Reform The Agenda
Good policy relies on three things: ideas, debate and courage. Australia is conspicuously lacking in all of them. By Andrew Stone.
Remarks by Andrew Stone at the Canberra launch of his book, Restoring Hope: Practical Policies to Revitalise the Australian Economy.
I am particularly keen to get the ideas in my book in front of those who can actually make a difference in whether or not any of them actually get enacted.
In this setting – here in Parliament House, and speaking primarily to people directly involved in the political and legislative process – I’d like to do something a little different from the Melbourne and Sydney launches in my comments today, and say a few words about the policy process, from start to finish, and how it relates to this book.
For anyone who writes a book like this, two key questions are: what constitutes good public policy (which can include “negative” changes, in the sense of removing damaging legislation or regulations that needlessly restrain growth and initiative)? And how does one actually get good policy implemented?
Rolling these two questions together, there are actually many hurdles to be cleared to bring good policy thinking to fruition – which helps to explain why genuinely beneficial structural reform, as opposed to band-aid solutions, has often proved so elusive. But these hurdles can loosely, I think, be gathered into three main categories.
1. The Need for Good Policy Ideas
Although a trite observation, the first challenge is to have good policy options being brought before policymakers.
One of my fears is that there is far less good, innovative policy thinking coming these days from the public service than used to be the case, 20 years ago.
Leaving that aside for the moment, however – and the related question, if true, as to why that might be the case – a first key point is that identifying good economic policy options requires:
· utmost care about unintended consequences; and also
· a broad focus on the effects of policy options (both beyond the immediate legislative areas involved, and also over different time-frames – short, medium and long).
Far too often, with government initiatives, the “left hand doesn’t know what the right hand is doing”, so that policies introduced to help on one issue end up hurting even more on another … or provide near-term relief, but only at the cost of long-term damage.
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An obvious example of this from the past dozen years is that both sides of politics purport to be concerned about manufacturing jobs, and Australia’s manufacturing base. Yet both Labor and Liberals continue to support an unrealistic Renewable Energy Target for 2020 that has helped to drive up the price of electricity (which, for retail customers, has tripled since the turn of the century!), which is a key input cost for most manufacturers.
Likewise, both Labor and the Coalition purport to be concerned about housing affordability, and the huge increase in the average price of housing relative to incomes over recent decades – yet both remain committed to a massive annual immigration intake which has added hugely to housing demand, and hence to prices (especially in Sydney and Melbourne), over the past dozen years.
· On this score, it is worth noting that on average over the 25 years to 2006 Australia already had, on a per-capita basis, the fastest immigration program of any developed nation, with only two exceptions – these being Israel, driven by a huge influx of Russian Jews in the early 1990s following the collapse of the Soviet Union, and tiny Luxembourg, a European tax haven with a population through this period of less than half a million.
· Yet since 2006 this average annual intake has been doubled! Having been ramped up massively during the pre‑GFC mining boom, when the unemployment rate briefly dipped below 4 per cent, it was then never ratcheted back down after the GFC struck and Australia’s unemployment rate rose markedly.
Against the background of these examples, a key goal of this book has been to try to contribute to offering genuinely good policy ideas – in the sense that they form part of a cohesive and intellectually coherent whole, rather than being piecemeal collections of disjointed policy ideas, cobbled together in haste.
Furthermore, good policy ideas must also be practical and politically achievable. It has always been difficult to get challenging reform ideas implemented, but this has become even more true in the current era of heightened Senate obstructionism, and of backbenchers more prone than in the past to panic at the first whiff of gunpowder.
In this world, calling for governments to commit themselves to intellectually desirable but unachievable reforms, which would burn up their limited political capital, and then decrying them for not doing so, is scarcely helpful.
Government, even when courageously led, is the art of the possible – and that is why I have also made it a priority in this book to try to carefully think through the politics, not just the economics, of any reform proposals … since my focus is on trying to actually achieve beneficial reform, not merely court the applause of the commentariat.
Often, these days, to successfully combine these two critical ingredients of intellectual coherence and practicality in addressing policy problems, novel and innovative thinking is required (as well as an awareness of the history of policy areas, to understand what things have already been tried and failed).
In that context, I also hope that this book does indeed provide some genuinely new ideas, with the capacity to break through policy log-jams – especially in the areas of housing and immigration, of higher education reform, of monetary policy, and of federal-State relations. Others will of course, however, have to be ultimate judge of that!
2. The Need for a Robust but Respectful Public Debate
A second essential element of getting good public policy outcomes is a robust and thorough, but civil, debate – since, as John Anderson has often noted, “good policy rarely emerges from a bad debate”.
