almost exclusively at swinging voters in marginal electorates - people known to be uninterested in politics, without ideology, economically illiterate and of a self-centred, what's-in-it-for-me? disposition - means nothing unpleasant or even faintly serious can be raised. (Our economic challenge will be feast not famine , 6/9/10)

Life is going to be hard for independents no matter which party gains power, because of the huge amount of work they will need to do in relation to every policy area (Savva N 'Shackled with a few rogue fence jumpers', Australian, 7/9/10)

Incoming government will be unable to pursue any reform agenda because of the need to get agreement from independents who have extravagant wish lists, complex and varied agendas (Hewett J 'Whatever the verdict, its a recipe for reform stupor', A, 7/9/10)

Despite a lot of talk, reforms vital to Australia's future are unlikely under Gillard Government. Opponents of economic modernisation and increased productivity (eg Greens and independents) are ascendant [1]

The fundamental weakness of Gillard Government is already being exposed. The Greens are able to dominate the policy agenda because positive reactions have to be given to any proposal they put forward [1]

While the Opposition has often highlighted questions about the competence of the ALP Government, its own competence is suspect in many ways [1]

A dispute emerged about whether the federal Opposition of the Treasury were acting unethically in relation to budget estimates [An aside: if one wanted to look for likely 'creative accounting' a really strong prospect seems to be Queensland's state budget]

The federal Opposition claims about its budget intentions had an $11bn discrepancy. 'Econocrats' review of this suggested that those budget figures had been a systematic exercise in creative accounting [1]
Minutes of meeting between top Canberra bureaucrats which briefed independents in choosing which party to support, was highly political. Independents were told that mining tax would not hurt resources boom - a view not shared by markets. Treasury Secretary said that his tax review had yet to receive final consideration, though sources suggest that government will not pursue this. The coalition disputes the biggest item in the claimed $11bn black hole in its budget estimates, and argues that its estimates are more realistic than the government's [1]

It was claimed in mid 2011 in relation to the federal Opposition that "The Coalition is trying to make a virtue of its lack of alternative policies" [1]

Independents claim to be interested in Parliamentary reform, but this can't be taken seriously because of their pork barrelling [1]

There is a great deal of interest in reforming Parliament [1]

There is a pressing need for reform of Australia's House of Representatives. It ranks poorly by international standards. Party-rooms tend to be more important than the chamber. New parliament house has distanced members from ministers and one another. Reform needs to make ministers more accountable; enhance discussion and debate on important issues; and improve scrutiny on policy and administration. The role of speaker must be stronger, and question time more effective and dignified. Rules related to questions and answers need to be tightened. General debate on big issues needs to be allowed. Parliamentary committees should not be limited to matters approved by ministers. A Parliamentary budget office is needed (Nethercote J. 'Bringing the House to order' Australian, 3/9/10)

Australia's governments have long wanted to see themselves as reformers, but House of Representatives has played no part in this - though Fraser and Hawke governments made some changes. Televised question period illustrates what people hate about politics. True debates are non-existent, Committees are useful but must be discrete. 2010 election outcome has reminded people that House matters (Nethecote J., 'The House's Day in the Sun arrives', Canberra Times, 7/9/10)

Reform of the House of representatives is not sufficient - changes are also needed in the Senate (Both houses need renovation, 7/9/`10)

Alternative View

Independents give the impression that Australia's democracy needs root and branch overhaul. This is wrong as system has worked well. It is important to avoid adding more red tape. Minority government can work with reliable support from coalition partner - but not with whims and fancies of those having no common ideology. Main goal of next government should be to strengthen Australia's economy - as world is competitive. There is a need to support private sector and make important reforms to boost productivity and competitiveness. Now need tax reform; budget surplus; reduced government size; investment in human capital and infrastructure; sustainable clean energy supply; better business access to capital; and flexible workplace regulation. Independents' support should not be accepted if they prevent government achieving this [1]

Resuming rightful roles - email sent 6/9/11

Phillip Adams

Re: Let Rudd resume rightful role, The Australian, 6/9/11

There is no doubt that change is needed to government in Australia.

However the suggestion in your article is unlikely to be helpful. When Mr Rudd was unceremoniously dumped in favour of Ms Gillard it was realistic to justify this on the grounds that the ‘government had lost its way’ (see Starting to Acknowledge Ineffectual Government?). Moreover Mr Rudd had contributed to this problem (see Re-considering the Origins of Kevin Rudd’s Failure and Mr Impractical). And it is understood that many in the ALP choose to blame Mr Rudd’s autocratic style for the failure of the Goss Government in Queensland in which he had played a central role (see Queensland's Worst Government?), and they may have feared a repetition of that debacle (see Testing the ALP’s Patience).

However ineffectual governance probably has structural causes rather than merely being the fault of particular political leaders. Thus the problem in 2010 was broader than Mr Rudd (Failure was not confined to the Rudd Government), just as it is now broader than Ms Gillard. For example, it was Australia’s whole political system that was autocratic in neglecting and rejecting the institutional memory (ie knowledge, experience and wisdom) that professional public services could have brought to make governments less crisis prone (see Misunderstanding the Public Service’s Contribution in Decay of Australian Public Administration).

Speculations about what might be needed to make government effective again are in Australia's Governance Crisis and the Need for Nation Building. The latter refers (for example) to: the problems facing democratic governments generally (such as complexity and populism); the difficult international environment; and artificial constraints on governments’ ability to deal with such challenges (eg public service politicisation and ever-increasing centralisation of control).

John Craig

Re: Minority rule about to collide with booming economy, Weekend Australian, 4-5/9/10Michael Stutchbury

Even if international environment turns nasty Australia's government will be able to step in with confidence to maintain growth because of its relatively low debt level (Winestock G., 'Australia's endless economic sunshine', AFR, 4-5/9/10)

This is essential because:

the democratic political process ensures government by representatives of the people. While this arrangement has many advantages, the 'man in the street' has difficulty undersanding complex rapidly changing policy issues, and the more that can be done to boost grass-roots understanding of such issues, the more realistic government is likely to be;
there is nothing to be gained (and a great deal to be lost) by half-baked policy prescriptions that are not based on consideration of both practical and theoretical aspects of an issue and the complex relationships between public policy issues (eg see On Populism and NBN's Bigger Picture). While public services traditionally provided support to elected governments in dealing with these complexities, they are no longer able to fulfil this role because of the trend towards politicisation;
basic decisions primarily on financial / pseudo commercial considerations (as has often been done in the absence of policy wisdom) is inadequate (see Economic / Financial Criteria: An Insufficient Basis for Policy);

This might be achieved by:

directing a small fraction of individuals' / enterprises' taxes to their choice of apolitical institutions that undertake such tasks in accordance with democratically-endorsed principles;
encouraging such entities to: (a) reflect diverse types of expertise and interests; and (b) mobilize both theoretical and practical competencies;
encouraging networking amongst such entities, perhaps by those involved creating an independent Nation Building Foundation with that role;
giving increasing precedence (through opportunity exploration processes operating under democratically approved protocols but without political accountability) to presenting proposals for responses to strategic opportunities as indicative plans for initiatives by various community / business entities with complementary capabilities, rather than simply expecting governments to manage responses; and
exposing the practical failures that are emerging as a consequence of 'post-modern' assumptions that challenge the perceived relevance of advanced knowledge (see also A Case for Restoring Universities);

As noted above, changes in the international economic environment pose future risks and Australia has a history of apparently inadequate evaluation of the implications of such changes;

Simplification of what is expected of government is vital because of the limits to rationality in dealing with complex systems (and the consequent counter-intuitive and unintended consequences that can flow from policy action).

High levels of complexity can't be managed by seeking comprehensive analysis so as to make 'wisdom of Solomon' decisions - but rather requires de-concentration of responsibility and ongoing incremental grass-roots adjustments. This applies just as much to government functions as it does to those within the mainstream economy (where the futility of attempts at central economic planning has long been recognised).

Attempts have been made for 2 decades to cope with complexity in government functions by the use of quasi-market processes (ie competition and commercialization) on the assumption that 'bottom line' measures can provide a way to coordinate government functions without the need for policy guidelines. However for mainstream government functions (ie those subject to serious market failures) this effort must be, and has proven, counterproductive.

Reinvigoration of the federal system should be a better option for managing complexity and provide the benefits outlined in A Federal System has Important Advantages. The latter refers to: the need for community engagement to reduce the risk of political instability; the ineffectiveness of centralised planning and control; the stability promoted by diversity and building on what already works; the geographic and intellectual isolation of Australia's national capital; the similar adverse effects of ineffectual past 'reform' on all governments.

In an economic context, this would (amongst other things) result in systematic efforts to stimulate the emergence of stronger market-focused industry clusters. Such a capability seems essential to:

build the economic productivity and tax base required to prevent the re-emergence of the long term steady decline in relative income levels, associated with Australia's commodity export dependence;
protect Australia's democratic traditions (see above); and;
provide alternatives to the growth of major existing cities, with the associated congestion and infrastructure problems (see Re-imagining Australia's Federation to Build New Cities).

Past attempts to boost economic productivity and competitiveness by promoting competition and re-engineering governments as pseudo-businesses are economically inadequate and have reduced the ability of governments to actually 'govern' (eg see Impact of Economic Liberalism in Australia, Governing is not Just Running a Large Business and Neglected Side Effects). Moreover government efforts to directly 'assist' industry have frequently been counter-productive, through impeding economic development (see What's wrong with government assistance to fill market gaps).

Complementary changes to Australia's tax system would be needed to provide state governments with the financial incentive to take economic development seriously, in order to counteract their political incentives to interfere in ways that have limited economic benefits (see below)

Other implications of empowering the exploration and development of community-based initiatives to address social, economic and environmental issues would presumably (in the longer term) be a decline in the need for governmental solutions, and thus in the size of government, taxation and red tape.

The One Nation phenomenon (see Assessing the Implications of Pauline Hanson's 'One Nation') illustrates the instability that can result from alienation. The democratic process enables such groups to voice their views, and may gives their representatives an insider view so reducing tensions based on ignorance. However the need to 'educate / accommodate' the alienated can be disruptive. Thus it is best to ensure that regional / minority communities are reasonably engaged and informed at all times.

Where functions that involve serious market failures are privatised, the need for complex regulation can be highly disruptive (see Privatization of Monopolies Leading to Regulatory Failure).

Where such functions are semi-privatised (eg through public private partnerships): the need for complex regulation can undermine the benefits potentially gained through greater production efficiency; the planning and development of integrated infrastructure systems can be distorted or impossible; and the political process is exposed to moral hazards (see Problems in the Basic PPP Model)

The erosion of individual morality is leading to serious social symptoms (as Christianity's traditional 'consider others' ethical ideals are neglected and apparently increasingly replaced by narrow self interest). In turn this is encouraging political leaders (and others) to claim moral authority to combat those symptoms and thereby challenge the separation of church and state and / or the presumption of individual liberty.

Though the primary purpose of churches' evangelical mission is to bring more abundant life to individuals, widespread success in doing so creates a social environment that permits the emergence of legal and government institutions that presume individual liberty and a secular state (ie one that does not claim religious authority).

There are reasons to suspect that intellectual obstacles to Christian adherence, which have increasingly been eroding the moral foundations of that liberty, can be dramatically reduced. Firstly the view that scientific understanding of the process of creation / evolution discredited Christian cosmology can be seen to be overly simplistic (eg see How solid are 'science, reason and critical thinking'?). Secondly the post-modern view that 'truth' is largely a social construct so that all opinions / values are equally valid can be shown to lead to serious practical failures (see Confusion of Knowledge). Cultural assumptions have consequences (ie affect the way societies and economies work) and the failure of students of the humanities to consider these out of a desire to be 'tolerant' is arguably the cause of much of the disadvantage that is suffered and many of the conflicts that arise.;

There is arguably no sustainable path to substantial further growth by Australia's existing major cities because of incompatibilities between the requirements of effective transport systems and constraints on urban forms (see comment on structural obstacles)

The managerialist dominance of universities (ie the view that management is a generalist function which does not require knowledge of the function being managed) seems similar to that which pervaded Australia's public services - and equally dysfunctional (see Decay of Australian Public Administration). Australia's difficulties in diversification into knowledge intensive industries lies in a lack of commercial capabilities and organisation to exploit available opportunities. Political 'push' on 'smart' inputs to that system (eg R&D) tends to be counter-productive at worst, or pointless at best (see The Economic Futility of 'Backing Australia's Ability 2' and Commentary on Smart State)

The ability of universities to effectively perform a critical role in contributing to public understanding of complex opportunities and challenges has been severely compromised by the distortion of universities in a naive desire to thereby boost economic performance - just as occurred with public services.

Losing What We Fought For? (email sent 1/5/11)

Terry Sweetman,
Courier Mail

RE: Wordy retreat founded on poor understanding of what we fought for, Courier Mail, 29/4/11

In an Anzac Day context, your article presented a thoughtful case that the legacy of Australians who have born arms is a nation which has ‘the ability to peacefully redefine’ itself. You also suggested that recognition of same sex marriage is a logical way now for Australia to redefine itself.

My interpretation of your article: God’s warrior, Jim Wallace, followed standard procedure on the cultural battlefield by apologising for comments on gay marriage and Muslims on Anzac Day. The boss of the Australian Christian Lobby had said that what Australians fought for was not gay marriage or Islamic. However this was reversed in the face of a robust claim that ‘what we fought for was freedom from prejudice and persecution’. However Wallace quibbled that the Judeo-Christian heritage that framed the nature of Australia that people fought for is important – and should be preserved. However the Judeo-Christian heritage has prompted blood-thirsty clerics in most warring nations. Wallace set himself up as an easy target – but he is right. Australians didn’t fight for gay marriage or Islam, and the heritage he speaks of has little to do with ‘freedom from prejudice and persecution’. Australian servicemen fought against nations and regimes in which prejudice and persecutions were elements of policy. However Australia has not been free of these. Australia punished homosexual practices and fostered sectarianism and discrimination. And racism was deeply entrenched as an element of policy. Prejudice lingered a long time. One can’t realistically articulate the diverse and perhaps incompatible motives of those who served. However many fought for a country, a political system and a civil society that is capable of mature, rational and peaceful transition. This might not please those who bore arms and later became conservatives. The country that once persecuted the sexually different now offers them legal protection. Recognition of same sex marriage is only a matter of time and political courage. Wallace acknowledged that people fought for different things, and this is always being redefined. The ability to peacefully redefine the nation – to make it better, fairer, more tolerant and more free is the legacy from those who served.

I should like to submit for your consideration that Australia is in some danger of losing what you suggest ‘we fought for’ (ie its ‘ability to peacefully redefine itself’) because the political system is proving ineffectual and civil society is too weak to do anything about it.

Elaboration: The political system is suffering, for example, from: (a) an inability to handle the complexity of the issues it confronts; (b) purging the professional public service support required to provide a reality check on foolish policies; and (c) seeking to win elections on the basis of populist, but ineffectual, policies (see Challenge to Democratic Institutions in Australia’s Governance Crisis and the Need for Nation Building).

The weakness of civil society is illustrated by, but no means limited to, the lack of realistic and up-to-date inputs to public policy debates in Queensland that leaves Executive Governments free of any real constraints from Parliament and thus able to abuse power, support cronies and be excessively secretive (see More Competent External Support to Parliament). The latter also suggests that civil society is weak because there is little depth of understanding of the institutions Australia inherited (because they were simply taken as given) and because the community has remained dependent on rich natural assets and copying policy initiatives from elsewhere in the Anglo-American world. An obsession with micromanagement by federal governments has also contributed to the weaknesses of civil society (see TEQSA: Will Micromanagement Again Triumph over Government?).

Other sources of risk to Australia’s ‘ability to peacefully redefine itself’ include: a hazardous lack of Asia literacy; attempts to politicise the role of the head of state, whose apolitical character is the foundation of the stability of government; and erosion of the moral foundations of liberal institutions (see Australia’s Governance Crisis and the Need for Nation Building).

Finally I suggest that:

Recognition of gay marriage does not seem to be a brilliant example of the way in which Australia should now redefine itself, given the apparent linkage between homosexual behaviour and child abuse (see Public Acceptance of Homosexual Behaviour). Efforts to strengthen Australia’s political system and civil society would probably be more constructive (see The Need for Nation Building and A Nation Building Agenda);
Australia’s Christian heritage (to the extent that it has kept out of politics) has been critical to the emergence of a society that can aspire to peacefully redefining itself (see Christian Foundations of Liberal Western Institutions). However that liberal institutional heritage can’t be maintained by force of argument or political edict, but only by wide adherence to Christianity within the community (see Get God out of the Classroom: Good Luck with That!).

John Craig

HC Coombs Policy Forum and ANIPP Initiative (email sent 20/6/11)

Dr Mark Matthews,
Executive Director,
HC Coombs Policy Forum

I should like to provide some suggestions in relation to the arrangements being put in place to improve the flow of information from the ANU into the federal public service. My (undoubtedly inadequate) understanding of what the HC Coombs Policy Forum and ANIPP are intended to do is primarily based on your Overview (of HC Coombs Policy Forum) and The Visioning Australia’s Future Initiative

My comments in turn are based on four decades of strategic policy R&D in relation to Queensland’s development (including being credited in the 1980s with forcing the Queensland Premier’s Department to establish a formal policy function for the first time). That experience has resulted in:

a need to consider the way in which governments, communities and economies ‘learn’, giving rise to suggestions about how that process might be enhanced, eg see Australia's Governance Crisis and the Need for Nation Building (from 2003) and Curing Queensland's Myopia (2011);
observation of what actually happened in Queensland (which while anything but Australia’s best practice demonstrates lessons that have broader relevance). In particular:
- The ‘informed’ community (ie those with pretentions to advise governments on policy) was initially decades out of date in terms of policy issues, while government itself was about 15 years out of date. It was always easy in the 1980s to find international sources that provided better and more up-to-date options about almost anything. Innovations took 15 years to be adopted because: (a) 5 years was required to formalize conclusions through international institutions such as OECD; (b) another 5 was required for understanding / acceptance of this by Commonwealth; and (c) another 5 years was needed for transmission to Queensland Government (including overcoming the drag effect of decades-out-of-date community opinion). There was thus a clear option to speed up the process by cutting out the middlemen, and getting the ‘informed’ community engaged in the process;
- There was little interaction between academia and government, and little immediate benefit from increasing the flow of research ideas from academia to government because: (a) academia suffered to an extent from the same ‘out of date’ problem as the ‘informed’ community generally and did not have awareness of practical aspects or of the complexity of issues; and (b) it was possible to generate more up-to-date and appropriate options by study of international experience and sources;
- A reformist government in the early 1990s (the Goss administration) adopted ideas that had been generated in academia (mainly in the Griffith University) as the basis for widespread change in Queensland’s Government. Those ideas were apparently heavily influenced by problems facing the Whitlam Government in the 1970s and the resulting work of the Royal Commission on Australian Government Administration. The combined effect of: (a) the adoption of policy ideas that had been ‘stewing’ in academia for years ; and (b) a lack of practical awareness of what was required for effective government and the actual functions of government led to a disaster from which Queensland has not yet recovered (see Toward Good Government in Queensland 1995 and Queensland's Worst Government?, 2005). Idealism that is not moderated by practical considerations is not always useful. Similar damage to government Australia-wide has apparently resulted from the adoption of idealistic policy which is not moderated by the practical experience of a politically-independent professional public service (eg see Decay of Australian Public Administration, 2002 and On Populism).

