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It takes a bleeding heart to see the bleedin’ obvious

5 Comments 05 July 2010

from Tim Bennett at electron soup

It takes a bleeding heart to see the bleedin’ obvious: Asylum seeker policy reform

By Kate Gauthier

Most policy reformers, especially social policy reformers, like to tell governments where they should spend more money. But when it comes to asylum seeker policy, reform advocates are not asking the government to spend more money; we are begging them to spend less.

It would be hard to find another area in which more money is thrown away on policies that prove completely ineffective, are extremely expensive, breach both international and domestic law, and inflict further damage on people who have fled persecution, torture and trauma.

Although onshore asylum seekers (people requesting asylum after they arrive in Australia) make up a much smaller number of entrants to Australia than our offshore refugee and humanitarian program, they dominate media and public interest. Australia granted a total of 13,507 refugee and humanitarian visas in 2008-09. Of these, onshore protection visa grants were only 2,378, or 17 per cent1 and less than half of these came by boat. The majority of our onshore asylum seekers actually arrives by plane2 and live freely in the Australian community without generating scathing opinion pieces.

In the current financial year (2009-10), asylum seekers who have arrived by boat and received permanent protection will make up less than one per cent of the migration program (around 225,000 in 2008-09). 3

Why then is so much money spent on so few? And why do we have a bipartisan approach to ‘getting tough’ on the victims of persecution, that sees the ALP and the Coalition engaged in a policy war of attrition, with asylum seekers as the collateral damage?

Unfortunately, this is an area of policy that, more than any other, is not developed in the halls of government but on the airwaves of talkback radio and in newspaper opinion pages. This leaves both sides of politics forced to peddle policies which, in their heart of hearts, they know are both cruel4 and destined to fail.

Push-me pull-you

Before looking at suggestions for policy change, it is important to address the myths and facts of push-pull factors affecting asylum numbers, upon which most policies are based.

There has been no proper analysis of any impact that domestic policy changes have had on asylum flows to Australia. Claims that Howard era deterrent policies ‘stopped the boats’ by reducing pull factors to Australia is sloppy policy evaluation at its worst, using only a temporal link to prove cause and effect. Claims that only push factors, such as in-country security concerns, have increased boat arrivals have no basis in proper research either. Without proper research and analysis, it is impossible to say definitively if Australia’s varying numbers are caused by normal changes in global asylum flows, statistical blips or domestic policy.

However, a cursory study of the statistics can give some ideas as to cause. As this first graph

5 shows, Australia’s varying asylum numbers have largely followed global trends over the years. Some small variation exists which is claimed by some to be caused by domestic policy changes.

Since there are similar ebbs and flows for plane arrival asylum seekers as boat arrivals, as shown by the second graph, the statistical analysis implies that domestic policy focused on boat arrivals has, at best, only a marginal impact on numbers. Given the costs of those policies – financial and human – was it really worth over $1 billion to process a mere 1,700 asylum seekers under the Pacific Solution? 6

Source: OECD International Migration Outlook 2010, and Department of Immigration and Citizenship figures.

The story so far

Boat arrivals: the ‘Indian Ocean solution’

The Howard Government’s split-personality approach to asylum seekers arriving by boat versus plane has continued under the Rudd and Gillard Labor Governments. All boat arrivals are taken to Christmas Island, dubbed by many as the Indian Ocean Solution. Although conditions and their treatment are a vast improvement on Howard’s Pacific Solution in Nauru and Papua New Guinea, the policy still entails breaches of international human rights instruments. Boat arrival asylum seekers are given a truncated protection assessment process compared with plane arrivals processed on the mainland – they do not have access to the standard merits review or any judicial review.7  This reduced investigation of claims will inevitably result in refoulement, the return of refugees to danger.

In theory, the 2008 reforms made to detention policy – changing Howard’s mandatory prolonged detention regime into a risk-based community detention system – should also apply to asylum seekers on Christmas Island. In reality they cannot, because there simply is not enough community infrastructure available on the island to accommodate the release of people who do not pose a health, security or compliance risk.8

Single men remain in detention until they are either granted a protection visa, or are moved to the mainland in order to facilitate a removal from Australia. There is no risk-based community detention for them.

Women and children

The matter of women and children is also problematic. They are generally kept in the ‘construction camp’ on the island, with far less security. However, it is not community-based accommodation by any means. With overwhelming numbers of children, there is not enough space on Christmas Island to accommodate them. The Government has moved groups onto mainland Australia into different locations. As of 21 May 2010 there were a total of 452 children in detention9 with only nine in community detention. The Government has kept them under guard in hotels and in remote outback towns. Again, for boat arrivals, there is no such thing as risk-based detention with community release for those deemed not to pose security, health or compliance risks.

The problem is that the Rudd and now Gillard Governments have the same view as the Howard Government, that Australia’s boundaries should be drawn differently for asylum seekers. Unless asylum seekers reach the mainland, they are still subject to excision laws, which grant them far fewer legal rights than asylum seekers processed on the mainland.

Where to from here? Recommendations for policy reform

There are two areas of asylum seeker policy: the international and the domestic. Each area has different policy objectives and possible outcomes. The first area deals with the breakdown in the international system of refugee protection that causes asylum seeking. The policy objective in this area should be to provide better refugee protection with an additional outcome being a reduction in the flow of asylum seekers to Australia.

The second area, domestic policy, deals with what we do with the asylum seekers themselves when they reach Australia. Policy objectives should be to create a cost-effective and humane system that quickly and fairly determines who is owed protection under international human rights instruments, and does so in a manner that protects the Australian community from any security or health threats. Using domestic policy to stop asylum flows is unrealistic and immoral. To stop asylum seeking, the Australian system would have to be worse than the places that people are fleeing – worse than extra-judicial killings, torture and persecution. And to attempt to influence the behaviours of other asylum seekers in third countries by punishing individual asylum seekers in Australia, who have committed no crime, is quite clearly immoral and in some cases a breach of our constitution.10

Asylum policy: Eight key steps for reform
  1. Set an example in our region by adopting best practice for asylum seeker and refugee protection.
  2. Encourage neighbouring countries to sign the Refugee Convention.
  3. Reduce the regional bottleneck with a short-term resettlement program.
  4. Use the same risk-based detention approach for all asylum seekers, whether they arrive by plane or boat.
  5. Create appropriate accommodation centres instead of high security detention centres and work with NGOs to establish community-based supported accommodation programs for those who are released into the community pending a visa outcome.
  6. Provide living assistance (funds) to those in the community awaiting a visa outcome.
  7. Expand programs such as the Community Assistance Support program to all vulnerable cases.
  8. End the use of Christmas Island and repeal the excision laws.

International policy: A breakdown in protection

While it is difficult for any single country to have a significant global impact on improving the system of refugee protection, Australia could certainly have a greater positive impact in our region.

Currently, Australia’s foreign policy focus is on the ‘evil trade’ of people smuggling and policies approach the issue as a criminal one. However, asylum seekers only exist where there is a lack of effective protection options. Removing people smugglers does not remove the core reason for the irregular movements of asylum seekers. The Government could make a long term impact on asylum flows in our region in three crucial ways:

1. Set an example by adhering to our human rights obligations

We cannot expect our neighbours to adhere to their human rights obligations when we attempt to deflect our own obligations onto other nations, by turning around boats at sea or sending asylum seekers to third countries for processing.

2. Encourage others to sign the Refugee Convention and assist them to comply

Using our significant diplomatic influence, combined with aid incentives, we could be doing much more to encourage nations in our region to become more involved in refugee protection. We need to provide funding and expertise to assist them to establish protection and settlement programs once they are signatories. We also need to take a proportion of our resettlement quota from this region, reassuring our neighbours that they would not carry the regional protection load alone.

3. Reduce the asylum bottleneck

In the short term, Australia should take some of the pressure off the asylum bottleneck in South East Asia by increased resettlement from the region. This could be done with very little disruption to the current migration program, by allocating some extra places over and above the annual 13,750 places in the offshore refugee and humanitarian program. This would reduce the attraction of boat journeys even for those not resettled immediately, as they would be able to see a realistic chance that they may be resettled eventually. According to the United Nations High Commission for Refugees (UNHCR), as at 30 April 2010 the Indonesian office of UNHCR had a caseload of 3,471 comprised of 2,705 asylum seekers and 766 refugees. The five year average for resettlement of refugees from Indonesia is a mere 82 people per year, which shows why many decide that ‘waiting patiently’ is not a good option.

Regional Processing Centre

On July 6th 2010, Prime Minister Gillard announced a new asylum seeker policy to establish a “regional processing centre (RPC) for the purpose of receiving and processing irregular entrants to the region.”11 The lack of details released makes it very difficult to make any in-depth assessment of the proposal. However, the key point that most media commentary missed was that the announcement also stated the RPC is just one initiative in a commitment “to the development of a sustainable, effective regional protection framework.”

If a protection framework is truly the approach, and if done correctly (and this is a very big if), this could be a leap forward to more effective regional cooperation leading to increased protection options for refugees and a reduction in asylum flows. In turn, that could lead to non-signatory countries such as Indonesia and Malaysia recognising that it would be in their best interests to sign the Refugee Convention and become part of a new cooperative regional approach to asylum. The greater sharing of resettlement in our region could then lead to an increase in public support domestically for Australia’s involvement in refugee protection.

However, if the focus of this policy is simply to reduce the domestic political problem of boat arrival refugees being granted protection in Australia, to move them offshore and out of the public eye, then this could lead to the warehousing of refugees in detention-like conditions and would be little better than the Pacific Solution. Any proposal that results in Australia shifting its responsibility elsewhere should be condemned. UNHCR has indicated this approach should complement, but not be a “substitute for a fully functioning, fair national assessment process.”12 The RPC should only be used as a preventative measure. Once asylum-seekers reach Australia, we have an obligation to process their claims and ensure that they are granted protection in a timely manner.

Three key areas need to be included in any RPC approach:

  • Accommodation: asylum seekers must not be detained, and the alternatives may create difficulties with local populations in poorer nations. Who will manage accommodation centres and who will oversee them to ensure that human rights standards are maintained?
  • Asylum claims processing: under whose system of law will asylum seekers be processed? Refugee Convention signatory nations have an obligation to allow asylum seekers access to their domestic court system. To subvert this legal right, will Australia ask other nations to copy our excision laws, which are a breach of this provision within the Convention?
  • Resettlement: processing needs to be coupled with realistic timeframes for resettlement so people are not left in limbo for years with no real protection; the very reason for asylum flows in the first place.

This should not be seen as an easy or quick-fix solution. It will take some time to set up proper processes, external scrutiny and develop a framework for resettlement. We have seen a shaky start to the proposal. Australia should have started with a regional conversation, not a bilateral one with East Timor. In order to show we are serious, Australia should increase our resettlement places from 13,750 to 20,000, keeping a significant proportion aside for regional protection burden sharing arrangements.

Of course, to start such a program, we do not even need to build yet another expensive processing centre. We should start by taking people waiting in Indonesia, who otherwise will risk their lives on boats as the resettlement waiting time is currently far too long.

Domestic policy: Treatment of individual asylum seekers

Despite the recent announcement of a regional processing centre, this will not negate the need for domestic asylum policies. The majority of our asylum seekers actually arrives by plane and will not be affected by this policy, and the reduction of boat arrival asylum flows will not be immediate. Most importantly, a regional processing centre should not be a substitute for an Australian protection claims processing system, but should instead be a preventative program to reduce dangerous boat journeys.

There is no shortage of policy suggestions for the treatment of onshore asylum seekers. To make a good start we do not even need to write new policies, but to take current policies and practices used for plane arrivals and properly apply them to boat arrivals. Overall, we just need to change the way we spend money – which would result in spending much less – as all estimates for humane onshore reception programs are far cheaper than the policy of mandatory detention of all non-visa holders.13

A United Nations High Commission for Refugees (UNHCR) study on the international experience of alternatives to detention found that providing accommodation and material support during the asylum procedure was critical to ensuring compliance with the immigration process. The research found that alternatives to detention remain effective enforcement tools, while being more fiscally responsible than detention.14

4. Use the same risk-based detention approach for all asylum seekers: plane and boat arrivals

On July 29th 2008 Senator Chris Evans, Minister for Immigration, announced the New Directions in Detention policy.15 It changed the mandatory prolonged detention regime into a risk-based detention system. All unauthorised people would still be subject to mandatory detention in the first instance, but people would undergo health and security checks and a compliance assessment. Those deemed not to be a risk to the Australian community and not a flight risk would be released into the community under a variety of mechanisms with differing levels of security and monitoring.

The most humane and least expensive outcomes would flow from the simplest policy change: take the current risk-based policies and practices used for plane arrivals, and properly apply them to boat arrivals. If someone is not a health, security or absconding risk, why pay all that extra money to traumatise them in detention?

5. Create appropriate accommodation centres instead of high security detention centres and work with NGOs to establish community-based supported accommodation programs for those who are released into the community pending a visa outcome

Many studies have demonstrated the negative psychological impacts of detention on asylum seekers. In order for the 2005 (Howard Government) and 2008 (Rudd Government) reforms to be truly effective, the focus needs to be on creating flexible accommodation and reception programs. All arrivals require accommodation in the first instance while security, health or identity concerns are addressed, and more importantly, while their social service needs are assessed. However, high levels of security are unnecessary in the majority of cases while these checks are conducted. Unfortunately, the complete lack of flexible accommodation facilities has tied the hands of the Department of Immigration, which had nowhere else but detention to place vulnerable asylum seekers pending the outcomes of those checks.

6. Provide living assistance (funds) to those in the community awaiting a visa outcome

The Asylum Seeker Assistance Scheme16 and the Community Assistance Support program17 provide limited financial support to some asylum seekers living in the community. However, the eligibility guidelines restrict many from receiving any assistance, leaving people destitute. Hotham Mission recently found that many asylum seeking children were not housed or fed to standards required by international law.18  The Government must expand these programs to ensure that, at minimum, all people who are allowed to remain in Australia are adequately fed, housed and clothed.

7. Expand programs such as the Community Assistance Support program to all vulnerable cases

In 2005, John Howard pledged to remove children from behind the razor wire, writing into the Migration Act that “Children shall be detained as a measure of last resort.” The release of children and their families, combined with the scandals of Cornelia Rau, a mentally ill Australian resident who was detained, and Vivian Alvarez Solon, an Australian citizen who was deported, meant that new ways of case-managing and accommodating vulnerable people were developed, including finding alternative non-detention accommodation.

As part of this, then Immigration Minister Senator Vanstone began a trial of the Community Care Pilot, now the ongoing Community Assistance Support program. This pilot succeeded because it used a holistic case-management approach, while keeping people in the community instead of in detention centres. The idea was that if you treat people humanely and ensure all their health and living needs are met, this will have positive outcomes for their immigration case. They are better able to assist in their case (trauma has detrimental effects on memory) and are more compliant because they feel their case is being heard fully and fairly. According to workers at service delivery agencies, this pilot program led to far higher rates of uncontested and voluntary returns of failed visa applicants.19 Overall, this reduces the costs of litigation, detention, and expensive forced and chaperoned returns home.

8. End the use of Christmas Island and repeal the excision laws

This package of suggested policy changes would necessarily mean transferring all asylum seekers off Christmas Island, as there is a lack of alternative accommodation on the island to allow for the release of people (who do not pose any risk) from the high-security detention facility. The remoteness of Christmas Island also makes it impossible to deliver torture and trauma counseling services that are readily available on the mainland. The location vastly increases the costs of accommodating detainees while reducing the quality of services provided to them. Governments in recent years have been loath to provide per detainee per day breakdown of costs. The latest available figures put Christmas Island at $2,895 per detainee per day compared with Villawood in Sydney at $190 per detainee per day.20

Offshore detention and processing of asylum seekers is a breach of our international obligations under the Refugee Convention, the International Covenant on Civil and Political Rights and the Convention on the Rights of the Child.21 But it is also bad policy from a purely rationalist perspective, as it does not achieve its goals. As outlined earlier, there is no evidence to show that punitive practices have any significant impact on asylum flows. If it does manage to reduce the acceptance rate of protection claims from excised compared to mainland-processed asylum seekers, then the excision system is set up for refoulement – the return of genuine refugees back to situations of danger.

The roadblocks

The media

The key roadblock to the adoption of these reforms is the current public and political environment. Since the boats started arriving again, there has been a media frenzy over the numbers, with the same kind of statistical obsession usually reserved for footy league tables, school rankings and Easter weekend road fatalities. The Coalition has jumped on the opportunity to reprise the 2001 election and talkback radio has once again put this issue on high rotation, probably increasing community fear and concern.

Illegal immigrants

Asylum seekers are often referred to as “illegals.” Under international and domestic law, it is not illegal to enter Australia without a visa for the purpose of seeking asylum. They have not broken any law at all. In fact, to be classified as a refugee you must be “outside your country of origin”22 which means that nearly every refugee must enter a country without a visa in order to reach UNHCR for processing.

Failure of Government to frame the debate

The Rudd Government missed an important opportunity to reframe the public debate about asylum seekers when it was elected in 2007. It could have generated public discussion that did not vilify individual asylum seekers or see small numbers of boat arrivals as a threat. This would have provided Rudd with public support for a more humane and evidence-based approach to policy reform. Instead, the Rudd Government continued to use the language and framing of the Howard Government, presenting asylum seekers as a border security issue, as an undesirable phenomenon, and as an international crime issue. By maintaining the negative view of asylum seekers while at the same time trying to be more compassionate in some policy reforms, the Rudd Government set itself up for failure. In essence, they have upheld the view that asylum seeking is a national security threat, but have softened policies believed by many Australians to stop it.

The Gillard Government is heading down the same path. Her first comments on the issue as Prime Minister were to attack the opposition’s “fear mongering”. However, she then followed by saying she would provide “strong management of our borders”,23 continuing to frame asylum seekers as a border protection threat. The problem with this approach is that Liberal policy makers will always be prepared to ‘out-tough’ any Labor asylum policies and thus appear more effective when the issue is framed as one of national security.

Removing the roadblocks

In order to address community fears and media misinformation on this issue, the Government should embark on a long-term education and information program. It needs to change the language, moving from the crime and punishment focus on people smugglers, to a solutions-based focus on the needs of people fleeing persecution. The Department of Immigration must be more proactive in providing briefing sessions for journalists and tackling incorrect news articles like the constant media use of “illegal” when referring to asylum seekers, when asylum seekers have broken no law. There should also be greater government support for NGOs and community groups who engage in providing the community with information on this issue.

There also needs to be more community information on the benefits that refugees bring to Australia. Many people argue that we have an international responsibility to protect refugees. That is true. There are also pragmatic reasons. Australia has a significant migration program and refugees make excellent migrants. This is partly because more than any other migrant group, they have a vested interest in making a go of it because they have no homes to return to if their settlement in Australia fails.

Australia has settled over 740,000 humanitarian entrants since federation. In that time, refugees have made significant social, civic and economic contributions to Australia. Five of Australia’s eight billionaire families in the 2000 Rich List came from refugee backgrounds.24

Moving forward

Successive Australian governments have viewed boat arrival asylum seeking as a problem which must be stopped, but none has ever given valid reasons for why they consider it a problem of such national importance, when asylum seekers come in such tiny numbers.  Unfortunately, there has been so much scaremongering on this issue that most policy makers have forgotten to see asylum seeking as it should be seen – a human rights protection issue, not a migration issue.

