From the Editor Chris Berg

t’s not too often that we can look enviously at the political Belian has written, the inability of the Belgian Parliament to state of a country buried deep in the European Union. approve European Commission directives means that ‘in its IBrussels is not just the capital of Belgium, but it is also hour of ungovernability Belgium is now more sovereign than the de facto capital of the EU, hosting the European Com- it has been in the past 50 years.’ mission, the Council of the European Union, the European This special edition of the IPA Review arrives in newsa- Council and one of the seats of the European Parliament. gencies and letterboxes at a significant moment for the cause So it is either fitting or ironic (I can’t figure out which) of limited government and open society in Australia. At the that Belgium has now been, for more than six months, without dramatic end of a nominally liberal/conservative govern- a government to call its own. As we quietly recover from the ment, we have assembled the nation’s best liberal and con- shrill hangover of the 2007 federal election, it’s worth consider- servative commentators to try to describe the legacy of the ing how Australia could have been if no government had been Howard government and the causes of its demise. But more successfully elected in November. importantly, this IPA Review en- Since the 10th of June, Belgian gages with the question—what politicians have been—at least as It’s worth considering next for liberalism? Has the cause this edition of the IPA Review goes of liberty advanced or retreated to press—unable to form a govern- how Australia could over the last decade? What are the ment coalition. This failure is the next steps? result of the adversarial relationship This edition also contains the between French and Dutch speak- have been if no full complement of non-election ing political classes, in particular, related commentary. Sam Gregg from the demand by Flemish na- government had engages with Christian leaders tionalists for more autonomy over who would ignore or reject free taxation and welfare policy in Flan- been successfully market economics for a socialist ders (a region that has traditionally Christianity, Paul Monk holds favoured centre right parties; the anti-nuclear campaigners up to francophone region of Wallonia elected in November the harsh light of logic, and Chris appropriately prefers their politics Murn tries to host a Christmas to have a more socialistic flavour.) The former government street party. Pieces by Alan Moran, as well as Sinclair David- remains in power, but only in a caretaker capacity, and the son, Alex Robson and Chris Textor, dig further behind the semi-former prime minister is set to step down once a re- claims of price-fixing by Visy and Amcor and reveal that not placement government is available. every criminal has committed a crime. Sure, not having a government has its disadvantages. Even without a functioning government, Belgian gov- The great economic reforms which have propelled Australia ernment services continue to be delivered. Rubbish is still up the ranks of economic performance would not be possible collected, social security payments are provided—even, as from a government that couldn’t get out of caretaker mode. Paul Belian points out, taxes continue to be collected. While Similarly, the important reforms Australia needs—workplace the government is in caretaker mode, government activity changes which deliver deregulation rather than centralisation, cannot be reduced, but neither can it be extended. the sale of remaining government enterprises, reform of com- As a result, the promises of more pork and populist ex- munications and occupational safety regulation, corporate tensions of middle class welfare which characterise Australian and financial services deregulation, and so on—all require a federal election campaigns may, indeed, obscure the fact that rather active government. when the federal government is in caretaker mode for the But on the positive side of the ledger, having no govern- election, that could be the best six weeks that government ment also means having a government that can’t mess things ever has. Cynics should hope for stalemate and inertia. up. Governments cannot extend their reach into the economy without a capacity to legislate. I P A Indeed, as Belgium is a central member of the EU, no government also means no government able to increase its international obligations. As the Flemish free-marketeer Paul

JANUARY 2008 R E V I E W Volume 59 Number 4 Inside this issue Jan 2008

1 Editorial 40 Four points on federalism Why ‘passing the buck’ could make good public policy 3 From the Executive Director and good political strategy. Richard Allsop 5 Christianity and the market How church leaders ignore the Christian tradition of 43 A revolution in healthcare economic liberty. Samuel Gregg Medicine meets the marketplace. Fred Hansen

9 Confusion and logic in the nuclear power debate? 46 In harm’s way Paul Monk How ‘health promotion’ has damaged the relationship between doctor and patient. Brian Bedkober 12 Council regulations crash street parties Christopher Murn 50 University research

THE HOWARD LEGACY The need for paying customers. Sinclair Davidson 14 What next? Liberalism after the Howard government. Chris Berg 52 Cyclones, rainfalls and temperature: Does Australia have a climate crisis? Jennifer Marohasy 16 The clearest in the West: Australia’s happy warriors.

Mark Steyn 55 What’s the appeal of “totalitarian chic”? 19 Fighting the last war Tim Wilson The construction reforms—not WorkChoices—were the real industrial relations issues in the 2007 campaign. Ken Phillips 57 Competition and the cartel crusade Alan Moran 22 Awkward problems in social policy Women and welfare after Howard. Louise Staley 60 Theft? What has been stolen? Sinclair Davidson, Alex Robson & Chris Textor 25 Liberalism must evolve to match generational shifts Tim Wilson BOOK REVIEWS 61 Louise Staley reviews Nanny State: How Food Fascists, 28 Everything’s changed? Teetotaling Do-Gooders, Priggish Moralists, and Other The Liberals have locked in conservative government. Boneheaded Bureaucrats Are Turning America into a Tom Switzer Nation of Children

29 Howard forgot to govern for individuals 63 Jennifer Marohasy reviews Australian Agriculture: Its Christian Kerr History and Challenges

31 Liberalism after 2007 64 Scott Hargreaves reviews The White Man’s Burden:Why A blueprint for leadership. Greg Hunt the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good 33 John Howard, environmentalist Jennifer Marohasy 66 Richard Allsop reviews No Way To Go: Transport and Social Disadvantage in Australian Communities 37 Status quo conservatism The Coalition’s taxing and spending record. Des Moore 68 Strange Times

Editor: Chris Berg. Associate Editor: Hugh Tobin. Executive Director: John Roskam. Printed by: Pinnacle Printing, 288 Dundas Street, Thornbury VIC 3071. Published by: The Institute of Public Affairs Ltd (Incorporated in the ACT) ACN 008 627 727. Level 2, 410 Collins Street, Melbourne Victoria 3000. Phone: (03) 9600 4744. Fax: (03) 9602 4989. E-mail: [email protected] Website: www.ipa.org.au Unsolicited manuscripts welcomed. However, potential contributors are advised to discuss proposals for articles with the Editor. Views expressed in this publication are those of the authors and do not necessarily reflect the views of the IPA.Reproduction : The IPA welcomes reproduction of written material from the IPA Review, but for copyright reasons the Editor’s permission must first be sought. From the Executive Director John Roskam

ohn Howard got the big things right. At the We won’t know the outcome of the Iraq invasion for years, if not domestic level, he understood the importance decades. Into the future Iraq will most likely define the way history Jof responsible economic management. At the treats John Howard, Tony Blair, and George W Bush. The political international level, he knew that September 11 was reasons why Australia supported the invasion were complex and var- an attack not only against the United States—it was ied. Howard’s personal reasons for the invasion came closest to those an attack against every country that upheld liberal of Blair—although Howard never expressed them as eloquently as did democratic values. He was not afraid to defend Blair. For Howard and Blair if a people could be freed from totalitarian those values. oppression they should be. Over the eleven years of his prime minister- John Howard had a faith in the Australian people. He didn’t talk ship what most infuriated his opponents was the down to them, he didn’t preach to them, and he didn’t take them for fact that he knew what he believed in. Not only granted. Certainly he had assumptions about the Australian people— this—John Howard also knew that belief in some- and it’s true that some of those assumptions were grounded in his early thing was possible. This is a possibility denied by life experiences. His affection for cricket was just a little bit fey—but he the postmodern left—for them belief is impossible, didn’t think less of anyone because they didn’t like cricket as much as he and there’s nothing to believe in anyway. did. When Howard said that Australia was the best country in the world John Howard’s belief that human rights had a he meant it. When Menzies, Whitlam, and Keating finished in politics universal application to everyone, everywhere, all the first thing they did was head off overseas. It’s difficult to imagine that of the time angered the left. For the left, human Howard will follow them. rights protection is delivered via a mandate from In his concession speech on the evening of the federal election result the United Nations. If only the left concerned it- John Howard spoke of Australia being a more confident nation than self with what was occurring in remote indigenous when he came into office. His analysis was correct. While it is doubtful communities in central Australia as much as it wor- whether government itself can make people more confident, it is true ried about what was happening in New York. that the decisions of government can make people less confident. One The Coalition’s Northern Territory interven- of Howard’s achievements was to give people the chance to regain their tion was dramatic, sudden, and heavy-handed. The own confidence. Individuals can only confront change with confidence intervention was based on the premise that the life if they and their families are economically secure. chances of a black child should be no different from This is John Howard’s legacy. the life chances of a white child. Howard viewed all of the discussion around ‘culture’ and ‘tradition’ for I P A what it was in reality—an excuse for inaction.

JANUARY 2008 R E V I E W R E V I E W JANUARY 2008 Christianity and the market How church leaders ignore the Christian tradition of economic liberty

Samuel Gregg

hen it comes to the social sciences, many concerned with thinking through the logic of a range of choices consider that economics wins the prize when it comes to the creation and distribution of material wealth. Wfor having the most materialistic view of Naturally, Christianity does not see economics as providing all human beings. One should not be surprised, then, the answers to human dilemmas. Life is, after all, much more than that some Christians regard the entire discipline of an exercise in maximising efficiency. But nor should Christians dis- economics with a certain suspicion. At the same dain the insights of economics into how flawed and limited human time, there are many Christian thinkers (or econo- beings, capable of great good and also great evil, might act when mists who also happen to be believing Christians) faced with a range of incentives. who are quite happy to make use of economic re- Reading through much contemporary Christian literature on search methods without necessarily assuming that economic policy, however, can be a depressing exercise, not least homo economicus constitutes the entirety of human because it soon becomes apparent that many Christian leaders beings’ potential and destiny. have very limited knowledge of basic economic insights. In some While all but the most economistic of thinkers instances, this seemingly manifests itself in a certain pride about recognise that there are limits to what free market their ignorance of such matters, or a tendency simply to dismiss economics can tell us about human action, it is not economic insights as irrelevant to the discussion. Such standpoints unreasonable to expect serious Christians of all con- would seem odd to great medieval scholars such as St Albert Magnus fessions interested in public policy to think through and St Thomas Aquinas, who were among the first great Western policy proposals from the ‘economic’ perspective. thinkers to state that the sciences required autonomy if they were to Contrary to popular mythology, orthodox Christi- function properly in their respective fields of research. anity has always valued and championed the power Then there is the widespread tendency—thankfully much, of human reason, seeing in it a reflection—albeit much weaker now than in the heady days of the 1960s, 1970s, and limited—of the divine Logos. From its origins in the early 1980s—for some Christian leaders and thinkers to assume that writings of Aristotle, economics has always been socialism is the most accurate reflection of the type of political economy mandated by the Christian Gospel. In this regard, the defeat of communism and the collapse of liberation theology—the latter being very much the creation of middle-class intellectuals who studied Samuel Gregg is Director of Research at the in German universities in the 1960s rather than any ‘indigenous’ Acton Institute, Grand Rapids, Michigan, USA, Latin American phenomenon—destroyed many romantic illusions and author most recently of The Commercial among Christians. Society (2007), which received a 2007 Templeton Still, one has the sense that figures such as the current head of Enterprise Award for books that promote a culture the Anglican Communion, Archbishop Rowan Williams of Can- of enterprise. terbury (who once described himself as a ‘hairy lefty’ on economic Opposite: image from 10th century illuminated matters), have never quite been able to bring themselves to admit manuscript the deep moral and economic problems with socialism, or to ac-

JANUARY 2008 R E V I E W Most social justice activists from Christian churches routinely ignore or attempt to downplay the significance of Centesimus Annus.

knowledge the real moral and material benefits flowing capitalism—the Scottish Enlightenment—were never anti-Chris- from the spread of free markets around the world. tian in nature or purpose. Indeed, many of the most important Not all Christian leaders are like this. There were Scottish Enlightenment thinkers, such as William Robertson and plenty of Christians—Roman Catholic, Protestant, Hugh Blair, were devout Christians and saw no necessary conflict and Orthodox—who greeted John Paul II’s 1991 social between the development of commercially market-orientated so- encyclical Centesimus Annus, with a sigh of relief. Not cieties and Christian belief and practice. Adam Smith was most only did this encyclical affirm basic traditional Chris- likely a deist, but was not at all hostile to Christianity. The late- tian teaching about the social and economic value of French Enlightenment, by contrast, was deeply anti-Christian and private property, limited government, profit, and free culminated in the French Revolution’s terrorist acts against Chris- exchange, but it also spoke positively of entrepreneur- tian clergy and faithful lay followers. ship and market economies. This, in turn, raises the question of why a significant number Moreover, Centesimus Annus also severely criti- of Christian leaders in the West today have such an animus against cised the cultural effects of state welfarism upon the so- markets and free enterprise more generally. One reason, it has to cial order. Not surprisingly, most social justice activists be said, is ignorance. Leaving aside a lack of sometimes elemen- from Christian churches routinely ignore or attempt to tary knowledge of how business, commerce, and markets actually downplay the significance ofCentesimus Annus. work, many Christian leaders today would greet the above obser- There is a certain irony in some Christians’ ambiv- vations about the Christian contribution to the development of alence about the free market economy, insofar as most modern capitalism with polite stares of incomprehension. They are serious economic historians acknowledge that most also much more likely simply to accept the fiction of Charles Dick- of the foundations of what we today call capitalism ens as capturing the essence of nineteenth-century capitalism than were laid down by medieval and early modern Chris- the careful research of the Oxford-based Australian-born economic tian theologians. In his magisterial History of Economic historian Max Hartwell, which demonstrates that the Industrial Analysis, Joseph Schumpeter carefully describes the de- Revolution led to rapid increases in all criteria of material well-be- cisive impact made by scholastic thinkers ranging from ing, ranging from nutrition levels to life-spans. St Thomas Aquinas to Cardinal Tommaso de Cajetan A second reason is a more theological one—a reluctance (espe- (more famous for his memorial confrontation with cially among self-identified ‘liberal Christians’) to accept the very Martin Luther) in clarifying many of the concepts vital basic Christian insight that human beings are not angels. People to the workings of market economies. These include are human creatures marked by what the Catholic Church calls the significance of subjective value in determining the ‘original sin’—what Joseph Ratzinger, now Pope Benedict XVI, worth of economic goods and services, and the notion once called a type of radical disorder that is present in all human that the just price is normally the market price. beings, and which means that people, no matter how much they These Christian scholastics also had much to say strive to model themselves on Christ, will always be tempted by sin. about the role played by the division of labour in fa- In Centesimus Annus, John Paul II suggested that a consequence of cilitating economic efficiency (centuries before Adam this fact of human imperfection was the need for the social order Smith), provided the first detailed analysis and positive to address the reality that in many times and circumstances people evaluation of the working of money-markets, helped will pursue their self-interest. to clarify the nature of money and banking, and also By this, the late Pope did not mean that society should or articulated a much more positive view of business and could be reduced to the pursuit of self-interest. Rather, he meant commerce than the rather negative attitude adopted that it could not be ignored and, as far as possible, its workings toward such pursuits by ancient thinkers of antiquity should be integrated into a society’s social, political, and economic such as Aristotle and Plato. arrangements. Again, many Christian leaders often refuse to pay Another irony is that the people and events most sufficient heed to this very Christian—and Smithian—observation associated with synthesising the various ideas that about the human condition. many regard as facilitating the development of modern A third reason is also theological—a failure to pay proper at-

R E V I E W JANUARY 2008 tention to the mandate that Scripture tells humanity we have been must be said, of most Christian social justice activ- given to be creative. Scholars such as Michael Novak refer to this as ists—remains an eternal role for the Church, regardless the notion of ‘co-creativity’—not ‘co-creative’ in the sense of being of the economic system in which it is working. There equal with God, but co-creative in the sense of co-operating with are also plenty of moral snares awaiting people in free God in unfolding the full potential of His creation. Environmental- enterprise systems (as in any economic system). Thus ists and others have argued that this Judeo-Christian motif lies at far, secular approaches to such matters have proved the very roots of the capitalism they generally dislike because of its rather inadequate at addressing these real problems, alleged effects on the environment. In making this connection be- not least because they almost always degenerate into tween Christianity and capitalism, the environmentalists are correct. the promotion of politically correct causes through It is not, of course, a mandate for wanton destruction of the envi- the invariably incoherent ‘socially responsible’ invest- ronment. Nor does the co-creativity theme morally justify anything ment movement. It would, however, help if some done in the name of free enterprise. Christian leaders acquired a better understanding of It does, however, make clear that humans are owed a high de- the free economy, if only because it would help them gree of economic liberty as a right (John Paul II even refers to this to minister to the vast majority of people who labour as the ‘right of economic initiative’) because they are called to be in this economy every day to create the wealth we all co-creators with God. Certainly rights-language is overused today, tend to take for granted. But as long as some Christian and some Christians are especially guilty of this. Nonetheless, until leaders fail—wilfully or otherwise—to understand this there is greater appreciation among Christians of this insight about system, their capacity to engage the people working in economic liberty as essential for human moral and material develop- its midst will be marginal. ment, many of them will inevitably focus only on the distributional side of the equation, and forget that unless wealth is created, distri- I P A bution becomes a matter of how we divide up a rapidly diminishing stock of resources. It is not, of course, the case that the Christian faith and Church does not have any role to play in the conditions of a free market economy. The salvation of souls—a rather peripheral concern, it

JANUARY 2008 R E V I E W R E V I E W JANUARY 2008 Confusion and logic in the nuclear power debate

Paul Monk

hould we spurn nuclear energy, despite the need Who is being ‘rational’ here? for alternative energy sources that will enable Unlike the authors of the reports, Lowe is convinced that nuclear Sus to cut greenhouse gas emissions? Ian Lowe, energy is ‘not a sensible response to climate change’. He remarks president of the Australian Conservation Founda- that ‘that section of the press’ represented by The Australian tion, argues that we should in the latest of Black Inc.’s Quarterly Essays, Reaction Time: Climate Change and rang me to ask if I had been persuaded by the ‘rational the Nuclear Option. The nuclear option, he claims, argument’ [Lowe’s own inverted commas] of the [Swit- would be a decisive step in the wrong direction and it kowski] report to ‘move beyond my emotional opposi- is ‘very strange’ that it is being considered, especially tion to nuclear power.’ I told them that my opposition to as a solution to climate change, given that, by the end nuclear power was rational and based on both the experi- of the twentieth century, nuclear energy looked like ence of the last fifty years and a sober assessment of global ‘a dying industry’. futures. Actually, it isn’t that strange. The surge in world His ‘rational’ opinion is that ‘promoting nuclear power as the so- energy demand, driven chiefly by the extraordinary lution to climate change is like advocating smoking as a cure for economic growth in China and India, has led to a obesity’. Instead, he advocates the immediate embrace of renewable sextupling of the spot price for uranium over the past energy. Yet the authors of the two reports do not promote nuclear four years. This has rekindled interest in both mining power as the solution to climate change, but as a useful part of it. and exploration. The market has done its work. Fur- They believe there is no possibility whatsoever of renewables pro- thermore, the use of uranium does cut greenhouse viding the solution to both baseload power needs and greenhouse gas emissions, so recommending it for this reason is gas emissions for many years to come. They call for a combination hardly strange. of cleaner and more efficient use of fossil fuels, nuclear energy and Whether or not it is ‘strange’, Lowe objects to renewables. the use of uranium. His essay is a response to the How are we to discriminate between these two sets of ‘rational’ appearance, in 2006, of two substantial government arguments? Reading the two reports, one can’t help being impressed reports which made the case not only for expanded by the volume of evidence and opinion that they drew upon and uranium mining but for a nuclear industry in Aus- their efforts to ponder the many issues raised by nuclear energy. tralia. Those two reports were Australia’s Uranium: Depending upon their predispositions, however, most people will Greenhouse Friendly Fuel for an Energy Hungry World, either accept the reports as authoritative and dismiss Lowe, or accept produced by the bipartisan House Standing Com- Lowe’s critique without actually reading the reports. That, all too mittee on Industry and Resources, chaired by Geoff often, is how public debate goes. Prosser; and Uranium Mining, Processing and Nuclear Both the government reports and Lowe’s essay are rich in claims Energy—Opportunities for Australia?, produced for and data, but we need to see and assess the reasoning that connects the Department of the Prime Minister and Cabinet their data to their conclusions. Both in the summaries of key points by a task force chaired by Ziggy Switkowski. and in the conclusions to chapters, the reports present many findings and recommendations. What they do not do is make explicit how they derived these from their data. Nor do they acknowledge Paul Monk is a founder of Austhink Consulting where they are most open to objections. Lowe, conversely, has of- (www.austhink.com). A longer version of this fered us a passionate essay, but the argument he makes is discursive article is available at www.ipa.org.au. and must be pulled together if we are to evaluate it.

