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Canberra needs collaboration, not conflict


Australians are poorly served by the bitter partisan politics dominating Parliament. Leadership, vision and informed policy are sorely needed to restore faith in the system and address the issues and challenges now and ahead, argues Michael O’Neil.

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Contradictions and conflict are at the heart of the Federal Government’s current policy inertia.

The public is becoming increasingly disillusioned and disenfranchised. The business sector and union movement are frustrated. And there’s no apparent end to this policy malaise in sight.

As our elected representatives left Canberra for a comfortable summer break after another season of political games that could provide the content for the next episodes of the ABC’s political thriller, Total Control, the public was left shaking its collective head.

Its time to try something new, or at least revive an old idea that worked well in the past.

The newly elected Hawke Government held an Economic Summit in 1983 at which business, unions and the government were represented. The summit followed the earlier ALP-ACTU pact known as the Prices and Incomes Accord which was formalised in government and operated from 1983 to 1996. A centrepiece of the Accord was wage restraint by the union movement in return for increases in the ‘social wage’ through initiatives like Medicare.

The motivation behind the Economic Summit and the Prices and Incomes Accord underpinned a new approach to politics in the 1980s. Different perspectives on important policy issues were discussed and debated by government, union, business and social stakeholders. There was a common view that the country needed economic reform and that collaborative process delivered, often with bipartisan support.

Consultation and consensus-building has given way to ministerial and prime ministerial dictates.

The big decisions by the Hawke-Keating governments included: allowing international markets to set the value of the Australian dollar; opening up the banking sector to competition; reducing import protection for local industries while also providing incentives to improve their competitiveness; wage and labour market reform; a transformation of taxation, the introduction of national superannuation, and enhanced environmental protection.

Most economists today would argue that the Hawke-Keating reforms have been critical contributors to the 28 years of uninterrupted economic growth we have enjoyed in Australia since the last recession in 1990-91.

But the approach taken by the Hawke-Keating governments has been lost. Consultation and consensus-building has given way to ministerial and prime ministerial dictates.

A tangible sense of knowing where the country is heading, and devising a strategy for how to get there, no longer exists.

Previous political maxims have also disappeared. The Liberal Party has always professed to be a market-based party. It says so on its website. “We believe that, wherever possible, government should not compete with an efficient private sector; and that businesses and individuals – not government – are the true creators of wealth and employment.”

So how do we reconcile that position with its approach, for example, to energy policy over the past decade?

By way of background, the centrepiece of the Rudd Government’s policy to address climate change was an emissions trading scheme. Under the so-called ‘cap and trade’ initiative, the Government set an annual, and declining, limit on how much pollution could be sent into the atmosphere. In the scheme’s final form, businesses would have had to buy permits to pollute in an auction. The sellers of such permits would be companies that no longer needed the permits because they had invested in new, low-emitting technologies and reduced their emissions.

Labor’s Carbon Pollution Reduction Scheme (CPRS) was a market-based response to climate change. Businesses would have bought and sold rights to pollute in a marketplace. Over time, the permits would have become more expensive as the number available decreased. This increasing cost to pollute would have been the incentive for businesses to invest in new technologies and equipment that were more ‘environmentally friendly’.

The Liberal-National Opposition led by Tony Abbott not only ignored the Liberal Party’s professed affinity with the private sector and the market, it attacked the initiative as “a great big tax on everything” and knocked it out of the political park in 2014 after gaining government.

But, according to some informed observers, the CPRS would have worked. Indeed, it would have achieved the outcome that the Morrison Government now professes to want – lower electricity prices for consumers.

Dr Martin Parkinson, the former head of the powerful Department of Prime Minister and Cabinet, told ABC News earlier this year that Labor’s CPRS would have delivered lower power prices.

Instead of staying true to its beliefs and backing a market-based policy response, the Abbott Government played politics. It won the political game but consumers and the environment lost.

It’s arguable that Australia is being short-changed on good policy because the Federal Government is tone deaf to input from the business community, unions and other informed stakeholders.

The Government led by Scott Morrison has followed the same contradictory approach. It dumped the National Energy Guarantee (NEG) under which electricity retailers would have been required to ‘guarantee’ reductions in emissions to meet targets and guarantee reliability of supply. The NEG was supported by the Business Council of Australia and the Labor Party, not usually comfortable bedfellows, because it was regarded as good policy.

