Policy Series

Knowledge capital is the real wealth of nations. If you stop to think about it, what matters more for opportunity, fairness and security than the skills, talents and ideas of the people? Yes, other things matter, but in the long haul they are way back in second place. And, yes, we do a lot already to foster our abilities, but we could be even smarter in this endeavour.

Education Structures

In Australia, growing our knowledge capital starts at the beginning. Child development is the foundation. It is well established that getting early childhood development right makes a lot else work well in later life. Nobel Laureate James Heckman established some time ago that the real rate of return could average 60% for early childhood investment programs. When many other investments are lucky to clear reasonable hurdle rates of 5-10%, this is, or should be, a no-brainer. Of course such quantification demeans the intrinsic worth of the endeavour, but it is interesting how readily an early childhood advocate adopts the trappings of an economist when he or she learns of such reality.

In terms of the cycle of life, the work accomplished in pre-school and child care is next sharpened by schooling. In Australia recently we have had some healthy debate about how that is best accomplished. Our unusual mix of private and public secondary schooling sharpens that debate here and points to the distinctive “Australian Way” of combining government and private provision. This model is also to be found in child care and in tertiary education, especially in vocational education and training. It is not unique to education either, as it operates in everything from superannuation to health and from electricity provision to imprisonment.

Whether the mix is optimal or not is a big debate and getting the balance right is not easy. For example, the Lomax-Smith Base Funding Review of 2011 struggled long and hard to define the right mix of private benefit and public good emerging from higher education but, given the difficulties of quantifying the public good component, ended up with rules of thumb. However, putting aside the precise metrics, it remains true that it is this principle of blending that has allowed Australia to enjoy one of the lower government outlay shares for industrial countries, despite the protestations of classical libertarians who would wish it lower still.

The great Australian statistician, Colin Clark, who pioneered notions of national income, once suggested that detriment would follow when government share of GDP exceeded 25%. Although this has happened, Australia has become one of the world’s most wealthy nations, sitting closely alongside the Scandinavians who breach the Clark rule in spades.

With public expenditure share at around a third of GDP Down-under (as opposed to Scandinavian models of over 50%), there is scope for correction, including through a greater public outlay share if we have got the balance wrong in our public-private partnership model in specific areas of provision. This applies in much of Australian education these days, and advocates of a free, fairer and more prosperous Australia should not step back from saying so until that is recognised.

Indeed, contrary to much conventional political wisdom, it is clear from studies that seek to ascertain willingness to pay for policy reform that the public is amenable to seeing more go to education and to paying for that through taxes if necessary. This includes higher education, often seen in politics as not carrying votes, even though such learning is central to the future for young people and appreciated as such not only by them, but also by their parents and grandparents.

In addition to increased undergraduate enrolment, the growth of postgraduate courses and executive programs is a major transformation of the modern university – further engaging many mainstream voters. Opinion surveys show that higher education can sway votes, particularly given the growth of the non-aligned voter phenomenon.

The “Australian way” of public-private partnership in schooling was at the core of the so-called “Gonski process”. The examination of what base-level provision was essential and who should pay for it involved the investigation of arrangements for this, the one major component of the education sector where overall and public funding meets or exceeds OECD averages (which is not so for earlier childhood funding nor for tertiary outlays, at least as regards the formalised sectors).

Beyond the formal government accreditation systems, there is much that goes on in professional and personal development on the education side and in external research and development on the innovation side. This includes family, corporate and community activity of a kind not normally pursued through ongoing official data collection. How Australia fares here is accordingly less clear.

In such matters we are at one with the drunk who looked for lost keys under the streetlight, not because that is where they were dropped but because the light was better. More could be done to learn of such things beyond the current focus that occupies most analysis and data. But in the funding battle between Big Science* (and indeed STEM** overall) and other research, such modest projects in the humanities and social sciences seem to get somewhat marginalised.

To the economist this is passing strange since value for dollar, including for producing simple citation metrics, is often greater for the cheaper projects. Indeed in terms of the discipline rankings Australia is at the top of its game globally in such fields as philosophy and international relations, and they cost peanuts, relatively speaking. But in academic matters value for money is often subordinated to other cultural and power forces when total subvention is artificially constrained.

The resultant research battle is bizarre, given the opportunities for good, productive research across the spectrum. Only 15-20% of current well-attested projects receive funding under nationally competitive grants schemes (with many more accordingly discouraged) when the real rate of return from such research is estimated to be on average 20% or more. This return exceeds most commercial business project outcomes, and yet we continue to restrict support which costs under half of the return. Both STEM** and HASS*** research support can be enhanced. Cultural explanation of public decision-making must be sought as to why this does not happen, not rational economic and business understanding.

Higher Education

In the most recent public debates in Australia, higher education reform has been at the forefront of debate in this broad field of knowledge capital. Though the Abbott government had flagged that its approach to universities was intended to be one of “masterly inactivity” with a more general policy philosophy of “no surprises”, the 2014 Budget encapsulated some rather dramatic and therefore largely unanticipated reform proposals for that sector.

The so-called “Pyne reforms” sought the following as their original ambition:

• Expansion of the system through demand-driven funding for sub-bachelor degrees;
• Restructuring of the pattern of funding by field of study and for infrastructure;
• Deregulation of undergraduate degree fees and lighter touch quality regulation;
• Introduction of greater competition from non-university higher education provider access to subsidies; and
• Increased private financing through reduced per-student grants, new doctoral fees and reduced grant indexation.

Amongst the cut and thrust of privatisation and competition, the irony of a new mandated scholarship scheme to come from deregulated university fees and paid to lower socio-equity students, was lost.

Most attention has focussed on the deregulation of undergraduate fees, the $100,000 degree possibility and the “threat” to fiscal consolidation of the greater provision of demand-driven places. Less attention has been placed on the slow undermining of educational quality from reduced per student funding, reduced indexation of grants and the diversion or diminution of infrastructure funding. The gradual rise of student-staff ratios in depreciating facilities and what this means for quality of learning and the learning experience, is ignored. And our decision-makers wonder why our nation’s productivity is declining!

There may be greater awareness if, as is now happening, other international student competitor nations start to take higher shares of the global market as our student experience deteriorates relative to theirs. But for now the bounce-back from the disastrous Indian student crisis, caused by poor migration regulation and poor community integration for international students, hides any such problems.

The way to square the circle on this is to understand the aspirations of voters and respond to that by a commitment to a narrative of investing in our future and ensuring that in higher education we aspire to an equal and shared partnership between public and private funding. The benefit to the economy, let alone beyond that, would more than pay for the cost.

A proper restructuring of government Budgets to distinguish recurrent from investment outlays would allow the public and the politicians to appreciate this payoff. As indicated, aspirational votes are there to be tapped. If, however, short-term “deficit fetishism” still prevails, some leadership on tackling the long list of well-known rorts in capital gains taxation, asset exemptions from means-testing, negative gearing, family trusts, GST exemptions, and more, would manage the transition well.

Taking the public into your confidence can work wonders as the micro-economic reform era indicated to governments of both persuasions,. More recently, Premier Mike Baird in NSW has turned around resolute opposition to privatisation and won handsomely.

Vocational Education

A big elephant in the room remains in the form of vocational education and training. It is not far-fetched to say it is in crisis. It suffers from divided responsibilities across governments of a kind that begs for federalism reform in Australia. Popular attention focuses on how this produces variant approaches to policy across jurisdictions, but probably the biggest consequence is the under-funding that results. The Commonwealth controls the nation’s public finances. It can – and does – under-fund the States and territories for their functions. It can – and does – opportunistically engage or withdraw from those areas through the specific purpose payments mechanism.

A classic case in point is the 2014 Coalition budget reduction in previously anticipated health and education spending from the Commonwealth to states and territories of $80 billion over the decade to 2025. It is precisely this withdrawal, plus bracket creep in income tax, that allows the Government to claim it is addressing the deficit – for the Commonwealth!

One crucial consequence of such legerdemain has been slow growth in public funding of vocational education and training. VET is the true Cinderella of education with substantial restriction on per student funding. One device for dealing with that, in turn, was for states and territories to open up training subsidies to a cheaper private sector and, as elsewhere in education, use some public subsidy to encourage wider private provision alongside basic public provision.

However the implementation process has been fraught. National regulation has proven to be flawed, particularly its very mechanical “tick a box” process focus and limited examination of education and training outcomes. States and territories’ funding regimes have been problematic. Most recently in 2015, for example, South Australia announced an intention to significantly reduce private provider access to publicly funded places, reserving most for TAFE, a move objected to by the Commonwealth government.

A potentially productive model in the Australian tradition has been compromised by poor implementation, and by failure to negotiate politically bi-partisan commitments to longer-term arrangements. Changes of government have changed the settings dramatically.

Such policy shifts and uncertainty over future settings, combined with basic underfunding of the public benefits from this education, even apart from equity and access issues, have been a recipe for a growing degradation of what is actually a jewel in the Australian crown.

Alongside Germany, Australia has actually been a global standard setter in technical education. Countries in our region have looked to adopting our ways and seeking our advice, and thereby allowing us to lock in major trading advantage and influence. This achievement is under threat.

Australian higher education was revitalised and put on sound foundations by the 2008 Review of Australian Higher Education. The further reforms contemplated today still build on that. Such a review for vocational education nation-wide, more than most reviews that we could think of, would help set a better path for a smarter Australia.

Within such a review the relationship with higher education would be an issue that could at last be systematically examined as part of the process. Various governments have had ambitions to tackle this, but they have largely fallen foul of the federal-state divide and not proceeded.

The mutual responsibility issue for employers has largely gone through to the keeper. Industry advice is sought and indeed privileged, but business support and facilitation of training is sometimes less forthcoming. One result has been a rigid rather backward looking conception of skills, when a more flexible future oriented approach is needed.

To go back to basics and see what type of vocational education and training we need for the future, how it should be funded and how it should be provided, is a long overdue exercise, made even more necessary by the short-sighted abolition of the Australian Workforce and Productivity Agency by the incoming Abbott Government. Perhaps the Council for the Australian Federation or an independent think tank such as the Grattan Institute could begin such a process.

Conclusion

The case is strong for ongoing investment in our future through a fair balance of public and private funding plus ongoing reform of the structures for delivery.

Seeking Budget economies by reducing investment in a smarter Australia is a false saving. The government and the private sector, and possibly the community sector too, are under-investing.

Greater deliberation over the systems for education and training delivery is also essential to guide future investment, including how to better build resilient, adaptive skilling for the future.

* ‘Big Science’ is a term used by scientists and historians of science to describe a series of changes in science which occurred in industrial nations during and after WWII, as scientific progress increasingly came to rely on large-scale projects usually funded by national governments or groups of governments.

** STEM refers to the disciplines of Science, Technology, Engineering and Mathematics.

*** HASS refers to the Humanities, Arts and Social Sciences.

 

Glenn Withers is an honorary Professor at the Australian National University and Tongji University Shanghai and President-Elect of the Academy of the Social Sciences in Australia. He is also Advisory Board Chair of Blended Learning International and was previously the founding Chief Executive Officer of Universities Australia.

Fairness, Opportunity and Security.
Policy Series edited by Michael Keating and John Menadue.

With many other people, we are concerned about the policy vacuum and the poor level of public debate on important policy issues. We began a series of articles on policy issues in Pearls and Irritations on 11 May. They have now all been posted.  There are forty-nine articles on fifteen policy areas from over thirty contributors. They are linked to the contributor’s name (below).

This now completes the series. In August, we plan to publish these articles in a book in order to continue the debate for better public policies for Australia. 

We will keep you posted.

To all the contributors – thank you very much for your excellent contributions. John Menadue, Michael Keating.

Introduction.
Ken Henry. ‘I can’t recall a poorer quality public debate, on almost any issue, that we have had in recent times in Australia.
Democratic Renewal
.  Vested interests (John Menadue 2), ‘Vested interests represent a growing and serious corruption of good governance and the development of sound public policy’
.  Loss of trust (John Menadue 1), ‘We need political reform to restore trust in our political system and our polity.’
.  Post majoritarian future. (Ian Marsh 1), ‘It is unlikely that in the future Australian governments will have majorities in both Houses of Parliament’.
.  Policy-making practice. (Ian Marsh 2) ‘Policy reform may well depend on reforms to our political system and decision-making processes.’
The Role of Government
.  The importance of values. (John Menadue), ‘Good government must be based on some broadly shared values that inspire and enthuse us.’
.  Role and responsibilities of government. (Michael Keating), ‘In practice, the responsibilities of governments have changed little in the last thirty years.’
.  Role of government. Ian McAuley) ‘Australia and similar democracies have done well because economic progress has been a shared venture between the public and private sectors.’
Foreign Policy
.  Security in the region. (Stephen FitzGerald), It is remarkable the headway that Paul Keating and Gareth Evans made in South East Asia … in gaining acceptance of Australia as one of them.
.  Australian foreign policy (Cavan Hogue), ‘Countries don’t have friends, only interests. The United States has always remained fiercely independent and has followed policies which served its own interests first.’
.  An independent Australian foreign policy. (Richard Butler), By relying on ‘great and powerful friends’ we have acted in a way that has ‘substantially compromised our independence and … exposed ourselves to increasing danger.’
.  What Australia’s foreign policy should look like. (Stuart Harris), We must be careful to avoid ‘a choice between the political and economic relationships with the US and China.’
.  Australia, the US and Asia. John McCarthy. In recent years Australia has superceded both Japan and the UK as the US states’ closest ally.
The Economy
.  Fixing the budget (Michael Keating 1)  ‘Why did the government break so many promises and insist that the unfair cuts in last year’s budget were absolutely necessary and any opposition was irresponsible.’, Michael Keating 2) The government’s plan to balance the budget by 2019-20 is not credible.
.  Taxation Reform (Michael Keating) ‘Encouraging unrealistic expectations of tax cuts is only making government more difficult.’
.  Federalism (Michael Keating) ‘It will be necessary to continue the reforms started by the Hawke-Keating governments.’  (John Menadue) One way to make federalism work better in the health field is to pool commonwealth and state funding and agree to a state-wide health plan in any state that is prepared to cooperation with the commonwealth.’
.  Job Creation and Participation  (Michael Keating) The best way to promote greater employment participation is to increase the investment in education and training to improve the skill base and employability of disadvantaged people.
.  Productivity (Michael Keating) Most important is the creation of an innovative culture through support of research and development, education and skills and forging close links between the scientific community and industry.
.  Innovation (David Charles) We need to transform from an economy largely driven by investments in the minerals and energy sector to one which has a wider spread of investment drivers.
.  Transport and Infrastructure (Michael Keating and Luke Fraser) Australia is racking up very substantial debts to finance unreformed infrastructure. It is scandalous that infrastructure investment escapes proper scrutiny.
Retirement incomes
.  A fair, effective and sustainable system. (Andrew Podger) We need to draw together all the threads of the retirement system, particularly pensions and superannuation.
Population/migration/refugees (Peter Hughes, Arja Keski-Nummi, John Menadue),  .  Immigration Part 1, Australia has a great record in nation-building, but benefits achieved cannot be taken for granted in the future.
.  Refugees Part 2,  How to move from toxic politics to a humanitarian policy once again.
.  Settlement Part 3 Successful nation-building needs good settlement services to support new arrivals.
Communications and the Arts
.  Cultural Identity (Julianne Schultz) We need to draw together diverse cultural policies to better serve our national interests.
.  Arts. (Kim Williams) We have eroded the standards and reduced public support for the arts.
.  Media Regulation in Internet World (Terry Flew) How media convergence is driving the need for regulatory and policy change.
.  NBN. (Rob Nicholls) We need to target the NBN rollout in line with what our major trading partners are doing,
Security – internal and Human Rights (Spencer Zifcak) We have draconian laws but inadequate safeguards. (Susan Ryan) We need to revive the Human Rights Act campaign of the 1980s.
Security, both military and soft power
.  (Michael Wesley) The politicalisation of security is endangering our safety.
Health
.  Part 1 Problems (John Menadue) Medicare was established forty years ago but is badly in need of reform. 
.  Part 2 Health reform opponents (John Menadue) ‘Health ministers may be in office, but seldom in power.’
.  Part 3 Health solutions (John Menadue) We need new processes, governance and policy directions to move us beyond the present inertia, incrementalism and tinkering.
.  Health workforce (Jim McGinty) The emphasis in health workforce reform must mainly be about nurses.
.  Co-payments (Jennifer Doggett) We have amongst the highest out-of-pocket health costs in the world. They lack logic, efficiency and equity.
Development of our human capital in the fields of education, science, innovation, research and development
.  Knowledge capital. (Glenn Withers) Knowledge capital is the real wealth of nations.
.  Eroding Human capital. (Chris Bonnor) Differences in education outcomes seem to be increasingly the result of differences in wealth, income, power or possessions. Let’s hear it for Gonski and My School.
Environment and climate change
.  (Ross Garnaut) It would be wise to supplement an emissions trading scheme linked to Europe with regulatory action. 
.  (Peter Cosier) Ways to combine a productive economy with a healthy environment.
.  (Jon Stanford) Will Australia rise to the occasion in the Climate Change Conference in Paris in December. 
.  (Brendan Mackey) Reconfiguring human endeavour to live within the boundaries of a finite planet.
Indigenous affairs
.  (Fred Chaney), Some progress in closing the gap – but a long way to go.
.  (Michael Gracey) Indigenous health requires a much broader definition of the meaning of ‘health’ and local empowerment.
Welfare and families
.  (Andrew Podger) Current arrangements are overly complicated, inconsistent and incoherent, overly means-tested, and without sufficient regard for efficiency.
Inequality and the Australian welfare system
.  (Andrew Podger, Peter Whiteford), In reducing inequality, priority should be given to promoting employment and addressing specific weaknesses in the tax and transfer system.
.  (Ian McAuley) The conservative slogan that a ‘rising tide lifts all boats’ is not working for the poor.

Media enquiries. johnmenadue@staging-johnmenadue.kinsta.cloud.

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Policy Series.

The growing problem of out-of-pocket health care costs in health care is undermining the benefits of Medicare and creating a barrier to increasing fairness, opportunity and security throughout our health system.

Out-of-pocket costs are the direct payments made by consumers for their health care which are not subsidized by any form of public or private insurance (or any other funding source). They include co-payments for care partially subsidized by Medicare and the PBS (for example GP services and prescription medicines), co-payments for goods and services subsidized by private health insurance (for those who have it) and the full cost of unsubsidized and un-funded forms of care, typically non-prescription medicines, allied health services not subsidized by private health insurance, medical aids and appliances.  

Currently, individual co‐payments comprise around 17% of total health care expenditure in Australia – the largest non‐government source of funding for health goods and services.^[1] This contribution by individuals represents a higher proportion of health care funding than in most other OECD countries and equates to $1,078 per capita per annum.

However, more important than the quantum of health funding contributed via co-payments is the way in which the burden of these out-of-pocket costs is spread across the population. There is a wide variation in the impact of co-payments on people with different illnesses and disabilities. People with conditions that can be largely treated by GPs or within the public hospital system generally incur lower co-payments than those with conditions that require allied health care and over-the-counter medicines.

This is the case independently of the length or severity of the illness/disability and its impact on both individuals and society as a whole. In fact, people with ongoing chronic conditions often end up receiving lower levels of subsidy for their health care than those with one-off or self-limiting conditions.

The overall impact of this ‘system’ is an inequitable and inefficient allocation of resources within our health ‘system’, compounding existing inequalities in our community. This is largely a result of the ad-hoc approach to co-payments and lack of leadership at the political level on this issue. Despite the fact that out-of-pocket costs make up almost one fifth of total health spending, Australia has no national policy on co-payments and there has been no comprehensive consumer or community consultation on this issue. Co-payments are set by governments, health care providers and others independently without any guidance from the community and without any overarching policy framework.

While there are a number of data and research gaps in this area, there is good evidence that existing co-payments within the Australian health system are causing financial hardship for many consumers and creating barriers to accessing care.

For example, the Commonwealth Fund’s 2013 International Health Systems survey[2] and its 2008 Survey of Sicker Adults[3] found significant evidence that co-payments were creating an access barrier for many consumers. Among the surveys’ findings were:

• 16% of Australians surveyed reported delaying access to treatment due to cost issues;
• 29% of Australians reported not accessing dental care in the past year due to cost; and
• 25% of Australians with a chronic condition reported not having a recommended test or follow-up treatment due to cost issues

These findings are reflected by recent research[4] undertaken by the Consumers’ Health Forum which found that more than 70 per cent of respondents had delayed going to the doctor, around half of whom attributed this delay to cost worries. Key findings of the survey include:

• Many consumers are already experiencing difficulty affording health care costs;
• Many consumers are failing to access needed health care due to its cost; and
• Any new co-payments – even if small – will further add to the financial difficulties being experienced by many consumers and create additional barriers to accessing appropriate care.

Other international evidence reflects these findings and show that co-payments create barriers to access to health care for many consumers without decreasing overall health care costs.

Overall, international research in this area has found that:

• Co-payments result in decreased access to health care for vulnerable groups
• This decrease in access is proportional to the size of the co-payment
• Access to both high and low value health services decreases as a result of co-payments.

There is also no evidence that co-payments result in overall cost savings to the health system although there is some limited evidence that co-payments can increase downstream health care costs.

Without significant reform, co-payments will continue to threaten the equity and efficiency of our health system. However, addressing this issue requires an understanding of the unique nature of health payments and their impact on individuals and families.

Unlike many other household expenses, the costs of health care fall unevenly and unexpectedly and typically coincide with decreased earning capacity and higher expenses elsewhere. This means that even small expenses can be an intolerable burden for someone living from pay-to-pay, and large outlays can be financial crippling even for the well-off. Also, because health is such a fundamental criteria for participation in other aspects of life, any barriers to accessing care can have significant flow-on effects in areas such as employment and education, further compounding the gap between the least and most advantaged. To be successful, any reform measures must reflect the underlying and unpredictable nature of health expenses and the relationship between health and other aspects of well-being.

Part of the problem is the need to resolve areas of misunderstanding on both sides of the political spectrum in this area. On the left, the debate has focused on the role of universal health care as requiring ‘free at the point of service’ care. This has resulted in ongoing efforts to preserve bulkbilling and free public hospital services, while largely ignoring the rise in payments for other forms of care such as dental care.

On the other hand, conservative governments have misguidedly focussed on the role of private health insurance (PHI) in assisting Australians to meet their health care expenses, despite the multiple disadvantages of PHI as a funding mechanism (due the fact that it combines the moral hazard of insurance with the lack of price control possible with a single purchaser). The lack of understanding of the underlying issues affecting health co-payments by both sides of the political spectrum is a major barrier to progressing reform in this area.

