October 10th 2015

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Articles from this issue:

COVER STORY Will drought and falling dollar spike food prices?

CANBERRA OBSERVED Nationals extract good deal in Turnbull takeover

EDITORIAL Obama's climate gambit: do as I say, not as I do!

FAMILY AND SOCIETY Senate committee says no to marriage plebiscite

NATIONAL AFFAIRS Turnbull divides party in Cabinet reshuffle

RURAL AFFAIRS FTAs eat away at our food and agriculture surpluses

RELIGION IN RUSSIA Byzantine Catholics driven underground

FINANCE Hidden by a metaphor: the secret life of money

EDUCATION Proliferation of screens making kids no smarter

NATIONAL AFFAIRS Cabinet door must be open to public service

FAMILY AND SOCIETY Child-support program under the microscope

PUBLIC POLICY Prohibition of drugs has the evidence on its side

CINEMA Kids will love pixelated Aussie classic: Blinky Bill: The Movie

BOOK REVIEW Hope for the Land of the Southern Cross

BOOK REVIEW Evaluating arguments against free will


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Cabinet door must be open to public service

by Colin Teese

News Weekly, October 10, 2015

I am departing from my usual formula to comment, not on economics or trade, but on broader government administration. This should not be seen as anything of a departure: government, and how it works, is actually my first love. Indeed, I am identified in this journal as a former deputy secretary of the Department of Trade.

The intangibles team: Malcolm

Turnbull promises to be

“better at selling policies”.

I am very much a bureaucrat, by inclination, training and experience.

Readers will recall that earlier this year I presented my ideas on what were the problems Tony Abbott would have to tackle to achieve his desired aims in government (News Weekly, March 28, 2015). Broadly speaking, I believed he would stand or fall in line with delivering policies that would serve and protect the wellbeing of ordinary Australians.

At least by the measure of regular polling, he has been judged unsuccessful. We now have a new leader. No, correct that. We have a different leader, indeed one who has passed through the leadership mill before. Mr Abbott’s successor should be under no illusions: he will be subject to no less demanding a scrutiny than was Mr Abbott.

Despite what many will say, and more think, the process by which Malcolm Turnbull succeeded Mr Abbott in no way offends constitutional propriety. For the rest, I am not much interested in the debate about whether or not we will be better or worse off under the new leader.

Deterioration in process

Some aspects of Coalition politics will surely change under the new leadership. And that will have its impact within the Coalition; it may also bear on the electoral fortunes of Labor. Those matters, too, lie outside my area of interest.

I am concerned about the steady deterioration of the processes that support effective government which have been developing over the last 20 or 30 years. In my view both sides of politics have contributed to the present deplorable state of government in Australia.

The incoming Prime Minister has assured us his approach will be different (and by implication better). Not on policy, he hastens to add, but rather on perceptions.

Specifically, he intends to restore the idea of cabinet government. On that we may hope he does better than some of his immediate predecessors, most of whom had the same intention but did not deliver. The fact is that, going back to Hawke and Keating, the rise in the power and influence of ministerial advisers and the diminishing role of the public service has undermined the proper function of government – including cabinet government. About which more later.

Much of what our new Prime Minister is saying deals with intangibles, such as being “better at selling policies. The policies are fine but we fall down when it comes to selling them.” Selling policy, we are told, is about carrying the people with us. If that’s not done well, we fail.

There is, perhaps a grain of truth in the proposition, but politicians should not allow themselves to be carried away. Fundamentally, policies that the people believe in will always bring a majority of the electorate with them. The opposite also applies.

Good policies sell themselves

What the political class trumpets as “the public interest” won’t necessarily be taken on trust in the wider electorate. Quite properly, such claims will be subject to searching examination. At best, salesmanship will play a small part in that process. The essential truth is that good policies sell themselves; bad policies are unsalable.

Pragmatism is another great catch-cry. Politicians are said to be more likely to succeed if they approach policy issues pragmatically; our new leader is already leaning in that direction.

It is fair enough to remind people that sound policy, an inescapable necessity for good government, must always take account of what is possible; which is fine so long as the focus remains on sound policy outcomes. Pragmatism to serve other ends is dangerous.

That the interaction of these variables can push policy in the wrong direction is best understood by recalling how illegal immigration policy was made and remade.

From a bureaucrat’s perspective, how we manage illegal immigration, is pretty straightforward: either you let them all in, or you keep them all out.

