Ambitious? Yes. Cyrus Vance, president Jimmy Carter’s secretary of state, called it “a daring stroke.” Foolhardy? Many thought so, including members of Carter’s staff.

Failure was a real possibility and would reflect badly on Carter, already struggling with a perception that he lacked authority. Egypt and Israel were sworn enemies who had been fighting wars since the creation of the state of Israel in 1948.

Carter took Menachem Begin and Anwar Sadat to Camp David, the presidential retreat in the Maryland mountains outside Washington, and kept them there for the next thirteen days. A media blackout prevailed until an agreement was reached. Kai Bird, author of The Outlier, a 2021 biography of Carter, described his approach as “sheer relentlessness.”

Sadat and Carter wore down an intransigent Begin until he succumbed, agreeing to a peace treaty with Egypt, including relinquishing control of the Sinai Peninsula, taken from Egypt in the 1967 war, and the dismantling of Israeli settlements there.

The agreement also included the election of a self-governing Palestinian authority in the West Bank within five years, together with (according to Carter’s detailed record) a five-year freeze on Israeli settlements there. Within three months, Israel started on a major expansion of West Bank settlements, with Begin denying the freeze had been part of the official agreement and Carter telling his staff that Begin had lied to him.

The peace treaty with Egypt, the strongest Arab state, stuck, although it cost Sadat his life. He was assassinated in 1981 by members of the Egyptian Islamic Jihad, who condemned him as a traitor for the Camp David accords.

Carter’s hopes for a broader Middle East peace have proved elusive ever since, although he could clearly see the consequences. Near the end of his presidency he wrote in his diary, “I don’t see how they” — the Israeli government — “can continue as an occupying power depriving the Palestinians of basic human rights and I don’t see how they can absorb three million more Arabs in Israel without letting the Jews become a minority in their own country.”

Nevertheless the accords were a notable achievement and unimaginable in the context of the Middle East politics of recent decades. Carter reaped a political dividend but also paid a cost: relations with the enormously powerful pro-Israel lobby in the United States were never the same again. They had not expected an American president to act as an honest broker.

Carter’s single term in the White House is generally rated among the less impressive in the presidential rankings. Yet his presidency has undergone a re-evaluation given his significant achievements in foreign and domestic policy, which look all the more substantial from today’s perspective.

In the tradition of the best political biographies, Bird gained access to volumes of material, including the copious personal diaries Carter kept as president as well as those of important figures in his administration. To learn that senior members were eating sandwiches at an important meeting in the cabinet room may not be vital to our understanding but it does point to a notable attention to detail.

Reading the narrative from the inside confirmed much of what I observed from the outside as a foreign correspondent in Washington during most of the Carter presidency. But it did so in much starker relief.

For example, the tensions between secretary of state Vance, the diplomat, and national security adviser Zbigniew Brzeziński, a cold war warrior, were evident at the time, but not their depth. Bird provides instances of what he called Brzeziński’s “highly manipulative” approach; Vance called him “evil, a liar, dangerous.”

Carter, a peanut farmer from small-town Georgia with a distinctive southern drawl, was an improbable candidate for the White House. He was a practising Baptist for whom, unlike many politicians, his religion was more than a veneer.

In a south where the echoes of the civil war still resonated and segregation continued in practice if not in name, he took a stand against racism. Yet he also was a skilled politician, elected as governor of Georgia despite his reputation as not being a typical white southerner and pragmatic when he thought he needed to be, including by downplaying his anti-racist credentials.

Still, running for president was a huge leap. He wasn’t taken seriously until he won the New Hampshire primary, and even then he was viewed with scepticism by leading members of the east-coast Democratic establishment. “He can’t be president,” said former New York governor Averell Harriman. “I don’t even know him!”

Sceptics dismissed him as self-righteous. His promise to voters that “I’ll never lie to you” prompted his friend and adviser Charles Kirbo to comment, perhaps not completely in jest, “You’re going to lose the liar vote.” But he came across to voters as sincere and authentic. And then, as now, coming from outside Washington was an advantage.

Circumstances played a large part: his Republican opponent was Gerald Ford, the sometimes hapless vice-president who had served the balance of president Richard Nixon’s term following Nixon’s resignation over Watergate. Even then, Carter won only narrowly.

In elite Washington, Carter’s team of knockabout southerners were often dismissed as hicks. But, like Carter, they were not easily deterred.

Carter brought a luminous intelligence, idealism and diligence to the White House that stands in stark contrast to the era of Trump. He argued that the world was not so easily categorised in traditional American black-and-white terms — that there was more to foreign policy than a contest between the United States and the Soviet Union. He preached against the “inordinate fear of communism” that had led to Washington’s embracing of some of the world’s nastiest right-wing dictators. The Vietnam war, he said of this approach, was “the best example of its intellectual and moral poverty.”

Bird writes that Carter rejected “any reflexive notions of American exceptionalism. He preached that there were limits to American power and limits to what we could inflict on the environment.” America didn’t go to war during Carter’s presidency — an exception up to that time and since.

He elevated human rights in foreign policy. It earned him derision from hardheads but it enhanced America’s reputation abroad, its so-called soft power.

Like any politician, though not as often, he compromised and backtracked when he judged that politics required it. Against his better instincts, he approved development of the MX missile, an expensive boondoggle championed by defence hawks, writing in his diary that he was sickened by “the gross waste of money going into nuclear weapons.”

In the wake of the OPEC oil embargo, when he was trying to persuade Congress to pass legislation to restrict energy consumption and provide funding for alternatives such as wind and solar, he diarised that “the influence of the oil and gas industry is unbelievable.” To set an example, he put solar panels on the White House roof and predicted that within two decades 20 per cent of the nation’s energy would be generated by solar power. He hadn’t count on his successor, Ronald Reagan, who removed the solar panels as one of his first acts as president, nor the ideological climate wars that followed.

While those actions were triggered by the energy crisis, he was receptive to the emerging issue of climate change. Just before leaving office, he released a report from his environmental think tank predicting “widespread and pervasive changes in global climatic, economic, social and agricultural patterns” if the world continued to rely on fossil fuels. It was a prescient warning almost half a century ago.

Carter’s domestic reforms included deregulation of sectors of the American economy, including banks and airlines, thereby increasing competition and reducing prices, though also bringing negative consequences. Consumer regulations led to mandatory seatbelts and airbags and fuel efficiency standards — something Australia is finally getting around to introducing almost half a century later. Environmental laws were passed to reduce air and water pollution; highly contested legislation locked up a large part of Alaska as wilderness and national parks, preventing oil and gas exploration.

In foreign policy, the Panama Canal treaties relinquished American control of the canal, returning sovereignty to Panama. Carter completed the normalisation of relations with China started under Nixon and negotiated an arms control agreement with the Soviet Union.

Other reforms proved to be harder sledding. Legislation on health reform that Carter thought could pass Congress was judged inadequate by Democratic liberals such as senator Edward Kennedy, who championed comprehensive national health insurance and used it as a platform to unsuccessfully challenge Carter for the Democratic nomination in 1980. It would take another thirty years for Barack Obama’s administration to enact significant, if still not comprehensive, healthcare reform.

Carter was never completely accepted by the traditional Democrats that people like Kennedy represented. It came down to suspicion about his Southern roots. Too conservative for northern Democrats, he was too much of a liberal for many southern Democrats and Republicans.

By 1979, with Americans waiting in long queues to buy petrol and paying what were then exorbitant prices for the privilege (US$1 a gallon), Carter’s presidency was at risk of sliding into oblivion. Against the almost unanimous advice of his staff, he decided on another Camp David retreat, this time a domestic summit, inviting some of the nation’s leading citizens to come up with ideas for the nation’s future. What was unusual then seems extraordinary now.

Over ten days a parade of “wise men” travelled to Camp David to diagnose the nation’s ailments and remedies. As with the Begin–Sadat summit, the rest of the nation was kept in the dark by a media blackout.

Carter emerged to give an address to the nation like none other. Sounding more preacher than president, he said America faced a fundamental crisis of confidence that no amount of legislation could fix. Americans were losing their faith in the future, worshiping “self-indulgence and consumption.”

Taking the side of the people while lecturing them at the same time, he said he no more liked the behaviour of a paralysed Congress pulled in every direction by special interests. The immediate test was beating the energy crisis, on which he announced a series of initiatives taking in a windfall profits tax on the oil industry to finance the development of domestic sources of energy, including coal and a national solar energy “bank.” (His focus was on cutting dependence on imported oil, rather than climate change.) He announced plans for rebuilding mass transit systems and a national program for Americans to conserve energy.

Contrary to the fears of his hard-headed advisors, the speech was a great success, reflected in surges in Carter’s approval ratings of 11 per cent in one poll and 17 per cent in another. He was able to convey that most precious of political commodities — sincerity.

But these and other achievements were overwhelmed late in his term by the Iranian hostage crisis. Its origins lay in the Islamic revolution and the toppling of the Shah, who the CIA effectively had re-instated as ruler of Iran in 1953 following the previous Iranian government’s nationalisation of the oil industry. Concerned by the risk to Americans in Iran, Carter resisted efforts to allow the Shah to seek refuge in the United States; but he eventually succumbed to pressure from David Rockefeller, Henry Kissinger and other establishment figures to allow him in on the pretext of urgent medical treatment.

Two weeks later, Carter’s worst fears were realised when Iranian students stormed the US embassy in Tehran and took sixty-six hostages. When diplomacy failed, Carter authorised a complex and risky rescue mission involving ninety-five commandos, a C-130 transport plane and six helicopters. A series of mechanical failures and accidents, including a collision between one of the helicopters and the C-130, resulted in the mission being abandoned.

The hostage crisis plagued the remainder of Carter’s term, reinforcing perceptions of him as a weak president. It subsequently became clear that the campaign team for Republican nominee Ronald Reagan worked behind the scenes with Iranian representatives to delay the release of the hostages, promising a better deal if he won the election. Yasser Arafat, leader of the Palestinian Liberation Organisation, had negotiated freedom for thirteen of the hostages the previous year and told Carter years later that he had rejected approaches from Reagan officials offering an arms deal if he could delay the release of those remaining.

The hostages were released on the day after Reagan’s inauguration following his landslide win in the 1980 election. Soon after taking office, the new administration, despite publicly maintaining Carter’s embargo on arms sales to Iran, secretly authorised Israel to sell military equipment to Iran.

The hostage crisis was not the only reason for the relatively rare election loss by a first-term president. Carter’s support was sapped by the 1970s ailment of stagflation — high inflation and stagnant economic growth — together with the energy crisis. Reagan, the former Hollywood actor, had an appealing personality and a now-familiar slogan: “Make America great again.”

James Fallows, speechwriter for the first two years of the administration, says that Carter invented the role of former president. He certainly had an active four decades of public life following the presidency, with the 110-strong staff of the Carter Centre in Atlanta working on human rights, preventive health care, election monitoring and international conflict resolution.

Carter raised millions of dollars for a program that virtually eradicated guinea worm, a parasitic disease that had disabled and disfigured 3.5 million people a year in Africa and India. His centre helped distribute twenty-nine million tablets in Africa and Latin America for the treatment of river blindness, another disease caused by a parasitic worm. “Americans got used to seeing this ex-president, dressed in blue jeans with a carpenter’s belt, hammering nails into two-by-fours for a house under construction by a team of volunteers for Habitat for Humanity,” Bird writes.

In the 1980s, he spoke out about the concerns he had developed about the Middle East when he was president but he had judged were too dangerous to express publicly. “Israel is the problem towards peace,” he said, citing particularly the expansion of settlements on the West Bank. Accused of bias, he responded that “a lot of the accusations about bias are deliberately designed to prevent further criticism of Israel’s policies. And I don’t choose to be intimidated.” In 2006, he published his twenty-first book with the provocative title, particularly then, of Palestine: Peace Not Apartheid, earning him epithets such as “liar,” “bigot” and “anti-Semite.”

By then Carter had been awarded the 2002 Nobel Peace Prize for “decades of untiring effort to find peaceful solutions to international conflicts, to advance democracy and human rights and to promote economic and social development.”

After he was diagnosed with cancer in 2015 he said, “I’d like for the last guinea worm to die before I do.” Nine years later, aged ninety-nine and in palliative care, he is still going, if not strongly — a metaphor for a lifetime of indefatigability. •

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Its reforms to Medicare have the potential to transform the operation of a system that, despite its reputation for good health outcomes, is creaking if not yet collapsing. Much more healthcare would be delivered through general practitioners and much less through hospitals and emergency departments. Fee-for-service remuneration for doctors, long a barrier to reform, would be diluted by alternative funding models based on the needs of individual patients.

In turn, GP practices would take on nurses, nurse practitioners, physiotherapists and other professionals, enabling doctors to focus on the more complex cases for which their training qualifies them. Continuity of care would be given greater emphasis, particularly for the rapidly rising number of patients with chronic conditions.

That is the ambition. The announcements in the May budget were a first cautious step down this path. Given the history of false starts in health reform in Australia, the challenge will be implementation, and that means overcoming resistance from the medical lobbies. As health minister Mark Butler put it in May, stakeholders in health “have sharp elbows and loud voices and they don’t always agree.”

In the same speech Butler characterised the Medicare scheme introduced by the Hawke government as a great system for the 1980s but wholly inadequate forty years later. That makes a change from the traditional political boast that Australia has one of the best, if not the best, health systems in the world.

Butler said that chronic conditions were now the leading cause of illness, disability and death in Australia. More than 13,000 patients went to hospital ten or more times a year. Rather than sporadic visits to the doctor, he argued, they need a coordinated team of health professionals — GPs, allied health workers, nurses and specialists, among others.

The statistics are confronting. Chronic conditions such as heart disease, diabetes and mental illness comprised 12 per cent of GP case loads in 1962, had more than doubled to 27 per cent by 2015 and are now close to 50 per cent. A fee-for-service system that results in average GP consultations of fifteen minutes is unsuited to such a reality, as are regulations that discourage the involvement of other health professionals.

Butler argued that general practice was in its worst state since the introduction of Medicare, with a fall from 50 per cent to 14 per cent in medical graduates choosing it as a career. Rebuilding general practice is the government’s highest priority, he added, including reversing the substantial decline in bulk-billing.

The biggest gripe among doctors has been the refusal of successive governments to increase Medicare rebates, which remained frozen for a good part of the past decade. Despite that, profit margins for GP practices, which have in many cases expanded from small or solo enterprises into large businesses, have remained at about 35 to 38 per cent of turnover over the last decade, according to the Melbourne Institute. And despite the shortages of GPs in rural areas, OECD figures for 2020 showed Australia with 123 GPs per 100,000 people compared with an OECD average of eighty-eight. One reason for this difference is the dominance of GPs in Australia, compared with a greater reliance on other health professionals overseas.

May’s federal budget funded a small general increase in rebates but also included a more targeted approach, tripling bulk-billing incentives for consultations involving families with children under sixteen, pensioners and Commonwealth concession card holders. That increase translates to an extra $13.80 for a standard consultation in metropolitan areas up to an extra $26.50 in very remote areas. It applies from 1 November, so its effectiveness remains to be seen.

Meanwhile, bulk-billing rates have been falling and the Australian Medical Association has recently recommended higher fees for patients. In some areas outside the big cities the challenge is finding any GP, let alone one who bulk-bills.

Steve Robson, president of the Australian Medical Association, is offering no guarantees on the bulk-billing incentive. “My sense is that it will probably stabilise things,” he tells me. “In the longer term the question is if we are to make care available, equitable and affordable for the patients who are most vulnerable, there are going to need to be more strategies in place than bulk-billing incentives.” Elizabeth Deveny, chief executive of the Consumers Health Forum, is slightly more hopeful. Though the incentive is no silver bullet, she believes bulk-billing rates will rise.

The government is promising fifty-eight urgent-care clinics as alternatives to overburdened and costly hospital emergency departments. Extra funding will help bring what is still an antiquated system of digital health records into the modern age with the aim of ensuring ready access to patient information.

Perhaps of greatest longer-run significance are the other measures announced. The budget provides funding for more nurses, including those working in primary care with GPs, and offers incentives for practices to employ them and other health professionals such as physiotherapists. Again, the idea is to free doctors from tasks that others can perform — signing off on repeat prescriptions, for example, which currently involves four million GP visits a year — enabling them to concentrate on more complex services, including treating chronic conditions. The Grattan Institute estimates that every ten GPs in Australia are supported by three nurses or other clinicians, compared with ten in Britain.

Extra funding is promised for consultations of sixty minutes or more, which are typically required for chronic conditions. Rebates will rise for nurse practitioners, the highly qualified professionals who play a major role in many countries but have been marginalised in Australia.

Under a new MyMedicare program, the government is encouraging patients to enrol with general practices — a system widely used overseas — to provide continuity of care and funding based on patient needs. As Butler said in his May speech: “MyMedicare is the foundation upon which we can build a range of blended funding models to better serve the needs of patients that fall through the cracks of our 1980s Medicare.” It will extend to multidisciplinary care for chronic diseases and frequent hospital users.

The Grattan Institute’s blended funding model would provide multidisciplinary medical practices with 70 per cent of their existing funding through “capitation payments” — payments per patient rather than per consultation — and 30 per cent through fee-for-service. (In other words, the fee-for-service component would be 30 per cent of the current rate.) Capitation is calculated according to the health, risk and socioeconomic profile of patients who enrol with a practice. Practices would be encouraged to opt into this model with a $25,000 grant from the government.

Blended funding, together with many of the government’s other announcements are not so much new as recycled ideas or extensions of existing programs. Stretching back to 1997, several rounds of coordinated care trials have tested multidisciplinary care for mainly complex cases. But they were not continued. Blended funding models were tried in different programs between 2011 and 2014 and between 2017 and 2021.

The Grattan Institute study, which noted that health has seen “more pilots than Qantas,” found that many trials suffered from design problems and insufficient implementation time. It also reported concerns about “stakeholder capture” — a polite way of describing doctors defending their patches.

Creating multidisciplinary teams of health professionals and more alternatives to expensive hospital care harks all the way back to the community health centres established by the Whitlam government in the early 1970s, for which funding was cut by subsequent governments.

“Other countries have reformed general practice and their rates of avoidable hospital visits for chronic disease are falling,” says Grattan. “Australia has spent twenty-five years on a merry-go-round of tests and trials that have not changed the system and our rates are holding steady. We are spending more and more on hospitals, while neglecting general practice: the best place to tackle chronic disease.”

The OECD also stresses this point in its latest economic review of Australia. Noting the relatively high cost of hospital treatment, it points out that hospital admission rates in Australia for diseases that can be treated by GPs are close to the highest in the developed world.

If the history of healthcare in Australia shows anything it’s that reforms are hard-won. When the recently departed Bill Hayden, as health minister in the Whitlam government, moved to bring Australia into line with every developed country apart from the United Sates by introducing a universal national health system, doctors’ groups ran a campaign against “nationalised medicine” that would make Donald Trump proud. One article in an AMA journal compared the threatened “enslavement” of the medical profession to that of Jews in Germany, and a poster featured the slogan “Heil wHITLAm.” Maliciously false rumours were spread that Hayden had been a corrupt policeman and was mentally ill.

Although the Fraser government systematically dismantled Hayden’s Medibank it was resurrected as Medicare by the Hawke government in 1984 — although not without another nasty campaign by doctors spreading false rumours about health minister Neal Blewett, who successfully sued for undisclosed damages.

The Coalition kept campaigning against the scheme until shadow health minister Michael Wooldridge persuaded John Howard to support it in the 1996 election because it had become too popular to oppose. That didn’t stop the Howard government from chipping away and undermining it.

Despite their periods of paranoia, doctors have generally done well out of Medicare, notwithstanding funding cuts under Coalition governments. Not only are they no longer campaigning against Medicare, but they are voicing support for the Butler reforms. The minister’s decision to include representatives of all the main health professions on his taskforce no doubt helped, with its report paving the way for the subsequent announcements. It gave doctors a stake in the plans and allowed them to claim some of the credit.

As AMA president Steve Robson put it, “something unexpected happened” following the AMA’s campaign to modernise Medicare. “Government listened,” he added, and went on to recite a list of budget initiatives.

Nicole Higgins, president of the Royal Australian College of General Practitioners, was positively effusive, welcoming the budget as “a game changer… For the first time in decades we have a government that’s committed to strengthening Medicare and general practice care.”

Former federal health department head Stephen Duckett, until recently health program director at the Grattan Institute and now an honorary professor at Melbourne University, puts this new mood into perspective. “Up until very recently the medical profession was opposed to any hint of any move whatsoever away from fee-for-service,” he says. “What has been announced so far is not going to fix primary care itself but what it is doing is signalling the direction of change. It is like putting a little bit of sand in the oyster: eventually a pearl will emerge.”

In between his work as an obstetrician and gynaecologist and as AMA president, Robson has been studying for a master’s degree in health economics, which he says has fired his interest in and concern about the economic sustainability of the health system. Reminded of the AMA’s reputation as the Builders Labourers Federation of the medical profession, he laughingly responds, “I think that award has gone to the Pharmacy Guild” — a reference to that organisation’s over-the-top campaign against the government’s introduction of sixty-day prescriptions.

But the heavy artillery remains ready to be deployed. Or, as Robson puts it, “There is a time to hold a hand and a time to slap it. At the moment we want to make it very clear that we are very keen to work with the government on sustainability and at the same time to make sure we are respected for the care we provide.”

Given the increased emphasis Butler is placing on the primary care provided by GPs, that approach makes sense for the doctors’ groups. Robson’s interpretation of blended funding under MyMedicare is that extra money for enrolled patients will be provided on top of existing fee-for-service payments — in other words quite different from the Grattan model of patient-based payments substituting in part for fee-for-service. Duckett suspects the Grattan formula, which follows overseas practice, may be too big a political hurdle for the government. Peter Breadon, Grattan’s health program director, says restricting patient budgets to a small part of total funding would be a missed opportunity for meaningful reform.

Given the doctors’ sensitivity, the government is treading warily, not responding to my request for clarification about how blended funding will work. It doesn’t use the word “capitation” in the context of blended funding because it raises red flags. “What we want to get completely away from is the UK system of capitation,” says Robson, a view echoed by the RACGP’s Higgins. Importantly, capitation-based patient enrolment is compulsory in the British system but would not be here. But Breadon argues that the real problem with Britain’s National Health Service is the severe austerity under which it operates, with long waiting lists and chronic workforce shortages. It’s not the British funding model that’s the problem, he says, “it’s the funding quantum.”

Nor, despite the increases in Medicare rebates and the bulk-billing incentive, is Robson making any concessions on rebates. To cover costs, he argues, they need to double from an average $40 per GP visit. As to whether the government is amenable to further increases: “They are not going to have a lot of choice if they want to make the health system sustainable.” So expect some future slapping.

Plenty of problems remain to be tackled. While bulk-billing rates for GPs are falling, they remain higher than for other health professionals. In 2021–22 the rates for allied health services were an average of 51 per cent compared with 88 per cent for GPs.

And in that year nearly half a million Australians decided against seeing a specialist because they couldn’t afford it. On average, about 50 per cent of initial appointments with a dermatologist, urologist, obstetrician or ophthalmologist cost more than double the $90 Medicare schedule fee. As with allied health care, those most affected were the ones who needed the services most, namely the sickest and the poorest.

The Commonwealth Fund, a US-based health research body that conducts international surveys, found that 28 per cent of Australians reported out-of-pocket expenses equivalent to more than US$1000 a year in 2020, exceeded only by Switzerland and the United States among eleven higher-income countries. Thirty-two per cent skipped dental care, which is not covered by Medicare, because of cost, second only to the United States.

Fee-for-service’s continuing predominance encourages overservicing. According to a 2015 OECD study, knee-replacement surgery in Australia occurred at almost twice the rate of France and almost five times the rate of Israel. Antibiotics were prescribed at twice the rate of the Netherlands.

Despite large government subsidies, private health insurance remains a bad deal for many patients, with premiums rising faster than inflation and significant out-of-pocket costs for private hospital treatment. Nor does the evidence show that this form of insurance has done anything substantial to fulfil its claimed objective of taking pressure off public hospitals, mainly because private practice is much more lucrative for doctors, as well as much more expensive for patients.

Prevention remains the Cinderella of the health system, neglected and funded at lower rates than in most OECD countries. Isolated examples of success, including one of the lowest rates of smoking in the developed world, haven’t brought forth similar efforts in areas crying out for attention, such as Australia’s high rate of obesity. The Abbott government abolished the Preventive Health Agency and only now is an interim body planned while legislation is brought forward for an independent Centre for Disease Control, expected to be running by early 2025. Its focus will be on preparing for future pandemics, but it also will have a broader prevention brief.

Then there’s the overall financing of health, which remains a muddle of overlapping Commonwealth and state responsibilities. The states run hospitals but they are jointly funded by the Commonwealth; when problems arise, they blame the Commonwealth and demand more money. Many aged care residents spend excessive and very expensive periods in hospitals because the Commonwealth funds aged care and lacks the incentive to move people to more suitable and much cheaper facilities. Thirty or more years of reports, recommendations and attempts at reform — most recently under the Rudd government — have failed to bring meaningful change.

National cabinet agreed in August to devote a special meeting before the end of the year to this and other issues in health. But there is still no word on a date or an agenda for this meeting.

For Labor, the longer-term question is whether caution will overcome ambition. On this, the last word belongs to Ian Hickie, professor of psychiatry at Sydney University’s Brain and Mind Centre:

Back in 2008 I had a book contract to describe the obvious failings in Australian healthcare. It was planned to challenge the national myth that our system was “exceptional,” literally “best in the world.” I didn’t persist as prime minister Kevin Rudd was promising sweeping national reforms and there was genuine community enthusiasm for a major revamp of Medicare.

How I wish I had persisted! The glaring structural faults in the system have simply grown wider and deeper over the last fifteen years. Now the federal health minister Mark Butler is saying in public what his predecessors would only discuss in private. Our 1980s-style Medicare no longer delivers a fair, equitable or sustainable system… The challenge for the Albanese government is not to get stuck in the arguments about how best to re-design the Titanic. •

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Lee is a novelist, painter and human rights lawyer. Her debut novel The Healing Party was shortlisted for several prizes, including the Victorian Premier’s Literary Award.

Born with spinal muscular atrophy and using a wheelchair, she is also the author of the latest Quarterly Essay, Lifeboat: Disability, Humanity and the NDIS. Of all the millions of words written about the National Disability Insurance Scheme, few have been as incisive as these, bringing to us the dimensions of her lived experience.

The NDIS has transformed the lives of tens of thousands of people — something that Lee acknowledges. “For those who can access the scheme and turn funds into the support they need,” she writes, “the NDIS is, as many have said, life-changing.” Without the NDIS, “I wouldn’t be able to pay for the support workers I need to live independently in my home.”

But she also argues that it has not lived up to expectations. The activists who fought for reform for many years focused on three principles: that a new scheme had to be based on rights; that those with disability should be able to decide themselves the supports they need; and that these supports should enable them to participate on an equal basis in economic, social and cultural life.

The NDIS’s design means it delivers these goals in theory but compromises them in practice.

Many have been unable to exercise choice or real management of their supports, Lee writes. She describes the process of drawing up an NDIS plan as “notoriously disempowering,” with processes hard to navigate and the planners who assist likely to change every year.

On one occasion she was told that her funding would be reduced as she became better or more independent, in line with the goals of the NDIS. Lee explained that her condition was progressive and she was likely to need more supports in the future rather than fewer. “You’re talking to a real person,” she told her planner, “not someone who has to fit into one of your boxes.” Her plan was reduced anyway.

The market-based approach that underlies the NDIS and the light-touch regulation that accompanies it means the government and the National Disability Insurance Agency, or NDIA, which administers the scheme, often have little knowledge of the scheme’s impact on individuals. Lee cites cases of private providers refusing to take on people who display challenging behaviours — people who have no government service to fall back on.

Her critique echoes that of Mark Considine, whose book The Careless State cites numerous examples of the failure of Australia’s privatised and deregulated social policy system, including the NDIS. Rather than competition among private providers making services cheaper and better, she writes, the opposite is the case. “Once they know you are on the NDIS, many providers will charge the maximum rate allowable under the scheme.”

The scheme also has had perverse effects, such as the assumption by society that it means those with a disability always have their own help. Flying to Byron Bay for the writers’ festival, where she would meet a support worker, Lee decided not to arrange for a separate support worker on the flight, which she estimated would have involved about fourteen hours of paid time, including the flight back.

But she could find only one airline that would allow her to travel alone. At security, where in the past staff had always helped her, she was asked where her carer was and had to rely on a friendly woman in the queue to lift her bag on to the belt. She was asked the same question at the boarding gate and by the flight attendant. “The NDIS has helped to minimise the individual effects of my condition but it has not helped make society more accessible,” writes Lee.

Nor has it led to a more inclusive society in other respects, a point also highlighted by last week’s report of the disability royal commission. Lee explained to her long-time friend Frida, who had a mental health condition, how the NDIS might be able to help her get back to work. “Yeah sure, but what can they do if no one wants to give me a job?” Frida replied. A new client rejected Lee, who works as a lawyer, as soon as he saw her. “He told the manager that he needed a lawyer who would look the part in court.”

According to the NDIA, 20 per cent of NDIS participants had a job in 2020, with another 31 per cent saying they were unemployed but wanted work. “We are disabled by society as well as by our bodies,” writes Lee.

She charts her journey from when she was young and “disability was something I had to deny and overcome” to acceptance: “You can accept your disability. What is not acceptable is when the world treats you as second class and excludes you because of it.”

As a young woman, her fear of becoming increasingly disabled and dependent drove her to travel widely in Europe and Africa alone and without support. “I was spurred on to experience everything, not miss out, never miss out, no matter how hard it was. Paradoxically, by experiencing my own helplessness, I was able to discover my inherent worth and power.”

Many of the shortcomings mentioned by Lee have been acknowledged by Bill Shorten, the minister responsible for the NDIS. The review he has commissioned is due to report by the end of October. Lee is hopeful. “The tide is turning,” she writes. •

Lifeboat: Disability, Humanity and the NDIS
By Micheline Lee | Quarterly Essay | Black Inc. | $27.99 | 144 pages

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In retrospect, what were we thinking? Did we really believe private companies would put serving the public above profit? That companies wouldn’t take advantage of light-touch regulation? That their insistence on commercial confidentiality wasn’t designed to protect their operations from scrutiny?

Which leads to another question: is our whole approach to social services systemically flawed?

Mark Considine, a professor of political science at Melbourne University with decades of experience in examining social programs, thinks so. His recent book The Careless State brings together what we tend to see as separate problems — problems that add up to an indictment of the privatisation and deregulation of Australian social policy — and provides some pointers to how we could do better.

Social services reform became an extension of the enthusiasm for financial deregulation, free markets and privatisation that swept the world during the 1980s and was taken up by the Hawke and Keating governments in Australia. Why not try market-based reforms in new areas, even though they were outside the traditional market economy? Lumbering, inefficient bureaucracies and the community service model went out of fashion; competition, choice and entrepreneurial flair were all the rage.

Efficient markets are driven by price competition, but in the new social service markets prices were set by a single purchaser of the services, which was the government. But governments lost touch with how services were provided and often found themselves reduced to mopping up and repairing when things went awry.

Not-for-profit providers shrank, unable to compete with the often ruthless cost-cutting and understaffing of their profit-making rivals. Clients, particularly the vulnerable, often fell prey to lack of information or misleading information. The absence of real alternatives made choice illusory.

Another result was that the quality of services deteriorated. “If money can be made by providing a terrible service, that is what a market will allow,” writes Considine. Serious fraud and rorting of the rules, costing billions of dollars, were evident in all the market-driven services he examined.

So what now? The timing may just be right for a serious reassessment. A change of government in Canberra and the searing experience of robodebt might provide the impetus for change.

One of those who commented on a draft of Considine’s book was Glyn Davis, who was vice-chancellor of Melbourne University. Davis has since been appointed by Anthony Albanese to head the Department of the Prime Minister and Cabinet, and wants to pursue the issues Considine identified.

Not surprisingly, The Careless State has struck a chord with non-government providers and charities, though not so much with for-profit enterprises. It also has attracted international attention: Considine has been invited as the keynote speaker at the annual Social Outcomes conference in Oxford next month.

Considine says that Britain saw a similar shift to market-based services, starting with the Blair government. But it was never as gung-ho in its approach and is already well on the way to a reconsideration. He recalls a British bureaucrat remarking that his counterparts in Canberra “were always more Catholic than the Pope.” Denmark, Israel and the Netherlands have already moved away from a free-wheeling market approach towards a more mixed model of public coordination and governance.

Australian politicians are starting to take notice as well. As chair of the select parliamentary committee on employment services, Victorian federal Labor MP Julian Hill kept the attention of his audience of employment providers with a provocative speech last October. “Over two decades of evidence raises legitimate questions about the impact of marketisation,” he said, “and there are a growing number of informed sceptics deeply concerned that competition and choice has failed and will continue to fail the most vulnerable consumers.”

The Albanese government made some changes to employment services last year. Among them was that those jobseekers considered the easiest to return to work are no longer assigned to employment agencies, for whom they were easy earners, but are instead referred to a digital service. The existing system remains for two-thirds of unemployed people, however, including an estimated 500,000 who have been on benefits for more than a year — a figure that has barely changed despite a substantial fall in overall unemployment.

The government’s changes prompted Hill to ask his audience: “Will you respond to the greater flexibility in the system and upfront investment by investing in people? Or will we see more ‘creaming and parking,’ as has plagued the privatised system for twenty years, underinvesting in those who need the most help?” Hill was referring to the fact that more money could be made by “creaming” — moving the easiest clients quickly into jobs — while “parking” those with greater needs but fewer prospects of employment.

Those hoping Hill’s views may be tempered by Liberals on the committee could be disappointed. Russell Broadbent, a Victorian Liberal MP with a long record of hewing an independent path, is the committee’s deputy chair. He praises Hill’s bipartisan approach, is impressed with the critique developed by Considine (who has given evidence to the inquiry), and is concerned the present system plays into the hands of those who argue that “everyone who hasn’t got a job is a slacker. That is just not true — most have multiple barriers to entry into the workforce.”

Broadbent also makes broader criticisms of the market-based social services. “How come private aged-care providers drive exceptionally beautiful cars? It’s not because they’re living on the breadline: it’s because they have taken their million dollars out and say to the managers ‘there’s the money that’s left — make it work.’” He hastens to add that not everyone deserves to be tarred with the same brush.

When Paul Keating’s government shook up employment services in 1995 it went further than most developed nations. The Commonwealth Employment Service was retained but forced to compete with private job agencies. The unemployed would be able to shop around for the best service, and quality would be assured by competition between providers.

As the rhetoric of the time put it, the government would be steering, not rowing. It would set the policies but not run the services. The shift fitted nicely with another fashion — the drive for smaller government.

Capturing the mood of the moment, Keating favourably compared the new market with the previous public “monolith.” But Considine quotes another reason Keating gave for the reform: “One of the things you have always got to do when you think about social reform in Australia is to make it Tory-proof… you have got to hermetically seal them so they can’t get their nasty little right-wing fingernails under them and tear them away.” In short, Labor adopted a policy it thought the Liberals could only agree with.

That’s not quite how it worked out. The Howard government did retain the changes but reshaped them in its own, harsher image. It increased the proportion of employment services transferred from the CES to private providers from 30 per cent to 50 per cent and whittled it away further in subsequent years. Then it closed the government body down completely, leaving the whole field to non-government providers.

It also removed the “mutual” in the mutual obligation policy introduced by the Keating reforms, cutting spending on the training programs that the government had provided for long-term unemployed and introducing Work for the Dole as a condition for retaining benefits. This pandered to the populist notion mentioned by Broadbent — the unemployed as “slackers” or “bludgers” (see also robodebt). Although it has been shown to do almost nothing to help people find real jobs, Work for the Dole has been retained by the Albanese government.

Against a background of rapidly increasing demand for social services, the same arguments for choice and competition influenced new policies in aged care, childcare, vocational training and later the NDIS. In the first two decades of this century, aged care spending rose from 2.8 per cent to 3.5 per cent of the total federal budget. For childcare the increase was from 0.77 per cent to 1.53 per cent; for employment services, including income support and job assistance, from 3.3 per cent to 4.5 per cent.

In the name of “contestability,” for-profit firms were allowed to offer their services alongside not-for-profit companies and community organisations. “A church agency with a history of 100 years of philanthropic work to the unemployed would be considered no better and no worse than an entrepreneur seeking to make a profit from the same social services market,” writes Considine.

Even the most respected charities were sucked into the vortex of ruthless competition. In 2005, the Salvation Army in Victoria was forced to repay more than $9 million for fraudulently upgrading unemployed clients to a “highly disadvantaged” classification so that they attracted much higher fees. Staggeringly, a 2012 audit found that only 42 per cent of job-finding fees charged by providers were genuine.

Private providers also sprang up like mushrooms when vocational education and training was progressively deregulated and privatised, starting under the Hawke government in the 1980s and eventually enfeebling the states’ TAFE systems. The reforms culminated in what Considine describes as “the most spectacular frauds yet seen in any social program… With extraordinary profits to be made, the system was deluged with providers targeting the most disadvantaged customers with courses that had little value and sign-up incentives that made it appear they were getting their program for free.”

Students had choices but insufficient information to make them meaningful, particularly if they were international students. In theory, they could switch to other providers if they were unhappy about the quality of the training they were receiving. In practice, enrolment and course fees created effective barriers. The education and training provided by some firms were so poor that childcare firms refused to employ their graduates.

Childcare itself has also performed poorly. Government subsidies for the rapidly expanding sector often feed almost directly into higher fees and bigger profits. A 2021 study found that an Australian couple on average wages spent 16 per cent of their income on childcare, compared with 3 per cent in South Korea, 4 per cent in Sweden and 5 per cent in Iceland.

“In effect childcare providers lift fees according to what the consumers will bear, with politicians then pressured to reduce some of the cost this generates for families,” Considine writes. He adds that childcare has also become a real estate business, with a bias towards the suburbs with the best prospects for capital gains.

The shortcomings in another market-driven sector, aged care, were tragically thrust into the spotlight during Covid, particularly in Victoria. The aged care royal commission’s scathing report labelled the neglect of clients, including physical and sexual abuse by staff, a “disgrace” that “should be a source of national shame.” Cutting costs on meals, typically described in promotional material as “home cooked”, meant many in care were malnourished.

The pandemic also highlighted how the best-quality care was being provided in government-run homes, where there were far fewer deaths. Eighteen reviews of aged care over twenty-four years led Considine to the conclusion that governance of the sector was “catastrophically weak.”

Substantial increases in funding disguise the fact that the system has not kept up with the increased demands of an ageing population. Considine estimates a 40 per cent reduction in spending per client over twenty-five years, coinciding with the steady shift from a community service to a market model.

Regulation has increased but is often ineffective. Large-scale gaming of the system is evident, with the proportion of nursing home residents classified as needing complex health care — which attracts higher funding — increasing from 12.7 per cent to 53 per cent over the decade to 2019.

Inspections of facilities do occur, but always with plenty of notice. “You knew at least a week ahead,” says one executive quoted in the book. Remarkably, the industry has prevailed in its strong objections to unannounced inspections. The Australian Aged Care Quality and Safety Agency is compromised by operating inside the health department, which makes the policy decisions in aged care.

For providers, the incentives are perverse: rather than rewarding them for higher standards, the system encourages them to cut costs to generate higher demand and bigger profits. Staff are underpaid and undertrained, which also means they lack the authority to advocate on behalf of clients.

Considine believes the aged care royal commission has not gone anywhere near far enough in its recommendations. “There’s a lot of regulation raining down from above but not much internal self-management and learning,” he says. “We haven’t actually laid out the basis of a transparent care strategy. I think there is still a very high likelihood, even with more trained personnel, that the management of some of these residential places could be behaving in a really unsatisfactory fashion.”

The National Disability Insurance Scheme, the largest reform in social policy since Medicare, is admirable in its charter to give everyone with a serious disability the right and the means to obtain the assistance they choose and need. What sets it apart from the other social programs Considine examined is the role of two intermediaries — local area and support coordinators — who help clients draw up a plan and implement it, making for more effective choice.

But the NDIS still incorporates some of the same problems Considine identified in the other programs. It relies on a market for services, with the aim of using competition between providers to achieve greater efficiency. But the services offered have not always been adequate in terms of quality and availability.

The NDIS example raises another weakness in market-based social programs — what Considine calls the “black box.” Instead of the government prescribing how services are delivered, it allows providers to offer services according to their own “secret recipe,” in the interests of innovation, competition and efficiency.

Considine gives the example of a provider who suggests weekly appointments when monthly appointments are adequate; clients then ask for higher funding to cover this. The government’s National Disability Insurance Agency, or NDIA, may see costs going up but be unable to act effectively against over-servicing because it doesn’t know enough about the services provided or has limited ability to act.

The Quality and Safeguards Commission is supposed to be the NDIS cop but it is seldom on the beat. In 2020, when it reported on the death of a person whose carer was charged with manslaughter, it had received more than 8000 complaints over two years but banned only one provider.

Considine identifies other inequities in the NDIS, with better-off or more articulate people or their families able to argue for better care plans. And the government’s arm’s-length approach creates the ever-present danger of fraud, as it has done in other choice-based social systems.

Last year, the NDIA reported that eighteen people had been charged since 2020 over alleged fraud against the NDIS totalling up to $14 million. At the same time, the head of the Australian Criminal Intelligence Commission, Michael Phelan, estimated that as much as a fifth of the $30 billion annual spending on the NDIS had been misappropriated. His agency had uncovered fake NDIS clients, systematically inflated invoices, payments for services never provided, and a network of professionals helping criminals exploit the scheme.

The picture Considine paints is not unremittingly bleak. Workplace health and safety has moved in the opposite direction, from a private insurance market approach to something closer to a public–private partnership, with greater government — in this case state government — involvement and control. The cost of the schemes Considine examined in New South Wales and Victoria rose and fell at different times but were ultimately brought under control alongside improvements in health and safety.

Employers are still able to choose their insurers, but uniform standards were set and operators are required to be more transparent, encouraging a “learn from the best” culture, as opposed to the black box approach. And workplace inspections occur without prior notice.

One other area Considine identifies as an outlier is maternal and child health, which is still a public service delivered by state governments and local councils at centres staffed by specialist nurses. The service is available to everyone; to the degree choice is provided, it involves public rather than private providers. The service has a high reputation, says Considine, and offers few opportunities for fraud or “creaming.”

While the Albanese government seems prepared to listen to critics of the present system, and while at least some people believe it is open to persuasion, its risk-averse approach to change raises questions about its willingness to embrace wholesale reform.

Some signs are less than encouraging. The government’s draft national care and support economy strategy talks, among other things, about “functioning markets, sustainable funding and… productivity gains.” In its response, the Australian Council of Social Service urges the government to look at better options, including alternatives to markets, given the “litany of systemic failures and inadequacies with markets in social services.” Anglicare argues that the government should take back the control and operation of employment services.

Considine believes the markets-and-choices model has been exhausted. The pendulum needs to swing back towards empowering the clients and staff of the services — “from choice to voice,” as he puts it.

A culture of improvement and innovation must come from within. Vulnerable people in particular should have access to specialists who advocate for their needs. The black boxes within which providers guard their business models have to be replaced with more transparency. Governments need to take responsibility for services as well as setting the standards.

Is that enough? “I don’t have the view that nationalising these services is necessary,” says Considine. “In most of these social services, where the government has been working with community organisations, it works well. There are some private organisations in childcare and aged care and parts of the NDIS who are credible.

“I don’t have a problem with a mixed economy. I have a problem with running a social service as if is a market. You need to run it as a public service because that is what it is.” •

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The report’s “highest” and “immediate” priority” was for a large enough increase in JobSeeker to significantly reduce poverty among the unemployed. The right amount, it suggested, would be 90 per cent of the age pension, or an increase of $256 a fortnight.

The government has responded by increasing the rate by just $40 a fortnight, or $2.86 a day. Yes, it did some other things — a slightly increased rate for unemployed people aged between fifty-five and sixty, an increase in rent assistance by $31 a fortnight, more money for single parents with children between eight and fourteen, incentives for more bulk-billing under Medicare, and help with energy bills. That will make a difference, but not — with the exception of the single parents’ payment and perhaps some people’s energy bills — a substantial one.

The increase in JobSeeker and the youth allowance will cost an estimated $1.3 billion next financial year out of an expected $668 billion in total revenue. Despite the professed concern about the impact on inflation of pushing more money into the economy, the inflation rate is coming down, the economy is slowing and the budget has been taking more money out of the economy than it is putting in.

No doubt the government believes it got the politics right. I mean, what were the members of the advisory committee thinking by suggesting such a huge increase in JobSeeker? Even $40 a fortnight was far too high in the eyes of people like Robert Gottliebsen, who wrote in the Australian that “it is particularly galling to see able-bodied younger people gaining extra money to pursue a non-working lifestyle at a time of labour shortages.”

How can a committee of experts possibly compete with such deep-seated prejudices, and with a government that feels it must indulge them?

It was ACT independent senator David Pocock who secured the government’s commitment to set up the Economic Inclusion Advisory Committee during the negotiations over industrial relations legislation last November. He called it a “game changer” for people living below the poverty line, especially as the government agreed that the committee’s expert advice about how the most vulnerable are faring “and what needs to change to ensure we don’t leave them behind” would be released publicly before each budget.

