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.” •

The post “You need to run it as a public service because that is what it is” appeared first on Inside Story.

Before 1988, grandparents had near-automatic right of entry. Over the next two decades a slow accretion of administrative, regulatory and legislative measures put permanent residency increasingly out of reach. Slowly but surely the focus of Australia’s migration program shifted to working age migrants with useful skills.

That shift might make a certain kind of economic sense, but what does it mean for grandparents who want to live near their Australian-based children and grandchildren but don’t have Australian citizenship? And what are the implications for families who might come to rely on grandparents for all kinds of help yet live in a country that makes permanent residence so difficult?

I began to get a sense of life on a long-stay temporary visa when I called Edward Adams for an interview about his experiences as a British citizen living in Australia. (Many of the names in this article have been changed to protect privacy.) He couldn’t talk because he was busy picking up a grandchild from school, but promised to call back later.

Seventy-two-year-old Edward and his wife Tracey, sixty-four, have lived in Australia for most of their grandchildren’s lives. “We just couldn’t imagine not being here to help in their formative years,” Edward tells me by phone from Queensland’s Sunshine Coast after delivering his grandchild safely home.

Along with school pick-ups and drop-offs two or three times a week, Edward and Tracey step in at short notice to look after the children if son Rory or daughter-in-law Matilda get caught up at work. They also provide extra support when Rory is travelling for business. “And that means our son and daughter in law have been able to be much more productive than they would have been if we weren’t here,” Edward argues.

When not with the grandchildren, the couple have other distractions. They’ve joined the local golf club and made lots of friends. For all intents and purposes, they are settled in Australia, just a short walk away from Rory, Matilda and the grandchildren. Because they aren’t permanent residents or citizens, buying land and building a house required approval from the Federal Investment Review Board. Edward estimates that this added $40,000 to the cost. Since they sold their house in England, their Sunshine Coast house is the only home they have.

Originally from Bath, west of London, Edward and Tracey both retired in 2014. They came to Australia at the end of that year, ahead of Rory and Matilda’s marriage the following March. Although Rory lived in Sydney, the wedding was held on the Sunshine Coast, and Edward and Tracey immediately fell in love with the area. Edward joked that if Rory moved north, then he and Tracey would consider migrating to Australia.

And that’s how it went. Soon after the wedding, Rory’s employer asked him to move and, in 2016, Edward and Tracey came back for a six-month stay on a standard visitor visa. They returned the following year, this time on a twelve-month visa that they were able to renew for a second year by making a short trip to New Zealand.

Edward and Tracey had put money aside — around $100,000 — to apply for permanent residency via contributory parent visas. But they hit the brick wall of the balance of family test. They needed to show that half of their children are Australian citizens or permanent residents — or, if the family is scattered across different countries, then more of their children live in Australia than in any other country.

They have another younger son, Phillip, in England, who doesn’t yet have a family, and if that had been the end of the story they wouldn’t have had a problem. With one son in each country they would meet the threshold having at least half their children settled in Australia.

But Edward has another son, now in his forties, from a previous marriage that ended acrimoniously when Edward’s first son was just two years old. Frequently overseas for work, Edward failed to meet the regular access requirements set down by the court to share custody. He supported his son financially but was otherwise largely absent as a parent. Edward and his first son are only rarely in contact.

The balance of family test is a pure numbers game: it takes no account of the depth or closeness of family bonds. Since Edward has two children in Britain and only one in Australia, the system locks him out, and so it locks Tracey out too. And it counts for nothing that they’ve been emotionally enmeshed in the lives of their three Australian grandchildren since the eldest was a baby, or that they frequently care for them.

In 2019, another option to stay in Australia opened up for Edward and Tracey, when the federal government introduced the sponsored parent (temporary) visa. This visa isn’t subject to the balance of family test and enables parents to live in Australia for up to a decade. In May 2019, Edward and Tracey’s son Rory was among the first to be approved as a sponsor, and in August the couple returned to Bath anticipating a three- to four-month wait. But within a week of submitting their medical checks they were granted visas and in early September they were on a plane to Australia.

“It was very swift,” says Edward. “Our dealings with the immigration department have been very satisfactory.” It came at a stiff price, though, which is part of the reason why this option hasn’t been anywhere near as popular as expected.

If they’d not been tripped up by the balance of family test, Edward and Tracey could have applied for permanent residency by pursuing one of two options. The first is the “contributory” parent visa, which costs at least $47,955 per person. Around 7000 were granted last financial year but 86,000 people are still waiting in the queue. Given the backlog, Home Affairs advises that a new application “may take at least 12 years to process [their emphasis].” The expert panel commissioned by the government to review Australia’s migration program reckons this is an underestimate; it puts the processing time at fifteen years.

The second, non-contributory, parent visa is much cheaper, with charges starting at $4560 per person, and there are “only” 51,000 people currently in the queue. But since far fewer visas are issued each year — just 1500 in 2022–23— the wait is much longer. Home Affairs advises it will take “at least 29 years” for a new application to be processed; the expert review panel warns it’s likely to be more than forty years.

Given the delays, costs and difficulty of getting a permanent visa, and the number of people, like Edward and Tracey, excluded by the balance of family test, you might expect more families to follow their lead in opting for the sponsored parent (temporary) visa. The government anticipated significant demand for the visa when it was introduced in 2019 and capped the program at 15,000 places annually “in recognition of the challenges of an ageing population, as well as the overall budget impact of older migrants.” It need not have worried — by March 2023, almost four years later, only 8204 visas had been issued.

Why has interest been so low?

Covid travel restrictions are part of the equation, but price is also a barrier. A three-year visa costs more than $5000 and a five-year visa more than $10,000. The same fee must be paid again when the visa is renewed — so a ten-year stay will cost $20,000 per person in two upfront payments.

Visaholders must also pay compulsory private medical insurance at about $5000 per year (although at least one big insurer will no longer provide cover for holders of this visa aged over seventy). And families who sponsor a parent must prove that they have a taxable income of at least $83,455.

There’s a sting in the tail, too: parents on this visa are barred from applying to settle permanently either under the contributory or non-contributory options.

Edward and Tracey might not have been able to establish their lives on the Sunshine Coast and watch their grandchildren grow up if it hadn’t been for the efforts of Arvind Duggal. For someone who insists he’s not “political” and just wants “a happy family life” Arvind has had a big impact during two Australian elections when he’s managed to put parent visas on the agenda and influence the policy promises of the Coalition and the Labor Party.

Arvind hails from Jalandhar, a city in Punjab famous for manufacturing cricket bats and other sports equipment. He migrated to Australia with his wife and two-year-old daughter in 2008 without realising he wouldn’t be able to bring his mother to join them. Because he has two older sisters living in India, the balance of family test prevented him from sponsoring his mother to settle in Australia permanently.

Arvind, who was working as a bus driver, discovered that two of his workmates, Parminder Sohal and Davinder Pal Singh, were also dissatisfied with the existing options for bringing parents to Australia. In 2015 the three men launched an online petition to then home affairs minister Peter Dutton.

Despite its far from catchy title — “Introduce Long Stay Visa for Parents Who Want to Spend Quality Time with Their Family”— the petition took flight and eventually attracted close to 30,000 signatures. The non-political Arvind was thrust into the unaccustomed role of activist and advocate. Having started out not even knowing the name of his local MP, before long he was well-versed in the crucial marginal seats where migrant votes might be influential.

Most mainstream media paid little attention, though SBS reported extensively on the issue, especially via its Hindi and Punjabi language services, as did news outlets catering to specific migrant communities. But in the closely fought 2016 federal election Arvind’s petition had the major parties scrambling to outbid each other to offer a new temporary long-stay parent visa.

Labor moved first. Two weeks before the poll opposition leader Bill Shorten promised a renewable three-year visa. At the end of their stay, parents would only have to leave Australia for four weeks and could then return for another three years. This was a big improvement on the existing visitor visa, which offered a maximum stay of just one year and forced parents to leave Australia for at least six months between visits.

Three days later, the Liberal Party trumped Labor by pledging that a re-elected Coalition government would introduce a five-year visa. Both parties would require parents to hold private medical insurance and post a bond to cover any future expense for government services. Labor set the bond at $5000; the Liberals based it on the existing Assurance of Support scheme (between $5000 and $15,000, depending on who sponsors whom and for how long).

The Coalition squeaked home and within months things started moving. The government launched a discussion paper and announced community consultations to help design the new visa, which it “envisaged” would be in place the following year.

Arvind’s supporters were elated. “My heart is in celebration by the chance of having my mum close to me for longer than six months sporadically,” wrote one of them on Facebook. “I cannot express how happy I am for reading this media release… having my mum for at least three years near her only grandchild is a dream… Gosh, I am in tears!!!!!!!”

But it wasn’t until March 2019, just before the next election rolled around, that details were announced. In the slow transition from generous campaign promise to concrete policy the new visa had been hedged about with bureaucratic conditions and high fees.

Arvind still works in transport, though these days he’s a customer service officer. “Peter Dutton betrayed us on his election promise,” he says when we meet for coffee in Adelaide at the end of his shift.

Eight days before the 2016 election, Arvind received a personally addressed email from the Office of the Minister for Immigration and Border Protection signed by Mr Dutton’s media advisor. It explained that the promised new visa would require sponsoring families to post a refundable bond “within the existing parameters.” There was no mention of a fee. Yet when details were finally announced in 2019, the application charge was a hefty $5000 for a three-year stay and $10,000 for five years.

The email also reassured Arvind that “the number of visas is not capped.” But when it eventually came to fruition, places in the program were limited to 15,000 annually.

Arvind says the Coalition chose to capitalise on the huge pent-up demand to bring parents to Australia. “It’s like selling a bottle of water in the desert,” he says. “You can choose the price… This is making money from grandparents visiting their grandchildren, which is un-Australian.”

Arvind was also disappointed with three other aspects of the new visa. A family must have a high taxable income to qualify as a sponsor, something not mentioned in the election campaign. It can only sponsor one set of parents. And parents must leave Australia for at least three months to renew their visas. (The email from Mr Dutton’s office said they’d need to leave Australia for “a minimum period of four weeks.”)

As Inside Story reported in the run up to the 2019 election, Labor promised to address some of Arvind’s concerns, saying it would remove the annual cap on the existing temporary long-stay parent visas and slash the fees by 75 per cent. The price of the three-year visa would come down to $1250 and a five-year visa to $2500.

After losing in 2019 Labor felt no need to publicly renew its promises ahead of winning the 2022 election, though Arvind says he was privately assured that an Albanese government would honour its earlier commitments. He’s now concerned that he’s seen no action.

“If Labor fails to deliver then migrant communities will have every reason to lose our faith in the Australian political system” he says. “It’s not setting a good example for our kids who just want family time with their grandparents.”

From the start, Arvind and his bus driver colleagues had modest ambitions for their campaign. All they asked for was an extension of existing visitor arrangements to allow parents to stay for up to three years. He doesn’t see why that should be so hard or cost so much extra.

The campaign has been stressful and taken a toll on family life. “If we didn’t have the balance of family test, I never would have done this,” Arvind says. “Just to get a long-stay visa took seven years.” He’d like to put the issue behind him, but he can’t quite let it go. “It’s not just about me,” he says. “So many people had faith in the campaign. They have worked really hard for it, but ultimately they’ve been very disappointed by the end product.”

Misook and her husband Soejun are also in Australia on long-stay parent visas, but their experience is far less happy than David and Tracey’s. They had no trouble with the balance of family test — their only child is an Australian citizen — and their long-stay visa enabled them to stay here while they endure the long wait for their contributory parent visas to be processed.

Misook and Soejun fall into the category of migrants “stuck in permanently temporary limbo,” in the words of home affairs minister Clare O’Neil. The expert review of Australia’s migration program calculated that 90,000 temporary visa holders have already lived in Australia for more than five years, long enough to “lose their connection with their home countries and become embedded in the Australian community.”

“My husband and I have stayed in Australia, legally, for almost eleven years in the hope of living here permanently and becoming Australian citizens,” Misook says.

The South Korean couple and their eighteen-year-old daughter Eun moved to Australia from Seoul in November 2012. Misook’s employer, a global company, sponsored her on a temporary skilled work visa to fill a vacancy in its Australian operations. She believed she would be able to seek permanent residence after being with the company for a year, only to find that this was out of reach due to her age. Applicants under the Employer Nomination Scheme must be under fifty, and Misook was already fifty-one. A possible exemption applied if Misook could stay with the same firm for four years and earn a salary above a very high threshold, but she had to leave her job in 2015 before meeting that condition.

By this time, Eun was at university. Having failed to meet the requirements for sponsorship, Misook and Soejun looked for other ways to stay in Australia with their only child. Since they were now too old to apply for skilled migration, Soejun got a student visa and went back to study.

By 2017, Eun had qualified as a lawyer, started working and become a citizen. This enabled Misook and Soejun to apply for contributory parent visas. Almost six years later, they are still waiting for a decision. In order to remain in Australia while the process drags on, they spent $20,000 to secure sponsored parent (temporary) visas valid for five years. The couple keep themselves engaged by volunteering for their local council, but Misook is frustrated that the visa conditions prevent them from working even when Australian employers are struggling to find qualified staff.

“Actually, my husband and I are healthy and have skill to work here in Australia, but we can’t work due to the ridiculous visa condition,” she says. “I have been suffering from a financial difficulty to pay all living cost due to the long delay of the visa process.”

Misook says she contributed more than $250,000 in taxes while working for the IT company; Soejun also worked and paid tax, and he and Eun paid thousands more in fees to study as international students. Yet they can’t use Medicare or any other government services. With their long-stay visas expiring in December 2024, the family’s anxiety and uncertainty grows.

Despite their generally positive experience, Edward says he and Tracey also have some concerns. The reality that their five-year visas expire in September 2024 is starting to weigh on their minds, and they are preoccupied with securing a second five-year stay. Their biggest worry is that they’ll be forced to leave Australia for at least three months to do so. Once processing times are added in, Edward reckons they could be away from their grandchildren for up to nine months, interrupting those close relationships and disrupting the lives of their son and daughter-in-law, who rely on help with childcare to manage busy professional lives.

Then there’s the cost. Since they have no home to go back to in England, Edward calculates they could be out of pocket $50,000 in accommodation and airfares.

“That’s money that would otherwise be spent here in Australia,” he says, noting that some of it would probably go to Rory and Matilda and their young family to help them weather rising prices and increasing mortgage repayments. “Most grandparents offer financial support to their families especially during today’s worldwide recession,” he says. “I don’t see any downside for the government in allowing us to apply onshore and granting us a bridging visa while our application is processed.”

Edward’s other concern is that he and Tracey won’t be eligible for travel insurance for the journey because they don’t hold Australian visas extending beyond the period of their trip. And once they’re in Britain they face a catch-22: because they’ve been away from that country for more than three months and are no longer considered residents, they can’t access the National Health Service unless they are returning permanently.

Edward has learned from Facebook that some three-year visa holders have been granted a waiver to apply for a renewal onshore because their presence in Australia is vital to enabling their adult children to stay in the workforce. But he’s unsure whether the rules were only relaxed because of Covid travel restrictions and fears he and Tracey may not get the same dispensation.

The rules appear clear cut. The Home Affairs website says permission to apply onshore “may” be approved if the parent is unable to depart Australia due to accident, serious illness or a disaster in the home country, but will not be approved because leaving Australia is inconvenient or the applicant has “sold assets in their home country”.

A letter to immigration minister Andrew Giles from Edward’s local MP brought no joy. The minister fobbed the inquiry off by referring to mandatory conditions applied to temporary visas under the migration regulations. But with its long duration, Edward thinks the sponsored parent (temporary) visa is in a different category to other temporary visas and doesn’t understand why it can’t be renewed in Australia.

“If we applied onshore and were granted the visa it’s not like we’re gaining any extra time on the ten-year limit,” he says.

The reasons for preventing subclass 870 visa holders from applying for a new visa onshore are opaque. It could be a manifestation of the “Genuine Temporary Entry requirement” — a demonstration that temporary parent migrants like Edward and Tracey still have a life elsewhere and aren’t trying to settle permanently. But given that the visa allows a ten-year stay, this is an absurd piece of bureaucratic rigamarole. Perhaps, as one government insider told me privately, “it’s just a very poorly designed visa.”

I have had serious reservations about the sponsored parent (temporary) visa from the outset. When it was first promised at the 2016 election, I described it for Inside Story as Claytons immigration, a reference to the faux whisky marketed in Australia in the 1970s with the tagline “the drink you have when you’re not having a drink.”

The visa offers neither permanent settlement nor a truly temporary stay. It’s a messy political compromise cooked up to appease migrant communities in marginal electorates.