Our federated structure can also prevent effort action in this area. Given Australia’s complex health ‘system’, with funding and service delivery responsibilities split between different levels of government and the public and private sectors, there will be no simple solutions. The cumulative impact of co-payments on consumers is multi-faceted, cuts across program and jurisdictional boundaries and arises out of the complex interactions between different areas of the health system.

Therefore, as radical changes are not likely to be politically palatable, the most realistic options for change involves smaller scale and targeted initiatives. This is likely to involve a suite of measures which partially address the issue within identified areas or populations. These may include:

• Workforce solutions: a reconsideration of when the GP gatekeeper role is essential, for example, through allowing practice nurses, pharmacists or others to provide clinically appropriate services (re-issuing of routine prescriptions, authorizing medical certificates, some preventive health activities) at a lower cost;
• Increased transparency around specialist fees: currently there is a large variation in fees charged by specialists and no evidence of a link between price and quality. Supporting consumers to find lower cost specialist services and working with specialist colleges to increase fee transparency, perhaps even shaming those whose fees are significant outliers, could help reduce the sometimes large out-of-pocket costs in this sector;
• The establishment of community health centres with salaried staff in areas of need. This would help in providing coordinated, prevention and chronic disease management services to a high risk group;
• Targeted assistance for people identified as having ongoing high health care costs. This would include people with chronic illnesses and seek to assist them in managing ongoing costs, for example, through identifying lower cost alternatives to their existing services/products, developing payment options to assist them in managing their costs, e.g. regular payment plans or providing targeted subsidies, e.g. PBS subsidies for people who rely on non-prescription medicine for serious illnesses; and
• Linking reduced co-payments and out-of-pocket costs to voluntary registration with a general practice and a pharmacy. There is some evidence that people with chronic conditions benefit from having a ‘medical home’ through improved management of their condition. Improving the health of people with chronic conditions is likely to also reduce their out-of-pocket health care costs and increase their productivity.

These proposals all have limitations and need further exploration. However, if developed further, in consultation with the community and based on existing evidence, they offer the potential to reform our current ‘system’ of health co-payments to deliver greater fairness, opportunity and security to consumers.

Jennifer Doggett is a Fellow of the Centre for Policy Development and a Consultant working in the health sector.  

[1] Senate Reference Committee on Community Affairs. Out-of-pocket costs in Australian healthcare. August 2014. http://www.aph.gov.au/parliamentary_business/committees/senate/community_affairs/australian_healthcare/~/media/committees/clac_ctte/australian_healthcare/report.pdf 

[2] http://www.commonwealthfund.org/publications/surveys/2013/2013-commonwealth-fund-international-health-policy-survey

[3] http://www.commonwealthfund.org/publications/surveys/2008/2008-commonwealth-fund-international-health-policy-survey-of-sicker-adults

[4] https://ourhealth.org.au/news-stories/news/empty-pockets-why-health-co-payments-are-not-solution-australia-needs#.VWO74Dr77IU

Policy Series. 

With a federal election due in 13 months and the Coalition Government not travelling well enough to be confident of re-election, what should an incoming Health Minister focus on to ensure we have a highly skilled, professional and sustainable health workforce to care for the nation’s future health needs?

The answer is simple. It’s all about nurses.

Under current settings, in 10 years we will be experiencing an unprecedented shortage of nurses.

A shortfall of 85,000 nurses by 2025 will increase to 123,000 by 2030. This is about 25% of the total nursing workforce and rising!

By contrast, the doubling of medical school places since 2000 has meant that the supply of doctors will be approximately in balance – from a marginal oversupply now to a marginal undersupply of 2,500 doctors by 2025. In 2012 there were 91,504 doctors registered to practice medicine in Australia. The recent announcement of the Curtin University Medical School with 100 graduates each year will significantly address that shortfall and provide doctors for areas of greatest need.

Australia already has a doctor/population ratio well above the OECD average, and, reflecting recent medical school growth, between 2008 and 2012 Australia’s population grew by 7% while the number of doctors grew by 16.4%.

While doctors have their issues, they pale in significance alongside the challenges facing nursing.

Also, doctors have traditionally looked after their own very well and have the political power to ensure their issues are attended to. Nurses have not traditionally used their undoubted public support and power to the same effect.

The problems with nursing supply are easily identified:

• The attrition rate for nurses has historically been very high, especially for early career nurses. This suggests a disconnect between training and real working life experience. The high attrition rate should not come as a surprise. Over 40 years of research has consistently shown that nurses leave their profession because they do not feel that they can provide the level of care to their patients that they were trained and wish to provide, and they do not feel valued as part of the health care team.

Interestingly and significantly, since the Global Financial Crisis in 2008 the number of nurses leaving the profession has fallen dramatically. This is most probably caused by external economic factors, but does emphasise the importance of retention as the key strategy in achieving a sustainable nursing workforce.

• The attrition rate for nursing students nationally is a high 34%. For doctors it is almost zero.
• Over the last few years many thousands of graduating nurses have not been offered jobs by state government hospitals – squandering what will be a much needed resource in the future. (Can you imagine that happening to doctors?)
• Nurses are getting older. In 2009, 19.8% of nurses were aged over 55. In just three years, by 2012, this had increased to23.1%. While this validates recent improvements in retention, it also points to the looming nursing shortage when these mature nurses do retire.

How can we make nursing more attractive and retain these well-educated nurses?

One of the key elements of necessary overall health workforce reform is to enable all health professionals to practice at the top end of their licence. Simultaneously, an assistant workforce, supervised by the health professional, should be employed to take on the more routine and mundane tasks. This will free up the health professional to provide the higher level of care for which they were trained.

This is particularly apposite in the case of nursing, where the supply/demand gap will be impossible to close in the medium term by the traditional responses of increasing training and/or migration.

These changes are already occurring, but the pace is far too slow. We can also expect a continuation of conservative opposition. The AMA opposed the introduction of Nurse Practitioners (and they were wrong). The ANF is resisting the increased use of Assistants in Nursing.

This is all learned behaviour in a health system where everybody preciously guards their silo regardless of merit. In my view this change in skill mix is not optional if we are to have a sustainable health workforce able to meet the needs of the Australian population into the future.

Apart from these structural role changes, there is a lot that particularly hospitals can do to enhance the role of nurses and make them feel truly valued.

Ramsay Health Care were something of a model employer of nurses during my time as Health Minister in Western Australia and I am sure that government hospitals could still learn a lot from them, and others, today.

Briefly on doctors.

The problem is not aggregate supply, but distribution – both geographical and by speciality.

The large increase in medical school places, and consequentially newly graduating doctors, creates an opportunity to ensure that remote, regional and outer suburban areas are better serviced.

Provider numbers and the MBS are but two powerful tools that could be used to limit medical over servicing, at the taxpayer’s expense, for the more affluent inner urban populations, while simultaneously improving medical services in areas of greater need.

Similarly, the heightened demand for medical specialty training places presents an opportunity to ensure that the less popular (among doctors) specialties, or those with projected shortages, are more adequately filled.

Mental health professionals are, and will continue to be, in short supply. The creation of more training places for psychiatrists and mental health nurses must be a priority.

Also, the diagnostic specialties will be in short supply. The reason for this is simple – pathology and imaging are the precursors of almost all medical treatment.

The great Medicare principles of free, universal and equal medical treatment for all Australians would be enhanced by seizing the opportunities which are now presenting.

The third area of health workforce focus must be primary health care.

Keeping people well and out of hospital should be the aim of health care policy.

It’s not only about GP’s, although they must be at the centre of integrated primary health care delivery.

The inappropriately named Medicare Locals were an important development in caring for the primary health care needs of local populations. The 61 Medicare Locals throughout Australia identified gaps in local area health provision and either funded or directly provided the necessary services. They generally eased the patient journey between the various health care providers.

Former Health Minister Peter Dutton will be remembered, not for his contribution to better health, but for his Taliban like indiscriminate destruction of anything which was the legacy of the previous government. Despite a promise from the now Prime Minister, he abolished Medicare Locals along with many worthwhile health bodies created by the former Labor Government.

We can only hope that the Primary Health Networks, which are due to commence on July 1, 2015, will continue that good work.

Services to the most needy groups – people with mental illness, the aged, indigenous Australians, remote rural and outer suburban residents and low income earners – are best delivered by highly coordinated primary health care. The concern is that Primary Health Networks will be so large in the areas and populations they cover that they will merely replicate state health department bureaucracies and lose the responsiveness of smaller, more community focussed local groups.

But, back to the workforce needs of primary health care. It begins with training.

More General Practitioner training places is the first requirement and should not be all that difficult to achieve. In recent years the number of General Practitioner training places has grown, but at a slower rate than other medical specialties.

It is also the nature of that training – health professionals should be trained in teams to work in teams. When dealing with an ageing population, increased incidence of chronic disease and dramatically increasing levels of obesity, we need teamwork from our health professionals to a far greater degree than previously.

It should begin at pre-vocational level at university and then continue through higher degree and specialist training in the workplace.

The problems confronting Australia’s future health workforce are so great and important that the former Labor Government created a specialist agency – Health Workforce Australia – to deal with the issues.

The failure of the Commonwealth Department of Health and Ageing to respond to health workforce issues was a significant trigger in the formation of Health Workforce Australia.

It should not have taken a parliamentary enquiry into overseas trained doctors to tell us what we already knew – that they were lost in the labyrinth.

Policy makers did not know that we were facing a nursing shortage of the magnitude revealed by Health Workforce Australia in its landmark study “Health Workforce 2025” and its subsequent refinements.

Perhaps it is just too difficult for the Commonwealth Department of Health to be trusted by the myriad of health workforce stakeholders to accurately describe the nature of the problems and to be honest and forthright in pursuing an agenda of health workforce reform to meet them.

The Commonwealth’s own track record, funding role, relationship with the states and universities and political pressures all militate against the Commonwealth Department doing a good job in this area.

Post the next federal election, whichever party is in power, the fourth area of health workforce policy for consideration should be the re-establishment of Health Workforce Australia with two clear primary functions:

1. To provide the statistical evidence to enable informed decisions to be made about health workforce future policy, reform and funding.
2. To be responsible for driving health workforce reform – across doctors, nurses and the whole range of allied health professions.

The first of these functions, statistical analysis, was brilliantly done by HWA in its four years of existence until abolished by Dutton. The second, reform, was getting underway, but is now stillborn. Today there is no agency in Australia charged with driving much needed health workforce reform. And if no one is driving it, it simply won’t happen.

Australia’s government health systems have not been subject to the rigours of competition and efficiency demands experienced by most other sectors of the economy. For this reason, an agency dedicated to reform would be economically beneficial, as well as planning to meet our future health care needs.

Reform would include, but not be limited to, the scope of practice for all health professions and the assistant workforce; efficiency in the training pipeline and better integrating university training with employer and community needs; training funding to employers and universities to match supply and demand and to allow graduates to develop specialist skills, and the very important role that migration plays in meeting Australia’s health care needs.

For many years Australia’s Health Ministers have supported the principle that Australia should be self -sufficient in its supply of health professionals. However we remain one of the least self-sufficient OECD nations when it comes to training our own. We rely heavily on overseas trained doctors and to a lesser extent nurses to plug gaps in service provision.

While the growth in medical school places should take some pressure off the need to import doctors, the looming nursing shortage will have the opposite effect on nursing immigration.

And, of course, the ethical issue of a rich first world country taking trained health professionals from third world and developing countries is at best, problematic.

Australia’s health workforce issues have taken a back seat since the election of the Coalition Government. That does not mean that they are being adequately dealt with or are any less real. It simply means that health stakeholders are grappling with so many other government decisions in health – Medicare co-payment; tearing up the Commonwealth/State hospital funding agreement; abolition of primary health care agencies; threats to medical research funding; abolition of so many other important organizations, and more. Before long the reality of the workforce problems will take centre stage and will then require even stronger reforming action.

James McGinty held several ministerial portfolios in WA – Attorney-General; Housing, Construction, Services and Heritage; and Health. He was the Inaugural Chair of Health Workforce Australia 2010-2014.

Policy Series

In Part 1 of this series I described the areas in our health sector that need reform. In Part 2 I spoke of the obstacles, particularly those imposed by vested interests in the health sector to protect their own interests by delaying or stopping reform. In this article, I will be suggesting ways in which we can overcome these obstacles to health reform. But make.

Don’t rush the process

The political process encourages parties seeking election or re-election to address problems with high political salience – waiting lists in public hospitals, needs among certain groups with chronic illness, and identified funding gaps. The political response is to develop specific proposals, usually involving carefully calculated budgetary costs.

Such a process, while providing short-term solutions to proximate problems, fails to address the structural problems identified in Part 1 – the fragmented nature of our health care arrangements, inequities, gaps in services, such as dental care, the allocation of resources towards high-cost hospital interventions at the expense of promotion, prevention and primary care, and the distortions associated with private health insurance.

It also privileges those vested interests outlined in Part 2, who can mobilize resources to block all but the most minor reforms.

System-wide reform takes time. And it takes open minds. Governments need to realize that even when they can set aside their own financial or professional interests, “insiders” find it hard to imagine any significant departures from existing arrangements. That was a major shortcoming of the Rudd Government’s Health and Hospital Reform Commission. Outside perspectives are essential.

In order to lift the process beyond immediate concerns, those pursuing reforms need to set out basic principles, and, in a well-managed consultation process, inform the community of options, and invite the community to discuss and agree or amend these principles. Such a path to reform contrasts with the quick-and-dirty proposals which emerge from processes such as the Abbott Government’s Commission of Audit. Rather, reform can draw on the tradition of white paper – green paper policy development and the reform process pursued by the Hawke-Keating Government. The Senate Committee system should also be utilised.

Guiding principles

As in any public policy the basic principle should be pursuit of efficiency and equity. Contrary to some simplistic notions, there is not necessarily a trade-off between these principles. An inefficient system is a high-cost system, and a high-cost system generally tilts the balance towards those who have most ability to pay. That is the basic failure of the United States system.

Economic considerations should extend beyond governments’ own fiscal costs. Rather they should take into account costs and benefits throughout the community. There is no benefit in saving people $1.00 in taxes through Medicare if the result is that they have to pay $1.25 for the same or inferior services in private markets through PHI.

In efficiency we fall well short as a result of the $10 b p.a. taxpayer subsidy to high cost PHI which makes it more difficult for Medicare to control costs; the perverse incentives in FFS which reward doctors when they treat sick people rather than keeping people healthy; a health workforce which is riddled with restrictive work practices and demarcations and an MBS and PBS which are not rigorously and regularly reviewed. Clinicians are broadly agreed that there are more than 150 services in the MBS which are of doubtful value. There is a rigorous process for getting drugs onto the PBS but little attention to getting some drugs off the PBS. We also need an independent pricing authority like in NZ to reduce the high price for generic drugs and the inefficiencies of drug pricing generally.

Equity should be concerned with ensuring that income, wealth or personal influence does not give individuals preference in treatment, displacing those with greater needs but lesser means. In equity, we fall short as a result of out of pocket expenses that are amongst the highest in the world; a $10 b. subsidy for PHI which goes mainly to higher income people who can then jump the hospital queue; the plight of people with mental health problems, indigenous people and country people. Dental /oral health care is excluded from Medicare.

A related principle should be one of solidarity or social inclusion. In social inclusion we are falling short by steadily moving towards a two-tier health system with Medicare becoming a safety net for the poor. We have a two-tier legal system with a safety net called the Legal Aid Service. But that service is not as good as the top tier private offering. Just as a two-tier legal system does not serve the poor adequately, neither will a two-tier health service .All should have access to the same high-quality services. We should resist most strongly the conservative notion that Medicare should be reduced to a safety net for the poor. The same high quality service should be available for all .While people with different means may make different payments, they should all be using the same services. The present “two tier” arrangements, where those with means are more likely to use subsidised private hospitals, violate this principle.

Within such a shared system, there should be scope for users to exercise autonomy and choice, so long as these do not impose costs on other users. Financial incentives on providers and users should not detract from the principles of personal responsibility.

Health care services need to be perceived as components of a set of policies promoting good health. In this regard, the community’s health should be seen as an asset worthy of attention in all government policies – taxation, urban design, trade agreements (patents), labour relations and wages policy, social security, environmental protection, sport etc. Public health should be of concern across all portfolios. Health ministers, state and federal, should have the same standing as Treasurers. Unfortunately we are more concerned about health services than health. An obvious example is our failure to address the enormous damage that alcohol, sweet drinks and junk food is inflicting on the health of Australians.

The government should consider alternatives to fee-for-service remuneration for primary care and other services. The New Zealand Government, for example, pays episodic care by doctors on a fee-for service basis but chronic care is paid on an annualized basis.

Health programs should have a user focus, rather than a provider focus. The user drawing on different services should not have to confront multiple institutions with their own funding arrangements, records and protocols of care. Policies should aim to integrate and not merely coordinate medical services, pharmaceutical care, hospital care and rehabilitation. Instead of a user focus, successive governments and DHA have failed to break the grip of providers. Our health service is structured to serve the convenience and interests of providers not users.

Such flexibility should be guided by the principle of subsidiarity. That is, services should be managed at the most feasible local level, provided such autonomy does not conflict with needs for central standards in important areas. We fall short in subsidiarity by neglecting primary and general practice care which is close to the patient. Instead we favour the clamour of the hospital sector.

Funding needs to be based on a judicious balance between individual (“out-of-pocket”) payments and pooled payments. While a lack of means should never present a barrier to those who need care, there is no reason why those with means should not make personal contributions. The balance between individual and collective funding is one which needs community consultation. There are arguments for a completely free, tax-funded system, and there are arguments for more individual payments where price signals play a role. But the choice needs to be put to the community in a way that explains the costs and the benefits of each method of payment. Most probably the community, presented with an informed choice, will opt for some balance.

One option to consider is the Nordic model whereby, subject to means tests, all people pay for their healthcare up to a certain amount before their universal system or Medicare in our case, kicks in. The Nordic health systems are effective in balancing individual responsibility wherever possible with patients with high needs and limited means. The very high and unfair costs of out of pocket expenses in Australia must be addressed.

For that proportion of costs the community chooses to share, this sharing should be through a single national insurer, with the capacity to use its purchasing power to keep costs under control, and guided by principles of ensuring access for those with limited means and covering all against high expenses. As with other high-cost and heavily-subsidised industries, such as clothing and footwear, the $10b plus per annum subsidy to PHI should be steadily phased out. If people want private health insurance that is their right but there is no reason for the taxpayer to provide a subsidy.

While the government should take responsibility for pooled funding, provision of health services should allow for both government and private involvement. In regulated markets private providers should be assured of reasonable returns on their investments (including their investment in human capital), but they should not be permitted to take advantage of any privileged position in the market.

All systems of remuneration, to private or public providers, should be subject to full accountability, and all services should be subject to the general principles of competition policy but without promoting competition where it serves no public purpose, such as a proliferation of look-alike high-cost private insurers. Accounting systems should expose all instances of cost-shifting – from Commonwealth to state governments, from governments to individuals, and from present outlays to future outlays. While there may be reasons for costs to be reallocated between different parties, such reallocations should be for reasons of equity or efficiency, and not for budgetary impression management.

All health care services should be subject to professional governance and accountability, with clear charters of responsibility but at arm’s length from executive government. We really don’t know much about how well doctors perform in private practise. We hear about occasional mal practise but very little about general performance and competence. We fall short because Medicare data which would show, for example, under and over servicing by local government areas, is not available. Such localised data would show areas of unfairness and sometimes abuse. Just as we are now developing a My School data base, we should develop the same for ‘My Hospital’ or ‘My GP Clinic’. Subject to some confidentiality issues, ‘open data’ should be publicly available on incomes and performance across the health sector.

The related issue of Commonwealth-state relations-the blame game- needs resolution. One possibility is for health services to be administered by joint Commonwealth-state commissions in each state, with pooled Commonwealth and state funding. Tasmania with its small and comparatively aged population could provide the basis for a trial.  This issue is canvassed further in my article Making the Federation work better which was posted on 20 May 2015.

An efficient national and integrated electronic health system would also significantly contribute to a national health service. It would maintain an up to date health record for every person and make unnecessary so many repeat referrals and examinations. It would improve the quality of care and reduce costs. DHA has failed in this field as in so many others.

The role of institutions

Health reform is too important to be left to health departments particularly DHA and bodies with superficial mandates such as the recent Commission of Audit.

Fortunately the Commonwealth has bodies such as the Productivity Commission, an organisation with not only technical expertise to analyse policy proposals, but also with the capacity to sound out those with policy interests. Most important, it can bring an “outside” view to public policy, addressing questions and options that may be beyond the imagination of “insiders”.

While the Productivity Commission can bring forth practical recommendations, the questions in health reform are so basic; however, that they require a wider and continuing process before specific issues can be addressed. Questions such as how costs are shared, and how scarce resources should be allocated, particularly for high-cost interventions with minor benefits, involve moral considerations.

One possibility is to establish a Health Reform Commission composed of independent and professional people to inform and lead public discussion and advise on important health reform issues. Clinicians should be included, but none of the vested interests. The Law Reform Commission established by the Whitlam Government in 1975 is an example of how enquiries and consultations can be conducted with the community in order to make recommendations to government that are well-informed. The Law Reform Commission estimates that over 85% of its reports have been either substantially or partially implemented making it an effective and influential agent for reform. The Reserve Bank is another example of how a respected, professional and independent body can be a leader in public discussion of important issues. A major objective of a Health Reform Commission would be to outflank the vested interests and carry an informed discussion with the community, particularly of the key principles that should drive health care. Ahead of establishing such a commission in government it would be useful to establish an interim group of professional and independent people who can facilitate informed public discussion and provide advice.

A general remit to the HRC would be to encourage service cost discovery, price discovery and quality discovery, integrity (fraud and abuse) and fairness (access to care regardless of means or location)

In addition to these general responsibilities there could be specific referrals to the HRC or the interim body, e.g.

• Ways to phase out PHI and introduce a dental/oral health scheme within Medicare.
• How to establish ‘medical homes’ in primary care which include both private and public clinics that provide a range of services.
• Remove perverse incentives for the remuneration of doctors.
• Reshape the health workforce to the needs of the 21^st

There are various ways to deal with public participation but the basic approach and method is that communities should be consulted to find what they want, and in successive rounds experts should analyse and report back on the costs and consequences of their proposals. For example, explaining that a completely free system would involve higher taxes and may involve greater waiting times.

