There are some who believe the financial crisis will end in 2009. Others suggest 2010. But one of the biggest tragedies of the current financial crisis will play out for more than a decade — in the form of the collective loss of whatever faith we had in our private sector.
There is a widespread belief that Australians have an inherent disrespect for authority. But it’s largely a myth. The truth is that, for all the Canberra-bashing, Australians have great expectations of Government. When a senior Telstra executive headed home to the States last year, his parting comment — well before the financial crisis was apparent to most — was about Australians’ remarkable reliance on government. He’d even been to church that weekend and heard someone praying that the Government would save us from all ills. Again, well before any talk of the financial crisis that has, no doubt, had many more turning to prayer.
What this financial crisis has done, along with the partly coincidental demise of one version of private sector childcare, is to enshrine our reliance upon Governments in policy decisions for the next decade.
If you want to know how this plays out, then look no further than our most over-governed jurisdiction, the Northern Territory. As I travelled around the country during the last recession, the one we had to have, three places stood out from the gloom. Canberra, Darwin and Alice Springs appeared immune to any recession; government towns or cities isolated from real world economics.
With the major Inpex gas project in the pipeline, Darwin may have added reason to be relatively immune this time round as well. But its Government’s strategy for the future, the long-term future, leaves little room for a private sector in a Territory where the local private sector — and the concept of sustainable economic practices — remains almost invisible.
With his mandate from some 50 voters in Fannie Bay at his premature election last year, Chief Minister Paul Henderson has now introduced Territorians to “Operation Stimulus”: a number of changes to procurement processes, or to how Government does business with businesses. Positive changes on the whole — cutting some of the red tape they’ve increasingly introduced over their past two terms. But the change that’s really required is no less than a change of culture.
The Territory Government does not believe that its role is anything as humble as merely addressing market failings; it believes that its role is to do anything and everything it wants — and to do it itself. With its substantial federal subsidies, even prior to the latest round of Rudd handouts, as well as financial gains from flogging off natural resources, it’s largely been able to do just that for years, without feeling any pressing need to consult or work with Territorians outside government or to find out what its private sector might actually be doing.
When the NT Government decides somehow that it wants something to happen, it does not first check on the marketplace or turn to the subtle tools of market intervention: a tax break here, the odd incentive there — with a touch of regulation where appropriate. Tools that would enable it to leverage off the passion, enterprise and skills of a relatively efficient private sector. Tools that really would stimulate the local economy in the most widespread and cost-effective ways.
Its first thoughts are to employ extra personnel, within an already-bloated bureaucracy, to accomplish its aims. Or, alternatively, to employ even more people to put together tenders, at great expense, for work that in some cases is already being done by the private sector. That’s not Government intervention; it’s even worse. It’s Government competition, pure and simple. And it has a long-term effect that’s opposite to stimulating the local economy, in some cases crippling the very enterprises it seeks to stimulate or destroying the fresh, perhaps greener opportunities that might otherwise arise from the ravages of recession.
The net result is a Government paying 100% — or more likely 130%, given the costs and often-inflated quotes of a tender process — for whatever it happens to want. Instead of a possible 10% or 20%, or at worst 50%, via the intelligent and judicious use of the many other tools that are at its disposal for working professionally and objectively with those outside government.
There are moments in history that make unlikely heroes; this is not one. It may have taken Nixon to go to China. And we should, perhaps, be grateful that John Howard was in power at the time of the Port Arthur massacre (for substantial gun reform might not have been achieved in the face of a right-wing Opposition). But, for all the relief some may feel at having installed a more left-wing social agenda in Canberra, we may well come to regret the fact that traditional, left-wing economic ideologies dominated the thinking of Australia and much of the western world in the financial crisis of the first decade of the 21st century.