No I haven’t been in hibernation – well not a conscious decision and there has been lots I could happily sink my teeth into over the past year, but maybe it was time to take a break and mellow a little – or not. Your call.

But I have been catching up on a little bit of reading. The book I’m talking about today I actually read nearly two years ago and I admit I’ve had to reread it for this blog, but it was no hardship. It’s about property rights. Wake up! It’s not a dry read at all. Maybe because it’s written by a couple of lawyers not economists. But therein lies part of its allure to this nerd. Lawyers think about ownership differently to economists.

“Mine! How the Hidden Rules of Ownership Control Our Lives”, by Michael Heller and James Salzman takes the reader on a fascinating journey about who gets what and why. Heller is a professor at Columbia University and Salzman is professor with joint appointments at UCLA and UCSB.

One drawback of this book for a non-US reader is that naturally, given their clearly biggest intended audience, pretty well all the stories are sourced for the US experience. Although to give them credit, they do allow themselves to make some international comparisons, which are mostly not flattering. As a result I will resist the temptation to roll my eyes and consign some stories as less relevant because – only in America!

I won’t be going into most of the stories here but note that I was particularly ‘fond’ of the story about the Maine lobster catchers and the futile attempts to stop the plunder of this resource and the biffo that ensued. Many fisheries all over the world exhibit (or exhibited) some pretty cowboy traits and it took the good fisher folk of Iceland to demonstrate that Individual Fishing Quotas, while they had some downsides both in their introduction (eg often gifting existing fishers quota for no cost – which they could then lease or trade) and also often result in diminished local fishing presence, generally over time get the biffo to cease, have excellent sustainability outcomes and improve the safety and efficiency of the fishing effort. As far as I can ascertain though, the Maine lobster fishery remains immune from these quotas. (This from that reputable(?)news sheet – USA today – on 30 October 2023 – “A federal court and Congress recently blocked federal regulators’ efforts to limit lobster fishing in the Gulf of Maine and gave lobster fishers until at least 2028 to operate without changes.”)

Why I found this book so interesting in the first instance is because in much economic theory, property rights are assumed as a given. While some areas of economic thought do probe deeper and try to work out how to assign (or reassign) property rights, these discussions are often not had more generally. Economics is mainly concerned with changes in ownership. Heller and Salzman concentrate of how initial ownership is decided. If the Heller-Salzman stories do nothing much else they provide insight to the options available in choosing who gets what and the implications for winners and losers from the choices made.

They posit six ways scarce resources can be initially allocated:

• First come first served
• Possession is nine-tenths of the law
• You reap what you sow
• My home is my castle
• Our bodies, ourselves
• The meek shall inherit the earth – it’s mine because it’s in my family

I think most of these are pretty self explanatory but I’ll give a short example of each just to be sure.

First come first served is pretty basic – I was here first and claimed it so it’s mine.

Possession is nine-tenths of the law says that if I have control of it it’s mine.

You reap what you sow means I worked for this so it’s mine. In other words I made, crafted or grew this so I own it and it’s mine to decide how it is used.

My home is my castle is a bit more complex and is best explained through the concept of attachment. This is the idea that something is mine because it’s attached to something that’s mine. So maybe a very relatable example is the space on the aircraft between the seats in adjacent rows. It is a source of some dispute as your boarding pass grants you access to your seat but is silent on whether that space between the rows belongs to you or does the person with the seat in front of you who reclines into this space have property rights too?

Our bodies ourselves means that individuals have autonomy over their bodies, that they are not enslaved for example, and that they have equal worth. But does it mean they are free to sell body parts?

The meek shall inherit the earth is the idea that something is mine because it’s been in my family. These matters most often arise in cases of divorce or inheritance.

While it might seem these principles are pretty straightforward the authors argue that they are becoming increasingly complex and lines are no longer particularly binary. As noted above, who “owns” the space between airline seats? The airlines themselves have been particularly adept at failing to address the question and leave it up to passengers to negotiate. By the same token, I suspect we’ve all fallen prey to the belief that I paid for the book, music or software therefore it’s mine. But that is so often not the case when it is an electronic form of ownership – a kindle, online music or a software program. All you’ve bought is a license to use and that can be rescinded at a moment’s notice. And it gets even more opaque when you consider that your new car can be totally disabled remotely by the manufacturer and the software needed to run it may require regular updates or even be hacked. Or, as was shown most not so long ago in Canberra when a certain well-known tennis star’s car was stolen, it can be used by the police to track the whereabouts of the car. It puts a whole new slant on ownership.

Ownership is a slippery beast and it’s getting harder and more complex to nail it. Deciding what’s right or not is curly and seemingly often there is no “right” answer. But there are considerations we can invoke such as ideas about winners and losers, how to think about possible innovative solutions and also raise awareness of how we can influence who owns what.