One other model is the “citizen jury” – so named because the citizens to be consulted are selected on a random basis, and are informed by professional and independent experts. They could be asked to provide their advice back to government on such key issues as: to what extent do we want to share the costs of healthcare and how co-payments should be reformed. End of life issues could also be canvassed as well as many expensive interventions that have limited effectiveness. These citizens’ juries in health could be important vehicles for an informed national conversation on health, a conversation that we do not have at present.

I see parts 1,2and 3 on Health Policy Reform as outlined as, hopefully, the means to put the debate on health reform onto a more constructive and pragmatic path. Unless we get our processes working more effectively and particularly how to bypass vested interests, reform will continue to be very difficult. When we improve our processes we can be more confident of addressing the particular policy issues outlined in these three papers.

Unless we address the issue of power and how and who exercises that power in the health sector we will not achieve worthwhile reform. Power is in the hands of providers. It is not really in the hands of the community, patients or even governments. That is the key issue. We need leadership, institutions and processes to focus on how we overcome this central issue.

Ministers of Health may be in office but they are seldom in power.

John Menadue chaired the NSW Health Council 2000 and the SA Generational Health Review 2003.

Policy Series.

In Part 1 on health policy reform I outlined the main areas where health reform is necessary. In Part 2 I examine the reasons why I think health reform is so hard. In part 3 I will consider ways in which the necessary path of health reform can be quickened.

The major barrier to health reform is the power of providers or at least their assumed power. The most recent budget showed that yet again.

A succession of Australian health ministers may have been in office but they have not been in power.

Aneurin Bevan who launched in the 1940’s in my view the best health service in the world knew a few things about health but more importantly he knew much more about political power and how to exercise it in the public interest. He drew on the strong support of the community, a minority of doctors and the majority of nurses. He won the day and not surprisingly the UK National Health Service was the centre piece at the London Olympic opening ceremony in 2012.

The power of insiders – or the faintheartedness of politicians

Reform disrupts established arrangements. In general, the longer those arrangements have persisted, the greater becomes the pent-up need for reform, meaning that reform is going to be disruptive to existing interests. By the same token, as arrangements become more entrenched, the more do those who benefit from them feel threatened, and the more political clout they develop to resist reform.

That resistance is often based on financial self-interest, but it also aligns with a general fear of change and professional conservatism. It is difficult for those who are “inside” a system – be they administrators, professionals or policymakers – to conceive of other ways of delivering services. Institutional inertia is a strong force. And in health care it is easy to lose sight of the fact that delivering services is not, in itself, the objective. That objective surely is serving the community by helping to keep the population healthy.

One group with a stake in maintaining current arrangements are those who administer health services. Health is a highly technical, large and complex field that is difficult for outsiders to come to grips with. This gives disproportionate power to health administrators on the inside to manipulate ministers.

“Joined at the hip” with these administrators are much the same vested interests (rent seekers) that batten on the health service and dominate the public debate. These are much the same vested interests who so selfishly and ferociously led the opposition to Medibank in 1974. They are still with us today but in a different guise. The AMA has a long and dubious history in opposing key health reforms going back to its opposition to the Pharmaceutical Benefits Scheme In 1942.

These vested interests include the AMA, the Australian Pharmacy Guild, the private health insurance funds, Medicines Australia and the state and territory health department bureaucracies. In addition, there is a general “pro-business” push to open up all aspects of health care more to the private sector, particularly pathology and radiology.

Where possible, financial incentives should encourage practitioners to keep people healthy, rather than to deliver services to the sick. The perverse incentives in FFS come to play particularly strongly when health care takes on a corporate structure, where business objectives such as return on shareholders’ funds displace professional service objectives traditionally associated with medical practices. Businesses operate on the basis of expanding their markets, not on the basis of telling customers they may be over-using their services. The AMA, however, is turning a blind eye to the growing corporate takeover of general practise and the associated vertical integration into radiology and pathology.

The Pharmacy Guild strongly defends the privileged position pharmacists have gained through political influence. On the one hand the Guild strongly defends the many restrictions on competition enjoyed by pharmacists – prohibition on pharmacies in supermarkets, prohibition on price advertising, restrictions on location and ownership of pharmacies and exclusive rights to sell many non-prescription medications. On the other hand it does little to encourage integration of pharmacy with general practice.

It is not only in retail pharmacy that Australians are overpaying. Governments are also generous with taxpayers’ money for the mainly foreign pharmaceutical firms who are able to exploit their power in patents. Medicines Australia, the body representing manufacturers and distributors of drugs, has successfully lobbied the Commonwealth to pay high prices for prescription pharmaceuticals. Australia pays top prices: for pharmaceuticals. We pay $2 billion per annum more than New Zealanders pay for equivalent drugs. The last budget failed to properly address this overcharging.

The private health insurance companies are expensive financial intermediaries, receiving a $10b annual taxpayer subsidy through the rebate, and additional support in the form of the Medicare Levy Surcharge, which subsidises those with high incomes to hold PHI. Not even at the height of manufacturing industry protection were people actually given cash subsidies to buy Holdens and Falcons.

Private insurers don’t deliver any health services; they are simply high-cost financial intermediaries taking commissions. As I outlined in Part 1, PHI benefits the wealthy and most importantly weakens the power of Medicare to control prices. Now the private insurers are edging their way into general practice. The Managing Director of Medibank Private also reportedly told doctors that private health insurance policy holders should have priority in public emergency departments.

Government subsidized private insurance is a major threat to health care in Australia. At first sight it may appear to relieve public budgets and to take pressure off public hospitals, but that’s not the way it plays out. It actually sucks resources out of the public hospitals. The remuneration of most specialists in private hospitals is multiples of the remuneration of specialists in public hospitals. And as PHI pushes up costs, governments, still left with funding a large part of health services, find that they become passive players, accepting prices set by private service providers and insurers.

Yet in spite of this economic danger, and the example of the clearly dysfunctional American system, governments in this country – Coalition and Labor – have been reluctant to take on the PHI industry. Before the 2007 election Kevin Rudd wrote to the industry assuring it that their taxpayer subsidies would continue. The industry never publicly defends its $10 b pa subsidy. It is too ashamed. Instead it lobbies in private.

In an economy where many traditional industries, from manufacturing through to print media, are facing huge competitive pressure and disruption, health care is seen as one last remaining growth sector, offering easy picking for business.

Those are the private vested interests. We also have eight state and territory health department bureaucracies supported by their ministers. In a nation where state governments feel that more and more financial and political power is accruing to the Commonwealth, it is natural that they defend their shrinking turf. Such considerations override any concern to see an integrated national system. In response, the Commonwealth is reluctant to stare down the parochialism of the states.

Reform is possible

Australian governments have a strong record in economic reform. In the 1980s the Hawke-Keating Government took on vested interests, and negotiated a wide-ranging set of reforms in the manufacturing, transport and financial services industries. Earlier, in the mid-1970s, the Whitlam Government, when it introduced Medibank, successfully stared down the AMA and the health insurers. Although the Fraser Government unwound many of these reforms, the Hawke Government successfully resurrected universal public insurance in the form of Medicare.

But there has been no significant reform of the health sector since then. In 1997 the Productivity Commission recommended a comprehensive inquiry into health financing, but no government has initiated such an inquiry. Corporate interests have become more involved in health care, and PHI has become embedded once again.

Governments generally over-estimate the power of lobby groups. They can make a lot of noise – particularly when, as a result of successful rent-seeking in the past, they have accumulated large funds to spend on scare campaigns .But the capacity to make noise does not equate to a capacity to influence voters. Opinion polls consistently show that the public believe Coalition governments are too much influenced by big business, which means reforming governments should be able to gain electoral advantage from standing up to rent-seekers.

The problem is not just about financial self-interest, however. It is also about the inertia of established practices, and an incapacity of those on the “inside” to imagine any significant variation on current arrangements. Practices such as the separation of pharmacies from medical services, fee-for-service funding, the dependence of private hospitals on private insurance, the separation of medical from hospital services in private hospitals, and so on, have become entrenched in the thinking of policymakers, politicians and many journalists. There is a deficit of imagination, an incapacity to think beyond the present.

A part of the problem lies in the Commonwealth bureaucracy. Commonwealth Ministers for Health are very dependent on the Department of Health and Ageing, particularly, as is often the case, when ministers are not across the issues and don’t have a clear policy program themselves. Aneurin Bevan showed how important political leadership is.

DHA is ill-equipped for policy reform. Rather, its objective seems to be to keep the peace with provider lobbies, and to keep the minister out of any public brawl or argument.

The Department is structured in ways that reflects the interests of providers such as doctors and pharmacists, rather than on the basis of community interests, such as acute care, chronic care or demography. It has expertise in administering existing programs but it has little economic expertise. Fiscal concerns tend to crowd out any consideration of economics.

In fact the Department doesn’t even effectively integrate the Commonwealth’s own major programs, let alone make any real progress in bridging the Commonwealth and state divide.

Late last year in its Capability Review of DHA, the Australian Public Service Commission said that the Department ‘is hierarchical and siloed, … the Department does not have a high level strategic policy framework … policy discussions are largely constrained within work silos … there is reluctance from the Department to consider new and changed policy directions’.

The Australian National Audit Office has also just reviewed the Fifth Community Pharmacy Agreement. It reported ‘Six broad principles and objectives were included in [this agreement] … The Department is not well positioned to assess whether the Commonwealth is receiving value for money from the agreement overall “               

The Ministerial/Departmental model in health has failed. It is incapable of contesting the power of the rent seekers. The community is effectively excluded.

Unless the health debate is taken to “outsiders”, away from the insiders – the rent seekers and vested interests– we are unlikely to see significant progress in health reform. The vested interests invariably win out over the public interest.

Political struggles between the public and rent-seekers are not uncommon, but there are reasons why in health care the public interest has a hard time securing a voice. Most of the public most of the time have little contact with health services. The intense users tend to be the chronically ill (who are reasonably active but do not constitute a majority) and those who are nearing the end of their lives and are not in a position to exert political influence. It is unlike services we all experience such as education or transport, where strong public lobby groups naturally arise. Also, health lobby groups are able to exploit the public’s trust in health care provider’s services – a trust which is well-justified on the grounds of professional competence, but which should not logically extend to trust on financial or political matters.

With a few exceptions the media does not really understand health issues. Press releases from pharmaceutical firms, pathologists and health insurers and other rent-seekers provide easy material for under-resourced journalists. It is easy for governments and so-called “business interests” to rise scare campaigns about the affordability and performance of government health services.

The power of vested interests in health must be strongly contested.

In Part 3 I will address governance and issues of process which are necessary to break through the inertia and counter the power of the vested interests that batten on the health system.

John Menadue chaired the NSW Health Council 2000 and chaired the SA Generational Health Review 2003. 

Policy Series

I will be posting three articles on health policy.

This article outlines the priority areas where reform is necessary.

Part 2 will explain why reform is so difficult but not impossible.

Part 3 will be about processes and governance issues that are necessary to move us beyond the present inertia, incrementalism and tinkering, with suggestions for policy directions. I will not be proposing specific policies.

The Rudd-Gillard Government – lost opportunities

Traditionally, in Australia and elsewhere, Labor and similar governments have been the initiators of health reform. Conservative governments, in general, have opposed or wound back health reform.

In Australia the Labor Party, guided by principles of universalism, equity and economic efficiency, gave us publicly-funded health insurance – initially through Medibank and then through Medicare.

In spite of high expectations in health reform, however, in its 2007-2013 period in government Labor really did little more than muddle through. The Rudd Government established a National Hospital and Health Reform Commission (NHHRC), but it was composed largely of health insiders who seemed to be incapable of seeing health policy from a broad perspective and who failed to grasp the basic economics of health care.

To its credit the Rudd and Gillard Governments had one major policy achievement – plain-packaging of cigarettes, and before it lost office was making progress on other aspects of prevention and public health.

Indigenous, mental and rural health all remain in a parlous state. Health programs operate in isolation from one another. The funding of health care through multiple public, corporate and private channels results in serious inequities. And, in general, there are administrative inefficiencies and a poor allocation of scarce resources.

Since 2013 the situation has worsened. The Abbott Government has abolished the Australian National Preventive Health Agency and Medicare Locals, has foreshadowed deep cuts in funding for state hospitals, and put up ill-considered proposals for GP co-payments. The new Minister for Health fiddles around the edges.

Getting the most from what we have

In considering health reform, we need to start with an appreciation that we have one of the best health services in the world in both efficiency and equity, thanks to Medicare. But Medicare was established over 40 years ago. There is little coherence or consistency in what we have at the moment. Our health care arrangements could not be called a ‘system’. They have no clear and underlying principles or philosophy.

As a result of that lack of coherence and fragmentation there is waste in our health care arrangements. When we discuss health care we discuss parts of it, medical services, pharmaceuticals, hospital and mental health. But seldom do we discuss the ‘system’.

Nurses, doctors, paramedics and others are all working hard and professionally, but they work in silos. I have estimated that reforms would result in a saving of at least ten per cent of our health bill or about $15b to $20b in today’s costs. Abolition of the taxpayer subsidy of over $10b per annum to private health insurance would represent about half of these savings. See my blog of 17 March 2015 on PHI and funding a Medicare dental scheme.    

But a big waste is in misallocation of scarce resources-a $10b Private Health Insurance subsidy and serious underfunding of mental and indigenous funding. Governments seek savings in public health and primary care – savings which are more than offset by higher needs for hospitalisation and high cost specialist care.

Seldom do we stand back and ask the central issue: what do we need and expect from a health system? That question should be a starting point for reform.

The concerns of health policy – a system approach

Reform needs to cut across programs, and concerned with the following six issues.

1. Primary care. Primary care has been largely ignored in health reform. It should be the starting point. Early interventions and health check-ups can head off costly and debilitating illnesses. But unfortunately the financial incentives are against primary care and in favour of expensive specialists.

We have an obsession with hospitals. But hospitals should be the last resort rather than the first. Countries such as the United Kingdom and New Zealand have high quality care, in part because of the philosophy underlying their systems, but also because those systems are grounded in primary care, which is the most efficient and equitable way to deliver health services for all regardless of income. It is where care is best integrated.

Fee for service (FFS) remuneration in primary care has encouraged “turnstile medicine”, excessive treatment and increasingly the corporatisation of general practice. FFS is a major barrier to reform in primary care. FFS may be appropriate for episodic or occasional care for walk-in patients but it is not appropriate for chronic and long term care, particularly mental and indigenous health care. Our governments have failed in this key area. Increasingly physicians in Europe and elsewhere are taking salaried positions where they are supported in practice medicine in a collegiate environment where the time for team review of patient management is a routine part of care, not something that is seen as an irritating waste of time with poor remuneration. FFS encourages over-investigation and over-treatment. Doctors respond to financial incentives just as other people do and this is not always in the interests of patients.

A major barrier of course to improved health services through primary care is that the Commonwealth funds GPs and other medical services, other than those in public hospitals, while the states operate public hospitals. There are substantial savings in keeping patients out of hospitals but with different funding steams there are few incentives to do so. In fact, when the Commonwealth is more concerned with its fiscal balance than with sound economics, it has every temptation to skimp on primary care, essentially imposing higher costs on the states and poorer health outcomes on the community. The Commonwealth’s fiscal obsession has outweighed any sense of economic responsibility.

The trends in General Practise are disturbing. In 1999 45 % of doctors were GP’s it is now less than 38%.The earnings of GP’s are substantially less than specialists. It is more attractive financially for medical graduate to become specialists

In this blog, John Dwyer (See ‘Commentary Part 1‘ and ‘Health Policy Reform Part 2‘) argued persuasively for an integrated primary care system in Australia. It would provide a ‘medical home’ for a wide range of patients with diverse health problems.

2.  Workforce. Health is the largest and fastest growing sector of the Australian economy. Its structure and workforce are riddled with 19th Century demarcations and restrictive work practices. For example there are several hundred nurse practitioners in Australia when there should be thousands. About 10 per cent of normal births in Australia are delivered by midwives: in New Zealand that figure is over 90 per cent.

We don’t have a shortage of doctors so much as a misallocation of doctors. Nurses, allied health workers and ambulance staff are denied opportunities to upgrade and realise their professional potential and improve services.

Pharmacies should be providing more basic health services for the community and should be active partners with doctors in primary care.

As Minister for Health, Nicola Roxon enabled some nurse practitioners and midwives to access the Medical Benefit Scheme but the access was quite minor. The MBS can be the lever for major workforce renewal.

It is quite remarkable that we have endless talk about the need for workforce reform everywhere but in the health sector. The restrictive work practices and demarcations in the health sector are a disgrace. Jim McGinty will be writing further on health workforce reform in this policy series.

3. Program structures. If we go to a garage to service our car we expect the garage to take responsibility for the whole car. But not in health. We have to go to different professions for different services, suppliers and interest groups all with their separate billing and regulations. Health services are structured and funded around providers – medical services by doctors, pharmaceuticals through big Pharma and the Pharmacy Guild, and hospitals through state governments and private agencies. The Department of Health and Ageing reflects this provider focus rather than a focus on consumers.

Such a provider-based structure, rather than a user- or customer-based structure, is reminiscent of corporate structures abandoned in the private sector a half-century ago, and is inconsistent with the “outcomes” focus of public sector reforms of the 1980s. Yet it survives in the health sector with the only institutional recognition of consumers is through the Health Consumers Forum of Australia, a body funded by the Commonwealth and which seems more like a marketing arm of DHA than a group representative of consumer interests. Patients are invariably last in the queue.

We need to progressively change the focus of health programs to serve the community rather than providers. One possible structure would be around types of users – acute, chronic and occasional. It would help reduce the competition between different provider areas for limited resources. DHA shows little interest in consumers but together with the Minister always seems to have an open door for the rent seekers such as the Pharmacy Guild and the AMA.

4. Funding. Funding of health services is a mess, resulting in serious inequities, high administrative costs, and misallocation of scarce resources. Some services, financed either through private health insurance or Medicare, are free at the point of delivery, while others can leave consumers with massive out-of-pocket expenses.

We have some of the highest co-payments in the developed world. They also lack rhyme or reason. ” with the level of government subsidies varying enormously. Some co-payment arrangements work on a safety-net basis, while others, such as for psychologists, leave the consumer bearing open-ended risks. The Abbott Government’s “reforms”, if implemented, would make the situation worse. Medical and pharmaceutical co-payments have little in common, and dental services are much more poorly funded than medical services. The safety nets are unfair and lead to abuse.

Persons on high incomes should pay more for health services through efficient and defensible co-payments. A “universal” service does not necessarily mean it should be free. Subject to a means test, there needs to be more discipline by consumers in their use of health services. There is no sign that the Commonwealth is concerned about the problem however, even though most other countries have better models to emulate. The Nordic countries, for example, insist on a single public funder and universality but with efficient and equitable co-payments. Jennifer Doggett will be writing further about co-payments in this policy series.

The other great funding distortion in Australian health care arrangements is private health insurance (PHI) – essentially a high-cost mechanism which allows some, particularly those with high incomes, to jump the queue for hospital services, thus worsening waiting times in public hospitals by diverting resources to private hospitals, contrary to the claim that it takes pressure off public hospitals. PHI penalises country people because there are few private hospitals in the bush. Australia’s arrangements also mean that private and public hospitals operate on different funding streams and with little integration of services.

The government, through means testing rebates for PHI, has removed some inequities, but PHI remains a costly and inequitable way to do what the tax system and Medicare do much better. Also, PHI is administratively inefficient with bureaucratic costs including profits about three times higher than Medicare.

Private gap insurance promoted by PHI has facilitated enormous increases in specialist fees. Most importantly, the expansion of PHI progressively weakens the ability of Medicare to control costs. The evidence world-wide is clear that countries with significant PHI have high costs without any better health outcomes.

The stand-out example of PHI causing high costs and poor outcomes is the United States. President Obama may have substantially achieved universal coverage, but PHI with its lack of cost control will ultimately cripple and finally destroy his reforms. Warren Buffett has described PHI companies as the “tape worm” in the US health sector.

The Commonwealth already has a sound model of a single payer operated through the Department of Veterans Affairs – a model which retains the strong control of a single payer accountable to the community whilst allowing private practise involvement in service delivery.

The Commonwealth has failed to understand the damage that PHI is already doing in Australia. PHI is a Damocles sword hanging over Medicare. We must assert the key importance of a single public funder.

The $10b plus per annum taxpayer subsidy to PHI is more than would be required to fund a Medicare dental/oral health scheme and significantly improve the funding of mental, indigenous and rural health

This subsidy of $10b is the most critical issue in health care. The nettle must be grasped!

5. Defining Medicare. This great Labor monument needs a review. Medicare has become a passive but efficient funding mechanism, providing a partial subsidy for certain health expenses, rather than the public insurer it was intended to be. After all, it is still called the “health insurance commission”, but it is nothing of the sort, and it is not even within the health portfolio.

Medicare has a remarkable database which should be used to highlight and inform policy concerning over and underutilisation of services across the country. Why for example do rates of caesarean section vary enormously across the country and why are Australian rates very high in world rankings? There are many other large variations in clinical procedures that must be made public and explained. Medical services should be subject to the same rigorous cost-benefit examination as pharmaceutical services. Medicare is not doing it.

Even more potential lies in the use of that database for research into efficacy of treatments. This was an intention of Medicare’s designers, who envisioned the day when computing power could extract clinical information from that database. That day has arrived, but the government, although willing to invest billions in some areas of medical research, shows no interest in using this valuable resource, or in the integration of MBS and PBS data which would provide rigorous pharmaceutical evaluation at a tiny fraction of the cost of clinical trials.

6. Cost and blame shifting. Governments, more concerned with their fiscal balances than with economic efficiency, try to shift costs on to other governments, Commonwealth to state and vice versa, on to individuals, or on to future generations for example in neglect of public health. Attempts to resolve the Commonwealth/state blame and cost shifting have been largely unsuccessful and certainly expensive with the Commonwealth succumbing to state political pressure without fixing the lack of integration.

In Part 2 I will be looking at the major obstacles to health reform, including the influence of the vested interests who are concerned to protect their own territory rather than serve the public interest.

John Menadue chaired the Report of the NSW Health Council 2000 and the SA Generational Health Review in 2003. 

Fairness, Opportunity and Security.
Policy series edited by Michael Keating and John Menadue.

Do Human Rights Fit or Should We Just Forget About Them?

