tag:theconversation.com,2011:/africa/topics/commission-of-audit-7049/articlesCommission of Audit – The Conversation2016-03-29T12:56:33Ztag:theconversation.com,2011:article/569472016-03-29T12:56:33Z2016-03-29T12:56:33ZTurnbull’s reform pitch – state access to income tax<p>Just when we thought the tax debate was winding down to minimalism, as least as far as the federal government was concerned, Malcolm Turnbull has decided to throw a curveball.</p>
<p>The government is preparing to discuss giving states and territories the ability to raise a share of income tax, in what would be the most radical move in federal-state financial relations since John Howard handed them the proceeds of the then-new GST.</p>
<p>The idea is being run by Turnbull and his department, led by secretary Martin Parkinson.</p>
<p>The access to income tax is to be canvassed at this week’s Council of Australian Governments meeting, when the states are also set to be offered about A$3 billion over three years to help with their health costs.</p>
<p>The income tax move can be seen as a carrot to placate premiers and chief ministers, who have been in constant protest over the Abbott government’s slashing of projected levels of spending in health and education and won’t be silenced with $3 billion.</p>
<p>On another view, if it was eventually implemented the income tax plan would be a “big idea” change that – depending on its scale – could make the Australian federation a whole lot more “federalist”.</p>
<p>The last time that allowing the states back into the income taxing field was contemplated was in the late stage of Bob Hawke’s prime ministership. Paul Keating, by then on the backbench between leadership challenges, strongly attacked this manifestation of “new federalism”. Nothing came of it.</p>
<p>Details of the Turnbull government’s thinking are sketchy. A possible model would have the Commonwealth income tax take reduced by a certain number of cents at each tax rate, leaving the room for states to fill the gap, or not, as they wished. The Commonwealth would correspondingly withdraw itself and its funding from some functional areas, leaving them to the states.</p>
<p>The Commission of Audit, set up by Tony Abbott and headed by Tony Shepherd, recommended a states’ role in income tax in its 2014 report.</p>
<p>It said the Commonwealth should “reduce its personal income tax rate by an equivalent percentage point amount to a new state surcharge … and
the states be provided with a capacity to periodically vary the surcharge they impose as a means of injecting further competition into the federation”.</p>
<p>Options were also canvassed in a discussion paper on the federation the Abbott government issued last year.</p>
<p>These were “‘making room’ in the income tax base so that states and territories can raise their own rates; or sharing the income tax revenue collected by the Commonwealth”.</p>
<p>The discussion paper was part of the process for a promised white paper on “The Reform of the Federation” which the website says “will set out a clear, well-defined and timely policy platform”. This white paper has so far not appeared.</p>
<p>The arguments advanced for giving states power to play in the personal income tax area include that it would better align revenue raising and spending responsibilities, Commonwealth-state overlaps in functions would be reduced, the “blame game” would be harder to run, and the states – facing escalating costs in health and education particularly – would have a new growth tax.</p>
<p>The main argument against is that Australia could end up with a patchwork of both income tax and service levels, when a better model is national harmonisation. A related issue is whether it would be desirable for the federal government to vacate certain fields – for example health – where many would see a case for it to keep an oversight, even at the cost of some duplication.</p>
<p>The new tax model would also be complicated to implement, with one problem being how it would mesh with the fiscal equalisation undertaken by the Grants Commission, which aims to even out the differences between various states’ revenue raising capacities and spending needs. Those critical of how the Grants Commission operates now dismiss that as a problem.</p>
<p>How much energy Turnbull is willing to invest in this exercise will depend to a large degree on the states’ reactions.</p>
<p>It’s somewhat analogous to his challenge to the crossbenchers to strike a deal among themselves to pass his industrial legislation if they want to avoid a double dissolution.</p>
<p>The choice for the states would be to agree among themselves over the period ahead on the income tax plan or forgo a solution to their spending needs.</p>
<p>Just as he has shifted part of the political weight for a double dissolution, if it comes to that, to the Senate crossbench, so he is seeking a way to transfer the long-term political burden of heath and education funding to the states.</p><img src="https://counter.theconversation.com/content/56947/count.gif" alt="The Conversation" width="1" height="1" />
Just when we thought the tax debate was winding down to minimalism, as least as far as the federal government was concerned, Malcolm Turnbull has decided to throw a curveball. The government is preparing…Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/416642015-05-12T23:28:30Z2015-05-12T23:28:30ZINFOGRAPHIC: Lessons in budget politics<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/81446/original/image-20150512-25056-vbzmra.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/81446/original/image-20150512-25056-vbzmra.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=7869&fit=crop&dpr=1 600w, https://images.theconversation.com/files/81446/original/image-20150512-25056-vbzmra.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=7869&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/81446/original/image-20150512-25056-vbzmra.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=7869&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/81446/original/image-20150512-25056-vbzmra.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=9889&fit=crop&dpr=1 754w, https://images.theconversation.com/files/81446/original/image-20150512-25056-vbzmra.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=9889&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/81446/original/image-20150512-25056-vbzmra.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=9889&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
</figcaption>
</figure><img src="https://counter.theconversation.com/content/41664/count.gif" alt="The Conversation" width="1" height="1" />
The Commission of Audit set the high water mark for reform designed to protect Australia against an economic downturn. One year on, little of it has made it into policy.Charis Palmer, Deputy Editor/Chief of StaffEmil Jeyaratnam, Data + Interactives Editor, The ConversationDiana Hodgetts, EditorLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/410882015-05-04T19:25:56Z2015-05-04T19:25:56ZTime to listen to the evidence for a rethink of super tax concessions<p>Evidence doesn’t matter when it comes to policy development. At least it doesn’t matter as much as it should in theory.</p>
<p>In theory, the full range of evidence is sought and nothing is off limits. In theory, objective evidence will show a clear path forward that is obvious to everyone. And in theory, as soon as new evidence is available, it will result in policy action.</p>
<p>This is the “evidence-based policy” mantra that echoes through forums for Australian scholars and bureaucrats, that academics rely on to train future policymakers, and that can even be found in the vision statements of Commonwealth departments.</p>
<p>But of course there can be big difference between theory and reality. Especially when that reality is a government minority in the upper house and <a href="https://theconversation.com/the-new-senate-could-be-abbotts-obstacle-or-an-opportunity-28002">one of the most complex Senates</a> in living memory.</p>
<p>Let’s take the current <a href="http://www.smh.com.au/federal-politics/political-news/its-super-tax-concessions-not-pensions-that-are-killing-the-budget-20140421-zqx7p.html">superannuation debate</a> for example.</p>
<p>Over the last six months a public consensus has emerged among academics, think tanks, community organisations, elements of the superannuation industry and most politicians about superannuation. They now agree that superannuation tax concessions are growing rapidly, are unevenly distributed and are in need of reform. Indeed, even new Treasury Secretary John Fraser has said we need a “<a href="http://www.smh.com.au/federal-politics/political-news/treasury-boss-john-fraser-calls-for-a-fundamental-rethink-of-superannuation-pensions-20150408-1mgqwq.html">fundamental rethink</a>” of retirement income policy.</p>
<p>Clearly, this public consensus has emerged because the latest evidence is in. We finally have a clear path forward about which everyone is agreed. Well, not quite.</p>
<h2>The evidence is old, political interest is new</h2>
<p>First, the evidence hasn’t changed. For many years, academics, bureaucrats and financial planners have known that the system of tax concessions for superannuation was fundamentally flawed. They have asked why – when the supposed purpose of superannuation is to reduce the number of Australians relying on the aged pension – does our system shovel billions of dollars of taxpayers’ money to wealthy people who were never going to get a pension anyway?</p>
<p>Back in 2007, <a href="http://media.wix.com/ugd/b629ee_7e1713e1e3d1f4d5be149103ff8f616b.pdf">Australia Institute research showed</a> that it was cheaper for the federal government to provide the age pension than it was to fund so called “self-funded retirement” via tax concessions. Since that time, dozens of analysts using a variety of methods and data sources have confirmed that finding. </p>
<p>Despite all the available evidence, up to now, the response has been policy inaction. For instance, both major parties went to the 2013 federal election <a href="http://www.abc.net.au/news/2013-07-31/bowen-promises-five-year-freeze-to-superannuation-policy/4856748">promising</a> to give the superannuation industry “<a href="http://www.smh.com.au/federal-politics/political-news/coalition-in-pledge-to-shield-super-20130127-2df10.html">certainty</a>”, which is just good spin for ignoring the problem.</p>
<p>Second, what has changed in the past six months is not the size or rigour of evidence regarding the problem, it is the political significance of the problem. To put it another way, the research that is behind this new-found interest in reforming superannuation is not economic data, it is polling data.</p>
<p>In opposition, the Coalition had a simple (but effective) political strategy in the lead-up to the 2013 federal election. Promise to do popular things like scrapping the carbon tax, avoid promises to do unpopular things such as cutting the age pension, and suggest the Rudd/Gillard/Rudd budget deficits constituted a “budget emergency” caused by a “reckless” government.</p>
<p>Similarly, on entering government, the prime minister and treasurer had a clear budgetary (and re-election) strategy: </p>
<ul>
<li><p>Step one: use the Commission of Audit to confirm that the budget emergency was even worse than previously thought. </p></li>