The influence of the “ethnic vote” is not a new phenomenon. Historian Rachel Stevens records that Malcolm Fraser’s Coalition government relaxed the requirements for family migration in its second term in “a pragmatic move designed to gain electoral votes from naturalized southern European migrants.” In the 1980s, Labor supported family migration for the same reason. Stevens cites veteran political journalist Michelle Grattan’s view that “without the southern European vote, the ALP would have lost the 1987 federal election by 2 per cent.”

Yet campaign-driven appeals to specific voters in marginal electorates rarely produce well thought out policy. The sponsored parent (temporary) parent visa is a good example. Designed to appeal to overseas born voters in key seats, it is likely to launch chickens that will come home to roost on some future minister’s desk.

What happens, at the end of a ten-year visa, if a parent has become too frail to return to their homeland, or if they no longer have the family or community supports to sustain them there? Human lives are messy and complicated and tend to explode administrative systems and rules, no matter how detailed and prescriptive. In fact, we already see stories like this, because of the absurd processing delays for permanent parent visa.

In 2020, SBS reported that ninety-eight-year-old grandmother Esmeralda Rosario was facing deportation to India after living in Australia on a bridging visa for twelve years. She had arrived on a tourist visa and then applied for an aged parent visa. In 2019 her application was refused because, unsurprisingly, the nonagenarian failed to meet the health requirement and her care was judged likely to impose significant costs on the Australian community.

SBS also documented the similar case of 93-year-old Mollie Manley. She had been living in Australia on a bridging visa for eleven years when her application for permanent residence was refused. The great grandmother had passed all relevant medical tests when she first arrived in Australia, but by the time her application was assessed she was blind and in aged care. She too was slated as a potential burden on the healthcare system.

Cases like these generally end up in drawn-out appeals before they finally land on the desk of the immigration minister with a request to intervene and grant a visa on compassionate grounds. The minister’s public interest powers can only be exercised after every administrative and legal avenue has been exhausted — a stressful, expensive and inefficient process that takes years.

Plenty of similar cases are yet to come. In March 2023, 17,223 parents were living in Australia on bridging visas — a subset of the 137,000 parents in the combined queue for contributory and non-contributory visas. Most of those people will either die waiting for a decision or end up being rejected because they have become too old and frail to meet Australia’s health requirements.

In 2016, I warned that a long stay parent visa could attract a lot of elderly migrants to Australia. At the time, there were already 80,0000 applicants queuing up for permanent visas, and I figured demand would be significantly higher after factoring in people who were put off applying by the cost or the endless delays for a permanent visa, plus those like Arvind’s mother and Edward who had been excluded by the balance-of-family test.

When the Labor opposition promised to remove the cap on numbers and slash the visa fee, the same concerns re-emerged. Migration expert Bob Birrell predicted “at least 200,000 parent applications” in three years if Labor won government. Demographer Peter McDonald estimated that up to two million families could be interested in sponsoring a parent.

So far, the sponsored parent (temporary) visa hasn’t proved anywhere near that popular, and not because the cap of 15,000 places remained in place or because Covid has interrupted travel plans. The likely reason is that the visa is cumbersome and expensive. But the government would be wise to tread carefully in reforming it. If it was cheaper and easier to access, then the ten-year visa may well become as widely used as Birrell and McDonald suggested, and that would invite a range of unintended consequences.

The Clayton’s approach to migration satisfies nobody and simply defers difficult choices. The government should have the courage of its convictions and either commit to parents being considered “close family” with a near automatic right to join their children in Australia, or say, no, sorry, such a policy is not acceptable to most Australian voters and the best we can offer is a genuinely temporary stay of shorter duration. •

This article is adapted from The Parent Conundrum, a narrative exploring Australia’s troubled approach to parent migration commissioned by the Scanlon Foundation Research Institute, although the views expressed should not be taken represent its views.

The post The visa that missed its mark appeared first on Inside Story.

In key fields — childcare, aged care, employment services and the NDIS — what we have is not a quality system of care but a disordered ecology of self-directed providers and distant regulators. Governments write complex contracts and rain down new rules when things go wrong, but they haven’t improved the systems themselves. We pay a high price for poor quality and often fraud-ridden services.

Royal commissions, parliamentary reviews, Productivity Commission reports and dozens of independent studies show the same pattern. Successive federal governments have dealt with rising demand for social services by encouraging private companies to form a quasi-market and then encouraging citizens to search for services that suit them.

The new vocabulary of social service reform became the offer of greater choice, with the power that might create for each individual to get what they want and for services to thus become highly responsive. The engine driving this imagined process was the failed idea that unhappy customers will simply exit a bad service and thus “signal” to producers that they must lift their game.

The problem with this “choice” model is twofold.

First, new service markets don’t suddenly spring into life across the social spectrum, waiting for customers to stroll in and make their selections. They are completely different from products: they can’t be produced in advance or shipped in the post or compared on a supermarket shelf. They are created at the same moment they are consumed. They require personal delivery and careful connection to the communities they seek to serve.

Second, these services are extremely difficult to regulate from a distance. We only know how good a service is when we experience it or when we observe, up close, someone else experiencing it.

What current services offer is a “buyer beware” warning and a distant form of regulation that catches the occasional rogue but misses the day-to-day defects across the system. That’s the reason the aged care royal commission found that the majority of people in our old folks’ homes were malnourished. That’s the reason thousands of people were duped by vocational education providers signing them up to ghost courses.

The “choice” idea turns out to be a stalking horse for something else altogether. It enables governments to withdraw from social services. Top public servants now like to say they are “steering, not rowing,” which has come to mean that they lack knowledge of how services are actually produced and experienced. The choice revolution has become a means of risk shifting.

Of course, choice itself is no bad thing. Everyone likes to have a choice when it comes to the important things they have to do. But that raises critical questions. What kinds of options can clients choose? And do they want to be left to figure all that out themselves? When US researchers asked a sample of the general American population if they want to choose their own cancer treatments, a strong majority answered yes. But when they asked people who actually had cancer, only a small number said yes. What they wanted was access to quality medical advice and a chance to be fully involved in decisions. That’s not choice, that’s voice.

The services in Australia’s service “markets” are a wide mix of the great and the ghastly — which is exactly what we would predict. Not all private providers are rogues, but it is also true that they all put shareholder value first; that’s the whole point of the market model. And once fraud becomes a regular event, heavier regulation and reputational damage become common.

This system produces a low-average model with some core characteristics. The owners of the services seek to increase their margins by de-professionalising the service and stocking it instead with poorly paid and untrained staff. Because they all do it and because they are all paid the same rate by the government, they face no market risk if they run a service that conforms to a poor minimum standard. Only the truly dreadful get noticed by the regulators.

Where a star-rating system is used to show consumers how the different providers are doing, the low-average system means that the best service only has to be slightly better than its terrible comparators in order to score points.

With weak oversight of the service itself, providers are tempted to put their best effort into marketing their service to would-be clients. If you browse the websites of aged care homes you will see that most offer “home-cooked meals” and a “place like home.” But no one knows exactly what that means until they move into a centre, which may be too late. Childcare centres promise educational activity, but there is no way to know if that ever happens or for how long in the average day.

Service providers also work very hard to get the maximum subsidy they can from the government. Many seek to reclassify their clients as more needy than they really are, or delay helping them solve smaller problems so the bigger issues will generate greater subsidies. Charges meanwhile rise faster than the average in the broader community because users receive government money to cushion the blow. These dynamics help explain one of the great paradoxes of these service markets: they can become more expensive at the same time as they deliver worse services.

These tragic conditions are well known inside each of the sectors. Sadly, the better operators get tarred with the same brush as the worst. “It is a matter of luck whether our most vulnerable and forgotten citizens end up in one of these shitholes or living a good life” is how one market player described rogue operators in the disability sector.

In that contrast is the clue to the way out of this terrible mess. Instead of a chaotic world of high-risk choices, we need to redesign these services with high, transparent standards of care built in. And we need those receiving the services and those supporting them to have a strong voice in their development and delivery. Throwing more money at the problem won’t make a jot of difference until a more systemic approach kicks in.

The good news is that many of the changes needed aren’t expensive, and some will actually save money. Services need to be better grounded in communities, which will require a more imaginative social investment strategy than has been evident to date. And shared expertise will need to play a bigger role within these services so we can promote the best solutions and share the best methods.

Each of these services has its own dynamics and will require specific reform. But common problems also need to be tackled. The first and most dramatic challenge is to make services more transparent by defining the core activities and standards of all service providers and building in the peer reviewing and evidence sharing that make real-time improvements possible. An agreed model of delivery must combine the best interests of clients with an efficient and responsive approach to current users and future demand.

With transparent models of service will come a greater capacity to share useful adaptations and innovations and use resources creatively. Regulation will also be cheaper and less time-wasting. A common service model would also give employees access to training to increase their skills and to participate in sector-wide benchmarking and self-improvement.

A second area for structural change involves the necessary shift from choice to voice. By all means, let’s keep systems that involve multiple agencies. Nothing is improved by going back to a single bureaucratic supply model — if ever such a thing existed. But let’s move past the myth that these systems will improve because consumers can simply move to the better option and thus drive out poor performers. Multiple suppliers are useful when they offer specialisation and community-specific capability, not when they seek to out-compete some carbon-copy agency down the street.

What really drives improvement is a stronger voice for clients and their families. More mechanisms are needed to help these “experts of experience” make a positive contribution to agencies’ performances. For example, public funds should come with the requirement that the agency has a client board that is consulted about all the key issues.

The third area where change would generate significant benefit is in infrastructure. By over-relying on private markets for core social services we have drifted away from public assets and weakened our planning capacity. Public payments for individual users include contributions to service infrastructure, but these assets reside in private hands and can’t therefore be used for maximum benefit. New models for private–public partnership are needed to build services for the future.

Local governments often provide the planning approval for such facilities but cannot manage them over their lifespan. As a result, aged care, childcare and training facilities are often built to optimise real estate value rather than to develop joined-up services such as joint childcare and aged care facilities.

Finally, we need to re-establish the role of public service providers within the broader mix of agencies. The public service can’t improve a service it doesn’t understand using staff who have no frontline capability. Public service delivery should always drive for high standards, test new methods and activate the “flanking services” — including counselling, rehabilitation and housing assistance — needed to make complex services work. And a “provider of last resort” should always be ready to move to places where market players won’t accept risks associated with long-term investments in clients.

There’s an alternative, of course: we can keep doing what we have been doing for twenty years and watch the most vulnerable in our community get ripped off and done down. It’s not a great choice. •

The post Choice versus voice appeared first on Inside Story.

To Sims, and many others around Australia, that’s how crucial the new tax debate is. It’s no longer just about whether Labor waves through Scott Morrison’s stage three tax cuts, amends them or abandons them. There is a much wider question, with much greater consequences for our country.

Governments can never satisfy us all. But from hospitals to defence, from childcare to aged care, from schools to fixing potholes, government services are falling way short of what Australians need and expect from their country. That shortfall helped Labor get into government. Now Labor’s there, what is it going to do about it?

Labor came to office as the flagbearer of many Australians’ hopes for a government that would end the chronic underfunding of education, health and welfare, not to mention the miserly $47.74 a day we give the unemployed to live on.

Some of those areas have now reached the point where things fall apart. GPs, tired of being cast as the poor cousins to specialists, are deserting country towns and suburban practices, and young doctors are not replacing them. Aged care homes and childcare centres are perpetually short-staffed because low pay and high workloads create constant turnover. Across the board, Australia is short of skilled workers because apprentice wages are so low that only half of them stay on to complete their training.

We could all add more examples. To me the most important is that Australia now finds itself in the most dangerous environment since the second world war, yet the Coalition kept defence spending to just 2 per cent of GDP (lower than in the 1960s when we faced no real threat) and settled on submarines that will be delivered between 2038 and 2050.

Faced with all these needs, Labor nonetheless went to the election with a platform of relatively modest, tightly targeted new spending, promising no new taxes and a big tax cut primarily for those in least need.

You can understand why. It wanted to be elected, so it played safe. And in 2025 it wants to be re-elected, so it doesn’t want to risk breaking any promises now. At least, not yet.

You see what Rod Sims meant? All those spending goals require more money, much more money. In the short term, the only way governments can get more money is by raising taxes, to reallocate spending from private purposes to public ones. What do we want Australia to be?

The looming budget is the government’s first test — and the timing is not good.

The fallout from Russia’s invasion of Ukraine (amid other factors) has lifted global food prices almost 50 per cent above pre-Covid levels, blown global energy prices to several times pre-Covid levels, provided cover for businesses everywhere to sneak their prices up — and could throw some big economies into recession.

The International Monetary Fund this week estimated that after decades of low price growth, global inflation has jumped to 8.75 per cent. Even with central banks slamming the brakes on hard (which the IMF applauds), it predicts global prices will rise 6.5 per cent next year before returning to something like normal in 2024.

Contrary to some commentary, the IMF is not forecasting a global recession; its half-yearly World Economic Outlook is towards the optimistic end of the spectrum. It predicts the global economy to grow by a relatively low 2.7 per cent next year, dragged down by global supply disruptions, a permanent slowing of China’s growth rate (to 4.4 per cent) and the fallout from the war in Ukraine.

It expects the United States to keep growing, albeit slowly (1 per cent); other forecasters expect much worse. The IMF envisages some big developing economies like India (6.1 per cent) and Indonesia (5.0) more or less hurdling the upheaval, while Brazil, Russia and Turkey now seem to be doing better (or in Russia’s case, less badly) than was forecast six months ago.

If there is a recession, it would be in the advanced economies — whose growth collectively is expected to slump to 1.1 per cent — and centred in Europe. Germany, Italy and Sweden are forecast to experience mild recessions: no upsurge in unemployment, just a year without growth.

On the IMF’s forecast, Australia will also be hit. It expects our growth to fall to 1.9 per cent next year and 1.8 per cent in 2024, and to stay low thereafter. Unemployment would gradually edge back towards 5 per cent, per capita growth would total just 4 per cent over five years. Governing Australia would not be fun.

These are only forecasts. But clearly the budget outlook is far worse than the one Josh Frydenberg unveiled in his budget in March. And even that projected a string of hefty deficits as far as the eye can see. At a time of record mineral prices and low unemployment, there is no good reason why Australia should have run up new debt of $32 billion in 2021–22.

A cardinal rule of budgeting is that, by and large, you pay for what you spend. If you don’t, you are leaving the bill for the new generation to pay. There are exceptions: you run deficits in bad times and cover them by running surpluses in good times. Infrastructure spending largely benefits the next generation, so it is fair to borrow to build. But at federal and state level — especially in Victoria and the ACT — governments have simply lacked the courage to make us pay for what they spend.

This combination of a grim global outlook, a grim state of the budget and a government still new to the job does make it likely Labor’s first budget will be, as treasurer Jim Chalmers keeps saying, responsible.

I assume he means that Labor will give priority to reducing the budget deficit. And that in working out the numbers, Treasury will err on the side of caution in guessing future energy prices, and hence company tax revenue. And that any new taxes and spending will implement the commitments Labor made in the campaign, and little else. And, of course, that Labor will go after the Coalition programs it has identified as rorts.

All that buys time. But circumstances are conspiring to force Labor to confront Rod Sims’s question: what does it want Australia to be? To deliver First World services, you need a First World revenue base. And for Australia, that means higher taxes.

Let’s take the long-term issue first. Australia is a low-tax country. At the government’s recent jobs summit, economist Ross Garnaut cited OECD figures showing that total federal, state and local government tax revenue as a share of GDP was 5.7 percentage points lower than the developed country average. That’s a shortfall of almost $140 billion a year.

The IMF’s data for total revenue reports a similar gap: governments in Australia raise 5 percentage points of GDP less revenue than the median advanced economy. In 2019 federal, state and local governments raised 34.6 per cent of GDP, well below 40.7 per cent in Canada (the country we most resemble), 46.5 per cent in Germany, and an average of 50.6 per cent in Scandinavia.

In part, that’s because retirement income in Australia is semi-privatised through superannuation, whereas retirees in almost all other Western countries, even the United States, rely on government-run retirement benefits funded by a separate social security tax on income. (The reason Australia appears to rely so much on income tax is that we have only one income tax. Most other Western countries have two, under separate names.)

But the OECD’s data show Australia also has the highest private spending on education of any OECD country, and the third-highest “voluntary” private spending on healthcare. Unemployment benefits are among the very lowest in the Western world.

Once, Labor ministers might have rebelled against this two-stream system in which the best services are reserved for those who can pay the fees demanded in the private sector. Now, as we saw when the Gillard government squibbed on the Gonski report’s school funding reforms, preference to private schools is one British tradition Labor still loyally supports.

In theory, Labor could use more desirable ways to meet the cost of bringing Australia’s services to the standards we expect. It could reduce spending on lesser priorities and reallocate the savings. Or it could take on the politically difficult economic reforms needed to speed up Australia’s sluggish rate of productivity growth.

In reality, speakers at the revenue summit agreed, the gap between today’s service levels and those we expect in aged care, the health system and so on is too vast to be filled by cutting services in other areas. Sims called it “self-evident” that savings from those cuts, while they could and should be made, are not on the scale needed to get us where we want to be.