From that standpoint I should like to submit the following for your consideration in relation to some issues raised in your documents:

It is encouraging to see such analysis being undertaken of the way in which interchange of information can be expedited;
There is no doubt that ideas that might be the basis of innovation are of most value early rather than later. This can be illustrated in relation to innovations of potential economic relevance as in Economic Solutions appear to be beyond politics (and the associated diagram). The point is that to really benefit from commercially-relevant ideas, they need to be transmitted to practitioners before being officially politically accepted. Political acceptance can’t happen until ideas have already been widely adopted, and thus ceased to provide potential competitive advantages (and this is one of the reasons that central economic planning is impossible). This point is not as obviously relevant to policy options, until it is recognised that government overall is as complex as the economy, so that centrally ‘planned and controlled public policy can be just as inappropriate as it can be for the economy. A formal accountability process requiring central control of policy may be highly dysfunctional, and a justification for reform rather than a justification for better informing those at the centre;
improving the exchange of information between the ANU and the federal public service (while useful) is a very limited goal in relation to what is probably needed because:
- there is an unavoidable ‘ivory tower’ element to both these institutions (especially in an environment in which holding senior public service positions depends on conformity with political expectations rather than deep knowledge and long experience of the practical requirements for effective policy);
- simply getting research results to the public service is of limited relevance because of the latter’s political responsiveness, and because Australia’s political system reflects what is known by a significant segment of the ‘informed’ community. Thus no matter what public servants know political acceptance is more likely to be boosted by improving understanding in the ‘informed’ community. And if ‘insiders’ gain understanding of policy options and get political agreement to implement these while much of the ‘should-have-been-informed’ community has no idea what is going on or ability to cope with the outcome the result can be politically disruptive – as illustrated by the ‘One Nation’ phenomenon (see Assessing the Implications of Pauline Hanson's One Nation, 1998);
- the prevailing expectation that responses to challenges and opportunities will be primarily orchestrated through Australia’s federal government is a significant factor in problems in governing Australia at present. As suggested in Australia's Governance Crisis and the Need for Nation Building complexity is a major constraint. Complexity can’t be handled through the rational processes for problem solving that have been the basis for success in recent centuries by Western societies, and complexity is increased by centralisation;
there is arguably a great deal to be gained by reducing complexity and reliance on political understanding in responding to some challenges and opportunities by: (a) de-centralisation of responsibility for government actions; and (b) democratically empowering some apolitical institutions to take new roles without direct political accountability – and this is what is suggested in Australia's Governance Crisis and the Need for Nation Building;
there are limitations in a ‘balance sheet’ approach to evaluating policy options that seems to feature in The Visioning Australia’s Future Initiative, because convention economics arguably requires major adjustments to cope with current conditions (see The Advantages and Limitations of Financial Criteria). For example, while presenting meaningful ‘accounts’ is highly desirable, information must be used to change what people do as well as to predict what will happen. A primary emphasis on using information to change behaviour (rather than providing information as the basis for rational decisions about ‘accounting’ outcomes) is a key feature of the neo-Confucian systems of socio-political-economy that have allowed rapid modernisation in East Asia (see East Asia in Competing Civilizations), and also perhaps a major obstacle to their ongoing success (see Are East Asian Economic Models Sustainable?);
there would, more generally, be value in seeking an Asia-literate approach to what ANU and the federal public service are attempting to do, because in the absence of this policy initiatives that seem very sound on a conventional basis may be dangerous (see Babes in the Asian Woods and Comments on Australia's Strategic Edge in 2030).

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

John Craig

Why ALL politicians need better advice, and what is needed for them to get it - email sent 7/2/12

Rob Burgess
Business Spectator

RE: The 'real' Julia needs new advisors, Business Spectator, 7/2/12

Your article suggested that there are deficiencies in the advice that Australia’s current prime minister is receiving. However she is anything but alone in this respect. Moreover the problem seems to be structural rather than being the fault of a few particular individuals (ie those deficiencies arguably reflect weaknesses in the institutional support to Australia’s political system both inside and outside the public sector).

Ms Gillard assumed the role of prime minister because she had argued successfully that a change in leader was necessary because ‘the government had lost its way’. However it seems that the Government’s ‘way remains lost’, and few seem to believe that the Opposition has ‘found its way’.

Some suggestions about the nature of the structural problems that make it hard for Australian’s elected representatives to ‘find their way’ and what might be done to improve the situation are in The Need for Nation Building and A Nation Building Agenda (which are sections added in 2008 to Australia's Governance Crisis and the Need for Nation Building, 2003+).