The government honoured the promise, appointing a stellar cast of committee members. At their head is Jenny Macklin, a former Labor minister with a legacy of major reforms (including the National Disability Insurance Scheme) and a record as a researcher and expert adviser on health and welfare issues extending back to the Hawke era.

She was joined by leading academic experts in relevant fields, including Professor Peter Whiteford on welfare payments, Professor Jeff Borland on the labour market and Associate Professor Ben Phillips on inequality. Then there were representatives of the major interest groups, including the Australian Council of Social Service’s Cassandra Goldie, the ACTU’s Sally McManus and someone even Mr Gottliebsen couldn’t place among the usual suspects — Jennifer Westacott, head of the Business Council.

The government shouldn’t have been surprised by the committee’s findings. Yet it did its best to bury the report, sneaking it out late in the day, distracting attention to other issues and writing Pocock out of the script.

This response wasn’t just part of the annual political ritual of lowering expectations before the budget. Treasurer Jim Chalmers had clearly decided that tackling what the report called the “serious inadequacy” of payments to the unemployed was not sufficiently important.

As its track record shows, Labor has higher priorities than that, such as politics. It didn’t get around to increasing unemployment benefits when it was last in government. Then, in opposition, it remained sufficiently unmoved by evidence that the unemployed couldn’t survive on the prevailing rate of $40 a day as to promise no more than a review in government.

Even that commitment was dropped before the last election. It was left to the Morrison government to provide a permanent $50 fortnightly increase ($10 more than in this budget) following the withdrawal of the Covid emergency payment.

Labor’s attitude stems from deep-rooted myths about unemployment. In the words of the Grattan Institute’s Danielle Wood, the myths’ most pervasive image is “a work-shy twenty-something playing video games in their parents’ basement.” The same attitude convinced the Morrison government it was on a winner with its ill-starred robodebt scheme and accompanying rhetoric about welfare bludgers.

Department of Social Services figures show that just 16.8 per cent of people on JobSeeker and Youth Allowance are under twenty-five. Anti-Poverty Week executive director Toni Wren points out that half of those on JobSeeker are over forty-five and 28 per cent over fifty-five — many of them facing overt or covert age discrimination.

Forty-three per cent of JobSeeker recipients have been assessed as having only a partial capacity to work, mainly because higher eligibility hurdles have barred them from the more generous disability support pension. Many of them are forced to apply for eight jobs each month to continue receiving their payment.

About 10 per cent of the unemployed are single parents with children between eight and fifteen who would have qualified for the higher parenting payment before the Howard and Gillard government reduced the cut-off age for children from sixteen to eight. This move has now been largely reversed, which will improve the lives of some of the one in six Australian children living in poverty — a figure that Toni Wren points out has not changed in twenty years.

In short, the figures reveal a very different profile of the unemployed from the stereotype.

JobSeeker has become the fallback payment for many of those who have been locked out of higher income support options by increasingly restrictive eligibility requirements. This has very little to do with the populist rhetoric that anyone should be able to get a job when the unemployment rate is down to 3.5 per cent.

Danielle Wood points out that the Macklin committee’s proposed increase of $128 a week would still take the payment to only just over half the minimum wage, leaving a very significant financial incentive to work. Better employment services for those who face large barriers to employment would help; ACOSS says Australia’s spending on those services is less than half the OECD average.

The government is reviewing employment programs, and it’s to be hoped they’ll improve, but this is no substitute for a decent level of JobSeeker. As the Macklin committee stressed, the payment’s current inadequacy is also itself a barrier to finding work.

Was David Pocock too optimistic about the Macklin committee being a game changer? Perhaps not, if we look to the future. Its first report shifted the public debate to an extent that must have unsettled the government, though not enough to take proper action. Otherwise, perhaps there wouldn’t have been even the $40 increase, which was decided only near the very end of the budget process when the government learned it had more money coming in.

The Macklin report’s message cut through the pre-budget communications clutter, despite the government’s best efforts and its equivocal response. It generated an outpouring of support from an unusually broad political spectrum. Among the 350-plus signatories to ACOSS’s follow-up letter to Anthony Albanese were four federal Labor backbenchers — and others came out in public separately — Liberal MP Bridget Archer, the teals, other independents and the Greens, former Labor and Liberal ministers and backbenchers, prominent economists, and church and community leaders. The letter made several pointed references to not leaving people behind — a sentiment Anthony Albanese expressed in his election victory speech last year and has repeated since.

The Macklin report’s impact came not only from its official, if reluctant, government sanction. Step by step it builds the argument for the sheer inadequacy of JobSeeker. In the twenty years to 2020, the rate for a single adult rose by less than 3 per cent in real terms. The post-Covid increase in 2021 lifted this to 13.7 per cent, still far short of the 47 per cent increase in disposable income received by median households. In the same period, the gap between JobSeeker and the age pension grew in real terms from $35 a week to $160.

As a proportion of the national minimum wage, JobSeeker fell from 47 per cent in 2002 to 41 per cent in 2021, making it the third-lowest rate, after Britain and New Zealand, among the thirty-four developed countries of the OECD. Including housing costs, for which assistance is more generous in both those countries, puts Australia at the very bottom of the OECD rankings. “When an average earner becomes unemployed their income drops by more than [in] any other high-income country,” says the report.

And then there is the moral argument. JobSeeker recipients told the committee about looking around the house for things to sell, choosing between medicines and paying electricity bills, and doing without meat and fresh fruit and vegetables. This is the face of poverty in Australia — one of the richest countries in the world, but one where inequalities in income and wealth have been growing.

Under the agreement with Pocock, the Macklin committee will report annually before the budget. The pressure to turn into reality the prime minister’s words about leaving no one behind and holding no one back will continue.

Has the government made a rod for its own back by agreeing to the committee, as the Australian Financial Review’s Phillip Coorey has argued, given how many worthy, competing and unavoidable demands are made on the budget?

To the contrary, if it helps dispel ignorance and misunderstanding about Australia’s unemployed and pushes the government to do more to help them, it may be to Labor’s political advantage. Voters may be less inclined to defect to the Greens and independents if the government implements more real Labor policies for which the arguments are so compelling. •

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He would say that, wouldn’t he? But what was dismissed at the time as political hype is looking less improbable these days. In the dazzle of the seven teals storming home in previously safe Liberal seats in last year’s election, the Greens’ achievement in increasing their numbers by six — from one to four in the lower house and from nine to twelve in the Senate — has tended to be overlooked.

Representation in the Senate fell to eleven this week with the defection of Lidia Thorpe, the first Aboriginal senator from Victoria and the Greens’ First Nations spokesperson, over her advocacy of a No vote in this year’s referendum. But the loss of her Senate spot has the upside of ending a damaging internal split over the Voice.

In Victoria, although the party’s predictions of a “greenslide” in November’s election didn’t eventuate, its representation rose from three to four in the Legislative Assembly and from one to four in the Legislative Council. In a long and continuing journey, the Greens have not so much stormed the barricades as crept up on opponents who have habitually underestimated them.

Not so long ago, winning seats in lower houses was considered a hurdle too high for independents or minor parties. The Labor and Liberal parties simply had too much of a head start when it came to exceeding 50 per cent of the two-party vote.

Not anymore. Labor is in power in Canberra with less than a third of the first-preference vote — below its losing result under Bill Shorten in 2019 — while the Coalition parties did only slightly better on primaries (but a lot worse on preferences). Increasingly it is Labor and Liberal preferences that are being distributed to independents and smaller parties rather than the other way around.

It is thirty-three years since the Greens first won a place in the Senate, where proportional representation lowers the barrier for election to 14.3 per cent in a typical half-Senate election. That was with the election of Western Australia’s Jo Vallentine, who had previously represented the Nuclear Disarmament Party in the Senate.

In 1990, the Greens’ lower house vote was just 1.4 per cent; even though environmental issues were prominent that year, it was the Australian Democrats, with 11.3 per cent in the lower house, who benefited, together with the Hawke government, courtesy of Democrat preferences.

When Brown entered the Senate in 1996, he and Dee Margetts from Western Australia were the party’s sole representatives. At the following election the party’s national vote was still only 2.6 per cent in the lower house and 2.7 per cent in the Senate. Since then, the party has been on a mainly upward trajectory, though not without fluctuations and setbacks.

A significant shift upwards started in 2001, and by the 2010 election, when climate change policy was prominent, the Greens vote reached 11.8 per cent in the House and 13 per cent in the Senate. That was the year the party broke through in the lower house, with the election of Adam Bandt in the previously safe Labor seat of Melbourne. (Michael Organ had won a lower house seat for the Greens in a by-election the Liberals didn’t contest in the NSW seat of Cunningham in 2002 but was defeated in the general election in 2004.)

Twenty-ten was also the year the Greens had their first taste of real power — and its consequences — at the federal level. Their alliance with Julia Gillard’s minority government produced an agreement on climate change measures, but the association with her increasingly unpopular administration, defeated at the hands of a rampaging Tony Abbott in 2013, rubbed off. The Greens lost more than a quarter of their 2010 vote. But they resumed their upward trajectory in the next and subsequent elections.

In last year’s election, the Greens’ vote went up to 12.3 per cent in the House of Representatives and 12.7 per cent in the Senate. Its lower house vote was a record, whereas its Senate vote was marginally below its previous high. There might never have been a better time to stand for election representing anyone other than the major parties, but the competition for the minor-party and independent vote had also intensified.

According to the Australian Election Study — the detailed survey conducted by academics after each election — 24 per cent of the people who voted for the teals in 2022 had supported the Greens in the 2019 election. That was more than the 18 per cent who had previously voted for the Liberals.

Combined with the 31 per cent of teal supporters who had voted Labor in 2019, this at least partly tactical voting put the teals into parliament. They also reduced the Greens’ overall vote, though not in the seats that mattered. To the contrary, the party boosted its numbers in the House of Representatives from one to four, with the re-election of Bandt for a fifth term, and three seats in inner Brisbane won with strong grassroots campaigns, including two taken from the Liberal National Party

On one view, the Greens have reached or are close to the upper limit of their vote, except now in Victoria. Increasing their representation in the Senate will certainly be difficult for the foreseeable future, given they already have two senators in each state. But in the lower house the argument that the party has hit a ceiling is based partly on three assumptions that are looking outdated.

One is that a vote for the Greens is wasted because they can’t win. Increasingly, in inner-urban seats, that’s no longer true.

Another is that the party is too radical and left-wing to command mainstream support. So how come it’s winning Liberal seats? Possibly because the whole notion of left and right is breaking down, at least among younger voters.

The third assumption is that the Greens can’t overcome the dominance of the major parties and their habit of stealing any of their opponents’ policies that attract significant support. That tactic is becoming much harder for the big parties because they’re shedding support at both ends: the Liberals are losing votes to the teals on the one hand, and to One Nation on the other, while Labor struggles to straddle the gap between more conservative voters in the suburbs and those attracted to the Greens in the inner cities. And then there is the Brisbane factor, where community activism and volunteering, together with a solid base in local government, means Greens are identifying better than other parties with real voters.

Demographics are also working in the Greens’ favour. Better-educated voters are more likely to vote Greens and their numbers are rising as a proportion of the population. Younger voters are much more likely to support the Greens and more likely than in the past to keep doing so as they get older, countering the effect of an ageing population. Concern about global warming has been rising among the general voting population and it has been rising more among the young.

The greatest challenge for the Greens is spreading beyond its base in the inner cities. The suburban vote is large and — combined with the country vote in the case of the Coalition — that means there is still a long way to go to replace a big party.

Not that this deters Bob Brown who, when I contacted him for an update, stuck unhesitatingly to his prediction of the Greens as an unstoppable force. “I think it is too slow, but it’s inevitable and inexorable because the old parties — Labor, Liberal and National — simply can’t change from being in favour of widespread exploitation of nature,” he says. “These days I liken it to the slowly rising sea levels: people aren’t taking notice until the next storm hits.”

If the Albanese government remains popular — a big ask for any government these days — it may be able to stave off further Greens advances. But that can’t be taken for granted. The big risk for Labor is defections by supporters who think the government is not doing enough to tackle climate change.

The Australia Institute’s Richard Denniss, who has worked for the Greens in the past, sees a particular vulnerability in the government’s position on coal and gas exports. “Labor for decades has focused on domestic emissions reductions, and they have always been slightly more ambitious than the Liberals and that has always been enough to win them first or second preferences on climate change,” he tells me. “Labor’s blind spot is supporting new coalmines and gas wells and arguing it doesn’t matter because they don’t count towards Australia’s emissions. This is an enormous opportunity for the Greens and the teals.”

The government argues that it is doing no more than following international practice in counting emissions where they are generated. But the United Nations and the International Energy Agency, among others, have said there can be no new coal and gas projects if we are to avoid catastrophic climate change. The Greens claim 114 such projects are waiting for approval in Australia.

Underlying the government’s approach is the hope that the market will get it off the hook: that falling demand for coal and, in the longer run, gas will see many projects shelved. That means it won’t bear the odium for blocking development and jobs. In the meantime it has supported the development of the giant Scarborough gas project off the Western Australian coast, although on one estimate it could produce three times Australia’s current annual domestic emissions over its lifetime.

Environment minister Tanya Plibersek said last year that it was not sustainable or reasonable in a modern economy like Australia to argue for a stop to mining (overstating the Greens’ policy of no new coal or gas projects). Besides, so goes the refrain, other countries will simply buy their fossil fuels from somewhere else.

The trouble is that the United Nations and the International Energy Agency say that’s not good enough. Particularly not, so the Greens argue, since Australia is the world’s third-largest exporter of fossil fuels and new projects will mean we miss our targets for emissions reduction.

Labor is caught politically on this issue. Stopping what has been an important source of Australia’s wealth would create a sizeable target for the Coalition, as would the risk of domestic gas shortages, though that should be avoidable. But the hypocrisy of its present policy creates the real risk of further haemorrhaging to the Greens.

The teals aren’t buying the government’s arguments either. Sophie Scamps, who won the Sydney seat of Mackellar from the Liberals, said in September it was hard to believe that “new coal and gas projects are being assessed and approved without any consideration given to the future impact that emissions from these projects will have on our environment and on our nation.”

But the Greens have their own dilemma: they need to avoid being seen as wreckers. After making loud threatening noises over the legislation enshrining Labor’s 43 per cent emissions reduction target, they ended up supporting it after securing minor concessions. Now the party is ramping up the rhetoric over the bill for the safeguard mechanism, which requires major polluters, including those opening new gas wells, to gradually reduce their emissions.

Bob Brown’s arguments about the Greens’ future notwithstanding, nothing is inevitable in politics. Independents and smaller parties have come and gone in the past. The Democratic Labor Party, formed from a split in Labor in the 1950s, maintained representation in the Senate for two decades and helped keep Labor out of office for twenty-three years by directing its preferences to the Liberals. The Australian Democrats, founded by former Liberal minister Don Chipp “to keep the bastards honest,” were a force on the centre left of politics for more than three decades. They have both faded to near irrelevance.

But the Greens are looking increasingly like a permanent fixture. Apart from their federal representation, the party has twenty-seven MPs in state and territory parliaments and more than one hundred in local government.

With growth, though, have come some of the same issues that make life difficult for the main parties. Stephen Luntz, the party’s long-serving Victorian psephologist, identifies three streams within the party: social democratic, a more radical or Marxist grouping, and a pure environmental strand. “We do best when we manage to harness those altogether,” he says. “There are times when we don’t and some members seek to push others out.”

This has been evident particularly in New South Wales (though also in Victoria), with outbreaks of factional fighting, threatened splits and resignations. In last year’s federal election, the Greens’ vote in New South Wales was 10 per cent, well below the national average of 12.3 per cent.

In Victoria, meanwhile, a brawl over perceived attitudes to transgender members escalated at the end of last year to an extraordinary threat to expel the Victorian Greens from the national party, which happens to be headed by Victoria’s Adam Bandt.

Going into next month’s state election in New South Wales, the party nevertheless has three seats in each of the two houses of parliament. The trend away from the main parties, reinforced by both the federal and Victorian elections, provides opportunities, though optional preferential voting will make it harder for the Greens to win lower house seats.

To date, the Greens have enjoyed the luxury of a party seldom held responsible for implementing its policies. Twice when it wielded real influence it suffered politically. In 2009, Labor blamed it for blocking the Rudd government’s legislation for an emissions trading scheme because it wanted something better. In 2013 it used its alliance with the minority Gillard government to negotiate significant measures to tackle climate change but was hurt by the association with a divided and unpopular Labor Party.

With more MPs in the current parliament, the Greens are walking a fine line between taking a stand against new coal and gas mines and not blocking progress on tackling climate change. The extent to which the party carries off this balancing act will help determine its future trajectory.

But the climb up the electoral mountain will get steeper as more attention is paid to Greens policies and the consequences of implementing them inevitably arouse controversy. That is the price of power. •

The post Walking a fine line appeared first on Inside Story.

In the event, the swing to Labor was less than 3 per cent. Labor had been wrong-footed by Malcolm Fraser’s announcement of a national wage freeze. Its candidate was unimpressive. But inevitably the blame fell primarily on Hayden.

It was Labor’s third successive election loss, and a new mood of pessimism descended on the party. Frantic behind-the-scenes activity culminated in senator John Button, an astute and respected Labor figure who had been a close ally of the opposition leader, writing to Hayden on 28 January 1983 after unsuccessfully trying to persuade him to make a peaceful transition to Hawke.

Button’s letter summed up the mood of senior figures in the party. “You said to me that you could not stand down for a ‘bastard’ like Bob Hawke,” he wrote. “In my experience in the Labor Party the fact that someone is a bastard (of one kind or another) has never been a disqualification for leadership of the party. It is a disability from which we all suffer in various degrees… I must say that even some of Bob’s closest supporters have doubts about his capacities to lead the party successfully, in that they do not share his own estimate of his ability. The Labor Party is, however, desperate to win the coming election.”

Six days later came one of the most extraordinary events in Australian political history. On 3 February, Fraser, hoping to maintain the momentum generated by the Flinders by-election and fearful that Labor could change leaders, asked governor-general Sir Ninian Stephen for an early election. At the very same time, but without being aware of Fraser’s decision, Hayden announced his resignation to a meeting of shadow cabinet.

Hayden had been convinced by Button’s letter, which he called “brutal but fair.” Nevertheless, it was a wrenching decision. “I am not convinced that the Labor Party would not win under my leadership,” he told the media. “I believe that a drover’s dog could lead the Labor Party to victory the way the country is and the way the opinion polls are showing up for the Labor Party.”

Fraser had been outmanoeuvred. When he went to Government House, he was expecting to fight an election against Hayden. When the governor-general granted him the election, his opponent was Bob Hawke, although still to be formally endorsed by the Labor caucus five days later.

With the economy in recession, a government in its third term and the public popularity Hawke had developed over the years, only a disciplined Labor campaign was needed to ensure victory. That was not quite the foregone conclusion it seemed in retrospect, particularly after Hawke reacted angrily to a question from the ABC’s Richard Carleton about whether he had blood on his hands over Hayden’s demise. If voters had a concern about Hawke, it related to whether he had the right temperament to be prime minister. Carleton’s question touched a raw nerve in Hawke: political assassinations are never gentle affairs, however much he might have pretended.

But he was a model of statesmanship and responsibility for the rest of the campaign. He exploited the recession and condemned what he argued was Fraser’s divisive approach to government. He adopted Hayden’s campaign themes of national recovery and reconstruction and added his own “r” — reconciliation.

As well, Labor promised a big spending program, tax cuts and petrol price reductions to tackle the recession. Fraser tried a scare campaign against Labor’s “mad and extravagant promises,” saying people’s savings would be safer under their beds than in the bank. Hawke responded with a clever quip harking back to the “reds under the beds” bogy that the Liberals had used against Labor in earlier times: “They can’t put them under the bed because that’s where the Commies are!”

On 5 March 1983, at the age of fifty-three, after decades of frustration and a period of self-doubt, Hawke became prime minister. Labor’s win was convincing: the two-party swing of 3.6 per cent came on top of the 4.2 per cent it had achieved under Hayden in 1980, resulting in a final Labor vote of 53.2 per cent — the highest support it has ever received in a federal election.

The vote gave the new government a majority of twenty-five in the 125-member House of Representatives, compared with the Whitlam government’s nine-seat majority in 1972. It was all the more impressive considering that Labor had suffered a devastating loss in 1975 and some had questioned not only its legitimacy as a governing party but its very survival.

The day after the election, Treasury secretary John Stone came to see Hawke and the new treasurer, Paul Keating, with a reality check: the projected budget deficit for 1983–84 was $9.6 billion. Adding Labor’s election promises could take the figure up to $12 billion — the highest since the second world war. Hawke had received an inkling of the deficit figure before the election, leading him to qualify his election promises. It was the signal that the economy would come ahead of election promises and that pragmatism was the priority.

In truth, the $9.6 billion figure was not a measure of anything tangible but a projection that Treasury typically calculated on pessimistic assumptions. But it was the excuse Hawke and Keating used to abandon most of their promises on spending and tax cuts. And it was the political weapon that they used relentlessly to attack the Fraser government’s economic legacy.

From the very beginning, Hawke was intent on laying the foundations for something that had eluded federal Labor for all its history — long-term government — and with it the opportunity to entrench Labor policies, and even, in his fondest hopes, to become the party of natural government.

Resentment lingered within the party over how the Coalition had never accepted Labor’s legitimacy after Gough Whitlam had returned it to power in 1972. That attitude led to breaches of convention such as the Coalition parties’ blocking of the budget and culminated in the sacking of Gough Whitlam by governor-general John Kerr. But there also was a recognition of the failings of Whitlam’s government.

This is why Hawke drew an immediate and deliberate contrast with his Labor predecessor. In his victory speech on election night he promised not excitement or a great wave of reform but “calmness and a sense of assuredness.” It did not sound like a revolution, socialist or otherwise, and that was precisely Hawke’s intention. Determined not to allow a repeat of the indiscipline of the Whitlam government, his first focus was process — the orderly management of government.

Under Whitlam, all ministers were members of cabinet, meaning decision-making was unwieldy and sometimes resulted in those who lost in cabinet appealing to caucus to reverse the decision. Instead, Hawke created a cabinet of thirteen from the ministry of twenty-seven elected by caucus. Ministers, including those from the outer ministry who participated in cabinet discussions in their area of responsibility, were required to support cabinet’s decisions in caucus. In a strictly formal sense, the supremacy of the Labor caucus in decision-making was preserved but in practice it was greatly weakened.

A second contrast was on foreign policy. Where Whitlam was intent on carving out a more independent foreign policy, sometimes at the cost of criticism from the United States, Hawke went out of his way to build good relations with president Ronald Reagan and secretary of state George Shultz, despite their conservative credentials. The Americans trusted Hawke and that was a political asset in Australia.

Third, Hawke drew a sharp distinction with the Whitlam government on economic policy. Whitlam had shown little interest in economics and it became one of his government’s biggest liabilities.

In many areas, Hawke left the running to his ministers, avoiding delving into the detail of policies unless there was a pressing political need to do so. But economic policy and foreign affairs were exceptions. He had studied economics at university, prepared national wage cases for the Australian Council of Trade Unions, served on the Reserve Bank board for seven years as ACTU president, and been a member of a committee of inquiry into the manufacturing industry, headed by Gordon Jackson, the head of CSR.

Within a month of coming to government, Hawke presided over a national economic summit that brought together leaders in federal and state governments, business, unions, and welfare and community groups. The epitome of Hawke’s consensus approach, it attracted scepticism, including by some within the new government. The opposition portrayed consensus as compromise when what was required was bold decision-making, and characterised the Hawke approach as corporatism — those in positions of power stitching up the game for themselves.

Significantly, the summit was held before the resumption of parliament and the venue was the House of Representatives chamber. The symbolism was clear: Hawke, no fan of parliament, was substituting the quest for agreement for the parliamentary clash that emphasised differences.

Hawke confronted the summit with “the gravest economic crisis in fifty years” and laid out his remedies: a budget with a deficit of $8.5 billion and the Accord between the government and the ACTU. The Accord was a distinctive feature of Labor’s economic policy, designed to subordinate wage increases to the overall demands of economic policy — in other words, to ensure that the kind of wage explosions that had occurred under both the Whitlam and Fraser governments, and for which Hawke carried some responsibility as leader of the trade union movement, would not be repeated. It traded off part of the wage increases that strong unions could achieve and that tended to flow on to the rest of the workforce under a centralised industrial system for the so-called social wage. This included universal health insurance under Medicare, more generous and targeted welfare benefits, and compulsory superannuation.

The government’s economic policy won endorsement from everyone present at the summit, with the sole exception of Queensland National Party premier Joh Bjelke-Petersen. The summit was also a success when it came to public opinion: voters liked the idea of community leaders agreeing on what was best for the country rather than playing politics. In reality, there was plenty of politics involved; it was just that it was being played more subtly than usual. Within months of coming to government, Hawke’s approval rating had shot up to 70 per cent.

The new government had luck on its side. The drought broke, bolstering the economic recovery already under way. Hawke was blessed with an exceptionally strong team of ministers, including Keating as treasurer, Gareth Evans as attorney-general, Hayden as foreign minister, Button as industry minister and Neal Blewett as health minister. Others who made their mark later were Peter Walsh in finance, Kim Beazley in defence, John Dawkins in education and Brian Howe in social security. In cabinet, Hawke was a skilled chairman, letting ministers have their say and striving for consensus. His own working style was methodical and diligent.

Three days after the election, the government had accepted Reserve Bank advice and devalued the dollar by 10 per cent, thought to be large enough to stop the damaging speculation in the currency. But almost immediately the dollar came under more pressure, as did the system under which officials set its value.

In the first week of December, the Reserve Bank spent $1.4 billion on buying foreign exchange to counter the overseas money flooding into the country. The Reserve Bank was advocating a free float of the dollar, as was Hawke’s senior economic adviser Ross Garnaut. But Stone, the formidable Treasury secretary, resisted, concerned about losing control of an instrument of economic policy and fearful that the Australian economy would be at the whim of international speculators. When Hawke concluded the lengthy internal debate by saying the dollar would be floated, Stone told him, “Prime Minister, you’ll regret this; you’ll come to see this as a terrible decision.”

The float became the Hawke government’s most significant economic decision, exposing the economy to the full force of international competition. It was a step that had ramifications for most other aspects of economic policy. No longer could the exchange rate be used to cushion against inflation that was higher than overseas or to protect inefficient industries.

Further steps towards financial deregulation removed the ceiling on interest rates and allowed foreign banks into Australia as a means of increasing competition. The latter was a controversial decision inside the Labor Party, but Keating sold it with the same zeal and political skill that he had used to oppose it when John Howard as treasurer had proposed it under the Fraser government.

The float and further financial deregulation triggered a wild ride during the 1980s, with the dollar crashing in value, a boom in credit, skyrocketing interest rates and big corporate failures culminating in a severe recession. Bob Johnston, the Reserve Bank governor at the time, subsequently told the author Paul Kelly, “It’s just as well they did not foresee all the consequences, otherwise we might not have got the change.”

For a Labor government, deregulation was a particularly bold decision, although one driven by circumstances, given the rapid growth of international currency markets trading in huge amounts of money. In opposition, Labor had opposed the Fraser government’s first moves towards financial deregulation. Effectively subjecting economic policy to the whims of the free market was the very antithesis of Labor dogma. Many on the left of the party accused the government of selling out, seeing its actions as justifying the resistance they had shown to Hawke’s becoming leader.

It is easily forgotten how vehement these complaints were. In the early years of the government, Labor’s national Left, a broader grouping than the parliamentary party but with caucus members playing a prominent part, periodically held news conferences to criticise government decisions, particularly on economic policy. Stewart West, the only left-wing member of the first Hawke cabinet, resigned after eight months because he could not support a cabinet decision on uranium mining. Brian Howe, a left-wing minister outside cabinet in the first term, accused the government on one occasion of having a “deficit fetish” and on another of policies that he compared to a mule — like the animal that cannot reproduce, they had no future.

The Left also took its grievances to Labor’s national conferences which, in theory, were the supreme decision-making bodies of the party. The debates were robust and the votes close, with the government relying on the Right and Centre-Left factions carrying the day.

But Hawke and Keating were dominant in cabinet and were strongly backed on economic decisions by employment minister Ralph Willis and by finance minister Dawkins and the fellow Western Australian who succeeded him, Peter Walsh. This meant their authority was rarely challenged successfully by the full ministry or caucus, even though caucus had the final say on decisions. On one occasion after an economic policy announcement following a meeting of the full ministry, science minister Barry Jones asked communications minister Michael Duffy, “How did that happen?” “It’s purely a matter of numbers,” Duffy replied. “There’s four of them and only twenty-three of us.”

The government had another advantage: on the hardest economic decisions, such as the float, financial deregulation more broadly and, in subsequent years, tariff cuts, privatisation and labour market deregulation, it had the support of the opposition, and particularly John Howard, first as shadow treasurer and from 1985 as leader. All these Labor decisions were in line with the philosophy of the Liberal Party, or at least that of its conservative wing led by Howard, who had tried unsuccessfully to persuade the Fraser government to adopt some of the same measures.

The way for these decisions was smoothed by one of Hawke’s underrated achievements: the skill he brought to decision-making, particularly on contentious issues. He would come to cabinet meetings well briefed but would first listen patiently to his ministers, making them feel their contributions were valued. Then he would sum up the debate and conjure up a solution to what sometimes seemed intractable issues — one that satisfied most of the concerns or, if not, that his colleagues felt they could live with.

Enjoying an extended honeymoon in the opinion polls and wanting to avoid separate elections for the House and Senate, Hawke decided to go to the people in December 1984, only twenty-one months after the 1983 victory. Labor strategists were counting on a repeat of Neville Wran’s success for Labor as NSW premier, when he followed up his narrow victory in 1976 with “Wranslides” in 1978 and 1981, setting the party up for long-term government.

But Hawke was overconfident. He opted for an unusually long campaign of seven-and-a-half weeks in the expectation that he could destroy his opponent, Andrew Peacock. Instead, he gave the Liberal leader a platform as alternative prime minister. As well, Hawke campaigned poorly. He broke down in tears at a news conference over the heroin addiction of his daughter. Wracked with guilt over the neglect of his parental duties, “I was within minutes of resigning from office at that time,” he said later.

Peacock proved to be an effective campaigner, hammering away day after day to get a plain message across to voters: that, “as certain as night follows day,” a re-elected government would bring in new taxes. Peacock based his claim on reforms introduced in Labor’s first term — an assets test on the age pension and a 30 per cent tax on lump sum superannuation, both of which he promised a Liberal government would repeal.

Labor’s defence was muddied by Hawke’s off-the-cuff commitment during a radio interview to hold a tax summit after the election. It meant Labor could deflect questions about the specifics of tax changes until after the election, but at the same time it added ammunition to the Liberals’ scare campaign. But Hawke emphasised another commitment: that under a second-term Labor government there would be no overall increase in taxation as a proportion of national income, and the same would apply to government expenditure and the budget deficit.

This “trilogy” became a means of enforcing harsh discipline in future budgets. But in the election campaign voters were more inclined to believe their taxes would be going up than that Labor would keep its promise.

Not for the first time, the result of the 1984 election defied predictions of a thumping victory for Labor. Instead of a swing to Labor, the opposition gained 1.46 percentage points after preferences, cutting Labor’s majority from twenty-five seats to sixteen. With 51.8 per cent of the vote after preferences, it was a solid win for Labor but, given expectations of a landslide, it was the Liberals who were celebrating — except for Howard, who had expected to become opposition leader after the election loss. As for Hawke, the political messiah had been reduced to a mere mortal. •

This is an edited extract from Bob Hawke by Mike Steketee, part of the Australian Biographical Monographs series published by Connor Court.

The post From messiah to mortal appeared first on Inside Story.

That was the year after John Hewson lost the unlosable election to Paul Keating. Labor had been in power for a decade, Australia had endured a severe recession in 1991 and the popular Bob Hawke had been replaced by the unpopular Keating. And yet the Liberals lost. Twenty-eight years later, the arguments in Is the Party Over? have striking resonances.

Puplick is what was once called a Liberal “wet,” as opposed to the party’s conservative “dries.” (They’re better known these days as small “l” liberals, or moderates.) Among the reasons he cited for Hewson’s loss to Keating was the pledge to opt out of environmental policy by deferring to states’ rights — or, as Puplick put it, “the right of states to butcher the environment.” The Coalition’s advocacy of nuclear power was “plainly stupid.” It had failed to recognise the rights of Aboriginal Australians. Its narrow-minded, penny-pinching approach to the arts and “bizarre threats to all but destroy the great national institution of the ABC” had cost it votes in the arts community. Its “crass homophobia” had alienated the gay and lesbian community.

He argued that the party also had a problem with women dating back to 1987, when the John Howard–led Coalition opposed the Hawke government’s affirmative action legislation for government employees. “Indeed,” wrote Puplick, “John Howard’s problem in the eyes of many feminists was compounded by the fact that the two most ardently pro-feminist members of his shadow cabinet, Peter Baume and Ian Macphee, were both ruthlessly eliminated from it.” Baume had been shadow minister for women’s affairs. Puplick himself lost his seat in the 1990 election after being relegated to third place on the NSW Senate ticket.

Yet the Liberal Party had a proud track record on these issues, Puplick argued, pointing to measures including creating the Great Barrier Reef Marine Park and the Kakadu and Uluru national parks, steering through the 1967 referendum that led to Aboriginal people being counted in the census, and legislating in the states to remove discrimination on the basis of sexuality.

In 1989, when Puplick was shadow environment minister, the Coalition adopted a target of a 20 per cent reduction in greenhouse gases by 2000 — well ahead of any commitment by Labor. Who could have imagined that a third of a century later, some Liberals and Nationals are still arguing the toss about human-induced climate change and whether we even need targets? Or that the Liberals would revisit the option of nuclear power, which is no more popular now and makes even less sense given the low cost of renewables.

Of course, more important factors were responsible for the 1993 election loss, including Hewson’s complex and ambitious Fightback! package, which included a GST and significant changes to Medicare. As well, Keating’s formidable political demolition skills exposed Hewson’s limitations as a campaigner.

Nevertheless, Puplick’s key point had force: the Liberals couldn’t afford to write off the voters they had alienated. The same choice, on many of the same or similar issues, faces the party after this year’s election loss.

Despite Howard’s argument that the Liberal Party is a broad church, the moderates lost influence in the years he presided over the party. Now the teals have scythed through their already depleted ranks, defeating moderates Trent Zimmerman, Katie Allen, Dave Sharma, Jason Falinski, Tim Wilson and Celia Hammond, as well as taking out Josh Frydenberg.

Scott Morrison’s election strategy assumed he could find an electoral majority in the outer suburbs and regions, despite the Coalition’s negatives on climate change, women and government integrity. Indeed, he was prepared to alienate small “l” liberal voters by advancing the credentials of his handpicked candidate in the seat of Warringah, Katherine Deves, and endorsing her criticisms of transgender rights. That failed both as a political wedge and as a strategy to attract conservative votes.

“It was a strategic, dog whistle–type manoeuvre to awaken culture war anxieties in outer-suburban seats,” said the Blueprint Institute, a think tank espousing classic liberalism, in its scathing post-election briefing. “Morrison was actively sacrificing the teal for the new dark blue.”

Yet Peter Dutton sees Morrison’s strategy as the way of the future, at least in broad terms. He says that 200,000 voters deserted the Liberal Party for the teals at the election compared with the 700,000 who switched to right-wing parties such as One Nation and the United Australia Party. His office didn’t respond to repeated requests for an explanation of these figures, which appear difficult to reconcile with the election results. “Our policies will be squarely aimed at the forgotten Australians,” Dutton said at his first news conference as leader, “in the suburbs, across regional Australia, the families and small businesses whose lot the Labor Party will have made more difficult.”

As for the teal seats, Dutton thinks that well-off voters can cope with higher petrol prices, whereas “people are putting $20 and $40 in their car because they can’t afford to fill up” in many of the areas he sees the Liberals representing.

One of Dutton’s predecessors, Tony Abbott, has his own instant history of the election result, perhaps tinged with schadenfreude over the losses by Liberal moderates. “This wasn’t actually a climate change election,” he argues. “The question is do we win so-called teal seats back by trying to be even more zealous on climate or by finding other issues on which to appeal?”

Dutton told his party room that the opposition will announce a new target for emissions reduction before the next election. But he didn’t take what many thought was the obvious step — as advocated by Zimmerman and other moderates — of accepting Labor’s target of 43 per cent and moving on. Colleagues say he believes he will be able to link Labor’s climate policies to the rising cost of living.

Senate opposition leader Simon Birmingham, the senior parliamentary moderate, was reduced to tortuously arguing that he would have supported the 43 per cent target if it hadn’t been put into legislation, given that the legislation was unnecessary. Such is the price of party unity.

But Birmingham and other moderates have a very different interpretation of the election result from Dutton’s. Apart from the teal electorates themselves, Birmingham tells me, many other seats were lost to Labor and the Greens because of the party’s loss of “teal-type” voters. “To win those seats back we are going to have to reconcile with those voters and their concerns on issues of inclusion and climate ambition.”

He draws a contrast with the 2019 election, after parliament had resolved the issue of marriage equality “and there were no particular distractions being run in the culture war space. We were able to keep the focus relentlessly on the economy and tax, with Labor’s help, and we won. By 2022, having had internally divisive debates on religious discrimination and then the distraction of transgender issues, they just compounded a sense of intolerance that is out of step with large parts of Australia, particularly in those seats that we lost.”

Fellow moderate, NSW senator Andrew Bragg, emphasises that the Morrison government lost seats to Labor and the teals rather than to right-wing parties. “It is very clear that the fastest way back to government is to reclaim the Liberal heartland,” he tells me.

Bragg has calculated an average Liberal primary vote of 41 per cent in the (broadly defined) inner-city Sydney seats of Warringah, retained by independent Zali Stegall; North Sydney, Wentworth and Mackellar, all won by teals; Reid and Bennelong, won by Labor; and Bradfield and Berowra, held by Liberals despite significant swings against them. To replace these eight seats, he says, would require winning in areas of western Sydney such as Bankstown, Parramatta and Liverpool, where the average Liberal primary vote was around 23 per cent. “It is a pipedream,” he says. “Our primary vote is simply too low.”

By contrast, lifting the Liberal vote by as little as six percentage points to 47 per cent in seats closer to the city should be enough for a win after preferences. “The idea that we abandon heartland seats and not represent people in the inner cities would be the first time the Liberal Party has sought not to represent a large part of the community. It is a politically innumerate approach.” And the story is similar in Melbourne and Brisbane, he says. “All up, it would be giving up on sixteen current or former Liberal seats.”

An analysis by Ross Stitt, a lawyer and political scientist, supports Bragg’s broad point by using the twenty electorates with the highest Yes vote in 2017 for marriage equality as a proxy for socially liberal values. The Liberals held ten of those seats in the 2016 federal election and eight in 2019 but lost all of them to teals, Labor and the Greens this year.

Despite Bragg’s figures, winning back teal seats is likely to be a challenge. Independent MPs in recent periods generally have increased their margins at subsequent elections. Labor has an interest in encouraging its supporters to vote strategically, as it did at this year’s election, to help the teals get re-elected, since it has no prospect of winning those seats itself. Ultimately, events over the next few years, including the performance of the Albanese government, the Dutton opposition and the teals themselves, will determine the future of these seats.

Bragg sees opportunities. “The first thing you need is a philosophy of live and let live,” he says. “Most people aren’t into weirdo culture war issues.” Another requirement is a distinctive economic policy — and this is where he sees openings, given Labor’s “vested interests” through its links with trade unions. He cites the Albanese government’s likely reintroduction of collective bargaining and steps to reduce the transparency of superannuation funds. “So we have to be bold in industrial relations, superannuation and tax. I don’t think we did enough on economic policy in the last election.”

Bragg’s views are echoed by influential Liberals outside parliament. David Cross, chief executive of the Blueprint Institute and a former head of policy and chief-of-staff to NSW Liberal education ministers, makes the point that Tony Abbott seems to have missed: every one of the teals ran campaigns attacking the Coalition’s weak position on climate change. “They pitched themselves as disaffected small ‘l’ liberals,” he says, “and the electorate responded.”

Cross believes that Liberals, “as friends of the free market,” know that liberalism is best placed to enable conservation and climate action. “They know we should be supporting the private sector’s desire to speed up the exit of coal from the grid rather than forcing energy companies to keep open loss-making coal-fired power stations — a perfect example of government overreach if there ever was one.”

Not facing the restraints applying to federal MPs, the Blueprint chief makes another point: there is no alternative. “Even in an alternate reality where Matt Canavan is prime minister, you are going to end up with net zero because you will be dragged there by the global economy. There is no conceivable world where in fifty years from now we won’t be in a net zero economy. That being the case, do we want to get the wooden spoon or take the opportunities?”

The concern of small “l” liberals like Cross is that the party has broken away from its moorings to become reactionary rather than liberal. “Whether you look at the treatment of LGBTQI students at school or the environment or even tax and fiscal reform, which policies in the party’s platform can you point to as being consistent with the philosophy on which the party was founded?” he asks. “You can see why the party has bled votes — to the teals because it is not a liberal party and in some other seats because it is not a conservative party.”

Rather than shifting to the populist right, says Cross, the party “must re-engage with classical liberalism and stop listening to those who bastardise their party’s philosophy to shroud Luddite attitudes towards progress and veil naked bigotry towards people that make them uncomfortable.”

As for the outer-suburban strategy, Cross calls it the “mythical base.” The idea that the party needn’t focus on winning back teal seats is “ludicrously misguided.” These are areas where people have voted for the Liberals all their lives, he points out — until May this year. “As recently as three or four years ago, the Coalition was holding these seats by massive margins. The idea that this [loss of support] has suddenly become a long-term trend, I don’t buy at all. What it does show is that the federal party, particularly under Morrison, has just diverted so far from these voters’ policy priorities. It shows the extent to which they have abandoned liberalism.”

The moderates’ arguments find support in the re-election in May of Tasmanian Liberal Bridget Archer, who defied the national voting trend to secure a small positive swing in the ultra-marginal seat of Bass. Archer stood up to Morrison and crossed the floor in support of an integrity commission and LGBTQI rights, and since the election has voted in favour of Labor’s legislation for the 43 per cent emissions reduction target.

Might the NSW Coalition government be the model for the federal party to follow? True, it has become mired in all sorts of scandals this year. And premier Dominic Perrottet hails from the conservative wing of the party, though the moderates say he shares many of their concerns, particularly over the federal party’s resort to populism.

But when it comes to policies, the government in Macquarie Street arguably does set a positive example. “The policy platform of the NSW government has been really successful,” argues Cross, citing moves on climate change and other issues that make it less likely to be threatened by a teal wave.

One answer to the question in the title of Puplick’s book, Is the Party Over?, came two years after its publication with John Howard’s landslide win against the Keating government — the start of four terms in office. Howard didn’t win by embracing moderate policies; rather, he focused on neutralising negatives, including his party’s hostility towards Medicare and his own fears about Asian immigration. By offering the smallest possible target, he got out of the way of voters who, in the words of Queensland Labor premier Wayne Goss, were waiting on their verandas with baseball bats to deal with the Keating government. Howard exploited the sentiment by aiming, he said, for an Australia that was “comfortable and relaxed.”

When the electoral pendulum swings, it can knock over everything in its path, including perceptions of electoral vulnerabilities. But a vote overwhelmingly against a government does not mean an opposition should forget about adopting policies that appeal to voters.

Despite preaching the gospel of the Liberal Party as a broad church, Howard often acted as though he didn’t mean it. But he was pragmatic enough to sway with the electoral wind. As opposition leader he appointed Puplick shadow environment minister because he saw the traction the issue was gaining with voters. He allowed a conscience vote to overturn health minister Tony Abbott’s ban on the RU486 abortion pill — an issue that had split the Coalition parties. In his last term of government he endorsed an emissions trading scheme to tackle climate change. It was the ideologues in the party, led by Abbott, who took a different path.

Puplick’s basic point remains clear and valid: a party seeking government can’t afford policies that put so many voters offside. As another prominent Liberal put it to me, “Will we win an election on reframing these issues? Perhaps not, but we have to stop losing votes on them.” •

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“There is no greater potential problem for the world than greenhouse-induced climate change — particularly for Australia and for our region,” she said at the time. Since then, the potential has turned to reality while governments have dithered and slithered to avoid serious action. And nowhere more so than in Australia.

Two and a half years ago, the Morrison government went to an election still refusing to contemplate the reality of inevitable changes in energy use. It was far too busy proposing subsidies for new coal-fired power stations, approving new coalmines and running a scare campaign against Labor for threatening the jobs of coalminers. There was no policy on transition: it was coal and gas forever.

As slippery as he was on these questions during the campaign, Bill Shorten did promise to create a Just Transition Authority — an independent body working with companies, employees, unions, local communities and state governments on economic diversification, pooled redundancy schemes, and labour adjustment packages for regions affected by the closure of coal-fired power stations. But he gave no further detail and no commitment to funding beyond establishing the authority. The Greens promised something similar but added that their Clean Energy Transition Fund would have a total of $1 billion to spend.