Fixing asylum seeker policy is far simpler than it appears and would save enormous amounts of money. However, until the framing of this issue is changed, those policy changes will never be made.

The approach for the past two decades has been punitive, punishing people for seeking protection. There is no clear evidence to suggest that those policies actually worked. In fact, new policies for community-based asylum seekers show that taking a more humane and constructive approach results in greater compliance with the system. We also know it costs a lot of money to be cruel. It is time to decide that the 20-year experiment in taking a penal approach to asylum has failed, and we must extend the risk-based detention approach across the whole asylum seeker regime, particularly for those detained on Christmas Island.

Many would describe that approach as a solution from the left of politics. But it is not a question of left or right; this issue breaks down the usual political divides. Petro Georgiou, Judy Moylan, Bruce Baird, Nick Greiner, John Hewson and Malcolm Fraser have shown that courageous moral action on social justice issues is not just the provenance of the ‘left’ parties. And Julia Gillard, herself from Labor left, has shown that unsympathetic attitudes to asylum seekers is not confined to the conservative right.

There is much electoral advantage to be gained in this area of policy. So much so that good evidence-based policy can be ignored, and brutal but ineffective policy adopted, in the hope of gaining that advantage. In the short term, there is little hope for real change in asylum seeker policy. It will not happen until we have a leader from either side of politics prepared to change the framing of this issue and generate a change in public opinion, a leader who can find the moral fortitude to forgo the votes gained by pandering to uninformed fears.

Instead of trying to dodge our international obligations to refugees, or use asylum seekers for political mileage, Australia should be proud that asylum seekers come to us for help. Our nation is a dream to persecuted people. We are that ‘somewhere over the rainbow’ where refugee children can be safe, where they can find freedom from fear. Australia’s system of democracy, rule of law and stable society are a beacon of light in a dark world. In order to reduce those tiny numbers of desperate people who come here, some politicians want to subvert the law, to reduce the rights we grant to people and to treat them inhumanely. To do this would snuff that light in the darkness, the very thing that makes Australia a great nation.

Shame on them.

Photo Credit: Tim Bennett, Electron Soup


Endnotes

  1. Department of Immigration and Citizenship (2009) ‘Fact Sheet 60 – Australia’s Refugee and Humanitarian Program’. Available online: http://www.immi.gov.au/media/fact-sheets/60refugee.htm
  2. Department of Immigration and Citizenship (2009) ‘Fact Sheet 61 – Seeking Asylum within Australia’. Available online: http://www.immi.gov.au/media/fact-sheets/61asylum.htm#g
  3. Estimates from the Department of Immigration and Citizenship.
  4. Georgiou, P. (2010) Valedictory speech to Parliament, p.5175. Available online: http://www.aph.gov.au/hansard/reps/dailys/dr030610.pdf
  5. Department of Immigration and Citizenship and Organisation for Economic Co-operation and Development (2010) International Migration Outlook 2010. Available online: http://www.oecd.org/document/41/0,3343,en_2649_33931_45591593_1_1_1_1,00.html#STA
  6. Oxfam Australia and A Just Australia (2007) A price too high: the cost of Australia’s approach to asylum seekers. Available online: http://www.oxfam.org.au/resources/filestore/ori ginals/OAus-PriceTooHighAsylumSeekers-0807.pdf
  7. Australian Human Rights Commission (2009) Immigration detention and offshore processing on Christmas Island, Section 8. Available online: http://www.hreoc.gov.au/human_rights/immigration/idc2009_xmas_island.html
  8. ibid, Section 9.
  9. Department of Immigration and Citizenship (2010) Immigration Detention Statistics Summary. Available online: http://www.immi.gov.au/managing-australias-borders/detention/_pdf/immigration-detention-statistics-20100521.pdf
  10. A Just Australia (2010) The Legality of Detention as a Deterrent. Available online: http://www.ajustaustralia.com/resource.php?act=attache&id=115
  11. Gillard, J. (2010) ‘Moving Australia Forward’, Speech to the Lowy Institute. Available online: http://www.pm.gov.au/node/6876
  12. Feller, E. (2010) ‘UN Assistant High Commissioner for Protection’, The Age, 19 July 2010. Available online: http://www.theage.com.au/national/un-asks-labor-why-fewer-afghan-claims-accepted-20100718-10g3y.html
  13. Justice for Asylum Seekers Alliance (2002) Alternative approaches to asylum seekers: Reception and Transitional Processing System, JAS Alliance, Detention Reform Working Group, Victoria. Available online: http://www.safecom.org.au/RTPScanberra1.pdf
  14. United Nations High Commission for  Refugees (2006) Alternatives to Detention of Asylum Seekers and Refugees. Available online: http://idcoalition.org/wp-content/uploads/2009/06/unhcralternatives.pdf
  15. Evans, C. (2008) ‘Labor unveils new risk-based detention policy’. Available online: http://www.minister.immi.gov.au/media/media-releases/2008/ce08072.htm
  16. Department of Immigration and Citizenship (2010) ‘Fact Sheet 62 – Assistance for Asylum Seekers in Australia’. Available online: http://www.immi.gov.au/media/fact-sheets/62assistance.htm
  17. Department of Immigration and Citizenship, ‘Fact Sheet 64 – Community Assistance Support program’. Available online: http://www.immi.gov.au/media/fact-sheets/64community-assistance.htm
  18. Hotham Mission Asylum Seeker Project (2010) The Rights of the Child. Available online: http://www.asp.hothammission.org.au/index.cgi?tid=31
  19. Department of Immigration and Citizenship (2009) Community Care Pilot & Status Resolution Trial. Available online: http://idcoalition.org/wp-content/uploads/2009/06/ccpmarch-2009.doc
  20. Senate Estimates, Legal and Constitutional Affairs Committee (2007) Hansard, 21 May 2007, p.121.
  21. Australian Human Rights Commission, op. cit., Section 8.1.
  22. United Nations (1952) Convention Relating to the Status of Refugees, Article 1. Available online: http://www.unhcr.org/3b66c2aa10.html
  23. Maley, P. (2010) ‘Lady’s not for turning on asylum seeker boats’, The Australian, 25 June 2010. Available online: http://www.theaustralian.com.au/news/nation/ladys-not-for-turning-on-asylum-seeker-boats/story-e6frg6nf-1225884008971
  24. Refugee Council of Australia (2010) Economic, Civil and Social Contributions of Refugees and Humanitarian Entrants. Available online: https://www.refugeecouncil.org.au/docs/resources/Contributions_of_refugees.pdf

AUTHORS(S): Kate Gauthier

Making it last

Shifting from fear to hope

1 Comment 05 July 2010

http://www.flickr.com/photos/gorey/2579760026/

Australia’s abundant energy and opportunities for future wealth and health

by Fiona Armstrong

Introduction

Unlike many other countries, Australia has no significant climate policy. Efforts to introduce a lacklustre emissions trading scheme have failed, and apart from some minor policies, Australia has no significant policy agenda to contribute to the global effort of stemming our relentless rise in greenhouse gas emissions, or to draw down our legacy of excess carbon dioxide (CO2), as we are warned we must.1

Australia’s history is closely linked with a reliance on natural resources. We have been encouraged to think that the ‘lucky country’ is dependent on its natural assets for wealth and prosperity and that their exploitation is our only key to a stable economy and flourishing society. The bad news is that the way we are using some of those resources is damaging not only the ecosystems on which we depend, but also our economic security and our nation’s reputation as a good global citizen.

The good news is that our abundant natural resources can continue to dominate Australia’s future. But we must begin to transform our economy now to capitalise on this continent’s natural advantages of sun, wind, and soil and the opportunities they afford for a secure future.

The fossil fuel lobby’s claims that renewable energy can’t do the job, or that cutting emissions will harm Australian’s job prospects, are simply unfounded – in fact the reverse is true.2 Wind and solar data tells us that we have massive energy resources available and technology exists to provide us with renewable energy day and night.3 Detailed reports indicate there is huge potential for the creation of jobs in constructing and operating new renewable energy infrastructure.4 Further studies suggest that a failure to engage with new global markets that are being created by action on climate change means Australia is missing out on opportunities to develop innovative intellectual property and on growth in profitable new industries.5

Unless Australia supports the development of an economy powered by renewable energy sources, we risk a loss of competitiveness internationally. Our reliance on coal looks increasingly reckless economically as well environmentally as other countries begin to look at imposing border taxes on carbon intensive imports.6 We need to begin our clean energy transformation now, or Australia will lose out on the jobs and economic benefits from what is predicted to be the ‘biggest high technology market of the 21st Century’.7

It is time to link climate with policy across the sectors (energy, transport and agriculture in particular) and to develop strategies to ensure Australia is able to meet its fair share of the global obligation to reduce greenhouse gas emissions and reduce atmospheric CO2 to a safe level. This will require a considerable shift away from the current focus on propping up ‘sunset industries’ in the face of inevitable change.

The scale of transition is enormous, but as Sir Nicolas Stern, Professor Garnaut and others have identified, the costs of not acting far outweigh the costs of action.8

Repositioning Australia now to capitalise on its natural advantages by building industries based on sustainable resources will enable us to lower our emissions and draw down carbon dioxide – with the additional benefits of more jobs (and more secure jobs), cleaner air, economic prosperity and energy security.

Addressing climate change is both a matter of domestic policy and international obligation. Australia cannot have any credibility in global discussions on climate change if it takes no effective action itself. Effective international action depends on emission reductions being undertaken by industrialised nations, not just promised. It is the implementation of effective policies to reduce each nation’s emissions that is the key to international agreements, not the other way around.

The development of a comprehensive policy suite to address the challenge of climate change for Australia is well overdue. Action is needed to reduce emissions, draw down excess carbon dioxide from the atmosphere, and to adapt and prepare for further changes to the climate. This will not only assist in eliciting cooperation from other global partners in the task of restoring a safe climate, it will also:

  • help position Australia in the increasingly competitive global marketplace of clean, sustainable industries
  • improve our energy and national security, and
  • provide considerable health and social benefits.

The story so far

During the past decade, Australian governments have been slow to respond to the global effort to reduce emissions and act on climate change. This reflected the scepticism (and later, denial) on the part of some of the senior members of the Howard government on the scientific evidence on global warming. Concerns about Australia’s reliance on fossil fuels (for electricity generation, transport and export revenue) led to that government’s refusal to ratify the Kyoto Protocol (an international agreement effective since 1997 between 190 countries) despite being only one of two industrialised countries not to do so.

Under pressure from shifting popular opinion however, Prime Minister Howard pledged to develop an emissions trading scheme to reduce green house gas emissions in 2006, and commitments were made by the then Rudd Opposition to address the issue. Elected on a wave of popular support and desire for change, the Rudd Government adopted the Howard policy of emissions trading in 2007, and during 2007-08, developed a ‘cap and trade’ model, known as the Carbon Pollution Reduction Scheme (CPRS). The Opposition changed position (and leadership) on the issue, and the legislation was rejected twice in the Senate, amid widespread criticism of the scheme.

With growing community concern about its inadequate targets, excessive use of offsetting, unnecessary compensation to polluters, and the setting of both a ‘cap’ and a ‘floor’ beyond which emissions reductions could not fall or rise, by early 2010 the CPRS had become a liability for the Government, and it was shelved (to be reconsidered, we are told, in 2013).

This decision offers a fresh opportunity to look at climate policy options in Australia and provides an open space for the development of innovative and effective policy ideas. Such ideas must necessarily reflect actions being taken globally as well as position Australia for leadership in the global effort to address the challenge of climate change.

Why does climate policy matter?

Climate change poses profound threats to the natural ecosystems and biodiversity on which humans depend, and is altering the previously stable climatic conditions that have existed over the past 10,000 years – allowing human civilisation to flourish. Overwhelming scientific evidence over several decades demonstrates human activity (in particular, the burning of fossil fuels for power, heat and transport as well as widespread deforestation) has led to an accumulation of carbon dioxide and other greenhouse gases in the Earth’s atmosphere above pre-industrial levels. This is causing increases in average global temperature, changes to the Earth’s climate, and severely compromising the ability of the Earth’s oceans to absorb carbon dioxide. Ocean acidification is threatening the viability of marine ecosystems, 9 with significant implications for food production for millions of people. 10

The most recent scientific evidence confirms these effects and demonstrates a rapid increase in the rate of warming due to dramatic increases in global emissions. The timeframe for effective action to reduce emissions and prevent the collapse of major ecosystems (and thus our food chain, among other things) is very short – global emissions must peak within this decade and then rapidly decline.11

Carbon dioxide isn’t the only problem

Climate change is only one of three ‘planetary boundaries’ (identified by Earth system scientists as quantified boundaries within which humanity can safely exist) that have already been transgressed. The others are the nitrogen cycle and biodiversity. Nitrous oxide requires special attention, as it is a significant climate forcing agent, with a global warming factor 300 times that of CO2.12 The profligate use of nitrogen by humans (mainly in agricultural fertilisers) is also responsible for the pollution of waterways and damage to marine ecosystems,13 and is implicated in outdated fossil fuel energy production.14

Biodiversity is often overlooked in policy discussions and efforts to reduce emissions. However there are compelling reasons to act to prevent further global warming on biodiversity grounds alone, and to place a value on the services afforded to us by the ecosystem. We need to recognise the vital connection between the choices we make on resource use, the status of the ecological system and the wellbeing of people.15 There are profound economic consequences for failing to do so: from a total of over $US 33 trillion (the 1997 estimated annual value of global ecosystem services), conservative estimates put the annual global loss of land based ecosystem services at €50 billion, and potentially equivalent to seven per cent of GDP by 2050.16

Protecting nature’s grey matterProtecting biodiversity means maintaining the irreplaceable intellectual property that is created by millions of years of evolutionary design – as memorably put by Ian McBurney from live·ecological: “We could also be losing the chance to study nature’s 3.8 billion years of design perfection and find cures for diseases or bio-mimetic glues, organic solar cells, structural designs, super fast computer hardware, self cleaning paints, truly biodegradable packaging, ‘photosynthetic’ hydrogen splitting for fuel cells, stronger and self assembling ceramics, more effective trains and aeroplanes, colour through shape, rather than pigments, bacteria that mine metals from waste streams, collision avoidance circuitry from locusts and lots more.”17

A diverse ecosystem is a resilient one, but the capacity of biodiversity to cope with climate change is not infinite: as the 2009 Australian Government report on biodiversity and climate change stated:

“Australia’s biodiversity has only so much capacity to adapt to climate change, and we are approaching that limit. Therefore, strong emissions mitigation action globally and in Australia is vital – but this must be carried out in ways that deliver both adaptation and mitigation benefits.” 18 Prompt and effective action on climate change is therefore an essential act of risk management.19 This action will also confer many more immediate benefits to Australia’s health, wellbeing, and national and economic security.

There is good news for jobs: studies show there are significant opportunities for ‘green’ jobs growth, since the renewable energy industry creates more jobs per unit of energy generated than the fossil fuel industry.20 It is also a safer industry: the risk of death or injury from workplace hazards is greatly reduced in the renewables sector compared with those working in coal mining and fossil fuel extraction.21

And there is good news for health: improvements to the transport system and powering it with clean renewable energy will reduce air pollution and (if carefully planned, promoted and maintained) stimulate greater physical activity, reducing the risks of some chronic diseases, such as respiratory disease, obesity, diabetes, and cardiovascular disease.22 Modifying our food choices away from high emissions livestock production can reduce cardiovascular disease,23 and reducing our dependence on industrial scale farming practices will improve soil and water quality.24

Shifting from the burning of fossils fuels, such as coal, for our energy supply will bring significant benefits for those living and working nearby, with developmental disorders, cancers, heart disease and respiratory problems all implicated in proximity to the mining, transportation and burning of coal.25

Fast facts The annual health costs of coal-fired power generation in Australia are estimated at $2.6 billion.26 Coupled with costs from traffic pollution (a 2003 estimate put annual health costs at $3.3 billion), the health costs to the Australian community from burning fossil fuels is around $6 billion annually.27


Fast facts If the currently externalised total climate and health costs for Australian power stations were accounted for, the costs of energy generated by fossil fuels would be considerably higher. If total climate and health costs were included, costs are estimated at: $A19/MWh for natural gas, $A42/MWh for black coal and $A52/MWh for brown coal.28 In contrast, wind power installations are around $A1.50/MWh, while solar thermal and solar PV are equivalent to around $A5/MWh.29

Values and principles

There are both self-interested and moral reasons to act on climate change. We should act to protect ourselves from current and future risks, and we should act to prevent others being affected. Fundamentally, however, the principle that overwhelmingly demands a shift in our approach to economics, our use of natural resources, and our response to climate change, is simply the principle of the ‘interconnectedness’ of ecology and human society. Too little understood by economists, policymakers and overwhelmingly urbanised global populations, the awareness that we are intrinsically part of and totally reliant on a complex interconnected ecological system (whose equilibrium is currently disrupted and increasingly threatened by our current activities) is what should drive our responses to climate and environmental challenges. There are other important issues that should also underpin our response, such as our obligation to intergenerational equity (we don’t leave a mess behind for our kids), global justice (we don’t further damage the wellbeing of people in poorer nations by selfishly insisting we have a right to pollute, and alter the climate), and finally the precautionary principle – because reducing the risk of dangerous climate change is the most profound act of risk management that we can take.

Fear of these risks and consequences may not be what drives us. Psychological studies reveal that, influenced by those with vested interests in the status quo, humans have demonstrated an extraordinary ability to deny the evidence on climate change and its imperative for action.30 A new national ‘narrative’ is needed that will enable people to feel optimistic about the future, confident in the solutions, and convinced that change will not only address current and future risk, but will actively contribute to the establishment of future societies that are better for all of us. As many organisations are beginning to appreciate, changing the way we do business is necessary to ensure that we continue to have access to the ecosystem services on which we depend. Shifting Australia’s economy from one that depends on exploitation of finite natural resources to one that is underpinned by infinite and clean resources is both a challenge and an opportunity. But the emerging evidence is that, not only is it possible, it will bring with it unparalleled economic gains – with the creation of jobs and industries that will make us internationally competitive and economically secure, with better health and more connected communities.31

How do we do it? Transforming energy, transport and land use to make Australia cleaner, healthier, safer, wealthier and more responsible

There is a great need to considerably broaden the policy discussion in Australia on climate change. To date, policies and programs have been developed that are inadequate in scale (Solar Flagships); ill-conceived (the Renewable Energy Target, otherwise known as RET and net feed-in tariff); fail to take account of the science (low emissions reduction targets); illogical (inclusion of native forest biomass and coal mine waste gas as eligible renewable energy sources in the RET); and poorly administered (insulation). Other policies, also insufficient in magnitude but nonetheless effective (Remote Renewables Program), have been abandoned.

Many of these policies have been developed in isolation from one another, when in reality, comprehensive, whole-of-government (let’s face it, whole-of-society) responses are needed.

There are three main strategies necessary to effectively address climate change. These are:

  • reducing the production and emission of greenhouse gases from all sources – starting our New Industrial Revolution
  • removing excess CO2 from the atmosphere – restoring the balance for land, air and sea, and
  • providing for the review and monitoring of a range of techniques for direct cooling of the climate – ensuring safety in climate interventions.