JANUARY 2008 R E V I E W Uranium mining reductions. But of course how long it The two reports, for their part, The two reports argue that Australia would last depends on the rate at which amply acknowledge the importance of should increase the mining and export of it is used and also how efficiently it is the ‘nuclear energy is too risky’ line of uranium on two basic grounds: it would used. If you are following the debate, argument. A third of the House Report be profitable and it would be globally this is one indicator to watch: just in so (chs 5, 6, 7 and 8) and fully half of the responsible. Lowe disagrees with both far as one or another estimate is better Switkowski Report (chs 5, 6, 7, 8 and 9) claims. His case against the profitability justified, our opinion regarding the case address risk and safety issues. The con- of uranium mining and exports looks far as a whole ought to be proportionally af- sensus of both panels is that those risks weaker than his case against the claim fected. Neither Lowe nor either of the are far less dramatic than popular fear that such mining and exports are glob- reports offers a compelling case for any or critical opinion, including Lowe’s, ally responsible. But to be confident of of these widely differing estimates. suggests. They also urge a major public any of this we would want to check out Lowe’s strongest suit appears to be education campaign to address people’s a number of patently contradictory fac- his claim that the use of nuclear en- fears. Instead of embracing this idea, tual claims by the two sides about the ergy to try to reduce greenhouse gas Lowe asserts that it would merely con- prospects for export earnings from ura- emissions is too risky. There are several sist of propaganda. nium or how long the supply of conven- grounds for this claim—that there is no tional uranium resources will last. safe way to store high-level radioactive ‘Propaganda’ or evidence? The The latter is especially troubling. Is waste, that there could be catastrophic Chernobyl deaths it less than 50 years, as Lowe argues, 85 accidents with nuclear reactors and that What constitutes propaganda and what years, as the Switkowski report argues, uranium can end up in hostile hands as constitutes correction of error are not or, as the House Standing Commit- weapons—but the reports address each merely matters of arbitrary opinion, but tee on Industry and Resources argues, of them. The problem with his essay is of the best evidence. Take the case of the 270 years? Even if it would last only 50 that he is too eager to dismiss their an- real or alleged risks to our safety from years, it might be worth exporting, but swers to his questions. He thinks that using nuclear energy. This is, perhaps, it would plainly only be part of an in- they lack credibility, but he diminishes the biggest shibboleth in the debate. The terim solution either to energy supply his own by simply trying to sweep ob- risk of nuclear accidents is commonly problems or greenhouse gas emission jections to his opinion aside. believed to be far more alarming than

R E V I E W 10 JANUARY 2008 Ian Lowe’s passionate objection to the expansion of Australian uranium mining and exports is less soundly based than he believes.

accidents related to fossil fuels. Think: This sounds like a lot of deaths, is in imminent danger and has The China Syndrome, Three Mile Island but it represents a tiny proportion of the to use nuclear—the one safe, and, especially, Chernobyl. background rate of cancer deaths and is available, energy source—now The House Report examined this spread over decades. Consider, by com- or suffer the pain soon to be in- concern in detail, drawing upon a wide parison, that between 10,000 and 15,000 flicted by our outraged planet. range of expertise and interest group sub- coal miners die in mining accidents Never mind whether you believe the plan- missions. Its findings were that, when we around the world annually. The overall et can be ‘outraged’. ‘Destabilised’ will do look at the actual statistics of accidents, contrast with Caldicott’s figures is stun- the work. Never mind, either, whether or nuclear energy has a very much better ning. What it underscores is the need to not you accept Lovelock’s apocalyptic safety record than fossil fuels. The mor- cross-examine the evidence on which we prognosis regarding the ‘imminent dan- tality rates from mining accidents and the base our overall judgment in this matter ger’ to civilisation. Here is a renowned morbidity rates from fossil-fuel pollution and to see where that judgment is most environmental activist who believes that are far worse than the deaths or disease sensitive to such cross-examination—re- global warming is a dire reality and who, that can be attributed to the peaceful use gardless of our starting point. far from thinking that the use of nuclear of nuclear energy. Why, therefore, do the If you are disposed, as Lowe is, to energy is a ‘very strange’ response to this public fear nuclear energy? suspect the motives or integrity of the state of affairs, is urging his ‘friends in the Chernobyl is part of the answer, but bipartisan House panel, you need, in movement’ to accept it. He goes so far as the evidence in this regard is remarkable. this case, to challenge the integrity of to assert that it is ‘the one safe, available Ever since the reactor at Chernobyl ex- the Chernobyl Forum, which produced energy source’, which, if true, would be ploded in April 1986, it has been widely the 2005 report. The Chernobyl Forum seriously disconcerting, given the limited regarded as a damning indictment of nu- comprised eight international agencies uses to which we can put it in the near clear energy. The House Report offered a and three national governments and drew future. But he does believe that it can and good deal of evidence that the Chernobyl upon the contributions of 100 recognised should be used. incident should not weigh as heavily in international experts. Does this make it Considerations such as these suggest the scales of our judgment as it tends to definitive? Perhaps not, but it must carry that Lowe’s passionate objection to the do. In particular, it found that the inconsiderable weight. expansion of Australian uranium mining cident caused far fewer deaths than are and exports is less soundly based than he commonly attributed to it. The advocacy of James Lovelock believes. Of course, this analysis is merely The panel heard and recorded Hel- On the broader issue of the riskiness of indicative, not exhaustive. It illustrates, en Caldicott’s claims that the Chernobyl nuclear energy, there is the opinion of nonetheless, how our reasoning can aid death toll included 5,000 to 10,000 world famous ecological campaigner us in navigating around the complexities clean-up workers alone, and will end up James Lovelock. He wrote in 2004: of a debate, instead of either being over- killing between 140,000 and 450,000 whelmed by them or waving them aside people through cancer. A major 2005 I am a Green and I entreat my and making a judgment based on only a UN report, Chernobyl’s Legacy: Health, friends in the movement to few salient considerations. Environmental and Socio-Economic Im- drop their wrongheaded objection to nuclear energy. Even if pacts, however, in the most comprehen- I P A sive evaluation of the Chernobyl acci- they were right about its dan- dent’s consequences to date, concluded gers, and they are not, its world- that there were only 47 deaths directly wide use as our main source of attributable to the Chernobyl incident energy would pose an insig- between 1986 (28) and 2004 (a further nificant threat compared with 19 in 18 years) and that the radiation re- the dangers of intolerable and leased by the explosion will end up caus- lethal heat waves and sea levels ing fewer than 10,000 cancer deaths over rising to drown every coastal a 50-year period from 1986. city in the world.…civilization

JANUARY 2008 11 R E V I E W Council regulations crash street parties Christopher Murn o, you have taken it upon yourself to throw a street party for your neighbours over the holidays. It wouldn’t be Moreland City Council Sa bad idea—you would be doing your part to promote Go For Your Life social interaction in your community. Street Party Kit But plan ahead. Navigating the bureaucratic hurdles y guide to An eas creating fa ntas that governments place in front of street parties takes a lot tic str eet part ood of work. ies in your neighbourh Here are some things that must be considered for such an event: council permits, public liability insurance, noise level infringements, traffic management plans, crowd control, food handling regulations, alcohol consumption, risk assessment, police checks, invitations, rubbish disposal, canvassing the street for road closure approval, obtaining road barriers and notification to police, ambulance and fire services. You will be forced to spend a lot of time corresponding with your neighbours before any event takes place. Approval by at least 75 per cent of the street’s residents is required for the road closure. Then guests must be invited and attendance confirmed. Don’t forget to ask your fellow residents for a con- GASAS tribution to cover the costs of the party. You may even be required to deliver written safe food-handling instructions, so ROAD CLOSED do not be surprised if your neighbours are ‘out’ when you come calling. Not only will you be consuming your time preparing a street party, but your money as well. Most councils require the coordinator to hold a certificate of public liability insurance for at least $10,000,000 worth of cover. Add to this permit The Moreland Street Party Kit cover features a fees, equipment hire, food and drinks, and things are starting drummer. Drumming would however exceed the to become very costly. Last year, it would have cost a citizen in 65 decibel limit for street parties in Moreland. the City of Whitehorse (Victoria) over $1,000 to hold a street party before a single sausage was sizzled. Street party organisers in the City of Rockdale (NSW) There are also road safety legislation and regula- are required to pay a temporary road closure permit fee of tions to consider. NSW residents must comply with $187 and an additional $29 per six metres of closed road. Part 8 of the RTA Guidelines for Traffic Facilities. Vic- Furthermore, Rockdale requires applications three months torian residents must abide by the Road Safety Act 1986 in advance of the event. Certainly, some councils waive the which, if neglected, may result in a $6,607 fine. application fee for community events or non-profit organisa- If you are lucky enough to reside in Townsville, tions, but most other councils demand an application or per- you may be eligible for up to $500 to meet the expense mit fee in excess of $100. (This often includes hire of street of food, drink and party equipment, courtesy of Mayor barriers.) Tony Mooney. Although effective at reducing the cost of parties, it creates perverse incentives to overindulge. Christopher Murn is a researcher at the Furthermore, it does not reduce the bureaucacy of or- Institute of Public Affairs. ganising a street party.

R E V I E W 12 JANUARY 2008 Don’t think that you will have time allow residents to hire the street as they • Whitehorse City Council’s street to relax; you will be preoccupied with would a hall, reducing the cost of public party guide recommends that food your duties as event co-ordinator. In the liability insurance to $20 per event. Most not be prepared by a person with City of Stonnington (Victoria), event co- other councils still require co-ordinators an infectious illness and prohibits ordinators must follow a 25-page safety to obtain a certificate of public liability the use of umbrellas on a windy day. plan. The safety plan makes event co-or- coverage at their own expense. Presumably Whitehorse citizens lack dinators safety wardens, responsible for Though these street party kits go a the common sense to take these pre- abiding by the safety plan and controlling long way towards informing event co-or- cautions of their own accord; the safety organisation, which comprises dinators and streamlining the application • The City of Stonnington recom- the safety warden and any additional process, they do little to remove the regu- mends that event co-ordinators wear wardens. latory burdens that complicate the exer- fluoro jackets and carry area maps, As a safety warden in Stonnington, cise. Event co-ordinators are being actively almost certainly to prevent them you will have to complete a complicated encouraged to throw street parties but, at from becoming lost on their own seven-step risk-assessment process in ac- the same time, must still comply with the streets. Additionally, event co-ordi- cordance with AS/NZS (Joint Austra- absurd regulatory requirements. nators are to carry sunscreen to en- lian/New Zealand) risk management In the City of Moreland (Victoria), sure that guests are not burnt on a standards. Fortunately, you will have five street party co-ordinators are required to sunny day. response guides to follow, ranging from employ an independent acoustic engineer vehicle accidents to electrical failures, to monitor sound levels at the event if • In New South Wales, residents of and several prewritten emergency an- they expect them to exceed 65 decibels. the City of Canada Bay are prohib- nouncements to memorise. To put this in perspective, a car exhaust ited from erecting permanent(!) bar- If Stonnington’s safety plan is to be must not exceed 90 decibels in Victoria, a beque structures on a council road. believed, you can expect to suffer anxi- lawnmower puts out around 90 decibels, a • And in South Australia, in the City ety, stress, injury, frustration, panic, ag- hairdryer 70 decibels, while laughter is 65 of Mitcham, environmental health gravation, coupled with the possibility of decibels. Therefore, to throw a street party officers may attend street parties to catastrophic events including drunken, in Moreland, you must either hire a sound make sure your sausages aren’t pink riotous and disruptive behaviour, fires, engineer or ask your neighbours to refrain in the middle. electrocution, food poisoning, illness, from laughing too loudly. hearing loss and property damage. Forget about having a cake store or So by all means go ahead and throw a You may be forgiven for now think- letting the kids run a lemonade stand; this street party—just don’t play any music, ing a street party is not worth the effort. will require temporary food trading and tell any jokes and don’t let the old lady But don’t despair—the Victorian state handling permits from your local council. down the street sell her cakes and cook- government implemented a $500,000 Your children will have to be very bright ies. Your local council wants you to have programme last year to save the street indeed to understand the plethora of re- fun but only on their terms; they even party. Though not yet adopted by all quirements and guidelines, fill out all the go so far as to make condescending sug- councils, it involves a grant of $6,000 permits and develop a pricing strategy that gestions about how to have fun in their to each council to develop a street party will allow them to recoup the permit fee. street party kits. kit. A street party kit typically includes a If you live in the City of Port Phillip, your Community spirit is invaluable; ‘how to’ publication, model traffic man- children must sell 50 glasses of lemonade, however it is not something that can be agement plans, a council barbeque and at $1 a glass, to cover the cost of the per- manufactured. If the government would two café-style umbrellas. mit alone. Further: like to increase community participation The central issue of the ‘Go For Your and involvement, they should first re- • In Victoria, in the Shire of Yarra Life’ street party initiative is the relief of move the restrictions that inhibit citizens Ranges, event co-ordinators must no- public liability insurance burdens on from interacting with each other. tify bus services of road closures and event co-ordinators. The pilot project in While the use of a council barbeque meet the costs of alternative routes; the City of Port Phillip (Victoria) did this and two café-style umbrellas won’t bring by registering the event co-ordinators as • Port Phillip City Council requires back the street party, the strongest mes- volunteers in order to invoke a conces- that event co-ordinators undergo a sage of the ‘Go For Your Life’ street party sion for non-profit ventures. Melbourne police background check; initiative is that citizens are still allowed City Council avoids this problem simply to throw a street party in this age of mad • In the City of Boroondara, street by meeting the costs of public liability bureaucracy. parties should not interfere with ve- insurance for co-ordinators through the hicular access to residents’ properties. Carlton Police and Community Consul- I P A This is particularly difficult given that tative Committee. In NSW, the City of barriers will be erected by the council Ryde amended its Casual Hirers Policy to when closing the street;

JANUARY 2008 13 R E V I E W What next? Liberalism after the Howard government

‘When you change the government’, ar- Howard’s major legacies, and it is largely a positive Chris Berg: gued John Howard in the last few days legacy. With the government’s extraordinarily flat- before the election, ‘you do change the direction of the country’. tering economic record, it is no wonder that vot- Paul Keating’s clarion call proved to be just as ineffectual the ers prefer more of the same. second time round. That could perhaps be because it obviously Unfortunately, brand status quo has applied isn’t true. Despite the high level of state economic and social in- to areas which advocates of liberal philosophy— tervention in Australia, the nation isn’t steered by Captain Govern- that is, the ideological combination of limited ment. government and the open society—would prefer As Tim Wilson writes in this special section on liberalism after it did not. As Des Moore shows in his piece on the the Howard government, part of the problem that the Coalition Howard government’s spending and taxing re- faced in its final years was the unwillingness of the government cord, despite their professed sympathy with small to grapple with key demographic and social changes. Similarily, government principles, the Coalition delivered no as Ken Phillips notes, in industrial relations the rise of indepen- reduction in discretionary spending and its elec- dent contracting has been meteoric—to the extent that there are tion promises foreshadowed no future reduction. now far more self-employed people than there are members of a Along a wide range of public policy areas, the union—but the cause of this change was economic, not legisla- Howard government could have done more. Indus- tive. trial relations reform was used as a federal power Between 1996 and 2007 a lot of things happened, and very grab, rather than as a push towards common law few of them were the consequence of Commonwealth legisla- contracts. Taxation reform drove yet another stake tion. into the already terminal federal compact. The ‘change the country’ line was doubly inappropriate be- Other reforms were barely reforms at all—the cause of the status quo strategy of the Rudd opposition. Federal Labor’s big ticket items may have been climate change and broad- band, but fibre optic networks and carbon trading don’t win elections. Rather, it was Labor’s mantra of ‘economic conservatism’ that was specifically designed to repudiate Howard’s argument. To try to emphasise their credentials, Rudd and Gillard’s repeatedly af- firmed the independence of the Reserve Bank—as if that was ever up for grabs. The message was simple: vote for the ALP, and they won’t change the country. But if you vote for the Coalition, they will embark on another round of industrial relations reform, and the country certainly will change. The Howard government became alienated from its own record of conservative governance. The 2007 election re-established the status quo brand in the minds of political strategists. It will likely go down as one of John

Chris Berg is a Research Fellow with the Institute of Public Affairs and Editor of the IPA Review. xt? What ne 2006 changes to media law did little to free up a stifled com- But conversely, the final years of the Howard govern- mercial media sector. It is hard to avoid concluding that the ment demonstrated what can result when a political party government’s approach to reform was about quantity, not has no philosophical base, lacks the fiscal restraint imposed quality. Economic reform packages may have started out by ideology, and simply purchases the votes it needs. Sooner well-intentioned, but when they emerged from the meat- or later, voters—or in the case of the 2007 election, the op- grinder of parliament, they too often represented steps position—punish them for their directionless expedience. backward. Perhaps one reason why liberalism seems impossible to This mixed record—the Howard government was ex- market to voters is because it hasn’t yet been tried. No ma- tremely successful at managing the economy, but disap- jor party has gone to an election—from opposition or from pointing at reforming it—is reflected in this IPA Review issue government—with a full programme of social liberalism and by the conflicting, but not irreconcilable, accounts by Tom economic liberalism. Switzer and Christian Kerr. In her piece, Louise Staley starts to examine what an ar- ray of liberal social policies might look like. Importantly, she Liberalism’s dilemma argues that ‘liberal’ in this context is not merely a synonym of Nevertheless, elections are not won or lost on the size of ‘left’, but neither is it ‘conservative’. Instead, liberalism needs government, weak media regulations, or eroding federalism. to develop its own approach if it is to break through the so- Elections are won on appeals to the status quo, issues such cial policy impasse. But this is an area where modern liberal as immigration, or security fears. Federal seats are won on thought is conspicuously lacking, and filling that hole will vacuous—and, as Richard Allsop points out, for federalists need to be a part of any liberal revival. deeply concerning—issues such as graffiti, hoons and train There is the possibility, too, to develop an economically lines. It isn’t just that voters are not interested in liberal poli- liberal message that may resonate with voters. The Howard cies. In many cases it has proven far easier to win votes with government suffered from its abstract message—‘economic an illiberal platform. growth’ is far less concrete than fibre-to-the-node and the Part of this gulf between the policy preferences of vot- Kyoto Protocol. Voters may instead respond to campaigns ers and liberal policy preferences has been explained well by targeting over-bureaucracy and regulation, particularly as Bryan Caplan in his 2007 book, The Myth of the Rational Voter: they affect business and community life. The record levels Why Democracies Choose Bad Policies. In it, Caplan nominates of regulatory and legislative activity during the Howard gov- four biases held by the average voter that are not empirically ernment provide ample scope to do so. It is fair to say that justifiable. The ‘make-work bias’ is a tendency to equate eco- such a campaign would be a direct repudiation of the How- nomic growth with jobs, rather than productivity; the ‘anti- ard record. foreign’ bias ignores the importance of foreign trade; the Ronald Reagan campaigned along these lines, although ‘pessimistic bias’ overplays contemporary economic prob- it should be noted that Australia lacks the anti-statist politi- lems; and the ‘anti-market’ bias underestimates the benefits cal culture of the United States. But if the Rudd Labor govern- of market exchange. ment turns out to be anything like the governments of Tony Caplan’s four biases go most of the way to explaining Blair and Gordon Brown, this regulation is likely to increase the distance between liberal philosophy and Liberal Party exponentially—presenting possible policy targets such as policy. As a consequence, the Coalition’s loss of government privacy and bureaucratisation. illuminates sharply a debilitating problem that liberalism Nevertheless, again we reach a strategic bottleneck— faces in 2007. campaigns against the Nanny State may swing voters to- What role can liberal philosophy have if it can’t be suc- wards liberal parties at the margins, but probably not deliver cessfully marketed to voters? two dozen seats. Arguing that a consistently liberal message Certainly, ideology cannot be the sole guide to policy. could win an election would be convenient, but doesn’t This is the classic dilemma for libertarians seeking public seem to be true. office. As one American libertarian noted, ‘There is no mass In this IPA Review, we have assembled a range of ap- constituency for seven-year-old heroin dealers to be able to proaches to this challenge. What is not under question how- buy tanks with their profits from prostitution.’ ever is the need for liberalism in Australia, and the challeng- Liberal political parties are unlikely to win future gov- es which liberals face—limited government and the open ernment on a platform of radical change, except in times of society remain ‘simple and obvious’ goals regardless of their crisis. The four biases of the irrational voter mean that dra- electoral popularity. matic increases in immigration or a reduction in the mini- I P A mum wage are hardly tickets to electoral success. In an era of status quo politics, it appears that ideology is, on net, an electoral negative rather than a positive.

JANUARY 2008 xt? 15 R E V I E W What ne The clearest in the West: Australia’s happy warriors Mark Steyn

ccording to my Oz-watching pals in Britain and America, John Howard is not a failure but What mattered to the world a victim of his own success. He made Australia safeA for the Labor Party—or, at any rate, safe enough was the strategic clarity that a small but sufficient number of bored electors were willing to take a flier on a house-trained Labor on the short leash of a quasi-Blairite leader. that John Howard’s ministry That, at any rate, is the spin. Even if it’s correct, and accepting that in parlia- demonstrated on the mentary democracies even the greatest generals go a bridge too far, I regret Howard’s end. True, I object in critical issues facing Western principle to Australia’s gun laws, and I regard much of the Aussie economy as embarrassingly over-regulated after a decade of supposedly conservative rule. But, as civilisation. the prime minister put it in one of his most famous soundbites, this is no time to be an 80 per cent ally. I Vietnamese.’ But those are races and nationalities. Islam is a reli- am a 100 per cent ally of Mr Howard. gion, and a political project, and a globalised ideology. Unlike the From my perch several thousand miles away, I birthplace of your grandfather, it’s not something you leave behind won’t pretend to be an informed analyst of the inter- in the old country. Indeed, the pan-Islamic identity embraced by nal dynamics of the Liberal Party. During my last visit, many second- and third-generation Muslims in the West has very en route from one meeting to another, there’d usually little to do with where their mums and dads happen to hail from. be someone in the car explaining in the ride from the ‘You can’t find any equivalent in Italian or Greek or Lebanese or airport why the fellow I was on the way to see was on Chinese or Baltic immigration to Australia. There is no equivalent the outs with whichever Prime-Minister-in-waiting of raving on about jihad’, said Howard, stating the obvious in a I’d met with the day before. I felt a bit like Bob Hope way that most of his fellow Western leaders could never quite bring in The Paleface, heading for the big shootout and get- themselves to do. ting his head stuffed full of contradictory advice: He ‘Raving on about jihad’ is a splendid line which meets what leans to the left, so draw to the right; the wind’s in English law used to regard as the ‘reasonable man’ test. If you’re a the east, so shoot to the west; etc. What mattered to reasonable bloke slumped in front of the telly watching jihadists the world was the strategic clarity that John Howard’s threatening to behead the Pope, or Muslim members of Britain’s ministry demonstrated on the critical issues facing (if National Health Service ploughing a blazing automobile through you’ll forgive the expression) Western civilisation. the check-in desk at Glasgow Airport, ‘raving on about jihad’ fits in First, the prime minister grasped the particular a way that President Bush’s religion-of-peace pabulum doesn’t. Both challenge posed by Islam. ‘I’ve heard those very silly Bush and Blair can be accused of the very opposite of the traditional remarks made about immigrants to this country since politician’s failing: they walked the walk but they didn’t talk the I was a child’, said the Democrats’ Lyn Allison. ‘If it talk. That’s to say, neither leader found a rhetoric for the present wasn’t the Greeks, it was the Italians … or it was the struggle that resonated. Howard did. Likewise, Peter Costello. Sympathising with Muslims who wish to live under sharia, he mused: ‘There are countries that apply Mark Steyn is the author of the bestselling book religious or sharia law—Saudi Arabia and Iran come to mind. If a America Alone: The End Of The World As We person wants to live under sharia law, these are countries where they Know It, and an internationally syndicated columnist. might feel at ease. But not Australia’. It’s a glum reflection on the He lives in the United States and can be read at times that such an observation should be controversial. Yet it stands www.SteynOnline.com. in marked contrast to, say, the Dutch Justice Minister Piet Hein

R E V I E Wxt? 16 JANUARY 2008 What ne Donner, who remarked that if the electors voted to bring in Australia should never have had a ‘Department of Immigra- sharia he’d be okay with that, or the Swedish politician who tion and Multicultural Affairs’, but, given that it did, Howard said that Swedes should be ‘nice to Muslims while we are in was right to rename it the Department of Immigration and the majority so that when they are in the majority they will Citizenship. Government should promote citizenship, not be nice to us’. multiculturalism. Underpinning those words is the realisation that most of The Liberal government was all but unique in under- the Western world is very demographically weakened. Immi- standing the three great challenges of the age—Islamism, de- gration adds to the gaiety of the nation, improves the choice mography, civilisational will—that in other parts of the West of restaurants and makes pasty-faced white folks feel very vir- are combining to form the perfect storm. Just as importantly, tuous about their multiculti bona fides, but a dependence on unlike so many second-tier powers, Australia did not put its immigration is always a structural weakness, and should be faith in the chimera of insipid, obsolescent transnational talk- addressed as such. At a time of unparalleled prosperity and ing shops in which attitudes substitute for policy. peace, the majority of developed na- I liked to call Alexander Down- tions have chosen, in effect, to give up er my favourite Foreign Minister, on the future. Mr Howard’s ministry was which, in hindsight, was damning one of the first governments to get this If it’s right to with the faintest of praise. After all, and, in contrast to the dismal Euro-fa- I’m not sure during his long tenure talism above, to try to do something to intervene in the how many candidates there ever reverse it. Peter Costello’s exhortation to were for runner-up: Dominique de Aussie couples—have one for mum, one Sudan, it’s not Villepin? Britain’s Robin Cook and for dad, and one for Australia—gets the Margaret Beckett? Canada’s Lloyd stakes exactly right. The mid-twentieth- wrong because Axworthy and Bill Graham? Colin century entitlement state was built on a Powell I never expected much from, careless model that requires a constantly but few hitherto clearheaded types growing population to sustain it. the Russian guy have shrunk in office as remorselessly When I made this point in a speech as Condi Rice. I loved Downer for his in Australia, Malcolm Turnbull passed declines to stick gleeful mockery of transnationalism me a note in which he’d scribbled down and its pointless committees stuffed various population models based on cer- his hand up at the with representatives of what he called tain fertility-rate calculations. I confess ‘busted arse countries’. (I attempted I’ve always had a certain antipathy to to introduce the term ‘busted arse Mr Turnbull because his republicanism relevant meeting. country’ to the State Department, seemed small-minded and unworthy, but so far without success.) In more but in the years in which I’ve spoken on this subject to po- genteel mode, he put it like this: ‘Multilateralism is a syn- litical figures on three continents, that’s the only occasion in onym for an ineffective and unfocused policy involving inter- which a key government figure already knew the numbers nationalism of the lowest common denominator’. See Dar- and understood their implications. fur, the Iranian nukes, the UN’s flop response to the tsunami, And that brings us to the government’s next great strand etc, etc. If it’s right to intervene in the Sudan, it’s not wrong of strategic clarity. At his 2006 education summit, John How- because the Russian guy declines to stick his hand up at the ard called for a ‘root and branch renewal of Australian history relevant meeting. in our schools, with a restoration of narrative instead of what The Howard years saw the emergence of a regional pow- I labelled the “fragmented stew of themes and issues”’. As he er that, from East Timor to the Solomon Islands, understood explained at the Quadrant 50th anniversary celebration, ‘This its responsibilities at a time when the Euro-Canadian poseurs is about ensuring children are actually taught their national shrank from theirs. inheritance’. The absence of a ‘narrative’ and an ‘inheritance’ As a distant observer of Australian affairs, I had some is a big part of the reason why British born and bred subjects small personal contact with Howard and co. over the years. blow up the London Tube, why young Canadian Muslims Merry, feisty, blunt and fair, they were exactly what we need with no memory of living in any other society plot to behead at this moment: happy warriors. I’m saddened that Austra- their own prime minister. You can’t assimilate immigrants lians feel differently. But if it’s too late to get the US Con- and minorities unless you give them something to assimilate stitution amended in time for them to run for President this to. It’s one thing to teach children their history ‘warts and November, the savvier candidates ought to snap ’em up as all’, quite another to obsess on the warts at the expense of all speechwriters. else. The West’s demographic weakness is merely the physi- I P A cal embodiment of a broader loss of civilisational confidence.