<li><p>Step two: use the commission’s findings to justify unpopular decisions (such as a GP co-payment and cuts to the age pension). </p></li>
<li><p>Step three: wait two years until things had settled down in the electorate before announcing tax cuts for middle and high-income earners in the lead-up to the 2016 election. </p></li>
</ul>
<p>This could have been an effective strategy, if only the Senate had not refused to support spending cuts that were not signalled before the last election.</p>
<h2>Where does superannuation fit into all this?</h2>
<p>So what has this got to do with the role of evidence and the emergence of a public consensus around superannuation policy? Well, a lot.</p>
<p>Where the Coalition government has succeeded is in convincing people that the budget deficit needs fixing. As anyone with a household budget understands, if you can’t cut your spending, then the only other way to avoid running up your debt is to increase your income. This is how common sense has come to prevail where tax concessions on superannuation are concerned.</p>
<p>According to Treasury, <a href="http://www.treasury.gov.au/%7E/media/Treasury/Publications%20and%20Media/Publications/2015/Tax%20Expenditures%20Statement%202014/Downloads/PDF/TES_2014.ashx">tax concessions on superannuation</a> cost the Commonwealth government <a href="http://www.abc.net.au/news/2015-04-01/lewis-woods-tax-reform-a-super-idea/6363644">around $30 billion</a> per year. Again according to Treasury, more than one-third of that lost revenue goes <a href="http://www.abc.net.au/news/2015-04-21/super-tax-concessions-fc/6365098">to the top 10% of income earners</a>. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/80189/original/image-20150504-23890-1q6pcjx.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/80189/original/image-20150504-23890-1q6pcjx.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/80189/original/image-20150504-23890-1q6pcjx.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=393&fit=crop&dpr=1 600w, https://images.theconversation.com/files/80189/original/image-20150504-23890-1q6pcjx.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=393&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/80189/original/image-20150504-23890-1q6pcjx.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=393&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/80189/original/image-20150504-23890-1q6pcjx.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=494&fit=crop&dpr=1 754w, https://images.theconversation.com/files/80189/original/image-20150504-23890-1q6pcjx.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=494&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/80189/original/image-20150504-23890-1q6pcjx.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=494&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Treasury estimates from the March 2015 Tax Discussion Paper show much in superannuation tax concessions (in green) goes to the top income earners.</span>
<span class="attribution"><a class="source" href="http://bettertax.gov.au/files/2015/03/TWP_combined-online.pdf">Commonwealth Government March 2015</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>So, if you want to have a big impact on the budget deficit, there are few policy areas that promise as much as the reform of superannuation tax concessions.</p>
<p>To reiterate our point, it is not that evidence is unimportant for policy development (often it is), but if it is a competition between politics and evidence, bet on politics every time. </p>
<p>We suggest that this is a principle that goes beyond the example of superannuation.</p>
<p>If we look to the international policy context, a similar story is playing out in relation to corporate tax evasion. Everyone who has taken the time to look at the evidence has known what Apple and Google have been up to with their tax for a decade. But in Europe – where unemployment and deficits remain high after the global financial crisis – it is politics (not new evidence) that has led to taking the “<a href="https://theconversation.com/irelands-move-to-close-the-double-irish-tax-loophole-unlikely-to-bother-apple-google-33011">double Irish sandwich</a>” off the tax-evasion menu. </p>
<p>This is equally the case in Britain. Poor polling in the lead-up to the May 7 general election has provided the political incentive for their Coalition government to enter into <a href="http://www.abc.net.au/news/2015-04-19/australia-uk-crackdown-profit-shifting-multinational-companies/6403712">a new partnership</a> with the Australian government to chase down firms that shift their profits offshore.</p>
<h2>Key MPs can tip balance towards evidence</h2>
<p>In our recent book on <a href="https://www.mup.com.au/items/152294">Minority Policy</a>, we argue that the conventional Australian approach to evidence-based policy inevitably results in complaints that good policy is being ruined by bad politics. This offers little to help understand the nuances of policy development in minority government contexts and does even less to support better links between evidence and policy in these contexts. In response, we suggest that the focus of those dedicated to improved public policy should be the question of <em>when</em> does evidence matter and <em>when doesn’t</em> it?</p>
<p>We argue that an understanding of the motivations and priorities of the parliamentarians who are, or might soon be, in a position of holding the balance of power can provide a powerful new lens through which the policy development process can be understood. </p>
<p>Like government ministers, Jacquie Lambie, Nick Xenophon and Clive Palmer all claim to consider evidence before making their decisions. But politicians representing different sections of the electorate can value different types of evidence, or can consider the same evidence but come to different conclusions. It is no longer just the evidence preferred by the minister that matters.</p>
<p>The evidence about superannuation tax concessions has been in for years, but it is the political will that has been out. However, the mood has clearly changed. There is now public consensus for a “fundamental rethink”. </p>
<p>Those interested in the role of evidence in informing and shaping policy can learn a lot by watching closely to see when it matters, when it doesn’t, and what might explain the difference.</p><img src="https://counter.theconversation.com/content/41088/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Over the last six months a public consensus has emerged among academics, think tanks, community organisations, elements of the superannuation industry and most politicians about superannuation.Richard Denniss, Adjunct Professor, Crawford School, Australian National UniversityBrenton Prosser, Senior Research Fellow, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/356672014-12-25T19:40:13Z2014-12-25T19:40:13Z2014, the year that was: Business + Economy<figure><img src="https://images.theconversation.com/files/67775/original/image-20141219-31557-1iurwfz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Amidst the hugging of cuddly animals, G20 leaders talked growth.</span> <span class="attribution"><span class="source">Andrew Taylor/G20 Australia/AAP</span></span></figcaption></figure><p>In April, Treasurer Joe Hockey set the tone for his economics policies <a href="http://www.joehockey.com/media/speeches/details.aspx?s=128">in a speech</a> in New York on what he referred to as ending the “entitlement culture”.</p>
<p>Hockey, who had <a href="http://australianpolitics.com/2012/04/17/hockey-speech-end-of-age-of-entitlement.html">given a defining speech in 2012</a> about ending the age of entitlement, outlined his mission:</p>
<blockquote>
<p>Waste and inefficiency in government spending must be rooted out. Government must live within its means.</p>
<p>Government benefits must be sustainable, fair and targeted to those in genuine need.</p>
<p>Welfare must be a safety net, not a cargo net. We cannot allow vast numbers in society to remain in an entitlement culture.</p>
</blockquote>
<p>Thus the script was set. But it has not exactly gone to to plan.</p>
<p>Recommendations of a wide-ranging <a href="https://theconversation.com/au/topics/national-commission-of-audit">Commission of Audit</a> set the scene for what many presumed would be a bloody May budget. Hockey announced a <a href="https://theconversation.com/infographic-federal-budget-at-a-glance-26658">A$29.8 billion deficit</a>; but it was clear few in the government realised how unpopular proposed cuts to <a href="https://theconversation.com/low-earners-do-most-in-budget-lifting-says-natsem-modelling-26981">family payments</a>, <a href="https://theconversation.com/federal-budget-2014-health-experts-react-26577">health reform</a>, programs targeting the unemployed (<a href="https://theconversation.com/regressive-measures-wont-help-youth-into-work-or-training-26700">particularly young people</a>) and measures affecting pensioners would prove to be.</p>
<p>With the budget quickly defined as unfair, the following six months would be marked by intense political gridlock and disastrous electoral fallout. Australians clear valued their entitlements.</p>
<p>December’s Mid-Year Economic and Fiscal Outlook (MYEFO) <a href="https://theconversation.com/government-reveals-40-billion-budget-deficit-clings-to-surplus-hope-35492">revealed a A$40.4 billion deficit</a>, which Hockey attributed to plunging iron ore prices leading to Australia’s worst terms of trade in 50 years, and a recalcitrant Senate blocking many of the government’s key spending cuts. </p>
<p>The government had managed to push through a number of measures, such as a <a href="https://theconversation.com/government-gets-round-senate-on-fuel-33538">fuel tariff</a>, the axing of Labor’s <a href="https://theconversation.com/carbon-tax-axed-how-it-affects-you-australia-and-our-emissions-28895">carbon</a> and <a href="https://theconversation.com/mining-tax-repealed-but-compulsory-super-increase-delayed-31181">mining</a> taxes and the implementation of a 2% deficit levy on high income earners. After a backflip from the Palmer United Party, the Coalition scrapped a planned increase in superannuation contributions and axed the low income super contribution, agreeing to dealy this a year. </p>
<p>However, other key initiatives such as $7 GP co-payment have been dropped (reintroduced as a cut to the Medicare rebate); redrafted, such as deregulation of the education sector, defeated before being put straight back onto the agenda by Education Minister Christopher Pyne; or in flux, such as the proposal to force jobseekers under 30 to wait six months to access welfare payments.</p>
<p>Nevertheless, the Coalition is still clinging to <a href="https://theconversation.com/government-reveals-40-billion-budget-deficit-clings-to-surplus-hope-35492">hopes of a surplus</a>, however distant - even as Australians learned a new economic term: <a href="https://theconversation.com/myefo-projections-signal-a-deepening-income-recession-35539">income recession</a>.</p>
<p>The government’s message has this year consistently been that of <a href="https://theconversation.com/au/topics/is-there-a-budget-crisis">budget crisis</a>, led by unsustainable government spending and debt.</p>