One area that I’m a bit passionate about is data. Bear with me. I’m not going to launch into a detailed statistical discussion. I’m talking about all the personal data we generate everyday. Things like our online searching, medical histories or energy use. Who owns this? Is the loss of autonomy over our internet-related data the price we pay for the convenience offered by using the internet? How do privacy provisions impact this and what are our rights to security over that information? Who owns the detailed notes our doctors make during consultations? It’s our information but collated by and for the medical professionals.

Some of these issues have been resolved to an extent. So that for example, my medical history is mine in as much as I can request it be made available to other doctors etc and indeed, in Australia, there is a system where it can be more generally available to treating doctors through the My Health system should I choose.

My energy data is now available to me from my smart meter although not seamlessly. But while I may have the ability to access this data, it is not exactly private as my utility company can also access the data.

Oh and don’t even get me started on what AI might mean for ownership. That is such a tangle it might take years to sort through. But one thing this ancient economist is sure about, where’s there’s money to be made there will be much action in the ownership stakes.

The attached article was printed in the 3 August 2022 edition of The Age. It describes a situation of which I was blissfully unaware – that home mortgage insurance is not portable. If you have less than a 20 per cent deposit for a real estate purchase you are required to buy expensive insurance to protect the lender in instances of a default and subsequent sale if the sale price is lower than the loan amount. And it is truly eye wateringly expensive – think five figures for most home loans. And this amount is also either part of your loan – and you get to pay interest on it – or you need a bigger loan because a large chunk of your equity just got siphoned off to pay for the insurance so, you guessed it, you get to pay interest on it. But, and here’s the crux of the story, if you want to change lenders in search of a better interest rate for example, and you still have less than a 20 per cent deposit, you have to buy a new insurance policy! These policies are not portable.

Read on friends and get into this article. Of particular relevance are the comments of those in the lending industry. None quoted offer an explanation for this, only lame ideas about paying down your loan (der) or trying to refinance with existing lender if you want a better interest rate. Tell me, how successful do you think that option would be if the lender knows they have you over a barrel?

There appear to be only a small number of providers of this product, so lack of competition may be a factor. But it might also be in the banks’ interest to make it difficult for borrowers to move lenders.

I was disappointed to note that the author did not seem to press further about why this product is not portable. Perhaps one suggestion- and I stress it is only that as I have no evidence, just a suspicion – is money. Here’s a set of questions to ponder. Does the bank get any recompense from the insurance providers to selling the product? If so, is it just a simple fee or does it include a trailing commission? Is there an incentive for banks and insurers to work together – even implicitly – to make this a very unsatisfactory market from the consumers’ perspective?

What do you think? I’d be thrilled to have answers.

https://www.theage.com.au/money/borrowing/archaic-lenders-mortgage-insurance-rules-hurt-borrowers-20220801-p5b698.html?btis

In case you’re a local just emerged from under your favourite rock, Australia has just had an election. There’s much that has been written about it and still more to go. But I will confine myself to a few observations and ideas – some of which may not have received much media coverage.

The change of government will most certainly mean some significant changes after nine years of a coalition government. How they will play out and what roles the “minor” parties and independents will play is also an unknown.

On a personal level, for the very first time I found myself in a”swing” electorate. I’m over it now. If the visual pollution didn’t get you then the unrelenting paper war taking place in my letter box was wearing.

I will make one overtly political comment and then move on. Both major parties are seeing a now undeniable shift in the way Australians vote having both seen their first preference shares fall to roughly one third each. Both will require – and I am sure receive – detailed scrutiny of the reasons behind this and suggestions about why and what can they do differently. From what has been reported in the media, some are still fully in denial that any problems exist or if they do then, wait for it, it’s our (the citizenry) who are to blame. For example, apparently women didn’t listen to the coalition’s campaign. Really? So please spare us this type of tripe and just get on with your post mortems quietly.

So there’s lots of differences we can expect with this government and from the parliament in general.

While the Labor party has actually some semblance of a climate policy it will face some opposition from the Greens and independents that it is not ambitious enough. One can only hope that sense prevails and and an agreement can be reached and we don’t suffer what occurred a decade ago when ideology and perfection won out over practicality. Look where that landed us.

But by the same token, I expect all parties to government to think carefully about proposals for ensuring the carbon reduction ambition, whatever that may be, are the best they can be. We don’t need knee jerk, flavour-of-the-moment proposals. We need cool-headed, serious and well documented consideration of all costs and benefits, both short and long term. We’ve heard a number of local governments wanting to ban gas connections in any new developments. In Victoria it is not within the authority of local government to rescind the current requirement for the obligation on developers to connect their projects to the gas network where this is available – it is the state government with this authority. It may be that this is an excellent idea. But we don’t know. It should be put to the test if it is a serious suggestion. But what comes next and what’s the end game? Weaning consumers off gas in the home and workplace will be a vexed undertaking. It will doubtless be expensive and consumers likely to bear the brunt of costs. It will have different impacts on different sectors of the economy and households. Over the longer term it would lead to many stranded assets and how to deal with the last 20, or 50, percent of connections would pose equally baffling conundrums. Which is not to say don’t do it. But just think about the whole picture. Is the payoff good? Might it happen organically? What other carbon reduction options should we be considering? How does this stack up against them? What proposals should be our first priority? have we thought through all th eoptions and will this one give us the best (or nearly) in the long term?