JANUARY 2008 xt? 17 R E V I E W What ne R E V I E Wxt? 18 JANUARY 2008 What ne Fighting the last war The construction reforms—not WorkChoices—were the real industrial relations issues in the 2007 campaign.

Ken Phillips

or the last century, it has been assumed when Labor caught up and moved beyond the Coalition. The story of that conservative parties represent the how this happened gives an insight about what we might see in the fu- Fbosses, and the Labor Party represents ture. the workers. The political divide has reflected When the Coalition unexpectedly won Senate control in the 2004 the assumed workplace divide. election, it was unprepared. It had not expected to be in a position to But, as a matter of internal business re- change the law as it wished. It chose to drive workplace reform as the big alities, this worker–boss consciousness in Aus- ticket item for the following three years. tralia has been collapsing for more than two There were several reasons for this. Howard saw an opportunity decades. The evidence is well accepted. Inde- to politically ‘checkmate’ Labor by tearing apart the industrial relations pendent contracting is widespread. Workers institutions that underpinned union and Labor Party power. Further, are ‘aspirational’ and no longer firm-loyal. The Howard’s agenda had an economic angle—to create more jobs without progressive management mantra is that ‘every- increasing inflation by freeing-up labour markets. He also had a cultural one is a manager’. agenda—to release latent entrepreneurship in the community. Competition pushes businesses in this di- But while it knew that it wanted to destroy union power by abol- rection. Employers who view their workforce ishing the Industrial Relations Commission, the Coalition had little if as ‘the enemy’ are failing; and the correlation any concept about what would replace it. This failure was its political between business profitability and effective undoing. human capital management is accepted as axi- Howard’s earlier reform priorities, such as the tax reform that omatic. brought in the GST, had, for the most part, been well conceptualised For the last decade, John Howard has and implemented early in the electoral cycle—leaving time before the successfully captured the political mood that following election for adjustments and community acceptance. Work- flowed from these momentous workplace Choices broke all these rules. changes. By contrast, Labor has been trapped As a total package, the workplace reforms ultimately proved to be by its past. riddled with inconsistencies in terms of its themes, principles and design. The 2007 federal election marks a point The legislation itself was complex and produced major compliance issues for employers. This confused and quickly numbed the Coalition’s political capacity and strategy. Ken Phillips is a Director, Workplace Reform This contrasted sharply with Howard’s reforms to the construction Unit at the Institute of Public Affairs. sector.

JANUARY 2008 xt? 19 R E V I E W What ne Construction reform campaigning against him. The industry campaigned instead The construction industry reforms were designed under Tony to support the reforms but did not attack Rudd. Abbott’s ministerial leadership. They were already half in place This was the clearest, but not the first, indicator that La- at the end of 2004 and had received a good deal of public bor was changing under Rudd and with a speed and substance acceptance. Abbott had created an atmosphere for change that is and was historic. Union influence is being restricted. through Royal Commission exposure of industry rorts. And The Coalition reacted badly. By mid-2007 it was already construction unions had assisted by persistently displaying in political panic. Instead of declaring that the shift under their thuggery and a complete lack of interest in the competi- Rudd was a Howard reform victory, the Coalition looked for tiveness of the industry. excuses to say that the change was not genuine. The govern- Industrial relations laws in the construction sector had ment ignored the change inside the ALP and walked away always involved the secret sanctioning of mafia-like behaviour from claiming a new high moral ground based on its free mar- by unions in collusion with selected construction firms. The ket-induced success. system stopped a free market operating by restricting competi- Rejecting the morality of free markets was also Howard’s tion under the banner of a ‘level playing field.’ This came at downfall with WorkChoices. But this time, the failures of a high financial cost and assisted criminals to operate. Police WorkChoices stand in stark contrast to the highly successful and business regulators kept their distance, believing that they construction industry reforms. were constrained by ‘industrial realities’. The full construction industry reforms were implement- WorkChoices ed by late 2005. The guiding principles involved the applica- WorkChoices was portrayed by the union movement as a con- tion of the rule of law and ensuring that there was a function- spiracy between bosses and the government. Instead, Work- ing free market. The period 2005–07 saw dramatic industry Choices came from a totally different conceptual direction change. Construction costs plummeted. Strikes disappeared. that was not apparent until it was well implemented. Company profits soared. Wages went up. Construction activ- John Howard has always maintained that the Liberal ity and the workforce expanded hugely. Party is not purely liberal but a complex blend of liberalism The macroeconomic impact produced downward pres- and conservatism. WorkChoices came from a particular aspect sure on inflation and an expansion of wealth. of the Australian conservative tradition which views unions Construction companies—large and small—welcomed and bosses as potentially equal oppressive exploiters of work- the reforms. Their futures became reform-dependent. Apart ers. WorkChoices removed union legal authority over work- from NSW, State Labor governments privately welcomed the ers, but rather than delivering power to bosses, it transferred change. Construction unions are generally factional enemies power to government. of these governments and excessive construction costs damage Under WorkChoices, managers must comply with highly State budgets. The reforms improved State budget infrastruc- complex, detailed and often confusing ministerial regulations, ture spending capacity. subject to change at ministerial whim. WorkChoices in fact The reforms also had a political impact inside the Labor caused enormous business frustration and behind-the-scenes Party which Howard didn’t seem to recognise. The reforms lobbying, which the Minister frequently ignored. WorkChoic- began a process of financially and industrially neutering the es is not an application of free-market principles but of tradi- mad, construction-funded Labor left—something which the tional Big Brother micro-interference in business. Labor Centre and Right factions and unaligned individuals What damaged the government most, however, was that could never achieve. This helped open the factional door for WorkChoices dropped a primary pillar of the rule of law. an unaligned Kevin Rudd. The 2005 WorkChoices Australian Workplace Agree- When Rudd took the ALP leadership in late 2006, he ments model dropped the requirement for the ‘no disadvan- initially followed the established public Labor position of op- tage test’ which had applied for years. This test had meant that position to the construction reforms. But on this, he and his no worker being employed could be offered an AWA on worse deputy Julia Gillard changed their position fairly rapidly. conditions than they currently had. With the test gone, work- For many years, construction union funding of the ALP ers could be and were given new work arrangements with the has been overwhelmed by that from the corporate sector. same employer on lower pay. Consequently, construction union influence inside the ALP It was a fundamental breach of core contract principles has long been counter-balanced by construction company in- which defied basic rule of law concepts. If a person has an fluence. existing contract, that contract cannot be altered without clear Around mid-2007, Rudd responded to representations agreement. The union movement pounced with brilliant anti- from construction companies and agreed to retain the reforms government marketing campaigns using real cases of workers and only modify aspects of them after 2010. Rudd bought receiving less pay against their wishes. Under commercial law, political time by neutralising potential construction industry many of the unions’ examples would have failed an uncon-

R E V I E Wxt? 20 JANUARY 2008 What ne The immediate future of a Kevin Rudd Labor Party is vastly different from the class-obsessed ALP of the past, although there are still some historical tensions.

scionable conduct test. The government reversed this policy The area meeting greatest political resistance has been in 2007, reintroducing the ‘fairness test’, but only after the workplace relations. Workplace reform is about allowing free political damage had solidified. market principles to operate inside firms. This changes rela- The design of WorkChoices reflected a confusion of tionships, cultures, motivations, creativity and outcomes. The competing and inconsistent agendas within the total work- last three years has triggered a major collapse in that political place reform package. The construction reforms applied free- resistance. market and rule-of-law principles and proved hugely success- The immediate future of a Kevin Rudd Labor Party is ful. WorkChoices was an arrogant expression of belief in Big vastly different from the class-obsessed ALP of the past, al- Brother government and a denial of the rule of law. though there are still some historical tensions. The government’s confusion over reform was reflect- The new federal model is the model that the ALP govern- ed in its incapacity to sell the reform package. Few, if any, ments of South Australia, Tasmania, Queensland and Victoria government ministers or backbenchers could explain the re- have adopted. Those governments have close personal and in- forms. Supportive advertising fell flat and became counter- stitutional affiliations with business, and conduct behind-the- productive because no clear message came through. scene struggles with unions and (still kicking) left-wing fac- The Australian Council of Trade Unions undertook an tions. They have substantially adopted free market principles, unprecedented lengthy campaign which delivered clear ‘rule often displaying a sharper intellectual grasp of the issues than of law’ messages that unsettled the government’s political ori- their dysfunctional Liberal oppositions. entation and confidence. The government’s inconsistencies Rudd’s risk is political infection from New South Wales. created and sustained the ACTU’s campaigning opportuni- There, the ALP government is of the traditional deal-making ties. unionist form, where the free market is systemically corrupted Kevin Rudd fed off this opportunity. As with the con- for the purposes of factional power plays. struction industry reforms, he adopted elements of Work- Rudd’s earliest test in this regard is likely to be implement- Choices that muted business opposition to him. Further, he ing his promise to harmonise workers’ compensation and oc- adopted those parts of WorkChoices that would deny unions cupational health and safety laws. The factional differences the same industrial power they once had. This limits a re- between New South Wales and the other States on these items surgence of left-wing factional power in Labor that would is stark. For most national employers, a consistent, single OHS otherwise undermine Rudd’s position. and workers’ compensation scheme offers one of the most im- The outcome is that industrial relations policy—once portant productivity opportunities available. thought to be at the heart of Labor principles—has been On workplace issues, the Liberal Party is a mess. It is con- dumped. Rudd initiated historic cultural, structural and pol- fused about its objectives, sometimes free-market, often au- icy change within Labor, thus supporting his own standing. thoritarian, still believing that it can benevolently micro-man- Throughout 2007 the Coalition refused to believe that age people’s behaviour. It wants a union-controlled ALP and this was occurring. It adopted obsessive denial, determined to fantasises that the ALP is unchanged. It is determined to assess fight the ghost of an old ALP rather than confront the ALP its opposition falsely for fear that a correct analysis will force that Rudd had made it become. change within itself. But above the party political issues, it may be that Austra- Industrial Relations and the future lia has edged closer to a consensus. That is, that at work, indi- of the major parties vidual and collective systems should coexist and even compete Over the last two decades, a significant political agreement to provide better outcomes for everyone involved. Class con- has developed around the wealth-creating superiority of free sciousness at work is rapidly dying in Australia and its parallel market systems. It’s been a struggle, but there is a strong con- political death would be a welcome event. sensus which supports the elimination of trade barriers, open financial markets, the private sector delivering government I P A services, choice in schooling and so on. Objectors to this consensus remain, but they exist on the political fringe.

JANUARY 2008 xt? 21 R E V I E W What ne Awkward problems in social policy Women and welfare after Howard Louise Staley

poverty, welfare—as well as the highly controversial Utopias are easy to imagine. and polarising issues of drugs, abortion, euthanasia and stem cell research. Nevertheless, we can examine Far more difficult is the task of imagining what a new liberalism two areas of social policy—welfare and public policy movement would look like if some attention needs to be paid to elect- concerning women—to illustrate the awkward com- ability. In the case of social policy (policies about human welfare and plexities that social policy presents for liberalism. behaviour), arguments about electability are often overshadowed by emphatic moral claims. Welfare Social policy has been a major challenge for liberals and the Liberal Party since the late 1960s, when the huge social changes we With the introduction by the Keating government still see unfolding started to gain some momentum. Indeed, social of ‘Working Nation’, the political culture in Austra- change is something with which liberal and conservative parties have lia changed from a consensus that unemployment always struggled—particularly as the causes of that social change are benefits are there to look after those whom society largely outside the political process. One example of this is the sub- has failed, to a division into those who believe that stantial change in attitudes towards same-sex relationships over the welfare is a stepping stone back into societal par- past eleven-and-a-half years. In 1996, the removal of discrimination ticipation (Labor’s rhetoric) and those who believe against same-sex couples was not even contemplated by either major that welfare is a barrier to social participation (Co- party and, had Australians been asked about it, they too would have alition rhetoric). been opposed. Yet the Australian people moved on, society changed, In either case, the result has been a change sometimes leaving the Liberal Party the ones out of step. Identical from the situation that prevailed until the 1980s arguments over the role of women continue to beset the Liberal Party, (where all unemployed people were entitled to gov- even though the country has also moved on. ernment support), to one where only those actively Part of the challenge for the Liberal Party has been the influence trying to obtain work could receive benefits. of conservatism on its organisation, but the rise of the conservatives Research shows strong support for ‘Work for within the Party does not fully explain the difficulties that it expe- the Dole’ across all educational levels. Significant- riences in dealing with social issues. With the notable exception of ly, support for ‘Work for the Dole’ programmes welfare policy, there has been a failure to engage with the complexity is higher in people who have been vocationally of most social policy issues. Advocates of liberalism have failed to trained than all other groups. These tradespeople develop in social policy the philosophically informed, but evidence- are the so-called ‘Howard Battlers’, who, through based, ideas seen in education, public management and many other their own efforts, have achieved a decent income areas. and lifestyle—and think that others should make Social policy is a wide field, encompassing discrimination, a similar effort. childcare, same-sex legal equality, maternity leave, affirmative action, In a strong economy, and with unemployment at record lows, it is the ideal time to capitalise on this feeling in the community that anyone who Louise Staley is a Research Fellow at the Institute of Public Affairs. wants a job can get one. To do so, it is important

R E V I E Wxt? 22 JANUARY 2008 What ne that future movements articulate the case for further re- former Republican Speaker in the US House of Representa- form towards personal income responsibility for those tives Newt Gingrich advocates shame as a control mechanism: of working age. For example, the contemporary trend to ‘Our culture should be sending over and over the message that move middle-aged dole-recipients onto disability payments young people should abstain from sexual intercourse until needs to be rejected as a major problem, not just for the marriage’. Similarly, Charles Murray, the US author, advocates welfare system but for the individuals themselves. removal of all welfare payments to single parents because he Welfare payments to single mothers present particular believes that ‘illegitimacy is the single most important social ideological challenges for both conservatives and liberals. problem of our time’. That sort of language is not part of the For conservatives, there is the problem of balancing their Australian debate. moral objection to ex-nuptial births against their desire to see In Australia, recent changes to sole-parent welfare have women stay at home and look after their children. Conserva- been limited to requiring the recipient to attend an annual in- tives appear not to recognise any contradiction between forc- terview until the youngest child is twelve and then facing a ing sole parents to work and advocating tax breaks or welfare limited activity test. This stands in marked contrast to welfare payments for married women who stay at home. On the other reforms in the US, where sole-parent benefits are limited to a hand, liberals have to reconcile their support for individual maximum of two years in any one spell and to a total of five choices about family structure with the evidence of diminished years overall. The significant difference in the magnitude of opportunities for children of sole-parent families. welfare restrictions is primarily a result of the different motiva- Under the Howard government, tentative steps were tions of reform. In the US, the demonisation of welfare moth- made to limit sole-parent benefits and these reforms were driv- ers as morally bad and in some way inherently different from en by the same concerns as those surrounding unemployment other mothers was a precursor to radical reform. By contrast, benefits—welfare dependency is bad for the recipient, and es- Australian reform was based much more on evidence of poorer pecially children. outcomes for children from single-parent households. This has been represented by critics of the Howard gov- One reason for Australia’s reform being so muted is that, ernment as a move towards ‘Americanisation’ of welfare, but unlike the US and UK, most single-parent households are the differences between the US’s approach to welfare and the headed by divorced women rather than young single women. Australian approach are instructive. Removing or severely restricting benefits in Australia is likely to In the United States, conservatives are much more likely be deeply electorally unpopular, as most women would know to make explicit moral judgements about desirable and unde- someone divorced with young children who relied on welfare sirable behaviour than Australian conservatives. For example, for a while.

JANUARY 2008 xt? 23 R E V I E W What ne Liberals have to reconcile their support for individual choices about family structure with diminished opportunities for children of sole-parent families.

However, another current policy setting appears to be opportunity is meaningless if there is no indication of it in out- encouraging teenage and single women into childbearing— comes. This is not the same as advocating equality of outcome, namely, the baby bonus. As there is substantial evidence that or affirmative action. Instead, it is recognition that there is a children born into single-parent households suffer a large lack of opportunity for women in a system that delivers only number of disadvantages, there can be no good argument for 15 per cent of their parliamentary representation as women. this policy and it needs to be scrapped. Instead of railing against quota-based affirmative action programmes, liberals would do better by working out other ways Women’s policies to increase the representation of women to better match the Liberalism has a problem with women. As a philosophy, lib- population—after all, it is absurd to argue that out of 226 Fed- eralism approaches people as individuals and is leery of any eral parliamentarians Australia cannot find 113 women of at policies, but especially those with government money at- least equal merit to the men currently occupying the green and tached, that seek to advantage people because of their mem- red leather benches. bership of a group. Paid maternity leave is largely the preserve of government As a result, liberalism tends to oppose affirmative ac- departments and some big businesses. Very few small and me- tion programmes, government largesse for maternity leave, dium-sized enterprises offer their employees this payment and childcare and parenting. Conservatives tend to be supportive the fact that so few have seen a benefit from paying women for of policies that help women as mothers, but much less so even part of the leave taken when they have a baby is unsurpris- of policies that help women in any other role. Conservatives ing. Despite the media image of a few high-flying women, most and liberals agree on their opposition to affirmative action in women are still employed in low-paid and low-skilled jobs, any form and neither group is likely to push for government and paid maternity leave is rare in the occupations in which funding of childcare either—conservatives because it helps women congregate, such as retail, hospitality and tourism. For women work and liberals because it is yet another govern- most employers, including some very large ones, there is only ment programme targeted at special interests. financial cost with no benefit in paying maternity leave. To -in In Australia, the Liberal Party has been at the forefront of troduce mandatory employer-paid maternity leave is therefore many of the policies that deliver financial support to parents, to limit rather than expand the employment opportunities for but has lagged in addressing the continuing discrimination women, especially unskilled women, as it makes them more which sees women earn less than men for the same job, and expensive to employ than men. an obvious under-representation of women in parliament, The question still remains whether government-paid ma- the judiciary, the armed forces and senior ranks of the public ternity leave is a worthwhile public policy objective consistent service. Any attempt to raise this structural problem that is with liberalism. Some may argue that the baby bonus is a sort of not only restricting the choices of individual women but also maternity leave payment and, at $5,000, is getting quite close disadvantaging Australia by not best utilising the available to providing the equivalent of three months’ wages to a low- talent, is howled down in the Liberal Party as feminist. Un- paid worker. But the baby bonus is not dependent on previous fortunately for the Liberal Party, over 50 per cent of mothers employment (increasing its attractiveness for those not keen on are in paid employment and they expect to have their needs work), and is not targeted to those in need (the high-flyers get- as workers addressed—and not merely as mothers who earn a ting company paid maternity leave get it too), making it such bit on the side to supplement the family’s income. a deeply flawed programme that it is not worth reforming. But A common cornerstone of both liberalism and femi- whether another programme, better targeted and structured, nism is an insistence that all citizens have equal rights at for paid maternity leave is desirable still remains difficult to law: liberalism’s emphasis on individual rights and equality support because the current existence of paid maternity leave of opportunity is the same as feminism’s emphasis on the by some private-sector organisations shows that some organisa- equal rights of women and men. A political movement truly tions think there is a business case for providing paid maternity based on liberalism will therefore pay attention to equality leave—that is, retaining their female employees is worth it. It of opportunity both within a political party and the wider may be a harsh reality that only highly skilled and highly paid community. A starting step is to recognise that equality of women get paid maternity leave, but it is not consistent with

R E V I E Wxt? 24 JANUARY 2008 What ne liberalism to intervene where there is no obvious failure by the private sector in the provision of jobs with paid maternity leave attached. Liberalism must In recent years, enormous sums of government money have been targeted at families with children instead of across-the-board tax cuts. Con- evolve to match servatives are very fond of these types of payments and justify the expenditure in terms of increasing the birth-rate, helping families and promoting the generational shifts stabilising impact on society with which families are credited. The grant of privilege to one group over another is generally opposed by liberalism, preferring to treat everyone equally and so, clas- Tim Wilson sically, liberals would oppose such programmes. However, apart from the historical entrenching of he Liberal Party’s loss at the Federal election such programmes to such an extent that their re- provides an opportunity for Australian liber- moval, or even restriction, is likely to be electorally alism to evolve. But this does not mean, as suicidal, it is intellectually lazy to single out pay- T many will likely argue, that liberalism has to ‘go soft’. ments to parents as deserving of abolition merely Liberals will not do themselves any good simply by because not everyone has children or because it abandoning the push for reforms such as smaller gov- is yet another government expenditure. Instead, ernment, lower taxes and workplace flexibility. some long and hard thinking, perhaps centred Regardless, reform needs to be addressed within around providing equality of opportunity for chil- the restraints of contemporary Australian attitudes. dren, must result in new policy directions that are As always, sound policy should be developed from a neither conservative nor merely the continuation philosophical foundation. The real challenge for lib- of the status quo. erals is to both guide and align Australian attitudes Towards a liberal social policy with an evolving liberal philosophy. And this needs to be done whether the Howard What social policy will look like if more informed government, at least in their final terms, failed. That by liberalism than conservatism remains an unan- there was failure can best be demonstrated by the swered question. The hard thinking and argument divergent attitudes behind generational voting. And is still to be had. the evidence is in the poll numbers. Amongst voters Those of us who claim liberalism as our guid- under thirty years of age Howard struggled to find a ing star do so to reach the twin destinations of message that resonated. equality of opportunity and individual rights. So- The current generation of young adults are the cial policy has more to say about both those goals largest generation entering the workforce since the than perhaps any other policy area. baby boomers. If liberals wants to have a future with In recent times, liberalism’s emphasis has a generation whose values will become predominant, been on attempting to reduce the scope of govern- they need to understand their values and let liberal- ment, even as conservatives and the left find ever- ism evolve to its next step. more ingenious ways to expand its reach. In social The irony is that younger people are probably policy, nobody yet has come up with another way the most naturally truly liberal generation in Austra- of ‘doing’ liberalism and we have to figure it out. lian history. This in no way means adopting the far left’s ap- Defining generations and their attitudes is the proach—mandating equality of outcomes, or es- sport of social researchers. And, for every rule, there tablishing entitlements based on group member- is an exception. But the individuals that were born ship. For any political organisation to be worthy of after the 1970s, who are either referred to as the lat- the name ‘liberal’, however, there must be a central ter part of Generation X or as Generation Y, do have place for social policy informed by liberalism rath- common traits. er than conservatism. Social policy will be a central battleground for public policy—liberals will need to innovate to compete. Tim Wilson is a Research Fellow at the I P A Institute of Public Affairs.