Hard upon the ascent of violent terrorism in the Middle East, Africa and elsewhere, and Australia’s first experience of terrorist crime in Martin Place, the Australian Government has been active in bringing forward new legislation designed to prevent and punish terrorist crime. There can be no quarrel with that. Nevertheless, the draconian nature of the new laws has caused alarm amongst many concerned with the protection of individual rights and freedoms.

One of the most pressing questions in contemporary Australian politics, therefore, has become how best to reconcile the interests of national security, on the one hand, and the protection of fundamental human rights and freedoms, on the other. In this article I consider critically the three large tranches of counter-terrorism legislation recently adopted by Federal Parliament. Then I look to the question of how human rights considerations might constructively be incorporated into existing debate and deliberation upon counter-terrorism law. 

1. The National Security Amendment Act 

The first of the three tranches of recent counter-terrorism legislation is contained in the National Security Legislation Amendment Act (No.1). The legislation amended several existing Acts to strengthen the powers of Australia’s intelligence agencies. It gives ASIO officers immunity from prosecution for criminal activity in which they may engage in the course of ‘special intelligence operations.’ It creates new offences and severe penalties for the disclosure of information that relates to these operations.

The Act defines a ‘special intelligence operation’ as one established to carry out special intelligence functions in the course of which an ASIO officer or affiliate may engage in criminal conduct or commit a civil wrong. A special intelligence function is one carried out for the purpose of obtaining evidence that may lead to a prosecution for a serious Commonwealth offence. That means, for example, that if during the course of a special intelligence operation an ASIO officer beats up an innocent party or recklessly causes them harm, s(he) will be immune from criminal prosecution.

Nevertheless, special intelligence operations are subject to legal limitations. An operation, tautologically, must be one that will assist ASIO in the performance of a special intelligence function. The unlawful conduct involved in undertaking an operation must be limited to the maximum extent consistent with conducting an operation effectively. The conduct involved must not cause death or serious injury to any person; involve a sexual assault; or result in serious damage to property.

Even this brief description makes it plain that the special intelligence operation provisions travel far more widely than is consistent with the rule of law. It is unacceptable in principle and practice that ASIO officers should be immune from prosecution for crimes they commit. This violates the fundamental constitutional principle that every person should be treated equally before the law.

The essential point remains that ASIO operatives should not be exempted from the law. In the 1984 case of A v Hayden, former Chief Justice of the High Court, Sir Anthony Mason put the point succinctly:

“For the future, the point needs to be made loudly and clearly, that if counter-espionage activities involve breaches of the law they are liable to attract the consequences that ordinarily flow from breaches of the law”. 

The National Security Amendment Act (No.1) prohibits the disclosure by any person of information that relates to a special intelligence operation. S.35P is as follows.

            35P. Unauthorized disclosure of information

• A person commits and offence if:
  1. The person discloses information; and
  2. The information relates to a special intelligence operation.
     Penalty: Imprisonment for 5 years.

This provision could slam the door on investigative journalism. Press freedom exists in part to ensure that government agencies can be held to account for their actions. The accountability principle applies to intelligence organizations no less than to any other entity in the machinery of government. S.35P is a concerted attempt to undermine it.

Journalists and whistle-blowers often work in tandem to obtain and expose information about governmental corruption and malfeasance. This activity is clearly in the public interest. Journalists cultivate knowledgeable and expert sources all the time. They promise sources that their identity will not be revealed. They receive and evaluate confidential information. For the most part, they are careful when publishing information concerning surveillance operations, particularly when they relate to the protection of national security.

S.35P, however, is likely to chill these crucial investigative activities. Journalists, lawyers and others who come into possession of specialist intelligence information may be prosecuted not only when they intend to disclose that information but also if they are reckless as to the possibility of its disclosure. All the government now needs to do to stop such disclosures is to warn media organizations that matters in which journalists have an interest may relate to special intelligence operations. Journalists are unlikely to court the possibility of jail once such a caution has been issued. S.35P should be repealed in its entirety.

2. The Foreign Fighters Act 

The second tranche of counter-terrorism legislation is contained in the Counter-Terrorism Legislation Amendment (Foreign Fighters) Act. The primary purpose of this legislation is to enable the investigation, arrest, prosecution and punishment of people supporting foreign conflicts. The secondary purpose is to limit the opportunities of Australian residents to engage in foreign fighting and domestic support for foreign fighters. Speaking generally, there is no problem with criminalizing such activities. The problematical issues are different.

Each of the foreign incursion offences pivots upon the definition of ‘to engage in hostile activity’. A person engages in hostile activity in a foreign country if they engage in conduct intending to overthrow the government of the country or to subvert society or intimidate the public in that country. This definition substantially expands the one formerly contained in the Crimes (Foreign Incursions) Act 1978. The expansion is achieved by the inclusion of the subversion and intimidation components.

‘Subverting society’ is defined extraordinarily widely. It may for instance apply to serious damage to any property, serious interference with an information system or a serious disruption to transport infrastructure. Such activities may legitimately be criminalized but to attach a life sentence to them is manifestly excessive. Importantly, too, the new subversion offences are not tied directly to terrorism. Subversive activity encompasses a range of actions that, unlike terrorist acts, need neither be intended to influence a government by intimidation nor be motivated by the advancement of a political, ideological or religious cause. To avoid substantial legal over-reach, these offences should be tied directly to the far narrower definition of a terrorist act contained in the Commonwealth Criminal Code. 

The problems attached to overly broad ministerial discretion are illustrated graphically by new offences attached to travelling to ‘no go zones’. Pursuant to the Foreign Fighters law, it is an offence for a person to enter an area in a foreign country that has been declared by the Minister for Foreign Affairs as a no-go zone, where the Minister is satisfied that a listed terrorist organization is operating there. To enter or remain in a declared area attracts a penalty of 10 years imprisonment.

The scope of the legislation is wide. It means that a person will be liable to prosecution for crossing an artificial geographical line, determined at the Minister’s discretion and drawn, in any part of the world, according to the Minister’s judgment as to the nature, extent and national security implications of a civil conflict occurring there.

The exceptions are narrow. They include cases in which a person has entered an area to engage in humanitarian or journalistic activities or for bona fide family reasons. They do not, however, cover business travellers, pilgrims, adventurers, ill informed tourists, people who enter inadvertently, people in transit, others who have gone to visit or support friends and so on.

The exception for journalists extends only to those who are working in a professional capacity. Social media correspondents, bloggers, researchers, independent cameramen and others are unlikely to fall into the professional category. The parliament should include, therefore, a general defence for a person who has travelled to the area for an innocent purpose that nevertheless falls outside the present narrowly defined, legitimate reasons for travel.

3. The ‘Metadata’ Act

The third tranche of counter-terrorism legislation is the Telecommunications (Interception and Access) Amendment (Data Retention) Act, better known as the ‘metadata’ law. Pursuant to this law, telecommunication service providers are required to keep telecommunications data of various kinds for a period of two years. The data to be kept includes the name and address of service subscribers; contact information; payment information; identifiers of the account from which, and to which, a communication has been sent; the date and time of the every communication; and the types of communication and service utlilised. Access to the content of communications, however, is excluded.

A dizzying array of law enforcement agencies may request the information to which service providers must provide access. Fifteen classes of agency are so authorized. These include the AFP; State Police Forces; ASIC; the ACCC; and all State Anti-Corruption Commissions. With one significant exception, a judicial warrant is not required before a demand for metadata relating to a person is made.

The exception is for journalists. In considering whether to approve the issue of a journalist information warrant, the Minister must be satisfied that the public interest in issuing the warrant outweighs the public interest in protecting the confidentiality of a journalistic source. In determining the balance to be struck between these competing public interests the Minister must also have regard to the extent to which the privacy of any person may be interfered with.

The problems with metadata legislation of this kind are self-evident. While the content of communications may not be accessed, metadata itself can provide a detailed picture of a person’s private life. Law enforcement agencies can with alacrity paint a person’s individual portrait from their phone calls, email, online chat, credit card purchases, web searches, identified associates, and physical location. The sophisticated new technology underpinning access to metadata can also allow enforcement agencies to engage in sweeping surveillance of entire communities.

All this might be justifiable if strong protections against arbitrary invasions of privacy were also embedded in law. But they aren’t. The cardinal error is the absence of a legislative requirement for enforcement agencies to obtain an access warrant, the justification for which is independently and impartially assessed by the judiciary whenever metadata is sought.

According Weight to Human Rights Considerations 

Unlike every other Western democracy, Australia does not have a constitutional or statutory Charter of Rights. In the present context, the lack of comprehensive legal protection for Australians’ rights and freedoms has two undesirable effects. The first is that there is no legal mechanism through which Australian governments can be encouraged or obliged to comply with international human rights law. This is despite the fact that Australia has ratified, and therefore has agreed to observe the terms of, every major international human rights treaty.

The International Covenant on Civil and Political Rights (ICCPR), for example, protects freedom of expression, freedom of movement and individual privacy. It is founded upon a commitment to the rule of law. Each of these rights is likely to be transgressed as the legislation previously described takes effect.

Freedom of expression is constrained whenever media freedom is undermined. The National Security Amendment Act will silence journalistic investigation with respect to special intelligence operations, while allowing security agencies to define such operations broadly. The Telecommunications Interception Act authorizes sweeping access to journalists’ metadata while providing only flimsy protection against the identification and surveillance of their sources. Furthermore, it will inevitably act as a prohibitory disincentive to sources who might otherwise seek to expose public and private corruption and malfeasance.

Privacy rights are frighteningly compromised by the metadata laws. Even in the absence of access to content, security agencies will now be able to create intimate portraits of surveilled individuals without their knowledge, without prior reasonable suspicion that an offence has been committed and without any restrictions on how the data will be analyzed and used. A criminal prosecution founded upon such secretly acquired metadata may prejudice the right to fair trial and, hence, the rule of law. The rule of law is further undermined by exempting ASIO officers from criminal prosecution when they engage in special intelligence operations.

The absence of a Charter of Rights has another profoundly detrimental effect. It impoverishes public discussion and debate about controversial legislation such as that recently enacted. A Human Rights Act of the kind proposed by the National Consultation on Human Rights in 2009, but shelved by the Rudd Government, would have added two significant dimensions to public and political deliberation concerning counter-terrorism laws.

First, once made law, the Act would have provided a clear set of internationally endorsed human rights criteria on the basis of which a more informed and considered judgment could have been made as to the desirability or otherwise of the three tranches of legislation recently adopted.

Secondly, a Human Rights Act could be a formidable legal instrument through which the Australian community generally could through time be educated concerning the fundamentals of Australian democracy – representative and responsible government, the separation of judicial power, the rule of law, freedom of expression, non-discrimination and the ethical foundation and practical relevance of human rights themselves. Study after Australian study has demonstrated the barrenness and failures of contemporary civics education. A Charter of Rights could provide one model set of non-partisan standards to which all Australians could look in making sense of their political world and in framing their aspirations for it.

Conclusion 

All too often the terrorism debate is framed in terms of trade-offs. The trade-off approach proposes that in order to strengthen national security, we are obliged to accept a corresponding decrease in human rights protection. If only we could get the balance right, our political difficulties might be resolved. There are two errors in this argument.

First, it presumes that these two public interests are distinct and in competition with one another. On the contrary, the protection of national security must necessarily include the defence of the fundamental values upon which Australian democracy is founded. A commitment to democracy, human rights and the rule of law is at the heart of those values. Similarly, a commitment to human rights plainly embraces the necessity to provide the safety in society upon which the effective exercise of human rights depends. The right to life, liberty and security is a fundamental inclusion in any and every human rights catalogue. The relationship between the two interests, therefore, is complex and mutually reinforcing.

Secondly, the real dilemma we face is not one that primarily concerns how national security and human rights should be brought into some kind of uneasy equilibrium. Instead the fundamental question to be addressed is what, in all the circumstances, does justice require? Or, to put the matter another way, is the threat of terrorism presently so great as to justify us acting unjustly? If we are to preserve the kind of society to which we aspire, the answer to that question must surely be ‘no’. 

Spencer Zifcak is Allan Myers Professor of Law and Director of Research at the Academy of Law, Australian Catholic University. He is immediate past president of Liberty Victoria. 

See following article by Susan Ryan on the campaign for a Human Rights Act in Australia.

 

 

 

Fairness, Opportunity and Security
Policy series edited by Michael Keating and John Menadue.

The policy rationale behind a national broadband network would appear to be a simple one. The objective would be to part subsidise the construction of a national network that ensures two policy elements would be achieved. The first is a broadband infrastructure that ensures that Australian homes and businesses have broadband at a level that does not limit the national competitiveness compared to its trading partners. The second is to ensure that this broadband service is universal.

The policy challenge is that this was never the original policy rationale and that current policy positions in the national broadband network are inconsistent with a deregulatory stance.

The policies associated with the national broadband network are trying to solve a very broad range of problems and moist of these do not fit in with delivering a telecommunications network. Even the title of the policy is misleading. The term “national” is associated with universality. However, the national broadband network is actually a set of access networks and the connectivity between these access networks is provided by commercial players.

It’s worth looking at how we go to the current situation. To do this, there is an overview of technology and then a look back at the start of national broadband network planning as an outcome of the 2007 election.

Technology

One of the problems with policy clarity is that there are technology debates which can cloud matters. There are two ways in which broadband services can be delivered. These are fixed line and wireless. In the wireless space, delivery can either use a territorial system, in the same way that mobile broadband is delivered or via satellite. Fixed line delivery uses a combination of optical fibres and (optionally) copper wire of some type. Current ADSL (which is a mercifully short acronym for asymmetric digital subscriber line) uses the copper pairs that historically delivered telephone services. The closer the fibre is to the premises, the higher the bit rate that will be able to be delivered. This is a result of the fact that copper pairs are not good at supporting big bit rate services. Coaxial cable is much better at delivering services over longer distances.

These issues lead to a set of acronyms and the need for standardisation. The existing Telstra copper network has two segments. The first is between the exchange building and the pillar in the street. The pillar typically provides about 300 copper pairs for about 150 premises. These premises are the “distribution area” (DA). The copper between the exchange and the DA is usually in very good condition as the cables are kept pressurised with compressed air to prevent water ingress. The copper in the DA may well have moisture issues and these can limit the data rates that can be delivered. When the fibre runs all the way to the premises, the technology is called “fibre to the premises” or FTTP. If the fibre runs to a new box of electronics serving a DA, this is “fibre to the node” or FTTN. If the last part is coaxial, using the cable which can deliver cable television, then this is a hybrid of fibre and coaxial or HFC.

A FTTP network uses one fibre that feeds a splitter which provides service to up to 32 premises and is normally designed to deliver to half that number. As a practical matter, co-locating ten splitters per DA – usually in the pavement near the pillar is a practical solution.

The FTTN solution requires power to be delivered to the electronics in the node. This is awkward as there is rarely a meter available.

History

The original approach for national broadband network planning sometimes known as NBM Mark I was for a limited government subsidy of a broadband network that would provide 12 Mbps downstream and 1 Mbps upstream. The requirement was set out in a tender process in 2008. The likely (and assumed) technology was fibre to the node, which is described below. The government offer was $4.7 billion and the tender process was designed to be in the form of a least-cost subsidy auction. That is, the winner would provide “best bang for the buck” without the government paying for the whole of the network.

The bids were expected to be a mixture of a little FTTP, mainly for new construction areas (greenfield sites) and FTTN in established neighbourhoods (brownfield sites). In practice, Telstra’s bid was only 12 pages long and was knocked out because it did not have the required industry plan. Telstra’s more detailed proposal was not submitted as Telstra was seeking assurances that there would be no structural remedies (specifically, structural separation) applied. Other bidders put in bids which were conditional on access to elements of Telstra’s network. This NBN Mark I process led to a report to the Minister in January 2009 that none of the other bids was appropriate.

In April 2009, the government announced that it would form a government business enterprise (now NBN Co) and invest $43 billion to roll out an FTTP network to 90% of homes and businesses, with the balance receiving broadband services using wireless technologies. The investment was critical to making sure that the project was “off balance sheet” for budgetary purposes. Over subsequent years, and specifically in a Shareholder Ministers’ Statement of Expectations in December 2010, the technology mix was changed to 93% FTTP, 4% terrestrial wireless and 3% satellite wireless.[1] There was also a policy requirement that there should be uniform national wholesale pricing. That is, the price should not be determined by the cost. This is important when NBN Co planned a $3.5 billion capital expenditure to deliver wireless services to 200,000 homes. Its subsequent review realised that this plan underestimated demand and costs meaning that the cost per premises will fall but the absolute costs will rise.[2]

The effect of the policy was that NBN Co was mandated to cross-subsidise regional and remote services from the lower costs in metropolitan areas.

There was also a concurrent policy which gave Telstra the choice between voluntary structural separation and legislated functional separation. However, it was barely a choice as the consequences for failing to “volunteer” included preventing Telstra from accessing spectrum, the lifeblood of mobile services and requiring it to divest its interest in box Foxtel and the HFC over which some viewers receive subscription television.

The reviews after the 2013 election have changed the fixed line technology to a mix of FTTP (26%), FTTN (44%) and HFC (30%).[3] Seven per cent of premises will still be served by wireless. This is the current government’s multiple technology mix.

The policy challenges

The most major policy challenge is the fact that deploying a different technology mix in response to a new government’s Statement of Expectations[4] is not a rapid process. The agreements between NBN Co, the government and Telstra, which took more than a year first time around, were more complicated given that each of Telstra and Optus were selling their HFC networks to NBN Co. The previous deal had provided a “disconnect fee” when customers were moved from HFC to the national broadband network.

Another issue is that technology marches on. This aspect of productive efficiency has three implications. The first is that the expectations of consumers change. When NBN Mark I was released, the iPhone 3GS was months away and the iPad had not been launched. The consumer expectation of multiple devices using fixed and mobile networks was in its infancy. Now consumers expect to get 25 Mbps from their 4G mobile devices and for this to remain a target for fixed broadband seems odd. After all the US Federal Communications Commission has raised the minimum bit rate in their definition of broadband to 25 Mbps.[5] The second problem is that the best technology is always the next one. NBN Co is proposing to use a standard called DOCSIS 3.1 for HFC services and this will deliver near fibre bit rates. However, it requires significant expenditure on “node splitting” in the deployed cable network and will only work when there are commercial quantities of DOCSIS 3.1 modems. In an irritating twist, this will be after the election that is most likely to take place in 2016.[6] The third effect of productive efficiency is that it is not a government monopoly. When TPG decided to use its a lower cost technology to extend its network to blocks of units using a variant of FTTN called fibre to the basement (inevitably, FTTB), the Minister for Communications imposed a new licence condition on fixed line carriers requiring that they offer wholesale services for FTTB to try and dissuade TPG from competing with NBN Co.[7] This is an odd course of action for a government that favours free markets. However, it reflects the continuing policy of implicit cross-subsidisation from the metropolitan areas to the bush.

Form an economic perspective, there is no real rationale as to why this subsidy should come from telecommunications users, rather than consolidated revenue. If there needs to be a policy to provide telecommunications services into remote areas, and this type of universal service policy is widely adopted on a global basis, then there is no reason why the subsidy could not be explicit (a line item on a bill) if it is not to come from Treasury. The newly established Bureau of Communications Research at the Department of Communications will be looking at this issue.[8] However, there is a technological matter which will change the economics.

When the first Shareholder Ministers’ Statement of Expectations was issued, this mandated NBN Co not to bid for spectrum in the 700 MHz band. We now have a situation where NBN Co is in the process of building 1,400 base station sites using 2.3 GHz spectrum which is not optimised for coverage. There are two parameters in designing a fixed wireless network, coverage and capacity. Coverage determines who will receive a service and capacity is based on how many people use that service concurrently. For most applications, spectrum below 1 GHz is best for coverage and above 1 GHz for capacity. The reason that the 700 MHz spectrum was not made available to NBN Co was that its value (in terms of budget estimates) was too great. In practice, there is spectrum that was unsold at auction which could be used to provide NBN Co services, Public Safety Mobile Broadband services and still have value for its use in supplying consumer mobile broadband services.

Solutions

It’s clear that trying to solve universal service policy matters at the same time as limiting the competitive effect of Telstra and rolling out a network whose design parameters are constantly falling behind the Pareto curve established by productive efficiency is problematic. There are areas where there is poor or no broadband. This is not tolerable in an advanced economy, ever. Solutions that simply transfer consumer wealth to incumbent operators are not the solution. Perhaps it’s time to take another look at what government intervention (financial or regulatory) is required to deliver a tightly specified outcome. This might mean making some subsidies explicit and it might also mean that spectrum which holds a valuation set by the previous government is reassessed for use in delivering that outcome.

At the end of March 2015, there were 389,000 premises actually connected to the national broadband network.[9] That’s not a lot to show for a process that started seven years earlier.

There are a few approaches that the parliament could take which actually reflect the rapid changes in technology and the cross-subsidisation issues. The first is that the Statement of Expectations should not be based on bit rates in election years. Far better to follow the approach pioneered by David Murray in the Financial Systems Inquiry and have a target which moves with either the OECD or, and this is a much tougher ask, in line with our major trading partners. The target should be a basket of service (expressed as an average bit rate served and amount of data served, a set of service levels and retail price). In line with the final recommendation, meeting this target need only be subsidised in the areas where commercial offerings have not kept up. The second is a rationalisation of universal service. It does not make sense to mandate that NBN Co should be the wholesaler of last resort in remote areas and Telstra is the retailer of last resort and then to require that both use different delivery technologies. The third is to provide those subsidies that are needed for the rationalised universal service from consolidated revenue, rather than in the form of cross-subsidies from metropolitan areas. Once this is done, the final approach is logically to target government subsidies at the under-served suburban and regional areas where current broadband access is poor. In this environment, it will not matter that TPG has a better fibre to the basement solution than NBN Co; there will be no need for special licence conditions. Instead, just let the market do its job. If this means that we end up with FTTP networks deployed by Telstra and others because people want to watch more than one Netflix ultra-high definition streaming service, then intervention by government will be fruitless.

Dr. Rob Nicholls is a Research Fellow at each of Swinburne University of Technology and the Centre for International Finance and Regulation. He is a visiting fellow at UTS Sydney Law. He is the Independent Telecommunications Adjudicator in a regime established to deal with wholesale disputes arising over both legacy services and migration to the NBN.