<p>But experts such as <a href="https://theconversation.com/australia-needs-higher-taxes-not-spending-cuts-34657">Professor Max Corden argue</a> that what Australia faces is a revenue crisis, which needs to be addressed through taxation. Despite calls for the <a href="https://theconversation.com/why-its-time-to-hike-the-gst-and-levy-an-inheritance-tax-35496">GST to be raised</a> and a re-think of generous tax measures for property owners such as <a href="https://theconversation.com/explainer-why-negative-gearing-is-bad-policy-21882">negative gearing</a> and tax subsidies for superannuants, <a href="https://theconversation.com/abbott-says-tax-and-federalism-changes-will-be-a-long-fight-33562">the government</a> is so far standing firm.</p>
<p>Integral to any decisions will be two important government white paper policy processes due to report next year, focusing on Australia’s <a href="https://theconversation.com/au/topics/renewing-federalism">system of federalism</a> - which among other things will tackle which tiers of government have fiscal responsibility for services - and taxation, now due next year.</p>
<p>Other key policies to look out for will be Professor Ian Harper’s final recommendations from the <a href="https://theconversation.com/harper-competition-review-seeks-widespread-change-experts-react-31963">Competition Policy Review</a>.</p>
<p>In business, there was much pain for Qantas this year as it sought to stem the bleeding caused by a savage domestic capacity war with Virgin and continuing losses in its international division. In February, the company announced it would cut 5000 jobs. Chief executive Alan Joyce was not one of those, despite <a href="https://theconversation.com/the-5000-qantas-job-losses-should-include-alan-joyce-23761">loud calls</a>. </p>
<p>In September the airline posted its largest ever loss - A$2.8 billion - that included a A$2.6 billion writedown on its fleet. Hamza Bendemra <a href="https://theconversation.com/did-qantas-bet-the-house-on-the-wrong-planes-30999">wondered at the time</a> whether it had invested in the wrong planes.</p>
<p>Meanwhile, Toyota joined Ford and Holden in <a href="https://theconversation.com/toyota-names-2017-end-australian-car-making-to-cease-experts-react-23037">announcing it would cease manufacturing cars in Australia</a> by 2017, leaving Australia without a local automotive industry. The move, while expected, <a href="https://theconversation.com/why-the-australian-economy-still-needs-manufacturing-31913">caused soul searching</a> over the future of Australia’s manufacturing industry more widely. </p>
<p>2014 was the year of the free trade agreement, with Australia finalising FTAs with <a href="https://theconversation.com/can-australia-win-from-ftas-in-the-asian-century-23295">South Korea</a> and <a href="https://theconversation.com/australia-japan-fta-finalised-after-long-gestation-25356">Japan</a> - and most notably <a href="https://theconversation.com/key-events-in-the-10-year-journey-towards-a-china-australia-fta-32328">China</a>, after a 10 year gestation.</p>
<p>Also on the international scene, in what many insiders dubbed a summit of two agendas, <a href="https://theconversation.com/au/topics/g20-brisbane">Australia’s first G20 summit</a> in Brisbane in November will be remembered for wrangling over climate change, and world leaders hugging koalas.</p>
<p>But beneath the superficial, there was news on the plan to crack down on tax cheats, and real movement to close the gender gap on female workforce participation.</p>
<p>G20 countries endorsed treasurer Joe Hockey’s 2.1% collective growth target with infrastructure and trade lead items. Achieving the US$2 trillion growth target by 2018 is far from certain, but by implementing a monitoring plan to keep G20 countries honest, Australia made accountability a key agenda item.</p>
<p>As the Australian economy is weaned off its reliance on the very much waning commodities boom, there is very much a wait-and-see sense about the future. Will there be further interest rate cuts? How will the newly inked free trade agreements, (notably that with Japan, which kicks off early next year) affect Australia’s economy? </p>
<p>Will Reserve Bank of Australia (RBA) governor Glenn Stevens be granted his wish for the Australian dollar to be at US75c by next December? We’ll bring it all to you in 2015. </p>
<hr>
<p><strong>Top five business and economy stories:</strong></p>
<ul>
<li><p><a href="https://theconversation.com/infographic-the-promises-vs-budget-measures-26660">Infographic: the promises vs budget measures</a></p></li>
<li><p><a href="https://theconversation.com/who-will-bear-the-60m-cost-of-the-search-for-mh370-26050">Who will bear the $60m cost of the search for MH370?</a></p></li>
<li><p><a href="https://theconversation.com/infographic-federal-budget-at-a-glance-26658">Infographic: federal budget at a glance</a> </p></li>
<li><p><a href="https://theconversation.com/a-thin-blue-line-how-facebook-deals-with-controversial-content-19966">A thin blue line: how Facebook deals with controversial content</a> </p></li>
<li><p><a href="https://theconversation.com/unemployment-coming-to-a-suburb-near-you-20762">Unemployment … coming to a suburb near you</a> </p></li>
</ul>
<hr><img src="https://counter.theconversation.com/content/35667/count.gif" alt="The Conversation" width="1" height="1" />
In April, Treasurer Joe Hockey set the tone for his economics policies in a speech in New York on what he referred to as ending the “entitlement culture”. Hockey, who had given a defining speech in 2012…Helen Westerman, Business + Economy EditorLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/328912014-10-23T19:16:49Z2014-10-23T19:16:49ZAbbott’s court is full of flatterers, and it’s a recipe for groupthink<p>In a democracy governments cop criticism: that’s a rule of politics. Opposition parties and politically-aligned organisations will always exploit opportunities to have a go at the government. But it is particularly irritating for a government when criticism comes from institutions noted for their political independence, and when some of its own agencies don’t seem to be fully on message.</p>
<p>It is tough for a treasurer, intent on talking up the economy, when the Reserve Bank issues a <a href="http://www.rba.gov.au/publications/fsr/">subtle warning</a> that Australia’s policy settings could necessitate higher interest rates to head off a housing bubble. </p>
<p>It is tough for the whole government, so committed to supporting the coal and iron ore industries and so hostile to action on climate change, when knowledgeable investors start selling down shares in resource companies. They can’t do much to hit back at the Rockefeller family’s decision to <a href="http://www.nytimes.com/2014/09/22/us/heirs-to-an-oil-fortune-join-the-divestment-drive.html?_r=0">sell its oil investments</a> in favour of renewables but when the ANU makes a similar move with its modest portfolio Jamie <a href="http://www.abc.net.au/news/2014-10-13/pyne-says-anu-decision-to-ditch-mining-companies-bizarre/5808674">Briggs is able to hint</a> that such disloyalty to the official line could jeopardise university funding. </p>
<p>Joe Hockey was quick to <a href="http://www.smh.com.au/business/mining-and-resources/reserve-bank-warns-of-housing-bubble-risks-as-treasurer-joe-hockey-dismisses-fears-20140916-10hovp.html">dismiss the Reserve Bank’s warning</a> about a housing bubble, and as doubts about the future of the coal industry intensified, Tony Abbott, at the opening of a coal mine, took the opportunity to <a href="http://www.abc.net.au/news/2014-10-13/coal-is-good-for-humanity-pm-tony-abbott-says/5810244">announce</a> that “coal is good for humanity, coal is good for prosperity, coal is an essential part of our economic future”.</p>
<p>When treasurers and prime ministers talk up particular sectors and industries, they risk misleading naive investors, particularly on housing. And, unwisely, they put their own credibility on the line.</p>
<p>But there are greater risks when governments react negatively to reasoned warnings and criticism. It’s unwise to damage the credibility of a nation’s economic institutions, and bypassing them in favour of other (often partisan) sources of advice is politically risky for the government itself.</p>
<h2>Don’t trash our institutional capital</h2>
<p>If Australia is to be “open for business”, local and foreign investors need to have confidence in a nation’s economic institutions – its central bank, its statistics office, its economic management departments, and its public auditors, to name the main players. </p>
<p>Beyond these central institutions, at greater distance from government, there are universities, think tanks, and even a few investigative journalists, analysing the flow of communication from governments. Their job is delve into the sources behind the carefully spun ministerial press releases, to dig deeply into statistics, to cross-check official data with data from other places, and to clarify issues.</p>
<p>It would indeed be worrying if their findings always reflected the government’s line, and wouldn’t do much to help investors.</p>
<p>It’s not clear, however, that the Abbott government fully appreciates the value of such institutions, or the political danger it faces when it draws only on those who share its views.</p>
<p>Just 12 days after being elected to office, it announced the <a href="http://www.smh.com.au/federal-politics/political-news/abbott-shuts-down-climate-commission-20130919-2u185.html">abolition of the Climate Commission</a>, a body established in 2011 to communicate “reliable and authoritative information” about climate change. Publicity around that abolition and Tim Flannery’s successful campaign to resurrect it with public donations distracted us from other moves, such as the government’s decision to <a href="http://australianpolitics.com/2013/11/08/abbott-abolishes-advisory-bodies.html">abolish 20 advisory bodies</a>, and to absorb others into portfolio departments.</p>
<p>It is easy to see how some business lobbies would be pleased to see the departure of such bodies. The coal industry was no friend of the Climate Commission, and the fast food and alcohol industries must have been happy to see the demise of the <a href="http://www.anpha.gov.au/internet/anpha/publishing.nsf">Australian National Preventative Health Agency</a>, which had made its first task an examination of the causes of obesity.</p>
<p>The ostensible reason for these cuts was to save fiscal outlays. Less evident, however, is the cost of the loss of sources of objective advice. </p>
<p>Having abolished a number of analytical agencies, the government appointed a <a href="http://www.ncoa.gov.au/">Commission of Audit</a>, to report on “the performance, functions and roles of the Commonwealth government”. The Commission was headed by the President of the Business Council of Australia, which also provided the head of its secretariat. The Commission has been criticised for its narrow terms of reference, its tight time frame, and for its lack of public consultation. And in appointing such a body the government passed over its own organisation with an international reputation for sound economic advice, and with a repository of knowledge and experience, the Productivity Commission.</p>
<h2>Be mindful of political risks</h2>
<p>A view based on crude military strategy rather than practical politics is that the Coalition, having been elected, was entitled to enjoy the spoils of victory, and to clear out those who had been serving the previous administration.</p>
<p>But have these moves really served the government well?</p>