JANUARY 2008 xt? 25 R E V I E W What ne Young Australians have come to their values through an organic evolution which has resulted from living in a dynamic capitalist society, rather than through traditional philosophical development.

In the past few years, there have been two books that have being raised in a free market system that that has attempted to look at the attitudes of an emerging Australian evidently delivered material fortune for themselves generation. In 2006, Rodd Honeywill and Verity Byth released and others. their book, Neo Power, following research into the attitudes of In fact, the free market has become a central half a million Australians. One of the findings of their research concept for the younger generation in the way it was to identify two distinct groups that are now emerging in views the world. The status quo is now enterprise Australian society: the ‘traditionals’ and the ‘New Economic and it even penetrates the way that young people Order’ or ‘NEOs’. In making their broad-brush generalisa- expect government to address problems. For an tions, Honeywill and Byth don’t break the two groups into avowed leftie, Heath demonstrates the strong at- age categories, but rather recognise their difference through traction that the younger generation has to capi- attitudes to society. But they do recognise that there is a much talism. Heath argues that the only new expectation higher concentration of NEOs within Generation Y. of Australia’s younger generation is that it Honeywill and Byth identify NEOs as consumers and expects more from capitalism … to work workers who are ‘socially progressive, economically conser- less corruptly, more ethically and to de- vative, and hungry for rich information and memorable ex- liver more choices to us than anyone else periences’. Conversely, traditionals are ‘aroused only by basic has been able to so far … [and that his] needs and the demand for rudimentary satisfaction … and are generation can re-inject the value of trust rooted in social, industrial, and technological conservatism’. back into capitalism. Ignoring the left-wing partisanship of his polemic, Ryan Heath, now advisor to Peter Garrett, published his frustration Through both immediate and secondary exposure, as a self-anointed representative of young Australia in Please the next generation are naturally socially liberal. just F*off: it’s our turn now. He describes Australia’s emerging In the immediate context, they have grown up in a generation as global, responsible, pro-capitalist, supportive of dynamic multicultural society. Equally, young peo- a market economy and a market society, individualistic, not ple have travelled extensively and appreciate and selfish and post-PC, amongst many other tags. respect cultural diversity. The outcome has been There are clear common traits amongst Australia’s young- that young people tend to look at cultural simi- er generation—they believe in the principles of a free mar- larities rather than differences. Drawing attention ket and a free society with individual responsibility central to to a quotation from his peers, Heath points out their way of life. In short, they are archetypal libertarians. that the younger generation of Australians simply Since the start of the First World War, libertarianism has ‘accept[s] 1700 types of normal’. sat outside the political mainstream as a radical ideology op- Research has also shown that civic virtue is posed to the growth of the state. Yet young Australians have back in vogue, though it is taking on a more income to their values through an organic evolution which has dividual focus. The Centre for Social Change at resulted from living in a dynamic capitalist society, rather than Queensland University of Technology analysed through the traditional philosophical development where in- the role of civic activism between the Civic Gen- dividual freedom was prized in comparison to the alternative eration (born in the early years of the twentieth variant forms of statism. century) and the attitudes and practices of Gen- Equally, they are not interested in government interven- eration X. The main difference is that the Civic tion in their or their peer’s lives. As a result of their empow- Generation tended to become involved through erment through prolific communications, they believe in institutions, whereas younger Australians take a individual responsibility. They are also pro-capitalist having more individual approach. Honeywill and Byth

R E V I E Wxt? 26 JANUARY 2008 What ne argue similarly that NEOs are so empowered that, when ology, or that they are represented by a political party. they see a problem, they literally seek to solve it them- Future liberals need to embrace these changes in at- selves, not turning to established institutions as a means titudes. This means a greater focus on a well-rounded lib- to a solution. eralism that embraces and respects diversity in social pol- Given these natural inclinations of Australia’s young- icy, supports free markets and market-based mechanisms er generation, it is noteworthy that the Liberal Party still in dealing with the challenges that government ought failed to capture their vote. Poll after poll demonstrated to address, and harnessing the potential of individuals, that they were a demographic that swung strongly be- rather than government, to effect change in society. hind Rudd and Labor. The history of the Labor Party In a climate of economic stability and a consensus has been essentially one of economic irresponsibility to- on economics, the Labor Party, and to a lesser extent the gether with a flux of social progressivism dependent on Greens, will remain the logical parties of younger non- the attitudes of the day. Yet, the common philosophical self-identifying libertarians who want social liberty and bonds amongst younger generations do not naturally sit who view individual activism as the pathway to the fu- with Labor. ture. There is a serious gulf between the Liberal Party and But if the liberals and the Liberal Party embrace these younger Australians. Liberal philosophy, but not Liberal changes, the future of liberalism in Australia is bright. Party policy, is more naturally attuned to the attitudes of younger Australians. I P A The problem here is that the values of younger generations are closely aligned to libertarianism, but they do not identify themselves as libertarian. As a result, young people tend to believe that their positions as simply logical, rather than elements of a connected philosophy or ide-

JANUARY 2008 xt? 27 R E V I E W What ne Everything’s changed? The Liberals have locked in conservative government Tom Switzer he other day, I received a call from an aspiring opin- explain that Kevin Rudd went out of his way to echo, not ion page contributor and former Australian diplomat repudiate, John Howard’s agenda during the past year? And Twho declared, in a voice that oozed a certain sort of not just ‘economic conservatism’ either. On a wide range of metropolitan smugness: ‘Now that everything’s changed, I’ll issues—from border protection and the federal intervention be writing more often for The Australian’s opinion pages’ in remote indigenous communities to welfare reform and a (which, during my editorship in recent years, have tilted in a national schools curriculum—Rudd usurped, not contested conservative direction). Howard’s position. True, Labor now dominates all State and To which I replied: ‘Everything’s changed? Goodness, Federal governments and no doubt there will be some adjust- what’s happened?’ ments to Howard government policies on Kyoto ratification Imagine my surprise when he responded, first, by saying and perhaps an apology to indigenous people. But the cen- ‘Haven’t you noticed? We have a new government!’—as if to tre of political and cultural gravity is nonetheless well to the suggest that the newsrooms all across the country would now right of where it was a decade ago. conform to new editorial instructions from the Canberra po- Whereas once conservative ideas were swept aside as be- litburo—and then by insisting that his article for me would ing outside the boundaries of serious (and morally respect- highlight how ‘the rest of the world is celebrating the end of able) consideration, today they represent the political and the Howard era’. cultural mainstream. On the great battlefields of history, Surely, I asked, in many parts of the world for long economics, citizenship, reconciliation, national sovereignty periods of time, isn’t good peripheral vision required to be and values generally, conservative ideas and those of classical aware of the Australian political scene? And isn’t, moreover, liberalism increasingly prevail. Newspapers, once the bea- the global commentary of our election outcome virtually cons of political correctness, have become livelier platforms confined to disgruntled ex-pats and locals such as - novel for debate and dissent. ist Richard Flanagan who, writing in The Guardian on 26 None of this is to deny that the left still controls the arts, November, argued that ‘a decade of John Howard has left a universities and the public broadcaster. But far from losing country of timidity, fear and shame’? We then wished each the hearts and minds of the Australian people, conservatives other good day, and hung up grumpily, one set all. redefined the nation’s cultural terrain. Howard’s own contri- The point here is not to make fun of the sophisticates bution to this shift, moreover, has been profound. Consider who are dancing on John Howard’s political grave, but to some of his many achievements: suggest that Australia will remain, for the most part, a pretty He was a long-standing supporter of the economic re- conservative place in the post-Howard era. And that those form agenda, which transformed Australia from a heavily who take it upon themselves to represent the country’s con- protected and subsidised closed shop into a high-growth, science will probably still spend much of their time agonising less-inflation prone, market-oriented powerhouse that is the over what left-wing British newspapers think about us, and envy of the industrialised world. He attacked the intellectual convincing themselves that we are an international pariah. left’s monopoly of public morals and validated the values of Indeed, all one needs to know about the new political the mortgage belt. landscape is that the new government thought that the one A consensus thus developed that those who want to be- it replaced on 24 November was pretty good. How else to come Australians should sign up to the nation’s fundamental values—be they sexual equality, religious and other freedoms, or respect for other cultures. Add in a basic knowledge Tom Switzer is editor of The Australian’s opinion pages. of English and an appreciation of the traditional narrative

R E V I E Wxt? 28 JANUARY 2008 What ne of Australian history and you had the makings of the citizenship tests that won overwhelming Howard forgot popular support. That would have been incon- ceivable during the Keating era of zealous multiculturalism and shame about the nation’s past. Howard’s drawcard was that, during his ten- to govern for ure, Australians became a relaxed, self-confident people who were at the same time alert to the dangers of militant Islam. Everything that should individuals be up—incomes, economic growth, the stock market, the budget surplus, consumer and business confidence and the standard of living—was up, while everything that should be down—un- Christian Kerr employment, inflation, even interest rates—was down. argaret Thatcher has been vilified time and Thanks to his reforms, Australian society time again for her comment ‘There is no now offers unparalleled opportunities. Far from such thing as society’, yet it is a statement producing Dickensian sweatshops, as predicted M of the obvious. by the unions, the workplace changes have pro- There is no one great mass in politics. There are duced steady and low-inflation wage growth. competing interest groups with which individuals The rewards of the economic miracle have been identify themselves—but individuals are the building evenly spread across poorer, middle and richer blocks. John Howard forgot this. That is why he is no suburbs and regions. No wonder the old Labor longer prime minister. language of class warfare has no strategic trac- Jargon-obsessed academics have called the Howard tion; to paraphrase Richard Nixon, we are all government ‘neo-liberal’. This, however, is nonsense. aspirationals now. John Howard made no secret of his social conservatism. To be sure, Howard’s decisions sometimes Under the Coalition government, social conservatism left a lot to be desired. He was as given to pater- tended to translate into populism. nalism and pork-barrelling as any of his predeces- Populists don’t like individuals. They like cohorts. sors. Much to the chagrin of his ideological sup- John Howard didn’t do enough to offer individuals porters, he failed to articulate a clearly defined greater freedom. He didn’t sufficiently trust Australians set of conservative philosophical principles. He with their own money. Taxpayers’ money was given as was neither a Reagan nor a Thatcher. And his bribes to key demographics. dramatic failure to execute an orderly succession If John Howard had given Australians liberty—the plan will tarnish his historical reputation. freedom to do what we want with the money we earn— Still, Howard’s legacy has been fashioned the Coalition could have legitimately claimed that La- by the extent to which he has transformed the bor technocrats posed a threat. But what the public saw political and cultural landscape. If anything, the from the Coalition after eleven years was handout after 2007 election was about his successor, with Rudd handout that stretched voters credulity and destroyed making the case that it was he, rather than Pe- the government’s reputation in the process. ter Costello, who is the true heir. Whether Rudd Howard forgot about individuals, then com- governs as he has campaigned remains to be seen, pounded his error in the campaign. The slogan ‘Go for but his political success and legitimacy depends growth’ was conspicuously related only to the economy. on presenting his agenda as a moderate form All year, the government was unable to relate its mes- of Howardism, just as Bill Clinton and Tony sage to individuals and their personal circumstances. Blair represented milder versions of Reaganism John Howard lost the 2007 federal election because and Thatcherism respectively. If, indeed, Rudd he is a social conservative and populist, not a liberal. turns out to be Howard lite, then one suspects The victors write history, particularly the quickie that people such as the aforementioned opinion page contributor will still be fretting and wailing about the state of the nation. Christian Kerr is a political commentator with I P A Crikey.com.au and a former adviser to two federal Liberal Cabinet ministers and a State Premier.

JANUARY 2008 xt? 29 R E V I E W What ne The Liberal Party has always stood for the individual against the state yet the Howard government attempted to stay in power thanks to the gifts of government.

histories that appear in the aftermath of election campaigns. ing Labor leader Kevin Rudd of me-tooism. Now was Labor’s Former Labor Senator Stephen Looseley’s assessment—that chance to act—or not to. Kevin Rudd’s decision at his campaign launch to stop matching Rudd had matched the tax cuts at the start of the cam- Howard’s spending promises marked the turning point of the paign. Now, he pointedly did not match Howard’s spending: campaign—now reads as writ. Remarkably as interest rates rose yet again last week, we But the truth is that Howard stopped getting through to now find Mr Howard running up the white flag on -in voters long before. It should have been obvious when only the flation, and running up a huge bill in a desperate bid barest ‘budget bounce’ appeared in May. to get re-elected, A bill he is happy to leave for us all to ‘Mr Howard has developed a devastating politics of the pay—once he heads off into retirement. Monday’s feed- surplus, which he has used to great advantage to deliver targeted ing frenzy of expenditure would actually make inflation- spending and tax cuts at successive elections’, The Australian edi- ary pressures worse. torialised just days before the poll. The politics were devastating, Mr Howard spent nearly $10 billion on Monday. but lazy. Howard simply let the billions roll in from the GST Trying to buy his way out of political trouble. And he and the mining boom and used them to buy off voters. did so little more than an hour after the Reserve Bank of This worked well enough from 2001 but, as The Australian Australia issued its monetary policy statement warning of also observed, ‘The limits of this tactic have become apparent rising inflationary pressures. How irresponsible can you in the course of the campaign as key voters in marginal elector- get? ...with this latest irresponsible and desperate pre- ates have started to take both the tax cuts and the handouts for election splurge, Mr Howard is putting his own interests granted.’ ahead of working families by risking further increases in The limits of the tactic should have been clear to the gov- their mortgage rates. ernment in June, in the aftermath of the federal budget. On 8 I have no intention today of repeating Mr Howard’s May, Howard gave away more than $31 billion in tax cuts. The irresponsible spending spree. polls barely moved. On the first full day of the election campaign he tried the In the closing days of the campaign, Rudd promised to take a tactic again, announcing a further $34 billion in tax cuts. Again, ‘meat axe’ to the Commonwealth bureaucracy, despite flagging the polls did not respond. the creation of dozens of new agencies and statutory bodies and In his campaign launch speech on 12 November, Howard promising at least 119 reviews. promised a further $9.5 billion in targeted spending. By this Despite initial reductions to the public service, there are stage, his election promises added up to $65 billion. All that now some 135,000 permanent members of the Common- money made not a jot of difference. wealth Public Service—16,000 more than when the Howard Again, The Australian’s leader-writers captured the issue. government was first elected. There are several thousand more ‘The contradiction in Howard’s prime ministership has become temporary public servants. These numbers have continued to too obvious’, they wrote. ‘Howard delivers opportunity through grow so that, despite privatisation and outsourcing, they had a big spending conservatism and publicly funded tax breaks surpassed 1996 levels by June 2003. rather than via genuine liberalism.’ The Liberal Party has always stood for fiscal rectitude That contradiction might have been too subtle for average and prudence, yet Howard abandoned this in his quest for re- voters, but they had noticed another inconsistency in Howard’s election. The Liberal Party has always stood for the individual message. The Reserve Bank raised interest rates at its Board against the state—for liberty—yet the Howard government at- meeting on 6 November, the week before Howard’s launch. tempted to stay in power thanks to the gifts of government. Hours before his campaign launch it issued a warning against The Howard government didn’t demonstrate that it of- further government spending. fered ordinary Australians economic liberty. At the end of its The interest rate rise had already damaged Howard’s eco- term, the Howard government had finally abandoned the best nomic credentials. Now, he appeared to be ignoring the Reserve reasons to vote Liberal. Bank’s advice. For months the government had been accus- I P A

R E V I E Wxt? 30 JANUARY 2008 What ne Liberalism after 2007 A blueprint for leadership Greg Hunt We have reached a point of paradox in Australian politics. On the one hand the history of the twentieth century and dian of those ideas, finds itself out of government through- of the first part of the twenty-first century has witnessed the out Australia. triumph of the ideas of liberalism. This is so not just in Aus- The Labor Party has won the last 21 consecutive State tralia but ever more so around the world. and Territory elections, and now a federal election. The last The eleven-year period of increasing prosperity un- Liberal Party victory at State level was in South Australia in der the Liberal Party leadership of John Howard and Peter October 1997, and at Territory level in the ACT in February Costello was defined by five great economic revolutions: 1998. • First, the commitment to a policy of budget surpluses as The question, then, is why, with both the success of lib- a means of reducing public debt and public demand for eral ideas and a truly successful economy, the Liberals find money. This, in turn, has taken significant pressure off themselves out of government throughout Australia for the interest rates and completely displaced the Labor ortho- first time. doxy of public debt. The answer to this question and to winning back the federal government within one term, as well as returning to • Second, the revolution in waterfront productivity. government in the States, requires two elements. • Third, the restructuring of our tax system to provide We must understand the nature of the contemporary incentives for those who work harder. governance challenge and we must establish a process to help • Fourth, the development of incentives to give the most win the battle of ideas and to develop a partnership with the disadvantaged a path from welfare to the dignity and Australian people. In addition to any internal review of the security of work; and last federal election, there should be an external process of • Fifth, the freeing-up of small business owners to cre- bringing together younger Liberals to create the new reform ate jobs by protecting them from ‘go away money’ and agenda. This agenda, or Liberalism Project, should focus union intrusion. on maintaining our commitment to continuing reform and modernization. The result of these revolutions was to create perhaps the world’s most successful developed economy—with all the The challenge human benefits—of the last decade. The challenge, then, for liberals is clear—if not simple. We Despite their vehement opposition at the time, the La- have to maintain our leadership as the great economic mod- bor Party has committed to retaining the first four of these ernists of Australia, while twinning this with a sense of hope, revolutions and is likely to keep significant parts of the fifth. aspiration and compassion. While there are questions about whether they can maintain There are three fundamental principles which we should these commitments, it is clear that the ideas have certainly consider in pursuing this dual combination of economic triumphed. leadership and deep human concern. The paradox, however, is that at the very time when the First, liberalism must not relinquish its commitment to ideas of open markets, open workplaces and open societies reform and economic modernization. A healthy economy is have triumphed, the Liberal Party, which has been a custo- not the end of governance, but it is the indispensable means to a great society. The raison d’être of Australian liberalism has always been to create the opportunities and conditions Greg Hunt is the Federal Member for Flinders by which all Australians can unleash their potential.

JANUARY 2008 xt? 31 R E V I E W What ne This means pursuing ideas—such as employee share owner- By comparison, an early sign of ideology under the ship—which both give people a stake in their work environments Rudd government is that by rejecting a clean energy target and bring people back into the workforce rather than structurally in favour of a renewables-only target, they have ensured that exclude them. And it means holding Labor governments to ac- over 75 per cent of Australia’s energy production will never count where they depart—as they already have at state level— be cleaned up. Instead of modernizing our fossil-fuel sector, from their apparent support for responsible budgetary policies they will marginalize it, in a classic case of putting ideology such as reducing public debt. ahead of practical policy. Second, the continuing commitment to economic reform must be matched by a renewed commitment to hope, aspiration A blueprint for the future and compassion. The Liberal Party’s vision—and its relationship If these ideas are to have currency, then they must be shaped with the public—must inspire and give a sense that Australia can into policy for the future. be a great and generous society. There is a hunger for a higher There may be real value in younger liberals—both with- sense of purpose. This is not only a basic human emotion, but in and outside of parliament—crafting a blueprint for the it is brought into prominence at precisely the time we achieve future of liberalism. It could provide a menu of innovative prosperity. policy proposals for continued economic modernization. Third, liberalism must recognize that successful politics is These ideas should be part of a vision which both main- about philosophy not ideology. The public want a clear set of tains our economic momentum and emphasises the great beliefs, but they do not want untrammelled ideology from either humanity which has underpinned the Liberal Party since its side of the political spectrum. The Labor Party has been margin- inception. alized whenever it has retreated to ideology which has, in turn, Ultimately, liberalism has been the guiding philosophy led to successive waves of economic failure. The Liberal Party for Australia’s growth and human development over the last has to be clear about its beliefs, but recognize that the public has century. The laws of economics and human nature which rejected what has been perceived as inflexible ideology. have helped shape the last century’s growth in economic and The key to the Labor Party’s resurrection under Kevin Rudd social freedom have not changed. Liberalism remains the was simply to accept the basic governing philosophy of the gov- guiding philosophy for the current century. ernment, while fighting its perceived ideology on issues such as The fundamental task of Liberals is to maintain our climate change and employment security. In reality the govern- leadership as the great economic modernists of Australia, ment’s policies were practical in both these areas, but the public while providing a sense of hope, aspiration and compassion. presentation of those policies largely fell on deaf ears. The Liberal Party must therefore acknowledge that the public has spoken. It must emphasise that it embraces the great chal- I P A lenge of clean energy and that, as the party of economic reform, it is best equipped to take practical action.