The electorate has shown itself concerned about the integrity of governments in this election. But while corruption is one way our taxes get spent in ways which give us a poor return, failure to properly assess proposals and rank competing options also results in less than optimal outcomes.

This PM fully understands why this is important as it was under his watch as Transport Minister, that Infrastructure Australia was founded with the express purpose of providing an independent, reliable and sound examination of infrastructure projects. It’s not a perfect model as lots of infrastructure proposals do not get examined by Infrastructure Australia. But an independent body to ssess climate change proposals based on bodies like Infrastructure Australia and the Productivity Commission, with expertise in project evaluation but, like these two bodies, no regulatory or policy remit. It’s purpose would be just to develop and provide good solid advice based on evidence and sound analysis. This would be an excellent place to start. We have limited funds and an urgent need to act. This should make it doubly imperative to make decisions based on such work. And maybe it should also be required to publish all its work so that informed debate and further refinement can be added by interested parties.

I think even a not so modest budget of say $100m would stack up and propbably be paid bnack (and then some) in the first study they undertook to improve the choices governments make.

What do you think?

Post Scrpit – This is not soley my idea. Credit also lies with my spouse. And yes, we have thrilling conversations over our morning coffees – isn’t this what all long time couples (40 years in August) talk about?

My goodness there’s been a blog drought! But never fear, I have been hatching some ideas – but they may not be to everyone’s liking – I mean they are not what I would consider controversial, but some might want to stop reading now because I’m going to talk about numbers – statistics, data you know…

What got me thinking about this particularly riveting topic was, of course, COVID. I’m wondering if our constant stream of COVID statistics is having broader effects. Are we becoming more used to dealing with data given that last year saw record numbers of people hanging out each morning for the case numbers etc to be released – we don’t do that for CPI or census data do we? 

One particular item caught my attention, but once I started thinking about it lots more examples popped up. My initial question arose around the use of two little words – ‘with’ and ‘because’. The numbers reported were for people in hospital with COVID and people in hospital because of COVID.

Stay with me here. These are two quite different ideas and the numbers are useful and informative, but for quite different reasons. The number ‘with’ is really important for hospitals – to know how many people they are treating and isolating for the disease for starters. But it really doesn’t tell those outside the hospital system particularly much. The number ‘because of’ is important as a general indicator of public health and the public health response. This tells us how severe symptoms are, how people are faring generally with COVID. It might be quite difficult sometimes for those collecting the data to know which option to choose for a given patient but I imagine most of the time there is good information on why the patient first presented at the hospital. Over time of course, it is quite possible for patients to move from one group to the other but generally this migration should be small, but maybe not?

See, one small change to the wording of the data descriptor and I’m off questioning the data¹.

When, as a young undergraduate, I was required to endure Statistics 101, our very patient lecturer tried very hard to make the subject speak to a group of mostly disengaged late teens. One particular example has stayed with me – road crash numbers. No matter how hard he tried to find a way for the statistic to show otherwise – young novice drivers were always more likely to have more, and more serious, road crashes. That is unless, of course, they were females and then the blokes outshone them by a long mark. Mind you, this was back in the dinosaur era so things my have changed since then.

But I think what he was banking on was that once we become personally engaged with the data we start to take an interest in it and question, query and dig deeper – sometimes. I hope this is true – at least for some of us. Curiosity about data and what it means, thinking about what the numbers purport to show and what they might actually show, are really important to understanding so much about what’s going on around us².

Presenting this data in a readily digestible format also improves and increases its accessibility and its reach. Cheers to the fabulous Casey Briggs (ABC TV for those of you living outside Australia – or under a rock if inside Australia) and his skilful use of modern technology coupled with a strong grasp of how to explain numbers and second prize to NSW for their recently updated COVID daily dashboard to make the numbers easier to see. And  people’s choice award for the young kids in Victoria who showed everyone else how good they were at collating the data and presenting it in a readily accessible form during last year’s never ending lockdowns. 

Quite a few COVID commentators have raised issues about what numbers are reported publicly and why some are apparently not collected – there’s always numbers not collected for all sorts of reasons and for some of us there’s never enough data but lots of these queries are valid. Why, for example was Victoria alone in reporting the breakdown of ‘with’ and ‘because’ with hospital admissions? I have no idea what the other states’ numbers mean and given that Victoria now just publishes ‘hospitalisation’ I am left wondering what it means in Victoria too – my guess is it’s people in hospital with COVID. Maybe I blinked and missed the commentary around the explanation for dropping the dual reporting .

