Category: Education

For some the crisis in vocational education and training (VET) and the fate of TAFE was a critical issue in the recent Australian Federal elections. For others it hardly made the radar. Unfortunately a number of those others included members of the re-elected Federal Government. Karen Andrews is now the fifth Minister or Assistant Minister responsible for VET since September 2013, bringing another new face to the sector. (more…)

So the election is in full swing and the word ‘Gonski’ is once more up there in lights. You have to feel a bit sorry for David Gonski. His achievements are indeed stellar but his name has become a proxy for just one: a major review into schools.

Actually it has become a proxy for school funding – and even more narrowly, a proxy for school dollars going this way or that. After Bill Shorten announced extra school funding, electorate by electorate, we now know how many Gonskis will flow and who gets them. Under Labor it seems everyone will get a Gonski. (more…)

Hearing or reading about vocational education and training (VET) today, we expect it to be another story of rorts and wrongdoings. And it is an horrific story, a story of for-profit private providers accessing public funding and not delivering the education and training students expected. It is a story of a number of private providers using brokers to search out vulnerable and naïve prospective students, and signing them up to a lifetime’s debt with promises of free courses and iPads. How did we get to such a position in such a short time? (more…)

We should have known it would come to this. For years both Labor and the Coalition have ducked and weaved while the education sector battled to ensure that at least the Gonski funding hope was kept alive. Labor recast Gonski’s recommendations into a form that the Gonski panel would hardly recognize, and the Coalition was never committed – in fact it is only a few months since they announced that extra Gonski funding wasn’t going to happen.

But the agitation wouldn’t go away and the May budget included a further $1.2 billion. It comes with certain obligations imposed on the States, somewhat of a backflip from previous Minister Pyne’s rejection of any such “command and control”. It also comes with various other conditions, including performance pay for teachers, something which was amongst the shortest-lived of Labor’s previous initiatives.

Labor’s current Gonski commitment is $4.5 billion over 2018-19 – a much bigger ‘Gonski’. Labor Leader Bill Shorten has released a state-by-state and electorate-by-electorate breakdown of where the money will go. In effect Labor is promising what it sees as the full Gonski. It certainly isn’t and I’m not referring to money.

In response, Education Minister Birmingham – in the new Coalition regulatory mode – was quick to point out that Labor will continue a model riddled with inconsistencies in funding between the states, territories and non-government systems.

He could have added his own government as a contributor to such inconsistencies – but his response does raise significant questions. How will the funding be targeted, will it get there and under what forms of accountability? Even bigger questions include: what will be the purpose of this funding, how will it target need and what steps will be taken to ensure efficiency, consistency and efficacy?

These are the same questions that Gonski asked, and to which he provided answers, several years ago – but his solutions were never taken up. Funding was to be focused on need and bring schools up to a resource standard to improve student outcomes. It was to be coordinated by a federal/state schools resourcing body to create some logic in the way schools were funded by the two levels of government.

What has happened in the post-Gonski years is that the way we fund schools from both levels of government, has achieved almost farcical dimensions. Everyone seems to believe in equity and boosting the struggling schools – but the evidence shows that we have not been doing that. Recurrent funding increases (per student) for schools have been at the same rate for the advantaged and disadvantaged for the last six years. When it comes to school sectors, increases for non-government schools are running at double the rate of increases to government schools, the ones which enrol more of the strugglers. As I have previously shown, the differences between the states defy explanation.

The Prime Minister and Leader of the Opposition don’t have to go too far to see what has happened in the absence of efforts to achieve better coordination. Instead of visiting their local schools for the inevitable photo ops they could dig into what the funding data is showing about these same schools. What would they find?

Let’s start with Bill Shorten’s electorate of Maribyrnong. It includes a variety of government and non-government schools, funded in ways that must have escaped the notice of the local member. A couple of Catholic secondary schools are very well funded, in part because they enrol students with a below-average level of socio-educational advantage (SEA). The Catholic Regional College receives $15,320 per student in combined government funding – but this is over $3000 more than goes to nearby Braybrook College, a government school with an even lower SEA. It is also well ahead of Pascoe Vale Girls Secondary College and St Albans Secondary. Caroline Chisholm Catholic College, also in the electorate, is funded, by governments, at levels ahead of two of these government schools. There are also some inconsistencies between the government schools.

In effect the Catholic schools have become more public than the government schools – but only in terms of their funding. In their operation they are private schools. Only the government schools must be available to every local student, from every family and under every circumstance. Not only that, there is a raft of quite different obligations, accountabilities, policies and practices impacting on the two sectors. The school playing field is anything but level. Go figure!