R E V I E Wxt? 32 JANUARY 2008 What ne John Howard, environmentalist Jennifer Marohasy

he story of John Howard the environmen- Mr Howard won the 1996 election and, true to his promise, sold talist is a story of deference to professed ex- part of Telstra, with $1 billion going to the establishment of the Tpertise. Prime Minister John Howard sought Natural Heritage Trust which focused on salinity in particular. the advice of high profile scientists and activists on The proposed 10 per cent Goods and Services Tax (GST) environmental issues. Many of these advisors had was the centrepiece of John Howard’s 1998 election campaign. impressive qualifications, and he listened to them Again he won the election, but the Australian Democrats held mostly uncritically. In response, he tried to do the the balance of power in the Senate and he needed their support right thing. to get the GST through Parliament. They negotiated the passage As a result, the Howard government oversaw the of the Environmental Protection and Biodiversity Conservation Bill introduction of legislation that banned broad-scale (EPBC) in return for passage of the GST legislation. tree clearing in western Queensland and fishing over Any person may nominate a plant or animal species for pro- large areas of the Great Barrier Reef. In a deal with tection under the EPBC Act and nominations have become an the Australian Democrats to get the GST through integral part of many environmental campaigns. Successful nomi- the Senate, his government introduced the Environ- nations normally secure significant government funding for the mental Protection and Biodiversity Conservation Act, development of ‘Recovery Plans’. Species can be listed under the now considered the centrepiece of federal environ- Act if there has been a substantial reduction in numbers and geo- mental legislation. His government also planned to graphic distribution, even if this reduction occurred decades ago buy back large volumes of water as environmental with populations now stable or increasing. The EPBC Act has flow for the Murray River. been used to stop, delay or limit activities as diverse as dam-build- But John Howard may simply be remembered ing, whaling and the growing of sugarcane. Most recently it was as the prime minister who failed to ratify the Kyoto used to prolong the approval process for the controversial Bell Bay Protocol. pulp mill in Tasmania. It was in January 1996 that Mr Howard made In the lead-up to the 2001 federal election, the National his first major announcement on the environment. Farmers Federation (NFF) and the Australian Conservation He was Opposition Leader and he spoke of the pro- Foundation joined forces to lobby the Howard government for posed establishment of a $1 billion fund from the $65 billion on the premise that vast areas of farmland were in ruin privatisation of Telstra to restore the national estate, and salinity was spreading. This campaign was based on a report including programmes to arrest soil degradation. The which quoted the national land and water resources audit which policy was initially applauded by the environmental had been funded by the Howard government’s Natural Heritage lobby, with the Australian Conservation Foundation Trust from the sale of part of Telstra. (ACF) saying that it represented the most important A few months later, the National Action Plan for Salinity and environmental statement ever made by the Coalition. Water Quality was announced by Senator Robert Hill, then En- vironment Minister, with the promise of $1.4 billion in further funding. This Action Plan generated more plans requiring more Jennifer Marohasy is a Senior Fellow at the government funding. Much of the planning, including that for Institute of Public Affairs. the likely extent of the spread of salinity, was based on computer

JANUARY 2008 xt? 33 R E V I E W What ne The environmental lobby doesn’t work from a set of principles that accord with liberal values; rather they are philosophically anti-development and anti-industry.

modelling that has not stood the test of time. Indeed, head of the Mur- Each year when the International Whaling ray–Darling Basin Commission, Wendy Craik, acknowledged on na- Commission (IWC) meets, Australian environ- tional television in 2005 that flawed models had been used to talk up mental ministers court the associated media with the salinity threat in 2001. their rhetoric condemning whaling. For example, Also in 2001, World Wide Fund for Nature (WWF) was pleading in the lead-up to the meeting in Ulsan in 2005, for money to save the Great Barrier Reef. The subsequent fishing bans, Australia’s Environment Minister, Ian Campbell, while initially estimated to cost about $1.5 million in compensation to denounced the killing of whales with grenade- commercial fisherman, have since blown out to nearly $200 million. tipped harpoons in Norway and said that he was Furthermore, many argue that there has been no environmental benefit, both shocked and saddened by broadcast images with fishing pressure simply transferred to already more heavily fished of whale-cooking classes in Japan. Meanwhile, regions of south-east Asia. the Howard government turned a blind eye to The banning of broad-scale tree clearing was a campaign issue for the slaughter of dugongs by indigenous hunters the Wilderness Society in 2001. Subsequent bans mean that Australia is using spears and speed boats in northern Austra- on track to meet its target under the Kyoto Protocol but that campaign lia. Dugongs, like whales, are long-lived marine was about more than saving trees or Kyoto. A report entitled ‘Rethink- mammals. The Howard government accepted ing deliberative governance: dissecting the Queensland land-clearing that about 1,000 dugongs are killed each year by campaign’ by the Queensland Conservation Council explains that the indigenous communities and that this is probably new legislation established a framework for the regulation of land use ten times the estimated sustainable harvest. on freehold land representing a significant departure from ‘dominant In advance of the 2007 election, Mr How- ideologies that accept private landowners retain sovereignty over land ard set up a ‘taskforce’ which recommended 25 management’. Furthermore, all ‘carbon credits’ have accrued to the gov- nuclear power stations be built—mostly along ernment, not the individual landholders. the east coast of Australia. Despite nuclear power In 2004, logging in Tasmania dominated the election campaign. It being the only proven source of greenhouse- initially appeared that both Labor and the Coalition would seek to out- neutral base-load power, environmental groups bid each other in terms of how much Tasmanian forest they could save. condemned the proposal. So unpopular was the Then, after opposition Labor leader Mark Latham announced his for- issue that the Labor party featured Mr Howard’s estry policy, the Howard government changed tack and was very pub- support for nuclear power in some of its 2007 licly applauded by timber workers for promising to save their industry. campaign brochures and Mr Howard went quiet This further cemented John Howard’s alliance with blue-collar workers on the issue. across Australia and he won that election. During the 2007 campaign the Labor par- During the same year, campaigning to return environmental water ty focused on Mr Howard’s refusal to sign the to the Murray River created much angst within farming communities. It Kyoto Protocol. The issue resonated. Al Gore was feared that if Labor won the election, a Latham government would had already painted the Australian government take up to 1,500 gigalitres of irrigation water for environmental flows, as a villain in his award-winning documentary while John Howard said he would take only 500 gigalitres. But, in Janu- film An Inconvenient Truth for refusing to sign ary 2007, under the Howard government’s $10 billion National Plan Kyoto—for refusing to do what Mr Gore consid- for Water Security, it was suggested that about 2,700 gigalitres—almost ered morally right. Al Gore went on to win the double what the Labor leader had proposed—be returned as environ- 2007 Nobel Peace Prize. mental flow. Incredibly, farmers weren’t up in arms. This was in part be- Many advocates for action on climate cause the government assured them that there would be no compulsory change readily admitted that, even if fully im- acquisition and that the water would be purchased at market price. The plemented, the Kyoto Protocol will do virtu- price of water skyrocketed and the government has not even purchased ally nothing to reduce rates of global warming 500 gigalitres. because developing nations, including India

R E V I E Wxt? 34 DECEMBER 2007 What ne The next Liberal Party leader needs to force a consideration of various policy options for Australia, including alternatives, costs and benefits, and global implications.

and China, do not have to meet any targets. Nevertheless, Lord Nigel Lawson, a former Chancellor of the Exche- they insisted that Kyoto is an important symbolic ‘first quer in the British parliament, recently commented that de- step’. Mr Howard correctly claimed that the exclusion of spite Kyoto and innumerable international gatherings of the developing nations would put Australia at a competitive great and the good, little in practice has been done to reduce disadvantage, and perhaps he thought that global warm- global carbon dioxide emissions. They continue to rise and ing would eventually fade as an issue. To the very end of the reason for this, of course, is that fine words are cheap, his term as prime minister, Mr Howard refused to ratify whereas the 70 per cent reduction in global carbon dioxide the Kyoto Protocol, even though his government was on emissions which would be required to stabilise carbon diox- track to meet its Kyoto targets and even though the politi- ide concentrations in the earth’s atmosphere would be very cal pressure to ratify was intense—including from within costly indeed. his own Cabinet. The environment, and in particular ‘stopping climate The environmental lobby doesn’t work from a set change’, has emerged as an ideal in which seemingly well- of principles that accord with liberal values; rather it is educated people often search for the grand gesture as much philosophically anti-development and anti-industry. They as real actions likely to result in practical, lasting solutions. met regularly to plan strategies and divvy up issues and The situation is unlikely to change in the short to medium they had John Howard hopping from one campaign to the term, whether global temperatures continue to increase or next—always pushing his government harder and harder cool. But what the next Liberal Party leader needs to attempt, to meet the next moving target. According to a recent Lib- at the very least, is to force a consideration of various policy eral Party report, the Howard government had $4.3 bil- options for Australia, including alternatives, costs and ben- lion in its 2007–08 budget for the environment compared efits, and global implications. with less than $500 million in Labor’s last year of office. Environmentalism has been aptly described as the new If the prime minister had had his own plan, his own religion of choice for urban atheists. It is belief-driven. But, vision and ideas for the environment, his government may hopefully, Australians have not lost all sense of reason— have been able to better prioritise issues and better able to hopefully, Australians are just waiting to be dragged back to consider expenditure in terms of its opportunity cost. But reality. After all, facts do not cease to exist just because they in the end, it seems his legacy would perhaps still be the are ignored. prime minister who refused to ratify Kyoto and ‘save the I P A world from global warming’.

JANUARY 2008 xt? 35 R E V I E W What ne

Status quo conservatism The Coalition’s taxing and spending record Des Moore

s a number of commentators point- How small was the Howard government? ed out in the lead-up to the elec- An important issue is whether the Liberal party’s avowed ‘small government’ Ation, at both the Federal and State philosophy is any longer of significance, or whether it is destined to die the levels, Labor has moved closer to the po- death of Labor’s former objective—the socialisation of the means of pro- litical centre. As a result, there seem to be duction, distribution and exchange. The temptation will be not to move fewer important differences between the forward, but to retreat and avoid controversy, which is what State Liberals major parties. seem to have done. The important exception is workplace Although Howard government ministers (including the prime minister relations, where Labor’s proposals run himself) consistently claimed to have reduced the relative size of govern- counter to its increased support in recent ment and the burden of taxation, they also followed the ‘soft’ government years for a more competitive economy. approach at the Federal level. Their claim was based on comparing apples Increased union influence and privilege, and oranges. They compared pre-2000–01 data—which include large gen- already holding back improvements in the operation of services in the States, will further reduce the job prospects of low-skilled Table 1: Commonwealth general government outlays workers as labour markets become more protectionist. and taxation—% of GDP But, at least on the surface, Labor appears largely to have abandoned socialist, Outlays Outlays Transfers Social Taxation big government objectives and to have ac- excl. to states Security cepted that government plays a more lim- interest ited role in Australia than it does in Eu- 1973-74 18.8 16.7 4.2 4.1 19.2 ropean countries. Such acceptance of more 1975-76 24.3 22.2 6.7 5.8 21.1 limited spending and improved budget management policies at both the Federal 1986-87 28.3 24.1 6.9 6.9 24.6* and State levels, of a depoliticised opera- 1989-90 23.6 20.7 5.8 6.2 23.1 tion of monetary (and exchange rate) poli- 1994-95 26.1 23.3 5.4 8.3 21.7 cy, and even the growing inclination to ac- 1995-96 25.9 23.3 5.4 8.4 22.3 cept privatisation of State-run authorities providing electricity, transport, ports and 1996-97 24.9 22.6 5.3 8.4 22.8 the like, suggest that the Opposition will 1998-99 23.1 21.6 5.2 7.9 23.0 have to effect major policy changes if it is 2000-01 25.3 23.9 6.4 8.6 24.3 to distinguish itself from Labor. 2004-05 24.9 24.0 6.4 8.2 25.3 2006-07 24.2 23.3 6.2 7.8 24.9

Des Moore is Director, Source: ABS Cat. No. 5204.0, 2006–07 Time Series. Institute for Private Enterprise. * The year 1986–87 had the highest proportion of tax to GDP pre 1999-00.

JANUARY 2008 xt? 37 R E V I E W What ne eral revenue grants to the States and Table 2: Commonwealth general government outlays the taxes to pay for them—with data for recent years that excluded from and taxation—% of GDP expenditure the GST payments now made in lieu of those grants, and ex- Outlays Outlays excl. Taxation cluded from taxes the revenue from interest the GST itself. Fortunately, the ABS 2000-01 22.5 na 21.3 national accounts adopt the correct approach, treating the GST as a fed- 2004-05 21.2 21.0 21.0 eral tax and its payment to the States 2005-06 21.3 21.1 21.1 as federal expenditure. This produc- 2006-07 20.8 20.8 20.8 es an accurate picture of what happened to government spending and 2007-08 (a) 21.0 21.1 21.0 taxing before and during the How- (b) 21.3 21.4 21.0 ard government. (See Table 1) As the Coalition took office 2008-11 21.0 21.1 20.7 in March 1996, the financial year Source: Mid-year Economic and Fiscal Outlook, October 2007 for 2000–01 and 2004–05 1995–96 provides the best baseline to 2006–07 data. For 2007–08 (a), Pre-Election Economic and Fiscal Outlook. Author’s year against which to measure the estimate for 2007–08 (b) and 2008–11 based on election promises by the Coalition. fiscal performance of the Coalition government over its period in office to 2006–07. benefits. This epitomises the soft, vote-buying approach and occurred despite the As expected, the first full year much stronger growth in average real per capita incomes over the period it was of the Howard government—that in office—about 2.3 per cent per annum—and the obvious reduction in need to is, 1996–97—produced a reduction assist middle and higher income groups. in total outlays of 1.0 percentage Unsurprisingly, despite the announcement of many tax ‘cuts’ (which includ- point of GDP. Outlays then moved ed some reduction in marginal rates aimed at a top 40 per cent in 2012–13), the even lower until the election year overall burden of Commonwealth taxation (including the GST) increased by over in 2000–01, when they reverted to 2.5 percentage points of GDP. In effect, this increase financed the elimination of above 1996–97 levels. But although the budget deficit and the build-up of a surplus of around 1 per cent of GDP. 2006–07 levels were again slightly Under the Howard government, Australians were thus ‘forced’ to save. below those in 1996–97, and also The government also continued to offer a very large number of ‘tax expendi- significantly lower than in the last tures’, totalling 4.0 per cent of GDP in 2006–07 and estimated to increase to 4.5 year of Labor, that was not due to per cent in 2009–10 (but not included in budget figures). These ‘expenditures’ any diminution of spending in dis- comprise the net cost of concessions, benefits or incentives provided through the cretionary areas. tax system when compared with the revenue that would be collected if the stan- Thus, if interest is excluded on dard tax treatment were applied to the general activities or classes of taxpayers the grounds that it is not part of dis- subject to tax. cretionary spending, total outlays in In summary, despite the continued strong growth in incomes and the drop 2006–07 were the same (relative to in unemployment from 8 per cent to just over 4 per cent, the Howard govern- GDP) as in the last year of Labor. In ment effected no reduction in discretionary spending. Could it have done so? In reality, the whole of the 1.7 percent- 1989–90, discretionary spending by the Hawke–Keating government was about age point fall in total outlays over 2.5 percentage points of GDP lower than such spending in 2006–07, equivalent the period between 1995–96 and to lower spending of nearly $28 billion. Although not sustained by Keating, that 2006–07 was due to the reduction in suggests a feasible starting point for believers in smaller government. interest costs, mainly reflecting the Nor did the Coalition foreshadow the possibility of reducing the size of gov- reduction in debt from the proceeds ernment if re-elected. Using the Budget data showing forward estimates and pro- of privatisations. jections (the ABS does not publish such data), the following suggests a policy of A major contributor to the con- keeping the level of spending and taxation stable. tinued high level of discretionary The question now facing the Liberal Party is whether it is prepared to develop spending was the maintenance of policies that are consistent with its small government philosophy. That would re- high expenditures on social security quire some really hard work. But with a Labor Party that has apparently changed

R E V I E Wxt? 38 JANUARY 2008 What ne Despite the large increase in real incomes since the end of the 1980s, around 20 per cent of the working-age population receives income support now compared with only 15 per cent then.

its colours and accepted the existing size of government, it A similar approach is open for wider adoption by State may be its main hope of electoral success at both the Federal authorities. Considerable scope remains for privatisations, and State levels. particularly at the State level, and it is surprising that the Of course, Australia already has one of the smallest gov- benefits flowing from such action in Victoria have not been ernment sectors, with the OECD’s latest estimates showing used by other State Liberal parties. The establishment of a our total general government outlays (including those for more competitive environment would reduce the scope for State and local governments) at 34.0 per cent of GDP in the widespread union restrictive practices that exist in these 2007, about 6 percentage points below the OECD average areas now. As noted, even Labor is increasingly accepting pri- and the second lowest after Korea amongst the 28 OECD vatisation, and this suggests that Liberal parties are being left countries surveyed. behind in an area where they should be leading. However, although the decrease in Australia’s outlays Other more general benefits from smaller government since 1996 has been slightly greater than the OECD aver- cannot be explored in detail here, but they obviously include age, there have in fact been much larger reductions in most lower taxation and the well-known benefits of higher em- OECD countries, including in previously very high-spend- ployment and productivity likely to flow from that, particu- ing Nordic countries. While those reductions still leave big- larly if rates are flattened. ger governments than in Australia, there has definitely been a Of course, that also requires lower spending. But, as in- downward trend over the past decade. dicated earlier, there is scope for reducing spending in ways that would not have adverse effects on lower income groups— The case for smaller government that is, by focussing on reductions in social-type payments If the Liberal Party has sufficient inclination and capacity to to higher income groups and providing those groups with develop a policy approach based on reducing the extent of some ‘compensation’ through accompanying tax reductions. government intervention in the community, there is plenty Justifications for taking such action include arguments that of scope for it to do so at both the Federal and State levels. increased real incomes have increased the capacity of a now For one thing, our larger-than-average-sized private sec- significant proportion of the population to finance more or tor already provides advantages waiting to be paraded and all of their own spending on items such as education, health, used as a ‘model’ for further development. Australia is one welfare and old age. It is, for example, anomalous that, de- of the few countries in the developed world to offer a large spite the large increase in real incomes since the end of the proportion of education and health services through com- 1980s, around 20 per cent of the working-age population re- peting private-sector agencies and the growing usage of such ceives income support now compared with only 15 per cent services indicates wide support for them in the community. then: the trend should have been the other way. Of course, their costs are subsidised by government to some More broadly, with increased standards of health and extent, and it would be necessary to continue to meet the full education, and higher income levels, there is a philosophical costs of low-income groups. But, unlike State-run agencies, challenge to be faced by the Liberal Party. Does it believe in taxpayers do not bear the full costs of private schools and individuals accepting increasing responsibility for taking care hospitals and users benefit from a competitive system that is of themselves or does it support a continued Nanny State much less subject to restrictive union practices. Critics of our role? smaller level of government spending in areas such as educa- I P A tion and health need to be reminded that total Australian spending (that is, both government and private) on them is broadly in line with total spending in other countries with comparable income levels.

JANUARY 2008 xt? 39 R E V I E W What ne Four points on federalism Why ‘passing the buck’ could make good public policy and good political strategy

Richard Allsop

National security and the economy are tra- MPs had no hesitation in referring the matter to the appropriate des- 1) ditional areas of Commonwealth respon- tination. In the process, constituents hopefully became a little wiser sibility. The provision of services such as about what they should, and should not, be expecting from the three health, education, transport and infrastruc- levels of government. ture are traditional State responsibilities. At some point in its tenure, the federal Coalition government de- Over the course of a decade, the Common- cided that this traditional approach needed to be changed. Suddenly, 2) wealth intervened more and more in areas federal MPs were being told never to ‘pass the buck’ on any issue and of State responsibility, largely on the basis to use State, and even local, matters to demonstrate their own creden- of its claims that the States and Territories tials as a grassroots member. were failing in these areas. Not content to deal with problems raised by constituents, MPs All published opinion polls indicated that, would endeavour to create them. They would visit local schools and 3) until the end, the Howard government identify leaking roofs, or stand at railway stations handing out ques- continued to enjoy positive opinion poll tionnaires asking people about perceptions of crime on public trans- ratings on national security and the econ- port. The fact that schools, public transport and policing were not a omy, while it was well behind Labor on is- federal responsibility in some ways added to the perceived attraction, sues such as health and education. as it meant that federal MPs could hardly be criticised for the problem having appeared, but could nevertheless claim credit for any attempts 4) The current eight Labor State and Territory to ‘fix’ it. Labor governments were all easily re-elect- Huge increases in MPs’ printing and postage budgets exacerbated ed at their most recent electoral contests. the tendency, as MPs were naturally on the lookout for local issues to The Coalition federal government lost the provide content for their brochures and newsletters. These publica- Federal election. tions tend to be full of pictures of MPs presenting grants to local sport- ing clubs and environmental groups, or announcing federal funds for n recent years, traditional concepts of federalism a black spot on a local road. Campaigning strategists quickly realised have come under attack at both a micro and a that specific local material was more likely to be read than general Imacro level. policy information. There once was a time when a key item for the Most of these projects were small enough to gain only local atten- receptionist in a political office was a list that divided tion, but sometimes there were big enough sums of money involved, every area of government activity into one of three or radical enough policy implications, to attract national attention. A categories—for example, army (Federal), police classic example was when the federal government offered $40 million (State), and dog catcher (local). and a takeover plan for the Mersey Hospital in Devonport. While the If a constituent rang about a matter which was people of Devonport were understandably upset by the loss of services the responsibility of a different tier of government, at the local hospital, it certainly appears that the Tasmanian government’s decision to rationalise services in north-western Tasmania was a logical one, given the availability of medical professionals and funds. Richard Allsop is a Research Fellow at the Unlike the Mersey Hospital case, in many situations the How- Institute of Public Affairs. ard government was right in its diagnosis of a problem. Most people

R E V I E Wxt? 40 JANUARY 2008 What ne Whether computers are a priority in schools should be a matter for those charged with running schools—not the federal government.

would agree that the removal of technical schools from education systems in An agenda which removed areas of du- the 1980s, or the way in which Australian history is taught in schools are prob- plication, and a federal leader brave enough lems, but it does not follow that, in response, the federal government should be to say that something is not an area for Com- building technical colleges all around the nation, or holding summits to design monwealth involvement, might not only lead national history curricula. to more efficient service delivery, it could re- Undoubtedly, the use of State issues had been made more attractive for the duce the scope for pork barrelling and may Federal Coalition from 2002 when the last non-Labor State government was actually be politically appealing as well. voted from office. There seemed to be little downside in attacking their Labor By its piecemeal involvement in a vari- replacements. However, even in the short term there were. By intervening so ety of State issues, the Howard government vigorously in areas of State responsibility, the federal government succeeded in achieved the counterproductive outcome of convincing voters that it was somehow jointly responsible for the quality of the making people feel that the Commonwealth nation’s hospitals, roads, ports, etc. was equally culpable for the failings of the By both its rhetoric and its actions, the Howard government also encour- State governments in areas such as hospitals. aged other groups across the political spectrum to believe that their hopes for Pointing out failures in hospitals should have political salvation lay specifically with the Commonwealth government. been left to state Oppositions and, if the pub- Given such broad-based support for an increased Commonwealth role, lic agreed with their arguments, then maybe allied with Kevin Rudd’s reputation as a process-driven micro-manager, there we would now have some State Liberal gov- appears little cause for optimism that there will be any reversal in the trend to- ernments. wards greater Commonwealth interference in areas of State responsibility under Unlike the Fraser government, the How- the newly elected government. ard government has left the nation’s economy The fact that on the Monday after the election Rudd was commanding in excellent shape. Yet, in many ways, the his MPs to visit two schools each to assess their IT status before the first caucus Howard government’s treatment of the fed- meeting was hardly symptomatic of someone who supports the devolution of eration is the equivalent of the Fraser gov- anything. Whether computers are a priority in schools should be a matter for ernment’s failure to deregulate the economy. those charged with running schools—not the federal government. However, just as in March 1983, when few And in a move that will make the previous government’s Mersey Hospital would have expected the Hawke government intervention look like mere tinkering, Rudd has said that he will take over run- to go down the path of economic deregula- ning all the country’s 750 public hospitals if State and Territory governments tion, maybe the Rudd government will make have not agreed to a national reform plan by the middle of 2009. He said that useful reforms to the federation. Let’s also the move was designed to ‘end the blame game between Canberra and the states hope that, just as the Liberal Party supported on health and hospitals’. There would not be a blame game if the States were the majority of the key economic reforms in left to run their hospitals. the 1980s, the new Opposition takes a simi- Those who still like to believe that certain matters are the legitimate re- lar attitude if the Rudd government surprises sponsibility of democratically elected State governments could only shudder us by proposing measures which genuinely when, at his campaign launch, Rudd said that ‘The buck stops with me’. This improve the federation. may surprise you, Kevin, but under Australia’s constitution some things are ac- In the week after the election there was tually not your responsibility. much discussion about the Liberal Party ac- Obviously, the underlying problem with Australia’s federation is vertical knowledging that it got issues such as Work- fiscal imbalance. The Commonwealth raises 82 per cent of the tax revenue, but Choices and global warming wrong. It would is only responsible for 36 per cent of the spending. There is always going to be also do well to recognise that its ad hoc as- a huge difficulty when those figures are so divergent. saults on the federation were not only bad This imbalance is likely to remain forever in the ‘too hard’ basket, but policy, but ended up being bad politics as perhaps more realistic is the hope that there can be a reassessment of which well. areas are the responsibility of which tiers of government. Crucially, the federal government needs to accept that if something is deemed a State area, the Com- I P A monwealth cedes any form of interfering or oversight role.