<p>Heavily influenced by the Commission of Audit, this year’s <a href="http://www.budget.gov.au/2014-15/content/bp1/html/index.htm">Budget Paper 1</a>, which in past years has contained a wealth of objective economic and fiscal information, reads like a political tract. Gone are figures showing Australia’s government debt position in relation to other countries, but there is room for optimistic figures on economic forecasts for economic growth, inflation and commodity prices.</p>
<p>It is possible an enquiry conducted by more trusted agencies would have charted more publicly acceptable ways to reduce the budget deficit. Even if there are to be some tough recommendations, a more open process helps a government to make hard decisions. Before appointing the Commission of Audit, the government would have been well-advised to consider opinion polling showing that the public <a href="http://essentialvision.com.au/trust-in-institutions-4">trusts the Commonwealth Public Service</a> far more than business groups.</p>
<p>In devaluing public institutions and in trying to quell voices of dissent, the government does itself no favour. It is tempting for Treasurer Hockey to take a <a href="https://theconversation.com/hockey-plays-the-abs-blame-game-while-unemployment-hovers-32746">swipe at the Bureau of Statistics</a> when it’s rethinking seasonal adjustment. It would be so much more comfortable for the government to see the ABC reduced to broadcasting BBC crime dramas on TV and reports of livestock auction prices on radio. But cutting off bearers of bad news and dissenting voices provides a government no more than a short-term benefit, while entrenching a culture of “groupthink” and an overconfident feeling of infallibility.</p>
<p>Around now the processes leading up to the May 2015 budget will be cranking up. It may be a good time for Abbott and his ministers to get out their copies of Machiavelli’s advice to the Medici Princes. Don’t populate the court with flatterers; rather, listen to your critics — they may help you avoid making stupid decisions.</p><img src="https://counter.theconversation.com/content/32891/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ian McAuley does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>In a democracy governments cop criticism: that’s a rule of politics. Opposition parties and politically-aligned organisations will always exploit opportunities to have a go at the government. But it is…Ian McAuley, Lecturer, Public Sector Finance , University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/295282014-07-29T04:08:20Z2014-07-29T04:08:20ZRich but untapped data resource will let us make policy work better<figure><img src="https://images.theconversation.com/files/55015/original/qx56gn5k-1406529341.jpg?ixlib=rb-1.1.0&rect=22%2C14%2C893%2C616&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The failure to publish collected data is hindering understanding of the effectiveness and failures of government programs.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/lod2/13432873994/in/photolist-mt1ZrL-msZC9M-mt2brw-mt2Pkm-mt2q1A-msZsYH-msZomB-mt1DXp-mt2wKN-msZMqp-mt12sv-mt1jwb-mt2cE3-msZ9zF-msZ54B-mt1986-msZVBH-msYSpK-mt23oC-msZPmr-mt1RRW-mt1akz-mt1o4S-msYD2n-mt19zZ-mt11aH-msZ4h6-msZ1gX-msZdWz-msYHYX-msZJKV-msZdPH-mt1SUh-msZpEP-msZ6q4-mt15Nv-msZLsF-mt1AXh-mt22om-mt1qvp-mt2CYu-mt2LSW-msZWoT-mt1iaJ-mt1JRn-mt1ipc-mt1bsM-msZCoX-mt12KM-mt159V">Flickr/LOD2project/European Data Forum</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>The <a href="http://www.dss.gov.au/our-responsibilities/review-of-australia-s-welfare-system">McClure Review of Welfare</a>, much like the <a href="http://www.ncoa.gov.au/">Commission of Audit</a> report, is unlikely to win the Abbott government many new fans in the social services sector. However, for those involved in social policy, it is worth noting the interim report’s findings on open data. Both reports offer an insightful way to inform public discussion of social policy while improving its effectiveness.</p>
<p>Opening government data involves making it freely available for use in a machine-readable format and permitting re-use without restrictions. The McClure review’s <a href="http://www.dss.gov.au/our-responsibilities/review-of-australia-s-welfare-system/a-new-system-for-better-employment-and-social-outcomes-full-version-of-the-interim-report">interim report</a> finds that: </p>
<blockquote>
<p>Improving data collection nationally, together with evaluation of services, will assist in designing effective services for disadvantaged groups and targeting those services to those most in need.</p>
</blockquote>
<p>The Commission of Audit points out that the failure to publish collected data is:</p>
<blockquote>
<p>… hindering insights into whether some of the fastest-growing government programmes are meeting their objectives or being delivered effectively.</p>
</blockquote>
<h2>Squandering the power of knowledge</h2>
<p>Current legislation in Australia greatly restricts the data available for social policy research. While special exemptions allow for the use and disclosure of health information where necessary for some research (into public health, for instance), this does not generally apply for social policy research. </p>
<p>We can study how soft-drink dependence is transmitted between generations more readily than studying the intergenerational transmission of welfare dependence. We can study how someone catches a cold in a way that we can’t study how they lose their job or their family. We can study what causes someone to pass on an illness in a way that we can’t study how they fall into crime.</p>
<p>The <a href="http://www.alrc.gov.au/inquiries/invasions-privacy">Australian Law Reform Commission</a> recognised this when it reviewed privacy legislation. The commission recommended extending public health exemptions to human research more generally. Importantly, technology that allows data to be disaggregated and de-identified exists, ensuring that we also address important privacy concerns.</p>
<p>As <a href="http://en.wikipedia.org/wiki/Daniel_Patrick_Moynihan">Daniel Patrick Moynihan</a> put it so eloquently, everyone is entitled to their own opinion, but not to their own facts. The trouble is there are lots of facts sitting in government data that the public cannot access. Often enough, not even the bureaucrats can.</p>
<p>These facts, were they available to everyone, could help us investigate the effectiveness of programs. They will help us discover what programs work and why, and how to further improve them. And they may also reveal ineffective programs, whereupon we should improve them or change approach.</p>
<h2>The pay-off continues for decades</h2>
<p>As Professor <a href="http://en.wikipedia.org/wiki/James_Heckman">James Heckman’s</a> work reveals through his analysis of data over numerous interventions, a whole lot of social programs might be justified as forms of redistribution but they were not necessarily efficient – they don’t increase total economic output. By contrast, Heckman <a href="http://jenni.uchicago.edu/human-inequality/papers/Heckman_final_all_wp_2007-03-22c_jsb.pdf">shows</a> that well-designed early childhood interventions make huge contributions not just to equity but to the economy more generally. </p>
<p>They are the gift that keeps on giving, rescuing at-risk kids from poor prospects. This pays dividends for decades afterwards in the form of higher employment, higher incomes, better educational outcomes, lower crime and on it goes.</p>
<p>Heckman’s research, among other studies in this field, has helped shape our understanding of the importance of early childhood interventions and improved our ability to make the case for investing in this area.</p>
<p>Open data gives us the tools to do the same kind of investigation in many other areas. It enables the identification of what works and what isn’t working. Both outcomes allow us to continuously improve. </p>
<p>Do we really want ineffective programs to continue? Do we really want to make short-term budgetary savings only to see total costs rise as poor educational, employment and other social outcomes hit the budget balance for decades to come?</p>
<h2>Are we to be a dumb or smart country?</h2>
<p>Those who do the difficult job of providing social services for little reward or thanks are increasingly evaluating program effectiveness. Their evaluations could be made much easier and cost-effective with greater access to existing data.</p>
<p>Speaking at the recent launch of a report by Lateral Economics, <a href="http://www.omidyar.com/insights/open-business">Open For Business: How Open Data Can Help Achieve the G20 Growth Target</a>, Commission of Audit chair Tony Shepherd made some pertinent points on the need for open data. Among them was the fact that a country as sophisticated as Australia should be more advanced in making data available. </p>
<p>As the Commission of Audit notes: </p>
<blockquote>
<p>Unlike many other countries, Australia makes relatively little use of its public data resources even though the initial costs of making data available would be low relative to the future flow of benefits … A failure to exploit this evidence would be a missed opportunity given Australia’s demographic and structural budget challenges.</p>
</blockquote>
<p>This is why the less sensational recommendations on open data should see the light of day. We need to be driving every effort to improve the evaluation of support services and programs so that we can demonstrate what is working and where it isn’t, fix it.</p>
<p>Making data more available for social policy research is a relatively non-contentious way to improve the effectiveness of social programs. It would have the added benefit of informing the policy debate. We can’t afford not to.</p>
<hr>
<p><em>This piece was co-authored by Amanda Robbins, Director of Equity Economics and previously a Treasury official and political adviser.</em></p><img src="https://counter.theconversation.com/content/29528/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Nicholas Gruen is CEO of Lateral Economics and Chairman of the Centre for Social Innovation. This piece was co-authored by Amanda Robbins, a Director of Equity Economics and previously a Treasury official and political adviser.</span></em></p>The McClure Review of Welfare, much like the Commission of Audit report, is unlikely to win the Abbott government many new fans in the social services sector. However, for those involved in social policy…Nicholas Gruen, Fellow, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/292022014-07-16T01:46:52Z2014-07-16T01:46:52ZTo revive long-term democratic thinking we have to innovate<p>The 2014 <a href="https://theconversation.com/federal-budget-2014-political-experts-react-26574">federal budget</a> was informed by the need to think long term and was accompanied by austerity rhetoric. Regardless of where you stand on the merit of austerity policy in <a href="http://www.krugmanonline.com/books/end-this-depression-now.php">affecting</a> economic recovery processes, the perception in the Australian electorate, rightly or wrongly, is that the boom years have come to an end. And perception is everything in politics.</p>
<p>The impact of the economic downturn since 2007 on western industrialised countries has encouraged a range of governments, regardless of their ideology, to engage in recovery strategies that involve a mixture of austerity measures over public finances with investment in new growth opportunities such as infrastructure. We now appear to be following the trend somewhat belatedly in Australia.</p>