For ten years until recently, Sims chaired the Australian Competition and Consumer Commission. The experience has made him sceptical of the potential for dramatically improving our productivity and hence growing a bigger economy. Rapid productivity growth, he said, requires increased competition — and the reality is that business is reducing competition, not increasing it.

“Our political debate always favours low taxation,” he said. “We have to point out that what comes with that is low expenditure. And we have to keep asking the question: is that what we want? If you want to spend extra money, you have to raise extra revenue. There’s just no avoiding that.”

He went on: “If you are against higher taxation, then you are against higher government expenditure… Many do not realise that in opposing taxation they are opposing extra spending on health, education and much else. I think we need higher taxation. I think it’s unavoidable.”

Why? Sims and other speakers at the summit gave several reasons:

1. Australians need better services

Annie Butler of the Nurses Federation cited the findings of the aged care royal commission: neglect and substandard care are widespread and systemic in aged care because the industry is underfunded by $10 billion a year. “Ridiculously low” wages lead to high staff turnover and hence shortages.

ACTU secretary Sally McManus argued that a lot of the crises Australia is experiencing in health and other services result from years of “chronic underfunding.” Economists predict that 30 per cent of all jobs created in the next decade will be in caring for others, but unless those jobs are better paid, workers will not stay in them. Our priorities have to change.

2. The transition to a low-carbon economy

The big economic reform facing Labor is going to be an expensive one: valuable in the long term but costly upfront. Business and government will need to invest tens of billions of dollars in building the solar and wind farms that will generate the power, the batteries that will store that power, and the transmission lines that will bring it from the inland to the cities. And if our coal stations are to close down by 2035, this money needs to be spent in the next decade or so to guarantee that we will still be able to turn on the lights.

The task is made even bigger and more crucial by the need to transition cars from oil to electricity and households and businesses from gas to electricity. Tim Washington, chair of the Electric Vehicle Council, told the summit that electric vehicles comprise, at best, 3 per cent of Australian car sales, compared with 15 per cent in other Western countries. With a global shortage of EVs likely to persist, he urged business and government to manufacture them here, using Australian designs, software, metals and lithium to create an entire value chain. He’s not likely to get that.

Fortunately, there is an ideal solution. Unfortunately, only the Greens, teal independents and economists support it. It is a carbon tax.

Sims confessed he found it baffling that so many Australians want action on climate change but instantly condemn the idea of a tax on carbon. Governments are going deeper into deficit to subsidise solar panels and electric vehicles, whereas the carbon tax would give the whole economy an incentive to decarbonise while raising taxes to fund the investments required.

“No such transition can be painless,” he said. “We need to decide whether we are serious about climate change. If we are, then it can be funded by a tax that will have the benefit of directly changing behaviour while insulating low income earners [through compensation].”

3. Get out of deficit and start paying down debt

Australia has less government debt than most Western countries, but only because the Hawke, Keating and Howard governments made fiscal responsibility a priority from 1985 until 2005. In both 2009 and 2021, as a resilient Australia emerged from the global financial crisis and Covid lockdowns respectively, our governments kept piling on stimulus as if money were no object. And the pollies’ fear of tax rises — much of it due to the vicious hostility of the Murdoch press towards anyone, especially anyone from Labor, brave enough to impose them — has kept us in deficit ever since.

Federal government revenue in this century peaked at 25.6 per cent in 2005–06, when it was 24.1 per cent of GDP. Since then spending has swollen to 26.8 per cent of GDP. Yet, far from keeping pace, revenue has fallen — because governments are frightened of raising taxes.

As ANU economist Ben Phillips put it, “We have plans for increased expenditure, but not for increased revenue. All we’ve got to increase revenue is bracket creep: it’s sneaky, but it works.”

(Bracket creep is the additional tax you pay when inflation pushes more of your nominal income into a higher tax bracket. The stage 3 tax cuts are often defended as simply handing back that extra tax. But only the high income earners will get their bracket creep back, and they get back more than they lost.)

Phillips estimates that Australia faces a revenue gap of $25 billion to $50 billion a year for the next decade. The summit heard lots of suggestions on how to close that gap: one that Labor has flagged for this budget, and others that we should be debating and putting to a new tax review.

Sims alone proposed five:

• Crack down on multinationals avoiding tax by non-commercial transfer pricing, including paying ridiculously high interest rates or “marketing fees” to a head office in a tax haven.

• Ensure Australians benefit when our mineral and energy resources are extracted. Norway takes almost 80 per cent of the revenue from its oil and gas fields, yet Australia allows companies to take those resources for virtually nothing. The petroleum resource rent tax, which is meant to do the job, desperately needs big repairs — and an extension to cover coal and iron ore.

• Introduce an excess profits tax, as the European Union has done recently. Australian Bureau of Statistics figures show that in the Coalition’s nine years in office, mining output rose by $195 billion but wages in the industry by just $5 billion. Net profits by the mining industry grew by $190 billion, yet taxes on mining shrank by $0.1 billion. If there is ever a time for a tax on excess profits, it is in Australia now.

• A carbon tax. (See above.)

• At state level: a comprehensive land tax covering all private property except farmland, to replace stamp duty on conveyancing. Economists generally see land tax as a most efficient tax. Sims called it a progressive tax, “based on assets that cannot be moved,” that produces a steady revenue flow.

• Road-user charges will be inevitable as electric vehicles replace petrol-driven cars. Their advantage is that they can be fine-tuned for vehicle type (trucks pay for the damage they do to roads) and time of day (peak-hour pricing).

Other speakers added at least another five:

• Prune tax breaks for superannuation.

• Prune or phase out negative gearing of property investments.

• Scrap fossil fuel subsidies, including the mining industry’s exemption from fuel excise.

• End concessional tax rates for family trusts.

• Increase the Medicare levy to pay for extra spending on aged care.

Sims emphasised that the reforms would need to be sold as a package, with compensation where appropriate, as the Hawke government did when it reformed tax in 1985. That package was preceded by a tax review by Treasury and a tax summit where a wide range of groups put their case.

Albanese has pledged no new taxes in this term apart from the ones Labor took to the election (primarily a crackdown on tax avoidance by multinationals — no votes lost by tackling that). But independent MPs Allegra Spender (Wentworth, NSW) and Zoe Daniel (Goldstein, Victoria) both urged a new tax review “with everything on the table” — with Spender adding “including the GST” and a hopeful plea: “We need to have grown-up conversations about tax.”

Well, good luck with that. I suspect most tax economists would agree that the GST rate should be raised, or its field widened, or both. New Zealand lifted its GST rate to 15 per cent back in 2010 without suffering any visible social collapse, and its GST is far more comprehensive than ours. That’s the main reason its government can spend more than ours.

The left needs to stop demonising the GST and think of tax reform as a package. You can introduce or increase or widen a GST fairly so long as you design the right package — as we saw in 1999 after the Australian Democrats stopped the Liberals using the GST to shift more of the tax burden onto lower and middle income earners.

But so long as we are unable to see any bipartisanship on tax, the GST will remain a no-go area. And bipartisanship is probably off the agenda as long as Peter Dutton is Liberal leader.

Where does that leave the stage 3 tax cuts? It looks like this movie has ended now, with treasurer Jim Chalmers apparently losing the fight despite his skilful attempts to persuade colleagues to revise, reduce or even scrap the cuts — which would be in line with his theme of protecting the budget in increasingly dangerous times and giving support only to those who really need it.

But good movies these days have a sequel, and these tax cuts won’t take effect until mid 2024. Given his impressive debut in the role, Chalmers has time to perfect it when he plans his next budget. He knows the case for either abolishing the cuts or reducing and retargeting them is very strong.

Stage 3 contains three elements:

• abolish the 37 per cent marginal tax rate on income earned between $120,000 and $180,000

• raise the threshold for the 45 per cent top rate from $180,000 to $200,000

• reduce the standard 32.5 per cent rate to 30 per cent — which would then be a flat tax rate for all income from $45,000 to $200,000.

Modelling by the Parliamentary Budget Office and by Ben Phillips found the first and the third are the expensive items. And the consensus at the summit seemed to be that if there is compromise, we should keep the third while scrapping the first.

A few points are important to note.

First, these tax cuts were proposed by treasurer Scott Morrison way back in 2018, six years before they would take effect. Since then, we have had a global Covid pandemic and the global inflation breakout. Committing to tax cuts six years before they took effect had no economic rationale. What drove it was politics. Morrison assumed the budget in 2024 could afford it. He was wrong.

Second, the cuts follow stage 1 (in 2018), directed to lower-middle income earners, and stage 2 (in 2020), focused on upper-middle incomes. Stage 1 was small, and has since been abolished by the Coalition itself. Stage 2 was bigger: it cut taxes for people earning less than $90,000 by $10 a year, and taxes for people earning over $120,000 by $1890 a year. The idea that high earners have been kept waiting while others have had tax cuts is quite untrue.

Stage 3 is seriously big money. The Parliamentary Budget Office last year estimated their cost at $18 billion in year one (2024–25), then more than doubling to $37 billion by year nine (2032–33). Treasury is now revisiting those numbers — and the cost will almost certainly be even higher now.

But even on the PBO’s 2021 estimate, that would reduce total government revenue by 3.5 per cent initially, and by more than 4 per cent by the start of the 2030s. That is a huge cut in revenue at a time when the budget is unable to cope with Australia’s existing spending needs, let alone the new ones coming over the horizon from the ageing of our population, China’s attempt to assert hegemony over the region, the excesses of the NDIS, and so on. We need tax rises, not tax cuts.

Third, the PBO estimates that 78 per cent of those billions of dollars would go to the richest 20 per cent of Australians. That’s largely because they pay 68 per cent of all income tax — but that in turn is because they get such a high share of the nation’s income. They would rank low on a list of those in need.

That said, it seems fair to say that the threshold of $180,000 for Australia’s top tax is too low. If Chalmers and his colleagues want to compromise, one option they might consider is to reduce the 37 per cent rate to 35 per cent with the same thresholds as now — but add a new 40 per cent rate for income from $180,000 to $200,000, and a timetable to raise that threshold to $250,000. Over time, that would save the budget a lot of money, without taking everything from those who would gain from the plan Labor promised them. •

The post Time to talk about tax appeared first on Inside Story.

It was a success according to its intentions. But that won’t take us very far. Its directors managed to evade almost completely an issue that is crucial to how Australia is to tackle the many, deep social problems spelt out by speakers on the floor of the Great Hall of Parliament House. I’ll come to that shortly.

The summit was intended to show Australians that our political climate has changed with the new government — and it did. The participants, speakers and moderators were mostly female. There was an abundant sprinkling of young faces, of non-white faces, of foreign accents. It looked and sounded like Australia.

The vibe was overwhelmingly positive. Political differences were set aside (except by the absent Peter Dutton). Everyone was given a chance to speak at some point, and most were worth listening to. Their contributions were mainly constructive.

The PM was his avuncular self, the friendly, trustworthy Uncle Albo, heir to the good Labor leaders of long ago. He urged the summit: “We have not gathered here to dig deeper trenches on the same old battlefield… Australians have conflict fatigue. They want politics to operate differently.” The contrast between his positivity and Dutton’s sniping showed why Australians, according to Newspoll, prefer him by a 61–22 margin.

This summit was a stage production. The cast spoke when they were meant to, and not otherwise. I didn’t see any debate on day one, though ANU vice-chancellor Brian Schmidt started some when he took the chair on day two. Mostly, if anyone wanted to disagree with what was being said, tough luck: they had no opportunity to do so. The “consensus” Anthony Albanese praised was more staged than real.

The summit was intended to produce a set of policy outcomes — and in a sense, it did. Soon after it ended, the government published a fourteen-page document listing what Treasurer Jim Chalmers described as thirty-six “concrete steps [it] intends to take… as an outcome of this… summit” plus a similar number of priorities for future discussion. Everyone got something to take back to their constituencies.

Seeing the speed with which the document appeared at the end of the summit, a cynic might wonder if, rather than responding to what it heard on the floor, the government took these decisions well before the summit, but held back the announcements to make it look like they came from the floor.

The summit was intended to highlight the importance — economic, social and political — of getting more women into work, into decision-making and into higher-level roles in the economy. And it did. Its three main policy themes were: how to fix the skills shortages in Australia’s workforce; how to change wage-fixing rules so that workers get a bigger share of the cake; and how to lift participation in the workforce. In the presentations, women’s work was central to all three.

Grattan Institute chief executive Danielle Wood sounded the bell in her opening keynote speech. Australia has one of the most gender-segregated workforces in the OECD, she noted, and market realities are now in sync with fairness in dictating that we tackle the underpayment of female-dominated caring occupations.

She cited an example: childcare workers are paid as little as $22 an hour, less than they could earn washing dishes at McDonald’s. No wonder we are perpetually short of them. Every year, Australia needs more than 33,000 more aged care workers, but they are grossly underpaid and overworked, so a huge turnover means a constant search for workers.

We can’t put off this issue anymore, and Labor’s leaders clearly recognise that. Treasury’s paper for the summit estimated that a quarter of Australia’s gender pay gap comes from low pay in the female-dominated caring and education professions. The Fair Work Commission is now hearing a case in which unions are seeking a 25 per cent pay rise for aged care workers. The government has promised to pick up the tab. That is where the action is.

But the obvious stage management of the summit should not obscure its genuine achievement. For two days, leaders of business, unions, community groups and federal, state and territory governments focused on contributing their knowledge, identifying the problems, finding common ground and scoping out solutions. They didn’t solve Australia’s problems, but they made progress on some fronts, and established good working relationships for future dialogue.

Yet the progress they made was marginal to the key issues facing Australia. Getting consensus meant the organisers could not allow the conference to tackle issues where consensus was impossible. Danielle Wood and fellow economist Ross Garnaut, the dinner speaker, certainly touched on some of them, but they were not targeted in any session.

One of them is crucial to almost every issue the summit addressed. It is tax.

The federal government is running deficits of $75 billion or more a year. While claimants were putting urgent cases to the summit for more spending in this area and that, Labor still insists on delivering an already-legislated tax cut, mainly for the rich, that will reduce tax revenues by 3 to 4 per cent. Where is it going to find the money to solve the problems the summit presented to it?

Garnaut pointed to the elephant in the room. “We have to stop kidding ourselves about the budget,” he said. “We have large deficits when our high terms of trade should be driving surpluses. Interest rates are rising on the eye-watering Commonwealth debt.

“We talk about the most difficult geo-strategic environment since the 1940s requiring much higher defence expenditure, but not about higher taxes to pay for it. We say we are underproviding for care and underpaying nurses, and underproviding for education and failing to adequately reward our teachers…

“[Yet] in the face of these immense budget challenges, total federal and state taxation revenue as a share of GDP is 5.7 percentage points lower than the developed country average.”

To put it another way, our governments every year raise roughly $120 billion less than they would if our tax rates were at the Western average. With that money, we could tackle every issue raised at the summit. The government, if it chose, could finance 25 per cent pay rises for aged care and childcare workers, raise the dole to $70 a day, restore the funding the Liberals took from universities, invest in research and new technology, pay the states 50 per cent of hospital costs, give state schools their fair share of funding, etc., etc. — and close the deficit.

There are many good ways to raise revenue. Australia has an abundance of tax loopholes allowing companies and individuals to avoid tax: negative gearing is a classic example, but as the International Monetary Fund once suggested, Australia could apply the same principle to business, and stop firms deducting interest bills from their tax.

In the June quarter, the Australian Bureau of Statistics tells us, the total wage bill for Australia’s millions of corporate employees was $164 billion, while its mining companies made a gross operating profit of $81 billion. In just three months! If any country ever had cause to levy a tax on super profits it is Australia, now. Jim Chalmers needs to make this a centrepiece of his October budget.

But no one in the sessions I heard mentioned tax in their speeches. Like all those who argue for more spending on worthy causes, they urged more spending without a word on how the government should find the money to pay for it. Tax is the issue we don’t talk about. The summit would have had more cutting edge if some delegates had dared do so.

There’s been little argument over the summit “outcomes” because they are mostly agreements on principles, aspirations, processes or short-term supports to be applied while longer-term outcomes are negotiated.

They are modest: first steps, not solutions. Maybe they needed to be to get tripartite agreement between government, business and unions. And having tripartite agreement on sensible first steps in the right direction gives the government more freedom to plan bolder steps to solve the problems.

One of the summit’s big moves to tackle the skills shortage, for example, was to increase the permanent migration target for 2022–23 from 160,000 a year to 195,000. Almost all that increase will comprise skilled workers and their families, mostly sponsored by state governments (who are primarily chasing health workers) and employers in the regions.

No one objected to that. Nor should they, because if the target follows current patterns, it will make little difference. In recent years, two-thirds of permanent residence places were awarded to migrants already in Australia, working or studying on temporary visas.