JANUARY 2008 xt? 41 R E V I E W What ne R E V I E W 42 JANUARY 2008 A revolution in healthcare Medicine meets the marketplace Fred Hansen

re we seeing a repeat of what hap- that healthcare in all Western countries is for proper risk-management. The result pened to the media industry in still an anomaly, given that it has always is unaffordable private insurance, which Ahealthcare? A wave of media-liter- been protected against otherwise perva- in turn has prompted more Americans ate consumers, using a host of new Inter- sive and successful market forces. to opt out of health insurance altogether. net tools, powered a dismantling of the Indeed, market dominance by gov- There is good evidence that, over the last big media monopoly on public opinion. ernments and third parties in Western decade, the steepest increase among un- Healthcare could be next. countries is so great that there is scarce insured Americans has occurred in the With competition nearly absent and competition in healthcare over prices and bracket of families well above the poverty with unchecked increases in demand over quality. Private insurers are simply fol- level. People just seem to think that they the last two decades, health markets in lowing the path of state-run healthcare, don’t get their money’s worth with the industrialised countries are undergoing stifling entrepreneurship and innovation. available insurance packages. intense change at tsunami-like speed, re- The situation is already precarious given Increasingly, waiting for doctors has sponding to levels of health expenditure that attempts to control costs over the last become the prevailing form of rationing that are growing twice as fast as the econ- decades have been largely unsuccessful. in the West: mild in the US, moderate omy at large. This year, for the first time ever, the in Australia and severe in Canada and As both the quality of state-run imminent meltdown of US Medicare has the UK. This, in turn, has created mil- health services and doctors’ reimburse- been suggested. The main reason for this lions of frustrated customers who have ment for such services have declined, cus- is that all the reforms so far undertaken begun to look elsewhere. The Internet tomers seem prepared to spend more cash have addressed only the demand side of and cheap airfares have greatly increased for their own healthcare, taking control the market. The strange thing here is that consumers’ opportunities and choices by over expenditures to boot. The Canadian buyers are telling sellers/providers how to creating new consumer-driven markets. government, for example, spent US$87 practice medicine. We are talking about Cosmetic surgery, retail walk-in clinics, billion on healthcare last year, but Cana- practice guidelines, preferred provider or- boutique medicine, Internet pharmacies dian consumers added US$38 billion out ganisations (PPOs), managed care, health and international medical tourism are of their own pockets. maintenance organisations (HMOs) and, only some examples. These areas, where Medical progress is not primarily to more recently, health savings accounts the state and other third-party agencies blame for exploding healthcare costs, as (HSAs). Their effects are limited as long are absent, are bristling with innova- most such progress is paid for, by default, as doctors are not free to re-bundle and tion and entrepreneurship: on a global by the dominant third-party purchasers re-price health services and compete for scale, nurses and doctors are busy re- in healthcare such as governments, em- customers. bundling and repackaging their services ployers and insurers. It is telling that, be- In the US, for example, state regula- at competitive (and often lower) prices. fore the introduction of Medicare in the tions do not allow no-frills basic health Over the last decade, free competition 1960s, overall healthcare spending in the insurance. Instead, they require insur- has brought down the prices in cosmetic United States was only five per cent of the ance to cover anything from genetic tests surgery by up to 30 per cent. Further- GDP. It now stands at 16 per cent and is and chiropractics, to acupuncture, mar- more, a growing number of high-quality projected to skyrocket to 25 per cent by riage counselling or artificial insemina- healthcare facilities in developing coun- 2030. The late Milton Friedman argued tion. Furthermore, insurers have to stick tries are catering for so-called medical to community rating and guaranteed tourists from industrialised countries, issues, which means that everyone has among them many uninsured Ameri- Fred Hansen a physician and to be accepted and pays the same pre- cans. Services abroad are, on average, journalist mium. There is, therefore, no possibility 80 per cent cheaper according to the

JANUARY 2008 43 R E V I E W founders of PlanetHospital. Their data There are plenty of signs of emerg- But there are even more instances show that heart surgery which costs more ing global market responses to the West- of consumer-driven changes pushing for than $50,000 in the United States can be ern supply crisis. The market for medical supply side reforms to health markets: purchased for $20,000 in Singapore, for tourism was worth $60 billion in 2006 • Growing numbers of consumers $12,000 in Thailand and between $3,000 and is rapidly growing. Again, according are not willing to put up with the and $10,000 in India. Though one may to McKinsey & Company, it could rise to rationing-by-waiting for a doctor have doubts about the quality and safety $100 billion by 2012. Big insurers are al- anymore and are paying out-of- of such a heavily discounted heart proce- ready adding global low-cost providers to pocket to jump the queue in indus- dure, the success rate of coronary bypass their health plan networks. Blue Shield of trialised countries. For instance, in surgery in India is reported to be 98.7 per California, for instance, allows enrolees of Australia, patients are paying up to cent as against 97.5 per cent in the US. its health plan to have access to cheaper $600 for private treatment to avoid Already, people can receive most major or physicians across the Mexican border. queues at crowded public hospital complex procedures abroad. The compe- Blue Cross of South Carolina allows emergency departments. At Sydney tition is on, and most hospitals catering treatment at the Bumrungrad Interna- Adventist Hospital, which has the for the international market have either tional Hospital in Thailand, which treated largest private emergency section passed Western accreditation standards 400,000 foreigners in the last year, includ- in NSW, doctors see 21,000 such or are attempting to do so. ing 80,000 Americans. Furthermore, In- patients per year. Australian dental According to McKinsey & Com- dia and China are already major suppliers tours to Thailand are already very pany, India’s health industry, one of the of low-cost drugs and drug ingredients to popular. most promising in the field, is expected US consumers, as the recent scandal over to grow from its present size of just US poisoned or toxic imports has revealed. In- • Web-based online patient networks $25 billion to a whopping $190 billion dia alone produces 350 varieties of antide- and mailing lists are becoming an in less than two decades. Many observ- pressants, heart medicines, antibiotics and increasingly powerful force. One of ers of the global healthcare industry are other drugs purchased by Americans. Last the biggest is the US-based Asso- expecting that, in the coming decade, year, China sold pharmaceuticals worth ciation of Cancer Online Resources the increasing pressure on the supply $670 million on the US market. The (ACOR) with 159 online cancer of healthcare will set off a tsunami of downside is that the risks to human health groups. Increasing numbers of peo- health consumerism of sorts. Although are also growing quickly and the US Food ple with health problems are look- up from 500,000 in 2006 to 750,000 in and Drug Administration is struggling to ing for help on the Internet, as 5.4 2007, the number of Americans travel- catch up, having conducted roughly 200 million Americans purchased drugs ling abroad for healthcare is tipped to inspections of plants in China and India from other countries over the Inter- increase to 6 million by 2010. over the last seven years. net last year.

R E V I E W 44 JANUARY 2008 The Internet and cheap airfares have greatly increased consumers’ opportunities and choices by creating new consumer-driven markets.

• Another market response to hospital extended hours for patients who can- hospitals have opened in Tijuana waiting lists is Internet-based servic- not gain access to their GPs. Private since some US health plans are now es for medical expertise framed as a providers are also setting up walk- covering services in Mexico. Stomach second opinion. Once a full patient in clinics. Research has shown that surgery, eye exams and routine check- record has been submitted, for a fee people aged under 34 years old—that ups are among the major services that of $450 Connected Health grants is, the next generation of healthcare Americans are seeking in Mexico. access to 4,000 medical specialists. consumers—are less loyal to their This is thanks to a legal system in This is probably good value for the GPs than their parents’ generation Mexico that makes it almost impos- money. A 2003 review by the British and instead prefer fast access to walk- sible to sue dentists. Medical Journal showed that working in clinics. • In the interest of huge cost savings, diagnoses changed in only five per • Doctors are responding to rising out- US insurance products such as ‘Mini- cent of cases, but that, in 90 per cent of-pocket budgets for medical care by med’ plans allow a limited number of of cases, new treatment alternatives converting their traditional practices doctor visits in the US each year, with were developed. into “boutique” medical practices. a much higher allowance in visits • Triggered by the 2003 US-wide in- Rather than the old-fashioned epi- elsewhere. As a mini-med provider, troduction of new tax-free health sav- sodic and inefficient fee-for-service PlanetHospital will cover all costs, ings accounts (HSAs), about 1,000 model, the boutique practice offers including travel arrangements and banks entered the healthcare market chronic patients (such as diabetics) treatment abroad for heart surgery by offering health coverage and de- care packages worth $1,500 for a for only $10,000. veloping new consumer models: US whole year’s medical service. These fledgling new health markets might uptake of HSAs has surged from • US employers, who had taken the finally undermine and outperform the be- 1 million in 2005 to 3.5 million in brunt of rising health care costs over hemoths of state-run health care, which 2006 and is expected to reach 10 mil- the last decades, are quietly shifting only rarely use their purchasing power lion by 2008. With plenty of cash for costs to employees through premium to benefit consumers. Walk-in custom- health purchases, HSAs are fuelling increases, higher deductibles or more ers, Internet drug buyers and healthcare the global market for medical tour- out-of-pocket payments. New con- tourists are building up pressure on pro- ism. Big US health insurers, such as sumer-driven healthcare plans in the viders in industrialised countries for more United Health and Blue Cross/Blue US, while still a small percentage, transparency in the quality and the prices Shield, have gained bank charters to are expected to triple in the next five of services, and finally for more consumer get into the HSA market. years. choices. One may be forgiven for thinking • In the face of an expected primary that this, of course, reflects the long-held • Health care tourism is expanding care physicians shortage of 200,000 conviction by classical liberals that mar- in Europe, with German and Eng- over the coming decade, US retailers kets perform better than governments in lish patients opting to pay a third or are responding with nurse-led and allocating resources, and are much faster a half of what they pay at home by GP-backed (1 for 4) walk-in clinics. to respond to the demands of consumers. travelling to Warsaw or Budapest for Five hundred of these are already op- Patients are realising that the power of the dental work. Patients have been trav- erating across the United States. Redi- consumer vote, exercised many times ev- elling across Europe for years to ob- Clinic, one of the new providers, is ery day on choices in different markets, tain major procedures at lower costs. reported to have a 97 per cent patient is incomparably better than one political The European Court of Justice ruled satisfaction rating. Wal-Mart has an- vote and a blank cheque to politicians ev- a couple of years ago that these coun- nounced that it will open such clinics ery four years. tries should mutually reimburse such in 2,000 of its outlets; Walgreens and services. CVS Pharmacies have purchased na- I P A tional retail clinic chains. • Offering dental work at one-fifth of US prices and inexpensive drugs, • In the UK, the NHS has responded Mexico is attracting the majority of in kind, opening walk-in centres with American medical travellers. New

JANUARY 2008 45 R E V I E W great deal of scrutiny has recently been given to the Strangely, nobody has suggested why this problem problem presented to medical practitioners (and may have arisen in the first place, other than to link it Aless recently to nurses) by violent patients. Clearly, non-specifically and dubiously with increasing violence something has eroded the relationship between patient and in the wider community. doctor. Following the fatal attack on Dr Khulod Maarouf-Has- From demand to prevention san in Melbourne in 2006, a nationwide Australian survey There was a time when medical practice was demand by Cegedim Strategic Data revealed that 83.3 per cent of driven: patients presented with a complaint for which the GPs had been verbally abused by a patient, 43.3 per cent doctor attempted to find an explanation and prescribe a threatened and 12 per cent physically abused. treatment. The Australian Medical Association and the Royal Prevention, however, is now all the rage. One of the Australian College of General Practitioners both have posi- reasons for the modern focus on prevention is the limited tion statements on personal safety for physicians. Among success in identifying the root causes of the remaining the suggestions made are that the taxpayer should fund scourges such as heart disease and cancer. Another reason (via incentive payments) infrastructure changes to improve is because governments believe that preventing the emer- practitioner safety and that safety protocols should be linked gence of disease, rather than simply treating it when it to accreditation. Other suggested measures include practi- presents, is the best strategy to limit the costs of taxpayer- cal activities such as staff training, tracking of patients who funded health schemes—and the harm that increases in have perpetrated repeated violence in general practice set- taxation may do to a government’s electoral prospects. tings, enhanced cooperation with police and the judiciary A critical result of this focus on prevention is that and the involvement of patients in achieving a safe working while the traditional role of the law was to intervene only environment. when the actions of one individual threatened another, However, not only does there appear to be no evidence intervention now increasingly occurs when individuals that physicians and staff may actually be protected by any harm themselves or they are harmed by chance (through of these measures, but they may ultimately lead to increased the fault of no other person). Now, issues such as smok- costs to consumers (or taxpayers). At the same time, one- ing, alcohol and obesity have been added to governments’ size-fits-all solutions will ensure that wastage is maximised. agendas. The end result is a programme of social control mas- Brian Bedkober is Editor of Australian Private Doctor. querading as health promotion.

R E V I E W 46 JANUARY 2008 Rather than simply presenting the facts, physicians have become the guardians of public morality, interrogating patients about their lifestyle choices, and making them feel guilty about making ‘bad’ choices.

Obviously, the role of the medical profession raises some additional matter that is on his agenda (often because in these health promotional activities is critical. of the related payment incentives) but not on the patient’s. The concept of health as the new religion fits well Much of this activity is facilitated by the medicalisation of with the bias of most physicians; physicians are life so that the government may justify exercising control over all generally comfortable with the idea that a happy aspects of it. By describing health in a meaningless, content-free and virtuous life must necessarily equate with a way such as a ‘state of complete physical, mental and social well- healthy one. Nothing is more important, that is, being’ and by classifying behaviours (such as eating or drinking too than good health and any choice that is inconsis- much) as ‘diseases’, what was previously the province of personal tent with the maintenance of good health is a bad choice has become the province of the medical practitioner. choice. Where people may be held responsible for unacceptable ‘be- But health preventive activities do not, of haviour’ they cannot, or so the argument goes, be held equally course, prevent the occurrence of illness. In many responsible for some ‘disease’ or ‘illness’ from which they suf- cases they merely delay its appearance. fer. As Thomas Szasz once noted, there is never a question about The emphasis placed on preventive care has whether a particular individual may actually like and choose to also resulted in the introduction of a large num- drink, smoke, take drugs or be overweight—the patient simply ber of new Medicare item numbers and incentive suffers from a ‘disease’ and must be treated. payments through which medical (and non-medi- A good general practitioner is now expected to actively en- cal) practitioners are increasingly able to access quire about the sex lives of patients, whether they might be sub- the public purse. ject to domestic abuse or engaged in child abuse, whether they This has resulted in a windfall for many prac- smoke, gamble or drink or take forbidden substances and so on tices as the use of computer templates and the and on. judicious employment of ancillary staff has en- Answers to some of these questions could result in referral to a abled the generation of the paperwork necessary range of authorities, including the police. These referrals, further- to access the not inconsiderable funds on offer. more, may be based not on what a patient is known to have done Where such interventions were necessary in the but on what he might do or might have done. Individuals may be past, of course, they were done without these item reported on scant evidence—often because scant evidence is all numbers—and whether anything further has been that is required, or reporting is mandatory, or there are significant achieved by their extensive uptake is extremely legal risks for the physician attendant upon failure to report. doubtful. The financial benefits, however, have Governments, for their part, are very pleased to be able to provided considerable (and much needed) rises in make use of doctors to perform these tasks; doctors are well placed the income levels of many practitioners—particu- to carry out surveillance and deliver the messages approved by larly those working in large group practices. government and its agencies, since so many citizens see their doc- Doctors are now paid by the government tor at least once a year. Who better than their friendly physician to to disseminate and act upon health promotional ferret out what patients are up to, advise them about the wisdom messages which (they may or may not know) are of their choices, refer dissidents for counselling, or report them to often of dubious validity and, rather than con- the appropriate authorities? centrate on people who present with a particular The theme for this year’s Family Doctor Week (22–28 July) illness, much of their precious time is now taken was Your GP: Part of the Family. However, as a result of the chang- up in doing ‘check-ups’, getting patients to fill in ing nature of medical practice, your GP, rather than being a part questionnaires and dealing with anxious patients of your family, has, to a significant extent, been converted into an who want to be screened for some illness that they agent of the government. have heard about and think they might or could As doctors have moved away from being paid by the patient have. to being paid by the government, they have moved from having a In those cases in which the patient does pres- commitment to the patient to having a role in tackling the prob- ent with a particular malady, the doctor invariably lems of ‘society’.

JANUARY 2008 47 R E V I E W Instead of treating illness and re- been acting in the role of the govern- gage in health promotional activities. specting the autonomy of the individu- ment’s drug police. Surprisingly, many Instead, it needs to be recognised that al and the privacy of personal life, they practitioners are actually keen to extend the doctor–patient relationship has are increasingly expected (and finan- this kind of role through capitation and been progressively poisoned as control cially manipulated) to conform to the fundholding schemes—several of which of the relationship has shifted to the dictates of political correctness. Rather are currently run by the General Prac- government. than simply presenting the facts (as cur- tice Network (formerly Divisions of It is not at all evident that the rently known), physicians have become General Practice). changing role of the doctor has been for the guardians of public morality, inter- Roughly speaking, these are the better, either from the perspective rogating patients about their lifestyle schemes whereby the health care needs of the individual or of the community choices, making them feel guilty about of individual consumers in a particular as a whole. When doctors are expected making ‘bad’ choices and acting not to geographical area are funded through to manage the social as well as the medi- satisfy the patient’s wants but to satisfy access to a managed pool of funds. The cal complaints of their patients, it is lit- the demands of the state. managers of these funds then become tle wonder that their relationships with While many patients have come to the subject of consumer anger when patients can be torrid—and that they accept that this is a proper role for the they must be rationed in some way. may be subject to abuse and attack. Not doctor, others have come to regard their Government is, of course, happy to have only have these changes placed doc- doctor with some apprehension—even somebody else appear to be responsible tors in harm’s way, but they also have with hostility and suspicion. Many find for these kinds of decisions. a great deal to do with the workforce these questions impertinent and simply It is natural, therefore, when doc- ‘crisis’ which general medical practice none of the doctor’s business—particu- tors are increasingly seen to be aligned now faces. larly when they come, as they often do, with government rather than with their All of this brings us back to the from someone who is younger and less patients, that patients should be more ‘non-specific’ link between violence mature than the patient being interro- inclined to vent their frustrations on towards physicians with increasing vio- gated. doctors. And these frustrations must lence in the wider community. In fact, When doctors believe that it is a inevitably increase as it becomes in- there is nothing non-specific about this part of their job description to enquire creasingly difficult for individuals to link at all. actively into a patient’s sex life and so live the lives they choose—because, for Violence towards physicians is simon, to inform on their patients and to example, they are not permitted to ex- ply another manifestation of the inci- collaborate with the local police and a change a shorter and less healthy life for vility and anti-social behaviour that a whole range of other government agen- a more enjoyable one when taxpayers number of authors have identified in cies, it is not surprising that many pa- bear a large proportion of the costs of relation to the welfare state. tients become abusive and even physi- an individual’s unhealthy choices. cally violent. This does not mean, however, that I P A Some of the most serious attacks medical confidences should never be have occurred when practitioners have broken or that doctors should not en-

R E V I E W 48 JANUARY 2008 Is government paperwork getting you down?

SUPPORT THE INSTITUTE OF PUBLIC AFFAIRS DONATIONS ARE NOW TAX DEDUCTIBLE! By donating to the IPA you help reject growing bureaucracy. Donate for liberty, so that eventually, you won’t have to. For more information, visit www.ipa.org.au or ring 03 9600 4744. University research The need for paying customers

Sinclair Davidson

ames Buchanan—the founder of the Public Choice academic life is fraudulent, that all of us are engaged in a gigantic shell JSchool in economics—has recently re-released his game aimed at the exploitation of the general public’. Buchanan, of autobiography. First published in 1992, Better than course, does not agree with Staaf—academic life is not fraudulent— plowing and other personal essays related the story of but, more importantly, he also does not agree with the more common how a poor farm boy from Tennessee made his way arguments for public funding of universities and public research. in the world and had come to win the economics Buchanan argues that the notion that academics produce research Nobel Prize. This year, Buchanan published Econom- as a by-product of advanced teaching is an argument that ‘must be ics from the outside in: ‘Better than plowing’ and be- rejected out of hand’. The academic, Buchanan says, struggles with yond. The first twelve chapters are reproduced from ideas themselves and observers (that is, students) are irrelevant to that the 1992 book and another four chapters make up struggle. the new book. As always with Buchanan, it must be Another argument that Buchanan partially rejects is the well- read carefully to capture the full meaning and nu- known down-stream benefits argument. Some practical benefit will ance. come out of university research at some point in the future and so we should subsidise it now. (I wrote about the myths of infinite return Do academics add value? and unfettered research in the December 2006 issue of the IPA Re- Buchanan makes the argument, in his final chapter, view.) Buchanan argues that this argument could only be true in the that ‘there is no ordinary quid pro quo between the sciences, but never in the humanities. In the end, Buchanan argues academician and the institution, organization, or that people aspire not to satisfy their existing wants, rather they aspire person for whom he nominally “works”, and who to better wants and this is the role of the ‘thinking classes’ and ‘scien- pays his salary.…’ This is not an unusual attitude tist-philosophers’—helping people to aspire to better wants. Conse- amongst academics. Henry Rosovsky, emeritus pro- quently, ‘society at large’ is willing to support universities. fessor and former Dean of the Faculty of Arts and This is a fine argument, to be sure; it may even be correct. The Sciences at Harvard University, relates a story about difficulty relates to the notion of ‘society at large’. How individuals the famous historian Ernst Kantorowicz (1895– choose to spend their own after-tax income is their own business. 1963) who refused to take a McCarthy-era oath of Universities, however, expect to be supported out of individuals’ pre- loyalty required by the California University system. tax income. It is not at all clear that the taxpayer should be funding Professor Kantorowicz refused not because he held the idle speculation of academics. This criticism is made somewhat strong views about McCarthyism itself, he may well difficult by the fact that Buchanan himself has been unusually pro- have, but because he argued that professors should lific in his career and is widely considered to have been an excellent not be considered employees in the usual sense. teacher. As he says, ‘The fact that my interests were always well within Rosovsky opines that ‘professors have the income of the boundaries of academic propriety gave me the sense of openness civil servants but the freedom of artists’. required for energized effort’. Buchanan is responding to the argument put Adam Smith, an academic for most of his life, had a poor view by the late Robert Staaf of Clemson University, ‘that of universities. He took the view that universities need not be funded by the taxpayer—indeed, he suggests that taxpayer funded universities are likely to do a poor job at educating students. He tells us that professors at Oxford have ‘given up altogether even the pretence of Sinclair Davidson is a professor in the School teaching’. Smith held the view that universities should teach. of Economics, Finance and Marketing at RMIT In order for people to earn an income, Smith argued that they University

R E V I E W 50 JANUARY 2008 need to ‘execute a certain quantity of both ignorantly and capriciously’. not to universities’. Stigler, known for work of a known value’ and, in a com- Paying customers, however, are un- his dry wit, recognised this to be a petitive environment, must do so ‘with likely to tolerate poor behaviour. Smith ‘dangerous proposal for what the econ- a certain degree of exactness’. As regards makes the point that teaching is best omist calls “consumer sovereignty”’. academics, Buchanan seems to disagree where there are no public institutions. Some might be tempted to argue that with this statement. How would anyone For example, when a young man ‘goes the Higher Education Contributions ever know the value of academic work? to a fencing or a dancing school, he Scheme (HECS) is indeed such a pro- This, of course, is always an important does not indeed always learn to fence or posal. That, however, is not the case. question. In the absence of a market, dance very well; but he seldom fails of HECS is a loans scheme, not a voucher value can never be determined with any learning to fence or to dance’. In short, scheme. The government strictly con- accuracy. if people’s livelihood is independent of trols the number of HECS places and Smith then explores how academics their efforts, they will often—but not al- the distribution of those places. might be monitored. The most obvious ways—tend to do less rather than more. Universities should have to earn form of monitoring is self-monitoring, Smith makes this point very strongly in their way in the world by collecting or peer-review as it is known in aca- the case of universities. money from paying customers—just demic circles. Peer-review for research like every other organisation does. Some purposes probably works better than The possibility of paying of those paying customers may be happy any other method, yet it is not without customers to pay on the basis that ‘philosopher-sci- its problems. Yet, in general, as Smith Paying customers are a foreign concept entists’ create better wants. Other pay- suggests, academics are likely ‘to be all at Australian universities. Indeed it is ing customers may be happy to pay for very indulgent to one another, and every mostly foreigners who pay for their the education they receive. Importantly, man to consent that his neighbour may university education. The notion of satisfied alumni are likely to make finan- neglect his duty, provided he himself is fee-paying Australian students has met cial contributions to their alma mater, allowed to neglect his own’. with much resistance from academ- whereas dissatisfied paying customers A second mechanism whereby uni- ics, academic unions and some politi- may make no such contribution. Indeed, versities and academics are monitored is cal parties. There are many arguments HECS may crowd out alumni donations by some external body such as govern- against the notion that students, or in Australia. Although Australian uni- ment. Here all the external body can do their parents, should pay for their own versities have commercialised over the is specify the hours taught or the subject education. Yet few ever consider that past 20 years, consumer sovereignty is taught. Brendan Nelson was opposed, paying customers would demand bet- still to be introduced. for example, to ‘cappuccino’ subjects. ter education. The external body cannot actually en- George Stigler has argued that I P A sure diligent teaching. Smith argues that ‘all public aid to higher education for this type of monitoring will be ‘exercised teaching should be given to students,

