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 Seeking a Liberal International Order Australia's Political Failure: Is 'The Economist' to Blame?    Curing Queensland's Myopia   Will More Factionalised Faceless Men Improve Australia's System of Government?  Reform: Is not that Easy Comments on 'Poor Government in Queensland'  How Governments Conned Themselves by Eliminating 'Public' Services   Dysfunctional Democracy   Name Calling is Still Not a Sensible Way to Deal with One Nation Australia's Future Tax System: The Cost of the GFC and the Opportunity to Fix Government  Lifting Productivity: The Need to Consider the Big Picture  Complicating Welfare Calculations   Will Pauline Hanson's One Nation Again Force the Political Mainstream to be Less Superficial?
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, requires understanding unfamiliar cultures and reduces governments' ability to counter social inequality; machinery has been damaged by ill-advised 'reform'; academic idealists have undermined confidence in the tacit wisdom and practical arrangements that have been the product of 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:

Secondly administrative support to elected governments has been seriously weakened and made more complex by poorly considered efforts to: (a) overcome 'bureaucratic resistance' to the impracticality or likely unintended consequences of populist policies; and (b) address the financial constraints facing governments through the use of methods that are not appropriate for governments' primarily-non-business-like functions. The breakdown of effective machinery of government has been further exacerbated by:

  • Increased centralisation of control of policies and programs which tends to result in overly-simplistic and inappropriate policies / programs for the same reason that centralised economic planning fails (ie an inability to access all of the required information and the suppression of collaborative / decentralised initiative). A major, though not the only, factor in increasing centralization has been...
  • federal - state financial imbalances that lead to irresponsibility, buck passing, duplication and complexity, 'pork barrelling' and thus make government functions wasteful and ineffectual.
  • 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 human / state claims of moral authority that arise from Judeo-Christian traditions have eroded (ie the expectation that moral interpersonal relationships are sufficiently ensured by individual consciences responsible to God). Experience under systems reliant on human / state claims to moral authority (ie where communal pressure is applied to ensure conformity) suggests that this will make it 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


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.


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.


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 (ie making 'suggestions / observations' that encourage political leaders and / or their advisers to institute 'reforms' that have the effect of reducing government's ability to govern effectively) may also have played a part, because encouraging enemies to thus weaken their capabilities is simply how 'Art of War' strategies are 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 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);

And the growing influence of economic systems that are incompatible with international practices established on the basis of Western traditions has contributed to: (a) global financial imbalances and instabilities; and (b) rising inequality.

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



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


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 Unrecognised Clash of Financial Systems?, Understanding East Asia's Neo-Confucian systems of socio-political-economyCreating 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


A drift towards more centralised control of policy and programs has been apparent for decades as a result of both: (a)  chronic fiscal imbalances within Australia's federal system - see below; and (b) political frustration with the apparent inability of traditionally less centralised machinery to respond to emerging challenges.

The initiative of rational / responsible individuals has been the primary source of strength in Western societies. This works well in organisational settings which have been created (eg by a rule of law or a reliance on profitability in resource allocation) to present problems that are relatively uncomplicated / understandable and where incremental initiative accumulates into effective system wide responses (See Cultural Foundations of Western Strength: The Realm of the Rational / Responsible Individual).

Functions that governments undertake tend to be: (a) 'governing' (ie creating a framework in which others can 'do things'); and (b) the provision of goods and services that can't be undertaken through competitive market processes - because decentralised incremental initiative is frustrated by very significant externalities (ie inter-relationships amongst different functions, or the absence of any workable market mechanism) - see also Governing is not Just Running a Large Business. The traditional processes of public administration can be reasonably effective in dealing with the complexity that governments have faced (eg through promoting collegiality and consensus amongst those dealing with interconnected functions).

However, as noted above, the issues that governments confront have become significantly more complex (ie interconnected) and rapidly changing - and this has tended to reduce the effectiveness of public functions. And in recent decades politicisation and attempts to apply market mechanisms to public functions (ie those subject to significant externalities or market failures) has further eroded the ability of traditional public administration methods to handle complexity.

Centralisation (eg by federal attempts to control functions that are state responsibility; by establishing strong policy capabilities in ministerial / cabinet / chief executive offices; or by merging agencies; or by establishing centralised 'super-departments') has been one method used in an attempt to bypass complexity (eg the strong relationships that any public function will tend to have with other functions and / or within particular regions) by imposing simple solutions that sound plausible to those who don't have any deep / realistic understanding of the situation.

However centralising control of government functions is not an effective solution - see also Centralization is Part of the Problem: Not the Solution. Trying to ignore complexity  does not make that complexity go away. Thus administrative centralisation faces the same fundamental obstacles as attempting centralised control of an economy. Central economic planning has long been recognised to fail because 'authorities' can never acquire all the necessary information / knowledge / experience / initiative / commitment. They thus tend to support actions that don't meet real economic demands. The same applies to centralised control of government policies and programs.

And as noted below attempts to simplify issues through federal government micro-management of state functions on the basis of Australia's federal fiscal imbalances dramatically distorts / complicates the performance of those functions. The obstacles to effective management of public functions have been further increased by politicisation of public services - as this tends to have the effect of eliminating experience-based understanding of the complexities involved without actually eliminating the complexities themselves.

See remedies suggested in A Nation Building Agenda below


Federal - State Fiscal Imbalances

A critical source of weakness in Australia machinery of government that has been growing for decades has been that the federal system has concentrated tax powers / revenues 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].

Fiscal imbalances have been a major driver (though not the only driver - noting that states had surrendered their income tax powers during WWII) of the drift towards centralisation mentioned above both across the federal-state interface and within states. Interest groups have presumably often sought 'national' action to deal with their agendas partly because the Commonwealth Government was seen to have much stronger sources of revenue.

Financial imbalance have had a practical impact on government in Australia through the provision of large amounts of special purpose funding which escalated from the 1970s (as noted below). This has seriously distorted public administration over many decades. Consequences include: irresponsibility, buck passing, duplication and complexity, 'pork barrelling'. Government functions have been rendered relatively wasteful and ineffectual.

Dysfunctional consequences of fiscal imbalances have included:

  • the expansion in special purpose funding (especially in the 1970s). This 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 within states to central intergovernmental-relations and financial staffs and away from those with the tacit / technical knowledge of what is required and whose commitment / initiative was 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, 23, 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]
  • 'pork barrelling' has emerged as a feature of federal election campaigning in 2013 [1]. Random 'major projects' seemed to be promised in various electorates that may or may not make sense from a local / regional viewpoint

There have been 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 were developing, Commonwealth revenues surged into large surpluses as a result of rapid economic growth associated with a resource investment boom [1] - a phenomenon which seemed unlikely to be sustainable  (see The Potential for Economic Instability). 

In 2014 it seemed likely that the 'magic pudding' that federal revenues had been seen to be was likely to be exhausted (see Restoring The Viability of Democratic Capitalism). The federal government (and interest groups) then started pressuring other levels of government to take more fiscal responsibility.

See remedies suggested in A Nation Building Agenda below


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.

It has also been argued that politically-motivated decisions within the Judiciary have had the effect of subverting decisions by parliament that reflected the will of a democratic majority.

Head of State

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]. In late 2013 a Governor General continued this destabilizing practice by taking a partisan political position (ie by advocating that Australia become a republic and endorse gay marriage) [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 has been the major motive of various campaigns [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 / networks) is totally incompatible with Australia's existing constitutional system [1, 2] and would lead to instability and / or abuses of power 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

Eroding the Moral Foundations of Australia's Liberal Institutions

Eroding the Moral foundations of Australia's liberal Institutions

More subtle, but ultimately potentially more serious, damage has been done through eroding the social foundations of the individual liberty that is built into legal, governmental and economic 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 responsible to God (rather than by state / communal pressure to conform) - and created a phenomenon that can be called 'responsible liberty' .

'Responsible liberty' within the community allowed a separation between affairs of state and the religious basis of that individual morality - ie it allowed / required the emergence of 'secular' states (those that dealt with everything but religion). 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 and other observers' views in The Emergence and Advantages of Responsible Liberty). The former argued that:

  • individual liberty could became the core of Australia's antecedent legal system in Britain, because it was presumed that interpersonal relations would best be guided by a Christ-ian 'value-others' ethical ideal that was deeply embedded in the consciences of individuals responsible to God. In other words individuals generally would feel and exhibit a sense of responsibility for the welfare of others - both directly and through motivating and empowering them also to be responsible and seek others' welfare. And this sense of responsibility was inbuilt in their consciences rather than resulting from supervision by others (eg families, communities, moral 'authorities'). The liberty this permitted (combined with other arrangements such as a rule of law, democracy, decentralized governance and profit-oriented investment) ultimately allowed the emergence of social environments in which rationality could be more useful in problem solving (because rationality tends to fail where complexity is not reduced), and thus dramatically increased the effectiveness of individuals in all walks of life;
  • in societies without the 'responsible liberty' derived from this 'embedded' ethical ideal, communal, legal and governance systems invariably are deeply involved in determining the nature of, and enforcing, moral behaviour (eg consider traditional tribal societies, East Asia, and the Muslim world) - and this has a major impact on scope for political / social liberty and the economic / political 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.

In Australia now, increasingly serious social dysfunctions (due to the erosion of an innate sense of ethical responsibility based on individuals' ultimate accountability to God) and a desire to impose preferred ethical principles are encouraging would-be moral authorities (eg what could be called the 'church' of political correctness) to supervise individuals' behaviour - thus undermining the liberal social foundations that are needed for liberal legal, governmental and economic institutions.

Evidence of a Problem

Challenges to the 'Christ-ian' philosophical and theological foundations of Western societies and an apparent decline in churches' willingness and ability to proclaim the Christian gospel appear to be having significant effects.


  • though popular media (such as TV and the Internet) can encourage an overwhelming emphasis on  individual self-interest many churches seem unwilling to warn against moral offences or to point out what is at stake in choices about religious adherence, eg everlasting life [1] - which have been fundamental features of Christian adherence. Christianity's founder, Jesus of Nazareth, set people free of religious legalism (ie concern for complex human interpretations of the 'spirit' of laws given to early prophets), but in doing so he raised the moral standard beyond what could be expected of unaided human beings and drew attention to the latter's exposure to ultimate judgment. The liberty that Christianity enabled people to enjoy must create risks to the society as a whole unless more-or-less 'everyone' is well aware that the freedom they have been granted is not unconditional;
  • in 2012 an anthropologist suggested that, while Australians increasingly put 'no religion' on census forms, they are perhaps the most spiritual people in the world because they have invented their own 'deities' to worship (such as the 'digger', the 'Australian farmer', the 'Aussie battler', the 'working class man' and the 'noble Aboriginal') [1] ;
  • in 2013 a social commentator suggested that Australians' values were changing quickly because of a rapid increase in ‘progressive’ thinking (which tends to be associated with godlessness) led by major universities and Greens-leaning inner-suburbs [1].
  • Western civilization is adrift in a world of ideas – having been uncoupled from religion for a century. The Judeo-Christian ethic tradition that endured (within a secular / modernist rationale) is under threat. The groupthink of Left orthodoxy is accelerating the demise of liberal values on which Western culture was built. The Left is encouraging separation from West’s philosophical / religious past. But the Right is silent on liberal values. The dilution of Western values can be seen most clearly in media – which censors public debate to promote politically correct angle. In 1973 Irving Kristol wrote of the depletion of moral capital in the West. Society was living off accumulated moral capital from traditional religion – but once expended society’s foundations would be uncertain. Post-modernism is in the final stages of its journey from university campuses to dominating ‘acceptable’ opinion in wider society. It does not allow debate about what is right and wrong. Postmodernists originally sought to do away with notions of rights and wrong – but subsequently decided to redefine these to suit themselves (ie to blame West for everything and portray Western values by default as inferior to any other). Tearing down Western values has become an end in itself. What replaces it is beside the point [1]
  • Christianity has established the foundations of a society in which people are concerned for others' welfare - yet those foundations are being lost

Decline of Christian Church has left a deposit – most people understand mores of being human. There is an egalitarian attitude to all human beings – but few would recall Paul’s statement about this being due to viewing all peoples as one in Christ.  This attitude to all people is central to our culture – yet it can’t be derived rationally or based on philosophers. Jesus’ teaching about ‘who is my neighbour’ has been institutionalised as social services to provide for those in need.  Yet this was based on self-giving life of Jesus.  Relationships based on love and forgiveness are seen as better than those based on law and duty. But love is seen as valuable without recognising that the love Jesus demonstrated but anything but romantic.  The idea of laying down one’s life for one’s friends comes from Jesus. In challenging religion, its overwhelming good has been forgotten.  As the nurturing foundation fades, how will the ‘building’ erected on it be maintained? The core of Christianity is worship. If principles and values are extracted from the tradition without worship, grace is lost and all that is left is law (which leads to death). There are already significant departures from inherited ethos (eg a loss of sense of responsibility for the common good). Responsibility to neighbours has become selective. The unborn are not seen to be equal. Individual human rights are seen as all that is important. Christianity opposed the worship of idols. Now idols are everywhere (eg trust in science / technology / markets / intellect / technology). But technology has its limits. Markets can lead to social inequality. Freedom seems empty as people are not helped to understand what is good and lasting. The sexual revolution loosed marriage bonds and confused the young. There is a need for more than being smart. But the foundation is missing. Secular humanists can espouse principles derived from Christianity – but they can’t ensure the freedom that is inherent in Christianity. And turning principles into law and political correctness is suffocating [1].  


And without a strong embedded Christian ethical ideal in many Australians there is a weakening foundation for 'responsible liberty' or thus for a system of law and government based on individual liberty.

Escalating social dysfunctions (see below) provide evidence that it is increasingly unwise to presume that Australians will have a strong innate sense of individual responsibility. Conspicuous amongst the resulting dysfunctions are: sexual abuse of (perhaps) 20% of children (and official resistance to examining this phenomenon); child neglect; the breakdown of up to 50% of marriages; the freedom from family and other responsibilities that men gained (at the expense of women and children) as result of the sexual revolution; the escalation of single parent families in which children tend to suffer disadvantages; worsening business ethics; widespread bullying; and increased domestic / random violence.

Indicators of the decay of an ingrained value-others-as-oneself ethical ideal and of its adverse social consequences include:

  • self-centeredness as the defining characteristic of the (so-called) ‘me’ generation (the 'Baby boomers');
  • an increasing emphasis on individual rights, rather than on responsibility for the welfare of others;
  • the emergence of a 'punk' culture in the 1960s which seemed to make individual irresponsibility (eg via drug abuse and indiscriminate sex) into an underground 'religion' - noting for example the wide influence attributed to Lou Reed;
  • 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:
    • poor educational achievements by boys who lack of male role-models [1];
    • low fertility rates as women find it increasingly difficult to find a man willing to commit to parenthood [1;
    • a perception that free sex and feminist marriage makes young men 'feckless' (ie unwilling to work hard / take responsibility)' [1]
  • the rapid growth of what has been called a Narcissistic Personality Disorder - characteristically involving parents who place all emphasis on themselves and none on their children. When both parents suffer this, massive problems arise in divorces - as litigants make zero concessions. Emphasis is placed on their rights, not on their children's rights.  Social researchers blame this on Generation I - and 'its all about me' traits fuelled by social media [1]
  • 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]
  • emphasis on self-fulfillment, 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]
  • concerns (by APRA) that something is seriously wrong with Australia's banks related to a lack of ethical behaviour [1];
  • the level of corruption by banks, other corporations and wealthy people became a matter of political concern in April 2016 [1];
  • ASIC told banks in mid 2016 that there was a critical need to improve staff culture - following a survey which revealed poor staff ethics [1]
  • the breakdown of organized civil society (see Social capital);
  • the emergence of dysfunctional interpersonal relationships (including:
    • general dysfunctions in families [1];
    • break-up 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]. Whether a child has one or two parents in their family dramatically affects their life prospects (DeParta J., 'The two little words that divide two classes', AFR, 3/8/12);
    • a substantial decline in the number of children living with both biological parents. A former teacher noted that in 1990 only 50% of the children in a class she surveyed lived with both their biological parents - and that a similar very-small-sample survey by another teacher in 2015 indicated that only (say) 10% of children still did so;
    • sexual abuse of a a very significant percentage of children in the general community. It has been plausibly suggested (see Sexual Abuse: The Problem) that: (a) this might impact 12% of boys and 25% of girls; and that (b) such abuse tends to arise in situations where children live with adults who are not their biological parents. If so this implies that the breakdown of traditional lifelong marriages (which leads to the the emergence of blended families) would be a contributing factor;
    • abuse of women (domestic violence [1, 2] is said to affect around 23%) and geriatrics [1, 2]
    • domestic violence by children that parents are too ashamed to admit to [1]
    • the emergence of what is seen as a 'king-hit' culture which has seen many killed or injured in random / drunken assaults [1]
    • 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
      • youths who engage in random acts of violence tend to be those with childhood problems. They would not participate properly in schools. They lack empathy and appear callous / emotionless. Those with potential for future random violence can be identified often by age 3. Children with low self-control can come from all levels in society.  The problem arises from the interactions within families. Parents have not had access to programs that encourage the introduction of behaviours and values leading to improved outcomes for children. The Positive Parenting Program can make a difference.  PPP seeks to equip children with the skills needed to regulate their own behaviour. [1]
      • adverse childhood experiences (ACEs) are being found to adversely affect children's brains - and to thus be a factor in the growth of poverty and inequality. ACEs and poor parenting within the lower socio-economic classes are not the only factors - but the situation can't be understood if the effect of this on children's brain dysfunctions is ignored [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]
    • Nearly 10% of Australian boys are budding criminals by age 12 - skipping school, carrying knives and damaging property [1]
    • very large economic costs as a result of workplace bullying [1]
    • bad neighbourhood relationships which have forced 20% of Queenslanders to move .[1]

  • persistent (and explicit) refusal by governments to address the vast majority of child sexual abuse that occurs in family / community contexts (see Reducing Child Sex Abuse Mainly Requires Potential Offenders to have a Conscience) ;
  • 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 Freedom As 'Responsible Liberty' Fades

Unless a 'put-others-first' ethical ideal is widely re-established through religion which is separate from the state / community pressure, new approaches to social control will continue to be seen to be needed to ensure compliance with elite perceptions of appropriate behavior. 

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

  • the perceived need for the state to:
    • restrain domestic violence [1] and violence in schools [1, 2]. A major government program to prevent / respond to domestic violence was launched in late 2015 - without apparent recognition that this is only one of many types of violence that arguably require a non-state solution (see Piecemeal Response Show Australia Still Doesn't 'Get' Moral Breakdown);
    • prevent parents from smacking their children [1];
    • teach school children to be nice to each other [1];
    • implement remedial strategies to prevent bullying in schools and homes [1], and at work [1, 2];
    • enact laws to ensure etiquette in people's behaviour on footpaths  [1];
    • remove disruptive families from their neighbourhood [1];
    • force men to take more responsibility for household duties [1];
    • take a hands-on role in promoting and sustaining marriage [1]
    • give Aboriginal elders legislative powers to order addicted persons into rehabilitation, mediate between groups and hold parents responsible for juvenile offenders [1]
  • defining a set of moral standards for politicians by setting down a code of conduct [1];
  • the reported loss of public interest in substantive policy issues - with concern only for personal impacts and whether politicians reflect their values [1];
  • a stream of initiatives by government in the UK aimed at improving people's behaviour [1];
  • 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 apparently mainly occurs when children live with adults who are not their biological parents;
  • arguments by both Australian state and commonwealth governments that the other needs to take responsibility for dealing with the massive problem of child sex abuse [1];
  • the introduction of shared responsibility agreements designed to influence the actions of aboriginal parents [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]
  • the introduction of legislation to protect the disabled from abusive carers [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]
  • 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]
  • potential and actual breakdown of the separation between state and religion (ie of the notion of a 'secular' state), eg as indicated by:

Examples of breaking the separation of religion and state

  • political activism by church-based organizations [1];
  • attempts by the (so called) Secular Party of Australia to make religion a political issue (see Challenges Facing the Secular Party);
  • calls for a Prime Minister (an Atheist) to express a 'godless vision of morality' [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];
  • calls 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?].
  • a perceived need for state funding of chaplains in schools [1];
  • a political debate about the values taught in state schools, and in particular:
    • the adequacy of the values taught in state schools was questioned by a 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]
    • the Victorian Government's:
      •  emphasis on Respectful Relationships Education as a key means for combatting domestic violence [CPDS Comment: This was an extremely strange proposal because: (a) a lack of appropriate concern for others has become the source of a huge number of social dysfunctions - not just domestic violence (see above); and (b) a lack of 'respect' is only one (and apparently not the most significant) factor in domestic violence (see Domestic Violence);
      • apparent determination to promote a state religion by presenting itself as the authority in relation to the ethical education of students [1]. Special religious education was removed from class times. New content on world histories, cultures, faith and ethics would take its place. Classes on domestic violence and respectful relationships would be compulsory for all students. [CPDS Comment: This seemed a regressive step as special religious education promotes respect for others (ie love for others as oneself) without reliance on the human / government claims of moral authority that Victoria is introducing and which must further undermine the foundations of Australia's liberal legal and government institutions]
  • 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;
  • proposals by the Greens to eliminate any right of religious freedom in relation to its proposed laws related to same-sex marriage [1]
  • a review of materials used for religious instruction in schools by the Queensland Government and an academic's call for government authorities to vet material used for religious education in schools [1]
  • attempts by self-appointed (moral) 'authorities' to enforce community acceptance of (what opponents describe as merely) 'politically correct' ideas, behaviours and attitudes by personal attacks on skeptical individuals. Communal pressure to ensure individual conformity with 'politically correct' ideas is likely to constrain individual difference / initiative / innovation (and thus progressive social, economic and political change) in much the same way that radical Islamic approaches to the communal / state enforcement of compliance with religious-legalists' interpretation of what Islam requires has constrained the prospects of Muslim-dominated societies. See also The Church of Political Correctness Threatens National Progress;

Political correctness has become a form of intimidation that is damaging both individuals and society. It tends to be irrational and lack common sense and to ignore truth - because a protected groups is not to be challenged. It can be likened to the tale of the emperor's new clothes. [Examples were suggested] [1].