And while the government would like to bring in new migrants to help reduce our skills shortage, particularly in hospitals and aged care, it has an even more urgent priority: tackling the scandalous backlog of unprocessed visa applications piled up by the Department of Home Affairs under the Morrison government.

Immigration minister Andrew Giles told the summit Labor inherited a backlog from the Coalition of almost a million unprocessed visa applications. It was an unbelievable number, including applications from all types of people: separated partners, skilled workers, overseas students, business. Brian Schmidt recalled the department taking twenty-one months to process the ANU’s applications to bring in some Indian academics — for three-year appointments.

Giles said the government has now swung an extra 180 staff onto clearing the visa backlog, and has so far reduced it by 100,000. One of the thirty-six “outcomes” was that it will now spend an extra $36 million to lift visa staff by 500 people for the rest of this financial year.

But the waiting list includes a staggering 330,000 people who are already in Australia on bridging visas until their applications are processed. It’s fair to assume that many, maybe most, of them are applying for permanent visas. Given the scale of this backlog, an increase of only 35,000 in the migration target seems extraordinarily timid. Labor will have to revisit that, and soon.

The big “outcome” for the young unemployed and school leavers was the agreement by the prime minister and premiers to pump $1 billion into TAFE in 2023 to provide 180,000 extra fee-free places while they negotiate a longer-term agreement to reform the sector. Again, you applaud the direction — and in this case, the boldness and the federal–state cooperation — but it’s only a short-term solution.

Another “outcome” was Albanese’s announcement that, as an inducement for older workers to keep working, or retirees to return to work, pensioners will be allowed to earn an extra $4000 — just for this financial year — without losing any of their pension.

Good, but I think the PM is safe from being knocked down by a stampede. For a few months, it might induce some pensioners to put in a few hours a week at some nearby workplace. But why make it so small? Why end it on 30 June? It’s almost as if it was designed to avoid having any substantial impact. It’s tokenism, when big gains are possible from a comprehensive policy to extend working lives for those who want to keep going.

Chalmers and finance minister Katy Gallagher routinely fob off questions about spending proposals such as raising the Jobseeker allowance by declaring sympathetically, “There are lots of good ideas out there, and I wish we could fund them all. But we have inherited a trillion dollars of Liberal debt…”

Someone must call that out. First, Table 9.2 of the 2022–23 budget papers implies that Labor inherited $979 billion of gross debt from the Liberals — but $303 billion of that was inherited in 2013 by the Liberals from Labor (who in turn inherited $64 billion in 2007 from the Liberals, and so on). It’s Liberal and Labor debt. It’s Australia’s debt.

Second, gross debt looks at just one side of the balance sheet — which is why we focus on net debt. Table 9.2 estimates Labor inherited $631.5 billion of net debt from the Liberals, who in turn inherited $161.6 billion of net debt from Labor back in 2013. It’s a cheap, false political point.

But on the first part of its routine line, Labor is right: there are a lot of good ideas out there, and the government can’t fund them all. Its job is to sift through them and set the priorities. And if it picks a bad priority, such as backing the Liberals’ stage three tax cuts, it sticks out like a sore thumb.

These cuts were Morrison at his worst. They do not take effect until mid 2024, yet became law in 2019 — with Labor’s support, because it was frightened of being depicted as a high-tax party. This is the legislation that will give tax cuts of almost $175 a week to someone earning $200,000 a year, and $2 a week to someone earning $50,000.

The Parliamentary Budget Office estimates the cuts will deprive the government of $243.5 billion of revenue — 3 to 4 per cent of budget revenue — over their first nine years alone. The PBO says 78 per cent of that will go to the richest 20 per cent of households: by definition, those who need it least. And that, at a time when the budget is perpetually in deficit, and the government assailed on all fronts for spending too little.

The summit’s speeches ranged far and wide. Many speakers gave interesting accounts of what they were doing, or their experiences dealing with the systems now in place. Highlights are on YouTube, and the entire summit can be seen on Parliament’s video stream.

Transcripts regrettably are not available, except on ministerial websites and those of some speakers. I recommend Danielle Wood’s challenging and probing overview of Australia’s economic potential, which castigated business leaders for their risk-averse “economic funk,” and called for Australia to adopt “full employment as our lodestar” and remember that, if we want to raise living standards, in the long run, “productivity is almost everything.”

Peter Davidson, principal advisor to the Australian Council of Social Service, also made a lot of challenging points in urging Labor to reform the employment services system. “The system [has] not been working for a long time,” he said. “Jobactive was more of an unemployment payment compliance system than an employment service. It sent people out into the labour market and when they didn’t find jobs, told them to search harder. People were literally told: ‘It’s not our role to find you a job.’”

Ross Garnaut’s dinner speech recounted the reasons for Australia’s success in the postwar era, and the challenges reformers faced then — and in the Hawke-Keating era — and now. “I grew up in a Menzies world of full employment,” he recalled. “Workers could leave jobs that didn’t suit them and quickly find others. Employers put large amounts of effort into training and retaining workers. Labour income was secure and could support a loan to buy a house. Steadily rising real wages encouraged economisation on labour, which lifted productivity.”

In the postwar era, and in the 1980s, Garnaut said, “success was based on using economic analysis and information to develop policies in the public interest; on seeing equitable distribution of the benefits of growth as a central objective; and on sharing knowledge through the community about economic policy choices. This built support for policies that challenged old prejudices and vested interests.

“Personal and corporate taxation rates were much higher than before the war. Full employment and a wider social safety net supported structural change and much larger and more diverse immigration… Menzies’s political success was built on full employment — helped by Menzies insulating policy from the influence of political donations to an extent that is shocking today.”

Garnaut ended by exhorting Albanese and Chalmers to follow the path of Hawke and Keating, strong politicians who took big risks to bring in reforms when they were clearly needed. “We have to raise much more revenue while increasing labour force participation and investment,” he said, urging two radical reforms he advocated last year in his book Reset: a guaranteed income scheme, and a shift to cash flow taxation of business.

But Albo is not Hawke and Chalmers is not Keating. Like the business leaders who have dragged down Australia’s business investment to the lowest share of GDP ever recorded, they are risk-averse. Their priority is to retain power, and they see the way to do that is by giving people what they want, not trying to persuade them that tackling tough reforms is in the national interest.

It is possible, though, even likely, that they will end up having no choice. The crisis in aged care, in hospitals, in GP practices, in childcare and in teaching will force an end to governments’ model of saving money by underpaying those who work for you (or whose wages you pay indirectly). Australia’s system of doing government on the cheap has been tried, and failed. We are going to have to learn from how the rest of the West does it, and that means raising taxes.

Many have noted that the Hawke government, like this one, began its term by staging an economic summit, which brought business and union leaders to Old Parliament House with the similar aim of “bringing Australia together” to tackle its economic problems. But we should also recall that its follow-up two years later was to invite a similar cast for a tax summit.

That is what Albanese and his team should start planning for. We cannot solve our problems without an honest national dialogue on the need for higher taxes, and where we should be looking for increased revenue. It could be combined with the announcement of a super profits tax on mining companies and the big banks. Reform needs to start now. •

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As anyone with a HECS debt can tell you, education is no longer a process. It’s a commodity. At the non-compulsory ends of the education spectrum — early childhood at one end, university at the other — education is a business enterprise, even if the business is run on a not-for-profit basis. What if the right “policy lens” could help us understand the pressures and the competing interests better? Would that help us to better plan and deliver education and care to young children? After reading Neoliberalism and Early Childhood Education, my answer is a qualified “yes” — accompanied by nagging thoughts about where this book could have taken us.

Guy Roberts-Holmes and Peter Moss set out to do something potentially very powerful: to “emphasise the significance of the political and economic for early childhood education.” But their book is not a straight work of analysis: their purpose is forcefully subversive. They are here to explain not only how neoliberalism operates in early childhood education and care, but also how to resist it. They want to convince the rest of us that neoliberalism is “deeply problematic, eminently resistible and eventually replaceable.”

A historian by training, Peter Moss has devoted his academic career to interrogating the assumptions and ideologies that underpin early childhood policy and practice. His colleague at University College London, Guy Roberts-Holmes, is a former early childhood teacher who entered academia after several years working with children. They therefore bring experience to bear, along with a strong sense of mission.

The revolutionary framing might seem odd for a book about the early childhood education and care sector. At times, it feels that way — particularly when Roberts-Holmes and Moss draw their bows too long. Nonetheless, the pairing of these two subjects — neoliberalism and early childhood education — makes sense. As the authors note, neoliberal economics is the lingua franca of policymakers across the globe, and education systems have not escaped its reach. While there are piles of analysis on neoliberalism in the university sector and in schools, preschools, kindergartens and long daycare centres have received relatively little attention.

For those not familiar with how neoliberalism grew from a boutique economic theory to a manual for business and government, Roberts-Holmes and Moss only skim the surface. But they get away with it because they are writing not so much about neoliberalism as about resisting the dominant paradigm — which, at the moment, happens to be neoliberalism.

The authors define neoliberalism as a “meta-narrative” that “reduces everything to the economic.” The market mediates both economic and social relations, and citizens are replaced by customers. Their analysis has a strong sociological bent, and it takes a wide frame, describing “the conversion of non-economic domains, activities and subjects into economic ones.”

Roberts-Holmes and Moss survey the school education system to provide context for their study and get a head start on building their thesis. They are mightily displeased with what they see, mapping neoliberalism’s “infection” of education systems across the developed world, tracing it through the spread of policy ideas and assessment tools like the OECD’s Programme for International Student Assessment, known as PISA.

The book focuses heavily on Britain, although the policy environment there is familiar enough to be accessible for Australian readers. Elements of the story will ring a bell (or, for some, welcome heralds of change) among Australian readers. These include national control of previously disparate and diverse school curricula; standardised national testing; and a relentless narrative of “parent choice” in school selection, even in the public sector.

For the authors, the “marketisation” of early learning and care is objectionable largely because it has fostered the emergence of private, for-profit providers, who compete with government and not-for-profit providers in a mixed market. In Britain, the number of private providers skyrocketed over the course of the 1990s, driven by demand from working families. By 2019, commercial providers accounted for 82 per cent, by value, of the long daycare sector.

The private sector has not come to such prominence everywhere. In Germany and Norway, for example, not-for-profit providers still dominate early learning and care. Roberts-Holmes and Moss demonstrate market similarities across the Anglosphere, from the United States to Ireland, Australia and New Zealand, but private capital has also found opportunities elsewhere across the globe, particularly in Asia. By 2013, two-thirds of the kindergartens in China were privately owned.

So how and why did the private sector come to play such a significant role in early learning in so many countries? As the authors show, where rapid expansion of the early learning sector was required it was private providers who were ready to move quickly enough to meet demand. The dynamic runs thus: the government neglects early childhood education and care; the government has an epiphany and realises it needs more of those services, in a hurry; private capital mobilises to meet demand.

While Roberts-Holmes and Moss are trenchant critics of neoliberalism, they also argue that, even if we accept the terms and tenets of orthodox economics, the operation of the open market in early childhood education and care is not “a roaring success.” The authors identify particular elements of market failure in the system, beginning with the fact that competition can’t drive down costs for parents because staffing is by far the largest expense for all providers, and pay and conditions for early childhood educators can’t be cut any further.

Using research from Europe, they also highlight the role of poorly informed consumers in driving the market. Parents are generally time-poor and find it difficult to compare the quality of competing early learning and care services. They are a long way from embodying Homo economicus, so they have little capacity to drive up quality by only purchasing services from the best providers.

Neoliberalism and Early Childhood Education includes a detailed account of the governance and assessment systems for early childhood and school education introduced in England over the past twenty-five years. For Roberts-Holmes and Moss, the very notion of national frameworks, curricula and quality standards — and the data they generate — is frightening. Disturbed by this evidence of intensified “surveillance capitalism,” they predict that our current trajectory will lead us to “monitoring and measuring children’s emotions” and trying to make them more “compliant,” and to “mass surveillance of school populations.” It’s sweeping and Orwellian. It’s also a shame they didn’t look further afield, to Australia.

Australia has leapfrogged most of the world in codifying and regulating high-quality early learning and care, via the National Quality Framework, a rigorous set of principles, policies and practices designed to ensure high-quality early learning and care for children. The curriculum document that underpins the Australian system, the Early Years Learning Framework, does not (as Roberts-Holmes and Moss might expect) reduce young children to passive, two-dimensional economic units. It treats them as capable, wonder-filled people and active citizens. Interviews with the highly respected team of Australian pedagogues who developed the Early Years Learning Framework might have provided a very helpful counterweight in this book.

Of course, the book contains a kernel of truth. Measuring human beings’ attributes, knowledge and performance is highly contested territory, and has been for millennia. But the idea that we mustn’t engage in any measurement at all, because it is invariably reductionist and a neoliberal trap, removes any possibility that we can improve children’s learning, wellbeing and development by assessing what we’re doing right now.

The sense of doom grows as the book develops. Neoliberalism has forced us to see the long daycare centre or preschool as “a factory or processing plant… that will ready children for the future.” Roberts-Holmes and Moss loathe the term “school readiness,” and they have a point: it’s dangerous to imagine that early childhood education and care services should, for example, teach children to read and write. It’s also sound to insist that children are not “empty vessels” who need to be filled with knowledge and skills before they start school. But I’m not sure that most commentators in Australia have that in mind when they speak about “school readiness.” Mostly, people who talk or write about the importance of pre-primary education want to see children arrive at school confident and happy, ready to thrive and learn.

Roberts-Holmes and Moss also take a swipe at Nobel Prize–winning economist James Heckman. The “Heckman curve” has proven a very effective tool in explaining the importance of investing public funds in the first five years of a child’s life. But Roberts-Holmes and Moss are having none of it — not even in relation to children in vulnerable and disadvantaged circumstances. In fact, they dismiss talk of early education as a leveller, or a tool of equality of opportunity, because it “negates the need for more radical political measures,” such as government redistribution of wealth. To be sure, a Marxian approach would even things up, but in the meantime, is it so wrong to want all children to have the same chance at getting a high-quality early education?.

The final chapter of the book is a call to action, with the authors asserting that “neoliberalism is entering into crisis” and that “the end may well be nigh.” (Those who claimed the same at the time of the global financial crisis, only to be disappointed, might disagree.) Drawing heavily on Foucault, Roberts-Holmes and Moss call on their readers to resist. They hold up the prospect of radical action to create alternative pathways for early childhood education and care: for example, “scrapping a system of commodified private services competing in a market-place,” and replacing it with “a system of early childhood services based on cooperative networks and public provision.”

Their method for achieving this? To redirect public funding away from the private for-profit sector. Confusingly, they concede that “private, for-profit services will continue to exist and can continue to compete with each other, but will do so without the benefit of public money or public encouragement.” This raises the obvious question: if the goal is to create a nirvana for all children, why develop a bifurcated system? And which children get the “good” early learning and care (provided by government and community groups) and which get the “bad” alternative?

The conclusion highlights a weakness woven throughout the book: the binaries of “good” and “bad,” and what they gloss over or ignore. For example, Roberts-Holmes and Moss lament the rise of competition and choice in the early childhood education and care sector, looking back wistfully to the old days (pre-1980s) when parents simply enrolled their child in “a good local centre, perhaps provided by the local council, along with other children from the neighbourhood — a public service for the community.” But what if that local centre wasn’t so good? What if its opening hours didn’t match that parent’s work commitments (or job aspirations)? What if the “neighbourhood” was in a low socioeconomic status area and the council couldn’t invest the resources required to meet the needs of all those children?

For the authors, it’s as though neoliberalism has wiped the slate clean, leaving us in a wasteland dominated by new technocratic, managerial structures that are killing us. Neoliberalism has certainly draped itself like a veil over the top of what we already had in the West: community, government and economy (none of it perfect, mind you). But it hasn’t suffocated the world as we knew it. Parents still care about their children; early childhood educators are still interested in children’s welfare; early childhood education and care services still deliver good services for children and their families.

In essence, Roberts-Holmes and Moss over-egg the pudding. In order to demonstrate that neoliberalism has changed and challenged the early childhood education and care system, it isn’t necessary to prove that it has sucked all the goodness out of it. Because it hasn’t. As a piece of polemic, this book is impassioned; as a work of analysis, it is often frustrating; as a roadmap for how to improve early childhood education and care, it is incomplete. But the book is certainly thought-provoking — and perhaps this is what really matters, because any discussion about the importance of early childhood education and care is to be welcomed. •

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But much of the debate about how to close this gap misses the bigger point. By focusing on retirement income policy — especially superannuation — it focuses on the symptom, not the cause.

The gender gap in retirement can only be fully understood in the context of the gender gap in lifetime earnings. The size of that gap is even more striking: an average woman with children, for example, earns $2 million less over her lifetime than an average man with children. Women are financially vulnerable even before they retire, and tinkering with super rules won’t fix that fundamental problem.