Two successive Labor governments made a mess of trying to soften the basics with overlays of unrelated consi­derations. They tried to “fine-tune” policy to take account of aspects of public opinion – specifically, humanitarian considerations. In the process, they became confused and found it impossible to reach a credible policy position.

The reasons are not hard to identify. To the extent that policy debate is aligned with the national interest, political differences and prospects for controversy will always be minimised. When extraneous issues are allowed to intervene, as they did with Labor and the illegal immigrant issue, the political divides deepen, making sound policy impossible.

The Labor governments never found a way to reconcile the contradictions between the national interest and humanitarian considerations. In trying to balance them, they managed to alienate almost the entire electorate.

The incoming Coalition made a much better fist of it, but the whole issue is still a concern; as Mr Turnbull seems to acknowledge. He may be helped, however, by the fact that illegal immigration seems to be ballooning into a global problem.

Its the economy, Mr Turnbull

Back in March I identified Mr Abbott’s problems as twofold: how to realise his wish to become known as “the infrastructure Prime Minister”; and how to deal with the ideological baggage he carried into his prime-ministership.

They have proved to be fatal to his leadership.

Mr Turnbull, too, comes to the leadership with a fundamental problem: how can he fix the problem of an ailing economy while remaining committed to the same policies.

Was it not Einstein who asserted that keeping on doing the same thing and expecting a different result was a definition of insanity?

One thing is certain: if Mr Turnbull really believes that the Coalition’s policies are fine then he is unlikely to succeed. I am, of course, talking here about economics. The approach he takes on things like climate change and same-sex marriage is controversial, but the big problems which will define his leadership relate to the economy.

He immediately must confront one reality. Under the Coalition’s watch, the rate of growth of the economy has slowed, unemployment numbers are up and the level of debt is higher than under the previous Labor government.

What Mr Turnbull does about fixing these problems is critical to his leader­ship. Commendably, he has committed to keeping us as a high-wage economy. But is that a realisable objective if his government remains committed to orthodox economic policymaking along the lines of his Coalition and the Labor opposition?

Not if you believe the business community. Wages, it claims, are too high; and in context, business is right. Much the same point is being made in most Western developed economies facing import competition from low-wage countries.

And we know that wage growth throughout the West has not kept pace with productivity advances. Real wage growth in the United States, for example, has remained stagnant for 30 years. To a lesser extent the same is true for Europe and Australia.

Death by dogma

Here in Australia we must face the fact that wage levels impact on the capacity of our manufacturing industry to compete with imports from cheap labour countries.

Mr Turnbull has yet to tell us how he reconciles this with the idea of a high-wage Australian economy. Especially when we observe what is happening to demand and prices for our export commodities.

Do he and his team understand that the problems for our manufacturing industry are closely linked to a doctrinaire commitment to undiluted free trade. With this handicap, our manufacturers will never be able to meet import competition from cheap-wage countries. More so, when their competitors benefit from cheaper company tax rates and competitive fixing of currency exchange rates.

When it comes to international trade, tariffs are a dead horse. Competitive exchange rates and the right sort of taxation arrangements are the new means of preserving competitive advantage. Our purity of doctrine in respect of these issues is affecting both our export opportunities and the capacity of our domestic industries to compete for a share of our domestic market.

Rather than leading us into the sunny uplands of a high-wage economy, those policies are condemning our workers to a race to the bottom on wages.

The pronouncements by the new Treasurer, Scott Morrison, relating to these issues are not encouraging. In recent times Joe Hockey seemed to have got the message right: keep up the rhetoric on reducing the deficit, but spend to keep the economy afloat. His successor seems to think he can save the economy into growth but fails to recognise that this will strangle demand.

Faced with these problems the Turnbull commitment to a return to cabinet government is certainly desirable; at the very least it would improve the prospects of crafting good policy.

But more is needed. Cabinet government, and, indeed the proper functioning of our Westminster form of government, very much depend on having a permanent and independent public service.

Since the time of Hawke and Keating both cabinet government and an independent public service have been undermined by the proliferation of ministerial advisers in cabinet ministers’ offices. Having blocked off the public service from its role of providing policy, cabinet ministers find themselves overloaded with political advice. Under these arrangements finding the best policy outcomes is almost impossible.

We must all hope that Mr Turnbull and his team understand just how much he has on his plate.

Colin Teese is a former deputy secretary of the Department of Trade.

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