Two and a half years later, promises of new jobs are raining down on fossil fuel workers like confetti. Earlier this month the Business Council of Australia said that moving to net zero by 2050 will create 195,000 jobs by 2070. Then it went one or two steps further and joined the Australian Council of Trade Unions, the Australian Conservation Foundation and the World Wide Fund for Nature in promoting the prospect of 395,000 jobs by 2040 if we build export industries in clean hydrogen, batteries and other areas. Take your pick — that’s either one and a half or three times the estimated 133,000 jobs now in fossil fuels in Australia. Are there any further bids?

Workers are entitled to be sceptical. Before the last election, the BCA said Labor’s policy of a 45 per cent reduction in emissions by 2030 would “wreck” the economy. Now it is advocating the same policy and says this is the one and only true road to prosperity.

New industries will certainly create opportunities, but not automatically. The NSW government’s announcement of five renewable energy zones has attracted serious investment. The first to go ahead is in the central west of the state, where the government received bids from the private sector for twenty-seven gigawatts of electricity worth $38 billion — nine times the generating capacity planned by the government. Andrew “Twiggy” Forrest has the resources to make good his proposals for green hydrogen manufacture in Gladstone in Queensland and the Illawarra and Hunter in New South Wales, even if there is a long way to go to turn them, and the jobs that go with them, into reality.

The labour market is dynamic, with jobs constantly disappearing and being created. The monthly employment and unemployment figures hide much of this movement because they capture only the net result of the change. And the phasing out of fossil fuels will be gradual, spanning decades, albeit with bumps along the way.

The Australia Institute’s Jim Stanford points out that his estimate of 133,000 fossil fuel jobs represents only about 1 per cent of the Australian workforce, and that proportion is already declining. The largest component is the 52,000 jobs in coalmining, followed by 33,000 in that portion of electricity supplied by fossil fuels, 28,000 in oil and gas extraction, 12,000 in gas supply and 8000 in coal and petroleum refining. Half of these jobs are located in or near capital cities — in companies’ head offices, in technical and professional roles, and in manufacturing and distribution — rather than in rural Australia.

In any one year in recent times, the economy has created twice as many new jobs as exist in fossil fuel industries. But particular regions are disproportionately affected. In six communities in Queensland, four in New South Wales and one in Western Australia, around one in nine jobs are in fossil fuels. Even then, Stanford points out, a similar number of people in each of those communities work in healthcare and social services.

None of this guarantees a smooth or fair transition, of course. Few miners and employees of coal-fired generators can expect to finish their old jobs one day and turn up in renewable energy or other industries the next, let alone with comparable pay and conditions.

Luckily, we already have experience in handling these kind of disruptions. Despite the suddenness of the French owner’s decision to close Victoria’s Hazelwood coal-fired generator in 2017, a series of initiatives cushioned the blow. The Victorian government created a support package that helped workers move to other power stations in the region or obtain jobs in mine rehabilitation, and established the Latrobe Valley Authority to fund a series of development and job creation initiatives. The unemployment rate in the Latrobe Valley actually fell from 9 per cent before Hazelwood closed to 6.5 per cent three years later. This success came at a cost to government budgets: the state committed $690 million and the federal government $43 million.

Other positive examples, and on a much larger scale, come from overseas. Before it started its long-term decline, Germany’s Ruhr Valley employed almost 500,000 coalmining workers. In 2007 federal and state governments, unions, the coal company and community representatives reached agreement to end subsidies for coalmining by 2018 and gradually close the mines. No redundancies were forced, but retraining and redeployment were strongly supported. Governments built new universities and technical colleges, funded environmental restoration projects and encouraged new business clusters, technology parks and cultural precincts. Unemployment remains higher than in the rest of Germany but much lower than it might have been in the absence of the orderly phasing out of coalmining.

Germany’s experience stands in sharp contrast to Britain’s, where laissez-faire policies largely ruled. Former coal regions in England, Scotland and Wales are now among the most deprived, with higher unemployment, poorer health and 50 per cent more people claiming the disability living allowance than in the rest of the country.

The assurances of a long-term role for coal and gas offered to the National Party by emissions reduction minister Angus Taylor — industries he says have “a great future” — put Australia where Germany was in the 1980s, before it accepted the reality of coal’s decline and started seriously planning.

But nor are promises of new industries enough, economically or politically. The successful precedents suggest that major policy and financial commitments are required from governments. The question is whether a federal government inclined to a hands-off approach (other than during Covid emergencies) is willing to step up.

The ACTU argues that the orderly closure of coal-fired power stations must involve no forced redundancies; lengthy and enforceable notice periods, such as AGL’s five-year notice of the closure of the Liddell plant; retraining schemes; and government support for economic diversification via investment in new infrastructure, education facilities and other initiatives. The rehabilitation of power stations and associated mines can also be a significant source of employment.

Most important of all for displaced workers are good wages and working conditions, which often have not been available in renewable energy.

Lest the Morrison government baulk at implementing union recommendations, substantial common ground can be found on these issues. “To believe that the market will be the sole solution to Australia’s decarbonisation is foolhardy,” says the Blueprint Institute, a think tank established by Liberal moderates that characterises itself as generally pro-market.

Blueprint argues that adaptation authorities should be created in coalmining and power-generating areas as a means of empowering local communities. They would each receive an initial $20 million from the federal government and continuing funding through 5 per cent of coal royalties collected by the states. Based on 2019–20 figures, this would raise $259 million a year, including $175 million in Queensland.

Like the ACTU, Blueprint favours requiring companies to give lengthy notice of closures, together with detailed planning for future investment and employment. It proposes income insurance for the first six months of unemployment to give employees the economic freedom to find high-quality jobs. This would be a variation on the social insurance schemes widely used in Europe and other developed countries that guarantee employees a large proportion of their previous incomes if they lose their jobs.

Blueprint suggests topping up existing welfare benefits to 70 per cent of individuals’ former wages, capped at $35,000. As well, it proposes short-term wage subsidies to firms hiring displaced coal workers in regions seriously affected by closures, and voluntary early retirement packages for workers over sixty.

If the government isn’t prepared to make commitments on this scale, it will create an obvious opening for the opposition. Labor is holding much of its fire, with the aim of directing maximum attention to the government in the lead-up to the Glasgow COP26 gathering. So far it has promised a National Reconstruction Fund with $15 billion in capital to help fuel a private sector revival of manufacturing, including in regional areas and renewable energy. Shadow climate change minister Chris Bowen has announced a $10,000 subsidy for each of 10,000 apprenticeships for jobs in renewable energy industries and another $10 million for a new energy skills program.

Bowen is also pushing for approval of offshore wind farms, which operate on a much larger scale than those on land and can, he says, provide tens of thousands of jobs, including in areas where coal-fired generators will be phased out. He promises Labor will “have much more to do and much more to say” on climate change policy.

The 2015 Paris agreement required signatories, including Australia, not only to develop ambitious targets to decarbonise their economies but also to take into account the “imperatives of a just transition of the workforce and the creation of decent work and quality jobs.”

Some countries have taken this seriously. The European Union has established a Just Transition Mechanism that is using a combination of grants and loans to mobilise no less than an anticipated €65–75 billion (A$102–118 billion) on a range of measures, including funding jobs in new sectors and providing training and other help to investors and businesses.

From what we know, Scott Morrison will be going to Glasgow without meeting the Paris agreement’s requirements on either score. Such a move would hasten the removal of climate policy from the government’s hands. Companies and investors would continue to withdraw their support for fossil fuels and look elsewhere to invest in renewable opportunities. Major trading partners could be expected to act on their threats to tax our exports for their emissions component. And our economic transition would be much more painful and disruptive than it needs to be. •

The publication of this article was supported by a grant from the Judith Neilson Institute for Journalism and Ideas.

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Nothing could be further from the truth. True, it only has one outdated target for tackling climate change. This is the one the government keeps insisting we are meeting and beating — although that depends on how you measure emissions and, even then, is more a commentary on the target’s inadequacy than a heroic achievement. But in some other areas it shows no such reluctance.

Take our national waste policy, adopted in 2019. While it isn’t as high-profile an issue as climate change, waste is of vital importance in its own right and also has implications for climate change: the less waste we recycle or otherwise recover, the more greenhouse gases we emit. Unless we become responsible for our own waste and aim for a “circular economy” that keeps resources and materials in use as long as possible, the realities of our polluted planet will catch up with us, just as they have on climate change.

The national waste policy has a target of reducing the total waste generated in Australia by 10 per cent per person by 2030. Another aims for an 80 per cent diversion from landfill by 2030. All “problematic and unnecessary” plastics, such as polystyrene and PVC, are to be phased out by 2025 and the amount of organic waste sent to landfill halved by 2030. Waste exports are to be banned by the middle of 2024 and another target, though without a date, would see governments and industry significantly increasing their use of recycled content. All these targets have been endorsed by state and territory governments, which are mainly responsible for achieving them, although they also retain their own, often more conservative, goals.

But wait, there’s more. The packaging industry, with the support of governments, has set particularly ambitious national targets, all to be met by 2025. By then, all packaging would be reusable, recyclable or compostable, 70 per cent of plastic packaging would be recycled or composted, and all packaging would include 50 per cent recycled content.

The impetus for the national targets was China’s decision in 2017 to stop importing much of our waste. Scott Morrison decided to make a virtue of necessity by banning the export of waste plastic, paper, glass and tyres, a decision that was finally incorporated in legislation last year that phased in the ban over three years.

The prime minister told the world all about it in the course of spruiking his green credentials at a special meeting of the UN General Assembly on climate in 2019. Morrison also boasted about how Australia was taking “real action,” but of course he didn’t have much of a story to tell in comparison with other nations.

Just what the gathered leaders made of the Australian prime minister devoting a good part of his address to plastic pollution, waste recycling, marine biodiversity and our opposition to whaling is unrecorded, but it’s possible there may have been some eye rolling, particularly when they were digesting his typically immodest claim that Australia was taking the lead on plastics pollution and recycling.

Still, there has been some follow-through. The export ban has been legislated. The government convened a national plastics summit last year and another is planned on national plastics design. We even have an assistant minister for waste reduction and environmental management, Trevor Evans, who is in his second term as the member for Brisbane. He may not be a household name, but he has won praise from the recycling industry. The government has even put some money where its mouth is, including $190 million over four years to subsidise modern recycling plants. It says this will increase the amount of plastic, paper, glass and tyres recycled by 645,000 tonnes a year.

But despite many announcements and much rhetoric, the shine quickly wears off when it comes to results.

The starting point, according to the government’s own figures, is that Australia throws away more and recovers less than many other developed countries. On average, each Australian generates 2.13 tonnes of waste annually, including from business and construction. On best estimates of available international figures, this compares to 1.26 tonnes in Singapore, 1.8 tonnes in Britain and 1.9 tonnes in Norway. (Not surprisingly, the United States comes in at 2.34 tonnes.)

Of these totals, 704 kilograms per capita went to landfill in Australia, compared with just 119 kilos in Singapore, 360 kilos in Britain, 514 kilos in Norway and 771 kilos in the United States. Australia’s overall recycling rate of 66 per cent (though less for households) looks respectable beside these countries, but less so when energy-from-waste projects are included. These barely exist in Australia, whereas in Singapore 91 per cent of waste is diverted from landfill through recycling or recovery for energy, and in Britain 80 per cent and Norway 73 per cent.

Of all the targets announced, only one can actually be enforced — the export ban. All the others are voluntary, reflecting how Liberal governments, state and federal, prefer to avoid regulatory burdens on business. A fine aspiration, perhaps, except for the long history of the failure of voluntary standards.

According to the latest National Waste Report, commissioned last year by the government from consultants Blue Environment, total waste per person rose by 3 per cent in the two years after the baseline year of 2016–17, which is not a good start to achieving a 10 per cent reduction by 2030. The resource recovery rate — the amount of waste diverted from landfill — had increased by 1.8 percentage points to 62.6 per cent, which suggests Australia will also fall short of the 80 per cent target for 2030. Organic waste sent to landfill had fallen by 2 per cent over two years, another slow start to the 50 per cent reduction target.

Perhaps the pace will pick up. But China’s import bans have created a major problem: they have sent Australian prices for recyclable waste plummeting, resulting in stockpiles of recycled goods, increasing amounts going to landfill and the collapse of a major recycling company, SKM. This is even though, four years after China announced its ban, our export ban only started phasing in this year.

On the latest monthly figures, for April this year, waste exports were worth $322 million, well above the average in recent years of $245 million. While exports to China have fallen to 10 per cent of their previous levels, those to Indonesia, Vietnam and Malaysia have been increasing. And although exports of glass and mixed plastic waste have gone down in line with the phasing in of the bans, those for sorted plastics have been rising because of strong demand and high prices overseas.

It will be another three years before the export ban is fully implemented, and even then some of the largest categories, such as metal, won’t be covered. Neither will some plastics, provided they are sorted sufficiently to meet overseas specifications. Taking responsibility for our own waste obviously has its limits.

Building up the domestic industry will take time and money. The industry says the extra 645,000 tonnes of recycling created by the Morrison government’s $190 million contribution to new infrastructure is only 5 per cent of the growth in recycling needed to reach the 2030 target of 80 per cent waste diverted from landfill. The impact will be larger if the government succeeds in convincing the states and industry to each match its funding.

Most of the plastic we put in our yellow bins and the plastic bags and wrappers we take to the supermarket are recycled, although some of it is too contaminated. But despite our diligence, this accounts for only 15 per cent of the total plastics used in Australia and only about 6 per cent of soft plastics. All states and territories have banned single-use plastics or announced that they will do so, which is the gold standard since it removes them from the waste stream altogether. But plastic production is still galloping ahead: global production grew from an estimated fifteen million tonnes in 1964 to 311 million tonnes in 2014, and is expected to double again by 2034 and almost quadruple by 2050.  On present trends, the world’s oceans will contain one tonne of plastic for every three tonnes of fish by 2025. By 2050, plastic will outweigh fish. Just what the Australian leadership promised to the United Nations can achieve remains to be seen.

Progress in the states is slow, too. A review commissioned by the Australian Council of Recycling reported last year that the only state to meet any of its past targets was South Australia — and then in one case only, diverting 75 per cent of commercial and industrial waste from landfill, where it achieved 82 per cent. With few exceptions, none of the states or territories had much prospect of meeting future recycling targets.

New South Wales, for example, was recycling 42 per cent of its municipal solid waste in 2017–18, less than seven years earlier, and the report judged it unlikely to achieve its 2021–22 target of 70 per cent. Queensland did worse: it had lower targets to start with but still failed to meet any of them. Despite actually lowering its target for recycling municipal solid waste from 55 per cent to 50 per cent, it had still only managed a 31 per cent reduction by 2018, according to the latest available figures.

Admirable as the national targets are, relying on voluntary compliance means they are little more than wishful thinking. To take one example, governments have resisted requiring minimum recycled content in products. Why would manufacturers bother when virgin plastic is still cheaper than recycled versions? Rules and specifications prevent the use of recycled products in some major areas such as infrastructure and building. “What is the point of reprocessing recyclables so they can be made into new products if there is not sufficient demand for the products?” asks Jeff Angel, executive director of the Boomerang Alliance of fifty-two environmental and community groups.

We may be heading in the right direction but we are doing so far too slowly. Does that sound familiar? •

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In the circumstances, it was a gratuitous comment. It was the policy of turning boats back, not temporary protection visas, that long ago stopped the people smugglers’ trade. But the prime minister was no doubt counting on his remarks playing well with voters.

On the ground in Afghanistan, Australia’s policies are having real-life affects. Amanda Hodge reported in the Weekend Australian on a conversation with a locally engaged agent of the Australian Border Force who spent four years persuading Afghans not to try to use the services of people smugglers to come to Australia. He is now in hiding from both the Taliban and dozens of angry and frightened men who followed his advice. His attempts over months to contact the Australian government for help have failed.

The Australian government’s role in perpetuating this “misery” is a reminder of the utter hypocrisy of Australia’s bipartisan refugee policy. Its rationale has always been to do what was popular, not what was right. This involved creating multiple myths that have unfortunately become embedded in public opinion.

One is that asylum seekers are a threat if they come by boat, yet no problem at all if they’re among the many more who come by air. The true difference is that the first attract media attention, while the second are largely invisible. The government calls the first illegals but not the second, but there is no such distinction under the Refugee Convention to which we purport to subscribe. And most of those who came by boat have been assessed as genuine refugees, desperate to flee despite the risks involved, as opposed to those who fly here and apply for asylum.

Another myth, exploded by the turmoil in Afghanistan, is that asylum seekers should form an orderly queue and wait patiently to have their cases considered by Australia. There has never been a queue, let alone an orderly one.

Few people in fear of their lives from the Taliban have the option of making it to a refugee camp in another country. Even if they could, their chances of being assessed, let alone accepted, are minuscule. Afghans can’t ask the Australian embassy for help — we have closed it.

Most of the Afghans who made it to Australia are Hazara. Long a persecuted minority in Afghanistan, they are ethnically distinct, and therefore visible, and mostly Shiite Muslims. They have been treated particularly brutally by the Taliban, who follow their own extreme brand of Sunni Islam.

One practice the Taliban adopted during the long war was to kidnap young Hazara men and conscript them into their fighting force. On occasions they would use them as human mine detectors, forcing them to walk ahead into landmined areas until they were blown up.

Is it any wonder that parents were so desperate for these men to escape that they pooled the life savings of extended families to pay people smugglers? The justification for Australia taking this trade away was that the smugglers extorted large payments from their customers and carried them in unseaworthy boats that regularly sank, drowning their occupants. Yet despite the well-known risks, the demand for their services never went away.

By stopping the people smugglers, the government boasts that it stopped the deaths. It didn’t: it simply wiped its hands of the problem and moved it elsewhere. People in fear of their life — which, by the way, is one of the criteria for being assessed as a refugee — will take any option available. When they were stopped from coming to Australia, some headed for Europe. Some drowned on the way, some suffocated to death in containers or trucks. Others remained stuck in Afghanistan, where they now await their fate.

Having joined the United States in prosecuting a twenty-year war that we lost, we should feel some moral responsibility for these people. Rather than condemning the evil trade of people smuggling, we should look for alternatives.

In the wake of the Vietnam war, where we had a similar obligation, Southeast Asian countries agreed to stop pushing Vietnamese boats with asylum seekers back out to sea in return for the United States, Canada and Australia accepting those assessed as refugees and Vietnam and Laos taking back those who were not. The result was that the vast majority of refugees were resettled and asylum seeker boats stopped coming to Australia.

It was not a popular move: we had not long before abolished the White Australia policy and had accepted few Asian immigrants. But the Fraser government accepted its responsibility anyway and secured the support of the Labor opposition. All the fearmongering about Asian ghettos and crime gangs turned out to be wrong or exaggerated.

There are no such signs of generosity of spirit this time. We are not expanding the existing refugee intake but instead offering to reserve 3000 places for Afghans, with the vague possibility of more in the future. Britain and Canada have offered to take 20,000 each.

The government’s default position is to accentuate the negative. Morrison muscled up to the people smugglers and presumably expects asylum seekers to wait in line at Kabul airport’s check-in counter. Defence minister Peter Dutton is in no greater hurry to help, suggesting some Afghans who worked with Australian forces could pose a security threat. ASIO can take months, if not years, to grant security clearances.

The government has ruled out allowing Afghan refugees in Australia the right to stay permanently. Instead, they will remain on temporary protection visas, meaning they have to reapply every three years, cannot travel overseas (or if they do they cannot return to Australia) and cannot apply to bring family members to Australia.

This is part of the cruel suite of policies meant to deter asylum seekers. Yet they are pointless: it has been demonstrated repeatedly that the progressively harsher treatment of those who made it here made no difference until the defence force started turning boats back. •

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There’s no chance of the plan’s being revived this side of the election given how united people with disabilities have become in expressing their outrage with the government. Or, as one of the architects of the scheme, John Walsh, puts it: “I can’t begin to say how angry I am about the way Australian governments collectively have let down people with disabilities.” Until recently, Walsh served on the board of the administering body, the National Disability Insurance Agency.

Yet, unlike most in the disability sector, Walsh agrees with independent assessments of the support NDIS participants receive, if not necessarily in the form the government was planning. The assessments were proposed by the Productivity Commission in its landmark 2011 report recommending the introduction of the NDIS — the inquiry on which Walsh served as associate commissioner. The problem now is that the government has lost the trust of a disability community that suspects its motives at every turn.

To recap, the NDIS, introduced by the Gillard government and supported by all parties in parliament, is the biggest social policy reform since Medicare. It replaced the hotchpotch of federal and state government arrangements described by the Productivity Commission as “underfunded, unfair, fragmented and inefficient.” And it has made a real difference. According to Bruce Bonyhady, head of the Melbourne Disability Institute at Melbourne University and another architect of the NDIS, “it is a scheme that is doing extraordinarily positive things for hundreds of thousands of people with disabilities.” More than 50 per cent of participants were receiving no assistance at all before it started, he adds.

Given that, Walsh’s anger requires some explanation. A quadriplegic who was heading for a career as an astrophysicist before a football accident at the age of twenty, he spent decades working as an actuary on no-fault state government accident compensation schemes. Their underlying principle of social insurance informed the development of the NDIS.

The Productivity Commission proposed much more than a welfare program: people would be given control over their affairs, choosing the supports they needed to live more independently, find employment and generally lead fulfilling lives. Its insurance principles stemmed from the reality that the lottery of life meant that any Australian could face a disability, thus giving us all a stake in managing this risk through the tax system. Treating it as insurance also meant taking a lifetime approach, emphasising early intervention to save higher costs later, and increasing the opportunities, including employment, for people with disabilities and for their carers. In short, its benefits to the broader economy, as well as to individuals, would be substantial.

Walsh’s beef is that this vision has been lost. “I don’t think the NDIS has ever been implemented,” he says. “Perhaps 10 per cent of people are self-managing” — given control of a package of funding to pay for agreed supports — “which is the real opportunity for people to be doing what was intended by the scheme.”

Meanwhile, he says, 40 per cent of NDIS funding is provided for the 7 per cent of people who live in group homes under the Supported Independent Living program, which was transferred from state and territory governments. “Many participants in SIL continue to have little choice or control over their circumstances but nevertheless have 86 per cent of their committed supports — in excess of $300,000 per person per annum — consumed on their behalf,” he told the joint federal parliamentary committee on the NDIS.

A substantial part of the rest of the NDIS budget goes to medical therapy for children. “This has become a much larger part than it was ever designed to be,” he tells me, and the figures bear him out. Of the 468,692 people covered by the NDIS, 193,814 — more than four in ten — are younger than fifteen. Autism (at all ages, although mostly among children) accounts for 146,412 participants compared with the Productivity Commission’s original estimate of about 75,000. Another 53,264 fall into the category of developmental delay. With the NDIS estimated to grow another 30 per cent before it is fully operational, these figures will continue to increase.

“It is not difficult to get an autism diagnosis,” says Walsh. “It’s a spectrum and there are many children who have signs of being on the spectrum but don’t necessarily need an individual support package to go and see a therapist.” For those in the disability sector, this is a brave statement, guaranteed to bring the wrath of parents on his head. But others agree with him and are prepared to say so. “A large number of children are being diagnosed with autism who don’t actually have it,” paediatrician David Roberts, a former president of the WA branch of the Australian Medical Association, told Inside Story in 2017.

“Over the past ten years,” said Roberts, “I have run across cases in the hundreds where the diagnosis has been made but the assessment has been conducted improperly and where there have been conflicts of interest in the diagnosticians.” Roberts hasn’t changed his view, telling me the rate of diagnoses has increased in the last four years. For a parent with a child on the autism spectrum or with developmental delay, though, an NDIS plan with guaranteed funding is a godsend, given the few government-provided alternatives.

Despite its problems, Bonyhady describes the NDIS as “an oasis in the desert.” An estimated 4.5 million Australians have some form of disability. The scheme was designed to cater for a minority who need the most support, with the Productivity Commission outlining a comprehensive strategy for the remainder, including mainstream services and community support. But funding for most of the lower-level programs, provided mainly by the states, has been withdrawn, so it is hardly surprising that people are prepared to move heaven and earth to get into the NDIS.

This is where the elephant enters the room. According to the latest “financial sustainability” report by actuaries, the scheme will cost a projected $28.1 billion this financial year, which is some $4.4 billion above the Productivity Commission’s 2017 costing for this year. By 2024–25, the actuaries project a cost of almost $41 billion — $12.2 billion more than the commission’s estimate — and by 2029–30, $60.3 billion, or $22.2 billion higher. The main contributors to the escalation are more people than anticipated entering the scheme, fewer leaving and average payments increasing by 12.5 per cent a year.

If the figures look scary, at least to budget-minded people, that’s precisely what the government intended when it released the report a few days before this month’s meeting of state and federal ministers. The idea was to concentrate minds on the need to cut costs.

It didn’t work, with the states and territories rejecting independent assessments and demanding more information about the financial assumptions used. There was some justification for their scepticism. Bonyhady says that up to October last year the government and the administering agency, the NDIA, were saying that the cost projections were in line with the Productivity Commission’s estimates except for two factors not taken into account in its calculations — the subsequent broadening of the definition of developmental delay in children, and the costs of people over sixty-five. While this older age group is not eligible for NDIS assistance, those who reach that age when they are already in the scheme continue to be covered.

Bonyhady says that new estimates were incorporated in this year’s May budget, followed by the actuaries’ report showing further increases. “The numbers just don’t change that quickly. It is very clear that there are now very different assumptions being built into the estimates. These are very complicated calculations, with literally hundreds, if not thousands of assumptions that go into these cost projections. It is impossible to know what to make of these numbers until one sees the detailed models and data.”

The government has stonewalled attempts by Bonyhady and others to see this material. Following the latest ministerial meeting, Linda Reynolds, the federal minister for the NDIS, promised to respond to state and territory ministers’ requests for more information on the costings. Still, the reality is that warnings from the auditors about cost blowouts were made as long as five years ago but have been ignored.

Even if Reynolds ends up convincing the states and territories, the federal government has lost the main weapon in its armoury — independent assessments. Rather than the present system of doctors and other health professionals familiar with the person’s condition helping draw up individual funding plans, the government wanted an allied health professional, unknown to the person, to assess the support he or she needed. This would be done in a session of up to three hours, using a checklist meant to even the playing field of assistance people received. It would overcome the “empathy bias” said to be inflating the plans that participants receive.

Whatever logic applies to such a change, the disability sector quickly saw it as a threat — a cookie-cutter approach with the main aim of saving money. Bonyhady gave it the damning label of “robo-planning,” a reminder of the disastrous robodebt scheme that saw welfare recipients pursued for debts through a faulty computer program that routinely assessed debts where little or no money was owed. His point is that it relied on a single assessment at a preset time using a checklist, when we know that  an accurate picture of disability  can only be obtained by a multidisciplinary assessment taken in multiple settings.

Moreover, one of the guiding principles of the NDIS was supposed to be plans tailored to individuals and starting with their goals. “The intention was that people get packages and flexibility in the use of their packages,” says John Walsh. “That cannot happen [under the present system] unless we are prepared to wear the cost of the scheme escalating to $40 billion. I don’t think the government will do that in a hurry.” He points to the experience of injury compensation schemes in Australia and New Zealand, where entitlements without independent assessments threat-ened the sustainability of the schemes, leading ultimately to restrictions on eligibility and benefits.

Bruce Bonyhady argues that participants’ goals are “absolutely critical to the culture of the NDIS.” As he wrote in a submission to the NDIA, “The focus is, and must continue to be, on what people with disability can do and the support required to exercise their full citizenship rather than what they cannot do.”

There are indeed some unfortunate parallels with robodebt. The government has focused increasingly on cutting costs, but enough examples have emerged of the government misdirecting money — from misspent JobKeeper dollars to sports rorts and commuter car parks — to raise the hackles of people with disabilities.

As well, the government has taken a hard-nosed approach to complaints about unfair treatment, again reminiscent of how the government often took robodebt cases to the brink before conceding that the Administrative Appeals Tribunal was unlikely to find in its favour. According to the NDIA’S figures, of the 3721 AAT cases closed by the end of last year, 3641 had been resolved before the hearing. Often the resolution came after people had spent enormous amounts of time and money, says Bonyhady, and in the vast majority of cases the NDIA conceded.

“All of these settlements are subject to confidentiality so they don’t set a precedent,” says Bonyhady. “The NDIA pushes it all the way in the hope that individuals will give up and then, if people push it to the point where they get to the AAT hearing, they literally settle on the steps.” Of the eighty NDIS cases that did go to a hearing, the AAT found against the government in forty-two. Proposals within the government for expanded debt-recovery powers have more echoes of robodebt.

Whether or not the latest actuaries’ figures are anywhere near accurate, there should be no argument about governments funding the NDIS generously. As the Productivity Commission put it in its 2011 report, “were government to be starting with a blank slate in determining its funding priorities, there would be a strong rationale for provision of disability services to be one of its highest spending priorities.” Nor is the current federal government in a strong position to argue that it is spending our money wisely and with restraint.

Rather, the question is whether any government would be prepared to fund a continuing rapid increase given contending demands. In the wake of the royal commission findings, should the government spend less on aged care and more on the NDIS? These choices will have to be made, whether we like it or not.

By giving the states and territories an effective veto power over major decisions, the current structure includes a safeguard against drastic cuts. But the states also are responsible for stumping up almost half the funding for the NDIS, although the increase in their financial contribution is capped at 4 per cent a year, with the federal government obliged to pay for the rest.

The issue of escalating costs will confront Labor if it returns to government any time soon. Shadow disability minister Bill Shorten, who helped create the political momentum for the scheme when the party was last in government, casts doubt on the claims of funding blowouts but nevertheless concedes some cost overruns. He blames it on such things as the $288 million the NDIA spent on consultants and contract staff in 2019, and the $17 million for legal expenses to fight cases in the AAT. But that still leaves a funding gap of billions of dollars.

Meanwhile, Bruce Bonyhady has developed a detailed alternative to the now-abandoned independent assessments and offered to work with the government to implement it. People with disabilities would be given a genuine say in the process, and the starting point would be the goals of individuals. Any questionnaires used for assessments would be tested and feedback sought, and expert reports would be considered. The emphasis would be on multidisciplinary teams conducting assessments, if necessary in multiple settings. Participants would be able to use their funding more flexibly, with a minimum of fixed categories.

The government has yet to respond. •

The publication of this article was supported by a grant from the Judith Neilson Institute for Journalism and Ideas.

The post Is this the NDIS’s robodebt moment? appeared first on Inside Story.

Tasteless perhaps, but was it true? The article by David Hickie, later to become editor-in-chief of the Sun-Herald and the Sydney Morning Herald, contended that “organised crime became institutionalised on a large scale in New South Wales” during Askin’s near-decade as premier from 1965. “Sydney became, and has remained, the crime capital of Australia. Askin was central to this.” The Liberal leader’s links with major crime figures allowed Sydney’s illegal baccarat clubs to transform into fully-fledged casinos and his “links with corrupt police allowed these casinos and SP betting to flourish.”

Then came the most sensational claim: “According to a reliable source very high in the old Galea empire” — the network of illegal casinos run by Sydney gambling figure Perce Galea — “Askin and [police commissioner] Hanson were paid approximately $100,000 each in bribes a year from the end of the Sydney gang wars in 1967–68 until Askin’s retirement. The source is impeccable. This information has not been available for the National Times to use until Askin’s death.”

In his history of the Fairfax empire Herald journalist Gavin Souter describes Hickie’s story as “one of the most controversial exposés ever published in the National Times,” the crusading Fairfax weekly published from 1971 to 1986. Despite the considerable angst the article caused in the Fairfax hierarchy, the newspaper followed up a fortnight later with another story by Hickie, co-authored by investigative journalist Marian Wilkinson. This article alleged that a group of Sydney bookmakers paid Askin $55,000 as “a going away gift” shortly before his retirement, in return for his help in blocking a proposal to double their turnover tax to 2 per cent. The tax didn’t rise under Askin but was doubled by his successor, Tom Lewis.

Born in working-class inner Sydney, Askin was the son of a sailor turned tram driver. He worked as a bank clerk, rising to manager of the travel department, then served in New Guinea during the second world war, while also acting as his battalion’s SP bookie. It was in the army that he met Murray Robson, on leave as a NSW state MP, who subsequently recruited him into the Liberal Party. Askin was a keen punter and racegoer for most of his life.

Following the National Times stories, the evidence about Askin’s corruption was spelt out in much more detail in Hickie’s 536-page book, The Prince and the Premier, published in 1985. (Galea was known as “the prince.”) Not that this put an end to the controversy. In 1993, another Fairfax publication, the Sun-Herald, commissioned its own inquiry into claims that Askin was corrupt. It was conducted by former NSW coroner Kevin Waller, who introduced his findings by declaring that, as a lawyer, he could not escape the constraints of his profession: “I am not prepared to condemn the ex-premier or anyone else without reliable evidence of guilt.” He admitted to suspicions but concluded that he could not be “comfortably satisfied” that Askin was corrupt until informants close to the action came forward, sources were named and the paper trail explored.

The Sun-Herald published a less equivocal opinion on the same day as Waller’s findings. Denis Lenihan, former chief executive of the National Crime Authority, concluded that the material before him provided reasonable grounds for believing that Askin was corrupt. If he were a magistrate, he would have committed him to stand trial.

The best part of another four decades on, the debate has been revived with the publication of Sir Robert Askin, a new book in a series of biographical monographs on prime ministers and premiers published by Connor Court. The author is Paul Loughnan, who wrote a PhD thesis on the Askin government and describes himself as an independent researcher and “a tragic swinging voter.” According to the series overview at the start of the book, Loughnan “demolishes once and for all the myths concerning [Askin’s] alleged corruption. They are just not true.”

The last word on Askin? Not quite.

Loughnan’s view is that the “Askin corruption myth was founded on hearsay, innuendo and uncorroborated evidence.” He lauds Askin’s “extraordinary record as the longest-serving and most politically successful NSW Liberal premier,” a man who won four elections in a state traditionally dominated by Labor, and who deserves much more respect than he has received, including within his own party.

Loughnan acknowledges that organised crime increased during the latter period of the Askin government, as manifested in the number of illegal casinos. But he asserts this would have happened under any government during those years “as a result of the global phenomenon of the institutionalisation of organised crime and its subsequent escalation.”

He argues that the evidence of Perce Galea — Hickie and the National Times’s primary source — should have been discarded. “Unfortunately their Deep Throat was a major crime figure who had laundered large amounts of drug money and had been dead for four years.” He builds his case by quoting a long list of people who have criticised Hickie, including Waller, Askin’s ministerial colleagues and staff, and investigative journalist Bob Bottom, all of whom said they had seen no or insufficient evidence of Askin’s corruption.

Loughnan derides Hickie as an inexperienced young journalist at the time. He speculates that Hickie was duped by Galea, who may have been seeking to punish Askin for refusing to legalise casinos.

Loughnan came to his conclusions even after conducting a lengthy interview with Hickie, who said all his principal sources could be discussed openly given the passage of time. When I contacted Hickie recently, he made the same offer to me, and a very different story from Loughnan’s emerged from that conversation. Loughnan has tried to make a molehill out of the mountain of information assembled by Hickie.

Hickie confirmed that a key but unnamed figure in his book, referred to as one of Sydney’s leading heart specialists, was his father, John Hickie, who formed a fifteen-year friendship with Perce Galea after treating him for a heart attack. Loughnan mentions John Hickie but curiously omits the fact that he was David Hickie’s father.

Why did a professor of medicine form such a close relationship with an illegal casino operator? Galea “had the rare knack of endearing himself to everyone he met,” David Hickie writes in The Prince and the Premier. He was a pillar of the Catholic Church as well as a flamboyant racetrack punter, and enjoyed entrée to the most privileged circles. Hickie’s book includes a photograph of Galea with then prime minister Robert Menzies and Cardinal Norman Gilroy, head of the Catholic Church in Sydney.

So was it his father who told Hickie about the bribes? No, he told me, but Hickie himself got to know Galea and his wife Beryl through the hospitality that they periodically extended to the Hickie family. Galea was the main source, Hickie confirmed, but by the time of the National Times story he had died, and editor David Marr and chief editorial executive Max Suich wanted corroboration from a living person. Hickie obtained that confirmation from Beryl Galea, who was the “impeccable source” referred to in the original article. He also subsequently received further corroboration from another illegal casino operator, George Walker, and from a senior person in the Galea organisation whom he declined to name because he may still be alive. As for the timing of the story on the eve of the funeral, Hickie said the concern was that others in the media would start publishing stories now that they were free of the constraints of defamation law.

Hickie sent me a six-page document he put together years ago, headed “Askin Corruption: Some Sources & References,” in which he lists scores of names. He gave a very similar version to Loughnan, he said, “by email on Wednesday 1 July 2009 at 10.24am.”

As well as that corroboration of the Galea allegation, Hickie names twelve bookmakers and three others in the racing industry as confirming the $55,000 payment to Askin. He provides the name of a former bank manager who told him about $20,000 deposited directly into Askin’s personal Rural Bank account as payment for a knighthood for a company chief executive. He provides five further sources and references for payments of up to $60,000 for knighthoods.

Hickie also drew on public sources, including Alan Saffron, son of the notorious Abe Saffron, also known as Mr Sin, who ran a prostitution and gambling empire. In his 2008 book Gentle Satan, Alan writes that Askin was on his father’s payroll, that his father had “an excellent business relationship and longstanding friendship” with the premier and with police commissioner Norm Allan, and that he paid the two men $5000 to $10,000 a week during the late 1960s.

True, many of these sources fall into the category of colourful racing (and other) identities, not to mention outright criminals. But then there is John Mason, a Methodist minister who became NSW Liberal leader. In a taped conversation with National Times editor David Marr in 1981, Mason told the story of an election donation a company in his electorate wanted to make to Askin. “It makes things easier if they give it in cash,” was Askin’s response when Mason raised it with him. Mason later attended the meeting at which the company executive handed wads of notes worth $20,000 to Askin. The Liberal Party subsequently introduced a rule that all fundraising had to be conducted through party headquarters so as, in Mason’s words, “to stop it being creamed off.”

Publisher and journalist Maxwell Newton told a radio interviewer that he handed a brown paper bag containing $15,000 in cash to Askin in his office in 1970 on behalf of Philippine businessman Felipe Ysmael. “I’ve never seen $15,000 disappear so quickly in my life,” said Newton. “He took the money and whipped it into the top drawer of his desk.” A police investigation concluded that Newton’s claim was “utterly without foundation.” But that was par for the course for police inquiries at the time and may have meant little more than that Askin had denied it.

Despite his views on the timing of the original article, Labor premier Neville Wran seems to have had no doubts about his Liberal predecessor. Asked in 1986 whether he thought Askin was a crook, he replied with a crisp “Yes.”

Shortly after the National Times stories in 1981, writes Souter in Heralds and Angels, David Marr and other Fairfax editors dined at the Lodge with Malcolm Fraser. “The prime minister criticised the National Times for running the Askin stories but changed his attitude when the others present supported Marr with their own testimony about the growth of organised crime in New South Wales.”

In his chapter on Askin for the two-volume study The Premiers of New South Wales, party historian Ian Hancock writes, “Very simply, Hickie’s sources, named or otherwise identified in confidential correspondence with the author, are too well-placed to be dismissed.”

Then there’s the money trail. According to figures provided to Hickie by the NSW parliamentary library, Askin earned an average annual salary of $6637 a year in his fifteen years as an MP and an average $27,518 in his almost ten years as premier, for a grand total (before taxes) of $374,730. When he died six years later, he left an estate of $1,957,995, while his wife Mollie’s estate in 1984 was $3,724,879. As political scientist Murray Goot writes in his 2007 article on Askin for the Australian Dictionary of Biography, “Although the Department of Taxation made no finding of criminality, it determined that a substantial part of Askin’s estate was generated through undisclosed income from sources other than shares or punting and taxed it accordingly.” A substantial part of Mollie Askin’s estate was similarly taxed, adds Goot.

None of this convinces Loughnan, whose main focus is on the unreliability of Perce Galea — whom he dismisses as a crook — as Hickie’s primary source for the casino payments allegation.

Corruption was not confined to the Askin years. When I went to Macquarie Street in 1981 as state political correspondent for the Sydney Morning Herald, stories about political and police corruption, past and present, were legion. Both parties had bagmen who collected bribes weekly, and a succession of police commissioners had been on the take. Until the National Times took the plunge, the assumption was that very little could be reported: it was difficult to establish proof, and the defamation laws were (and still are) a high barrier.

But some moments of high farce did enter the public arena. Police had enormous difficulty raiding illegal casinos, despite reporters repeatedly gaining ready access. When Wran, as premier, ordered police to close the casinos in 1977, commissioner Merv Wood remonstrated that this would be terribly unfair. The loss of 300 jobs so close to Christmas would bring unnecessary hardship, he said, and be “inhumane.” When Wood was questioned in 1979 about organised crime by the ABC’s Caroline Jones, he asked, “Can you tell me where it is, Miss Jones?”

John Mason challenged the Wran government in 1979 to hold a public inquiry into illegal casinos, which continued to operate despite Wran’s instructions. Soon after, he told parliament, Liberal MP Tim Walker offered him $5000 a week to stop raising the issue.

Loughnan believes all of this should be disregarded. It may be that much of the evidence collected by Hickie and others would neither have met the standard of criminal proof required in court nor survived defamation cases. But that is a reflection on a legal system that allowed so many people to act so corruptly for so long with complete impunity. •

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There was nothing too remarkable about the actual words. Plenty of others were saying the same — though not too many Liberals and fewer prominent Liberals, particularly members of the Morrison government. The following month Kean revealed that senior Liberals, including members of federal cabinet, were privately urging stronger action on climate change, and advised the federal government to drop its reliance on emission credits held over from the Kyoto agreement to meet its 2030 emissions target. That was too much for Scott Morrison.

“Matt Kean doesn’t know what he’s talking about,” he declared. “He doesn’t know what’s going on in the federal cabinet and most of federal cabinet wouldn’t even know who Matt Kean was.”

Aimed at a fellow Liberal, it was quite a put-down. It was also a bit of a stretch, considering that Kean is leader of the Liberals’ moderate, or small “l,” faction in New South Wales, fancies himself as a future state premier and misses few opportunities for publicity. Any federal MPs who hadn’t heard of him would have been way behind with their homework.

As for federal cabinet, bound by solidarity and secrecy, it is a sure bet that ministers are talking much more frankly to Kean than they are in public, and those most likely to be doing so are fellow moderates. Yes, they do exist in federal cabinet, including near the top of the tree — their ranks include Simon Birmingham and Marise Payne — even if their voices are muted and their influence on policy limited. This has been the lot of moderate Liberals ever since John Howard first became opposition leader in 1985.

Prominent moderate Peter Baume, a minister in the Fraser government, resigned from the Liberal Party in 1996 when Howard became prime minister because he didn’t want to be associated with a conservative government. Others, like Ian Macphee, lost preselection to conservatives. Still others, like Robert Hill, environment and defence minister in the Howard government, and Christopher Pyne, a minister in every Coalition government from Howard until 2019, tried to keep the moderate flag flying by working within the government. And then there was Philip Ruddock, a critic of Howard’s stance on immigration in opposition who, as immigration minister, implemented some of the harshest policies Australia has seen towards refugees.

Much of the recent public debate about the Liberals and Nationals has focused on right-wing MPs who typically oppose marriage equality and other social reforms, are climate change sceptics, if not deniers, and may doubt that Covid-19 is as serious as most people think. They have been particularly adept at leveraging their small numbers to hold the government hostage, with climate change the outstanding example. But moderates are a larger group, and some Liberals who wouldn’t use that label are also increasingly frustrated at the lack of progress on urgent issues confronting the government, including climate change.

Christopher Pyne (centre) — shown here in 2019 with fellow Liberal moderates Marise Payne and Simon Birmingham — has been active in the pushback against the party’s right. Dean Lewins/AAP Image

They might not be as vocal as the Craig Kellys and Barnaby Joyces, but they are showing signs of growing assertiveness. One indication is the growing support for two Liberal-aligned organisations applying pressure from outside — the Blueprint Institute and the Coalition for Conservation.

Blueprint’s chief executive and co-founder, Harry Guinness, was a policy and political adviser to Julie Bishop when she was foreign minister and deputy Liberal leader. His responsibilities included foreign aid, climate change and environmental sustainability.

Last summer’s bushfires were the catalyst for Guinness — self-described as “definitely philosophically a small ‘l’ Liberal” — and colleagues to set up Blueprint as a pro-market think tank. “With the bushfires there was a genuine sense that the time had come, after a decade of messing around with climate policy and not doing justice to what is really the biggest economic challenge of this generation and the next generation,” he tells me. “It is clear there needed to be more research and a more compelling story coming from the right of politics, getting beyond the energy reliability and the affordability issues.”

Guinness’s first employee was Daniel D’Hotman, a Rhodes scholar he met at Oxford University, where Guinness obtained a master’s degree in international development. The contrasts between Britain, which has a strong bipartisan policy on climate change, and Australia struck them both. “I was inspired by the UK,” says Guinness. “It’s pretty remarkable what has been achieved. Or maybe it’s remarkable what has happened here. If you think of the history of conservatism and the philosophy it has, it makes sense for a conservative party to be stewards of the environment and protecting the economy and thinking ahead.”