But the government has some tools to close the gap at its source, starting with the biggest economic reform available: cheaper childcare. High out-of-pocket childcare costs are the single biggest barrier to secondary earners, most of whom are women, taking on more work. The barrier is so high that in a household where both parents have a full-time earning capacity of $60,000, the second earner would be working for about $2 per hour on her fourth day in a week, and for free on her fifth day.

Raising the childcare subsidy from 85 per cent to 95 per cent for low-income families, flattening the taper, and removing the annual cap, as Grattan Institute has recommended, would ensure 60 per cent of families would pay less than $20 per day for childcare. We estimate these changes would cost an extra $5 billion a year and deliver a GDP boost of about $11 billion a year — and, crucially, an extra $150,000 of lifetime earnings for the typical mother.

If the government were looking for a smaller step in the right direction, it could consider making childcare free for second and subsequent children, recognising that childcare is especially expensive for families with multiple children in care.

A more equal government-funded paid parental leave scheme would also help. We recommend six weeks reserved for each parent plus twelve weeks to share between them, paid at the current rate of the minimum wage. Overseas experience shows that more equal sharing of care early on establishes habits for life.

By supporting women who would like to do more paid work, these reforms would go a long way to closing the gender gap. KPMG estimates that 39 per cent of the gap is the result of caring responsibilities, including career interruptions, part-time employment and unpaid care.

But the gap exists even for women and men who spend the same amount of time in paid work. This problem is harder for governments to fix, since much of it plays out in the private sector and is a result of prevailing norms. KPMG finds that 39 per cent of the gap can be attributed to explicit or implicit discrimination, since it can’t be explained by either the type or the amount of work.

But another 18 per cent of the gap reflects the difference in pay for male- and female-dominated occupations and the undervaluing of traditionally “female” jobs. This is something the government does have some power to change, because it is either directly or indirectly responsible for a large share of wages in the female-dominated care sectors. Care jobs historically have had very low remuneration despite their importance and complexity. We have recommended a review of pay and conditions in care sectors, including how to finance higher pay.

Other changes to retirement income policies can make a difference downstream. A case exists for paying super contributions on government-funded paid parental leave, for example, as already applies to other forms of remuneration. But a Grattan analysis shows that these payments would yield only modest income gains because they would be offset by lower pension payments after retirement. A high-earning woman who takes two stints of leave in her early thirties would get an extra $356 a year in retirement, a low-earning woman $164 a year, and an average-earning woman just $73 a year.

Another long-overdue change — abolishing the $450-a-month threshold for paying compulsory super, which can’t be justified in a world of electronic payrolls — affects almost twice as many women as men. Abolishing it would increase retirement incomes for affected workers by between $100 and $300 a year — another modest improvement.

Both those reforms would help, but only at the margins. Instead, the real priority when it comes to the gender gap in retirement is closing the holes in the social safety net for older women who are approaching retirement or already retired.

Single women who don’t own their home are at greatest risk of poverty in retirement and are the fastest-growing group of homeless Australians. Raising the rate of Commonwealth Rent Assistance by at least 40 per cent would lift the incomes of those women by at least $1300 a year, or about 5 per cent.

These changes to retirement income policy would tackle some of the most acute symptoms of the retirement gender gap. But the economic gaps between men and women begin much earlier.

The problem has no quick fix. It will require ambitious and often expensive changes. But unless we drastically reduce the lifetime earnings gap, we can expect to be papering over the retirement income gap for many decades to come. •

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As we celebrate International Women’s Day, we should recognise the economic pain women have borne through this crisis. They were more likely to lose their jobs, more likely to pick up extra unpaid work, and less likely to get government support.

It isn’t too late to right the wrongs. In a new Grattan Institute report we argue that federal and state governments should boost support for women’s employment to build a broader recovery and avoid exacerbating economic inequalities between women and men.

Women were more likely to lose paid work during the pandemic because they are more likely to work in the “social consumption” businesses that were forced to scale down operations or close entirely during lockdowns. About two-thirds of hospitality and personal service workers, for example, are women.

Women are also more likely to have part-time or casual jobs, which were much more vulnerable than full-time jobs. And that meant they were much more likely to lose jobs and hours than men, and less likely to be eligible for JobKeeper.

Since lockdowns lifted, the employment bounce-back has been faster than expected. But it is still incomplete. In January, 55,000 fewer women were in work than before the crisis, and 9000 fewer men. Unemployment and underemployment remain too high for both women and men, and are expected to stay that way for years.

Most of the industries that continue to be affected by restrictions — higher education, tourism and hospitality, for instance — employ a majority of women. Prominent among the vulnerable groups that haven’t experienced a bounce-back are single parents, 80 per cent of whom are women.

The divergence between men and women at work has been compounded by a divergence at home. Women already did the lion’s share of housework, caring and other unpaid work. With many adults working from home during the crisis, and children learning from home, that load only grew. Everyone did more, but women, and especially mothers, took on a bigger share of the extra work.

More unpaid work means less time for employment and education. Many women reduced their paid hours, left the workforce altogether or stopped studying. These choices, made out of short-term need, have long-term ramifications for women’s earnings, careers and economic security.

For many women who lost jobs or reduced their paid hours, 2020 will be another interruption in a stop–start career. And that means a wider earnings gap between men and women: even six months out of work can add another $100,000 to the $2 million average lifetime earnings gap between men and women.

What can be done? In the short term, governments must give priority to reducing unemployment and underemployment as quickly as possible. More stimulus is likely to be needed, and governments should take this opportunity to build a broader recovery.

The extra spending should be targeted to the sectors that are still struggling, many of which are major employers of women. This could include vouchers to encourage spending on hospitality, tourism and entertainment, and temporary expansions of social programs and services.

The federal government should also strengthen support for people who are still out of work. It should expand the JobMaker hiring credit and, as has been widely advocated, further increase the JobSeeker payment and Commonwealth Rent Assistance. This would boost economic activity, help unemployed people to look for work, and improve the living standards of Australia’s most vulnerable people, including single mothers.

As they focus on rebuilding in the longer term, governments should invest in the care economy to boost economic growth and improve the living standards of all Australians, while reducing women’s economic disadvantage. Making childcare cheaper is the most significant thing the federal government can do to support women’s employment. Investment in aged care is also urgently needed and would create jobs for women while improving the living standards of older Australians.

So far, the federal government has failed to meaningfully tackle the economic costs borne by Australian women in the Covid-19 recession. It should use the next budget, due in May, to ensure Australia really does build back better. •

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The biggest budget announcement is full immediate expensing of business investments, at a cost of $26.7 billion in just over two years. Under the scheme, almost every company in Australia will be able to immediately write off in full any eligible depreciable asset. Bringing forward depreciation reduces the real cost of investing for firms, particularly in long-lived assets such as plant and equipment. Similar schemes have proven effective in boosting business investment and employment.

The plan to offer wage subsidies to firms that hire workers under thirty-five should boost employment. Young people have been hardest hit by the Covid-19 recession, and are at the greatest risk of scarring should they remain out of the workforce for an extended period. The government will subsidise the wages of newly employed workers to the tune of $200 per week for new employees under thirty, and $100 per week for those under thirty-five, so long as they are employed for twenty hours a week or more and are a net addition to the payroll. This will support employment, but it’s a big step down from the JobKeeper wage subsidy, which is scheduled to be phased out by March next year.

Each of these measures will support employment and investment. But most striking is what’s been left out of the recovery plan for now, especially more direct measures to boost employment, and support for household spending beyond next year.

The plan to bring forward $13 billion in personal income tax cuts will help, but the extra money for middle-income earners won’t flow through until mid next year. Further cash handouts of $250 to pensioners and carers, in December and again in March 2021, should also boost spending, although many pensioners proved reluctant to spend the first two tranches in April and July. But there’s little in the budget beyond the end of next financial year to keep households spending.

So what’s missing?

Social housing is the most obvious absentee, given it can be rolled out quickly and delivers something that is desperately needed. Industry forecasts suggest that 12 to 18 per cent of all construction workers could lose their jobs in the months ahead, as the pipeline of apartment buildings starts to dry up. The government should have committed to build 30,000 social housing units, at a cost of $10 billion, to quickly fill that hole.

Boosting the childcare subsidy to reduce parents’ out-of-pocket costs is among the more significant economic reforms the government could have announced. More direct spending on government services like mental health and aged care would also have been a proven job winner. Instead there’s another $10 billion for major road projects, where capacity constraints are already biting.

The question of what happens to the JobSeeker benefit remains unresolved. More than a million Australians are benefiting from a temporary $250-a-fortnight boost to JobSeeker from the coronavirus supplement, but that’s due to end in December. The government says it will make an announcement closer to Christmas, but the lingering uncertainty will crimp households’ spending in the meantime.

Support in the budget is so heavily concentrated in the short term that policy decisions taken since the Mid-Year Economic and Fiscal Outlook last December actually improve the budget bottom line in 2023–24.

At least some further spending in some of these areas is almost inevitable in the coming months. Beyond JobSeeker, the Royal Commission into Aged Care is all but guaranteed to recommend substantial further funding for aged care when it reports next February.

But perhaps the biggest concern with the budget is that it simply settles for getting back to the pre-Covid era, and takes nearly half a decade to get there.

While the government expects unemployment to peak at just 8 per cent by Christmas, it’s still expected to remain above 6 per cent by the end of 2022, and be 5.5 per cent by mid 2024. Yet those who can still remember pre-Covid Australia will remember the economy back then was nothing to write home about. The jobless rate averaged 5.5 per cent over the five years to February 2020, and the average worker’s wages rose by just 0.3 per cent a year (after inflation) over that time.

Unemployment of 5.5 per cent in four years’ time would remain well above Treasury’s “full employment” estimate of 5 per cent, so it’s no wonder real wage growth is forecast to flatline over that time. Even for people in work, living standards are expected to stagnate.

The government should inject a further $50 billion in fiscal stimulus by the end of 2022. This could drive unemployment one percentage point lower, kickstarting growth in wages nearly two years earlier than under its current plan.

Concern over the cost of public debt shouldn’t hold the government back. Australia is expected to spend 0.9 per cent of GDP on interest this financial year, falling to 0.8 per cent by 2023. That’s lower than the 1 per cent it spent in 2018–19, despite a big growth in debt. And debt is expected to shrink as a share of GDP over the next forty years, despite projections that interest rates will gradually rise from 1 per cent today to 5 per cent within the next two decades.

Budget 2020 is a good start, but there’s plenty of unfinished business. There remains more work to do come MYEFO in December, and the 2021 budget in just seven months’ time. •

Brendan Coates is Household Finances Program Director at Grattan Institute.

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In the chair was Justice Elizabeth Evatt, who would become the first chief judge of the Family Court of Australia in 1975. She was joined on the commission by Anne Deveson, a trailblazing journalist with a passion for social justice, and Felix Arnot, the progressive Anglican archbishop of Brisbane. Their terms of reference were extremely broad: they had to examine the “family, social, educational, legal and sexual aspects of male and female relationships,” with a focus on sex education programs, medical training in sexuality, family planning, pressures on women in relation to children and family, and the legal and medical status of abortion.

The commission invited Australians to tell them “what do you think?” about sex, abortion, family life, family planning, parenthood, childcare, women’s rights and homosexuality.” People responded to this call in many ways. They gave evidence in person. They phoned in. They participated in research. They wrote official submissions that were available to be read while the commission was sitting. All of this material informed their final recommendations — more than 500 of them, published in five hefty volumes, that caused a sensation when they were finally released in 1977.

The submissions were as diverse as the people who wrote them. Whether they were typed on letterhead, or handwritten on floral stationery or in block letters on plain paper, they expressed a range of emotions: love, anger, loneliness, bewilderment, determination. People wrote with ideas for how to make human relationships better. They wrote to plead for political and social change or, sometimes, to prevent it.

When submissions arrived at the commission’s offices in Sydney, they were numbered and sorted into folders. The submissions on abortion offer a snapshot of the community’s polarised views. The push to liberalise abortion laws at the very beginning of the 1970s had inspired the formation of groups who challenged reform, such as Right to Life Australia. On the day parliament debated the abortion bill, women’s groups constructed a “women’s embassy” on the lawns of Parliament House, an appropriation of Indigenous protest strategies that dramatised women’s exclusion from the debate taking place inside the parliament. But they were outnumbered by their Right to Life opponents, who reportedly sent thousands of letters and telegrams to MPs urging them to reject any reform.

So it is unsurprising that many Australians wrote to the royal commission to oppose any liberalisation of abortion law on the grounds that it was a moral affront that would undermine the traditional family. These letter writers saw abortion as a “degrading” practice that lowered the “moral standard” of the family, and of society more broadly.

In contrast to this language of family, nation, and moral standards were other submissions, like this one from “Mary,” which was later included in Anne Deveson’s book about the royal commission, Australians At Risk:

Here is a personal testimony of what I had to go through to get an abortion in 1965. I was over forty three years old, but had a very young family; a girl under nine and a boy four. My loving partner was an alcoholic who made my life painful and unbearable, without hope or future.

Falling pregnant again, Mary had searched without success for a doctor who would terminate the pregnancy, her mental health deteriorating rapidly. When she finally obtained the abortion, she found that the doctor had also given her a hysterectomy without her consent. “I was given no explanation for this and no psychological follow up,” she wrote. “I hope no other woman has to live through a similar experience… [M]y nightmare of four months has given me the impetus to fight for abortion law appeal.”

In writing to the commission, Mary placed a deeply private memory on the public record to make a claim for abortion law reform. Other men and women wrote with similar intentions. Women who had experienced violent relationships narrated their experiences with uncaring police. Gay men and women wrote of the shame they felt concealing their sexuality. Mothers wrote about the difficulty of balancing family and work.

While the commission took testimony from doctors, social workers and other recognised experts, many of the people they heard from were ordinary citizens whose authority to speak derived from their private experiences. Many of these people were not only heard through their submissions, they also contributed to the commission’s public hearings, which attracted consistent media attention.

The commission enacted a kind of public intimacy similar to that which animated many of the social movements of the decade. It was a new way to talk about private life and about a new political strategy. It is best summed up by the women’s liberation slogan, “The personal is political,” an insight that emerged from “consciousness-raising,” the group discussions of personal life used to build political communities.

Women’s liberation and gay liberation were animated by this idea. The idea that the personal was political made Australians rethink the boundary between public and private. It changed our political and social life. All too often, though, this change has been obscured when we tell the national story of the 1970s.

We have long viewed the 1970s as a decade of political upheaval, centred on the drama of the dismissal of the Whitlam government on 11 November 1975. More recently, a second narrative of the 1970s has also taken hold. This story, told by Paul Kelly, George Megalogenis and other journalists, foregrounds the economic upheaval of the period — the stagflation, the end of the long postwar boom, the oil shocks — to frame the 1980s and 1990s as an era of crusading deregulatory reform.

Forged in the wake of the ground-breaking reforms of the Hawke–Keating governments a decade later, in the 1980s, this narrative reflects the centrality of economics in our framing of contemporary political life. Those reforms needed a genealogy, and portraying the 1970s as a decade of economic failure provided one.

I’m not suggesting that this story of the 1970s is inaccurate, or that the pain that the economic downturn caused was imaginary. But we construct historical narratives to serve our purposes in the present. This one was crafted to persuade us of the necessity — and success — of that later wave of economic reform. Today, as we tally the costs of deregulatory economic reform, we might write this history differently.

The economic narrative also obscures the extent to which the seventies was an extraordinary era of social reform and social contest. The decade saw the emergence (or reawakening) of many social justice movements. Many of our fundamental ideas about marriage and sex were challenged. Movements such as women’s and gay liberation reshaped our social norms and our political culture, even if their impact was partial and uneven. It was a turning point in the history of modern Australia, and fundamentally changed how we view private experiences and recognise the distinctive needs of women, children and people with different sexual orientations.

While none of these revolutions is complete, the struggles they animated reshaped Australia. But because we have tended to investigate these changes separately, rather than cumulatively, their collective impact has been more difficult to gauge. This relative neglect of the social transformations of the 1970s is even more striking when we think about the many ways that public discussion of issues previously considered private have shaped contemporary political and social debate.

Think of the recent explosion of stories using the hashtag #MeToo. The long campaign for marriage equality. The Royal Commission into Institutional Responses to Child Sexual Abuse. Domestic violence. Today, the politics of private experience takes up a lot of space in public life. Public discussion of these issues is characterised by an emphasis on personal testimony —individuals speaking publicly about private experiences.

Think of Chrissie and Anthony Foster, advocates for survivors of institutional child sexual abuse, or Rosie Batty, the 2015 Australian of the Year, who found a public voice as a woman who had endured domestic violence. The marriage equality campaign used ordinary people’s love stories to encourage Australians to vote “yes.” And #MeToo resonated so strongly because it gave women who had experienced sexual assault a platform for sharing personal stories.