This is vital not just to winnow good proposals from bad ones, but also to bring the public along – since it is no good expending political capital fighting for solutions to problems that the general public doesn’t yet realise they have (even if there is indeed a real problem in need of a solution).
“The post‑Howard period has seen countless speeches given and columns written demanding a renewed commitment to reform without specifying what reforms ought to be implemented.”
Governments must therefore avoid as best as possible springing surprises on the people – something of which governments of both political persuasions have been guilty far too often over the past 15 years.
But we also need much better leadership in our public policy debates from our politicians, opinion leaders and the media.
In addition to the lack of intellectual coherence and impracticality that I spoke of a moment ago, two other key failings that have marked Australia’s failed post-GFC economic policy debate, and that we need our debate‑leaders to avoid in future, have been:
· Shallowness; and
· An increased focus on promises off in the “never-never”.
On the former, the post‑Howard period has seen countless speeches given and columns written demanding a “renewed commitment to reform” – yet all too often these contributions have lacked any specifics as to what reforms, exactly, ought to be implemented.
Authors signal their virtue with ringing but vague calls for “tax reform” or “microeconomic reform”, or invocations of the spirit of the 1980s and 1990s – almost as if they wish we could simply float the dollar a second time, or replace wholesale sales tax with a GST again. But what is usually missing is any sort of detailed program of concrete, proposed reforms.
That is why, in the hope of standing out against this unhelpful tendency, each chapter of my book concludes with a set of precise policy recommendations, set out in detail, intended to coherently address the policy problems I have identified.
My hope is that, whether or not readers agree with all or even any of these, they at least provide a solid foundation for a productive public debate – rather than one in which imprecision about the issues and the proposals allows both sides to talk past one another, without ever seriously grappling with the problems at hand.
As for the issue of an increased focus in Australia’s economic policy debates on promises off in the “never-never”, this has been largely a development – and a very damaging one – of the past twenty years … whereby politicians increasingly take refuge in making or demanding lofty pledges to distant policy goals far into the future, as a substitute for tackling near-term and concrete policy challenges.
Parliament, and the nation’s media, are filled with heated debate over greenhouse gas emissions commitments for 2050, thirty years away (and more than forty years away when Kevin Rudd began championing such nonsense, egged on by much of the Canberra Press Gallery).
Similarly, the centerpiece of the Turnbull government’s 2016-17 Budget was a promised cut to the company tax rate to 25 per cent in 2026-27 – or, in other words, after the election after the election after the election after the one we were then about to have!
Endless debate about pledges of this sort – in place of concrete discussions about specific policy plans for the next three to five years – is rightly seen by many Australians as a sign of fundamental unseriousness.
To achieve a productive reform debate, we urgently need less encouragement of this sort of thing, and more ridicule of it.
3. The Need for Political Courage
Finally, though, even with good policy ideas and a good national debate about them, there are many occasions when such ideas still fail to come to fruition.
After all, to become a reality, good policy proposals must still navigate the political process – which is where all of you here come in!
I don’t propose to say anything here about the challenges created by factionalism, by internal political rivalries, or by all the horse-trading that can surround policy reforms (under which even proposals that are broadly agreed within government to be desirable can wither, if they become hostage to fights for concessions over other, unrelated policy priorities).
What I do want to say, however, is that the longer I have observed the reform process – from within Treasury, from the Reserve Bank, and most of all in my nearly five years having the privilege to work directly for The Hon Tony Abbott – the more I have come to believe that the most critical ingredient in actually achieving beneficial reform is courage on the part of key individuals – especially senior ministers and the Prime Minister.
The easiest thing for a government and for a Minister to do is to preside – to simply process the flood of administration that comes up each day from the public service, and address the small crises that perpetually flare up in every policy area, but not think hard about whether there are structural issues that need to be tackled and, if so, what far-reaching changes, potentially creating losers as well as winners, might need to be championed.
That is why, even more than finding good policy options and ensuring a proper public debate about them, the most critical element to achieving beneficial reform is not leaders with a command of every policy detail (although that is also helpful), but ones with good gut instincts about what needs to be done and the bravery to have a go at trying to do it!
With that in mind, thank you all again for coming along today – and I hope that the ideas in this book might prove helpful in reinvigorating the economic policy debates within Parliament and more broadly.
Most of all, though, I hope that those of you who can do so will help to encourage Ministers (and Shadow Ministers) who have good policy ideas that they could champion to take that next step, and have the courage to prosecute the case for these ideas both internally, and with the public at large.