 

[1] At http://www.nbnco.com.au/content/dam/nbnco/documents/statement-of-expectations.pdf accessed 5 May 2015

[2] NBN Co, Fixed Wireless and Satellite Review, NBN Co http://www.nbnco.com.au/content/dam/nbnco/documents/NBNCo_Fixed_Wireless_and_Satellite_Review_07052014.pdf (2014) page 9 accessed 5 May 2015

[3] NBN Co, Strategic Review – 12 December 2013, NBN Co http://www.nbnco.com.au/content/dam/nbnco/documents/NBN-Co-Strategic-Review-Report.pdf (2013) page 19 accessed 5 May 2015

[4] At http://www.communications.gov.au/__data/assets/pdf_file/0014/221162/SOE_Shareholder_Minister_letter.pdf accessed 5 May 2015

[5] At https://www.fcc.gov/document/fcc-finds-us-broadband-deployment-not-keeping-pace accessed 5 May 2015

[6] At http://www.nbnco.com.au/corporate-information/media-centre/media-releases/nbn-co-to-unleash-fibre-speeds-for-cable-customers.html accessed 5 May 2015

[7] The condition is at http://www.comlaw.gov.au/Details/F2014L01699 and the consultation at http://www.communications.gov.au/consultation_and_submissions/consultation_on_draft_carrier_licence_condition accessed 5 May 2015

[8] At http://www.communications.gov.au/the_bureau_of_communications_research accessed 5 May 2015

[9] NBN Co, National Broadband Network – Rollout Information, 23 April 2015, NBN Co http://www.nbnco.com.au/content/dam/nbnco2/documents/nbnco-rollout-metrics-23042015.pdf (2015) page 3 accessed 5 May 2015

Fairness, Opportunity and Security.
Policy series edited by Michael Keating and John Menadue.

In the 2013 Federal election, neither of Australia’s major political parties took forward a detailed media policy. This was surprising as one of the main features of the Gillard and Rudd Labor governments was significant attention being given to reviews of media and communication law and policy, particularly between 2011-2013. The Convergence Review was established in 2011 to ‘review the current policy framework for the production and delivery of media content and communication services’ (Convergence Review Committee, 2012, p. 110), and presented a comprehensive roadmap for media policy reform in April 2012. It was accompanied by a series of other media-related policy inquiries during 2011-2013, including the Finkelstein Review of news media regulation (Finkelstein, 2012), and the Australian Law Reform Commission (ALRC) reviews into the National Classification Scheme (ALRC, 2012) and Copyright and the Digital Economy (ALRC, 2013). These media-related reviews occurred in the context of Labor’s commitments to develop a National Broadband Network (NBN) as an enabling technological infrastructure for wider forms of innovation in the digital economy, in the cultural and creative industries, and in delivery of government services.

There is considerable merit in Labor revisiting these media inquiries as it seeks to develop a comprehensive media policy framework for a future Federal government. In particular, the issues identified by the Convergence Review around the need to develop a regulatory framework sufficiently robust for the next 20 years continue to warrant a response. The Convergence Review argued that ‘many elements of the current regulatory regime are outdated and … other rules are becoming ineffective with the rapid changes in the communication landscape’ (Convergence Review Committee, 2012, p. 1). In particular, it was argued that ‘Australia’s policy and regulatory framework for content services is still focused on the traditional structures of the 1990s—broadcasting and telecommunications. The distinction between these categories is increasingly blurred and these regulatory frameworks have outlived their original purpose’ (Convergence Review Committee, 2012, p. vii).

Similar observations have been made elsewhere about how existing laws, policies and regulations lag behind the technological, economic and socio-cultural changes associated with the Internet and media convergence. The European Commission has observed that ‘lines are blurring quickly between the familiar twentieth-century consumption patterns of linear broadcasting received by TV sets versus on-demand services delivered to computers’, and that ‘if, in a converging world, linear and non-linear provision of similar content were to be treated as being in competition, then the current differences in [regulatory] regimes could clearly distort that relationship’ (EC, 2013, pp. 1, 11). The Media Convergence Review conducted in Singapore in 2012 found that ‘policy and regulatory frameworks which were designed for traditional media platforms and industry structures are no longer able to cope with the characteristics of the converged media environment’ (MDA, 2012, p. 5).

Media convergence has been central to driving the need for regulatory and policy change. Convergence refers to the combination of computing, communications and content around networked digital media platforms. It also refers to the rise of new, digitally based companies such as Google, Apple, Microsoft, Netflix and Amazon, the rapid growth of social media platforms such as Facebook, Twitter and YouTube, the proliferation of user-created content, and multi-screen accessing of media content (e.g. accessing TV programs from tablet computers). Media convergence occurs in parallel with a series of other changes in the global media and communications environment that include:

1. Increased access to, and use of, high-speed broadband Internet;
2. The globalisation of media platforms, content and services, meaning that digital media content can be sourced, distributed and accessed to/from any point in the world;
3. An acceleration of platform and service innovation that makes it increasingly difficult to define the ‘industry’ that major digital companies are operating in (e.g. is Google a media company?);
4. The proliferation of user-created content, and the associated shift of media users from audiences to participants, resulting in the blurring of a once relatively clear distinction between media producers and consumers;
5. The blurring of public-private and age-based distinctions, as all media content is increasingly distributed and consumed online, in environments that are public in terms of their access platforms yet private in terms of their consumption.

How such developments impact upon existing forms of media law and policy are many and varied. The Australian Communication and Media Authority (ACMA) identified a series of what it termed broken concepts, where ‘regulation constructed on the premise that content could (and should) be controlled by how it is delivered is losing its force, both in logic and in practice’ (ACMA, 2011a, p. 6). An example would be the ’75 per cent audience reach rule’ for commercial broadcasters, that seeks to limit the leading players to the capital city markets, and enabling regional ownership of TV stations. Such a rule presumes that we only access television content from television stations, whereas we now access it online, whether from the networks themselves (e.g. ABC iView), from YouTube and like services, or from the IPTV providers such as Netflix, Stan, Presto etc. This is not to say that catering to specific regional markets is no longer important – it is – but rather that the instrument chosen of restrictions based on geographical reach is no longer fit for purpose.

In an environment of dramatic change in the media landscape, what are the enduring concepts that continue to shape regulation? For libertarians such as the Institute for Public Affairs (IPA), there are none: technological change and limitless consumer choice render the need to regulate media content or protect audiences redundant. To that end, the IPA have recommended abolishing the ACMA and the Classification Board, as well as privatising SBS and breaking up the ABC (Roskam et. al., 2012). But no other country in the world is approaching media convergence in that way, and the digital media players themselves expect some form of media regulation to continue in the future. To take one example, Google recognises the importance of Australian content rules for the maintenance and strengthening of a diverse national cultural identity, even if it wishes to debate the best means of achieving such goals (Flynn, 2012).

The ACMA (2015) has identified a set of 16 enduring concepts that continue to provide public interest principles around which regulation of media industries, markets, content and services can be evaluated. They are a mix of traditional media policy goals and principles that have become increasingly important in the digital environment, and include principles pertaining to market standards, social and economic participation, cultural values, and community safeguards. These principles cover: questions of market access and standards, including consumer rights for complaint and redress; social and economic participation, including the equitable provision of digital services, digital literacy, and the need to safeguard content diversity in a pluralist democracy; cultural values, including support for Australian content, community standards provisions, localised services, and media ethics; and safeguards, such as access to emergency services, protection of children from potentially harmful content, and privacy provisions for the management of digital data.

Such core concepts provide the basis for identifying principles-based regulations that can be durable and enhance Australian media and its contribution to citizenship, culture and public life at a time of rapid changes associated with digital convergence. In relation to cultural values, for instance, it is apparent that many of the provisions that have existed to support Australian identity, community values, localism and ethical standards have only applied to the dominant platforms such as broadcasting and, to a lesser extent, print media. Developing policies that would, for instance, support Australian content on IPTV services or the multichannel services of commercial broadcasters, promote local community identity through online media, or ethical standards among bloggers and online-only services, requires new approaches to regulation that are developed in consultation with the community and with the providers themselves. It also requires consideration of what constitutes a “media company” of sufficient audience reach to warrant regulation of its conduct and policies to promote socially desirable forms of media content, and how this is undertaken without inhibiting freedom of personal communication.

In balancing the relationship between competitive markets and community safeguards, the ideal policy setting would be that of platform neutrality, where rules are based on media content rather than upon platforms or delivery technologies. A good example of the risks associated with treating content differently based upon its platform was the long prohibition on R18+ computer games, that was finally overturned in 2013, and which had left Australian games regulations at odds with the rest of the world, as well as creating regulatory anomalies that generated uncertainty in a fast growing industry. This would be applied in a manner that was gradual and not necessarily rigid: the community has greater expectations of the accuracy of content appearing on the ABC web site, for instance, than it does of personal blogs. But principles such as protection from harm and community standards remain important regardless of the delivery platform, or indeed whether the provider is locally based or part of a global platform, and it is appropriate for government to work with the major digital media platform providers to ensure that they meet minimum safeguards.

The positive role of such principles in promoting quality, diversity, Australian content and localism also points to a central role in the 21^st century for public service media. The ABC and SBS have become multiplatform content services, and have been important innovators in the convergent media environment. They will continue to face the challenge of how to provide the content that is central to their Charter obligations (accurate and comprehensive news services, educational content, multicultural content etc.), while also opening up their platforms in order to enable greater community access, diversity of voices and public participation. In order to do this, and to promote digital citizenship in the 21^st century, governments will need to ensure that they are adequately resourced and not artificially inhibited from being innovators in the convergent media environment.

In advancing an agenda for media policy reform, the challenge is that the same media outlets that are affected by legislative change are those who also provide public information about it. The extreme disjuncture this can produce was seen in the previous Labor government, when Senator Conroy’s proposals to amend communications legislation in order to establish a Public Interest Media Advocate to strengthen the requirements on news media outlets to conduct themselves in an ethical manner saw him compared to Joseph Stalin and Kim Jong-Un on the front page of the Sydney Daily Telegraph (Hobbs and McKnight, 2014). Added to this is the propensity for media incumbents to seek policy outcomes that best suit their own interest: News Limited favours a self-regulatory Australian Press Council that it funds itself, rather than a government-supported entity; the commercial TV networks wish to see the three-station rule preserved into the indefinite future; and so on. There is also the long history of Australian media proprietors being close to the conservative political parties, perhaps best seen in recent times with Rupert Murdoch and then Opposition leader Tony Abbott sharing the podium at the 70^th anniversary dinner of the Institute for Public Affairs in April 2013. The lessons for Labor of the period in office from 2007 to 2013 may lead some to view media policy as something that goes in the “too hard” basket: you end up making political enemies for little tangible electoral return.

But important reforms to media legislation have been passed by Labor governments before, and could be again. The Hawke and Keating governments oversaw the creation of a new Broadcasting Services Act in 1993, as well as the Telecommunications Act 1989 and the Classification Act 1995. There is little doubt that the urgent need for change is felt in the relevant industries, in light of the forces associated with next-generation media convergence discussed above. It is also apparent that public expectations about getting better quality media and about ethics and standards in the media remain high, and the Internet and social media have made it much easier for all sections of the community to make their voices heard when they are dissatisfied with the Australian media’s performance. By taking a principles-based approach to amending media legislation, and being committed to open and public consultation rather than a “closed door” approach to consultation, a future Labor government could make lasting and important changes that would have important benefits for a democratic and diverse Australian culture, as well as enabling Australian media to be at the forefront of digital innovation, rather than simply seeking protection from global media platforms.

References Cited

• Australian Communications and Media Authority (2011) Broken Concepts: The Australian Communications Legislative Landscape, Melbourne: ACMA.
• Australian Communications and Media Authority (2015) Evidence Informed Regulatory Practice—An Adaptive Response, 2005-15, Melbourne: ACMA.
• Australian Law Reform Commission (2012) Classification – Content Regulation and Convergent Media, ALRC Report 118, Sydney: ALRC.
• Australian Law Reform Commission (2013) Copyright and the Digital Economy: Final Report, ALRC Report 122, Sydney: ALRC.
• Convergence Review Committee (2012) Convergence Review: Final Report, Canberra: Department of Broadband, Communications and the Digital Economy.
• European Commission (2013) Preparing for a Fully Converged Audiovisual World: Growth, Creation and Values: Green Paper, COM(2013) 231 final, 24 April, Brussels.
• Finkelstein, R. (2012) Report of the Independent Inquiry into the Media and Media Regulation, assisted by M. Ricketson, Canberra: Department of Broadband, Communications and the Digital Economy.
• Flynn, I. (2012) The Convergence Review and Media Policy – The Missed Opportunities. Telecommunications Journal of Australia 62(3): 47.1-47.9.
• Hobbs, M. & McKnight, D. (2014) “Kick This Mob Out”: The Murdoch Media and the Australian Labor Government (2007 to 2013). Global Media Journal – Australian Edition 8(2), http://www.hca.uws.edu.au/gmjau/wp-content/uploads/2014/11/GMJAU_Kick_this_mob_out.pdf, date accessed 3 May 2015.
• Media Development Authority (2012) Media Convergence Review – Final Report. Singapore: MDA.
• Roskam, J., Paterson, J. & Berg, C. (2012) Be Like Gough: 75 Radical Ideas to Transform Australia. IPA Review 64(2): 6-11.

Terry Flew is Professor of Media and Communications at the Queensland University of Technology. He is the author of six books, including The Creative Industries, Culture and Policy (Sage, 2012), Global Creative Industries (Polity, 2013), New Media: An Introduction (Oxford, 2014) and Media Economics (Palgrave, 2015, co-authored with Stuart Cunningham and Adam Swift). He is a member of the Australian Research Council College of Experts, and an International Communications Association (ICA) Executive Board member. In 2011-12 he was seconded to the Australian Law Reform Commission, chairing the National Classification Scheme Review.

 

 

Fairness, Opportunity and Security.
Policy series edited by Michael Keating and JohnMenadue. 

3.1 Overview

The migration process starts in earnest after a visa is given to a migrant. Its success or otherwise is determined after the person arrives in Australia and becomes part of the workforce and community.

Australia, along with the other great traditional migration countries, has sought to smoothly integrate migrants into its multicultural society, by assisting them to become quickly productive through specialised assistance if necessary, and providing a relatively.

3.2 Settlement Policy and Services

Supporting migrant settlement is a cooperative effort between the Australian government and State/Territory and local government. The Australian government needs to work closely with other spheres of government to ensure that they are fully informed about migrant flows and their characteristics, especially the characteristics of new communities, so that they can make appropriate provision within their own jurisdictions.

Although most permanent migrants are selected on the basis of qualities that will enable relatively quick and easy integration into the Australian economy and our multicultural society, some (such as humanitarian entrants and family stream migrants) will require specialised assistance for a short period to help them get started in Australian society.

Australian governments should continue to maintain a suite of specialised services aimed at ensuring migrants who need assistance in acquiring English-language skills, dealing with initial settlement problems, connecting with mainstream government services and gaining employment get such assistance.

English language capability is well recognised as being essential to gaining employment and wider social integration into the Australian community. Settlement programs need to give special emphasis to English language acquisition, especially soon after arrival, with a variety of access opportunities to suit the needs and circumstances of individual migrants. The programs should aim to bring migrants to a level of English consistent with their capability.

More intensive services should be available to assist refugee and humanitarian entrants who may bring with them the legacies of war or other conflict and incarceration in refugee camps for years or decades. Such services might include on-arrival accommodation, initial orientation to Australia, and support for other refugee-specific health issues, including torture and trauma.

For non-English-speaking migrants who are still acquiring English-language skills, and are unable to access commercial translating and interpreting services, governments should continue to provide targeted translating and interpreting assistance.

The migration process progressively introduces people from many different national, regional, ethnic and linguistic backgrounds into Australian society. Initially, they may be relatively small communities dispersed across the Australian continent. It is important that settlement policy recognises and supports new communities in establishing themselves in Australia. Past experience has shown that effective leadership within new communities is absolutely vital to their quickly becoming productive. Settlement programs should provide financial support to develop community leadership and problem-solving to accelerate integration.

There is considerable goodwill in the community towards new migrants in keeping with Australia’s long tradition of acceptance of migration. The Australian government should seek to harness the willingness of community groups to extend the hand of friendship and support with appropriately designed programs.

Australian governments should continue to explore ways to introduce new migrants to Australian laws and social norms at appropriate parts of the visa, settlement and citizenship process.

Ultimately, the benefits that any migrant gains from settlement services flow on to the wider community by making migrants more productive participants in the workforce more quickly and hastening their integration into a socially cohesive society.

The effectiveness of migrant settlement programs should be regularly reviewed and evaluated to ensure that they are properly targeted and are having real impacts in improving the individual migrant settlement process.

Specialised migrant services should operate as a bridge to broader mainstream services. The Australian government should continue to promote Multicultural Access and Equity[1] to ensure that its agencies are able to engage with Australia’s multicultural society effectively.

3.3 Australian Citizenship Policy

Since Australian citizenship first came into being on 26 January 1949, it has played an important role both as a national symbol for the Australian-born and in integrating millions of migrants formally into the Australian community. This parallels the citizenship policy approach taken by other great migrant receiving countries – the USA and Canada.

Australian citizenship policy should continue to embody the following principles:

• Australian citizenship, and the values that go with it, should be a unifying national symbol.
• Australian citizenship policy should actively encourage the acquisition of Australian citizenship by permanent resident migrants, without unnecessary barriers, as part of building a cohesive multicultural society.
• Acquisition of Australian citizenship should be based on close association with Australia, either through birth in Australia to an Australian citizen or permanent resident parent, descent from an Australian citizen parent or physical presence in Australia as a permanent resident.
• Concessions to standard residential requirements should be permitted to permanent residents who have spent at least some time physically present in Australia, but only on a limited basis in special circumstances.
• Australia should continue to permit its citizens to retain their Australian citizenship if they acquire another citizenship, in order to retain beneficial links with an Australian diaspora of over one million people.
• Australian citizenship is strengthened by certainty; no citizen should be deprived of it except in circumstances where they are convicted of obtaining it by fraud and deprivation would not result in statelessness;
• The process of deprivation of Australian citizenship should not be used as a substitute for criminal law to punish naturalised citizens for crimes committed after becoming an Australian citizen.

The take-up rate of Australian citizenship by eligible permanent residents is estimated to be about 80%.[2] This is high by OECD standards and comparable to the citizenship take-up rate in Canada. Nevertheless, take-up rates vary between nationalities and there are significant numbers of eligible people who, for various reasons, have not yet taken up Australian citizenship.

Australian governments should promote the values of Australian citizenship and its acquisition by permanent residents on an ongoing basis, with major promotions every few years in order to maintain the high Australian citizenship take up rate.

Recognising that permanent residents are able to, and mostly do, stay and contribute to the Australian community throughout their lives, governments should resist the temptation to increase the existing limited differential between the rights of Australian permanent residents and citizens as a basis for promoting citizenship.

Testing on aspects of knowledge of matters relating to Australian citizenship has been in existence since 2007 as a preliminary to the acquisition of Australian citizenship by migrants. It is uncertain whether this has had any concrete benefits or indeed adverse impacts on the take-up rate of Australian citizenship. Australian governments should ensure that any testing regime does not become a barrier to the acquisition of citizenship to people who will spend their lives in Australia and make an ongoing contribution to Australian society. Alternatives to testing should be made available to those who are uncomfortable with it and should be geographically accessible throughout Australia.

The acquisition of Australian citizenship should continue to be made a celebratory event through public citizenship ceremonies conducted by local government or the Australian government.

3.4 Australian Multicultural Policy

Australian governments from both major political parties have endorsed broadly similar Australian multicultural policies since the 1980s, as have all Australian states and territories. Some states and territories have given multicultural policy legislative status.

For a society as diverse as Australia’s, and largely built on immigration, a continued focus on multicultural policy is vital to social cohesion, migrant integration and community relations.

Broadly speaking, all multicultural policies stress as a foundation that all Australians should be committed to the basic structures and principles of Australian society – our Constitution, democratic institutions, respect for the law and English as the national language. At the same time, the policies stress the right of all Australians to express their own cultures and beliefs, within the law, and the need to accept the right of others to do the same.

Australian governments should continue to provide active leadership in articulating and disseminating multicultural policy as the foundation for a productive and harmonious society. This will not only make us a better society, but a more resilient one in resisting externally generated stresses and pressures. 

3.5 Conclusion – Immigration, Refugee and Settlement Policy

The policy approaches outlined in Parts 1, 2 and 3 constitute an integrated approach to future Australian immigration needs.

They aim to enable Australia to continue to harness the opportunities of the global movement of people to its own national economic and social development. At the same time, they should better position Australia to deal with the growing challenges of forced and irregular migration by making a significant humanitarian contribution to contribution to global displacement, including through a generous refugee resettlement program.

Pursuing these policies should also reinforce a united and resilient Australian society capable of resisting external and internal challenges to a harmonious community.

They will contribute to a:

• growing and prosperous Australia with a critical population mass to support the governance overheads of modern society
• a skilled labour force attuned to Australia’s economic needs
• a closer relationship with Australia’s regional neighbours
• better management of displacement and irregular migration, including humanitarian solutions
• a culturally diverse, confident and united society

 

Peter Hughes is Visiting Fellow, Crawford School of Public Policy,

Visitor, Regulatory Institutions Network, Australian National University

Arja Keski-Nummi was formerly First Assistant Secretary of the Refugee, Humanitarian and International Division in the Department of Immigration and Citizenship 2007-2010.

John Menadue was Secretary of the Department of Immigration and Ethnic Affairs, 1980-1983.

 

[1] https://www.dss.gov.au/our-responsibilities/settlement-and-multicultural-affairs/programs-policy/multicultural-access-and-equity

[2] Department of Immigration and Citizenship, Citizenship in Australia (October 2010)

Policy Series  

Part 2: Refugee Policy 

2.1 Overview

The current and future global environment for irregular migration is extremely challenging.

Many more people are on the move globally to gain protection from persecution, security from conflict or greater economic opportunity – or a mixture of these things.

The movement of people is being accelerated by growing awareness of the opportunities to move, new communications technology, cheaper transport and active facilitators.

The United Nations High Commissioner for Refugees (UNHCR) states that global forced displacement of some 51 million people (17 million refugees, 33 million internally displaced persons and over one million asylum seekers) is at the highest level since the Second World War. There are many millions more people seeking migration opportunities for employment over and above the forced migration figures.