It was in the 1970s that our ideas of what was “public” and what was “private” began to change. Women’s liberation and the gay and lesbian rights movement criticised the idea that things that happened in private were beyond the realm of politics.

“The personal is political,” the title of an essay by American feminist Carole Hanisch, was one of the most famous formulations of the Women’s Liberation Movement. It destabilised a foundational concept of modern political culture: the notion that there were two separate spheres of life, public and private. In this formulation, the public was the space of politics, government and paid work; the private was the place for intimacy and domesticity. The division between the two was strongly gendered, reinforced by ideology and government policy.

Citizenship is key to understanding these changing ideas of public and private. For much of the twentieth century, Australian citizenship was defined in exclusionary ways by ideas not only about race but also about gender. Historically, Australians’ rights to welfare, for example, were determined by gender as well as race. The foundational Harvester judgement of 1907 insisted that male wages should be determined by the needs of a male breadwinner with a wife and dependent children. This system — a form of social welfare – ensnared women as dependents of their husbands, as Marilyn Lake and other historians have demonstrated. In response, white women argued for special rights and protections (such as maternity allowances) on the grounds of their valuable national service as mothers, which further reinforced the gendered division between public and private spheres.

The assumption of male power within the family also left women and children vulnerable to abuse: domestic violence and rape in marriage, for example, were often viewed as “private” matters rather than crimes — indeed, rape within marriage was not criminalised nationally until 1991. And “privacy” was not an equal right: in some cases, it perpetuated oppression.

Across the 1970s, our ideas of what was “public” and what was “private” began to change. Second-wave feminism criticised the idea that what happened in private was beyond the realm of politics. As the split came into question, so too did the ideas of citizenship that had developed from it. Feminists no longer argued that motherhood was the basis of women’s contribution to the nation; gays and lesbians argued that keeping their sexuality “private” was oppressive and harmful.

Challenging and contesting the boundary between public and private life was central to the liberation movements of the 1970s. The changes they wrought in Australian social, cultural and political life are the subject of my book. It asks: how did the personal become political, and how did this change reshape the boundary between public and private life? How did this reshaping of what we thought of as public, and what we thought of as private, transform Australia in the late twentieth century?

These movements brought the personal to bear on the political in new ways. The shift rewrote our expectations of government and generated new ways to “do” politics and to become political. Women, in particular, emerged as a distinctive constituency with their own political demands: for women’s refuges, childcare centres, equal pay, and a host of other reforms. These new demands of government didn’t just change women’s lives — they changed our politics, the role of the state, and how we thought about citizenship.

They also created new kinds of political allegiance that didn’t always map neatly onto a male-dominated politics of left and right, Liberal and Labor. While Gough Whitlam appointed a women’s adviser to his staff, for example, many Labor MPs remained vehemently opposed to abortion. Later in the decade, prime minister Malcolm Fraser faced feminist opposition within his own party as he struggled to limit government spending on women’s services. The new politics of private experience carved new allegiances across long-standing political divides, and it continues to do so in often unpredictable ways.

These changes have not always been progressive. We can easily mistake decriminalisation of homosexuality or the Sex Discrimination Act as moves towards “equal rights” when in fact they didn’t guarantee these rights. The rights movements have been overwhelmingly white, though they have had vocal Indigenous critics (and sometimes participants).

The emergence of neoliberal economic prescriptions in the late 1970s also stymied and distorted many of the women’s movement’s key reforms. Childcare, demanded by mothers as a right to respite from the work of motherhood as much as a workplace entitlement, was soon tied to the goal of increasing women’s workplace participation and alleviating the “burden” women placed on the welfare system.

By the end of the 1970s, the ground had shifted beneath the feet of the liberation movements, and the logics of competition and deregulation had changed the framework of possibility for revolutionary gender and sexual politics.

To be interested in the 1970s, then, as the American scholar Victoria Hesford noted, “is to be interested in the alternatives offered to what has become our neoliberal present.” The seventies can provide us with a roadmap to understand the present day, but the era also gives us a glimpse of a different way of thinking about the nation, a way of imagining national belonging outside the framework of efficiency and productivity.

There are many ways to tell this story, but here I will focus on three case studies to show how these movements and campaigns reshaped Australian politics and conceptions of citizenship: early campaigns for homosexual law reform, feminist struggles to fund women’s refuges, and the emergence, in the late 1970s, of organised anti-feminist women’s groups. All reveal how the shifting line between private and public — between the personal and the political — reshaped both Australian politics and experiences of private life in the 1970s. Together, they show how the meanings — and the political uses of the private — changed over the period, with unpredictable consequences.

In the 1950s, according to the historian Graham Willett, homosexuality was “carefully excluded” from public life in Australia. Yet by the late 1960s, it had become an issue that many activists, civil libertarians and politicians believed needed to be “dealt with” through legislative reform. Why did this change take place? And how did homosexual people themselves emerge as part of these campaigns for decriminalization and equal rights?

Several factors were at play in the change, but perhaps most important was the gradual emergence in the 1960s of a liberal-minded middle class in Australia, members of which worked for reform in a number of areas, including civil liberties. On the question of homosexuality, they were guided by the Wolfenden report into sexual offences and prostitution, released in Britain in 1957. Wolfenden took as its guiding assumption the liberal view that homosexuality was determined by biology or childhood rather than “choice.” “It is not the function of the law to interfere in the private lives of citizens…” it declared. “[T]here must remain a realm of private morality and immorality which is not the law’s business.’

The report received surprisingly strong media and even religious support, but even with this backing, the British parliament was very slow to enact its recommendations, only passing the Sexual Offences Act in 1967. But that legislation came at an ideal time for Australians seeking similar reform here. The local call to decriminalize homosexual acts “between consenting adults in private” was, as Willett noted, lifted straight from the language of the Wolfenden report, and the earliest organisation to campaign for this change was not made up of gay men and women but of Canberra-based civil libertarians.

The Homosexual Law Reform Association of the ACT, formed in 1969, was one of the earliest organisations to campaign for homosexual law reform in Australia. Yet, as founder Thomas Mautner, a lecturer in philosophy at the ANU, stated, “we are not a society for homosexuals, and to my knowledge, no member of our committee is a practising homosexual.” The group argued for homosexual law reform on a platform of the right to privacy and protection of civil liberties: for homosexuality as a practice to be legal but publicly invisible.

When the pioneering gay rights organization CAMP — the Campaign Against Moral Persecution — was founded in 1970, only two of the founders were willing to be publicly identified in a newspaper profile in the Australian. Yet CAMP was different from the ACT reform group, because its members were themselves gays and lesbians. CAMP sought a new public visibility for homosexual people: in their first newsletter, Camp Ink, the group stated that: “the overall aim of CAMP INC is to bring about a situation where homosexuals can enjoy good jobs and security in those jobs, equal treatment under the law, and the right to serve our country without fear of exposure and contempt.”

By the early 1970s, gay activists were “coming out” rather than staying “private,” a brave move when male homosexual acts were still against the law. Being gay, then, was no longer simply a matter of what you did in private, but part of one’s intimate identity that could not be confined to the private sphere. The personal became political. Within just a few years, gay men and women were making submissions to government inquiries, including the Royal Commission on Human Relationships, and were seeking visibility, not privacy, to alleviate their oppression.

Women were also demanding new rights and protections from the Australian government. In 1973, Gough Whitlam was the first national leader in the world to appoint a dedicated women’s affairs advisor, the talented Elizabeth Reid. Reid worked within the government while activists worked outside it: both were equally important to the feminist reforms achieved during the Whitlam era.

The scale and scope of women’s activism in this period was immense, but I want to focus here on the development of women’s refuges, because they emerged from feminist theorising of the relationship between the private and the public, the personal and political.

While domestic and family violence has a very long history, it was reframed by the women’s movement in the early 1970s. The movement offered a new, structural analysis of domestic violence and a new response: the women’s refuge. Australia’s first women’s refuge was established in March 1974, when a group of Sydney women’s liberationists took possession of two houses in inner-city Glebe, establishing a refuge they named Elsie.

Feminist refuges like Elsie represented a new response to domestic violence: church-run women’s shelters had existed for decades but they focused on bringing families back together after violent incidents and offered no structural analysis of the problem of men’s violence against women and children. Women’s refuges were crucial to making the “private” problem of family violence visible in public: they drew attention to violence, but also to the lack of effective responses and protections for victims. Refuges sought to remove the protection of the private sphere — and its attendant shame — that allowed these crimes to continue, unprosecuted. Within a year of Elsie’s creation eleven women’s refuges had been established around Australia.

But even as women’s refuges quickly proved an indispensable response to the endemic problem of domestic violence, they remained a feminist innovation that sat uneasily within existing patterns of government service provision. Were they a health, housing, welfare or childcare service? Refuges served all these functions and more, but the integrated, overlapping nature of the work they performed made it difficult for them to secure government funding from a single agency or department. Even after refuges had some success in obtaining federal government funding, Australia’s system of federalism, where funding for health and other services is collected by the Commonwealth but administered by the states, produced significant funding inequalities across the country. Progressive state governments, like that of New South Wales, allocated considerable resources to women’s refuges, while others, like Queensland’s, did not.

Complicating the picture even further was the federal government’s shifting position on funding. Women’s refuges constantly had to pursue and defend state funding for their service in the face of threatened (and actual) funding cuts, and the Commonwealth ceased all dedicated federal funding for refuges in 1981–82. It would be more than a decade after the first refuge was founded before governments took any policy action on domestic violence beyond limited funding to refuges. Activists succeeded in politicising male violence against women in the 1970s, but securing stable government support for refuges would be an ongoing, and difficult struggle.

The struggle over refuge funding was a microcosm of the larger problem for the women’s movement. The mid 1970s was a moment of reckoning, with feminists facing a Liberal government that they feared would be less sympathetic to their demands for state support for women’s services. What they didn’t yet understand was that the mid 1970s was also the beginning of a seismic shift in western politics. The stagflation and recession of those years undermined the longstanding Keynesian consensus of the postwar period.

New economic prescriptions emerged, insisting that free markets, not state intervention, were the keys to greater efficiency, prosperity and freedom. By the early 1980s, a noisy faction of economic “dries” had emerged within the Liberal Party, emboldened by the economic downturn — and the lack of effective policy responses to it — that had overwhelmed Malcolm Fraser’s final term in office.

The feminist public servant Sara Dowse called this shift the “monetarist ascendancy.” Diverse groups including libertarians, devotees of the free market and moral conservatives all believed that policies and services designed to promote social equality were not only to blame for the poor economic conditions but also ran counter to conventional Liberal ideals of self-reliance and individual rights.

Shrinking the state would have particular implications for women, who had only just secured government funding for childcare, refuges and health centres. Reductions in these services would mean that women would once more be expected to shoulder the burden of family care and domestic labour. This dovetailed with conservative calls for women to renew their embrace of home and family. It was in this charged ideological space that anti-feminist women’s groups emerged and found a brief moment of political influence in Australia.

Two groups gained particular prominence: The Women’s Action Alliance, formed in 1975, and Women Who Want to Be Women, formed in 1979. While they were small, they exerted a measure of political influence: for example, Margaret Slattery, a member of the Women’s Action Alliance was appointed to Malcolm Fraser’s National Women’s Advisory Council in 1980, and members of these organisations were active in women’s groups in the Liberal Party. If we are to understand the impact of the women’s movement from the 1970s onwards, especially how it ruptured and remade the foundational categories of “public” and “private” and reshaped women’s citizenship identities, we must also consider the ways that this opened up possibilities for new kinds of anti-feminist activism for women.

Both Women’s Action Alliance and Women Who Want to Be Women were staunch and persistent in their advocacy for women they believed were neglected by feminism: stay-at-home wives and mothers. They sought to connect their activism to older traditions of maternalist politics while simultaneously presenting themselves as political outsiders, who had been displaced by upstart feminist activists. Depicting themselves in struggle against feminist “insiders” within government gave them greater credibility in their quest to gain influence over women’s policy in the late 1970s.

In their 1976 newsletter, Women’s Action Alliance argued that feminists lacked “expertise in the field of the woman at home” and had no “understanding or interest in the position of the full-time homemaker.” Women Who Want to Be Women constructed a constituency (in its newsletters) of “the silent majority of women, even those who haven’t heard of us, who want to be and are happy to be women.” The group objected vehemently to feminists in government roles and targeted their positions for abolition, and it made use of new channels designed to facilitate women’s access to government, like the National Women’s Advisory Council, to call for the abolition of these new forms of access.

Rather than embrace the women’s movement’s structural analysis of women’s oppression, anti-feminists asserted a liberal individualism in which state intervention was to be abhorred. Babette Francis, spokeswoman for Women Who Want to Be Women, told the Australian in 1980 that “promotion of theories of women’s oppression and disadvantage serve merely to destroy hope and initiative. Feminists, apparently, won’t feel their utopia has arrived until they have herded all women into one gigantic women’s refuge or rape crisis centre.”

At the same time, though, anti-feminist women campaigned for their own forms of state support using a politics of personal experience, just as feminists did. Anti-feminists called for new tax supports for single-income families and for financial assistance for women who chose to stay at home with their children. In effect, they used strategies developed by feminists to work against feminism’s goals. Their activism raises an important question: if the personal was political, then whose “personal” would be prioritised in Australian politics moving into the 1980s?

As we look back on the seventies today, it is clear that the feminist and sexual revolutions reorganised our public and private lives, with far-reaching and often unpredictable consequences. The faultlines in Australian politics have blurred and shifted; politics today is organised as much by gender and sexuality as it is by older ideas of left and right. Marriage equality, for example, was passed by the Australian parliament in December 2017 only after a postal survey demonstrated that there was majority public support for such a change. Just as abortion had fractured the 1973 federal parliament along cross-party faultlines, so too was support for marriage equality found across the political spectrum.

The Australian public’s enthusiastic endorsement of same-sex marriage in 2017 would have been unthinkable in the 1970s. The Royal Commission on Human Relationships, in a set of otherwise sympathetic recommendations on homosexuality, did not “feel able to” recognise homosexual marriages in 1977. Whether you think the passage of marriage equality legislation was radical or retrograde in 2017, that it happened at all was due to the persistence of activists, not politicians, and to a receptive public culture that offered LGBT people visibility and platforms to tell stories about their lives.

This is one of the important legacies of seventies movements: the creation of spaces for a range of perspectives in public life. Creating this space has helped to create social change. The Royal Commission on Human Relationships was one of the boldest enactments of the Whitlam government principle of “open government” and it gained its authenticity and authority from “ordinary” people’s stories of their experiences. Two more recent government inquiries — the Human Rights Commission’s Bringing Them Home report in 1997 and the Royal Commission into Institutional Responses to Child Sexual Abuse in 2017 — also demonstrated the powerful impact of telling personal stories in public.

These inquiries had limitations in producing change: Indigenous children are still removed from their parents at higher rates than the rest of the population, and the royal commission did not investigate the family and home, the place where most sexual abuse occurs. But they both helped shift public debate. In the words of Katie Wright and Shurlee Swain, the Royal Commission made child abuse “speakable and nameable” as a social problem.

Asserting that “the personal is political” was not enough to make change in the 1970s; it was a belief enacted through activism, and political reform. This reform was dependent on a strong activist presence beyond the parliament and bureaucracy. Elizabeth Reid could argue for change in government policy because there was a strong women’s movement supporting her; anti-feminist women, despite all their energy, failed to effect lasting change because they did not mobilise a large group of women behind them.

Women’s and gay and lesbian activists of the 1970s didn’t quite manage to remake the world, but perhaps it is unfair of us today to judge them for that, when we still have so much change to make. As Carol Hanisch reminded her readers in 1970, “there are no personal solutions at this time. There is only collective action for a collective solution.” Perhaps we need to reanimate this principle today, as we grapple with both the legacies and the unfinished business of the 1970s. •

This is the edited text of this year’s Ernest Scott lecture, presented on 19 September. The lecture can be viewed here.

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Ridiculous? Well, this is essentially the system we have set up for second-income earners in Australia, most of whom are women. Here and elsewhere, Covid-19 has shone a spotlight on how inequality is baked into our social structures, and one of the many inequalities so exposed is the differential impact of crises like this pandemic on women.

It’s a deep divide, beginning with the high proportion of women doing the essential caring work in hospitals, the indispensable cleaning of public and private places, and the nurturing of children in the home. In order to take up the last of those roles, women often have little choice but to reduce their paid working hours. If this weren’t enough, women’s jobs were among the first to be cut in sectors such as hospitality and retail.

Perhaps we shouldn’t be surprised about these inequalities. In Australia today, just seven of the thirty federal government ministers are women — an imbalance that extends across state and territory government too, with women filling only forty-eight (or 26 per cent) of 181 ministerial positions. When it comes to pressing public policy issues, whether they are social, economic or political, women are noticeably absent from the key decision-making forums.

So, are we going to continue to buy this pre-Covid product, or are we going to demand something more fit for purpose?