NSW publishes weekly data on hospitalisations broken down by vaccination status. Seriously useful data which I would presume other jurisdictions collect, but why don’t they publish it?

What our fixation on these numbers may have provided is an introduction to statistics my erstwhile lecturer could only dream of. So while I don’t expect a sudden interest in every ABS release or an explosion in graph drawing, maybe we can expect a slightly more informed understanding of what it presented to us in the form of statistics. 

In the Guardian on 30 January 2022, there was a very interesting explanation of how to interpret the data on the vaccination stays of people in hospital with COVID. I won’t try to reproduce it here because they had some very nifty graphics, but here’s a link – I hope it still works. If it doesn’t, I’ve included a less professional looking link at the end.

It shows the full context of who’s in hospital and the relative size of each cohort – relative being the most important factor here. For people who are fully vaccinated, the proportion in hospital is way smaller than the proportion of non-vaccinated people. This is even though there are more vaccinated people in hospital. Very simply, a small proportion of a large number (those vaccinated in this case) can easily be bigger than a larger proportion of a small number (those not vaccinated). It’s a very neat rebutal of anti-vax claims that because more vaccinated people are in hospital, vaccines don’t work.

I guess my message is, we all need to think about what we are served up as reliable data. It should go without saying to make sure you use reliable sources. But beyond that, think hard about what are the numbers they have collected – ask yourself – do I really understand what they are representing or am I assuming this?

Then think hard about how to use the numbers. And maybe you’ll find yourself hankering for those labour market statistics and the regular GDP figures will be fascinating – or not. But maybe political polling is your thing – same applies here – always find out who they surveyed, what they asked and how the survey was conducted.

And of course, always be very sceptical about things you read online….

Footnotes

1 This particular super power is probably also connected to my other more well-known super power of breaking forms by interrogation.

2 Or have I just listened to one too many More or Less podcasts? For the curious, More or Less is a relatable, if slightly nerdy, podcast that ‘likes to be at the sharp end of statistics’. I highly recommend it for some interesting number dives.

Link to the Guardian

https://www.theguardian.com/news/datablog/ng-interactive/2022/jan/28/the-simple-numbers-every-government-should-use-to-fight-anti-vaccine-misinformation

The other week I zoomed in to a book launch. It was for a book I haven’t read but might do. But I was interested to hear what the author had to propose. The book is Reset by Ross Garnaut. He has some interesting ideas about what governments could/should be thinking about for post-covid policies to get the economy moving. I might talk more about it if I get to read the book, but he includes ideas he has published before on harnessing Australia’s advantage in renewable energy and building a new manufacturing industry on this. He also suggests taxation reform among other options.

But what I want to talk about is a comment made on the night by Rod Sims, the Chair of the Australian Competition and Consumer Commission. In talking about the theme of Garnaut’s book, he noted that a long list of folks (including unashamedly this author eg see my blog on energy policy) had opined that governments shouldn’t waste the opportunities a crisis offers for reform. He said that the commonwealth had been “lacking the bandwidth” to engage in any reform thinking.

Really? I am absolutely sure – and aware from personal communications – that large parts of the bureaucracy, and I assume the political class – have been working full steam on Covid matters. But please don’t tell me that the folks in Treasury, Prime Minister and Cabinet and some of the line departments, have not also been looking at how do we recover, what opportunities are there for doing things differently?

We all know about how people have adapted and adopted to new and different ways of doing business in the last year. Rapid change has been evident throughout the economy. Sure it’s stressful and not a pace you’d necessarily think is a good idea to try to sustain. But it says so clearly that the status quo is not immutable. We can and should try to do things better and that often means reassessing priorities – what we do – and thinking very creatively about how we do things.

I suspect that “lack of bandwidth” (oh please tell me this isn’t going to become the next awful fave cliche) is possibly a euphemism for “we’re just not interested in this”. This government did indeed win the last election on a pretty clear promise to not to do anything much. It was dragged into a massive spending program pulled together in rapid, and frankly astonishing, quick time, which despite people now poking holes in it with the benefit of hindsight, clearly met its objective of supporting the economy. But as the saying goes “ one swallow does not make a summer” and already the option for doing something really useful for those out of work – oh like offering more than a minor increase in JobSeeker payments – has been forgone.