People accuse others of doing things that are wrong or 'politically incorrect - while others resent the implications that those who do so are seeing themselves as superior. John Stuart Mill criticized both state constraints on freedom - and the tyranny of prevailing opinion where the community imposes its ideas / practices on those who dissent by non-regulatory means). What goes on in the name of 'political correctness' is an example of the latter. This is inconsistent with a free society and unpopular with many people. One problem is that different things upset different people - so the issue is subjective. [1]

Children will now have been exposed to political correctness since they started school. This started with totalitarian threats (eg by Stalin) to kill those who did not follow the party line. It is not enforced to protect the marginalized - but the conceit / power of enforcers. What is enforced can be ridiculous - but needs to be accepted when backed by force. It is not safe to just accept the script - because what is being enforced can change. [1]

One observer suggested that political correctness can give rise to political extremism - because it stifles ordinary discussion and leads those with different opinions towards extremism in frustration.  Given the parallel between political correctness and radical Islam that was noted above, it may be that  the need to over-ride the Islamic equivalent of 'politically correct' movements explains the prevalence of authoritarian regimes in Muslim majority states.

The former head of UK Equalities and Human Rights Commission who popularized the term 'Islamophobia' to denigrate those who pointed to difficulties in integrating Muslims now reportedly argues that those who contended that no such obstacles existed have been the main problem (see here)

The politically correct class (PCC) in Australia is like an evangelical religious movement - and this has perhaps arisen as traditional Protestant church groups have seen memberships decline. Some people want to be in groups with coherent beliefs which they want to spread to others. While their opinions may be valid, the PCC is distinguished by not wanting to debate them. Anyone who disagrees is seen to be evil and to deserve suppression. The PCC is small in number but influential because it dominates large sections of the media, universities, legal professions, bureaucracies and some large corporations. Anyone in those bodies who expresses different opinions will have limited career prospects. The PCC came to capture these organisations from the early 1980s perhaps because of huge expansion of universities and introduction of PCC material into schools at that time.  Australia is worse than UK and US in stifling public debate on social and political questions. This is difficult to correct because juniors soon realize what they are expected to believe - so the system is self perpetuating. There are still contrary voices - but they need to have established positions to be immune from persecution [1]

A former devout Muslim argues that, though Islam contains good features, it can never be a religion of peace because it also endorses the use of extreme violence to achieve them.  Political correctness has been the major obstacle to recognising the resulting threats.

 A weekend conference Christian groups planned at a hotel to discuss a forthcoming plebesite in relation to whether or not same sex marriage should be accepted had to be abandoned after threats by same-sex marriage supporters caused the hotel management to fear for the safety of staff and guests [1]

  • the perception that the 'Australian of the Year' process had been captured by 'social engineers' with a particular agenda who appointed individuals who then lectured the community on their perceived flaws [1];
  • concerns that freedom of religion and speech are being eroded by anti-discrimination laws [1];
  • suggestions that freedom of religion is at risk (from political Islam, humanism and 'civic religion') and that particular emphasis is directed against Christianity [1]. If valid, the latter would be significant as: (a) religious freedom arguably had its origin in New Testament Christianity; and (b) the emphasis on this from the time of the Reformation was the source of liberal institutions in Western societies more generally (see Where Did Religious Freedom Come From?)
  • proposals for legalization of gay marriage, which some see as providing a wedge for the state to interfere in traditionally-private family life (see Broader issues related to gay marriage);
  • a perceived 'tyranny' associated pressure not to 'offend' sexual minorities. Victimhood is now a major focus in Australia's universities. There is no appeal against the ad-hoc judicial system that enforces 'political correctness' - yet transgression can destroy lives [1]
  • political activism by the judiciary. For example:
    • A majority decision by the US Supreme Court to make same-sex marriage legal in the US on the basis of the equality provisions in the US constitution was seen by dissenting opinions to: (a) not actually based on the constitution as the latter had said nothing about same-sex marriage; and (b) to have the effect, not of shielding minorities, but of crushing dissent [1];
  • an emphasis on people's 'rights' to particular benefits rather than on individuals' responsibility to consider the welfare of others; 
  • the apparent emergence of dogmatism in some areas of science.  It has been suggested, for example, that science has become a sort of church, with scientists being virtual priests. Like the church in earlier centuries, scientists feel responsible for the intellectual orderliness of society (see Bauer H. Dogmatism in Science and Medicine, 2012);
  • the emergence of autocratic claims to the moral high ground on the basis of fairly narrow understandings of the issues. This included:
  • '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];
  • 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 seems to be justified by the view that individual rights have been constrained in some respect. However, it is frequently pointed out that in practice a Bill of Rights would seem likely to compound such 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 of 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;
  • 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]

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 similar argument was developed in The Re-emergence of 'gods' (2015)


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)  

In early 2014 an Australian senator expressed concern about dysfunctional family arrangements - and was criticised by others for raising such concerns. The senator had not however mentioned the potential adverse political and economic consequences of those social dysfunctions (see Family Issues).

See remedies suggested in A Nation Building Agenda below

The Need for Nation Building



Recognising a Need for Nation Building

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:

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.


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:

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:

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

In August 2016 after a double-dissolution election had clearly made it impossible for the federal government to be effective, there was again a suggestion about the need for reform of Australia's democratic system.

In a world of truncated media cycles, short term policies and fragmented parliaments, the political world is splintered. However this chaos highlights an overall pattern of public dissatisfaction with the major parties and their disconnected way of doing democracy. Major reform of Australia's political and policy process is needed - because of combative political tactics, a lack of cooperation in dealing with growing national challenges; poor perceptions of political leadership; public disconnect / disillusion; increasing roles for independents. Innovations that might help include: bringing citizens directly into policy process and citizens' juries / participatory budgeting. This is based on the view that ordinary citizens are now likely to have as much knowledge as ministers / departmental experts. This would allow 'ownership' of the policy outcome. Such changes are being made outside federal sphere - but are ignored inside. It was true once that those at the top of the policy tree would have the most relevant knowledge - but this is not so now - so politicians / bureaucrats and peak group lobbyists are not consistently to best at knowing what is going on. 19th century representative democracy is increasingly inadequate - and there is a need for democratic innovation [1]

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 and also in Developing Economic Game Changers).

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 understanding 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 mongst 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 provide such a reality check because the trend towards politicisation has resulted in services dominated by politically-skilled 'yes men';
  • 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 by: (a) assuming that much social knowledge is merely a 'construct' to benefit elites; and (b) ignoring the practical consequences of such knowledge (see also A Case for Restoring Universities and Moving Australia beyond Traditional Multiculturalism);
  • increasing access in particular to realistic assessments of the changing international context, and of the increasing global significance of 'Asia' in particular.
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.

And Australia's dealings with 'Asia' have been severely hampered by a lack of strategic Asia-literacy even amongst those who are supposedly most expert in this area (see  Babes in the Asian Woods). A strategic approach would involve not so much an ability to speak Asia languages and do business in the region, but rather to understand how and why Asia (especially East Asia) works as it does (eg see A Strategic Approach to Asia-Literacy ).

  • 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 arrangements to facilitate better ongoing incremental grass-roots adjustments.  This probably requires: (a) support for enabling the complexity of issues which cut across various decision centres to be understood; and (b) empowerment of institutional arrangements which stimulate collaborative initiative amongst diverse institutions with complementary roles. The biggest obstacle to creating workable solutions is the perception that political leaders should be in the business of making decisions and making things happen (ie micro-management). If political leaders primary (though by no means only) role could be viewed as ‘governing’ (ie creating an environment in which others can make decisions and do things) most of the problem should disappear.

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.
  • 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; paying close attention to the development of a 'public' service culture (so that the private interests of insiders do not come to dominate as politicisation is ended); 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)

The erosion of individual morality is leading to serious social symptoms (as Christianity's traditional 'value-others-as-oneself' 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 characterised by 'responsible liberty' that permits the emergence and maintenance of legal and government institutions that presume individual liberty and a secular state (ie one that does not claim religious / moral authority) - see also Religious Education: The Need for a Bigger Picture View (2013).

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)

  • empowering universities to become more effective, for example as suggested in A Case for Restoring Universities. The latter referred to:
    • reducing political demands for emphasis on immediately commercially / economically relevant outcomes from research, and the managerialist emphasis on a 'business-like' approach to academics' non-business-like activities;
    • addressing confusions that are emerging about the nature and relevance of knowledge such as those associated with: postmodern assumptions; and the limitations of rationality, science and philosophy.

The ability of universities to effectively perform a critical role in contributing to public understanding of complex opportunities and challenges has (just as occurred with public services) been compromised by a naive political desire to force them to boost economic performance . 

Australia's main 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 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).

Governments have placed these obstacle in the path of universities at the same time that confusion has arisen about the nature of universities' primary product (see Confusion about knowledge), and the latter also require attention.

The prospect of providing better institutional support to Australia's governments was considered earlier in Restoring 'Faith in Politics' (2006).

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:

John Craig

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

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

Creating an Environment for National Political Leadership

Creating an Environment for National Political Leadership - email sent 30/5/12

Michael Gawenda,
Centre for Advanced Journalism

University of Melbourne

Re: Longing for a courageous leader, Business Spectator, 30/5/12

Your article pointed to obvious current limitations in the quality and effectiveness of political leadership in Australia.

I would like to submit for your consideration that there are structural reasons for these problems, such as the increasing complexity of the issues governments face that is not being matched by the better support that the political system needs to cope with a more complex environment (see Australia's Governance Crisis and the Need for Nation Building, 2003+).

Some suggestions about what might allow these limitations to be overcome are in Australia's Next Successful Prime Minister (2012).

I would be interested in your response to my speculations.

John Craig

Fixing Australia's Broken Democracy

Fixing Australia's Broken Democracy - email sent 9/6/12

Professor Peter Van Onselen,
University of Western Australia

Re: The royal reason our system is broken, The Australian, 9/6/12

I should like to try to add value to your excellent article.

Your suggestion about a constitutional debate like that in the late 19th century seems extremely worthwhile. Issues related to the head of state and federal state relationships need to be considered properly (ie through more than a brief talk-fest), because:

  • Advocacy of, and opposition to, the shift to a republican system seems to have been conducted without any serious consideration of how such a system would work – and politicisation of the role of the head of state (eg via direct election) would risk future political instability unless accompanied by many other constitutional changes (see Republican Realism: A Purely 'Ceremonial' Head of State?, 2010);
  • Further centralisation of power within Australia’s system of government would, as your article suggests, probably make a bad situation worse (see Fixing Australia's Federation, 2010).

There have recently been various comments on a survey which suggested that young Australians are losing interest / faith in democracy as an effective system of government (eg see Callick R., Relativism eroding faith in democracy, The Australian, 5/6/12). This is hardly surprising as a loss of confidence in democracy has been emerging for decades (eg see Challenges to Australia’s Democratic Institutions).

However Australia’s system of government is ‘broken’ in many ways that go beyond the dysfunctional federal system that your article mentioned and the ‘relativism’ that Rowan Callick drew attention to. Some suggestions about those causes (and others, as well as possible remedies) are offered in Australia's Governance Crisis and the Need for Nation Building (2003+). And some suggestions about the possible requirements to restore effectiveness to democracies in a global context are outlined in Saving Democracy.

I would be interested in your response to my speculations.

John Craig

Running Repairs to the Ship of State

Running Repairs to the Ship of State - email sent 16/2/13

Peter van Onselen,
University of WA

Re: PM's in check, now Shorten must move, The Australian, 15/2/13

While I have no idea whether (as your article suggested) it is up to Mr Shorten to decide the best way to rejuvenate the federal government, I should like to submit that there is a need for much more than choosing who should sit in which particular chair on Australia’s unseaworthy ship of state as it sails through hazardous waters.

The current prime minister assumed that role because it seemed clear to insider observers in 2010 that ‘the government had lost its way’ (see Recognising a Need for Nation Building). However the problems in Australia’s government that then threatened the ALP with electoral annihilation were not just due to the failings of her predecessor, but were more the result of structural defects that have made Australia’s ship of state unseaworthy.

Some undoubtedly-improvable speculations about those defects were outlined in Australia's Governance Crisis and the Need for Nation Building (2003+). The latter referred, for example, to:

  • The ever-increasing complexity of policy issues, which has made effective public debate (the foundation of democratic politics) much less realistic, and has favoured insubstantial political populists;
  • Politicisation of public services to ensure ‘responsiveness’ – a ‘reform’ that had the unintended effect of inhibiting reality checks on poor policies;
  • Requiring competition and commercial practices in the hope that this would boost efficiency in the provision of public goods - a ‘reform’ that was often counter-productive because many government functions are subject to serious market failures, and cross-functional collaboration is critical to enabling governments to deal with complexity;
  • Fiscal imbalances within Australia federal system which lead to: (a) duplication and increased complexity / costs; (b) distortion of state administrations; (c) suppression of initiative; (d) and overly-simplistic policy prescriptions - because central planning of public functions must fail (just as central economic planning fails) because central authorities must lack access to enough of the required information.

A serious commitment to running repairs to Australia’s ship of state, perhaps along the lines suggested in A Nation Building Agenda, would be more useful than worrying about who is sitting in the captain’s chair.

John Craig

Moving on: Good Idea but Not Easy

Moving on: Good Idea but Not Easy - email sent 26/3/13

Professor Marilyn Lake,
University of Melbourne

Re: It's time - for the 'old men' of the ALP to move on, Brisbane Times, 26/3/13

There is no doubt that it was time for some theories about what is needed to ‘fix Australia’ to be discarded – eg for reasons suggested in relation to recent proposals by a Commission of Audit for ‘fixing Queensland’.

However throwing out the ‘old’ (and it is noted that there are many parallels between the ‘old’ ideas of the ALP and those of the Opposition) is no use unless one is very certain that the ‘new’ is not only desirable but also workable. And, as implied in the comments mentioned above, there is a need to strengthen the institutional support to Australia’s political system if desirable outcomes are to be both realistic and competently implemented.

Speculations about what achieving such outcomes might require in a national context are outlined in Australia's Governance Crisis and the Need for Nation Building (2003+) – and briefly outlined in Running Repairs to the Ship of State (2013). These reforms would be neither easy nor quick to put into practice, but would be essential if ‘new’ policy options are not to be sabotaged by the institutional incompetence that has increasingly plagued governments across Australia.

I would be interested in your response to my speculations.

John Craig

Is 'Policy Heroism' the Answer?

Is 'Policy Heroism' the Answer? - email sent 28/3/13

Annabel Hepworth
The Australian

Re: 'Heroics' needed on major projects, says Tony Shepherd, The Australian, 28/3/13

While the business leaders you quoted were undoubtedly correct in identifying the need for infrastructure investment, encouraging more ‘heroic reforms’ by the federal government (which would probably generate unexpected and dysfunctional side effects) was not a very good idea.

My interpretation of your article: BCA President (Tony Shepherd) has urged the federal government to show leadership in fixing infrastructure shortfalls – rather than managing a ‘genteel decline’ in prosperity. A growing infrastructure backlog is eroding competitiveness, increasing cost-of-living pressures and lowering quality of life. Past ‘heroic reformers’ have been succeeded by those who are more cautious. New approaches are needed to reduce health costs – and federal Treasurer was wrong to criticize Queensland’s contracting-out approach to clinical health services. Much remains to be done in relation to infrastructure (eg asset sales and fundamental reform to the cost of service delivery to unlock funds for new productivity-enhancing projects). The federal government’s plan to pump $20bn into nation-building projects had been hampered by GFC. All state-governments are cash strapped (especially Queensland and SA). The federal government could borrow cheaply – and productive opportunities are available. Government’s infrastructure tsar (Rod Eddington) described a ‘disconnect’ between people’s concerns about infrastructure and a reluctance to raise taxes. Infrastructure must either be funded by government or by user-pays. Federal Labor has baulked at user-pays – but faces pressure from business to encourage infrastructure provision and to use the budget to fill the void left by dumping of resources projects. BCA expects federal infrastructure funding to become more important as state budget limits are reached. Federal Labor set up Infrastructure Australia which has a solid list of projects worth funding, and the Opposition has supported the need for ‘cranes’ and ‘bulldozers’. There is a need to ‘change the game’ on infrastructure – with national leadership.

There are much broader problems that need to be fixed in Australia’s system of government and those problems are largely (though not only) a by-product of past ‘heroic reforms’ that have helped to make government machinery more-or-less unworkable.

It is submitted for your consideration that:

  • severe problems in Australia’s machinery for the planning and development of infrastructure have been obvious for many year (eg see Infrastructure Constraints on Australia's Economy, 2005). The latter referred amongst other things to: federal / state fiscal imbalances; and fragmentation of responsibility and loss of competencies within states as part of earlier ‘heroic reforms’;
  • Making up a list of projects through Infrastructure Australia that might be worth funding (but would probably further fragment and dislocate Australia’s machinery for planning and developing infrastructure) is less useful than encouraging that group to look at the mess that infrastructure machinery has become (see Infrastructure Magic?, 2008);
  • the ‘heroic reforms’ currently being attempted by the Queensland Government (including contracting out clinical services) are based on a desire to do something about real problems, but they involve trying to apply business-like methods that:
  • while there may well be a need for increased infrastructure spending (possibly financed by government) to boost Australia’s economy in the post-resources boom era, it needs to be recognised that the global economy seems currently to be being driven by quantitative easing by reserve banks which is primarily stimulating ‘growth’ by enabling government debts to rise to unsustainable levels - especially in Japan, China and the US (see Debt Denial: Stage 3 of the GFC?). There is a need to consider that context in making decisions about how Australia should respond to the end of the resources boom in an environment in which fundamental structural defects in the global financial system remain in the ‘too hard’ basket (eg see G20 in Washington: Waiting for Hell to Freeze Over?);
  • options for boosting Australia’s economy (and thus the tax base and government revenues) need to be considered in assessing governments’ fiscal capacity (eg see Comments on Dow's Advanced Manufacturing Plan for Australia);
  • there is arguably more to be gained by the decentralisation of responsibility than by expecting the federal government to take ‘heroic’ initiatives that inhibit decentralised incremental initiatives (see Centralization is Part of the Problem: Not the Solution). De-concentration could be part of the ‘nation building’ needed to genuinely reduce the risk of a ‘genteel decline’ in prosperity (see also Running Repairs to the Ship of State).

John Craig

Increasing Governmental Incompetence via A Federal Commission of Audit?

Increasing Governmental Incompetence via A Federal Commission of Audit? - email sent 4/4/13

Tom Dusevic
The Australian,

Re: Bureaucracy to be laid bare in audit, The Australian, 3/4/13

Your article suggests that the federal opposition, if elected, would launch a commission of audit to examine the quality of all government outlays (and that this would, amongst other things help identify the cause of the huge growth in the number of executives in the federal bureaucracy).

I should like to suggest, however, that a commission of audit would be a seriously inadequate way of addressing the many problems that afflict Australia’s federal government because such a commission would: (a) address those diverse and interconnected problems from only one (ie a financial) point of view; and (b) perhaps encourage a future government to issue edicts that do a great deal of damage because of factors that are well known within the bureaucracy but unrecognised by the commission because of its narrow terms of reference. These points are developed in more detail in relation the inadequacy of a recent commission of audit in Queensland (Reforming State Governments: Does Queensland's Commission of Audit Have the Answer?).

The latter argues that more could be achieved by giving attention to financial issues in a broader context ie by dealing with financial constraints as one issue amongst many while: (a) getting on with the job of governing competently; and (b) recognising that doing so will be impossible without enhanced institutional support (eg as suggested in Australia's Governance Crisis and the Need for Nation Building, 2003+).

There is absolutely nothing new about narrowly focused inquiries doing a great deal of damage to Australia system of government (see Decay of Australian Public Administration, 2002 ) and considerable evidence of the resulting dysfunctions (see Towards a Professional Public Service, 2001)

John Craig

National Plan for School Improvement: An Example of Bad Policy?

National Plan for School Improvement: An Example of Bad Policy? - email sent 15/5/13

Gene Tunny
Queensland Economy Watch

Re: Long-term education target unlikely to be met – haven’t we learned from previous unachievable targets?, 15/5/13

Your article realistically suggested that:

  • directing funding to the school system is no guarantee of achieving the desired educational outcomes; and
  • it is strange that the Commonwealth is committing to a highly ambitious target in an area in which the states play the most important role.

However the situation is arguably even worse than this, because the National Plan for School Improvement (which evolved from the Gonski Review) seemed to be:

  • Concerned with very real problems – namely the growing incidence of social disadvantage in various communities; and
  • Trying to remedy the problems through improved education - even though the problem has many causes most of which can’t be affected by increasing education spending.

Moreover throwing huge quantities of special purpose funding in the direction of state-run schools will inevitably exacerbate the effectiveness and efficiency problems that are implicit in Australia’s federal fiscal imbalances (ie buck passing, duplication and complex administration).

These points are further developed in Comments on The Gonski Review.

John Craig

Get Ready for Coalition Chaos

Get Ready for Coalition Chaos - email sent 5/6/13

Mark Kenny

Re: Discipline disintegrates in the face of poor polls, National Times, 5/6/13

While Australia’s federal government is an acknowledged disaster area, there is nothing new about this (see Recognising the Need for Nation Building, 2010).

However there is no reason to believe that a future Coalition government would perform any better. The Coalition does not seem to have credible positive proposals, but rather gains support on the basis of inept government. And one proposal that the Coalition has put forward to ‘fix government’ would seem likely to make the situation much worse (see Increasing Governmental Incompetence via A Federal Commission of Audit?).

Some suggestions about how a semblance of competence might be restored to government are in Australia's Next Successful Prime Minister (2012).

John Craig

Beyond 'Negative' and 'Celebrity' Politics

Beyond 'Negative' and 'Celebrity' Politics - email sent 11/6/13

Kylie Lang

Re: Political leaders must give us reasons to care, Sunday Mail, 9/6/13

Your article suggested that voters want political leaders who they can believe in. However what voters really need is for the ‘political leaders they believe in’ to be able to govern competently. For years the electorate has been: (a) oblivious to serious weaknesses that have been emerging in government machinery; and (b) willing to support celebrity populists (ie those who proffer ‘something to believe in’ that is not realistic).