Instead, the current Government passed the Treasury Laws Amendment (Prohibiting Energy Market Misconduct) Bill 2019 in November. The Bill will, amongst other measures, require electricity retailers to pass on cost savings they achieve through their supply chain to consumers. A failure to do so can ultimately see the Government order the sale of a power company’s assets.

The policy is widely opposed by energy companies and the Business Council of Australia has called the new law “heavy-handed” and “intrusive”.

(The fact that the Bill is described on the Commonwealth’s Department of Environment and Energy website as the ‘Big Stick Bill’ confirms that the Government was sending a transparent political message to voters – ‘we’re on your side’ – that suits its political game.)

Climate change more broadly is a policy issue where Canberra is well out of step with the states. While Federal ministers disparage renewables, brandish lumps of coal in Parliament, and mock South Australia’s big battery, the business community and the states are getting on with the job and backing renewables.

While there are a variety of possible policy responses to climate change to be considered, it is imperative that the Government listen to, and acknowledge, the science. Opportunities for investment, entrepreneurships, jobs, new skills are being lost while the politicians in Canberra dither.

Speaking on the 30th anniversary of the Prices and Incomes Accord in 2013, the former ACTU president and now Shadow Assistant Minister for Skills, and Aged Care, Ged Kearney, said the ACTU would welcome “more tripartite engagement and dialogue at industry, sectoral and regional levels”.

Ms Kearney renewed a previous call from the ACTU for “the establishment of a series of industry councils where unions, employers, government and wealth managers like superannuation funds can identify problems and develop solutions.”

There are numerous policy areas where such collaboration could be effective. The education sector is one where collaborative political engagement could deliver much-needed gains.

The latest OECD Programme for International Student Assessment (PISA), published in early December, revealed a decline in reading, maths, and science problem-solving skills by Australian students since 2000.

The PISA revelation prompted business to call on schools to “lift their game”. (When thinking of the performance of the banking sector and current issues related to Westpac, teachers might well urge those in the financial sector to “lift their game”).

Such calls closely followed a BDO SA State Business Survey in September that revealed 50 per cent of companies surveyed did not believe the state’s universities were producing employable graduates.

Unions have also called for reform of the education system, including vocational education and training (VET), to improve skills and underpin job security.

There are now also widespread calls for the Federal Government to invest in infrastructure to boost Australia’s flagging economy.

Again, consultation and collaboration between key players in this space would be beneficial. Past failures to do so have cost Australia dearly, according to Julieanne Alroe, the Chair of Infrastructure Australia, an independent adviser to the Federal Government.

Speaking on the publication of the 2019 Australian Infrastructure Audit in August, Ms Alroe said: “The 2019 Audit finds that engagement with customers and the broader community on project planning, needs to increase across most sectors and jurisdictions.”

“A failure to engage can carry substantial costs to projects, and it is estimated that around $20 billion worth of infrastructure projects was delayed, cancelled or mothballed due to community opposition over the past decade.

“Better engagement with communities and businesses can help to establish a social licence for projects as it provides an opportunity to incorporate their feedback through project planning and delivery.”

Australia also lacks a coherent policy on population growth and the impact on the nation’s cities and regional towns. Tapping broad stakeholder views on issues like immigration policy and regional development could bring new ideas to the fore. In 2018 the South Australian Centre for Economic Studies proposed a new, ‘regionally-focussed’ visa class be created to encourage overseas migration into regional South Australia.

There is an old adage that ‘no-one has a mortgage on good ideas’. It’s arguable that Australia is being short-changed on good policy because the Federal Government is tone deaf to input from the business community, unions and other informed stakeholders.

From voters in the street to the lobbyists peddling influence in the corridors of power in Canberra, people are looking for a sense of direction and policy certainty.

Education and climate change are two examples of policy failure of the Council of Australian Governments (COAG) because this body represents only the Commonwealth and State governments. There is a clear need for a body or a summit process involving other parties to deal with far sighted issues.

From voters in the street to the lobbyists peddling influence in the corridors of power in Canberra, people are looking for a sense of direction and policy certainty.

The public would respond well to a government that knows what it’s doing and shows leadership, having been informed by people of knowledge and experience.

Getting results is what gets governments re-elected.

The views in this commentary have been informed by the SA Centre for Economic Studies Independent Research Fund, a group comprised of business and public sector representatives, which focuses on improving public policy outcomes.

Associate Professor Michael O’Neil is Executive Director, South Australian Centre for Economic Studies, University of Adelaide.

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