This week, a formidable coalition led by former foreign minister Julie Bishop, epidemiologist professor Fiona Stanley, former SA premier Jay Weatherill and philanthropist Nicola Forrest has called for a major structural reform that has the potential to build a more equal society. What they want is a high-quality, universally accessible childcare and early learning system.

On one view, “childcare” might be thought of as being the responsibility of individual parents. Looked at differently, though, high-quality childcare is fundamental to ensuring greater equality. It is also key to increasing women’s workforce participation. In Australia, women are currently 38 per cent of all full-time employees, and 68 per cent of all part-time employees. While some women want to work part-time, research confirms that many want full-time employment but can’t afford it.

Even after subsidies, full-time childcare fees absorb a quarter of household income for an average earning couple with two children in Australia, compared with the OECD average of 11 per cent. A family getting the maximum subsidy (on an income of less than $68,000) still needs to find an annual $9000 for full-time care. Almost half of Australian parents with children under five report struggling with the costs.

This means that if both parents earn $60,000 a year and the secondary earner — usually a woman — chooses to work more than three days a week, the secondary earner currently loses 90 per cent of the income on the fourth day, and all of it on the fifth day. This obviously has a brutal impact on women’s career trajectories, with part-time work rarely leading to leadership roles.

Lifting women’s workforce participation is an important step on the road to ensuring that both women and men have an equal opportunity to become political leaders. There’s plenty of room for progress — of the 193 countries in the United Nations, only thirteen are led by a woman.

Representative democracy is about representing the needs of the whole community and drawing on the expertise of all people. The current system discourages women from becoming active citizens for a range of reasons, including their disproportionate responsibility for childcare. Sharing the caring, not only within the family but within society as a whole, is fundamental to ensuring women are equally represented at decision-making tables around the country.

Universal, accessible early learning also benefits the children who are our future leaders. Research shows that the early years of a child’s life, up to five years of age, are critical to their future academic, health, social and professional trajectories. Play-based early learning develops the executive functions critical to our nation’s economic future. Competencies and emotional frameworks that lead to high-value jobs (which should include childcare) in the fastest-growing sectors are developed in those early years. We are investing in our future if we invest in children’s education at this age.

While we know these early years are critical, preschool is currently only universally available for four-year-olds, except in Victoria, where three-year-old preschool is becoming available. Childcare varies hugely in quality and is simply unaffordable for many Australian families.

These problems are reflected in the data, which shows that many children are continuing to fall through the gaps. The Australian Early Development Census reveals that one in five children entering school are developmentally vulnerable in one or more domains. If we look only at Indigenous children, the numbers are stark: six in ten are developmentally vulnerable. By the time these kids get to school, critical neural pathways are embedded. It will be a struggle for them to catch up, whether in reading, writing or emotional regulation.

As our leaders search around for “shovel ready” projects to get the economy back on track, they need to look beyond the obvious strategies of investing in bridges and roads. An investment in building universal, accessible early learning in Australia will have a multiplier effect, improving our economy and society in ways that benefit everyone. •

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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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At present, the federal government subsidises fifteen hours a week of preschool for four-year-olds through a deal with the states and territories called the Universal Access National Partnership. But it has still not committed any funding for 2020, preventing preschools from signing long-term leases and contracts or preparing their budgets. Meanwhile, it shows no sign of following Labor’s lead and extending the subsidy to three-year-olds.

Under attack in parliament last week, education minister Dan Tehan was keen to change the topic. The real point, he said, is that the Coalition is able to fund services because it runs a strong economy, at which point he segued into the story of a self-funded retiree aggrieved by Labor’s dividend imputation policy. Warming to the theme, assistant children and families minister Michelle Landry told the House, “We are building a strong economy, and part of that is because we are not afraid to stand in this place and say a certain four-letter word, and that four-letter word is ‘coal.’”

Among the many shortcomings of the government’s response has been its failure to engage with the compelling economic and fiscal case for investing in early childhood education. As their erstwhile Coalition colleague Adrian Piccoli told the Press Club, “There are significant economic benefits, both from a workforce participation perspective as well as economic benefits from improved performance in education.” Or, as Susan Pascoe and Deborah Brennan write in Lifting Our Game, their report for the Review to Achieve Educational Excellence, “there is considerable and consistent evidence that investment in quality early childhood education has a strong return on investment.”

One of the numerous examples cited by Pascoe and Brennan is a study of the impact of Spain’s decision to include three-year-olds in public preschools in the 1990s. The study, conducted by researchers at Utrecht University, found that the Spanish reform ultimately returned four dollars for every dollar spent. While increased workforce participation was a factor, the researchers concluded that “the gains for children are the major driver of the total societal gains of universal ECEC [early childhood education and care].”

To understand why this is so, we need to recognise that “the past twenty years has seen an explosion of research on how brains develop and a wholesale rethinking of how children learn,” says Stacey Fox, a leading Australian early education researcher who spoke alongside Adrian Piccoli at the Press Club. “We now know that in the first five years children learn more and learn faster than at any other time in their lives,” Fox said. “By the age of five a child’s brain has reached 90 per cent of its total growth.” So what happens before primary school even begins will shape the fundamental architecture of a child’s brain, forming the foundation for all future learning.

In this critical developmental window, play-based learning is an extension and enrichment of the natural tendency of children to explore, discover, improvise and create. By way of example, Fox referred to children building a castle out of blocks, an activity that in itself will develop their fine motor skills. But if the castle falls down because it lacks a stable base, an educator might prompt the child to ask why or to rebuild it in another way. The activity might even evolve into an impromptu experiment to compare the stability of two castles. Then, when another child comes along and knocks the castle down or wants to build something else, “the educator helps mediate that moment; helps coach them in how to resolve that conflict; gives them tools and tips on how to manage their emotions: take a deep breath; think about what’s going on for the other child.”

If everyone gets interested in building a castle, it might be possible to develop a sequence of learning that extends children — the history of castles; how bridges work; an excursion to see a bridge — and gives them a chance to try, practise and consolidate new know-how. “It’s really skilled early childhood educators who create those opportunities and extend the learning that’s going on moment for moment for each of the children,” Fox observed.

The evidence of the longer-term significant impact of interventions like these is essentially beyond dispute. As the Productivity Commission outlined in its most recent five-yearly productivity review, “There is evidence of immediate socialisation benefits for children, increased likelihood of a successful transition into formal schooling and improved performance in standardised test results in the early years of primary school as a result of participation in preschool programs. The benefits are even greater for children from disadvantaged backgrounds and can persist into adulthood.”

The Longitudinal Survey of Australian Children came to a similar conclusion. It found that preschool attendance was associated with improved performance in Year 3 NAPLAN tests in numeracy, reading and spelling, equating to fifteen to twenty weeks of schooling. Across its member economies, the OECD’s Starting Strong 2017 report found, the average advantage in science performance among fifteen-year-olds who attended two years of preschool equated to half a year of formal schooling.

These findings support the conclusions of seminal studies like Britain’s Effective Provision of Pre-School Education (EPPE) project, which tracked 3000 young people over a decade and a half and found that, at age sixteen, students who attended two years of preschool achieved higher overall exam scores and better grades in English and maths.

Children from disadvantaged backgrounds are overrepresented among the 22 per cent of school starters who are considered to be developmentally vulnerable, and stand to gain the most from access to two years of early childhood education. A critical challenge lies in the fact that enrolment and consistent attendance are not the same thing. Ninety-six per cent of four-year-olds are enrolled in preschool, but around 30 per cent are not regular attendees. As Dan Tehan told parliament, “35 per cent of vulnerable and disadvantaged children and up to 41 per cent of Indigenous children are not attending for the fifteen hours on offer.” It is a very real problem, even if it is unclear how the minister believes the government’s refusal to commit funds will help.

In this connection, Stacey Fox praises the Victorian government’s Access to Early Learning program, which identifies barriers to attendance and assists families to locate, enrol in and engage with early childhood programs. “They actually work in the local community to work out what those barriers are and to get rid of them, and really work with families to help them understand why early childhood education is every bit as important as school,” Fox said. “I’ve seen the evaluation results of that particular model and it was really effective.”

In their report, Susan Pascoe and Deborah Brennan highlighted the NSW government’s Start Strong program. It requires at least three-quarters of any funding increase to providers to be passed on in fee reductions (a government-imposed discipline that is almost unimaginable in dealings with fee-charging primary and secondary schools). The requirement, as Pascoe and Brennan noted, saw some preschools dropping their fees to the levels of a quarter of a century ago (again, pretty much unimaginable in the compulsory school sectors).

At heart, Adrian Piccoli’s message to Minister Tehan (and the treasurer and the prime minister) is a simple one. “Budgets are moral documents. They say what you think this country should be about.” If the Morrison government doesn’t heed the moral and policy imperative to expand early childhood education, it might be forced to reckon more closely with the political considerations. As Piccoli pointed out, “early childhood resonates with voters; it’s a major cost-of-living issue.” Public support for Labor’s position is at 77 per cent, according to polling conducted by Essential Media, and even higher among the 11 per cent of voters with children under five. It might pay for the government to bring more than coal and franking credits to the debate when it returns to parliament in April. •

The post Australia’s “next great social policy reform” appeared first on Inside Story.

AFTER the collapse of ABC Learning three years ago, childcare and early education disappeared from the media spotlight. The rise and fall of ABC was a mesmerising saga, complete with stories of high finance, lavish lifestyles and corporate intrigue. Its aftermath was sober but equally compelling, with most of ABC’s centres quietly taken over by GoodStart, a non-profit consortium involving several of Australia’s major charities, and criminal charges laid against ABC’s former CEO, Eddie Groves, and some of his business associates.

Absorbing as it was, the ABC drama deflected attention from the arduous, unspectacular but crucial work being done behind the scenes. Over the past few years, governments around Australia have adopted a new national policy framework for early education and care, agreed to deliver a year of preschool education to all children by 2013 and endorsed the phasing in of new, nationally consistent quality standards. Since 2006, total government expenditure on early education and care has increased by more than 50 per cent in real terms. Outside the world of early childhood, however, these changes are not widely known.

These are encouraging developments, but there remain traps – both in policy and implementation – that could stymie moves towards more accessible, affordable, high-quality education and care around Australia. And there is a major weakness in the new policy framework: the absence of any articulated link between responsibility for the care of children and gender equality.

IN THE early 2000s the concept of “social investment” began to frame thinking about social and economic policy in Australia. Politicians and public officials increasingly acknowledged the growing scientific and economic consensus about the importance of the early years for children’s later development, and particularly their readiness for school. Some political leaders became strong enthusiasts for these ideas. Kevin Rudd, for example, identified parent and child centres as his “one big idea” for the 2020 Summit. As the emphasis in public policy shifted from competition and microeconomic reform to more socially focused ways of building human capital and boosting labour productivity, social investment played a growing role in national economic reform debates.

It was in this context that the federal, state and territory governments, through the Council of Australian Governments, or COAG, endorsed the wide-ranging National Early Childhood Development Strategy: Investing in the Early Years. The strategy focuses on children from birth to eight years and embraces education, childcare and health as well as housing, child protection and family support. It has a particular focus on reducing inequalities between groups of children.

Building on this broad strategy, the federal, state and territory governments endorsed two national partnership agreements. The National Partnership Agreement on Early Childhood Education aims to ensure that by 2013 every child has access to fifteen hours of high quality preschool education for forty weeks in the year before starting school. Under the agreement, preschool programs can be delivered through a range of services including long day care, preschools, and family day care. The National Partnership Agreement for Indigenous Early Childhood Development includes additional measures to help “close the gap” between Indigenous and other Australian preschoolers. Strengthening this initiative, one element of the National Indigenous Reform Agreement specifically focuses on ensuring that Indigenous four-year-olds in remote communities have access to early childhood education.

Early childhood services have traditionally been regulated by the states and territories, and inconsistent regulations have been a longstanding concern. As part of the national reform agenda, a National Quality Framework will guide the licensing and quality rating of long day care, family day care, outside school hours care and preschools from January 2012. The framework introduces nationally consistent regulations and improved ratios of staff to children and requires a more highly skilled and qualified workforce in all early childhood settings. Parallel legislation will be introduced in all jurisdictions to establish a new legal and regulatory framework for early childhood education and care and lay the groundwork for a unified national system. A learning framework for the preschool years, Belonging, Being and Becoming, forms part of the new quality arrangements; a separate framework, My Time, Our Place, will apply to school-age care services.

Significant changes to staff-to-child ratios and qualifications are to be phased in over several years. By January 2014, all long day care and preschool services catering to twenty-five or more children will need to employ a qualified early childhood teacher. Half of the staff employed in each long day care centre or preschool will need to have, or be working towards, a diploma-level early childhood education and care qualification or above. Other staff in centre-based childcare and all family day carers will be required to have, or be working towards, a Certificate III level early childhood education and care qualification, or equivalent. Achieving these targets and attracting and retaining qualified professional staff in services characterised by low pay, poor promotion prospects and sometimes arduous working conditions may prove to be the critical challenge for the sector. A high proportion of the staff in long day care are currently paid at minimum award rates, have few opportunities for career progression and do not benefit financially from upgrading their qualifications.

Administrative changes at both federal and state levels reflect the emerging culture of a more integrated service system. An Office of Early Childhood Education and Child Care has been established within the federal Department of Education, Employment and Workplace Relations. As its name suggests, the Office has responsibility for both early education and care. The shift in location of responsibility for childcare from the Department of Families, Housing, Community Services and Indigenous Affairs symbolises the focus on education and employment (or, at least, human capital development) embedded in current ideas about services for young children. In complementary fashion, all states and territories have now brought responsibility for preschools into their departments of education.

THE agreements, goals, targets and other bureaucratic requirements that underpin the early childhood reform agenda represent a considerable achievement by public officials and build on decades of work by others in the sector. The long-term potential of these initiatives and reforms should not be underestimated. Nevertheless, gaps, weaknesses and inconsistencies continue to characterise Australia’s approach to early education and care.

One of the biggest risks is the reliance on private markets to deliver most Commonwealth-funded childcare services. (Preschool has not been opened up to market forces in the same way as childcare in Australia – this is one marker, a positive one, of the lack of integration between education and care to date.) The transfer of more than 650 ABC Centres to the socially oriented GoodStart consortium has certainly moved the balance of ownership back towards toward the non-profit sector. But even accounting for this shift, two-thirds of Australia’s childcare centres are operated for profit.

Under Australia’s market-based childcare system, parents are seen as consumers who purchase services in a competitive marketplace. The childcare benefit effectively operates as a voucher that parents can spend at an approved service of their choice. This is very different from preschools, where the dominant model around Australia is either a free service provided as part of the school system or a relatively low-cost community service. The issue here is not whether individual, private services can provide excellent care and education – clearly they can. The question is whether there is evidence at a system level that the market can deliver the outcomes for children envisaged in Australia’s early childhood agenda. At this stage, the research evidence suggests we should exercise considerable caution.

Market-based systems rely on the assumption that “consumers” are savvy individuals who can discipline providers by withdrawing their custom and going elsewhere if the service provided is inadequate. For markets to work, consumers need to have access to a range of providers who can provide appropriate services. Evidence suggests that these assumptions do not hold up well in respect of care services. Parents do not go into the market seeking a packaged product called “childcare”; they search for services that cater to the needs of their children (in terms of age, personality, level of ability) and they frequently require hours and days of care that mesh with their employment commitments. For many, proximity to home, work or school will be important considerations. Most parents do not have a choice between services – they are lucky if they can find one that matches their needs. Even if they have a choice, they typically purchase childcare only infrequently, and don’t have extensive experience in assessing information about quality and prices. Governments may seek to aid transparency and assist consumer choice through regulation and accreditation and by providing information about how individual services perform against standards, but not all groups have equal skills in making use of such information: an increased focus on consumerism and choice favours those with more resources and education, who have an advantage in navigating the system.

Childcare markets (and other markets in care) are quite unlike markets for products such as soap or breakfast cereal. A growing body of research shows that the real costs of switching providers are simply too high for many parents to countenance. Parents are aware that there are considerable costs in switching services and that many of these costs – ending relationships with friends and carers/educators, losing familiar environments, having to reinvest time and emotional energy to settle into a new service – are borne by children. Even when they have concerns about quality, many parents are reluctant to impose these costs on their children, and so they find themselves effectively locked in to continuing to purchase from the same provider. The “emotional economy” of care thus limits the effectiveness of market mechanisms.

THE policy-makers driving the new early childhood agenda are building on, and seeking to reshape, a complex historical legacy marked by separate roles for the federal government and the states and territories. Broadly, the federal government has focused on childcare services that meet the needs of working parents and the states have delivered educationally focused preschool programs – although this shorthand characterisation does not do justice to either tradition.

