The elephants in the room

The 2016 Federal election campaign will go down in history as one characterised by the exceptional depth and breadth of policy debate and analysis. Eh? Sorry, the blog was not referring to the political party campaigns but rather the contributions of various think tanks.

For those despairing of negativity, puerile slogans, scare campaigns and robotic responses turn off the TV, put the papers in the recycling and turn to the very impressive contributions made by think tanks such as the Grattan Institute, the Australia Institute, Australia21 and assorted others.

The most comprehensive is the June 2016 Grattan Institute report Orange Book 2016: Priorities for the next Commonwealth Government. Grattan research starts from some interesting foundations. As the CEO, John Daley, says they look at areas where they can make a difference and they have a tendency to focus on areas where rent-seekers are thickest on the ground – which in Australia provides an awful lot of fertile areas for investigation.

The report draws on seven years of reports and analyses and starts by outlining the problems: falling per capita income; relatively high unemployment and underemployment; the need for budget repair; growing pains in cities; inequality; poor educational outcomes; and barren political debate. It suggests that change can come from using the evidence there is (a radical idea), “robustly articulating the public interest, and staring down interest groups.”

Its prescriptions range across tax efficiency, labour force participation, innovation, superannuation reforms to cut costs, infrastructure and education reforms, planning and housing, transport, road management, climate change, electricity markets, gas markets, school education, higher education, and health policy and implementation. In other words just about all the subjects which touch every Australian. The blog doesn’t pretend to agree with everything Grattan recommends but it does wish the same sort of sustained evidence-based analysis was adopted by the political parties.

Australia21 takes a different approach. It has prepared a series of short papers – under The Elephants in the Polling Booth title – on issues which are not getting enough attention. The paper on drug policy by Mick Palmer and Alex Wodak seeks to counterpoint politicians’ strong language on drugs with the actual approach which “has been ineffective, often seriously counterproductive and a poor use of scarce resources.” It recommends new forms of regulation; avoidance of criminal sanctions for possession and use; some legalisation and taxation in the case of cannabis; and recognition that “dealing with inequality and poverty is likely to reduce drug problems which are more common and more severe among those most disadvantaged.”

Alex Wodak, David Morawetz and Bob Douglas also look at inequality and include a list of taxation, welfare, health and education reforms which would make Australia a fairer and more productive place. They point out the current inequality in Australia is the highest since the 1950s with the top one percent taking nine percent of Australian income. Paul Barratt argues the case for ‘curiosity driven’ research as opposed to the ‘practical’ and the ‘relevant’. Mike Waller outlines a new national economic agenda and Paul Barratt, in another contribution, highlights the need for war powers reform so that Parliament has a say in whether and when Australia goes to war rather than deciding on the basis of whim.

The Australia Institute looks at the way politicians compete to exaggerate the potential (positive) impact of their policies on the national economy and the potential (disastrous) impact of their opponents in between demonstrating Freud’s “the narcissism of minor differences.” It suggests that “there are numerous indicators that Australia’s economic performance is likely to get worse, not better, in the absence of strong countervailing measures.”

One of the best parts of the report is a table which summarises 12 economic performance indicators and how they rated under 11 Prime Ministers from 1950-2016. Obviously external factors are significant in terms of the state of the economy at any point but the results are fascinating anyway. The key indicators chosen are the unemployment rate, full time equivalent employment rate, GDP growth per capita, business investment growth, public investment as a share of GDP, innovation investment growth, growth of exports as a share of GDP, real wage growth, real personal income growth, growth in household debt as a share of GDP, current account balance and the growth of government debt as a share of GDP.

The standout PM is Harold Holt who got the best results in four of the areas. Whitlam did best with two, Keating was our best PM when it came to innovation while Gillard achieved the highest increase in business investment growth. Rudd did well on export growth but had the biggest increase in government debt as a share of GDP although the circumstances were unusual and the counter-factual – what would have happened if the austerity fetishists had had their way – is instructive. The record holders for growth in household debt as a share of GDP were John Howard and the Abbott-Turnbull Governments.

The table also allows the reader to compare the economic performance of the Gillard Government with Abbott-Turnbull. On every indicator, except GDP growth and government debt (the latter in percentage terms rather than gross terms), Abbott-Turnbull was worse. With GDP growth the result was equal. So much for superior economic management!

Another counter-intuitive result from a research centre – University of Melbourne Centre for Workplace Leadership – found that the public sector in Australia is more innovative than the private sector and less than one in five private sector organisations reported high levels of radical innovation. The survey also showed that “there is a significant gap between managers’ perception of their leadership skills and the way they are viewed by employees.”

The most innovative thing in most Australian companies over recent decades is how creatively they used the tax system and the Prime Minister’s recent innovation statements suggest that this is the area where much of his innovation policy will continue to focus.

The reality is that none of these reports seem likely to influence the election outcome or, more importantly, what happens after the election. But it may be that some of the issues are nagging away among some people outside those who shape campaigns and report on them. A recent piece by Tim Colebatch in Inside Story explores his ‘niggling doubts’ about the current election commentary. Tim has always been an astute judge of polls and elections and, unlike many others, is prepared to see the elephants in the room. Perhaps they might be more influential than we imagine.