My interpretation of your article: Australia needs a true leader. Without this people are apathetic about politics. A coming change of government is not interesting, as the Opposition has done nothing but oppose. Voters want substance, not celebrity – a clear path to progress backed by sensible affordable policies. In 1942 Menzies outlined a direction for Australia after WWII. He believed that a thriving democracy required an aspirational middle class – and thus called on men returning from war to not be ‘boneless wonders’. He called for active citizenship. However Australia is now more politically demotivated than ever. ANU studies have shown a declining interest in politics by younger people. They are very concerned about political issues, but have no faith in politicians championing them. Young people are using social media (rather than joining political parties) to support causes. Dr Martin Aaron says that under 30s are sick of waiting for politicians to stop bickering. Civic participation may be better through groups such as Australian Youth Climate Coalition, OurSay, Young and Well Cooperative Research Centre and Foundation of Young Australians. Politicians need to pay attention to such groups.

The constraints on the effectiveness of Australia’s political system are primarily structural rather than simply a lack of visionary leaders. The complexity of issues has increased dramatically. The professional support needed to provide a reality check on, and successfully implement, political policies has been eroded by politicisation of public services and changes that it was hoped would increase the efficiency of service delivery. The international environment has changed in ways that are not well understood, and there is a lack of machinery to gather the strategic intelligence to operate in that environment. Australia has traditionally not needed well developed civil institutions to formulate up-to-date and realistic policies – because of past dependence on both natural resource wealth and copying policy initiatives from other OECD countries. These and other issues (as well as the sorts of institutional changes that may be needed to make government effective) are speculated in Australia's Governance Crisis and the Need for Nation Building (2003+).

In what is degenerating into an increasingly unworkable institutional setting, political leaders can’t manufacture the ‘substance’ that you suggest is needed (ie a clear path to progress backed by sensible affordable policies). Almost all that they can offer to gain electoral support is ‘negativity’ (ie evidence of others’ failings) or ‘celebrity’ (eg simplistic but insubstantial promises to fulfil the community’s dreams – see On Populism, 2007+).

In 2010 Australia’s political system came close to recognising that there was a fundamental problem (see Recognising a Need for Nation Building). However the need to do more than replace a populist prime minister was not recognised and political gamesmanship soon re-asserted itself.

Illustration: This can be illustrated by the relatively ‘easy to understand’ but inadequate policy proposals that are being advanced (by the federal Government and Opposition respectively) to deal with very complex policy challenges - see National Plan for School Improvement: An Example of Bad Policy? and Increasing Governmental Incompetence via A Federal Commission of Audit?. One dimensional responses (eg through education funding or fiscal constraint) can’t deal effectively with all-too-real problems that have multiple dimensions, and thus require that many different approaches be able to be taken simultaneously by many different groups (eg by citizens, families, civil society as well as multiple levels of government and multiple agencies each of which has different functions). It is worth remembering that it is not possible to define ‘easy to understand’ answers for the future of an economy – and that this is why market arrangements are put in place so that those answers can be found by decentralised incremental initiative.

A rethink of who is supposed to do what is needed before it is likely that political leaders will be able to be effective in making the contribution that the electorate expects of them.

Until this is done the electorate will continue to be frustrated. There is certainly a need for groups like those mentioned in your article to try to put forward the best possible policies. But without a serious (and incremental) commitment to institutional change, Australia’s politicians will be unable to achieve what is really needed no matter how good their policies may sound to the electorate.

I would be interested in your response to my speculations.

John Craig

Restoring Political Competence is Becoming Urgent

Restoring Political Competence is Becoming Urgent - email sent 28/6/13

Annabel Crabb

Re: Questions Kevin Rudd now has to answer, The Drum, 27/6/13

Your article noted that Mr Rudd’s press statement following his re-election to lead the ALP started by acknowledging that "in recent years, politics has failed the Australian people". He never said a truer word, though this problem has been developing for decades rather than just arising ‘in recent years’.

The now-officially-recognised failure of Australian ‘politics’ is primarily a systemic problem (eg related to changes that have rendered the political process and government machinery less effective). It is not simply the fault of particular individuals or groups, and can’t be fixed simply by replacing those who are seen to have ‘failed’ with others (eg replacing Mr Rudd with Ms Gillard in 2010, or replacing Ms Gillard with Mr Rudd in 2013).

Moreover the need to deal with those systemic problems and restore competence to Australia’s political institutions is becoming urgent because international financial, economic and security risks are increasing.

The above points are developed further on my web-site, and I would be interested in your response to my speculations.

John Craig


Systemic Obstacles to Effective Politics

Australia's ‘politics’ is failing largely because changing circumstances and the unintended consequences of past reforms have made it much harder to identify constructive policies and have them implemented competently.

Examples: Changing circumstances include increased complexity and the inadequacy of of simply continuing to copy US / UK policy precedents; while the public sector’s ability to handle complexity and provide a reality check on policy has been eroded (eg by politicisation and by attempts to make governments more business-like in carrying out their non-business-like functions).

Dysfunctional Outcomes: Many dysfunctions have arisen domestically from a desire to impose simple / easily comprehensible / politically saleable 'solutions' to multi-dimensional problems (ie to problems that have aspects that are not improved (or potentially made much worse) by remedies that take account of only one or two of those dimensions).  For example:

  • attempt to 'reform' government machinery to make it more politically responsive or 'efficient' in the delivery of public goods and services have seriously reduced the ability of governments to govern or provide public goods and services effectively (eg see Decay of Australian Public Administration and Neglected Side Effects of National Competition Policy);

Political idealism needs a 'reality filter': Governments deal with many complex and highly inter-related issues - and their primary function (governing) involves creating a framework for social and economic activities within the community. Governing requires a depth of knowledge, experience and wisdom that is quite different to that associated with the provision of public goods and services - and the latter also require a depth of knowledge, experience and wisdom because they are typically subject to serious market failures and thus can't be provided effectively on a pseudo-commercial basis (because of their non-commercial relationships with other functions).

The machinery of government that Australia inherited from the UK embodied arrangements (eg via a permanent professional public service; collegiality; and formal cabinet / budgetary processes) to support elected governments. The latter's policy agendas might address (say) 100 current issues, and these had to be integrated with the thousands of policy issues related to both governance and service delivery that were current at some time in the past. Traditional public service arrangements provided support in doing this - but not because public servants were particularly smart. Rather government machinery embodied a huge amount of ‘tacit’ knowledge (ie knowledge that was implicit rather than anything that anyone could put into words). It was embodied in: (a) the diverse knowledge and experience of practitioners in many functions; (b) the things they did and the way they did them in response to many long-forgotten needs or policies; (c) the way the overall system operated to try to take account of the across-the-board implications of new policy proposals; and (d) exploration of future needs and options without necessarily being bound by the limitations of politics.

Government machinery (including the decision making role of elected politicians to bring in community knowledge and perspectives) was a sort of ‘computer’ that dealt with very complex issues.  That 'computer' included a 'reality filter' (via a permanent / apolitical professional public service) through which populist political idealism would be passed - thereby altering / eliminating ideas that were unlikely to work in practice. That 'computer's' ability to support elected governments in both governance and the provision of goods and services has been seriously disrupted over recent decades as a result of 'reforms' implemented by those with narrow agendas and little or no knowledge or experience of the nature or functions of government.

  • attempts to deal with the fiscal challenges that governments increasingly face through commissions of audit have also involved overly-simplistic assumptions about the difficulties of adequately supporting elected governments - because while financial considerations are important they are only one amongst many considerations that are needed in making decisions about changes in government (eg see Reforming State Governments: Does Queensland's Commission of Audit Have the Answer?);
  • the establishment of Infrastructure Australia in an attempt to define priority projects for federal government financial support involved the naive assumption that such projects could be identified and implements in relative isolation from the diverse other functions that they were related to (see Infrastructure Magic?);
  • the Gonski educational reform agenda appears to be directed towards solving very real problems - namely systematic educational under-achievement in various regions. However the problem has multiple causes, and can't be resolved through a single-dimensional 'solution' (ie more spending on, and control of, education by the federal government) - see comments on the Gonski review 

Serious failures have also arisen from a lack of strategic understanding of the international environment and Australia's traditional reliance on the UK and the US who are also struggling to understand a changing world (because the humanities and social science faculties of their universities, like those in Australia, have not yet seriously considered the practical consequences of differences in cultural assumptions). For example:

  • Australia participated in US-led military action in Iraq and Afghanistan in order to counter security threats posed by Islamist extremists - though the military / security 'solution' that was the US preference was an overly simplistic response to a much more complex challenge (eg 'freedom from oppression' by Saddam Hussein's regime was not sufficient to ensure peace and prosperity in a country such as Iraq because the cultural and institutional preconditions that 'free' societies depend on were not present);
  • It was naively assumed that an 'Asia century' would involve international diplomatic and relationships that operated under Western principles (see Australia in the Clayton's Century).

A more comprehensive account of the emergence of systemic obstacles and speculations about what might be required for a solution is in Australia's Governance Crisis and the Need for Nation Building (2003+).

The latter outlines the need for, and possible means of achieving, nation building initiatives that should help restore the competence of Australia's democratic political institutions - initiatives such as:

  • Increasing the ability of community generally and opinion leaders in particular to understand: complex policy issues; the international context (Asia in particular); and that complexity can render simple-sounding 'solutions' ineffective;
  • Simplification of what governments have to deal with;
  • Democratically empowering apolitical institutions to accelerate the development of community-based or market-based support to individuals / enterprises;
  • De-concentration of responsibilities to ensure that large segments of the community don’t become alienated / disengaged;
  • Re-creation of competent apolitical public services;
  • Clarifying the relationship between public and private sectors;
  • Reminding churches that strong Christian foundations are needed for liberal legal and governmental institutions like those in Australia;
  • Empowering state and local governments to be more effective (eg by changes to tax regimes);
  • More rapid market-driven growth of regional centres;
  • Empowering universities to be more effective.

Australia’s political system has been floundering for several decades and the cumulative effect is becoming serious (ie Australia has been headed down a ‘banana republic’ path). The electorate has faced a choice between:

  • political populists who achieve electoral support by proposing grand programs and projects - even though the latter may achieve little of practical value and be very expensive (see On Populism);
  • those who look better only because of their predecessors failures but have little or no adequate policy agenda - and sometimes spend their entire term undertaking umpteen inquiries that often can't really identify viable programs or projects because they are narrowly focused.

The environment increasingly favours political confidence tricksters of dubious character and limited talent who gain electoral support from grandiose promises because of the lack of any realistic / competent alternative.

Simply changing governments (or the personalities who dominate within governments) on the basis of their ‘popularity’ with the electorate cannot restore competence in the face of the systemic obstacles that exist. The situation can only be improved by political leaders who are willing to address the systemic obstacles as part of the process of implementing the political priorities of the day.

A case for dealing with systemic obstacles was outlined in more detail in Australia's Next Successful Prime Minister (2012). The latter pointed to:

  • weaknesses in external and internal support to Australia’s democratic political institutions in developing policy;
  • obstacles to competent policy implementation (eg public service politicisation and attempts at centralised micro-management of issues that are too complex to be dealt with that way); and
  • the risk that a deteriorating international economic environment could pose threats to Australia’s economic, employment and public-revenue growth.

The Urgency of Restoring Political Competence

Restoring competence in Australia’s political system is becoming ever more urgent because of the escalating international financial, economic and security risks that Australia is confronting. Some of the instabilities and market changes that require domestic economic adjustments are reasonably obvious on the basis of conventional economic analysis. However analysis which takes account of structural incompatibilities between competing cultural and economic systems (eg as suggested in The Infantile US vs China Debate) suggests that the risks may be far greater than is widely recognised.

Though the situation changes from day to day a flavour of the problem is illustrated by:

  • Debt Denial: Stage 3 of the GFC? - which highlighted financial system obstacles to the global economic recovery that had been hoped for in early 2013;
  • Fasten Seat Belts: Rough Weather Ahead - which highlighted increasing tensions in East Asia and the relationship between these and a 'clash of civilizations' that is particularly reflected in incompatible financial systems;
  • Credit Bust First: 'Sixth Revolution' Later - which referred to the attempts that have been made by quantitative easing to create a sustainable basis for global growth and to the emerging conclusion that: (a) this is doing more harm than good; and (b) unwinding this is likely to be seriously disruptive. The core problem is that high debt levels have grown as a by-product of attempts to solve structural problems in the global economy with counter-cyclical policies; and
  • Australia's Hazardous Foreign Liabilities in an Unstable International Environment - which referred to risks that Australia faced at the start of the GFC which have been moderated by domestic changes, but escalated by the international financial / economic risks that are now emerging.
Australia's Political System

Australia's Political System - email sent 30/8/13

Barry Jones

Re: Barry Jones: the 2013 election and the death of rationality, The Conversation, 29/8/13

I noted with interest your observations about the poor quality of recent election campaigns and the increasing evidence of lightweight populism.

Some suggestions that these problems have systemic (and thus potentially correctable) causes are in Australia's Governance Crisis and the Need for Nation Building (2003+). The latter refers, for example, to:

  • the increased complexity (interconnection) of policy issues which often makes simple explanations impossible;
  • inadequacies in the support available to the political system in dealing with complex issues related to: (a) weakness that have historical roots in the civil institutions needed to promote realistic public understanding; and (b) politicisation of public services;
  • the rise of populism (see also On Populism, 2007+);
  • Institutional changes that should help to reduce these systemic problems.

I would be interested in your response to my speculations.

John Craig

Navel Gazing Certainly Can't Solve the ALP's Problems

Navel Gazing Certainly Can't Solve the ALP's Problems - email sent 2/9/13

Frank Bongiorno

Re: Hearts, heads and pockets, Inside Story, 2/9/13

Your article speculated about the issues that the ALP will need to consider if it fails to win the coming federal election.

As I interpreted it, the main issues mentioned were:

  • How the federal leader of the ALP should be elected;
  • Corruption;
  • Whether party leadership matters more than party rules;
  • The ALP’s relationship with the unions;
  • Politicians’ desire for personal profit;
  • Personal / sexual relationships amongst participants;
  • Chris Bowen’s book (Hearts and Minds) on the future of the ALP – which see this in terms of neo-liberalism with a bit of state intervention as an alternative to socialism. This abandons any moral criticism of capitalism or attempt to promote social solidarity;
  • Kim Carr’s Letter to Generation Next – which is from the heart. It reflects a more optimistic left tradition and is: more keen on state intervention; more inclined to celebrate collectivism; and more inclined to pursue ideological distinctions. He believes in growth and markets – and argues that strong state intervention is needed to make markets work. He strongly supports manufacturing;
  • Proposals from within British Labour Party (The Socialist Way) are more sophisticated than those in Australia – because there are stronger left-leaning think-tanks in UK. There is a shift towards reconsidering political economy, rather than then mere concern with redistribution (because of problems created by banks, and declining support for welfare state). Australian Labor looks more to the past than the future. Britain confronts more directly rising inequality, the effects of the GFC and government spending cuts. Some oppose statist / centralized solutions in favour of localism / volunteerism, while others defend traditional social democracy with reformed central state. Centralization under Blair was seen to be counter-productive.
  • Carr’s book is closest to ideas emerging from Britain – but in Australia there is much greater faith in the power of the state to do good, and much less interest in local / voluntary solutions

I should like to agree with your suggestion that there is a need, in seeking future directions, to take a bigger picture view of the challenges facing the ALP - rather than one concerned primarily with internal reforms.

My reasons for suggesting this are that: (a) the world is changing in ways that make traditional policy prescriptions a much less relevant guide to useful future policies; and (b) the problems that the ALP has experienced are shared with other Australian political factions as a consequence of the need to reform / adapt the governmental institutions established to deal with the past to cope in a changing environment.

The point about a changing environment can be illustrated by:

The point about governmental institutions can be illustrated by Australia's Governance Crisis and the Need for Nation Building (2003+). The latter refers, for example, to:

  • the increased complexity (interconnection) of policy issues which often makes simple explanations impossible;
  • inadequacies in the support available to the political system in dealing with complex issues related to: (a) weakness that have historical roots in the civil institutions needed to promote realistic public understanding; and (b) politicisation of public services;
  • the rise of populism (see also On Populism, 2007+);
  • Institutional changes that should help to reduce these systemic problems.

I would be interested in your response to my speculations.

John Craig

The Need for 'Running Repairs to the Ship of State'

The Need for 'Running Repairs to the Ship of State' - email sent 16/11/13

Dennis Shannahan
The Australian

Re: How Julia Gillard's ambition destroyed Kevin Rudd and ALP, The Australian, 16/11/13

Your article suggested that it was Julie Gillard’s failure to help when Kevin Rudd was in trouble in 2010 that led to the ‘destruction of the Labor government’ – because her actions led to the publicly unexplained removal from office of a popular first-term Prime Minister.

However I submit that (while personalities and ambitions play a role in politics) your explanation is too superficial, because weaknesses in Australia’s political / governmental systems have developed and not been remedied. These seem far more important in explaining why ‘popularity’ can be associated with ‘dysfunction’. Machinations within the ALP were only part of the problem (eg see Navel Gazing Certainly Can't Solve the ALP's Problems). The latter referred to an undoubtedly-improvable speculation about problems in Australia’s institutions (Australia's Governance Crisis and the Need for Nation Building , 2003+) which, amongst other things, referred to:

  • the increased complexity (interconnection) of policy issues which often makes simple explanations impossible;
  • inadequacies in the support available to the political system in dealing with complex issues related to: (a) weakness that have historical roots in the civil institutions needed to promote realistic public understanding; and (b) politicisation of public services;
  • the financial imbalances in Australia’s federal system that generate huge problems and inefficiencies in most major public sector functions; and
  • the rise of populism because of the complexity of the issues and the lack of adequate ‘reality checks’ on popular policies by politicised public services (see also On Populism, 2007+).

‘Populism’ (ie the fact that a prime minister such as Mr Rudd can be ‘popular’ though (as your article noted) it was obvious very early on that his government was dysfunctional) is the problem that needs attention.

That problem had been obvious in 2007 (see Sorry to Spoil the Party - but Populism Trumps Electoral Victory, 2007). And it became increasingly obvious as the Rudd Government’s notable ‘achievement’ revealed more idealism than realism and seemed to reflect a desire to gain applause rather than to achieve practical outcomes (see examples in Appendix below).

By July 2010 many observers were starting to realize that the federal government’s behaviour implied the existence of systemic problems in Australia’s machinery of government. However merely replacing Mr Rudd as prime minister was insufficient, as this merely addressed a symptom rather than the cause of those problems (see Recognizing a Need for Nation Building).

Likewise replacing ALP Governments with a Coalition Government cannot overcome structural weakness in Australia’s political and governmental institutions (see Australia's Next Successful Prime Minister, 2012 and Get Ready for Coalition Chaos, 2013). The problem is not just limited to political personalities. And to date the Abbott Government has shown no more sign of recognizing this than its predecessors.

Some suggestions about the sorts of ‘running repairs to the ship of state’ that might overcome the problem of ‘popular’ governments being dysfunctional are in A Nation Building Agenda.

John Craig

Appendix: Some Examples of the Rudd Government’s Populist Un-realism

Many of the major initiatives that have been seen as the ‘progress’ achieved under the Rudd Government (eg as outlined briefly in Parliamentary MPs deliver tributes to Kevin Rudd on the news of his resignation, 13/11/13) seem suspect. For example:

  • dismantling the Howard Government’s ‘Pacific Solution’ for dealing with asylum seekers now seems to be generally accepted to have been a mistake. Moreover neither encouraging nor discouraging people smugglers really gets to grips with the humanitarian disaster represented by the world’s umpteen million refugees (see Boat People Magic, 2013);
  • saying ‘sorry’ to the stolen generations was also a feel-good, rather than a productive, response to the difficulties facing Australians with indigenous ancestry (see Apology Magic?, 2008);
  • establishing an Emissions Trading Scheme was another ‘feel good’ but relatively ineffectual measure – because:
    • the then ‘Carbon Pollution Reduction Scheme’ only applied to CO2 which is apparently only responsible for about half the greenhouse gas effect of concern to the IPCC; and
    • far more could have been achieved by sponsoring long-overdue evaluation of non-anthropogenic theories of climate change to show either the vital necessity for, or the irrelevance of, measures to contain greenhouse gas emissions (see Finding the Truth on Climate Change). Seriously examining all hypotheses (not just those the IPCC long focused on) would provide the best way to reduce ‘tis – tisn’t’ political debates about the issue;
  • the economic stimulus package in response to the initial effects of the GFC (while probably good in theory) was of limited practical significance because:
    • the commodity boom that saved Australia (virtually alone amongst OECD economies) from most of the GFC’s impacts: (a) was mainly due to China’s unsustainable massive-investment-based response to the risks it faced; and (b) left Australia’s economy (and government revenues) highly dependent on the continuation of that boom; and
    • more fundamental questions about Australia’s long term economic strategy were not addressed (eg see Lifting Productivity: Considering the Bigger Picture, 2010);
  • rolling out a National Broadband Network through a government owned company was always likely to limit scope for discovering better options and lower costs (NBN's Bigger Picture , 2010);
  • the health and hospital reform plan seemed anything but constructive (see Is a National Health and Hospitals Network Progress?, 2010) because:
    • it focused on boosting medical services – though more could arguably be achieved by addressing the environmental and nutritional quality issues that are giving rise to the escalation of the chronic degenerate diseases that consume much of health budgets; and
    • the plan simply reinforced the limitations on effective / efficient service delivery that are implicit in Australia’s world-beating federal financial imbalances;
  • the Resource Super Profits Tax seemed unlikely to be a significant source of the revenue needed to compensate for Australia’s growing structural budget deficits – see RSPT Won't Hurt Miners: But Pity Help Naive Australians.

