In a recent article in the Sydney Morning Herald, Ross Gittins pronounced that we are ‘staring at the end of the era of economic reform. It has ended because it is seen by many voters as no more than a cover for advancing the interests of the rich and powerful at their expense.’

Gittins then goes on to cite a lot of evidence that people are disaffected. Thus the size of the support for Trump in the US and Brexit in the UK, and to a lesser extent, the success of minor parties favouring more economic autarchy in Australia, all point to a threat to economic reforms aimed at deregulation and open markets. In addition, Gittins argues that the reform agenda has been captured by the supporters of small government bent on privatising those services that remain funded by government, often with what Gittins claims to be dubious results or worse.

But according to Gittins, ‘the reformers’ greatest failure has been [to] … ignore their reforms’ effect on fairness’. Indeed, ‘at a time when technology and globalisation are shifting the distribution of market income in favour of the top few per cent of earners they’re pushing “reforms” to make the tax system less redistributive’.

There is much that resonates in Gittins critique of the present reform agenda and why it is foundering. Nevertheless, I would like to offer a somewhat different perspective. (more…)

The Senate must be permitted to help avoid major infrastructure debacles. 

Many recent posts in Pearls and Irritations have focussed on democratic renewal. Some have decried a lack of trust and competence in our political class. At the same time our retiring Reserve Bank governor advises government should spend more on productive infrastructure.

Given that the Australian Senate looks harder and harder to deal with for any government and public faith in major infrastructure projects is at a low ebb, how do we proceed? (more…)

Taxation reform is a continuing and topical issue. With a new government and the need for budget repair I am reposting below an earlier article in the policy series by Michael Keating.  John Menadue

Oliver Wendell Holmes, the great American jurist, is reputed to have said, ‘I like to pay taxes. In this way I buy civilisation.’ However, in contrast to Holmes’ noble ideal, too often today we hear people railing about the burden of taxation, as though it is in some way an unfortunate even illegitimate imposition upon ourselves, our economy, and our way of life.

Lower taxation has been embraced by all political parties without any evidence that, given our already low starting point, less taxation will in fact lead to higher economic growth, let alone pay for itself. Indeed there is no evidence that the advanced economies with high growth rates of per capita income have lower levels of taxation. Nor have past cuts in our income tax led to faster growth, such as when the top income tax rate was reduced from 60 per cent to 45 per cent. (more…)

In this article in the Harvard Business Review, Jeff Kehoe poses the future of capitalism. He says

Although it may be necessary to treat inequality as an economic problem, it is not sufficient. The US as a country needs to ask and answer some basic questions. Who gets to set the rules? What value should they reflect? What’s fair? What do we owe to one another?

See link for full article: https://hbr.org/2016/07/can-capitalism-be-redeemed

This is a repost of an article by Michael Keating last year which was part of the Fairness, Opportunity and Security policy series.  John Menadue

The rate of employment participation and the productivity of those employees together determine the average per capita incomes of Australians, and therefore our living standards. In addition, being employed creates many of the social contacts and sense of self-esteem that are vital to our individual well-being. While arguably the best way to reduce inequality is to create the conditions where those disadvantaged people who are presently on the margin of the workforce get work, or in other cases get more work.

In short increasing employment participation is most important if governments want to improve living standards, individual well-being, and equality. (more…)

With the election of the new government, I have decided to repost several articles from our policy series that are still relevant.  One of these is by Michael Keating (below) on the role and responsibilities of government.  John Menadue

Different possible conceptions of the responsibilities and roles of government are an important backdrop to the policies that will be examined later in this series of articles. The purpose of the present article is to show that despite the ideological debate between the extremes on the Right and the Left of the political spectrum, in practice:

• The responsibilities of governments have changed little in the last thirty years
• The roles have changed, but changes in regulatory regimes and the ‘marketisation’ of some services has enabled governments to better fulfil their continuing responsibilities. 

(more…)

Vested interests and the subversion of the public interest.

There are many key public issues that we must address such as climate change, growing inequality, tax avoidance, budget repair, an ageing population, lifting our productivity and our treatment of asylum seekers.

But our capacity to address these and other important issues is becoming very difficult because of the power of vested interests with their lobbying power to influence governments in a quite disproportionate way. (more…)

Our loss of trust in institutions.

We speak often about the need for new ideas and policies to fill the void in the public debate.

We will be examining these issues in this series Fairness, Opportunity and Security.

But I think there is a prior problem.  We need political reform to restore trust in our political system and our polity. (more…)

In the series, Fairness, Opportunity and Security that Michael Keating and I edited there were several articles that are still particularly relevant. Several of them deal with the disappointment many of us feel about our institutions and the lack of trust in parliament and politicians. I will be reposting some of these articles over the next week. I still believe that democratic renewal is essential in Australia today. John Menadue

Role of government. The importance of values. (Repost)

Good government must be based on some broadly shared values that inspire and enthuse us.

We can accept that our leaders must make some compromises from time to time, but we need to know ‘what they stand for’. We look for leaders who have conviction. (more…)

The argument

Recent pieces offered a seemingly simple way forward to deal with national infrastructure issues.

It should be simple. All parties should commit to (Infrastructure Australia’s) “project” list – in part or in full – and then stop spending. These “projects” have been properly assessed and found to be worth doing, and specifically worth doing by the federal government because they have some national significance. [1]

 

Indeed, governments should limit project spending to proposals that have been properly and publicly assessed. We are entitled to know what is being done in our name and why. (more…)

This article expands on previous comments that the Williams (No. 2) case is reason to reconsider Commonwealth engagement in land transport. [1]

The challenge to Government spending programs

Williams (No. 2) was the third recent challenge in the High Court to Commonwealth Government spending.

Before these three cases it was widely assumed the Government could spend as it sees fit. Governments worked on that assumption using the equivalent of Jack Sparrow’s compass to guide them; Conservative administrations set course towards rural roads, Labor steered to cities.

The three High Court cases should consign the assumption, the compass and lack of proper Commonwealth direction to the deep. [2] (more…)

Dr Rex Patterson entered politics in 1966 by winning a by-election for the seat of Dawson as an ALP candidate on the platform of Northern Development. During Whitlam’s time as Opposition leader (1967-72), Patterson and Whitlam worked closely together on Northern Australia policies; Patterson also developed a media and parliamentary profile as Labor’s spokesman for rural affairs and Northern Development. As a federal public servant in the 1950s and 1960s, Patterson had developed expertise in sugar, pastoralism and other primary industries and was therefore well qualified to be Labor’s spokesman for these issues. (more…)

Another proposal involving high speed rail Sydney-Melbourne recently surfaced; from CLARA (Consolidated Land and Rail Australia).

Extensive media reports noted an advisory board including former Trade Minister the Hon. Andrew Robb, ex Premiers the Hon. Barry O’Farrell and the Hon. Steve Bracks , and former US Transportation Secretary Ray Lahood. A figure of $200billion was mentioned, with a claim it will not rely on government funding.

So far the outline is sketchy.There are four website pages and a sub three minute video. The idea seems to be to create a series of new cities in inland NSW and Victoria linked to the state capitals by high speed rail. It is a decentralisation plan of which high speed rail is one aspect. Decades would pass before such a plan came to fruition, if ever. (more…)

Road pricing is a hot topic for policy advisers although less popular with the public and elected representatives. This article attempts a (overly) simple explanation of what, why and whereto of road pricing. (more…)