After years of reform drought, 2011 turned out to be one of the more productive years for economic reform. But only up to a point: each of the big set-piece reforms put in place by the government were flawed and undermined by politics and successful fightbacks by rentseekers and special interests – the states, the mining industry, big carbon emitters. This would have counted as an average year for reform in the 1980s and 1990s.
Still, there’s a context for everything: when the rest of the developed world is seemingly incapable of balancing their own budgets, a government committed even to the bare bones of continuing reform looks good by comparison. Indeed, some of the strongest criticism of the government from non-political sources this year was for its insistence on returning the budget to surplus next year. Strange times we live in when the business sector whinges about a Labor government’s fiscal rigour.
And after 2010, in which the quality of economic debate went significantly backwards (Andrew Robb’s infrastructure bonds proposal honourably excepted), we’ll take what we can get. So who did best, worst and why?
Best policy achievement
The best policy package put together this year is Bill Shorten’s Future of Financial Advice reforms (which Chris Bowen initiated), designed amongst other things to end the long-running rort of commissions for financial advice on superannuation and the conflict of interest of financial planners spruiking in-house products to clients. If implemented, the package will be good for the retirement savings of millions of Australians and good for future budgets. But it remains unpassed, and the gullibility of the independents, who appear to have been swayed by a self-interested campaign by financial planners, and the cynicism of the opposition, which allows financial planners to dictate its position, may yet cruel the hopes of Australians for a better super and wealth management system.
The carbon pricing package therefore gets the gong, despite being deeply flawed. The deep irony of the package is that after as varied a line-up as John Howard, Kevin Rudd, Malcolm Turnbull and Tony Abbott all supported or promised a carbon price, it was Julia Gillard – who explicitly ruled one out – who delivered it, albeit in a form in which much of the heavy lifting of the long-delayed decarbonisation of the Australian economy will be done by less-efficient direct action measures favoured by the Greens and the opposition. Nonetheless, for a painfully carbon-addicted economy like Australia’s, it is way past time that a structural mechanism for curbing the addiction was put in place. That’s now been done, in however flawed a fashion.
Worst policy failure
No contest: asylum seekers. This was a huge failure politically for Gillard (and Bowen), but more importantly a failure of moral courage by the entire parliament. We’re fortunate in Australia: rare is a public issue in this country for which the cost can be counted in lives. A successful economy is critical; our health system crucial to our quality of life, our education system a vital aspect of civil society and the economy, but our asylum seeker policy – such as it currently is – is prompting people to place their lives at risk to come here, and many are dying. It is in our hands to reduce, if not eliminate, that tragedy, but our parliament does nothing.
Biggest legislative win
One of the few unalloyed successes of this government has been its record of getting legislation through parliament. Its Migration Act changes were atypical: this is a government adept at securing support for its bills. It saved the best until last, securing the passage of its mining tax (profoundly flawed, but anyway) through the House of Representatives with some minor tweaks and some money for the independents. It was a classic piece of legislative horsetrading to give Gillard her "year of decision and delivery”. For all the predictions about instability and uncertainty, this minority government has a legislative record not much shy of standard-issue governments without a Senate majority.
Best public policy report
It’s a rare thing that can achieve bipartisanship these days, but that’s what the Productivity Commission managed with its report on a national disability insurance scheme. Typically hard-headed, the PC nailed the deep flaws of the current hotchpotch of support systems: "The current disability support system is underfunded, unfair, fragmented, and inefficient, and gives people with a disability little choice and no certainty of access to appropriate supports.” It did exactly what the PC and its predecessor bodies are best at: framing the debate and laying the groundwork for major reform by demonstrating the costs of current arrangements and proposing a solution, which will form the basis of the government’s reform efforts on this front in coming years and which will hopefully be picked up by an incoming Coalition government.
Most influential think tank
Public policy is now contested more than ever. No economic issue can creep onto the agenda without special interests commissioning the same handful of economic consultancies – you know who they are – to churn out rubbish modelling designed to suit the interests of those commissioning it. Think tanks have proliferated, first on the Right and then the Left, feeding the media cycle with reports and op-eds. The economic forecasts of private sector firms are treated as Holy Writ by the media. But amongst it all, the Productivity Commission remains one of the most important players in Australian public policy: independent even of government, forthright, and accused of bias only in relation to the vigour of its economic rationalism.
You only have to look at who hates the PC to know it’s on the side of the angels: crass populist and economic xenophobe Barnaby Joyce insists he likes to use its reports as toilet paper. Except, of course, for when he agrees with them. The PC – a creation of the Howard government when it brought togther the Industry Commission, the Bureau of Industry Economics and Economic Planning Advisory Commission – is an ornament to public life in Australia.
As economic consultants proliferate and their confected numbers about job losses, economic impacts and squandered GDP are sprinkled around like confetti, it’s difficult to single out a single report that more than any other laid on the stupid.
But there is one – from one of the biggest sources of garbage "independent” reports, the copyright industry. Time and again this industry – one of the world’s most powerful cartels, who still make billions from gouging Australians – has vomited into the media cycle absurd claims about the impact of file sharing. In March, the Australian Content Industry Group produced a doozy: a report on file sharing that claimed it cost the Australian economy $900 million a year.
ACIG released excerpts of the report, but not the report itself, to Fairfax for a Sunday paper splash and then sat on the report for over a week. When it was finally released, the reason for ACIG’s reluctance became clear: the report did no work on file sharing levels in Australia but simply applied the conclusions of a wholly discredited European report to our own market. Even by the standards of Big Content, it was a howler.
This story first appeared on www.crikey.com.au on December 28. Republished with permission.