Starting our New Industrial Revolution. Reducing emissions and removing CO2 from the atmosphere requires moving away from the use of fossil fuels in the energy and transport sectors. The changes needed are technically possible, economically feasible and will lead to significant long-term reductions in future energy costs, improvements to population health, and increased agricultural productivity. This will bring about substantial changes to the way we use natural resources but we will be healthier, safer, and facing a more secure economic and foreign policy future as a result. Policy options must include strategies that will achieve a rapid transition to zero emissions technologies, reduction in energy demand and reduced emissions from non-energy related sources.32

Restoring the balance – for land, air and sea. The drawing down of legacy emissions (those already in the atmosphere) is also needed to restore a safe climate zone of atmospheric CO2. At present the main option for this is that of biosequestration. Australia has enormous potential to sequester large quantities (potentially billions of tonnes) of CO2 in soils and forests.33 We need to begin to account for our ‘natural capital’ and stop cutting down our native forests, degrading our waterways and, mindful of the need to secure quality land for food production, increase the use of biochar and undertake substantial reafforestation of our ‘wide brown’ land. Where possible, policy makers must take into account the value of ecosystem services and reflect that value in the establishment of price signals and regulatory measures.34

Ensuring safety in planned climate interventions. Providing for the review and monitoring of a range of techniques for direct cooling of the climate in legislation is necessary to ensure that Australia is aware of, and remains engaged in developing governance frameworks for any technologies being explored to directly alter global or regional climates. This approach acknowledges that while the utmost priority should be placed on eliminating emissions and drawing down excess, should the Earth’s climate suddenly deteriorate, it may be necessary to consider a range of options to protect the Earth’s systems while natural safe climate conditions are restored.

The Policy ToolboxAustralia’s next term climate policy goal: Smarter, greener, fairer, healthier

Implementation of the strategies above requires the development of broad national climate change legislation encompassing a suite of policy responses35 to reduce emissions, draw down carbon and ensure sound governance of climate cooling techniques. This should be accompanied by commitments at the COAG level for state and territory legislation that supports and assists the goals of national initiatives.

The legislation must include the following key elements:

  1. Specific targets for emissions reductions and draw down of emissions – these must have a timeframe attached for regular review (e.g. annually, according to advice from an expert climate scientific advisory committee)
  2. Meaningful financial incentives e.g. a price on carbon that is set at a level that will prevent financing of any new coal fired power generation (unless it can safely capture and store 100 per cent of its GHG emissions) and make clean renewable energy cost competitive with fossil fuels
  3. Energy efficiency standards, fuel consumption standards and greenhouse gas emissions standards that encourage significant reductions in energy use (of fossil fuels in particular) and create disincentives for inefficient energy use in building, transport, and appliance technologies 36
  4. Programs and incentives to discourage deforestation, encourage reafforestation and improve land use to deliver emissions reductions and promote biosequestration 37
  5. Investment in: national energy transmission infrastructure, zero emissions energy technology development and deployment, and zero emissions transport infrastructure 38 and
  6. Removal of the perverse incentives that exist in current policy, such as the current subsidies to fossil fuel industries.39

The legislation must make use of these top climate tools:

  1. Carbon tax - the revenue from which should be used to offset the increase in energy costs for low income and disadvantaged households, assist workers who are disadvantaged during the transition, and to fund the renewable energy transformation
  2. Gross feed-in tariff, for a guaranteed period and tiered according to technology – this is needed to expand renewable energy technologies that are not currently cost competitive under the RET e.g. solar thermal with storage, wave, geothermal; it should be established initially to operate alongside the RET but over time the RET should be phased out
  3. Mandatory standards for emissions and energy efficiency – to drive emissions abatement and to reduce energy use
  4. Progressive taxation policies that encourage the rapid deployment of zero emissions technologies and conservation of natural capital – e.g. tax relief for renewable energy technologies through accelerated depreciation rates; tax breaks and other incentives for landholders/communities to undertake reafforestation projects/reduce deforestation and improve biosequestration
  5. Public financing to upgrade and expand national energy transmission and public transport infrastructure;
  6. Funding to support capital investment for renewable energy technology and the development and deployment of technologies for biosequestration and improving soil quality e.g. biochar – through the provision of low interest loans or loan guarantees
  7. Removal of subsidies for those industries that cause us harm e.g. fossil fuels and intensive agriculture – these should then be applied to renewables and organic farming
  8. Transition and adaptation support for communities – undertaking comprehensive regional climate risk assessments that evaluate economic, health, social and environmental risk and developing action plans to address risk;
  9. Comprehensive education programs to improve climate literacy in all communities;
  10. Investing in research – this is needed to monitor climate change in order to respond effectively; for further development of zero emissions technologies; to improve our understanding and capability for drawdown and transition strategies; and to improve our understanding of climate cooling techniques
  11. Investment in education and training of the skilled workforce needed to manufacture, install, operate and maintain new technologies; and retraining of workers in high emissions industries to enable them to participate in the new green economy, and
  12. A sustainable population policy – recognising the environmental impact of our high per capita emissions and the effect of the human population on our fragile ecosystem.

Why choose these tools?

Tax

In his landmark report on the economics of climate change back in 2006, Sir Nicholas Stern identified a price on carbon as a key element to cutting emissions. Nothing has changed; only the urgency of its application has increased. A carbon tax provides a better choice than emissions trading because it:

  • creates an economy-wide incentive to reduce emissions 40
  • is simpler and more transparent than emissions trading 41
  • provides a reward for more long-term (and higher cost) structural changes, while an ETS just encourages low-cost reductions 42
  • provides a steady flow of revenue for governments to direct towards emissions abatement 43
  • provides more price certainty for business than the volatile market of emissions trading 44
  • can be adjusted according to a jurisdiction’s emissions profile 45
  • sets no upper limit on emissions, unlike an ETS, which creates a ceiling (beyond which emissions will not occur) and a floor for emissions reductions 46
  • doesn’t discourage voluntary action 47 and
  • since there are no “rights to pollute” with a carbon tax, it is less likely to generate the compensation claims and buyback costs associated with an emissions trading scheme.48

And a tax will be more efficient economically. A 2008 study from the US Congressional Budget Office found that on economic efficiency measures, the net benefits of a tax were roughly five times that of a cap-and-trade (emissions trading scheme), with reductions achieved at a fraction of the cost.49

Feed-in tariffs

The choice to implement net, rather than gross, feed-in tariffs in some Australian jurisdictions has been a mistake; the rewards for net feed-in tariffs are minimal and quite insufficient to drive investment in large scale renewable energy technology.50 In contrast, a gross feed-in tariff has been used effectively in Germany, where it provides investment security, has created hundreds of thousands of jobs and saved billions of Euros in avoided expenditure on fossil fuels.51

The story is similar in Spain where, in addition to an EU renewable energy target of 20 per cent by 2020, a gross feed-in tariff is responsible for delivering the Government’s 2010 target of 20 GW of installed wind capacity,52 and driving a surge in investment in the cheapest form of solar power – concentrated solar thermal (CST).53 A guaranteed long term tariff rate at a high enough level to cover costs, coupled with a specific target for CST is responsible for Spain currently boasting the largest global share of solar thermal projects under construction.54

Standards and targets

It’s time to move beyond voluntary standards – these have been in place in some jurisdictions for decades and emissions have continued to rise. Relentless increases in energy consumption in Australia (predicted to rise 35 per cent by 2030),55 need to be addressed through aggressive and continually improving mandatory standards and targets for energy efficiency to reduce energy demand. There is huge potential for emissions reductions from improving energy efficiency: according to a 2008 McKinsey and Co report, about 25 per cent of potential emission reductions could be achieved through energy efficiency measures alone, and what’s more, they are cost-positive (i.e. they save money). To make these standards effective, it is also vital to increase the incentive for emissions reductions by electricity and gas utilities through decoupling the link between revenue and volume of energy sold – in other words, to shift from the current incentive to sell more energy, to less.56 Australian transport emission standards also require considerable strengthening if the health costs (see above) and emissions abatement needed are to be achieved. The transition away from fossil fuels will also require direct investment in the production of clean renewable energy powered vehicles.

Infrastructure

Immediate and major investment in zero emissions public transport is necessary to encourage a shift away from private cars to public transport and bicycles in metropolitan areas, increased use of and investment in electrified rail to replace much of the heavy haulage of road transport, and development of a national fast electric rail network to reduce emissions from domestic aviation. To facilitate the contribution of decentralised renewable power generation, a nationally integrated ‘intelligent’ grid for electricity distribution is needed – for which public investment is required.

Removal of fossil fuel subsidies

Achieving effective emissions reductions requires the removal of existing perverse incentives that work in opposition to this goal. Around $10 billion is currently provided in public subsidies to the fossil fuel industries in Australia every year via a range of state, territory and federal programs.57 Decarbonising the economy requires that these subsidies are instead applied to the development and deployment of zero emission technologies.

These policies and others listed above are not an exhaustive list of all the options available for inclusion in a comprehensive climate ‘policy suite’, but are certainly some of the key ingredients. Other important options include, for example, the establishment of a national climate change commission to oversee, monitor and report on the implementation of policy. It is clear, however, in the time remaining to effectively act on climate change, no single policy will be enough, and a range of options must be urgently employed.

What is the evidence that the New Industrial Revolution is possible?

It is not only possible – it can be achieved in relatively short time frames, as the technology is already available and resources are abundant. All that is missing is political will.

A new report from Melbourne consultancy Beyond Zero Emissions (BZE) supports the findings of international studies which demonstrate that the world’s energy requirements could be met from renewables within 10-30 years – with aggressive policy action.58 The BZE report (released July 2010) suggests it is possible for Australia to undergo an energy transformation and move to 100 per cent renewable energy for its stationary energy supply by 2020. This could be achieved using fully scaled commercially available technology (wind and solar thermal power with storage) to provide 24 hour dispatchable power from geographically dispersed energy-rich sites across the country.59

The use of these two technologies directly addresses the claims of naysayers who assert that renewable technology is not yet up to the task of large-scale national power generation. The distribution of generating systems overcomes the variability of wind and, combined with the availability of power storage with solar thermal (up to 16 hours), also lays waste to the argument that only fossil fuel and nuclear sources can provide baseload power. Combined with energy efficiency gains, the use of biofuels from agricultural waste, and upgrades to transmission infrastructure, the rollout of these two technologies could achieve massive emissions reductions from the single largest source of greenhouse gas emissions in Australia – fossil fuel power generation. It would also generate 75,000 jobs during construction and 80,000 ongoing jobs in operations, maintenance and manufacturing – well in excess of those currently employed in the fossil fuel energy supply workforce.60 The required investment for the implementation of this plan is estimated at around 3-3.5 per cent of gross domestic product over 10 years, or AU$35-40 billion per year for 10 years. When the loss of irreplaceable natural capital (i.e. currently unaccounted for ‘externalities’) is accounted for, this may seem like a very prudent investment indeed.

Other recent modelling supports these predictions of national jobs growth from strong policy action through investments in renewable energy, with regional areas in particular set to gain from an energy transformation.61 The National Institute of Economic and Industry Research estimates 770,000 extra jobs could be created by 2030 across Australia if a suite of policy measures to reduce emissions is implemented.62 As well as contributing to Australia’s competitive advantages by creating a strong and resilient domestic renewable energy industry, this type of action will also help to reduce our long term energy costs, build national capital and improve health outcomes.63

The renewable energy revolution is not only possible – it’s happening already. Investment in renewable energy is generating more jobs per dollar invested and more jobs per megawatt hour than fossil fuel generation.64 Global employment in renewable energy is already outstripping direct employment in the oil and gas industries.65 Since 2005, global investment in renewable energy has increased 230 per cent,66 and is expected to total A$185 billion in 2010.67 And, far from being a laggard, China is leading the world, with investments in renewable energy of $US34 billion in 2009.68

Conclusion

It is both possible and necessary for Australia to develop effective climate policy to contribute its fair share to the global task of emissions reduction and to ensure its own secure economic future, while protecting the wellbeing of its citizens.

Policy makers must realise that by taking responsibility for effective action, Australian leadership and action would send a strong signal and influence the response of other nations. As a ‘middle power’, the most effective act of diplomacy open to us is to prove by our own example that it’s possible to go from heavy polluter to climate problem-solver. Australia urgently needs other countries to believe in that possibility, because as a ‘land of droughts and flooding rains’ we have more to lose from climate change than most.

To build public support for effective policy, it is vital that policy makers communicate the scale and urgency of the problem to the community. Voters cannot be expected to support policies they don’t understand or comprehend the need for. The demonstrable disrespect for science that has pervaded political discussions in Australia threatens us all. It is time our political leaders defended climate scientists and made it clear that we do face grave risks, and that it is therefore necessary to develop policies that reflect the scientific evidence. It is also important that the benefits of taking action are made clear to ensure there is a sense of optimism about the future and to encourage innovation in the development of solutions. Overcoming domestic resistance by those with vested interests requires that governments enlist the support of the ordinary citizens – by communicating the benefits of actions as well as the risks. Many people may be unaware that effective mitigation is possible – and entreating the community to join in a national exercise that offers optimism and hope for the future may just be a successful political act.

Ultimately, whether or not we respond effectively will be a test of democracy that will determine our future as a species. Right now, it’s not going so well. Major corporations have greater sovereign power (and bigger balance sheets in some cases) than many nations – and this is reflected in global, and in particular Australian, responses to climate change. At present it is those who have a vested interest in the status quo who are dictating policy. If, as citizens, we choose to deny them this influence, we will need to make our voices much, much louder than they are at present. The time is ripe for a revitalisation of democracy to ensure our political leaders respond. This may be the most important project we can ever undertake.

The risks of not acting are enormous, but the benefits, if we are successful, may be profound. As Al Gore said: “We have at our fingertips all of the tools we need to solve the climate crisis.” Here in Australia we have abundant energy sources, relative wealth, an educated population, and a history of good global citizenry. It’s time we applied all these to a new national project – addressing climate change.