The bandwidth issue surely can’t relate to suggestions for reforms. There are suggestions coming from all quarters – not just from Ross Garnaut, but numerous others; some well thought out and not just speedy sketchy ideas that sound good. Just off the top of my head I can think of places like the Grattan Institute, Business Council, ACOSS, the Productivity Commission and yes others also with vested interests like some of the consulting companies. I’m pretty sure the State and Territory governments also have ideas. These things do not necessarily need to be huge front page news. I have just been alerted to a paper from the Queensland Productivity Commission, drawing on a wealth of material and research over the past ten years, on ways to reform regulation and regulatory practice. QPR Improving Regulation. And of course academic economists such as Garnaut have been espousing ideas. And let’s not forget all those inquiries languishing or being given halfhearted consideration, thinking aged care, environment, the PC’s report on mental health – and that’s just the ones we’ve been talking about this year! They seem to be falling from the sky.

Sure, from conception to implementation takes time and resources, but more importantly it requires commitment. Commitment was what brought forward the last big concerted reform push in Australia (in case you’re guessing, of course it was the National Competition Policy).

That grew out of the economic turmoil of the early 1990s and was driven by a government determined to get the economy moving and provide a basis for long term gains.

Well here’s another opportunity writ even bigger. And while the figures on recovery to date are encouraging, they can’t hide the fact that we were not exactly flush with success prior to February last year. So getting back to there is good but not the path to long term growth. This point has been made several times over the last few weeks by none other than Philip Lowe governor of the Reserve Bank. And he hasn’t been howled down.

All this points to there needs to be more humility and commitment from the commonwealth to engage with the ideas generators, use the expertise and abilities that have been on full display from the bureaucracy this past 12 month, and think longer term. Accept that the world has changed, and just “keeping an even till” just isn’t viable any more.

I thought I might end this with my own personal wish list. Of course it will be biased towards my own preferences and interests, but it serves to provide an illustration of just what might be possible if government seizes the opportunities and recalibrates the Australian economy.

• Energy policy as a reality not an abstract concept.

• Environmental policy that works – revisit the recommendations of the Samuel report

• Water policy, get the CSIRO a seat at the table for goodness sake.

• Climate policy – if the last 12 months have shown us anything it’s how to tap into and listen to the scientific community and so deal most effectively with matters which rest on scientific work. Or more generally, just listen to those who have important information to inform policy.

• Aged care. I do to need to say more? But a huge rethink about how this is provided in Australia. We need to go back beyond patching the system and shoveling more money at it to a complete rethink about how it is provided and how it is regulated.

What’s missing? Bandwidth, commitment or vision? You decide.

In Australia, one of the somewhat unexpected consequences of the Covid-19 waves has been a conversation, albeit subdued, about the relative roles of the levels of government. Most notably, this has focussed on the roles of state and territory governments and the federal government. There are lots of federations around the world – all with their own unique ways of dealing with the inevitable issues of federation – and I freely admit that I know very little about how these federations all work. So I will confine my discussion to the one I know a bit about – Australia.

I was having a first post lockdown lunch with a trusted long time friend a month or so back and she said to me how she was a bit surprised by the powers the state government had and how central they had been to the Covid response.

It brought back memories of a survey/focus group (I can’t recall which) report from some 15 years ago, which asked about Australians’ view of the different levels of government. That report highlighted that a large proportion of the population was puzzled or uncertain about what each level of government was responsible for and how they worked together. In addition, it found that most people thought the federal government was the real seat of power and that they would characterise the relationship between the levels of government as seeing the federal government as the parent and the states and territories as the (wayward) children. My memory is that the research did not canvas views about local government.

Having spent most of my 40+ years of working life in one or other of these institutions and having had a long association in both places with federal-state relations I was neither surprised nor convinced by these results. I would add, that I have often seen a similar bias about the ability of states and territories to be evident in federal bureaucrats and politicians.

This is a far too simplistic view in my opinion. And what’s more, it fails to take into account the relative roles and responsibilities of the two tiers of government.

One way to characterise these differences is that the Federal government looks after the external affairs – trade, foreign affairs, defence etc., as well as ceded national oversight of some areas like parts of business regulation, the lion’s share of tax revenue and broad ability to direct a number of macroeconomic variables, as well as some social policy programs like pensions, unemployment benefits and the like. (Note this is not an exhaustive list). While the states and territories are primarily focussed on delivery of services – hospitals, schools, police, emergency services and transport and lots of infrastructure.

Undeniably there is plenty of overlap and scope for confusion, even among those charged with administering this system of government on occasion. That means that there are also plenty of opportunities for gaps through which things can fall, and lots of room for finger pointing when things go wrong. There are numerous examples of all of this in our 119 years of federation.

There have also been a number of attempts at reform of the federation and how it works – I can remember Lang Hancock hoeing into the debate early on in my career at a mining industry conference, where he expounded the view that the states and territories were an anchor on the prosperity of Australia and need to be abolished. I’m sure this wasn’t the first reform option floated and it certainly wasn’t the last. From competitive federalism, to cooperative federalism through to creating another state (!) (Rural and regional Victoria and NSW) to COAG and National Cabinets the list goes on since then.

