While John Howard was pursuing Workchoices in the 2000s, others were talking about different types of economic reform. Specifically, what was called “the human capital agenda”, the so-called third wave of economic reform after micro-economic reform in the 1980s and early 1990s, and competition policy. “Human capital” focused on increasing productivity, participation and output through improved education levels and skills, a healthier workforce, and more efficient and effective health and education systems.
Much of this was reform terra incognita — we didn’t (and still don’t) know how to measure productivity in health and education despite their being major areas of government expenditure. Since then, they’ve only grown bigger. Earlier this year, education passed 8% of the Australian workforce; health and social care has been the largest employer in the country for nearly a decade. Together, education and health employ over 2.5 million people, or more than 20% of the whole workforce.
Even some of the most hardline ideologues backed the human capital agenda: right-wing reformist Gary Banks, then leading the Productivity Commission, spoke of the particular importance of education. And there’s a strong argument that such reforms are true in spirit to the underlying philosophy of neoliberalism, that of individual freedom, because education and health are key to maximising one’s economic freedom and opportunity. Indeed, both Hayek and Friedman wrote about the importance of education.
Much of the push for the human capital agenda came from Steve Bracks’ Victorian government, and much of the resistance came from the Howard government — something Banks acknowledged when he referred to how it faced “some resistance at Commonwealth level.”
Now, the human capital agenda is back at the Productivity Commission via yesterday’s Five Year Productivity Review that is designed to identify opportunities for productivity-enhancing reform. There are, the PC says, “significant opportunities in prospect. And they lie in areas that many would not traditionally associate with productivity: health, education, cities and confidence in institutions … Health and education are expanding their share of the Australian economy. Moreover, they are directly under the control of governments. Delivering them much more efficiently, and with a serious focus on what improves outcomes for the users of these services, will deliver bigger benefits than even traditional industry reform.”
What follows is a couple dozen recommendations covering not just health and education, but cities, transport, and energy, including the decidedly inconvenient recommendation that the government “adopt a proper vehicle for reducing carbon emissions that puts a single effective price on carbon”.
Indeed, between the human capital stuff and many of the other recommendations, this report plays less like the bold new agenda that some in the media have hailed at as, and more like a remix of the PC’s old hits. For example, the PC has long been a supporter of road pricing, through which motorists would not merely pay the cost of road use but of the congestion they cause as well. And behold, road pricing gets a run, albeit as pilot programs “to communicate the need for road funding reform to the community.”
Other long-term reform favourites also appear — land taxes replacing stamp duty; volumetric tax rate for alcohol; the report actually directs us all to go and read the Commission’s infrastructure report from 2014 that recommended benefit-cost analyses and institutional changes. And after decades of urging that the pharmacy rort diligently preserved by successive governments terrified of the pharmacists’ lobby be broken up, this time the Commission proposes a “nuke it from orbit” approach of having automated dispensaries and cutting pharmacy courses at university to curtail the supply of pharmacists.
All of these are eminently sensible reforms, and ones that governments are unlikely to touch.
Occasionally, the old hits give way to some motherhood stuff that sounds odd coming from the hardheads of the PC. On the vexed issue of e-health records — which have stumped successive governments and seen the waste of hundreds of millions of dollars for a system that many medical practitioners find near-unusable, the Commission suggests “ensure uptake of electronic medical records by health professionals and hospitals by making them easy to use”. Gee, you think, guys? Doubtless there was mass concussion at Woden as Department of Health staff slapped their foreheads in realisation of what they’d been doing wrong all this time.
But, really, this is hardly unexpected. There is no big bold new politically easy reform agenda waiting to be discovered like some treasure trove for a lucky politician. We know what we should be doing. Some reforms will cost more money, not less. Others require political will from federal and state governments that isn’t there. Plus ca change.