Photo Credit, Michael Gorey, http://www.flickr.com/photos/gorey/2579760026/

Endnotes

  1. Hansen, J. et al. (2008) ‘Target Atmospheric CO2: Where should humanity aim?’ The Open Atmospheric Science Journal, 2: 217-231; The Royal Society (2009) ‘The Coral Reef Crisis: Scientific justification for critical CO threshold levels of < 350ppm’, Output of the technical working group meeting, London; Rockström, J. et al. (2009) ‘Planetary Boundaries: Exploring the safe operating space for humanity’, Ecology and Society, 14; Safe Climate Australia (2009), ‘The Australian Safe Climate Transition Plan Strategic Framework’. Available online: http://www.safeclimateaustralia.org/research-resources-publications/safe-climate-transition-plan/
  2. Beyond Zero Emissions (2010) Zero Carbon Australia 2020 – Stationary Energy Plan. Available online: http://media.beyondzeroemissions.org/ZCA2020_Stationary_Energy_Report_v1.pdf
  3. ibid.
  4. . Zero Carbon Britain (2010) Zero Carbon Britain 2030: A New Energy Strategy. Available online: http://www.zerocarbonbritain.org/index.php/zcb-home/downloads
  5. Vivid Economics (2009) G20 low carbon competitiveness, Report for The Climate Institute and E3G. Available online: http://www.climateinstitute.org.au/images/carboncompreport.pdf
  6. McNeil, B. (2009) The Clean Industrial Revolution, Sydney, Allen & Unwin; Kamalick, J. (2010) ‘New climate bill set in US Senate, draws fire and support’, ICIS News. Available online:  http://www.icis.com/Articles/2010/05/12/9358895/new-climate-bill-set-in-us-senate-draws-fire-and-support.html; Honk Kong Trade Development Council (2010) ‘Italy joins France in calls for carbon border tax on imports entering EU’, World Energy Media. Available online: http://worldenergymedia.com/News7344_Italy-joins-France-in-calls-for-carbon-border-tax-on-imports-entering-EU.htm
  7. Wit, E. et. al. (2010) ‘From known unknowns to unknown unknowns – the postponement of the CPRS’, Norton Rose. Available online: http://www.nortonrose.com/knowledge/publications/2010/pub28451.aspx?lang=en-gb&page=all; Vivid Economics, op. cit.
  8. Stern, N. (2006) Stern Review on the Economics of Climate Change, London, HM Treasury UK; Garnaut, R. (2008) The Garnaut Climate Change Review, Melbourne, Cambridge University Press; Vivid Economics, op. cit.
  9. See Hardt, M.J. and C. Safina (2010) ‘Threatening Ocean Life’, Scientific American, 52-59.
  10. The Royal Society, op. cit.
  11. German Advisory Council on Global Change (WBGU) (2009) Solving the climate dilemma: The budget approach, Summary for policy-makers. Available online: http://www.wbgu.de/wbgu_sn2009_en.pdf; Brahic, C. (2009) ‘Humanity’s carbon budget set at one trillion tonnes’, New Scientist. Available online: http://www.newscientist.com/article/dn17051-humanitys-carbon-budget-set-at-one-trillion-tonnes.html; Hansen, et al., op. cit.; Copenhagen Climate Congress (2009) Climate Change: Global risks, challenges and decisions, Synthesis Report, Denmark. Available online: http://climatecongress.ku.dk/pdf/synthesisreport/
  12. Melbourne School of Land and Environment (2008) ‘Reducing greenhouse gas emissions from agriculture’, The University of Melbourne. Available online: http://www.landfood.unimelb.edu.au/soils/nonco2.html
  13. Rockström, J. et al., op. cit.
  14. Townsend, A. R. & Howarth, R. W. (2010) ‘Fixing the global nitrogen problem’, Scientific American, pp.64-71.
  15. Bennett, J. (2003) The economic value of biodiversity: a scoping paper, Asia Pacific School of Economics and Government, The Australian National University. Available online: http://www.environment.gov.au/biodiversity/publications/scoping-paper/index.html
  16. The Economics of Ecosystems and Biodiversity (TEEB) (2009) The Economics of Ecosystems and Biodiversity for National and International Policy Makers – Summary: Responding to the Value of Nature, Part iv. Available online: http://www.teebweb.org/LinkClick.aspx?fileticket=I4Y2nqqIiCg%3d&tabid=1022&language=en-US
  17. McBurney, I. (2008) ‘State of the planet’, Live Ecological. Available online: http://www.liveecological.com.au/index.php?option=com_content&view=article&id=15:state-of-the-planet-2008&catid=25:resources&Itemid=34
  18. Department of Climate Change (2009) Australia’s biodiversity and climate change, Summary of a report to the Natural Resource Management Ministerial Council, Australian Government. Available online: http://www.climatechange.gov.au/~/media/publications/biodiversity/biodiversity-summary-policy-makers.ashx
  19. Garnaut, R., op. cit.
  20. Centre for Full Employment and Equity (2008) A just transition to a renewable energy economy in the Hunter region, Australia, The University of Newcastle. Available online: http://e1.newcastle.edu.au/coffee/pubs/reports/2008/Just_Transition/Just_transition_report_June_30_2008.pdf; The Climate Institute (2009) Clean Energy Jobs and Investment in Regional Australia. Available online: http://www.climateinstitute.org.au/images/J1742Report.pdf; Kammen, D., Patadia, S. & Wei, M. (2010) Putting renewables and energy efficiency to work: How many jobs can the clean energy industry generate in the U. S.? , Energy Policy, 38, 919-931.
  21. Greenpeace (2008) The True Cost of Coal. Available online: http://www.greenpeace.org/international/Global/international/planet-2/report/2008/11/cost-of-coal.pdf
  22. Selvey, L. and Sheridan, J. (2002) The Health Benefits of Mitigating Global Warming in Australia, Climate Action Network Australia. Available online: http://www.cana.net.au/sites/default/files/report5.pdf
  23. Friel, S. et al. (2009) ‘Public health benefits of strategies to reduce greenhouse gas emissions: food and agriculture’, The Lancet, 374: 2016-2025.
  24. Rockström, J. et al., op. cit.; United Nations Environment Program (2010) Assessing the Environmental Impacts of Consumption and Production: Priority Products and Materials. Available online: http://www.unep.org/resourcepanel/documents/pdf/PriorityProductsAndMaterials_Report_Full.pdf
  25. Physicians for Social Responsibility (2009) Coal’s Assault on Human Health. Available online: http://www.psr.org/assets/pdfs/psr-coal-fullreport.pdf
  26. Biegler, T. (2009) The hidden costs of electricity: Externalities of power generation in Australia, Report for the Australian Academy of Technological Sciences and Engineering (ATSE). Available online: http://www.atse.org.au/resource-centre/func-startdown/63/
  27. ibid.
  28. ibid.
  29. ibid.
  30. Frantz, C. and Mayer, F.S. (2009) ‘The Emergency of Climate Change: Why are we failing to take action?’, Analyses of Social Issues and Public Policy, 9(1): 205-222.
  31. Australians Conservation Foundation (ACF) and the Australian Council of Trade Unions (ACTU) (2010) Creating Jobs – Cutting Pollution: the roadmap for a cleaner, stronger economy. Available online: http://www.acfonline.org.au/uploads/res/ACF_Jobs_report_190510.pdf; Selvey, L. and Sheridan, J., op. cit.
  32. Diesendorf, M. (2009) Climate action: A campaign manual for climate solutions, Sydney, UNSW Press; Mallon, K., Hughes, M. and Kidney, S. (2009) Climate Solutions 2: Low-Carbon Re-Industrialisation, WWF Australia. Available online: http://www.wwf.org.au/publications/climatesolutions2.pdf; Friedman, T. (2008) Hot, Flat and Crowded, London, Allen Lane; Beyond Zero Emissions, op. cit.
  33. Wentworth Group of Concerned Scientists (2009) Optimising Carbon in the Australian Landscape. Available online: http://www.wentworthgroup.org/uploads/Optimising_Terrestial_Carbon.pdf
  34. The Economics of Ecosystems and Biodiversity, op. cit.
  35. Stern, N., op. cit.; Garnaut, R., op. cit.; Friedman, T., op. cit.
  36. McKinsey and Company (2008) An Australian cost curve for green house gas reduction. Available online: http://www.mckinsey.com/locations/australia_newzealand/knowledge/pdf/1802_carbon.pdf
  37. Diesendorf, M. op. cit.; Mallon, K., Hughes, M. and Kidney, S., op. cit.
  38. ClientEarth (2009) p.42; Diesendorf, M. op. cit.; Friedman, T. op. cit.
  39. Diesendorf, M. op. cit.
  40. Kelly, T. and Brook, B. (2009) Submission to the Senate Select Committee on Climate Policy, Submission No. 552, p.47. Available online: http://www.aph.gov.au/senate/committee/climate_ctte/submissions/sub552.pdf
  41. Humphreys, J. (2007) Exploring a Carbon Tax for Australia, Policy Monograph, Perspectives on Tax Reform (14), Centre for Independent Studies. Available online: http://www.cis.org.au/policy_monographs/pm80.pdf
  42. Wittneben, B. (2009) ‘Exxon is right: Let us re-examine our choice for a cap and trade system over a carbon tax’, Energy Policy, 37.
  43. Karmarck, E. (2009) Addressing the risks of climate change: The politics of the policy options, Paper for the US Climate Taskforce. Available online: http://www.scribd.com/doc/16942075/Kamarck-ClimatChang-FINAL
  44. Garnaut, R., op. cit., p.309.
  45. Wittneben, B., op. cit.
  46. Wittneben, B., op. cit.
  47. Kelly, T. and Brook, B., op. cit.
  48. Kelly, T. and Brook, B., op. cit.
  49. Congressional Budget Office (CBO) (2008) Policy Options for Reducing CO2 Emissions. Available online: http://www.cbo.gov/ftpdocs/89xx/doc8934/02-12-Carbon.pdf
  50. Diesendorf, M., op. cit.
  51. Beyond Zero Emissions, op. cit.
  52. Global Wind Energy Council (2010) Outlook for 2009 and beyond. Available online: http://www.gwec.net/index.php?id=131
  53. World Future Council (2009) Feed-In Tariffs Support Solar Thermal Power in Spain. Available online: http://www.e-parl.net/eparlimages/general/pdf/080603%20Solar%20thermal%20toolkit.pdf
  54. Renewable Energy Focus (2009) ‘Concentrated solar thermal power (CSP) market could reach 24 GW by 2020’. Available online: http://www.renewableenergyfocus.com/view/5008/concentrated-solar-thermal-power-csp-market-could-reach-24-gw-by-2020/
  55. Australian Bureau of Agricultural and Resource Economics (2010) ‘More gas and renewables in Australian energy mix’, Media release. Available online: http://www.abare.gov.au/corporate/media/2010_releases/18mar_10.html
  56. Schwartz, L. (2009) ‘The Role Of Decoupling where Energy Efficiency is Required By Law’, Regulatory Assistance Project – Issues letter. Available online: http://www.raponline.org/docs/RAP_Schwartz_IssuesletterSept09_2009_08_25.pdf
  57. Greenpeace, op. cit.; Riedy, C. (2003) ‘Subsidies that Encourage Fossil Fuel Use in Australia’, Working Paper CR2003/0, Institute for Sustainable Futures, Sydney, University of Technology. Available online: http://www.isf.uts.edu.au/publications/CR_2003_paper.pdf
  58. Brown, L. et al. ibid; Jacobson, M. and Delucchi, M. (2009) ‘A path to sustainable energy by 2030’, Scientific American. Available online: http://www.scientificamerican.com/article.cfm?id=a-path-to-sustainable-energy-by-2030; European Renewable Energy Council (2010) RE-thinking 2050: Making the EU 100% renewables-based. Available online: http://www.erec.org/fileadmin/erec_docs/Documents/Publications/ReThinking2050_full%20version_final.pdf; World Future Council, op. cit.
  59. Beyond Zero Emissions, op. cit.
  60. Beyond Zero Emissions, op. cit.
  61. The Climate Institute, op. cit.
  62. Australians Conservation Foundation (ACF) and the Australian Council of Trade Unions (ACTU), op. cit.
  63. Australians Conservation Foundation (ACF) and the Australian Council of Trade Unions (ACTU), op. cit.
  64. United Nations Environment Program (2008) Background Paper on Green Jobs, p.10. Available online: http://www.unep.org/labour_environment/pdfs/green-jobs-background-paper-18-01-08.pdf
  65. Kammen, D., Patadia, S. and Wei, M., op. cit.; United Nations Environment Program and SEF Alliance (2009) Why Clean Energy Public Investment Makes Economic Sense – The Evidence Base, p.79. Available online: http://sefi.unep.org/fileadmin/media/sefalliance/docs/specialised_research/Executive_Summary_FINAL_20090720.pdf
  66. Pew Charitable Trust (2010) Who’s Winning the Clean Energy Race?. Available online: http://www.pewglobalwarming.org/cleanenergyeconomy/pdf/PewG-20Report.pdf
  67. Bloomberg New Energy Finance (2010) Renewable energy investment opportunities and abatement in Australia, Report for the Climate Institute & Westpac. Available online: http://www.climateinstitute.org.au/images/reports/renewableenergyinvestment.pdf
  68. Pew Charitable Trust, op. cit.

AUTHORS(S): Fiona Armstrong

More than luck

Getting value for public money: Housing, pensions and child care

3 Comments 28 June 2010

http://www.flickr.com/photos/proimos/4046053052/

by Ben Spies-Butcher and Adam Stebbing

Introduction

Each election year both sides of politics make their claims for economic responsibility. In 2010 the Coalition focused on government debt, while Labor placed a self-imposed limit on new public spending. Many people may not realise that Australia’s debt is already very low by international standards, and our taxes are below those in most rich countries.

Despite this, there is still plenty of room to improve the federal government’s financial position. But we heard little this election about the most wasteful and inequitable government spending. We could be saving billions each year, while providing greater support to those on low incomes and reducing the cost of living – but to do so will require considerable political courage.

In this chapter we examine three of the most important areas of social spending – retirement incomes, housing and childcare. We also put forward some general rules for getting better value for public money: increasing the accountability of public spending; making funding direct to service providers; and simplifying consumer choice.

The story so far

Getting value for our tax dollars is important to all citizens. But public debate on this issue is often based on ideology and double-speak. While governments from both sides of politics talk of cutting spending, they have consistently increased backdoor tax rebates and loopholes that give most to rich. In housing, superannuation and elsewhere our governments now spend as much through complex and unfair tax schemes as they do in direct support through more targeted spending initiatives.

While the Howard Government claimed fiscal responsibility, it consistently increased spending in some of the least efficient, but most electorally beneficial ways. Free market think tanks called this ‘big government conservatism’, as spending on the baby bonus, private schools, private health insurance and families all increased in ways that maximised the cash paid to the (often well off) individual, but minimised the level of services delivered per government dollar.

Labor has slowly begun to wind back some of the worst excesses. But in many areas it has continued to build on dodgy foundations. It has added to the inefficient childcare rebate, rather than taking the opportunity for genuine reform. It promises to extend superannuation in a way that guarantees even more public support for those on the highest incomes, rather than reforming the system to genuinely support low and middle income workers. And it has left in place tens of billions in tax concessions that actively undermine broader economic objectives in housing policy. By making public spending simpler, more direct and more accountable there is significant scope for savings.

Areas needing reform

1. Pensions and retirement incomes

The retirement incomes system has particularly wide ramifications for the value we get from our public money because the government offers considerable financial support to both its major arms – the aged pension and superannuation. While Australia is well positioned to deal with the effects of an ageing population, it does increase the urgency of ensuring that our policy settings are both equitable and efficient. The government has made some progress on retirement incomes policy, but much more remains to be done.

Current government policy

Age pension

The age pension is the major retirement income policy, providing at least some assistance to 78 per cent of the population aged 65 years and over in 20081. Funded out of tax revenue, the pension cost around $27 billion in 2008-092. Long overdue, the government increased the weekly full rate of the age pension by $32.49 for singles and $10.14 for couples3. It also simplified pension allowances, by incorporating the GST pension supplement, as well as the pharmaceutical, utilities and telephone allowances into a sole pension supplement 4.

The government has placed additional pressures on workers, particularly those who undertake manual work, by increasing the qualifying age for the pension to 67 years by 20205, a measure that is difficult to justify on financial or equity grounds.

Superannuation

Superannuation provides a secondary source of retirement income to more than 90 per cent of employees6. It is supported by the government through the Superannuation Guarantee (SG) that directs nine per cent of wages into super and by generous but extremely unfair tax concessions that reduced tax revenue by $24 billion in 2008-097– costing almost as much as the age pension.

These concessions reduce the fiscal sustainability of the Budget. They cost the Budget two per cent of GDP each year, but are expected to reduce spending on the pension by only 0.2 percent of GDP in 2050 – meaning we spend $1 of public money on super for every 10c we expect to save on the pension.

The government has taken small, but important, steps to reduce the inequities of the super tax concessions: it reduced the annual contribution limits that the tax concession applies to $25,000 for those younger than 50 years and $50,000 for those who are older8; and it has improved their overall equity with its proposed 15 per cent rebate (up to a ceiling of $500) for those with annual incomes under $37,0009. And, improving fairness and simplicity, the government also banned commissions for financial advisors and required funds to provide a low-cost default super option to consumers10.

However, the government also reduced the benefits that low-income earners receive from the co-contribution super scheme, lowering the matching rate from 150 per cent to 100 per cent from 2009 to 201211. And, the proposal to increase the Superannuation Guarantee to 12 per cent creates greater inequity because it will amplify the problems already present in concessional tax arrangements. Thus, it will effectively increase support to high-income earners.

The Inequity of the Tax Concession for Superannuation Guarantee Contributions

In its reply to the Henry Tax Review, the government announced that it would increase the Superannuation Guarantee from nine to 12 per cent of wages and introduce a 15 per cent rebate for the super contributions of those earning less than $37,000 p.a. Table 1 compares the current tax arrangements with those proposed by the government.

Table 1. The Current Tax Concession for Superannuation Guarantee Contributions and the Rudd-Gillard Government’s Proposal

Current Concession Proposed Concession
Income ($) Marginal Tax Rate Tax Discount (%) Tax Discount ($) Tax Discount (%) Tax Discount ($)
35 000 15 0 0 15 472
60 000 30 15 810 15 1 080
100 000 38 23 2 070 23 2 760
250 000 45 30 6 750 30 9 000
500 000 45 30 13 500 30 18 000

Under the current tax arrangements, individuals pay a flat rate 15 per cent tax on their super contributions; tax payers earning $35,000 p.a. receive no benefit from this concession, while those earning $250,000 p.a. receive $6,750 per annum of government assistance. This concession is inequitable in both monetary and proportional terms. Although they provide some benefit to lower income-earners, the government’s proposals maintain the inequity of the existing tax concession and, by increasing the Superannuation Guarantee to 12 per cent, boost the monetary benefit received by those on the highest incomes.

Proposed reforms

Make Super Fair

Target assistance

The super tax concessions’ fairness could be enhanced by heeding advice that the Rudd-Gillard Government received from a range of sources, including the proposals of the Henry Review and our paper for the Centre for Policy Development12 found in Table 2. While the Henry Review recommended a flat rate 20 per cent tax discount for super contributions up to annual limits, our Centre for Policy Development report proposed a 20 per cent rebate for those earning up to $80,000, with a taper that reduced the rate of the rebate by one per cent for each additional $1,000 of income. Both of these proposals, particularly that of the CPD report, would improve the equity of the super tax concessions.

Table 2. Proposals for Reforming the Tax Concession for Super Contributions

Henry Tax Review CPD Proposal
Income ($) Marginal Tax Rate Tax Discount (%) Tax Discount ($) Tax Discount (%) Tax Discount ($)
35 000 15 20 630 20 630
60 000 30 20 1 080 20 1 080
100 000 38 20 1 800 0 0
250 000 45 20 4 500 0 0
500 000 45 20 9 000 0 0

Improving accountability

Support for super avoids many budgetary oversights and long-term projections, such as the Intergenerational Reports, making it harder to assess the value the public is getting for its money. Concessions given to superannuation should come under the same scrutiny as public spending on the pension.

Using savings for nation building

One aim of super is to enhance national savings. If that is the goal and tens of billions of public dollars are spent on the effort, it is reasonable that a more direct link be made by requiring super funds to make a small investment in government bonds to make funds more available for public infrastructure and nation building.

Making super simple

A key problem with super for workers is its complexity. Creating a default public super fund would help people manage choice, particularly for young and casual workers who move between jobs and industries.

2. Housing

Housing policy has one of the largest impacts on the federal budget of any social service. However, its impact is often overlooked because the bulk of support comes through concessional tax arrangements, similar to those supporting superannuation. In the past support for both public housing and home ownership have broadly met the needs of the community. But gradually spending on public and affordable housing has decreased while support for purchase by owners and investors has increased. The result is rising house prices, leaving many behind.

There are now 105,000 homeless in Australia. Another 445,000 low-income families are in housing stress in the private rental market. High house prices and rising interest rates mean hundreds of thousands of low-income owner-occupiers are also in housing stress13.

Ironically, it now appears that government spending on programs meant to improve affordability (like the First Home Owners Grant) is actually exacerbating the problem. Rather than increasing the supply of housing as population increases, these types of policies tend to increase the price of existing housing. The limitations of current housing policy are increasingly accepted across the economic community, but there are significant political obstacles to reform. The first-term Labor Government took some steps in the right direction.

Current government policy

Supporting renters

A long-term lack of funding for social housing has meant increasing need to subsidise private renters. These subsidies now cost $2.6 billion per year14. There is no direct means test – renters who qualify for other government payments can also get rent allowance – but this means that some low-income earners fall through the cracks. The level of assistance also does not account for higher rents in cities like Sydney and Melbourne.

The stimulus package began to address this by investing $6.6 billion to building 20,000 new units of social and defence housing15. This is a significant commitment, but still only a small step towards reducing the 230,000 waiting list for public housing16. The National Rental Affordability Scheme also offers greater rental stock by encouraging institutional investors like super funds to build affordable housing.

Helping first home buyers

Both the past Coalition and the Rudd-Gillard Government introduced new schemes to support first home buyers. Initially these were poorly targeted, giving most assistance to the wealthiest. Labor has made some modest improvements. It amended its own First Home Savers Scheme, and the First Home Owners Grant, to better target these payments. Even so, these programs do relatively little to benefit low-income earners.

The extra support provided by the government to home buyers has been far from efficient. While incentives for new housing can stimulate building, the grant also goes to those buying existing housing, which tends to simply inflate prices. Indeed this appears to have been the intended effect of the stimulus measures, encouraging first home buyers into the market to stabilise falling house prices. However, it has left many with large mortgages as interest rates now increase, prices rise and investors return to crowd out new entrants.

Billions in tax concessions

The budget provides $40 billion a year to existing home owners in concessional tax treatment, primarily through the exemption on capital gains 17. This encourages home owners to spend more on renovation than they otherwise might and to retain larger houses than they need – pushing up house prices for everyone. The government then spends an additional $5 billion on negative gearing18, and billions more in the concessional treatment of capital gains (although this is not properly reported), for investors. Negative gearing has been shown to push up house prices for all19.

So the government is now backing every buyer at an auction, funnelling money to new home buyers, existing owner-occupiers and investors, spending tens of billions each year and yet the effect of all this is basically the opposite of the stated goal of improving housing affordability. All of these measures have a fatal weakness: they compete against other government schemes and give even more to the very buyers that new entrants are competing against.

There is increasing recognition that this situation is unsustainable. A 2004 Productivity Commission report identified the interaction of negative gearing and the capital gains tax concessions as potentially promoting a the boom-bust cycle in the property market20. A number of economists have identified the unsustainable nature of household debt, almost all of which is housing debt generated from rising property prices21. And the Henry Review recommended wide-ranging reforms to reduce the preferential treatment of housing in the tax system to allow investment to flow more evenly through the economy22.

Proposed reform

Addressing supply

Addressing housing affordability requires an increase in supply. A series of reports have shown that the most cost-effective way to do this is through direct government investment in social housing (see Industry Commission 1993). The stimulus has been a good first step, but more needs to be done. Likewise, any assistance given to owners or investors needs to be targeted to those building or buying new stock to reduce the inflationary effects of government assistance.

Targeting assistance

In the short term support for the private rental market must remain. But this assistance should be better targeted to those most in need. This requires changing the means test for rental assistance, and restricting tax concessions to landlords who provide affordable housing to low-income tenants.

From left field: So crazy it just might work

The Henry Review proposed a more radical idea, including the family home in the means test for the aged pension to reduce incentives to retain more expensive housing in older age 23. This proved politically unpalatable, but a similar objective can be achieved through more creative means. Abolishing the aged pension means test would also remove the bias. While this would be inequitable when taken by itself, it could be funded by removing tax concessions for high-income earners investing in superannuation. The net effect would be largely revenue neutral, have no negative effect on equity, provide greater accountability and would make housing more affordable.