John Craig

Outline + Challenges to Democratic Institutions Poor Evaluation of Strategic Issues Lack of Asia Literacy Weakening Administrative Support Federal Fiscal Imbalances Politicisation of the Judiciary and of the Head of State Erosion of the Moral Foundations of Liberal Institutions The Need for Nation Building A Nation Building Agenda Addenda: A; Losing What We Fought For? B: HC Coombs Policy Forum and ANIPP Initiative C: Why ALL politicians need better advice, and what is needed for them to get it	Outline Australia's traditional system of government is at risk, and the document briefly outlines various interconnected causes for concern before speculating about a possible 'nation building' agenda. Democratic-style government has faced growing structural difficulties (eg the greater complexity of policy issues often transcends simple / purely-rational prescriptions; globalization makes economic intervention increasingly counter-productive and requires understanding unfamiliar cultures; machinery has been damaged by ill-advised 'reform'; academic idealists have undermined confidence in the wisdom gained from experience; and political leaders have often responded to their difficult situation by seeking votes on the basis of impractical populism). This has created particular difficulties for Australia because the civil institutions that an effective democracy requires to provide the raw material for political debate have never been strong as a result of Australia's 'lucky country' reliance on: (a) natural resource wealth; (b) alliances with UK / US; and (c) ideas developed in Western-style global institutions. As a consequence of those institutional weaknesses there has been: inadequate evaluation of Australia's strategic interests; and a lack of literacy related to strategy and methods of East Asian societies, which are central to the most significant current 'clash of civilizations'. Secondly administrative support to elected governments has been seriously weakened and made more complex by poorly considered efforts to: (a) overcome 'bureaucratic resistance' to populist policies; and (b) address the financial constraints facing governments. The breakdown of effective machinery of government has been further exacerbated by: federal - state financial imbalances that lead to irresponsibility, buck passing, duplication and complexity, and thus make government functions wasteful and ineffectual; politically motivated appointments to the Judiciary, which undermine its ability to ensure that the Parliament and Executive act lawfully and within the Constitution; attempted politicization of the head of state ('Crown)', whose role as the holder of all Executive power without a political agenda and power base is the foundation of the Constitution; and an emerging breakdown of the separation of 'church' and 'state' as obstacles to state claims of moral authority that arise from Judeo-Christian traditions have eroded (ie the presumption that moral interpersonal relationships are ensured by individual consciences responsible to God). Experience under systems reliant on human moral authority suggests that it will be impossible to maintain the individual liberty that has been the basis of Australia's legal and government institutions and economic system. The resulting potential and actual governance failures and radical changes are particularly risky at a time when external threats seem far greater than they have for two generations [1, 2, 3, 4, 5]. If such dysfunctions in Australia's system of government are not corrected, then: the political stability that Australian's have long enjoyed through their democratic tradition would seem likely to be lost (eg if a breakdown in effective government leads a disaffected community to support authoritarians who promise solutions by suppressing disagreements); economic reversals and external challenges to Australia's future can be expected. In the context of an increasingly obvious failure of effective governance and an unstable international environment, suggestions about a process of nation building that might reduce these risks were added in 2010. May 2003 (and updated in 2010}
Challenges to Democracy Indicators Causes (Complexity + Globalization + Ill-advised 'Reform' + Post-modernism + Populism) Reliance on 'Luck'	CHALLENGES TO Australia's democratic institutions While the following discussion of problems affecting the democratic process focuses on Australia's situation (and relies heavily on Queensland examples), the diagnosis appears to have more general relevance. Indicators Democratic institutions (ie the effective power of elected representative governments) have been under challenge for at least two decades. Symptoms of this decline include perceptions about: the adoption of a global perspective by elites who do not then act in the interests of their communities, or provide leadership in civic society (as suggested in the mid 1990s in The Revolt of the Elites and the Betrayal of Democracy by Christopher Lasch) [Similarly the adoption of a 'national' perspective, and indifference to local / regional issues undermines the effectiveness of local and state democratic processes] ; reduced community confidence and participation in the party political process [1, 2]; growing indifference [1]; the emergence of a 'democratic deficit' (ie of a gap between expectations about the political system and day-to-day experience of it [1]); dominance of the political process by insiders [1]; suppression of free expression of some ideas in the guise of anti-discrimination laws [1] the political instability created by the One Nation phenomenon as a reflection of economic uncertainty [1] in the mid1990s the inept introduction of theoretically advantageous economic reforms (involving market-liberalisation) generated severe political instability across Australia (particularly in Queensland), as residents in many economically marginal regions had no way to understand those reforms or cope with with the social and economic stresses they suffered as a result (see also *Assessing the Implications of Pauline Hanson's One Nation, 1998) apparent deliberate political deception of the public [1, 2]; Australia's integration between Parliament and the executive allows abuse of power, because there is no independent investigation of such misdeeds [1] propaganda, spin, overstatement which makes people inclined to disbelieve what they hear [1]; heavy public spending on advertising which has political implications [1]; an unwillingness by governments to provide access to information [1, 2, 3] - without which effective public policy debate, the cornerstone of democratic government, is impossible; the weakness of machinery for developing public policy [as well illustrated by the 'republic' debate]; a lack of machinery to research and engage the public in debate about longer term policy issues [1]; erosion of political talent due to factionalism [1, 2]; minister's unwillingness to accepted responsibility for anything - and a tendency to blame staff [1] populist government [1], which is seen to have been professionalised and mainstreamed in Australia; a loss of public interest in substantial policy issues - and a tendency to be concerned only with the way policies affect themselves and whether politicians reflect their values [1]; the increasingly difficult questions governments have to deal with which require ever higher levels of technical information [1]; an unwillingness to impose fiscal discipline - because politicians have learned that surpluses are simply used by their successors to benefit their favoured interests [1]; the emergence of (so called) 'junk politics' - which reduce debate from substantive issues to distractions such as personal histories and moralizing, and prefer symbolism to substance [1]; extremists possibly holding the balance of power [1]; an increasing 'revolving door' between politics and business [1]; dysfunctional parliamentary debates, and institutional abuses [1, 2, 3, 4]; and political leaders being good at winning elections - but at little else [1] public cynicism about politicians because of: abuse of power which compromises rights; partisan public service appointments; and spending money for political advantage. Courts are little interested in democracy / justice. Parliamentary supremacy is critical to the rule of law. All parties continue to resist the constraints that real democracy would pose to unfettered use of power [1] Within one party (the ALP) there has been extensive debate about the need for fundamental reform. It has also been suggested that solutions can not be found through internal reform - because the real problem may be that the national* political process is losing its relevance to local and global arenas [1] At an international level questions about the effectiveness of democratic institutions also include: loss of power by parliament in the face of globalization and autocratic government, and the corruption of institutions for political advantage; the effectiveness of democracy in managing a society's collective knowledge; perceived conspiracies by elites; suppression of rights; and philosophical fashions which have made it difficult to challenge autocratic leaders Challenges to the global dominance of Western-style democratic capitalism also arise overtly from Islamist extremists (see September 11: The First Test) and covertly from trends towards the creation of an international order based on East Asian traditions that would be incompatible with the post WWII global order promoted under US leadership (see Creating a New International 'Confucian' Economic and Political Order?) Another area of challenge that has yet received limited attention is the tendency that some democratic governments have exhibited to incur large debts - because public demands for benefits from governments that exceed the ability of the economy to provide tax revenues have not been able to be effectively resisted. This is a fundamental challenge because broadly based democracy became the basis for government first in the UK at the time of the industrial revolution, when it provided a means to redistribute throughout society the wealth generated from the deployment of capital. If the capacity of an economy to generate income does not exceed a community's demands on that income through democratic government, then something has got to give. Causes Several 'natural' causes can be suggested for these symptoms (eg increasing complexity; globalization; lack of support from a competent Public Service or independent policy institutions; post-modern cynicism; and a descent into populism). However it is also possible (though by no means certain) that deliberate Art-of-War style subversion of Australia's system of government may also have played a part, because this is simply how strategy is traditionally conducted in East Asia (see below) Key conclusions that will emerge are that: increasing complexity is a fundamental challenge to the effectiveness of 'rational' methods of problem solving (including that associated with democratic politics) that are foundational to the strengths which Western societies have exhibited in recent centuries (see comment on complexity below); as governments' challenges have become too complex for simple solutions to be identified, democratic societies have tended to support political elites who unrealistically declare that the issue is actually quite simple (eg solutions require only (say): more moral values; setting up a new organisation; or spending huge amounts of money) and re-engineer government machinery and other institutions to ensure that tame 'experts' tell them what they want to hear. This has amplified the risks that complexity poses, because it has eroded the ability (through consensus forming and collegiality) that an effective public service traditionally provided to enable governments to deal with the complexity that is their major challenge (see comments on government machinery below). First the increasing complexity of the issues which governments have to deal with since the 1970s has reduced their ability to generate effective solutions. For example: in the 1970s 'great society' ambitions to re-engineer societies to overcome disadvantage were generally frustrated - a problem which analysts often ascribed the limits to rationality ie to the counter-intuitive responses of complex social systems to simplistic state initiatives; in the 1970s and 1980s the methods for managing the macro-economy which governments had used with apparent success in the post WWII era were no longer effective - arguably because strong feedback effects between price increases and wages led to stagflation; environmental constraints emerged for which no realistic long term solutions have yet been able to be envisaged. from the 1970s the pace of change in the natural, social and political environment has accelerated. One result of this has been a change in they way organisations are managed - specifically the emergence of techniques for strategic planning / management. However this pace of change has increased complexity in the issues that have to be dealt with by political debate - as not all perceive that familiar relationships and assumptions can quickly go out of date globalization in the 1990s has introduced cultural differences as a factor in policy and debates - which raises almost insuperable problems because of the difficulty of effective communication across cultural boundaries and of developing a global order able to accommodate cultural differences (eg see The Second Failure of Globalization?); poor individual behaviour resulting from a breakdown in morality has become an increasingly important factor in social outcomes which the state can do little that is effective to correct (see [1] and Moral Foundations (below) and comments in About Child Sex Abuse and in Competing Civilizations). This may be the origin of (a) so-called 'junk politics' which are said to reduce state action to moralizing and symbolic gestures [1] and (b) growing state pressure to define and enforce moral principles which would result in the loss of the political and economic benefits of individual liberty (see below); difficulties have become obvious in planning transport options in traditional ways (ie one element at a time) not only because of the dependence of each element on the total transport network, but because there is a need to simultaneously and dynamically evaluate and manage (a) individual transport elements (b) the network (c) the effect of a crisis in the global financial system on project funding (d) a possible discontinuity in transport technologies and preferences related to the global peak oil event and (e) an associated shift in regional location choices. Increased complexity has also made adequate public debate about some issues very difficult, and contributed to perceptions (or the reality) of deliberate deception of the public by political leaders [1]. For example: politics is about deciding who gets what - but policy issues are now so complex, that it is very hard to understand the interaction between policies - so the results are unpredictable. [1]; there seems to have been a 'cover-up' by almost all community leaders in Australia of the extent of child sex abuse - presumably because they do not know what to do about it; deception by political leaders has been alleged in relation to Australia's approach to unauthorized migration in a debate in which all parties presented overly-simplistic cases (see Complexities in the Refugee Problem); the public debate about unilateral military action in Iraq was conducted on the pretence that the presence (or absence) of WMD was the key issue - though it was presumably at most a small part of the geopolitical strategic considerations involved about which the public remained uninformed (eg see The Second Failure of Globalization?); in the public debate about the possibility of an Australian republic, it has apparently been in the interests of both advocates and opponents to ensure that the public remains ignorant of the fact that the option it favours (ie a direct-election presidency) is not practical with Australia's present constitution (see Australia's Republican Conspiracy?); The problem is not confined to national politics as attempts to develop solutions to a global environmental challenge (climate change) appears also to in danger of over-simplifying the problem to the point where proposed solutions could be ineffectual and hazardous (see Climate Change; 'No time to lose' in doing exactly what?). Similar constraints applied to the G20's responses from 2009 to the global financial crisis (see Too Hard for the G20?). Complexity also appears to contribute to perception of conspiracies by elites. Theories about 'conspiracies' seem to emerge from sources who do not understand how political and economic affairs are conducted in practice and thus can't say how those practices might be improved, and find it convenient to ascribe problems to elite 'conspiracies' (see About 'Grand Conspiracy' Theories). Complexity poses fundamental challenges to democratic government and to Western societies in general, because complexity renders rationality ineffective (ie the assumption underpinning rationality that problems can be understood in terms of simple concepts is rendered invalid). The strength of Western societies has arguably been based on the creation (through various means including democracy) of artificially simplified social spaces in which rationality can be a reasonably effective means of problem solving (see Cultural Foundations of Western Strength). Finding means to make the problems governments face less complex is likely to be critical to restoring effective government (eg as suggested in A Nation Building Agenda below). The problem is like that facing central economic planners. Economists main justification for a market economy is that central authorities can never acquire the complex information required to make appropriate decisions, so it is better for governments to create a framework (ie a market economy) through which decentralised decisions can be made by businesses each of which face a simpler environment. The solution to the problem of complexity in 'governing' will probably involve something similar. Second globalization, which has accelerated in recent decades, has increased the difficulties governments face. For example, economic activity has become harder for governments to constructively influence. Globalization of economic activity through improved transport and communication and the raising of skills in previously under-developed states has: increased the economic significance of international trade and investment and the need for compliance with international standards - and thus reduced the ability of elected governments to define rules and arrangements to suit domestic desires; reduced the scope for higher tax rates on individuals or corporations (because of the need to compete with other regimes, some of whom have low environmental and social welfare expectations) - and thus reduced the scope for public spending without incurring fiscal deficits and increasing debts; fundamentally challenged the broadly-based representative democracy which emerged in the UK in the mid 19th century as one means of ensuring a reasonable sharing of the wealth generated by capital intensive production in industrial society. Globalization has been associated with a general shift of capital-intensive production to lower wage economies increased the importance of specialized market and technological knowledge as the basis for economic competitive advantage in the post-industrial functions that advanced economies have diversified into. This has further reduced the ability of democratic institutions (who can never possess this specialized and constantly-changing information) to take a constructive lead in stimulating economic change (see Economic Solutions appear to be Beyond Politics); Moreover there is no effective system of global governance and this reduces the influence of nation states relative to the global market by enabling 'jurisdiction shopping'. Also the current global order, which (though unsatisfactory) is compatible with Australia's traditional democratic capitalist institutions, could fail under some circumstances (see The Second Failure of Globalization? and comments below on the potential emergence regionally of an international order based on East Asian traditions). Democratic governments have tried to respond to the consequences of economic globalization by: reducing the role of the state [1]; or undertaking what Robert Reich in the 1980s identified as The Work of Government - ie creating sound regulatory and taxation regimes to attract business, and providing quality economic inputs (eg an educated and skilled workforce, infrastructure, and technological infrastructure); or 'third way' governance arrangements - under which it is assumed that a global market will drive the economy and that government's should seek to compensate for the social costs and empower the community to compete. However none of these options provide democratic institutions with much power to set overall directions for a community. An equally significant, and universally ignored problem, is that globalization has encouraged political leaders to try to act in international arenas on the basis of domestic political paradigms in environments in which those paradigms are much less appropriate. US unilateralism in relation to the 'war on terror' is a notable example (see The Second Failure of Globalization?). The problem is that: cultural assumptions (and associated social institutions) are critical factors in the ability of a society to archive material prosperity - or to successfully adopt a system of (say) democratic capitalism (see Competing Civilizations); this constraint is universally put in the 'too hard' basket and ignored - thus creating huge potential for conflicts Third as governments experienced increasing difficulties changes to machinery of government (as outlined below) have been implemented. In particular: governments tended to assume that when their policy ambitions were frustrated, the fault must lie in the administrative institutions; and budget constraints were seen as best resolved by making public functions increasingly market, rather than policy, driven (eg by privatization or the adoption of 'commercial' goals). Unfortunately, because 'reformers' were often driven by political or economic goals and apparently had little experience of the requirements for effective governance, such changes further reduced the effective influence of elected governments (eg efforts to overcome 'bureaucratic resistance' eroded the knowledge and skill base of key support institutions by often-inadvertently installing cronies and 'yes men' in dominant position). The key challenge facing governments is their ability to handle complexity (see Governing is not just running a large business). Governments' core function is 'governing' (ie creating a framework, through a system of law and in other ways, for the social and economic activities undertaken by the community). Undertaking this successfully requires a huge amount of knowledge and experience. The secondary function of government is providing goods and services that are subject to significant market failures. The factors that lead to market failures (ie make it impossible to successfully manage such functions through market mechanisms) also give rise to complexity (ie to making the management of relationships between functions as important as managing individual elements). Traditionally governments received support in managing complex relationships between functions through the consensus forming processes and collegiality of professional public services. However the latter capabilities were severely eroded by 'reforms' that were intended to promote efficiency in the production of individual elements (see Neglected Side Effects of national competition policies) Fourth, changes in epistemology (ie in assumptions about the nature of knowledge) as reflected in (so-called) post-modern assumptions have become pervasive in many university arts' / humanities' faculties and influenced the way in which a generation of their students think about policy issues. This assumption effectively denies the existence of public truth (as claims about truth are seen to always reflect the assumptions which particular social groups make for their own political advantage). In practice asserting that all claims about 'truth' are subjective leads to many real-world dysfunctions (eg practical knowledge and experience have been devalued resulting in reduced institutional capabilities and 'taboos' have emerged on the study of some critical, especially cross-cultural, issues - see Eroding the West's Foundations). Furthermore these assumptions imply that any statement of public policy or attempt to debate policy, which are foundational components of democratic governance, must be almost meaningless. In the absence of agreement about 'public truth' real democratic governance is essentially impossible, and national cohesion probably requires some sort of social hierarchy (as has been the East Asian tradition because of adherence to 'truth-denying' epistemologies - see 'Asia' Literacy). Finally in the absence of viable solutions, the democratic process has tended to install populist governments - those which speak of solutions which are: trendy enough to bluff the media and other elites (who carry public opinion) though they lack practical substance (see Towards Good Government in Queensland and Queensland's Challenge which outlines the ongoing 'nightmare' that resulted from a lack of practical competence in attempting to implement the 'dreams' of Queensland elites); or out-of-date but based on public understanding of what is believed to have worked in the past; or focused on easy-to-understand 'projects' rather than the policies required for systemic solutions. Queensland has had a tradition of focusing on 'major projects' which: (a) reflects the lack of top management skills in its small business / branch office environment; (b) has been a key factor in its economic under-development and problems in public administration (see Management Gaps in Queensland). This 'major projects', rather than systematic policy, focus has extended to the Federal Government through programs such as Auslink - which essentially guarantees that critical problems in developing integrated transport systems will remain unresolved. In turn, populist governments apparently tend to rely on 'experts' who tell them what they want to hear (ie that there are simple solutions). The politicisation of Public Services in Australia (ie ensuring dominance by cronies and 'yes men' illustrates this problem (see The Growing Case for a Professional Public Service; and Decay of Australian Public Administration). An attempt to define a systematic view of the growing phenomenon of policy populism has been developed by Steve Dovers, while the chronic weakness of Queensland's political system can realistically be described in terms of populism resulting from a lack of institutional support. Some specific examples of insubstantial populism in recent public policies include: the superficial assessment of strategic issues involved in Australia's commitment to war in Iraq (see below) the very poor quality of debate and analysis about the possibility of a fundamental change to the the central institution of Australia's constitution in the 'republic' debate. Despite popular support for changing Australia's head-of-state system. A model was presented to a referendum which did not meet public desired for a 'directly elected' presidential system. Moreover advocates of that model seemed unable to explain to the electorate why the popular model would be inconsistent with stability and effectiveness under Australia's system of government. Also a republican model for Australia based on a populist 'directly elected' president was reportedly advocated by a potential Prime Minister on the grounds that this was the only way to 'wedge' his political opponents [1]; methods envisaged to develop Australia's innovation capabilities by increasing the supply of 'smart' inputs (eg education and research) without seriously upgrading capabilities to profit from those inputs (see The Economic Futility of Backing Australia's Ability 2 and Commentary on Smart State). The application of those policies has accompanied the rapid decline in Australia's innovation ranking; focusing on 'children overboard' or playing the 'racism card' in relation to problems in dealing with unauthorized migration which involved far more complex issues (see Complexities in the Refugee Problem); the focus on greenhouse gas emissions as the source of climate change and the assumption that aggressive action to reduce this would have only minor costs (see Finding the Truth on Climate Change). Other examples that arose in the context of Australia's 2007 federal election campaign are cited in On Populism while those that provided a backdrop to the 2010 federal election are mentioned below. Traditionally political populism meant that governments could do little good, but the existence of a professional public service ensured that populists' wild imaginings were subject to a reality check which limited the damage that could be done . Now unfortunately, politicisation of public services means that populism can potentially be extremely damaging to the public interest - and scope has been created for the election of persons who might be, in effect, mere confidence tricksters. Australia's Reliance on 'Luck' These increasing difficulties facing democratic governments generally have been compounded by Australia's traditional 'lucky country' status, and the consequent lack of adequate support for institutions that are critically important for effective democracy. Democratic political systems are critically dependent on the existence of strong civil institutions (eg universities, research institutes, associations) able to provide quality ideas for policy debate, and on support in policy development and implementation by a competent civil service. As noted below, public services in Australia have been weakened by ill-informed efforts to 'reform' them. However Australia's civil institutions have always been weak because Australia depended on the 'luck' of rich resources and copying policy initiatives from leading OECD societies and global institutions that are based on compatible Western principles. This chronic institutional weakness (which results amongst other things in poor general community understanding of the nature and functions of government) reflects the general tendency of resource dependent economies, such as Australia's to raise up political and business elites who rely on resource wealth rather than providing economic leadership (see About the Curse of Natural Resources; Queensland's Weak Parliament and Comments on Australia's Economic Under-development). Furthermore shifts in society towards the 'radical individualism' that apparently characterized many political activists of the baby boomer (and later) generations is likely to have further eroded effective participation in the civil institutions on whose contributions the democratic process depends. See remedies suggested in A Nation Building Agenda below