<p>However, profound doubt remains whether the long-term policymaking and governing resilience required to maintain such strategies is possible. This is the result of what my colleague Gerry Stoker <a href="http://www.ppnc.com.au/uploads/1/9/6/2/19623627/stoker_paper_for_green_and_hay.pdf">has termed</a> the “democratic myopia inevitably created by pressures of the electoral cycle”. This is obviously more acute in Australia given the three-year electoral cycle and the gatekeeping role of the <a href="https://theconversation.com/the-new-senate-could-be-abbotts-obstacle-or-an-opportunity-28002">crossbenchers in the Senate</a>.</p>
<h2>To depoliticise or democratise?</h2>
<p>The capacity for long-term politics is not easy to achieve in any circumstances in democratic politics and has arguably become harder to conjure. The boom years (1990-2007), in which the old growth model dominated, have left many established democracies with economic legacies that will be difficult to overcome. This is because of the prevailing model of politics on offer – short-term in focus, consumerist in style and top-down in ideology – which seems incapable of moving in a new policy direction. </p>
<p>There are some who go further and argue that short-termism is an inevitable feature of contemporary democratic politics. Their prescription appears to be that the only hope for long-term policy processes to emerge is to take issues away from democratic politics through processes of depoliticisation. This involves handing such issues over to special-purpose bodies such as <a href="https://theconversation.com/commission-of-audit-lays-path-for-deep-cuts-26172">Commissions of Audit</a>. </p>
<p>Recent evidence, however, suggests that this approach doesn’t really work because of the resulting <a href="https://theconversation.com/government-grapples-with-audit-commission-ripples-26255">political management issues</a>. At the very least, it is only a small part of the answer.</p>
<p>As Stoker observes, the key question then becomes can democratic politics deliver long-termism? Can politics confront tough choices? Can democratic politics legitimate short-term sacrifices for long-term gain? Can it take on and defeat powerful and vested interests?</p>
<h2>The need for a new politics</h2>
<p>I think it can, but only if a new politics is on offer. This is a politics that seeks to establish common ownership of the major public policy problems that we are confronting such as reform of the federation, climate change or infrastructure. We need a new politics that thinks long term and engages citizens directly in the fundamentals of reform thinking. </p>
<p>The terms of reference to the <a href="https://www.pm.gov.au/media/2014-06-28/white-paper-reform-federation">White Paper on the Reform of the Federation</a> identify the appetite for reform among Australians. They also hint at some potential democratic innovations that could be bent to the purposes of long-termism. </p>
<p>For example, the terms of reference refer to the notion of <a href="http://europa.eu/legislation_summaries/institutional_affairs/treaties/lisbon_treaty/ai0017_en.htm">subsidiarity</a>, which was used to build long-term thinking across the austerity economies of Europe. Referenda following considered deliberation on major “once in a generation” decisions offer another way forward. There are other options such as devolution of decision-making through city deals or regionalisation.</p>
<p>What is certain is that the critical challenges confronting the Australian government in a complex world can no longer be managed through hard power “command and control” politics. This is an era where the use of soft power, or the power to persuade and partner with the citizenry, has become the only alternative.</p>
<hr>
<p><em>This article is based on a presentation to the Institute for Governance and Policy Analysis <a href="http://www.canberra.edu.au/events/upload/event/1BA13866-6773-411F-B17E-FF0F17039F52.pdf">Infrastructure Forum</a> at Parliament House, Canberra, on Monday.</em></p><img src="https://counter.theconversation.com/content/29202/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>As a researcher Mark Evans has received funding from the Australian Centre of Excellence for Local Government, the ACT government, the Al-Tajir World of Islam Trust, Austrade, Australian National Audit Office, the UK's Economic and Social Research Council, the European Union, the UK Economic and Social Research Council, the National Water Commission, the Nuffield Foundation, the United Nations Development Programme, the West Africa and North Asia Forum and the World Bank. </span></em></p>The 2014 federal budget was informed by the need to think long term and was accompanied by austerity rhetoric. Regardless of where you stand on the merit of austerity policy in affecting economic recovery…Mark Evans, Director of the ANZSOG Institute for Governance, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/272702014-06-11T20:30:15Z2014-06-11T20:30:15ZPenny wise, pound foolish: how to really save money on refugees<figure><img src="https://images.theconversation.com/files/50188/original/wjqq9fhk-1401851294.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Whichever way you add up the sums, Australians pay far too high a price for the government's refugee policy.</span> <span class="attribution"><span class="source">AAP/DIAC</span></span></figcaption></figure><p>At a cost of <a href="http://refugeecouncil.org.au/r/bud/2014-15-Budget.pdf">A$826.1 million</a> in the 2014-15 federal budget, the processing and detention of <a href="http://newsroom.customs.gov.au/channels/media-releases/releases/operation-sovereign-borders-joint-agency-task-force-update-20">around 2500</a> asylum seekers on Nauru and Manus Island is a scandalous waste of taxpayers’ money. The government’s own data shows that offshore processing is wildly expensive in comparison to onshore alternatives. The <a href="http://www.ncoa.gov.au/report/appendix-vol-2/10-14-illegal-maritime-arrival-costs.html">Commission of Audit</a> reported earlier this year that detaining a single asylum seeker for one year offshore costs more than $400,000. </p>
<p>Late last month, the government announced that it would <a href="http://refugeecouncil.org.au/n/mr/140530_RCOAfunding.pdf">withdraw</a> $140,000 in annual funding for the Refugee Council of Australia, the nation’s peak body for refugee organisations. This is just one example of how the government is looking to save a few dollars while ignoring the obvious way to save real money – processing asylum seekers in Australia.</p>
<h2>Economic cost</h2>
<p>Even detaining asylum seekers in Australia is vastly cheaper than detaining them offshore. As the Commission of Audit reported, it costs $239,000 a year to hold an asylum seeker in a mainland detention centre (or around half the cost of Manus Island or Nauru). </p>
<p>It is less than half the cost again to hold asylum seekers in community detention – where the asylum seeker is put into community housing by the Department of Immigration – at less than $100,000 a year. By far the cheapest option, however, is to allow asylum seekers to live in the community on a bridging visa (less than half the cost again of community detention). </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/50079/original/4rsk7nwj-1401772921.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/50079/original/4rsk7nwj-1401772921.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/50079/original/4rsk7nwj-1401772921.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=325&fit=crop&dpr=1 600w, https://images.theconversation.com/files/50079/original/4rsk7nwj-1401772921.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=325&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/50079/original/4rsk7nwj-1401772921.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=325&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/50079/original/4rsk7nwj-1401772921.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=409&fit=crop&dpr=1 754w, https://images.theconversation.com/files/50079/original/4rsk7nwj-1401772921.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=409&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/50079/original/4rsk7nwj-1401772921.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=409&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Commission of Audit 10.14: Illegal Maritime Arrival costs.</span>
<span class="attribution"><span class="source">National Commission of Audit</span></span>
</figcaption>
</figure>
<p>The Commission of Audit described the detention and processing of boat arrivals as “the fastest-growing government program over recent years”, with expenditure skyrocketing from $118.4 million in 2009-10 to $3.3 billion in 2013-14. To put this into perspective, the United Nations High Commissioner for Refugees (UNHCR) <a href="http://www.unhcr.org/52af08d26.html?_ga=1.258065802.1823144903.1396622436">is responsible</a> for 11 million refugees and 38.7 million “people of concern” globally with a total budget of <a href="http://www.unhcr.org/pages/49c3646c1a.html">US$5.3 billion</a>. </p>
<p>Although it is unclear from the Commission of Audit’s report exactly which costs were included in its calculations, these figures almost certainly underestimate the true economic cost of Australia’s refugee policy. For example, the figures probably don’t include the extra foreign aid given to countries hosting our offshore processing centres. Papua New Guinea received an <a href="http://www.smh.com.au/federal-politics/political-news/aid-budget-cut-to-give-png-more-20130802-2r4wj.html">extra A$420 million</a> in foreign aid over four years for agreeing to process and resettle all asylum seekers who arrive by boat.</p>
<p>There are also the <a href="http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;db=COMMITTEES;id=committees%2Festimate%2Ff246c0cd-c536-4f01-bd8b-df3cdbf8f806%2F0006;query=Id%3A%22committees%2Festimate%2Ff246c0cd-c536-4f01-bd8b-df3cdbf8f806%2F0000%22">unknown costs</a> of the Operation Sovereign Borders Joint Agency Task Force, spread as it is over <a href="http://www.customs.gov.au/webdata/resources/files/OSBOrgChartJune2014.pdf">several government departments</a>.</p>
<p>Even though the Commission of Audit identified bridging visas as the most affordable option, the government <a href="http://apo.org.au/research/policy-punishment-asylum-seekers-community-without-right-work">denies</a> many asylum seekers on <a href="https://www.immi.gov.au/visas/bridging/">bridging visas</a> the right to work. It thereby forfeits their taxes and the extra consumer spending their incomes might generate, and places an additional financial burden on local charities. </p>
<p>This policy is also depriving the Australian community of potential long-term contributors. Demographer Graeme Hugo’s 2011 study <a href="http://www.dss.gov.au/sites/default/files/documents/01_2014/economic-social-civic-contributions-booklet2011.pdf">A Significant Contribution</a> found that refugees have yielded “a unique demographic dividend” to the Australian population as a young and notably entrepreneurial cohort, which fills labour shortages and makes a vital contribution to regional economies. </p>
<p>Choosing to process asylum seekers offshore or onshore without work rights is not just an unnecessary waste of taxpayer dollars, it is also a long-term social and economic loss.</p>