A recent Blueprint report argues that net zero emissions are inevitable by 2050 or even earlier, and the longer we delay the costlier it will be. As a first step, it says, we should commit to halving emissions from coal-fired electricity this decade.

Apart from climate change, Blueprint is conducting research and publishing papers on early learning, childcare, unemployment insurance and other social policy issues, and on economic policies including tax reform. Guinness says it has a budget of less than $1 million a year from donors who are anonymous “at this stage” but is diversifying to corporate sponsorships and membership contributions that will be made public.

Guinness has attracted a stellar cast to serve on Blueprint’s Strategic Council, including two of the Liberal Party’s most senior moderates, Christopher Pyne and Robert Hill. Another member is Bruce Baird, a senior minister in the NSW Greiner government who, having moved to federal parliament, was kept on the backbench by Howard. Two other former state ministers from the sensible side of the NSW Nationals, Wendy Machin and Adrian Piccoli, have also been enlisted.

Even more heavyweight is the team of “ambassadors” — Malcolm Turnbull, Lucy Turnbull, Robert Hill, Nick Greiner and Philip Ruddock — assembled by the Coalition for Conservation. Compared with Blueprint, it takes a more direct advocacy role, and also organises events, including the webinar last year that brought together Turnbull and former British prime minister David Cameron to discuss “the UK Conservative leadership on climate.”

The Coalition for Conservation’s chair is Cristina Talacko, whose many other roles include director of the Export Council of Australia, vice-president of the NSW Liberal Party’s Women’s Council, and secretary of the state party’s environment and energy policy branch. She tells me that C4C, as she refers to her organisation, started five years ago under the name Conservatives for Conservation. About two years ago, it changed names because “calling ourselves conservatives was putting off a lot of the moderates or middle group.” Combined with the growing momentum of the climate change debate, the decision seems to have worked: C4C has grown from about 500 signed-up supporters two years ago to 2000 last year, with numbers now standing at somewhere around 5000.

“We couldn’t talk about climate change in the very early days: it was seen as a very ‘left’ or costly thing to discuss for Liberals,” says Talacko. “The feeling was that you have to choose between the economy and the environment. We changed that perspective because we are showing that the only way to grow is to grow sustainably.”

As for the vocal group in the government that opposes action to reduce emissions, she says that “you can count them on your fingers and that is a good thing.” She adds that her organisation has helped to create “more of a safe space” for the voices of the centre in the party to be heard. C4C’s latest webinar brings together Liberal backbenchers Katie Allen and Trent Zimmerman with advocates for electric vehicles.

Talacko has also helped lend a sense of urgency to the debate. “The Liberal Party has always been known as the party of business, and its progressive leaders are seeing these opportunities and are ready to capitalise on them. No Liberal will want to be responsible for preventing Australia from seizing the next big economic opportunity.”

Recently she has advocated setting a net zero target “while it is still a choice, not an ultimatum,” citing moves in Europe and the United States to impose carbon levies on international trade from countries that are dragging their heels on climate change policy. While Scott Morrison is inching towards adopting a target, he is still focusing on the costs of doing so, rather than the opportunities it creates. “Fossil fuel reliant jobs are few and at risk, while jobs in renewables are growing at a higher rate,” says Talacko.

One sure sign that the debate is shifting is a recent publication by the Menzies Research Centre, the Liberal Party’s official think tank. Its latest policy paper includes a lengthy introduction from executive director Nick Cater extolling the substantial contribution the farming sector can make to reducing greenhouse gas emissions. “An increase in the organic carbon content of soils of just 0.5 per cent, for example, would have the same effect as closing Australia’s coal-fired power stations for three years,” he writes. (Others argue that the potential is much greater and that most or all of Australia’s total emissions could be offset by increasing soil carbon.)

Cater certainly isn’t the first to promote the benefits of sequestering carbon in the soil. But it isn’t the kind of advocacy you’d expect to hear from him. A former editor of the Weekend Australian, he continues to write a weekly column for the daily Australian in which he has revealed himself to be anything but a small “l” Liberal, let alone a climate change activist. He has railed against the “Armageddon industry,” and in 2017 wrote that “time has helped illuminate the dewy-eyed naivety of the climate change policy Rudd took to the 2007 election.” That policy was to sign the Kyoto accord, which Howard had refused to do, and to put a price on carbon, which happened to be Howard’s policy at that election, as well as Labor’s, although Cater forgot to mention that.

Cater also promoted the favourite far-right conspiracy of the time: “The science of global warming offered the intellectuals another chance to organise the world as they wanted it to be, to take charge of human affairs and to bypass the irksome process of democracy… It was an opportunity to settle old scores by refighting the lost battle of the Cold War: the fight against free markets.” Strange then that Rudd’s, and Howard’s, plan to adopt an emissions trading scheme was based squarely on free-market economics.

If even Nick Cater has begun  barracking for action on climate change, then you could say the debate really has moved on. What’s next — the Nationals taking up the cause? Actually, they already have. Not Barnaby Joyce and Matt Canavan, of course, who are campaigning against a net zero target because “if the Nationals supported net zero emissions we would cease to be a party that could credibly represent farmers.” Nor the deputy prime minister and Nationals’ leader Michael McCormack, who has to publicly support his government but thinks we should exempt agriculture if we adopt a target.

Another National, NSW agriculture minister Adam Marshall, thinks that idea isn’t so flash. “Ring fencing farmers from a net zero carbon target is nothing but political point-scoring based on the needs of those who think in timelines that are based on their political needs, not the future of agriculture.” He wonders how farmers can help shape policy and take advantage of the opportunities it opens up if they are excluded from the target. “What I want is for farmers to be paid for the valuable environmental benefits they bring to the table for New South Wales, for biodiversity, carbon, renewables, sustainable agriculture and so many other untapped potential income streams. By cutting them out you’re cutting them off.”

Farmer bodies long ago left the federal Nationals in their wake. The National Farmers’ Federation has a target of net zero emissions by 2050. Meat and Livestock Australia and the grain industry are aiming for net zero by 2030, and the pork industry by 2025. The National Party used to be the farmer’s friend but these days you have to wonder: carving out industries may be in the interests of the coal and other fossil fuel interests that donate generously to the Nationals, but it is not in the interests of farmers.

With net zero emissions targets promised by most developed countries and every Australian state government, Liberal and Labor, with public opinion in favour of stronger action, with US president Joe Biden foreshadowing a comprehensive set of policies to tackle climate change and British prime minister Boris Johnson announcing a green industrial revolution, how long can the Morrison government hold back the tide?

One of the last occasions the moderates took a significant public stand was in 2006 when three backbenchers, Petro Georgiou, Russell Broadbent and Judi Moylan, crossed the floor of the House of Representatives to vote against the offshore processing of asylum seekers. When Judith Troeth threatened to do the same in the Senate, Howard withdrew the legislation rather than face defeat. It turned out to be a pyrrhic victory for the moderates, with the Gillard government enacting the same policy six years later.

Since then the moderates have been on the back foot. But the stirrings in the ranks suggest that reports of their death have been exaggerated. The big test will be the future course of national climate policy. •

The publication of this article was supported by a grant from the Judith Neilson Institute for Journalism and Ideas.

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Paid for by industry superannuation funds, this recent TV ad is designed to pressure the government to deliver on its promise to lift the compulsory super rate from 9.5 per cent to 12 per cent in increments of 0.5 per cent, starting in July and finishing in 2025.

The ad’s promise of extra money for nothing sounds great. Except, of course, it doesn’t work that way. Four pieces of research over the past decade — the review of taxation by former treasury head Ken Henry, a Grattan Institute study, work by the Reserve Bank and, most recently, the Retirement Income Review headed by former treasury official Michael Callaghan — have all come to the same conclusion: increases in compulsory superannuation come predominantly from wages.

Arguments to the contrary, including by Labor and the super industry, are unconvincing. Sure, wages growth has been very slow anyway, but that doesn’t mean it wouldn’t be slower still if employers have to increase the superannuation rate further.

Yes, the ad’s description of a 12 per cent rate being guaranteed is correct — so long as you believe politicians keep their promises. This particular pre-election promise by the Morrison government falls into the category of making-promises-we-don’t-believe-in-but-are-necessary-to-help-us-win-the-election. Whether Morrison keeps the promise depends on how much pressure is applied through public opinion, including that influenced by advertising campaigns, versus the wishes of those in the government who have always opposed compulsory super.

And if the future is even more super, as the ad argues, then the future is also even greater inequality — something the Labor Party is supposed to be against. More super is fine if that’s what people want to do with their money, but it’s a bad idea if a large chunk of it comes from taxpayers boosting the retirement incomes of people often better off than themselves.

When treasurer Josh Frydenberg released the final report of the Retirement Income Review in November, he highlighted a few of its findings, including that “the age pension reduces income inequality among retirees, as low-income retirees receive the largest age pension payments.” That’s true, but he left out the rest of the report’s conclusion: “While the age pension helps offset inequities in retirement outcomes, the design of superannuation tax concessions increases inequality.”

That design applies a flat rate of 15 per cent tax on contributions and earnings, meaning the higher your income, the more you save in tax by not paying normal income tax rates of up to 47 per cent.

In June 2018, more than 11,000 people had more than $5 million each in their super accounts. The review calculated that a super balance of $5 million attracts around $70,000 a year in tax concessions on earnings. A $10 million balance attracts more than $165,000. By contrast, the full age pension, with supplements, is worth $24,552 a year for an individual or $37,014 for a couple.

To those who argue that people who pay more tax should be entitled to higher concessions, the review points out that higher-income earners receive not only bigger concessions in dollar terms but also “more superannuation tax concessions than lower-income earners as a percentage of superannuation contributions.” (My emphasis.)

The Henry report calculated that 37 per cent of superannuation tax concessions went to the top 5 per cent of taxpayers. The latest report says the total cost of the concessions on both contributions and earnings grew by almost 40 per cent to $42 billion in the four years to 2019. Unchanged, it projects their value to increase from 4.6 per cent to 5 per cent of GDP over the next forty years, while spending on the age pension will fall from 2.5 per cent to 2.3 per cent. In short, inequality will increase.

Politicians on both sides of the fence used to worry about such unfairness. “A major deficiency of the current system is that tax benefits for superannuation are overwhelmingly biased in favour of high-income earners,” treasurer Peter Costello said in his first budget speech in 1996. And he did something about it by imposing a tax surcharge on superannuation contributions for high-income earners. But a few years later, in 2003, he responded to complaints about administrative complexity by starting to phase out the surcharge. It disappeared altogether in 2005.

Costello’s complete conversion to the interests of the super industry and greater inequality came in 2006, when he introduced tax-free super for all retirees as well as allowing people to tip up to $1 million into their funds before applying generous caps on their annual contributions.

When Wayne Swan’s turn as treasurer came in 2007, he started in the same place as Costello nine years earlier. He spelled out the regressive impact of super concessions on an income tax system that was supposed to be progressive. While those on incomes above $180,000 received a 31.5 percentage point reduction in their marginal tax rate, someone on $35,000 received just 1.5 percentage points.

The situation was even worse for those whose incomes were below the tax-free threshold, who were still taxed 15 per cent on their compulsory super contributions. In other words, they were being penalised for being required to put money into superannuation. Swan fixed that with a rebate, as well as halving the caps for super contributions attracting the tax concession. But he baulked at further reform to tackle inequity, including the Henry report’s recommendation for a uniform 15 per cent tax deduction on contributions for most people.

Apart from their gaining little or nothing in tax subsidies, the superannuation system is a raw deal for many low- and middle-income earners for another reason: as their super income increases, their pension payments fall because of means testing, with the result that they are little or no better off for having been compelled to put aside 9.5 per cent of their salary.

Governments have tinkered further to tackle some of the worst excesses. Costello’s surcharge has been resurrected, with people with incomes above $250,000 now paying 30 per cent tax on contributions. Superannuation balances above $1.6 million (around 1 per cent of retirees) also attract extra tax.

But the basic inequity of the system remains. And it has increasingly been ignored in the debate, despite the best efforts of organisations such as the Australian Council of Social Service, which has a long track record of well-researched campaigning for a fairer system.

The system’s inequity also raises questions about its sustainability. When Josh Frydenberg released the Callaghan report he highlighted its finding that the costs of the overall system were “broadly sustainable.” But he didn’t mention why the report uses the word “broadly.” While higher superannuation balances should reduce the cost of the age pension slightly over the next forty years, the cost of the super tax concessions are projected to grow and exceed the cost of the pension by about 2050. “The increase in the SG [super guarantee] rate to 12 per cent will increase the fiscal cost of the system over the long term,” the report adds.

While the report doesn’t make specific recommendations — something for which the politicians will be grateful — it does make some pointed observations. One of them stresses the unfairness and unsustainability of tax-free super in retirement:

There are areas where superannuation tax concessions are not a cost-effective way to help people achieve adequate retirement incomes. In particular, the cost of the earnings tax exemption in retirement will grow faster than the growth in the economy as the system matures and provides the greatest boost to retirement incomes of higher-income earners.

The report observes that “extending earnings tax to the retirement phase could also simplify the system by enabling people to have a single superannuation account for life and would improve the sustainability of the system.”

It also points out that the present structure discriminates against women, who retire with smaller super balances, on average, and less of a taxpayer subsidy.

Successive reports, including Henry’s, the Grattan Institute’s and Callaghan’s, have found that increasing the super guarantee is not necessary to give people adequate retirement incomes. The benchmark typically applied for maintaining living standards in retirement is 65 to 70 per cent of previous income. This is based on people facing lower costs in retirement, often having paid off their home and raised and educated their children, and no longer needing to save for retirement.

The latest review found that, assuming what it called an efficient drawdown of savings, this benchmark was reached or exceeded for all income levels at the present compulsory super rate of 9.5 per cent. Even given the “inefficient” way many people spend their super — by withdrawing at only the minimum required rates of 4 per cent or 5 per cent, for example — the inquiry found that most retirees’ income was 60 per cent or more of that while working.

Particularly in the earlier years, that means retirees often aren’t running down their savings and feel that they can cover unexpected expenses and, in particular, leave an inheritance. While that is their choice, it doesn’t mean that it should be encouraged by government policy. “Superannuation is intended to fund living standards of retirees, not to accumulate wealth to pass to future generations,” is how the report puts it. And because inheritances are not distributed equally, it adds, they increase inequity in the next generation.

Many developed countries have some form of inheritance or wealth tax. Australia has none. To the contrary, we have a form of reverse wealth tax, with taxpayers subsidising inheritances via the super system. The bigger the amount, the bigger the subsidy.

The super guarantee should not be increased without first making the tax concessions fairer. Otherwise, higher-income earners will receive even bigger taxpayer subsidies — largely paid for by the taxes of lower-income earners, many of whom benefit little from the system but are compelled to put money aside that could be better used to meet their present-day needs. •

The post If the future is more super, then the future is greater inequality appeared first on Inside Story.

The correspondence between Australia’s governor-general, Sir John Kerr, and the Queen’s private secretary, Sir Martin Charteris, known as the Palace letters, adds a whole new dimension to Australia’s greatest constitutional crisis. It reveals that Buckingham Palace was far more than a passive recipient of Kerr’s voluminous letters, and it confirms that Kerr was planning for a possible dismissal months before he sprang his ambush on Gough Whitlam.

The letters also show the extent to which Kerr drew the Palace into his plan as part of his quest for support and affirmation. And they makes clear that Charteris kept the Queen fully informed and passed Kerr’s correspondence on to her. All the while, the elected prime minister of Australia was not just kept in the dark by Kerr but also actively deceived.

The letters establish something else, too: that aspects of the history continue to be contested. They were released in July thanks to the persistence of Whitlam’s biographer, historian Jenny Hocking, despite the formidable forces arrayed against her — the Queen, the National Archives and the Morrison government — and despite rebuffs from the Federal Court and then the Full Federal Court. The final victory in the High Court had a broader significance, asserting what should have been beyond dispute — that, as Hocking puts it, we own our own history.

Less than four months after the release of the letters, and in time for the forty-fifth anniversary of the dismissal on 11 November, two duelling versions of history have been published, one by Hocking and the other by the Australian’s Paul Kelly and Troy Bramston. Despite their similar titles, they vary markedly in their interpretation of the Palace’s role in the events of 1975. Where Hocking sees unconscionable interference by the Queen to overthrow a democratically elected government, Kelly and Bramston argue that the Palace adhered strictly to its longstanding policy of non-interference in the affairs of nations in its realm.

The two books even offer us duelling prefaces by former prime ministers, ironically with Paul Keating in the Kelly–Bramston corner and Malcolm Turnbull in Hocking’s. For Keating, “the idea that the Queen may have wished or actively conspired in arrangements with Sir John Kerr to effect a party political outcome in Australia amounts to no more than tilting at shadows.” For Turnbull, the letters’ surprising revelation is that Charteris responded in detail to Kerr instead of making “little more than a brief, polite acknowledgement.” Charteris should have prevailed on Kerr to be upfront with Whitlam, Turnbull argues, and should have discouraged him from dismissing Whitlam; instead, “some of his correspondence can be read as encouraging him to do so.”

This is Paul Kelly’s fourth book on the dismissal, the last two of them in collaboration with Bramston. He was at Parliament House as a reporter on the day of the dismissal, has interviewed most of the main players and is an undoubted authority on the subject. That also means he is invested in his version of history: that Kerr was wrong to hide his intentions from Whitlam and wrong to sack him, but that the decision was all his own.

Only after the dismissal, he and Bramston write, did Kerr inform the Queen of the “elaborate, secret and extraordinary plan he had implemented, none of whose components he had previously disclosed to the Palace.” Among these components were that he had already decided to dismiss Whitlam on 11 November, that he had denied Whitlam’s request for a half-Senate election, that he had consulted chief justice Sir Garfield Barwick and, later, that he had dissolved parliament for an election on the advice of the new prime minister he had appointed, Malcolm Fraser. This is literally true, though he had certainly canvassed options with the Palace beforehand, particularly the possibility of forcing an election by dismissing Whitlam and commissioning Fraser.

Hocking, too, has a prior position to defend. She was convinced before the release of the letters that the Palace was implicated in the dismissal. It had become clear to her while working on her two-volume biography of Whitlam, she says, that “much of what was known as the history of the dismissal was simply wrong” — not a comment Kelly would have appreciated. She raised expectations beforehand about the “explosive” content of the letters.

As it turns out, the two books agree on a great deal, including the fundamental proposition that Kerr was wrong to act as he did. While views about Kerr’s actions divided largely on predictable political lines in 1975, unequivocal support for Kerr’s actions has since dwindled to a much smaller group of conservatives and monarchists. In their book and in subsequent articles, Kelly and Bramston quote a brace of former governors-general as disagreeing with Kerr, including his predecessor Sir Paul Hasluck (previously a Liberal minister), Quentin Bryce (2008–14) and Peter Cosgrove (2014–19).

Among Kerr’s present-day critics they also number Kim Beazley, former federal Labor leader and current governor of Western Australia, who said Kerr’s correspondence was unnecessary and sought to compromise the Queen. “He’s there as the Queen’s representative and one thing we are obligated to do, aside from the relationship that we have with the administration of the Australian people, is to prevent her name from being sullied or drawn into controversy,” says Beazley. “I cannot see in that correspondence a second’s regard for her situation.”

But Kelly and Bramston also cite Bryce, Cosgrove and Beazley, together with Bill Hayden, governor-general during the Hawke and Keating governments, as believing the Queen to have a strict policy of non-interference in Australian affairs. “In this sense, they confirmed a generation later the messages that Charteris and the Queen were giving Kerr in 1975,” write Kelly and Bramston. “The principle of Palace non-interference is decades old.”

This is a bit of a stretch. It is no surprise that the Queen’s former and current representatives are not inclined to criticise her. In any case, only Hayden explicitly asserts that this policy of non-interference operated in 1975.

Policy is one thing and practice another. In his preface to Hocking’s book, Turnbull describes Kerr’s endless letters as “sycophantic grovelling” and “stomach-churning.” Charteris not only indulged Kerr, he also encouraged him in his thinking and sided with him after the dismissal. It is true that he didn’t specifically urge Kerr to act on 11 November, and he did suggest that the dismissal power should be used only as a last resort. And Charteris confirms, as Kerr said, that the Queen was not told of what he had done until after the event.

But it is what else Charteris didn’t do that is revealing. At no stage did the Palace’s official policy of strict non-interference prompt him to respond to Kerr’s flood of correspondence by saying something along the lines of, “This is all very interesting, dear chap, but it’s got nothing to do with us — it’s all up to you.”

Instead he wrote back with suggestions and advice of his own, including the observation that the reserve powers, including of dismissal, did indeed exist. Strict non-interference surely would have dictated no such comment, since Whitlam argued that the reserve powers were a dead letter and that the governor-general was obliged always to follow the advice of the prime minister. His view was backed by the formal opinion of attorney-general Kep Enderby and solicitor-general Sir Maurice Byers that the reserve powers were relics of a sovereign age and there was no basis for using them in the situation Kerr faced in 1975.

Since then, the general view has been that the reserve powers do indeed exist, if for no other reason than Kerr’s use of them. But the point here is that in 1975 Charteris injected himself into a partisan debate in Australia and sided with conservative opinion. The statement from Buckingham Palace after the release of the letters that “neither Her Majesty nor the Royal Household had any part to play in Kerr’s decision” is at best disingenuous.

Most significantly, Charteris never suggested to Kerr that he should reverse his inexcusable decision to deceive Whitlam. Kelly and Bramston quote Kerr’s predecessor, Sir Paul Hasluck, saying in an oral history interview for the National Library that, had he been governor-general, “at a much earlier stage there would have been discussions between Whitlam and myself and some indications to Whitlam that certain matters needed reconsideration.” Hasluck believed that, had he still been in the role, “probably the history of Australian politics would be quite different.”

In other words, Hasluck would have given Whitlam the option of going to an election as prime minister rather than being sacked. Whitlam may then have taken up Fraser’s offer for the Coalition-controlled Senate to pass supply — that is, the government’s spending bills — if Whitlam agreed to an election by the middle of 1976.

Either way, Whitlam would surely have lost an election: his government had been beset by too many scandals and presided over too much economic hardship to have a realistic chance of winning. What would have been avoided was the governor-general’s disgracing his office, the criticism Kerr brought on the monarchy and the undermining of the legitimacy of the Fraser government, which was tainted and constrained by the manner in which it came to office.

Kerr’s excuse for the ambush was his concern that Whitlam would ask the Queen to sack him if he were frank with him. He wanted to protect the Queen, he said, from having to deal with such a difficult situation. What Whitlam would actually have done is unclear. For Hocking, the fact that he made no attempt to contact the Palace when Kerr sacked him speaks for itself. Instead, in a moment of distracted formality, the two men shook hands.

But it is not quite so straightforward. What would Whitlam have done if Kerr had said he would dismiss him if he didn’t call a general election? Kerr believed that Whitlam was on a course from which he was not prepared to deviate, designed to break the Senate’s power to hold governments hostage. But he never gave Whitlam a chance to test that view. It seems improbable that Whitlam would have chosen dismissal over contesting an election as prime minister, particularly if he had taken up Fraser’s offer.

Kelly and Bramston produce conflicting evidence, including from Whitlam himself, who wrote in his 1979 book The Truth of the Matter, “At no time during the crisis had the possibility of replacing Sir John Kerr been a significant element in my thinking.” But on 31 December 1975, two weeks after his devastating defeat at the election, Whitlam had told British prime minister Harold Wilson that “[Kerr] deceived me — realising, I’m sure, that I would have been in touch with the Queen if my suspicions had been aroused.”

While Kelly and Bramston argue that the remark to Wilson must carry weight, they don’t see it as definitive: “In such a crisis Whitlam was likely to rethink at any given moment.” Some of those closest to him at the time differ on what Whitlam would have done had Kerr told him of his concerns. One consideration was that sacking the umpire — as many would have seen it — would not have gone down well with voters.

Astonishingly, as Kelly and Bramston highlight, Kerr believed that Whitlam’s threat to sack him would be ineffective and that Whitlam knew this. In a letter to Charteris on 20 November 1975 — that is, nine days after the dismissal — he wrote:

As you know from earlier letters, on occasions, sometimes jocularly, sometimes less so, but on all occasions with what I considered to be underlying seriousness, he [Whitlam] said that the crisis could end in a race to the Palace to see who could get there first. Of course, though I did not say this to him, only he had to go to the Palace. I could act, if necessary, directly myself under the Constitution. I am sure that he would have known this and the talk about a race to the Palace really constituted another threat.

In other words, Kerr knew he could cross the finish line before the race even started. It was a conclusion that was reinforced by Charteris, who clarified Prince Charles’s remark to Kerr that the Queen might not have to act if Whitlam advised her to dismiss Kerr. As usual, Kerr was having detailed discussions with the royals and others while hiding his planning from Whitlam. Charteris wrote:

If such an approach was made you may be sure that the Queen would take most unkindly to it. There would be considerable comings and goings, but I think it is right that I should make the point that at the end of the road the Queen, as a Constitutional Sovereign, would have no option but to follow the advice of her Prime Minister.

Hocking quotes Paul Rodan’s interpretation of this letter in Inside Story: “The references to ‘comings and goings’ and ‘at the end of the road’ speak volumes: any such recommendation from Whitlam would only be implemented after some delay.”

And yet, despite this assurance that he would win the race, Kerr continued to keep Whitlam in the dark. He wanted to keep his job. His expressed desire to protect the Queen could be seen as admirable. But it was nonsensical: his actions as the Queen’s representative damaged the monarchy anyway.

In any case, none of it was an excuse for Kerr’s deception of an elected prime minister. In his preface, Keating captures the lengths to which Kerr went to pretend that he was on Whitlam’s side. When Keating himself accompanied Whitlam to Government House five days before the dismissal, the room was filled “with great mirth and noisy guffawing… I took this mirth between the governor-general and the prime minister to mean that they were seeing eye to eye on the big issue in front of them.”

Kelly and Bramston discovered a gem that was not included in the Palace letters: a letter from Prince Charles to Kerr in March 1976 in which he is effusive in his praise of the governor-general and tells him not to lose heart over the demonstrations against him and “all sorts of misinformed criticism and prejudice”: “What you did last year was right and the courageous thing to do — and most Australians seemed to endorse your decision when it came to the point.”

There could hardly be a clearer example of royal partisanship, and Kelly and Bramston acknowledge the fact by describing it as an unwise letter that had the potential to damage Charles’s future as King of Australia. But it really went no further than Charteris had in his endorsement of Kerr’s actions after 11 November.

Hocking writes that “never was a man less suited to the position of governor-general than Sir John Kerr.” What she means is that he took the job too literally. Kelly and Bramston quote Kerr as saying that “the whole question of the reserve powers became a reality for me from my early student days.” Kerr’s patron at law school was H.V. “Doc” Evatt, who was to become federal Labor leader and who had written about the use of the reserve powers in his 1936 book The King and His Dominion Governors. As Kelly and Bramston write, Whitlam had unwittingly appointed as governor-general “one of the nation’s most passionate zealots for the reserve powers.”

Even if he had been aware of this when he chose Kerr, Whitlam might have written it off as irrelevant to contemporary history. But there were other signs that Kerr would not take kindly to being treated as an automaton, obliged to accept the advice of the prime minister. Kerr had long left his Labor sympathies behind, and had a strong sense of self-importance when it came to matters great and small. For his swearing in, for instance, Whitlam suggested he wear a lounge suit, but Kerr instead turned out in a full morning suit of top hat and tails — a practice he extended to less formal occasions, such as presenting the Melbourne Cup. It was just one sign that he identified himself much more with the establishment than with his working-class origins as a boilermaker’s son.

If Whitlam’s strengths were his drive to modernise Australia after twenty-three years of conservative rule and — to use the words of his speechwriter, Graham Freudenberg — the “certain grandeur” that he brought to his office, his weakness was in assessing his fellow human beings. He misjudged Kerr from the start, and his patronising attitude towards him in office did not help. Whitlam occasionally referred to Kerr as “my governor-general,” Keating writes, whereas “Kerr, consumed with vanity, would have hated the notion that he was someone else’s person or instrument.”

Whitlam saw no need to indulge Kerr’s sense of his own importance or his pomposity. He regarded the governor-general’s position as ceremonial and nothing more. For Hasluck, this lack of trust and confidence between Whitlam and Kerr was the underlying problem that eventually yielded the dismissal.

Hocking spends a large part of her book writing about her campaign for the release of the Palace letters. Heroic as this battle was, it will strike many as of secondary importance to the content of the letters and her interpretation of them. But it does capture the absurdity of the situation: the Palace’s defence that secrecy was necessary “to preserve the constitutional position of the Monarch and the Monarchy” was, as Hocking writes, “like being stuck in a Victorian-era time warp, the language and the deference reflecting another time and a different, essentially colonial political system.”

And the same can be said of the letters’ portrayal of the vice-regal representative chewing the fat with the Queen and her advisers, 17,000 kilometres away in London, about how to dispose of the Australian government. Has there ever been a more vivid image to illustrate the need for Australia to become a republic? •

The post The governor-general’s ambush appeared first on Inside Story.

But we have been overlooking our nearest neighbour for so long that such a slip is hardly surprising. Turnbull devotes five pages out of 698 to the Pacific Island nations, including PNG, and then only in the context of the so-called Pacific step-up, under which Australia has increased its involvement in the region in response to greater Chinese interest. His only other mention of PNG is two sentences in a diary entry referring to a day he spent in PNG on his way to India.

So the fact that PNG faces the threat of a hidden pandemic has largely escaped our attention. “There is no Covid in most of the country,” says Glen Mola, professor of obstetrics and gynaecology at the University of Papua New Guinea and a leading figure in the nation’s health sector. “But there will be — it’s just a matter of time.”

Mola fears that once the virus reaches urban slums and squatter settlements in Port Moresby it will be very hard to stop. “This is where ten to twenty people sleep in the same room most nights,” he tells me. “Once a few people start getting sick and a few die, I predict people in these squatter settlements will disperse. Lots of people will think of going home to their rural village and at that point people will start taking the virus with them. So we will have these cascading epidemics.”

So far the official figures paint a more optimistic picture. As of 10 September, 507 positive cases and five deaths had been identified in the whole of the country, mostly in Port Moresby. But these figures have been revealed by only around 25,000 tests in a population approaching nine million. Australia, with its population of twenty-five million, has conducted 6.8 million tests.

The comparison is misleading in one sense. Most of the testing has been conducted in Port Moresby, which has a population of around 400,000 and where the first cases were detected in overseas travellers. Apart from an outbreak at the Ok Tedi mine — also the result of transmission from overseas — the assumption is that there are few positive cases in the rest of the country. That may be true for now, but it is hard to be certain when testing has been conducted in only half the provinces.

A variety of lockdowns have been introduced and lifted. In March the government declared a state of emergency, with non-essential staff of businesses required to stay home, bans on air and road travel, and restrictions on markets and roadside selling. But these prohibitions were not implemented in some cases and subsequently relaxed in others. In August a curfew was imposed in Port Moresby, schools closed for a fortnight and the wearing of masks made mandatory. Only two weeks later, though, despite the number of positive cases rising, prime minister James Marape lifted the restrictions, saying, “We have to adapt to living with Covid-19 for this year instead of taking on drastic measures.”

This may be the only realistic position to adopt in a developing country like PNG. Tonia Marquardt, medical manager for Médecins Sans Frontières in PNG, says that stage four lockdowns of the kind imposed in Victoria would do more harm than good. “Extreme restrictions in a population that really lives hand-to-mouth in terms of daily needs would do an enormous amount of damage. I think the best approach is to have a really strong response to clusters, locking them down quickly. and to be aware it will keep coming back and to respond strongly when there are outbreaks.” Mola agrees that a hard lockdown strategy would be difficult, particularly in urban areas, and says it could lead ultimately to mass hunger, looting and rioting.

Even before the pandemic, the PNG health system was woefully inadequate to meet the needs of its people. Crowds of sick people often gather outside hospitals, waiting to be triaged; only the more serious cases make it to emergency departments, where they face another wait to be admitted. In a nation where tuberculosis and malaria are widespread and outbreaks of polio have been recorded recently, only 2.5 per cent of GDP is spent on health, according to the World Bank, compared with 9.2 per cent in Australia. The government says there are only 500 doctors and 5000 hospital beds in the whole of the country.

“It’s a real worry that our health services don’t have any slack,” says Mola. “We have to flatten out the spread of the virus as much as possible so we can cope with the extra load on the health system. We don’t have the capacity to give all health workers full PPE” — personal protective equipment — “for every patient or every episode of healthcare. So health workers will get infected and when a minority get very ill and health workers are looking after health workers, people will get very frightened.” He recently advised couples to postpone having a baby because of the likely strain on the hospital system over the next twelve months.

The World Health Organization is working with the World Bank, the Asian Development Bank and the Australian and New Zealand governments to provide more resources for testing and more personal protective equipment. But the challenge in PNG is for the money and physical assistance to get to where it is needed. While Port Moresby hospital made plans months ago to deal with Covid-19, Mola says it has only just started receiving the money to implement them.

Australia hasn’t altogether ignored these problems. It has sent an Australian Medical Assistance Team of eight people, including public health specialists and laboratory experts, to PNG. Last month it announced an $80 million contribution to an international program to provide access to a Covid-19 vaccine for health workers and other vulnerable groups in Southeast Asian and Pacific countries. But the money comes from Australia’s existing, already meagre aid budget.

Earlier in the year the government promised $100 million to help Pacific countries deal with the economic effects of the virus. Papua New Guinea was allocated about $20 million. Again the money is what Canberra calls a “reprioritisation” from the aid budget. Given the scale of PNG’s budget problems it is a drop in the bucket.

Last year, Australia gave PNG a $440 million loan, meant as a temporary measure until the country refinanced its debt with the help of the International Monetary Fund; repayments were subsequently suspended in a sign of the scale of PNG’s economic woes, which have been greatly exacerbated by the pandemic. In May, Australia’s foreign affairs department conceded that “the scale of the Covid-19 crisis will dwarf the resources we have available, including through our ODA [Official Development Assistance] budget.”

What else can Australia usefully do? Provide more testing kits, for one, says Mola. And perhaps we could send them a Norman Swan, he suggests, or another credible medical figure to combat the rumours running rife. One is that the virus has been brought into the country by the WHO; another that it was the Bill Gates Foundation, which wanted to boost its vaccination business. And then there’s the resistance healthcare workers have encountered to measures to stop the spread because “it’s in God’s hands.”

China, among other countries, has been providing virus-related assistance, including tonnes of equipment, as part of the increased engagement with the Pacific that has made Australia nervous. Last month Scott Morrison also announced a “comprehensive strategic and economic partnership” with PNG. Effectively an update of previous such agreements, it is strong on rhetoric about enduring ties, strong democracies and improving healthcare, but contains few specifics.

But the agreement does reaffirm — under the heading of strategic cooperation — the redevelopment of the Lombrum naval base on Manus Island. Apart from having been an Australian dumping ground for asylum seekers, the island occupies a potentially important strategic position off PNG’s northern mainland. In June, the PNG government was reported to be planning to tear up the agreement reached in 2018, with the then PNG foreign minister Patrick Pruaitch saying negotiations had been mishandled by the previous government of Peter O’Neill and he had ordered a review. Pruaitch is among those in the government supporting a greater Chinese role in the region.

Judging by the Australian defence department’s response to questions, that tension has been smoothed over. The department says there has been no request from PNG to review the agreement, work has started on preparing the site for construction, and contractors are being selected “through an open and competitive tender process.” The department is coy about US involvement in the redevelopment, although it was part of the original announcement. “Cooperation between PNG and the United States is a bilateral matter for both nations,” it says.

Perhaps Chinese firms won’t bother to put in a bid. They are already doing just fine on other projects, including at Momote, which has the closest airport to Lombrum. This also is being redeveloped, with a longer runway and other work to upgrade the facilities. Performing the work is China Harbour Engineering, identified by former US navy officer Thomas Shugart as a subsidiary of China Communications Construction Company — which happens to be one of the companies building Chinese bases in the South China Sea and has been singled out for potential US sanctions.

When asked about Australia’s attitude to this work, Australia’s foreign affairs department played a straight bat: “Momote Airport is one of the many airports across Papua New Guinea being upgraded as part of the Asian Development Bank’s Civil Aviation Development Investment Program. Australia welcomes ADB funding of infrastructure projects and support to economic reform in Papua New Guinea.”

Papua New Guinea is not about to look any gift horses in the mouth, and can only benefit from competitive rivalry between China on the one hand and Australia and the US on the other. As Rowan Callick pointed out recently in Inside Story, “Port Moresby is shifting to Beijing as inexorably as its economy is declining.” He added that PNG was the only country in the Pacific to support China’s new security legislation imposed on Hong Kong when the matter came before the UN Human Rights Council.

If the concern about China, increasingly verging on paranoia, keeps strengthening in Australia, PNG won’t mind. It may mean that we finally give our nearest neighbour the attention it deserves, and at a time when it seems likely to be facing a growing Covid-19 caseload. •

The post Just a matter of time for PNG? appeared first on Inside Story.

It’s clear from the letter that the governor-general is hurt by the attacks on him but is taking the advice of “my few close friends and advisers” not to defend his position publicly, although “this is difficult for an extrovert and activist.” He suggests he could still be tempted, though, if “the calumnies and criticisms become unbearable.” The message that comes back from Charteris is unambiguous — please don’t — and that advice is accepted.

With due allowance for hindsight, Gough Whitlam made a bad choice in appointing Kerr to a position where he revelled in the trappings of office and refused to see himself as a “cipher” — the description once used by Whitlam — who was duty-bound to follow the advice of the democratically elected prime minister. It points to one of Whitlam’s weaknesses: he was a poor judge of character.

The letters confirm what Kerr has previously claimed: he did not tell the Queen beforehand of his action on 11 November. In his letter to Charteris on the day of the dismissal, he writes: “I should say that I decided to take the step I took without informing the Palace in advance because under the Constitution the responsibility is mine and I was of the opinion that it was better for Her Majesty not to know in advance, though it is, of course, my duty to tell her immediately.”

This is an impeccable exposition of the principle that the Queen should be kept away from political controversy. But the letters reveal much more: the months of voluminous correspondence between Kerr and the Palace that not just kept the Queen informed of the unfolding political and constitutional crisis but also canvassed all the options available to him, including dismissal. Most strikingly, the response from Charteris, who was passing much of the correspondence on to the Queen, was to support Kerr in his view that he could use his reserve powers and to commend him once he had done so.

On 4 November, a week before the dismissal, Charteris writes to Kerr in the following terms:

When the reserve powers, or the prerogative, of the Crown, to dissolve Parliament (or to refuse to give a dissolution) have not been used for many years, it is often argued that such powers no longer exist. I do not believe this to be true. I think those powers do exist, and the fact that they do, even if they are not used, affects the situation and the way people think and act. This is the value of them. But to use them is a heavy responsibility and it is only at the very end when there is demonstrably no other course that they should be used.

Here Charteris was taking a partisan position, even if the legal position was accurate. It was Whitlam who argued that the reserve powers did not exist or, if they did, that they were a dead letter. It is the difference between law and convention. The governor-general is the constitutional head of the armed forces, but no one suggests he or she should be the one calling out the troops. Whitlam’s argument was that in a democracy the power to dissolve parliament and call an election could be exercised only on the advice of the prime minister. Others disagree, but that is not the point: Charteris was siding with Kerr and the Liberals against Whitlam.

More than that, he was actively supporting Kerr: “I think you are playing the ‘Vice-Regal’ hand with skill and wisdom.” While Charteris counselled that the reserve powers should be used only as a last resort, he never suggested they should be avoided altogether.

After the speaker of the House of Representatives, Labor’s Gordon Scholes, writes to the Queen on 11 November asking her to restore Whitlam to office as prime minister on the grounds that he continued to command a majority in the lower house, Charteris replies that only the governor-general could do this. “The Queen has no part in the decisions which the Governor-General must take in accordance with the Constitution.” (My emphasis.)

This too was siding with the Liberals, who argued that the governor-general had no alternative but to act, and against Labor, which argued he must not.

Charteris not only supports Kerr: he is effusive in his praise of him. When Kerr tells him after the dismissal that he received a complimentary letter from Sir Robert Menzies, Charteris says he is “delighted… It must have been reassuring to find that he thinks history will credit you with having acted rightly.”

History has not been so kind. Though it is generally accepted that the reserve power of dismissal does exist, there remains fierce argument over whether it should have been used.

Kerr was faced with a deadlock created by two implacable political enemies unwilling to give ground. But there is substantial evidence that the situation could have been resolved politically. By 11 November a number of Liberal backbenchers were prepared to concede defeat and pass the budget. Kerr made a series of political judgements: that the opposition senators would not break ranks; that Whitlam’s proposal to temporarily fund government services through the banks would not work; and that an election had to be held before the end of the year.

At the same time that Kerr was canvassing his options and ultimate intentions with Charteris, he was keeping Whitlam in the dark. More than that, he was actively deceiving him by suggesting he was playing a passive role, and giving no hint of his intentions for fear that Whitlam would ask the Queen to sack him first. At the same time he was leaving Malcolm Fraser confident enough to stick to his guns in blocking the budget at a time when he was coming under enormous pressure, including from members of his own party, to buckle.

Kerr’s justification for deceiving Whitlam was to avoid exposing the Queen to an impossible situation. As far back as September, before the opposition had blocked the budget in the Senate, Kerr is expressing concerns that Whitlam would ask the Queen to sack him before he had a chance to sack Whitlam. Charteris is sympathetic but ultimately offers Kerr no comfort, writing on 2 October:

If such an approach was made you may be sure that The Queen would take most unkindly to it. There would be considerable comings and goings, but I think it is right that I should make the point that at the end of the road The Queen, as a Constitutional Sovereign, would have no option but to follow the advice of her Prime Minister.

Nine days after the dismissal, Kerr raises with Charteris whether he should have given Whitlam prior warning of his intentions to give him the option of calling an election rather than be sacked:

History will doubtless provide an answer to this question but I was in a position where, in my opinion, I simply could not risk the outcome for the sake of the Monarchy. If in the period of say twenty-four hours, during which he was considering his position, he advised The Queen in the strongest of terms that I should be immediately dismissed, the position would then have been that either I would in fact be trying to dismiss him whilst he was trying to dismiss me, an impossible position for The Queen, or someone totally inexperienced in the developments of the crisis up to that point, be it a new Governor-General or an Administrator…

Maybe, but this didn’t justify the ambush of Whitlam. It was one thing for Whitlam to threaten to go to the Queen as a means of putting pressure on Kerr; it is uncertain whether he would have acted on that threat. Kerr was more focused on protecting the monarchy than on safeguarding Australian democracy.

The correspondence captures the bizarre nature of our system of constitutional monarchy: the Queen, sitting on the other side of the world, has a role in our system of government that, though largely symbolic, can on rare occasions involve real decisions. Kerr’s fear of dismissal points to a flaw in the system that has yet to be addressed, along with the Senate’s power to block supply — the trigger for the 1975 constitutional crisis. The Queen has less independent power in Britain than she does in Australia.

The National Archives released the Palace letters on Bastille Day, a celebration of the French revolution. The Palace letters deserve to revive the debate on an Australian republic. •

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The simplified system, said Morrison, “will make it easier for people to comply with requirements and spend more time searching for jobs, which is the key element of welfare reform.” Moreover, “this investment will also help us stop the rorts by giving our welfare cops the tools they need on the beat to collar those who are stealing from taxpayers by seeking to defraud the system.”

Those were the days. The government was in its first term and Morrison was an ambitious, gung-ho minister with a fondness for the police and military analogies that had stood him in such good stead in party circles when he was overseeing Operation Sovereign Borders.

Robodebt started the same year — though it didn’t acquire its pejorative nickname until later — and it reflected Morrison’s punitive approach. The increasing potential of automated data-matching — in Morrison’s words, the fact that more government systems were talking to each other — was for the first time making it cost-effective to pursue overpayments of welfare benefits.

The problem was that the systems were talking different languages. Crucially, the tax office was supplying income figures that couldn’t be matched to the benefits people were receiving. The government went ahead anyway, putting the onus on welfare recipients to prove the figures wrong, and causing real hardship and trauma, including reported suicides, among vulnerable people.

A program that had previously reviewed 20,000 cases a year conducted more than 900,000 reviews in the four years to the end of August last year, with 734,000 identified as having been overpaid. Except that many of them hadn’t been. Most of the reviews looked at benefits paid under Newstart and Youth Allowance, though they were eventually extended to other payments, including the age pension, the disability support pension, Austudy and the parenting payment.

Subsequent events have culminated in the government’s promise to pay back $721 million to 373,000 Australians for 470,000 illegally recovered and often non-existing debts. With almost two-thirds of the debts having been reversed, the government’s early depiction of the sunlit uplands looks particularly ironic.

Speaking on the same day as Morrison in 2015, human services minister Marise Payne was just as effusive about how data analytics would inform policy decisions. “Improvements to real-time data sharing between agencies will mean that, with customer consent, their information won’t have to be provided twice,” she said. “Improved data sharing will also significantly increase the government’s ability to detect and prevent fraud and non-compliance. This means customers who [simply] fail to update their details with us will be less likely to have to repay large debts and those who wilfully act to defraud taxpayers will be caught much more quickly.”