JANUARY 2008 51 R E V I E W Cyclones, rainfalls and temperature: Does Australia have a climate crisis? Jennifer Marohasy

n November 2007, the United Na- o tions (UN) released the last of its Figure 1: Number of tropical cyclones between 90 E and Imuch publicised fourth series of 160oE, 5oS and 40oS for seasons 1969/70–2003/04 expert reports on climate change, with a comment from Secretary-General 25 Ban Ki-Moon that the report’s findings are more terrifying than the worst-case 20 clones

scenario in a doomsday film. It is hard cy to reconcile the Secretary-General’s 15 comment with the substance of the report. 10 But then again, when it comes to climate change, the hysteria appears 5

to continually trump substance. In the Number of tropical same way that many people are thrilled 0 by a good doomsday film, we seem to have become caught up in the drama 1969/70 1974/75 1979/80 1984/85 1989/90 1994/95 1999/00 2004/05 of an imaginary climate crisis. Season Type the two words ‘climate crisis’ into Google and the first link is to the Based on the work of Professor Neville Nichols. Data are not entirely comparable through film An Inconvenient Truth.The film, the entire period, as there was complete satellite coverage only from 1977 onwards. about how the earth is being destroyed by greenhouse gases, not only won Al Cyclones Rainfall Gore a Academy Award in the docu- There has been little overall change in the There was good rain in Brisbane during mentary category but also the 2007 number of cyclones in the Australian re- 1998/1999. The city is now running out Nobel Peace Prize. Its website explains gion since 1910, but there has been a shift of water because of a dramatic increase in how we can take action as individuals to more intense systems—particularly cat- population, a lack of investment in new to reduce greenhouse gas emissions— egory four and five cyclones. According to water infrastructure and the absence of the including by running our dishwashers the Bureau of Meteorology, over the Southern cyclones which once brought downpours only when there’s a full load. If only I Hemisphere as a whole, the number of cy- that filled the catchment dams. had a dishwasher! clones has increased from the 1950s but there Not a day goes by without some ref- Then again we don’t have a cli- has been little change since around 1970. erence in the Australian media to water mate crisis—at least not in Australia. Cyclones have the potential to wreak restrictions in our cities and the drought The evidence for this comes directly havoc. On 10 November 2007, The Aus- gripping the Murray–Darling Basin. Is this from Bureau of Meteorology records tralian published an article entitled ‘Austra- evidence of a climate crisis? on cyclones, rainfall and temperature lia facing worst cyclones in years’. It began, This year many regions received good over the last 100-or-so years. ‘Australia should brace itself for the worst autumn rain—there was even flooding in tropical cyclone season since 1998/1999’. the Hunter Valley. Large areas were plant- La Nina conditions in the tropical Pacific ed to wheat in the Murray–Darling Basin. Ocean, not global warming, were given But there was no follow-up rain, so crops Jennifer Marohasy is a Senior Fellow as the reason, in particular that sea surface failed—particularly in western NSW. It at the Institute of Public Affairs. temperatures are the coldest since 1999. was a cruel blow to many farming families,

R E V I E W 52 JANUARY 2008 Figure 2: Murray Darling Basin Annual Rainfall 1900 - 2006 The hype surrounding the 800 release of each 700

600 IPCC report has 500 intensified, with infall (mm) Ra 400 the UN Chief 300

200 describing the 100 11 year rolling average most recent 0 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 report as Year Source: Australian Bureau of Meteorology “terrifying”.

and so the drought continues despite the enth warmest on record since comparable continue in the Murray–Darling Basin earlier prediction from the Bureau of Me- temperature observations become available or it may start raining at Christmas time teorology that La Nina conditions could in 1910, with an annual mean temperature with flooding in August 2008 as bad as bring good winter rain. 0.47°C above the standard 1961–1990 av- that experienced in 1956. I use the word The Murray–Darling Basin Commis- erage. ‘may’ because I don’t know what the future sion’s latest ‘Drought Update’ states that The Bureau also commented that de- holds, but given the available data, I can rainfall (July–September) over much of the spite record warm daytime temperatures confidently conclude that we are not now Basin has continued to be below average in the drought-affected southeast, last year experiencing a climate crisis. or very much below average, with patches was cooler than the previous year (2005) The United Nations first started pub- of ‘lowest on record’ in northern NSW. when averaged across the whole country. lishing climate change reports in 1990. Water flowing into rivers over August and This was attributed to a very active tropical More than two decades later, these reports September has receded towards the record wet season resulting in cooler temperatures are still equivocal about the extent and low levels of 2006 and system storages are through the north, and clear skies associat- the reasons for what has become known lower than this time last year. ed with the drought in the south—result- as ‘global warming’. But the hype sur- Regrowth from the 2003 bushfires, ing in cold overnight temperatures from rounding the release of each report has more plantations of blue gums and al- April to July. The annual mean maximum intensified, with the UN Chief describing monds, combined with more farm dams temperature was 0.60°C above average the most recent report as ‘terrifying’. This and more water recycling has further re- (ninth highest), while the mean minimum report will be the focus of international duced the amount of water running into temperature was 0.34°C above average discussion in Bali in December with un- rivers and streams in the Murray–Darling (seventeenth highest). Temperature anom- doubtedly more dramatic media headlines. Basin. So there is a severe water shortage, alies varied throughout the year, but spring There will be very public politicking as although it is partly demand-driven, and it 2006 was particularly warm (+1.42°C), those who believe in the doomsday sce- may get much worse if it doesn’t rain soon. being Australia’s warmest spring season on narios insist that dramatic cuts are made to But the long-term rainfall record for the record. greenhouse gas emissions, particularly in basin shows no sudden downturn. Rather, Given that climate always changes— countries such as Australia. And it is likely we are going through a very dry patch. the earth is generally either warming out of that, as perception continues to define the an ice age or cooling into one—the warm- political reality, there will be more serious Temperatures ing over the last 100 years is nothing out of demands made on us as individuals—not There has been a general warming trend, the ordinary. just that we fill our dishwasher completely globally and in Australia, over the last before turning it on. Conclusion 100 years. At the beginning of this year, I P A the Australian Bureau of Meteorology an- One should never take the climate for nounced that, last year, 2006, was the elev- granted. Next year, the drought may

JANUARY 2008 53 R E V I E W R E V I E W 54 JANUARY 2008 What’s the appeal of “totalitarian chic”? Tim Wilson

n politics there have been many power- But Guevara is not the only murderer CIA, during his attempts to stir up a revo- ful symbols, but few have crossed over in history who has achieved significant lution in Bolivia. Following his capture, Ifrom politics into popular culture like public support after their passing. Despite Guevara accepted that he had executed up Albert Korda’s photograph of the ‘heroic being responsible for up to 70 million to ‘a couple of thousand’ people. Docu- guerrilla’, Che Guevara. The image sells deaths, Chairman Mao still enjoys rever- mentation is available to prove that he and has been emblazoned on a diverse ence amongst large sections of the Chinese executed at least seven hundred. Further- range of objects from clothes to piggy people. The Politburo now only pays lip more, Guevara hardly rejected material- banks. Guevara’s image has come to rep- service to his legacy, but he is still glorified ism: proudly owning Rolex watches and resent rebellion and has achieved a recog- in public mosaics and buildings through- living in mansions in the most exclusive nition that few political activists have. Yet out the country. parts of Havana. Guevara’s life and works were hardly the Stalin enjoys similar treatment. Sta- Guevara’s image is often used to evoke sum of his so-called political achievements. lin once famously had the census-takers rebellion against the established order and Guevara was an enthusiastic and deluded shot after they reported that 30 million few would doubt that the ‘heroic guer- Marxist revolutionary with a penchant for people had died under his regime. Yet to- rilla’ was also not afraid to use violence to executions, making his status as a political day he still commands considerable respect achieve his aims. Yet Fontova points out hero questionable, particularly when there amongst the Russian people. His years of that Guevara’s life is largely a myth cobbled are so many more deserving. power often generate respect amongst a together to maintain the legitimacy of his Lately, a cadre of anti-Guevara activists population which appears more content stature. In particular, most of his fans and have become quite vocal in their disdain with the certainty of totalitarianism than critics know Guevara as a guerrilla who for Guevara and the status he has achieved. the unpredictability of freedom. used his military skills to help Castro take One of his most vocal critics is the Cuban The Kims of North Korea have also Cuba. But Fontova shows convincingly exile, Humberto Fontova, who recently built cult followings within their realm. that Guevara’s military career was a mirage published Exposing the real Che Guevara However, any cult status achieved in the perpetuated in the magazines and newspa- and the useful idiots who idolize him. West is for their quirkiness, as portrayed pers of the West. During the Bay of Pigs As a child, Fontova’s family was sepa- by the Kim Jong-il marionette in the film invasion, Guevara was fooled and diverted rated as they tried to flee the (then unde- Team America: World Police. by a CIA plot which involved fireworks, clared) new communist nation. His family But only Guevara’s image has man- mirrors and the playback of a recorded was eventually reunited when they arrived aged to transcend politics into popular battle. His involvement in the defeat of in the United States, but Fontova is inca- culture. Ironically, his stature is highest in anti-communist rebels was to arrive at the pable of letting those he holds responsible the countries to which he was most pas- real battlefield on the final day after the for their exile get away unscathed. His sionately opposed. rebels were essentially defeated. The irony book is designed to tear apart the credibil- In a recent article in the Washington is that despite not seeing a real battlefield ity of the man who he believes responsible Post, journalist David Segal argued that an he still suffered injuries—he accidentally for so much of the past and contemporary image of Guevara in an art exhibition was shot himself. hardship of the Cuban people, while also demonstrative of his cult status—‘Che is Equally, during the Battle of Santa taking a swipe at the ‘useful idiots’ in the politics’ answer to James Dean’. But Gue- Clara, where Che’s forces overthrew the United States who dutifully, but unthink- vara is not Dean: Che was very much a Cuban Batista regime, the US print media ingly, revere his image. rebel with a cause. claimed that one thousand people were Yet, as Fontova argues, Guevara was killed. However, as Fontova details, the hardly the anti-materialist, harbinger of Batista troops gave up with little struggle Tim Wilson is Director, IP and Free peace that many Hollywood celebrities and only one person was killed. Trade Unit at the Institute of Public would like him to be. Guevara was killed Rather than a military victory, Castro’s Affairs. by Bolivian troops, with support from the success in Cuba was more a public affairs

JANUARY 2008 55 R E V I E W articulate a future of hope for his audience. Reeves’ argues that, after Reagan’s passing, conservatives romanticised his Presidency and achievements beyond reality. The period between his death and his burial supports this view. Reagan’s demise gripped the United States—there was a week of mourning and his body was on display 24 hours-a-day in the Capitol Building. The long hours were uncommon but necessary to clear the hordes that at- tended to pay their respects. Reagan also remains the only conservative political hero to have his ideology endorsed with a moniker—Reaganism. Reagan had clearly tapped into the imagination of the American people and has Exposing the real Che President Reagan – The been revered despite the gulf that separates Guevara and the useful triumph of imagination the day-to-day details of his Administra- tion from the legends that now surround idiots who idolize him By Richard Reeve him. By Humberto Fontova (Simon & Schuster, 2006, 592 (Sentinel HC, 2007, 256 pages) Despite his success, Reagan has not pages) achieved the same degree of celebration that Guevara has: he hasn’t appeared in fashion houses or been tattooed on an un- victory in Washington DC and New York. have to an idol is the former President of mentionable part of Angelina Jolie’s body. Throughout and following Castro’s and the United States, Ronald Reagan. Particu- The image of Reagan at the rally in Guevara’s takeover of Cuba, The New York larly in US politics, candidates now actively support of Senator Durenberg, with his Times often ran stories recognising their invoke the spirit of Reagan to secure elec- weathered face and stiff posture framed by significant military achievements against tions. The current Republican Presidential a sea of American flags, is the closest pho- the Batista rebels, despite it now coming to Primary is filled with candidates who all tograph that encapsulates the image now light that most battles involved few shots, claim to be the heir to the Reagan legacy. portrayed of Reagan—a stoic, uncompro- let alone casualties. Guevara was a man of many words and mising crusader. Yet it has only made its What is clear is that Guevara, like he often spoke in crusading language when way onto t-shirts on conservative websites Castro, has achieved his cult status despite he talked about the success of communist and the occasional political memorabilia his failures and the pain that he inflicted. Cuba and his interest in overthrowing the store in Washington DC. It would be more appropriate to argue that United States. Equally, Reagan evoked very Perhaps it is their defeat that makes Guevara was less the ‘heroic guerrilla,’ and strong language in defence of the United their memory fashionable. Purchasing pro- more the ‘artful dodger’. States, conservatism and the justification communist memorabilia is not limited to How has Guevara successfully es- for the overthrow of the Soviet Union. naïve celebrities and left-wing political ac- caped his reputation, well described by Both leaders also spoke about sacrifice in tivists who are capable of turning a blind one of his friends as that of an executioner achieving their stated goals. eye. who engaged in ‘bloodletting for its own Both men also tapped into the imagi- Conservatives often buy communism’s sake’? Is Guevara’s appeal based simply on native psyche of their audiences. Guevara’s memorabilia for its chic value. I confess to the idealism that he portrayed (outside of imaginative appeal appears to have been owning North Vietnamese propaganda the execution chambers) to a youth mar- established long after his passing, aided by prints, and North Korea is one of the top ket waiting to be led? Or was the ‘Heroic a number of hagiographies and a gullible ten destinations to which I want to travel. Guerilla’ just an image that prints well and media. If it is defeat that transforms communism’s communicates a subconscious message? The capacity for Reagan to tap into face into pop-culture, perhaps we should What is perhaps of interest is that the imagination of the American people be celebrating Guevara’s t-shirts. there is no conservative idol. There is no was the topic of Richard Reeves’ book, I P A conservative pop icon that enjoys unparal- President Reagan—The triumph of imagi- leled support amongst young people and nation. Reeves depicted a political leader movie stars. who understood the value of words as well Perhaps the closest ‘icon’ conservatives as action, and who understood the need to

R E V I E W 56 JANUARY 2008 Competition and the cartel crusade Alan Moran

t the heart of the Trade Practices Legal measures to control or pre- targets of this regulatory aggression. Act is Section 45. Over some 20 vent monopoly come under the title It is argued with some cogency that Apages, this section explains the ‘antitrust’, an American term dating individual firms that have achieved mar- illegality of businesses conspiring to from the nineteenth century for laws ket domination bring benefits involving fix prices or otherwise diminish com- that originally targeted firms such as the economies of scale that are far less likely petition in a market. Issues concern- successful Standard Oil enterprise built in the case of market domination by in- ing combines, or cartels of firms which up by John D. Rockefeller. In fact, Stan- ter-firm agreements. Cartels are, accord- avoid competing with each other and dard Oil was by no means the ruthless ingly, lacking an important attribute share the market, have been brought price-boosting monopoly that has been that an individual monopolist might to prominence in Australia with the ac- depicted. Its share of refining capacity have. Cartel agreements are of greatest knowledgement by Visy and Amcor that was under pressure from major rivals importance in Australia where there is such agreements had been made and were current, at least between 2000 and 2002. This has given new impetus to Many high profile businesses were the role of the Australian Competition and Consumer Commission (ACCC) ludicrously targeted by anti-trust laws, in uncovering such agreements. A phrase of Adam Smith’s is frequently the starting point for people in the light of their obvious lack of favouring government control over cartels. Smith maintained that, ‘People of market power. the same trade seldom meet together, even for merriment and diversion, but such as Shell and Texaco and it fell from no provision to break up a dominant the conversation ends in a conspiracy 82 per cent in 1899 to 64 per cent at the firm once it has reached such a market against the public, or in some contriv- time of its break-up in 1911. Prices of position (although there is provision to ance to raise prices.’ What those invok- kerosene (the main petroleum product) prevent that being achieved through ing Smith’s authority rarely point out is fell precipitously during the period of takeover activity). that Smith went on to counsel against Standard Oil’s industry domination. Economic analysis of cartel issues intervention by the authorities, saying: Standard Oil was not the last firm tends to fall within two schools. Legal ‘In a free trade an effectual combination to come under unjustified regulatory at- authorities such as the ACCC and many cannot be established but by the unani- tack. Many high profile businesses are economists maintain that there is a great mous consent of every single trader, and now seen as having been ludicrously deal of collusion taking place and that it cannot last longer than every single targeted in light of the obvious lack of prices across many product areas are trader continues of the same mind.’ market power that was revealed by com- much higher as a result. In this respect, Over the past century, the existence mercial processes. Modern-day victims one writer in the Australian Financial of suppliers’ market power, its endurance of the regulatory agencies have included Review this year (13 October) reported and the appropriate role for government large firms, for example, GM and IBM, the current Chairman of the ACCC in controlling it have been major issues both of which faced years of scrutiny to have said, ‘If I can find an industry for economic and political analysts. and legal action before claims about where they were not involved in, I will their monopolistic abuse collapsed in tell you.’ the face of market positions that had Others are sceptical. They argue that Alan Moran is Director, Deregulation crumbled under the weight of competi- some unique circumstances are required Unit at the Institute of Public Affairs. tion. Microsoft and Google are now the for a cartel to hold together. Among

JANUARY 2008 57 R E V I E W Detail from unionist cartoon in New York American, November 1, 1904, exhorting union members to vote for anti-trust politicians after the failure of industrial action.

these is an inability of firms outside the estimated that overcharging was 25-30 per In this respect, analysis is made cartel (attracted by the high prices and cent on average (one study he drew from more difficult because economics has profits that the cartel is creating) to enter conducted by the OECD may have been never provided a useful guide on how the market. Such entry undermines the more rigorous, but still put the level at 15 prices are actually set. Marginal costs are cartel and forces its collapse. Of course, per cent). sometimes used to define where firms where such entry is forbidden and the Connor believes that cartels are per- should offer product, but this cannot be cartel enjoys other support from govern- vasive and he is generally in favour of useful as a price determinant except as ment, as was the case in the long-stand- more vigorous government intervention a possible price floor in cases where the ing Australian domestic airline cartel, its to enforce competition. His analysis does market is highly over-supplied. Thus, existence can be enduring. Even where not attempt to estimate the longevity of nobody would claim that cartelisation entry is difficult—because, for example, the price distortion of the cartels—al- occurs in the car market, yet cars, which it requires some scale economies and the though it does suggest that some persisted embody a high fixed-cost component, building of a reputation—cartels will for decades. Moreover, the counterfactual normally sell for at least twice their mar- often be vulnerable because the partner is not easy to assemble. How do we judge ginal costs. firms are likely to have different costs what the excessive price has been? Often Connor makes some curious state- and marketing aspirations and will fre- industries that are relatively concentrated ments in his analysis. For example, he quently cheat on each other. (as is almost mandatory for those where argues that if cartels are charging a price The most comprehensive studies of firms can agree to subdue their inter-firm sufficient to allow the highest cost mem- cartels have been conducted at Purdue rivalry) see some price volatility as com- ber to be profitable, this proves that all University by John Connor and his associ- petitors jostle for market share. After an others are making ‘economic profits’ ates. In a 2005 paper, ‘Price-Fixing Over- agreement has collapsed, a spate of price- and overcharging. In fact a dispersion of charges’, Connor examined data on 237 cutting would be expected and prices can costs across an industry is almost inevi- cartelised international markets covering fall to marginal costs (and below) for cer- table, with some firms earning far more 512 episodes. From this meta-analysis he tain periods. than others. Even in highly disaggregated

R E V I E W 58 JANUARY 2008 There is no evidence that the industries that are alleged to be prone to cartelisation have experienced lower productivity or that their customers have been markedly disadvantaged.

supply cases such as wheat, at any given facilitated and, as such, are clearly pro- • Are there cases where cartels may world price, the most marginal suppliers consumer. Others attempt to fix rates proffer advantages as are generally are likely to be barely profitable, while and share the market, but none of these accepted by most governments in some suppliers will earn high profits. endure—the different costs, rivalry and the case of shipping conferences, No piece of work has attempted the ability of non-conference competi- some of which also have price to analyse these cases from the scepti- tion to poach trade ensures that such agreements? cal perspective. The issue for most of measures cannot diverge from market • Should it be illegal to offer to enter those who are wary of government in- rates for very long. By and large, Aus- into price/production agreements volvement is the degree to which cartels tralian governments have taken the view even if there is no intent to abide actually boost prices above competitive that trying to prevent these attempts at by them? market levels. Dominick T. Armentano, market-sharing would undermine other in his 1986 monograph Antitrust Policy: advantages that the Conferences bring • If agreements are as widespread as The Case for Repeal, appears to favour in terms of greater frequency and reli- are asserted by the ACCC Chair- no law restricting cartels, but this would ability of sailings, coordination and risk- man, should there be a major in- mean no restraint on measures like sell- sharing. crease in funding for regulatory ers’ rings parcelling up contracts in ar- The invariable instability observed agencies to combat them? (While eas where few suppliers are qualified. At with shipping cartels was also seen in this is doubtless a view of the agen- the very least, the absence of legal con- the Visy/Amcor agreement. Visy used cies themselves, they are not dis- straint on firms striking anti-competi- the agreement to shed unwanted cus- interested parties. Furthermore, tive agreements would mean more of tomers (those that were seasonal and increased activity and funding by them would exist and they would have unprofitable for other reasons) while regulatory agencies is likely to bring far more potent effects if the next logi- chiselling away at the more valuable el- about the sort of misplaced aggres- cal step were to be made—namely, al- ements of Amcor’s customer base. Dur- sion that has been seen in the US lowing such agreements to be judicially ing the course of the agreement, Visy’s and in Australia where, for example, enforceable. market share grew from roughly 50/50 the ACCC has used imaginary data There are those who argue that, in- to 55/45, with Amcor’s share bolstered when trying to pursue cases against stead of agreements on price being disal- by being burdened by the less valuable petrol retailers.) lowed per se, the ‘rule of reason’ should customers. Finally, those who believe that carteli- apply to all such agreements. While pro- Neither price falls nor major shifts sation is widespread need to identify vision is available for the ACCC to al- in market shares are characteristic of just how great the detrimental effects low agreements, this must be subject to traditionally described cartels. If, as have been. There is no evidence that considerable prior analysis and be open seems to be the case, the agreement the industries that are alleged to be to scrutiny. No such agreements have largely clouded a different form of prone to cartelisation have experienced been registered in recent years. competition through which Visy con- lower productivity or that their custom- Shipping conferences—associations tinued to attack those of Amcor’s mar- ers have been markedly disadvantaged. of shipping firms to set rates and sched- kets that it valued, does this constitute Moreover, if the level of cartelisation has ules—are one sort of cartel that many an agreement to defraud the public? It been and remains pervasive, this does consider to be benevolent, although this is by no means illegitimate for firms not appear to have been accompanied was not a view shared by the ACCC or (or political parties or football teams by lower levels of productivity for econ- by a recent Productivity Commission for that matter) to deceive their com- omies as a whole. report. They are covered by specific pro- petitors. Indeed, secrecy and deception visions (Part X) in the Trade Practices are major parts of the competitive ar- I P A Act. Many shipping conferences simply moury. attempt to coordinate sailings in such The issues therefore revolve around a way that frequency and reliability is the following questions:

JANUARY 2008 59 R E V I E W Theft? What has been stolen? Sinclair Davidson, Alex Robson & Chris Textor