So let’s visit the Prime Minister’s electorate in Sydney’s eastern suburbs. There aren’t too many government schools there because previous governments, in their wisdom, closed them down and the current government is scrambling to meet the new demand for public school places. In NSW public funding of non-government schools seems to have been at more sustainable levels. But Yeshiva College and St Clare’s College, in the Wentworth electorate, manage to receive more public funding than the not too distant Rose Bay Secondary College and Randwick Girls High School. Yeshiva College has just 69 students, so diseconomies of scale apply, something which raises other questions. All these schools have a similar SEA level.

The electorate of Wentworth reveals more. The level of student achievement, as measured by NAPLAN, doesn’t significantly vary between schools which enrol similar students. But the total level of investment which goes into these similarly high achieving schools varies wildly, from around $12 000 per student in the public schools to double, and in some cases triple, that amount in the local private schools. With his background in business the Prime Minister would know about the need for investments to pay a dividend. It seems that the public investment of around $65 million each year in the private schools isn’t making much difference to student achievement. When he next wants to show that money doesn’t improve results he has the evidence on his doorstep. In the meantime, Bill Shorten might like to think about where the $15 million Gonski money he has earmarked for the electorate should not go.

In the past, to point to this sort of thing would raise the usual accusations of the politics of envy. There is not envy behind these figures, just dysfunction. Gonski’s sector-blind solution would have avoided this happening. But both parties have avoided most of Gonski’s important solutions, and now have to give urgent attention to resolving the consequences. They either have to reduce funding to the non-government schools or level the playing field in the ways they operate. Doing nothing isn’t an option.

But nothing is precisely what they will do.

Chris Bonnor AM FACE is a retired Australian principal, education writer and Fellow of the Centre for Policy Development. He is a previous president of the NSW Secondary Principals’ Council and author of several books including The Stupid Country and What Makes a Good School, both written with Jane Caro. 

The Turnbull Government’s Budget for 2016-17 reflects an essentially ‘steady as she goes’ fiscal strategy. Not that that is a fault – indeed it can be a virtue, especially when matched against the give-aways in other previous pre-election budgets.

Furthermore, we could not have realistically expected any other sort of Budget, given the extent to which the Government had narrowed its options before Budget day. In addition, a policy of matching every new spending initiative by a saving, is bound to produce minimal change; not least because cutting existing programs typically generates more opposition than the support for the new initiatives. But that said there are a few interesting and useful initiatives in this Budget.

First, the changes to superannuation go further than just about anybody expected. While the big super funds will not welcome the consequent reduction in the funds that they have to manage, the changes should be widely supported by all but the top 4 per cent of superannuants, as better targeting the tax concessions and improving equity. In particular, I welcome the changes that should help women with broken work patterns. I think, however, that it would have been better to have reduced the threshold for the increased 30% tax on superannuation contributions to $180,000 rather than the proposed $250,000 per annum; the lower $180,000 threshold would then correspond with the threshold for the maximum income tax bracket.

Second, the other useful initiative is the new approach to assisting young unemployed people make the transition into employment. This represents a marked improvement on the Abbott Government’s harassment of these young people, as if their unemployment was purely their own personal fault. Of course, there are risks that the new approach might be exploited by unscrupulous employers – and that has happened in the past – but this approach does seem worth trying. My main concern is that governments tend to spread the funding too thinly with labour market programs, in favour of assisting more people with the limited funds available, but at the risk of dropping the quality of the assistance to the point where it loses effectiveness.

Nevertheless, overall, and in stark contrast to the 2014 Budget, this Budget does seem to generally pass the test of ‘fairness’. Perhaps the biggest future concern for fairness is that the Government clearly intends to increase the fees paid by university students to cover an average of 50% of course costs, instead of the present average of 40% of course costs. So far as I am aware there is no evidence that the private benefit from a university education is as high as 50% of the course costs, in which case this change will be unfair and it will very likely particularly impact on enrolments by disadvantaged students.

I also think that it would have been fairer if the Government had kept the deficit repair levy in place which affects the people in the top tax bracket. After all the deficit is as far as ever from being repaired, and lower income people have been called upon to make bigger sacrifices to help repair the deficit in the past, and they are not now going to get any relief.

The major criticism of this Budget, however, is that it does not really represent any further progress towards achieving fiscal repair and a return to surplus. On the relatively optimistic Budget projections we are being promised that a surplus will be achieved by 2021. But we have heard that one before, and many have ceased to believe such projections.