When applied to robodebt, this enumeration of the new system’s benefits turned out to be wrong or misleading in every detail. The data shared was not real-time: annual income figures from the tax office were averaged out to compare them with fortnightly benefit payments, producing many wrong assessments. Customers were not asked for their consent: they were pursued to provide information the government already had or was responsible for obtaining.

On top of all that, the relatively few perpetrators of welfare fraud are also being repaid their robodebt money because the government finally had to concede that the whole scheme broke the law. That admission came more than two years after Terry Carney made exactly that point as a member of the Administrative Appeals Tribunal. Carney, now a professor of law, has since described robodebt as “illegal, immoral and ill-constructed.”

The government is continuing with “online compliance intervention” — robodebt’s official title — but it will no longer use income averaging and it has promised other “refinements.” It has yet to give a clear commitment not to try to recover some of the same debts by different means. As Morrison put it earlier this month, the decision to refund the money “doesn’t mean those debts don’t exist. It just means that they cannot be raised solely on the basis of using income averaging.”

The government is also forging ahead with upgrading and increasingly automating its welfare payments system. Properly designed — and that’s a big caveat in the light of recent experience — the modernisation should make it easier for people to claim their correct benefits and easier for the government to make sure that they are paid the correct amounts.

The Welfare Payments Infrastructure Transformation project — the one described as among the biggest in the world five years ago — has another two years to run. Services Australia, formerly the Department of Human Services, claims that it has made practical improvements, including introducing prefilled claim forms using information already available to the government, enabling claims via mobile devices and verbally, and speeding up claims processing for some students and the unemployed. It boasts that the number of questions on the online claim form for students and trainees has been reduced from 117 to thirty-seven.

But, as the robodebt experience demonstrates, many of the new system’s claimed advantages are double-edged. The “digital assistants” introduced to answer customer questions, for example, mean less human interaction, which is reflected in staffing reductions that have already taken place. But most of us already know just how frustrating it can be dealing with digital assistants.

Similarly, analytics will be used to “proactively provide support to those who need it.” And also to take it away? A new “payment utility platform” promises same-day payments but also “simpler debt repayment processes.” In the wake of robodebt, how many people will be keen to use it?

A new “entitlement calculation engine” will determine payment levels. And if a person wants to challenge the calculation? Presumably they will be expected to sort it out with one of the new digital assistants.

It is one thing to increase automation for people well versed in the ways of the digital economy, but it is entirely another to impose it on vulnerable people who may or may not be familiar with online processing. As Australian Council of Social Service chief executive Cassandra Goldie told Inside Story this week, “Robodebt fundamentally failed because we stripped out the ‘human’ in human services. Instead it was up to individuals to try and prove their innocence in a David versus Goliath battle with automation.” For Goldie, humans must have a role in decisions about essential services like income support and “we must build in ways to enable people to easily correct decisions where mistakes have been made.”

In the end, it is how the system is designed that will determine the nature of the experience for its users and how much emphasis is placed on ferreting out suspected wrong claims.

Judged by the guidance from the top, the bias will be towards limiting entitlements. In 2018 the government introduced ParentsNext to add another layer of obligations to those already imposed on parents on low incomes who receive parenting payments. According to a Senate committee report, one in five parents had their payments suspended for missing appointments or failing to participate in “pre-employment” programs under this new scheme.

The social services minister who promised in 2015 to use the modernised welfare system to sool the “welfare cops” on to beneficiaries is now the prime minister who says the refunded debts still exist.

Having initially refused to apologise for robodebt for fear of legal liability, Morrison thought better of it and, in response to a pointed question from Bill Shorten, assured parliament of his deep regret for any hardship caused. But government services minister Stuart Robert immediately added that 939,000 Australians had $5 billion worth of debt “that the government lawfully has to collect across a whole range of programs.” Message? We’re still coming after you.

In her 2017 book Automating Inequality, American political scientist Virginia Eubanks describes how digital eligibility systems, matching algorithms and other tools have been used in the United States to drastically cut the welfare rolls. “At their worst these systems act as empathy overrides, allowing us to turn away from the most pressing problem of our age: the life- and soul-threatening legacy of institutional racism, classism and sexism in America,” she said in a speech last year. “They allow us to ignore our moral responsibility by replacing the messiness of human relationships with the predictable charms of systems engineering.”

It doesn’t need to be that way. But governments will have to resist the temptation to succumb to the convenience of allowing machines to make decisions that require judgement, compassion and humanity. •

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Why would hard-headed investors put their money into a venture based on the assumption, as Traill recounts it, that “a bunch of do-gooder non-profits could run a very large-scale business and do social good.” Traill surprised the doubters: the money from charities, private investors, banks and government that he helped bring together into a winning bid created a highly successful social enterprise called Goodstart.

The new company paid $95 million for a stripped-down version of ABC Learning, which at its peak had more than 1000 centres, and raised another $70 million to fund its ongoing operations. A non-profit outbidding private rivals was one surprise. Another has been the success of combining an unsentimental business approach with a soft heart.

Today Goodstart is the largest provider of childcare and early learning in Australia, with 665 centres catering for 75,600 children and employing 16,700 people. In 2018–19, its revenue grew by 8.2 per cent to $1.1 billion. The surpluses it earns as a not-for-profit are invested in raising the quality of early learning and supporting centres in disadvantaged areas.

That’s not to say everyone is happy. Particularly in the earlier years, staff complained about cost cutting, minimum staffing levels and having to pay for needed resources out of their own pocket. More recently, an employee posted a comment that “a lot is expected to be done out of goodwill” and another that staff were “not being recognised and rewarded for their hard work.” But Goodstart argues it has been steadily improving its performance.

According to John Cherry, the company’s advocacy manager (and a former Australian Democrats senator), the number of Goodstart centres meeting the national quality standard — which measures such things as staff-to-child ratios and staff qualifications and is administered by state and territory governments — has grown from about half in 2012 to 93 per cent. It’s now higher than the average among preschools, which have been regarded as the high-quality end of the early learning sector. Fee increases have been below average for the past four years, in contrast to those of ABC Learning, which were above average.

Cherry says Goodstart pays above award wages, has spent about $100 million on professional development and has increased the number of teachers it employs by about 300, bringing the total to 1300. Its social inclusion budget — which helps disadvantaged children get access to early learning — has risen from $1.5 million to $12 million in the past four years, though arguably this is still a modest amount in proportion to its revenue. Goodstart’s policy is not to turn any child away, and it provides speech therapists, occupational therapists, psychologists and other support.

What would Goodstart be worth now? “You would probably list it for over $1 billion if you wanted to run it more commercially,” says Traill, who chairs the company. As part of the original deal, three charities — Mission Australia, the Benevolent Society and the Brotherhood of St Laurence — each put in $2.5 million, an investment that returned them 12 per cent a year, as well as another 15 per cent in the form of a dividend based on the success of the business. Another $22.5 million was raised from forty-one investors, who put in amounts ranging from $100,000 to $3 million and also earned 12 per cent a year, with the money repaid after seven years. The National Australia Bank lent $50 million and the federal government a further $15 million — debts that have also been repaid.

Traill is driven partly by his upbringing in Morwell, a disadvantaged town in country Victoria, where he witnessed bright kids missing out on the opportunities that his own parents were able to give him. He went to Melbourne University and then to Harvard for an MBA, before joining Macquarie Bank, where he spent fourteen years during the 1980s and 1990s. He was co-founder and executive director of the bank’s private equity arm, Macquarie Direct Investment, which boasted a gross rate of return of 32.3 per cent.

Deciding there was more to life than getting rich at the millionaires’ factory, he left in 2002 to start Social Ventures Australia. A not-for-profit, it has supported more than fifty projects that deliver social as well as financial returns, and has a busy consulting arm.

Achieving a return on investment in its broadest sense remains central to Traill’s thinking. “We know that waiting until a child begins formal schooling is the least effective intervention if a child’s development is falling behind their peers, both for the individual and from a return on investment point of view,” he wrote in an introduction to the Goodstart’s 2018 annual report. “If as a nation we begin to place an emphasis on early learning — as nations as diverse as Finland, China and New Zealand are already doing — we will reap the rewards for this and the following generations.”

A wealth of evidence attests to the ability of children to soak up learning in the first five years of life. A report to federal and state governments in 2017 argued that children who received high-quality early education were more likely to complete year 12 and less likely to repeat grades or require additional support. A recent PwC study that attempts to quantify the returns on investment in early childhood education calculates that every $1 spent produces about $2 in benefits, taking into account factors such as children’s higher future earnings, extra income for parents and carers from additional work, higher government revenue from taxation, lower welfare and healthcare costs, and reduced criminal activity.

Other countries, particularly Britain and the United States, are ahead of Australia in social impact investing. British legislation gave the not-for-profit social sector access to almost £600 million (A$1.13 billion) in unclaimed money in banks that has been leveraged into £1.7 billion (A$3.2 billion) in investment. Mostly, though, social businesses here and overseas operate on a small scale. Goodstart’s success has attracted attention particularly because of its size.

“I think we are regarded as a bit of a global exemplar,” says Traill. “My hope has always been that Goodstart becomes a precedent, and not just in early learning.” He sees its application in areas such as aged care, further education, and social and affordable housing — areas where there is scope for the superannuation sector in particular to invest in low-risk, long-term ventures with many of the same characteristics as infrastructure projects.

One of Traill’s other hats is as chair of the investment committee of Sunsuper, an industry superannuation fund that has put $200 million into an investment trust for aged-care housing — money it says is a good property investment that also delivers social benefits. The HESTA industry super fund has a $70 million social impact investment trust managed by Social Ventures Australia and recently allocated $20 million to a Melbourne apartment project to provide affordable housing.

Traill is exploring further opportunities in aged care, where he sees many similarities with early childhood education. The hearings of the royal commission into aged care certainly are reinforcing the need for high-quality, ethical care, as are the financial difficulties the sector is facing. Traill argues that returns in the order of the 12 per cent achieved for Goodstart investors should be attractive, particularly in the present circumstances of a low-growth economy, and that it would be a comfortable level of risk for a well-run company. He adds that as a board member of Sunsuper he has a legally enforceable responsibility to maximise the return to fund members. “If these businesses are run ethically there is no reason they should not be able to generate a long-term rate of return.” He also sees potential in the further education sector, where private colleges “have lost sight of the quality agenda.”

Traill says there is no need for stratospheric executive salaries, with Goodstart showing that a business can achieve a depth and balance of skills without having to pay “nosebleed” packages. “People are paid well by non-profit standards, but nothing like the seven-figure bonuses people of comparable talent would be getting in the private sector.”

Of course, aged care is not the only sector that has suffered reputational damage. There’s the banks. And there’s business more generally, in the wake of a global financial crisis that has led to a debate about the very future of capitalism. “We need a more sophisticated form of capitalism, one imbued with a social purpose,” Michael Porter, one of Traill’s lecturers at Harvard, has argued. “But that purpose should arise not out of charity but out of a deeper understanding of competition and economic value creation… It is not philanthropy but self-interested behaviour to create economic value by creating social value.”

This not only challenges the traditional obligation of the corporation to act solely in the best interest of shareholders but greatly expands notions of corporate social responsibility. Consumers, particularly young people, are increasingly insisting that businesses behave honestly and transparently, says Traill.

And then there is government. Why is it, Traill asked in a speech five years ago, “that despite a generation of economic growth and in many areas quite significant funding growth, the data tells us that we haven’t made much progress on the core moral and economic issue that we face in this country — that many Australians live in a cycle of exclusion and cannot fully participate in the community?” He quoted two examples: at age fifteen, the poorest 25 per cent of students were nearly two-and-a-half years behind the most affluent students; and, based on 2014 statistics, more than 1.6 million Australians were without work or without sufficient hours of work. “Our conclusion is simple and powerful: money isn’t flowing to the right places to achieve social impact.”

The question is how much difference can be made by social impact investment. With governments progressively withdrawing from public or social housing and with 190,000 households on the waiting list, there is plenty of scope for a social enterprise like Goodstart. But the scale of the problem is such that, even with investment by superannuation funds, such a project can go only a small way towards filling the gap.

The same applies more generally to affordable housing. According to a report prepared for federal and state Treasury heads, the main barrier to the supply of affordable housing by the private sector is the lower returns compared to those for other property. It argued that no innovative financing model could close this gap and that “a sustained increase in the investment by governments is required to stimulate affordable housing production and attract private and institutional investment.”

Traill was appointed this year to chair a federal government taskforce to develop a social impact investment strategy. But what the government has in mind, at least at this stage, is far more modest than large scale social entrepreneurship. Rather, it is exploring the use of the social impact bonds that Traill, through Social Ventures Australia, helped pioneer in the states. According to a federal government announcement last month, it is looking for “solutions to address entrenched disadvantage and some of society’s most intractable social problems” in areas ranging from welfare dependence to social housing. As well as providing $5 million for the taskforce, this year’s federal budget dipped a small toe into the water by allocating $14 million for three social impact investment trials.

Details remain to be worked out, but the Department of Social Services says the trials will seek to increase labour force participation of people receiving working-age income support payments and to “strengthen the wellbeing and self-reliance of families with children.” Organisations will receive funding based on the results they achieve. These outcome-based payments, as opposed to fee-for-service or block grants, are a key element of social impact investments. But the department says the trials won’t involve another typical characteristic — funding from private investors.

The taskforce comes under the prime minister’s department, reflecting Scott Morrison’s interest in the area. This was expressed most clearly in 2015, when as social services minister he dressed up the concept in conservative garb. Governments would get smaller in proportion to the size of the social challenges, he said, which meant that non-government players would have to get bigger, including through private investment in social needs. “What I am basically saying is that welfare must become a good deal for… private investors.”

If this is the real motivation of governments then it raises an obvious question. If social impact investing is simply a substitute for government programs, what exactly will it achieve? According to proponents, it is a more efficient way of delivering services that focuses on the outcomes actually achieved; a more innovative approach to some of the social problems that have defeated successive governments; and perhaps, if private wealth is harnessed for social purposes, a modest attempt to address inequality.

The first social impact bond was launched in New South Wales in 2013. The state’s seven “social benefit bonds,” as they’re called, cover challenges like reducing the number of children in out-of-home care, driving down rates of youth unemployment, homelessness, and reoffending among former prisoners, and improving palliative care and mental health services.

Victoria has its own version, called Partnerships Addressing Disadvantage, which aim for a wider source of private funding, including pure philanthropy and loans. The Andrews government stresses they will not replace existing government services, whereas Gladys Berejiklian’s NSW government says that “achieving the outcomes should reduce the need for, and government spending on, acute services.” South Australia has introduced a social impact bond to target homelessness and Queensland has three pilot bonds, with many of the projects in the different states covering similar areas to those in New South Wales.

On paper, the early bonds introduced in New South Wales have been successful, with outcomes better than those under government programs, as well as returns to private investors of up to 12 per cent a year and potentially as high as 30 per cent for investors prepared to risk losing their capital if the project is not successful. But they have been operating on a small scale. The first bond, Newpin, an intensive and therefore costly program to reduce out-of-home care for children, has returned 328 children to their families in six years, compared to the estimated 114 in the absence of the program.

That result is impressive, but the net figure of 214 makes barely a dent in the 17,879 children in out-of-home care in New South Wales in 2017 and the 47,915 in Australia. It does show the potential savings available, though, given that it costs around $60,000 a year to keep a child in out-of-home care. But many children do not meet the criteria of the Newpin program.

The structure of the bonds can be complex. An average of 11,712 staff hours was taken up in developing each of the first two NSW bonds. While experience has streamlined the process, the requirements for measuring outcomes and investor risks and returns can vary. A substantial risk premium is needed to attract investment in the first place, meaning the total cost of a social impact investment project is higher than if it were funded directly by government — and also explaining why some of the more recent projects have moved away from seeking private investment, reducing their complexity but retaining the emphasis on outcomes-based funding.

Contrary to the impression often given, the money raised from private investors via the bonds doesn’t represent additional funding, since investors expect their money back, plus earnings. The only exception is if projects fail and investors’ capital is not protected. The advantage to government — assuming that it would otherwise have funded the program itself — is that it has contracted out the risk.

Elyse Sainty, director of impact investing at Social Ventures Australia, sees social impact bonds occupying the middle ground between purely experimental projects, where outcomes are hard to predict, and tried and tested programs where governments have greater certainty about results and so are more confident about carrying the performance risk themselves.

Olivia Wright, engagement manager at the NSW Council of Social Service, says there have been some savings to the NSW government from social benefit bonds but they are less than expected. She sees merit in the scheme but also has serious reservations. “They probably are not the silver bullet that they were conceived to be maybe five years ago,” she says. Her main concern is that they are a huge burden on the social sector, requiring large amounts of time, money and human resources, meaning they are not an option for the many small social welfare organisations and those dealing with disadvantage as the result of very complex social problems. “They are really only available as a tool for a very small number of organisations that have access to the human and financial resources to allow them to go through the long and arduous process of developing a bond.”

On the other hand, she sees benefits in the discipline that social impact bonds impose, especially with the requirement for measurable outcomes. And she sees an increasing trend towards people wanting to use their everyday investments to do good. “The primary issue from our perspective is how does the social sector build the capacity to meet that demand?”

On the present evidence, social impact bonds will only contribute at the margins to tackling social disadvantage, compared with the kind of resources that can be marshalled by governments through taxation revenue. But social entrepreneurship on the scale of Goodstart can make a larger impact. Traill’s ambition is to shift the traditionally conservative mindset of the superannuation funds and unlock the $2.8 trillion that they manage. Just a tiny fraction of that would be enough to fund hundreds of Goodstarts.

That requires a wider acceptance of the idea of capitalism with a social purpose, or capitalism 2.0, as it has been dubbed. It suggests a profound change in business culture that will be a challenge to achieve. But at least rhetorically, change is in the air. Some large businesses in Australia are more openly promoting social and environmental values, even at the cost of offending conservative politicians. In August the US Business Roundtable, representing big business, declared a new purpose — not just serving shareholders but also investing in employees, fostering diversity, inclusion, dignity and respect, dealing ethically with suppliers and supporting the communities in which businesses operate.

It may only be words at this stage, but it at least suggests that even big business feels under pressure to change the way it sees its role. •

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In the 2016 election, Labor invented the scary claim that a Turnbull government would privatise Medicare. There was no such plan in the Coalition’s top or even bottom drawer, if for no other reason than that such a move would be political suicide. Though it is impossible to prove what role it played, Mediscare is now generally believed to have been a major factor in pushing the Turnbull government to the brink of defeat.

Payback came in this year’s election, with lies from the Coalition and other anti-Labor groups about Labor’s “death taxes,” “car taxes” and unlikely plan to confiscate tradies’ utes apparently contributing to Scott Morrison’s miracle election win. If lying so blatantly pays so well, then an escalating arms race becomes inevitable. And the consequences beyond the next election? What little trust we have left in democratic politics could easily go down the gurgler.

Ask the major parties what can be done about it and they say that these things are best sorted out in the cut and thrust of political debate, with free speech uninhibited and voters deciding which claims or counter-claims to believe. There are just too many grey areas, they say, for hard and fast judgements to be made about political claims.

Defenders of the present system are buttressed by the fact that lying is officially sanctioned. The most spectacular recent example comes from Britain, where an opponent of Brexit took a civil action against Boris Johnson for claiming during the referendum campaign that the British government paid the European Union £350 million a week.

Sir David Norgrove, chair of the UK Statistics Authority, described Johnson’s claim as “a clear misuse of official statistics.” According to Full Fact, an independent fact-checking service, net British payments to the EU were less than half that figure.

The case against Johnson was based on the argument that he had abused public trust in his office by making statements that were false and misleading. In May, a magistrate’s court ruled that Johnson had a case to answer; in June, it was overruled by the High Court.

In its judgement, released last week, the High Court said that the magistrate had erred in finding that Johnson was acting as a public officer when he made the statements. Moreover, the scope of legislation covering the making of false statements was restricted to reflections on the personal character or conduct of a candidate during an election campaign. “Parliament must deliberately have excluded any other form of false statement of fact, including those relating to publicly available statistics,” the judgement added. No politician could ask for a better endorsement of lying.

Successive Australian parliaments have done much the same as Britain’s. The Australian Electoral Commission, or AEC, polices the closest thing we have to sanctions against misleading and deceptive behaviour during campaigns. But it can only act on conduct that affects the process of casting a vote. Not only are the powers narrow but the AEC interprets them very strictly and shies away from any role in determining truthfulness.

In one case during the last election that received little publicity in a crowded field, voters in the Queensland electorate of Dickson were handed fraudulent flyers claiming to show “how to vote for a minor party or independent” but placing preferences for Peter Dutton above those for Labor. This effectively meant he would benefit from these unsuccessful candidates’ votes when their preferences were distributed, and was contrary to the actual preference allocation of the candidates.

Seven News traced the person who had authorised the flyer to a house that displayed a sign advocating a vote for Dutton. The AEC told Seven that the publication wasn’t in breach of the law because the flyer didn’t purport to be an official how-to-vote card. Perhaps not: it is just that it was deliberately designed to mislead voters.

In three Melbourne electorates, Chinese-language signs with Liberal Party authorisation and the same purple colour used in AEC notices advised voters on the “correct way to vote: on the green voting card, put preference 1 next to Liberal Party.” The AEC said it could take no action here either, because the signs complied with requirements on authorisation and positioning. It was another effective sanctioning of unethical behaviour.

Circulating false information about an opponent’s policies, such as Labor’s alleged death taxes, is arguably more serious. Many more voters can potentially be influenced, particularly under a compulsory voting system in which people often pay scant attention to politics but can be influenced by scare campaigns.

Ask the public and, unsurprisingly, they are not in favour of officially sanctioned lying. A poll commissioned by the Australia Institute after the 2016 election found 88 per cent support for truth-in-political-advertising legislation enabling parties and candidates to be fined for false and misleading advertising in the same way as companies.

Parties may increasingly follow public opinion rather than lead it, but in this case they are quite willing to make an exception. The challenge is how to reform a system from which the major parties believe they benefit.

Zali Steggall, the independent candidate who vanquished Tony Abbott in Warringah, made integrity in politics a key component of her campaign. As well as supporting a national anti-corruption body, a restoration of the principle of ministerial responsibility, an independent public service and fixed four-year terms of parliament, she argues for a parliamentary fact-finding office and a law to enforce truthfulness during political campaigns. Her wish to make truth-in-advertising legislation a priority in this term will find support among other independents and the Greens.

Persuading the major parties will be harder, but there is at least a sign of a crack in the wall there as well. Jason Falinski, the Liberal MP for the seat of Mackellar, which adjoins Warringah, also came out during the last election supporting truth-in-advertising legislation. “We definitely need rules in political advertising to make sure that people are not misleading the voters when it comes to making a decision about who to vote for,” he said. “We have truth in advertising across the board: it just doesn’t apply to political campaigns.”

Consumer law provides penalties for businesses that create a false or misleading impression through advertising, packaging or online shopping services. Exaggeration, particularly when consumers can easily identify it — along the lines of “our steaks are the best in the world” — is allowed but claims that leave a misleading impression in the minds of reasonable people are a breach of the law.

According to A.J. Brown, professor of public policy and law at Griffith University and a board member of Transparency International, there is no reason similar provisions cannot be applied to political discourse. “You can create an offence for conduct that is either deliberately or recklessly misleading and deceptive,” he told me this week. “You can include the same sort of test as for competition and consumer law: whether a reasonable person would be induced to act differently if they had not followed the misleading and deceptive information.”

Brown argues we have gone beyond the point where misdemeanours by rogue elements are not frequent or serious enough to justify a new law. Now is the time to act, “before we go any further down this slippery slope.” The AEC could undertake investigations and, if necessary, refer cases to the police or a national integrity commission. Other than fines, penalties could include withdrawing or reducing public funding to offending parties or candidates.

Legislation of this kind would not be unprecedented. South Australia and the Northern Territory already have laws covering advertisements and other election material that is inaccurate and misleading to a material extent. Complaints in South Australia are handled by the state’s electoral commission, which has required advertisements to be withdrawn and retractions to be published. It can also pursue legal action, although it has not so far done so. A similar law was introduced federally by the Hawke government in 1983, but it was repealed before it could apply to the following election.

Graeme Orr, law professor at Queensland University, is another advocate of reform. “The level of trust has gone down so far that it is salutary to have something on the books,” he says, adding that there is no evidence that the South Australian legislation has had an excessively chilling effect on free speech.

Orr concedes such a law can be hard to enforce, particularly in relation to anonymous online material. It also can be difficult to apply remedies in the limited time before elections. But he believes the South Australian law has had a beneficial, if limited, effect on behaviour and that a federal law could do the same if it clamped down on the worst excesses during election campaigns.

Expecting the major parties to call a truce in the battle of escalating lies is a big ask. But given the level of trust in our political system, their ultimate survival may depend on it. •

The post The slippery slope of officially sanctioned lying appeared first on Inside Story.

Well, perhaps on their good days. All successful politicians have some ability to charm voters. But both these leaders are highly ambitious, driven people who have clawed their way to the top over the odd dead body. As former NSW premier Neville Wran once put it, in a comment applicable to all political parties: “You get nothing in the Labor Party without getting up to your armpits in blood and shit.” Morrison, as a former NSW director of the Liberal Party, and Shorten, as a factional numbers man, have both done their share of political bloodletting.

Both are believers in former Labor powerbroker Graham Richardson’s “whatever it takes” brand of politics. Morrison cemented his reputation within the dominant right wing of the Liberal Party with his brutal approach to refugee policy as immigration spokesman in opposition and as immigration minister in government. In 2011, he even complained about the Labor government’s decision to pay the airfares of relatives to attend the funerals of asylum seekers who had drowned off Christmas Island. Shorten twice dropped any pretence of loyalty to the leader by switching his support, and that of his followers, from Kevin Rudd to Julia Gillard and, later, back to Rudd.

The same applies to those still trying to claw their way up. Energy minister Angus Taylor holds the provincial NSW seat of Hume with a margin of 10 per cent, but that doesn’t stop him playing his politics hard. He has made several threats of legal action over matters that should be part of legitimate political debate. One concerned media coverage of a company that was registered in the Cayman Islands and of which, according to his official biography on the parliamentary website, he was co-founder and director before he entered parliament. This was the parent company of the one that benefited from an $80 million water purchase by the federal government, although by then Taylor says he had long severed ties. This week, he or his office tried to stop the distribution of a leaflet critical of his record, particularly on climate change, by claiming a technical breach of the Electoral Act.

Then there are the big issues that neither side wants to talk about. The Reserve Bank’s latest economic forecasts suggest a slowing economy, casting doubt on both sides’ promises of budget surpluses for this and following years. It brings to mind the projected budget deficit of $9.6 billion — huge in those days — with which Treasury confronted the Hawke government straight after it came to office in 1983, making the campaign promises of both sides unaffordable. There had been a hint during the campaign that the budget might blow out, but it didn’t suit either side to bring it into the debate, apart from a fleeting reference by Hawke just before polling day.

As for the impact of the current trade war between the United States and China, which has the potential to blow up the world economy, let alone the implications of China’s rapid rise to superpower status, forget it: the election campaign is fully occupied with weightier matters, such as shovelling money into marginal electorates.

At least the majority of adult Australians get to have their say in elections, discouraging parties from merely pandering to their base. The virtue of compulsory voting is that it forces people to exercise their right in a democracy.

True, that seems a strange argument — compelling people to exercise a right? And it is not strictly true: the only real compulsion is to get your name marked off the electoral roll and be given ballot papers.

After that, in the privacy of the polling booth, you can do what you like, including voting informal and making rude comments on your ballot paper, as some do. Though not that many: the informal vote in the last federal election was 5.1 per cent for the House of Representatives and 3.9 per cent for the Senate, suggesting that most people take their obligation seriously. But another almost 14 per cent of eligible voters didn’t bother to vote, whether by not enrolling, by not getting around to voting or by deliberately deciding not to.

Nevertheless, a valid vote of around 80 per cent is a significant statement about participation in a democracy. Compulsory voting means more people pay more attention to elections than otherwise, though how many is a moot point. It is no more a burden or an infringement of rights than the requirement to pay taxes or send children to school. It spares parties and candidates from the expensive and time-consuming chore of trying to persuade people to vote. And it generally means that more than just a minority of adults decide who governs them, unlike in the United States.

But compulsory voting does have its weaknesses. It is not compulsory to take an interest in politics, and an increasing number of people do not. In last week’s Essential poll, conducted twelve days before the election, 16 per cent of voters said they had not been paying any attention to the election, 29 per cent that they had been paying little attention, 36 per cent some attention and 19 per cent a lot. Those figures may change as polling day draws closer but perhaps not by much, judging by past elections.

The biggest factor in Labor’s favour is the sentiment that it’s time for a change. There is no shortage of factors to support this feeling: Liberal leadership instability; infighting over policy and in particular the inability to reach a coherent position on climate change and energy; the one-man show that has been the Liberal campaign, with many of Scott Morrison’s ministers apparently in hiding; the Coalition’s lack of a comprehensive third-term agenda; the departure of senior Liberal moderates like Malcolm Turnbull, Julie Bishop and Christopher Pyne; and the Liberals’ broader problem with women.

By contrast, Labor has offered leadership stability (though not popularity) since the Rudd–Gillard–Rudd period. It has a comprehensive suite of policies with an overriding theme of fairness. On climate change, a prominent issue for many voters, it offers a more credible policy than the Coalition. Though many haven’t warmed to Shorten, he can point to an impressive line-up of prospective ministers, including popular women in senior positions.

The question is how much all this matters. Labor opened up a big lead over the government in the wake of the coup against Turnbull, but the Liberals have recovered much of this ground. Since the start of the campaign five weeks ago, the polls have hardly moved. There are probably two major contributing factors. One is that voters have made up their minds and are not for turning. The other is that they are so disillusioned with politics or so apathetic that they just haven’t been paying attention. Labor hopes the first reason is the predominant one, on the assumption that it is driven by people who want to vote the government out. The Liberals’ hopes lie in the second.

In the 2016 election, 42 per cent of voters decided how to vote during the election campaign, according to the Australian Election Study. That may explain why Shorten crept up on Turnbull and almost pulled off an unexpected victory. But the figure has fluctuated considerably between elections.

Morrison’s best chance is with those voters who aren’t interested in the election and leave their decision until late, provided he can get through to them. Even sowing a small doubt in people’s minds could be enough to make them decide to stick with the devil they know. In that respect the Liberals have plenty of ammunition: Labor’s paring back of tax concessions affects only a small minority, but the Liberals are trying to convince voters otherwise. The exaggerations, the misleading claims and the outright lies are all part of a desperate bid to grab the attention of the disillusioned and the uninterested — not that the Liberals are the only offenders in that regard.

Our political currency has become so devalued that perhaps it’s time for a royal commission into politics. Just look at what it’s done for the banks: not only are they eating into their fat profits to pay compensation to some of the previously ignored customers, but the whole culture inside financial institutions has changed, or so we are assured. If that can happen with the banks, imagine the scope for cultural reform in politics.

Now why haven’t we heard that argument from the parties during the campaign? •

The post Beyond the political duopoly appeared first on Inside Story.

Conventional wisdom suggests that Labor, as the frontrunner, should keep its head down, play safe, present a small target and focus maximum attention on its opponent’s weaknesses. That is what John Howard did in 1996, when, apart from swearing to “never, ever” introduce a GST, his best-remembered promise was to make people comfortable and relaxed. It worked a treat, giving him a landslide victory against the Keating government.

It also worked, with slight variations, for Tony Abbott in 2013, when he campaigned successfully on Labor’s perceived negatives, promising to axe the (carbon) tax, stop the boats and repay the debt. Like Howard he was full of reassurance, promising no cuts in most areas of spending — a commitment he broke promptly and spectacularly in his first budget.

Labor’s approach in this election is exactly the opposite. It is presenting a big target by promising tax increases, although Bill Shorten prefers to call them subsidies and gifts, in order to pay for a long list of spending programs while still delivering bigger budget surpluses than the Coalition.

It is a coherent policy package and, on paper, it should appeal to voters. The additional revenue comes overwhelmingly from higher-income earners, while the spending programs are spread more broadly. ln health, consistently ranked by voters as the most important issue, Labor is promising to reduce growing out-of-pocket expenses and reduce hospital emergency queues. More money is promised for childcare and early education. More university places will be created and upfront fees for TAFE students will be waived. And so on. By contrast, the Coalition, although it’s the underdog in the election, is largely offering more of the same, apart from tax cuts and a promise not to topple any more prime ministers.

While Scott Morrison has campaigned strongly, Bill Shorten is proving more than a match, being judged by audiences as the winner of the first two leaders’ debates. But Labor’s plan to use the campaign to put the final nails in the coffin of a government that was beyond revival is not running to plan. Instead the polls have tightened, though only slightly, leaving Labor clinging to a very narrow lead.

At public events such as the leaders’ debates and the ABC’s Q&A on Monday, Shorten has been dogged by questions about the impact of his tax changes and the cost of his promises. There is nothing more difficult in politics than taking benefits away from people. Largesse extended by a government in good times — tax-free superannuation or extending the tax rebate for franking credits to those who don’t pay tax, for example — quickly come to be seen as entitlements.

Shorten is right to say it’s a matter of priorities and that the benefits of the tax concessions go overwhelmingly to higher-income earners. But those who will lose money are guaranteed to complain the loudest, and they inevitably include a few who are relatively less well off. An Essential poll this week showed just 39 per cent support for Labor’s plan to “reduce tax concessions for investors and self-funded retirees,” though this was still more than the 32 per cent who opposed it. The other positive for Labor is that more people back its policies overall than those of the Coalition, by a margin of 46 per cent to 36 per cent.

But the leaders’ forums suggest a disconnect in voters’ minds between Labor’s spending promises and the paring back of tax concessions to fund them. Shorten has been repeatedly confronted with variations on the question: where’s the money coming from?

The real challenge for a Labor government will be to persuade the Senate to pass its tax changes, particularly its plan to restrict negative gearing for property to new home purchases from the start of next year, halve the capital gains tax concession, and limit franking credit refunds. While the Greens could be expected to support them, they are not measures destined to appeal to crossbench senators elected on pain-free populism.

Yet Labor still has cause for optimism about the election result. Going into the election as a minority government, the Coalition must win seats to stay in power. And Shorten has taken the negative gearing and superannuation changes to one election already, and he almost won.

Young people have enrolled to vote in this election in large numbers. They are more likely to benefit from Labor’s tax and spending policies than older voters, and many of them are motivated by the threat of climate change. Even if they vote for the Greens, most of this vote should flow back to Labor in preferences. Not that any of this is obvious in the opinion poll results to date.

Indeed, for all the media focus on the Coalition and Labor, the combined big-party support remains at remarkably low levels. According to the three main polls — Newspoll, Ipsos and Essential — between 36 per cent and 38 per cent of people intend to vote for the Coalition, compared with the 42 per cent that saw it just scrape into power at the last election. Labor’s support is between 33 per cent and 36 per cent, closer to the 35 per cent it received in 2016.

That means as many as 28 per cent of voters intend supporting minor parties and independents (with the caveat that some of the polls consistently overstate the vote for the Greens), compared with 23 per cent at the last election. A strong element in that is an “up yours” message to the major parties. Despite the multiple scandals surrounding One Nation, it has nationwide support of between 5 per cent and 7 per cent, and much more in Queensland. Presumably the billboard featuring Pauline Hanson saying “I’ve got the guts to say what you’re thinking” is resonating.

Despite the fact that Clive Palmer left his Townsville nickel refinery employees in the lurch, faces criminal charges brought by the Australian Securities and Investment Commission, and has a grab bag of policies that do not pass elementary scrutiny, Ipsos shows that 3 per cent of voters nationwide intend supporting him, and more in Queensland.

Though the latest Essential poll was conducted on Monday — just twelve days before the election — only 55 per cent of voters say they have been paying at least some attention to the campaign, and only 42 per cent in the case of eighteen- to thirty-four-year-olds. Unfortunately for Labor, the total includes the small but noisy minority most exercised about the loss of tax concessions.

The last opposition leader to think he was a sure thing at the election, only to come a cropper over his big-target strategy, was John Hewson in 1993. Bill Shorten’s comfort is that Hewson’s policies, including a GST and cutbacks to Medicare, went much further than his.

Having had the courage to announce what he intends to do, if Shorten wins he would have more moral authority to implement his program than any recent prime minister, though whether the Senate takes any notice of that is another matter. •

The post Labor on the edge appeared first on Inside Story.

“What will you do to restore faith and trust in the political system?” he asked. Scott Morrison responded by running on his record, including the change to the Liberal Party’s rules that makes it harder to change leaders between elections — an unintended admission that he would not have been in his job under a better system.

He also referred to what he called “demonstration of performance” — stopping the boats as immigration minister, just as he promised he would; reducing welfare dependency as social services minister; bringing the budget back to surplus as treasurer; and, for the locals, giving Western Australia more GST revenue. A few details were overlooked, such as the Coalition’s promise before the 2013 election to eliminate the surplus, which remained in deficit when Morrison was treasurer, and still is; but let’s not be too pedantic.

Bill Shorten promised a national anti-corruption commission as a down payment on rebuilding trust in institutions. And he also suggested that Labor was “trusting the Australian people with our policies” by being upfront about “what we want to do and how we’re going to pay for it.”

All in all, you could call it one very small step for democracy. With their occasional outbreaks of civility, both leaders also conceded indirectly that the problem of trust goes much deeper. Mind you, this only occurred under duress, such as when they were asked what they admired about each other. (Morrison nominated Shorten’s public service; Shorten proffered Morrison’s stance on mental health and that he was “a man of deep conviction.”) The audience, perhaps overcome with relief that the pollies were not slagging off at each other, applauded.

Of course it won’t last. Politics has always been a winner-takes-all blood sport and increasingly it has become a no-holds-barred contest. There was a slight reprieve in the last election, when Malcolm Turnbull tried to accentuate the positive and was relatively restrained in his attacks on Labor — the operative word being “relatively.” Labor responded with Mediscare, the spurious claim that a re-elected Coalition government would privatise Medicare. It is now received political wisdom that this is what brought Labor to the brink of winning the election, though the evidence is less clear.

The Liberals certainly aren’t observing the niceties this time. In the first week of the campaign, 93 per cent of Liberal advertisements on Facebook were negative, according to the Australian National University’s Andrew Hughes, although there has been a shift to more positive messaging since. Among the more dubious is a Liberal advertisement that tries to outscare Mediscare — a claim, without evidence and despite Shorten’s repeated denials, that a Labor government could introduce death duties.

Both sides of politics are well aware that voters hate negative advertising. But they have increasingly used it in recent decades because they are convinced it works, though this is a view that has come under challenge more recently. What is not in doubt is the corrosive long-term impact of negative campaigning. If you start with a degree of voter scepticism about politics, reinforce it with the spectacle of politicians attacking each other, double down by imputing the basest of motives to your opponents, and then add in some false claims, is it any wonder that voters’ opinion of politicians is at a low ebb? It certainly is not an approach that, in Morrison’s terms, values public service.

In this descending spiral, negative campaigning increasingly turns people off politics, leading politicians to become increasingly strident in their desperation to catch attention, alienating voters further… and so on. This has landed us where we are today, with parties complaining how hard it is to get their messages across.

In 2007, a Democracy 2025 survey found that 86 per cent of respondents said they were satisfied with how democracy worked in Australia — a high point in recent times. By 2013 this had fallen to 72 per cent and since then it has dropped off the cliff, plunging to 41 per cent last year — and that was before the Liberals’ coup against Malcolm Turnbull.

All kinds of factors may be bound up in this precipitous fall, ranging from the collapse in trust in institutions generally to the international reverberations from the chaos of Brexit and the toxic presidency of Donald Trump. Nor is it just the politicians who are to blame in Australia. Mainstream and social media amplify negative political messages, while many voters never get around to serious consideration of policy.

This election may be the ultimate test of whether policy reform is still possible in Australia or if, rather, virtually any proposal for change can be torpedoed by a scare campaign. Though Labor’s policies are often presented as radical, in truth they are mostly cautious and limited. Ending a tax refund for people who do not pay any tax and paring back one of the most generous negative-gearing tax concessions in the world (and grandfathering the old system) are not revolutionary proposals, except within the tight boundaries of what is possible in politics these days. They are nowhere near as far-reaching as the Fightback! package that John Hewson took to the “unlosable” election in 1993, which was won by Paul Keating.

Labor’s defeat in this election would instantly be interpreted as a verdict on these issues and it would guarantee that no policy reform of any substance would be advanced in the foreseeable future. Some may argue that future governments would still be able to make changes once in office. After all, most of the major economic reforms of the Hawke government were not taken to voters beforehand. But it was the formidable sales skills of Keating and Bob Hawke that entrenched those changes and, even more importantly, they mostly had the support of the opposition. It is hard to envisage such a combination in the current climate.

Last year’s Democracy 2025 survey canvassed attitudes to a series of reforms aimed at rebuilding trust. The themes that emerged most prominently were greater integrity, transparency and accountability in the political system, together with more voter involvement.

Placing limits on election donations and campaign spending gained the strongest support. Some restrictions apply now but, to the extent that people know about them, they seem conscious of how ludicrously inadequate the existing measures are, particularly at the federal level.

There was also strong backing for the proposal that “public services should be co-designed with Australian citizens,” for the recall by local voters of MPs who are not performing, for free votes in parliament, for citizen juries to help solve complex policy problems, and for ordinary party members and voters to have more say in choosing party leaders and election candidates.

Some of the proposals may be challenging to implement in practice. There will certainly be resistance from the political establishment. But if politicians are to have any hope of getting voters to listen to them, let alone persuading them of the merits of their policies, the strong sentiment behind these reforms will need to be acknowledged and acted upon. •

The post Confidence cliffhanger appeared first on Inside Story.

Snowy 2.0 would deliver round-the-clock renewable and reliable power, he declared. A second interconnector between Tasmania and Victoria would unlock the “battery of the nation” to supply more zero-emissions hydro power to the mainland. The Coalition would spend $2 billion over ten years to buy more emissions reductions. New initiatives would promote energy efficiency among households and, wait for it, a national strategy would encourage electric vehicles.

For a moment it looked as though he was responding to public sentiment, in the shape of polling showing rising levels of concern over climate change.

But ScoMo’s attempt at catch-up was soon overwhelmed by the visceral urge to mount another fear campaign against Labor. The idea was to label Labor as extreme on climate change, but in the process the PM sent a different message — a message about a Coalition that is dragging its heels on climate change and doesn’t believe in its own policies.

The problem for the government is that, for anyone who cares to take a look, the main elements of Labor climate change policy are conservative — literally. Or, as Tony Wood of the Grattan Institute puts it, “Labor is basically proposing to take the Coalition’s policy vehicle, put its own badge on the bonnet, and then drive it faster.” It has adopted the Coalition’s safeguard mechanism, under which the biggest polluters have limits placed on their emissions, but made it tougher. It has promised to introduce the national energy guarantee adopted by the Turnbull government before the Coalition’s hard-right flank torpedoed it.

Other measures go further than the Coalition, including ending our unenviable status as one of the few remaining developed countries without a limit on carbon emissions from vehicles. But, overall, it is a less ambitious policy than the explicit, economy-wide price on carbon introduced by the Gillard government, even though the problem has become more serious and urgent in the intervening years. It ignores the need to phase out coal, despite the fact that — again in the words of Grattan’s Tony Wood — “the world must eliminate coal-fired power within about thirty years for any chance to meet agreed climate change targets.” Politically clever it may be, but that comes at the price of inadequate policy.

But this is an election campaign in which, as in war, truth is the first casualty. With Labor unwilling to say what its policies cost, the government has helped out with some figures on the burden for business: $13 billion, $26 billion, $35 billion — take your pick. The best that can be said for these numbers is that they are wild guesses.

The highest figure is based on an assumption that 50 per cent of the reduction in emissions under Labor’s policy would come from companies buying international permits at the highest possible forecast price. Bloomberg New Energy Finance, whose research was cited by the government, says $35 billion is “not a credible estimate.”

Providing access to international permits is intended to give business more flexibility in finding ways to reduce its emissions. Business has welcomed the policy for this reason. But if it is cheaper to cut emissions directly or offset them domestically, companies won’t buy international permits. How many they will buy is impossible to tell at this stage, since the companies themselves don’t know.

Either way, there will be a cost, whether it is absorbed by companies facing competition or passed on to consumers. The government’s scheme also comes at a cost — mainly to taxpayers. The one certainty is that the cost of not acting is much greater.

By the way, the Coalition actually thinks international permits are a good idea — or it did only a little more than a year ago. As it said in its review of climate change policies in December 2017, “The government supports, in principle, the use of international units.” The review acknowledged some uncertainty about the price and the quality of international permits — that is, whether they represented genuine reductions in emissions. But, it said, “access to high-quality international units will provide greater flexibility to business and government in meeting emissions reduction targets.” In other words, Morrison is criticising his own policy.

As he is in other areas. Together with trying to scare voters over Labor’s 50 per cent target for sales of new electric cars by 2030, the government jumped on Bill Shorten’s comment that it could take only eight to ten minutes to charge an electric car. That’s perhaps a little optimistic, at least for a full charge, but there are already charging stations that can do a full charge in fifteen minutes, and an eight-minute charge can take you 200 kilometres.