I suspect that if a world wide pandemic can’t resolve the issue then maybe we should content ourselves with regular visits and some tinkering to make things work a bit better, but wholesale change? – not likely is my opinion.

There is room for more cooperation and less central government interference – especially in areas where it is arguable their level of expertise is limited. And while in my last few years in the state government I noticed a slight easing of the federal bureaucrats’ bias that they know better than the states and territories to embrace a more collegiate approach, this could have just been a sampling error on my part because my interactions were limited to a small group of federal bureaucrats. Certainly the calibre of state and territory engagement in the commonwealth-state relationship arena varies over time and this seems to depend to a large degree on the politics of the moment. But there is common ground in the same eye rolling I see in all jurisdictions from long serving senior staff about the waning influence and capability of the bureaucracy. Is this just the rose coloured glasses effect or is there more to it? Certainly our PM has not given his bureaucrats much to hang on to regarding their role in ensuring good government. Does he really think the public service not being involved in policy development only in delivery is going to serve this country well? Sure governments set the agenda – but not in isolation, not least not in isolation from a disinterested bureaucracy with years and years of policy experience to draw on. Some of the bureaucracy is also very good at pointing out to governments what needs to be done and offering options on how to improve the well-being of Australians. I mean really, this is a government that came to the last election with one policy – some tax cuts and not much more. And let me also tell you that there is a great deal more ‘policy’ to be developed than just the broad macro view of a program. 

I segued away from my main topic – apologies. I think that the reform I’d most like to see pursued in this federal-state space is one of respect and humility. Tall ask. But the powers that the states wield and the need for quite a lot more consideration of how that impacts other jurisdictions as well as the whole of Australia means that no one probably has all the answers, no one probably can see the complete picture and all players must be prepared to make concessions and to listen to others’ points of view. Some things – like dealing with national or even just cross border emergencies – flood, fire, health spring to mind – need to be resolved not put back into endless committees etc. But they also need to be flexible and open to further improvement – one advantage of the competitive federalism model was the ability to benchmark and learn from other jurisdictions.

So here’s my Christmas wish. Let’s see if we can’t acknowledge that there are great minds with great ideas worth listening to and implementing and that experience and understanding count. These ideas come from all sort of places and no one institution has a monopoly on them. Watch what others do. Learn from their mistakes and learn from their successes too.

One important factor that no one is questioning in Australia’s response to the Covid-19 pandemic, has been the impressive and central role of the so-called National Cabinet. (Not withstanding the current spike in Victorian cases arising from local transmissions).

The evidence for its crucial role is plain to see, in the setting aside of party political – in fact seemingly nearly all political – considerations, the unified approach and messaging, even taking into account that each jurisdiction faces different circumstances. The speed with which it has responded, and, of course, one of my favourites, the heady sight of politicians a) asking for advice from experts, b) acting on that advice and c) allowing those experts to have the public profile to explain those responses.

There have since been numerous column inches devoted to this unprecedented (yes I did write that) display of teamwork and shared leadership and decision making. With the odd notable exception, like early days on school closures, we have seen little lecturing by the ‘wise old commonwealth’ to the recalcitrant states and territories which was a common phenomenon in the past efforts at federal state relations. So much so, that the Prime Minister has called time on the previous vehicle – the charmingly named COAG (Council of Australian Governments) – and said that the new National Cabinet will replace it. This has been greeted with howls of support from all round – just about. Support has come from most quarters, including some who may even have an inkling of what COAG was or did. I personally take with a grain of salt the report that 75% of a particular group of ‘the public’ ie those surveyed, felt that the National Cabinet would be better than COAG. Hands up who might think that there isn’t much to be taken from that as you can’t believe 75% of the general public know what COAG is, let alone what it was set up to do and how well it has achieved its objectives. Heck, I bet 95% of folks didn’t even know it existed.

Be that as it may, the joy at the death of COAG and the ascendency of the National Cabinet seems to me to be a little bit premature. Don’t get me wrong, I’m not about to launch into a strong defence of COAG, but maybe the enthusiasm and expectations for the new body could do with a little tempering.

First a little history. Prior to 1995, when COAG was established, meetings between the Commonwealth and the States and Territories were ad hoc affairs. Prime Minister Keating established COAG to oversee the implementation of the National Competition Policy. In that respect, I suspect it would be gauged as mostly successful. However, it morphed into a general forum for dealing with (some) Commonwealth-State issues, and indeed, it was the home of the attempt, lead by Victoria but never really having the buy-in from the other jurisdictions to succeed, of a Third Wave of Reform. But its remit had also substantially widened to include all manner of topics including further energy reform, the rollout of the National Disability Insurance Scheme, waste, domestic violence, and a whole raft of partnerships and other agreements. Critics accuse it of becoming too bureaucratic – a place where good ideas go to die. But any institution charged with such a broad range of responsibilities is going to implode or descend into a maze of committees and sub-committees – or both.

