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Federal

Dec 18, 2012

2012 Crikeys: best and worst policy achievements

It was a transitional year in policy, with the government bedding down its carbon price while establishing its big picture strategy. Crikey hands out its policy gongs.

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We handed out the political gongs yesterday, but let’s get down to some harder policy questions. Amid the noise of Parliament, what actually got done? And what were the biggest missed opportunities and dumbest contributions on the reform front? The 2012 Crikeys go to …

Best policy achievements: carbon, education, disability and health insurance

It was a transitional year in policy. The government’s political strategy was focused on a successful introduction of the carbon price, which duly transpired. The main policy game was structured around two Big Picture, Vision Thing policies: a national disability insurance scheme and the Gonski report on education funding reforms. Both will be, literally, decades in the making. Both require significant budget expenditure but, in the manner of St Augustine, not yet.

Meantime, there was an economy to manage. Labor’s commitment to a surplus in 2012-13, simultaneously excoriated as fake and insufficient by the Coalition and criticised as too strict by a wide range of economists and business, was driven by politics but, handily, was also political in its implementation. Spending was brought forward into the end of 2011-12 (particularly the mini-stimulus of the carbon price over-compensation) or pushed back into 2013-14; public servant search parties were sent out to find hollow logs to raid and departments were told to dig deep for savings.

But along the way, some quality savings were achieved. The private health insurance rebate, a long-growing tumour on both health policy and spending, was hacked into, although sadly not cut out altogether. Another dud policy, the baby bonus, was also pared back. Tax rebates for foreign executives were cut back; so too superannuation tax expenditures for high income earners, and defence spending that mainly benefited US arms manufacturers.

The government got no credit for this fiscal discipline — the reliably small-government Australian Financial Review bizarrely whined about defence cuts; the government was, as always, accused of class warfare in reducing middle-class handouts; the Coalition complained about all the cuts, insisted it would find more and better, yet unspecified, savings, then quietly supported them.

And there was a growing lament from business and economists that Labor’s fiscal contraction was too much, too fast, that it should abandon its quest for a surplus because economic growth was too sluggish. But it allowed the Reserve Bank to slash interest rates, giving Australia economic growth, low unemployment and remarkably low interest rates by historical standards.

Worst policy failure: asylum seekers

This is a failure responsibility for which extends right across Parliament: on asylum seekers, the bloody-minded, bigoted cynicism of the Coalition, Labor’s haplessness and the self-righteous policy purity of the Greens and refugee advocates have combined to deliver us a revamped Pacific Solution. It’s a brutal, cruel and ridiculously expensive policy that has so far proven ineffective in discouraging boat arrivals, particularly of illegal economic immigrants from Sri Lanka.  The parliamentary debate produced tears, anguish and soul-searching, but precious little in the way of real solutions. That this is the least worst we can do is a damning indictment of everyone in parliament, no matter where they sit.

Honourable mention: Labor’s new Anti-Dumping Commission, which will spend $25 million investigating the heinous crime of selling stuff cheaply to Australian consumers and businesses.

Biggest legislative win: financial advice reforms

Bill Shorten’s success in shepherding the long-gestating Future Of Financial Advice reforms through Parliament was a landmark reform moment (although some questions remain over the detail — more of that soon, we hope). Negotiating with the crossbenchers and with key industry representatives, Shorten got the guts of the package through despite intense opposition from the financial planning industry and their political wing, the Coalition. Australians will benefit for decades to come through better returns on their superannuation, improved wealth management advice and lower transfer payments for seniors, but it will barely be noticed.

Best public policy report: Gonski education funding review

It was delivered in December last year, but David Gonski’s Review of Funding for Schooling, unveiled in February, has played an influential role in federal politics. It set the stage for a fundamental overhaul of education funding and even spawned its own hashtag, not to mention unleashing a torrent of bad puns. It has also freed Labor from its long-standing “hitlist” dilemma of how to deal with the Howard-era gross imbalance in school funding in favour of the private sector by providing a vehicle for a single funding mechanism for each students — coupled with Labor’s expensive commitment that no schools would be worse off. The result wrong-footed the Coalition — Christopher Pyne issued a media release within half an hour of the release of the 280-page report to criticise it, but other Coalition MPs endorsed it, particularly once the “I give a Gonski” campaign took off.

Stupidest report: mining and the investment pipeline

It was another cracker year for asinine reports, dodgy “independent modelling” and idiotic surveys paraded as fact by shysters and the journalists too lazy, too stupid or too biased to be bothered showing the slightest scepticism. Even so, a certain ennui appeared to have set in by year-end with the Minerals Council, the biggest per-capita generator of bullshit in the southern hemisphere, hiring Henry Ergas and Crosby Textor for its reports and then flicking them to The Oz, like they were just going through the motions.

My personal favourite, however, was the Business Council’s report on threats to Australia’s investment pipeline. From the glib name to the dodgy methodology and absurd conclusions, this one had it all: it used a study that compared Australian construction costs with those in Texas, where about a third of the construction industry workforce is Mexican, and four times as many workers are killed on the job as here, to conclude that, astonishingly, Australia had higher construction costs. But the best part was that another section contributed by our old friends at Access Economics counted a fictitious high speed rail project, said to cost $60 billion, as part of the investment pipeline supposedly under threat.

Honourable mention: the World Economic Forum report on competitiveness based on surveys of a handful of executives in each country, which demonstrated, inter alia, that Middle East oil sheikhdoms have more independent court systems and greater trust in government than Australia.

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