And, guess what, the Morrison government is subsidising them. In October last year, energy minister Angus Taylor announced that the government, through the Australian Renewable Energy Agency, would contribute $6 million towards a network of “ultra-rapid charging stations powered by renewable energy.” The ultra-rapid charge, he said, “will provide a range of up to 400 kilometres in just fifteen minutes, compared to a current charging time of several hours.”

Looking at the electricity industry as a whole in his 2017 review of energy policy, chief scientist Alan Finkel said his plan to achieve the government’s 26 per cent reduction in emissions would see 42 per cent of electricity demand met by renewable energy by 2030. The Finkel review, like so many other independent assessments, was a casualty of the Coalition’s internal climate wars.

But the government says it remains committed to the 26 per cent target and it is counting on the electricity sector to do the heavy lifting. Labor’s target of 50 per cent renewables is not much higher than Finkel’s estimate of 42 per cent under the Coalition’s policy. Certainly the difference is nowhere near big enough to justify Angus Taylor’s accusations about “Labor’s economic wrecking ball.”

Taylor epitomises the Coalition’s problems with climate change policy. A strong conservative, he is an ally of fellow Rhodes scholar Tony Abbott and is mentioned periodically as future leadership material. Like Abbott, he says he believes in climate change. But he has been a strong critic of wind farms. In 2013, shortly before he was elected for his first term as the MP for the NSW provincial seat of Hume, he described subsidies for wind farms as “economic lunacy and bad public policy.” He railed against “a massive, unintended policy failure” and “the absurdity of the economics of wind farms.”

His electorate, which covers much of the Southern Tablelands, is one of the three leading locations in Australia for wind farms, and more big projects are on the drawing board — all providing jobs and contracts for local businesses, and benefits to land owners and local communities. Asked whether his views had changed, he avoided the question, instead telling Inside Story through his office that the Coalition had a strong record on renewable energy but that the unprecedented growth in generation from wind and solar reinforced the need for the government’s policy of more investment in reliable 24/7 generation.

A hint that his underlying views remain the same is that he was notable by his absence at the opening of a new wind farm at Crookwell last November. You might well have expected the local member to attend such an event, especially if he is also the minister for energy. •

The post Whose climate policy is that? appeared first on Inside Story.

For one thing, the joke, like mud, seems to stick. Gough Whitlam called Billy McMahon, the prime minister he went on to defeat in the 1972 election, “Tiberius with a telephone.” Almost half a century later, this reference to McMahon’s pathological plotting is the title of Patrick Mullins’s well-received biography of the former PM.

During the 1983 election campaign, prime minister Malcolm Fraser said that people should hide their money under the bed if Labor were elected. They couldn’t do that, his opponent Bob Hawke famously responded, because that’s where the commies were — a reference to the Coalition’s “reds under the beds” scare campaign of years past.

Trying to scare voters witless about the intentions of the other side has long been considered the most potent weapon in the election arsenal. But this campaign is showing that old-fashioned ridicule can spike the guns just as quickly.

Last week, betraying something similar to Fraser’s desperation, Scott Morrison claimed that Labor’s target of 50 per cent sales of electric cars by 2030 would spell “the end of the weekend.” Small business minister Michaelia Cash chimed in with a promise to “stand by our tradies and save their utes.” Labor saw the opening and made them look very silly.

The Liberals and Nationals used to do a good line in ridicule of Wayne Swan, the treasurer who promised year after year to deliver a budget surplus that never materialised. Then, in 2012, Joe Hockey made the equally solemn promise as shadow treasurer to deliver a surplus in the first year of government and in the subsequent years of a Coalition first term.

Seven years later, we’re finally Back in Black, the title of the Liberals’ unofficial campaign theme song, borrowed from AC/DC. Well, not quite, but we’re promised a surplus this financial year and every subsequent one, more or less to eternity. Say it often enough and it may even come true — or, as the lyrics go:

’Cause I’m back
Yes, I’m back
Well, I’m back
Yes, I’m back
Well, I’m back, back
Well, I’m back in black
Yes, I’m back in black

Of course, the real calculation here is not the budget but politics. The opinion polls show that voters think the Coalition is a better economic manager and the surplus is held aloft as the great manifestation of that fact.

We all know what happened during the last Labor government: it squandered the surplus inherited from the Howard government and left us with a mountain of debt. At least that’s the perception and it’s not easy to shift, even if the reality is somewhat different.

The global financial crisis erupted the year after Kevin Rudd’s election in 2007, with the resulting economic slowdown putting budgets around the world into deep deficits. The Labor government, on the advice of Treasury, decided to counter the slowdown by spending billions on cash handouts and programs for new school buildings and insulation. With the help of Chinese demand for our minerals, this kept the economy out of recession but resulted in the budget plunging from surplus to deficit.

Not all the money was spent wisely, and a Coalition government may well have been more restrained. But it could not have avoided the falling revenues and increased spending, particularly on welfare benefits, that made a deficit inevitable. Such subtleties don’t gain much traction during an election campaign, though.

A budget deficit in the circumstances of 2008, as in any marked economic downturn, is not only inevitable but a good thing. The alternative is cutting spending so hard that it matches the loss of revenue — and makes the recession worse. As it happens, it was government spending, by both the federal government and the states, that accounted for more than half of last year’s not very impressive economic growth.

The parallel politicians draw between the federal budget and household budgets is misleading. Unlike households, governments can pay for deficit and debt by raising more revenue. Yes, there is a limit, as Greece found out in the wake of the GFC, but we are a long way from that situation.

As economist Warwick Smith pointed out this week, federal budget deficits have been the norm ever since Federation. There were certainly surpluses during the Great Depression, but then the world woke up to the fact that government austerity was increasing unemployment and making the situation much worse. Deficits persisted throughout the long Menzies years and for much of the period since.

Surplus budgets were handed down by the McMahon government and (here’s a surprise) twice by the Whitlam government, but then the economy went pear-shaped and we saw another run of deficits. Paul Keating as treasurer finally brought home the bacon, as he put it, and delivered three surpluses before the budget was overwhelmed by recession. Peter Costello reeled in the deficits with the help of strong economic growth and brought down ten budget surpluses.

The problem with deficits is that they generate debt, which has to be repaid with interest. Despite the long string of deficits during the Menzies era, Warwick Smith says that debt actually shrank to negligible proportions as a share of the economy the postwar boom. Under Costello, government debt was paid off completely — a rare occurrence.

It makes sense to put the budget into the black during good times, so as to provide a buffer when the economy slows down. But it is not, despite government boasts, the ultimate proof of economic virility.

For one, chance plays a big part — as Costello said in the wake of last month’s budget, which continues the fashion of promising tax cuts and surpluses as far as the eye can see. “Since we can hardly tell you what’s going to happen in the economy in the next six months, the idea we can tell you where we’ll be in 2030 — I wouldn’t take that to the bank,” he said.

If coal or iron ore prices go down, if wages keep on refusing to grow, if the international economy turns sour — to give just a few examples — the surpluses forecast by both the Coalition and Labor will disappear quicker than a puff of smoke and the budget will stay in the red. As it should. Even if it invites ridicule. •

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In Australia, Barry Jones raised the issue the following year in his book Sleepers, Wake! As science minister in the Hawke government he set up the Commission for the Future which, among other things, produced a report on the greenhouse effect that received international recognition. Later in the decade, the United Nations established the Intergovernmental Panel on Climate Change, or IPCC, which produced its latest report this week.

Hawke’s environment minister, Graham Richardson, an archetypal NSW Labor-right exponent of “whatever it takes” (which was also the title of his memoirs), had much more political clout than Jones. But in 1989 he couldn’t persuade cabinet to adopt his proposal to stabilise emissions at 1988 levels by 2000 and reduce them by 20 per cent by 2005. Treasurer Paul Keating won the day by arguing that the economic costs were too high, and so the Coalition under Andrew Peacock went to the 1990 election with a stronger climate target than Labor’s.

In 1990, British prime minister Margaret Thatcher gave a classic exposition of the precautionary principle at the second World Climate Conference in Geneva. “The danger of global warming is as yet unseen, but real enough for us to make changes and sacrifices, so that we do not live at the expense of future generations…” she said. “Any of the precautionary actions that we need to take would be sensible in any event. It is sensible to improve energy efficiency… and to develop alternative and sustainable sources of supply; it’s sensible to replant the forests which we consume; it’s sensible to re-examine industrial processes; it’s sensible to tackle the problem of waste.”

True to conservative principles, Thatcher saw these policies as “a sort of premium on insurance against fire, flood or other disaster.” As she concluded, “It may be cheaper or more cost-effective to take action now than to wait and find we have to pay much more later.”

Among other things, Thatcher set up the Hadley Centre, which became a world leader in climate research and much later became the target for a largely unfounded attack by climate sceptics. This was an era before climate science was hijacked by commercial interests, who recruited big “C” conservatives to turn the issue into a political and ideological crusade against change.

Like the boiling frog, we have become so used to the planet slowly warming that we barely notice the harm it has caused already and are oblivious to the accumulating evidence of much worse to come. “The next few years are probably the most important in our history,” says Debra Roberts, a South African scientist who co-chaired one of the working groups that produced the latest IPCC report. The context is the report’s finding that limiting global warming to 1.5°C would require “rapid, far-reaching and unprecedented changes in all aspects of society.” Although we have left it very late, in other words, an unprecedented global effort could still avoid some of the worst consequences of climate change.

This is the considered view of the hundreds of scientists whose work has been distilled by a UN panel that critics say errs on the conservative side in its findings. The contrast with the nothing-to-see-here insouciance of our prime minister could not be starker.

In a pre-emptive strike a few hours before the release of the IPCC report, Scott Morrison assured Alan Jones that Australia would take no notice of its findings. “No, we’re not held to any of them at all, Alan, nor are we bound to go and tip money into that big climate fund [to help developing countries] — we’re not going to do that either. So I’m not going to spend money on global climate conferences and all that sort of nonsense.”

In a moment of rare courage for a politician under shock-jock fire, the prime minister resisted Jones’s urging that Australia follow the US lead and withdraw from the Paris accord. His reasoning was that it was the Coalition government, under Tony Abbott, that had signed up (“and when Australia puts its word to something, it means something”), that climate was an important issue for countries in the Pacific, and that our commitment to cut emissions by 26 per cent from 2005 levels by 2030 would have no impact at all on jobs or electricity prices. For good measure, he repeated that Australia would meet its Paris commitment “in a canter,” despite the expert advice, including from his own energy department, that this is impossible under the present trajectory of rising emissions.

This is what passes for leadership these days: meeting the demands of an undisciplined Liberal Party and ignoring the national interest. Morrison no doubt figures he won’t be around in 2030 to be held accountable for his irresponsible statements and the lack of any policy to deal with climate change beyond 2020.

It is not that the world has done nothing to address the issue over the past twenty or so years. It is simply, as the IPCC report makes clear, that we have not done enough. Despite most countries committing under the Paris accord to limiting global warming to below 2°C, the actions they have taken would see temperatures rising by 3°C by 2100 and more thereafter. This would greatly increase the risk of reaching tipping points such as the melting of the Antarctic and Greenland ice sheets, which would cause sea-level rises of many metres over hundreds or even thousands of years.

The report warns that these still could be triggered with temperature rises limited to 1.5°C–2°C. But a 1.5°C ceiling could reduce sea-level rises by ten centimetres by 2100, which may not seem much but which the IPCC says would protect ten million people in low-lying areas.

We need to take other comforting crumbs where we can find them. For example, coral reefs would decline by a mere 70–90 per cent with 1.5°C warming, compared to “more than” 99 per cent at 2°C.

The IPCC calculates that the use of coal for electricity generation would need to be reduced to close to zero by 2050 to limit warming to 1.5°C. That this is a bridge too far for the leaders of our main parties is clear not just from the outright rejection of such a target by the Liberals and the Nationals but also by the equivocation of Bill Shorten, who told journalists on Monday that “we are not saying that there won’t be fossil fuel as part of our energy mix going forward.”

But there is some good news: Australia has the capacity to meet not only its present 2030 target in a canter but also Labor’s more ambitious goal of a 45 per cent reduction. That is the view of a report last month by Monash University’s ClimateWorks Australia, which found that Australia has the potential to cut emissions by 55 per cent on 2005 levels by 2030.

Between 2009 and 2013, the report points out, we reduced greenhouse gases at a rate close to what was needed to achieve net zero emissions by 2050. That included most of the brief period when Australia had a price on carbon, and a time of large reductions in emissions from land clearing.

“Australia enjoys world-leading renewable energy resources, along with potential to store carbon in the land,” says the report. For example, electricity-sector emissions could be cut by 68 per cent by 2030 with a renewable energy share of 70 per cent. Emissions from the land sector, mainly through revegetation and afforestation, have the potential to be reduced by 103 per cent by 2030 — broadly the rate between 2005 and 2016.

The ClimateWorks scenario looks optimistic on present policies and trends. To take just one example: unlike most developed nations, we still have no fuel-emission standards for vehicles, nor any government incentives for electric vehicles.

The success of far-right leaders, most recently in Brazil, doesn’t augur well for further progress. Countries that have led the way in the past under conservative leaders, such as Britain and Germany, have been backsliding or showing signs of it.

We can only hope that leaders will rediscover the art of leadership and the will to act in the broader interest. •

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What does this have to do with Australia, a country that largely eradicated the disease several generations ago? Judging by our attendance, not too much. Foreign minister Marise Payne was there, and issued a statement reaffirming Australia’s “commitment to end the tuberculosis epidemic,” but she said nothing about the 2030 deadline or the specific measures in the meeting’s declaration.

You can argue that a sense of altruism would be one reason for one of the wealthiest nations on earth to get involved — but only if you ignored our shameful slashing of the foreign aid budget to one of the lowest levels among developed nations. But there is another reason with potentially greater appeal to a hard-hearted government: self-interest.

A few kilometres across the Torres Strait, TB is rife. While Australia has seven new cases each year per 100,000 people, Papua New Guinea reports 432 per 100,000, and that is certain to be an underestimate given that the disease often goes undiagnosed and untreated. The official figure ranks PNG as having the tenth-highest rate of the disease in the world, with 31,000 new cases reported each year and more than 3000 deaths.

Once diagnosed, TB can readily be treated, which is why it has largely been eliminated in developed countries. Tackling it is mainly a matter of resources: conducting diagnoses and providing medicines and the staff to administer them. The current lack of commitment and resources makes it the leading cause of death by infectious disease in the world, killing 1.6 million last year in Africa, parts of Asia and the western Pacific. It is a disease of poverty, transmitted through coughs and sneezes and exacerbated by poor health and overcrowded housing.

It also is a matter of priorities. Malaria and HIV are also relatively easy to detect and treat, and huge inroads have been made into tackling them thanks to major funding provided by bodies such as the Global Fund to Fight AIDS, Tuberculosis and Malaria. Yet TB receives less than 20 per cent of the total funding for these three diseases, says Suman Majumdar of Australia’s Burnet Institute. One consequence is the emergence of drug-resistant strains of TB that are less susceptible to easy treatment. The cost of treating standard TB in PNG is $62; for the drug-resistant strains, with a success rate of 54 per cent, it is above $12,000.

Nevertheless, Australia has shown a willingness to help on occasions, the outstanding example being in PNG’s western province, that part of the country closest to Australia. Which takes us back to self-interest.

In 2012, Anna Bligh’s Labor government in Queensland stopped funding clinics on Torres Strait islands that were part of Australia and were easily accessible to people from PNG under the Torres Strait treaty that allows free movement of people on either side of the border. Although jointly funded, the Gillard government refused to fill the funding gap and the clinics closed down.

The argument for this version of stopping the boats was to avoid the risk of the disease spreading to Australia, with many patients making it to Cairns hospital. And the supposed justification was that they were the responsibility of PNG. With the most basic services in PNG provided sporadically at best, many patients were left untreated.

But then it was revealed that Daru, a small Torres Strait island in PNG’s western province, had the dubious distinction of the highest infection rate in the world for drug-resistant strains of TB. The risks of its rapid spread in PNG and to Australia were high.

Spurred by this emergency, the Australian government spent almost $50 million in foreign aid money on treating and preventing TB in Daru and nearby areas during the six years to 2017. According to the Burnet Institute’s director, Brendan Crabb, “aid programs are often criticised for being ineffective but this is a good example of success.” Marise Payne’s predecessor, Julie Bishop, claimed in 2015 that deaths from drug resistant TB in western province had fallen from about 25 per cent of cases to fewer than 1 per cent.

Burnet, in partnership with the PNG government and World Vision, implemented a comprehensive and innovative program. New and more effective diagnosis and treatments were introduced. Members of the local community who had survived TB were trained to help patients complete their treatment by ensuring they took their medication daily, with counselling, education and even hot meals. One of the biggest challenges in tackling TB is that curing the disease requires six months of daily treatment; for the drug-resistant strains, this can stretch to two years.

Despite Crabb’s enthusiasm for the program, he says the job is only half done. Really bringing the rates down will require large-scale detection, treatment and, importantly, prevention of latent TB, including its drug-resistant forms, he says. One step is the systematic screening program that has been introduced on Daru, with everyone ten years and older being checked for signs of the disease.

Heartening as the progress on Daru is, it was an emergency response. Along with the Australian government and the partnership between Burnet, World Vision and the PNG government, the World Bank and the World Health Organisation also became involved — a scale of operation unlikely to be replicated in many places. Without continuing commitment, the risk is that the rates will go back up again.

Resources and commitment are always a challenge in PNG, with hospitals regularly running short of medicines and other supplies. In July, local MP Sekie Agisa said two nursing staff at Daru hospital had caught TB because of a lack of the most basic supplies, including face masks, drugs and repairs to an X-ray machine that had stopped working.

Daru has a population of just 16,000 in a nation of more than eight million. An estimated 90 per cent of people in the developing world have a latent form of TB. In most cases it will remain dormant but it is triggered by a weak immune system in people who are ill or malnourished. If active and left untreated, each person will infect another ten to fifteen people a year. Combined with chronic communication and transport problems, this brings home the scale of the challenge.

Harvard Medical School’s Jennifer Furin and Cape Town University’s Helen Cox, both experts on TB, have described the efforts to tackle drug resistant TB in PNG as “woefully inadequate.” Writing in 2016, they asked: “Why does there seem to be a double standard in implementation of action on outbreaks of deadly infectious diseases? Evidence shows that [multi-drug resistant TB], which is spread through the air, is just as deadly as Ebola and has health, population and economic consequences that will almost certainly eclipse those of both the Ebola and recent Zika virus outbreaks — deemed a global public health emergency — combined.”

The fact that tuberculosis is a disease of poverty poses another problem. Compared to the research funds poured into new drugs and technologies in areas such as cardiovascular disease and cancer, where there are potentially large returns on investment, TB barely rates.

As a result, many diagnoses of TB in low- and middle-income countries are still conducted in the same way as they were a century ago — by a doctor’s clinical judgement and by examining sputum samples under a microscope, with samples sometimes sent away for further analysis in a process that can take weeks or months.

Promising developments in recent years include a new drug and the new GeneXpert diagnostic test that can provide results in two hours and with much greater accuracy. But higher costs, the need for a power supply and for maintenance are major barriers to widespread adoption of this new test in PNG and other countries.

The UN meeting commits governments to treat forty million people with TB in the next four years and provide preventive treatment for another thirty million vulnerable to the disease. A total of $US13 billion a year would be spent by 2022 to provide universal access to prevention, diagnosis, treatment and care of TB and spending on research into TB would increase from $US700 million a year to $US2 billion.

How Australia and other countries will translate these noble sentiments and aspirations into action remains to be seen. •

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The system’s main elements not only remain intact, they are being expanded as part of a much wider shift to automating welfare — or what might be called government by algorithm. And despite the improvements, robodebt (which goes officially by the more antiseptic title of Online Compliance Intervention) is still making mistakes and causing anguish.

In 2017, no fewer than 1,385,276 people received debt notices from the Department of Human Services. Only 3.7 per cent or 51,230 of them went through the robodebt system, which compares income data provided by welfare recipients with information held within the government. This is a substantial drop from the previous year, perhaps reflecting a more measured approach by the government after the controversy of 2016 and 2017. But the emphasis is on expansion, with the department telling me it plans to increase data-matching, including through robodebt, to more than 600,000 reviews a year. The logic behind this, from the government’s point of view, is clear: data-matching, particularly in its automated form, has made it much more cost-effective to pursue overpayments of welfare benefits.

This is part of a bigger modernisation of the welfare system over a seven-year period, in what the Department of Human Services calls “one of the world’s largest social welfare ICT system transformations.” Given that the department and Centrelink have been using a computer system that began operating in 1983, an upgrade certainly seems justified. This isn’t just the government’s view: the National Welfare Rights Network’s Kate Beaumont said in 2015 that the new system promised to reduce the administrative burden on recipients and result in reductions in overpayments and debt recovery.

The developments here are in line with the automation of welfare delivery and monitoring in other Western nations. In the United States, where most welfare programs are delivered at the state or county level, automated eligibility is now “standard practice in almost every state’s public assistance office,” writes political scientist Virginia Eubanks in her recent book Automating Inequality. More than that, predictive models and algorithms are increasingly being used to target and withhold assistance.

In Britain, a single universal credit is being introduced to replace six separate government benefits. In 2013 the National Audit Office found the scheme to be riddled with major technical problems, prompting the Labour opposition to label it a “titanic-sized IT disaster.” Due to be rolled out nationally by last year, it is at least five years behind schedule.

There’s no doubt that an efficient administration using modern computer power and algorithms can process welfare claims more efficiently. But the experience with robodebt and with automatic programs overseas provides some cautionary tales. Those same tools can be used for culling the welfare rolls, justifiably or not. According to Eubanks, automated eligibility systems, ranking algorithms and predictive risk models are being integrated into human and social services in the United States “at a breathtaking pace, with little or no political discussion about their impacts.”

In 1973, nearly half of the Americans living below the poverty line received benefits from the Aid to Families with Dependent Children program, or AFDC. A decade later, after the widespread introduction of automated welfare management systems, the figure had dropped to 30 per cent. Today, fewer than one in ten benefit from its replacement program, Temporary Assistance to Needy Families, or TANF.

Automation is not solely responsible for this dramatic fall. From 1996, president Bill Clinton’s quest to “end welfare as we know it” imposed time limits and an array of strict conditions on benefits. Because welfare fraud looms large in the popular imagination, it can provide political cover for drastic measures.

Depending on how it is defined, rates of welfare fraud in the United States have been calculated to be as high as 10 per cent for improper payments, including fraud, and as low as 0.8 per cent based on the proportion of allegations that result in criminal convictions. Either way, fraud goes nowhere near providing an explanation for falls in welfare numbers of the magnitude that occurred in the United States. (In Australia, according to an analysis of more than $200 billion in Centrelink payments, the savings from detected fraud amount to less than one-fifth of one per cent.)

But all welfare systems have an inbuilt tension between helping those in need and minimising disincentives to work. That makes the design of the system, and the motivation behind the design, critical. In 2006, the government of Indiana, led by Republican governor Mitch Daniels, a long-time critic of AFDC and TANF, sought expressions of interest in outsourcing and automating the administration of TANF and two other schemes, the food stamps program and Medicaid. The riding instructions could not have been clearer: welfare dependence had to be cut, and financial incentives would be given for reducing eligibility. Daniels described the state’s welfare system as the worst in the United States, “irretrievably broken,” wasteful and fraudulent.

The goals were achieved in spectacular fashion. In two years, a million applications across the three programs were rejected, a 54 per cent increase on the previous three years. When the contract with IBM for the new system was signed in 2006, 38 per cent of poor families with children received benefits under TANF; by 2014, despite the worst economic downturn since the Great Depression, the figure was down to 8 per cent. The campaign went far beyond any notion of tough love to become a brutal attack on the poor that reinforced the trend towards increasing inequality — one of the factors in the rise of political populism in the United States.

Critical to the new system in Indiana — as it was to the initial rollout of robodebt in Australia — was reducing the scope for human discretion. No government employee dealt with a case from beginning to end: when people called for help, they always spoke to a different person — if they were lucky enough to get through. A lawyer told Eubanks that 95 per cent of the Medicaid applications he handled involved errors made during processing, resulting in eligibility mistakenly being denied. Any deviation from the rigid application process, however minor, was interpreted as a “failure to cooperate” and used to deny eligibility. Previously this had been a punishment of last resort for those who refused to participate in assessing eligibility. Now, in Eubanks’s words, “failure to cooperate” became “a chainsaw that clear-cut the welfare rolls, no matter the collateral damage.”

She cites the case of Omega Young, who missed an appointment in 2008 to authorise her continued access to Medicaid because she was in hospital with terminal cancer. Although she rang to say she couldn’t make it and gave the reason why, her medical benefits and her food stamps were cut off for “failure to cooperate.” Months later, with her medical bills reaching $10,000, she won an appeal that restored her benefits. The decision came the day after she died.

Eventually, after the public controversy put pressure on IBM, the company produced a 362-page document outlining how to fix problems such as “inaccurate and incomplete data gathering” and “incorrect communications to clients,” leading the Indiana government to cancel the contract and abandon the plan.

In 2016, Allegheny County in Pennsylvania introduced a “predictive risk” computer model aimed at forecasting where child abuse and neglect were most likely to occur. It uses 132 variables to rate the risk of children being mistreated, including the length of time parents spend on public benefits, past involvement with the child welfare system, the age of the mother, whether the child was born to a single parent, mental health issues and periods in jail.

When the model was applied to historical data in New Zealand, where it was first developed, it was found to predict with “fair, approaching good” accuracy whether a finding of mistreatment of children would be established by the age of five. Tested against similar data in Allegheny County, it scored a predictive rate of 76 per cent. If that sounds impressive, Eubanks points out that with 15,139 reports of abuse and neglect in Allegheny in 2016, it would have produced 3633 incorrect predictions. In the first nine months of the new model’s operation, more reports than previously were identified for investigation and those rated as a higher risk were more likely to be substantiated. But, Eubanks adds, of the higher-risk reports that triggered a mandatory investigation, 28 per cent were overridden by a manager and dismissed and only 51 per cent of the remainder were substantiated.

The goals set for the Allegheny system are limited and it is used to support human decision-making rather than replace it. Five other cities and states, including New York City and Los Angeles, have since introduced similar systems in what Eubanks describes as “a nationwide algorithmic experiment in child welfare.” The question is whether other jurisdictions will be as careful about placing clear boundaries around their operation. The NZ government stopped trials of the system in 2015 after a new minister, Anne Tolley, took over the social development portfolio. A briefing document on the project leaked to the media showed that she had written in the margins, “Not on my watch! These are children not lab rats.”

Australia, too, is looking at the possibilities of predictive analytics. According to the head of enterprise architecture at the Department of Human Services, Garrett McDonald, such a system could aim to minimise overpayments and thereby prevent debts occurring. At IBM’s Think 2018 conference in Las Vegas last month, he quoted the example of people on benefits being required to estimate their income over the next twelve months, with those who underestimated receiving excess payments from the government that needed to be recovered.

“So what we’re looking at,” McDonald said, “is how do we deploy predictive analytics so we can take a look at an individual’s circumstances and say ‘what do you think the probability is that you may end up with an inadvertent overpayment and how can we engage with you proactively throughout the year to help true that up, so that you don’t reach the end of the year and have an overpayment that we need to recover?’” If it sounds positive, it also suggests an extra level of prying into “an individual’s circumstances.”

Privacy is a real concern for the targets of these schemes. An electronic “coordinated entry system” for homeless people introduced in Los Angeles has been widely lauded for its greater efficiency. It combines data from a disparate array of homeless services and matches it to available resources, reducing overlap and double dipping. Assessment for the scheme includes an intrusive survey that asks questions about experiences of sexual assault and family violence, mental health problems, suicide attempts, drug taking, unprotected sex and prostitution; algorithms use this information to determine those with the greatest need for accommodation. As Eubanks observes, this creates a dilemma for the homeless: “Admitting risky or even illegal behaviour… can snag you a higher ranking on the priority list for permanent supportive housing. But it can also open you up to law enforcement scrutiny.”

The Turnbull government has budgeted to save $3.7 billion in the four years to 2019–20 “primarily due to measures to enhance the integrity of social welfare payments, including expanding and extending data-matching activities with the Australian Taxation Office.” It is data-matching that lies at the heart of the robodebt scheme: where wage or salary figures supplied by employers to the ATO appear to be higher than those reported by people who are or have been on benefits, the computerised system notifies them by letter about the discrepancy and asks them to check their employment income. If the figure is deemed not to have been challenged, demands are made for payments, including through debt collection agencies.

In the way the system operated in 2016 and 2017, this process occurred irrespective of whether people received the initial letter — they often went to old addresses — or whether the recipients were able to clear the multiple hurdles in their way. In 2016, thirty-six million calls to the department went unanswered, according to the Community and Public Sector Union, and those that were answered often involved long waits.

To date, debt recovery has focused on people on unemployment benefits and youth allowances, which make up $1.5 billion of the total expected savings of $3.7 billion over four years. On 1 July last year, the automated system was extended to include shares, bank interest and other non-employment income. A system that was used to recover debts mainly from those on benefits such as Newstart and the parenting payment now covers pensioners and other retirees more likely to have other assets. Age pensions account for $1.1 billion of the anticipated $3.7 billion in savings, parenting payments $700 million and disability support pensions $400 million.

In the context of almost $80 billion a year spent on these programs, these may not seem large amounts. For some groups, though — such as the unemployed, who receive very meagre benefits to start with — the savings targets represent a significant proportion of outlays. The government aims to recoup almost 4 per cent of total unemployment and sickness benefits payments of $10 billion a year, for instance. This may well be a realistic goal from the department’s point of view. The introduction of robodebt meant that the Department of Human Services planned to suddenly expand a system that had sought to recover debts from 20,000 people each year to an estimated 783,000 debts in 2016–17. It appears that this target, provided to an inquiry by the Commonwealth ombudsman, was not achieved, with the department not responding to a request for the actual figure. Instead, it repeated that it was increasing data-matching reviews to more than 600,000 a year.

Conservative governments have tended to be particularly heavy-handed when it comes to pursuing welfare recipients. In 2016, then human services minister Alan Tudge said to those who allegedly owed money to Centrelink, “We’ll find you, we’ll track you down and you will have to repay those debts and you may end up in prison.” It is not an attitude likely to encourage people to cooperate with the government, particularly when overpayments are often inadvertent and frequently the result of government errors. Reducing the scope for humans to exercise discretion made the system much harsher.

The Commonwealth ombudsman reported that the letters notifying Centrelink customers of alleged income discrepancies were “unclear and deficient in many respects,” omitting crucial information such as the helpline telephone number, the fact that help from a human was (theoretically) available, and the fact that an extension of time could be provided to supply information.

Robodebt shifted the onus of proof wholly to the individual to check the accuracy of the information in the letter. A major reason for errors in the debt calculations was that the income figures the ATO passed on to the department from employers were on an annual basis, whereas the department calculates benefits on fortnightly income. If it did not receive contrary information, the department’s policy was to average the ATO figure over the year, meaning the debts calculated were often too high because many people had interrupted periods of work and were entitled to full benefits when unemployed.

If people challenged the department’s demands — which required particular persistence — debts were often reduced to zero or a fraction of the initial assessment. One of the cases in the ombudsman’s report concerned a woman who received a debt notice for $5875. When she supplied bank statements and an employment contract showing she had stopped working for an employer whom the department assumed had employed her for the whole year, this was ignored and she received a letter from a debt collection agency demanding immediate payment of the full amount.

When she contacted Centrelink again, she was told that she needed to provide payslips and a separation certificate. When she said she had been unable to obtain them from her employer because the business had changed hands multiple times, and that she had provided bank statements instead, she was told there was nothing further that could be done. She eventually succeeded in having her case referred for manual reassessment and the debt was reduced to zero. She joined the more than 10,000 people — not counting those who gave up the fight — whose debt was reduced to zero in the fourteen months to September last year.

The experiences with robodebt have a parallel with the welfare system in Indiana, where “refusal to cooperate” was used on the slightest pretext to deny or cut off assistance. In Australia, a lack of response to a Centrelink letter was assumed to mean a failure to cooperate, even though it often was the result of the letter being sent to an old address or people being unable to get through on the telephone.

The robodebt controversy has at least caused the government to temper its hardline approach. Centrelink delayed sending out letters over Christmas and the new year to spare people anxiety over the holiday period. It accepted and has at least partly implemented the ombudsman’s recommendations, including by providing access to a dedicated helpline (no helpline number was provided in the initial letters), delaying action to recover debts when people seek a review, allowing people to use bank statements rather than payslips to verify their income, offering more assistance to vulnerable people and no longer automatically charging a 10 per cent debt recovery fee.

As well, Centrelink has recruited 1000 people on contract to bring total staff dealing with customers to about 2500. It now sends out registered letters, which are returned if people have changed addresses. (The Australian Council of Social Service estimated that more than 6500 people first heard about their alleged debt when they were contacted by a debt collector.)

The National Social Security Rights Network (previously the National Welfare Rights Network), the peak body for community legal centres with social security practices, has received fewer requests for help since the initial controversy. Joni Gear, the Network’s legal project officer, says this is partly because people have become more familiar with the system and partly because the department has put considerable effort into improving its communication with people affected.

But she adds that the basic process remains the same, and human checking for errors still doesn’t occur at the initial stage. Debts are still being wrongly assessed and the onus of proof remains with the person accused of having been overpaid. “We have a lot of issues with this type of system, particularly for people who are still social security recipients. It’s a huge burden to have to comply with this process and quite stressful, thinking potentially you have a substantial debt and to have to prove you aren’t being overpaid.”

Gear says the improvements to the system still leave many social security recipients stranded because they are not familiar with an online process. “We need to make sure that face-to-face customer service still exists for these people and that they don’t fall through the cracks.”

What the government didn’t do is adopt the majority recommendation of a Senate committee — that is, of its Labor and Greens members, with Coalition senators dissenting — that the robodebts system be suspended until fundamental issues of procedural fairness were addressed. But the Department of Human Services is hoping that “George” will relieve some of the pressure on its staff. George, a robot, is “starting to explore solving some significant challenges that we have in our face-to-face servicing,” according to the department’s chief information officer Gary Sterrenberg. “One of these is violence. George is able to detect violence in a crowd and that gives us signals to be able to help our staff avoid those situations.”

So people whose frustrations boil over because of the lack of empathy shown by the department’s computers can be brought to heel with the help of another computer. A perfect example of government by algorithm.

“Automated decision-making shatters the social safety net, criminalises the poor, intensifies discrimination and compromises our deepest national values,” writes Virginia Eubanks. Perhaps it doesn’t need to be that way, but it will require the wonders of modern technology to be deployed in a much more sensitive way than they have been to date. ●

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The central proposition of his new book, Randomistas: How Radical Researchers Changed Our World is one you might expect an academic to get excited about. Randomised trials, he says, are the best way to establish an evidence-based approach to decision-making. But then Leigh still operates very much within the mindset of his former profession of academic economist: by the time he entered parliament in 2010, he had gained first class honours in law and arts at Sydney University and a PhD in public policy from Harvard and had then, at age thirty-two, been appointed professor of economics at the Australian National University. That makes him an unusual politician or, as Peter Dutton once put it (reflecting his own worldview), “a weird cat,” more interested in ideas and facts than ideology and factions. (Leigh hasn’t joined a Labor faction.)

In their classic form, randomised trials use a randomly selected group of people, whose reactions to a test treatment are compared with a control group that represents the status quo. In medicine, this often involves testing a new drug on one group of patients while the control group is given a placebo.

It’s hardly a new idea, but Leigh argues that it should be applied much more widely and rigorously. He starts by citing the example of scurvy. During the Seven Years War in the mid eighteenth century, 133,708 of Britain’s 185,899 sailors lost their lives to scurvy, compared to 1512 killed in action. Before the war, James Lind, a thirty-one-year-old ship’s surgeon, had tried six different treatments on twelve sailors with advanced scurvy. Surprisingly, the only one that worked was a mixture of oranges and lemons.

As is often the case with unexpected findings, his discovery was largely ignored until half a century later, when lemon juice started being issued on demand in the Royal Navy. Leigh argues that the cure was a key reason for Britain’s naval dominance. “In fact, it is possible that if the scurvy randomised trial had been conducted by another colonial superpower, Australia’s national language might be French, Dutch or Portuguese.”

Of course, we are much more scientific in our approach these days. Or are we? Leigh cites assumptions and commonly held beliefs — that after-school programs help troubled youths, for instance, or that micro-credit solves poverty — that don’t hold up when properly evaluated. “Once you raise the evidence bar, a consistent finding emerges: most ideas that sound good don’t actually work in practice.”

The health sector has made extensive use of randomised trials as part of what’s called “evidence-based medicine.” But the very fact that such a term is used suggests that we can be slow learners. Rare indeed is the kind of frankness displayed by a dean of medicine in the United States who told his first-year class on their first day, “Half of what we teach you here is wrong; unfortunately we don’t know which half.”

Examples abound of what Leigh calls “eminence-based medicine” — cases where the prestige attached to doctors results in their opinions carrying greater weight than justified by the scientific research. He cites one Australian study that identified over 150 medical practices in common use despite being unsafe or ineffective.

Randomised trials remain relatively rare in surgery, for instance, and even then the results are not necessarily acted on. One in a thousand Americans receive spine fusion surgery each year, yet randomised trials show no better results than for intensive rehabilitation. In Australia, Leigh estimates, fewer than 10 per cent of programs for Indigenous people have had any kind of evaluation, let alone been subjected to randomised trials.

The book is full of equally interesting and sometimes disturbing examples. Yet, while Leigh argues for the much wider use of randomised trials, it can be surprising, at least to the outsider, to learn how extensive their reach already is.

The Flybuys loyalty program run by Coles has an inbuilt randomised trial: one in every one hundred customers doesn’t receive any promotional material. This enables the company to test the success of its promotions against a control group. (Judging by the amount of material it pumps out, they must reap very good returns.)

After noticing that its toolbar generated more attention if it was blue, Google split users into forty groups of equal size to establish which shade generated the highest click-through rates. It estimated that applying the result added $200 million to its bottom line.

A Californian winery printed three different versions of a cellar-door price list for a cabernet sauvignon that usually sold for $10, quoting prices of $10, $20 and $40. It then randomly chose one of the three price lists each day for several weeks and found that the wine sold nearly 50 per cent more when priced at $20 than at $10 — a concrete example of the arbitrariness of wine pricing that many have long suspected. Here’s another suspicion confirmed: randomly varying the prices in mail-order catalogues for women’s clothing found that demand jumped by up to a third when prices ended in the number nine, such as $9.99 or $39.

Leigh is such an enthusiast that he runs his own randomised trials, at least in simplified form. He chose the title for this book and a previous one, Battlers and Billionaires, by placing an advertisement on Google for a few days randomly showing different titles — twelve in the case of Randomistas — and then using the most popular.

Some of the greatest potential for making a difference lies in the application of randomised trials to policy-making. Take, for example, the trial wittingly or unwittingly carried out by the Promise Academy in New York’s Harlem district. This is a public charter school that operates extended class hours from 8am to 4pm and after-school activities as late as 7pm. With more applicants than places, it runs a lottery to choose whom it accepts. Whereas average African-American high school students in the United States lag two to four years behind their white counterparts, those who attend the Promise Academy perform equally well.

When it comes to crime, Neighbourhood Watch is Australia’s oldest and best-known community policing program. Despite the claims often made for the scheme, though, randomised trials have shown it to have no impact whatsoever on crime levels.

By contrast, a NSW trial that split those arrested on drug offences randomly between the Drug Court and the traditional court system found that, for every one hundred offenders who went to the Drug Court, eight drug crimes were committed in the subsequent year, compared with sixty-two crimes among the second group. The Drug Court treats addiction outside the jail system, with offenders who successfully complete a year-long program typically put on a good behaviour bond, with the threat of a jail term if they lapse.

And then there is politics. During Barack Obama’s first run for president, his campaign experts judged that a video of him speaking and a message saying “sign up” were likely to be the most appealing to visitors to the Obama website. When they switched between these and a series of different images and messages, they found they were wrong, with the combination of a black-and-white family photograph and a “learn more” message yielding 41 per cent more email addresses, which translated into 280,000 more volunteers and US$60 million more in donations. According to the Republican National Committee, the Trump team tested up to 50,000 different Facebook advertisements every day of the campaign.

In fact, many of the techniques that have become a standard part of election campaigning have been shown not to work, or at least not as well as assumed. Randomised trials of American robocalls, where computers automatically dial telephone numbers and play messages, found they generated one extra vote, at most, for every 1000 people who heard the message.

The results can be so impressive that Leigh sometimes seems to come close to suggesting that randomised trials are the answer to absolutely everything. But they can raise tricky ethical issues.

In one case, a group of surgeons in Houston conducted keyhole surgery on the knees of patients with osteoarthritis, while patients in a control group received an incision in their knee (and, the Houston doctors insisted, were told that was all it was). Two years later, the members of the two groups reported similar degrees of pain and knee function. It’s certainly a useful finding, but it raises the question of how many and what kind of patients would agree to sham surgery when they were told exactly what was (not) happening to them.

In 2012 Facebook conducted a psychological experiment by randomly altering the emotional content in the news feeds of 700,000 users. When people saw more negativity in their friends’ posts, their own posts became more negative and they were less likely to use Facebook the next day.

What amounted to emotional manipulation attracted some strong criticism, prompting Facebook’s chief operating officer, Sheryl Sandberg, to make an apology of sorts: “It was poorly communicated and for that communication we apologise. We never meant to upset you.” Not everything in life can be measured and some things that can should not be.

Randomised trials need to be properly conducted to produce accurate results. Like opinion polling, they have the potential to be misused to achieve a predetermined result.

Those reservations aside, Leigh has produced an absorbing book. Refreshingly, considering it was written by a politician, it isn’t all about its author. We should wish the professor–turned–political evangelist luck. Politics is more constrained than it has been for a long time by what is considered achievable and popular. Experts are routinely mocked and evidenced-backed claims ridiculed. Politicians are focusing more on pandering to emotions and less on persuading voters of the merit of policies that have been shown to work.

Leigh himself is vulnerable to government jibes about prescriptions he advocated as an academic, including an inheritance tax, that he now is obliged to disown as a member of the Labor team. That said, he can fudge with the best of them when put on the spot.

We can only hope that, despite the views of Peter Dutton, he is not regarded as a misfit in politics, too bright for his own good. He deserves a better fate than Barry Jones, also known as the man with two brains, who never advanced beyond junior minister, his expertise often ignored and his prophecies unheeded. ●

Randomistas: How Radical Researchers Changed Our World
By Andrew Leigh | Black Inc. | $29.99 | 256 pages

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Immediately below it is a second inscription. This one quotes from the 1998 Noumea Accords between the French government and leaders of the indigenous Kanaks, which formalised a staged devolution of power from France to New Caledonia. “The moment has come to understand the shadows of the colonial period,” it reads in part, “even if this era was not devoid of light.”

Even if obliquely and grudgingly, the words are an acknowledgement of the devastation inflicted on the Kanaks by the French colonisers. Indigenous revolts were violently suppressed, land taken and culture trampled. It is a familiar story to Indigenous people in Australia.

As historian Ken Inglis pointed out many years ago, 26 January was celebrated sporadically and in various forms in the early decades of last century, and it was not until 1931 that Victoria adopted the name Australia Day.

The La Foa monument is testament to the evolving relationship between the original inhabitants and the European colonists. It’s also an example we could follow to help resolve the debate about the outdated inscriptions on our own statues and monuments. It might also help us navigate the renewed debate over Australia Day, which has become another depressing example of how our main political parties feel compelled to follow rather than lead.

Most of the ubiquitous opinion polls in recent months suggest that a majority of Australians oppose changing the date of Australia Day from the anniversary of Arthur Phillip’s landing at Sydney Cove. But could the poll results reflect the fact that most people haven’t given the subject a great deal of thought? A survey commissioned by the Australia Institute found that only half of Australians know that Australia Day marks the arrival of the First Fleet, and fewer feel that the date is offensive to Indigenous Australians. It also suggested that Australians are attached to the idea of a national day but don’t necessarily believe it needs to be held on 26 January.

To argue, as did citizenship and multicultural affairs minister Alan Tudge last week, that the day is “a great unifying moment for this country,” let alone to imply that it is somehow a sacred part of our tradition, is absurd. As historian Ken Inglis pointed out many years ago, 26 January was celebrated sporadically and in various forms in the early decades of last century, and it was not until 1931 that Victoria adopted the name Australia Day. Other states followed later.

As early as 1938, on the 150th anniversary of Phillip’s arrival in Sydney, Aboriginal leaders called for a day of mourning and protest. And as recently as 1960, members of the Pioneers’ Association of (proudly convict-free) South Australia declared themselves to be “deeply disturbed” by attempts to persuade their state to accept 26 January as Australia Day. It was not until 1994 that it was decided that Australia Day should be celebrated on the actual date — as opposed to the nearest Monday, where it had ensured that Australians could enjoy that most sacred of all Australian institutions, the long weekend.