Strategy	INADEQUATE INTELLIGENCE AND STRATEGIC ASSESSMENT There has been a serious weakness in Australia's ability to assess its national strategic interests (eg because of weak domestic institutions and reliance on external leadership). This was clearly revealed, for example, by the public debate concerning weapons of mass destruction (WMD) as the basis for participating in military action in Iraq in 2003. An evaluation of the strategic environment related to the problem of dealing with the risk of terrorists with WMD strongly suggests that the US's strategic response linked to regime change in Iraq was based on very complex considerations (eg see speculations in The Second Failure of Globalization?). In brief: key issues that apparently needed to be explored in the background to that situation include: the political and economic failure of numerous states, a problem that has many causes and gives rise threats to neighbours and to global society; the loss of confidence in multilateral action by the US, which had originally sponsored and long supported that system, and the emergence of proposals for unilateral US action However in Australia there appear to be no governmental or independent institutions able to make and communicate such assessments to the public - or even to the government (though one observer pointed out that advice may have come behind the scenes from PM&C, DFAT and Defence Departments [1]) Prior to Australia's commitment to the campaign in Iraq, the public case for regime change was based only on its WMD programs - though this issue was probably only a 'marketing' tool (noting Paul Wolfowitz's remarks suggesting that it was the focus because it was the only thing everyone agreed about. And even after the event, the assessment of the case for participation (by a parliamentary committee and the media) focused only on weaknesses in intelligence about the WMD issue and those institutions proved entirely incapable of addressing Australia's strategic interests generally (see Strategic Assessment). This is particularly significant in that it appears that the strategy being pursued by the US administration, whose lead Australia has followed, was flawed (again see The Second Failure of Globalization?). In brief: It seemed that the hidden-agenda of the 'Neo-Cons' (who held sway in determining the US's response to the 911 attacks, because they appeared to be the only ones with any serious proposals) was to take pre-emptive action to avert the risk of a major future war (ie one that could emerge following likely Islamist revolutions against bad governments throughout the Middle East) by creating in Iraq a successful model of political economy that might be emulated across the region. However that aspiration arguably involved unrealistic assumptions about the prospect of successfully creating such a regime in Iraq (because the cultural and institutional preconditions for such a regime could never be created through the use of 'hard power'). However this was never considered because the nominal goal of dealing with WMD was all that was publicly mentioned, and students of the humanities were off on a postmodern 'trip' involving the belief that cultural assumptions had no practical consequences. Another example of apparently inadequate intelligence and strategic assessment involves the imbalances in the global financial system (see Structural Incompatibility Puts Global Growth at Risk) which apparently closely relate to the challenge that East Asia's neo-Confucian styles of governance poses to the democratic capitalist style of global order that Western societies have established in recent centuries (see East Asia in Competing Civilizations). Similarly economic policies (such as the National Competition Policy) seemed to be derived primarily on the basis of academic theories without closely studying changes in the international environment which may render those theories inadequate. A significant decline in the ability of Australia's overseas representatives to access and assess information has also been suggested [1], as has a lack of reliance on systematic professional advice in relation to the commitment to intervention of Iraq. [1] It is noteworthy that Daniel Ellsberg showed how intelligence presented to the US government about the Vietnam war could be distorted to meet political expectations and then used to justify pre-formed assumptions about desirable strategic policies [1]. Australia at that time would have been less likely to have been susceptible to such 'group think' because it had a professional Public Service who could safely express independent opinions. However politicisation in recent years has presumably reduced this protection. The problem of identification / protection of the national strategic interest is complicated by exposure to rising powers in East Asia whose strategic methods and means for exerting power are radically different to those of Western societies (eg see below). See remedies suggested in A Nation Building Agenda below
Lack of Asia Literacy	LACK OF ASIA LITERACY It is of particular significance that there is very limited understanding of the challenges to Australia's system of government that are implicit in the rapid progress being achieved under neo-Confucian styles of government, as goals and strategic methods are radically different in societies with an ancient Chinese heritage, rather than the West's Judeo-Christian and classical Greek heritage (see East Asia in Competing Civilizations and 'Asia' Literacy). In brief: In East Asia abstract ideas are not regarded as reliable, so methods for problem solving and managing change have been created that do not depend on individual rationality or political debate. For example, power in Asia is equated, not with making decisions as Australia's citizens and political elites expect to do, but rather with having social subordinates who make decisions for the powerful. Such societies tend to act as a whole, rather than as a collection of individuals. This is significant because, for example: the problem of complexity that now bedevils Western approaches to political power is dealt with differently, and this is one of the reasons that: the obstacles to authorities in guiding faster economic development are less severe than in Western societies - so economic 'miracles' are observed; the civilizational 'clash' with East Asia seems more significant than that with Islamist extremists. A prominent Japanese bureaucrat argued, for example, that the complexities of social and environmental issues would, in fact, destroy the idea of 'progress', which has been the unique and characteristic goal of Western societies [1]. power is exerted by providing information to influence others' thinking rather than more directly; 'war' is fought through deception and encouraging others' to weaken their position rather than by overt opposition; and ethnic business / organised crime combine with governments in pursuit of nationalistic goals (see Art of War); Australia's weak strategic intelligence gathering and assessment capabilities make it vulnerable. Examples of the impact of such methods seemed to have emerged in the 1980s in relation to the influence of apparently-ultranationalist Japanese groups on Queensland's political economy. The implications of these challenges is speculated more comprehensively in China as the 'Future of the World'?, An Invisible Clash of Financial Systems?, Understanding East Asia's Neo-Confucian systems of socio-political-economy, Creating a New International 'Confucian' Economic and Political Order?, Some Thoughts on the China Era, Comments on Australia's Strategic Edge in 2030 and Babes in the Asian Woods. The latter includes examples of the risks that Australia faces as a consequence of Asia-illiterate opinion leaders and decision makers - including: misunderstanding the origins of the global financial crisis, and the role that non-capitalistic financial systems in East Asia: (a) played in generating the international financial imbalances that contributed to that crisis; and (b) could play in future in causing East Asian systems of socio-political-economy to fail; establishing a regime for taxation of Australia's mineral resources that could significantly reduce the revenues Australian governments gain because differences between the character of East Asian and Western systems of political economy were not understood.. the possibility of encouraging political actions which have the effect of 'hollowing out' the practical competence of Australia's institutions (eg by politicisation of public services); misunderstanding Australia's geo-political interests. Very substantial strengthening of support to Australia's democratic institutions may be required, if they are to remain viable in such an environment. See remedies suggested in A Nation Building Agenda below
Public Administration	Weakening administrative support Since at least the late 1980s Governments have been tending towards ineffectual or risky populism - a problem that was mentioned above (and is also considered separately in the Decay of Australian Public Administration and On Populism). This partly reflects a decline in the ability of Public Services to competently support executive governments in policy development and implementation as a result both of the politicisation / de-skilling of senior appointments and of attempts to remodel governments as pseudo 'businesses' in order to hopefully gain better value for money by increasing production efficiency. National Competition Policy appears to have had a role in weakening administrative support to government because the side-effects of seeking to apply business-like methods to fundamentally non-business-like functions were not considered (see Review of National Competition Policy Reforms: A Commentary). The goal of those methods was to boost economic productivity through raising the production efficiency of such functions and their responsiveness to demand. What was clearly not recognised was the limitations of bottom-line criteria to many public functions (see The Advantages and Limitations of Financial Criteria). Breaking down their administrative support has led some political leaders to: be seen to be arrogant - perhaps because, having surrounded themselves with cronies and 'yes men', they do not understand the need to communicate with segments of the community who do not share their assumptions; experience sudden electoral reversals (see The Origin and Spread of the Queensland Effect); apologize constantly for administrative failings to avoid the perception of arrogance [1]; be seen to be good at nothing but winning elections [1]. In the process of 'reform' the dominant goal of Public Services shifted from helping the public by ensuring good government, to helping the government of the day to retain political power. It has been suggested that it is a major problem that senior civil servants are no longer useful sources of policy advice - as: the success of democratic models (and the reason they did not turn into the 'mob-ocracy which opponents feared when universal suffrage was granted) was because of the political and cultural role of the senior civil servants [1]; the strong influence that pseudo market / commercial 'solutions' have had on public services has tended to leave them dominated by 'econocrats' whose advice is likely to be inappropriate in ways that are not widely perceived (The Advantages and Limitations of Financial Criteria); as noted above the loss of the steadying wisdom of experience that used to be provided by professional public services now makes it possible for political populists to do massive harm to the public interest, in ways that were not possible in the past. It has also become essentially impossible to manage the delivery of public goods and services as a whole, because they involve functions that can not be coordinated satisfactorily through market mechanisms. The latter problem is illustrated particularly by emerging concerns about infrastructure deficiencies (see Infrastructure Constraints on Australia's Economy). See remedies suggested in A Nation Building Agenda below
Federalism	Federal - State Fiscal Imbalances Another critical source of weakness that has been growing for decades in Australia's machinery of government has been that the federal system concentrates tax powers in the federal government and responsibility for service delivery in state administrations (including local government). This imbalance appears to have come about largely, but not only, because over the past 70 years the High Court (which lacks the technical ability to fully evaluate the economic, public finance or public administration effect of its decisions - and has always been appointed by Commonwealth ministers) has concentrated ever increasingly fiscal capacity in the Commonwealth Government [1]. This imbalance has seriously distorted public administration in Australia over many decades. Dubious consequences of this arrangement are: what amounts to centralised planning of complex government functions is attempted across the federal-state interface and is required also within states (see below). This faces the same fundamental obstacles as centralised economic planning (ie excluding relevant information / knowledge / experience / initiative / commitment, and thereby generating solutions that tend to be unrealistic, no matter how politically popular they are). The initiative of rational individuals is the primary source of strength in Western societies - but this is squeezed out by centralised controls. This appears to be a primary source of ineffectual government in Australia; in particular the expansion in special purpose funding (especially in the 1970s) appeared to reduce the ability of states to perform their functions effectively because it: (a) reduced their ability to make decisions and funding commitments; (b) forced states to concentrate more on lobbying for federal approval than on the requirements of their functions; and (c) shifted internal decision making to central intergovernmental-relations and financial staffs and away from those with the tacit / technical knowledge of ehst is required and whose commitment / initiative is vital to producing effective / efficient outcomes. Using the 'power of the purse' to achieve 'national' strategic goals necessarily results in less efficiency and effectiveness, and (in effect) significantly reduces the value of that 'purse'. The overall effect has been somewhat like that of tariff protection on corporate managements, or welfare dependence on the disadvantaged. The weakening of state administrative capacities may have been a factor in the decline in public capital investment in the 1980s and 1990s to levels well below OECD norms - and the consequent backlogs which many observers now identify (see also Infrastructure Constraints on Australia's Economy); there is a problem in accountability and political motivation because the federal government carries the political cost of raising revenue - while the states get many political benefits out of spending it. The federal government is now constantly forced to try to refute accusations of being a high taxing government (despite the fact that Australians overall tax burden is less than in many developed countries) because taxes collected on behalf of the states (eg GST) are labelled as federal taxes. Moreover one observer has suggested that very rapid growth in state spending has arisen because states are not responsible for revenue raising [1]; states, who have responsibility for economic development, have had limited financial incentive to take development of productive modern economies seriously - because Commonwealth payments are states' most important revenue sources and these tend to be distributed 'equitably' irrespective of the weakness or strength of a state's tax base (see Comment on Review of Grants Commission Arrangements and [1]). This disincentive has probably significantly lowered: Australia's overall economic performance (noting that Australia's per capita GDP had been in more-or-less constant decline relative to international standards ever since federation - though this trend changed in the 1990s); aggregate tax revenues available to Australia's public sector; attempts by the federal government to micromanage nominally state functions have further eroded the effectiveness of Australia's overall system of government through reducing community access to understanding of complex public policy issues, and thus reducing the effectiveness of the democratic process (eg see TEQSA: Will Micromanagement Again Triumph over Government?); public functions are not always performed effectively because of divided responsibility and conflicts. For example: coordination between land use and infrastructure is seen to be a major problem in planning SE Queensland. This problem must be exacerbated by the Commonwealth Auslink program (which envisages a leading role for the Commonwealth in coordinating the regulation of different transport modes and development of strategic infrastructure [1, 2, 3, 4, 5]) and the Roads to Recovery program (which would eliminate state involvement in local roads[1]). It has been noted that Auslink advocates national consistency in resources allocation - but that no benefit-cost analyses supported its project proposals [1]. Auslink arrangements would separate these critical infrastructure questions from the jurisdiction of states who are being expected to coordinate them with land use and other types of infrastructure (and thus prevent any attempt at optimization of resource allocation). Moreover: the involvement of the Commonwealth Department of Transport in determining how the upgrading the Ipswich Motorway should proceed seems likely to be counterproductive [1, 2, 3, 4] - because (a) it may divert attention away from the need to address failures in Queensland's public administration which have led to the above-mentioned mismanagement of land use and infrastructure and focus attention on one symptom of that problem (b) conflict and confusion seem more likely than practical progress (see Focusing on projects is a bad way of developing infrastructure or the public sector); Initiatives that the federal government is willing to support are seen to suffer various practical weaknesses [1]; federal - state conflicts over the Tugun by-pass was seen to potentially cause years of delay [1] under the Auslink program there is no longer a National Highway system that receives funding, but a National Network which includes whatever the federal government wants to fund - a judgment which others can not anticipate [1] the federal government was criticized by state governments over the road projects it chose to fund in the 2006 budget [1] the federal Opposition argues that federal funding for certain types of roads merely provides states with an excuse for poor roads [1] present financial arrangements allow states to blame Commonwealth for all problems [1]; the vertical fiscal imbalance is largely due to decision by states to reduce their own efficient taxes - as it suits them to gain credit for spending without responsibility for taxing [1]. game-playing over shifting public health costs appears to dominate over public health considerations [1, 2] cost shifting has affected roads [1] hospital costs might be significantly reduced if this were the responsibility of only one level of government [1] -[though it is by no means certain that this would be the most effective way of reducing health system costs - see Commentary on Directions for Health Reform in Australia]; it has been suggested that private schools may receive more favoured financial treatment than state schools due to Australia's vertical fiscal imbalance [1]. the federal government finds itself with too much revenue and hands back its large revenue surplus in the form of tax cuts, while the states struggle to provide essential services with limited income. [1] There are increasing signs that these fundamental defects in the federal system are being recognized - and leading to power struggles which further debilitate Australia's governance. For example: the problem of fiscal imbalance has been analysed [1]; disputes have emerged about the financing of state functions - see below; the Commonwealth has adopted a coercive (rather than a cooperative) approach to Australia's federal system [1, 2, 3] (similar to that of the Whitlam government in the 1970s?). In particular: Austlink (and other transport programs) have sought to dictate federal priorities in primarily state functions - see above major education / training initiatives have been structured to bypass states [1, 2]; the Commonwealth has sought to gain total control over universities [1, 2]; road funding would be withheld unless federal industrial relations principle are adopted [1]; uniform legislation would be enforced [1] the federal government will monitor the way in which states spend federal grants, and publicize any perceived poor decisions [1] conditions might be applied to GST grants. Commonwealth also has its sights on local government funding and a national workers compensation scheme [1] federal government will not release road funding unless Queensland accepts industrial relations system, and will deal directly with mining companies in resolving port constraint [1] federal efforts to reduce state influence over health funding were seen as a major focus of CoAG meeting [1] the federal government is seeking to prevent state-owned entities from participation in a tourism promotion program [1] the federal government is seeking to take over regulation of all export ports [1] Federal government is considering direct funding of regional health bodies - and bypassing states, as well as making funding subject to competition [1], a proposals which medical groups opposed [1] Federal government is seeking other areas to get uniform national laws or over-ride state laws and make them redundant in the cause of more effective micro-economic reform [1] Federal health minister has threatened to replace current funding agreement with untied general purpose payments, or to bypass states and directly fund private sector health organisations. [1] Federal education minister wants to increase national regulatory control over universities at the expense of states [1] it has been suggested that the Commonwealth has adopted a highly centralist approach because it believes that the states (a) are incompetent and (b) have a role purely as service deliverers - which does not give them any role in development of policy [1] the federal government is seen to be interfering in state areas of responsibility because it can make no progress in dealing with its own, and can thus avoid responsibility [1] an end to commonwealth / state fighting has been seen as necessary to allow progress in dealing with key issues [1]; despite access to GST states have never had worse access to own-source revenues and community has yet to grasp the significance of this for state service delivery or state tax reform.[1] the incompetence which state governments have demonstrated in performing their functions has led to community support for their abolition - though this would be constitutionally impossible and would not actually solve the problem [1] federal prescriptive control over universities has been sought by extreme interpretation of the 'trading corporations' power, and seems likely to further reduce the already weak ability of Australia's universities to provide the substantial contribution to public affairs required for an effective political process [1]; proposals have been put forward for a federal government take-over of responsibility of all health services [1]; micro-economic reform has been increased national centralization of regulation. Now national bureaucrats impose penalties on state governments if they make electorally-endorsed decisions that are seen to be inappropriate. States have passed over responsibility to get someone to blame when things go wrong. There would be benefits in diversity - where outcomes would respond to local circumstances. [1] reform of the federal system is seen to be vital to overcoming problems affecting the health system. [1] Federal and state governments increasingly recognize the need for health systems to be operated by a single level of government [1] attempts to erode the federal system have been seen to damage Australia's constitution which has provided a century of political stability that few other countries experienced by (a) removing a key balance of power and (b) preventing regional issues being dealt with mainly by affected regional communities [1] proposals have emerged for changing financial arrangements and rationalizing functions [1, 2, 3, 4], resulting in no agreement [1]; some see solutions to confusion and duplication associated with federal system to lie in increasing Commonwealth regulatory authority. But it has shown an equal or greater ability to generate complex systems.[1] there is a need to make states accountable by letting them raise their own revenue [1]; states have argued that the national competition agreement has been torn up, while health and education have not been able to be discussed in COAG [1]; the establishment of an effective national electricity market is at risk from intergovernmental tensions [1] state's could respond by a High Court challenge in relation to industrial relations, and by simultaneously re-establishing their own income tax regime [1] states threatened continuance of national agreement assigning corporations powers to the commonwealth if the Treasurer challenges their access to GST revenues [1] the PM indicated an intention to pursue what he saw as the national interest - over-riding the states if this was necessary [1] the federal government is seen as seeking to destroy the remaining functions of states - which would not be in its interest as it would then be held responsible for, and have to deal with, all problems that arise [1] the federal government is seen to be ignoring the constitutional limits on its powers (using its financial dominance) on the grounds that states are inefficient - yet part of that problem arises from Commonwealth duplication of their functions [1] federal government efforts to take control of ports could create a very complex regulatory and administrative environment, and disputes with the states about this would not be in the national interest [1] Commonwealth attempts to control everything are seen to be a risk to the nation as a whole [1] Australia's federal system now makes the states helpless - mainly because of centralized financial power. However this is quite contrary to the intent of the Constitution and was put in place by decisions of High Court - not by voters .[1] Australia's dysfunctional federal state system needs to be overhauled - to allow greater integration of the health system. [1] the federal system is a blockage to good government, and there is a need for a summit to decide how power and money should be divided [1] highly centralised federal control of state grants was suggested to potentially result in 'set-up costs' equal to the grant [1] NSW treasurer suggested that costs of greying population could create large funding problems - which required an overhaul of federal / state funding arrangements [1] The division of responsibility for health between federal and state governments was seen as the biggest biggest obstacle to reforms [1] Australia has one of the best systems of government in the democratic world, and its federal system is worth preserving [1] NSW is to host a national summit on ways to reform Australia's fiscal system - to address report which identified a gap between states' revenue raising powers and spending responsibilities. [1] a High Court decision, related to use of corporations power, appears to allow the Commonwealth to seek control of virtually anything [1], which must massively compounds the dysfunctions that have grown in Australia's system of government as a result initially of the removal of state income tax powers during WWII. the federal system was seen to be 'broken' (noting duplication; inefficiency; unnecessary red tape; sub-standard services; and conflicts over control). A special constitutional convention could be the way to fix this [1] Moreover these distortions may now become unsustainable because of what appears to be a potential imbalance between aggregate public revenues and expectations about public spending. Though this issue has not been systematically evaluated, reasons to suspect that a problem is emerging in raising revenues to meet public service expectations include: constraints and demands on federal revenues have increased, including: the reduced ability of governments generally to collect taxation due to globalization [1]; international competition which seems to imply a need for tax rates to fall [1]. One factor in this may be the the traditional tendency of increasingly-economically-significant East Asian societies to fund only basic state welfare support because this is expected to be mainly a family responsibility; likely changes in the pattern of economic growth that would slow the rapid growth of GST revenues [1]; as a result of population aging and the retirement of the baby boomers, economic growth must slow and prevent a repeat of past growth in public revenues [1]; increasing federal expenditure demands related to matters such as: welfare costs of an aging population [1] and substandard aged care facilities [1] - a situation which could be affected by potential increases in average lifespans [1] environmental restoration; security and children damaged by family and social dysfunctions [1] the financial pressures facing younger workers (eg because of high housing costs and HECS debts) [1] must restrict their ability to pay high tax rates. disputes have arisen about financing public expectations in key state functions such as: public health services [1, 2]. As a result concern has been expressed as the result of a Health Care Summit about the effect of overlapping responsibility on services effectiveness, and about cost-shifting between different levels of government [1]. An inability to address health system problems because of disputes over financing has also been identified [1]; water supplies - where shortages are looming in many localities [1] ; tertiary education [1]; roads [1]; state taxes [1] the federal government (it has been claimed) is seeking to force states to pay more of the cost of essential services generally [1]; signs are emerging (in spite of the revenue surge from a property boom) of a revenue / spending imbalance in the 'growth' state of Queensland which probably can not be reduced simply by tax rises (see Growing Pressure for Increased Taxation). NSW appears to be experiencing the start of a chronic financing problem [1]. And NSW and other major states have found it necessary to express concern about the revenues they lose because of Commonwealth transfer payments (see Comment on Review of Grants Commission Arrangements). At the same time that these pressures have developed, Commonwealth revenues surged into large surpluses as a result of a rapidly growing economy [1] - a phenomenon which seemed unlikely to be sustainable (see The Potential for Economic Instability). See remedies suggested in A Nation Building Agenda below