Of course, some will say why should we worry? Certainly Australian Government debt is not high. Even at its projected peak in 2017-18 it will still represent only 19.2 per cent of GDP, much less than half the ratio for the US. And as for the rating agencies they lost all credibility after their incredibly optimistic ratings leading up to the Global Financial Crisis, and they still seem happy to give the US Government a AAA rating.

Instead, the real concern about continuing budget deficits is that they have already greatly reduced Australia’s capacity to respond to the next external shock to our economy. Furthermore, these deficits are continuing even after twenty-five years of uninterrupted economic growth in Australia. While on the other hand, the risks of an external shock are if anything increasing as the world economy continues to be highly volatile and uncertain, with the outlook for China – our most important trading partner – being perhaps especially problematic.

Frankly Australia needs a more ambitious medium-term approach to Budget Repair. The Government, however, continues to proclaim that this repair must come from more restraint on the expenditure side, and rules out increases in taxation; even if this is achieved by reductions in tax concessions, which really are an alternative form of expenditure.

The reality is that on the evidence in this Budget, this Government is running out of options to further reduce expenditure. The Government has made great virtue of its claim that since the 2015-16 MYEFO all policy decisions have been more than fully offset, resulting in a small surplus over the four years of $1.7 billion. But this claim is itself suspect. The claimed surplus of $1.7 billion over the next four years is dependent on a projected net surplus from policy decisions of $5.9 billion in the final year, 2019-20. In the other years, policy decisions have in fact added to the budget deficit, including as much as $3 billion in the forthcoming financial year. While the likelihood of the net $5.9 billion saving being achieved in the last year is highly problematic.

In addition, this budget is continuing to factor in $13 billion of previous expenditure savings and $1.5 billion worth of revenue increases that have not passed the Parliament. Maybe that will change after the election, and maybe it won’t. In fact, the likelihood seems to be that following the election even if the Government is returned it will not have a majority in the Senate, in which case it really needs a better fiscal strategy to repair the Budget.

Instead of continuing to remove funding from a lot of small programs, with a loss of services – especially cultural and welfare services – the Government needs to refocus on achieving improvements to the efficiency and effectiveness of the big spending areas such as education, health, infrastructure and defence (as discussed in my article “Fixing the Budget – Part Two” and published in Fairness, Opportunity and Security). But even if the rate of growth in the Forward Estimates for these expenditure functions were reduced by as much as a feasible two percentage points per annum, it is doubtful that would be enough to restore a Budget surplus equivalent to around 1 per cent of GDP which is the medium term target.

Furthermore, this pre-election Budget strongly suggests that this Government does not envisage that the majority of Australians actually want smaller government. Thus the overall Budget outcome according to the Government’s own figuring is that, even in four years’ time, in 2019-20, total receipts will still represent 25.1 per cent of GDP and payments will represent 25.2 per cent of GDP – both higher than under Labor’s last year in office in 2012-13 when they were 23.0 and 24.1 per cent respectively.

As the Balanced Budget Commission of experts, appointed by the Committee for the Economic Development of Australia, found Australia has a revenue problem rather than just an expenditure problem. Furthermore, that Commission identified sufficient revenue options that had a reasonable chance of gaining majority support to play the major role in restoring the Budget to a satisfactory surplus (see my post 29 March 2016).

In sum, sooner or later politicians will find that they have to talk about the revenue options if we want to maintain the present nature of our society and the social obligations that involves. And frankly the sooner that conversation begins the better. But unfortunately don’t expect that conversation to happen over the next two months of this election campaign.

We are indebted to the Hindu religion for that useful term sacred cow. As every schoolboy knows, Hindus venerate the cow and forbid its slaughter or abuse. Our political landscape abounds in sacred cows – institutions or practices that are considered beyond criticism, immune to scrutiny and supported by politicians of all parties. Some sacred cows are worth having, of course. Perhaps the most sacred is the Parliamentary Remuneration Tribunal – much loved by MPs when it delivers them well-deserved salary rises at regular intervals. Other sacred political cows are harder to account for. Here’s my list of the top seven.

The family home – This venerable institution has been a protected species for generations. Never mind that families are leaving the family home in increasing numbers, and one’s “principal place of residence” is quite likely to be standing empty while its owner decides whether to sell it at a hefty profit in an overheated property market. Since 1985 the “family home” has been exempt from capital gains tax – a concession Treasury estimates will cost the budget around $50 billion in 2015-16. On top of that, people with multi-million-dollar homes at Point Piper or Toorak can still claim the old-age pension. According to Canberra University’s National Centre for Social and Economic Modelling, almost 90 percent of the current GST exemption benefits the top half of income-earners. And neither side of politics wants to know.