<h2>Human cost</h2>
<p>The human cost of Australia’s refugee policy is equally staggering. </p>
<p>The government’s contracted provider of health and medical services in detention centres <a href="http://www.smh.com.au/federal-politics/political-news/manus-island-asylum-seekers-in-mental-health-crisis-20140525-38wwd.html">recently reported</a> that around half of those detained on Nauru and Manus Island – and around one-third of those detained on mainland Australia – suffer mental health problems. </p>
<p>Asylum seekers on <a href="http://www.abc.net.au/worldtoday/content/2014/s4012886.htm">Manus Island</a> and <a href="http://www.theguardian.com/world/interactive/2014/may/29/nauru-family-health-risks-report-in-full">Nauru</a> lack quality psychiatric and medical services. The <a href="http://unhcr.org.au/unhcr/images/2013-11-26%20Report%20of%20UNHCR%20Visit%20to%20Nauru%20of%207-9%20October%202013.pdf">UNHCR</a> and <a href="http://www.amnesty.org/en/library/info/ASA12/002/2014/en">Amnesty International</a> have found that conditions in these facilities constitute cruel, inhumane or degrading treatment under international law. One asylum seeker, Reza Berati, <a href="http://www.news.com.au/national/manus-island-riot-how-did-iranian-asylum-seeker-reza-berati-die/story-fncynjr2-1226839986356">has been killed</a> in offshore detention. Many have suffered physical and mental injuries. </p>
<p>Tragically, the bridging visa system may be economically favourable but it does not necessarily offer asylum seekers any greater certainty or comfort. Recently, unacceptably long delays in processing and the fear of deportation exacted the <a href="http://www.abc.net.au/radionational/programs/drive/tamil-asylum-seeker-dies-after-self-immolation/5495048">highest price</a> when Tamil asylum seeker Leorsin Seemanpillai self-immolated and later died.</p>
<h2>Intangible costs</h2>
<p>There are also intangible costs associated with Australia’s treatment of asylum seekers. </p>
<p>Most important is the damage to Australia’s international reputation. This includes the imperilling of Australia’s <a href="https://theconversation.com/fatal-attraction-is-our-relationship-with-indonesia-worth-the-trouble-22171">relationship</a> with our largest neighbour, Indonesia, and the undermining of our own efforts to <a href="https://theconversation.com/asean-human-rights-declaration-a-step-forward-or-a-slide-backwards-10895">improve human rights protection</a> in the Asia-Pacific. </p>
<p>Less visible – but just as important – are the intangible costs to the Australian public. Australia’s refugee policy undermines its own commitments to human rights, the rule of law, and transparency and accountability. Asylum seekers are detained offshore not just to send a warning to prospective boat arrivals, but also to keep them out of sight of the Australian public and out of reach of Australian lawyers, media and even Australia’s own <a href="http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;db=COMMITTEES;id=committees%2Festimate%2F5972266f-4662-4bc3-a322-e674390efe88%2F0009;query=Id%3A%22committees%2Festimate%2F5972266f-4662-4bc3-a322-e674390efe88%2F0000%22">Human Rights Commission</a>.</p>
<p>Whichever way you add up the sums, Australians pay far too high a price for the government’s refugee policy. Last week, immigration minister Scott Morrison reiterated that this “pound foolishness” would persist. Labor too <a href="http://www.theguardian.com/world/2014/may/27/offshore-processing-would-continue-under-labor-says-richard-marles">confirmed</a> its steadfast commitment to offshore processing. </p>
<p>It seems we are prepared to pay almost anything to appease Australia’s <a href="https://theconversation.com/what-underlies-public-prejudice-towards-asylum-seekers-23974">irrational fear</a> of asylum seekers who arrive by boat.</p><img src="https://counter.theconversation.com/content/27270/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Joyce Chia has previously received funding from the Australian Research Council. She is a former board member of Multicultural Centre for Women's Health (Vic), volunteers with the Asylum Seeker Resource Centre, and is a member of Amnesty International and the Greens.</span></em></p><p class="fine-print"><em><span>Dr Claire Higgins is receiving funding from the National Archives of Australia and the Australian Academy of the Humanities, and is a member of Amnesty International. </span></em></p>At a cost of A$826.1 million in the 2014-15 federal budget, the processing and detention of around 2500 asylum seekers on Nauru and Manus Island is a scandalous waste of taxpayers’ money. The government’s…Joyce Chia, Senior Research Associate, Andrew & Renata Kaldor Centre for International Refugee Law, UNSW SydneyClaire Higgins, Research Associate, Andrew & Renata Kaldor Centre for International Refugee Law, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/263932014-05-11T19:22:36Z2014-05-11T19:22:36ZAustralia’s ‘unsustainable’ health spending is a myth<p>The unsustainability of government health expenditure in Australia is a myth that has been carefully nurtured to justify policies to transfer costs from government to the public. </p>
<p>Tomorrow’s budget is expected to introduce co-payments for visits to the doctor and other ways to reduce health spending. The government argues that it must do this because health spending is out of control and the new measures are necessary to make Medicare sustainable. </p>
<p>But evidence contradicts this argument.</p>
<h2>A case of bad arithmetic</h2>
<p>As a percentage of GDP, Australian government spending on health is the tenth lowest of the 33 countries in the <a href="http://www.oecd-ilibrary.org/social-issues-migration-health/public-health-spending-2013-1_healthxp-table-2013-1-en">OECD database</a> and the lowest among wealthy countries. </p>
<p>The 8.3% of GDP spent by the US government, for instance, is higher than the 6.4% spent by the Commonwealth and state governments in Australia.</p>
<p>Nor is it true that total health expenditure – government plus private spending – are unsustainable. Australia spends about 9.5% of GDP on health services; the United States spends 17.7%. And while US spending may or may not be good value for money, it hasn’t undermined its economy or sapped the vitality of the country.</p>
<p>The fear that the rising share of GDP spent on health will harm the economy or our standard of living – reflected in numerous reports for the government, including the recent <a href="http://www.ncoa.gov.au/">National Commission of Audit’s</a> – is probably a result of bad arithmetic. </p>
<p>It’s entirely possible for spending on health to rise more rapidly than GDP and for the amount of non-health GDP to continue to rise. </p>
<p>If GDP growth per capita fell to the annual average of 1.4% per annum, which occurred between 1970 and 1990, then by 2050 per capita GDP would rise by 65%. And if health expenditures rose to the US level of 17.7%, there would still be a 50% increase in non-health GDP per capita. </p>
<p>The unsustainability myth is created by focusing on percentages and not on the absolute level of resources available.</p>
<h2>Inherent flexibility</h2>
<p>Health spending probably will rise as a share of GDP, but the economy is flexible. In 1901, agriculture accounted for 19.5% of GDP; today it is 2%. </p>
<p>The composition of GDP varies with technology and demand, and increasingly (as agriculture and now manufacturing, decline in percentage terms), services – including health services – have expanded. </p>
<p>The desirability of this trend is more contentious than the non-issue of whether expansion is possible. No strong evidence links additional health spending to additional health. But this is because of the difficulty of the research question, in particular, the difficulty of linking incremental changes in the quality of life to health services. </p>
<p>However, health is one of the chief determinants of well-being and with an ageing population and increasing chronic health problems, the maintenance of the quality of life requires increased health spending. </p>
<p>As life expectancy rises spending patterns will change. But there’s no reason to be uniquely concerned with health spending.</p>
<h2>Ideology and the absence of evidence</h2>
<p>Of course, it’s desirable that health spending should be efficient and a common justification for co-payments has been that they will eliminate frivolous services. But the evidence for this evergreen argument is almost entirely absent. </p>
<p>A massive <a href="http://www.rand.org/pubs/commercial_books/CB199.html">randomised controlled trial of health-care costs</a>, known as the <a href="http://www.rand.org/health/projects/hie.html">RAND Health Insurance Experiment</a>, unambiguously rejected the hypothesis that co-payments eliminated only peripheral services. What the study found is that they reduce the demand for services but the effect is small and falls disproportionately on low-income groups. </p>
<p>What’s more, the co-payments expected in the budget will be imposed on GP services – the low-cost end of Medicare, which provides early detection and treatment of serious illnesses. If ignored, these will progress and need high-cost hospital and specialist care.</p>
<p>So why does the government favour co-payments? Irrespective of the long-term effects, it will save the government money in the short term. But this is the worst way of reducing a budget deficit. Taxes on carbon emissions, higher taxes on minerals and the closure of tax loopholes are preferable strategies. </p>
<p>The contribution to the deficit from co-payments will be small. The “savings” to the government budget from a $6 co-payment was estimated by <a href="http://www.theaustralian.com.au/national-affairs/opinion/price-signal-of-6-is-fair-for-worldclass-healthcare/story-e6frgd0x-1226792700135%202014">Terry Barnes</a> from the Australian Centre for Health Research to be $750 million across four years, an average annual saving of about 0.3% of federal spending and 0.14% of total health spending.</p>
<p>The real reason for co-payments appears to be ideological – a dislike of communal sharing even when it is to alleviate the financial burden of those already disadvantaged by illness.</p><img src="https://counter.theconversation.com/content/26393/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jeff Richardson receives funding from the National Health and Medical Research Council. He is affiliated with the Australian Greens.</span></em></p>The unsustainability of government health expenditure in Australia is a myth that has been carefully nurtured to justify policies to transfer costs from government to the public. Tomorrow’s budget is expected…Jeff Richardson, Professor and Foundation Director, Centre for Health Economics, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/264332014-05-11T19:20:19Z2014-05-11T19:20:19ZReverse mortgages need a rethink if they’re the new age pension<figure><img src="https://images.theconversation.com/files/48103/original/5tgdtmr3-1399594506.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Reverse mortgages can be risky for both borrowers and lenders.</span> <span class="attribution"><a class="source" href="http://www.aag.com/retirement-reverse-mortgage-pictures">Flickr/American Advisors Group</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>The Commission of Audit has <a href="http://www.ncoa.gov.au/report/phase-one/part-b/7-1-age-pension.html">recommended</a> including homes above a certain value in the means test that determines who gets the age pension and how much. Under the proposal, homes valued in excess of A$500,000 would be assessable for singles, while for couples the trigger would be A$750,000. </p>