Judiciary	Political biases in the Judiciary Erosion of the political independence of the Judiciary also seems to have undermined Australia's machinery of government. The technical competence of the Judiciary is critical to the administration of law (and to Australia's reputation as a place to do business in particular), while Judicial independence is vital to safeguard citizens against abuses of executive power. Numerous allegations, whose validity the author has no way to assess, now suggest that the quality and legal competence of the Judiciary is being compromised by appointments based on political rather than merit criteria - in a manner similar to that which has undermined effective public administration.
Head of State Constitutional Origins Putting Political Stability at Risk? An Assassination? Options	Politicization of the 'Crown' Similar damage seems to have been done through efforts to politicise the role of the head of state. Under Australia's current constitution the Governor General and state Governors (on behalf of the 'Crown') carry all the power of executive governments, and make it available for use by the democratically elected governments. The effectiveness of representative democracy has now been de-stabilized and seriously damaged by politicization of the 'Crown', as: a Governor General used the position to advocate a particular political agenda [1, 2], and continued doing so after leaving the position [1, 2]. A state governor has announced an intention to pursue a similar practice [1] . In 2009 a new Governor General also took a public political position [1] the Federal Opposition leader broke the convention which had treated the Governor General as being outside of the political game [1]; a Governor General (G-G) resigned in the face of populist pressure involving allegations, a flawed Church inquiry, a biased media campaign, opinion polls, a Senate resolution [1] which also breached constitutional conventions and a weak Federal Government - pressure which one observer described as the worst case of 'trial by media' since the case of Lindy Chamberlain and which ultimately led to a virtual political 'assassination'; and similar 'media frenzy' seemed likely to follow any other appointment of a Governor General - thus discouraging good people from being prepared to take the position [1] Ensuring that in future the holder of this office should be a person who has popular support (or perhaps even has a definite political agenda) seemed a major motive for the latter campaign [1, 2, 3, 4, 5, 6, 7]. One legal observer implied that political support was a vital requirement of the position [1]. However politicisation of this position (ie requiring popular support, and a political agenda and networks) is totally incompatible with Australia's existing constitutional system [1, 2] and would lead to instability unless preceded by a referendum to appropriately change the constitution. Even thoughtlessly subjecting this institution to populist pressure has damaged Australia's system of government. Constitution Origins Australia's constitution was derived at the start of the 20th century from the system of governance that existed in Britain at that time. That system was the product of a long period of evolution whereby the power and privileges which monarchs had acquired through through military leadership were shared first with a military 'nobility' and ultimately, in the mid 19th century, with the broad mass of the community through a system of representative democracy. This steady transfer of power from military to civil authorities involved the emergence of a constitutional monarchy under which eventually: the Crown delegated power to make laws to an elected Parliament, and the power to interpret the law in civil, criminal and administrative matters to an independent Judiciary; an executive government was formed by the party with the majority support of a democratically elected Parliament; the Crown retained all the executive power of the state, but agreed not to use this for their own purposes and to act on advice from the head of the government; and the Crown oversaw the government's day-to-day actions to ensure that they complied with the constitution. In Australia's version of this system the British 'Crown' was represented by a Governor General (or Governor in the case of the states). Apart from ceremonially 'planting trees', the role which the G-G used to play was to enable the democratically elected government to govern by exercising the same restraint in the use of executive power as the British Crown. Putting Political Stability at Risk A G-G who has their own political power base and agenda will either be a political supporter of the elected government or an opponent. If they are an opponent then they may make it difficult at the very least for the elected government to govern [1]. It can be noted that the Constitution allocates all executive power to the Governor General and does not even mention the Prime Minister. Those powers include vetoing legislation. With an independent political mandate a Governor General would be able to oppose the will of Parliament and claim that they were acting in the people's interests in doing so [1] The constitutional crises that are likely to emerge where an elected head of state had their own political agenda, power base and electoral mandate can be illustrated by the 1975 sacking of the Whitlam Government by the then Governor General. Whilst the Governor General was presumably acting to resolve what was seen as a constitutional crisis related to the blocking of supply, the fact is that the 'sacking' was: (a) political popular - as illustrated by the large subsequent voter preference for a change in government; and (b) widely seen itself as a constitutional crisis. With a popularly elected Head of State, conflicts between the latter and the also-elected but-less-powerful government would presumably be a regular event, and shatter Australia's reputation for political stability. On the other hand, if they are of the same political persuasion, then the scope for autocratic power to emerge will be huge as: the same faction would have control of the legislature, the executive government and the reserve powers of the 'Crown' (which could be interpreted as being almost unlimited); and the judiciary, whose independent powers are delegated from the Crown, might have limited ability to act as a counterbalancing force. The author recalls a paper (but can no longer locate it) which argued out that countries who had political head of states separate from governments tended to have periodic revolutions. A Vice Regal Assassination? The political 'assassination' of an incumbent G-G has undermined and exposed the rickety foundations of the institutional core of Australia's constitution (and this may well have been the intention of the campaign) - but has not shown how to create a solid foundation. It seem certain to impact on whether Australia emerges as a future republic. It might result in either: future G-Gs who have their own popular / political agendas - and thus contribute to political instability until a re-written Australian constitution is approved at a referendum (see below); or damage to the republican goal of making the position of Governor General into one that requires popular support - if the attacks on Peter Hollingworth as G-G are eventually shown to have been unjust thus demonstrating that (a) popular opinion can be misled especially if the subject is not an experienced politician and (b) any experienced politician could be unable to provide the apolitical attitude the Governor General's constitutional role requires. Practical Options Presumably Australia could seek to have an elected G-G who has a political agenda, but for stability and to protect against autocratic power it would then seem desirable to rearrange a large number of other aspects of the constitution - perhaps to something like the US system where the executive and the head of state are combined but separated from the legislature. Implications? Adopting a US style system in Australia would seem likely to: increases the intensity and sophistication of political debate because both the executive and legislature would presumably be well resourced to support policy research - which would seem highly desirable given the deplorable standards that have emerged as administrative machinery has been politicized; and encourage a much 'smaller' role for governments - because (a) under British Law the state does not seek to represent the community as a whole as in European (Roman) Law traditions and (b) the separation of executive and legislature would inhibit the coordination required for governments to play a strong interventionist role. Interestingly it appears that Prince Charles as king might guarantee Australia's transition to a republic because his reported desire to speak out about public policy issues - rather than continuing the traditional practice of doing so only in private [1] - would seem very likely to destroy the apolitical character of the British monarchy and thus its constitutional usefulness in the UK and elsewhere. See remedies suggested in A Nation Building Agenda below
Foundations of Liberty Evidence Restraining Liberty Consequences	Moral foundations of individual liberty More subtle, but ultimately potentially more serious, damage has been done through eroding the foundations of the individual liberty that is built into legal and governmental institutions that Australia inherited from the UK. For something like 1000 years in Western societies, a 'love-others' / 'value-others-as-oneself' ethical ideal which derived from Christ-ian traditions has seemed to be a settled basis for a morality driven by individual consciences. This allowed a separation between affairs of state and the religious basis of that individual morality. That separation was immensely important to building a legal system which incorporated individual liberty and thus to the economic prosperity and strength which Western societies achieved relative to others particularly over the past 500 years (see Competing Civilizations). The latter argued that: individual liberty could became the core of Australia's antecedent legal system in Britain, because it was taken as given that interpersonal relations would be guided by a Christ-ian 'put-others-first' ethical ideal that was deeply embedded in the consciences of individuals responsible to God. Moreover that liberty (combined with other arrangements) allowed the emergence of social environments in which rationality could be effective in problem solving, and thus dramatically increased the effectiveness of individuals in all walks of life; in societies without this 'embedded' ethical ideal, legal and governance systems invariably are deeply involved in determining the nature of, and enforcing, moral interpersonal relationships - and this has a major impact on scope for political liberty and the economic models that can be used, Moreover; government can be far more effective in dealing with complex and constantly changing social and economic systems, when it does not seek to do so simply on the basis of religious principles that are meant to (and most relevantly) apply to individual behaviour. Evidence It now appears that challenges to the 'Christ-ian' philosophical and theological foundations of Western societies have weakened the embedded ethical ideal in Australia to the point that it can no longer provide the foundation of moral interpersonal relations and thus a system of law and government based on individual liberty. This could be the case if child sexual abuse is anywhere near as rampant within the community as some have alleged (see About Child Sex Abuse). The breakdown of up to 50% of marriages (which in itself can be a form of child 'abuse' because of the stresses it may create, and which seems to have created the basis for the escalation of sexual abuse) as well as various other indicators of social dysfunction can also be noted. Indicators of the decay of an ingrained put-other-first ethical ideal include: self-centeredness as the defining characteristic of the (so-called) ‘me’ generation (the 'Baby boomers'); narcissistic (self-love) personality traits are increasing. 25% of students revealed such traits strongly in 2006 (up from 15% in 1982). 80% of people thought they were important in 1980s compared with 12% in 1952. An epidemic of poor parenting is seen as the cause [1] virtual freedom from family responsibilities which men have had the potential to enjoy since the sexual revolution of the 1960s and 1970s - a freedom which now appears to be translating into (a) poor educational achievements by boys who lack of male role-models [1] and (b) low fertility rates as women find it increasingly difficult to find a man willing to commit to parenthood [1]; emphasis on self-fulfilment, sometimes including veneration of self as a fragment of the divine (which seem to be the core of 'New Age' and growing (pseudo) Buddhist traditions); a perceived inability to make moral judgments [1] Morality? What were once seven deadly sins (that led to spiritual death and damnation) - namely lust, gluttony, avarice, sloth, anger, envy and pride - have all become behavioural problems requiring treatment, not punishment, except for pride that has become a virtue (as an antidote to the sense of low self-esteem that is seen as the source of many social and psychological problems). And what were once virtues (humility, kindness, abstinence, chastity, patience, liberality, diligence) are now also seen as requiring correction through counseling (Furedi F., 'The seven deadly ills', Australian, 2-3/2/02) escalating drug abuse apparently expressing a desire to 'escape' from a unhappy lives [1]; weakening of ethics in: business [1] - which (a) erodes public confidence in commercial institutions that are essential to economic productivity (b) undermines the status that professionals gained by the ideal of putting community interests before one's own and (c) and requires significantly more complex and costly accountability procedures; government - associated with increasingly lying [1] the breakdown of organized civil society (see Social capital); the emergence of dysfunctional interpersonal relationships (including: general dysfunctions in families [1]; breakup of up to 50% of marriages, and the consequent 'distressing' (in varying degrees) of anything up to 50% of children [1]. Children from divorced families are twice as likely to drop out of school, become parents while teenagers or be jobless as young adults [1]. Such children may do worse on measure of life welfare [1]. Boys lacking male role models are seen to develop anti-social behaviour [1] a substantial increase in the numbers of children living in one parent families, which is frequently associates with growing up in poverty and subsequent disadvantage throughout life [1]; more extreme abuse in not-yet-legalized ways of smaller numbers of children (eg sexual abuse - which might impact 12% of boys and 25% of girls), women (domestic violence [1, 2] is said to affect around 23%) and geriatrics [1, 2]; 250,000 children live in homes affected by domestic violence - which increases the risk of violence when they themselves form families [1]; contract killings in extreme cases [1]; formal contractual agreements for adult children to care for their aged parents because arrangements based on trust are too uncertain [1]; the abuse of children in foster home - which is seen to indicate a loss of moral capital [1]; attacks on ambulance officers attending to patients [1]; a 'toxic' environment for children (related to family breakdown, rampant individualism and inequality) that has been seen to contribute to: youth suicides; ADHD; risk taking; depression; autism; cerebral palsy; crime; insecure neighbourhoods; and drug-taking [1]. Moreover: Health professionals have suggested that the way babies brains are formed is significant. As they get positive stimulation they effectively tell baby “this is the way to interact with the world”. But if positive stimulation is replaced with constant neglect or abuse, then the connections formed tell the baby - “the world is an uncaring place”. Thus the kind of care parents deliver to their infants is vital and all the indicators are that something has gone wrong with the connection. Learning and behavioural problems have increased dramatically. One in four teenagers now has a significant mental health problem. Youth suicide, mainly boys, has quadrupled in the last 40 years. Teenage girls are five times more likely to commit acts of violent crime than thirty years ago. ('The Science of Raising Children: Pt 3', ABC, 21/10/01); children's health generally has deteriorated - a situation which is seen to be associated with lack of support for working mothers, and the ending of public health initiatives related to maternal and child welfare [1] a large blow-out in welfare costs is expected because of the numbers of young people from dysfunctional family / community situations who will depend on welfare, and perpetuate their problems with their own children [1]; a Queensland teacher has highlighted concerns about large numbers of children who are uninterested in education, disrespectful, engage in petty crime and willing to steal from society - and have parents who are passively support such behaviour [1] children have problems (obesity, diabetes, asthma, autism, Down Syndrome, high suicide rates; increased difficult to treat psychological problems; girls match boys in aggressive behaviour), many of which are seen to come from socio-economic disadvantage - though they are more likely due to social dysfunction [1] homosexual behaviour - which a plausible insider [1] suggested is often be an emotional / addictive disorder (as a reaction to childhood abuse and neglect) typically leading to unhappy / unstable lives, rather than a harmless alternative lifestyle option; increasingly serious racial abuse in schools [1] violent and bullying students in state schools [1] very large economic costs as a result of workplace bullying [1] bad neighbourhood relationships which have forced 20% of Queenslanders to move .[1] official government acceptance of homosexual behaviour (eg in the areas of tax, superannuation, Medicare benefits, Centrelink payments, child support and immigration), though such acceptance seems to constitute endorsement of past child abuse and neglect, and to facilitate future sexual abuse of children (see Breaking Off the Long Engagement?); deterioration in community health associated with increased obesity, because children's outdoor activities are constrained by fear of strangers [1] Both Prime Minister and leader of the Opposition have expressed concern about the social consequences of changes in Australian values and culture [1] Part of the social breakdown mentioned above (eg child abuse) is overly associated with disadvantaged communities (eg those suffering high unemployment, low education etc) [1]. However: the existence of a correlation between social breakdown and disadvantage does not show what has caused the correlation - though a key requirement for overcoming disadvantage for individuals is probably that they gain stronger support from responsible family and community members (see Commentary on Is the Smart State a Just State?). some indicators of social breakdown (eg in family relationships) are more widespread than serious social disadvantage; changes in attitudes which are likely to contribute have occurred, and the apparent scale of the social breakdown does not support the view that disadvantage is the major cause; Part of the social stresses identified are also undoubtedly associated with pressure for harder work [3] - while it has also been suggested that the major cause lies in the failure of men to take on a larger share of household tasks as women have gained equality, and increasingly participate in the workforce [1] Others have attempted to explain changes in the nature of relationships and the growth of 'rampant individualism' in terms of various consequences of globalization [1]. Others again have suggested that the worst of the problems are over and the situation is improving as a result of general economic prosperity [1] Restraining Liberty Unless a 'put-others-first' ethical ideal is re-established through religion which is separate from the state, entirely new concepts of law and government may be developed which regulate the nature of 'moral' interpersonal relations. Indicators of the growth of, and pressure for, 'social / ethical' regulation include: the blurring of the line between individual and state responsibilities, and the predicted future increase in the use of formal agreements about behaviour that could be required in various circumstances (eg as has been done with indigenous communities) [1] political activism by church-based organizations [1]; the reported loss of public interest in substantive policy issues - with concern only for personal impacts and whether politicians reflect their values [1]; proposals for legalization of gay marriage, which could provides a wedge for the state to interfere in traditionally-private family life (see Broader issues related to gay marriage); defining a set of moral standards for politicians by setting down a code of conduct [1]; a perceived need to insert 'values' into public debates [1], and for the Deputy prime Minister to himself stress moral values [1]. And the ALP was said to believe that politics in future would be concerned solely with values - without concern for traditional political debates about programs and budgets [1]; Comment: Determining 'values' through political authorities would break the separation of church and state the perceived intent of an ALP leader to build an election campaign on religious values [1]; proposals for state funding of chaplains in schools [1]; 'antidiscrimination' legislation which suppresses the free expression of some ideas [1] or protects some behavioural choices that are traditionally seen as immoral, and lead to (sometimes quite unforeseen) social dysfunctions [1]; the expressed concern that churches do not recognize professionally derived ethics, but have treated them as part of universal moral principles [1]. [An aside: The significance of 'professionally' derived ethics from the viewpoint of the churches (ie of eating the fruit of the tree of knowledge of good and evil) is presumably embodied in Genesis 2-3]; research by the Australian Computer Society into ethical standards that should be adopted in that industry [1]; a political debate about the values taught in state schools, and in particular: the adequacy of the values taught in state schools has been questioned by the Prime Minister and others [1], and provisions have been made for federal funding to be cut to university courses which the government objects to [1]; a study was commissioned by the Federal education minister on the values which should be inculcated through the education system [1]; it was suggested that state schools do not need religion to impart values like 'inclusiveness, respect for others, ethnic diversity and multiculturalism', and that religious education should be removed from the curriculum to make room for other subjects [1] Comment on 'Clayton-ism': that writer's preferred alternative was not to regard any values as better than any others and treat all cultures equally - which would, in effect, constitute the core of a new official religion (which could perhaps be called 'Clayton-ism' - the religion you have when you are not having a religion). Superficially values included under Clayton-ism would be radically different to Australia's institutional traditions (and disruptive) because (a) many cultures that Clayton-ism would include do not endorse equality of individuals, (b) some regard racism as natural and (c) some are overtly intolerant of religious differences. However if it was then decided (on some arbitrary basis) that such features should be excluded, then Clayton-ism would be well on the way to becoming a prescriptive official state religion the federal government's efforts to promote values education can be seen as attempt by it to be regarded as having moral authority [1] officially-sponsored proposals ("Religion, Cultural Diversity and Safeguarding Australia", 2004) to promote religious harmony in Australia through a government-driven process to: (a) shift both public institutions and the community generally towards officially being a 'multi-faith' (rather than a Christian) society; and (b) promote particular 'civil' values. Comment: This proposal seemed to constitute a version of the 'Clayton-ism' mentioned above and to emerge without consideration of: (a) the likely dependence of Australia's liberal legal and governance systems on having a community with 'Judeo-Christian' expectations about moral behaviour being controlled primarily by individual consciences responsible to God, rather than by social pressures which generally seems to be the alternative; and (c) the damage that would result from state efforts to control the community's religious practices or 'values' - given the importance for individual liberty of separating church and state, and the social, economic and political advantages of that liberty; a stream of initiatives by government in the UK aimed at improving people's behaviour [1]; ALP proposals for government machinery for micro-supervision of the fairness of employee-employer relationships (see Fair Work Australia: Establishing the Machinery of a Socialist State?); a perceived need for a Statement of National Values (focused on: democracy; equality of all people; religious tolerance; rule of law; mate-ship) [1] advocacy of a Bill of Rights [1] as a means to establish moral rights [1] or national values [1], or because it can no longer be assumed that elected representatives will act in the general community interest [1]. Victoria is to follow ACT in establishing a statutory charter of rights and responsibilities [1] Comment: advocacy of a Bill / Charter of Rights seems very strong evidence that authorities have felt the need to constrain individual behaviour. However in practice a Bill of Rights would seem likely to compound those constraints by limiting rights in future to those which are prescribed. Traditionally under common law individuals have been able to do what is not prohibited, but a Bill of Rights would seem to reverse this presumption or freedom and guarantee only the right to do what is specifically permitted. When an issue arises in future that no one has previously considered, it would reasonably be argued that the right did not exist because it was not mentioned in the Bill of Rights the establishment of Family Law, the Family Court and the Child Support Agency to enforce child support. In some respects the latter has raised the cost of 'free' love to a very high level. Family law, it may also be noted, has been seen as a source of many problems [1], and (in Queensland at least) the Families Department seems to experience considerable difficulties. Moreover the cost of child support (combined with the high incidence of family breakdown) seems likely to act as a real disincentive to marriage and parenthood - at an inconvenient time for an aging population; legal action against institutions for the sexual misdeeds of their staff [1] - which creates a requirement for managements to try to control interpersonal relationships; checks on teachers in relation to child abuse - a practice which was seen as likely to be inadequate [1]; proposals by ASCA for preventing child sex abuse (a phenomenon that was acknowledged to be widespread) which amount to promoting community morality. However it seemed to be expected that morality of individual behaviour would be promoted by government policies and programs, rather than independently of the state [1] the suggested creation of special courts or other arrangements to deal with sexual abuse of children [1, 2] - which mainly occurs when children live with adults who are not their biological parents; arguments by both state and commonwealth governments that the other needs to take responsibility for dealing with the massive problem of child sex abuse [1]; the perceived need for: restraining domestic violence [1] and violence in schools [1, 2]; preventing parents from smacking their children [1]; teaching school children to be nice to each other [1]; remedial strategies to prevent bullying in schools and homes [1], and at work [1, 2]; laws to ensure etiquette in people's behaviour on footpaths [1]; authorities to remove a disruptive family from a neighbourhood [1]; governments to force men to take more responsibility for household duties [1]; governments to take a hands-on role in promoting and sustaining marriage [1] Aboriginal elders to be given legislative powers to order addicted persons into rehabilitation, mediate between groups and hold parents responsible for juvenile offenders [1] the introduction of shared responsibility agreements designed to influence the actions of aboriginal parents [1] the introduction of legislation to protect the disabled from abusive carers [1]; the creation in Queensland of machinery to 'keep government honest' in the era following the 1980s' Fitzgerald inquiry which: was described by one expert observer as creating the most complex system of government in the Western world [1]; and was seen 15 years later to require scaling back because the resulting 'red tape' made government ineffective [1] federal government proposals to restrict the way in which welfare payments can be used by some households (eg those crippled by alcoholism or unable to manage their children) [1] calls have been made for the adoption of Islamic Sharia Law in Australia, because of the social and environmental failure of Christianity and democratic capitalism Advantages were seen to lie in: (a) Islam being a total system for life which applies to both personal and governmental affairs; (b) Islam's similarity to the traditions of indigenous Australians; (c) the loss of values in Australian life; (d) prohibition under Islam of vices / interest / homosexuality / exploitation for money / immorality / wife beating / over-indulgence / rape / paedophilia; and (e) Islam's promotion of water conservation; and ethics in the workplace. [1] [Comment: see Sharia 4 Australia?]