Funding mechanisms, subsidy structures and eligibility rules drive home the division between services supported by each level of government. For example, the childcare benefit and the childcare rebate, the main Commonwealth subsidies that assist parents with the costs of work-related childcare, are only available to users of approved services. To be approved, a service must meet various conditions, including being open for a minimum number of hours per day and weeks per year. Since preschools typically operate only during school terms, and offer only half days or short (six-hour) full days, most are not approved for fee relief purposes and the parents who use them cannot claim the benefit or the rebate even though in some states (particularly New South Wales) preschool can be very expensive.

The reasons why parents choose particular service types for their children are complex and multifaceted. It is far too simple to say that childcare is used to accommodate parents’ needs while preschool is a child-focused system: parents want the best for their children regardless of their own workforce status. For families whose children attend preschool so that parents can hold down jobs, the current system is incomprehensible and unfair.

While efforts to integrate education, care and health are laudable, services for young children also need to be considered in relation to the broader policy agenda. As yet, there is little evidence that this is occurring. For example, there is a notable lack of coherence between Australia’s new national paid parental leave scheme and the approach to early childhood education and care outlined here. The parental leave scheme provides eighteen weeks’ paid leave at the minimum wage for eligible families. From the child’s perspective, we could interpret this as an implicit guarantee of the possibility of six months of parental care, with public support. After that, however, there is no entitlement to care or education until the child becomes eligible for fifteen hours of preschool education in the year before formal school begins. And despite the fact that the majority of mothers are back at work before their children start school, the early childhood agenda contains no targets for providing care for one-, two- and three-year-old children and no mechanisms for linking services to areas of greatest need.

Another striking feature of Australia’s early childhood agenda is the absence of any recognition of the role of children’s services in supporting a more equal division of labour between women and men. The principles articulated in Investing in the Early Years include “a focus on the whole child,” “a focus on the whole service system” and “a focus on respect for diversity and difference” but there are no references to the connections between childcare and the promotion of gender equality. This could, in part, be a reaction by elements of the early childhood community to the perception that in the past the federal government’s focus on childcare has been excessively workforce-oriented and insufficiently focused on the interests of children. Still, the absence of even the smallest gesture towards gender equality is noteworthy. The strategy refers in a general way to “outcomes for families related to workforce participation” and the childcare reform package is featured as a gender equality measure in other government documents such as the Women’s Budget Statement, but there are no clear mechanisms that compel governments to follow through on these statements or to enable the tracking of progress towards goals.

EARLY childhood policy in Australia is undergoing profound restructuring and reform, much of it positive, though some of it less ambitious than it should be. COAG has proved to be an effective mechanism for establishing and maintaining federal leadership in the sector and significant steps have been taken towards improving quality standards, streamlining regulatory processes and strengthening the skills and qualifications of the early childhood work force. But much remains to be done. The new agenda is being built on a legacy of division between sectors, providers and levels of government. Finding effective ways to address the gaps, inconsistencies and pitfalls of this legacy is a major challenge for the implementation of Australia’s new early childhood agenda.

A parallel challenge is to develop ways of rewarding and remunerating early childhood professionals at levels commensurate with the value and importance of their work while ensuring that families, especially the most disadvantaged, are not excluded from services. If the overall goal is to provide all children with the best start in life, and to support the participation of both women and men in social and economic life, additional investment by governments and taxpayers is both inevitable and desirable. •

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WHEN paid parental leave came into effect on 1 January this year it received relatively little press coverage, which might seem strange given its importance for those looking to juggle the demands of a family and a career. There was the odd story about a family missing out on the payment by a few hours following the birth of a child late on New Year’s Eve. But there was nothing of the fanfare that had surrounded the policy’s announcement in the 2009 federal budget, nor of the debate that it had sparked during the 2010 federal election campaign.

Part of the explanation must lie in the bipartisan backing the policy has enjoyed since Tony Abbott pronounced himself in favour of a far more generous scheme than the one now in place. In a speech on International Women’s Day last year, Abbott put forward a plan to pay a parent of a newborn child full salary compensation for six months. For most families, this would be worth significantly more than the current payment of eighteen weeks at the federal minimum wage.

Another reason for the low-key response to paid parental leave might lie in the complexity of the issues it raises – the level of compensation, the length of leave, whether superannuation should be included and how much of all of this should be reserved for a spouse, to name just a few. These invite real debate and are part of a wider conversation about what sort of society Australia should be.

The complexity of its policy objectives is reflected in how paid parental leave works. It is linked to the national minimum wage and, in even the most straightforward cases, affects a recipient’s tax liability, Medicare levy and family tax benefit entitlements. Families faced with such exotic concepts as the “quarantining of FTB-B” could be excused for wondering whether a PhD in immunology might not be a prerequisite for working out how much better off they will actually be.

Compare this to the baby bonus, a simple payment of five grand, tax-free. When introducing it in 2004, Peter Costello claimed that it would encourage families to have “one for mum, one for dad, and one for the country.” Since then the debate over the baby bonus has done little more than tap into vague fears about declining fertility rates and a looming economic crisis brought on by an ageing population.

The linking of the baby bonus to population debates goes against the traditional rationale for supporting parents of newborn children. Professor Chiara Saraceno, an expert on social policy at the Social Science Research Centre in Berlin, stresses that European parenting policies have had “very little” to do with addressing low fertility rates. Rather, maternity leave schemes have always been, and continue to be, shaped by issues such as the loss of jobs and wages, the needs of children following childbirth and the reconciliation of work–family issues for mothers. “More recently,” she says, “particularly in Scandinavian countries, the concern has been to allow adequate time for parents to care for their child.”

This year’s International Women’s Day might, just like last year’s, put paid parental leave back in the public spotlight. If it does, a national conversation about how to provide our children with the best possible care may gain momentum. Such debate cannot begin too soon. The government has signalled that the policy will be reviewed in two years, and given how considerably political support for the policy has changed in the two years since it was announced, there is every reason to expect that attitudes towards parenthood in the workplace will undergo a similarly radical transformation.

The Productivity Commission’s report that set out the design of the policy didn’t attempt to predict how it might evolve. But the commission did sketch the details of parenting policies in other countries, particularly in Europe, to which the Australian model could be compared. For example, many European countries provide maternity payments that compensate most or all lost income during a period of leave, along the lines of Abbott’s proposal.

Experience in Europe has also shown that well-designed policy can bring about changes in attitudes towards parenting. Labor’s election promise to provide fathers and partners with an extra two weeks of leave is based on the Norwegian policy, where the availability of paternity leave on a “use it or lose it” basis has resulted in most men taking time off work following the birth of a child.

It is in the area of childcare that Australia could learn a lot from Europe. According to Saraceno, “childcare is high on the agenda of all European countries” and the Scandinavian countries, as well as Italy, have always had childcare systems “with a strong educational focus.” This is not to say that the tension between quality and quantity of childcare services, a major issue here in Australia, is not also a problem in Europe. Saraceno admits that “the goals of increasing the number of places and improving the quality of services are sometimes at odds”, and the situation has not been helped by European Union monitoring that emphasises quantity over quality and does not distinguish between public and private services.

There are no simple answers to these questions. But there are lessons to be learned from other countries. Paid parental leave in its present form represents an important first step in this process. It has the potential to transform social attitudes about the relationship between parenthood and a career, and to catalyse debate about what we as a country provide for the next generations of Australians.

One final point that should not be neglected: by linking paid parental leave to the national minimum wage, the adequacy of this wage has become an issue not only for those who earn it, but also for all those workers looking to have children. It will be interesting to see whether this has any impact on the minimum wage case this year. My guess is that we are unlikely ever to see a repeat of the Fair Pay Commission’s 2009 decision to grant no increase in the minimum wage. •

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This discussion is based on Deborah’s article for Inside Story, Reassembling the Childcare Business.

Podcast theme created by Ivan Clarke, Pang Productions.

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GOOD POLITICS and good public policy can be difficult to align. Dealing with the fallout from the collapse of ABC Learning presents a case in point. The parents of 120,000 children enrolled in ABC centres and the 16,000 employees are asking important questions. Will the centres be open in 2009? Will staff receive their holiday pay and other entitlements? Should parents and staff seek alternative places and jobs? These questions need answers. But the resolution of immediate political issues must not be allowed to overwhelm the longer term objectives of good public policy. Clear-headed, strategic thinking is needed to reform and strengthen the early childhood sector. Before the collapse of ABC, important initiatives had begun in relation to standards and accreditation, workforce reform and Commonwealth–State relations. These initiatives must not derailed; rather, they should be expanded by adding in the possibility of a greater role for the non-profit sector.

The Rudd government’s approach to early childhood education and care is different in fundamental ways from that of previous governments. Under Howard, childcare was treated as little more than a commodity to be bought and sold – and, indeed, traded on the stock exchange. The Commonwealth gave no serious attention to the lax regulations administered by state governments and took a unduly complacent approach to its own weak accreditation system – perversely citing the high levels of “success” in gaining accreditation as evidence that quality care was being provided in Australian childcare centres. Influenced by recent research into early childhood development, and also by British New Labour’s approach to the early years, the Rudd government sees early childhood education and care as important to its long-term social and economic strategies – including productivity, labour force participation, skills formation, social inclusion and the “education revolution.” Early childhood services are also seen as important elements of “closing the gap” between Indigenous and non-Indigenous children.

Labor’s agenda for early education and care includes universal access to preschool education in the year before school and the development of parent and child centres which will act as service hubs, bringing together health, education and childcare and providing targeted services for particular groups. This ambitious agenda was always going to be difficult to deliver, given the scale of corporate provision in this country (unparalleled even in the United States). With the collapse of ABC there is an extraordinary opportunity to reconsider the fundamentals of Australia’s approach and to reinstate a national program focused on the needs of children and families. Such a program will require sound policy underpinnings, quality standards (including workforce development), planning processes and responsible stewardship of public resources.

How did Australia, once regarded by international observers as having an enviable childcare system, become a case study for other countries in what not to do? In the wake of ABC’s collapse, Julia Gillard blamed the previous government for having “let the market rip,” for having no workforce plans, no quality plans and no plans for market development. There is some truth in this statement, but it is far from the whole story. It was the Hawke government, in 1991, that introduced market forces into early childhood and promised that the market would lead to greater choice and lower fees. Labor extended childcare assistance (the forerunner to the Child Care Benefit) to the users of for-profit care, marginalised the community sector and encouraged provision by private businesses. It decreed that private entrepreneurs, not governments, should determine the location of services, even though huge public subsidies were involved. Labor introduced accreditation to allay the anxieties of those concerned that profits were incompatible with high quality care of children.

But under Labor’s system, there was no cap on the number of long day care centres that private operators could set up, no guidance about needs or planning, no cap on public subsidies. Instead, “market signals” were to guide these processes. The Hawke government retained small operational subsidies for community-based care, in recognition of the sector’s significant role in caring for babies, working with non-English speaking families and caring for children with disabilities, but this was its only concession to Australia’s tradition of non-profit care.

Labor’s responsibility for the “turn to the market” in early childhood is a relatively familiar story to those who follow Australian childcare politics. What is not so well known is that one of the major reasons that the Hawke government pursued the path of private, for-profit care was to contain the small advances that had been made towards increasing the qualifications of workers in childcare and improving their professional status. Labor’s finance minister Peter Walsh and his supporters were scathing about the employment of trained teachers in early childhood. They argued that efforts to extend the employment of teachers were intended “to make even softer the nests of bachelors of early childhood education and their middle-class well-feathered friends” and they accused childcare workers of crippling the system with “creeping credentialism.” The private sector’s resistance to the employment of well-trained staff was a major reason for Labor’s support for the sector. The lack of attention to workforce planning and qualified staff referred to by Julia Gillard was not an accidental by-product of the shift to the market; it was a design feature introduced by a Labor government.

The Howard government intensified Labor’s market focus. It ended operational subsidies to community-based care and abandoned plans to expand the non-profit sector. Many community-based childcare services closed and the pressure on sponsoring bodies, particularly local governments, intensified, leading some of them to vacate the field. The most significant policy shift in terms of laying the ground for corporate providers occurred in 2000 when, as part of a suite of family policy measures introduced in connection with the GST, the Howard government introduced the Child Care Benefit. The benefit is effectively a voucher that parents can use at any “approved” childcare service (mainly long day care and family day care). The amount depends on family income, the hours of care used and the type of care. The benefit positions the parent as a consumer who chooses from a range of “products.” Since many types of childcare are in short supply, however, and since starting a child in care is a time-consuming and sometimes emotionally fraught activity, there is little real prospect of parents using their power as consumers to “discipline” the market. Most parents elect to have the benefit paid directly to their provider, entitling them to reduced fees. Direct payment also provides a cash stream to providers and minimises their exposure to unpaid fees, especially on the part of low-income families who gain the most from the Child Care Benefit.

ABC Learning listed on the stock exchange shortly after the introduction of the benefit and Eddy Groves has explicitly linked the growth of his company to the possibilities opened up by this new benefit. ABC grew rapidly, snapping up small independent providers and community-based centres around the country, particularly in Victoria and Queensland, and later expanding internationally. As well as owning more than 1200 centres in Australia and New Zealand at its peak, ABC had substantial holdings in the United States and Britain. It also owned a training college for early childhood staff and had substantial interests in other businesses, including a toy and equipment provider that had an exclusive contract to supply ABC-linked centres around the world.

The Commonwealth does not publish data that would enable us to see the scale of ABC’s presence in individual states. Figures published by the Productivity Commission show that 73 per cent of long day care places across Australia are owned by private, for-profit operators. There are significant variations between the states: 83 per cent of long day care places in Queensland are run privately for profit compared with 29 per cent in Tasmania. But we do not know how many of the private places are owned by independent businesses and how many are run by corporate providers. ABC’s annual reports provided inconsistent data from year to year, so it has not been possible to get an accurate picture from that source. We do know, however, that as ABC increased its share of the market, the “choices” in many communities diminished. At the same time, the costs of care grew far more quickly than general consumer prices — fuelled by generous Commonwealth subsidies.

The Child Care Tax Rebate has also been integral to the rapid expansion of the Australian childcare market. This measure, introduced in a slightly different form by Labor in 1994, was originally intended as an alternative to tax deductions for childcare expenses. It was seen as fairer than both tax deductions (which provide most to those with the highest marginal tax rates) and tax rebates (which deliver nothing to those outside the tax system). Under Howard, the value of the rebate grew to cover 30 per cent of “out of pocket” expenses – the difference between what parents paid and the amount they received back from the Child Care Benefit. Labor has increased the value of the rebate to 50 per cent of out of pocket expenses up to a ceiling of $15,000. Parents who use “approved” care for work-related purposes are now entitled to a taxpayer subsidy for half their childcare costs up to this limit (which applies per child, not per family). The rebate was an open invitation to providers to increase their fees, and most did. ABC attracted criticism for the sharp spike in fees that coincided with the implementation of Labor’s new policy, but no one should have been surprised.

The demise of ABC Learning could result in the Australian childcare landscape being fundamentally reconfigured. Deputy Prime Minister Gillard has encouraged private providers and not for-profit organisations to register their interest in buying or managing ABC centres. The inclusion of not-for-profit organisations in the expression of interest process suggests that the government is considering an enhanced role for community-based providers, even if these providers do not have the capital to purchase ABC centres. Such a scenario suggests the possibility of re-instating a measure of diversity into a sector dominated by private interests. A number of other strategic considerations need to be addressed.

For a start, the role of markets in this sector should be acknowledged. Private providers will continue to play a major role in providing services – with almost three-quarters of all long day care centres now in private hands, there is no going back to the 1970s. But the Commonwealth government, in partnership with providers, unions, educators and other stakeholders, should resume responsibility for the planned provision of services that meet community needs. In other words, it should reinstate something like the Children’s Services Program. The current system, which places all power in the hands of entrepreneurs, while sending the bill back to taxpayers, has to end.

ABC Learning’s demise also presents a great opportunity to think more sensibly and creatively about the division of responsibility between the Commonwealth and the states. In most parts of Australia, services for children below school age are split into “education” (state-funded) and “care” (Commonwealth-funded). “Educational” services such as kindergartens and pre-schools usually employ degree-qualified teachers, but their hours of operation do not suit most working parents and they do not cater for babies and toddlers. Running in parallel, we have a system of childcare services intended to meet the needs of working parents. These generally do not employ teachers, and their working conditions are more onerous than those of preschools. While staff in both systems do a wonderful job, this is an old-fashioned system that does not reflect contemporary thinking about children’s development. It is a system that cannot meet the Rudd government’s objectives for integrated education and care. These days we know that high quality care and education are inseparable. And the division into separate service types certainly does not reflect the reality of busy parents’ lives.

Finally, there is a great opportunity to bring the skills and talents of the non-profit sector back into childcare policymaking. The headlong rush to the market and to private profits that has characterised this sector since the early 1990s has marginalised community-based childcare. This short-sighted approach needs to end. The challenge for the government will be to manage the politics (and economics) of ABC’s demise, without losing sight of the medium and long-term public policy objectives to which it is committed. •

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