Defence – When was the last time a politician questioned the defence budget or dared suggest possible savings? There has been much argument about whether the Navy’s fleet of 12 new submarines should be built in Australia, but where is the argument about the cost of the subs (around $4 billion a pop) and how many we actually need? The last time an Australian sub fired a torpedo in anger was 1942. Perhaps we could manage with just ten new subs, or eight, even half a dozen. The rule at budget time seems to be that once the military have submitted their shopping lists, no one can question them. Who can argue with the experts about national security? But we pay a big price. According to the Government’s defence white paper, designing and constructing the new subs will cost at least $50 billion up front, with ongoing maintenance on top of that – all part of hefty upgrade of the overall defence budget. You could build a lot of schools, hospitals and very fast trains with that sort of money.

The car – Motorists love their cars and politicians love motorists. After all, if enough people drive cars governments are saved the expense of building railways and other decent public transport services. I’d better confess that I’m a regular motorist myself, having driven an ancient Honda for the past 22 years and contributed my fair share to traffic congestion, air pollution, global warming and the incidence of obesity. Car manufacturing plants in Australia may be closing down, but that hasn’t stopped us buying cars in record numbers – 1,155,408 new ones last year, up 3.8 percent on the year before – which means more government revenue from petrol taxes, registration fees and the rest. And since the car is a sacred cow, the correct political response is to build more roads for it – bigger, more expensive freeways like Mike Baird’s extravagant West-Connex now hacking its way through Sydney’s western suburbs. The result: more pollution, more congestion, more cars.

Wealthy private schools – The fathers of Federation laid it down that education in Australia should be free, secular and compulsory. Those were the days! For millions of Australians today, education is expensive and religiously based, and if parents opt for home-schooling, it is no longer compulsory for kids to go to school. So-called “State aid” was a source of deep sectarian bitterness until Gough Whitlam entrenched the principle of needs-based education in the 1960s. Yet many of the wealthiest private schools continue to receive lavish public subsidies. Why have the most privileged schools become a sacred cow? Julia Gillard shares some of the blame for promising that under the Gonski funding reforms no school would see its funding cut. It is now the norm for schools charging parents $30,000 a year to receive generous public funding enabling them to build extra tennis courts, swimming pools with underwater cameras and auditoriums with orchestra pits and state-of-the-art performance facilities. Fairfax media reported recently that five of Sydney’s most expensive schools have received more than $92 million in state and federal funding since 2012. Do politicians object? Not that I’ve heard.

Development – By development I mean anything built by developers, that revered new breed of public benefactors who give us vast shopping malls, giant office towers and high-raise apartment blocks, often in unsuitable locations, whether we want them or not. Developers also build infrastructure – roads, railways and the like – which used to be called public works and were funded from the public purse, unlike today, when major infrastructure is more likely to be built and run by private operators for their own profit. But then, developers give us growth and jobs and prosperity and other features of the good life, so who can complain? Yet somehow I find it strange that using my seniors’ Opal card I can travel half way around NSW and home again for $2.50, but if I take the privately-run rail service with five stops between the city and Mascot airport (also privately run), it will cost me $19 each way, Is anything wrong?

Sport – Of course sport is a good thing, but I’m talking here about Big Sport – sponsored professional football, big payouts for exclusive TV coverage, naming rights for multi-million-dollar stadiums funded by the taxpayer. Politicians don’t dare criticise the elite sporting establishment, and no premier or prime minister would dream of turning down an invitation to a footy grand final. Now that Malcolm Turnbull has pronounced AFL the most exciting football code – a brave call – and since this is a most exciting tiome to be an Australia, Aussie Rules must be the game to follow. Bad luck for rugby and soccer fans. The NSW Government is spending $1.6 billion on new sporting stadiums when there’s no shortage of good ones already. Why not spend some of that money on school ovals and local council sports grounds to encourage more people to participate in healthy recreation?

