Blunders of our governments

What would you include in a list of Australian government blunders if you were preparing a book like Anthony King and Ivor Crewe’s 2013 book Blunders of our Governments ?

King and Crewe looked at British governments both Tory and Labour and came up with a long list including the Millennium Dome (Blair); the poll tax (Thatcher); Private Finance Initiatives; IT disasters and others.

If it wasn’t so painful for the English the poll tax blunder would have some amusing sides. It basically did for Maggie and it provoked a quintessential moment which says much about the Tory Party back then – if not so much now the populists and Poujadists have taken it over. When asked what householders who found it difficult to pay the tax should do, environment secretary Nicholas Ridley, replied that “They could always sell a picture.”

PFIs, called Public Private Partnerships in Australia, resulted in some amazing outcomes. For instance NHS hospitals will need to pay private companies around 55 billion pounds under PFI agreements, now abolished, before the last contract ends in 2050. Another one resulted in the UK Inland Revenue (now HM Revenue and Customs) offices being sold to a company based in a tax haven.

The most spectacular PFI failure was probably the Blair-Brown effort to set up a PFI for the London Underground – driven largely by the high minded-policy objective of shafting then London Mayor, Ken Livingstone. After spending hundreds of millions of pounds on lawyers, consultants and others the project never went ahead.

But what of Australia? First on the list would have to be energy tax policy as illustrated by Clinton Fernandes’ research into the treatment of oil and gas exploration and exports. Qatar, which is now so rich it is going to aircondition the outdoors for the football World Cup, has established a $360 billion investment fund financed by its oil and gas exports. Australia has received some $300 million in royalties for oil and gas and given oil and gas companies $324 billion in tax credits. Norway’s sovereign wealth fund has more than $1 trillion in assets. Australia’s version – the Future Fund – has $148 billion and a Chair busily arguing that there is nothing wrong with the economy that won’t be fixed by more de-regulation.

Norway ended up with the world’s largest fund, Qatar one of the largest, and Australians bought lots of large screen TVs and ended up paying more for gas than did the countries who bought it from us.

Tax avoidance is hardly unique to Australia although we are very good at helping it along. For instance, we effectively subsidise Rupert Murdoch’s Australian companies to poison local discourse by tolerating their tax avoidance. Michael West’s investigations – featured in his newsletters and on his website – are a long-running demonstration of the extent of tax evasion and avoidance in Australia.

And where do we start on defence spending? The 1963 purchase of 24 F111 fighter planes of which the first eight had problems and all in all suffered some 14 crashes? We nixed car manufacturing and plan to spend more than $60 billion on French submarines allegedly to be constructed here. In reality, as the government owned French company which designed the submarines told The Economist after it had won the contract, the metal bashing would occur in Australia while all the sexy technical stuff would be undertaken in France. We preferred this option to a cheaper Japanese version because, allegedly, it was ‘unsuitable’ for our waters. To add to our submarine woes we have bought the flying lemon – the F35 – for about $17 billion dollars. In contrast, when he was newly elected as Prime Minister Canada’s Justin Trudeau had the good sense to cancel their order.

Climate policy; the repeal of a carbon price; funnelling money to companies under the Emissions Reduction Fund corporate welfare program; the Murray Darling disaster which has seen billions spent for no outcomes other than those for some producers of cotton and rice which could more easily and cheaply imported; and our determination to solve the problem of lack of rain by building more dams.

Snowy 2 is another boondoggle (like Lake Argyle) and 70 years after Snowy 1 the new scheme will cost more than five times the initial estimate; probably not be ready until 2025; and, will cut through swathes of national parks.

NBN would be high on any list of blunders as well as any list of blunders perpetrated because of sheer bastardry. However, it is not all Tony Abbott and Malcolm Turnbull’s fault. The root of the problem came with the privatisation of Telstra. Instead of adopting the logical public policy choice – structurally separating Telstra’s network from its other operations – Howard with the urging of successive CEOs and investment bankers decided to get the most money possible by selling them together. Some of the proceeds went into the Future Fund but we have seen what a puny thing that is compared with other similar bodies.

Telstra had first class network experience and expertise and was envied around the world for its success in providing services to thinly dispersed populations. It would have been logical for the freshly independent network provider to explore and then provide broadband and 5G options without having to use slow outdated connections.

What can one say about the Department of Home Affairs? The traditional bureaucratic response to bureaucratic failures is to deem an organisation not fit for purpose. Sadly the organisation is fit for the purposes its head and Minister seem to desire but whether it is fit for purpose for Australia or its purported responsibilities is another matter. Contracts to companies headquartered in a Kangaroo Island shed; Customs staff involvement in smuggling; visas for au pairs of mates and high roller gun runners visiting Crown Casino; massive backlogs in resolving refugee and visa applications; spending $22 million for 125 staff to operate on Christmas Island while there are no detainees there; gratuitous cruelty; and, massive staff turnover are just a few of the problems we know about.

There are many more which could be listed and another book like Crewe and King’s could easily be written about Australia. But then Brexit shows nobody learnt anything from the English original so one has to doubt whether an Australian one would result in anything different.

Declaration of interest: Telstra was a long term blog client and the blog’s firm worked on the privatisation scoping study but not the privatisation itself.