Australia’s traditional engagement with this issue has been through our offshore humanitarian resettlement program, but over the past 15 years national policy debate has centred almost exclusively on the management of smuggled maritime asylum seekers. Australia experienced a flow of some 10,000 maritime asylum seekers, mostly from outside the region, in the period 1998–2007 and 50,000 in the period 2008–2013.

The debate has divided Australian society and the net result has been the adoption of the harshest possible measures to disengage Australia from this flow of people.

In the context of growing world displacement and people movement, Australia will remain an attractive destination.

Policy responses by successive governments to date have focused on ‘quick fixes’ driven by political and community pressures. A more measured approach will be needed.

One choice, advocated by many, would be to maintain open access for maritime asylum seekers and to accept the consequences. Experience in Australia and Europe indicates that this approach will attract very large numbers of both asylum seekers and economic migrants facilitated by people smugglers. The numbers coming to Australia reached 4,000 people in a single month in July 2013. There is no reason why they could not go much higher. Exploitation and deaths at sea, corresponding to the size of the movement, go with this inherently disorderly and unsafe movement. If significant flows of maritime asylum seekers to Australia resume from troubled developing countries, it is unlikely that many would return to their country of origin, irrespective of whether or not they are found to be refugees.

If Australia does not want to accept renewed flows of maritime asylum seekers, it will need to make a long-term investment in global and regional management of protection and the movement of people. Australia cannot escape the phenomenon of global displacement and must re-engage with it.

Existing solutions, which are heavily dependent on naval interdiction and small Pacific island nations, may not be sustainable in the long term.

The demand for migration opportunities, whether forced or economically based, to Australia and other (developing and developed) countries is unlikely to be satisfied. Priorities will need to be set as to those most in need and how they can best be assisted.

2.2 A Formal Policy on Refugees and Displacement

At a strategic level, Australia needs to develop a formal policy on refugees and global displacement. The policy should integrate our responses to global and regional refugee issues, bringing together foreign policy, aid policy, the offshore humanitarian resettlement program and domestic asylum policy (including for both maritime and visaed arrivals). Interventions under this policy should tackle the root causes of refugee flows as well as their consequences.

The global asylum system is under extreme pressure with host countries in both the developing and developed world struggling to cope. Many refugees are unable to get protection close to home and are subsequently exploited by people smugglers who fill a vacuum left by States. The situation is complicated by mixed flows of refugees and economic migrants.

Australia can play a role at the global level in working with UNHCR and partner countries to develop new, more orderly and effective responses to the modern dynamics of people movement.

At a regional level, Australia needs to be much more active in engaging regional partner countries to better manage the movement of people and develop a sense of collective responsibility in dealing with protection issues. Australian and regional partners should develop habits of routine consultation and action, based on agreed principles, in response to forced migration and other irregular movements of people in the region. This is a long-term task, as few countries in the region are parties to the 1951 Refugee Convention and few have strong national institutions for migration management.

The regional policy aim, in partnership with UNHCR, would be to tackle root causes of displacement as well developing an improved system of refugee protection. An orderly regional system of protection should encourage asylum seekers to seek protection in a secure environment in countries of first asylum, closer to the country of origin, and have their future determined in those countries (whether it be local integration, international resettlement or return home).

The policy should seek to provide protection and migration opportunities for those most in need and, by stabilising those populations, to minimise exploitation opportunities for people smugglers and irregular migration.

In fostering and developing such a system, Australia should look beyond its own immediate interests and be willing to take an active role in solving the displacement problems affecting its neighbours. Australia should also recognise that its regional partners are unlikely to become parties to the Refugee Convention. Cooperative arrangements will need to be based on practical measures consistent with Refugee Convention practices.

The Bali Process on People Smuggling, Trafficking in Persons and Related Transnational Crime has been an important vehicle to date in putting questions of protection, people smuggling and law enforcement on the regional agenda. In the longer term, Australian policy should work towards more targeted regional processes possibility involving ASEAN and/or sub-regional groupings.

The work of government in developing better regional approaches should be complemented by a Track 2 Dialogue involving selected countries in the region and bringing together government policymakers with non-government experts in a “non-official” conversation on these matters. This will provide an opportunity for constructive dialogue and development of new policy approaches in this contested area of public policy.

At the national policy level, Australia should draw on a range of policy tools in its interventions in global displacement.

Foreign policy and development assistance can play an important role in tackling root causes of displacement as well as the willingness of countries in the region to stabilise displaced populations in first asylum or transit mode.

The Humanitarian Program, which has been Australia’s traditional contribution to durable solutions, should be increased to a base, ongoing program of 20,000 places a year, reflecting growing global displacement and the need for Australia to do more. This would represent about 10% of Australia’s total annual permanent migrant intake. The program should be operated flexibly, allowing for significant one-off increases from time to time to deal with acute global crises or regional displacement of particular significance to Australia.

The resettlement program needs to be accompanied by measures that foster good employment and integration outcomes for refugee arrivals.

Each cohort of people moving in the region is different, reflecting protection needs, security from conflict, economic pressures or a combination of all of these. Australian government responses need to reflect the unique circumstances of each national group.

Australian government policy should involve targeted use of other available tools to promote orderly migration, as appropriate, such as alternative migration pathways, “in-country humanitarian programs” and “orderly departure” arrangements from selected source countries.

Asylum decision-making and review processes, whether for asylum seekers who are irregular maritime arrivals or those who arrive with visas by air, should be regularly reviewed and evaluated to ensure that they remain fair, quick and efficient. They must be tailored to deal appropriately with new protection issues that arise and the unique circumstances of different cohorts of asylum seekers.

Irregular movements of asylum seekers by sea, following journeys across vast distances, facilitated by smugglers for commercial gain, are not in the interests of asylum seekers because of the inherent exploitation and danger. Nor are such movements in the interests of regional states. Australian policy should continue to discourage irregular movements by sea (except in the most limited circumstances where Australia is the logical first asylum country) and promote an orderly asylum system.

Regional policy measures should help to provide satisfactory protection alternatives for asylum seekers, but the maritime people smuggling option cannot be allowed to remain open in parallel.

Firm, but humane, action is needed here. The preferred approach would be for the Australian government to negotiate readmission agreements, under acceptable conditions, with transit countries such as Indonesia and Malaysia, which enable any people reaching Australia by sea to be safely returned to a transit country by air and have their future determined from that location. Acceptable conditions would include asylum seekers being permitted to remain in the community of the transit country, with asylum claims considered by UNHCR, and a pathway to local or international durable solutions for refugees. Such arrangements would be safer and more desirable than use of small Pacific countries and boat turnarounds on the high seas. If these mechanisms were seen to be effective, they would rarely need to be used. 

2.3 Legacy caseload from 2008–2013 maritime arrivals

Australia has a continuing responsibility to resolve the future the some 30,000 people who sought to arrive in Australia by sea in the period 2008-2013 and have not yet had final decisions on their refugee claim or resolution of their long-term immigration status.

The first priority is to resolve the situation of the 1707 people in PNG and Nauru[1] most of whom are in detention in extremely difficult circumstances.

The Australian government should work with local authorities in PNG and Nauru to expedite decision-making on asylum cases with a fixed deadline to finally decide all cases. Apart from those few people found to be refugees who may be able to settle effectively in PNG and Nauru, the Australian government should negotiate resettlement in third countries or, as a last resort, Australia. The assistance of UNHCR should be sought in final resolution of the caseload.

A fixed deadline should also be set for primary and review decisions for the remaining maritime asylum seeker caseload in Australia. For those found to be refugees, the Australian government should recognise that it is unlikely that political conditions will improve in source countries in a way that will enable refugees to return home within the foreseeable future. It should therefore set a defined pathway to permanent residence and Australian citizenship.

As noted in Part 1.6, the use of detention as an immigration tool should be minimised except for short periods for specified purposes. The Australian government should use its influence to ensure that detention facilities are of an acceptable standard in PNG and Nauru and that agreement is reached with those countries to enable the equivalent of Australian community detention arrangements while asylum cases in the regional processing centres remain unresolved.

The Australian government should make arrangements for the repatriation of those found not to be refugees (or in need of complementary protection). Such returns are necessary to maintain the integrity of the protection system. Returns should be voluntary where possible, supported by reintegration assistance. In some circumstances involuntary returns will be necessary and these should be supported, where necessary, by written agreements with source countries.

Peter Hughes is Visiting Fellow, Crawford School of Public Policy,

Visitor, Regulatory Institutions Network, Australian National University

Arja Keski-Nummi was formerly First Assistant Secretary of the Refugee, Humanitarian and International Division in the Department of Immigration and Citizenship 2007-2010.

John Menadue was Secretary of the Department of Immigration and Ethnic Affairs, 1980-1983.

 

 

[1] Department of Immigration and Border Protection, Immigration Detention and Community Statistics Summary, 31 March 2015

Policy Series 

I have been giving presentations recently in which I have exhorted the creative community to accept responsibility for: –

1. Writing refreshed meaningful arts policies for federal political parties to inform a renewed approach for support and activity;
2. Forming renewed priorities and objectives for national arts training and other tertiary institutions which address evident misdirection and negative trends; and
3. Advocating coherent and well-formed detail in school curriculums of our primary and secondary systems which are devoted to the arts generally and music specifically as fundamental rights for all Australian students so as to improve the national capacity to think, concentrate, learn and appreciate creativity.

Our society is increasingly governed by several sustained characteristics, which are profoundly unhelpful to clear direction in national policy construction and commentary equally. These trends have manifest impact on the process of policy formulation and are seen particularly in:

• Politicians and their bureaucracies increasingly debasing, through neglect and disengagement, creativity and intellect as the vital crucibles of the national future;
• The broad commentariat often being disconnected from informing debate (often from rigid ideology or old fashioned ranting) about creativity, imagination and innovation as being central, indeed vital, to a national future which is confident and meaningful;
• Money being treated as the measure of value in all things rather than as one of many measures; and
• Our society adopting a perilous course to celebrate the anti-intellectual and what I would describe as the triumph of general ignorance where dogmatic assertion is preferred over considered respectful discussion which aims to test ideas and assumptions from informed knowledge based study, so as to arrive at evidence supported approaches focussed at all times on real outcomes.

It is time to stop the marked, steep and growing decline in the policy content and resourcing of creative arts endeavour; in training institutions; and to address the primary need for schools to be transformed in according arts education (with specialist teachers) as important a priority as reading, maths and science.

For too long the creative community of practitioners and critics in the performing and visual arts, literature, cinema and television production and their many extensions across the digital domain, have tolerated the rise of simple-minded empty policy to rule the day, absent coherent analysis and objective focus on outcomes. We have all stood back for the last two decades and more, watching virtually helplessly as the erosion of standards and of resource commitment allied with the corrosion of language and policy process has marched on relentlessly. It has been essentially unchallenged as we have become too accepting of the second best, of poor execution and timid feedback.

Two decades is a long time in a connected world, especially one where the internet and digital technology generally has changed forever the nature of information access, exchange and the direction of society through politics, commerce, creativity, education and communication. Continuing fragmentation is guaranteed – the ferocity of attack and the velocity of change will only grow. Merit, ingenuity, speed, flexibility and performance increasingly rule the digital day. Australia is losing out in this process because of national policy failure as reflected in depleted institutions and moribund approaches. It is time for reinvention and positive connected action.

The urgency of public policy renewal in education and the arts is impossible to over emphasise because the old models don’t work any longer. We need to think and behave differently. In an era where the settings change daily and where ‘the internet of things’ will see over 75 billion connected devices by 2020, it is an immediate necessity that a considered comprehensive review of policy and settings takes place to recalibrate for this century and beyond. Creativity and imagination are core elements in the skillsets needed broadly for the nation to win through before we focus more closely on creative ‘cultural’ production and its many standalone merits.

We are a small country at ‘the bottom of the world’ (notwithstanding the internet) and condemned to irrelevance if we do not arrest the current trends. We have many parochial pillars which whilst ‘cheerful’ to some, are venomous to national ambition and achievement. After all a nation of 24 million which speaks English is either profoundly advantaged or potentially disabled as a result almost entirely of its public policy settings and the outcomes they achieve and reflect.

Examining arts policy specifically, the ALP has an arts policy which tries to accommodate all comers. As a result it has little durable essence or meaning other than providing a recital of modern clichés. The federal Coalition has no published arts policy at all. None. The Greens offer a telegrammatic set of populist, disconnected ‘thought bubbles’.

It is essential that we honour our duty of intergenerational care and accept the need for national ground up policy (and allied resourcing) review to ensure a healthy, dynamic creative landscape which is innovative, connected and ambitious on the one hand and appropriately trained, resourced and critiqued on the other. A meaningful wholesale review of the policy and commercial settings on that which comprises the creative landscape is way overdue with a clear eye on the future and its myriad creative, technology, commercial and behavioural change challenges in the sort of way we all recognise as necessary in the connected cross border universe we now live in – one where dramatic disruption rules.

As that vulnerable little English speaking country there is no future in being bland! We need bold confident national futures which only come from ground plane policy review and the ambition it adopts. It is imperative that stakeholders work together to fashion a fresh positively integrated approach which understands this radically changed environment.

The failure of political agendas in creative life is, I suggest, our collective failure. The absence of fresh, relevant, compelling approaches reflects a failure to renovate thinking where many working settings are frozen in a time capsule – reflecting a failure to renovate thinking over the last 25 years. It is a disturbing example of a vacuum in effective action – in my view sadly embodying Australian complacency. I say so because it would seem to me that many of the working settings we have are from long ago in their policy, regulatory, financial and industrial frameworks. Let alone letting consumers and their changed behaviours into the policy room as a core governing discipline.

The cryogenic policy list is a very long one including such examples as: –

• An Australia Council which has become increasingly an instrument of the bureaucracy and not an independent informed advocate in a robust contemporary way for policy and the rights of creators, distinctive work and audiences.
• There is the equally tortured territory of sacred cows such as peer review which needs re-examination. I would firmly contend peer review is frequently no such thing but rather an instrument for mediocre compromise over petty ‘village sharing’ of ever diminishing spoils.
• And we need to address the descent into mindless managerialism which has encroached into all spaces and now dominates so much of creative policy, decision-making and serving at the altar of process and not of delivered outcomes.
• We have gone backwards in arts education school curricula ever since the 1970s in a process of dumbing down to lowest common denominators where the privileged are cared for separately and all others are now condemned to opportunities being closed off with transformation denied.    
• Copyright laws are inadequate and outdated, unequal to the task in confronting theft and defending the absolute rights of creators to protect their work.
• Content regulation approaches are essentially unchanged in their core fabric and remain disappointingly true to views which drove policy with the precursors to the Australian Communications and Media Authority – most recently the Australian Broadcasting Authority and before that the ABT and the ABCB before that. For many those will be acronyms that are meaningless but they require mention because thinking that informs regulatory formulation hasn’t been revisited in decades.
• Then there is a dysfunctional absence of any minimum enforced criteria about Australian content outcomes on the national broadcasters (whilst there are some minimum public bargain outcomes on commercial broadcasters). This has been allowed to linger for decades on a self-interested, inaccurate but convenient altar of editorial independence, matched with an inevitable plaintive cry as to being poor and under resourced by the ABC for example, voiding the whole issue of identified priorities and choices reflected in expenditure outcomes made by it, while hopelessly antiquated, inefficient structures and practices persist.
• There are too many outmoded forms of industrial and other agreements which limit creative freedom, before we even venture into proposals for media constraint in 2013 which made it clear Australia was to be very much a ‘Je Suis Non Charlie’ jurisdiction.   We should never forget what happened then.

The list is very much larger but serves to show that all too often such inheritances bedevil the possibility of clear thinking, limit and censor fresh options and confine opportunity to innovate and drive better outcomes from strong, flexible frameworks which comprehend our national vulnerabilities. All of which provides an extended example of the need to renovate the policy house.

We in the creative community need to review the core logic that underpins the support on which many rely so that we can aim to make the policy and related resource settings fit for purpose over the longer term. We need to get back to the good elements in how it began in a few decades ago – we did it. Together. It was often messy. It was invariably colourful. But we made it happen.

The political parties have bad policies or no policies because we do not challenge them. We do not write them. We have to get back in the policy process on the ground floor with refreshed standards, better understanding of successful policy principles and objectives built on performance and relevant methods, which will provide fresh directions.

I don’t offer assurance on delivered solutions beyond a strong plea to work together, refashioning directions and priorities built on common recognition that policy travels poorly and demands fundamental change. I do so because it needs to be an effort in creative community commitment to its own future to have durability and a sense of personal and professional responsibility.

We need a dynamic approach which gathers the spectrum of interests necessary to produce invigorated policy capable of application and evolution over the medium to long term, informed by a range of practitioners, creative community organisational leaders and policy hard heads so that it is practically primed for advocacy and implementation.

The review requires a group comprising: a tight range of selected primary creators (chosen by a group of creative elders in the key disciplines – across the performing and visual arts, design, writing and the video production media); the heads of the leading representative bodies in the creative community; allied with experienced recent former policy leaders from such relevant national departments as Treasury and Prime Minister and Cabinet. Clearly any such group needs to take account of gender and indigenous balance to ensure it speaks for modern Australia. It should be led by a senior member of the creative community.

The group should be tasked with the challenge to forge a program for lasting reform which addresses issues holistically and doesn’t repeat the present cycle of tired twentieth century policy recitals condemned to irrelevant Incrementalism mired in an often dogmatic past.

That group needs to have an agreed contemporary Terms of Reference which doesn’t try to restrain and contain thinking so that the task is approached with a wide mandate governed by Barbara Tuchman’s definition of wisdom – applying judgement with access to experience, ample available information and lots of common sense! The group needs to proceed as follows: –

•  First, to run a core diagnostic program resolving the list of key issues;
• Second, to weigh the range of options, debate merits and weaknesses, refining the priorities and outcomes to be targeted so as to have an integrated tough spirited policy model with clarity in its direction which is capable of extended advocacy;
• Third, to conduct representation, research and review with key stakeholders across the spectrum of interests in the creative community, within the diverse elements of the commentariat, the academy and the broader general community (- the citizenry of audience, parents and taxpayers equally); and
• Fourth, having refined the policy framework and priorities commence the arduous task of political representation to the various parties aiming to forge a fresh outcomes based approach informed from evidence as tested by debate in the community.

The task is not without challenge but the policy product is essential to commencing a better approach which draws from the creative community itself agreeing to refashion priorities for long term improvement in actual outcomes engineered for a future with robust standards.

The richest and most energetic societies acknowledge the centrality of creativity to their health and wellbeing and as core to the resilience of their critical culture. It has always been my view that Australians generally do not receive criticism well. Further our inability to receive criticism is matched only by our inability to give criticism – in ways which are professionally focused – thoughtful, caring, constructive and nourishing. Creative work and its health are dependent on a forensic approach to review and judgement. Informed, shared and vigorous opinion matters in this turbulent and unpredictable period.

Creative endeavour has never been more fundamental to developing a modern society. One open to change which is flexible and energetic, reinforcing and celebrating the intellectual capacity, capability and originality of its citizens. From a national commitment to creative endeavour; invention, employment, debate, national confidence and good social values follow. History provides the body of evidence.

In too many areas of Australian policy delivery we have progressively arrived at stultified, formulaic approaches which operate to the detriment of ambition, skill, performance, review and reward. We need to change approaches in order to achieve better focus and delivery.

The cycle of refreshed change in public policy will be with us ever more as long as there is a dependence on regulatory obligations on the one hand and investment from the Commonwealth (and States) in various forms on the other. Too often recently support has been taken as a given, with a governing immature outlook of subsidy or quotas being a ‘right’ which has been countermanded by opposition which has often relied more on prejudice than forensic, fair minded appraisal.

Support in the modern era requires an articulated rationale, allied accountability and periodic review as to benefits from actual outcomes. That approach must lie at the heart of an invigorated approach to creative policy formulation by the participants. Only good work informed from strong thoughtful argument with a focus on results, will go the distance.

No doubt these are confronting times. Volatility, uncertainty, complexity and ambiguity are the bywords for modern world settings. Current times do not allow for the bland. And yet in Australia today there is often a disconnectedness from ideas that produce great, compelling work. Almost all successful creative work has a mainspring from originality and is rooted in a nation’s stories – things of enduring value. They are the products of real risk taking – nothing good ever eventuates from creative caution. There is no point in in the 21st century as a small English speaking population, in a digitally literate world, in being bland.

We must strive for a policy voice that renews the reasons to celebrate creativity and intellectual courage. Reasons to win national respect and political commitment. Reasons to renew many specialist depleted training institutions. Reasons to revitalise curiosity, creative originality and drive innovation fearlessly. Reasons to speak out, making sustainable connection with new and old audiences. We need to back, defend and promote that which is about fresh Australian creative adventure.

We all need to have our feet on the ground and to be utterly realistic in recognising that changes in the world’s operation mean that standing still is not an option. Confronting these potent forces driving dramatic reconfiguration is not easy. Relevant different responses are essential if we are to drive a sustainable future. We must all defend and promote substantial creative policy renewal with conviction because these things really matter!

Kim Williams has had a long involvement in the arts, entertainment and media industries here and overseas and has held various executive leadership positions since the late 1970s including as chief executive at each of News Corp Australia, FOXTEL, Fox Studios Australia, the Australian Film Commission, Southern Star Entertainment and Musica Viva Australia and as a senior executive at the ABC. Melbourne University Press published his first non-fiction book Rules of Engagement in 2014.

 

 

Fairness, Opportunity and Security.
Policy series edited by Michael Keating and John Menadue.

IT’S TIME TO think much more seriously about culture. For years we bought the Clinton truism, ‘It’s the economy, stupid’, but this simple binary no longer provides sufficient guidance for the future.

Self-evidently, a successful society must have a robust and innovative economy – one that is able to adapt to changing domestic and global circumstances. This process of adaptation and change seems to be one that Australia is ill-equipped to tackle; there is little evidence of big thinking, and a lot of protection of existing interest groups and sectional activities.

The need to redefine the nature of the Australian economy, to search for new areas of comparative advantage, and embrace the emerging ways of measuring the impact of intangible benefits, is more acute than it has been for decades.

In the area of culture, politicians and policy makers seem to be as wilfully blind to the opportunities as they are in other areas of comparative advantage canvassed elsewhere in this series. But there is excellent research being done here by scholars and practitioners, and enormous capacity, as a recent report by Professor Justin O’Connor and Mark Gibson for the Securing Australia’s Future program showed.