<p>The family home is currently exempt from the assets test but the commission argues this is inequitable because it means high levels of wealth are sheltered. It suggests a more comprehensive means testing regime be put in place by 2027-28.</p>
<p>If this proposal is picked up by the federal government, it would see a sizable group of retirees required to call on the equity in their homes to help fund their retirement. </p>
<p>It would be a brave government that “forced” pensioners to sell their homes to release that equity, which makes reverse mortgages a likely tool for retirees who need to convert their home into cash flow.</p>
<p>Even now, a reverse mortgage can be an alternative to “downsizing” into a smaller and cheaper home to release funds for retirement.</p>
<h2>How reverse mortgages work</h2>
<p>A reverse mortgage allows homeowners to access a loan, or a regular stream of cash (an annuity), using their home as collateral. Borrowers continue to live in the property until death – or they move into aged care – after which the loan is repaid from the sale of the house. </p>
<p>The mortgage can apply to the full value of a property, or borrowers may be able to access “residual value protection”, allowing them to set aside a portion of the house’s value to be available for aged care or as an inheritance.</p>
<p>Interest rates are generally higher than for standard home loan products due to less competition in this sector and higher risks for the lender.</p>
<p>For some years now, on the back of the lessons learnt from the global financial crisis, there have been government-imposed rules around “negative equity” that prevent lenders from extracting repayments beyond the value of the house. This means lenders can suffer a loss if the loan amount exceeds the value of the house at the date of the sale, something that may happen in a softening property market.</p>
<p>Reverse mortgages involve compounding interest, where interest charges are added onto the loan as they accrue. This means the loan amount can rise quickly.</p>
<p>Taking out a reverse mortgage can affect the availability of funds for major items such as aged care and bequests, and it can have an impact on other family members who may live in the house. Ultimately reverse mortgages demand a much higher degree of financial literacy from individuals, who may need professional advice on issues such as tax and Centrelink implications.</p>
<h2>Could we end up like the US?</h2>
<p>Despite the fact that reverse mortgages helped send mortgage insurer the Federal Housing Administration bankrupt in the US, the market there is <a href="http://www.reuters.com/article/2014/03/17/us-banking-reversemortgages-idUSBREA2G05T20140317">returning</a>.</p>
<p>How would increased demand for reverse mortgages change the Australian financial system? </p>
<p>The bulge of baby boomers entering retirement, along with a change to means testing along the lines proposed, could be expected to lead to an increase demand in such products. In theory, new lenders would be attracted into the market, thus increasing competition and driving interest rates down (in relative terms, against the risk-free rate).</p>
<p>Three main sources of risk are apparent, the first of which is declining real estate values, or the risk of negative equity. The loan amount may end up being larger than expected if the borrower enjoys a long life or property values fall. </p>
<p>Second, with a reverse mortgage the lender generally has no recourse to assets other than the home. Third, at this stage of life borrowers may neglect maintenance and property improvements, eroding the value of the home.</p>
<p>Many of these risks, in particular real estate values and an ageing population, are systematic and may become systemic. Should reverse mortgages enjoy significant growth, as projected, Australian lenders would have increased exposure to house price risk. If house prices dropped, more defaults would occur.</p>
<p>The impact of growth in reverse mortgages on the housing market itself may be limited, as properties are sold only after death or upon a move into aged care. But there may be a decrease in downsizing activity if these products become more popular.</p>
<h2>An alternative to bank lending</h2>
<p>Currently, reverse mortgages are mainly provided by the banking sector, which is already over-exposed to mortgages. At the same time, the superannuation sector is looking for long-term investment opportunities. Why not create financial products where super funds provide cash flow for retirees in exchange for access to the value in their homes?</p>
<p>Some super fund members may not want further exposure to Australian real estate, particularly if they are already house owners, but this could be an additional option in the current portfolio of investment choices offered by funds to their members. </p>
<p>The outcome might be comparable to the situation in overseas pension systems – such as Germany’s – where pensions are organised to a large degree as intergenerational wealth transfers, where one generation pays for the next generation. </p>
<p>Such a system could increase the resilience and efficiency of the Australian financial system.</p><img src="https://counter.theconversation.com/content/26433/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Harry Scheule does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The Commission of Audit has recommended including homes above a certain value in the means test that determines who gets the age pension and how much. Under the proposal, homes valued in excess of A$500,000…Harry Scheule, Associate Professor, Finance, UTS Business School, University of Technology SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/263232014-05-08T20:38:33Z2014-05-08T20:38:33ZThe state of Australia: cultural economy<figure><img src="https://images.theconversation.com/files/47831/original/2qmn5j9s-1399337504.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The state of culture in Australia? Basically, it’s in rude health</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/arselectronica/4308925550/in/photolist-7yLnrQ-7yN6nb-7BtLcP-7Bun38-7Bxzm5-7yGA2p-7yGA1k-7yNTJS-7BtLca-7yK7yR-7yK7xt-7Bybey-7Bun4V-7BuBXK-7Bybhy-7BybfC-7BuBVB-7BtLba-7BuyxV-7By4Vy-7By4Wo-7BuBWR-7By4Y9-7BuyzV-7By4Xj-7BA1om-7yLnmw-7Bwcn2-7yGA4i-7yGzWi-7Bwckp-5j1Q5m-5j1VAb-7yGzZH-7yN6uj-7BuyAT-7yGA2R-7BwciK-7yGA52-5j6Es1-7Buqgi-7yGzYX-7yGzY8-7yN6sj-7yNTP7-5j1KJw-7yN6tj-5j1TLj-5j1HBW-7BAJPd">Ars Electronica</a></span></figcaption></figure><p><em>In the lead-up to the budget, the story of crisis has been hammered home, but there’s more to a country than its structural deficit. So how is Australia doing overall? In this special series, ten writers to take a broader look at the State of Australia; our health, wealth, education, culture, environment, well-being and international standing.</em></p>
<hr>
<p>Naturally, federal budgets are fretful times for economic sectors underwritten by discretionary public expenditure. The arts and cultural sector is composed of parts that rely heavily on public funding (such as heritage, museums), parts that are a mixture of public and private (such as film, television, radio), and parts that are largely private (fashion, design, video games). Obviously, some parts of this sector therefore have more reason for trepidation than others.</p>
<p>The recent report from the <a href="http://www.ncoa.gov.au/">Commission of Audit</a> makes clear that there is indeed a budget crisis – although <a href="https://theconversation.com/australias-economy-is-healthy-so-how-can-there-be-a-budget-crisis-26036">not everyone</a> would see things that clearly. </p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/47835/original/ys3xmv6j-1399338216.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/47835/original/ys3xmv6j-1399338216.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/47835/original/ys3xmv6j-1399338216.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=905&fit=crop&dpr=1 600w, https://images.theconversation.com/files/47835/original/ys3xmv6j-1399338216.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=905&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/47835/original/ys3xmv6j-1399338216.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=905&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/47835/original/ys3xmv6j-1399338216.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1137&fit=crop&dpr=1 754w, https://images.theconversation.com/files/47835/original/ys3xmv6j-1399338216.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1137&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/47835/original/ys3xmv6j-1399338216.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1137&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">Neal Sanche</span></span>
</figcaption>
</figure>
<p>But if we can accept for a moment there <em>is</em> such a crisis, political reality indicates it will need to be met with expenditure cuts as well as tax increases (although the Abbott government did make an election promise not to do this). As <a href="https://theconversation.com/commission-of-audit-and-the-arts-cuts-are-not-galore-26211">I previously noted on The Conversation</a>, those spending cuts – come May 13 – will probably not have much impact on arts and culture in this budget cycle (although the Commission did recommend that <a href="https://theconversation.com/proposed-merger-of-screen-australia-and-australia-council-spells-incoherence-26178">Screen Australia face funding cuts</a>).</p>
<p>So what then is the state of culture in Australia? Basically, it’s in rude health. We know this from government data itself. The Australian Bureau of Statistics collects a variety of statistics, although as with most aggregate economic data, there are several years of lag between gathering and reporting. </p>
<p>In February of this year the ABS released an experimental set of <a href="http://www.abs.gov.au/AusStats/ABS@.nsf/Latestproducts/5271.0Main%20Features12008-09?opendocument&tabname=Summary&prodno=5271.0&issue=2008-09&num=&view=">cultural and creative activity satellite accounts</a>. These are for 2008-9.</p>
<h2>How we’re doing now</h2>
<p>The ABS Satellite account for 2008-9 shows the contribution of the cultural and creative economy to Australian GDP was A$86 billion, which is almost 7%. Cultural activity makes up A$50b of that, and creative activity is larger, at A$80b (a A$42b overlap of cultural and creative explains how these numbers add up to A$86b).</p>
<p>Public cultural spending was A$7.6b. Some A$2.3b of this was from federal spending, about half of which was for public broadcasting.</p>
<p>A <a href="http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/4102.0Main+Features40Jun+2011">2010 survey</a> carried out by the ABS indicates that Australians get a regular fix of culture, with about 85% reporting attending a cultural event, the most popular being cinema, but with music festivals, parks, and museums and galleries not too far behind.</p>