Other indications of the lack of pragmatic realism in the idealistic reforms sought by the Rudd Government include:

  • Infrastructure Magic? (January 2008) – which suggests that setting up an organization (eg Infrastructure Australia) whose name implies that is the ‘solution’ to a difficult policy problem is a classic, but ineffectual, way of addressing such problems;
  • Talkfest Magic? (February 2008) – which suggests that a one-off summit is unlikely to be able to come up with much in the way of practical / achievable policy options;
  • Productivity Magic? (April 2008) – which argues that developing the private sector’s capabilities will contribute more to productivity than improving government functions that are often subjected to serious market failures;
  • Public Service Magic? (May 2008) – which suggests Public Service professionalism is unlikely to be restored if politicisation (ie installing cronies and ‘yes men’) remains the preferred method for achieving this.
Undermining Australia's System of Government from the Top?

Undermining Australia's System of Government from the Top? - email sent 23/11/13

Sarah Elks
The Australian

Re: Monarchists not happy as Quentin backs republic, gay marriage, The Australian, 23-24/11/13

Your article pointed to yet another irresponsible Governor General politicising that position in apparent ignorance of the implications this has for Australia’s system of government.

This problem was explored further some years ago in Politicization of the ‘Crown’ (2003+), which suggested that:

  • Existing constitutional arrangements depend on the head of state (eg Governor General) holding essentially all executive power and using it only on the advice of an elected Government that has the confidence of the lower house of Parliament (while keeping an eye on whether the said Government is playing by the rules / constitution in the things that it asks the Governor General to endorse);
  • If the head of state has an independent political agenda (as the current holder of the position apparently aspires to have), their willingness / ability to carry out that role must be suspect, and there is a real risk of either:
    • Instabilities associated with conflicts between the elected Government and the head of state; or
    • Abuses of power associated with collaboration between them in the absence of any apolitical oversight, if their political agendas are aligned;
  • Australia could becoming a republic relatively simply providing the (say) President can be assured of being apolitical;
  • Extensive revisions of Australia’s constitution would be required to achieve stability / effective government if a President had a political agenda that was independent of the elected Government (eg if a President were directly elected). Something like the American system (eg where the Executive is an elected president and their power is counterbalanced by a legislature that is separate from the Executive) might be needed. Such revisions would be difficult to get through (noting the low success rate of referenda generally). Those who advocate an Australian republic (eg the present Governor General) do not seem to have yet thought through this aspect of the issue.

John Craig

The Choice Between Evils that Governments Now Face: 'Process Addiction' or Bad Decisions

The Choice Between Evils that Governments Now Face: 'Process Addiction' or Bad Decisions - email sent 10/12/13

The Australian

Re: Reviews mount as Abbott cabinet must direct action, editorial, and Kelly J. ‘Too many reviews expose Abbott to ‘process addiction’, The Australian, 9/12/13

It is interesting, but hardly surprising, that the Abbott Government now apparently finds itself embroiled in commissioning umpteen inquiries rather than acting decisively.

This is however an inevitable consequence of the complexity of the issues that governments face and the weaknesses of Australia’s institutional support to the political system (ie of the lack of civil institutions able to take an up-to-date and realistic approach to policy issues, and of the decay that public services have suffered as a result of a desire to make them more ‘responsive’ to political agendas and more ‘business-like’ (ie competitive rather than collaborative) in undertaking their primarily-non-business-like functions).

What seems to be happening to the Abbott Government was fairly predictable (eg see Get Ready for Coalition Chaos). This is quite like what happened to Queensland’s unfortunate Borbidge Government in the 1990s. It came to power on the basis of the lack of practical achievements of the Goss Government which had preceded it, and then found that it needed about 90 inquiries before it would be in a position to make reliable decisions. Those inquiries were all reporting at about the time that the Borbidge Government was voted out because of its inactivity. It was then replaced by the Beattie administration, which apparently decided that it had to ‘just do things’ even though it was not certain about what to do. The result was even worse than the Borbidge Government’s inactivity – ie publicly-visible crises in many government functions and an unsustainable blow-out in government debts.

The Abbott Government has an unfortunate choice between two evils (ie making often-bad decisions or manifest indecisiveness / inactivity while conducting a large number of inquiries).

This problem (ie the complexity of policy issues that renders simplistic decisiveness hazardous) can be illustrated by Mr Abbott’s desire to be an ‘infrastructure prime minister’ and to give priority to the development of roads. The problem is that:

  • A primary emphasis on roads is arguably not desirable in providing for much of Australia’s future transport needs – for reasons suggested in Brisbane’s Transport Monster. The latter notes: (a) constraints (ie high fuel costs) associated with ‘peak oil’ that fracking technologies have arguably not eliminated; (b) the apparent peaking some years ago of urban motor vehicle usage – in terms of vehicle kilometers travelled; and (c) the adoption of ‘urban footprints’ in major cities for environmental reasons that block access to the cheap rights of way that are needed for affordable freeway systems;
  • Any decisions about transport systems need to be closely integrated with land use and many other considerations, and funding of random roads through a federal government agency which is not able to coordinate with those other considerations is unlikely to be beneficial.

This is not the only area in which the policy agenda on which the Coalition Government won power in 2013 seems to need significant reviews before sensible actions could be committed. For example::

  • Financial, economic and security difficulties in the international environment (eg those associated with 'Asia' and global debt constraints) are likely to adversely affect Australia but don’t seem to have been adequately considered in developing policy proposals. Thus domestic economic and fiscal challenges are likely to be different from / harder than those that have been presumed, and effective international relationships will be a struggle;
  • Diversification from economic reliance on mining is needed, but can’t be achieved by just ‘more or the same’ economic reforms;
  • Assumptions about what is needed for effective government seem naïve. For example: (a) difficulties in ‘governing’ generally are likely if fiscal challenges are addressed in isolation (ie through a Commission of Audit); and (b) Deficiencies in the provision of public goods and services for which the Commonwealth has no constitutional power can’t be overcome by ever-more-intrusive attempts to micro-manage state activities.

Unless and until there is a serious effort to develop more effective institutional support to Australia’s political system (eg as suggested in Australia's Governance Crisis and the Need for Nation Building , 2003+), all future governments will presumably face the same ‘choice between evils’ that now confronts the Abbott Government.

John Craig

Rebuilding Australia's System of Government

Rebuilding Australia's System of Government - email sent 4/1/14

Klaas Woldring

Re: System reconstruction in Australia is long overdue, Online Opinion, 3/1/14

Your article suggested that, because of problems with Australia’s system of government, it would be best to adopt a ‘non-Westminster’ political system (such as that in Scandinavia, Holland, Germany and Austria) – ie a system characterised by a search for cooperation amongst a number of parties rather than the ‘adversarialism of the Westminster system’.

There is no doubt about the need for reform of Australia’s system of government. The struggle that the present federal government is experiencing parallels that of its predecessors and was quite predictable (eg see Get Ready for Coalition Chaos, June 2013).

However there is a fundamental difference between the Roman Law traditions on which the ‘European’ systems that you suggest as a future option for Australia and the British Law tradition that underpins the Westminister system. The former regards the state as having legal priority over individuals, whereas the latter gives much greater emphasis to the legal status and capabilities of individuals. These differences have deep cultural roots and arguably have been the cause of many conflicts in recent centuries (see Fragmentation of the Global Order, 2001).

Thus I respectfully suggest that any proposals for reform of Australia’s political system on ‘European’ lines needs to fully consider the issues involved. For example, giving legal priority to the state increases the risk of authoritarianism. And a requirement for political consensus before governments can form can increase the risk of indecisiveness – and thus of being slow to learn from making mistakes.

There are arguably ways to rebuild Australia’s system of government that would be compatible with the Westminster tradition that has been the foundation of that system in the past – eg as suggested in Australia's Governance Crisis and the Need for Nation Building (2003+).

I would be interested in your response to my speculations.

John Craig

Beyond Infrastructure Despair

Beyond Infrastructure Despair - email sent 27/1/14

Michael Deegan
Infrastructure Australia

Re: Hepworth A., Roads to despair: we're 'living beyond our need', The Australian, 27/1/14

You were quoted as pointing out that Australia has significant infrastructure problems – especially in relation to roads.

My interpretation of the article in which you are quoted: Australia is now living beyond its ‘needs’. Road revenues exceed road spending. Some roads are in disrepair, some little used and others congested. Simply providing more money won’t solve this problem. In a study of infrastructure by Infrastructure Australia roads were the only infrastructure type to fail every test. The Prime Minister has said that he wants to be an infrastructure prime minister. Infrastructure minister (Warren Truss) has asked state and territory officials to identify projects in national land transport network. Road agencies are dealing with infrastructure that is not fit for its purpose and governments face expectations for roads that they can’t meet. While the private sector was willing to invest it was never given the right to make freight-focused investments when they make commercial sense

I should like to submit for your consideration that Australia’s infrastructure problems are not limited to roads, and require systemic solutions (rather than continued efforts to identify lists of ‘project’ for federal governments to try to get political applause by announcing). A now somewhat dated attempt to identify critical systemic obstacles to infrastructure development was outlined in Infrastructure Constraints on Australia's Economy (2005). Unfortunately the latter is probably still relevant because changes since then have tended to simply be more of what has long been making infrastructure development so complex, expensive and ineffective.

Systemic problems have included:

  • Federal fiscal imbalances which have made it all but impossible for states to take serious responsibility for their nominal (eg infrastructure) functions – and have left them with no financial incentives to take economic development (and thus the creation of a strong tax base) seriously. For reasons suggested in Federal-state fiscal Imbalances consequences in relation to the provision of public goods and services have included: irresponsibility, buck passing, duplication and complexity, and 'pork barrelling'. Government functions have been rendered wasteful and ineffectual. The effect has been rather like the effect of tariff protection on manufacturing (ie encouraging others to focus on lobbying for federal funding rather than on whatever job really needs to be done);
  • Fragmentation of responsibility within government administrations as a consequence of seeking to make service delivery more ‘business-like’ (ie competitive rather than collaborative) in the performance of essentially non-business-like functions;
  • Encouragement of direct private sector control / financing of public goods and services that are subjected to very real market failures; and
  • Politicisation of public services to avoid any reality check on the implantation of populist (ie ‘Yes Minister’ influenced) policies.

Getting beyond despair about Australia’s infrastructure functions is possible. But it requires change.

Might I respectfully suggest that Infrastructure Australia could make a major difference by addressing such systemic obstacles? Australia needs a federal government committed to ‘governing’ (ie making it possible for others to ‘do things’) rather than one that tries to micro-manage everything.

Centralised decisions about an economy tend to be just plain silly. The same clearly applies in relation to infrastructure – as suggested in relation to the present federal government’s ambitions to spend heavily on roads (see The Choice Between Evils that Governments Now Face: 'Process Addiction' or Bad Decisions).

I would be interested in your response to my speculations.

John Craig

And the Winner of the 2014 'Pink Batts' Award is ....

And the Winner of the 2014 'Pink Batts' Award is .... - email sent 15/5/14

Ian McAuley
University of Canberra

Re: Rudd humbled, but real lessons of insulation scheme go unlearned, The Conversation, 15/5/14

Your article suggested that the inquiry into the Home Insulation Program (the formal name of the Rudd Government’s notorious $2.5bn ‘pink batts’ response to the global financial crisis) has focused on “who knew what, and when (and that this was) entertaining political theatre, but not a productive use of public resources”. You also pointed out that “the commission’s hearings confirms the findings of the 2010 Auditor-General’s report into the Home Insulation Program, which found that many of the problems resulted from systemic failures in public administration.”

I would like to submit for your consideration that a new Award could be given in future along with other national honours – namely a ‘Pink Batts’ Award. The Home Insulation Program is not unique. Governments have implemented many superficially attractive initiatives in recent years which turned out in practice to be either ineffectual or counter-productive (eg see On Populism, 2007).

The ‘Pink Batts’ Award could be given for the government initiative that superficially sounded the most plausible but contained the seeds of severe problems that experienced / careful consideration would have revealed.

I should like to also suggest that the recent federal budget included several candidates for a future ‘Pink Batts’ Award. Three contenders are mentioned on my web-site. In brief it is suggested that:

  • The proposed large increase in conventional defence spending should be considered for an Award because it is likely that boosting Australia’s security now mainly requires more emphasis on ‘soft power’ capacity;
  • The proposed large increase in spending on infrastructure (especially roads) might justify an Award because: (a) the imbalances between the taxing capacity and spending responsibilities of the federal and state governments have long been a source of duplication, uncertainty, buck-passing and wastage; and (b) the emphasis which the federal government wants to give on road infrastructure seems inconsistent with current real-world infrastructure priorities and illustrates why the use of the power of the purse by federal governments to control the public goods and services that states provide is dysfunctional;
  • The proposed large increase in medical research funding may deserve an Award because boosting Australia’s economy through enhancing innovation primarily depends on creating the competencies and organisation to commercialize potentially valuable ideas. There is little to be gained simply continuing to: (a) provide ever more ‘smart’ inputs (eg research and education) to an economy that remains insufficiently developed to use them productively; and (b) block the development of the economies’ innovation capacity through internal government programs to ‘assist’ potential innovators.

The existence of systemic problems that can give rise to candidates for ‘Pink Batts’ Awards has been apparent for some years (see Challenges to Australia’s Democratic Institutions, 2003+). These systemic problems were on the point of gaining recognition in 2010 when the ALP leadership concluded that the Rudd Government had ‘lost its way’ (see Starting to Acknowledge Ineffectual Government).

However Australia’s system of government still needs repair, as the present Federal Government also seems to be ‘flying by the seat of its pants’. Perhaps Luke 23:34 is relevant.

John Craig

Three Candidates

A ‘Pink Batts’ Award for National Security?

The 2014 budget included a proposal to increase ‘defence’ spending to 2% of GDP. The problem with this is that this will be focused on increasing conventional ‘hard power’ defence capabilities, when Australia’s security challenges increasingly require mainly ‘soft power’ responses [or at least they have done for several past years].

The world is now afflicted by serious geo-political instabilities (see Geopolitical Indicators).

For example, the Muslim world seems to be plagued by conflicts as attempts are made to decide which (if any) system of political economy would best enable such societies to overcome the constraints that have kept them mired in backwardness for centuries. So far the chaos in the Muslim world has affected Australia through the flows of asylum seekers that conflicts have generated. But there could be much worse consequences in future. These could be headed off by helping afflicted countries to find systems of political economy that would be likely to work – and this requires ‘soft power’ strengths more than traditional ‘hard power’ (eg see Boat People Magic).

Likewise Australia faces security challenges from East Asia that are most likely to involve the use of ‘soft power’. Traditional East Asian Art of War tactics feature deception and encouraging opponents to make mistakes which weaken their position. To counter such tactics Australia needs, for example, to strengthen government institutions so that ‘pink batts’ programs don’t continue to emerge. Conventional ‘hard power’ resources are not sufficient to counter East Asian Art of War tactics (see Comments on Australia's Strategic Edge in 2030 ).

The federal budget’s proposal for a large increase in conventional military spending is a real contender for the 2014 ‘Pink Batts’ Award.

A ‘Pink Batts’ Award for Public Goods and Services?

There are major problems in Australia’s federal system.

The Federal Government has control of most revenue. And the states have only limited and at-times unsatisfactory sources of revenue – even though they have are responsible for providing most public goods and services (eg in areas such as infrastructure, hospitals and schools). The imbalances in Australia’s federal financial arrangements have long produced duplication, uncertainty, buck-passing and wastage (see Federal Fiscal Imbalances).

The 2014 federal budget will force federal-state negotiations about hospital and school funding, because it has cut federal payments for these services and thereby perhaps encouraged state press for increases in the GST. However this has gone nowhere near what is needed for states to be able to take real responsibility for, and competently plan and provide, public goods and services. How more fundamental reform might be achieved was speculated in Fixing Australia’s Federation. The latter referred, for example, to dramatically reducing the need for the federal government to play any role in funding state functions and seeking alternative methods to promote coordination.

The 2014 budget has demonstrated why fundamental reform is needed. Infrastructure takes many forms and all need to be planned and developed in close collaboration with the organisations responsible for other functions. Approval of funding of isolated ‘projects’ by the federal government does not allow effective and efficient infrastructure planning and development (eg see Infrastructure: A Big Picture View). In fact it has precisely the reverse effect. This is well illustrated by the budget’s commitment to an increase in infrastructure funding with a major emphasis on roads. This emphasis on roads is out of touch with the fact (illustrated in Brisbane’s Transport Monster) that:

  • Rising fuel costs have reportedly resulted in a peaking some years ago of urban motor vehicle usage (in terms of vehicle kilometres travelled) and though ‘fracking’ technologies have reduced the constraints on liquid fuel production that the peaking of conventional oil production implied, they have not reduced the constraints on vehicle usage implicit by rising fuel costs;
  • There has been a shift in urban infrastructure priorities towards public transport. Australia’s major cities have adopted ‘urban footprints’ to inhibit the adverse environmental effects of urban sprawl. This has not only blocked access to the cheap rights-of-way that are needed for inexpensive freeways, it has also been complemented by a change in urban forms to emphasize higher densities and public transport .

While a federal agency such as Infrastructure Australia (for example) can make a list of possible projects, it is in no position to ensure that any particular project is well integrated with other aspects of its regional environment. And Australia’s private infrastructure lobbies (who will presumably favour road infrastructure because it can conveniently be privately provided) are also not in a position to balance infrastructure decisions with other regional factors.

The federal budget’s proposal to focus a large increase on infrastructure spending on roads is thus also a real contender for the 2014 ‘Pink Batts’ Award.

A ‘Pink Batts’ Award for Research?

The 2014 budget included a proposal large long-term increase in funding for medical research – apparently partly because this is seen as a way of boosting Australia’s capacity to innovate and invent (Parnell S., $20bn medical ‘future fund’ eases the pain, The Australian, 14/5/14).

While medical research in itself is undoubtedly a ‘good’ thing and this is an area in which Australia has leading edge research competencies, it is not certain that this should be a high priority in terms of benefiting Australia’s economy at the expense of other areas of research or other uses for those funds.

Australia now has a significant economic challenge. It has been recognised since the 1980s that boosting the economy’s capacity in innovation is a path to achieving international competitiveness in high productivity / high wage industries. However the big gap in Australia’s ability to innovate has never been in any lack of bright and potentially valuable ideas. Rather it has been in economic underdevelopment (ie in the lack of the commercial competencies and organisation within the market economy to turn ‘smart inputs’ (such as research) into commercially / economically significant opportunities into successful enterprises – see Political Push on Economic Inputs Can Achieve Little

Progress has been limited because governments: (a) have given in to interest group pressure to fund ‘smart inputs’ (ie education and research) though the economy has remained insufficiently developed to properly exploit them (eg see The Futility of 'Backing Australia's Ability 2'); and (b) sought to provide ‘assistance’ to potentially innovators rather than stimulating the market-responsive economy to develop the capacity to do so (see Problems with Direct Government 'Assistance').

Irrespective of what health benefits the world would get from a large program of medical research in Australia, Australia won’t get significant economic benefits unless a serious attempt is made to develop the expertise and organisation within the market economy to achieve commercially-successful innovations on a large scale (eg as suggested in A Case for Innovative Economic Leadership, 2009). In such an environment government investment in basic research will have an important part to play. But medical research would not necessarily be the area of highest priority.

The federal budget’s proposal for a large increase in funding for medical research is thus also a real contender for the 2014 ‘Pink Batts’ Award.

A Bigger Picture View of Australia's Challenges

A Bigger Picture View of Australia's Challenges - email sent 27/5/14

Rob Burgess
Business Spectator

Re: Weak logic beneath Australia’s biggest gamble, Business Spectator, 27/5/14

I should like to try to add value to your article’s suggestion that a more holistic view of Australia’s challenges is needed than is reflected in the recent federal budget (which was limited to financial considerations) – because the latter involves overly simplistic assumptions about what is required for Australia is to become more internationally competitive. Your article also noted that:

  • Many factors have been critical to Australia’s past strengths and success (such as human capital, legal and political institutions and traditions, international relationships, ‘brand Australia’ and a strong work ethic);
  • Unless such issues are considered, radical reform (such as the federal budget attempted) can cause inadvertent damage; and
  • The federal budget could put Australia’s “world beating stock of human capital on the line for uncertain gain”.

There is little doubt about the need to take the broader view (eg about the position of Australia’s human capital) that your article suggested. Some reasons for a broader approach than was reflected in the federal budget were mentioned in Restoring The Viability of Democratic Capitalism. The latter referred, for example, to: the inability of current government machinery to deal with increasingly complex issues; the unfamiliar cultures and practices that now need to be taken into account; the inadequate support to the democratic process from dependent civil institutions and politicised public services; the need to accelerate economic development; the problems associated with federal financial imbalances; and the need to cease assuming that business-like methods help in undertaking governments’ non-business-like functions.


John Craig

Political Malfunction in Australia: A Way Forward

Political Malfunction in Australia: A Way Forward - email sent 5/7/14

The Editor
The Australian

Re: Our politics is in crisis, the community deep in denial, The Australian, 5/7/14

Your editorial suggested that all is not well with Australia’s political system and that this is likely to have adverse consequences for Australian’s future welfare. However it is not just the general community that is in denial about Australia’s challenges. The same arguably applies to community leaders. A breakthrough is needed.

My interpretation of your editorial: The Australian has long campaigned for reforms in Australia to make it freer, smarter, richer and more democratic. But Australia’s political system is now in malfunction. The nation is in denial about its economic challenges – and political decision making is ineffective. There is a culture of complaint, a decline in self-reliance, a belief that all problems are governments’ fault, political searches for votes by claiming that government can solve all problems, and a media that mirrors this narcissism and short-termism. Politics is noisy, destructive and consumed with self-interest without a capacity for collective self-improvement. The government faces huge challenges – especially with a hostile senate packed with political beginners. After two decades of uninterrupted growth, Australia has a political / social culture that is complacent and feels ‘entitled’. Expectations exceed what can be financed by taxes on a business-as-usual basis. It has depended on economic reforms that started in 1983 and a fading China boom. There are many external risks and financial markets are distorted. There is a need to control the budget to reduce Australia’s risks. There is no agreement about the need to do this, and proposals for budgetary reform have been mired in concerns about fairness. Doing nothing would consign Australia to a miserable, low-growth future and a high level of exposure to external economic shocks.