An increasing awareness and acknowledgement of Australian history before 1788 will eventually lead to a more suitable date for our national day. The Mabo judgement of 1992 overturned the fiction of terra nullius and recognised that Aborigines and Torres Strait Islanders had a legal right to land, which went on to be enshrined in legislation. Kevin Rudd’s apology to the stolen generations in 2008 was another step towards healing past wrongs. And there has been a growing appreciation of the richness of Indigenous art, ancient and modern, and to a lesser extent of Indigenous languages, which are the oldest, or among the oldest, in the world.

Australians are also gradually awakening to the evidence that British settlers did much more than occupy land populated by nomadic hunter-gatherers. When Indigenous author and historian Bruce Pascoe used the journals of the early explorers to tell the story of life in Australia before European settlement, he found repeated references to permanent settlements.

As he describes in his book Dark Emu, they included extensive yam pastures in Victoria and grain fields in Queensland that flourished without the use of fertiliser or herbicides. Large buildings held tonnes of surplus grain. Some villages were home to 1000 or more people, and some houses had thick coatings of clay over the roofs and were large enough to accommodate up to forty people. There were cemeteries, wells and means of irrigation. Dams and channels were built to facilitate the harvesting of fish. On an island off the Western Australian coast, hundreds of stone buildings were part of a high-density settlement.

Pascoe argues that there is a reason why we know so little of this history. The Europeans arrived in Australia, as they did in other colonies, with fixed ideas about the superiority of their civilisation. “To understand how the Europeans’ assumptions selectively filtered the information brought to them by the early explorers is to see how we came to have the history of the country we accept today,” he writes. “It is clear from the journals that few were here to marvel at a new civilisation; they were here to replace it… Few bothered with the evidence of the existing economy because they knew it was about to be subsumed.”

After 1860, he adds, most people saw no evidence of any prior complex civilisation. Villages had been burnt, their foundations stolen for other buildings, and the occupants killed in warfare, or by murder or disease.

Some large stone structures, possibly used for ceremonial purposes, did survive. They were so impressive, Pascoe writes, that the settlers who came across them could not accept that they were Indigenous and concluded that they must have been built by Europeans or, according to one theory, aliens.

Yes, European settlement needs to be seen in the context of prevailing beliefs at the time. We can’t undo history, but it is one thing to acknowledge it and another to celebrate it without reflecting on its consequences.

Changing the date of Australia Day is not the most important step towards coming to terms with our history. Twenty-seven years after government and opposition agreed to establish a Council for Aboriginal Reconciliation and seventeen years after the date set for the process to conclude, reconciliation remains an ongoing project. Our Constitution still makes no reference to Australia’s first peoples, and a broader agreement on Indigenous input into decision-making seems remote.

But while the date of our national day is only one small element in dealing with the past, it is hard to see how reconciliation can be advanced if we continue to assert that 26 January is a great unifying moment or fail to acknowledge that the benefits bestowed by Western civilisation came at a very high cost for the original inhabitants. •

The post It’s time for a new “unifying moment” appeared first on Inside Story.

In its recent report on the National Disability Insurance Scheme, the commission’s laudatory superlatives just keep flowing. It describes the scheme as “a complex and highly valued national reform” that, if implemented well, “will substantially improve the wellbeing of people with disability and Australians more generally.” With the scale, pace and nature of the changes under the scheme “unprecedented in Australia,” the level of commitment to its success and sustainability among governments, people with disability and those working with them is “extraordinary.” The commission cites descriptions of the scheme as “ground-breaking” and a “once-in-many-generations reform.”

On one level, this is not surprising. It was the commission itself that came up with the model for the scheme that was largely implemented by the Gillard government and its successors. Its most recent report responds to a reference from treasurer Scott Morrison for a review of the scheme’s costs, including how to manage any cost overruns, and the scheme’s prospects for ultimate sustainability. Despite the open invitation to suggest savings and despite a series of problems in implementation, the commission continues to accentuate the positive.

But it also rings some warning bells. By June this year, twelve months after the start of the national rollout of the NDIS (though trials have been under way since 2013), 122,065 people had participated. Forty-three per cent of current participants (a small number had left the scheme by June) were under fifteen, compared to the 30 per cent figure assumed in the earlier modelling of full operation in 2019–20. Twenty-nine per cent of current participants (including those under fifteen) had autism as their primary disability; another 37 per cent had an intellectual disability. In short, two-thirds of scheme participants were in these two categories, far ahead of the other twelve categories listed under the NDIS.

Assuming current proportions are maintained and the NDIS scales up to the expected total of 475,000 participants, the current figure would equate to almost 138,000 people with autism, compared to a 2011 Productivity Commission estimate of about 75,000. In addition, almost 176,000 would have an intellectual disability, including those with developmental delay — a condition not included in the commission’s original modelling but added later by the Gillard government. The Productivity Commission report says that the term developmental delay, which the NDIS distinguishes from autism, applies to children who take longer to reach age-specific milestones than others. It is used in the absence of a diagnosed condition: that is, there is usually a specific condition causing the delay but this has yet to be formally identified, often because of the age and capabilities of the child.

The report includes the startling finding that 40 per cent of children who entered the scheme after being assessed with developmental delay had no identified deficits in functional capacity compared to the normal range for their age. “Children with mild or no deficits in the NDIS clearly runs counter to the objectives of the scheme and, depending on the volume of supports that these children receive, could have significant cost and equity implications,” it says. “As such a tighter gateway that better assesses eligibility is necessary.”

The National Disability Insurance Agency, which administers the NDIS, offers the explanation that children had entered the scheme on the basis of a medical diagnosis rather than an assessment of functional impairment. Given that a substantial reduction in functional capacity is supposed to be one of the requirements of NDIS funding, this suggests some serious teething problems, if not worse.

The report’s findings about unexpectedly high numbers of children with autism or intellectual disability entering the NDIS come as no surprise to some who work in the field. Speaking before its release, David Roberts, who has practised as a paediatrician for more than thirty years and is a former president of the Western Australian branch of the Australian Medical Association, told Inside Story: “A large number of children are being diagnosed with autism who don’t actually have it. Over the past ten years I have run across cases in the hundreds where the diagnosis has been made but the assessment has been conducted improperly and where there have been conflicts of interest in the diagnosticians.”

Roberts feels strongly enough to speak publicly about the issue because of a wider concern. “The introduction of Medicare was an absolute revolution in how Australian healthcare was delivered and it has been an outstanding success. The introduction of the NDIS has the potential to be a similar if not just as great a success. But it is going to go pear-shaped if we can’t stop the rorting. It is clearly unsustainable.”

Few others practising in the field are prepared to be as direct as Roberts, at least in public. Nevertheless, there is significant support for his view.

Peter Parry, a child psychiatrist and senior lecturer at the University of Queensland, has long argued that there is an “over-diagnosis epidemic” in autism. One of the issues, he tells Inside Story, is the trend towards medicalising differences, encouraged by the pharmaceutical industry and “the human desire for simple answers.” Another contributing factor is the resources available: for example, in Queensland, funding has been allocated to schools on the basis of the number of children in specific disability categories. The Queensland Education Department has reported rates of autism diagnosis as high as one in fifty students — three times Parry’s best estimate of the rate worldwide, which itself has seen at least a twenty-fold increase since the 1950s. A survey of psychiatrists and paediatricians in Queensland in 2005 found that, in the face of diagnostic uncertainty, 58 per cent had erred on the side of providing an autism diagnosis to enable access to educational funding. In New South Wales, the term “autism diagnostic factories” is used informally to refer to some specialist practices.

At the heart of the problem is the fact that diagnosing autism is subjective and imprecise. Autism is a type of developmental abnormality whose symptoms include difficulties in social interaction, and restricted and repetitive behaviours, activities and interests. It can’t be determined by a blood test or a scan, at least not solely. Rather, it is based on an assessment of behaviour and the child’s development.

A standard measure used in diagnosis is whether the child needs “substantial support” — a term open to wide interpretation. “Many children with normal development have one or two features that are autistic but don’t require substantial support, and as they mature, the traits fade away,” says Roberts. The problem, he argues, is that “people lower the bar on ‘substantial support’ to the point where they grant parents access to funding because it is in their own interests to do so.” The process is improper, he adds, “because the funding organisations, such as the federal government through the NDIS and Medicare, don’t make sure that the clinicians involved aren’t conflicted.”

The way the diagnostic process should work is that the child sees three health professionals with expertise in the field: a paediatrician, a clinical psychologist and a speech pathologist, who make independent assessments. If there is agreement on a diagnosis of autism, advisers funded by the federal government — “partners” under the NDIS — then direct parents to the right source of funding for the child’s treatment. And the diagnosticians, those who design the treatment program, and the therapists who deliver the services should all operate at arm’s length from each other.

In practice, argues Roberts, bodies such as the Autism Association of Western Australia, or AAWA, and other private-sector autism therapy providers have relationships with clinicians who conduct the diagnostic assessments. In short, they seek out clinicians who they think are most likely to diagnose autism, and thus facilitate access to the NDIS and Medicare funding packages. Moreover, the same people who provide the services to autism patients organise the diagnostic process and write a treatment program. “They dress it up as an interdisciplinary approach but all of these people inter-refer,” Roberts says. The treatment program should be tailored to the child’s specific needs, he adds, but is instead often based on the resources that providers have available.

This is not the only conflict. In Perth, the advisers who connect parents to funding, whether through Medicare, the NDIS or the state government program, work in the same building as the AAWA and often appear to work for it. The AAWA originally operated as a charity but now is a service provider in competition with other private organisations. When diagnosed, says Roberts, patients visiting the AAWA will typically be referred to advisers in the same building, who in turn send them back to the AAWA rather than to other companies. He adds that the WA Department of Communities has a similar arrangement, offering diagnostics to parents and then, through its allied health service, “capturing” the child for therapy services funded by the federal government. As a consultant paediatrician, Roberts is involved in diagnosis of autism but not in its treatment.

Mandy Mason, whose daughter has been a patient of Roberts, recalls taking her to see an autism adviser in Perth and being told that she could use her funding to “come next door to us” — a reference to the AAWA. She says the word “us” stuck in her mind because the advisers were supposed to be an independent source of information on available services.

It quickly becomes clear that many involved in this area see discretion as the better part of valour. After I submitted detailed questions to the National Disability Insurance Agency, it responded that it would be “inappropriate” to comment on an individual’s views — in other words, those of Roberts. The office of social services minister Christian Porter referred me to his department, which referred me back to the National Disability Insurance Agency. The AAWA did not respond to repeated requests, including in a detailed email, for comment.

A spokesperson for the National Disability Insurance Agency did acknowledge that “there is strong evidence which suggests the way health professionals diagnose autism varies considerably across Australia,” but added that this was being addressed. One expert familiar with the operations of the NDIS, who did not want to be identified, says professionals can come under “huge moral pressure from the family to give a diagnosis because that is the key to getting funding.”

The diagnostic uncertainties are highlighted in a draft national guideline for diagnosing autism released in September by the federal government–funded Cooperative Research Centre for Living with Autism. There is no consistent process for diagnosing autism, says the centre, and “this inconsistency has led to uneven service provision across the Australian states and territories, along with confusion within the community about the diagnostic process.” It points out that appraisal of behaviours “is an inherently subjective task that relies heavily on clinician experience and skill” and that the “gold standard” diagnosis is no more than a best-estimate clinical judgement. The guideline itself runs to seventy-two pages, not including references, and emphasises a tiered process, including different settings in which behaviours should be assessed and a focus on the degree of functional impairment.

The chief research officer at the Cooperative Research Centre, professor of autism research at the University of Western Australia Andrew Whitehouse, tells me that the guideline is being developed with the sole purpose of achieving a common approach and he is unsure what effect it will have on the number of children diagnosed. When I put David Roberts’s concerns to him, he says, “Are there children getting a diagnosis of autism because it might help provide support? Yes, I think there are. I attach no value judgement to that whatsoever.” He adds that this was where the NDIS eligibility criterion of the degree of functional impairment was important. As far back as 2011, a review commissioned by the federal government reported “concern that some autism advisers were also service providers, presenting a clear conflict of interest and therefore potential inability to offer unbiased advice or information to families.”

Whitehouse says that “any number of reasons” could help explain increased rates of autism, including more diagnoses of children with mild symptoms, more types of behaviour now meeting the criteria for diagnosis, a greater survival rate among children born prematurely — known to be associated with an increased risk of autism — and greater awareness of the condition, not only among clinicians but also among parents. “On the family side, if a child is developing differently, we start to think about autism now, whereas twenty to thirty years ago we didn’t.”

Overall, the commission found that utilisation of the NDIS was lower than expected but that this was largely because assistance that had been committed had yet to be taken up. But there were higher rates than expected for children and higher than expected costs for individual funding packages.

Canberra’s response to the higher rates has been the introduction of an Early Childhood Early Intervention program for children six years or younger, designed as a “gateway,” or perhaps more accurately as a hurdle, through which families are directed by therapists with experience in early childhood intervention to alternative mainstream services, as well as to the NDIS. It includes the specific aim that fewer than 50 per cent of those assessed should be given access to the NDIS. The Productivity Commission recommends this target be removed because it is incompatible with one of the key features of the NDIS: that it is open to anyone who meets the eligibility criteria.

While most working in the autism field are reluctant to question the high numbers entering the NDIS, Roberts’s view is different. He sees a threat to the very future of the scheme. The Productivity Commission and the government seem more sanguine, but the warning signs are clear. The commission says the NDIS came in under budget at the end of the trial period last year but this was because early cost pressures, such as the greater than expected number of children, were more than offset by lower than expected utilisation of the scheme overall. It says that the schedule for rolling out the full scheme is too ambitious and “poses risks to the financial sustainability of the scheme.”

The commission’s report spells out how costs have escalated since its initial modelling in 2011, when it estimated a total gross cost of $13.6 billion a year when the NDIS is fully operating. This figure has now increased to $22 billion, based on an estimate by the National Disability Insurance Agency, with the difference largely attributable to population increases and pay rises for social and community services employees since 2012. Moreover, the Department of Social Services has estimated a cost of $32 billion a year by 2029, with costs expected to increase above long-term inflation and population growth. But the commission also quotes estimates in 2011 by the Australian Government Actuary of offsetting costs of $11 billion reflecting savings in other government programs, and listed further indirect savings through better health, less crime and less need for supported accommodation.

Apart from Morrison’s asking the Productivity Commission to look at the scheme’s sustainability, there is little sign that the government is blanching at the escalating costs. The only significant response from Canberra to the commission’s report has been a statement from Christian Porter stating that the commission, “while identifying known issues and risks, had confirmed that the NDIS costs are on track.” As for emerging cost pressures, he argues that they “are being appropriately monitored and addressed.” The government will work with the National Disability Insurance Agency, the states and the territories to consider the report’s findings and recommendations, said Porter, but he rejected the idea of delaying the timetable for the full rollout.

The NDIS is worth fighting for. Though there have been frustrations, disappointments and teething problems, it is giving new hope and opportunity to tens of thousands of people whose struggles with disability had gone largely unrecognised. It gives them a measure of control over the services and facilities they need, replacing a system that the Productivity Commission called under-funded, unfair, fragmented, inefficient and unsustainable. Taking a lifetime approach based on insurance principles and with an emphasis on early intervention, it is an investment in the future, aimed at allowing more people with disability and their carers to lead fulfilling lives, including earning incomes. And while its cost is bracing, the commission, among others, argues that it will save money in the long run.

The ultimate justification for the NDIS is the telling comment made by the commission in its initial report in 2011: that “were government to be starting with a blank slate in determining its funding priorities, there would be a strong rationale for provision of disability services to be one of its highest spending priorities.”

The government has taken steps to tackle the risks that the scheme will be overwhelmed by those diagnosed with autism and developmental delays. The commission says it is too early to assess the success of these initiatives. If they are not adequate, the danger is that the government will take more brutal action that harms those most in need. ●

The post Autism and the NDIS: a matter of interpretation appeared first on Inside Story.

That includes Australia, if not as severely as in many other countries. The latest Lowy Institute poll finds that 52 per cent of Australians aged between eighteen and twenty-nine agree with the statement that “democracy is preferable to any other kind of government,” compared to 60 per cent for people of all ages. The fact that support for democracy enjoys only a bare majority among young people (compared with a third who say a non-democratic government can be preferable in some circumstances and 12 per cent who say the kind of government doesn’t matter) suggests we are in dangerous territory.

So here’s an idea. One of the major threats to democracy is the perception, and too often the reality, that politicians can be bought, particularly by wealthy donors to parties and candidates. One way to address that would be to ban political donations. Yes, outright.

That means election campaigns would be paid for by taxpayers. Not a popular move, you may think. But of course it happens, partially, already. The Australian Electoral Commission handed out $62.8 million in government funding to candidates in last year’s federal election, based on $2.63 for each vote cast for the House of Representatives and the Senate.

In case we needed reminding of the problem with the present system, this is what the 2014 inquiry into political donations in NSW discovered: “What stands out [in submissions from the public and others] are the feelings of shock and disgust at the brazen way in which some candidates and MPs have apparently sidestepped political donations laws for personal and political gain.” Headed by former senior public servant Kerry Schott, the inquiry was established by the Baird government in the wake of the scandal over illegal donations to prominent Liberals from property developers, some of whom had planning applications before the state government.

It is not just illegal donations that can compromise politicians. In 2015, the ABC’s Four Corners revealed how people associated with the Calabrian Mafia in Australia used donations to the Liberal Party to gain access to members of the Howard government and succeeded in overturning a deportation order against Frank Madafferi, who had a long criminal record in Italy and was subsequently convicted of drug trafficking in Australia.

Just last month, a joint investigation by Four Corners and Fairfax reported that Huang Xiangmo, a Chinese property developer who arrived in Australia in 2011, donated $770,000 to the Liberals before the 2013 election and another $100,000 to the campaign of the then trade minister Andrew Robb, who helped seal the free trade deal between China and Australia. Robb now receives $880,000 a year plus expenses as a senior economic adviser to the Landbridge Group, the Chinese company that obtained a ninety-nine-year lease on the Port of Darwin. He says he has acted at all times in accordance with his responsibilities as a former member of cabinet.

Labor has reason to be grateful to Huang as well. Together with two other members of the Australian Council for the Promotion of the Peaceful Reunification of China, of which he is president, he donated $500,000 to the party’s NSW branch in 2012. One of Huang’s advisers on the council was Ernest Wong, whom Labor chose to replace Eric Roozendaal in the NSW Legislative Council. Roozendaal now works for Huang’s property development company.

Before the 2016 election, according to Four Corners, Huang promised to donate $400,000 to the Labor Party. During the campaign, Labor’s then defence spokesman Stephen Conroy argued the Australian navy should be able to sail into the South China Sea, where China has laid claim to disputed islands, as a demonstration of the right to freedom of navigation under international law. Huang told Labor he was cancelling the donation as a result of Conroy’s comments. The day after Conroy’s comments, Labor senator Sam Dastyari appeared at a news conference for the Chinese media alongside Huang and said Australia should not meddle with Chinese activities in the South China Sea.

Four Corners also reported that Dastyari and his office lobbied the immigration department on Huang’s application for Australian citizenship. Huang’s company previously had paid a $40,000 legal bill for Dastyari. Last year, Huang was quoted as saying, “The Australian Chinese community is inexperienced in using political donations to satisfy political requests. We need to learn… how to have a more efficient combination between political requests and political donations.” He doesn’t seem to be doing too badly himself on this score.

ASIO’s director-general Duncan Lewis warned the heads of the Liberal, National and Labor Party organisations two years ago that the Chinese Communist Party connections of Huang and another generous donor of Chinese extraction, Chau Chak Wing, meant that their donations could compromise Australian political parties. The recommendations of the national security agencies generally are regarded as so important that they have bipartisan support. The decision was unanimous in this case as well: the major parties decided to ignore the warning and keep sticking out their hands for money.

What were Australian politicians thinking? As Michelle Grattan wrote, “Did they believe that, in the absence of democracy in the land of their birth, these businessmen were just anxious to subsidise it abroad? Hardly.”

Surely the game is up. The argument that political fundraising is conducted at arm’s length and never influences the decisions politicians make has been exposed repeatedly as a lie, as have the claims by large donors that they just want to support the democratic process.

The present laws on donations are a fig leaf pretending to cover a system designed to maximise donations and feed an ever-escalating political arms race. New South Wales has the tightest laws on paper in the country, but if they are not broken they are readily circumvented by channelling donations through Canberra, where the law governing federal parties is much more lax and there is no federal anti-corruption body.

Among those who have advocated a complete ban on private political donations is Geoffrey Watson SC, counsel assisting the Independent Commission Against Corruption in inquiries that uncovered illegal donations and the diversion of funds through Canberra. So did former NSW premier Mike Baird and former opposition leader John Robertson while they were in office. The review by former Queensland National leader Rob Borbidge and Liberal leader Joan Sheldon of the Newman government’s defeat in the 2015 election recommended that the Queensland Liberal National Party consider full public funding of election campaigns and the banning of trade union and corporate donations.

Implementing a pure public funding system isn’t without its challenges, of course. University of Queensland law professor Graeme Orr argues it would mean funding the cost of parties’ administration as well as campaigning and, as he told me, “It is difficult to imagine how you could come up with a metric of what is a reasonable amount to run a party,” given their often different structures and activities.

The Schott inquiry came out against full public funding. It argued that in a democracy small donations played an important role by making those seeking public office responsive to their constituents. Last year, New South Wales went part of the way, introducing an annual cap of $6100 for donations to registered political parties and $2700 for MPs, candidates and third parties.

The Schott report also argued that it would not be feasible to fund all candidates, including those from new parties, as well as third-party groups that contributed to the public debate. And it thought it likely the High Court would rule against a ban on private donations as a breach of the implied freedom of political communication under the Constitution.

In a chapter for a forthcoming book, Orr argues that it is possible for the campaigns of parties during election periods to be completely publicly funded where there are caps on election spending as well as on donations. Expenditure limits apply in New South Wales and, to an extent, South Australia, where they are a condition for accepting public funding. As well, writes Orr, “over time public funding may be leveraged higher and donations caps screwed lower to the point that parties generate and rely on no private money other than membership fees and any return on capital they may own.”

In fact, this trend is already under way, in Australia and overseas, in what Orr describes as a “creeping expansion” of public funding that has occurred with limited debate. It is driven not only by the worthy cause of reducing corruption but also by parties anxious to secure reliable funding, particularly with a decline in corporate donations.

In 2015, the Australian Capital Territory quadrupled public funding at one stroke to $8 a vote, with both Labor and Liberal parties arguing that it would prevent corruption or the perception of corruption. Orr calculates that this would have covered between 82 per cent and 97 per cent of the campaign costs of the major parties at the previous election. This compares to public funding accounting for about half of the election campaign costs of federal elections and up to 80 per cent in New South Wales.

As well, the ACT, NSW and Queensland help fund parties’ administrative costs. “In the space of just over thirty years Australia has gone from having no public support for parties (apart from modest tax deductibility), via funding at moderate rates based on votes received, to schemes of considerable generosity,” Orr writes. He adds that high levels of public funding, typically ranging between 50 per cent and 90 per cent of costs, apply in Europe and Canada.

Orr has previously suggested that full public funding could operate for parties and candidates for election campaigns, with private donations of up to $1500 a year allowed for administration. What’s to stop parties from transferring donations to campaigning? Distinguishing the two is already built into the regulatory system, he says.

The Turnbull government has promised reform of foreign donations, with further details and timing yet to come. Of 180 countries, 114 have banned foreign donations, most of them long ago. Labor introduced legislation for a ban in 2010 but the bill didn’t make it through the Senate. You can draw your own conclusions as to why the government continues to cogitate on the issue rather than acting. Let’s just say that the greed of political parties should not be an excuse.

When, or if, a ban on foreign donations is finally implemented in Australia, it will fall far short of what is required to restore a measure of trust in Australian democracy. Orr says it is using a sledgehammer to crack a single nut, when there is a bag of bigger nuts waiting.

It’s true that increased public funding could encourage politicians to exploit the system. Orr describes the $8 a vote now provided in the ACT as “a remarkable amount in a physically small jurisdiction, with a simple media market and a single house of parliament.” Moreover, other measures introduced at the same time completely remove the cap on donations, which previously was $10,000 per person. The rise of campaigning through social media presents another challenge, requiring new regulations and enforcement.

But ultimately it comes down to what our priorities are. Or, to put it another way, what price democracy? The constitutional barriers should not be insuperable, given the High Court’s suggestion in 2015 that freedom of political communication should be balanced by “equality of opportunity to participate in the exercise of political sovereignty.” The court also has acknowledged there can be some restrictions on freedom of speech, provided they are reasonable and proportionate to the issue being addressed.

This is a case where we should not allow the perfect to become the enemy of the good. •

The post Why we need full public funding of election campaigns appeared first on Inside Story.

And the answer? No, he couldn’t have. At least, not if you accept newly released findings from the Australian Election Study, or AES. Conducted after every election since 1987, it is the most detailed survey of long-term voting trends in Australia.

The latest AES results also question what has become conventional wisdom: that “Mediscare” – Labor’s attempt to scare voters witless by claiming the government had a secret agenda to privatise Medicare – was the killer issue that almost cost the Coalition the 2016 election. In short, elections are more complicated than that.

Of course, the idea when Turnbull staged his coup against Abbott in 2015 was that the new prime minister’s high standing among voters would end the run of thirty consecutive Newspolls in which, as he reminded us, the Coalition had trailed Labor. Next, the government would go to an election and win a thumping majority, and Turnbull would throw off the shackles of a right-wing party room and govern with unchallenged authority.

The AES findings show just how quickly Turnbull’s gloss wore off. It asked voters to rate current leaders, as well as Abbott, on a scale of 0 to 10, with 5 being a neutral score. Turnbull topped the list at 4.9, but he compared poorly with some of his predecessors as prime minister, including Kevin Rudd, who rated 6.3 in 2007, Bob Hawke on 6.2 in 1987, and John Howard on 5.7 in 1996.

But Turnbull was more popular – or, more correctly, less unpopular – than Bill Shorten, who rated 4.2. Even though they led parties with much smaller voting bases, the Nationals’ Barnaby Joyce and the Greens’ Richard Di Natale followed closely behind with 4.1. Lagging the field was Tony Abbott on 3.6.

In a chapter for a new book on the election to be published later this year by ANU Press, Clive Bean of Queensland’s University of Technology, one of the academics who conduct and analyse the survey, uses multivariate statistical analysis to calculate the factors that significantly influenced the vote. His finding is that Turnbull’s leadership actually reduced the Coalition vote by about 0.15 per cent. But Shorten dragged Labor’s vote down by nearly 0.9 per cent. “The net effect for the leaders was thus about three-quarters of 1 per cent in favour of the Coalition,” Bean writes.

The figures allow Bean to make a hypothetical assessment of the impact of replacing Abbott with Turnbull:

Assuming the same level of effect on individual voting decisions if Abbott had remained and taking account of Abbott’s much lower rating (3.6 compared to Turnbull’s 4.9)… the benefit to the Coalition vote of replacing Abbott with Turnbull was just under 2 per cent. Given the closeness of the final result (a two-party-preferred margin of only 0.72 per cent), one clear implication of this calculation is that if Abbott had remained prime minister the Coalition would have lost the election, all other things being equal.

Abbott supporters are unlikely to be convinced. They’d argue that he won in 2013 despite being unpopular, and that the rating voters gave him following last year’s election came after he had lost the leadership. But despite his big win in 2013, Abbott still only rated 4.3 in that year’s AES; nor did he become popular after he became PM. It is as plausible to argue that the 3.6 rating voters gave him after the 2016 election would have been lower if he had remained prime minister as it is to say it would have been higher.

This is particularly the case because Abbott’s trademark is negative politics. Unencumbered by Turnbull’s promise to elevate politics to a higher plane, Abbott would have run a different, more aggressive and possibly more effective campaign last year, at least in terms of taking the fight to Labor. But that would probably have come at the cost of making him even less popular among voters, who consistently say they hate this type of politics.

On the issues, 24 per cent of voters picked health and Medicare as the most important election concern for them and their families – higher than any others on the list, including management of the economy (20 per cent) and education (12 per cent). The figure for health and Medicare was up from 19 per cent at the last election. Moreover, 45 per cent said Labor’s policy on health was closer than the Coalition’s to their own view of the issue – up eight percentage points from the last election. Those who preferred the Coalition’s policy fell from 27 per cent to 26 per cent, meaning a Labor lead of nineteen points on this issue.

While the survey didn’t specifically mention Labor’s Mediscare campaign, those figures certainly imply that it cut through. On the other hand, health nearly always rates as the top issue for voters. In fact, in three of the nine previous elections, voters preferred Labor’s policy on health over the Coalition’s by a larger margin than in 2016.

Bean calculates that health and education each benefited Labor’s vote by 0.8 per cent. With the taxation issue helping the Coalition by 0.25 per cent, this means that the net electoral benefit to Labor from issues that swung the vote in last year’s election was over 1.3 per cent. “Considering how close the election was in the end, the benefit from these issues could be argued to be what allowed Labor to push the Coalition to the brink of defeat…” he writes.

Unfortunately, however, the results of this analysis do not allow us to say whether it was the “Mediscare” strategy that caused the health issue to have the electoral impact it did. The evidence that the issue of health has had similar effects in other recent Australian elections… means that it is entirely possible that the health effect in 2016 had more to do with the issue agendas of the electorate than the campaign tactics of one of the major political parties.

The point Bean is making here, as explained to me, is that “election after election, come hell or high water, no matter how strongly health features as a campaign issue, it always matters to the voter.”

None of this is to say that Mediscare had no effect. It was a classic scare campaign – that is, one based on, at best, a very slender thread of evidence but designed to create doubt in people’s minds. Labor seized on a proposal within the government to outsource the Medicare benefit payments system to the private sector – an option that the Coalition abandoned during the campaign. The Coalition also disavowed any intention to privatise Medicare itself: a credible commitment considering that any such policy would be electoral suicide.

Given Labor’s long-term strong advantage on the health issue, any claimed threat by the Coalition to Medicare had the potential to resonate with voters. But that is different from Labor supporters claiming it as the killer issue or the government using it as the scapegoat for its near-death experience in the election. As Bean put it to me, “If the Coalition is saying we would have won easily apart from the Mediscare issue, that is probably a bit of a stretch.”

Taxation was nominated as the most important election issue by 11 per cent of voters surveyed – the same as in the previous election and below the average figure for elections going back to 1990. But on an issue that traditionally has favoured the Coalition parties, the gap with Labor shrank to two percentage points – the equal lowest in nine elections. About the same number as in recent elections favoured the Coalition’s policies on tax – 33 per cent – but those preferring Labor’s policies rose from 25 per cent to 31 per cent.

While most voters weren’t very concerned about taxation as an issue, Bean found that it really did matter for those who did regard it as important. The data doesn’t drill down far enough to determine the effect of individual tax policies. Speculatively, though, if Labor lost votes with its bold decision to campaign on tackling the affordable housing issue by reducing negative gearing and capital gains tax concessions, that may have been countered by the unpopularity of the Coalition’s promised company tax cuts and, among higher-income Liberal supporters, its superannuation changes.

Although subject to academic review, the conclusions drawn from successive Australian Election Studies have had their critics. Murray Goot, an emeritus professor of politics at Macquarie University who has written extensively on opinion polling, says respondents to the survey are heavily biased towards better-educated, older people and may also be skewed towards the more politically interested. As well, he points to the declining response rate to the surveys. Nevertheless, he has drawn extensively on the findings himself in the past.

The AES surveys are conducted after each election, with questionnaires sent out to a random sample. The response rate in the first survey in 1987 was 62.8 per cent, but it has fallen in every election since, with two exceptions, and the drops have been greatest in recent elections, so that in 2016 it was just 22.5 per cent.

But the AES has more than quadrupled the total sample over the thirty-year period, so that the number of valid responses of 2818 in 2016 was well above the average for AES surveys and higher than that used in most opinion polls. These responses are then weighted for factors such as age, gender, state of residence and how people voted to turn the survey into what the AES says is a representative sample of the Australian voting population. The problem with this, according to Goot, is that the weighting assumes that those who did not respond have the same views as those in the sample.

The value of the AES is that it is much more comprehensive than other opinion polls, which often also have similar problems, and that it shows trends in voting behaviour stretching over a thirty-year period.

The post Could Tony Abbott have won the 2016 election? appeared first on Inside Story.

Trump, with characteristic braggadocio, says he invented it. “That was mine, I came up with it about a year ago and I kept using it and everybody’s now using it, they are all loving it,” he said last year. “I don’t know, I guess I should copyright it, maybe I have copyrighted it.”

It was one of his lesser lies. He is old enough to remember that it was the campaign slogan used by Ronald Reagan to great effect in the 1980 election (which I covered for the Sydney Morning Herald). It helped Reagan to a landslide victory against Jimmy Carter, thereby achieving the relatively rare feat of defeating a first-term president.

Reagan, too, was a showman, though a much better-natured one than Trump. And he ran heavily on an anti-establishment, anti-Washington, anti-politician theme, even though, unlike Trump, he had been a practising politician as governor of California.

But he didn’t win by convincing Americans of his vast knowledge of governing (as evidence of his foreign policy experience, he once cited a meeting with the King of Siam). Rather, he tapped into the same demographic as Trump has – white, working-class Americans in northern and midwestern states, who became known as Reagan Democrats, as well as middle-class white voters who felt, and still feel, under economic pressure.

Where Carter saw complex problems, Reagan had simple solutions not burdened by much supporting evidence – trickle-down economics, for instance, and pouring huge sums into defence programs like Star Wars, both of which blew out the federal deficit. Neither did anything to help Reagan Democrats, just as Trump’s policies are more likely to harm his core supporters than help them.

There has long been a loose association between politics and the truth but, like everything else about his campaign, Trump took it to a new level. According to PolitiFact, 70 per cent of Trump’s statements during the campaign were mostly false, false or “pants on fire false.” Hillary Clinton was a paragon of virtue by comparison, with only 26 per cent in these categories.

That Americans elected Trump regardless doesn’t just reflect a cynical view among voters that politicians always lie. One of the great contradictions today is that there has never been more access to information and there has never been greater ignorance and misunderstanding.

The most basic responsibility of journalists and editors is to check facts and discard those that are wrong. Of course, it is an imperfect process, with many a porkie slipping through as a result of insufficient checking, deadline pressure or the reporting of uncontradicted assertions. But it at least applies a filter to the millions of claims and counterclaims jostling for attention. Or it used to.

People’s trust in traditional media has plumbed new depths, as it has for other institutions. Now they apply a different filter, choosing the media that suit them, feeding their own prejudices and preconceptions and shaping their own realities. Most of the media have adjusted to feed this beast, forsaking rigorous journalism and balance to stake their claim for a segment of the market. The truth, the whole truth and nothing but the truth? Well, it depends: it has become relative.

So-called facts are deployed as weapons in battle. In the process they become casualties of the truth because in a war there is no scope to give ground. Challenging a statement that is wrong becomes part of a conspiracy, turned against the accuser, as in Trump’s mantra against “lying Hillary” and the mainstream media.

A reported 62 per cent of Americans now obtain their news from social media, where real facts come a distant second to assertions that have the most tenuous connection to the truth or none at all. Donald Trump was a leading proponent of the claim that Barack Obama was born overseas. It was preposterous and repeatedly proven to be wrong, but he persisted with it until late in the campaign because people believed it and it played to his advantage.

In Trump’s world of whatever-it-takes politics, there are no boundaries. He was prepared to promise anything that had any appeal and say anything that advanced his cause.

Now that he has been elected president, the optimistic view is that his promises will be as dispensable as the truth. Perhaps he doesn’t really want to lock up Hillary. Banning all Muslims from entering America is impractical, apart from being a bad idea. Ditto deporting illegal immigrants. He seems intent on building a wall along the southern border, but may stop short of going to war with Mexico to force it to pay for it. Former auto and steel workers might like the idea of slapping a 45 per cent tariff on Chinese imports until China threatens to retaliate and set back the world economy by years.

If he breaks all or some of these promises, his strongest supporters will feel betrayed and rightly so. Just possibly, they will let him get away with it if he succeeds in restoring a sense of confidence in Americans, as Reagan did. But he will have fed the relentlessly downward spiral in politics, further eroding trust and reinforcing anti-establishment sentiment. By the time of the next election, many will be looking for another candidate to represent their views.

The promises that Trump seems most likely to keep, like abolishing Obamacare and implementing yet more tax cuts for the rich and big business, are the ones most likely to harm Trump’s core supporters. Obamacare has reduced the number of Americans not covered by health insurance – typically poorer, casual workers – by twenty million, according to the US health department. Tax cuts at the top end will do nothing to reverse the staggering rise in inequality that has seen the living standards of lower- and middle-income earners stagnate or fall over recent decades while those on higher incomes have soared.

Is there a way out of the deadly political spiral of increasing alienation of voters and increasing resort to opportunistic populists? Leadership of the right kind would be a start.

Globalisation and all its ramifications, including free trade and economic restructuring, has often been imposed on voters in developed countries, rather than its benefits being sold to them. In Australia, the support of John Howard’s opposition for financial and labour market deregulation and tariff cuts reduced much of the electoral grief that otherwise would have been visited on the Hawke and Keating governments.

Globalisation has brought increased prosperity, particularly by lifting hundreds of millions out of poverty in developing countries. But it has also left people behind, despite the breezy assumptions in Western countries that displaced workers would move effortlessly to the new growth areas of the economy. Tell that to a migrant textile worker in Australia expected to pick up a job in IT.

This problem is finally being acknowledged, if not yet addressed, at senior levels of the Australian government, in a belated response to a rise in protectionism and of populist politicians like Le Pen, Farage, Hanson and Trump. Martin Parkinson, head of the prime minister’s department, recently highlighted two of the consequences of globalisation: on the one hand, a decline in global income inequality as incomes in poorer countries rose faster than those in wealthier countries and, on the other, a rise in income inequality within countries.

He argued that the first response to rising protectionist pressures should be a reinvigorated structural reform agenda based on open trade and investment policies that lift competitiveness, attract greater investment and allow Australia to capitalise on opportunities in the world economy. In short, a standard contemporary economic prescription.

But he went further: “Rising inequality is not destiny or a necessary consequence of the forces of globalisation. It is a choice made by individual countries. All governments have the policy apparatus at their disposal to build a more economically and socially equitable society that remains internationally competitive.”

While arguing that Australia’s redistributive tax and welfare system already did a better job of this than most other countries, he then advocated measures to better equip the workforce to manage change. “Education and training,” he said, “are important domestic policy levers which Australia and other nations can pull to build growth and support those who are more at risk from unemployment or underemployment during periods of structural change.”

And, as a third response, he said we should support those who, despite their best efforts, could not rapidly reskill or find reasonable paying work and therefore needed income support to sustain a reasonable standard of living.

Conservative forces, including in the Turnbull government, could do well to reflect on this instead of arguing reflexively that social spending always needs to be cut. An investment in retraining, education and income support may pay off not only economically but politically if it mutes the siren call of Trumpism. •

The post Draining the inequality swamp appeared first on Inside Story.

Social impact bonds, or social benefit bonds as they are called in New South Wales, are generating enough excitement to make Malcolm Turnbull proud. Not only that, they fit right into his innovation agenda, holding out the promise of a new way to tackle some of our most intractable social problems. They also tap into a growing market for investments aimed at doing good as well as earning a return.

The idea is to harness the resources of private investors to fund social programs at a time when governments feel increasingly constrained. The investors get a return only if the programs are successful, meaning some of the risk is transferred from taxpayers to private individuals and payments are based on outcomes rather than what the program happens to cost.

Pioneered in Britain six years ago, social impact bonds have spread rapidly, with sixty launched in fifteen countries. In Australia, Barry O’Farrell’s Coalition government in New South Wales was the first to announce a trial of the bonds in 2011, when Mike Baird, as treasurer, acted on a report commissioned by the former Labor government. Now Baird’s government is running two bonds aimed at reducing the rate of foster and institutional care for children. In July, it announced a third designed to reduce reoffending rates among ex-prisoners.

Baird wants to introduce two new social impact investments each year. He has outlined three priority areas: increasing access to early childhood education, encouraging more permanent foster care (including through adoptions), and using a new Aboriginal Centre for Excellence to help Indigenous children in western Sydney make the post-school transition. And as a sign of how far it is prepared to go down this path, the government is exploring four other areas – homelessness among veterans, waste management, the road toll and domestic violence. The new projects won’t all necessarily involve bonds: the government is also looking at potentially less complex alternatives such as government or private grants paid on the basis of outcomes.

Labor governments may not be quite as gung-ho about the idea, but Victoria, Queensland and South Australia have all announced pilot programs, or have plans to do so, in areas including drug and alcohol treatment programs, homelessness, prisoner reoffending and out-of-home care for Indigenous children.

As a concept, social impact bonds require a leap of thinking. Since governments took over providing mainstream social services from churches and charities during the first half of the twentieth century, it’s been assumed that the best way to ensure people are not left behind is to maintain nationwide programs funded by taxpayers.

Beyond routine social security payments, though, governments have a generally poor record in delivering services. Take, for example, shortcomings in child fostering and adoption, prisoner rehabilitation, and dealing with homelessness and long-term unemployment. There are arguments for trying something different.

At the same time, governments, particularly conservative ones, are looking to spend less in these and other welfare areas. As social services minister, Morrison was unequivocal about what he saw as the trend. Governments, he said, would get smaller in proportion to the size of the social challenges of the future:

But the non-government sector, the community, the private sector, will have to get bigger when it comes to addressing these challenges. This must extend to… private capital investment in addressing social needs – not charity… What I am basically saying is that welfare must become a good deal for investors – for private investors. We have to make it a good deal – for the returns to be there, to attract the level of capital that will be necessary in addition to the significant injection of capital and resources that is already provided by the states and the Commonwealth.

In the same speech, he said he was “very keen” to explore social impact bonds because “they have great potential for helping improve people’s lives while increasing public sector accountability.” When I submitted questions about the government’s plans to Morrison’s successor in the portfolio, Christian Porter, a spokesperson told me that the Coalition is exploring ways to develop a social impact investment market in Australia. “The government is open to looking at where social impact bonds might be a good fit in delivering outcomes for Australian communities,” she added.

Federal Labor is on board, too, at least in principle. “I am really interested in how to encourage and support the not-for-profit sector as they try to think of new ways of doing things,” shadow families and social services minister Jenny Macklin told me. “The good thing about social impact bonds is that people are trying out a new idea. At the moment I think there is still a lot of work to be done to see whether or not they will be effective. We need proper evaluation and a strong evidence base.”

In a speech last year, Porter also sounded a note of caution. Referring to various initiatives to increase housing affordability, including the South Australian trials of social impact bonds directed at homelessness, he observed that success had been “mixed” and “few projects have been able to scale up to the level of supply needed to make a real difference…”

Last year’s McClure report on welfare reform recommended expanding outcomes-based social investment models, including social impact bonds, or SIBs:

To date, evaluations of SIBs trialled overseas and in Australia have been promising. The vested interests of the parties in ensuring success has led to innovation and performance. A key benefit of SIBs is the opportunity they provide to “test and try” a multitude of different approaches. Where these solutions prove effective they could be scaled on a larger level.

This year’s federal budget included $96 million for a Try, Test and Learn Fund, which will invite bids from inside and outside government for innovative solutions to the problem of long-term welfare dependency among working-age people. Under its “investment” approach to social security, based on the New Zealand model, the government has commissioned an actuarial analysis, similar to that used by the insurance industry, to identify groups of people at risk of long-term dependency. As a result, young carers, young parents and young students will be the initial priorities for funding. The idea is to focus on policies or programs that, through prevention or early intervention, make a return on their investment – that is, that they save more money than they cost.

The first social benefit bond in Australia, launched in New South Wales in 2013, was Newpin (the new parent and infant network), which aims to help fostered children aged five years or younger return home and also to prevent the removal of those at risk of entering out-of-home care. Families go to Newpin centres, where staff help them work through problems such as the legacy of abuse they experienced as children, drug or alcohol addiction, and domestic violence. Caseworkers, typically trained in social work and early childhood development, and sometimes in psychology, focus on building respectful relationships with participants, in turn helping them to build better relationships with their children. Families are expected to attend two to four times a week for an eighteen-month period.

The program is run by Uniting, the services and advocacy arm of the Uniting Church in New South Wales and the Australian Capital Territory, and is partly funded by $7 million raised from fifty-nine investors, including wealthy individuals, family foundations, superannuation funds and Uniting itself. Payments to investors are based on the number of children successfully restored to the care of their families for at least a year.

According to the NSW government, “the bond targets a financial return of 10–12 per cent per annum for investors over its seven-year term.” In the first year, on the basis of a “restoration” rate of 60 per cent, the return was 7.5 per cent. In the second year, the return rose to 8.9 per cent and in the third year to 12.2 per cent, with a restoration rate of 65.2 per cent. This compares with a base restoration rate of 25 per cent, which the NSW Department of Family and Community Services considers to be the business-as-usual level. The maximum annual return is 15 per cent if a restoration rate of 70 per cent or better is achieved.

These are handsome returns that would be envied by most commercial investors in the current financial environment. Newpin investors do face risks: if the restoration rate falls below 55 per cent, they can lose up to half their funds. But they also have protections. Investors are assured of a minimum 5 per cent return, regardless of the restoration rate. And the proportion of restorations that fail because children are returned to out-of-home care within twelve months is assumed to be a maximum of 10 per cent, although the actual figure to date is 12 per cent.