A United Nations Conference of Trade and Development report in 2010 showed that even when global trade was declining by 12 percent a year, the cultural sector had had a global growth rate of 14 percent a year between 2002- 2008 and at that time accounted for $592 billion. Not only is it one of the most rapidly growing sectors, but it is as UN, EU, UNESCO and other reports have shown, a sector that now accounts for about a fifth of GDP in most developed countries and is rapidly growing in others.

It is also a sector in which Australia has distinctive advantages, but one in which we are in danger of falling short. The cultural sector is one of the great new engines of influence and economic growth. It is one which plays to many of Australia’s strengths as an educated, globally engaged, outward-looking, multi-lingual democratic state in the same time zone as the world’s most populous and increasingly middle class regions.

The cultural sector has the potential to create high value jobs and reward innovation and to enhance the qualities of citizenship. It accounted in 2008-09 for the employment of between 6 and 9 percent of the workforce, generated between $35 and $67 billion of Gross Value Add, according to a report by the 2013 Creative Industries Innovation Centre, ‘Valuing Australia’s Creative Industries’. The range acknowledges some of the definitional issues, which I will return to later.

But we do know that it includes one of our largest home grown international companies, News Corp, and other publicly listed companies, and then ranges to medium, small and micro enterprises. It also includes activities and institutions that are supported by the state because of their contribution to citizenship, national identity and quality of life. In addition there is a sector made up by micro, small and medium enterprises that attract a small amount of public subsidy.

This is a diverse sector, which is part of its strength and part of the reason it has not been able to mobilise publicly as effectively as sectors which are more narrowly defined.

FOR TOO LONG in Australia the public policy response to culture has been to equate it with the arts. There were once good reasons for this, but the two domains are no longer synomous. And this is an old fashioned false equivalence. It does not work to the advantage of either national institutions, individual artists and the subsidised sector, or the commercial and instrumental parts of the sector. In the jargon of the sector this is called an ecosystem – the links are strong and material, as we see when a project that has received some public or philanthropic support becomes a commercial success.

Limiting cultural policy to an arts policy, when the arts are regarded as baubles, areas of patronage which can be dispensed at whim and not integrated into a bigger strategic approach to national cultural economic development, means that the sector is framed in the wrong way – one which means it is not treated as seriously as other areas that account for comparable amounts of economic activity.

This is deeply entrenched in Australian public policy. In part it is because there is an abiding sense that areas of intangible value are hard or impossible to measure. This is no longer as true as it once was – innovations in impact measurement and innovative refinements in accounting standards are making it possible to evaluate these activities more effectively.

There is a need for a strong and robust arts policy, one which supports the non profit sector and helps it become more sustainable, one which provides our most able and innovative artists with the support that they need to produce great works of art, one that provides pathways for new and emerging artists, one that is sufficiently resourced to make strategic investments in a range of major, middle sized and small organisations, and one that operates with the support of, but not at the behest of, politicians.

Unfortunately, despite the great success of public funding for arts and other key areas, including public broadcasting, film and the cultural institutions, there is a default that seems to reassert itself when funding decisions are being made; that these soft areas are therefore best dispensed as favours, favours which provide attractive ‘announceables’ for politicians. A more robust and effective model would be derived from building on the evidence of past success and finding new ways to make the sector more sustainable, connected and resourceful, while still enabling talented individuals and organisations to produce great works of art. The less well measured payoff is the social benefits that accrue and help to foster innovation and active citizenship.

Although measuring cultural value will to some degree always require a different approach, to simply say it is too hard and therefore an area depending on patronage, sells short the capacity of the people, companies and institutions operating in this domain. While it is true that measuring impact is an inexact science, it is an area that has increased in sophistication in recent years, and is now engaging skilled scholars and researchers, and entrepreneurs interested in the potential of impact investment.

The cultural sector does not have a settled definition, but thanks to several decades of intense policy and intellectual work it is possible to begin to define it in a way that is appropriate for this country. In 2009 UNESCO devised and adopted a statistical framework that was designed to capture the scale of activities and by providing an agreed international definition, make comparisons, and assessments of success more robust. The framework takes the major areas of cultural activity and divides them into six broad cognate groups and two related domains: heritage (which includes archeological, physical, environmental, structural and intangible dimensions), performance (theatre, music, festivals), visual arts (from fine art to photography), audio-visual (film, tv, video), publishing (books, newspapers, magazines, libraries), design (fashion, architecture, graphic design, advertising), tourism, sport.

Each of these domains has activities that have different relationships with the state and the market. They derive value and meaning from relationships with audiences, but they also provide benefits in terms of identity, citizenship and meaning in a way that is not available in many other industries.

All of Australia’s major trading partners are lavishing more and more attention on it in pursuit of trading and branding advantages, and domestic returns. As Thomas Piketty notes, this is an important sector for every nation state because its returns are not solely material.

SO HOW MIGHT this be done in an Australian context? What key decisions might be made which would enable this sector to achieve its potential, to deliver on economic, quality of life and national and social cohesion criteria?

As has been noted, much of this economic activity already occurs with only very limited interaction with the state, beyond a regulatory burden that is shared somewhat unequally depending on activity, scale and location.

Australia became a signatory to the UNESCO Convention on Cultural Diversity a decade ago, but the import of this has not been exercised or realised. This provides a legal rationale for a reorganisation.

The starting point is to aggregate the areas that account for the estimated $6 billion of commonwealth expenditure on cultural agencies and output, to put them into a single portfolio, or one linked by clear lines of accountability.

At the moment this expenditure (which is supplemented by an additional $2billion spent by states and local government) is scattered across many portfolios. Indeed so widespread is this range of activity it is unlikely that the estimated public expenditure accurately captures it.

So a quick survey of the spread of cultural activities makes the point.  The arts, some of the national cultural institutions, and screen funding agencies are in the ministry for the arts; the public broadcasters and broadcasting regulators are in the communications portfolio; heritage and parks are in environment; archives and copyright in attorney-generals; the crucial cultural dimension of Indigenous affairs in its own department; sport is in health; war memorials in veterans affairs; AIATSIS in education; tourism and creative industries export is in trade; cultural diplomacy (now known as economic diplomacy) is in foreign affairs; citizenship is in border protection and immigration; science and the remnant creative industries in industry and cities, which are home to most Australians and most cultural activity, are represented only as infrastructure.

This failure to aggregate an important area of policy is truly bipartisan.

Neither Coalition nor Labor Governments have grasped the potential that would come from a reallocation of responsibilities into a coherent portfolio. During the Rudd-Gillard-Rudd era arts and heritage were detached and arts was tacked onto five different ministries in almost as many years – with staff numbers falling with each transfer.

By comparison in most comparable countries culture has been aggregated into one portfolio. The titles vary but almost all include culture alone, or with various combinations – and media, and arts, and sport, and creative industries, and religion, and tourism, and science, and education.

This does not mean that governments control and direct culture, this is a long way from the old days of the Cultural Revolution and its ilk. Rather it recognises that if this sector is to achieve its potential for citizens, companies and the national interest, it needs to be taken seriously and that government needs to work on ways to enable a sustainable, innovative and profitable sector.

AT A TIME when global trade has stalled or reduced, trade in cultural and creative products is growing in double digits every year. Australia is active in this domain. Indeed as Nick Bryant has documented there is evidence of Australian businesses and individuals making a disproportionate impact.

But still we have a trade deficit in this sector, thanks to the volume of imported audio-visual material. Being an English speaking country makes Australia an easy destination for the cultural product produced by global leaders. But being an English speaking country in this part of the world, also offers enormous potential advantages to export cultural products and services as has been done so spectacularly with education.

Over the past decade most countries with which Australia likes to compare itself and almost all of our major trading partners, have implemented policies to boost, enhance and enable their cultural sectors.

Britain led the way with its redefinition of the creative industries in the 1990s. Taking those activities and services that had a cultural input and were at a meta level the product of creativity, and reclassifying them as an industry. At a practical political level this was designed to address the collapse in manufacturing and mining, which followed the restructure of the British economy. The point that reputedly convinced New Labour was a report that showed that the British music industry was larger than the steel industry.  The era of creative industries was born.

Similar lessons have been drawn albeit for different reasons by many other states. The South Koreans used investment in cultural and creative industries to super charge the economy. Its electronic manufacturing sector has been supplemented with film, digital, fashion, music and other activities that are creating a buzz, and generating income. Japan has been exporting ‘Cool Japan’ for years. China is now investing heavily in culture, with both a commercial and non commercial remit, building creative precincts in new developments and countless new museums, and investing heavily in soft diplomacy, particularly targeting diasporic communities in every continent. Singapore has invested heavily in design, cultural tourism, digital activities and more. Taiwan is a global leader in interactive digital products and other creative industries. Indonesia places a great emphasis on its cultural uniqueness and is seeking to strengthen this both in education and commerce. New Zealand has been a world leader in ascribing value to environmental assets (100% Pure) and has actively and successful translated this into film, fashion and environmental innovation. Every where you look countries in this region are investing to build capacity in these areas.

‘CREATIVE INDUSTRIES’ WAS a powerful construct but like any new construct one that had problems and internal contradictions. While some Australian state governments are now attracted to this way of framing the sector, it is a caravan that has moved on. A more effective definition revolves around cultural activities.

Over the past two decades the analysis of the success of the creative industries approach has led to new thinking about ways of aggregating this area of activity as the cultural industry or cultural sector – as economists argue it does not really demonstrate the characteristics of an industry.

The creative economy approach was viewed somewhat gingerly by those in the arts whose work could best be judged on its intrinsic value, and who were accustomed to an either/or mode of policy discourse as well as excessively competitive access to public funding.

While those involved in the commercial end of the sector rightly welcomed this approach, more effort was needed to delineate the pathways to success between art created for its intrinsic and instrumental value, and that which could measure success on a commercial balance sheet.

Certainly there is strong evidence of cultural activity in education, health, social welfare and other areas transforming lives and communities, but this has not been as readily embraced as solutions based on law, regulation and economics. The study of the impact of access to early childhood education, exposure to and engagement in creative and artistic pursuits is now overwhelming. It more effectively turns lives around than almost any other form of intervention. Indeed the recent decision by the British Government to extend free early childhood education because of both its personal and social benefits makes the Australian debate about childcare look arcane.

For those most engaged with this project simply collapsing art into a measure of its economic value was never going to be sufficient. We have long been accustomed to the notion that things of intangible value can’t be measured and therefore they are not taken as seriously as they might be. During the development of the Creative Australia policy considerable effort went into ways of defining the activity that could derive from investment in artists. The best analogy was to equate this to the investment in pure scientific research. It may have a commercial and instrumental value, but the research itself is of singular importance.

It is important to understand this history and the unintended consequences of copying a policy framework that has evolved quite rapidly. Simply adding creative industries to a departmental title short-changes the very real potential for policy development with a broader cultural framework, with direct and increasingly measurable tangible and intangible benefits.

The EU responded to this debate between creative industries advocates and artists, in its 2010 Green Paper by adopting a definition which described cultural industries as those ‘producing and distributing goods or services which…have a specific use or purpose which embodies or conveys cultural expression, irrespective of … commercial value’ and creative industries as those ‘which use culture as an input and have a cultural dimension, although their outputs are mainly functional’. This is necessarily a fluid and shifting domain, something UNESCO recognised by including the creative industries as one of the domains of activity. This is a useful starting point for policy development here.

NONETHELESS THE ECONOMIC value of the cultural sector is significant. It is marred by definitional problems, but these essentially pivot on what to include, and what to leave out. The Australia Council’s recent Arts Nation report uses a methodology that values the sector at 4 percent of GDP and the contribution to national well being at $66 billion a year. Work done by Price Waterhouse Coopers for the Copyright Council includes the copyright industries (with a commercial IP component) and the percentage of GDP jumps to almost 9 percent. The UN suggested that in most advanced economies this sector was worth up to 20 percent of GDP.

Definitions are important, and so is data, which made the decision by the Australian Bureau of Statistics to jettison its short-lived Art and Culture series that captured this data, particularly lamentable.

It is worth noting that two of the world’s leading cultural economists, Professor David Throsby at Macquarie and Professor Justin O’Connor at Monash are in great international demand  But at home they are generally only consulted to bolster sectoral argument, rather than to make the bigger case underpinned by robust economics, international evidence and persuasive case studies. Similarly research concentrations in the creative industries headed by Professor Stuart Cunningham at Queensland University of Technology and the Creative Industries Innovation Centre at the University of Technology, Sydney have built considerable analytical capacity.

In Australia this debate has been stymied by equating culture with arts defined quite narrowly as the non-commercial sector. A more sophisticated way of framing this builds the links between the creation of art of intrinsic value, and the commercialisation of related products and services – rather than considering it as a binary option.

The focus on non-commercial artistic and cultural production has grown hand in glove with various stages of cultural nationalism. The desire to tell uniquely Australian stories has been evident since white settlement, and indisputedly for millennia before. Mechanisms to enable this, despite the relatively small scale of the domestic market to foster a sustainable sector, have evolved ever since. In this market-driven global age, the challenge of imagining, creating, producing and consuming Australian stories is as great as it ever was. Participating in a global English language market presents challenges – but also enormous opportunities.

IN A REPORT for the Australia’s Comparative Advantage study in the Securing Australia’s Future program lead by the Australian Council of Learned Academies and the Prime Minister’s Science, Engineering and Innovation Council, Professor O’Connor and Mark Gibson made a series of recommendations which would go a long way to achieving this repositioning including:

• Recognising that the cultural economy has significant economic importance in direct and indirect employment.
• Developing policy in this area that acknowledges cultural values independent of economic value.
• Framing the cultural sector as a complex service sector involving producer, social and personal services as well as links to manufacture and retail.
• Recognising that the state has a crucial role in the cultural economy despite rising levels of personal consumption and expenditure.
• Considering reorganisation of portfolios to encourage greater integration as has been done in other comparable countries.
• Supplementing the role of the Australia Council with other agencies that can advocate for the full range of genres and industry sub components.
• Reviewing Australia’s under performance in trade in cultural goods and services
• Exploring the opportunities for cultural leadership in the Asia region based on interconnection between the public sphere and cultural production possibly by creating an agency comparable to the British Council.

To this list I would add two more:

• Commissioning a Productivity Commission review of the obstacles to sustainability in the sector, which is inhibited by a regulatory framework that has evolved over time and in response to very different circumstances and a lack of access to investment and capital. As was noted earlier, this is a very diverse sector, and there are many regulatory obstacles only apparent up close. Copyright issues, which are common to many of these genres, are variable in their impact, but a common concern in the digital age. Then there is enormous variation between sectors. Publishing faces different issues to live music which has to contend with local government and insurance regulations.  Even film and television face different regulatory obstacles.
• Requiring a cultural impact statement to accompany new policy proposals using the impact assessment methodologies that have been evolved in recent years. Just as the economic and public importance of the environment has been incorporated into the assessment of policy, there is a need to evaluate the cultural impact, both in terms of the tangible and intangible consequences of such innovations. The example I use in this regard draws on the response of the architects to the Building the Education Revolution projects. A large amount of research has been done that demonstrates the way the educational experience can be enhanced by design. In the rush to build new facilities, this opportunity was not even considered, but could have produced more buildings with a bigger impact than jobs for builders and a roof over the heads of school children.

Aggregating this sector in such a way would ensure that policy advice was of the highest calibre. Lessons could be learnt from the successful operation of areas such as public broadcasting, and the impacts could be regularly assessed.

Unlike many other areas of policy this sector has the potential to impact directly on community wellbeing and cohesion. Government cannot do this, but with the right policy settings it can enable the commercial sector to flourish, and the non-commercial sector to produce even greater benefit for Australian citizens. This is a potentially enormous market;  a source of high quality jobs and national value.

Professor Julianne Schultz AM FAHA is the founding editor of Griffith Review and chaired the reference group for the Creative Australia. These views are her own.

Fairness, Opportunity and Security
Policy series edited by Michael Keating and John Menadue.

Overview

This paper sets out a broad design for Australia’s immigration, refugee and settlement policies for the coming decades.

The issues are covered in three parts:

1. Immigration Policy and Administration
2. Refugee Policy
3. Migrant Settlement and Citizenship Policy

Part 1: Immigration Policy and Administration 

1.1 Guiding Principles

Australia’s planned immigration program has played a major role in Australia’s development over the last 70 years – directly adding 7 million people, including 800,000 humanitarian entrants, to Australia’s population and dramatically diversifying Australia from a predominantly Anglo-Celtic community to a multicultural society with more than 270 ancestries.

Through immigration Australia has been able to gain some of the best human capital in the world to build a nation, as well as making a humanitarian contribution.

Governments of both major parties have in recent years set Australia’s permanent migration programs at record levels in absolute terms and continue to do so (over 200,000 permanent migration and humanitarian visas planned in 2015–16). Temporary entry programs have also risen to unprecedented levels, well in excess of permanent visas.

At the same time, however, public debate in Australia has been diverted to, and dominated by, the relatively narrow issue of asylum seekers arriving irregularly by sea.

Immigration still has a major role to play in building Australia. It is important to our population, our economic development, to growing the workforce in an ageing society and to providing a population necessary to fund the overhead costs of a modern nation state occupying a huge continent.

Based on a projection of the current permanent and temporary immigration framework, Australia’s population will increase to 38 million people in 2050. Without immigration, it would stagnate at about 24 million people. It is estimated that, based on the continuation of current policy settings, migration will have added 15.7% to our workforce participation rate by 2050 and 5.9% in GDP per capita growth.[1]

Immigration also continues to play an important role in Australia’s ongoing integration with its near region by adding cultural and linguistic skills from regional neighbours that are important to Australia’s place in the Asian century.

The benefits achieved through migration to date cannot be taken for granted. Many other countries are competing for relatively young, highly skilled, English-speaking internationally mobile people.

In this context, Australia’s immigration policy needs to be reaffirmed and re-articulated for the coming decades to ensure that it continues to serve Australia as well in the future, as it has in the past.

Australian immigration policy should be guided by the following principles:

• Australia should continue to have a planned immigration program for nation building.
• Australia’s immigration program should be in the national interest – serving economic needs, but also including generous components for entry of people based on close family connections and on refugee and humanitarian grounds.
• Australia’s immigration program should continue to be based on objective selection criteria, which are non-discriminatory on the grounds of race or religion.
• Australia’s immigration program should retain a core focus on migration for permanent settlement with a pathway to Australian citizenship. At the same time, it should recognise the massive growth in international mobility and make continuing provision for large-scale temporary migration, where it can meet national interests in economic, social, cultural and foreign policy areas.
• Australian governments should continue to set annual permanent and temporary immigration targets and planning figures, including indicative figures for forward years, but these should be administered flexibly without inefficient micromanagement to achieve rigid targets.
• Australian government planning should continue to document an optimum figure for net migration gain and use this as a key reference point in permanent and temporary migration program planning.
• Australia’s immigration program planning should be supported by research into post-arrival outcomes of migration.
• Australia’s immigration program planning should be supported by regular consultation with key stakeholders – States and Territories, business, unions, migrant groups and the broader community.
• Australia’s immigration program should continue to be supported by targeted services to those migrants who need them, particularly refugees, to assist with early, productive settlement and integration into the community.
• Australia’s immigration program should continue to be supported by an Australian citizenship policy which promotes early take-up of Australian citizenship to ensure that migrants become full and formal members of the Australian community.
• Australian government leadership is needed to articulate a vigorous, inclusive and unifying multicultural policy in cooperation with State and Territory governments.

1.2 Migration for Permanent Settlement

Australian immigration policy should continue to foster migration for permanent settlement to meet economic, social and humanitarian objectives (the latter discussed Part 2: Refugee Policy).

Migration to meet labour market needs should focus primarily on skilled workers with high-level, recognised professional, technical and trade qualifications. Programs should be designed to meet both long-term social capital needs to build a stronger skills base in the Australian workforce as well as short-term variable demand by employers.

The permanent migration program should be designed to meet longer term needs and remain relatively steady over time, leaving demand driven temporary entry programs to adjust up and down with the economic cycle.

Over the past decade, skilled people working in Australia under various temporary entry programs have increasingly become a feeder group into the permanent migration stream. Australian governments should continue to foster this approach where it meets the needs of the migration program and does not introduce perverse incentives into temporary entry programs.

Australia should permit permanent residence on the basis of business ownership or general investment in the Australian economy on a strictly limited basis, after detailed evaluation of the outcomes of previous programs. It has proven difficult to measure the concrete benefits to Australia of this form of migration. It exposes Australia to risks inherent in “selling” visas, dubious sources of capital, extradition problems with wealthy migrants who subsequently become fugitives from justice without clear offsetting migration benefits or economic gains.

The Australian government should establish advisory bodies, drawing on the skills of business, unions, demographers and State/Territory governments to design permanent and temporary entry programs that remain attuned to labour market needs.

Australian immigration policy should continue to make provision for migration based on close family connections, particularly spouses, parents and dependent children.

Policies in relation to spouse migration should continue to focus closely on the genuineness of relationships to ensure the integrity of this migration category. Adequate planning provision should be made to accommodate numbers of spouse visas consistent with Australia’s population growth and the greater interaction between the Australian community and foreign communities, rather than constraining spouse migration numbers with artificial ceilings and long processing times.

Policies in relation to the migration of parents of previous migrants should recognise the natural wish of some migrants to be able to look after their parents in Australia, particularly in their later years. Given the high costs that people in this age profile may impose on government budgets, such migration should continue to require a commensurate financial contribution from Australian-based sponsors.

Australia occupies a vast continent. States/Territories and regions have differing population, economic, labour market and social needs.

To be successful, migration policies and criteria must continue to be sensitive to the specific needs of particular industries and geographic locations.

State and Territory governments, regional governments and business should continue to be given the ability to sponsor migrants to meet their specific needs, while accepting responsibility for outcomes commensurate with their sponsorship of migrants.

1.3 Temporary Migration

Temporary entry programs have grown to unprecedented levels over the last decade.

There were some 800,000 temporary entrants in Australia as at 30 September 2014 (excluding visitor visa holders, bridging visa holders and New Zealanders temporarily in Australia – which bring the total to some 1.8 million)[2]. The flow of temporary entrants such as temporary skilled migrants, students and working holiday makers is well in excess of the permanent migration and humanitarian program, reflecting increasing global mobility and Australian entry programs designed to meet specific economic, social and cultural objectives.

Australia is in a position to continue to benefit from further growth in global mobility with well-designed, and internationally competitive, temporary entry programs, provided that the risks inherent in such programs are carefully mitigated.

Temporary skilled migration is an important tool in meeting short term, fluctuating skilled labour market needs and should be expected to rise and fall relatively rapidly in contrast to a steadier long-term permanent migration program.