The risks to Australians’ welfare that your editorial pointed to are valid – though probably understated for reasons suggested in Restoring The Viability of Democratic Capitalism (2014) and The Challenge and Potential Cost of Inequality and Insufficient Income (2014). There is moreover a need to consider the political malfunctions that your editorial referred to in a broader context

Just as Australia’s need for economic reform started to be recognised in the 1970s and received attention a decade or so later, so there is now a need to address defects in Australia’s system of government that started to become obvious in the 1990s (eg those suggested in Australia's Governance Crisis and the Need for Nation Building, 2003+).

Many factors have contributed to Australia’s current political malaise. The biggest ‘denial’ challenge is that the economic and public sector ‘reform’ that community leaders have supported in recent decades has been inadequate and has had dysfunctional unintended consequences. To overcome this, Australia’s civil institutions, which have had the dominant influence on political thinking, arguably need to devote more effort to understanding (for example):

  • the nature and functions of government. This does not seem to have been well understood perhaps because Australia’s system of government was inherited, rather than developed locally. Because of this ‘reforms’ that were hoped to be beneficial have sometimes compounded existing weaknesses (see Decay of Australian Public Administration, 2002 and Neglected Side Effects, 2004). Governments’ core function is ‘governing’ (see Governing is not just Running a Large Business) yet political leaders were enticed into micro-management, eg by heeding advice to emphasise a business-like approach to service delivery, or by demand for ‘national’ (ie generous-government-funded) action. Likewise to speed reform, ‘Yes Minister’ thinking led to politicisation of public services to promote ‘responsiveness’ to new political agendas (rather than building on existing knowledge and experience of the complex functions of government). Elected governments thus tended to surround themselves with ‘yes men’; to deprive themselves of sufficient experience-based ‘reality checks’ of superficially-plausible policies (see On Populism, 2007+); and to make it very difficult for governments to realize that not everyone understood or supported their policies (eg see The Origin and Spread of the 'Queensland Effect', 2001);
  • the requirements and options for building economic competitiveness. The need for economic reform has been widely recognised since the 1970s, and was addressed in the 1980s and 1990s. However the market-liberalization emphasis of the economic reform agenda (whose main impact was to expose individuals and enterprises to competition) was not on its own an adequate basis for ongoing economic competitiveness (see Defects in Economic Tactics, Strategy and Outcomes, 2000 and Lifting Productivity: Considering the Bigger Picture, 2009);
  • the implications of changes in Australia’s international environment (eg see Babes in the Asian Woods, 2009+ and An Approaching Crisis?, 2013+).

To break through the very real problems outlined in your editorial arguably requires something like the solution to a similar political malaise (ie so-called Eurosclerosis) that affected Europe in the 1970s. Civil institutions outside the political system ended the political impasse (through the so-called Europe 1992 process) by putting in place new real-world arrangements which meant that political change was clearly not just a zero-sum game (ie a question of ‘fairness’). One of hopefully-many options to create a positive-sum game out of the reforms needed to boost Australia’s future productivity and competitiveness is suggested in A Case for Innovative Economic Leadership (2009). Options for behind-the-scenes changes to strengthen Australia’s civil and state institutions more generally were outlined in A Nation Building Agenda (2010).

John Craig

Sorting Out Australia's Infrastructure Mess Needs 'Government' not Micro-management

Sorting Out Australia's Infrastructure Mess Needs 'Government' not Micro-management - email sent 18/7/14

Callam Pickering

Re: Abbott's infrastructure projects must have a solid foundation, Business Spectator, 18/7/14

Your article points to the need to avoid the scatter-gun approach to infrastructure project selection that has led to bad decisions in recent years. One cause of the problem undoubtedly lies in federal government efforts to micro-manage state functions as a consequence of: (a) the mal-distribution of taxing power and revenues in Australia’s federation; and (b) an unrealistic faith in central planning. Practical solutions are not hard to find – but would require the federal ‘government’ to actually get on with its job (ie ‘governing’ – rather than just seeking to ‘do things’ itself).

My interpretation of your article: The federal government deserves credit for emphasizing the importance of infrastructure. A report from Productivity Commission reminds us of the importance of project choice (rather than spending more of just privatizing state assets). It advocated a comprehensive overhaul of planning processes. Australia has had an infrastructure shortfall for decades. Infrastructure will be emphasised by the G20 and the federal treasurer has noted federal government’s goal of being the infrastructure government. The Productivity noted the need for caution about project selection and privatisation. Well targeted infrastructure spending is vital for Australia’s future. The federal government needs to make sure that it gets the projects right.

The problem with the conclusion in your article is that it is virtually impossible for any federal government agency to identify the ‘right’ projects for many types of infrastructure (eg because of the need to integrate such decisions with other aspects of the functions of which infrastructure is the capital component, or with the requirements of other government functions or with the requirements of regional development generally).

Because of this the federal government’s announced major emphasis on road infrastructure spending arguably qualifies as a solid contender for a 2014 ‘pink batts’ award (see Public Goods and Services in And the Winner of the 2014 'Pink Batts' Award is ..... ). The latter includes suggestions about how the problem might be resolved. Unfortunately this requires that federal governments moderate their search for political applause by deciding which projects have the most solid foundations, and rather get on with ‘governing’ instead (ie creating a framework within which others can make such judgments without having to rely on financial handouts to implement them).

The imbalances that exist in Australia’s federal financial arrangements have had many adverse consequences (see Federal State Fiscal Imbalances, 2003+). This is however not solely to blame for the disaster that Australia’s processes for developing infrastructure have become. Politicisation of public services and the virtual demolition of machinery that could competently plan and develop infrastructure (out of a desire to make governments more efficient through adopting a business-like approach to their non-business-like functions) are also significant considerations (eg see Infrastructure Constraints on Australia’s Economy, 2005 and Infrastructure: A Big Picture View, 2012).

John Craig

Note added later: In October 2014 it was noted that:

  • the assumptions being made by Australia's federal government about the best options for providing electricity to communities (ie via remote coal fired power stations) were being out-dated by electrical engineers and energy economists who were pursuing increasingly affordable, small-scale power supply technologies such as solar photovoltaics [1]. Central planning is a hazardous business.
  • a satirical TV series highlighted the effect that political appeal, rather than economic effectiveness, would have on project selection by a fictional 'National Building Authority' [1]
Deeper Analysis of Security Issues

Deeper Analysis of Security Issues - email sent 16/11/14

Meron Wondemaghen
University of New England

Re: Defining deviance: four steps in constructing a threat to security, The Conversation, 13/11/14

Your article concerned the political process whereby a threat which requires a response is constructed. This used the example of debates about boat people (an issue that recently has evolved into concerns about Australians joining foreign fighters).

I should like to suggest that at each stage in this process the public / political perceptions involved have tended to be superficial, because there have been much deeper issues involved.

For example, there were very significant issues involved in the background to the arrival in recent years of ‘boat people’ mainly from the Middle East (eg security concerns for Australia and the inadequacy of ‘people smuggling’ as a solution to the humanitarian disaster reflected by the world’s umpteen million displaced persons). Yet in the first instance, debate seemed to focus on whether racism was the primary basis on which the question was being evaluated (see Complexities in the Refugee Problem, 2001+). And when there was consensus on problems associated with people smuggling, emphasis was only given to protecting Australia from being affected – rather than on what might be done to eliminate the problem at its source (see Boat People Magic, 2013).

Likewise Australia’s initial response to the ‘war against terror’ (which has morphed into a campaign against the so-called Islamic State) was apparently based on a very superficial analysis / understanding of the issues involved (eg see Poor Evaluation of Strategic Issues , 2003). And more recent efforts to fight that ‘war’ continue to be based on superficial assessments (eg see Politicians are Wrong: Terrorism by Islamist Extremists Does Involve Islam).

And other security issues are seen to be arising in Asia which again require a much more sophisticated understanding and analysis that Australia’s institutions seem to be capable of providing (eg see Comments on Australia's Strategic Edge in 2030, 2011).

It is my suspicion that Australia’s institutional support to the political process needs to be considerably strengthened in order to overcome / reduce such problems – for reasons developed further in Australia's Governance Crisis and the Need for Nation Building (2003+)

John Craig

Further Notes Added Later

Australia’s response to ‘strategic’ issues generally (ie those that are emerging that are likely to have a significant impact) has often been superficial. This seems to be a by-product of: (a) the Lucky Country syndrome – ie the fact that Australians have believed that they will be OK no matter what; and (b) Australia’s reliance on importing public policies from UK / US / OECD – rather than doing the necessary serious work here. And this has worked fairly well because Australia has genuinely been ‘lucky’ in relation to resource wealth and benefiting from friendly liaison with the world’s most advanced nations. However now the world is changing and the naivety of Australia's official proposals for dealing with with a prospective 'Asian Century' illustrates the hazards of being behind the eight ball (see Australia in the Clayton's Century: The 'Asian' Century you have when you are not having an Asian Century, 2012)

 The present writer's basis for suggesting that responses tend to be superficial involved about 4 decades of ‘strategic’ policy R&D – ie looking at what is coming at Queensland / Australia from the world, and at the slow / inadequate responses that seem to be all too common (because it hasn’t really mattered).

Politics has tended to be seen as a game – rather than a serious issue affecting people’s welfare and security. The response to ‘boat people’ (for example) was largely a game of political point scoring. It did not involve looking at the serious global issues of which boat people were symptoms. And, in recent years superficiality has arguably become much more widespread – because public service politicisation eliminated what had been a key source of a ‘reality check’ on mere populism (see On Populism, 2007+).

But now the chickens are likely to come home to roost. Despite the rhetoric surrounding the November 2014 G20 meeting in Brisbane, the easy days are over. The world is in trouble (see An Approaching Crisis). The G20 has not solved the problem (eg see Counter-cyclical policy can't solve structural problems Sustainable Growth Requires More than an Infrastructure 'Trick' and Creeping Threats to the  Global Economy). Australia’s resource-boom luck has run out – and the economy is inadequately developed to quickly create viable alternatives (eg see How Durable is Australia's Luck?). Community expectations are much higher than the economy / government can sustain (see The Challenge and Potential Cost of Inequality and Insufficient Income). The liberty that has been the foundations of Western societies success is highly prized, but is being challenged with determination by societies whose traditional cultures are incompatible with individual liberty (eg see Is the 'Free World' in Decline?).

Thus it is important that the way Australia responds to strategic challenges (as what to do about ‘boat people’ was at one stage) should be evaluated in terms of whether those responses genuinely dealt with the underlying real issues – rather than by analyzing the way political games have been played for the entertainment of an under-informed electorate.

Strengthening Australia's Democracy

Strengthening Australian Democracy - email sent 22/11/14

Hon Mr Tony Abbott, MP
Prime Minister of Australia

Important international changes are impacting on Australians.

For example, your recent email (which is reproduced on my web-site) pointed to Australia’s prospective Free Trade Agreement (FTA) with China. Economic and business observers clearly believe this FTA contains many attractive features and complements other actual and prospective FTAs in Asia. The G20 meeting in Brisbane reached agreement on many initiatives intended to boost global economic growth. At the time of the G20 meeting China’s president spoke to Australia’s parliament about the possibility of entering a ‘comprehensive strategic partnership’. India’s prime minister also spoke to parliament about the opportunity to develop closer economic and strategic ties.

I would like to suggest that it is desirable for the government to encourage Australians to gain a deep understanding of the strategic context in which such ‘deals’ are being considered. Australia has an unfortunate history of forming policy on the basis of a fairly superficial view of world events (see Deeper Analysis of Security Issues). While benefits have traditionally come from going along with the great powers of the day, there is a need now for more than this. Democracy works well when the community has a sound understanding of the issues that political leaders are grappling with. But, when significant segments of the community don’t have a basis for such understanding, the political process can:

The China FTA and Possible ‘Partnership’ suggests examples of the need to deepen public understanding of Australia’s strategic context. It implies, for example, that it would be dangerously naïve to try to negotiate improved relationships without access to a much better understanding than that of the apparently-Asia-illiterate authors of the 2012 Australia in the Asian Century White Paper (eg see Australia in the Clayton’s Century: The ‘Asian' Century You Have When You are not Having an Asian Century, 2012).

It is not simply up to governments to undertake research and stimulate debates to raise the electorate’s understanding. If Australia is genuinely to maximize its own prospects (rather than becoming a victim) and become a significant influence in making the world a better place by developing constructive relationships in ‘Asia’, governments also need to encourage / stimulate Australia’s civil society as a whole to improve its game in this regard (eg see A Nation Building Agenda).

John Craig

The China FTA and Possible ‘Partnership’: Illustrating the Need for Deeper Public Understanding of Australia’s Strategic Context [Working Draft]

The Economic Benefits

A recent email from Australia’s Prime Minister (Tony Abbott) drew attention to the benefits Australians would gain from a proposed Free Trade Agreement (FTA) with China.

From: Tony Abbott [mailto:.....] On Behalf Of Tony Abbott
Sent: Monday, 17 November 2014 7:54 PM
Subject: Delivering real benefits for Australians

Australia has just concluded a historic free trade agreement with the world’s second largest economy, China. This agreement, with our largest trading partner, will add billions to our economy, create jobs and drive higher living standards for Australians. Freer trade, means more jobs and a stronger economy – it’s that simple. This is good news for Australia – because it will mean more investment and more jobs. It's also good for consumers, because when trade barriers fall, prices fall with them. Families will benefit from lower prices for essential family goods. This agreement greatly improves Australia’s competitive position, providing significant benefits to Australian farmers – particularly for producers of dairy, beef, sheep meat, wine, seafood, grains and horticulture. Australia’s services industries such as legal services, education, telecommunications, tourism and travel, construction and engineering, and health and aged care services will all benefit from being able to do business in China more easily. Along with agreements signed with Korea and Japan earlier this year, this agreement with China forms part of a powerful trifecta of agreements with our major trading partners in North Asia. These economies account for more than 60 per cent of our exports of goods. These agreements are a major part of the Government’s Economic Action Strategy to build a strong and prosperous economy and a safe and secure Australia. Find out more about the agreement here.

Businesses generally seem to see the FTA to: (a) have major potential economic benefits; and (b) be only the first step towards a broader 'partnership' with China.

Signing the FTA with China was worth the 10 year wait. The agreement is transformational. It puts many important Australian industries on more competitive international footing. It will improve: trade; job creation; and business confidence. NZ gained a lot from a similar agreement. China's growing middle class is a major factor. The business community needs to build on the FTA and encourage deeper collaboration. There is a need to think creatively about the benefits of Chinese investment. China's continuing economic reform is welcomed (eg in relation to exchange rates and foreign investment) though more needs to be done. The renminbi is likely to dominate Asian trade and perhaps challenge the $US as global reserve currency. Thus China's confirmation of Sydney as a renminbi trading hub is welcome. Business accepts the challenge of making all this work (Smith M., The FTA is a Great Deal, Now for the Hard Work, China Spectator, 18/11/14)

Todays' FTA with China has taken 10 years and complements other agreements with Japan, the US, Korea, Singapore and NZ. China's share of Australia's exports (32%) was greater than the other 5 combined (29%).  Australians living standards depend increasingly on China. Exports to all other countries (including Japan) declined between 2008 and 2013. However at present exports to China a starting to sag. While resource exports must eventually slow - their prospects are still sound. However the FTA will now broaden the trade relationship. The rise of China's middle class will be a big story over the next decade - and the FTA will allow Australia to benefit (eg in terms of agribusiness exports and inbound investment). For China it is all about everyone benefiting from a growing pie. Australia needs to understand this and meet China halfway. China needs to be seen as a partner rather than a just a customer (Laurensen J., 'FTA only a first step towards real partnership, China Spectator, 17/11/14)

And China's president made a case to Australia's parliament for the development of such a partnership.

China's president (Xi Jinping) declared that the 'big guy' / China is dedicated to pursuing peace and prosperity in the Asia-Pacific in a speech that urged China and Australia to jointly meet various security challenges in the region. Australia and China should be harmonious neighbours who stick together. China's intentions were peaceful, though there was a caveat that China would firmly uphold its core interests (sovereignty / security / territorial integrity). Hugh White (ANU) suggested that Xi was determined to be positive - in contrast to US President Obama's dark view of the region's prospects (which identified China with that dark future). Xi said many people were uncertain / concerned about China - the big man in the crowd. China is dedicated to peaceful development - a stable domestic environment and a peaceful international environment. China is an Asia-Pacific country - and without peace and prosperity in the region stability and development in China can't be assured. China promotes mutual benefit and inclusiveness and advocates a new vision of Asian security to create a virtuous cycle of development and security. China is prepared to dialogue / negotiate to maintain free navigation / peace / tranquility / cooperation. China and Australia should increase dialogue - and work together. This would require increased mutual understanding. There are no historic obstacles to a relationship between China and Australia. Both want peace and cooperation / stability and prosperity. This can go beyond commercial partnership to become a strategic partnership. There are different histories / cultures / social systems / stages of development - so disagreements must arise. This requires candid talk, seeking common ground and meeting others halfway. Development should be mutually reinforcing. China supported Australia's northern development, and Australia's involvement in China's western development. Two way investment should be increased. People to people exchanges should increase. [Xi gives reassuring message about China’s benign intentions , The Conversation, 17/11/14]

A perspective on how China might view these arrangements can be gained from the reported reactions to the FTA of: (a) Chinese officials; (b) an Australian analyst concerned with strategic / political issues [1, 2] and (c) an Australian observer involved in developing trade and investment links with China.

Chinese analysts are now starting to explain the FTA. China expects 8 gains. Increasing China's exports is the main issue - while diluting the US-led Transpacific Partnership and promoting an APEC-focused Asia Pacific FTA is also significant. The FTA also: reduces strategic pressure on China by showing that China's rise is not a threat; promotes yuan internationalization; improves access to good food products; expands investment opportunities; and makes it easier for Chinese businesses to hire Chinese staff [1

Australia's MP's strategic policies in Asia have not impeded his economic agenda. An FTA with China has emerged despite Australia's alignment with Japan and the US to resist China's regional ambitions. There are three possible explanations: (a) China is more concerned with economic outcomes than with strategic / political issues; (b) China cares about the strategic political issues, but doesn't think that Australia's views matter; and (c) China does care about both these issues and Australia's views, but prefers to use carrots to sticks to bring Australia closer to China. Many in Canberra believe that (a) is correct and that China is not really interested in challenging US leadership in Asia. However that view is clearly invalid. The view that Australia does not matter is also wrong - as Australia has been acquiring a prominent place in regional power politics. Thus (c) seems most likely to be correct. Australia has taken a long step away from endorsing what it had previously been saying - and towards accepting Xi's vision of Asia's future under Chinese leadership. Whether this will last is the question [1]

Why has China provided Tony Abbott with a FTA when Abbott has opposed Beijing's political and strategic aspirations in Asia? Beijing was happy to use the stick on others - which raises the question of why it has not used carrots with others as it has so many to offer. It was suggested (by Malcolm Cook) that the economic benefits of FTA to China outweigh other issues. He concede that China is trying to create a new order in Asia - and that Australia's attitude to this matters. However he argues that economic considerations outweigh this. However it is more likely that China's leaders believe that wider economic opportunities will seduce Australia from alignment with China's strategic rivals - and thus accept China's regional leadership. Both views may be right. It is hard to see any really significant consequences of the FTA. It is possible (though not probable) that China wants to use the FTA with Australia to drive economic reform in China. The FTA is more likely to be about politics than economics - in both Canberra and Beijing. Australia's PM showed himself more open than before to China's vision of Asia's future. It will be interesting to see how China responds. It would be nice to think that Australia's economy matters a lot to China - but the reverse is the case. China's economy is so important to Australia that this is being used as a carrot to look kindly on China's aspirations for regional leadership  [1]

China has been seeking to create a new international order because it had not been allowed to take an appropriate place within established international institutions as the result of a US belief that China was 'immature'. Elements of the international order were perceived to involve: (a) making Renminbi an international currency because of concern that a strengthening $US will damage other economies; (b) creation of AIIB; (c) development of trade relationships; and (d) efforts to contain official corruption. Geo-political considerations were seen to impede the development of benefits for the free trade arrangement that China and Australia were proposing (see outline of ASEAN, APEC and CHAFTA and resulting Interchange with Daryl Guppy)

The Strategic Complexities

However it has also realistically been noted that for Australia to actually get the benefits that the proposed FTA seems to offer would not be straightforward because:

While the government is promoting a 'Free Trade Agreement' with China, all that yet exists is a statement of intent which will be time-consuming and complex to finalize (eg in 2016). And even then it would only be a 'preferential trade deal' - as otherwise there would have been no need to negotiate details. Some have seen China's offer to Australia of a 'comprehensive strategic partnership' as like making someone 'employee of the month' rather than giving them a pay rise. Some announced elements of the 'FTA' were negotiated separately, while others were already in place. The Opposition has been talking about revealing 'hidden nasties' - such as eliminating tariffs on everything. The government has responded by pointing to the need to end the 'age of entitlement'. Industry wants the text of the proposed agreement to be released - but it is not yet available  [1]

The China FTA is a game changer. It improves the business outlook and shows that Australia's relationship with traditional allies has alienated China. Australian goods and services now have better links to China and global markets. It is likely that mutual self-interest will pull Australia and China closer together. The pull effect was very strong during mining boom - as this was just a China boom. The FTA ensure that trade will continue to increase. Australia will be pulled into China's business orbit - and it will take a lot of effort by Australian businesses to break into Chinese markets. Deeper integration with Chinese businesses will be required, and risky. China's market is fragmented and highly competitive. Australian firms must now invest in very long supply chains from Australia's countryside to China's minor cities. Previously only a small number of multinationals were involved in dealings with China. Now Chinese business competitors will increase in number and sophistication and increase pressure on Australian service providers (eg banks). Manufacturers will need to build personal relationships and inter-organizational trust. Chinese investment in Australia is likely to increase substantially. [1]

The FTA with China is generating excitement. China is seen to be sending a powerful signal that it is prepared to open and do business with a developed economy. Australian industry is reportedly shocked at the breadth and depth of Chinese 'concessions'. It is seen to be better than other recent FTAs. Broader claims are that: (a) China is using this FTA to show the world that it will do business with a developed country using Australia as a starting point; or that (b) China's president wants to use the FTA to expose China's economy to international competition to hasten domestic reforms. It is generally assumed that the FTA is positive for Australia, Chin and the liberal economic order - because it is presumed that China is well on the way to opening domestic sectors to outsiders. There are real benefits (eg access to Chinese markets for services and agribusiness products). In return China has gained benefits - eg related to reduced tariffs; more open investment access; and possible access by Chinese workers. However , while there are benefits, something does not seem quite right. For example China has given increased access for beef, but still has a goal of having a beef / meat product exports industries. Australian rice and wheat farmers gained no exemptions. China needs beef imports in the short term but will build its domestic export capacity in the long term through technology transfer gained while investing in production in Australia. A Chinese SOE was very disappointed to miss out on buying Inghams because of this motivation. China has frequently signed FTA. However even where tariffs are cut China then imposes ad hoc regulatory hurdles to restrict imports of the government believes that China is not 'winning' or for other political reasons). Domestic anti-trust laws have been used against foreign companies threatening domestic competitors. Licensing requirements have felled many foreign firms. China remains only partly committed to free trade - as a tactical fix to improve the competitiveness of China's firms. The key issue for China in the FTA is liberalization of its SOEs from FIRB scrutiny - as this would facilitate takeovers to gain technology and know-how. While the FTA is of value, its benefits should not be overstated - nor should it be assumed that this indicates any dramatic domestic reform in China's economy (Lee J., A reality check for the China-Australia FTA , China Spectator,  18/11/14)

Realpolitik (ie power / influence based on practical consideration rather than ideology - is increasingly shaping the world. Australian investors face competition from China. The latter have focused their efforts in Africa. China is now Africa's largest trading partner. SOEs and wealthy Chinese individuals are working in unison and crowding out foreigners. While Australia has been negotiating a FTA with China, Africa is surrounded by free trade ports. While China may be helping lift Africans out of poverty, it does no seem concerned about the sources of ivory or diamonds. Chinese investors are now diversifying. Australia's economy is so poorly developed that domestic investors have little choice but to shift money off-shore - and they are increasingly collaborating with those in Asia. The Asia-Pacific is becoming deeply integrated very rapidly [1] (CPDS note: China's wealthy are likely to have gained that wealth through exploiting their positions within state-linked enterprises and financial institutions - rather than through 'private' initiative)

Resource companies are not the only ones at risk if China's credit boom bursts. Australia's banks should also be concerned - as they have doubled investment to China since 2011 to over $1tr (according the BIS) just at the time when investors elsewhere have been seeking to get out. While it is not certain which sectors have gained this investment - it seems likely that much / most will have gone to China's shadow banking system which is most at risk from China's investment boom / bubble (Bell N., Too much, too late: Have Australian banks missed the boat on China?, Business Day, 17/11/14)

Some in the real estate industry are concerned that large scale Chinese real estate investors in Australia seem to acquire significant sites at very high prices and just sit on them. Rather than seeking to gain a profit (the goal of local property developers which requires them to build on such sites quite soon) the motive seems to be merely to get money out of Asia.  The FTA lifts the level of such purchases that are not subject to FIRB scrutiny from $54m to over $1bn. The effect of such investments is not being considered by the various reviews that are being conducted into the effect of Chinese investment in individual properties [1].