3. Childcare

The main challenge to childcare in Australia comes from individual public subsidies for the purchase of private services delivered by the for-profit and non-government sectors. In pitching its message at ‘working families’ during the 2007 federal election campaign, Labor identified unaffordable childcare as one of several pressures undermining family ‘work-life balance’ that the Howard government had failed to address and that it could handle better. So, have the government’s childcare policies improved affordability for working families?

Again, the answer is mixed. In contrast to its predecessor, the Labor government has promoted universal access to childcare and envisages it as part of a longer-term strategy that includes increasing labour force participation and productivity, social inclusion and the ‘education revolution’24. Whilst the government has taken steps in the right direction, other policy decisions have undermined both equity and efficiency.

Current government policy

Subsidising Child Care

The government supports private childcare services through two subsidies for consumers, which largely leaves them to co-ordinate activity themselves through market mechanisms in the private sector.

The Child Care Benefit (CCB) is a means tested cash benefit available to those who consume up to 50 hours of services from private providers; each week, it provides up to $30.10 for registered care or $180 for approved care per child. The Child Care Rebate (CCR) provides a 50 per cent flat rate rebate to consumers for their out-of-pocket expenses on approved childcare services up to $7,778 per child each year.

The CCB provides most assistance to those on lower incomes, whilst the CCR benefits almost all consumers of childcare, particularly higher income earners who have greater purchasing power and thus larger out-of-pocket expenses.

Building new centres

An immediate challenge for parents is a lack of quality, affordable childcare. The government has committed to building an additional 38 childcare centres but this is a far cry from the 260 it promised at the 2007 election25. When ABC Learning collapsed – the major private provider that accounted for 25 per cent of childcare places nationwide – the government injected $58 million to support the continuation of childcare services until all but 55 centres (of over 1,000) were transferred to new operators26. But despite the collapse of ABC Learning, the government has yet to impose accreditation or other regulatory controls on the sector27.

Problems with current policy

Failure to regulate

The collapse of ABC Learning has, as Cox28 notes, provided the government with an opening to review the whole system and impose further regulations on the childcare sector. The government has also ‘avoided at all costs’ an active involvement in childcare provision, which would have provided a direct means to increase competition in the sector and expand access.

Runaway prices

Current policy gives parents more money to spend on childcare without sufficiently increasing the supply of childcare places. This tends to push up the price of childcare and reduce value for money.

By raising the CCR to 50 per cent (from 30 per cent) up to a ceiling of $15,000 in 2008, the government has further raised the purchasing power of childcare consumers without adequately addressing supply. Logically enough, this feeds the inflation in childcare fees that reduce the affordability of care29, although the impact may be unwound to some extent by the decision to wind back the ceiling of the CCR to $7 778 per child each year in this year’s Budget.

Moreover, by favouring the CCR over the CCB, the government has expanded the benefits received by higher income-earners at the expense of lower income-earners. In short, the Labor government’s policies have done little to alter the market environment of childcare or extend universal access.

Proposed reforms

Direct funding

Funding needs to be direct. If supply is the issue, than building centres and funding them is the solution; using mechanisms like rebates and subsidies is less direct and less efficient.

Regulation of the sector

Regulation which makes it easy for parents to choose quality care, rather than maximising inefficient and confusing choice in an artificial market.

Table 3. Redistributive Implications of CCB and CCR

Family Adjusted Taxable Income ($) CCB Received Per Week($) Out of Pocket Amount ($) CCR received per week ($)
30 000 114.00 56.00 16.80
50 000 112.00 88.00 26.40
70 000 73.54 126.46 37.94
100 000 24.15 52.76 52.76

* Calculations assume one child in Long Day Care (50 hours) costing $200 per week. CCB rates as of 2005.30

An agenda for reform

There are a few simple principles that can help to make public spending more efficient and equitable. These principles underpin the reforms proposed in the three areas we have discussed, but also apply more broadly.

1. Accountability

The first step to ensure that public programs are sustainable and offer value for money is to find out exactly what things cost. That might sound straightforward, but there are two accounting tricks that make it much more difficult. First, governments can reduce the cost to the Budget by restructuring a policy as a tax concession rather than a spending measure. The effect on the economy and the budget bottom line is the same, but it doesn’t show up on the official statistics. Second, governments can cut spending on services, passing increased costs on to individuals. Instead of paying through our taxes, we pay (often even more) in higher charges, but it looks like the government is being ‘responsible’.

Recognising the need for greater accountability, the Henry Tax Review31 proposed that the government release a ‘Tax and Transfer Analysis Statement’ each five years to report on the cost, efficiency and distributive effects of the tax and transfer system, including tax expenditures. This recommendation should be implemented. It would shine light on neglected public programs and hopefully inspire further research and public debate.

2. Make funding direct

The next step is for governments to more clearly match their funding models to what they actually want to achieve. Too often funding is designed to have the maximum short-term electoral effect, rather than the maximum effect on welfare and service provision. Research suggests that reducing the distance between the government as funder and the organisation delivering the service contains costs.

The most obvious example here is the private health insurance rebate. The policy aims to encourage people to use private hospitals. The goal is controversial, but even on its own terms the policy fails. Rather than funding private hospitals the government provides a subsidy to individuals, to purchase insurance, which then covers hospital stays. That is a complex and convoluted way to subsidise private hospitals, and the result is that only half of the money ever ends up supporting private hospital beds32. Indeed, if the government decided to simply provide a subsidy directly to the hospital for each service it delivered, the same effect could be achieved while saving more than $2 billion a year.

By funding insurance rather than hospitals the current scheme also subsidises gym memberships, dental work and administration costs that are not the main focus of the policy. By funding individuals, these subsidies tend to increase inflationary pressure and reduce the ability of governments to ensure good value for money. Often direct provision (as with public hospitals) is the most efficient alternative. But there are many ways of supporting greater choice while also reducing costs by funding services, not individuals.

3. Let people choose not to choose

People do not always want more choice. Recent developments in economics have shown that people’s ability and desire to choose is not infinite.33 Often having complex choices means that people simply fail to act, or make decisions they later regret. Competition and choice can be powerful forces to improve efficiency – but increased choice often just leads to confusion and to industries taking advantage of governments and consumers. The solution is to give people manageable choices, and to introduce public default options to allow people to opt-out.

Photo Credit: Alex E. Proimos, http://www.flickr.com/photos/proimos/4046053052/

Endnotes

  1. Australian Institute of Health and Welfare (2009) Australia’s Welfare, Canberra: Australian Government (accessed 22/05/2010) http://www.aihw.gov.au/publications/index.cfm/title/10872 :97
  2. Australian Government (2008) Budget Paper No.1. Canberra: Australian Government (accessed 22/05/2010) http://www.budget.gov.au/2009-10/content/bp1/html/index.htm :68
  3. AIHW, loc. cit
  4. ibid
  5. Australian Government (2009) Budget Paper No.1, Canberra: Australian Government (accessed 22/05/2010) http://www.budget.gov.au/2008-09/content/bp1/html/index.htm :23
  6. Nielson and Harris, “Chronology of Superannuation and Retirement Income in Australia”, (6 February 2008 updated 3 July 2008), Parliament of Australia, Parliamentary Library Background Note
  7. Treasury (2010) Tax Expenditures Statement 2009, Canberra: Australian Government: 4
  8. Australian Government (2009) Budget Paper No.1, loc. cit.
  9. Australian Government (2010) Stronger, Fairer, Simpler, Canberra: Australian Government (accessed 23/05/2010) http://www.futuretax.gov.au/pages/default.aspx
  10. Newman, G. (2010) ‘New superannuation funds soften pain’ The Australian, May 3 (accessed 22/05/2010) http://www.theaustralian.com.au/business/new-funds-soften-pain/story-e6frg8zx-1225861307940
  11. Australian Government (2010), Stronger, Fairer, Simpler, loc.cit
  12. Spies-Butcher, B. and A. Stebbing (2009) ‘Reforming Australia’s Hidden Welfare State: Tax Expenditures are Welfare for the Rich’, Occasional Paper No.8 Sydney: Centre for Policy Development.
  13. Shelter NSW (2010), ‘Housing Australia Factsheet: A quick guide to housing facts and figures’, National Shelter, available at http://www.shelter.org.au/archive/fly-factsheet-australia.pdf
  14. Steering Committee for the Review of Government Service Provision (2010), Report on Government Services 2010, Productivity Commission: Melbourne: 16.6
  15. Swan, W. & L. Tanner 2009, Updated Economic and Fiscal Outlook, February, Commonwealth of Australia: Canberra: 17
  16. Shelter NSW (2010), ‘Housing Australia Factsheet: A quick guide to housing facts and figures’, National Shelter, available at http://www.shelter.org.au/archive/fly-factsheet-australia.pdf
  17. Senate Select Committee on Housing Affordability in Australia (2008), A Good House is Hard to Find: Housing affordability in Australia, Final Report, Canberra: Commonwealth of Australia: 40
  18. Colebatch, T. (2010), ‘Negative gearing top tax break’, The Age, March 27.
  19. Hanegbi, R. (2002), ‘Negative Gearing: future directions’, Deakin Law Review, 7(2), 349-365.
  20. Productivity Commission (2004) First Home Ownership, Report No.28, Melbourne: xxv
  21. Keen, S. (2009), ‘Household debt: The final stage in an artificially extended Ponzi bubble’, Australian Economic Review, 42(3): 347-357.
  22. Henry, K. (2010) Australia’s Future Tax System: Final Report, Canberra: Australian Government (accessed 22/5/2010) http://taxreview.treasury.gov.au/content/Content.aspx?doc=html/pubs_reports.htm
  23. ibid.
  24. Brennan, D. (2008) ‘Reassembling the child care business’ Inside Story, 19 November (accessed 23/05/2010) http://inside.org.au/reassembling-the-child-care-business/
  25. Tiffen, R. (2010) ‘Lost in the Spin Cycle’, Inside Story, http://inside.org.au/lost-in-the-spin-cycle/
  26. Ellis, K. (2009) ‘The Future of ABC Learning’ Ministerial Statement 15 September (accessed 23/05/2010)
  27. Cox, E. (2008) ‘A Rather Too Conservative First Year’ InSight, 21 November (accessed 23/05/2010) http://cpd.org.au/2008/11/a-rather-too-conservative-first-year/
  28. ibid.
  29. Cox, E. (2007) CPD Road Test: The child care rebate, Sydney: Centre for Policy Development, 22 November (accessed 23/05/2010) http://cpd.org.au/article/cpd-road-test-child-care-rebate
  30. McIntosh, G. (2005), ‘The new child care tax rebate’, research note, no. 3, 2005-06, Parliament of Australia, Parliamentary Library, Canberra: 2
  31. Henry, K. (2010) Australia’s Future Tax System: Final Report: 722
  32. McAuley, I. (2005), ‘Private Health Insurance: still muddling through’, Agenda, 12(2), 159-178: 167.
  33. see Fuller, J. 2009, ‘Making bad decisions’, Heads, You Die: Bad decisions, choice architecture, and how to mitigate predictable irrationality, Per Capita, available online at < http://www.percapita.org.au/01_cms/details.asp?ID=215 >.

AUTHORS(S): Adam Stebbing and Ben Spies-Butcher

Sharing the luck

How to end social apartheid in Australian schools

8 Comments 28 June 2010

http://www.flickr.com/photos/pinksherbet/3387387075/

How our schools funding system is hurting students – and what to do about it

by Chris Bonnor

Imagine this letter from a suburban constituent to her local member in 2020:

“I’m writing because I can’t really find a secondary school for my son Jahred in Year 7 next year. The closest school is a church school but we’re not churchgoers. Anyway, we can’t afford fees like that. The closest public school was closed down in 2012. Another was made selective. There is a good school in the next suburb but it became one of those independent public schools a few years ago. They interviewed Jahred but now they say that they can’t cater for his special needs. There is a music academy four suburbs away but he is really better with his hands. Of course there is the comprehensive school near the shops but I don’t want him in with the wrong sort, if you know what I mean. Anyway, he doesn’t mix with many of the kids that go there. They’re not like us. Mum tells me that in her day there were plenty of good schools, and grand-dad grew up in the bush where all kids went to the local school. Everyone now talks about choice – but what choices do I have?”

It would be a sad letter, one which suggests almost a social and academic apartheid, separating the schools depicted. What is really worrying is that many Australians can write a letter like this right now.

Many Australian schools are not obliged to take all comers. Simply by charging fees school enrolments are inevitably sorted along social lines – and devices such as tests, interviews, scholarships and references act as additional discriminators. Selective schools, particularly in New South Wales, contribute to the growing social and academic divisions between one school and another. Even a “comprehensive” public school in a high demand area (that is, a high income area) has some capacity to pick and choose. There are enrolment procedures, rules and zones, but little gets between school principals and the intake of students they desire. In fact almost half our secondary schools have some say over who walks in through the school gate.

The flipside of consumer choice – where schools either actively or passively choose desirable students – is now a big feature of our education system. The end result is that we are seeing unprecedented social, academic and other differences in the enrolment profile of schools.

Fast facts: The widening gap

  • In 1996 there were around 13 low-income for every ten high-income students in our public school playgrounds. Ten years later there were 16 for every ten.1 The opposite trend occurred in private schools. This gap is increasing.

“Catholic schools are not educating most of our poor, especially at the primary level. 72 per cent of Catholic students from families with lowest third of family income attend Government infant/primary schools and only 19 per cent attend Catholic schools. At secondary level 63 per cent of the “poorest” Catholics attend Government secondary schools and 22 per cent attend Catholic secondary schools. Predominantly our schools now cater for the huge Australian middle class, which they helped create.”2

- Cardinal George Pell, Archbishop of Sydney, 28 September 2006

Research and commentary in this area highlights the role played by our increasingly dysfunctional federal system of government; a complex umbrella under which good intentions have been mixed with trade-offs and short term fixes – and the education portfolio attracts more than its fair share of ad hoc decisions and special deals.

Research also refers to the arguably unique way in which Australian private schools are funded from both private and public sources with relatively little government oversight or regulation. These schools compete against each other and also against the public schools which are dependent on state government finances and which, unlike private schools, are usually obliged to enrol all comers. It would be hard to come up with a better formula for generating divides between schools.

But as the letter from Jahred’s mum suggests, the public-private divide is not the whole story. Public education systems have created and cemented their own hierarchies. Selective schools have multiplied in New South Wales. The impact of creating greater autonomy for schools in Victoria has been well-researched.3 The most recent variation to inclusive public schooling is the creation of “Independent Public Schools” in Western Australia – something which has excited both Tony Abbott4 and Julia Gillard.5 In Stephen Lamb’s words:

“the school reforms driving the growing diversity in schools over the last decade have intensified the gaps between schools serving the rich and those serving the poor, gaps marked by growing differences in school size, student intake, resources and achievement.”6

We know and should be concerned about the high cost of low educational performance.7 International comparisons show that selecting children for separate and unequal schooling does not deliver improved learning outcomes for whole systems or countries.8 We also know much more about the social and economic costs and impacts of inequality.9 In the light of this how much confidence can we really have in our divided school system with its long underperforming tail?

Schools policy: the need for a new approach

Since 2007, the Labor government has been working hard to build a more comprehensive and integrated national framework for curriculum, assessment, reporting, teaching and infrastructure. It can point with justified pride to its plans and programs in funding much-needed improvements to school buildings and facilities, targeted funding, teacher quality, school leadership, vocational education and access to university, to name a few. The commitment to equity, especially for Indigenous young people, is especially welcome.

But we can’t continue to bolt even good policy onto a regressive school system. We need to reframe the education debate, while recognising that one third of the nation’s children are enrolled in private schools. Jane Caro and I attempted this in The Stupid Country.10 A number of ‘must read’ analyses have been written by Jack Keating11 and more recently by Lyndsay Connors and Jim McMorrow.12 These all show that the way out of our current predicament lies in revisiting how we provide and fund schools.

Fortunately, in 2010, the Government has finally commenced its long awaited Review of Funding for Schooling. In the context of an otherwise conservative reform agenda, only this review gives cause for hope that attention will be turned towards the deep structural and equity problems in Australian schooling.

The Discussion Paper and Draft Terms of Reference for the Review seems to be sounding the right notes. It constantly refers to all students, the need to determine principles, to learn from overseas models and the need for a fairer and more transparent system.13 It even refers to the review being “evidence-based” – an expression which quickly went missing after the initial excitement of the 2007 election. Even the composition of the expert panel leading the review provides grounds for cautious optimism.14 Done properly, the review and reform of schools funding can address the issues discussed in this chapter.

But even the best plans and intentions can be hijacked by commitments and promises to vested interests, which would pre-empt any serious review of this enduring and difficult aspect of the politics of education in Australia. We can only hope that the newly-elected Gillard Government will follow-through with this review, focus on the good principles already announced, and engage the community in debate around these fundamental issues: What sort of public education system do we want in Australia? What sort of society is our current system creating?

Review of school funding: Labor’s principles

“The guiding principle of the review of funding for schooling is that a funding system will support schools to raise the educational standards of all school students whilst reducing achievement gaps between students.

In reviewing school funding arrangements, the Australian Government aspires to an outcome which:

  • results in a fair and simple funding model that supports student attainment and distributes funding to where it is needed most, regardless of sector.
  • builds the strongest possible platform for financially sustainable long-term investment in schooling and improvements in educational outcomes beyond 2012.

Consequently, the Australian Government’s view is that the principles upon which any new model for school funding is developed should be based on simplicity, flexibility, stability, equity, value for money, transparency and best practice.”

Source: ‘Review of Funding for Schooling: Discussion Paper and Draft Terms of Reference’, Commonwealth of Australia 2010

Getting the focus right: Key issues in funding education

There has been an endless – but constantly recycled – debate about the merits or otherwise of public or private schools, and whether students in one system or the other should get more public funding. Media attention also intermittently focuses on the superficial labelling of good and bad schools encouraged by My School. However, the market principles underlying the current system of schools funding, that competition and choice creates quality for all, go unchallenged.

As we begin the second term of a Labor Government it is time to think long term, clarify goals and review policies, to ensure a strong alignment between principles, policies and the wider structural reforms needed to make these policies sustainable and successful. In the process we have to be driven by social justice concerns but also by the fact that greater equity and access to quality schooling, and improved educational outcomes, can deliver dividends in economic growth and competitiveness.

Issue #1: Supporting comprehensive public schools

Long ago Australia established a system of public schools premised on the belief that circumstances of birth, family and community should not determine who succeeds and who struggles. Quality public schools have always been at the centre of the successful Australian story. We need to reverse the long slow march away from a system in which most schools were inclusive, were rooted in their communities and which, in their 100-year heyday, significantly cut across social divides.

Strategy

The primary focus of the schools funding review must be on the schools that are open and accessible to all. This rests on one core principle: that every family deserves the choice of an excellent public school. Funding principles should reward schools, regardless of sector, which commit to inclusive enrolment practices.

Issue #2: Needs based funding to reduce the gaps

The main idea driving schools policy in Australia is the increasingly discredited belief that it is school competition and choice which creates quality for all.15 We promote this choice mainly by subsidising private schooling. But regardless of the merits of any individual schools, choice remains elusive for most people.