The pilot: Britain’s then justice secretary Kenneth Clarke talks to prisoners at Peterborough Jail at the launch of the first social impact bonds scheme in September 2010. Chris Radburn/PA Wire

The families chosen for the programs are those considered most likely to benefit. “If the state child protection service thought there was definitely no chance of reunification, they would not refer to us,” says Liz Sanders, the head of Newpin. As a government official confirmed, “the aim is to identify people for whom the service can make the most impact and achieve the best outcomes.” This means that most of the 43,399 children in out-of-home care in Australia in mid 2015 – a 15 per cent increase over four years – are unlikely to be reunited with their families, even where this might be the best outcome. That figure includes 16,843 in New South Wales, which is disproportionally high in terms of share of population.

Compared to the scale of the problem, the numbers helped by Newpin have been small: after three years it had returned 148 children to their families, with eighteen going back to out-of-home care within twelve months, making a net restoration of 130 children. Another forty-seven were prevented from going into care. But sixty-six children left the program.

Nor does this kind of intensive social work come cheap. Contrary to the impression created by the Baird government, the $7 million provided by investors covers less than 20 per cent of the estimated $41 million the program costs over seven years. Another $9 million is allocated to the expected return to investors, the expected performance payment to Uniting, and a set payment to Social Ventures Australia – $50,000 in the first year, rising by 3 per cent in subsequent years – for managing the bond. To help meet Uniting’s commitments, the NSW government helps with an estimated cash flow of $50 million, which is supposed to be more than covered by the savings to the government ultimately generated by reduced out-of-home placements.

KPMG modelling for NSW Treasury before the launch of Newpin suggested that the program could save the state about $80 million by 2030. In 2014, the NSW government was reported to be planning to retain half these savings and use the other half to pay Uniting and bond investors.

But the government is not prepared to endorse this figure or commit to a current one. When I pressed the office of the NSW treasurer, Gladys Berejiklian, for current estimates of savings, the best government officials could offer was that further data was needed before a full analysis of gross and net savings was conducted.

Also aiming to reunite families, though structured differently from Newpin, is the second NSW program, Resilient Families, run by the Benevolent Society. Westpac and the Commonwealth Bank raised $10 million from investors for a five-year program to which the Department of Family and Community Services refers families with at least one child under six (including unborn children) assessed as being at risk of significant harm.

Under the program, caseworkers aim to visit families in their homes at least twice a week during an initial period of intensive support that also includes a twenty-four-hour call line. Families receive help dealing with substance abuse, domestic violence and other problems, and staff act as advocates on issues such as inadequate housing and welfare benefits.

“The funding has a lot of flexibility and we also can adapt very quickly,” says Claudia Lennon, the program’s manager. She cites as an example “Baby Ray,” an infant simulator doll used to help teach expectant parents how to care for a child. Imported from the United States, the doll is programmed to cry in certain circumstances – when its nappy hasn’t been changed, for instance – and to collect data on routines such as feeding, burping and nappy changes, as well as whether it has been shaken or had its head bumped. “It is a fabulous practical learning tool for parents expecting their first baby,” says Lennon. “It brings up things that parents would not have thought about, such as babies crying and not stopping.”

Two groups have invested in Benevolent Society bonds: a capital-protected class, which provided $7.5 million and receives a maximum return of 10 per cent a year; and a capital-exposed class, which put in the remaining $2.5 million and risks losing its money, but can achieve annual returns as high as 30 per cent. The minimum investment is $50,000. For each of the first two years, the return to the investor classes was 5 per cent and 8 per cent respectively in each year.

The NSW government provided $5.75 million up front to help establish the program and reduce the risk to investors. Assuming the scheme’s continued success, that amount will be deducted from the government’s payments at the end of the five-year bond. Westpac and the Commonwealth Bank did not charge for their services as financial intermediaries.

As with Newpin, payments are based on outcomes, but in this case there are three different measures rather than one. Two of them – the number of safety and risk assessments conducted on participating families, and the number of reports to helplines – showed a deterioration in each of the two years, which the Benevolent Society attributes at least in part to the “increased visibility” of family interactions under the program.

Despite this, Resilient Families was still able to report positive outcomes because two-thirds of the weighting is given to a reduction in children going into out-of-home care. The latest investor report puts this reduction at 27 per cent in 2014–15. What it doesn’t make clear is that the 27 per cent represents three children – a fall from eighteen to fifteen.

These figures drive home the point that social benefit bonds are not only in their early stages but are also operating on a very small scale. The NSW government is still developing principles to guide exactly how risk will be shared between government and investors and to determine actual, as opposed to assumed, benchmark costs – that is, what it currently costs the government to deliver services.

Innovation is one of the political selling points of social impact bonds. New South Wales is now leading the nation “in the innovative area of social impact investment,” Berejiklian declared in August last year.

But while the method of financing the program may be new, at least in the case of Newpin, the program’s approach is not. It originated in Britain as long ago as the early 1980s and was run by non-government organisations and funded by local government, which traditionally delivers social services in Britain. It was an expensive program, though, and fell victim to funding cuts.

Sanders, Newpin’s head in Australia, worked on the program in Britain before Uniting recruited her in 2005 to run it here. “Governments have been trying to find short-term solutions to these problems, so they love ten-week parenting programs,” she says. “That works for some families but it doesn’t work for the families we see because of entrenched intergenerational issues that need to be addressed.” These often include abuse suffered by parents when they were children, and recent or current drug and alcohol addiction. It was when Uniting was looking to expand the program from four to ten centres that it successfully tendered for one of the first two social benefit bonds in NSW.

Underlying that history is the potential conflict between innovation and the need to draw on a solid base of evidence. As government officers told KPMG during an evaluation of the trials, “if there is good data and a solid evidence base then it is likely that there are already effective programs in an area and there may be little in the way of service innovation.” Investors are also more likely to be attracted to a proven program.

Nevertheless, those involved in Newpin and Resilient Families praise their flexibility compared to sometimes lumbering bureaucracies with hard-and-fast rules. Parents who leave Resilient Families can rejoin the scheme, for instance, without needing to go through another government referral process. But there is no inherent reason why this should not be the case for any program delivered by non-government organisations, whether or not it’s funded by outside investors.

Supporters are keen to scale up the programs, confident that there is sufficient investor appetite to fund expansion. But they agree that the inhibiting factor is a shortage of personnel and other resources. This is not just a government funding issue: social workers and others in the field are mostly poorly paid, meaning that non-government organisations have trouble recruiting them.

It’s also the case that creating the bonds has been complex and extraordinarily time-consuming. KPMG calculated that the average number of staff hours spent on planning and developing each of the two NSW bonds was 11,712. It’s true that this was the first time the bonds had been introduced in Australia, and further experience is likely to reduce this figure. You’d certainly hope so.

Adding to the complexity is the involvement of a third party – namely, investors – and financial intermediaries. A 2011 report by the University of NSW Centre for Social Impact, headed at the time by former prime minister’s department head Peter Shergold, argued that social investors wanted a simple structure for the bonds and recommended against the use of a financial intermediary for a NSW pilot. But officials now say that this kind of financial expertise has been essential in establishing the structure.

As a result of these and other factors, some proposed schemes – here and overseas – have failed to make it beyond the conceptual stage. Back in 2012, the NSW government announced plans for three bonds: the third, designed to reduce prisoner reoffending rates and to be run by Mission Australia, didn’t proceed. Mission Australia is coy about the reasons. According to the government’s Office of Social Impact Investment, the decision not to go ahead was based on risks and challenges that included “performance targets, funding required, reputational risks to the parties involved, investor profile and legal,” as well as ongoing changes in prison policy and administration.

Negotiations for New Zealand’s first social impact bond, to help people with mental illness find employment, collapsed in July this year after a year of talks and $1.6 million in government spending on four proposals. The reported reason was that investors were unable to obtain guarantees about the security of their investment.

And sometimes the bond is issued, and fails. In the United States, a bond targeted at juvenile prisoners in New York was scrapped when it failed to reduce reoffending rates. The main investor, Goldman Sachs, lost a notional US$7.2 million as a result, but the blow was cushioned by a Bloomberg Philanthropies guarantee over most of the capital, resulting in its paying Goldman Sachs US$6 million.

While the savings to government from social impact bonds have the potential to significantly outweigh the costs of investor returns, administrative complexity and failed programs, the evidence to date is unclear. For each child who avoids going into out-of-home care, the NSW government saves between $30,000 and $45,000 a year, according to one official calculation. And that amount doesn’t include the indirect costs of potential future welfare benefits, health costs and crime. But the calculations are difficult to make: restoring a child to a family doesn’t guarantee he or she will have better life outcomes.

The jury is still out: the OECD’s Antonella Noya. Agence Française de Développement

Overseas experience suggests that savings are not always as large as anticipated. The UK National Audit Office reported in 2015 that a £3 billion Work Programme contract cost just 2 per cent less than would otherwise be expected. While that program isn’t financed through a social impact bond, it operates on the same principle: the government contracts with service providers to pay on the basis of the results achieved in finding work for long-term unemployed or those in danger of entering their ranks.

An OECD working paper warns of the risk of manipulating programs focused on outcomes. “It may be possible to game the results by selecting clients that are easiest to reach,” it says, “…while leaving those that would be most expensive without service.” Indeed, this was the experience in Australia with the Job Network, created when the Howard government privatised the Commonwealth Employment Service.

As a result, some in the welfare sector are wary of social impact bonds. As one policy adviser put it to me, an organisation committed to assisting the most disadvantaged, though not necessarily in the cheapest way, could be driven out by operators who promise quick, cheap results. “In the early days of the Job Network people made a lot of money, both for-profits and not-for-profits,” says this adviser. “They funded huge expansions in their charitable services by creaming funds from the Job Network. Then the government got wise and cut back. Who lost out? It was the unemployed.” In this race to the bottom, “it is very hard to see what the countervailing forces are, especially in a market environment where you set people up as competitors.”

Perhaps it will be different with social impact bonds. Many investors are motivated not just by the prospect of a financial return but also by a desire to improve people’s lives. But in its enthusiasm, the NSW government in particular has a political stake in the success of the bonds, creating a potential bias towards unnecessarily attractive investment returns.

In Britain, which has gone furthest down the social investment path, only philanthropists have put money into social impact bonds, according to one of their architects. That raises the question of whether the same goals can be achieved without the considerable cost and complexity involved in incorporating an investment return.

The OECD working paper, though not endorsed by the organisation as a whole, is cautiously supportive of social impact bonds but concludes that it is too early to make a definitive judgement. It argues, for example, that “few public authorities currently have the skills required to draw up complex results based contracts that are required for SIBs.” And on the other side, “few investors have detailed understanding of the types of social outcomes that are needed to address complex social challenges or of the barriers that need to be overcome to achieve better results. People who look at the world through a financial lens may think that everything can be fixed through incentive structures.”

In a second OECD working paper released this year, researchers Antonella Noya and Stellina Galitopoulou are also cautious:

SIBs have been costly instruments so far. They have entailed significant transaction costs that stakeholders should consider before embarking on them. Policy makers should evaluate carefully what is the value added for implementing a SIB for a policy intervention compared to a more traditional approach. However, transaction costs are expected to drop as more SIBs develop and there is a streamlined process for establishing them… Overall, while SIBs have achieved interesting results in some policy areas and triggered debates that can help reflect on how social services are being financed and delivered, additional knowledge and sound evidence need to be generated in order to reduce controversies around SIBs. The jury is still out.

The world’s first bond, designed to reduce reoffending rates among prisoners on short-term sentences at Peterborough Jail in Britain, operated for two years before the British government replaced it with a national rehabilitation scheme. While still based on payment by results, the new scheme will be implemented through a direct contract with the government.

This is despite the fact that the bond was judged by the government to have been a success, achieving an 11 per cent reduction in reoffending rates at a time when the national figure went up by 10 per cent. As with the Benevolent Society’s bond, the actual numbers don’t look as impressive: a reduction from 159 reconviction events for every 100 people released from prison to 141 – that is, from slightly more than one-and-a-half new offences per person to slightly less. Participation in the program was voluntary, presumably making it more likely to succeed, while the new program will be compulsory.

Victorian green bonds, issued by the state government in July at a coupon rate of 1.75 per cent, are an example of a less complex way of attracting private investment without a financial intermediary. Seventeen investors, including insurance and funds-management companies, contributed $300 million in a little over a day to finance LED traffic lights, mini-hydroelectric power stations, low-carbon buildings, a large-scale renewable energy power station and other projects.

All of this means that the question of whether social impact bonds can change the world, as Mike Baird believes, is still very much open. They may have a role in testing new approaches, but until there is much clearer evidence of net savings to taxpayers, it would be a courageous government that used them to run large programs. •

This article was jointly funded by Inside Story and Australian Policy Online.

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JULIA Gillard rarely let her emotions show, although she probably had more reasons than most during the fraught years of minority government. One such time was in May this year, when she introduced legislation to implement the National Disability Insurance Scheme. In parliament, she talked of meeting twelve-year-old Sophie Deane, who has Down syndrome and, in her parents’ words, “reads and writes, mucks around on the monkey bars, can be well behaved and badly behaved, runs like a billy goat and is a budding photographer.”

Like all good photographers, Sophie had first put her subject at ease, slipping her hand into the prime minister’s and then climbing into her lap. Then, at a later function, she snapped a beaming Gillard. The following week, in Brisbane, the PM met seventeen-year-old Sandy Porter, who has cerebral palsy. He presented Gillard with a card with signatures he had collected. It was headed “Thanks Prime Minister Gillard!” and underneath was Sophie’s photograph. Gillard’s voice started breaking as she added that the new scheme would give Sophie, Sandy and others with disability the security and dignity every Australian deserved.

Her speech and her reaction that day were the culmination of what Jenny Macklin, Labor’s family and community services minister, tells me was “one of the best grassroots campaigns I have seen.” It also marked a remarkable political achievement: the introduction of a major social reform, on a par with Medicare, that had barely had been on the political radar six years earlier.

The key was the Every Australian Counts campaign, which confronted and connected voters and politicians with people we often find easier not to think about – those who, in every respect except one, are the same as their fellow Australians, with similar feelings, aspirations and disappointments. The campaign developed a momentum that carried everything before it, pushing aside the multitude of other priorities jostling for the attention of politicians, rolling over the objections of Treasury and Finance officials whose job is to discourage governments from spending money, sweeping up conservative premiers reluctant to give an even break to a Labor prime minister, and even taking with it Tony Abbott, who had built his reputation on opposing Labor taxes but agreed with barely a moment’s hesitation to an increase in the Medicare levy from 1.5 per cent to 2 per cent to fund the scheme.

It is an achievement all the more notable because the basic issues and principles were explored in forensic detail as long ago as 1974 but have largely been ignored for most of the four decades since. Soon after coming to government in 1972, Gough Whitlam commissioned an inquiry headed by New Zealand judge Owen Woodhouse into a national accident compensation and rehabilitation scheme. Its report recommended a system of no-fault compensation for all injuries – extending beyond the present coverage of workers’ compensation and motor accidents to cover anyone with an injury, whether acquired or from birth, and those with incapacity due to illness. These people would receive a proportion of their previous earnings – up to 85 per cent for total incapacity – or a fixed amount if they weren’t in work, and would have access to rehabilitation services.

“Australians should not have to live in doubt or anxiety lest injury or sickness reduce them to poverty,” Whitlam declared in his policy speech for the 1974 election. “We want to reduce hardships imposed by one of the great factors for inequality in society – inequality of luck.” Legislation for a scheme covering acquired injuries, financed through payroll tax and excise duties, was before parliament when the Whitlam government was dismissed in 1975. It had aroused vociferous opposition from vested interests, particularly insurance companies and lawyers, and was abandoned by the incoming Fraser government.

But the problems remained as real as ever. If you broke your neck in a car accident or at work, you were covered by a third-party insurance scheme or workers’ compensation. If you did the same by hitting a rock when diving into the water, you received no compensation at all. Instead, you had to wait in a queue for a patchwork of ad hoc services that might or might not meet your needs and might not even reach you before the money ran out. The same went for people who were deaf, blind, autistic, had cerebral palsy, Down syndrome, a severe intellectual injury or any manner of other disabilities.

Often those in this position wanted to work but help was not available, either to get them there or in the workplace itself, even though providing that assistance would save on welfare benefits and bring in more tax revenue, not to mention increase their life satisfaction. As a result, according to the Organisation for Economic Cooperation and Development, Australia is near the bottom of the league table on indicators such as the proportion of people with a disability who are unemployed and the number living below the poverty line.

The scheme that Labor steered through parliament this year doesn’t pay people an income. Instead, it gives control over how funds are spent to the 410,000 people the Productivity Commission has calculated would be eligible for support, and to their families. In consultation with each person, DisabilityCare, the organisation set up to administer the NDIS, works out a plan with the best mix of services and aids. Rather than governments giving fixed grants to service providers, funding is allocated on the basis of individual needs calculated over a lifetime. The insurance-based approach creates incentives to minimise costs by favouring early intervention and access to education and training to maximise long-term independence. The Productivity Commission estimated that such a scheme could ultimately see an extra 320,000 people in the workforce, meaning tens of thousands of carers also would be freed to go to work or increase their hours.

IT WAS Brian Howe, Paul Keating’s deputy prime minister and a long-serving minister in the Hawke and Keating governments, who was the catalyst for the renewed debate. Howe had introduced the first disability discrimination legislation in 1992 and initiated the first Commonwealth–state disability agreement in the same year. Preparing for a speech at the University of Melbourne around 2007, he went back to the Woodhouse report and started thinking about the principles involved.

As a board member of the Disability Housing Trust, Howe came into contact with Bruce Bonyhady, a former Treasury official, who now chaired Yooralla, the largest disability service provider in Victoria. The father of two sons with cerebral palsy, Bonyhady recalls that Howe told him, “You should stop thinking about disability as welfare and start thinking about it as risk and insurance.” After Treasury, Bonyhady had worked in funds management and insurance. “I thought, he’s right and that got me going.”

Howe introduced Bonyhady to Bill Shorten, who Rudd had appointed as parliamentary secretary for disabilities. For someone who even then saw himself as a future prime minister, the portfolio had come as a disappointment. As one colleague put it, Shorten “didn’t really want it but it was all that was left.” But the appointment turned out to be a happy coincidence between Shorten’s ambition and the needs of people with disabilities.

Shorten was shocked by what he found. “I thought I had seen unfair treatment in the workforce,” he says, “but nothing prepared me for the invisible castle that people lived in in their own country. Imagine if we had put a million or a million and a half people” – those with disabilities and their families – “behind a walled city and told them that everything you get is less than other people get access to. There would be a revolution.”

Shorten became an outspoken advocate for reform. It wasn’t a risk-free stand: he was criticising the neglect of both Labor and Liberal governments and he was applying external pressure to the government of which he was a member. In a passionate speech, “The right to an ordinary life,” he drew attention to how 30 per cent of households that included a person with disability were living on less than half the median income, even though their living expenses were much higher than average, and how 20 per cent of NSW prison inmates had a serious intellectual disability, compared to 1 to 2 per cent of the general population. He expressed his frustration at the fact that disability reform was regarded as a marginal issue in the political debate. But he also realised its potential political potency. “I have a 100 per cent conviction that this is far more important than Canberra insiders, including in the press gallery, have treated it up to now,” he said in 2010.

In 2008, Bonyhady had co-authored a submission to Kevin Rudd’s 2020 summit calling for a national disability insurance scheme, or NDIS, and the summit had adopted it as one of its “big ideas.” It was the first time the issue had broken into the mainstream of public debate, however briefly. Shorten appointed Bonyhady as one of the experts to the Disability Investment Group, with a brief to look at the feasibility of such a scheme. It reported that the patchwork of ad hoc services for people with disabilities who fell outside the workers’ compensation and motor accident schemes was “a national disgrace.” And it warned that the demand for services was growing at 7.5 per cent a year as the rising incidence of disability in an ageing population combined with a shrinking pool of carers, leaving the huge potential cost of replacing informal, largely unpaid care with formal care.

Shorten realised that the compelling logic of experts would not be enough without another ingredient. He told people with disabilities, their carers and service providers that they needed to begin working together. “He couldn’t believe how totally fragmented this sector was,” says Bonyhady. Shorten used the argument he had often drawn on as a union official, and one that has been a theme in his approach to politics: “We can spend all the time arguing about what we don’t agree on or we can focus on the 90 per cent that we do agree on and get things done.”

According to John Della Bosca, the former NSW minister for disability services who was to head the community campaign, “Each of the key groups approached disability and the politics of disability in very different ways, depending on whether they were advocates, carers, or disability service providers.” The different groups also competed for limited resources, trying to convince state governments that their particular disability deserved priority.

Shorten set up a ministerial council headed by Rhonda Galbally, a longtime campaigner for disability rights, to encourage people to work together. Galbally suggested forming a single group and, with Bonyhady arguing how the NDIS proposal could itself be a unifying force, the result was the formation of the National Disability and Carer Alliance.

Della Bosca, who had just resigned from the NSW parliament, contacted the alliance to offer his help. As a former secretary and campaign manager of the NSW Labor Party, his expertise was considerable. “From the beginning, we identified that the biggest problem facing a campaign was that, unless you were a person with a disability or a family member, you didn’t really understand how tough it was,” says Kirsten Deane, executive director of the alliance and mother of Sophie, the twelve-year-old who charmed Gillard. “Most Australians assumed that because we had some semblance of social welfare and had come a long way from institutionalisation, there had been some progress.”

Della Bosca also saw that disability groups tended to talk to each other rather than to the broader community. “We decided the key problem was not people with a disability but people without a disability and persuading them that something had to change,” says Della Bosca. “We worked hard to neutralise the disability language and to use community vernacular.”

Della Bosca hit on the campaign slogan of “every Australian counts.” He saw it as a way of challenging Australians’ core beliefs, confronting them with the question, as he puts it, of “we are a country which says we believe in fairness but how can it be fair that we treat other Australians like this?” Without deep pockets for advertising, the alliance concentrated on a community campaign. “We didn’t have a lot of financial resources but what we did have was people,” says Deane. Social media was one tool for people to tell their stories and describe the problems they encountered – the bureaucratic nightmare involved in obtaining basic services and facilities, for instance, or the barriers to employment – and how an NDIS would make a difference. “Once things started being posted online like Facebook, other people felt empowered to do the same thing,” says Della Bosca. “It became a self-fulfilling thing.”

But the campaign relied primarily on “very ordinary, old-fashioned grassroots local campaigning,” says Deane. “We had very, very passionate people – it was about mobilising them.” Leaflets were stuffed in letterboxes and handed out at train stations and supermarkets. Rallies were held around the country, as were national morning or afternoon teas – so-called DisabiliTEAS – one of which attracted a total of 90,000 people nationally.

Critical to success was having people with disabilities at the forefront of the campaign. Rather than relying on professionals to lobby governments and oppositions, they and their families arranged appointments with their local MPs. “These meetings were very deliberately structured to be positive,” says Deane. “MPs are very used to people coming into their office and complaining about a particular issue.” Instead, people told their local members about the difference an NDIS would make to their lives, often finishing with a line like, “I need you to be my champion in parliament.”

It was a great idea, but the gap between conception and execution could be considerable. “The vast majority of severely disabled people have an intellectual disability, so you have to give them self-confidence,” says Della Bosca. “The idea of going into an office and talking to a member of parliament about what you think should happen is very daunting.” Training sessions were organised, with Della Bosca playing the role of MP. The logistics were often challenging, too. “If it takes someone with a severe physical disability three hours to get ready – and that’s not at all unusual – and you get a call from an MP’s office to come in at 9 am, that can mean you have to get up at three in the morning,” says Fiona Anderson, the campaign’s Queensland coordinator.

At least 80 per cent of federal parliament’s 150 lower house MPs received visits from people with disabilities, and some more than once. The more MPs were contacted, the more they started discussing the issue among themselves. The campaign put together a library of photos of MPs with people with disabilities holding signs saying, “I count.” “It was a very simple idea but it was one of the most successful things we did,” says Della Bosca of the approaches to politicians.

EARLY in the life of the Rudd government, Brian Howe had also taken Bonyhady to see Jenny Macklin, who was the senior minister with responsibility for disability reform. The connection between Howe and Macklin was close and longstanding: he was a mentor and recruited her during the Hawke government to conduct an extensive review of health policy. She and Shorten had complementary skills: Macklin was the policy wonk who argued the case in detail before cabinet and brought the scheme into being. Shorten was the communicator, adding passion, political nous and public pressure to the cause.

Macklin realised that such a major reform required extensive policy work. The Prime Minister’s department – which, like Treasury and Finance, was concerned about the cost of the scheme – pushed for the Productivity Commission to hold an inquiry. Given the commission’s reputation for a rigorous, unsentimental approach to economic and industry policy, that move would have raised alarm bells in many Labor circles. But Macklin agreed. She had sent the commission a reference on a paid parental leave scheme and had been impressed with its report, whose recommendations she had implemented.

Macklin suggested the commission recruit John Walsh, an actuary at PricewaterhouseCoopers, to work on the inquiry. Walsh not only had personal experience of disability – an accident playing rugby league had turned him into a quadriplegic – but, with the support of Della Bosca as minister, he had designed and seen implemented what was then the gold standard in disability care – the NSW Lifetime Care and Support Scheme, which provides treatment, rehabilitation and other services for those severely injured in road accidents.

In the meantime, Shorten had helped organise the coup against Kevin Rudd, and following the 2010 election Julia Gillard rewarded him with a promotion to assistant treasurer. Although he was no longer responsible for disability affairs, he decided to cash in some of his political chips with the new prime minister, gaining her agreement to a dinner at the Lodge with the major figures involved in disability reform, including Macklin, Bonyhady, Galbally and Walsh. “It was a critical step on the road to her ultimate complete commitment to the scheme,” says Bonyhady.

When it came, the Productivity Commission’s imprimatur for an NDIS was a huge boost. It said the present system was “underfunded, unfair, fragmented and inefficient,” giving people no certainty of access to the support they needed. It also was unsustainable, with insufficient funding meaning priority was given to crises cases and resources were withheld from early intervention and respite programs that could reduce the number of future crisis situations. The report found that funding would need to double from the $6.2 billion spent in 2009–10 – an estimate the federal government subsequently increased to $8 billion a year for a fully operating scheme. They are figures guaranteed to make treasurers and finance ministers blanch. But the Commission justified the extra spending with the telling comment that, “were government to be starting with a blank slate in determining its funding priorities, there would be a strong rationale for provision of disability services to be one of its highest spending priorities.” In any case, services were becoming increasingly costly without any overall improvement in quality.

That didn’t mean the money was easy to come by. Earlier this year, Macklin went to the Expenditure Review Committee of Cabinet asking for $14 billion over five years to cover the phasing in of the scheme – this in a budget process in which revenue was repeatedly being revised downwards. It took three or four meetings, with the Finance and Treasury departments doing their best to pare the figure back, before Macklin could convince her colleagues. “It certainly was the hardest thing I ever had to take to ERC,” she says.

Following Brian Howe’s example stood her in good stead. Like Howe in the Hawke and Keating governments, Macklin was a member of the ERC, and like him she had earned respect from her colleagues by agreeing to cuts in programs – family payments and the baby bonus, for example – to make way for other priorities. Moreover, while Gillard didn’t normally attend ERC meetings, ministers knew that she had become a strong supporter of the NDIS.

In the final stages of the budget deliberations, ministers decided on an increase in the Medicare levy to help pay for the new scheme. “So much of politics is to do with timing,” says Macklin. “By the time we proposed the Medicare levy increase, there was so much momentum for the scheme, no one was game to not do it.”

Launching Carers’ Week on 14 October, Tony Abbott repeated the Coalition’s commitment to an NDIS, even though it was “a vast undertaking, an undertaking almost unprecedented in the life of our country.” In case that was interpreted as a qualification, the new prime minister gave an additional assurance. “We will make this work. This is too important for our country to fail this test.”

Abbott is likely to come under plenty of pressure from within his government to delay or pare back the scheme. An eager new opposition leader, for one, along with a large group of energised families and supporters, will be determined to keep him up to the mark. •

This article was jointly funded by Inside Story and Australian Policy Online.

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“WILL you still need me, will you still feed me, when I’m sixty-four?” It’s a good question, particularly if you are now around twenty-four, which was Paul McCartney’s age when his song was released on the Beatles’ Sgt. Pepper’s album in 1967.

Decades earlier, in 1909, Australia had become one of the first countries in the world to introduce an age pension. Only half the population lived long enough to reach the qualifying age of sixty-five, and those who made it that far could expect, on average, to keep going to seventy-six if they were male and seventy-eight if they were female. Even then, a tough means test saw fewer than one in three actually receive a pension.

Today, almost 90 per cent of Australians make it to sixty-five, and men can then expect to live on to eighty-four and women to eighty-seven, according to government figures. Almost eight in ten of them get a full or part pension, and most receive extra income from superannuation, subsidised by tax concessions while the funds are accumulating and tax-free when they’re paid out. So they’re okay, Jack – while it lasts.

Yes, we are much richer as a nation than one hundred years ago. But we are increasingly careless about how we hand out the wealth. When it comes to working out how we can continue to keep baby boomers in the manner to which they have become accustomed, the figures look downright scary.

The first baby boomers have reached retirement age and the big bulge they create in the nation’s population profile is going to take a long time to digest. In 2010, three million Australians were aged sixty-five or older, but by 2050 that figure will have reached 8.1 million, a much faster growth rate than for the rest of the population. They will make up nearly a quarter of the population, and most of them won’t be paying income tax.

But according to the Actuaries Institute, even these Treasury projections considerably underestimate the size of the problem. “Australian life expectancies are rising much faster than is commonly understood,” says Melinda Howes, the institute’s chief executive. “The figures that are generally reported are life expectancies for males and females at birth.” By the time someone has got to the age of sixty-five, the equation has changed: by definition, they are going to live longer than average. “If you look at a sixty-five-year-old in 2010, the man who thinks he is going to live to seventy-nine is actually going to live [on average] to eighty-six. That is 50 per cent longer than he is expecting.”

Treasury projects improvements in mortality based on past trends. When Howes and her colleagues were writing Australia’s Longevity Tsunami, a study the institute released last year, they used figures from the government actuary that allow for both past and future improvements in mortality. On that data, life expectancy at age sixty-five rose two years – to eighty-six for men and to eighty-nine for women.

Rates of improvement in mortality can vary appreciably, the report cautions. But it says that its projections “may be the best indication that we have and are more realistic than the reported life expectancies.” In fact, it suggests that even those projections could be too conservative. “At every point over the last forty years we have underestimated how fast our longevity is improving,” says Howes. As the report puts it, “The pace of scientific development appears to be accelerating and it is possible that this explosion in knowledge will drive increasingly rapid advances in medicine. These advances may cause mortality rates to fall with increasing speed.”

Australia’s Longevity Tsunami cites medical advances such as the mapping of the human genome, stem-cell research and the 40 per cent drop in heart disease in the first decade of this century. Then there is the development of a “polypill” – a combination of well-known medicines that advocates say could reduce deaths from heart disease and strokes by up to 80 per cent if taken by everyone over the age of fifty-five. And there is growing talk about a “cure” for ageing. All of this is great news for us as individuals but it has consequences that cannot be ignored.

On the other side of the ledger, Howes acknowledges that increasing obesity and diabetes could slow the increase in longevity, just as unforeseen events, such as war, have done in the past. “What we are really saying is that, if we are still underestimating, then here are the implications.” For retirees, the implication is that they will run short of money because they will live longer than they expected. For the nation, the already substantial impact of an ageing population will be even more severe.

Treasury has told Howes it accepts the institute’s findings and will change its assumptions about mortality improvements. As a result, the life-expectancy figures it uses will rise – by about three years – as will the estimated cost of supporting an ageing population.

IT WAS this very trend that the compulsory superannuation scheme introduced by Paul Keating twenty years ago was designed to address. But it hasn’t worked out that way. According to a report released last October by CPA Australia, the body representing the accounting profession, compulsory superannuation “has had a minimal impact on Australians’ capacity to save for a self-funded retirement.” The report says that the government “is effectively funding a $30 billion per annum tax concession that will do little if anything to relieve pressure on the cost of providing the age pension to retirees and the impact on the public purse.”

The cost of this generosity is rising rapidly. In figures released by Treasury in January, the value of superannuation concessions for 2012–13 is a projected $32 billion. In three years’ time, Treasury calculates, this will have jumped to $45 billion. Among the major areas of government spending, this is already the fastest-growing, and it will grow even more rapidly with the increase from 9 per cent to 12 per cent in compulsory super being phased in between 2013–14 and 2019–20. On the current trajectory, the tax concessions will exceed the cost of the pension by 2015–16.

The wealth accumulated through superannuation and other assets will reduce the proportion of older people receiving a full age pension. But the percentage not receiving any age pension is projected to rise only slightly, according to Treasury’s 2010 Intergenerational Report. It estimated that the total cost of the pension will increase from 2.7 per cent to 3.9 per cent of GDP by 2050. The increase in compulsory super from 9 per cent to 12 per cent should reduce the figure somewhat by 2050, but the catch is that the cost of the tax concessions far outweighs the savings on the pension.

Although the main reason for the dramatic rise in the cost of the pension is the ageing of the population, another important factor is that the pensioner means test is generous – very generous. A couple with assets up to $1.05 million – $1.05 million on top of the value of the family home, that is – still qualifies for a part-pension, albeit a minimal one. And couples can also earn a fortnightly income of $2597.60, or $67,538 a year, before they lose the pension altogether.

This was one of the reasons why the 2009 report to the federal government on retirement income recommended against an increase in compulsory superannuation contributions to 12 per cent. The panel that wrote the report, headed by former Treasury head Ken Henry, found that the combination of the pension and the existing 9 per cent rate of compulsory superannuation would give people on half average weekly earnings who’ve worked for thirty-five years a net retirement income about 10 per cent higher than their earnings before they retire. It sounds like nice money if you can get it, but is it the trade-off these people would make if they had a choice whether to sacrifice more of their income when the pressure on their budgets is greatest – when they are paying a mortgage and raising kids, for instance – so that they can enjoy a higher income in their retirement, when their demands are much lower?

As the Henry report points out, the impact of reduced take-home pay to cover superannuation is likely to fall most heavily on low- and middle-income earners because they are less able to draw on other savings. Despite this, the government, with the support of the opposition, is going ahead with the increase to 12 per cent.

The “replacement rate” – the after-tax ratio between retirement income and previous earned income – is lower for those on higher incomes. Compared to 110 per cent for those on half average earnings, it is 71 per cent on average earnings and about 55 per cent on one-and-a-half times average earnings. As the Henry report argued, “there may well be a case for such a person [on above average earnings] seeking a higher retirement income but the case for the government mandating that outcome is much less clear.” Higher income earners typically salary sacrifice on top of their compulsory contribution and thereby gain extra tax concessions. The Henry panel found that employees on incomes two-and-a-half times average earnings made average voluntary contributions of an additional 10 per cent of their income, giving them an expected income replacement rate of about 95 per cent.

The big contributors to the blow-out in tax concessions are self-managed superannuation funds, which mostly have one or two members. The deductions are even more generous than for the retail or industry funds to which most Australians belong, and there are greater opportunities for maximising financial returns. Because the members of self-managed funds are also the trustees, “they are working both sides of the street,” says Alex Dunnin, director of research for the financial information company Rainmaker. “I can set up a trust and the trust buys a property, which might happen to be the building my business is in. I am paying rent to the landlord, which happens to be the trust which happens to be the super fund. And I’m doing it entirely legally.”

Figures released last month by the Australian Prudential Regulation Authority show that total assets of self-managed funds increased almost three-and-a-half times to $439 billion in the eight years to June 2012. They now hold almost a third of total superannuation assets, more than either the retail or industry funds, even though members of self-managed funds make up less than 8 per cent of the total membership of super funds. The average account balance of individual members of self-managed funds in June 2012 was $481,000, compared to $23,000 for those in industry funds and $24,000 in retail funds. Newly released Australian Taxation Office figures for 2010–11 show that 29 per cent of total self-managed assets were in funds with more than $1 million, including 9.5 per cent with between $2 million and $5 million and 0.3 per cent with more than $10 million. In other words, with the help of abundant tax concessions paid for by the rest of the population, 1329 self-managed funds with about 2500 members had accumulated assets of over $10 million each.

Dunnin estimates that at least 40 per cent of the value of the tax concessions is going to the 8 per cent of superannuation fund members who are in self-managed funds. “Overall, we are spending more than $30 billion a year on these tax breaks and the overwhelming majority is going to people who are quite wealthy,” he says. “Is that the job of these tax breaks?”

MANY people would argue that it is fair enough that they get a tax deduction on their superannuation. After all, if you’re a wage earner then the government is making you put aside 9 per cent of your salary, and a higher percentage in the future – money you cannot get your hands on until you are at least fifty-five.

What that argument ignores, though, is the large-scale redistribution of wealth that is taking place within the superannuation system. In reality, it’s people on lower incomes who have a right to feel cheated. And if you’re young, you have a right to feel doubly dudded. The tax concessions are distorted not only in favour of people on higher incomes but also to advantage older generations.

The tax deduction for super operates like a flat tax, with contributions and interest earnings taxed at 15 per cent from the first to the last dollar of income. That means the deduction is worth much more to those on higher incomes, who pay marginal tax rates of 38.5 per cent and 46.5 per cent.

From this financial year, the government is offering some extra assistance to lower-income earners by refunding the 15 per cent tax on super through a rebate. But no tax is payable now on incomes up to $18,200, meaning that the rebate does no more than return the penalty tax already paid on super contributions. Above this, the rebate is worth up to $500 a year when incomes reach $37,000, at which point it cuts out.

Those on $180,000 save more than seven times as much through the super concession – $3807 – and above $180,000 the savings are greater again. Treasury calculated last year that the top 1 per cent of income earners receive an average of $510,000 in retirement support from the government, all of it through tax concessions, compared to $250,000 for the bottom 10 per cent, almost all of it through the age pension. Still, there can’t be too many Australians earning incomes below $37,000, can there? Well, according to the government there are 3.5 million of them – people in jobs, that is, not retirees or those solely on welfare benefits.

In short, the super tax system works in the opposite way to most government benefits: the higher your income, the more you get from the government. Ken Henry calculated in 2009 that the top 5 per cent of taxpayers received 37 per cent of the value of the super tax concessions.

IF THE government believes that forcing people to set aside some of their income for later life warrants a tax concession, then it should at least make sure that people use the money for retirement. At the moment, people retiring have the option of taking all their superannuation as a lump sum, spending it and then going onto the age pension.

Moreover, the tax concession should be a fair one. Who says so? Among others, Peter Costello and his successor as treasurer, Wayne Swan. In his first budget speech in 1996, Costello said that “a major deficiency of the current system is that tax benefits for superannuation are overwhelmingly biased in favour of high-income earners.” He made a start on tackling the issue by doubling the tax on super contributions to 30 per cent for those on incomes above $85,000, a figure that was raised each year in line with wages growth. But he later changed his mind and ended up significantly increasing, not decreasing, the inequity of the system – first by removing the surcharge and then by abolishing the tax on superannuation income taken from age sixty.

In 2009, Swan pointed to the contradiction between the regressive impact of superannuation tax concessions and an income tax system that is designed to be progressive. His attempt to deal with this lapse from what he called “our ideal of fairness” was typically timid and incremental: he introduced the rebate for lower-income earners and lowered the caps on concessionally taxed voluntary contributions. He also brought back Costello’s 30 per cent super tax, but only on incomes above $300,000, or just 1.2 per cent of taxpayers.

The tax concessions discriminate between generations, too. Because superannuation income is tax-free from age sixty, once again, the higher your income, the more tax you save. As Bank of America Merrill Lynch economist Saul Eslake puts it, “I can’t think of any single policy reason, as distinct from a baser political motive, why people over the age of sixty or sixty-five should pay less tax on the same amount of income than people under the age of sixty-five.” The politics are driven by demographics: the rapidly rising numbers of baby boomers who are retiring. Over the next decade and a half, more than 60 per cent of the total assets of superannuation funds are expected to shift from pre-retirement accumulation accounts to retirement benefit accounts.

Surely compulsory superannuation at least has increased retirement incomes, even if it has cost the government, aka taxpayers, a packet? Only if it is used for its intended purpose. Extraordinarily for a government-subsidised retirement income system, there is no requirement that superannuation benefits be used as retirement income. And often they aren’t.

The CPA Australia study uncovered an increasing tendency for people approaching retirement to take on more debt – at the very time they would be expected to reduce it – and to use their superannuation lump sum to pay it off. For households in the fifty to sixty-four age bracket, superannuation grew by 48 per cent in the eight years to 2010 but property debt rose by 123 per cent and other debt by 43 per cent. CPA Australia made the link between superannuation and debt levels by comparing retirees with those still in the workforce, using figures from the Household Income and Labour Dynamics in Australia survey, which has tracked 7682 households every year since 2001. In 2010, the average household debt of people between sixty and sixty-nine who hadn’t retired was $119,000, while for retired households it was $50,000. At the same time, superannuation for the non-retired averaged $304,000 compared to $238,000 for the retired, even though other financial assets were about the same for both groups.

The latest Australian Prudential Regulatory Authority statistics show that virtually equal amounts of super benefits, $35 billion in each case, were taken out in lump sums and pensions in 2011–12. If this seems extraordinary in a system that is supposed to provide for people for the rest of their lives, it at least is an improvement on the two-thirds taken out as lump sums in 2004–05. One reason for this, says the authority, is that, as retirement benefits grow, people are more likely to take at least some as income.

THESE shortcomings in the superannuation system are well-known, if seldom publicly acknowledged.

In November, Treasury secretary Martin Parkinson probably went as far as a bureaucrat could in questioning the system’s sustainability, especially given that Swan has declared tax-free super benefits off limits. “With the Commonwealth budget coming under increasing pressure over the next few decades, the fiscal sustainability of all policies, including superannuation, will demand greater public scrutiny,” he told the Association of Superannuation Funds of Australia. “This scrutiny will be even more important to the extent that existing concessions are seen to favour some at the expense of the majority.”

Without a change in policy, in other words, future generations are unlikely to get anything nearly so generous as the current super tax concessions. So there’s another reason to feel put out if you were born after the baby boom, even if you’re not on a lower income.

With a shrinking percentage of taxpayers supporting an increasing proportion of non-working Australians as the population ages, governments are supposed to be coming up with ways to save money. And they have produced a few: the pension age for women is rising gradually from sixty to sixty-five, bringing it into line with that for men; and, starting in July 2017, a pension age of sixty-seven for both men and women will be phased in over six years. Between 2015 and 2025, the age at which superannuation benefits can be accessed will rise from fifty-five to sixty. And there has been the tinkering at the edges of superannuation concessions detailed above.

But compared to the amount of sacrificed revenue pouring into superannuation, these are minor adjustments. There is speculation that the government, which has promised to find major savings to pay for Labor priorities such as the national disability insurance scheme and education reform, will look again at the super tax concessions in this year’s budget. But on past form, any measures are unlikely to affect more than a small number of the super-wealthy. Tony Abbott has made it harder for the government to be bold, particularly in an election year, by ruling out any “negative, unexpected changes” to the super system in the first term of a Coalition government – except, that is, for his previously announced decision to abolish the rebate for low-income earners, costing them up to $500 a year.

There is an obvious point that should attract wide agreement: superannuation, particularly that mandated by the government and supported by tax concessions, should be used for the purpose for which it is intended – that is, income during retirement. If politicians are too timid to ban lump sums outright, they at least should be prepared to put a ceiling on them – say $50,000 – with retirees required to take the rest of their super as income. Australia’s Longevity Tsunami is just one recent report to urge the government to change the system so that retirees use a larger portion of superannuation benefits as income.

This would be one small step towards tackling the long-term sustainability of a retirement income system in which the cost of tax concessions is ballooning. The more revenue given away, the higher the burden on the working population, whether through tax increases or spending cuts.

Other perverse incentives will need to be removed as well. An Australian Bureau of Statistics survey in 2010–11 found that the average age of retirement for those who had stopped working in the previous five years was 61.4. One reason for the relatively low figure is that people can access their super from age fifty-five. Although it does not become tax-free until age sixty, it is another encouragement for people to use their super for purposes other than retirement income, increasing their reliance on the pension.

Melinda Howes and her co-authors would like to see eligibility for the pension tied to rises in life expectancy, with the superannuation preservation age fixed at three to five years below the pension age. The “preservation age” will be raised from fifty-five to sixty in steps between 2015 and 2025 – a move in the right direction when it comes to sustainability. But a bolder step would see it continue to go up to sixty-seven, in line with the future pension age.

Australia has received fair warning about the consequences of failing to tackle these issues: part of the financial crisis facing governments in Europe and the United States stems from inadequate provision for ageing populations. Our problem is not as severe, both because the population is not ageing as rapidly as in many other countries and because we have a means-tested welfare system, albeit generously so.

But political timidity in the face of the long-term trends in Australia will lead us down the same slippery slope. Perhaps the best hope is that we will be rescued by a revolt by a younger tax-paying and voting generation who get mad and are just not prepared to take it any more. •

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