. There has also been: a suggestion that a breakdown in civil society due to loss of trust is interfering with the effectiveness of economic transactions, and that this might need to be resolved by the churches [1]. recognition by Christian leaders of the effects on Australia's values and institutions if its religious foundations are shifted [1]. Consequences? The effect of a perceived need to apply external constraints to most aspects of individual behaviour would be to eliminate the liberty that has been central to past legal and political systems and to the economic success that has been enjoyed. Moreover externally driven morality (by moral legalism or social sanctions) does not seem very effective. A Chinese writer (whose work the author can no longer locate) commented on the difference between doing the right thing when others were watching - or all of the time when conscience was the guide. Islamic legalism seems to require threats of horrendous punishment. New testament writers commented on the fact that 'no one could ever live under the Mosaic law'. In earlier eras, blood sacrifice was one 'solution' that was found to the failure of moral legalism to prevent what leaders saw as rampant sin in a nation. Knowing how widely the moral law was abused, but powerless to do anything about it, community leaders could show how seriously they viewed the problem by arranging to sacrifice an innocent scapegoat. An interesting parallel may be drawn with the official blind eye that was turned to the problem of child sexual abuse in Australian families and the political 'assassination' of the G-G in 2003. The erosion of the moral foundations of individual liberty is also a threat to national security because of the risks associated with possible terrorist attacks by Islamist extremists. This arises because making a convincing case for civil liberties in Muslim dominated countries is (probably) the key to defeating the ideology of the spiritual leaders who motivate militants to commit acts of terror - yet the social symptoms which have resulted from the loss of the ethical basis for moral interpersonal relations is a major obstacle to the credibility of any such case (see Combating Terrorism with Civil Liberties) See remedies suggested in A Nation Building Agenda below
The Need for Nation Building Starting to Acknowledge Ineffectual Government? (Overcoming Australia's Government Paralysis + S-L-O-W Learners) The Secret of Failure: Claim Wisdom Without Practical Realism Failure was not Confined to the Rudd Government Unstable Government (Resuming Rightful Roles) Unstable Environment	Recognising a Need for Nation Building [Working Draft] Starting to Acknowledge Ineffectual Government? In July 2010, various observers finally started to acknowledge that a federal Government's behaviour implied the existence of systemic problems in Australia's machinery of government. Even at the time of its election, the Rudd Government showed signs of likely incompetence (see Populism Trumps Electoral Victory) and there were many examples of futile or counterproductive actions in addition to those which finally achieved public recognition in mid 2010 (see Reconsidering the Origins of Kevin Rudd's Failure). Kevin Rudd's subversion of federal cabinet was not just the work of a rogue individual. The ease with which this was done for 2 years exposes a dangerous flaw in Australia's system of governance that has merely been papered over by eliminating Rudd. Bypassing cabinet resulted in serious consequences - ie the dreadful RSPT, which caused significant damage to the country. It should not be assumed that this could not happen again (eg suppose a terrorist incident had allowed Rudd to reinforce his autocratic style). Or what if he had been a more competent / malevolent demagogue able to manipulate public opinion and remain popular. Most government decisions over the past two years were made by the 'gang of four' not by cabinet. Companies now have to publish corporate governance statements - but these don't exist for government. Canberra elites are telling themselves that the flaws in the system do not need to be addressed, because Rudd was brought down. But there is a need for a constitutional change that recognises the authority / responsibility of ministers, or perhaps a 'Statement of Governance Practice'. The policy mistakes of the past six months should never be allowed to happen again. (Kohler A Ending Australian Autocracy, BusinessSpectator, 2/7/10 A somewhat related view was expressed by Peter Botsman in Empty Rightousness – the Real Problem of Modern Labor (July 2010). For most of 2010 the Rudd Government had been a flying logjam - with ministers and public servants chasing the PM and his kitchen cabinet around the country hoping for decisions on the policy dilemmas that were piling up. Instead of decisions there were constant requests for more information / analyses / options. Advirors were not relied upon to present the best available options. The government won the daily new cycle, but lost the battle in terms of the need for a clear strategic direction. [1] International efforts to reduce GHG emissions have been very costly and produced no benefits. Claims that reductions can be achieved at minimal costs were based on insane assumptions about the value of yet undeveloped technologies. Such claims were part of a general patter whereby Western leaders were not willing to tell the electorate the truth about the high cost of shifting to a low-carbon economy . The grotesque misuse of the Treasury, the politicisation of its advice, and its entry into direct political combat, with Ken Henry acting like an unelected cabinet minister proposing policy and defending it in parliament and in the community, is one of the very worst and most institutionally damaging results of the Rudd interregnum. [1] The most serious of these for the future arguably involved 'reforming' Australia's health and hospital system by increasing centralised control (see Making a Bad Situation Worse?). That 'reform' seemed to assume that service delivery could be centrally managed by defining 'efficient prices' for health services - though (as shown by Soviet economic failures) central authorities can not define prices that will lead to the production of goods and services that meet real needs. Eventually the Rudd Government showed such extreme dysfunctions that it was impossible to continue turning a blind eye, and Mr Rudd was replaced as Prime Minister by his deputy on the grounds that 'the government had lost its way' [1]. However concern about systemic defects soon subsided, even though: the likely incompetence of the Rudd Government had seemed obvious on the day it was elected (see Sorry to Spoil the Party - but Populism Trumps Electoral Victory); others governments were also failing (see below); the Rudd Government's successor, the Gillard Government, also seemed likely to experience severe problems (see below). There seemed to be no serious effort to understand the causes of these problems. Business leaders, for example, expressed concern about the policy and practical paralysis that affected governments, but seemed oblivious to the need to address the source of these problems. Overcoming Australia's Government Paralysis (email sent 12/12/10) John Durie, The Australian, Re: ‘CEOs decry policy vacuum’, The Australian, 11-12/12/10 Your article recorded the concerns of various business leaders about a lack of progress in addressing important policy issues. However there is a need to look beyond those particular issues at the causes of political and institutional paralysis. Until structural obstacles also receive attention, little progress is likely. My interpretation of your article: Australia’s business leaders are concerned by policy inaction, Carbon pricing, tax and infrastructure are key issues. But bold decisions are being hampered by a hung parliament. Terry Davis (Coco-Cola Amatil) sees a policy vacuum resulting. Bernie Brooks (Myer) is concerned with protracted decision making / waste. Graham Twartz (Hills Holdings) sees the need for decisive / accountable government. None saw the NBN as a major issue, through Telstra (David Thodey) and Hills saw it as an opportunity.Leaders (eg James Fazzino, Incitec Pivot) were concerned with hard infrastructure to take advantage of industrialisation / urbanisation in Asia. IAG (Mike Wilkins) was concerned with complacency about current economic strength, and the unfinished tax reform agenda. Leaders saw a need for business tax cuts, and were concerned about skills shortages. Richard Goyder (Wesfarmers) saw the need for increased labour mobility. A need for early decisions about responding to climate change and energy efficiency was perceived by David Thody, Grant King (Origin Energy), Mark Selway (Boral), Alan Joyce (Qantas) and Marius Kloppers (BHP). Resolution of issues related to mining taxes was perceived to be critical by Tom Albanese (Rio Tinto) and Andrew Forrest (Fortescue), and a taskforce led by Don Argus will report to government on this soon. At present business leaders seem to have unrealistically simplistic views of what is required to achieve the outcomes they seek (see comments on ‘Seeking Magic Solutions’ below). Policy and practical paralysis must continue, unless and until community leaders: start to consider not only desired policy outcomes but also the obstacles to good government that have emerged naturally or from unwise advice; and put in place the supporting machinery now required for Australia’s system of government to again become effective. Some suggestions about institutional reforms that might be required are in A Nation Building Agenda. This refers to addressing challenges such as: Weak policy development capacity due to the lucky-country’s traditional dependence on natural resources, and copying others’ policy initiatives; The increasing complexity (eg interconnection) of issues, which facilitates electoral support for ‘populist’ (ie simplistic but unrealistic) policy; Dependence on political leadership in addressing system-wide social and economic challenges, thus often increasing controls rather than opportunities; The adverse effect of centralised control and revenues on the grass-roots initiative and responsibility needed to deal effectively with many challenges; The lack of real Asia-literacy (ie ability to understand that increasingly significant region from an ‘East Asian’ viewpoint); and Politicisation of government machinery (often inadvertently), thereby further depriving elected governments of practical and realistic support. The speculations in that document may be of interest, though they are are at best a starting point. John Craig Seeking Magic Solutions Some formal submissions by business leaders have been unrealistically simplistic. For example, the Business Council of Australia (in Bradley G., Parliament must focus on reform where there is broad agreement, BCA, 16/9/10) suggested a policy agenda for the federal government that would not only focus on issues about which there was already broad agreement (such as parliamentary reform and improving indigenous Australians’ life opportunities) but also provide leadership in: (a) formulating a national infrastructure plan (involving both regulatory / pricing policies and priority projects to boost national productivity); (b) tax reforms; (c) national energy security; (d) focusing COAG on fewer more-important issues; and (e) promoting integrity in federal budgets. The BCA’s proposals seem unrealistic because they demand outcomes of shambolic machinery of government. For example, the key to effective development of infrastructure arguably lies in overcoming artificial institutional obstacles to effective action by (mainly) state governments. The main problems are arguably: (a) fiscal imbalances within Australia’s federal system; (b) politicisation / deskilling of government machinery because of a desire to ensure unquestioning compliance; and (c) attempts to develop functions subject to market failures through market processes, or to apply business-like methods in undertaking non-business-like government functions (eg see Infrastructure Constraints on Australia's Economy, 2005). The BCA’s ‘solution’ involves central planning (eg devising a list of projects suitable for federal government or private funding) and this would simply compound problems created in Australia’s system of government generally over the last few decades. Likewise: tax reform which does not give specific attention to the capacity of state and local governments to independently fund their primary functions and bear financial consequences from the success or failure of their effectiveness (or otherwise) in enabling the development of productive modern economies is inadequate (see Australia's Future Tax System: The Cost of the Financial Crisis and the Opportunity to Fix Government). There is however no serious attention to the effect on the operational effectiveness of governments in major proposals for tax reform (such as the Henry Review); the problems in Australia’s overly-complex machinery of government can’t be resolved by limiting the Commonwealth to micro-managing a smaller number of state functions through COAG. There is rather a need for fundamental reform of the federal system, to end the suppression of grass roots competencies and initiative (eg see Fixing Australia's Federation as well as specific examples of counter-productive outcomes from attempts to develop idealistic ‘national’ solutions Making a Bad Situation Worse and Proposed National History Curriculum: Information without Understanding?); there is no point in simply promoting integrity in federal budgets when there are serious problems in the integrity of state budgets (eg see CPDS Comments on Queensland’s 2009-10 Budget). Money wasted by state governments due to the lack of independent policy capacity and internal competence is just as serious as wastage by the federal government. Also, your article recorded calls by many business leaders for firm policy decisions in relation to climate change, so as to facilitate investment. However until there is a serious effort to reduce uncertainties in the associated science, it is simply not realistic to ask for a policy position to be defined that will not be susceptible to unpredictable change in a few years time (see Carbon Certainty is a Long Way Off). S-L-O-W Learners (email sent 16/12/10) Paul Kelly The Australian Re: ‘No time to rest on our laurels’, The Australian, 15/12/10 Your article, which I have outlined below, drew attention to frustrations which ‘outsiders’ (eg business leaders and economic policy experts) have about the complacency that ‘political-media insiders’ now exhibit in relation to Australia’s economic prospects. However, those ‘outsiders’ are themselves partly to blame. Some past ‘reform’ initiatives they advocated have contributed to making Australian governments ineffectual, because those who led in developing and selling radical changes that were hoped to boost economic efficiency had little experience or knowledge of the nature and functions of government. The fact that the risk of making governments ineffectual still seems to elude those who advocate continuation of Australia’s past approach to economic reform implies that they are S-L-O-W learners. My reasons for suggesting this are outlined below, together with observations about: Apparent defects in the theoretical foundations of conventional ideas about improving Australia’s economic prospects; and Whether ‘Asian values’ might be more relevant to Australia’s future, as your article implied, than those embodied in (say) European-style social democracy. Regards John Craig Outline of Article and Detailed Comments My interpretation of your article: Australia is at risk because of complacency. Political-media ‘insiders’ are more complacent than ‘outsiders’. Insiders see the 2010 political compromise as workable with economic success assured. Business executives are very frustrated. Kim Williams (Foxtel) sees ‘blanding out’ that can only lead to failure. Monday’s AFR reported on BCA forum’s doubts about ALP’s ability to set strong policy agenda – with concerns related to: minority government; NBN; skill shortages; infrastructure; red tape; and lack of federal-state collaboration. Gary Banks (Productivity Commission) warned that rising national income from resources boom was concealing poor productivity performance. Government must both deliver fiscal restraint and manage structural pressures associated with mining boom. Banks argues there is a need for: labour mobility; less industry assistance; reform of defence procurement; and less anti-competitive regulation and regulation that adds to business costs. Also industrial relations reform is needed, as well as carbon pricing rather than more expensive alternatives. Ross Garnaut continues to warn about complacency. Judith Sloan (for CIS) warns that Fair Work Act poses distinct economic risks. An OECD report shows problems in students’ attainment in maths and sciences. The ALP seems confused and divided over such issues. In the past OECD praised ‘Australian model’ of pro-market reform based on: leadership; identifying and selling reforms that promote both productivity and equity. But this model has faded. Treasurer argues that Australia is well placed to benefit from Asian economic power. But Australia’s values are more at home with declining Europe. Asian values are: personal improvement; economic competition; educational excellence; national pride; strong family ties; cultural traditionalism and rising religious faith. Are these Australia’s values? Many seem opposed to social-democratic and green progressivism that shape ALP. GFC has delivered a shattering intellectual and moral message to the world. US is wounded but European model is crippled. Europe’s system of government debt, entrenched welfare, extensive regulation and tolerance of all as unifying values is broken. ALP needs to put steel into its economic thinking. The requirements for success have never been more obvious, yet they are not mentioned by insiders to Canberra’s political-media culture. There is no doubt about the need to end complacency. However complacency about the causes of governmental paralysis is as damaging as complacency about new productivity-enhancing initiatives (see Overcoming Australia’s Government Paralysis). The latter suggests that some past productivity-oriented reforms have contributed to seriously eroding the effectiveness of governments – though they were, by no means, the only factor. Dysfunctional government has become the norm in Australia’s recent history. The lack of substance in the Rudd Government’s policy agenda should have been obvious in 2007 (see Populism Trumps Electoral Victory), rather than in mid 2010. Other Australian governments had been publicly perceived to be ineffectual for years (see Failure was not Confined to the Rudd Government). One reason was that, starting in the 1980s, all Australian governments had progressively been through a similar process of managerialist / new-public-management ‘reform’ (see Decay of Australian Public Administration, 2002). Radical reforms intended to promote efficiency and effectiveness, often proved dysfunctional in practice because: those advising about ‘reform’ (often with business or economic backgrounds) tended to lack realistic understanding of the nature and functions of government. Success with governments’ core roles (ie creating a legal framework for social and economic transactions in the community; and providing goods and services that are complicated by serious market failures) depends ultimately on experience and knowledge (see Governing is not just Running a Large Business, 2002). However efficiency-oriented ‘reformers’, who often advocated business-like practices, were unaware of this. In particular microeconomic ‘reforms’ undertaken under National Competition Policy sometimes had the unintended effect of eroding the abilities required for effective government (see Neglected Side Effects, 2004); and. politicians took advantage of the ‘managerialist’ assumption that management was a generalist activity (which implied that managers did not need to know much about the functions they were ‘managing’). As experience and knowledge were derided, governments agencies tended to be stacked with cronies and ‘yes men’. [Note added later: Ignoring the existing body of experience and knowledge to achieve a particular reform agenda is hazardous, because governments' established institutions will embody the results of (say) 1000 prior reform agendas, most of which those concerned with the (say) 10 latest trendy issues will be unaware of. And once everything has been 'torn down to start again' so that their 10 goals are facilitated, failures must escalate because of the necessarily-limited knowledge of the latest batch of reformers]. Damage was done because of the lack of understanding or consideration of the requirements for effective government (or concern with the side effects of ‘reform’) by those who advocated radical changes to promote efficiency. A parallel with recent observations about the source of problems in Europe is apt. There is a fundamental flaw in the European project. Europe’s economic crisis resulted in part from reckless spending. Also common interest rates were set that were too low in some countries and too high in others, while the Euro blocked devaluation as a relief valve for struggling economies. However these are bye- products of constructivist roots of the European project. EU is example of constructivist hubris Hayek described. He defined this as the belief that all social and cultural institutions were not only created by man but could be easily changed according to man’s wishes and beliefs. This follows from the rationalist view of society (of Descartes and Voltaire) and contrasts with the British empiricist tradition (of Locke, Hume and Smith). Constructivists believe that anything in society can be altered / improved, while empiricists believe that such attempts can be dangerous. Later Hayek turned the empiricist tradition into his theory about social and economic structures depending on dispersed knowledge which is too complex to be centralised in any one mind. This is why disregarding grown institutions is bound to fail. EU was a project imposed top-down on people of Europe. It was driven by intellectuals and politicians on the basis of their conclusions about what was needed for peace and prosperity. The EU did not start as a popular movement, but as a political / academic ideal. ‘Europe’ remains an artificial construct. Europe’s crisis shows what happens when economic and social structures are wilfully ignored and replaced by systems designed in academic ivory towers and the backrooms of power. Putting design over experience and planning over evolution contains the seeds of disaster (Hartwich O. ‘A fundamental Euro flaw’, Business Spectator, 16/12/10) Furthermore Australia’s ‘ideal’ pro-market reform process involved advocacy of conventional economic theories that seem no longer adequate. Reasons for this are speculated in The Advantages and Limitations of Financial Criteria (2010). For example: Economic theory emphasises the role of financial systems in economic coordination. However the GFC showed that they can also be a source of instability. Money ordinarily plays a virtuous role (as a store of value and means of exchange) in simplifying individuals’ economic environment and thus facilitating rational decision making. However its role can turn ‘vicious’ if money ceases to be simply a means of measuring economic activities and becomes rather the primary focus of economic activity. Complex financial systems can reduce individuals’ ability to make rational decisions; It is no longer appropriate to treat fiscal and monetary policy as the main tools for economic management, because: (a) neither fiscal nor monetary policy is adequate for macroeconomic management; and (b) strategic information management can potentially have valuable economic impacts. Finally your question about whether Asian ‘values’ are better than the values underpinning Europe’s social democracy is more complex than your article suggested. Firstly ‘Asia’ (if this is taken to refer to societies with an ancient Chinese cultural heritage) tends not to have values in the way this would be understood in Europe (ie ideas / ideals people believe in). Rather ‘Asia’ tends to have traditions (ie things people do). Such societies lack the West’s classical Greek heritage, that gave rise to an emphasis on abstract ideas, universal values and the notion of a rule of law (see East Asia in Competing Civilizations, 2001). Thus government under ‘Asian’ traditions is by man (social elites) rather than by law, and ‘laws’ can be selectively enforced to discipline those who don’t comply with the [supposedly] whole-of-society consensus that elites have facilitated (rather than enforced on the basis of respect for abstract values such as ‘justice’ for individuals). ‘East Asian’ traditions create obligations between individuals with particular relationships. Universal values (ie those which apply in relationships with ALL people) are not the norm. Secondly, there is no doubt that ‘Europe’ is currently suffering crippling economic stresses and that some models of social democracy are part of the problem (eg by creating unsustainable debts because of demands for redistribution of resources that are not available). However, it can also be noted that: broadly based democracy emerged (initially in the UK) at the time of the industrial revolution partly as a means for redistributing the wealth generated by mobilizing capital (which had facilitated mechanisation and later mass production) in industrial economies; low-wage competition from emerging economies in capital intensive ‘industrial-era’ functions has been a widely-recognised challenge to previously advanced economies since the 1960s; market liberalization was seen in the 1980s as enabling advanced economies to sustain high levels of economic productivity in the face of that competition. However this was inadequate – because competitive pressure alone does not ensure that the systemic requirements for successful competition exist (see The Inadequacy of Market Liberalization, 2004). Moreover democratic governments are structurally incapable (because of the pressures they respond to) of providing effective leadership in overcoming those constraints (see Economic Solutions Appear to be Beyond Politics, 1995) there are none-less: (a) considerable advantages in democratic political systems (see Effective Democracy in Competing Civilizations, 2001); and (b) means to promote their economic viability (see A