“the competitive use of individual choice, combined with selection and streaming and an increasing concentration of social geography, will stratify the opportunities available to students from different socio-economic backgrounds and undermine the performance of the system as a whole.”16

Tom Bentley, then Director of UK think-tank Demos, now one of Prime Minister Gillard’s top advisors

We are allocating scarce public resources – in many cases well above entitlement – to children whose level of achievement and access to quality learning is already well-supported. We increase the advantages for some while increasing the concentration of lower achieving children in disadvantaged schools. It is simply harder for all children to achieve in these circumstances.

Strategy

Good policy will identify the real drivers of quality and equitable schooling. It will ensure that public investment in schools allocates teachers and other resources according to the needs of all students for a quality education. It will acknowledge the diversity in school provision but, in common with most OECD countries, will ensure that this does not widen the opportunity and achievement gaps between children and between schools.

Issue #3: Rebuilding confidence with real transparency

The policies and strategies for transparency represented by the My School website don’t really pass close scrutiny. The information provided is not sufficient, accurate or meaningful. It drives invalid comparisons between schools, in turn feeding a poorly-informed language about success and failures, winners and losers.

Strategy

Schools should always provide as much information as possible to parents and the wider community, information which is validated by independent and frequent school reviews. There are no short cuts in this, least of all the publication of comparative school-by-school tables based on raw student test scores.

Independent appraisal and the development of schools in cooperation with each other, improves quality far more than anything achieved by competition. Schools which are not performing to expectations should be provided with support, but if needed must also make changes to leadership and practice in areas as diverse as classroom teaching and links with their community.

Issue #4: Building social capital

We need to recognise and rebuild the social and civic purpose of inclusive schools. Schools generate and sustain social capital; they are part of the glue which creates viable communities and underpins a healthy democracy. Good policy will encourage the role that inclusive schools play in creating community cohesion, harmony and development. While all schools work hard in civic and social justice programs, the loss of the essential bridging and linking work performed by inclusive local schools reduces the power of all schools to create connections across religious, racial and social class divides.

Strategy

Public funding must strongly support, as a priority, local schools which are open to all students. Schools which choose, by the use of various discriminators, not to serve all children and families should have a reduced entitlement to such funding. If we can do this we’ll achieve a much better balance between the private benefits schools provide for students and families and the wider public benefits of public funding – and we’ll accrue social and economic dividends from this improved balance.

Issue #5: Effective investment in schools

For years we have been under-investing in early childhood education and under-investing in ‘at risk’ students in disadvantaged schools and communities – while combining public and private funding to over-invest in children whose level of achievement is already high.

Investment in education should provide the best delivery for the dollar, supporting student growth and maximising student achievement. We should better resource those children and families for whom it will make the greatest difference. Good policy will also ensure that investment in schooling is efficient, providing complementary rather than wastefully competing services, as well as providing the resources and services which are proven to be effective.

“No arbitrary obstacles should prevent people from achieving those positions for which their talents fit them and which their values lead them to seek. Not birth, nationality, colour, religion, sex, nor any other irrelevant characteristic should determine the opportunities that are open to a person…”17

- Milton Friedman and Rose Friedman

Strategy

We need to achieve a pattern of investment in schooling which reflects known evidence, agreed targets and priorities. The huge capital investment in school infrastructure is welcome but it has been rolled out regardless of school size, sector or properly assessed need. Even more important than the much publicised issues of waste and efficiency, it may simply be compounding the equity problem. Even if the claimed benefits of the computer roll-out are realised, the opportunity cost of the “digital education revolution” really needs to be carefully considered.

Issue #6: Individual achievement and retention rates

Australia’s school achievement and retention rates vary considerably over time and from place-to-place, with a persistent level of student disengagement. Our response seems to be to import unproven solutions – such as narrowly focused testing of students and subsequent ranking of schools – from jurisdictions which are less highly regarded and where claims of success are seriously contested. It’s an odd strategy for a country where average student achievement ranks well in the world but where the underachieving tail, well-documented for some time in OECD reports,18 is doggedly resistant to a long parade of quasi-market reforms. 

The retention of students into their late teenage years, supported by the best possible teachers, is crucial to maximising student achievement. This would improve livelihoods for all school leavers and deliver economic dividends which would accrue to the whole nation.19

Strategy

Good policy will ensure that each school as far as possible will implement curriculum and teaching which caters for and engages all students. Rather than cutting off pathways for kids at the very time they grow and change, siphoning them into selective or trade schools, we must support proven programs which can re-engage those students who might leave school early, including alternative school structures.20

We need a national curriculum that meets the needs of all students, engaging them through to the time they leave.

Recommendations

1. Jack Keating’s National Reform Agenda

A good start for education reform would be the structural initiatives and projects included in Jack Keating’s 2009 proposals for a national reform agenda. Keating refers to curriculum and funding but also talks about the need for reframed goals and purposes, a common regulatory framework and a national quality agency. He calls for a specific focus on early childhood, the middle years and student pathways in the upper secondary years. Professor Keating has more recently added proposals for funding schools to meet the needs identified in his 2009 paper. He expands on the principles against which funding should be measured and considers the most effective means of distributing resources.21

2. Teachers are the key: Connors and McMorrow’s New Directions in School Funding

In their search for a funding model the expert panel should pay close attention to Lyndsay Connors and Jim McMorrows’ New Directions in School Funding – a Proposed Model.22

In the words of the authors, the directions proposed in their report would:

  • put education back into schools funding
  • provide a more educationally explicit, rational and ethical basis for schools funding
  • establish clear lines of responsibility
  • align government and non-government schools funding
  • make quality teaching the centrepiece of schools funding

In common with others they argue that there is currently no rational link between the amount invested publicly in all our schools and the work we expect of them. What they propose is deceptively simple: teachers are the most significant key to quality learning, so the provision of teachers to schools in Australia must be the mechanism by which governments can achieve quality with equity. Connors and McMorrow show that governments are already providing the costs of teacher salaries and related expenses in Australia. The distribution of this resource means that the teaching workload of schools needs to be assessed. This workload will vary according to the range, intensity and complexity of needs arising from the students they enrol and the vastly differing circumstances in which they operate – something which is at the core of the problems described in this chapter.

Under Connors and McMorrow’s model, schools with similar workloads and resource needs would receive a similar level of teaching resources, regardless of sector. Schools with the greatest gap between their current level of teaching resources and their target standard would receive the greatest level and rate of public funding increase.

Like all models it has to be tested and will need modifications and improvements. But at least they propose a manageable transition to needs-based funding, something we have walked away from over the last 15 years.

If implemented their model will address most of the issues raised in this chapter in a way which may even gain grudging acceptance from the very disparate interests in Australian school education. It will help to create comparable opportunities in all schools and most strongly support those schools which meet an obligation to be inclusive. Only in these ways can we recreate the social and civic purpose of schools and put quality, equity and the learning needs of children at the heart of our school system.

Conclusion

Perhaps the best way to conclude is to again think about Jahred and his mum. Unless things change Jahred’s situation really will epitomise an increasingly regressive framework of schools. He wouldn’t have any choice: he would go to the increasingly marginalised school near the shops. His classmates would be the socio-economically deprived, the strugglers; the only role models within sight will be the teachers trying to do the very best for Jahred against the odds. He may join that persistent and growing tail of underachievers. His country would more or less support him whatever he does – in school, in transition, in some work and even in jail. But Jahred – and the rest of us – would all have lost an opportunity to do something better.

Photo Credit: D Sharon Pruitt, http://www.flickr.com/photos/pinksherbet/3387387075/

Endnotes

  1. Preston, B.  in Bonnor, C. (ed) (2008) ‘The unintended consequences of government policies & the historic power of rent-seekers protecting positional goods’, 2020 School Education Summit – the public good and education of children.
  2. Pell, G. (2006) Keynote address to the National Catholic Education Conference, Sydney. Available online:  http://www.sydney.catholic.org.au/people/archbishop/addresses/2006/2006928_17.shtml
  3. Lamb, S. in Teese, R., Lamb, S. and Duru-Bellat, M. (eds) (2007) ‘School Reform and Inequality in Urban Australia – A case of Residualising the Poor’, International Studies in Educational Inequality, Theory and Policy: Volume 3 – Inequality: Educational Theory and Public Policy, Netherlands, Springer.
  4. ABC News (2010) ‘Abbott backs WA school system’. Available online:  http://www.abc.net.au/news/stories/2010/02/15/2820482.htm
  5. Australia.to World News (2010) ‘Laurie Oakes Today Weekend Interview with Julia Gillard, Deputy Prime Minister’. Available online: http://www.australia.to/2010/index.php?option=com_content&view=article&id=2919:laurie-oakes-today-weekend-interview-with-julia-gillard-deputy-prime-minister&catid=101:australian-news&Itemid=167
  6. Lamb, S., op. cit.
  7. Organisation for Economic Cooperation and Development (2006) ‘The High Cost of Low Educational Performance - The Long-Run Economic Impact of Improving PISA Outcomes’. Available online: http://www.oecd.org/document/58/0,3343,en_32252351_32236191_44417722_1_1_1_1,00.html
  8. McGaw, B. (2007) ‘International benchmarking of Australian schools’, Speech delivered to the Victorian Curriculum and Assessment Authority Branch Conference Day, December 10 2007. Available online: http://www.sisr.net/apo/mcgaw.pdf. For further work on PISA data see Schneeweis, N. and Winter-Ebmer, R. (2005) Peer effects in Austrian schools, Working Paper No. 0502, Department of Economics, Johannes Kepler University of Linz, Austria, p.2. See also Lamb, S. et. al. (2004) School Performance in Australia: results from analyses of school effectiveness, Centre for Post-compulsory Education and Lifelong Learning, Melbourne, Victorian Department of Premier and Cabinet. Available online: http://www.dpc.vic.gov.au/CA256D800027B102/Lookup/SchoolPerformanceinAustralia/$file/SHAREDFUTURE040826%20-%20school%20performance%20in%20australia%20FINAL.pdf
  9. The Equality Trust (2010) The Evidence. Available online: http://www.equalitytrust.org.uk/why/evidence
  10. Bonnor, C. and Caro, J. (2007) The Stupid Country, Sydney, UNSW Press.
  11. Keating, J. (2009) A new federalism in Australian education: A proposal for a national reform agenda, the Education Foundation and R.E. Ross Trust. Available online: http://www.fya.org.au/wp-content/uploads/2009/05/fya_newfederalism_fullreport2.pdf
  12. Connors, L. and McMorrow, J. (2010) New Directions in Schools Funding, The University of Sydney Faculty of Education and Social Work. Available online: http://sydney.edu.au/education_social_work/professional_learning/resources/papers/ConnorsL_&_McMorrowJ_10_Executive_Summary.pdf
  13. Australian Department of Education, Employment and Workplace Relations (2010) ‘Review of Funding for Schooling’. Available online: http://www.deewr.gov.au/Schooling/Programs/Pages/FundingReview.aspx
  14. Australian Department of Education, Employment and Workplace Relations (2010) ‘Review of Funding for Schooling – Expert Panel’. Available online: http://www.deewr.gov.au/Schooling/Programs/Pages/FundingReviewExpertPanel.aspx
  15. Ravitch, D. in Dillon, S. (2010) ‘Scholar’s School Reform U-Turn Shakes Up Debate’, The New York Times. Available online:  http://www.nytimes.com/2010/03/03/education/03ravitch.html?_r=1
  16. Bentley, T. (2004) A fair go: public value and diversity in education, London, Demos.
  17. Friedman, M. and Friedman, R. (1980) Free to Choose, New York, Harcourt.
  18. Organisation for Economic Cooperation and Development (2003) Learning for tomorrow’s world – first results from PISA 2003. Available online: http://www.oecd.org/dataoecd/1/60/34002216.pdf
  19. Rorris, A. in Bonnor, C. (ed) (2008) ‘Investment in Australian Schools Somewhere between the virtuous and the vicious’, 2020 School Education Summit – the public good and the education of children.
  20. For an excellent example of creativity in structuring school learning, see Big Picture Education Australia. In these schools student learning is built around their passions and in tandem with internship in work and mentoring. Available online:  www.bigpicture.org.au
  21. Keating, J. (2010) Resourcing schools in Australia – a proposal for the restructure of public funds, Foundation for Young Australians. Available online: http://www.fya.org.au/wp-content/uploads/2010/07/ResourcingSchoolsInAustralia_by_Prof_JackKeating1.pdf
  22. Connors, L. and McMorrow, J., op. cit.

AUTHORS(S): Chris Bonnor

Sharing the luck

Getting health policy into shape

7 Comments 24 June 2010

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Australia can get healthier by using resources wisely and making smarter choices

by Jennifer Doggett

Introduction

In 2007, the Labor Government inherited a health system long overdue for reform. Australians are living longer than we did a generation ago, partly due to medical advances such as the ability to identify and treat early-stage heart disease. However, while we’ve been winning the battle against many acute, short term illnesses, many chronic conditions such as diabetes, have been on the rise. These conditions require longer-term and more complex care, often involving multiple health care providers. Trying to get our current health system to provide this type of care is like using a typewriter to twitter.

This chapter provides an overview of the state of Australian health policy, its challenges, and recommendations for specific health reforms.

The story so far

Australia’s health system was designed for another era and another generation of Australians. In fact, neither of the two major federal health programs – Medicare and the Pharmaceutical Benefits Scheme (PBS) – have changed significantly since they were set up (in the 1940s for the PBS and the early 1980s for Medicare). Along with the need to update these programs, there are other drivers for reform, such as the historical unfairness of a system in which some groups with the poorest health status have struggled to receive the care they need. These groups include people with chronic conditions, those living in rural and remote communities and Indigenous Australians. The need to change Australia’s inflexible and archaic health workforce practices has also added to the pressure for reform.

Many attempts to solve these problems have been held back by structural barriers to change, such as the historical division in funding and service delivery responsibilities between the Commonwealth and State/Territory governments. This split, which makes little policy or financial sense, has led to gaps, duplications and cost-shifting across different levels of government. Confusing governance arrangements have also reduced transparency and accountability in all areas of health care. These barriers have greatly hindered our health system from adapting to meet our changing health care needs.

Fast facts: Where does health funding come from in Australia?

  • Federal Government 43%
  • State/Territory governments 25%
  • Direct consumer payments 17%
  • Private health insurance 7%
Source: Australian Institute of Health and Welfare: Australia’s Health 2008

The reform agenda

In 2007, the Labor Government was elected on a platform of health reform and made a pre-election commitment to address the structural problems within the health system. Soon after taking office, the Government instigated a number of inquiries and commissions 1 into all areas of the health system 2, including an overarching National Health and Hospitals Reform Commission (NHHRC) 3. A dizzying array of reports and strategies was produced via these processes, which recommended major changes to the funding and delivery of health care in Australia.

The Government has responded to these recommendations and announced a reform agenda to fundamentally change the way health care is funded and delivered in Australia.

The positives

Overall, there are many positives in the Government’s reform agenda. These include:

  • An increased focus on prevention – aiming to reduce the rates of chronic disease and promote healthy ageing in the community.
  • A re-orientation of the health system around primary care – aiming to reduce overall health care costs and increase equity within the health system.
  • Setting national performance standards – aiming to drive quality improvements and empower consumers to make more informed health care choices.
  • Rejecting Denticare and Medicare Select – NHHRC proposals which would have increased costs without delivering consumer benefits.
  • Changing governance structures – aiming to provide greater transparency and accountability and increase community confidence in the health system.

The gaps

However, there remain a number of gaps in the Government’s approach to reform which, unless addressed, will undermine the overall effectiveness of the proposed changes. These include:

  • The lack of an underlying philosophy or set of principles – over the past few years of inquiries and public hearings, the community was not consulted about the principles that should guide our health system. This makes it difficult to assess whether or not the reforms reflect community values and expectations.
  • Continuing confusion over governance issues – there are still no clear lines of accountability between federal and state/territory governments, Cabinet, ministers, boards, officials and clinicians.
  • The improvements in transparency are only partial – a missed opportunity to use new technologies (Web 2.0) to drive community engagement, accountability and a focus on outcomes rather than inputs.
  • No single pool of funding for health care – against the advice of almost every health economist, the funding silos remain.
  • No systematic approach to consumer payments – while the reforms make major changes to the ways in which governments fund health care, they do not address the problems inherent in our current approach to direct consumer payments.
  • Failure to address the problems with dental, Indigenous and mental health care – these three key areas, currently failing the community, have been largely ignored by the reforms.
  • Continuing to support anti-competitive practices and pandering to special interest groups – medical professional and pharmacy groups, the pharmaceutical and private health insurance industries, and state bureaucracies, continue to receive unwarranted subsidies and special consideration, contrary to community interests.
  • Maintaining current workforce boundaries – the reforms do not address the archaic workforce structure and rigid professional boundaries of our current health workforce.
  • Failing to transform Medicare into an active purchaser of health services which delivers greater benefits to consumers.
  • Ongoing funding for the Private Health Insurance (PHI) rebate – a $4.5 billion black hole in the health budget which has been left alone by the reforms.

Of course, well-designed reforms are only part of the story – implementation is just as important, as became clear during the previous Rudd term of government. The barriers to successful implementation were strong, due to an unfavourable Senate (relevant for some measures which require legislative change), a Federal Health Department with a poor record of driving health system reform and ongoing pressure to back down on some measures from interest groups with a vested interest in maintaining the status quo. The newly-elected Gillard government must identify entrenched cultures and recognise the need for change management processes throughout the health system if it is to surmount these challenges.

Mythbuster: Australia’s health system is fairer than most? Not for some

A 2008 Commonwealth Fund[1] survey of chronically ill adults in Australia, Canada, France, Germany, the Netherlands, New Zealand, the United Kingdom, and the United States found that over a third (36 per cent) of Australians with chronic conditions reported problems with accessing health care due to cost. This was higher than participants from any other country, apart from the US.

Source:  Schoen, C., Osborn, R., How, S.K.H., Doty, M.M., and Peugh, J. (2008) In Chronic Condition: Experiences of Patients with Complex Health Care Needs, in Eight Countries, Health Affairs November 2008.

Policy ideas

Idea #1 – Health credit cards and a single safety-net

a) Addressing consumer payments

Consumer payments are a major gap in the government’s health reforms. The reforms fail to deal with direct consumer payments for health care, despite the fact that these payments make up the third largest source of health funding in Australia and influence both how consumers access health care and which goods and services they access. The current ad hoc system of co-payments is inefficient, unfair and often does not reflect the actual cost of health care to the community.

There is strong evidence that consumer payments are causing financial hardship among some groups of consumers and restricting their access to cost-effective forms of health care. The safety-nets put in place to address these inequities are themselves complex and difficult for consumers to understand. They often do not target those most in need and also create perverse incentives to use less efficient forms of care. For example, someone with a sports injury may pay more for a course of physiotherapy treatment than they will for anti-inflammatory and pain relief medication – even when the physiotherapy treatment is more cost-effective.

A better approach to consumer payments for health services would be to give all consumers a ‘health credit card’ to pay for health care without upfront payments.

A single health safety-net should also be created to cover medical, dental, pharmaceutical and allied health care and target consumers who have difficulty affording health care. These two strategies would significantly improve both the fairness and efficiency of our health system.

b) How it works

The federal government issues all consumers with a health credit card to pay for all health goods and services with no cash upfront. The government assumes responsibility for paying providers the full amount of their fees for all health goods and services paid for by the health credit card. The government deducts any applicable subsidies (e.g. Medicare rebates) and sends the consumer a consolidated bill for the outstanding gap amounts.