CPDS Comment:  This needs to be considered in the light of reports about: (a) the huge quantities of cash that China's anti-corruption efforts have reportedly caused corrupt officials to remove from China; and (b) the apparent 'political' bias involved in China's anti-corruption efforts (ie the 'princelings' who dominate China's current regime seem to be exempt) - see also Overcoming Australia's Corruption Shortage?

Also China has an autocratic / 'soft-fascist' regime. It is ruled by educated elites through a process of building collegiality and consensus within an hierarchical framework that encompasses the society as a whole. This is in some ways similar to how effective bureaucracies work internally in Western governments. There is however no reliable rule of law or any form of real accountability to China's ordinary people. Its economic goals are quite different to the independent profit-driven (ie capitalistic) aspirations that drive industrial development in liberal Western states. China’s economic aspirations appear to be state-driven and mercantilist (ie to build economic, and therefore military, power) – see Understanding East Asia's Neo-Confucian Systems of Socio-political-economy (2009).

China has been under huge pressure to change (see Heading for a Crash or Meltdown) but it can't be presumed that China's solution to its problems won't merely involve doing other things the same way.

Moreover it appears highly unwise in dealings in East Asia to assess economic options separately from social, political, military and even criminal considerations - because those considerations tend to be inter-related (ie to be dealt with by the same state-centered networks).

Reasons that economic issues need to be considered in a broad context are outlined in Babes in the Asian Woods, 2009; Comments on Australia's Strategic Edge in 2030, 2011; In East Asia Deals Always Involve Politics, 2012; 'Free' Trade with China: Not Likely under a Neo-Confucian Regime, 2013, 'Rules' that favour state-linked businesses are not the only behind-the-border problem in economic dealings with China, 2013; Aussies Outsiders to What?, 2014; and 'Free' Trade with China Remains Highly Unlikely, 2014.

Also China’s so-called ‘Communist Party’ has reportedly maintained power not only by being able to raise Chinese peoples’ living standards but by presenting itself to China’s people as the vehicle by which China might obtain vengeance for perceived historical wrongs.

The ‘non-capitalist’ financial systems that have underpinned economic 'miracles' in East Asia (ie those that don't emphasis return on capital) have constituted a novel form of protectionism (see Resist Protectionism: A Call That is Decades Too Late, 2010). They have also imposed macroeconomic constraints on global growth because reducing the risk of domestic financial crises required domestic 'financial repression' which in turn required damaging international financial imbalances if global growth was not to stall (see Structural Incompatibility Puts Global Growth at Risk, 2003 and Impacting the Global Economy, 2009). Those methods:

  • continue to pose significant global risks (see Creeping Threats to Global Economy, 2014). The world is not facing a risk of recession which would require counter-cyclical economic tactics (eg stimulatory spending or easy money policies), but rather major structural obstacles to ongoing economic growth;
  • have left China exposed to a financial crisis (like that which Japan suffered in the 1990s) which could also risk China's political stability – see Assessing China's Prospects (2014);
  • can't easily be changed given the incompatibility between liberal Western-style systems and China's cultural heritage (see The Cultural Revolution needed in 'Asia' to Adapt to Western Financial Systems, 1998).

In order to find a way out of (or to divert attention from) the strait-jacket of the incipient financial crisis that has been tightening since the GFC started, China seems to be trying to create a new international trade-tribute regime like that by which Asia was administered from China prior to Western expansion (see Creating a New International 'Confucian' Financial and Political Order). China's so-called ‘Communist’ Party has operated as something like a pre-1911 Confucian bureaucracy since the late 1970s – a fact which has now become very obvious (see The Resurgence of Ancient Authoritarianism in China).

As the former reference noted the FTA and proposed 'partnership' with Australia are only examples of a significant number of initiatives that seem to be being undertaken to place China at the center of a new international political and economic order that involves the same sort of unrepresentative / illiberal practices that China's own people are currently subjected to - in the hope that this will reduce the risk of the financial failure that seems certain to bring down China's regime if the disciplines of a liberal Western-style international order continue to apply.

As noted above, economic and business observers saw the FTA with China as being very beneficial to Australia economically. However they did not seem to give any serious consideration to the broader implications of that deal. As noted above, analysts have been uncertain about whether the FTA should be viewed as primarily an economic issue or as primarily a political / strategic issue. And the present writer's suspicion is that both these perspectives are necessary and overlapping.

The China-Australia FTA: Option 5 - email sent 28/11/14

Malcolm Cook
Institute of SE Asian Studies

Re: The China-Australia FTA: Option 4, The Interpreter, 21/11/14

I noted the reference to the above comments about the FTA in Hugh White’s Why economics doesn't explain China's FTA decision (China Spectator, 26/11/14) and would like to put in my ‘two cents worth’ on the basis of an attempt some years ago to reverse engineer the intellectual basis of East Asian economic miracles.

As I interpreted it you were suggesting that China’s primary motivation is to use such FTA’s to drive change in its domestic economy.

I would like to submit an alternative hypothesis, namely that China is engaging in a large number of international efforts to boost economic collaboration (including the FTA with Australia) in order to create a new international order because key features of East Asian systems of socio-political-economy are: (a) very hard to change because of incompatibilities between Western and East Asia cultural traditions; and (b) likely to lead to catastrophic failure in a liberal Western style international environment.

China is exposed to the risk of a financial crisis as bad as, or worse than, that Japan experienced as a result of Japan’s poorly-directed investment binge in the 1980s. This is compounded by domestic stresses associated with the way China’s system works which are increasingly difficult to contain (eg the widespread support for social equality which is incompatible with the social hierarchy that is critical to China’s current system; and the likely increasing middle-class demands for their preferred ways of doing things / ideas to be taken into account) - see Heading for a Crash or a Meltdown?

I suspect it is possible that the numerous ‘economic cooperation’ endeavors that China is promoting involve an attempt to create: (a) a ‘world-within-the world’ in which China is the big / fearsome / fixer who can make things happen to benefit the elites in other societies – which is similar to my undoubtedly-improvable understanding the trade-tribute regime by which Asia was administered from China prior to Western expansion; and (b) disrupt to liberal post-WWII international economic and political order that the US and its allies have championed under which China (and similar countries) are currently headed for almost certain crisis. My thoughts on this are outlined in Creating a New International 'Confucian' Financial and Political Order (2009+).

I would be interested in your response to my speculations

John Craig

Another analyst suggested that the arrangement needed to be considered in the light of a multi-pronged challenge to the pax Americana (ie the international order based on free markets, liberal democracy and a rule of law) that seems to be emerging (see Dupont A., 'On the Brink of a New Cold World, The Australian, 29/11/14) and that a there was thus a need for an overarching national security strategy.

And China's president's proposal for a 'comprehensive strategic partnership' with Australia posed a moral dilemma for Australians in relation to whether benefits should be sought through becoming insiders in an unrepresentative / authoritarian / elitist system. His address to Australia's parliament spoke of China's benign intentions - but also noted that: (a) that China is the 'big guy'; and (b) the partnership would work through building relationships and seeking consensus. The latter would involve working in the neo-Confucian / bureaucratic / 'Asian' way - rather than the liberal democratic Western way that builds off the capabilities of free individuals and concern for their welfare.

Australia's political leaders have sought to improve Australia's relationship with China through dialogue with China's leaders without apparently being aware that in 'East Asia' the traditional goal of such interchanges is to manipulate others' actions, while making it hard for others to understand what is actually going on (see The Limits to Dialogue and A Diplomatic Coup in Beijing: By Who? ). Deception is the core of traditional Art of War strategies. Reliable understanding requires looking closely at what is actually being done, not listening to what is being said.

Governments need to make it clear to Australia’s people whether these factors have been carefully considered by those developing the proposed FTA, and will be considered by those negotiating any prospective 'partnership' with China. Such arrangements are potentially a good idea – providing the community fully understands what it is getting involved with and is thus in a position to constructively influence the relationship rather than becoming a victim. This does not yet seem to be the case.

Australia's prime minister thanked China's president for an historic statement at a dinner in his honour about China becoming fully democratic by 2050. However Mr Abbott had misunderstood China's leader. Xi had referred to turning China into a modern socialist country that is prosperous, democratic, culturally advanced and harmonious by the middle of the century. China experts worldwide have pointed out that Abbott had not understood what was said. China's leaders only refer to democracy within their one party system. At best this might evolve into something like Singapore's semi-democracy. Abbott was probably inadequately briefed and lacked the context to understand Xi's words. [1]


Ending Australia's Political Paralysis?

Ending Australia's Political Paralysis? - email sent 6/2/15

Norman Abjorensen,
Australian National University

Re: Conservatives in Crisis, Inside Story, 3/2/15

Your article suggests that the current turmoil in the ‘conservative’ political camp reflects that the fact that the ‘conservatives’ represent privileged interests, and that they have failed to gain broader electoral appeal.

I would like to suggest by contrast that it is Australia that is in crisis – and that, until some serious institutional reforms are put in place, any political faction that gains power is likely to be on a slippery slope to quick electoral defeat.

There has recently been an extremely unusual electoral slaughter of a first term government in Queensland. And the federal conservative administration is trying to work out how it can avoid the same fate. However the crisis that they face parallels what their Labor predecessors faced. Consider, for example, the federal ALP’s perception that the Rudd Government had ‘lost its way’ (eg see Testing the ALP’s Patience, 2010), and the inability of Mr Rudd’s Labor successor (Julia Gillard) and her successor (Kevin Rudd) to stabilize the situation. And consider the Queensland Beattie Government’s repeated need to apologize for, and throw vast amounts of money at, its crises [1, 2] and its simultaneous escalation of at-times-dubious infrastructure spending that left Queensland with spiraling debts that now seriously constrain government options (see Queensland’s Debt Binge, 2012), and the inability of Mr Beattie’s Labor successor (Anna Bligh) to achieve her apparent goal of stabilizing government (see Queensland’s Next Successful Premier, 2007).

There are underlying problems that afflicted both the Labor administrations and their Conservative successors. Australia’s system of government has been struggling to cope with the challenges it faces (eg see Reconsidering the Origins of Kevin Rudd’s Failure (2010) and Australia's Governance Crisis and the Need for Nation Building, 2003+). The latter refers, for example, to: increased complexity which tends to be hard to handle through a democratic process; weakened public service support to governments (eg through politicisation); trying to be ‘business-like’ about government’s primarily non-business-like functions; distortions of government operations through the centralization implicit in federal fiscal imbalances; and the retreat into insubstantial political populism because anything else seemed too hard. Similar comments on the history of the breakdown of effective governance in Queensland, and what might be done about it, were in Reversing Queensland's Institutional Decay (2013).

And Australia’s economy has operated for much of the past decade on the basis of a ‘stronger for longer resource boom hypothesis’ (ie that, in contrast to past boom bust cycles, the resources boom and the jobs and revenue it generates would continue indefinitely) – see Do Blind Spots Cloud the RBAs Lucky Country Vision (2011). A structural deficit was put in place in the federal budget in about 2006 by committing boom-era capital gains tax revenues to tax cuts and income transfers (see Global financial crisis, 2009). The importance of creating a foundation for diversifying Australia’s resource-dependent economy, which had been universally acknowledged in the 1980s, was forgotten. Moreover the methods used to facilitate economic diversification had been inadequate (see Defects in Economic Tactics, Strategy and Outcomes, 2000+ and Lifting Productivity: Considering the Bigger Picture, 2010+) and had had serious unintended consequences (see Neglected Side Effects, 2004). And, as the commodity boom has unwound, large revenue shortfalls have escalated budgetary deficits. Also in diversifying its economy Australia now faces competition from increasingly-economically-capable emerging economies with lower tax rates and lesser public service / income transfer expectations. Thus at the very least Australia faces a significant economic challenge (eg see How Durable is Australia's Luck?).

And the signs of increasing global financial, economic and political instability suggests that Australia’s challenges will be compounded (see An Approaching Crisis). For example:

  • a major constraint on global growth arguably lies in a deficiency in final demand that quantitative easing can’t correct (eg see ‘Roubini: Why QE isn’t working’, CNBC. 1/2/15). And that demand deficiency seem largely (though not solely) a by-product of structural incompatibilities between Western and East Asian financial and economic systems (eg see Putting the Economic Risk of Deflation in Context, 2015 and Structural Incompatibility Puts Global Growth at Risk, 2003);
  • the demand deficiencies that have been vital to the methods used to achieve economic ‘miracles’ in East Asia have made the world economy dependent on easy money policies (eg see Impacting the Global Economy, 2009). Those monetary policies have had nasty side effects in terms of: encouraging ever higher levels of public debt (often making them unsustainable when interest rates normalize); increasing politically-destabilizing social inequality by feeding asset inflation; encouraging resource misallocation; and increasing the risk of financial instability (and of massive CPI inflation in the event of a ‘real-economy’ recovery);
  • China, whose strong debt-driven commodities’ demand allowed Australia to largely avoid the effects of the GFC, seems to be headed for problems that could be even worse than Japan suffered from 1990 for somewhat similar reasons (see China: Heading for a Crash or a Meltdown, 2010+).

Governments have seemed unaware (or unwilling to tell the electorate) that Australia has a real economic problem. The electorate wants things to be ‘good’ – but has no real way to know what is needed to get ‘good’ outcomes. Governments have continued to promise ‘good things’ to the electorate – while trying to come to grips with their declining fiscal capacity to meet public expectations in the face of revenue weaknesses and escalating demands (eg due to population aging). Governments have also seemed unaware (or unwilling to tell the electorate) that serious weaknesses have been introduced into Australia’s machinery of government (eg see Decay of Australian Public Administration, 2002).

Much stronger institutions are needed to address these problems. For example, the politicisation of public services that has allowed insubstantial political populist’s to gain public support needs to be ended. And civil institutions need to enable the electorate to understand: (a) that it has problems – and what its problems really are; (b) that governments on their own lack both the resources to solve those problems, and the ability to free themselves electorally from interest group demands that they do so; (c) that Australia’s system of government needs overhaul; and (d) how the community itself can take more initiative in solving its social, economic and governance problems (eg see A Case for Innovative Economic Leadership).

Developing stronger institutional support to Australia democratic political system would not be an alternative to ongoing government operations. It needs to happen concurrently. This would require careful management, but would not be impossible.

Until stronger institutional support exists, state and federal administrations of any political flavour must continue to stagger from crisis to crisis (and to early electoral death). In 2012 it seemed likely that Queensland’s next unsuccessful premier would be whoever was unlucky enough to lead the party that won that year’s state election (see Queensland's Next Unsuccessful Premier, 2012). The same is true in 2015 - as the only real difference now is that the state’s economic challenges have become harder and the LNP’s ‘lease-assets’ option for dealing with the state’s fiscal constraints has been proven politically unacceptable (eg see Queensland Economic Policy Issues, 2015 and The Black Holes in LNP and Labor Economic Agendas, 2015). And there is nothing really different about Australia’s national government. Any future Prime Minster who does not want to share their recent predecessors’ ignominy will have to pay serious attention to overcoming weaknesses in governments’ institutional support (eg as suggested in Australia's Next Successful Prime Minister, 2012).

I would be interested in your response to my speculations

John Craig

Insubstantial Election Campaigns are only a Symptom of Australia's Political Malaise

Insubstantial Election Campaigns are only a Symptom of Australia's Political Malaise - email sent 13/2/15

Carol Johnson (University of Adelaide) and
John Wanna (ANU)

Re: Mantras, manipulation and mandates , Inside Story, 13/2/15

Your article suggested that the seeds of the present federal political malaise were laid in the 2013 election campaign which was a battle of catch phrases not supported by much in the way of policy detail or substance. This certainly seemed to be the case at that time (see Get Ready for Coalition Chaos, 2013)

However there was nothing unusual about the 2013 federal election campaign in this respect (see On Populism, 2007 and The Need for Running Repairs to the Ship of State, 2013). The lack of substance in political rhetoric had been blindingly obvious for years. Oppositions have been winning elections mainly on the basis of the manifest incompetence of their predecessors. And in the absence of any realistic policy agenda incoming administrations have had a choice between making dubious decisions or conducting endless inquiries (see The Choice Between Evils that Governments Now Face: 'Process Addiction' or Bad Decisions, 2013).

In Queensland that devilish choice can be traced back to the mid-1990s (see Queensland’s Worst Government, 2005). The 1989-1996 Goss Government ‘reformed’ Queensland’s government machinery in the same way that many other did in that era (ie it replaced public service expertise and experience with political motivation and ‘yes men’). Its inability then to actually achieve anything led to the unexpected electoral success of the Borbidge Government. The latter then found that it needed about 90 inquiries before it would be in a position to make reliable decisions. Those inquiries were all reporting at about the time that the Borbidge Government was voted out because of its inactivity. It was replaced by the Beattie administration in 1998 which apparently decided that it had to ‘just do things’ even though no one was really certain about what to do. Many publicly-visible crises emerged and required apologies, and the groundwork was laid for a blow-out in Queensland government debts by ‘solving’ crises with large cash injections and accelerating sometimes-dubious capital spending beyond levels that were likely to be sustainable. A political commitment was famously made to a new dam for SE Queensland even if it was not feasible. And when its proved non-feasible, the state was out some hundreds of millions of dollars. The 2007-2012 Bligh Government seemed sensibly to want to prevent crises rather than throw money at them, but struggled to do so – partly because of Queensland’s increasingly difficult fiscal position. The 2012-2015 Newman Government resurrected the Beattie administration’s ‘just do it’ style (with a different political orientation) and found winning a second term to be hard. And it’s (presumably Palaszczuk Government) successor now appears very likely to face both the Borbidge Government’s 1996 predicament (ie gaining power unexpectedly with no serious policy agenda) and serious fiscal constraints.

I should thus like to submit for your consideration that Australia’s political malaise has a structural / institutional cause – rather than being a consequence of the way election campaigns are conducted (for reasons suggested in Ending Australia's Political Paralysis?, 2015). Changing circumstances and unconsidered consequences of past ‘reforms’ have rendered governments increasingly ineffectual. Significant ‘repairs to the ship of state’ are well overdue.

John Craig

Australia's Lack of Strategic Leadership: Addressing the Causes

Australia's Lack of Strategic Leadership: Addressing the Causes - email sent 14/9/15

Peter Leahy,
National Security Institute,
University of Canberra

Re: Strategic Leadership Lacking, The Australian, 14/9/15

There is no doubt (as your article suggested) about the lack of strategic leadership in relation to Australia’s participation in conflicts in the Middle East. This deficiency: (a) has been obvious for a very long time (eg see Poor Evaluation of Strategic Issues , 2003); and (b) is by no means limited to the Middle East or to military strategy (see Lack of Asia Literacy, 2003; Babes in the Asian Woods, 2009+ and A Case for Innovative Economic Leadership, 2009).

