Dec 20, 2011

The 2011 Crikeys: the government policy hits and misses

2011 was the biggest year in economic policy for a long time - which isn't saying much. What was best and worst?

Bernard Keane — Politics editor

Bernard Keane

Politics editor

After years of reform drought, 2011 turned out to be one of the more productive years for economic reform. But only up to a point: each of the big set-piece reforms put in place by the government were flawed and undermined by politics and successful fightbacks by rentseekers and special interests -- the states, the mining industry, big carbon emitters. This would have counted as an average year for reform in the 1980s and 1990s. Still, there’s a context for everything: when the rest of the developed world is seemingly incapable of balancing their own budgets, a government committed even to the bare bones of continuing reform looks good by comparison. Indeed, some of the strongest criticism of the government from non-political sources this year was for its insistence on returning the budget to surplus next year. Strange times we live in when the business sector whinges about a Labor government’s fiscal rigour. And after 2010, in which the quality of economic debate went significantly backwards (Andrew Robb's infrastructure bonds proposal honourably excepted), we'll take what we can get. So who did best, worst and why? Best policy achievement The best policy package put together this year is Bill Shorten's Future of Financial Advice reforms (which Chris Bowen initiated), designed amongst other things to end the long-running rort of commissions for financial advice on superannuation and the conflict of interest of financial planners spruiking in-house products to clients. If implemented, the package will be good for the retirement savings of millions of Australians and good for future budgets. But it remains unpassed, and the gullibility of the independents, who appear to have been swayed by a self-interested campaign by financial planners, and the cynicism of the opposition, which allows financial planners to dictate its position, may yet cruel the hopes of Australians for a better super and wealth management system. The carbon pricing package therefore gets the gong, despite being deeply flawed. The deep irony of the package is that after as varied a line-up as John Howard, Kevin Rudd, Malcolm Turnbull and Tony Abbott all supported or promised a carbon price, it was Julia Gillard -- who explicitly ruled one out -- who delivered it, albeit in a form in which much of the heavy lifting of the long-delayed decarbonisation of the Australian economy will be done by less-efficient direct action measures favoured by the Greens and the opposition. Nonetheless, for a painfully carbon-addicted economy like Australia’s, it is way past time that a structural mechanism for curbing the addiction was put in place. That's now been done, in however flawed a fashion. Worst policy failure No contest: asylum seekers. This was a huge failure politically for Gillard (and Bowen), but more importantly a failure of moral courage by the entire parliament. We're fortunate in Australia: rare is a public issue in this country for which the cost can be counted in lives. A successful economy is critical; our health system crucial to our quality of life, our education system a vital aspect of civil society and the economy, but our asylum seeker policy --such as it currently is -- is prompting people to place their lives at risk to come here, and many are dying. It is in our hands to reduce, if not eliminate, that tragedy, but our parliament does nothing. Biggest legislative win One of the few unalloyed successes of this government has been its record of getting legislation through parliament. Its Migration Act changes were atypical: this is a government adept at securing support for its bills. It saved the best until last, securing the passage of its mining tax (profoundly flawed, but anyway) through the House of Representatives with some minor tweaks and some money for the independents. It was a classic piece of legislative horsetrading to give Gillard her "year of decision and delivery". For all the predictions about instability and uncertainty, this minority government has a legislative record not much shy of standard-issue governments without a Senate majority. Best public policy report It’s a rare thing that can achieve bipartisanship these days, but that’s what the Productivity Commission managed with its report on a national disability insurance scheme. Typically hard-headed, the PC nailed the deep flaws of the current hotchpotch of support systems: "The current disability support system is underfunded, unfair, fragmented, and inefficient, and gives people with a disability little choice and no certainty of access to appropriate supports." It did exactly what the PC and its predecessor bodies are best at: framing the debate and laying the groundwork for major reform by demonstrating the costs of current arrangements and proposing a solution, which will form the basis of the government's reform efforts on this front in coming years and which will hopefully be picked up by an incoming Coalition government. Most influential think tank Public policy is now contested more than ever. No economic issue can creep onto the agenda without special interests commissioning the same handful of economic consultancies -- you know who they are -- to churn out rubbish modelling designed to suit the interests of those commissioning it. Think tanks have proliferated, first on the Right and then the Left, feeding the media cycle with reports and op-eds. The economic forecasts of private sector firms are treated as Holy Writ by the media. But amongst it all, the Productivity Commission remains one of the most important players in Australian public policy: independent even of government, forthright, and accused of bias only in relation to the vigour of its economic rationalism. You only have to look at who hates the PC to know it's on the side of the angels: crass populist and economic xenophobe Barnaby Joyce insists he likes to use its reports as toilet paper. Except, of course, for when he agrees with them. The PC -- a creation of the Howard government when it brought togther the Industry Commission, the Bureau of Industry Economics and Economic Planning Advisory Commission -- is an ornament to public life in Australia. Stupidest report As economic consultants proliferate and their confected numbers about job losses, economic impacts and squandered GDP are sprinkled around like confetti, it’s difficult to single out a single report that more than any other laid on the stupid. But there is one -- from one of the biggest sources of garbage "independent" reports, the copyright industry. Time and again this industry -- one of the world’s most powerful cartels, who still make billions from gouging Australians -- has vomited into the media cycle absurd claims about the impact of filesharing. In March, the Australian Content Industry Group produced a doozy: a report on filesharing that claimed it cost the Australian economy $900 million a year. ACIG released excerpts of the report, but not the report itself, to Fairfax for a Sunday paper splash and then sat on the report for over a week. When it was finally released, the reason for ACIG's reluctance became clear: the report did no work on filesharing levels in Australia but simply applied the conclusions of a wholly discredited European report to our own market. Even by the standards of Big Content, it was a howler. *Later this week: the Crikeys award the best (and worst) in media, business and culture

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46 thoughts on “The 2011 Crikeys: the government policy hits and misses

  1. GocomSys

    Thorn makes sense, others are struggling as usual!