So yes, it was definitely time, 25 years on, to consider what COAG was doing, why and how. The pandemic just provided a big push to the inevitable.

On 29 May 2020, the Prime Minister announced that the COAG will cease and a new National Federation Reform Council (NFRC) will be formed, with National Cabinet at the centre of the NFRC. Beyond that – not much else, oh except to note that the Treasurers will also form a group (as they had in the past) still to be known as the Council on Federal Financial Relations, and it will take on a broader role in the funding agreements between the Commonwealth and the States and Territories. I might add this is where the real angst will emerge, it always does around the money. There will also be ‘taskforces’ to deal with those other aspects of COAG business – eg domestic violence etc. The focus for the National Cabinet will be singular, but have many strands – as it works towards job creation. It will meet fortnightly for the present, but monthly once the pandemic requirement is lessened. One excellent outcome is that it will continue to be done electronically, so that premiers from more distant locations can fully participate – this is especially important for those in WA and the NT.

Much of this sounds good. But as the nuns used to drill into us – the road to hell is paved with good intentions. Hopefully this will have a life of five really useful years and, assuming that changes of government do not result in a lessening of the impetus, this group will remain active and true to its goals.

But the remit is bound to broaden, the need to speak with one voice will be curbed by the lessening of the imperative and politics will again enter the fray.

So yes, it was past time for COAG to be reviewed, revamped or retired. There is much to be hopeful for with this new arrangement. But there is also much to be circumspect about. Let’s revisit this in 18 months to three years and see what’s happened. But also, let’s build in some points of national review – anything from 5 to 10 years would be okay. Letting these processes drag on, morph and get various roles attached to it over the years willy nilly risks loss of purpose and focus, poor outcomes and most importantly a loss of faith in the institution to do its main job – of bringing together the jurisdictions to solve problems in a meaningful and collegiate way – oh, like grownups!

One last jibe if I may. It’s not a Cabinet like those of us well inculcated in public service advice and policy would think of it. The processes etc around it are completely different and while some of the changes – possibly no more communiques at the end of each meeting – might seem like a win – a little more transparency could lead to a lot more accountability and, as a tax payer and citizen, that thought gladdens my tiny shrivelled heart. Just sayin’.

Post Script. If you are interested, Annabel Crabb has written an engaging piece on the recent history of Federation reform which might provide you with a little more context if you are not previously mired in the arcane byways of this topic. You can find it here https://www.abc.net.au/news/2020-06-07/federal-reform-treacherous-waters-scott-morrison-capital/12320028?utm_source=abc_news&utm_medium=content_shared&utm_content=link&utm_campaign=abc_news

Sorry about the lack of a hyperlink – some aspects of WordPress still elude me.

Some vaguely linked thoughts have been festering in my brain this last week. So this blog comes in three separate but interrelated parts.

1. While there may be superficial similarities, Australia and the US are, on many counts, very different economies;
2. there seems to be some confusion about what ‘economic rationalism’ means in policy terms; and
3. that competition policy (and its legacy) champion competition for competition’s sake has always been a furphy of an argument so for goodness sake get over it.

A little while ago, my nerdy book group decided to read John Quiggan’s latest tome – Economics in Two Lessons: Why Markets Work So Well, and Why They Can Fail So Badly. Early on in my reading I became a little confused about some of the examples he was using. But then it dawned on me – this is not a book by an Australian academic aimed at an Australian market – it is a book by and Australian academic aimed at a US audience. Of course, why not? That’s where the bigger market is – but why not make it clear that you are using US examples not Australian ones? I had to deduce this from my own knowledge and experience. I’m not sure that casual readers either can, or care to, make the distinction and certainly authors (many Australian authors should know better, while most US authors simply assume that we are only talking about/interested in, the US) don’t clarify either. So in part, given we imbue so much American ‘culture’ etc it is not surprising to me that lots of people think we are pretty much the same with the same experiences – except of course we do have different national leaders – our win.

But it highlighted for me the very pertinent fact that our two economies are very different – not just in the obvious way – eg size – but in how they work, how they are administered and what policies are implemented and how.

Sure both countries implemented what I guess commentators have often referred to as ‘economically rational’ policies. Not really sure I know exactly what this means, and I am pretty sure Fred in the street has an even vaguer idea, but firmly believes it is either the work of the devil or a fiendish plot by the economic overlords to grind them into the ground. Be that as it may, I think it generally means policies that look for market solutions rather than government involvement in the day to day running of things. This has, since the late 1970s/early 1980s included governments stepping back from provision of services and utilities, like telecommunications, water, sewerage, energy etc and allowing greater scope for private sector provision of goods and services even within largely government-owned institutions or sectors.