Some suggestions about how these weaknesses might have been addressed were in:

John Craig

Yes, The System is Broke

Yes, The System is Broke - email sent 19/9/15

Niki Savva

Re: No, the system ain’t broke, The Australian, 19/9/15

I must differ with the theme of your article. Australia suffers serious systemic problems in dealing with its current challenges. These difficulties arise primarily from inadequate institutional support to political leaders and from community, business and political expectations that the federal government can, and should, be primarily responsible for solving them. Prime ministers are being asked to do the impossible. Quickly discarding them when they fail to live up to those expectations solves nothing.

My Interpretation of your article: Some see Australia’s system as broken because there have been five prime ministers in 5 years. Alternately it can be seen that the system has worked by weeding out incapable leaders. Several incapable leaders were replaced recently – but the same system sustained Bob Hawke and John Howard. The main difference now is the social media and the 24 hour news cycle. Both Hawke and Howard experienced difficulties initially but overcame these because of the experience they brought to the job; their temperament; their adherence to proper process; their ability to attract good staff; their ability to sift advice; and their commitment to reform. Good process improves the prospects of success. None of what has happened is the result of flawed system – but rather of flawed people in it. It was recently suggested that the GFC both made Kevin Rudd and broke him – because it gave him a reason for being and led to a centralised method of operation and poor cabinet processes. Some see the trouble with Rudd and Gillard as that they thought they were smarter than others – but did not know what they did not know. Rudd Gillard and Abbott were also pressured by media changes – ie by a speeded-up news cycle. It would be unforgiveable if Turnbull joined them. There have been significant changes to Australia’s prime minister at various times in the past.

My reasons for suggesting that ‘the system is broke’ are outlined in Australia's Governance Crisis and the Need for Nation Building (2003+). This suggests many reasons for recognising that the system that worked fairly well in the past (eg for Hawke and Howard) has become unworkable now. For example, the democratic process itself faces growing structural difficulties associated with: (a) greater complexity which often makes it impossible to find simple 'rational' policy and program options and instead requires incremental / decentralised adjustments; (b) globalization which constrains what governments can influence and requires understanding the practical consequences of radically-different cultures; (c) the damage to machinery of government through ill-advised reform (eg by the Hawke and Howard administrations); (d) the rising influence of idealists who have not understood the importance of experience in developing practical policy; and (e) the populism (ie announcing whatever sounds trendy without much concern for whether it is practical) that political leaders have often resorted to cope with their predicament.

There are various other issues mentioned in that document that suggest the need for steady institutional reform, and that merely installing leaders with the latest ‘great ideas’ is unlikely to produce significantly better results.

As suggested in the section of that document on A Nation Building Agenda, two of the requirements to overcome these constraints are arguably to reverse:

  • The loss of competence associated with public service politicisation and 'efficiency' reforms that were not based on experience of what governments actually do; and
  • The expectation that the federal government can, or should, be the primary source of solutions to Australia’s challenges.

In relation to the former, it can be noted that a significant (though not the only) cause of the loss of competent internal support to government was the application of business-like methods to government’s primarily-non-business like functions (eg see Decay of Australian Public Administration, 2002). Unfortunately those who pressed for those dysfunctional ‘reforms’ have been slow to realize that they didn’t know what they didn’t know about what was required for governments to govern (eg see S-L-O-W Learners, 2010).

And, though some progress has started to be made in reducing reliance on central planners by engaging state leaders in making decisions related to reforming Australia’s tax system, there is still a long way to go (see Australia's Future Tax System: The Cost of the Financial Crisis and the Opportunity to Fix Government, 2009; Fixing Australia’s Federation, 2010; Infrastructure Obstacles and Opportunities: Submission to Productivity Commission , 2014; and Australia’s Infrastructure Incompetence, 2015).

Also, while it is still recognised that Australia future international competitiveness depends on developing its innovation capabilities, it does not seem to be recognised that:

  • more-of-the-same methods that have been used in the hope of achieving this over the past 3 decades won’t be enough. It is not enough to create an 'efficient' market economy. It also must be a 'developed' economy, and this does not automatically exist - though there are ways to accelerate its emergence (ie to have an 'economic miracle'). However leadership in creating (say) an effective market-responsive innovation system can’t be provided by democratically-accountable institutions (eg see Australia’s Competitiveness Some Suggestions, 2013). And unfortunately there is strong resistance by those who need to provide leadership to doing so because of resource-cursed Australians' traditional preference for reliance on natural resource wealth and on governments to redistribute it. Likewise lobbying governments to ‘do something’ about social dysfunctions (such as domestic violence) seems to have become the main mission of many institutions who would themselves need to take the lead if an environment is to be restored in which such social dysfunctions are less common-place than they have become while individuals can remain free of moral legalism (see General Observations about ‘Is the Smart State a Just State?, 2003 and Christian Foundations of Liberal Western Institutions, 2010);
  • Without a dramatic increase in access to strategic intelligence about what is happening elsewhere, competitiveness is unlikely to be significantly improved (see also Australia's Lack of Strategic Leadership: Addressing the Causes, 2015). The world has been being assumed to be like it was (eg see Australia in the Clayton's Century: The 'Asian' Century you have when you are not having an Asian Century, 2012) and thus allow traditional economic principles to guide the development of effective policy. However this is not so. The growth and stability of the world economy are at risk because of an unprecedented debt burden sustained by the ultra-low and dysfunctional interest rates which have been made necessary largely by the international financial imbalances associated with the non-capitalist financial systems of East Asia’s major economies (eg see Impacting the Global Economy, 2009 and An Approaching Crisis - From Late 2013). China (on whose economy Australia has become highly dependent): (a) has been seeking to create a new authoritarian international order as an alternative to the ‘liberal’ order that the US has championed since WWII because of the cultural obstacles that exist in East Asia to operating within a ‘liberal’ institutional framework (see Creating a New International 'Confucian' Financial and Political Order, 2008+); and (b) seems likely to be facing a major crisis because of associated structural difficulties in generating capital for investment without its past reliance on escalating debts (see Ongoing Uncertainty and Context to China's Share Market Boom and Bust, 2015).

Suggestions about the need to strengthen Australia’s institutions were also made in 2012 when Julia Gillard was being pressured to stand down to make way for a stronger candidate (see Australia’s Next Successful Prime Minister). However no one seemed to be interested.

John Craig

Ignorance and Incompetence is the Biggest Enemy of Reform

Ignorance and Incompetence is the Biggest Enemy of Reform - email sent 23/9/15

Paul Kelly
The Australian

Re: Negative Politics the Biggest Enemy of Reform, The Australian, 23/9/15

Your article acknowledged that there are systemic obstacles to Australia’s political system dealing effectively with current challenges. However it implied that most of those difficulties related to the role of the media. In Yes, The System is Broke I suggested that the problem was far broader. I would like to illustrate this point further with an example below related to public service effectiveness. In relation to this it is also noted that in 2010 there were other observers who suggested the existence of systemic problems – none of which emphasised media influences (see The Need for Nation Building).

By way of background, my career involved strategic policy R&D in Queensland – ie trying to identify things that were ‘coming at’ government / Queensland in order to stimulate a timely response (see CV).

One thing that became very obvious was that the democratic political system was always out-of-date in understanding of emerging opportunities and challenges and tended to over-simply issues. This is to be expected as policy issues tend to be very complex and the political system tends to reflect ‘everyman’s’ understanding rather than leading-edge-expert knowledge. None-the-less democratic politics plays a very useful role and (given competent support) those limitations can be overcome.

However in the 1970s the Whitlam Government encountered severe difficulties in implementing its idealistic but impractical social / economic / governance reform agenda – and this was seen to be the result of public service ‘resistance’ rather than political over-simplification. The Royal Commission into Australian Government Administration which subsequently looked at that administration’s frustration concluded that the need was to make public services unquestioningly compliant with political agendas – because the fact that the Whitlam Government’s agendas had been impractical was most obvious to those (not including the Royal Commission) with a high level of relevant knowledge and experience.

Taking a lead from the Royal Commission, the standard process for ‘reform’ of public services then came to involve a ruthless insistence that practical defects in political agenda were not to be highlighted. This lead to serious failures by idealistic reformist state administrations (eg see The Fall of the House of Cain, 1992 and Towards Good Government in Queensland, 1995) – and somewhat similar arrangements were later put in place by the Howard Government at the federal level. The lack of an adequate reality check on idealistic but impractical political agendas has remained a feature of government in Australia ever since – with devastating consequences (eg see The Growing Case for Professionalism, 2001+ and On Populism, 2007+).

This point is of current relevance because essentially everything that the current federal government (and opposition) believe is appropriate to dealing with Australia’s current challenges and opportunities involves over-simplifications that need to be subjected to a reality-check that it is highly unlikely that public services are currently equipped to provide. 15-20 years of career stability would be required to build up the required depth of knowledge and experience, and this has not been available.

Ways to reduce this and other systemic obstacles to effective governance in Australia were speculated in A Nation Building Agenda (2008).

John Craig

Australia's State and Territory Governments Want a 'Republic' - Whatever That Means

Australia's State and Territory Governments Want a 'Republic' - Whatever That Means - email sent 26/1/16

Tom Allard
Sydney Morning Herald

Re: 'We want a republic': Australia's states and territory leaders are united, Brisbane Times, 25/1/16

State / territory politicians may be united in wanting a ‘republic’. But they have not suggested what a workable ‘republic’ would involve (eg would it involve an elected or appointed head of state). This matters because with an elected head of state, extensive constitutional and machinery-of-government changes would be needed to avoid dangerous political instability. This failure to be open with the public about the ‘republic’ issue is another example of the lack of practical realism that governments have degenerated into that is preventing Australia’s increasingly serious challenges being competently addressed.

My Interpretation of your article: State and territory leaders unanimously back Australia becoming a republic – ie for an Australia head of state. However divisions remain over when the change should be made. State and territory leaders signed a declaration to end constitutional monarchy as part of an Australian Republican Movement campaign. The declaration was that ‘Australia should have an Australian head of state’. The Australian Republican Movement chairman (Peter FitzSimons) said that overwhelming political support for a republic was significant. The Prime Minister, Malcolm Turnbull, continued to support the change to a republic – but believes that there are other more important issues at present. Mr FitzSimons wants a plebisite in 2020. The vote would be followed by a congress of political and community leaders to choose a preferred republican model – and to support whatever model was then democratically supported at a referendum. Mr FitzSimons backs a minimalist republican model whereby the governor general would be nominated by the prime minister, approved by parliament and then become head of state. This would replace governor-general being appointed by the British sovreign on recommendation of the prime minister. Others favour direct election of a president. Disagreement over this was a factor in the failure of 1999 republic referendum. Of 54 Commonwealth nations, 33 have become republics under Queen Elizabeth.

A proposal for the appointment an Australian as head of state was put to the electorate in 1999 and rejected apparently because the majority either: (a) supported retention of links to the British monarchy; or (b) wanted the head of state’s position to be filled by direct election. However direct election would be incompatible with Australia’s constitution because it would politicise the head of state’s role (for reasons suggested in Politicization of the ‘Crown’, 2003+).

Australia’s constitution is built around an apolitical head of state (ie Australian representatives of the hereditary British monarchy). The head of state holds ALL executive power but exercises that power solely on the advice of elected executive governments (providing doing so conforms with the constitution). There would be a risk of political instability if a (say) ‘president’ were elected. The electorate would judge potential presidents in terms ‘political’ criteria and the president’s political agenda would either conflict or coincide with the agenda of the elected executive government. As an elected president would then have their own ‘legitimate’ political power base, conflicts or conspiracies could arise in the exercise of executive power.

Creating a workable Australian republic would seem to require either:

  • appointing someone to play an apolitical role similar to that of the current Governor General / Governors – as proposed in the 1999 referendum and now endorsed (your article suggests) by the head of the Australia Republican Movement; or
  • electing the head of state and making sweeping changes to the constitution and system of government so that politicisation of that role does not lead to instability. This might, for example, involve adopting something like the US system where the elected head of state also heads the government executive and is counterbalanced by a much stronger (and independent) legislative branch.

State and territory leaders (and others) are being irresponsible by merely advocating a ‘republic’ without clearly identifying whether or not this would be associated with an elected head of state (and thus whether major across-the-board changes to the constitution and machinery of government would also be needed).

Australia’s machinery of government has long been in desperate need of repair (for reasons suggested in Australia's Governance Crisis and the Need for Nation Building, 2003+). The latter referred to the need for: (a) much stronger support to Australia’s political processes to enable them to be competent and effective; and (b) the use of alternative apolitical methods for addressing society’s challenges and opportunities. And given significant current domestic social [1, 2, 3, 4, 5], economic [1,2, 3] and budgetary [1, 2] challenges (as well as international economic [1] and political [1, 2, 3] instabilities and risks that compound them), there is now a desperate need for governments to become much more competent and effective than they have been in recent years. Nothing will be achieved so long as established interests believe that it is in their political interest to keep the public ignorant of the nature of, and uninvolved in actually dealing with, the real challenges and opportunities Australia faces.

Advocating removal of the stabilizing influence of the British monarchy as the foundation of Australia’s system of constitutional government, without clearly identifying what it should be replaced with, would not be a constructive step – as was reportedly suggested also by one federal MP, Andrew Nikolic (Kelly J., and Coultan M., ‘Bill Shorten taps Malcolm Turnbull’s instincts to stir republican pot, The Australian, 26/1/16)

John Craig

Justifying the Opinions of 'Australians of the Year'

Justifying the Opinions of 'Australians of the Year' - email sent 27/1/16

Miranda Devine,
Daily Telegraph

Re: Sorry David, but it’s the wrong fight, Daily Telegraph, 26/1/16

Your article was critical of the Australian of the Year process on the grounds that you believe it has become a plaything of ‘social engineers’ who ‘reflect all the unhealthy preoccupations of the Left’ – and tends to result in Australians being lectured on what is wrong with them. You were especially critical of the selection of former Army chief David Morrison for 2016 – on the grounds that (despite having been Chief of Army for four years) he had: (a) said that he didn’t ‘think that there was a military solution to anything’; and (b) given flowery speeches decrying masculinity and patriarchy instead of providing the leadership that front-line soldiers needed.

If the effect of being selected as Australian of the Year is (as you suggest) to give individuals a platform for expressing their personal opinions about matters of possible public concern, those responsible for the Australian of the Year process surely need to establish a means whereby the reasons underlying those opinions can be made publicly accessible, and then publicly debated.

For example one of the David Morrison’s opinions that you mentioned probably has substance that is only apparent to those who have studied the issue in depth. There seems to have been widespread recognition over the last few years by security / defence analysts that there are (as Morrison reportedly stated) limits to ‘military solutions’ to the world’s problems. Some suggestions about why that conclusion can be seen as reasonable are outlined in Muslims Must Lead the ISIS Fight - But Muslim Armies Can't. The latter points to the fact that defeating Islamist extremism primarily requires discrediting Islamist ideology in the minds of Muslim communities – and that military forces can’t be expected to do this.

Those who aspire to lead national opinion (as Australians of the Year seem to want to do) can’t be effective if they are forced to compress complex strategic conclusions into the one-liners that suit media interviews.

The need for an arrangement for Australians of the Year (and those who receive other Australia Day awards) to present the rationale for what would otherwise be ‘one-liner’ opinions can also be illustrated by other complex issues. For example:

Finally in relation to your concern that the Australian of the Year process at present simply allows individuals to pressure others to comply with their perceptions of appropriate moral standards, I should like to suggest (if so) it is anything but unique in that respect (see Restraining Liberty, 2003+). The latter identifies increasing moral authoritarianism by political / community leaders that is putting Australia’s traditional and advantageous liberal social, economic and political institutions at risk.

The opportunity that the winners of Australia Day awards have to raise issues of public concern should surely be transformed into a vehicle for rational debate - rather than merely being a way for award winners to present themselves as moral elites.

John Craig

Morrison Highlighted the Need for Research Into The Causes of Muslims' Problems

Morrison Highlighted the Need for Research Into The Causes of Muslims' Problems - email sent 2/2/16

Kuranda Seyit,
Forum on Australia’s Islamic Relations

Re: Morrison the cure for Islamophobia, On Line Opinion, 1/2/2016

Your article suggested that:

“David Morrison recently pointed out that religious discrimination in Australia is without doubt alive and well. He was referring to Muslims in particular …. (and) ….. When he spoke out against this vile trend called Islamaphobia, he silenced its proponents … (and) …. When the Australian of the Year says, "We need to understand the challenges that they face", then that's code for "Hey you bigots stop your hate, stop your attempts to ruin this great country". That's code for bigotry no longer has a home in Australia. Stop!”.

There is no doubt that Morrison implied that religious discrimination (which you described as ‘Islamophobia’) is the main source of the problems that Muslims face in Australia. However there is a clear need for a reliable way for such opinions to be properly assessed (see Justifying the Opinions of 'Australians of the Year'). As the latter suggested, issues about which Morrison expressed an opinion (such as whether religious discrimination is the primary source of Muslims’ problems) can be anything but clear cut. The complexities of those issues are further illustrated in Muslims' Problems are Not Limited to Islamist Extremism, and Can't Be Solved Simply by Reclaiming Islam's Past Intellectual Traditions. The latter involved comments on concerns expressed by a reputable Islamic scholar about ‘the crisis facing Islam’ – a crisis that he did not seem to believe had its origins in ‘Islamophobia’.

David Morrison himself illustrated the need for some mechanism to validate the opinions of Australians of the Year. He reportedly gladly pointed out that another issue on which he had expressed an opinion (ie an Australian republic) was more complex than he had originally indicated – ie because of “the practical difficulties of arriving at a satisfactory model for a republic” (Baxendale R., David Morrison ‘stole’ best line from David Hurley’, The Australian, 2/2/16).

Thus (as suggested in Justifying the Opinions of 'Australians of the Year') it seems important to improve the processes associated with the Australia Day honours to ensure that those given favoured platforms to express their opinions have the opportunity to properly justify them.


John Craig

Unsolicited Response from 'Michael' to a copy of the above received 2/2/16

Let me get this straight, Muslims believe they are the victims of intolerance ?

The Jewish community have been the prime targets from Muslim extremists [ to be PC] for many years. As Muslim immigration has increased out of all proportion so to has Anti - Semitism , threats to Jews . In fact the problem has become so great that our security has just been further upgraded our Jewish Day schools have now armed guards, One of the largest Jewish day schools in Sydney in Bondi has just had a 'Bomb proof ' fence erected and the main Jewish community Centre in Caulfield Melbourne is about to erect a bomb proof wall around the premises.

All visiting Israeli Politicians, Musicians, Artists, sportspeople { tennis players Inc ] and Jewish speakers must have security .

All this because of Potential so called Lone wolf Muslim attackers.

When The Age Editor last night came to the Jewish Community Centre to address the Jewish community he had to go through security .

I can assure you the Muslim community does not require this type of security and they are not afraid of Jewish Extremists wanting to blow up their Mosques or kill their flock!

The mantra that it is only a small minority of bad apples is rubbish .It only took 20 Bad apples in New York a few each in London, Paris , Turkey and only one bad apple in Sydney. The cost and inconvenience to the Jewish community and the infringement on our human rights for having to live under siege is unacceptable and it make no difference when the majority do nothing and claim to be the victims !

There is a word if Jewish called Chutzpah [cheek] that is what I call the Muslims claiming to be the victims! 

Improving Democracy

Improving Democracy - email sent 6/2/16

Michael Cope,
Qld Council of Civil Liberties

Re: Remeikis A., Queensland must say no to four-year terms until democracy improves: QCCL, Brisbane Times, 3/2/16

You were quoted as referring to the need to improve Queensland’s democratic processes. I should like to put forward some observations and suggestions about this on the basis of long term public-service involvement in seeking to improve the effectiveness of government in Queensland (see CV) – and subsequent continuation of an interest in that issue in both a Queensland and a broader context (see CPDS Web-site).

The democratic process is only part of machinery of government in Queensland / Australia. For example, effective democracy requires: (a) well developed capabilities in civil institutions (eg research bodies, associations, universities) to provide practical and up-to-date inputs to policy debates; as well as (b) knowledgeable / experienced professional civil services (to provide a ‘reality check’ on policy proposals and competent support with implementation).

Weaknesses in those other areas will make an effective democratic process impossible. Proposals for ‘political’ reform that do not build on (and build up) those external and internal support capabilities risk merely generating practical failures that discredit whatever goals reformers might have had for the ‘political’ aspects of government machinery.

Examples: This can be illustrated by the failed attempt at reform of Queensland’s machinery of government by the Goss administration in the early 1990s following the Fitzgerald Inquiry’s late 1980’s exposure of political / police corruption (see Toward Good Government in Queensland, 1995). Complete political disregard of the need for knowledgeable and experienced public service support resulted in machinery of government that was ineffectual and this seriously hampered the performance of subsequent administrations (see Queensland’s Worst Government? 2005). It also created an easy target for those who sought to profit from abuses of power (see Reform of Queensland Institutions – or a Rising Tide of Public Hypocrisy?, 2004). This was ironic as inhibiting corruption had been the focus of the Fitzgerald Inquiry whose goals the Goss Government had believed that it was giving effect to – but without recognising that merely creating new institutions whose names implied that they were the ‘solution’ would not be enough (see Journey Towards a More Effective ‘Fitzgerald Inquiry’, 2009 and Independent Commissions Are Not Enough to Contain Political Corruption, 2013).

Similar ‘reforms’, dominated by primarily ‘political’ considerations rather than practical performance, led to the failure of other Australian administrations in the same era – and to serious ongoing limitations on the effectiveness of governments in Australia generally (see The Decay of Australian Public Administration, 2002). Public services’ ‘responsiveness’ and ‘managerialism’ (that saw management as a generalist function requiring no depth of knowledge of the area being managed) was emphasized by political factions who lacked practical experience of government and up-to-date knowledge of government functions. This led to public services dominated by yes-men – which was anything but a formula for competence.

The absence of professional (ie experienced / knowledgeable) public services led to many problems, such as:

And a significant ongoing feedback effect arguably developed between weakening public sector agencies and weakening the economic strategies that governments’ adopted (see Broken Governance and Ineffectual Economic Strategy: Two Sides of the Same Coin?, 2015). This, needless to say, exacerbated governments’ budgetary challenges.

Proposals some years ago for improving Queensland’s political system (by changes to the legislature) were well intended but would have achieved little without substantial complementary enhancement of the external and internal support the ‘political’ system requires to: (a) know what to do; and (b) put policies into practice (see The Upper House Solution: A Commentary (2006).