Case for Innovative Economic Leadership, 2009); though the GFC has had particularly severe effects in the US and Europe, the non-capitalistic characteristics of ‘Asian’ models of socio-political-economy have been a factor in the emergence of the GFC (see GFC Causes). Moreover those models contain vulnerabilities (see Heading for a Crash?) and might prove unsustainable in the global economic environment that emerges when / if the GFC ends (see Are East Asian Economic Models Sustainable?). The Secret of Failure: Claim Wisdom Without Practical Realism Unfortunately many elected officials in Australia had increasingly acted as if they had super-human wisdom and failed to recognise the importance of informed, practical and independent advice and initiative (see Intellectual Arrogance: Mr Rudd is not alone in Abusing Power). Over decades this had done a great deal to undermine the effectiveness of Australia's institutions. For example: political leaders had become content to present opinion leaders and the electorate with populist policies that had little prospect of practical outcomes (see On Populism). As noted above this apparently emerged because the increased complexity of the issues governments address has made it impossible at times to express realistic policy simplistically; simultaneously elected officials turned their backs on the 'reality check' on their policy ideas once provided by professional, independent and experienced public services as a result of: widespread acceptance of public service politicisation. The result was that political leaders (deliberately or accidentally) surrounded themselves with 'yes men' and as a result suffered a loss of contact with reality and of the fact that not everyone shared their assumptions (see Decay of Australian Public Administration). Ironically even political reformers who sincerely tried to 'reform' bureaucracies to ensure that they had access to competent advice, were likely to surround themselves with 'yes men' - as they (predictably) were unable to tell what they didn't know (see Turning a Blind Eye to Incompetence and Abuse of Power); applying 'business-like' methods theoretically to lift the efficiency of governments' often 'non-business-like' functions (see Governing is Not just Running a Large Business). Business success is measured by the bottom-line (ie profit), whereas most government functions suffer market failures that make them too complex to be assessed in terms of pseudo-commercial outcomes. Attempting to do so resulted in oversimplification in managing many functions, and fragmentation that prevented collaboration and the development of the broad perspective needed to advice properly on broad policy issue. In particular the application of National Competition Policies arguably had adverse effects on the ability of government agencies to provide practical policy advice and support to governments that its economic and academic architects did not anticipate (see Neglected Side Effects) federal governments generally presumed that they had Rudd-like wisdom in relation to functions constitutionally allocated to state governments. Increasing centralisation of control (made possible mainly by imbalances in the allocation of responsibilities and access to tax revenues in Australia's federal system) has led to costly duplication, blame shifting and serious erosion of the ability of other governments to perform, or be held democratically accountable, for their nominal functions (see Federal State Fiscal Imbalances and Large doses of (federal) medicine have been making states sicker). The notion of 'subsidiarity', (ie that public functions should be allocated to the lowest level of government able to undertake them in order to ensure community engagement and effective linkages between functions at a local / regional level) was ignored. National political leaders increasing sought to micro-manage functions such as education, health, infrastructure, regional development without any consideration of the organisational chaos, wastage, breakdown in coordination; and suppression of initiative that resulted; political leaders increasingly sought to present themselves as moral authorities, the logical end point of which would be to break down the separation of church and state and put individual liberty (and its political and economic advantages) at risk (see above) This had clearly been foolish. The inability of central decision makers to acquire the information needed to make appropriate decisions is the foundation of economists' case for a market economy (based on Hayek's famous 1945 writing on 'The Use of Knowledge in Society'). The same constraint applies to centralisation of control and planning in managing organisations - and this is why central strategic planning, which was initially adopted by business as a way of coping with increasingly rapid change in the 1970s, had been largely abandoned in the corporate world by the 1990s (see *Strategy Development in Business and Government, 1997). However centralisation of planning and control, which fails because it freezes out the knowledge, experience, initiative and commitment of all but those at the centre, has increasingly characterised government in Australia. By 2010 centralization seemed to be viewed by opinion leaders generally as the 'solution of choice' to all presenting problems - though this often only allowed symbolic claims to be made about dealing with presenting challenges and opportunities, while nothing much was really achieved. Failure was not Confined to the Rudd Government* Queensland's Goss Government in the early 1990s, in which Mr Rudd had a central role, also rendered itself ineffectual by also presuming that central authorities had super-human wisdom. As other observers noted, there was nothing significantly different about what Mr Rudd was doing as Prime Minister and what was done by the Goss Government in Queensland almost 20 years previously. Centralised decision making, contempt for cabinet processes, poor communication and an office run by 'young men in suits' with no real world experience. This criticism could apply equally to Kevin Rudd's 2 1/2 years as prime minister and to an earlier stage in his career. Similar concerns existed about the state Labor government of Wayne Goss in the mid 1990s in which Mr Rudd was a central player. A review of the Goss Government's loss of power in 1995 by Mick Young is strikingly similar to the criticisms directed against Mr Rudd when he was dumped as prime minister. Others have criticised Mr Rudd's reliance on young, inexperienced advisers. Young spoke of government being run by Labor loyalists who knew little about other people. This involved a party in which a chosen few ruled over the alienated majority. Queensland Labor sources note that while Mr Rudd played a limited public role in the Goss Government, he was at the centre of government affairs. Young found that decision making was too centralised, and that communication with the electorate was poor. (Franklin M. Rudd reprised errors of Goss Government (The Australian, 2/7/10) Refusing to listen to advice or the voices of experience ultimately caused the Goss Government to snatch political defeat from the jaws of expected victory (see Queensland's Worst Government which draws upon the present writer's 1995 submission to the ALP's review of its electoral failure, *Toward Good Government in Queensland, 1995). Some claim that Mr Rudd was exceptional in this respect. Kevin Rudd was viewed as most influential person in Queensland in 1992 - even though he was not publicly known or elected. At the time he was head of Cabinet Office, but had total control of government. This problem of control by un-elected officials was not new as as a federal minister the power of political advisers had become very obvious (Cohen B 'Don't vest all power in either PM or the factions', Australian, 28/6/10) Kevin Rudd never listened. This ensured that when he was eventually challenged, he would quickly lose (Richardson G., 'Fear and loathing of Rudd was all his own doing', The Australian, 29/6/10) Presumably it was memory of this electoral debacle in Queensland that led to the speedy mid 2010 dispatch of the then prime minister (Mr Rudd) by the federal ALP caucus Though some claim that Mr Rudd was primarily to blame for this and he seemed very talented in this respect, presuming 'Rudd-like' wisdom and thus refusing to listen to the voices of experience seemed to the present writer to characterise the Goss Government generally. 'Its much simpler than that' was the standard response from staff in the premier's office when Public Service staff tried to draw attention to the lessons of their experience. Moreover in Queensland it was not only the Goss Government that suffered serious failures in mainstream functions as a result of losing Public Service competencies and unrealistically centralising machinery for planning and control. Consider, for example: Failure in Queensland's Electricity Distribution Network (2004) with dealt with official 'forgetfulness' about the need for investments in network upgrading; Intended Submission to Health System Royal Commission (2005) related to the likely adverse effect of excessive centralization on competencies in health management, that were revealed at Bundaberg Hospital; and Structural Incompetence and SE Queensland's Water Crisis (2007) with dealt with the massive cost of official 'amnesia' about the professionally-well-known limitations on SE Queensland water infrastructure.. Queensland's government has suffered ongoing crises leading to levels of public dissatisfaction that not even the appointment of the state's first female premier (Anna Bligh) could prevent (eg see Ballough S etal 'Bligh's battling a toxic poll shock', Courier Mail, 21/6/10) In 2010, observers started suggesting that Queensland's institutions had become seriously dysfunctional - ie that the way Queensland was governed and managed (its governance infrastructure) needed urgent overhaul [1] And other state governments which implemented packages of 'public management' reforms similar to the Goss Government also experienced similar failures, and have ever since been seen to be ineffectual (most notably the NSW government - see 'It's time to fix the failed state', 2008). For example the Cain Government in Victoria introduced 'reforms' in the 1980s that were apparently copied by the Goss Government in Queensland in the early 1990s even though Victoria experienced organisational chaos (see Review of The Fall of the House of Cain, 1995) which eventually resulted in an electoral wipe-out that not even the appointment of Victoria's first female premier (Joan Kirner) could prevent. The Greiner Government in NSW and the Kennett Government in Victoria also experienced unexpected electoral backlashes similar to that which affected the Goss Government - arguably because their theoretically-sound policy ideas did not translate into practical benefits. The same 'public management' approach eventually became firmly established in the federal government also and seemed likely to result in political leaders who were surrounded by 'yes men' and in danger of losing touch with practical reality (see The Decay of Australian Public Administration). And suggestions emerged soon after Mr Rudd was displaced as Prime Minister that his successor might exhibit similar behaviour (ie ignore her cabinet colleagues) [1]. Unstable Government* The Federal election in August 2010 further exposed the looming failure of Australia's government institutions, and the consequent potential for political instability. For example the lack of any significant policy agenda's by either of the major parties during the election campaign was seen to reflect systemic / institutional problems. Example: Ultimately it is the electorate that is to blame for the poor electoral campaign (though media and business also have responsibility). While the media covers a flawed political culture they do not create it. Economics is critical, and dependent on expert opinion - yet this is much less presented in media than 'spin'. Business contributes by providing self-interested rather than realistic economic policy options. There is no serious public policy debate - and this is what cause problems in political system [1] Australia has suffered a failure in its political culture and economic policy over the past decade. Productivity has gone backwards since 2005 - and living standards would decline if governments were inefficient / wasteful [1] An almost 'hung' Parliament resulted in which ultimate victory was tipped back (by independents) to the existing (ALP) government, even though its leader had: (a) suggested that the Government had 'lost its way'; and (b) made pre-election attempts to 'fix' major sources of public disquiet (eg over people smuggling, climate change and the Resource Super Profits Tax proposal) that were widely seen to be unsatisfactory. A few observers suggested that the resulting minority ALP Government could prove effective. Most however seemed to believe that it was likely to be unstable and ineffectual. Optimistic Views There is an excellent chance that the new parliamentary make-up will produce three years of good government. Vested interests will be crushed and important debates will proceed [1] The gridlock of the election result has delivered a road map to a more open Parliament, a less dominant executive and a framework to tackle climate change, tax reform and the divide between city and country Australia. That is the potential upside of the election no one won. It must be weighed against the inherent instability of a minority government without a clear mandate - and an opposition that believes to its core that it has the greater claim to legitimacy. [1] Pessimistic Views The ALP is broken culturally and philosophically and so would benefit from not being in government. Australian politics is dominated by trans-national corporations (eg those who forced Rudd's removal). [1] Commentators generally believe that it will be hard to govern [1] Decision about which party should government was reached in way that is inherently unstable [1 ] ALP gained power with support of outsiders, while large segments of its electoral base walk away [1] The task of governing will be very difficult, and no one knows if it will last. Problem would have been the same for Coalition [1] There is concern that funds committed for spending in rural areas to gain the support of independents could delay spending needed elsewhere [1] The election result "merely marks the beginning of what will become a long festival of delusion, conspiracy and outright lies – where its hysteria will only be surpassed by its grubby bitterness and its commercial exploitation" [1]. A hung parliament has been seen as a 'new paradigm', but it is just pork barrelling by another name [1] A 'new paradigm' has been proclaimed - but it is so vague it could mean anything [1] Bob Brown raised the potentially destabilising prospect of the Greens working with the Coalition on some legislation [1] Election outcome produced a government but no guarantee of stability. This is particularly of concern because of the need for tax reform [1] Suggestions about a return to tariffs and protectionism make a mockery of those who have led economic reform in Australia [1] Because the modern practice of aiming election campaigns almost exclusively at swinging voters in marginal electorates - people known to be uninterested in politics, without ideology, economically illiterate and of a self-centred, what's-in-it-for-me? disposition - means nothing unpleasant or even faintly serious can be raised. (Our economic challenge will be feast not famine , 6/9/10) Life is going to be hard for independents no matter which party gains power, because of the huge amount of work they will need to do in relation to every policy area (Savva N 'Shackled with a few rogue fence jumpers', Australian, 7/9/10) Incoming government will be unable to pursue any reform agenda because of the need to get agreement from independents who have extravagant wish lists, complex and varied agendas (Hewett J 'Whatever the verdict, its a recipe for reform stupor', A, 7/9/10) Despite a lot of talk, reforms vital to Australia's future are unlikely under Gillard Government. Opponents of economic modernisation and increased productivity (eg Greens and independents) are ascendant [1] The fundamental weakness of Gillard Government is already being exposed. The Greens are able to dominate the policy agenda because positive reactions have to be given to any proposal they put forward [1] Observers were also quick to identify similar Opposition weaknesses. While the Opposition has often highlighted questions about the competence of the ALP Government, its own competence is suspect in many ways [1] A dispute emerged about whether the federal Opposition of the Treasury were acting unethically in relation to budget estimates [An aside: if one wanted to look for likely 'creative accounting' a really strong prospect seems to be Queensland's state budget] The federal Opposition claims about its budget intentions had an $11bn discrepancy. 'Econocrats' review of this suggested that those budget figures had been a systematic exercise in creative accounting [1] Minutes of meeting between top Canberra bureaucrats which briefed independents in choosing which party to support, was highly political. Independents were told that mining tax would not hurt resources boom - a view not shared by markets. Treasury Secretary said that his tax review had yet to receive final consideration, though sources suggest that government will not pursue this. The coalition disputes the biggest item in the claimed $11bn black hole in its budget estimates, and argues that its estimates are more realistic than the government's [1] It was claimed in mid 2011 in relation to the federal Opposition that "The Coalition is trying to make a virtue of its lack of alternative policies" [1] And in mid 2011: the Economist magazine likened Australia's political system with a 'Punch and Judy' show [1], though perhaps such critics are themselves not entirely innocent of the problem (see Australia's Political Failure: Is 'The Economist' to Blame?). a former senior ALP minister blamed the media for dumbing down political debate in Australia because of its preference for superficial stunts over serious analysis [1. 2] - though this itself seemed like a 'dumbed down' explanation of the problem. As recognition grew that all was not well with Australia's system of government, some suggested the need for reform of Parliament (though other suggested that this was of secondary importance). Independents claim to be interested in Parliamentary reform, but this can't be taken seriously because of their pork barrelling [1] There is a great deal of interest in reforming Parliament [1] There is a pressing need for reform of Australia's House of Representatives. It ranks poorly by international standards. Party-rooms tend to be more important than the chamber. New parliament house has distanced members from ministers and one another. Reform needs to make ministers more accountable; enhance discussion and debate on important issues; and improve scrutiny on policy and administration. The role of speaker must be stronger, and question time more effective and dignified. Rules related to questions and answers need to be tightened. General debate on big issues needs to be allowed. Parliamentary committees should not be limited to matters approved by ministers. A Parliamentary budget office is needed (Nethercote J. 'Bringing the House to order' Australian, 3/9/10) Australia's governments have long wanted to see themselves as reformers, but House of Representatives has played no part in this - though Fraser and Hawke governments made some changes. Televised question period illustrates what people hate about politics. True debates are non-existent, Committees are useful but must be discrete. 2010 election outcome has reminded people that House matters (Nethecote J., 'The House's Day in the Sun arrives', Canberra Times, 7/9/10) Reform of the House of representatives is not sufficient - changes are also needed in the Senate (Both houses need renovation, 7/9/`10) Alternative View Independents give the impression that Australia's democracy needs root and branch overhaul. This is wrong as system has worked well. It is important to avoid adding more red tape. Minority government can work with reliable support from coalition partner - but not with whims and fancies of those having no common ideology. Main goal of next government should be to strengthen Australia's economy - as world is competitive. There is a need to support private sector and make important reforms to boost productivity and competitiveness. Now need tax reform; budget surplus; reduced government size; investment in human capital and infrastructure; sustainable clean energy supply; better business access to capital; and flexible workplace regulation. Independents' support should not be accepted if they prevent government achieving this [1] However, while there may be a case for reforming the federal Parliament, for reasons suggested above weaknesses in Parliament largely reflected more fundamental problems (eg increased complexity, erosion of practical support, ever increased expectations due to centralization of policies and programs). Moreover, as also noted above, political demands by some advocates of Parliamentary reform seemed likely to make the overall machinery of government in Australia less effective (eg see also More Statesmanship: Less Politics). In September 2011 the failure of the Gillard Government to achieve practical outcomes in relation to many issues of public concern made her also the target of leadership speculations - though leadership change could not solve the underlying structural problems that constrain government effectiveness. Resuming rightful roles - email sent 6/9/11 Phillip Adams *Re: Let Rudd resume rightful role, The Australian, 6/9/11* There is no doubt that change is needed to government in Australia. However the suggestion in your article is unlikely to be helpful. When Mr Rudd was unceremoniously dumped in favour of Ms Gillard it was realistic to justify this on the grounds that the ‘government had lost its way’ (see Starting to Acknowledge Ineffectual Government?). Moreover Mr Rudd had contributed to this problem (see Re-considering the Origins of Kevin Rudd’s Failure and Mr Impractical). And it is understood that many in the ALP choose to blame Mr Rudd’s autocratic style for the failure of the Goss Government in Queensland in which he had played a central role (see Queensland's Worst Government?), and they may have feared a repetition of that debacle (see Testing the ALP’s Patience). However ineffectual governance probably has structural causes rather than merely being the fault of particular political leaders. Thus the problem in 2010 was broader than Mr Rudd (Failure was not confined to the Rudd Government), just as it is now broader than Ms Gillard. For example, it was Australia’s whole political system that was autocratic in neglecting and rejecting the institutional memory (ie knowledge, experience and wisdom) that professional public services could have brought to make governments less crisis prone (see Misunderstanding the Public Service’s Contribution in Decay of Australian Public Administration). Speculations about what might be needed to make government effective again are in Australia's Governance Crisis and the Need for Nation Building. The latter refers (for example) to: the problems facing democratic governments generally (such as complexity and populism); the difficult international environment; and artificial constraints on governments’ ability to deal with such challenges (eg public service politicisation and ever-increasing centralisation of control). John Craig Unstable Environment At the same time the international environment posed significant threats to Australia that could prove damaging if governments remained ineffectual. For example, viewed in terms of simple 'economic' data, the economic environment was widely seen in 2010 to be benign - and Australia's biggest problem was likely to be managing very rapid growth, and structural adjustment pressures on other industries (eg manufacturing) and the regions in which they are concentrated. Re: Minority rule about to collide with booming economy, Weekend Australian, 4-5/9/10Michael Stutchbury Even if international environment turns nasty Australia's government will be able to step in with confidence to maintain growth because of its relatively low debt level (Winestock G., 'Australia's endless economic sunshine', AFR, 4-5/9/10) However, just as before the global financial crisis emerged, structural features of the international financial system suggested that a crisis was likely which continued ineffectual government in Australia had the potential to transform into a social and political disaster. In particular: there had been no serious effort to solve problems associated with the financial imbalances that made continued global economic growth impossible (see Unresolved Problems and Coming Crises). The main problem was that 'deficit' countries were still being relied upon to be willing and able to continue accumulating public and private debts and this would have to stop sometime (see Structural Incompatibility Puts Global Growth at Risk (2003) and Too Hard for the G20?); China's economy (on which Australia had become extremely dependent to sustain both a commodities export boom and government revenues) appeared likely to be in difficulties when international financial imbalances could no longer be sustained. China's economy has a 'Ponzi-like' character. Its growth has depended on transfers from potential consumers to fund high levels of state-led investment with little regard to profitability. Because resource allocation has been based on communitarian consensus rather than calculations of profitability, those transfers have had to be very large so that China's financial institutions would not need to borrow in international financial markets - and this led to a domestic demand deficit and contributed to unsustainable international financial imbalances (see Heading for a Crash). The RBA's warning that Australia was vulnerable to any downturn in China, and so needed to boost productivity [1], may be noted; Moreover those who take a leading role in supporting the Western-style international economic and political order that is compatible with Australia's institutions seemed increasingly stressed. For example: Europe confronted large losses by financial institutions and the austerity forced by the high debt levels of some governments - which could lead to: financial crises; political instability as a result of social stresses; and demand deficits which impede growth; political leadership in the US appeared to be struggling in attempting to deal with prevailing challenges (eg foreign wars, as well as high government debts and unemployment). One observer suggested that the US is so bitterly divided internally, that it is now incapable of providing any international leadership [1] An aside: Some suggestions on what those who support Western-style international institutions (eg the US) might do to improve their position are included in China may not have the solution, but it seems to have a problem) In the event that a global financial / economic crisis were averted because emerging economies (primarily China) succeeded in creating a new style of international political and economic order (eg one based, not on Western-style democratic capitalism, but rather on neo-Confucian traditions), then Australia would be confronted with civilizational challenges that it is ill-prepared for (see Some Thoughts on the 'China Era' and Lack of Asia Literacy above)
