Parliament fails; think tanks go to top of class

by Crispin Hull on March 3, 2017

HARDLY a week goes by without the publication of some well-thought-out, evidence-based paper recommending solutions to some of Australia’s pressing economic and social problems – tax, education, health, defence, energy and so on. But very few of them come out of our Parliament. And if they do, they come out of parliamentary committees which are usually not evidence-based but rather dependent on submissions by usually self-serving interest groups.

You would think that Federal Parliament, with 226 members, each with an average of five staff , adding up to nearly $400 million in salaries alone, would be bristling with well-researched policy ideas.

(And we will leave the 150,000 plus public servants out of this.)

If the Productivity Commission looked at Federal Parliament, its report would read like that to the parents of a recalcitrant schoolboy truant – too busy teasing other kids to get on with solid schoolwork.

Six or seven major policy areas need significant change if Australia is to maintain its position among the top 10 or 20 nations for standard of living. And the solutions are fairly obvious.

In education, we are spending far too much on already over-funded schools. Parents of students in these schools are already well-motivated. The money should go where it needed most. Not on accouterments in wealthy schools but on basic education in schools in poorer areas where parental motivation is low and where money will have the most effect in improving educational standards. Present policy is sounding grimly in falling results in independent national and international tests.

Health is hopelessly under-funded. Long waiting lists for “elective surgery” are a drain on the economy. So is squeezing GPs who are at the forefront of preventing patients ending up in hospital.

In defence, we are spending tens if not hundreds of billions of dollars on big jets, frigates and submarines whose need is questionable and whose effectiveness in the approaching age of air and sea drones and cyber-warfare is worrisome.

In energy, we are clinging to last century’s technology instead of promoting and embracing the new.

On climate change our efforts are so pitiful that we will be penalised with trade penalties by other nations. We are allowing our Great Barrier Reef to die by allowing dredging and agricultural run-off to compound the effects of climate change.

Housing remains grossly over-priced in Sydney and Melbourne and over-priced almost everywhere else.

On the economy, budget repair and tax, obvious solutions are taken off the table more quickly than they are put on while we borrow more to pay for current spending.

And while even MPs acknowledge deficiencies in our constitutional structure, only one or two brave hearts dare mention some reform proposals.

About the only things on offer from the major parties are an unfunded company tax cut and cuts to welfare from the Coalition and some prospective tinkering with negative gearing and capital-gains tax from Labor. None will effectively address the big items.

The policies that will address those items are not coming from our elected representatives, but from the think tanks, broad-based community groups, journalists and even bloggers.

The Grattan Institute’s carbon-intensity scheme and its scheme to erode big payments to wealthy schools through inflation were gems of public policy which governments of either complexion should have embraced. But did not.

The Australian Council of Social Service’s suggestion on extending the Medicare surcharge to everyone, not just to those without private insurance, and to end the rebate for private insurance would restore Medicare to a universal health system not just a safety net for the poor. But they have been ignored.

And remember, for catastrophic illness and trauma, everyone ends in the public system, even Kerry Packer.

The Australia Institute’s incisive research on tax concessions for the wealthy should have been followed up with legislation.

The Grattan Institute’s analysis of the Coalition’s company-tax cut rightly points out that foreign investors will get the lion’s share of the benefits and the “jobs and growth” mantra will not happen for a decade or two, if that.

Fairfax journalist Peter Martin’s inspired idea to calculate the Medicare levy on income before negative gearing, fringe benefits and super contributions are deducted is an obvious candidate for Budget repair once you know about it.

Even when these cowed and lazy parliamentarians are presented with an external decision – by Fair Work Australia on penalty rates, for example – they have been too gutless and gormless to take it on themselves. Rather they have hyperventilated into hyperbolic hypocrisy. Labor had put the umpire in place and said it would respect the umpire’s decision – until it did not like that decision. The Coalition – having long pushed for a change in penalty rates – instead of welcoming the decision – blamed Labor for it. (Though, admittedly, it changed its tune later.)

The Australia Institute and the Grattan Institute have rightly argued for GST reform. Me, too.

And I will conclude with my 10 cents’ worth now. We were conned in 1999 when the GST was introduced with the Australian Democrats’ insistence that health and education (the feel-good elements) be exempt. It was idiocy.

I have just been on the Officeworks website. Guess what? Every single item a parent would want for their schoolchild was subject to GST – pens, paper, every item in Officeworks “education” section, computers, the “works”.

Then I went to a pharmacy site. Guess what? Every New Age unproven complementary “medicine” pedelled by a profit-pursuing pharmacy website was GST free.

This is bollocks. We should charge GST on education and health. School fees would be subject to GST. New Age crap “medicine” would be subject to GST.

The GST should be raised to 15 per cent. Big compensatory payments should be put into old-age pensions and other welfare.

So that when the Packers put their next generation through Cranbrook they will pay some tax, in the form of a GST on the fees and there would be no escaping it.

I used to wonder why John Howard and the Coalition agreed with the gullible Democrats on GST exemptions for health and education. The answer is obvious. It was an exemption for them and their mates.

And so, too, with the exemption for fresh food. The poor line up with their taxed processed food and the yuppies smile with a basketful of exempt fresh produce.

Solutions to these problems stare you in the face, but you wouldn’t know it listening to Question Time.
CRISPIN HULL
This article was first published in The Canberra Times and other Fairfax Media on 4 March 2017.

{ 4 comments… read them below or add one }

David Hunter 03.04.17 at 8:47 am

Well said: there are clearly many ways to reduce the budget deficit but neither side has the brains or the stomach for real reform

Brian O'Donnell 03.04.17 at 9:50 am

Hi Crispin,

Your understandable frustration about the issues you raise shows through in the language you use – even more powerfully put than usual.
I would be so bold as to disagree with you about one point though. I think the decision on penalty rates is a grave mistake. It is a macro-economic solution for a micro-economic problem. Apart from the harm the poorest among us will suffer as a result of loss of income (and all the downstream consequences that will flow from that), the economy as a whole will suffer greatly when those dollars disappear from circulation at a time when wages are desperate low already. There is no evidence to suggest that there will suddenly be a whole bunch more people employed to inject compensatory dollars into the economy. Those who say that this will happen are almost certainly wrong.

Part of the reason for the dearth of policy ideas that you rightly highlight so well, is that governments have lost sight of why they exist. They exist to ensure the common good. They should look that up and think about it.
Common good
From Wikipedia, the free encyclopedia

In philosophy, economics, and political science, the common good (also commonwealth or common weal) is a term of art, referring to either what is shared and beneficial for all or most members of a given community, or alternatively, what is achieved by citizenship, collective action, and active participation in the realm of politics and public service.

Stephen S 03.04.17 at 9:54 am

And let’s add to this list our obsessive policy of high population growth, which all three parties, and Treasury/RBA, and media of both left and right, remain rusted on to, defeating any possibility of hearing the electorate. Notable here are recent speeches by Ken Henry and Phil Lowe, who despite our OECD-topping SydMel house prices, still could not bear to countenance any examination of our OECD-topping rates of population growth. Ken admits it’s crazy to crunch 7m more into SydMel, but still we gotta do it.

Kevin Rattigan 03.05.17 at 2:25 pm

Unfortunately it still remains true that should a public servant or politician put forward any of these sensible ideas, elements of your profession will immediately dig up some individual or group that might be, or claim to be, adversely affected, making the proposal instantly “controversial”. Many of those army of advisers in Parliament House you mention are dedicated to protecting their bosses from criticism and will tell them to have nothing to do with controversial issues less it affect their re-election prospects.

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