The flag – The flag may be a sacred symbol, but why should the present design be considered sacred? You don’t have to be a rabid republican to wish for an Australia flag with a more distinctive national character. The Canadians removed the Union Jack from their flag in 1969. New Zealanders stuck with their old flag in a recent referendum, killing any prospect of change in Australia for the foreseeable future, but surely we can do better. Politicians hate talking about the flag because it divides public opinion and upsets the RSL. The same goes for Anzac Day. Rather than celebrate a great military disaster, why not celebrate peace, the end of the Second World War, the most lethal and destructive cataclysm in recorded history? Why not celebrate VP Day, the end of the war with Japan? Paul Keating, in his usual combative style, had this to say: “The Liberals were always soft on the Pacific War. For them it was all about Gallipoli, while our Second World War battles in places closer to home came second. I went to Kokoda to make the point that Gallipoli looked back at Britain, whereas Kokoda looked to our independence.”

No doubt there are other sacred cows, and a few old ones , like the Monarchy and the Church, that are regularly lampooned these days and are no longer as sacred as they were. So let me round off my list with the cow herself. I don’t mean that Daisy is a sacred creature. I’m talking about the industry to which she belongs – the beef cattle industry, earning an estimated $7.27 billion in export income every year. There are roughly 26 million head of cattle in Australia and politicians love them all. Never mind that many cattlemen treat their animals cruelly, trucking them long distances in confined spaces to be put to death in blood-drenched slaughterhouses, or exporting them live for even more brutal treatment overseas. People have long wondered whether animals feel suffering as we do. I think Shakespeare had the answer, as he often did: “The poor beetle that we tread upon in corporate sufferance feels a pang as great as when a giant dies.” I couldn’t have put it better myself.

Evan Williams is a former newspaper editor and Walkley Award-winning journalist. He wrote speeches for Prime Minister Gough Whitlam and a succession of NSW premiers. He headed the NSW Government’s cultural sector from 1977 to 2001, and for 33 years wrote regular film reviews for The Australian. He is a Member of the Order of Australia.

Two plus years of conservative government has given oxygen to a number of strange solutions to ill-defined problems. Malcolm Turnbull’s proposal to have the States alone fund government schools, leaving the Commonwealth to look after private schools, is the latest.

As a serious suggestion it has been widely condemned, but it would be premature to dismiss it as a piece of spontaneous kite flying. Conservatives have been playing in this space for some time. In April 2014 the Centre for Independent Studies (CIS) flagged having wealthy parents paying fees for public education. Around the same time Tony Abbott commissioned another Tony (Shepherd) to come up with ideas, including about funding for schooling. Most of his suggestions were wisely ignored – but issues arising from having schools funded by two levels of government struck a nerve.

Then in June last year the Abbot government’s green paper on federation reform contained a proposal for the Commonwealth to abandon funding of public schools. It was one of four options – but it seems Turnbull’s current proposal has won the day. Malcolm has lurched to the right again. That emotional attachment of the Coalition to private schools, once declared by Christopher Pyne, won’t be shaken.

It’s not that having two levels of government play around with schools isn’t a problem. It certainly is – and it helps explain why our current framework of schools is largely unsustainable. It’s just that sensible solutions to date have been placed in the too hard basket – or modified out of contention after lobbying by sectional interests.

The best example is Gonski’s recommendation that a Commonwealth/State schools resourcing body be established to help restructure school funding to reflect student needs, regardless of sector. Both levels of government would contribute, but the allocation of funding would be well outside the political sphere and arguably manageable across levels of government.

The fact that it didn’t happen is regrettable – because the Prime Minister’s current proposal is going to open a pandora’s box of new problems, while failing to resolve longstanding ones. In their most generous moments there will be few observers who would believe that a Coalition government will slow down galloping funding increases to private schools.

Even leaving aside the school sector trench warfare that would be renewed, shifting all funding of public schools to the states, in the absence of any overarching equity monitoring, risks cementing the inexplicable variations between the states in the way they currently fund schools.

There are many examples, best illustrated by comparing recurrent funding for secondary schools with an average level of socio-educational advantage (ICSEA 950-1050). On average the state and territory governments across Australia fund each student in these schools at around $10,260 (2013 figures from My School). Location alone suggests that there will be noticeable differences between the states/territories: Students in the Northern Territory, for example, are funded at $16,400, well above the national average.

But secondary students in Victoria are funded at around 60% of the level of students in the ACT. In fact Victorian public school students are funded by their state government at levels well below those in other states. If you want to be a well-resourced public secondary student, don’t attend high school in Victoria, or for that matter in Tasmania. Aside from the two territories, the best funding per student comes from the state governments of South Australia and Western Australia.

It’s not as if current Commonwealth funding solves any of these problems. The average federal recurrent funding to state public secondary school students was $2000 three years ago. Victoria, Tasmania and especially Queensland are well below this figure. There may be a good explanation for these variations but I’ve missed it.