A Nation Building Agenda	A Nation Building Agenda [Working Draft] Australia faces many social, economic, environmental and governmental challenges and opportunities which require practical actions (eg governments need to enact legislation, provide public goods and services while many other types of organisations need to carry out their functions). And there are many proposals for what those actions ought to be. The following suggestions for nation building are not about what 'things' need to be done, but rather how Australia's governmental, private and community institutions might be adapted progressively to be more able to do those 'things' effectively - in a difficult and changing environment. Such efforts to build stronger institutional capabilities should not be a precondition for taking practical actions (as this would be a formula for not achieving much). Rather 'nation building' should be a result of enabling diverse organisations to strengthen their capabilities and re-organise as necessary as a result of doing the day-to-day 'things' they need to do. 'Building the nation' involves making Australia's institutions (eg governments generally; state / local governments in particular; the political system; business and community organisations; churches; associations; universities; etc) more effective in future. To achieve this there is arguably a need for community leaders to : recognise that new challenges, such as those outlined in this document, require changes to traditional arrangements (eg consider the impact of increased complexity on the viability of a core source of the strength of Western societies (ie rationality), the damage done to machinery of government (which has eroded governments' ability to deal with complexity) and East Asian influences that are quite different to Western traditions); liberalize artificial constraints on various institutions, or create legal frameworks in which they might undertake new functions; and reduce the expectation that the lead in in dealing with major emerging challenges and opportunities has to be taken by central authorities (as the latter merely results in entertainment for the community with their ineffectual efforts to understand, decide and control everything, and constraints on everyone else's ability to take the rational incremental actions appropriate to their circumstances that has been the traditional strength of Western societies). Constructive initiatives are likely to include: strengthening the ability of independent institutions to increase understanding, by the community generally and opinion leaders in particular, of complex issues - so that policies are not simply derived from academic theories, political ideologies, financial considerations, interest group pressure or ignorance (a suggestion the present writer made earlier in relation to a national economic reform agenda). This is essential because: the democratic political process ensures government by representatives of the people. While this arrangement has many advantages, the 'man in the street' has difficulty undersanding complex rapidly changing policy issues, and the more that can be done to boost grass-roots understanding of such issues, the more realistic government is likely to be; there is nothing to be gained (and a great deal to be lost) by half-baked policy prescriptions that are not based on consideration of both practical and theoretical aspects of an issue and the complex relationships between public policy issues (eg see On Populism and NBN's Bigger Picture). While public services traditionally provided support to elected governments in dealing with these complexities, they are no longer able to fulfil this role because of the trend towards politicisation; basic decisions primarily on financial / pseudo commercial considerations (as has often been done in the absence of policy wisdom) is inadequate (see Economic / Financial Criteria: An Insufficient Basis for Policy); This might be achieved by: directing a small fraction of individuals' / enterprises' taxes to their choice of apolitical institutions that undertake such tasks in accordance with democratically-endorsed principles; encouraging such entities to: (a) reflect diverse types of expertise and interests; and (b) mobilize both theoretical and practical competencies; encouraging networking amongst such entities, perhaps by those involved creating an independent Nation Building Foundation with that role; giving increasing precedence (through opportunity exploration processes operating under democratically approved protocols but without political accountability) to presenting proposals for responses to strategic opportunities as indicative plans for initiatives by various community / business entities with complementary capabilities, rather than simply expecting governments to manage responses; and exposing the practical failures that are emerging as a consequence of 'post-modern' assumptions that challenge the perceived relevance of advanced knowledge (see also A Case for Restoring Universities); increasing access in particular to realistic assessments of the changing international context. As noted above, changes in the international economic environment pose future risks and Australia has a history of apparently inadequate evaluation of the implications of such changes; simplification of what governments are expected to deal with. This might be achieved by: enabling practical responses to social, environmental and economic challenges and opportunities to emerge by mobilizing different elements in the community to support one another without presuming a need for government action or increased red tape (see below) de-concentration of responsibility by constitutional and tax system reforms suggested in Fixing Australia's Federation - though the latter would need to be expanded to take account of the (perhaps similar) requirements for enabling local governments also to be effective; Simplification of what is expected of government is vital because of the limits to rationality in dealing with complex systems (and the consequent counter-intuitive and unintended consequences that can flow from policy action). High levels of complexity can't be managed by seeking comprehensive analysis so as to make 'wisdom of Solomon' decisions - but rather requires de-concentration of responsibility and ongoing incremental grass-roots adjustments. This applies just as much to government functions as it does to those within the mainstream economy (where the futility of attempts at central economic planning has long been recognised). Attempts have been made for 2 decades to cope with complexity in government functions by the use of quasi-market processes (ie competition and commercialization) on the assumption that 'bottom line' measures can provide a way to coordinate government functions without the need for policy guidelines. However for mainstream government functions (ie those subject to serious market failures) this effort must be, and has proven, counterproductive. Reinvigoration of the federal system should be a better option for managing complexity and provide the benefits outlined in A Federal System has Important Advantages. The latter refers to: the need for community engagement to reduce the risk of political instability; the ineffectiveness of centralised planning and control; the stability promoted by diversity and building on what already works; the geographic and intellectual isolation of Australia's national capital; the similar adverse effects of ineffectual past 'reform' on all governments. democratically empowering apolitical institutions to accelerate the development of improved community-based / market-based support to individuals / enterprises (see Defects in Economic Tactics, Strategy and Outcomes, 2000 and A Case for Innovative Economic Leadership, 2009). In an economic context, this would (amongst other things) result in systematic efforts to stimulate the emergence of stronger market-focused industry clusters. Such a capability seems essential to: build the economic productivity and tax base required to prevent the re-emergence of the long term steady decline in relative income levels, associated with Australia's commodity export dependence; protect Australia's democratic traditions (see above); and; provide alternatives to the growth of major existing cities, with the associated congestion and infrastructure problems (see Re-imagining Australia's Federation to Build New Cities). Past attempts to boost economic productivity and competitiveness by promoting competition and re-engineering governments as pseudo-businesses are economically inadequate and have reduced the ability of governments to actually 'govern' (eg see Impact of Economic Liberalism in Australia, Governing is not Just Running a Large Business and Neglected Side Effects). Moreover government efforts to directly 'assist' industry have frequently been counter-productive, through impeding economic development (see What's wrong with government assistance to fill market gaps). Complementary changes to Australia's tax system would be needed to provide state governments with the financial incentive to take economic development seriously, in order to counteract their political incentives to interfere in ways that have limited economic benefits (see below) Other implications of empowering the exploration and development of community-based initiatives to address social, economic and environmental issues would presumably (in the longer term) be a decline in the need for governmental solutions, and thus in the size of government, taxation and red tape. ensuring that substantial segments of the community don't become alienated / disengaged, as alienation can contribute to political instability. This arguably would best be achieved by encouraging the de-concentration of responsibility as mentioned above. The One Nation phenomenon (see Assessing the Implications of Pauline Hanson's 'One Nation') illustrates the instability that can result from alienation. The democratic process enables such groups to voice their views, and may gives their representatives an insider view so reducing tensions based on ignorance. However the need to 'educate / accommodate' the alienated can be disruptive. Thus it is best to ensure that regional / minority communities are reasonably engaged and informed at all times. re-creation of competent apolitical public services to support the community's elected representatives - by: providing career protection from demands for unquestioning acceptance of political ideologies no matter how naive; emphasising experience as well as valuing theoretical knowledge; taking a long term approach to reforms which involves development through normal operations, rather than 'big bang' reform as a pre-condition for actually doing anything; and reconsidering the adverse effect that competition and 'quasi-commercial' goals have on the ability of government agencies to provide support in undertaking government's core role (ie governing); clarifying the relationship between the public and private sectors by privatising functions that can satisfactorily be coordinated through competitive markets and undertaking functions subject to serious market failures through public agencies (eg departments / statutory authorities) with widespread use of contracts in undertaking definable components of those functions. Where functions that involve serious market failures are privatised, the need for complex regulation can be highly disruptive (see Privatization of Monopolies Leading to Regulatory Failure). Where such functions are semi-privatised (eg through public private partnerships): the need for complex regulation can undermine the benefits potentially gained through greater production efficiency; the planning and development of integrated infrastructure systems can be distorted or impossible; and the political process is exposed to moral hazards (see Problems in the Basic PPP Model) reminding churches of the importance of the Christ-ian foundations of the individual liberty that is assumed as the basis of Australia's legal and government institutions. The erosion of individual morality is leading to serious social symptoms (as Christianity's traditional 'consider others' ethical ideals are neglected and apparently increasingly replaced by narrow self interest). In turn this is encouraging political leaders (and others) to claim moral authority to combat those symptoms and thereby challenge the separation of church and state and / or the presumption of individual liberty. Though the primary purpose of churches' evangelical mission is to bring more abundant life to individuals, widespread success in doing so creates a social environment that permits the emergence of legal and government institutions that presume individual liberty and a secular state (ie one that does not claim religious authority). There are reasons to suspect that intellectual obstacles to Christian adherence, which have increasingly been eroding the moral foundations of that liberty, can be dramatically reduced. Firstly the view that scientific understanding of the process of creation / evolution discredited Christian cosmology can be seen to be overly simplistic (eg see How solid are 'science, reason and critical thinking'?). Secondly the post-modern view that 'truth' is largely a social construct so that all opinions / values are equally valid can be shown to lead to serious practical failures (see Confusion of Knowledge). Cultural assumptions have consequences (ie affect the way societies and economies work) and the failure of students of the humanities to consider these out of a desire to be 'tolerant' is arguably the cause of much of the disadvantage that is suffered and many of the conflicts that arise.; empowering state governments (and local authorities) to become effective: (a) in dealing with their operational functions (as suggested in Fixing Australia's Federation); and (b) in encouraging the development of productive modern regional economies (as suggested in Economic Development Incentives). Changes to tax systems are central to such changes, but not the only requirement. A serious review of complexities that have been introduced into the planning and development of infrastructure seems critically important (see Infrastructure Constraints on Australia's Economy and Defects in Infrastructure Planning and Delivery). Infrastructure Australia would be more productively engaged in addressing systemic obstacles, than in developing lists of major projects; exploring opportunities for the more rapid market-driven growth of regional centres, both to improve amenity in those regions and to reduce congestion in larger established cities (see Re-imaging the Federation to Develop New Cities); There is arguably no sustainable path to substantial further growth by Australia's existing major cities because of incompatibilities between the requirements of effective transport systems and constraints on urban forms (see comment on structural obstacles) empowering universities to become more effective, by reducing political expectations about emphasising commercially / economically relevant outcomes from research, and the managerialist emphasis on a 'business-like' approach to academics' non-business-like activities (eg see A Case for Restoring Universities). The managerialist dominance of universities (ie the view that management is a generalist function which does not require knowledge of the function being managed) seems similar to that which pervaded Australia's public services - and equally dysfunctional (see Decay of Australian Public Administration). Australia's difficulties in diversification into knowledge intensive industries lies in a lack of commercial capabilities and organisation to exploit available opportunities. Political 'push' on 'smart' inputs to that system (eg R&D) tends to be counter-productive at worst, or pointless at best (see The Economic Futility of 'Backing Australia's Ability 2' and Commentary on Smart State) The ability of universities to effectively perform a critical role in contributing to public understanding of complex opportunities and challenges has been severely compromised by the distortion of universities in a naive desire to thereby boost economic performance - just as occurred with public services. The prospect of providing better institutional support to Australia's governments was considered earlier in Restoring 'Faith in Politics' (2006).
Addendum A: Losing What WE Fought For?	Losing What We Fought For? (email sent 1/5/11) Terry Sweetman, Courier Mail RE: Wordy retreat founded on poor understanding of what we fought for, Courier Mail, 29/4/11 In an Anzac Day context, your article presented a thoughtful case that the legacy of Australians who have born arms is a nation which has ‘the ability to peacefully redefine’ itself. You also suggested that recognition of same sex marriage is a logical way now for Australia to redefine itself. My interpretation of your article: God’s warrior, Jim Wallace, followed standard procedure on the cultural battlefield by apologising for comments on gay marriage and Muslims on Anzac Day. The boss of the Australian Christian Lobby had said that what Australians fought for was not gay marriage or Islamic. However this was reversed in the face of a robust claim that ‘what we fought for was freedom from prejudice and persecution’. However Wallace quibbled that the Judeo-Christian heritage that framed the nature of Australia that people fought for is important – and should be preserved. However the Judeo-Christian heritage has prompted blood-thirsty clerics in most warring nations. Wallace set himself up as an easy target – but he is right. Australians didn’t fight for gay marriage or Islam, and the heritage he speaks of has little to do with ‘freedom from prejudice and persecution’. Australian servicemen fought against nations and regimes in which prejudice and persecutions were elements of policy. However Australia has not been free of these. Australia punished homosexual practices and fostered sectarianism and discrimination. And racism was deeply entrenched as an element of policy. Prejudice lingered a long time. One can’t realistically articulate the diverse and perhaps incompatible motives of those who served. However many fought for a country, a political system and a civil society that is capable of mature, rational and peaceful transition. This might not please those who bore arms and later became conservatives. The country that once persecuted the sexually different now offers them legal protection. Recognition of same sex marriage is only a matter of time and political courage. Wallace acknowledged that people fought for different things, and this is always being redefined. The ability to peacefully redefine the nation – to make it better, fairer, more tolerant and more free is the legacy from those who served. I should like to submit for your consideration that Australia is in some danger of losing what you suggest ‘we fought for’ (ie its ‘ability to peacefully redefine itself’) because the political system is proving ineffectual and civil society is too weak to do anything about it. Elaboration: The political system is suffering, for example, from: (a) an inability to handle the complexity of the issues it confronts; (b) purging the professional public service support required to provide a reality check on foolish policies; and (c) seeking to win elections on the basis of populist, but ineffectual, policies (see Challenge to Democratic Institutions in Australia’s Governance Crisis and the Need for Nation Building). The weakness of civil society is illustrated by, but no means limited to, the lack of realistic and up-to-date inputs to public policy debates in Queensland that leaves Executive Governments free of any real constraints from Parliament and thus able to abuse power, support cronies and be excessively secretive (see More Competent External Support to Parliament). The latter also suggests that civil society is weak because there is little depth of understanding of the institutions Australia inherited (because they were simply taken as given) and because the community has remained dependent on rich natural assets and copying policy initiatives from elsewhere in the Anglo-American world. An obsession with micromanagement by federal governments has also contributed to the weaknesses of civil society (see TEQSA: Will Micromanagement Again Triumph over Government?). Other sources of risk to Australia’s ‘ability to peacefully redefine itself’ include: a hazardous lack of Asia literacy; attempts to politicise the role of the head of state, whose apolitical character is the foundation of the stability of government; and erosion of the moral foundations of liberal institutions (see Australia’s Governance Crisis and the Need for Nation Building). Finally I suggest that: Recognition of gay marriage does not seem to be a brilliant example of the way in which Australia should now redefine itself, given the apparent linkage between homosexual behaviour and child abuse (see Public Acceptance of Homosexual Behaviour). Efforts to strengthen Australia’s political system and civil society would probably be more constructive (see The Need for Nation Building and A Nation Building Agenda); Australia’s Christian heritage (to the extent that it has kept out of politics) has been critical to the emergence of a society that can aspire to peacefully redefining itself (see Christian Foundations of Liberal Western Institutions). However that liberal institutional heritage can’t be maintained by force of argument or political edict, but only by wide adherence to Christianity within the community (see Get God out of the Classroom: Good Luck with That!). John Craig
Addendum B: HC Coombs Policy Forum and ANIPP Initiative	HC Coombs Policy Forum and ANIPP Initiative (email sent 20/6/11) Dr Mark Matthews, Executive Director, HC Coombs Policy Forum I should like to provide some suggestions in relation to the arrangements being put in place to improve the flow of information from the ANU into the federal public service. My (undoubtedly inadequate) understanding of what the HC Coombs Policy Forum and ANIPP are intended to do is primarily based on your Overview (of HC Coombs Policy Forum) and The Visioning Australia’s Future Initiative My comments in turn are based on four decades of strategic policy R&D in relation to Queensland’s development (including being credited in the 1980s with forcing the Queensland Premier’s Department to establish a formal policy function for the first time). That experience has resulted in: a need to consider the way in which governments, communities and economies ‘learn’, giving rise to suggestions about how that process might be enhanced, eg see Australia's Governance Crisis and the Need for Nation Building (from 2003) and Curing Queensland's Myopia (2011); observation of what actually happened in Queensland (which while anything but Australia’s best practice demonstrates lessons that have broader relevance). In particular: The ‘informed’ community (ie those with pretentions to advise governments on policy) was initially decades out of date in terms of policy issues, while government itself was about 15 years out of date. It was always easy in the 1980s to find international sources that provided better and more up-to-date options about almost anything. Innovations took 15 years to be adopted because: (a) 5 years was required to formalize conclusions through international institutions such as OECD; (b) another 5 was required for understanding / acceptance of this by Commonwealth; and (c) another 5 years was needed for transmission to Queensland Government (including overcoming the drag effect of decades-out-of-date community opinion). There was thus a clear option to speed up the process by cutting out the middlemen, and getting the ‘informed’ community engaged in the process; There was little interaction between academia and government, and little immediate benefit from increasing the flow of research ideas from academia to government because: (a) academia suffered to an extent from the same ‘out of date’ problem as the ‘informed’ community generally and did not have awareness of practical aspects or of the complexity of issues; and (b) it was possible to generate more up-to-date and appropriate options by study of international experience and sources; A reformist government in the early 1990s (the Goss administration) adopted ideas that had been generated in academia (mainly in the Griffith University) as the basis for widespread change in Queensland’s Government. Those ideas were apparently heavily influenced by problems facing the Whitlam Government in the 1970s and the resulting work of the Royal Commission on Australian Government Administration. The combined effect of: (a) the adoption of policy ideas that had been ‘stewing’ in academia for years ; and (b) a lack of practical awareness of what was required for effective government and the actual functions of government led to a disaster from which Queensland has not yet recovered (see Toward Good Government in Queensland 1995 and Queensland's Worst Government?, 2005). Idealism that is not moderated by practical considerations is not always useful. Similar damage to government Australia-wide has apparently resulted from the adoption of idealistic policy which is not moderated by the practical experience of a politically-independent professional public service (eg see Decay of Australian Public Administration, 2002 and On Populism). From that standpoint I should like to submit the following for your consideration in relation to some issues raised in your documents: It is encouraging to see such analysis being undertaken of the way in which interchange of information can be expedited; There is no doubt that ideas that might be the basis of innovation are of most value early rather than later. This can be illustrated in relation to innovations of potential economic relevance as in Economic Solutions appear to be beyond politics (and the associated diagram). The point is that to really benefit from commercially-relevant ideas, they need to be transmitted to practitioners before being officially politically accepted. Political acceptance can’t happen until ideas have already been widely adopted, and thus ceased to provide potential competitive advantages (and this is one of the reasons that central economic planning is impossible). This point is not as obviously relevant to policy options, until it is recognised that government overall is as complex as the economy, so that centrally ‘planned and controlled public policy can be just as inappropriate as it can be for the economy. A formal accountability process requiring central control of policy may be highly dysfunctional, and a justification for reform rather than a justification for better informing those at the centre; improving the exchange of information between the ANU and the federal public service (while useful) is a very limited goal in relation to what is probably needed because: there is an unavoidable ‘ivory tower’ element to both these institutions (especially in an environment in which holding senior public service positions depends on conformity with political expectations rather than deep knowledge and long experience of the practical requirements for effective policy); simply getting research results to the public service is of limited relevance because of the latter’s political responsiveness, and because Australia’s political system reflects what is known by a significant segment of the ‘informed’ community. Thus no matter what public servants know political acceptance is more likely to be boosted by improving understanding in the ‘informed’ community. And if ‘insiders’ gain understanding of policy options and get political agreement to implement these while much of the ‘should-have-been-informed’ community has no idea what is going on or ability to cope with the outcome the result can be politically disruptive – as illustrated by the ‘One Nation’ phenomenon (see Assessing the Implications of Pauline Hanson's One Nation, 1998); the prevailing expectation that responses to challenges and opportunities will be primarily orchestrated through Australia’s federal government is a significant factor in problems in governing Australia at present. As suggested in Australia's Governance Crisis and the Need for Nation Building complexity is a major constraint. Complexity can’t be handled through the rational processes for problem solving that have been the basis for success in recent centuries by Western societies, and complexity is increased by centralisation; there is arguably a great deal to be gained by reducing complexity and reliance on political understanding in responding to some challenges and opportunities by: (a) de-centralisation of responsibility for government actions; and (b) democratically empowering some apolitical institutions to take new roles without direct political accountability – and this is what is suggested in Australia's Governance Crisis and the Need for Nation Building; there are limitations in a ‘balance sheet’ approach to evaluating policy options that seems to feature in The Visioning Australia’s Future Initiative, because convention economics arguably requires major adjustments to cope with current conditions (see The Advantages and Limitations of Financial Criteria). For example, while presenting meaningful ‘accounts’ is highly desirable, information must be used to change what people do as well as to predict what will happen. A primary emphasis on using information to change behaviour (rather than providing information as the basis for rational decisions about ‘accounting’ outcomes) is a key feature of the neo-Confucian systems of socio-political-economy that have allowed rapid modernisation in East Asia (see East Asia in Competing Civilizations), and also perhaps a major obstacle to their ongoing success (see Are East Asian Economic Models Sustainable?); there would, more generally, be value in seeking an Asia-literate approach to what ANU and the federal public service are attempting to do, because in the absence of this policy initiatives that seem very sound on a conventional basis may be dangerous (see Babes in the Asian Woods and Comments on Australia's Strategic Edge in 2030). I would be interested in your response to the above speculations. John Craig
Addendum C: Why ALL politicians need better advice, and what is needed for them to get it	Why ALL politicians need better advice, and what is needed for them to get it - email sent 7/2/12 Rob Burgess Business Spectator RE: The 'real' Julia needs new advisors, Business Spectator, 7/2/12 Your article suggested that there are deficiencies in the advice that Australia’s current prime minister is receiving. However she is anything but alone in this respect. Moreover the problem seems to be structural rather than being the fault of a few particular individuals (ie those deficiencies arguably reflect weaknesses in the institutional support to Australia’s political system both inside and outside the public sector). Ms Gillard assumed the role of prime minister because she had argued successfully that a change in leader was necessary because ‘the government had lost its way’. However it seems that the Government’s ‘way remains lost’, and few seem to believe that the Opposition has ‘found its way’. Some suggestions about the nature of the structural problems that make it hard for Australian’s elected representatives to ‘find their way’ and what might be done to improve the situation are in The Need for Nation Building and A Nation Building Agenda (which are sections added in 2008 to Australia's Governance Crisis and the Need for Nation Building, 2003+). John Craig

AUSTRALIA'S GOVERNANCE CRISIS and the Need for Nation Building (2003+)
CPDS Home Contact	Decay of Australian Public Administration Fixing Australia's Federation Fixing Australia: Do the Econocrats have the Right Answers? On Populism Australia's Political Failure: Is 'The Economist' to Blame? Curing Queensland's Myopia