The US has pursued this policy with far greater zeal and reach than Australia. This has meant that in Australia, for the most part, privatisation, corporatision and the like has had a softer edge, has had bounds, limits and regulations imposed more frequently and more invasively than in the US. As a consequence of this less enthusiastic approach, and the fact that often in the media – and academic works – it is difficult to see if reference is being made to the US (usually a default position wherein the author feels no compunction to identify the country to which they are referring because of course it’s the US – US-centric authors abound) or another place – maybe Australia, I think confusion arises about the actual policies in place in Australia and their effects.

So it does seem unreasonable to blanket shame Australian policies for failings in the US. Beware of what you are reading and be sure it is citing relevant matters.

In the wake of the economic turmoil being experienced by the Codiv-19 lockdown there has been all manner of calls for nationalisation of entities – here in Victoria there is an almost cult-like attachment to a mythical beast – the SEC – which has regularly received calls for a Lazarus-like resurrection. (For those not well acquainted with this – it is the old state-owned electricity company which was split up and privatised in the early 1990s. It was a pretty interesting place by all accounts – run by engineers but which, according to some, was a paragon of how to run a successful energy business, trained a multitude of apprentices and single handedly kept the LaTrobe Valley going – I’m just about willing to agree to that last proposition. Sure they trained apprentices – but was that the best use of their resources and did they train the right ones? And yes they kept the lights on – mostly – but did they do so in a truly effective and efficient way? How would they know if they were? What would they have made of the change in energy from coal to renewables? I think you get my drift.)

I get it that at times of uncertainty (now) the past can look particularly rosy. But do you really want to live there? The ever reliable the Hon Kim Carr is calling for the government to boost manufacturing – really? Because that was such a success last time we tried it? Effective rates of protection in excess of 100% couldn’t save many industries from themselves. Sure, make sure we have industry policies which assist industry to thrive – including manufacturing. But please don’t impose tariffs, pay bounties or otherwise prop up industries which we can’t actually sustain without the government lifeline. In fact, the interesting question now is a bit of a reinvention of the old defence argument – we need certain industries because in the event of war we need to be self-reliant. Well that ship has sailed for pretty much every economy on earth. We are so interconnected now that for a small economy like Australia to try to go it alone would be unbelievably expensive and even that assumes we know what we would need to protect. I am hearing very similar arguments now about the need for this, but for production of medical supplies and pharmaceuticals. Time to take a big deep breath, see what actually has happened and how and then draw conclusions.

And then, Clancy Yeats in The Age on 18 April makes a strange song and dance about the ACCC actively allowing firms to cooperate – banks, supermarkets, insurance companies and so on – to provide agreements on how to support their customers during a pandemic.

Usually this sort of behaviour is pounced on by the ACCC, but firms have a defence of public interest under the Competition and Consumer Act. In this case however, the ACCC has retreated from its usual policy of not being proactive, as it usually relies on testing things in court, because, for obvious reasons we don’t have time. But this is not an illustration of competition failing – it is more an acknowledgement that sometimes markets do not produce the best outcomes. Competition policy in Australia has always acknowledged this – as has economic theory. This is no failure of rational economics or neoliberal thinking. But it is recognition that markets are not perfect. That is why most markets are regulated in some way, shape or form. Is this really news?

A couple of random postscripts.

Am I suffering from ISO madness or does it seem to others that our politicians – particularly at the federal level – Prime Minister and Treasurer mainly – have been answering journalists’ questions? And doing so in a straightforward way so they pretty much stick to ‘the facts’ as much as can be known?

One thought I had – and I would appreciate comments from readers more closely involved – are ministers now taking much more notice of the advice of bureaucrats and perhaps the ‘minders’ been a bit sidelined in all of this? Certainly their acceptance of the need to take scientific advice is really encouraging – may they not lose these lessons. But more generally, I can see the hand of measured, dare I say, reasonably non-partisan, advice creeping into their interviews and press releases. A distinct lack of spin is evident. Please let me be right. It would gladden my shrunken little heart to think this might be true and send me into the depths of hope that this may continue.

If I am right, then bureaucrats the ball is in your court – at least for the time being. Time to throw off the shackles of pandering to ministerial whims and offer true open and honest advice.

For the politically minded amongst you – this is an excellent way to get the general population behind you. You should no longer be surprised about what people think and do when you treat them like adults and are straight with them.

So why, oh why, did we get reports yesterday that the head of the National COVID-19 Co-ordination Commission, Neville Power, is championing cheap power – read more gas – oh lordy – and that theme was echoed by our Energy Minister, Angus Taylor. Mr Power, made sensible comments about not indulging in ‘nation building’ investments that only work with heavy government subsidy etc but more gas? Really? Given that he dismisses the Henry tax review options as out of date – not sure why – I think his thinking on where cheap power might be found is also wanting a refresh.  What do you think?