The patterns of capital expenditure on schools by the states…just don’t seem to form any pattern at all. The last time I checked (two years ago) annual capital expenditure per government school student in NSW and Victoria averaged around $500, but had generally declined over four years. In contrast, capital expenditure per student in Queensland government schools almost trebled, to around $1700 per student in 2012. Capital expenditure increased in South Australia. It also increased in Tasmania to 2011, yet all but disappeared in 2012. Western Australia showed a three year decline followed by a substantial boost in 2012.

In the light of all this it is instructive to read the following in Matthew Knott’s SMH report. He showed how last year’s green paper warned that the option now adopted by Turnbull

“could, however, lead to very different funding models being applied across the states and territories and between the government and non-government sectors, leading to differences in the level of public funding for schools with similar population characteristics.”

Too late, that’s already happening – and on a large and inexplicable scale. Left to their own devices – especially the political ones – governments at both levels won’t get it right. We have to get back to Gonski’s recommendation to set up a schools resourcing body, funding schools on need with the money coming from both levels of government. Yes, where the money comes from is important, but where it goes, and who is checking, is critical.

In the meantime and while he is licking his COAG wounds, the Prime Minister could do worse than read Jessice Irvine’s piece in the Fairfax media. Why would a canny investor like Malcolm Turnbull ignore the big dividends which would come from investing in schools?

“Kids from low socioeconomic backgrounds are our greatest untapped source of potential growth. They are our most undervalued stock…..Investing in our most vulnerable kids remains the best social investment strategy around. Only a foolish investor would turn his back on it.”

Chris Bonnor is a Fellow of the Centre for Policy Development and a Director of Big Picture Education Australia.

Amid all the political chatter about tensions between Turnbull and Morrison, a possible early election, and the laundering of donations to the Liberal Party, Labor has released a substantial policy document –Growing together: Labor’s agenda for tackling inequality.

With a gathering of Labor luminaries – Jenny Macklin (who has main carriage of the policy), Bill Shorten, Chris Bowen, Andrew Leigh – it was hardly surprising that the media had a strong presence at its launch at ANU late last month.

But it turns out that the journalists were more interested in a photo shoot than in public policy, because the document got little media coverage. Those who believe in an anti-Labor media conspiracy would not be surprised, but my view is that the journalists were looking for “deliverables” in the form of specific proposals (they found a few tidbits), but they weren’t equipped to do justice to a document outlining a major shift in policy emphasis.

The document has two strong policy messages. First is its focus on inequality. Not welfare transfers or redistribution, but inequality. Second is its dismissal of any idea that there is a tradeoff between “economic” and “social” objectives.

To understand how far these messages are out of sync with our present thinking, imagine Christian Porter, Alan Tudge, Scott Morrison and Mathias Cormann on one platform giving unscripted statements on the economic importance of dealing with inequality?

These policy principles should really be no-brainers. Who would not say inequality is a major problem? And who would not believe that good economic policy and good social policy are inseparable?

Unfortunately, they are not obvious.

While most people may understand the moral case against rising inequality, they do not necessarily grasp the fact that inequality has bad economic consequences. High and persistent inequality destroys incentives, creates an “underclass” dependent on social security transfers, deprives people of the opportunity to develop and use their capabilities, and in the long run undermines the political legitimacy of the economic system. It’s no surprise that worldwide we are seeing the emergence of populist politicians with simplistic prescriptions for complex problems.

And to suggest that we must sacrifice social objectives for the sake of “the economy” makes no more sense than the (probably apocryphal) story out of the Vietnam War: “we had to destroy the village in order to save it”.  As the philosopher Karl Polanyi stressed, we live in a society, not in a market: markets are, or should be, subservient to society, and should be subject to society’s norms. There is no superior entity called “the economy” to which we must pay homage. Economic policy that goes against our desire for a fair and just society is just plain bad economics.

Yet that’s not the way the public see it. Poll after poll gives Labor a strong lead over the Coalition in “social policy”, while giving the Coalition a strong lead in “economic policy”.  Such a contradiction could be sustained only if the idea of a tradeoff is ingrained in people’s minds.

So while Labor is on the right track in bringing together economic and social policy, it has a lot of convincing to do. Some of that work has to be directed at the public in general, some at journalists who have difficulty in understanding public policy, and some has to be directed at enthusiasts on the “left” who are too ready to dismiss economics, and who abandon the quest to find ways of overcoming inequality and social exclusion that are based on sound economic principles.