Immigration policy should continue to enable responsible employers to sponsor foreign workers to meet short-term skilled labour market needs that cannot be met domestically. At the same time there must be program design safeguards to ensure that foreign workers are not less costly than available Australian workers and that there are sufficient protections built in to ensure that sponsors do not exploit foreign workers.

Immigration policy should continue to facilitate the entry and stay of people who are seeking to study in Australia and depart at the end of their studies, as part of Australia’s education export and cultural exchange. The degree of facilitation should be closely related to the immigration risk factors. A high degree of scrutiny should be applied to those areas of the education system where abusive practices are evident.

While immigration rules should provide access to permanent stay for foreign students, on the same basis as overseas applicants, there should be no guaranteed pathway to permanent residence for international students simply because of an Australian qualification. The export of education should be internationally competitive and stand on its own merits and not be subsidised by the permanent visa system.

     International education agents are in many cases the face of Australian education overseas. For consumer protection purposes, they should be subject to quality standards, registration and sanctions for misbehaviour in the same way that Australian migration agents are regulated.

Immigration policy should continue to foster opportunities, on a reciprocal basis, for young people from selected countries to live and work in Australia for periods of one to two years under working holiday arrangements. Domestic labour market impacts, especially on Australian youth, should be monitored and evaluated. Potential abuses need to be quickly identified and policy should contemplate annual limits on visas if required.

More recently, Australia has, on a small-scale, commenced assisting Pacific neighbours through targeted arrangements which enable temporary entry of seasonal workers in agricultural industries (the scheme is currently available to citizens of Kiribati, Nauru, Papua New Guinea, Samoa, Solomon Islands, Timor-Leste, Tonga, Tuvalu and Vanuatu).

Migration policy should leave scope for limited amounts of unskilled temporary migration in the context of Australia’s engagement with its region. Program design should ensure that such foreign workers are able to benefit financially from the arrangements without exploitation, that such arrangements remain competitive for employers who are unable to secure a consistent Australian labour supply and that the workers return to their countries of origin.

As a general point, many temporary entry programs are more inherently susceptible to abuse. It must be recognised that many foreigners temporarily in Australia with work rights are more at risk to exploitation than Australian workers because of their unfamiliarity with the Australian system, lack of informed networks and/or poor English language skills. Australian government and State/Territory government authorities should cooperate to ensure that such workers are given information on their rights and access to easily usable complaint mechanisms. Workplace inspection authorities must be adequately resourced to monitor for abuses in the workplace and sanction employers. It should be a criminal offence for employers to charge temporary skilled workers for sponsorship for either temporary or permanent residence.

Policies in relation to temporary migration should take account of the phenomenon of “circular migration” and foster this when it is in the national interest.

Australian immigration policy should continue to facilitate genuine tourists to Australia with fast and flexible visa and stay arrangements carefully calibrated to reflect degree of immigration risk.

1.4 New Zealanders

Under policy introduced by the Australian government in 2001 (in the context of arrangements for a reciprocal social security agreement between Australia and New Zealand), New Zealand citizens can enter and live in Australia indefinitely without meeting globally applied visa criteria, but do not have permanent resident status. They cannot access a range of government services without qualifying for permanent residence by meeting global migration criteria.

New Zealand citizens entering Australia on this temporary basis have an advantage over citizens of other countries in that they can freely enter and live in Australia, with access to the labour market, without meeting the permanent residence visa criteria applied globally to other nationals. As at 30 September 2014, there were over 650,000 New Zealand temporary residents in Australia[3] .

Some of these New Zealand temporary residents are able to meet globally applied permanent visa criteria and become permanent residents with a pathway to Australian citizenship. Many others do not have the skills and other attributes that enable them to qualify. This is resulting in what is unique in Australian terms – a long-term temporary population, including Australian born children, without access to permanent residence and Australian citizenship.

The Australian government should evaluate the outcome of the trans-Tasman migration arrangements, including the changes introduced in 2001, with a view to considering whether all New Zealanders should in future be subject to globally applied arrangements or whether existing arrangements should be retained and some concessional arrangements should be introduced to allow long-term New Zealand temporary residents to transition to permanent residence.

1.5 Immigration Policy and Regional Engagement

Permanent and temporary migration programs have over the years have played an important part deepening Australia’s engagement with its region.

India and China are now the top two source countries of permanent migrants. Asia-Pacific countries figure prominently in temporary skilled worker numbers. Nine Asia-Pacific countries are in the top 10 source countries of overseas students. Four Asia-Pacific countries are in the top 10 working holiday maker source countries. Asia-Pacific countries figure prominently in overseas tourism and a number of them are given the most facilitated electronic visa arrangements which Australia offers globally[4].

The most recent region-specific initiative has been the Pacific Seasonal Workers Scheme.

Australia has already invested significantly in cooperative arrangements on important, but relatively narrow, border management and migration control matters with regional neighbours.

At the multilateral level, Australia should be working to develop broader regional cooperative arrangements to ensure effective routine consultation and co-operation on management of migration within the region. This should include regular migration, irregular migration and refugee protection.

On a bilateral basis, Australia should continue to look at opportunities to strengthen and deepen its regional ties through migration arrangements that are in the national interest – including greater facilitation of travel for citizens of selected regional neighbours, whether permanent or temporary skilled migration, working holiday arrangements, student entry, tourism or expansion of seasonal worker arrangements. 

1.6 Program and Border Integrity

Australia has been able to achieve high level of success and of community support for a planned immigration program (which operates at a much higher level than other traditional immigration countries on a per capita basis) over many years because of its ability to effectively regulate movements to Australia in the national interest, maintain integrity of programs and achieve a relatively low population of unlawful non-citizens.

Well-developed entry policies, backed by a careful risk management approach, have enabled Australia to make the most of the world’s mobile talent and adjust to different potential source countries over time.

These policies have been supported by effective border management and compliance programs. These capabilities should be maintained at a high level. At the same time, they should be regarded as “processes” in support of Australia’s global activities to gain the best social capital for Australia rather than an outcome in themselves.

Effective intelligence, supported by domestic and international interagency cooperation is vital in responding to dynamic irregular migration, crime and security risks. Equally, domestic capability to enforce immigration law, including removal of people without lawful authority to stay, is vital to the integrity of programs and also to protecting migrants – especially temporary workers.

Australian immigration authorities need to use a variety of tools to ensure compliance with immigration law. These tools should always be proportionate to the risk presented. The use of “held” detention, except for very short periods to deal with identity, health and security risks, or risk of absconding, should be avoided as far as possible because of unnecessarily harsh outcomes which usually follow for those held in detention. Detention of children should be avoided wherever possible and special arrangements should be made for them if short periods of detention are unavoidable.

Alternatives to detention which enable immigration authorities to remain in touch with persons of interest who do not have authority to remain in Australia should be used wherever possible.

Any use of detention needs to be subject to rigorous external scrutiny of detention facilities and conditions as well as case-by-case examination of the reasons for detention of individuals being held for more than a short period.

1.7 Managing Migration – Australian Government Capability

Effective immigration programs do not run themselves. Australia needs an ongoing national capability to achieve domestic and international goals in relation to migration.

These capabilities include a strong policy capacity, backed by evidence based research and active evaluation of program outcomes to inform further policy. The most well-intentioned policies can have unintended consequences and these must be quickly identified and policy rectified.

This policy capability should be supported by a strong service delivery and operational network overseas and within Australia, backed by the latest technology.

The case for full integration of the Australian Customs functions with the Department of Immigration has never been convincingly made and no major unrealised synergies or efficiency gains identified.

The Australian Government should revisit the existing administration model to consider whether any real gains have been achieved or whether Australian Customs should become an operational agency within the broader portfolio or separated from the Department of Immigration.

One of the great strengths of the Australian immigration system until recently has been an integrated national administration which brings together entry policy, citizenship policy and post arrival settlement services. This has ensured a close feedback loop to entry policy based on the practical experiences and outcomes for different cohorts of migrants.

The migrant and refugee post-arrival settlement programs transferred to other departments in 2013, including the Adult Migrant English Program, should be returned to the Department of Immigration and Border Protection.

1.8 Australian, State/Territory and Local Government management of immigration outcomes

Consistent with its nation building objective, Australia’s immigration program necessarily impacts all states and territories, although to different degrees.

The Australian government should put in place mechanisms to ensure that State/Territory and local government are involved in short-term and long range migration planning. Immigration, whether permanent or temporary, brings prosperity, but it also brings with it the associated costs for expanding infrastructure. It is important that governments put the necessary processes are in place to ensure that infrastructure planning and implementation reflects population growth from migration and as well as natural increase.

The success of Australia’s immigration program has always depended upon community confidence in the efficacy of the program and its benefits for the country. All levels of government need to take responsibility for public education on immigration and its benefits.

Peter Hughes is Visiting Fellow, Crawford School of Public Policy,
Visitor, Regulatory Institutions Network, Australian National University

Arja Keski-Nummi was formerly First Assistant Secretary of the Refugee, Humanitarian and International Division in the Department of Immigration and Citizenship 2007-2010.

John Menadue was Secretary of the Department of Immigration and Ethnic Affairs, 1980-1983.

[1] Migration Council of Australia, The Economic Impact of Migration (2015)

[2] Department of Immigration and Border Protection, Temporary Entrants and New Zealand Citizens in Australia as at 30 September 2014.

[3] Department of Immigration and Border Protection, as above.

[4] Department of Immigration and Border Protection

Fairness, Opportunity and Security
Policy series edited by Michael Keating and John Menadue.

Six months ago Tony Abbott announced that he wanted to ‘create a more rational system of government for the nation that we have undoubtedly have become’. A worth aspiration, but what does it mean in reality?

Fundamentally there are two contending doctrines regarding the future of federal-state relations in Australia. One view is that we should be working towards a clearer separation of the respective roles and responsibilities of each of the two levels of Government. The other view is that the two levels of government inevitably have to share responsibilities, and that the best way forward must be a system of cooperative federalism based on better arrangements for sharing joint responsibilities in the future.

This article will examine each of these two contending viewpoints, and their respective implications for the future of our federal system of governance. The conclusion is that each viewpoint has its merits, and in the best traditions of Australian public policy pragmatism, an amalgam of the two based on the nature of the different responsibilities for each of the different functions is probably the best outcome.

Separate roles and responsibilities

There is considerable intellectual attraction in the philosophical proposition that our system of government should be arranged so that:

• policies and service delivery are as far as practical the responsibility of the level of government closest to the people receiving those services, and
• each level of government is sovereign in its own sphere, with minimum duplication between the Commonwealth and the States.

Of course this proposition is not new; indeed the champions of States’ rights insist that this is what the framers of the Constitution intended. Furthermore a clearer separation of roles and responsibilities, coupled with commensurate revenue raising capacity, should enhance democratic accountability. It should also help improve efficiency by reducing duplication and ending the blame game where the buck is passed back and forth between governments.

Liberal governments have traditionally been attracted to these ideas, although their actual policies have often led to increased power and intervention by the Commonwealth in areas such as schools, irrigation and roads. The most important transfers of power from the Commonwealth to the States have, however, been initiated by Liberal governments. First payroll tax was passed over to the States and more recently the GST was introduced with the States receiving all the proceeds.

Shared responsibilities but separate roles

Despite the intellectual attraction of each level of government having its own clearly identified separate roles and responsibilities, there are in fact good reasons why the national government has become increasingly involved in functions that were originally the responsibility of the States:

1. The actual decision to federate was always intended to lead to the development of a national market, but a consequence of that, along with increasing globalisation, is that common standards and regulation is required across many fields including rail gauges, heavy transport, workplace relations, company law, competition policy, food standards and the recognition of qualifications.
2. The responsibilities of governments have grown, with the Australian Government now having constitutional responsibility for income support, medical services, pharmaceuticals, and public health. In addition, it is the Australian Government that is expected to manage the macro-economy, ensure full-employment and price stability, and promote national development including population growth, employment participation, and productivity.
3. These various national responsibilities are not self-contained, and they inter-relate with and can be affected by many other government functions.
4. The national government must necessarily dominate taxation policy and revenue collection, especially where factors of production are highly mobile, and thus the vertical fiscal imbalance which is such a feature of the Australian federation is to at least some extent also inevitable.

For these reasons any reforms of our Federal system of government need to ensure that the capacity of the national government to meet the legitimate expectations regarding its responsibilities is maintained. In particular, it will be important to consider for each government function how strong is the national interest in this function, either because of the national government’s direct responsibilities or because of the implications for its other key responsibilities.

So while some rationalisation of responsibilities of some government functions may well be sensible, where the national interest is not critical, there are other functions where the national interest is strong. In this latter case, the government responsibilities for the functions should continue to be shared, and the reforms need to focus on better arrangements for sharing those responsibilities.

Rationalisation of roles and responsibilities to achieve greater separation

The Abbott Government is now looking at these issues afresh and expects to release a White Paper on Federalism later this year. A strategy for radical change in our federal system could involve a big cut to the total $50 billion for specific purpose program funding to the States, of which hospitals ($16.4 bn), schools ($16.4 bn), infrastructure ($6.8 bn) and skills and workforce development ($1.8 billion) account for 83 per cent of that total. This cut in State revenue could be balanced by a substantial increase in the GST so that the State budgets were no worse off, or even a little better off. The revenue saved by the Commonwealth from the specific purpose programs could be used to pay sufficient compensation to low and middle income households so that they would not be too disadvantaged by the increase in the GST. The remaining surplus from the specific purpose program savings (probably about two thirds of the original total savings) would then be available to finance Budget repair (if necessary), other expenditure priorities and/or income tax cuts.

Clearly substantial savings in specific purpose programs will have to focus on the funding for the three big functions of hospitals, schools and infrastructure and the scope to hand back responsibility to the States for these functions, and/or to otherwise achieve savings. As noted that will require an assessment of how closely each program relates to other Commonwealth responsibilities, and its significance for meeting those other responsibilities.

Starting with hospitals, I consider that hospitals are so closely related to the Commonwealth’s responsibilities for medical services, that it would be counter-productive for the Commonwealth to withdraw totally from hospital funding. Health planning and delivery needs to be more closely integrated, not separated into different programs that are administered by different governments. In addition, the amount of hospital funding has already been reduced in the previous Budget, so it is assumed that no further savings are made in Commonwealth funding for hospitals.

Similarly in the article that I posted on fixing the Budget two days ago I suggested that the Commonwealth should make savings of at least $10 billion over the next four years by ceasing to fund uneconomic infrastructure that should not be built by any government. Further infrastructure savings for the Commonwealth alone could be achieved by handing the responsibility for funding back to the States for all infrastructure, other than nationally significant projects; at a rough guess these saving might amount to another $3.5 billion each year.

That leaves schools as the most significant function for potential rationalisation. Here the Commonwealth might consider totally withdrawing, thus saving $16.4 billion in 2015-16 and rising in future years. The justification would be that the Commonwealth has only limited influence now on school outcomes and schools are not all that closely related to Commonwealth responsibilities for tertiary education, which in turn are closely related to other Commonwealth responsibilities for the labour market.

Some rough ball park figuring suggests that if say the Australian Government:

• Withdrew from funding state schools
• limited its funding of infrastructure to nationally significant projects that would have an identifiable influence on the national economy,
• withdrew its funding from many other smaller specific purpose programs

then perhaps as much as $20 billion per annum could be available for GST compensation, fiscal repair and tax cuts.

To fully compensate the States, however, they would probably demand around $25 billion in extra GST revenue, because of the $80 billion cuts in the last Budget to health and schools over the next decade. This $25 billion extra GST revenue could be achieved by:

• some base broadening from the present 50 per cent of coverage of consumption to around a 75 per cent coverage
• an increase in the tax rate from the present 10 per cent to 15 per cent, or
• some combination of the two.

It would, however, be in the States’ interest to concentrate on base-broadening as GST revenue would then be more likely to rise faster in future.

After compensating middle and low income households for the additional cost impact of the increased GST, the Commonwealth would then have around $12 billion annually from the specific purpose program savings to finance a 7 per cent reduction in the income tax cut or meet other priorities; less than the 10 per cent income tax cuts introduced by Howard and Costello in 2001.

Clearly less ambitious packages involving less rationalisation of Federal-State responsibilities could be envisaged. That would mean less increase in GST and less reduction in income tax.

In particular, I think a better rationalisation of functions would be achieved if the Commonwealth took over sole responsibility for vocational education and training (VET), as a swap for withdrawing from funding State Schools. VET is closely related to Higher Education which is already largely funded by the Commonwealth. Indeed some institutions provide both forms of tertiary education, and they will need to become more closely integrated in the future.

In addition, VET should play a key role in improving skills that are vital to increasing employment participation and productivity, enhancing national development and reducing the inequality of incomes. For these reasons skills and workforce development are already primarily a Commonwealth responsibility, with VET providing one, albeit a critical means through which the Commonwealth realises these key responsibilities.

Such a swap of responsibilities of schools for VET between the Commonwealth and the States would halve the savings to the Commonwealth, meaning that the need to find additional GST revenue would be reduced by $7.5 billion from $25 billion under the first package to $17.5 billion under this alternative package. However, the savings to the Commonwealth Budget from specific purpose programs would also be reduced by $7.5 billion to just under $4.5 billion. Consequently the scope for tax cuts or meeting other expenditure priorities in this alternative package would be quite small. Indeed, it might even be non-existent if there was still a fiscal deficit because of insufficient savings from other Commonwealth expenditures or failure to sufficiently broaden the income tax base.

One other point to note is that if the reform packages outlined above fully realised, then the scope for income tax cuts identified in either package would result in tax cuts beyond those necessary to offset the impact of bracket creep. So in each case average income tax rates would actually be reduced, although not by much in the second package. Furthermore, if some of the compensation for the impact of the GST increase on low to middle income household budgets took the form of tax cuts, then this scope for reducing average income tax rates would be even bigger.

One big problem, however, with any package rationalising Commonwealth-State responsibilities along these lines is that the Abbott Government has said it will not act on the GST without unanimous support, and indeed it cannot act without the agreement of all the States and Territories, plus the Senate. Maybe this agreement would be forthcoming after an election if the Government based its election campaign around this sort of reform package. I also consider that Labor should support at least the rationalisation of responsibilities by swapping its funding for State schools for a take-over of VET. The fact that this would involve an increase in the GST does not seem to me to be an argument against this rationalisation, as it would lead to more efficient government programs and help put State finances on a firmer footing. 

A better sharing of Commonwealth-State joint responsibilities

Even a radical rationalisation of Commonwealth-State responsibilities is likely to leave the Commonwealth and the States sharing some responsibilities. But how best to share these joint responsibilities has been a long running problem, so we also need to consider how these programs can be better designed and managed to achieve better results.

Historically the Commonwealth and the States have focussed on the inputs for shared programs, often based on an agreement about how much each would provide in funding. A better way forward is to reach agreement on the outputs and outcomes to be achieved, and then determine consequent funding. The actual delivery of those services, however, should usually be the sole responsibility of the States, or some other provider where the market is opened up to choice (for example, as is happening for vocational education and training in an increasing number of States). The idea is that the Commonwealth will focus on what needs to be achieved, but the States would then have considerable discretion as to how these output and outcome targets will be achieved, having regard to their own local circumstances. In effect there is a purchaser-provider relationship between the Commonwealth and the States for the delivery of services, although in this case the provider works as a joint partner in planning and funding the services.

Increasingly other providers are, however, entering what is effectively a managed market for publicly funded services, often with better results. Indeed the Australian Government is increasingly by-passing the States in seeking partners for the delivery of government services. Where the Government contracts with multiple accredited providers, this allows for more variety of service provision so that people are then able to choose the provider which is best able to meet their personal needs. Indeed this would be the model, if as proposed above the Commonwealth took over sole funding responsibility for VET. The Commonwealth would then continue the present practice of allowing trainees to select their provider from an accredited list, which would include TAFE providers, and the Commonwealth would then directly pay the provider.

Experience so far suggests that there can be problems of quality control with this purchaser-provider model of service delivery. Tighter regulation may be necessary, but governments can also use the power of their purse to ensure improvements in quality over time, by only accrediting those providers who continue to meet standards and/or who have achieved the best outcome results. This approach and the competition now being experienced may also lead to the State providers improving the quality of their services too, and consequently less pressure on the Commonwealth to intervene in the actual delivery of services.

Where the Commonwealth and the States continue to share responsibilities for planning and funding the services, a more informed way of achieving agreement on the outcomes and outputs to be achieved is proposed by John Menadue in an accompanying article. In brief, Menadue proposes a Joint Commonwealth/State Health Commission in any State that is willing to agree, which would pool all funding sources. Such a joint approach to future planning and funding seems to offer the best chance of achieving the necessary focus on each individual patient’s multiple health issues through the full integration of all health services and their funding. This is particularly important in an area like health where consumer sovereignty cannot be assumed, unlike many other public services where it is more reasonable to assume that after clients have received professional advice they are the best judge of what they want.

Nevertheless, while these ideas for sharing responsibilities better seem to offer a path towards a more cooperative system of Federalism, they are not without their own problems. First progress is inevitably slow as the future arrangements for each service needs to be considered on its merits. Second there is an unresolved issue as to what sanctions might be available where a State fails to meet the agreed output/outcome targets, especially if that reflects under-funding by the State.

Conclusion

An interesting question is whether any government will be prepared to embark on a radical reform of Federal-State relations by withdrawing a large amount of funding for specific purposes, and increasing the GST instead, even if that did offer the best chance, or even the only chance of funding significant future income tax cuts.

The package of reforms for Federal-State relations proposed here would involve some rationalisation of responsibilities that are currently shared, and the net loss of funding to the States would have to be financed by some increase in the GST. However where, as is almost certain, some functions continue to be shared then it will be necessary to continue the reforms started by the Hawke-Keating Government, and further developed by the Rudd Government in favour of new and better ways to share joint responsibilities. But assuming that this alternative approach involves only a modest withdrawal from funding specific purpose programs, there would be little or no scope for income tax cuts beyond those necessary to offset the impact of bracket creep.

Furthermore, even a radical rationalisation of responsibilities would still leave the States being significantly dependent financially on the Commonwealth, although less so the more specific purpose payments are cut and the GST increased. But so long as the States continue to be significantly dependent financially then their claims to sovereignty are compromised, and some continued sharing of responsibilities will continue.

Dr Michael Keating AC was formerly Secretary of the Department of Finance, and Secretary of the Department of Prime Minister and Cabinet.