Consumers have the option of making one payment for the total amount of all consolidated out-of-pocket costs for the given period or paying in instalments (similar to credit card payments) with minimal or no interest. Consumers are required to make a minimum monthly payment but the amount of this payment would be indexed to consumers’ ability to pay, and would be capped at a pre-determined level (for example 10 per cent of after-tax income per annum), so that no consumers would face financial hardship due to their health and medical bills. This would ensure that no consumer faces financial barriers to accessing health care and would create efficiencies by shifting complex isolated administrative processes from consumers and providers to a more streamlined process undertaken centrally by a government agency.

How it works: example

Lucy injures her leg skiing and requires treatment from a number of private health care providers, including a GP, specialist physician, exercise physiologist and osteopath. In addition to this, she requires prescription pain relief medication, has a number of x-rays and uses an ambulance service. The total cost of her care for the accident is over $3,000. She pays for all these goods and services with her health credit card with no up-front payment. This means that she can access the care she needs immediately, despite not having sufficient funds available. At the end of the month she receives a consolidated bill for the total out-of-pocket costs for her treatment of $600. As Lucy is a student on a low income she is able to pay off this debt in low monthly instalments of $80.

Mythbuster: Medicare means that we pay for less of our health care than people in other countries, right?

Actually, Australians contribute more to their own health care expenses than do citizens of many other countries, including the UK, Japan, Germany, France and the Netherlands. Even Americans, though they pay more overall than Australians for their health care, contribute only 13 per cent of their total health funding through direct payments (compared with over 17 per cent for Australians). [1]

Source: Organisation for Economic Cooperation and Development Health Data 2008.

Idea #2 – Regional health authorities and citizen juries

a) Addressing the distribution of resources

Australia’s current health funding system distributes resources primarily based on the location of providers rather than the needs of communities. This has resulted in an unequal allocation of Medicare and PBS funds, Medicare Safety Net funds, and the take-up of public subsidies for private health insurance across the population.

The allocation of resources differs markedly according to geographic location and often the people who need health care the most receive the least. People in large capital cities receive 23 per cent more combined Medicare and PBS funding than those in rural or remote areas, despite the fact that they are healthier.

Fast facts: where is health spending most needed?
Major cities
Regional (outer)
Remote
Very remote
Life expectancy at birth (males) 79 77 77 72
Life expectancy at birth (females) 84 83 82 78
Source: Australia’s Health 2008 AIHW

Redistributing funds to regions based on need would address the current imbalance by targeting resources to the areas that are currently most neglected. The Labor reforms provide some scope for the regionalisation of health services through the establishment of Medicare Locals (MLs), regional primary care organisations which will be responsible for some population health functions.

Citizens’ juries are a form of participatory democracy which involves selecting a random sample of the relevant population and asking them to deliberate, as citizens, on issues such as how health resources should be allocated 4. The process involves giving them good information on the issues for debate; encouraging them to question experts to clarify that information or seek more information; and then giving them time to reflect and to make recommendations on the best use of health resources.

Using citizens juries to influence priorities for funding in each region would enhance consumer and citizen input into the health system and increase accountability for health funding.

b) How it works

Medicare Locals would be given a set budget for providing all health care in their regions. Budgets would come from a national pool of funds created by combining all current health funding, from federal, state/territory and local government sources. This would be distributed equitably by a new national agency on the basis of evidence about health care needs. Publicly available information on local health needs and health spending (regularly collected and updated in accordance with national standards) would inform decisions by Medicare Locals about the appropriate allocation of services and resources in that region.

However, under the federal government’s current reform agenda, Medicare Locals will provide only primary care services and have a very limited budget-holding role in areas such as after-hours care. They will take on responsibility for services such as health promotion and some chronic care packages but the majority of primary care will continue to be funded via MBS/PBS budgets. This means that Medicare Locals will not have the capacity to address the structural unfairness of the way we allocate health resources.

By strengthening Medicare Locals, giving them total responsibility for the health care needs of a defined population, they would have a genuine opportunity to address the geographical inequities in our current health funding system. This would also improve clinical co-ordination, data collection, health service planning, and the accountability and efficiency of health resource allocation.

Each Medicare Local would be required to establish a citizens’ jury to provide advice on the community’s priorities for resources allocation within the region and its underlying values for the delivery of health care. Citizens juries would not have a decision-making function or replace elected and appointed officials in Medicare Locals. However, they would provide these officials with information about the principles that the citizens believe should underpin their health services and on important issues such as resource allocation and competing priorities.

How it works: example

A Medicare Local is established in the Mallee region in North West Victoria. It is allocated a budget with which it needs to provide health care for its citizens. In order to determine principles for the provision of health care and priorities for funding, a Citizen’s Jury is established comprising 15 community members with a mix of age, gender, socio-economic status and ethnicity. The jury meets several times and is given information by local services and experts about the health status of the community, the cost of different forms of health care and the potential for health gains. The Jury determines values and principles for the allocation of health care resources which include fairness, efficiency and transparency. In terms of funding priorities, the Jury advises that a greater emphasis be placed on prevention, including addressing the social determinants of health. This advice is provided to the ML which undertakes to report back to the Jury on how its views have been reflected in its approach to health service provision. The ML then develops a plan for meeting the health care needs of the region in the context of the community’s values and priorities. This includes reallocating funds from current acute care programs to Indigenous health, mental health and health promotion services.

Idea #3 – Consumer controlled health budgets for people with chronic conditions

a) Problem: poor chronic disease management

One of the major challenges facing the Australian health system is to effectively manage the care of people with chronic illnesses. Caring for someone with a chronic condition requires a higher level of coordination and management compared with the care required for an acute health problem.

Chronic illnesses persist over time and often require care involving a mix of services and providers including, often, non-medical forms of care such as home-help, performed by non-professionals or family. The treatment and support options for people with chronic conditions are not always straightforward and may vary considerably depending upon individual preferences and circumstances.

Our major health programs, such as Medicare, have been developed for a community with predominantly acute care needs. They tend to be administratively complex and inflexible and are not well designed to meet the complex and varying needs of people with chronic illnesses. A traditional government program structure cannot operate without being able to define the range of services relevant for each condition in advance and to anticipate the varying needs of consumers with chronic conditions. The result is that people with complex care needs often end up making choices dictated by what fits the system rather than what is best suited to them. The system puts consumers in a passive and disempowering position, contributing to a poorer quality of life.

Consumers can be given greater flexibility and control over their care by giving consumers (or their carers) greater control over their care budgets. It would also help them become more engaged in their care and to obtain more individualised services which better meet their needs, providing incentives for the efficient use of health resources and the development of innovative strategies. 5

b) How it works

People with chronic illnesses whose needs are not being met by current services would be able to apply for a consumer-controlled health budget. When a budget is allocated, based on current cost of services, a plan would be developed by the consumer, together with a care coordinator (for instance, a GP or a social worker). This plan would detail options for allocating the budget, care goals and outcomes. The consumer (or carer) would then be able to allocate the resources as they wish, within guidelines, as long as they contribute towards meeting the goals set. The goals and outcomes would be regularly reviewed by the care coordinator, in conjunction with the consumer (and carer). Clearly, it would also be important to ensure that consumers (and/or their carers) were willing and able to take on the additional tasks and responsibilities required to manage their own budgets. For some consumers the potential benefits may not outweigh the effort involved in taking on this role and they should be entitled to receive high quality care managed in the current manner. It is also important to recognise and put into place mechanisms to avoid the potential for exploitation of consumers, in particular those who may be more vulnerable due to issues such as cognitive impairment, by carers, family members or service providers who may seek to benefit personally from greater control over a health budget at the expense of the consumer.

How it works: example

Paul and Felicity have a six year-old son with developmental delay and challenging behaviours. They are entitled to respite care for six hours a week however have had problems finding a regular carer from the government’s approved list. Their preferred carer is Felicity’s mother, however, she lives interstate. Currently they cannot use their respite care budget to pay Felicity’s mother’s travel costs. However, with a consumer-controlled health budget, Paul and Felicity can spend their budget for respite care on a monthly airfare for her to come and look after their son one weekend a month while they go away.

Quick wins: Three fixes in three minutes

Combining pragmatic politics and progressive policies

If major health system reform is all too hard, here are three practical solutions to long-standing problems with our health system which successive governments have failed to address.  They can all be implemented without major structural changes and with minimal political risk.

Quick win #1 – Deal with the doctor dilemma

The problem: Too many doctors in some areas and not enough in others. For example, there are an estimated 335 doctors per 100,000 population in major cities and 148 in outer regional areas. 6

One reason for this is that the Government restricts the overall number of provider numbers (allowing doctors to provide Medicare-subsidised services) but is unable to control where doctors practice. This means doctors congregate in areas where they live, such as leafy green suburbs in major cities. This leaves many communities with a doctor shortage, in particular in rural, remote and outer-urban areas.

Governments have previously been reluctant to attach provider numbers to specific areas (which would greatly improve workforce planning) as the medical profession has argued that this would violate a clause in the Australian Constitution prohibiting civil conscription for doctors (and dentists). Other methods employed by governments to attract doctors to areas of need (such as bonuses for working in rural areas) are expensive and have only limited effectiveness.

The politics: The Government needs to juggle the needs of communities with doctor shortages with the political and public relations muscle of the Australian Medical Association (AMA) which vigorously opposes any restrictions on where doctors can practice.

The solution: Rather than tying new provider numbers to areas of workforce shortage (thus effectively forcing doctors to work in specific areas), the Government could simply restrict new provider numbers in the small number of areas of over-supply. This is a less coercive measure than compelling doctors to practice in specific areas (doctors retain the freedom to practice wherever they like, except in areas of over-supply) and therefore less likely to be opposed by the AMA or interpreted as comprising civil conscription. The result would be a more equitable allocation of the medical workforce without the need for increasingly high subsidies for doctors to work in areas of need.

How it works: Have a condition attached prohibiting the doctor from working in areas of demonstrated over-supply. Many provider numbers (for example those allocated to overseas-trained doctors) already have conditions attached to them so this would simply be an extension of the current approach to managing medical workforce supply.

Winners: Communities currently under-supplied by doctors. This includes almost everywhere apart from affluent inner-city areas.

Losers: Newly qualifying doctors wishing to practice in areas of over-supply.

Quick win #2 – Re-hash the rebate

The problem: A costly and inefficient rebate for private health insurance which costs more every year and delivers very little in terms of increased access to health care.

The politics: The rebate is generally agreed by health economists and stakeholders to be a public policy disaster. However, as much as many people resent being forced into taking out PHI, the rebate is seen as money in their pockets and removing it may cause a voter backlash.

The solution: Give private health insurance subsidies directly to consumers to spend on their choice of health care.

How it works: The funds currently going into the PHI rebate – approximately $4.5 billion per year – would be redistributed to low and middle-income households to spend on the health care of their choice. This would provide approximately $600 a year for each household earning less than $200,000 a year (this is based on 2007/08 figures from the Australian Bureau of Statistics publication Household Income and Income Distribution, published in 2009). These funds could be used to pay directly for health care services and products such as medical, dental, allied health and hospital costs, medicines and medical devices. It may also be used to purchase private health insurance. The subsidy could be used to pay for part or all of the health care product or service purchased. Any funds not used in one year would be saved and added to the additional contributions the next year so households would be able to build up a health fund over time, if they wished to.

The funds could be accessed via the health credit card (as proposed above). Alternatively, they could be linked to the tax or social security system or Medicare/PBS cards.

How it works: example

With three small children, Beth and Evan have frequent health care expenses but because they are living on one income, they can’t afford private health insurance premiums (even with the subsidies). Mostly, they struggle to even afford the gap payments for GP visits and medicines. Currently, they gain nothing from the PHI rebate but under this system would be able to use their subsidy to pay for the GP and essential medicines.

Winners: Consumers who would have greater choice in how they spend their health care subsidy.

Losers: 1) Private health funds would lose the current guaranteed subsidy (although if they are providing consumers with a useful service they might not lose members); 2) People on high incomes who currently receive the PHI rebate.

Quick win #3 – Reduce adverse reactions: a MedicinesWiki

The problem: Adverse reactions to medicines are a common – and often avoidable – problem within our health system. Over ten per cent of general practice patients report experiencing an adverse drug event (ADE) in the past six months 7 and overall it is estimated that more than 1.5 million Australians suffer an adverse event from medicines each year resulting in at least 400,000 visits to general practitioners and 140,000 hospital admissions. 8

Currently, we are not using the collective knowledge and experience of consumers to improve the safety and quality of medicine use in the community. Changing the way in which consumers can access and share information about their medicines would help improve the quality use of medicines and reduce the current high rate of ADEs.

With the trend towards consumers taking a greater role in managing their own health, it is important that they have the information, support and tools to use medicines safely and appropriately. This needs to involve consumers actively sharing information with others in a collaborative and interactive environment. There is also the potential for consumers to play a greater role in monitoring the performance of new medicines on the market through providing opportunities for them to report suspected ADEs and other side-effects. We need a new model of engaging consumers in promoting quality medicine use and reducing ADEs.

The politics: Both pharmacists and the pharmaceutical industry have previously resisted moves to provide consumers with more information about medicines.

The solution: A MedicinesWiki 9 would provide a single point of contact for consumers accessing information about their medicines and reporting ADEs. This would enable consumers to obtain information about their medicines and provide an interactive source of information from consumers on their experiences in taking the drug.

How it works: The Government would establish and host a MedicinesWiki and actively seek consumer contributions. The Wiki would contain information about medicines (similar to Consumer Medicine Information) as well as provide opportunities for consumers to contribute their experiences of medicines and to ask questions. Over time, the Wiki would become a source of information on medicines for consumers and for health professionals and regulatory bodies interested in identifying problems with medicine use.

Winners: Consumers, particularly those with chronic conditions.

Losers: None, although some pharmacists and doctors may see this as reducing their authority.

So crazy it just might work…

Prediction markets for health care

Choices about medical treatment can be some of the most important decisions we ever have to make. However, in our current model of health care, consumers typically get only one opinion on diagnosis and treatment options from their doctor. In some cases consumers may seek a second opinion but it is very rare for consumers to seek any additional views, partly because it is so time- and resource-intensive. Given evidence that there is considerable variation in clinical practices among doctors, this model has significant limitations. Where there is clinical variation, not all the experts can be right.

A better approach would give consumers facing potentially life-changing decisions access to the most comprehensive information possible. This is difficult within our current model of medical practice as relevant knowledge is spread among large numbers of people and consulting them individually is not practical.

One solution is prediction markets. Prediction markets provide one mechanism for cost-effectively capturing the knowledge held by a large number of individuals. They work as a betting exchange where people are able to bet on the outcome of a specific event. This creates incentives for individuals with knowledge of a particular issue to participate 10.

In practice, prediction markets have proven to be more successful in predicting outcomes than consultation with experts. Companies such as Google use this mechanism as part of their corporate planning processes. Setting up a prediction market for health care would give consumers the opportunity of accessing knowledge from potentially hundreds or thousands of doctors and using this to inform their health care choices.

How it works: Example

Rani has been diagnosed with a melanoma on her back. She has received advice from two different specialists on treatment options. This advice differs according to the recommended margins of the incision and the follow-up treatment. Like many treatment options, these choices involve balancing benefits and risks and neither choice is clear cut. Rani would like to obtain information from a broader range of doctors with expertise in this area. Via a prediction market she asks doctors to bet on the chances that her cancer will recur within a defined timeframe given different treatment scenarios. Doctors are then able to bet on the outcome of different scenarios and those who turn out to make correct predictions benefit financially. Rani is able to use the information obtained via the prediction market to inform her choice of treatment.

Conclusion

In its first term in office, the Labor Government did more to progress health reform than the previous government managed in four consecutive terms. It tackled some of the most important structural barriers to reform and managed to gain COAG’s agreement to major funding and governance changes.

However, the failure of the government to articulate the principles underpinning the proposed changes means that the reform agenda lacks coherence and a clear link with community values. Overall, the reforms concentrate on the funders of health care and ignore important consumer issues, including co-payments for health services, and fail to address key areas requiring reform, such as health workforce practices and the need for a more equitable distribution of health resources. The Rudd-Gillard government also left some glaring policy failures of the Howard era untouched, such as the private health insurance rebate.

The challenge for this new electoral term will be for the minority Gillard Government to deliver on the promises of reform while addressing the gaps in the current agenda. Tackling the vested interests of professional and industry groups will be the key to driving reforms in these areas. Ensuring consumers and consumer interests are at the centre of all reform efforts will be essential if the next three years are to result in real improvements in health care rather than simply administrative changes which shift costs from governments to consumers.


Photo Credit: Selma Broeder, http://www.flickr.com/photos/selma90/3675162262/

Endnotes

  1. These included: the National Primary Care Taskforce; the National Health and Hospitals Reform Commission; the Preventative Health Care Taskforce and COAG processes.
  2. Although some important issues, such as the private health insurance rebate, were excluded from these inquiry and consultation processes.
  3. National Health and Hospitals Reform Commission (2009) A healthier future for all Australians – National Health & Hospitals Reform Commission Final Report June 2009. Available online: www.yourhealth.gov.au/internet/yourhealth/publishing.nsf/Content/nhhrc-report
  4. More information on citizens’ juries, including a free ebook on how they work in practice, can be obtained from www.gavinmooney.com
  5. The National Health Service in the UK is currently trialing a similar model (called personal health budgets). More information about this trial can be found at http://www.dhcarenetworks.org.uk/PHBLN/
  6. Australian Institute of Health and Welfare (2008) Rural, regional and remote health: indicators of health system performance. Available online: http://www.aihw.gov.au/publications/phe/rrrh-ihsp/rrrh-ihsp.pdf
  7. Miller, G.C., Britt, H.C. and Valenti, L. (2006) ‘Adverse drug events in general practice patients in Australia’, Medical Journal of Australia, 184 (7): 321-324.
  8. Roughhead, E.E., Lexchin J. (2006) ‘Adverse Drug Events: counting is not enough, action is needed’, Medical Journal of Australia, 184 (7): 315-6.
  9. Wikis are being increasingly used in other areas of health and medicine. An example of a Wiki on Diabetes is available at http://diabetes.wikia.com/wiki/Diabetes_Wiki
  10. One useful introduction to the features of prediction markets is: Watkins, J.H. (2007) ‘Prediction Markets as an Aggregation Mechanism for Collective Intelligence’, Proceedings of 2007 UCLA Lake Arrowhead Human Complex Systems Conference, Lake Arrowhead, California. Available online: http://hcs.ucla.edu/lake-arrowhead-2007/Paper10_Watkins.pdf

AUTHORS(S): Jennifer Doggett

More Than Luck | Edited by Mark Davis and Miriam Lyons

Introduction

3 Comments 02 June 2010

Download the whole book as a PDF.

What use is politics? It’s a question many Australians began to ask in the lead-up to the 2010 election as the Rudd and then the Gillard government ditched what seemed like a policy a day in a bid to lighten their electoral baggage. The home insulation scheme; increased childcare places; the Carbon Pollution Reduction Scheme; the besieged mining tax; a humane approach to asylum seekers: all went out the door or were heavily scaled back. It was as if the government stood for nought except getting re-elected. What was the point, many wondered, of all the grassroots work, of all the sweat that it took to get rid of the Howard government, when its replacement was so unwilling to stand up for the people and the issues that put it there?