Cartels are theft, usually by well voluntary, price-fixing is not theft in this not ‘too high’. In any case, is the enjoy- dressed thieves. weaker sense. ment of the profits of mutually beneficial What about other, less direct forms exchange (even when they are not shared — ACCC Chairman Graeme of ‘theft’? Cartels do not defraud con- evenly) really immoral or evil? In that Samuel, Inside Business, ABC TV, 4 sumers or engage in any form of decep- case, no mutually beneficial or ‘profit- November 2007. tive conduct or deliberate or negligent able’ trade would ever be allowed. misrepresentation which would make Perhaps the worst that can be said he defining characteristic of theft consumers less well off after the exchange about a cartel is that by charging a ‘high’ is that it is a non-voluntary trans- than they initially anticipated. Consum- price, it may leave some gains from trade fer of property rights. How is a T ers receive exactly the benefits from ex- unexploited. Some resources may not price-fixing cartel similar? change that they thought they would. move from low- to high-valued uses. In Cartels do not obtain wealth directly Perhaps it is the secret way in which other words, the cartel misses out on by force. Consumers voluntarily agree to prices are determined in a cartel that is some profit. But that hardly qualifies as pay the price that is charged. Trivially, bothersome. But all companies choose ‘theft’ or as being ‘unfair’. price-fixing is not theft in the usual sense their prices in a way that could be deemed Price-fixing only involves a violation of the word. ‘secret’. Indeed, consumers do the same of property rights when participants are Exchange lies at the heart of all thing, and individuals do likewise when protected by government regulation or economic transactions—even those in- they negotiate wages. Secretly determin- artificial barriers to entry. For example, in volving cartels. Parties give up property ing your desired rate of exchange does most modern economies, the largest and rights over certain goods in order to ob- not violate anyone’s property rights. most extensive cartel is organised labour. tain rights over others. Both want to give So much for theft. But is a cartel un- Unions bid up their members’ wages and up as little as possible in exchange for as fair? Ownership of a bundle of property then try to prevent non-members (‘scabs’) much as possible. There is nothing im- rights does not entitle the holder to con- from working at a lower wage. moral about the desire of each party to sume the goods of others at an arbitrarily Unions are protected by minimum obtain a rate of exchange that favours determined ‘correct’ or ‘fair’ price. Thus, wage laws and other labour market reg- them. cartels do not violate that property right ulations that are designed to help them Of course, some prices are obtained either—since no such right exists. achieve this goal. But here it is the prop- as a result of coercion, duress, or other When a consumer buys from a car- erty rights of ‘scabs’ or potential entrants forms of pressure (such as blackmail or tel, he does not receive fewer benefits than that are violated. And it is the govern- extortion). But a cartel does none of he anticipated; nor do producers receive ment that violates their rights by erect- these things. It never forces consumers more benefits than they anticipated. ing these artificial barriers, not the union to agree to a particular price or transac- Indeed, the expectations of both itself. tion. Because the price paid is always parties are completely fulfilled. A price In summary, cartels are not thieves, does not suddenly become ‘unfair’ just and are not ‘unfair’. On the contrary, in Sinclair Davidson is a professor at because one or both of the parties in a free society, firms should be permitted the school of economics, finance and retrospect would have liked it to be dif- to ask whatever price they wish. Nobody marketing at RMIT University in ferent. In that case, we could abolish all is forced to agree to this price. Outlaw- Melbourne. trades, since consumers and producers ing price-fixing is a violation of private always would have preferred a different property rights. Preventing price-fixing is Alex Robson is a lecturer in the price, even at the time of agreement. theft. department of economics at the ANU Is it unfair that firms profit by in Canberra. charging ‘high’ prices? Consumers would I P A Chris Textor is an honours graduate always like to pay lower prices. So, irre- and employee of the ANU, and member spective of whether a firm makes a profit of the Australian Libertarian Society. or not, there will never be a price that is

R E V I E W 60 JANUARY 2008 Freedom in the nanny state

dition to economic controls, abortion Louise Staley reviews was illegal, homosexual sex was against Nanny State: How Food the law and married women were barred from working in the public service. Fascists, Teetotaling It would be a mistake, therefore, to Do-Gooders, Priggish regard the more recent past as a golden age Moralists, and Other of freedom. In many important respects, individuals have much greater freedoms Boneheaded Bureaucrats now than they did in the past; both in how Are Turning America into they choose to live their lives and in their economic freedoms. The nature of what a Nation of Children might be called regulation of the personal by David Harsanyi sphere is, however, changing. The religious (Broadway, 2007, 304 pages) basis for laws relating to temperance, abor- against porn, Internet gambling and Ja- tion, homosexuality, and mixed-race rela- net Jackson’s nipple, while simultaneously tionships has given way to ever-increasing promoting less intrusive government as a state paternalism. In the past, certain be- ooze, smokes, porn—the usual political ideology. However do-gooders of haviours were seen as morally wrong, now suspects—are joined by trans-fats, the left are named and shamed in greater new laws are passed ostensibly to protect cheerleaders and jungle gyms in numbers for their multitude of Nanny others from our actions and increasingly B to protect us from ourselves. the long list of life’s pleasures being regu- State interventions. For those opposed to lated out of existence by an ever-expand- excessive regulation, it is always tempt- Why this is occurring in the personal ing government in Nanny State: How Food ing to highlight the overlap of conserva- sphere, at a time when the limits of regu- Fascists, Teetotaling Do-Gooders, Priggish tives and the left. But this is a cheap shot lation in the economic and moral spheres Moralists, and Other Boneheaded Bureau- without at least attempting to explain the are receding, is immensely interesting. For crats Are Turning America into a Nation of motivations of both groups. the first time in human history, people in Children by David Harsanyi. It may be that the conservatives developed societies are free to make many David Harsanyi’s book is an amusing causes (porn, gambling, drugs and pros- fundamental life choices: in fertility, sexu- tour of the worst excesses of the Nanny titution) are the last faint echoes of what ality, and timing of death, yet at the same State. was previously a full-blown symphony of time are losing the choice to smoke, to His examples are appropriately bi- control, while the regulation of the left eat certain types of food, to drink alcohol zarre, such as the legislation drafted by is just beginning in limiting individual when pregnant. How this reversal of the Californian congressman Doug Ose to choices. traditional approach—that is, regulating control swearing on the airwaves, which The proper limits of regulation and what can be done in the bedroom while sets out in excruciating detail which words, the symbiotic relationship that much of leaving the kitchen alone—will pan out hyphenated compounds, and other gram- the new regulation has with risk avoid- for individual’s lives is still unknown. matical forms are banned. Or the 50-year- ance raise tons of questions that would This book has much to recommend old being asked for his ID in a Kentucky make for a fascinating book, but this it as a handy and enjoyable compendium bar because a 70-year-old had successfully is, unfortunately, not that book. Nanny of some of the most excessive examples of sued on the grounds of age discrimination State is long on examples of nanny-state law-making. No case can be proved by ex- when he wasn’t asked. regulations, but is disappointingly short ample, however, so Harsanyi’s claim that Apart from that small and virtuous on analysis and argument. the rise of this new regulation stops people group called libertarians, everyone else is Over the past 30 years, the nature learning common sense and lose the ca- a target for Harsanyi. He saves particu- of regulation has changed markedly in pacity for personal responsibility remains lar scorn for what he sees as the inherent all developed societies. In Australia, shop open to attack from the equally possible hypocrisy of moral conservative crusades trading laws were heavily restricted in all examples of people behaving with im- states, price controls existed for many mense stupidity. foodstuffs, such as milk, eggs and bread, Louise Staley is a Research Fellow at and monopoly providers delivered tele- I P A the Institute of Public Affairs. communications and electricity. In ad-

JANUARY 2008 61 R E V I E W R E V I E W 62 JANUARY 2008 The history of food hints at its future

While some have suggested that Jennifer Marohasy reviews the recent failed wheat crop is a sign of Australian Agriculture: Its inappropriate intensive European agri- cultural techniques and climate change, History and Challenges Australian Agriculture documents the tre- by Ted Henzell mendous increases in wheat yields over the last 100 years—particularly the last (CSIRO Publishing, 2007, 20 years—as a result of innovations such 308 pages) as high-yielding varieties, rotation with canola and improved management with griculture began in Australia with nutrition and diseases. the arrival of the first European Henzell also documents the extent settlers in 1788. In the early years, to which yield per hectare has increased A dramatically in cotton, driven by a signif- wheat was grown in coastal New South There are also stories for those in- icant investment in research and develop- Wales, with the flour produced rationed terested in wine, including material on ment and the adoption of new genetically along with a fixed quantity of beef, sugar some of the colourful characters who modified varieties. In contrast, produc- and tea. Many early settlers considered pioneered wine-making in our hot cli- tivity in the sugar industry has suffered fruit and vegetables a health hazard—in- mate before the advent of mechanical from the banning of organochlorine pes- deed, a Dr Johnson suggested that cu- refrigeration. Interestingly, the Forster ticides and growing the crop as a mono- cumber should be well sliced, dressed brothers in Melbourne were using refrig- culture. Not only does Henzell illustrate with pepper and vinegar and then prop- eration to make their lager beer 50 years how Australia’s fruit and vegetable indus- erly thrown out, as it was good for noth- before South Australian wine producers tries have used quarantine policy to limit ing. realised how important refrigeration was competition from imports, but he also Over the last two hundred years for the production of light white wines. shows the extent to which those policies much has changed—including not only Furthermore, fortified wines are remark- have hampered opportunities to develop where and how our food is grown but ably tolerant of hot oxidant conditions export markets. what we like to eat. This history is de- during fermentation, which perhaps ex- The most powerful message to draw tailed, commodity by commodity, in a plains why they accounted for about 85 from Henzell’s book is not only that each new book by Ted Henzell with the de- per cent of Australian wine sales during commodity has a unique history, but that ceptively bland title Australian Agricul- the 1930s and 1940s. each commodity will only survive as an ture: Its History and Challenges. Henzell puts the modern animal lib- Australian industry into the twenty-first Henzell’s book contains much of eration campaign in some context, when century if it manages to stay internation- interest for food buffs on the history of he describes just how many cattle died ally competitive—in particular, through different products and their methods of on the early sailing ships on their way to the development and implementation of production. It is surprising to learn that Botany Bay. Nearly all the early introduc- new and innovative technologies, from it was Chinese migrants who grew most tions were financed by the government, the planting of the crop through to the of the vegetables for Sydney at the turn of as live importation was such a costly and sale of the final product. And consider- the twentieth century and that they prac- risky business. Only 227 beasts survived ing how recent an addition many ‘staple’ tised one of the most sustainable organic of the 364 boarded in the first 10 years of foods such as tomatoes are to Australian farming systems in the world—the use of settlement. kitchens, we may be eating very different nightsoil (human manure). This perhaps In the chapter on sheep and wool, foods in many different ways by the end explains why recipe books back then rec- Henzell explains that with the industrial of this century. ommended that carrots be boiled for two revolution underpinning the development hours! of the wool industry, there was an excess of I P A mutton. So, in the 1840s, when there was a sharp fall in demand for stocking new Jennifer Marohasy is a Senior Fellow stations, about a million head of sheep a at the Institute of Public Affairs. year were boiled down for tallow.

JANUARY 2008 63 R E V I E W Ironic title not ironic enough

Africa is a mess. To fix it, the Scott Hargreaves reviews Sachs/Bono approach seeks more aid. Easterly believes The White Man’s Burden: World Bank/IMF policies con- Why the West’s Efforts to tributed to Africa’s ruination Aid the Rest Have Done and, therefore, a reform of their policies would help. So Much Ill and So Little I believe that Africa’s sal- Good vation lies in Africa itself—not inside the U.S. Congress or the by William Easterly corridors of the World Bank. (Penguin, 2006, 448 pages) And its salvation lies in returning to and building upon its own indigenous institutions…. hen you are the new kid on Easterly’s ‘Us and Them’ style deter- the block, the swiftest and mines the structure of the book, de- Wsurest way of making a name scribing aid providers and recipients for yourself is to pick a fight with who- There are so many as either Planners (bad) or Searchers ever is the current king of the heap. If (good). ‘Planners determine what to the competition is to see who knows the parties involved supply; Searchers find out what is in de- most about directing foreign aid, and mand’, Easterly said. your name is William Easterly, you pick in utopian Planners, such as Sachs, are those a fight with Jeffrey Sachs. who prefer grandiose plans such as the Professor Jeffrey Sachs, Director of programmes that UN’s Millennium Development goals, the Earth Institute at Columbia Univer- which set elaborate goals for poverty sity and special adviser to the UN on no-one need take reduction and health improvements the ‘Millennium Development’ project, around the world by 2015. Providing provides the intellectual grunt behind voluminous (and damning) evidence, pop-star Bono’s more charismatic efforts responsibility for Easterly shows that it is precisely this to ‘Make Poverty History’. Sachs is the kind of ‘big push’ that is most likely to only academic on Time magazine’s list of failure. fail. the world’s most influential people. There are so many parties involved Easterly, on the other hand, toiled grammes already in place. While Tony in such utopian programmes that no-one for years as a research economist for the Blair and Gordon Brown played to the need take responsibility and there is no World Bank, and sought to reach out to ‘Make Poverty History’ crowd, Easterly accountability for failure. Easterly ap- a wider audience during the 1990s with was pointing out the absurdity of per- provingly quotes Edmund Burke’s cau- a series of articles in criti- Foreign Policy petuating a cycle of debt forgiveness for tion against revolutionary utopianism, cally examining US and ‘western’ for- recidivist defaulters. and sees himself very much at one with eign aid. This dispute did serve to open the ‘Searchers’. While the Planners dom- While Sachs and Bono focused on up the field for public debate, but the inate the World Bank and the Interna- African poverty and called for a mas- focus on the protagonists took atten- tional Monetary Fund (IMF), Searchers sive increase in foreign aid, Easterly tion away from other voices, such as tend to work on the ground. In the case was trying to point out the incredible Dr George Ayittey, a prominent Gha- studies of AIDS-prevention programmes record of failure arising from the pro- naian economist and President of the or infrastructure projects, searchers seek Free Africa Foundation. He told this to understand the local cultures, establish Scott Hargreaves is a regular reviewer: direct incentives for good behaviours, contributor to the IPA Review. and achieve remarkable results.

R E V I E W 64 JANUARY 2008 Pearse and his fellow-travellers have a simple approach to anyone—qualified or otherwise—who wishes to engage in debate about the science behind global warming: smear them.

Magalasy village, Ambalavao, Madagascar

Easterly is frustrated with the out- Easterly’s ‘purple prose’, his objectives, Easterly criticises the neo-colonial- comes of the recent focus on culture as a if not his methods, are not so different ism of Western aid agencies, and the driver of economic development. While from those of Sachs: not so ‘neo’ imperialism of American any supporter of economic and political foreign policy, but seems unable to in Easterly’s rejection of plans to freedom would agree on the importance imagine a world in which Western aid aid developing countries, there of supportive cultural institutions—de- agencies are not somehow prime mov- is nothing of the false ethics that mocracy, property rights, the rule of law, ers in creating economic development finds frequent expression in the civility, etc.—in the hands of Western in recipient countries. The supposedly anti-aid attitudes of those who Planners what often occurs is the forced ironic tone of the book’s title—The argue … the affluent have no transplantation of Western institutions White Man’s Burden—comes back to moral responsibility to help the into very different societies. A true haunt the author. wretched Burkean would not look at the outcomes of 500 years of Western societal devel- A truly radical view would come from George Ayittey’s book, Africa Un- opment and then transplant them into someone like Dr Ayittey, quoted earlier, chained: The Blueprint for Africa’s the very different context of Africa. For who went on to say: Future, was published in 2004 by Easterly, as for Burke, the evolutionary Africa doesn’t need aid. The aid Palgrave Macmillan. process is just as important. resources it desperately needs I P A As a good research economist, can be found in Africa itself Easterly wants more reliance placed on because its begging bowl leaks measurable outcomes and accountabil- horribly. ity. But this is where the artificiality of the supposed conflict between Easterly Perhaps inevitably, given the gravita- and Sachs becomes clearer. Amartya tional force of power and money, Dr Sen, Nobel prize winning economist, Ayittey’s think-tank is nevertheless has rightly pointed out that for all based in Washington, DC.

JANUARY 2008 65 R E V I E W Is transport welfare?

One of the strengths of this book Richard Allsop reviews is that it does consider this important debate without too many diversions No Way To Go: Transport into the other contentious transport and Social Disadvantage debates. in Australian Refreshingly, for a public transport book, it is recognised that ‘car Communities availability is a strong defence against Edited by Graham Currie, transport disadvantage, particularly if the car is your own’ and that ‘the car Janet Stanley will continue to be central to assuring and John Stanley social inclusion for very large numbers (Monash University ePress, of Australians’. While co-editor John 2007) Stanley has in the past written criti- cally on how the Victorian train and For the saner parts tram privatisation was undertaken, the ransport policy wars are usually fact that he is CEO of the private bus fought on two battlefields. On of the political industry association in Victoria means Tone, the combatants fight over that No Way To Go also contains no in- the funding mix between roads and spectrum, there is a principle opposition to private opera- public transport, while on the other, tion of services. there is vigorous dispute about the rela- real need to weigh Overall, the book provides useful tive merits of public versus private pro- information about international trends vision of infrastructure and services. up priorities. in addressing transport disadvantage, This book considers a third front considers particular categories of disad- in the transport wars—‘mass’ transit vantaged groups and assesses some cur- pitted against ‘social’ transit. to be many times greater in ultimate rent trends in government policy. Of course, for those who like re- value than those that focus on people The fact that most of the contribu- ally big government there is no battle who are already included’. tors are academics means that, at times, here at all (just fund everything), but In other words, taxpayers are like- the book gets weighed down by aca- for the saner parts of the political spec- ly to get more bang for their buck by demic style and prejudice, a problem trum, there is a real need to weigh up providing a base level of service for the compounded by an unusual structure priorities. currently transport disadvantaged (so- (partly arising from its origins as an ‘e- But can transport policy usefully cial transit), rather than by increasing book’), some repetition and some de- be an extension of welfare policy? levels of service where there is already viation from the main task of the work. The contributors to No Way To Go: reasonable provision (mass transit). Although the mobility issues confront- Transport and Social Disadvantage in A key premise of the book is that ing those in remote indigenous com- Australian Communities generally take ‘poverty has less to do with absence munities are undoubtedly among the an implicit position in the mass versus of income than with people’s lack of most serious in the nation, they are so social debate, but it becomes explicit capacity to choose and do what they far removed in nature from those facing when two of the editors write that ‘the want to be’. While this may generally other disadvantaged people in normal individual benefits of reduced social ex- be a dubious proposition, it is true that urban situations that they could well clusion to the people involved are likely in the area of transport it is the lack have been considered elsewhere. of availability of a base service, rather More illustrative of the main issues than unit trip price, which is the obvi- of the book are the chapters which con- Richard Allsop is a Research Fellow at ous manifestation of comparative dis- sider such issues as how the ageing of the Institute of Public Affairs. advantage. the population will increase the num-

R E V I E W 66 JANUARY 2008 It hardly seems equitable to include welfare- motivated social transit in the transport budget.

bers of people unable to drive cars for school buses and also that school buses After all, if the socially disadvan- health reasons. Undoubtedly, the most should be allowed to be used to provide taged are provided sufficient welfare powerful case study is provided by route bus services at other times of the payments so that they can afford to Anne Hurni, who contributes a chapter day. Currently, they are prevented from buy a car, those welfare payments are looking at the transport problems con- doing so as school buses do not meet not included in road budgets. Thus, fronting sole parents and young people Disability Discrimination Act (DDA) it hardly seems equitable to include in western Sydney. requirements. welfare-motivated social transit in the Decades ago, the poorest members The DDA is clearly going to have a public transport budget. of the community lived in inner urban major impact on transport funding pri- Addressing transport disadvantage areas where both extensive public trans- orities for the next two decades. State is surely an aspect of a policy to address port and the ability to walk to many governments have been handed an general disadvantage. The value of destinations prevented specific prob- enormous cost burden by this piece of spending on social transit can be more lems of transport disadvantage from federal legislation and, in many cases, easily compared with other welfare arising. Today, the location of many of meeting its requirements will preclude measures, as opposed to other trans- the poorest members of the community consideration of spending on other pri- port measures. And, if the decision is on the urban fringe, or in provincial orities. made to spend welfare dollars on social centres, means that walking or public The main problem with No Way transit, community services depart- transport are not viable options and To Go is that it does not offer any real ments can contract-in services in the living in such places therefore produces answers to questions about how anyone same way that education departments comparative transport disadvantage. in government should assess the merits have historically contracted school bus Warrnambool provides the case of different measures to address trans- services. study for a regional centre and the port disadvantage. Nor does it provide Transport authorities should be chapter about it contains some inter- a workable model for weighing these solely charged with the responsibility esting examples of how the funding up against measures to improve mass of moving as many people as possible of community transport can provide transit. Actually, the more one consid- as efficiently as possible. counterproductive outcomes for those ers the topic the more one concludes it is designed to help. that if public transport is to have a vi- I P A This chapter includes some useful able future, it really will be necessary suggestions for regulatory reform. The to include social transit in the welfare authors argue that non-students should budget and leave transport authorities be allowed to access spare capacity on only responsible for mass transit.

JANUARY 2008 67 R E V I E W STRANGE TIMES

Psychic police to ban sees himself as being worthy of weighing While all of Oprah’s 45 personal as- potential drunks into the debate on GM foods. sistants appear to be alive and well, the Authorities in England and Wales have As to why Kim Chance thought it story might be a little different for the clearly decided that prevention is better would be a good idea to seek Smith’s ‘ex- Aussie PR company. than the cure when it comes to thwarting pertise’ is anyone’s guess. As Peter Lee of the drunken shenanigans. Bush Telegraph in Farm Weekly WA points eat safe Police will now have the authority to out, the large base of scientific evidence Before tucking into a bowl of penis pasta, ban citizens from city centres for up to 48 championing GM foods probably made or nibbling on an erotic candy, Norwe- hours based on the belief that they might Mr Chance quite uncomfortable. Perhaps gians will now know exactly how ‘healthy cause disorder or commit alcohol-related Chance believed his discomfort was noth- and safe’ their erotic food really is. After crimes. Further, punters who haven’t even ing that a little yogic flying couldn’t fix. At a surprise inspection by Norwegian food had any alcohol can be banned if police the very least, it might distract his learned regulation authorities, the country’s larg- predict that they are likely to drink. colleagues from their evidence-based argu- est erotic chain store has had to re-label its ‘Orders to leave’ are given at the dis- ments. erotic foods to comply with regulations. cretion of officers and need not be based The authority said that current labels on anything other than their own ‘suspi- Working for Oprah can be a violate the rights of consumers to know cions’. real killer that their food is ‘healthy and safe’. Aussie PR firm Markson Sparks recently A fairly miffed ‘sexual adviser’ in one Yoga versus Science distributed a press release pointing out the of the stores commented that ‘we were The WA Minister for Agriculture, Kim perks of being a celebrity’s personal assis- a bit surprised… Food is not really our Chance, has taken a gamble by enlisting tant, such as first class flights, accommo- core product’. However, the stores will the advice of an author whose credentials dation and gifts. However, the release then comply with the regulations and label appear to be largely in his head. went on to say that ‘A story sadly underre- all food products, including panties, bras Jeffrey Smith, anti-GM author of ported is the number of celebrity personal and handcuffs made out of candy. Seeds of Deception and Genetic Roulette, assistants who die from opening their boss- Also, for failing to report the impor- perhaps sees his authority on the issue as es’ anthrax-filled mail. Oprah Winfrey’s entation of erotic candy within 24 hours arising from arguably less ‘scientific pur- tire staff of 45 personal assistants was wiped of its arrival, the company got a slap on suits’. Smith, a devotee of transcendental out by the dangerous spores’. the wrist. Obviously, they’ve been a very meditation and levitation, claims that The incident made international naughty store. ‘yogic flying’ can increase a person’s IQ. headlines and some of Markson Sparks’ In the absence of any suitable scientific clients certainly weren’t laughing, with one I P A training or background, perhaps his ‘aug- saying they were ‘appalled’ by the stunt, mented intelligence’ is the reason Smith and another calling it ‘trash’.

R E V I E W 68 JANUARY 2008