  2. the man on the clapham omnibus

    For 2012, whenever I see a reply by SB, Truthy or the various other incarnations I’ll have the Monty Python song playing in my head …

    ‘Let’s hope that there’s intelligent life somewhere out in space cause there’s bugger all down here on earth..’

  3. GeeWizz

    [“Boaties or whatever you want to call them are asylum seekers. They have a pefect legal right to arrive in this country by any means they can and ask the Australian Government for asylum. “]

    Actually no, the UN Refugee Convention states very clearly they must come directly from the country of persecution. That would therefore rule out anyone coming by boat from Indonesia.

    [“This constant referral of them as illegal by Abbott and the right wing media is a further attempt to vilify these people, just as Howard did in the Tampa days. “]

    But alas… they are illegal under both U.N refugee conventions AND Australian immigration law.

    A person who arrives without a valid visa and passport is an unlawful non-citizen who must be detained. This is all in the legislation that the lefties should get around reading sometime.

    [“Australia does not have the right to turn these people away, it has a duty to care for them until their status is determined, and to resttle as many as it can once they are determined to be refugees.”]

    Sure we do for the reasons stated above. It’s the illegals job to try and sneak in through the back door, it’s Australia’s job to stop them.

    [“I agree that their getting on boats and sailing here is dangerous and should be discouraged, but there is no way that Nauru will ever be more than a Pacific Island stopover on the way to Australia in the future”]

    Well heres Dillards chance to prove Tony Abbott wrong, she can simply reintroduce the Pacific Solution, reintroduce turning back the boats and reintroduce TPV’s and if they don’t work then she can say Tony Abbotts policy was a failure.

    She won’t though because it worked in the past, it will work again.

  4. Suzanne Blake

    Labor has failed in just about everything in the last 4 years and Australia is paying.

    ECONOMIC GROWTH: LABOR 1.4% to July 2011, Coalition 3.6% annual average in its last 10 years in office.

    INFLATION RATE: LABOR 3.5% in last quarter, Coalition 2.5% annual average in last 10 years in office

    BUDGET SURPLUS: LABOR -$48 billion 2010/11, Coalition +$20billion in 07/08

    GOVERTMNT DEBT: LABOR $107 billion 2011/12, Coalition $0 2007/2008

    STRIKES: LABOR 159,800 working days lost in year to July 2011, Coalition 88,400 days lost in year to July 2007

    YEARLY INTEREST ON DEBT: LABOR $5.5 billion in 2011/12, Coalition $0 2007/2008

    ILLEGAL ENTRANTS: LABOR 89 boats / 4949 people 2010/2011, Coalition 3 boats, 25 people 2007/2008

    EASE OF STARTING A BUSINESS: LABOR 15 World Bank Doing Business Rank, Coalition 10 in last year of office

    YOUTH UNEMPLOYMENT RATE: LABOR 24.3% Sept 2011, Coalition 16.9% Sept 2007

    UNEMPLOYMENT RATE: LABOR 5.2% Oct 2011, Coalition 4.2% Sept 2007

    Lyi ng Gillard and incompetent Swan have a lot of answer for.

  5. outside left

    A neocon fudging figures {$11 billion black hole,lol} who’d of thunk it? Inflation under libs 2.75% average, 3.1% labor. Unemployment : libs Average 5% , labor 5.1%. Nothing exciting so far . World bank ratings have us at no.2 for ease of starting a business, but these same people rank no.53 when it comes to paying taxes. Illegal entrants incomplete, you did not include the ones who flew in. The lying rodent and his mates have even more to answer for!

  6. Jesus García


    Suppose it’s true that last quarter inflation was 3.5% but you compared it with a 10y annual average. Are you inherently dishonest or just plain stupid?

    This year inflation was 2.5% considering it was lifted up by natural disaster, oil supply fear in the Middle East and Quantitative Easy by Britain and the Feds. not to mention strong demand from China.

    Your figures forgot to mention the GFC and world economic environment.

    Miss Patriotic you should be in the front line in Afghanistan stopping the Taliban from sending them refugees to our shores.

  7. Jesus García

    Quantitative Easing

  8. Suzanne Blake

    @ Jesus

    We had Asian Financial Crisis in region in the 90’s and SARS .

    Strong demand from China has been there for a decade or more.

    Recent inflation is rampant wasteful Swan spending / failed “green” schemes pushing up power prices. The Queensland flood / cyclone is a blimp in one State and there is a lag as well.

    QE by UK and Feds have zip to do with our inflation rate.

    GFC etc would push inflation down, not up??

    Taliban has next to no impact on refugees in Afghanistan anymore.

  9. shepherdmarilyn

    OK Boyee, it is none of our frigging business who or how people get anywhere but here.

    Border command made that very clear.

    L&C 122 Senate Monday, 8 February 2010
    which you sighted this boat but surely you are able to tell me at what point you believed, or
    you were given direction, that it was not your responsibility anymore.
    Mr Carmody—It is a bit hard to talk about responsibility. Ultimately Border Protection
    Command can only intercept vessels on the contiguous zone around Australia, which is about
    20 nautical miles around Australian territory.”

    But then the act against the law by having refugees arrested and jailed in Indonesia where we know very well they will not be protected.

    So boyoh, it’s none of your business or mine who or how people get from a – b.

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