Predictably Labor cried foul, citing lack of support for its schemes from an obstructive opposition and, in the case of the carbon pollution reduction scheme, the Greens. But it didn’t help the government’s credibility that this showpiece scheme, their response to what Rudd had called the ‘political and moral challenge of our times’, was weak in the first place. With their proposed handouts to the energy industry, the government stood accused of pandering to vested interests. The scheme was so similar to that offered by the previous government that it seemed that no matter who you voted for, the same sectional groups would retain their hold on power.

Some say we get the governments we deserve, and to an extent this is true. When we stop paying attention to politics, we make it easier for politicians to stop paying attention to us. If we vote for the political equivalent of the crazy warehouse guy (‘All the services you want at half the price!! Why pay more?’), we shouldn’t be surprised when we get policies built to fall apart as soon as the press conference is over.

Yet it is also true that governments get the citizens they deserve. If you treat elections as a marketing campaign instead of a genuine contest of ideas, then you should expect people to shop around for the best deal they can get for themselves. Both sides of politics were happy to abandon their values and fight on their opponent’s territory this year – with Labor attacking the Coalition’s parental leave policy as ‘a big new tax’ and the Coalition arguing that Labor’s refugee policy is cruel to boat people because it fails to treat them badly enough to discourage them from coming.

In this context it’s understandable that the timing of the election debate was shifted to avoid clashing with the finale of Masterchef. It was much easier to get a clear picture of Callum and Adam’s different philosophies on cuisine than of Gillard and Abbott’s different philosophies on Australia’s future. In a choice between two stage-managed contests, why would you choose to watch a battle in which the shrapnel from small bullets ricochets off even smaller targets?

There are significant differences in what the major parties have done in the past, and in what they would like to do now, but the scope for difference on what they actually plan to achieve is so limited. Gillard is drawn reluctantly, Abbott gleefully, towards the politics of fear and exclusion. The Coalition would prefer not to act at all on climate change, while Labor vacillates, wanting to do what’s needed – but only if it comes at no political cost.

Politics, like nature, abhors a vacuum. Fear dominates elections when there isn’t a positive vision compelling enough to crowd it out, and neither major party told a positive story this election year.

A stasis has settled over government and opposition in Australia. The final election result – a hung parliament and an agonising wait for an outcome – was emblematic of a political system that is being dragged down by its own entrenched cultures. One in which voters registered their disgust by voting informal in record numbers. We need to change the game. Governments in Australia have traditionally fought hard for their showpiece policies. After World War II Menzies fought to repair relations with Japan to underwrite Australia’s export future. Whitlam fought for tariff cuts and Medicare. Fraser fought for acceptance for Vietnamese boat people. Hawke fought for the Accord and for floating the dollar. Howard fought for gun control and the GST. All of them staked their political futures on big gambles; things they believed in so strongly that they would rather not be in power than not achieve it. In Rudd, and now Gillard, we have no such vision, no such beliefs.

Is Prime Minister Gillard’s focus on consensus-building an attempt at Hawke-style leadership that will work to bring as broad a group of Australians as possible on board for reforms of unprecedented ambition? Or just an excuse not to lead at all?

Gillard is right to recognise that leadership is not just about giving orders – but it’s not about giving people exactly what they want either. You can never give voters enough of what they don’t really need to make them happy. Real leadership involves helping people face up to hard decisions that they’d probably rather avoid, and inspiring them to see the opportunities that open up when we’re willing to make shared sacrifices to solve shared problems.

But the present stasis isn’t simply the product of the people at the top of the political food chain. The current Labor government is a symptom of a broader political system that no longer seems to know or care what issues are important, even crucial, let alone how to begin to address them. It’s not only the major parties but the entire political system that is bogged down in its own cultures.

How are we to move the game on when so much mainstream political commentary is stuck in the one, dated idiom? The blog The Piping Shrike had an excellent post on the media response to the Labor government’s ditching of the emissions trading scheme. The mainstream media, it was pointed out, endlessly cited Lowy Institute polling that showed that public support for action on climate change, even if it involves significant cost, had fallen from 68 per cent in 2006 to 48 per cent of the population in 2010. But the media only cited the data that suited it. In fact the same polling also showed that 87 per cent supported action at some cost, down a mere six points from 93 per cent in 2006. Sixty per cent believe climate change has become a more urgent issue over the past year. Is it perhaps, The Piping Shrike speculated, that the media is caught up in the logic of old politics which necessitates a straightforward political and popularity contest and an electorate driven by the hip-pocket, and is unable to canvas a more complex narrative? 1

It often seems as if our major parties don’t trust voters to look beyond narrow self-interest – even when opinion polls and research groups tell them otherwise. When Australians are asked whether they would prefer tax cuts or more spending on health and education, the answer is clear: invest in services.2 And yet both major parties promised tax cuts at the 2007 election, Rudd’s leadership fell partly because of one attempted tax hike, and in 2010 Labor enthusiastically attacked Abbott for the economic irresponsibility of the tax he wanted to pay for the kind of generous parental leave scheme they’d love to offer themselves.

Rather than focus on what politicians can do to improve people’s lives, the media focuses on personalities. Politics is usually reported as if it were a horse race. Journalism lives for the leadership contest and little else. It might ‘sell papers’, but it doesn’t fix broken planets, brittle economies or entrenched disadvantage. The political demands of a 24 hour news cycle, where issues rarely get more than three days sustained coverage, combines with opinion polls which rarely delve into voters’ deeper or longer-term aspirations. The result is that the political world is locked between two mirrors – whichever direction it looks in, it sees infinite images of itself reflected back with less and less clarity. One of the most telling things about the 2010 election and the emergence of independents and Greens as a political force, was the way in which some commentators fell into a near-panic as the result of the cosy two-party system being disrupted.

Others play out a tired, dated war with ‘the left’. In an echo of the 1990s ‘culture wars’, to them even global warming is some kind of left-wing conspiracy. The direct political power of such commentators is often overestimated. But they have changed perceptions about the political middle ground such that the fears and grudges of an ageing demographic have come to be understood as the mainstream. For so long as politicians pander to such fears there can be no innovation.

Another obstacle to change is the Australian electoral system. The ALP can afford to be contemptuous of progressive ideas because it knows that when disaffected Labor voters support minor parties, the votes flow back to them in preferences.

These sorts of invitations to ‘politics-as-usual’ are everywhere in Australian politics. Yet these are unusual times; times of environmental limits and approaching tipping points, of global economic instability; of looming energy and water shortages; of sclerotic, overloaded cities. Times that call for leaders able to rise above the mire of politics-as-usual, and to make innovative, bold decisions.

These exceptional times are especially dangerous for Australia. Almost 50 years ago in The Lucky Country, Donald Horne wrote that Australia was a second-rate country living on its luck. Primary industry had sustained for too long what was basically a weak economy and a weak leadership class. A decade into the most recent mining boom, the same is true today. We must consider whether we can continue to coast along, or make the changes needed to not only call ourselves ‘a lucky country’, but a country run by people who know how to make the luck last.

Instead, our leaders prefer to play dice with destiny. The Labor government talks about future generations more often than John Howard did, but the gap between rhetoric and reality reveals a lot of long bets. Judging by the policies of the current federal government, it is betting that the mining boom will last forever; that we’ll discover a cure for Dutch Disease 3 that doesn’t involve slowing the boom down; that cheap oil won’t run out, or that an equally cheap alternative will be found before it does; that global inaction on climate change will continue; and that Australia will escape the consequences of that inaction if it does.

Business as usual won’t cut it anymore. In areas like urban infrastructure, electricity generation, or paid parental leave, Australia is pursuing policies designed for a world that no longer exists: a world of cheap oil, or endless credit, or single-income families, or a climate that will remain stable forever. In some areas of Australian public policy, like our love affair with suburban freeways, or our workplaces’ attitudes to child-bearing, we have barely changed in generations.

Revolutions start when enough people get disgusted with the same thing. And enough people in Australia are now frustrated enough to want to start something new. The disgust that welled up in the Howard years has for many people returned, but with greater urgency given that on crucial issues such as global warming time is much shorter now. Rudd once complained of the ten years wasted by the Howard government’s inaction on global warming. He and Gillard have since added another five. 2013 is too long to wait for an emissions trading scheme.

But it’s not enough to point fingers and complain and say ‘no’ to what we don’t like. Revolutions in thinking don’t start that way. We also need to map a viable path to the future we want.

To begin to map out a new political agenda for Australia requires at least two things. First, we need a conceptual framework in which to think through what is new about the world we live in and what that means. Second, we need to identify and strategise our way around obstacles to change.

One such obstacle is the vested interests that have stalled progress in so many important areas. Machiavelli recognised the problem 500 years ago, when he wrote:

There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. For the reformer has enemies in all those who profit by the old order, and only lukewarm defenders in all those who would profit by the new.4

In Australia vested interests include corporations as well as the industry associations and lobby firms whose job it is to defend those who want to avoid paying the full costs of their activities. Tasmania tells an important story here. Before the 2010 Tasmanian election there was almost as much concern about the distortion of the political process by powerful interests as there was about the hotly contested Gunns pulp mill itself. Essential Research found that almost half of Tasmanian voters thought that it didn’t matter which party they voted for, ‘because the major parties are both too weak to take on the interests of big business’. This perception probably played a major role in the decision of many Tasmanians who would not otherwise identify as ‘green’ to put the Greens in a position to decide who would hold government.

Often, vested interests have champions in the media: influential newspaper columnists who see their role as speaking up for ‘realistic’ policy – where realistic is defined as what entrenched interests will accept.

To tackle vested interests and deal with some of the problems covered within this book, we need to redefine realism – an action that is both necessary and physically achievable should be seen as a realistic action. Political reality must be reconnected with social and environmental reality. Australians who want real change can’t afford to just cross our fingers for the outcomes of the next review, the rediscovery of recommendations from the last review, an emergency spine transplant after the election, or the positive influence of a more progressive senate.

But there is little point in working to redefine realism if we don’t know why we are doing it or where we are heading. If we are to do more than merely rely on luck, we need a viable, hopeful narrative about the future. To build such a narrative requires that we be idealists first and pragmatists second – there is no point being pragmatic unless you know what you are being pragmatic about. As many of the old standards of modern life lose their viability — the established print media, abundant fossil fuels, unconstrained economic growth, the availability of an endless environmental sink for pollution by the ‘externalities’ of industrial production — so we need to rethink our conceptual maps and write the story of our new political and economic future.

The single issue with the most potential for transforming the politics we have into the politics we need is also the issue that comes up most often throughout this book: global warming. It’s difficult to be anything other than deeply alarmed about the incapacity of modern politics to deal with climate change – but by highlighting the deep problems in our tools for tackling complex global problems, this issue is also planting the seeds of change. After a decade of inaction by its predecessor, when the Rudd government finally began to canvass the problem it found Australia almost irrevocably committed to an economy based on fossil fuels. Our cities were designed around car travel, while our homes relied on coal to turn on the lights or the shower. Our governments were just as hopelessly addicted – to the jobs and tax revenues provided by mining and energy companies, and afraid of their lobbying power. If Australia had been allotted a sustainable CO2 emissions quota for the 21st century, we would have used up almost a third of it by the end of 2005. Yet as Fiona Armstrong writes,5 addressing global warming will have major economic and social benefits. To achieve change she recommends simple, practical measures that use currently available technology and that will take little more than political will.

Unlike the goldfish in government, most citizens can see beyond the election cycle to dream of what life will be like for our friends, our families, and ourselves in 50 years time. When we think of the state of our planet and our continent, some of those dreams take on a nightmarish quality. We pulp our mightiest trees for paper and drain our precious aquifers to grow water-guzzling crops for export. In the bush our rivers turn into gutters, our fields turn white with salt and our soil blows away on the wind. In the cities we lose hours each day to slow, maddening commutes through gritty smog, and shop at supermarkets where the tomatoes bounce and the carrots taste like cardboard.

People are starting to cry ‘enough’. We want a future that is bright, healthy and green. We want meaningful action to combat climate change and sustainably manage our water, forests and marine habitats. We want Australian farming to reflect the unique nature of our fragile continent. We want our kids and grandkids to grow up in a country richer in ‘nature’s gifts’ than the one we inherited from our parents – with better soil, bigger forests, healthier rivers and a safer climate. We want Australia to play a strong role in building international momentum for evidence-based action on climate change. We want the way we live from month to month to be sustainable from decade to decade. And we won’t accept anything less than clear, consistent, principled leadership to help us achieve that future.

We now need to build the politics that makes such change possible.

An abiding theme for any hopeful narrative about the future will be the growing interconnectedness of everything. As our car-dependent lifestyles make us fatter and sicker, so urban planning and health policy converge. Given our reliance on centralised supplies of energy and water, so infrastructure policy is also national security policy. In an information- and knowledge-based economy, education policy drives long-term economic development. Whether Indigenous policy succeeds or fails depends on the effectiveness of policies that span several departments and levels of government.

Globalisation is at the same time driving a new dynamic of policy connectedness. In an age of global financial shocks, environmental disaster, and mass movements of peoples, more than ever the decisions made in one place affect all others.

Solving this century’s problems will require the ability to think in systems. Governments are currently struggling to deal with the increasing complexity of the systems they are trying to manage. This is partly due to a political culture that confuses leadership with top-down approaches to problem-solving – a confusion shared by people in senior positions of all stripes and ideologies. Management in much of the public sector is still surprisingly hierarchical and centralised, and complex problems are still examined like Swiss clocks – broken down to the sum of their parts, which are then each individually understood and managed.

Our solutions, then, need to be holistic. The stories we need to tell about the future need to be inclusive; our ideas for policy need to reach across disciplinary, portfolio, and national boundaries.

In this book you will find many such ideas. Jennifer Doggett shows how to reorient the health system around the people who use it, making health funding fairer and more effective in the process, while Marcus Westbury and Ben Eltham look at how to make cultural policy reflect the needs of today’s culture-makers. Chris Bonnor looks at viable ways out of a situation in which the lottery of birth determines who succeeds and who struggles in Australian schools. Kate Gauthier explains how Labor set itself up for failure on the refugee debate, and describes what it would take to turn that debate around. In a campaign in which both sides of politics are pinching their pennies, Ben Spies-Butcher and Adam Stebbing show the big savings to be found by ditching or reforming some of our least transparent, most unfair, and least effective forms of spending. Ian Dunlop and Ian McAuley show how vulnerable the ‘quarry economy’ is, especially with peak oil and climate change around the corner, while Fiona Armstrong shows how we can shift ‘from fear to hope’ by making the most of Australia’s green economic opportunities.

But where will the political will come from to support these and the many other important ideas in this book?

After the 2007 federal election GetUp! consulted its members on their vision for the new Labor government. The consultations began with a series of Get Togethers in people’s houses – thousands took part in over 300 meetings where they discussed everything from climate change to civic education. People at these meetings sent their ideas and ambitions in to GetUp! central, which compiled the results and sent them out to members to prioritise. Their responses – over 30,000 of them – became The People’s Agenda for Parliament, a ten-point wish list for the Labor Government. 6 Since then GetUp! and other organisations that seek to harness people power have moved to the forefront of politics. If politics comes down to a battle over who can spend more money or manage the media more effectively, we all lose. But people with less money and media in their pockets can still win policy victories when they have the numbers on their side.

As the ‘old’ media becomes ever more predictable in its thinking, more entrenched in horse race political reporting and more than ever part of the process, intent on playing out faux culture wars between an all-powerful phantom left and ‘ordinary people’ on real threats such as global warming and imaginary threats from asylum seekers, so new thinking is coming in not only from the fringes, but from the mainstream — the streets, the suburbs, from schools, from universities, from kitchen tables — that the new conservatism has tried to pretend is its own.

That there is broad support for new ways of thinking is shown by recent polling.

Against the old ‘greens vs jobs’ divide that continues to guide so much political rhetoric, in the lead up to the 2007 election the mining division of the CFMEU consulted its members on climate policy and received unanimous support for signing the Kyoto Protocol. At the time the National Secretary Tony Maher said ‘Our members are sick of being demonised and seen only as part of the problem.’7

As Phil Lynch points out in ‘Human Rights at the Cross-roads’, an independent poll commissioned by the National Human Rights Consultation showed that 75 per cent of people believe we need stronger measures to protect the human rights of people with mental illness, the elderly, Aboriginal Australians and people with disability. 8 In ‘Strengthening our Democracy’ Marian Sawer, Kathy MacDermott and Norm Kelly note that according to the 2007 Australian Election Study 69 per cent of voters believe that big businesses – the kind of organisations that make the most substantial donations to political parties – have too much power. 9 In fact, as recent analysis of Australian Election Study data by Murray Goot and Ian Watson shows, much recent mythology about why Australians vote as they do simply doesn’t stack up. 10

Instead of letting ourselves be played off against each other by politicians seeking electoral advantage with divide-and-rule tactics, we might rediscover the things we believe in common and relearn how to trust each other. In learning how to trust each other, to challenge old ways of doing things, and to cooperate more effectively we learn to make full use of our power as citizens. As the rest of this book shows, there’s no shortage of opportunities to wield that power once we get the hang of it.

When politics is broken we have the tools to change almost everything about our own lives, but nothing about the world around us. We are empowered as consumers yet disenfranchised as citizens. It’s time to take citizenship back.

This book is deliberately optimistic, despite the clear obstacles to progress. It’s what Worldchanging.com editor Alex Steffen has described as ‘a fighting optimism’:

We can freely acknowledge the tremendous struggle ahead of us, and yet choose to remain decidedly optimistic, and to work from a fundamental belief in the possibilities of the future. When we do that, we liberate ourselves from some of the burden of despair and powerlessness we’ve all been saddled with at the dawn of the 21st Century. 11

New thinking and leadership always starts small. In this book you will find one strand in a wider global stirring of progressive sentiment. There are small ideas and big ideas, all of which seek to add to new narratives about the future that many people now feel are necessary given the failures of the recent past. All share a commitment to the same core principles: that in order to move forward as a nation we need to share this country’s luck more fairly and learn how to make it last.

Endnotes

  1. The Piping Shrike (2010) ‘Scorched earth policy’. Available online: http://www.pipingshrike.com/2010/04/scorched-earth-policy.html
  2. Australian Election Studies (AES) ’1987–2004′. Available online: http://assda.anu.edu.au/analysis.html
  3. See http://morethanluck.cpd.org.au/making-it-last/living-off-our-resources/
  4. Machiavelli, N. (1988) The Prince, Quentin Skinner (Ed), Cambridge, Cambridge University Press.
  5. See http://morethanluck.cpd.org.au/making-it-last/shifting-from-fear-to-hope/
  6. Recently the Centre for Policy Development’s own small readers’ poll was flooded with responses – many of which are echoed in the chapters in this book.
  7. Maher, T. (2007) Crib Rooms and Climate Change: Empowering Mine Workers, CFMEU Mining and Energy Division. Available online: http://www.cfmeu.com.au/storage/documents/NSWMC_enviro2007.pdf
  8. See http://morethanluck.cpd.org.au/sharing-the-luck/human-rights-at-the-cross-roads/
  9. See http://morethanluck.cpd.org.au/more-than-luck/strengthening-democracy/
  10. Goot, M. & Watson, I. (2010) ‘Howard’s victories: which voters switched, which issues mattered, and why’, Inside Story. Available online: http://inside.org.au/howards-victories-which-voters-switched-which-issues-mattered-and-why/
  11. Steffen, A. (2008) ‘The Politics of Optimism’. Available online: http://www.worldchanging.com/archives/007919.html

AUTHORS(S): Mark Davis and Miriam Lyons