A serious problem is that Queensland / Australian civil institutions have traditionally had limited ability to provide reliable (ie practical and up-to-date) inputs to the political system (eg see Queensland’s Weak Parliament, 1999) because: (a) Queensland / Australia has suffered a ‘resource curse’ in that economic performance has depended much more on natural wealth than on the strategic knowledge and competencies of local commercial / civil institutions; and (b) Australia’s machinery of government was inherited from the UK rather than developed locally – so naive mistakes have been made in the advice given to the political system about machinery of government issues.

Examples: The belief that the use of competition and business-like methods in undertaking governments’ primarily-non-businesslike functions should be emphasized to boost Australia’s economic productivity resulted in the severe weakening of the collaboration and competencies required to support governments’ core role (ie ‘governing’) – eg see Governing is Not Just Running a Large Business, 2002+ and Neglected Side Effects (2004).

Governments' primary role (governing - ie creating a framework that is in the public interest in which others can 'do things') requires support by public servants with a great deal of knowledge about how the 'world works' and of emerging opportunities and threats facing a community that might require changes in how it is 'governed' in the public interest. Governments' secondary role involves the provision of goods and services that are subject to such significant market failures that they can't be undertaken in a competitive market environment. Being 'business-like' (ie operating in ways appropriate to the provision of goods and services in a competitive environment) is not not the key to ensuring effectiveness in either governments' primary or secondary roles. And the structural features required for competitive delivery of goods and services can obstruct the cross-functional collaboration required to deal with policy issues and goods and services that suffer serious market failures.

Also the perceived 'bureaucratic' features of government administrations are largely a by-product of their political accountability - as this requires responsiveness to interest groups rather than to an organization's 'customers' (see Why are Bureaucrats bureaucratic?, 1993). 'Business-like' skills and methods (which are suitable for customer-responsive operations) are not the key to overcoming that source problems in government administration either.   

Similar problems arose in universities where attempts to bias outcomes to the production of more economically beneficial outputs (eg by the adoption of managerialist and quasi-commercial methods like those applied to public services) contributed to a significant decline in the quantity and quality of policy options that might have enhanced governments’ ability to ‘govern’. In the 1970s and 1980s there were many valuable policy contributions from Australia’s universities and public services but this contribution declined dramatically in the 1990s. In the case of universities the problem was compounded by the widespread acceptance of ‘post-modern’ ideologies (primarily in the humanities). This involved the assumption that claims of truth in relation to human affairs were simply a matter of opinion – rather than providing any basis for determining what is likely to be most effective in practice (see A Case for Restoring Universities, 2010)

Likewise an emphasis on private ownership and control of infrastructure that was subject to major market failures led to difficulties in the planning and development of infrastructure (see Problems in the Basic PPP Model, 2002+). One of those difficulties was the loss of the public service competencies needed to guard against abuses of such arrangements by those who gained insider influence over political decisions for their private benefit in ways that paralleled often-expressed concerns about the US military-industrial complex (eg see Brisbane’s Transportation Monster, 2008+).

And attempts to solve governments’ ever-rising financial / efficiency problems through external ‘audits’ have achieved little because they were not based on a recognition of the fundamental difference between: (a) ‘governing’ (ie creating an environment in which others (eg businesses) can do things); and (b) ‘doing things’ (eg in a competitive market environment) - see Reforming State Governments: Does Queensland’s Commission of Audit Have the Answer? (2013). The latter suggests that greater gains in terms of dealing with budget difficulties might have been achieved by ‘governing’ better (eg by development of a stronger economy and tax base, or by reducing the social dysfunctions that lead to large demands on the public purse) than was achieved by merely trying to boost efficiency in ‘doing things’ that are subject to serious market failures.

Other growing obstacles to the development of effective democratic political institutions were considered in Australia's Governance Crisis and the Need for Nation Building (2003+).

Issues: The latter referred to:

Australia's Governance Crisis and the Need for Nation Building (2003+) also suggested possible ways to reduce those obstacles.

The need for improving democracy is not confined to Queensland / Australia (eg see Restoring The Viability of Democratic Capitalism (2014) which considers the global challenge to democracy that is posed by rising inequality; and Dysfunctional Democracy (2016) which comments on the need for effective reform of democratic institutions in an international context). For example, it seems that China is currently seeking to create an authoritarian international order like that by which Asia was administered from China prior to Western expansion as an alternative to the international order built on a presumption of liberal democratic states that has prevailed since WW2 and which is compatible with Australia’s political and economic institutions (Creating a New International 'Confucian' Financial and Political Order, 2009+ and China's Strategic Approach to its Economic and Political Problems: A Speculation, 2016). And a recent account of the US presidential race (Sheridan G., America: here comes the revolution, The Australian, 6/2/16) implied that insubstantial populism is dominant across the board – and this in turn implies a dramatic decline in the US’s domestic affairs and ability to fulfill its past role as the leader of a liberal international order.

The emphasis that the Queensland Council for Civil Liberties is giving to enhancing the effectiveness of democracy in Queensland is to be applauded. I wish you success in achieving your aspirations.

John Craig

They Never Learn

They Never Learn - email sent 19/2/16

Elizabeth Colman
The Australian

Re: Corporate Chiefs Tackle Public Service Bureaucracy, The Australian, 19/2/16

Your article dealt with yet another proposal for improving the performance of the Australian Public Service by making it more ‘business-like’. Such proposals illustrate the lack of understanding of the nature of ‘government’ (and the dramatic differences between what is required for successful ‘business’ and ‘government’). That lack of understanding has been a major (though not the only) factor in the decline in government effectiveness in Australia in recent decades.

My Interpretation of your article: Qantas, ANZ, Telstra and Australia Post executives will be drafted to Australian Public Service to advise high-level bureaucrats on making public sector management more ‘business-like’. Australian Public Service Commissioner (John Lloyd) will consult human resource experts from the nations’ biggest companies on performance / talent management, recruitment and termination. Mr Lloyd also believes that unions are not contributing constructively to negotiations. Bringing in corporate advisers was recommended in a contestability review by Sandra McPhee – which sought a mobile workforce that could move seamlessly between corprate Australia and the public service. Ms McPhee’s review will be made public soon by Employment Minister (Michaelia Cash) and Finance Minister (Mathias Cormann).

Improving Democracy refers to major deficiencies that have been introduced into government administration in recent decades (and also to potential solutions). One of the perennial sources of the deficiencies that have been introduced has been the naïve view that ‘business-like’ methods would help governments undertake their primarily-non-business-like functions.

There is unfortunately nothing new about ineffectual efforts to overcome the problems that have been introduced into government administration in Australia (see S-L-O-W learners, 2010).

John Craig

Response from Experienced Public Servant - Received 20/2/16

Well said!     We’ve seen it all before....... so called corporate experts with smart techniques eg performance management to supposedly sort out  the poor old Govt and give it a if anyone in the Corporate Sector really has much understanding/experience  of Govt anyway!   Many corporate players when transplanted to Govt either never succeed or don’t stay long enough! They certainly don’t have a mortgage on wisdom.....none that I’ve seen anyway. 

I think the problem is also about a lack of quality leadership from the top by our political leaders,  who don’t understand the real purpose of Govt themselves, only party politics. So when these so called reviews are announced,  we  are left with a lot of “window-dressing” with nothing actually gained !

The Political Process is Not the Only Source of Political Turmoil

The Political Process is Not the Only Source of Political Turmoil - email sent 11/6/16

Professor Peter Van Onselen,
The Australian

RE: Politics in turmoil: it’s time to reform our broken system, The Australian, 11/6/16

Your article realistically points to the fact that Australians are becoming disillusioned with politics and suggests that reforms to the political system are needed to correct that problem (ie by broadening the range of people who become involved in politics; and changing the electoral process).

However, while systemic reforms are needed to make Australia’s political system less dysfunctional, those reforms arguably need to go well beyond the political system itself (eg as suggested in Australia's Governance Crisis and the Need for Nation Building, 2003+). There has been a growing lack of realism in Australia’s governments (and thus a decline in their competence) that can’t be overcome simply by changes to who is involved in politics and how they are elected.

Structural obstacle arguably include: the growing complexity / interconnection of the issues governments need to deal with; the need to deal with unfamiliar cultures in an increasingly global environment; the weakening of experience-and-research-based reality checks on policies due to the 'senior'-level politicisation of public services; a loss of realism in many academics’ contributions to policy debates associated with the spread of ‘post-modern’ ideologies; seeking electoral support on the basis of ‘populism’ (ie promising to do what is trendy irrespective of whether it is likely to be effective); weaknesses in evaluating Australia’s strategic interests due to traditional dependence on allies and a lack of realistic understanding of ‘Asia’; oversimplification of policies / programs as a result of centralization; the federal fiscal imbalances that tend to prevent effective contributions by state / local governments; and the erosion of the individual morality that has been the necessary foundation of Australia’s liberal political and economic institutions.

The above document includes suggestions about the sorts of systemic reforms that are probably needed to overcome the structural incompetence that has come to characterise Australia’s political and government systems (see A Nation Building Agenda). Similar suggestions in a state government context about the need to boost the realism of what governments deal with and thus their competence (rather than merely changing the political process) are in The Upper House Solution: A Commentary (2006).

John Craig

The Church of Political Correctness Threatens National Progress

The Church of Political Correctness Threatens National Progress - email sent 22/6/16

Michael Sexton
Solicitor General, NSW

RE: The Church of Political Correctness Controls National Discourse’, The Australian, 3/6/16

Your article highlighted the increasing / stifling influence of the ‘political correctness class’ (PCC) in Australia’s institutions, and their similarities to a religious movement. You also raised the question of how the PCC came to capture so many institutions.

My Interpretation of your article: The politically correct class (PCC) in Australia is like an evangelical religious movement - and this has perhaps arisen as traditional Protestant church groups have seen memberships decline. Some people want to be in groups with coherent beliefs which they want to spread to others. While their opinions may be valid, the PCC is distinguished by not wanting to debate them. Anyone who disagrees is seen to be evil and to deserve suppression. The PCC is small in number but influential because it dominates large sections of the media, universities, legal professions, bureaucracies and some large corporations. Anyone in those bodies who expresses different opinions will have limited career prospects. The PCC came to capture these organisations from the early 1980s perhaps because of huge expansion of universities and introduction of PCC material into schools at that time. Australia is worse than UK and US in stifling public debate on social and political questions. This is difficult to correct because juniors soon realize what they are expected to believe - so the system is self-perpetuating. There are still contrary voices - but they need to have established positions to be immune from persecution.

I should like to suggest three factors that may have contributed to the rise of the ‘political correctness’ problem.

First the complexity of the issues that governments have to deal with has been growing. Gaining proper understanding thus more and more requires considering problems from different perspectives and taking account of many different cause-effect relationships to assess which is most significant. However those with pre-formed opinions tend to see only the evidence that points to the solution that they already ‘know’ to be correct. [In the philosophy of science a similar phenomenon is referred to as the ‘theory dependence of observations’]. Those with pre-formed opinions and established political positions can avoid the need to consider other points of view by simply criticising, ignoring, abusing or otherwise punishing those who raise complexities they don’t want to consider. [Once again this has parallels with problems recognised in the philosophy of science – ie the difficulties of achieving fundamental ‘paradigm shifts’ in science]. ‘Conservatives’ are traditionally characterised by having pre-determined points of view – and being unwilling to consider other points of view. However now those who advocate what they hope to be ‘progressive’ policies are also doing so.

Second the growing influence of post-modern ideologies in the humanities’ faculties of Western universities probably explains why those with what they hope are ‘progressive’ policies now refuse to consider others’ point of view. Post-modernism is the notion that claims of ‘truth’ are primarily a reflection of individual or cultural preferences and have political implications because they tend to reflect the world-view of established elites. Post-modernism is arguably a result of recognition of the complexity that characterises social and political affairs. However it is also an over-reaction to that complexity – because it ignores the fact that some / many conventional assertions about ‘truth’ are likely to be reasonable, if only approximate, reflections of reality. Post-modernism is a form of philosophical ‘idealism’ (ie the view that ideas determine reality) as compared with ‘realism’ (ie the notion that ideas should reflect reality). If those who are in, or have graduated to influential positions from, a post-modern-oriented humanities’ faculty subscribe to philosophical ‘idealism’ (ie assume that ideas primarily determine reality rather than the other way around) then they could see ‘political correctness’ (ie promulgating hopefully-progressive ideas and preventing consideration of alternatives) as an effective way to change the world. However that assumption is unlikely to be realistic.

Third the 1974-1976 Royal Commission into Australian Government Administration may have been a factor in the rise of ‘political correctness’. Its primary conclusion was that a lack of responsiveness by public servants led to the difficulties that the 1972-75 Whitlam Government had had in implementing its version of the  Great Society agenda in the US in 1964-65. The latter had been well-intended but often-simplistic - because unintended consequences included ultimately unaffordable budgetary demands and perpetuating disadvantage through welfare dependency [1, 2, 3, 4]. Wilinski's theory about the need for a ruthless approach to public sector 'reform', which was ultimately-widely-adopted in the 1980s, was apparently based on the RCAGA's conclusion . The consequence of seeing public servants as the problem was that subsequent ‘reform’ of government administrations in Australia (especially ‘reform’ by ALP administrations) emphasised increasing their responsiveness by effectively politicising public services (ie ensuring that they were dominated either by sympathisers or by ‘yes men’ and thereby purging much of their intellectual capital) – see The Decay of Australian Public Administration (2002). And later non-ALP administrations also came to favour the political advantages of top-level public service politicisation – though this had massive adverse implications for the competence of governments (eg see The Growing Case for Professionalism, 2001+). I observed at first hand such a ‘reform’ process by Queensland’s 1989-95 Goss Government (see Towards Good Government in Queensland, 1995). The ‘reform’ process (which largely replicated that of Victoria’s 1982-90 Cain Government even though the latter had had disastrous consequences) had all the characteristics that your article ascribed to a ‘political correctness’ movement. ‘Reformers’ thought they knew all the answers (though they tended to be inexperienced; technically out-of-date; and intent on punishing scapegoats for past problems). No one but sympathisers and yes-men could gain ‘senior’ positions and nothing could be debated or questioned on a professional basis.

I should also like to draw your attention to some other observers’ comments on the ‘political correctness’ phenomenon. Amongst other points these refer to:

  • A parallel between political correctness in the Australian context and the way in which communal pressure to enforce religious-legalists’ interpretation of what Islam requires has stifled progress in Muslim majority states; and
  • The effect that stifling discussion of controversial social and political issues may have on encouraging the emergence of political extremism.

‘Political correctness’ is however only one of the ways in which Australians’ liberty is being constrained (see Restraining Liberty) and thereby creating obstacles to the continued achievement of social, economic and political progress through the rational / analytical methods of problem solving that can be effective only where individuals are not coerced to conform to the opinions of the self-righteous and narrow-minded (see Erosion of the Moral Foundations of Australia’s Liberal Institutions).

Note added later: Some examples of the obstacles to progress that can be created by the ignorance that 'political correctness' usually reflects are illustrated by:  Assessing the Implications of Pauline Hanson's One Nation (1998); Complexities in the Refugee Problem (2001); UN Declaration on the Rights of Indigenous Peoples: Perpetuating Disadvantage? (2007); Finding the Truth on Climate Change (2007); Queensland's Preference for Economic Futility (2016); Federal Government 'Dragging the Chain' on Reform of Safe Schools Program (2016); and Should Australia's Political Leaders be 'Marketing' Islam? (2016). It can also be noted that something like 50% of the material published in scientific journals was suggested in 2015 to be 'untrue' because of both the difficulty of getting reliable results and 'a preference for pursuing fashionable trends of dubious importance'.

In order to reduce the ‘political correctness’ problem it would seem desirable to encourage: (a) freedom of speech; (b) attention to the actual substance of complex issues about which there are political disagreements – rather than calling opponents names; and (c) strengthening the foundations of Australia’s liberal institutions (eg as outlined in A Nation Building Agenda) with particular reference to restoring professionalism in public services and realism in university humanities’ faculties. Public services and academia can be catalysts for comprehensive analytical evaluation of complex political issues (and thus suppress ‘politically correct’ name-callers and the political naivety and potential extremism they provoke). But they can’t / won’t do this when they themselves are effectively politicised.

I would be interested in your response to my speculations

John Craig

What Then? A Government of National Unity?

What Then? A Government of National Unity? - email sent 4/7/16

Tim Colebatch,
c/- Inside Story

In A Long Campaign, A long Wait .. and Then What? (Inside Story, 3/6/16) you suggested, in relation to Australia's recent yet-undecided federal election, that some sort of coalition government arrangement was likely to be the ‘then what’.

My suspicion is that Australia is likely to face a debt crisis fairly soon which will force the political system to become a lot more realistic. It might even result in the need for a government of national unity.

At the moment we have one major party that says Australia needs to get its economic act together – but has no real idea how to do this in practice (eg see here, here and here). The other is committed to increasing spending on social programs. Neither is confronting Australia’s potential ‘national’ debt crisis.

The likely crisis (see Don't Overlook Australia's Risk of a 'National' Credit Crisis) has its origins in:

  • the dependence that domestic growth has had on rapidly increasing ‘national’ debt (many times faster than GDP increases) to levels (240% of GDP) that external observers believe could be hazardous and damage the banking system because of banks’ exposure to real estate whose value critically depends on large continuing international capital inflows and rapidly rising national debts. ‘Government’ debt is a less immediate threat – though its rapid rise increases risks (especially if political instability makes Australia ungovernable and thus leads to the threatened loss of 'governments' AAA credit rating and market attention to 'national' debt levels);
  • the potential debt crisis 1980s in Australia’s biggest export market, China – where national debt seems to be rising 40% of GDP pa (ie about 6 times faster than GDP increases) from its currently-hazardous 280% of GDP. China had been replicating Japan's creation of huge amounts of credit with little regard for return on, or return of, capital that led to its late-1980's financial crisis. Escalating credit in China is now apparently being focused, in desperation, on creating speculative financial markets in the hope of thereby reducing national bad debts as China’s regime has lost its former enthusiasm for maintaining growth by industrial / property / infrastructure over-investment;
  • High and potentially unsustainable public and private debt levels everywhere else because global growth has had to be sustained for decades by reducing interest rates and quantitative easing; and
  • growing understanding that low interest rates / quantitative easing can’t solve the problem. They have in fact been a factor in causing deflationary demand deficits by distorting savings and investment practices - as well as giving rise to social inequality (as rising asset values make the rich richer while 'real economies' and household incomes stagnate) and thus ultimately to political instability.

A government of national unity (if an unlikely majority ALP administration doesn’t eventuate anyway) could be useful because the cuts to public spending that recovery will probably require would be politically feasible if the ALP is a party to the process because (as was the case for the socialist administration in Greece) they so obviously would not want to do it.

The core of a possible agenda for a government of national unity is speculated in Alternatives to Monetary Policy. In brief the latter suggested an emphasis on: (a) increasing governments’ administrative competence; (b) reliance on strategic information, rather than monetary policy or government spending, to drive economic growth; and (c) attention to the ‘clash of civilizations’ issues that first created chronic financial instabilities and obstacles to sustainable global growth.

John Craig

What Might the 'Fifth Estate' Best Do?

What Might the 'Fifth Estate' Best Do?

In late 2016 questions were asked about what the 'Fifth Estate' could best do to improve Australia's current position. A core fact to consider is that someone else has to do the groundwork that the ‘Fifth Estate’ draws together and publicizes.

One problem in recent years has been that the quality of that groundwork has been very poor – because of institutional weaknesses (ie in civil institutions such as universities and associations and in public services).

Some observations about those weaknesses are in The Upper House Solution: A Commentary (2006) and Playing Political Games When Major Reforms are Needed (2016). The former pointed to:

  • problems in civil institutions that have arisen (for example) from Australia’s ‘lucky country’ status. This makes (eg business / union) association members more interested in maximizing the share they can get of natural wealth either directly or by lobbying governments than iby contributing to an understanding of how the community as a whole might do better. New policies in Australia have long tended to come from outside (eg from OECD, US, UK) rather than from domestic sources and been first identified by federal government (because of its international connections) and only become recognised publically and thus politically acceptable about 10-15 years later – ie well after they were ‘state of art’ elsewhere. When the present writer was involved in strategic policy R&D in the 1970s and 1980s this was glaringly obvious. About 20 years from the mid-1980s was spent lobbying business associations in Queensland to do more than put a ‘pro-business’ spin on current policies. This was a waste of time as they were committed to just putting a pro-business spin on whatever policy ideas were trendy. In late 2016 someone starting wondering whether the Business Council of Australia should do more than that (see What will BCA’s choice of a new leader say about its direction?, 15/10/16). This was being considered apparently because of the virtual complete absence of any serious economic policy agenda by either side before the recent federal election – in the face of a situation where there is a desperate need for vast improvements (see Playing Political Games).
  • Problems in public services as service professionals had traditionally been relied on to come up with constructive policy options. As Playing Political Games also pointed out, public services almost ceased to be able to this from the late 1980s because ‘reform’ agendas were put in place to make public services more ‘responsive’ – which mainly meant that that they came to be dominated by cronies and ‘yes men’. In the late 1990s the present writer had a brief role in the Queensland Premier’s Department and was involved with an inter-departmental group that was looking at the government’s ability to plan (the so-called ‘Preparing for the Future’ project). The consensus by senior agency staff was that they needed to set up systematic processes to assemble and disseminate strategic information relevant to the future of whatever functions that they were responsible for – because the absence of such intelligence severely limited their performance. However the powers that be did not want to know.

If the Fifth Estate is to make a real difference it probably needs to look at how to overcome these obstacles (ie the relative lack of heavyweight sources). This might be achieved over a number of years by seeking out and publicizing the efforts of those in civil institutions or government agencies whose jobs involve: (a) systematically assembling strategic intelligence about some issue; and / or (b) drawing conclusions about the practical implications of such intelligence. The result should be a gradual increase in the ‘meat’ in the public policy and economic debates that the Fifth Estate covers and thus in its ability to constructively 'change the world'.