<p>Private cultural spending in 2010 was just under A$20b, with television, books and film capturing the bulk of that spending. According to the <a href="https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Tax-statistics/Taxation-statistics-2010-11/">Australian Tax Office</a>, just A$28 million was donated to cultural organisations from tax-deductible private ancillary funds.</p>
<p>By industrial sector, gross value added (GVA) estimates run to A$65b, the majority of which was broken down as:</p>
<ul>
<li>design (A$26b)</li>
<li>literature and print media ($13bn)</li>
<li>fashion ($12bn)</li>
<li>broadcasting, digital media and film ($8bn). </li>
</ul>
<p>The cultural and creative sector produces more GVA than health care, but less than construction.</p>
<p>There were about 1 million employees in this sector, with a quarter of those working in cultural and creative occupations outside the cultural and creative industries. There are more than 160,000 business or non-profit organisations in the cultural and creative industries sector.</p>
<p>International comparisons are plagued by definitional consistencies, but the ABS reports that Australia’s cultural and creative sector is very similar to that of Canada, Finland, Spain and the UK by most measures. (The largest, on a per-capita measure, is <a href="http://arts.gov/sites/default/files/nea_guide_white_paper.pdf">the US</a>.)</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/47834/original/gjn7r4sq-1399338094.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/47834/original/gjn7r4sq-1399338094.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/47834/original/gjn7r4sq-1399338094.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=401&fit=crop&dpr=1 600w, https://images.theconversation.com/files/47834/original/gjn7r4sq-1399338094.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=401&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/47834/original/gjn7r4sq-1399338094.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=401&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/47834/original/gjn7r4sq-1399338094.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=504&fit=crop&dpr=1 754w, https://images.theconversation.com/files/47834/original/gjn7r4sq-1399338094.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=504&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/47834/original/gjn7r4sq-1399338094.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=504&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">Yu Shibao</span></span>
</figcaption>
</figure>
<h2>How we got here</h2>
<p>There is much more detail that we could report from the above statistics. Yet we don’t need to worry too much about the lags in the data or the crude aggregations because a few overarching findings and long-run trends stand out.</p>
<p>The first is that the cultural and creative industries are large, vibrant and growing, and it is the creative, market-facing parts that are doing most of the heavy lifting.</p>
<p>That is entirely unsurprising, and nor – I will stress to add – is it an ideological point. These sectors can grow because they face not just millions of Australians but billions of global consumers. </p>
<p>The single most important factor driving and shaping the Australian cultural and creative economy is the global marketplace. And within that, Australia’s single greatest advantage is that we are a multi-cultural English-speaking nation, meaning that we have a comparative advantage in cultural content production for a global market.</p>
<p>The factor most accelerating this is the rise and spread of digital and computational technologies into all corners of cultural and creative production. This lowers the cost of production and distribution, increases access and variety, creates new platforms, and makes possible new business models.</p>
<p>A further significant trend is the long-run <a href="http://www.step.org/global-wealth-report">growth in household wealth globally</a>, not just in Australia. This increases the quantity of household spending and, consequentially, demand for cultural and creative content. Furthermore, <a href="http://www.theatlantic.com/international/archive/2013/07/does-art-help-the-economy/277842/">as demonstrated recently in the UK</a>, a strong case can be made connecting the growth of the arts and cultural sector with GDP growth. </p>
<p>These three factors – globalisation, technology and wealth – are not the only things that matter, but to a first order of approximation they are most of the story of how we got here.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/47833/original/m6h2qmzg-1399337844.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/47833/original/m6h2qmzg-1399337844.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/47833/original/m6h2qmzg-1399337844.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=379&fit=crop&dpr=1 600w, https://images.theconversation.com/files/47833/original/m6h2qmzg-1399337844.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=379&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/47833/original/m6h2qmzg-1399337844.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=379&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/47833/original/m6h2qmzg-1399337844.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=476&fit=crop&dpr=1 754w, https://images.theconversation.com/files/47833/original/m6h2qmzg-1399337844.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=476&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/47833/original/m6h2qmzg-1399337844.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=476&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">National Museum of Australia.</span>
<span class="attribution"><span class="source">Sam Ilić </span></span>
</figcaption>
</figure>
<h2>The next ten years</h2>
<p>The most important policy forces affecting the cultural and creative economy in Australia are not those from within Australian cultural and creative industry policy. They are the factors affecting Australia’s position <em>vis-à-vis</em> the global economy, digital technology development and adoption, as well as the factors affecting household wealth.</p>
<p>These are factors relating to bilateral trade agreements (and the intellectual property provisions written into these), the state of the National Broadband Network, Australian tax policy, the vibrancy of the mining sector, and so on, will likely continue to have a far greater impact on the state of Australia’s cultural economy than, say, specific details pertaining to the funding of the National Gallery.</p>
<p>What is likely to change? We might usefully distinguish among the cultural economy between those parts that are more in the manner of <a href="http://en.wikipedia.org/wiki/Public_good">public goods</a> (such as national galleries, museums, and so on) from those that are subsidised industries (such as public support to the film industry).</p>
<p>Public goods suffer <a href="http://www.standard.net/topics/opinion/2011/01/14/free-rider-problem">free-rider problems</a>, and are best supplied through public funding. We can expect that Australian cultural public goods will continue to be funded, and maybe even receive greater funding as Australian wealth grows.</p>
<p>But the subsidised industries part of the cultural sector will face a tougher time. These can survive through lobbying and scare campaigns. But they also tend to be eventually defeated by innovative competition and new technologies.</p>
<p>It’s unclear where, for example, <a href="https://theconversation.com/topics/the-future-of-public-broadcasting">Australia’s public broadcasters</a> fall on this spectrum. In the early years they very clearly were a public good. They still are in the case of some remote and regional broadcasting. But they are a purely subsidised industry in most urban markets and many media segments.</p>
<hr>
<p><strong>Further reading:</strong> <a href="https://theconversation.com/topics/state-of-australia">The State of Australia series</a></p><img src="https://counter.theconversation.com/content/26323/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jason Potts is affiliated with the Institute of Public Affairs.</span></em></p>In the lead-up to the budget, the story of crisis has been hammered home, but there’s more to a country than its structural deficit. So how is Australia doing overall? In this special series, ten writers…Jason Potts, Professor of Economics, RMIT UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/262872014-05-07T01:56:52Z2014-05-07T01:56:52ZUsing youth as ‘whipping boys’ sets scene for Generation Grim<p>In the English court during the 15th and 16th centuries boys were engaged to cop the punishments of young princes. These young people were referred to as <a href="http://www.phrases.org.uk/meanings/whipping-boy.html">“whipping boys”</a>. When the young crown prince misbehaved, the whipping boy was beaten and made to suffer.</p>
<p>Such practice seems fanciful now. However, the idea that privileged members of the community can transfer chastisement onto others less fortunate appears to have endured. This is the impression left by the Commission of Audit report, which endorses the government line that Australians have been “living beyond their means”.</p>
<p>But who will suffer the tough budget medicine? In particular, young Australians in need will be hit hard if the Abbott government adopts many of the <a href="https://theconversation.com/commission-of-audit-lays-path-for-deep-cuts-26172">recommendations of its Commission of Audit</a>. Many young Australians are struggling. Let’s face it, many young people are already doing it tough. </p>
<p>The fact that the Australian Human Rights Commission’s National Children’s Commissioner recently <a href="https://www.humanrights.gov.au/intentional-self-harm-and-suicidal-behaviour-children">launched an inquiry</a> into intentional self-harm and suicidal behaviour among young people demonstrates just that. <a href="http://theconversation.com/why-rising-youth-unemployment-demands-our-urgent-attention-25990">Youth unemployment</a> is also a worrying problem, so much so that Tony Nicholson, executive director of the Brotherhood of St Laurence, <a href="http://createsend.com/t/r-5C601D516BD00F6A2540EF23F30FEDED">recently described</a> unemployment among young people as an “epidemic”.</p>
<p>I am not suggesting a direct <a href="http://www.aifs.gov.au/institute/pubs/fm/fm49jb.pdf">link between youth suicide and unemployment</a>. What I am emphasising is that young people who are struggling hardly need further whacks as proposed in the Commission of Audit’s report.</p>
<h2>How the Commission of Audit hits young people</h2>
<p>Many of the Commission of Audit’s measures would have direct negative impacts on the lives of disadvantaged young people. Here are some examples.</p>
<p>First, restricting young people’s access to unemployment benefits (Recommendation 27) now <a href="http://www.theaustralian.com.au/national-affairs/budget-2014/no-dole-before-25-youth-will-have-to-earn-or-learn/story-fnmbxr2t-1226903967790#">appears likely to be adopted</a> in some form in next week’s budget. The proposed expansion to mutual obligation rules is a well-rehearsed response to rising levels of youth unemployment.</p>
<p>Once again, this approach is likely to do nothing to help long-term unemployed young people find work in the current tight youth labour market. Instead, it runs the risk of further economically disadvantaging and socially isolating a group of already vulnerable young people. The Commission of Audit’s recommendation and the government’s leaked pre-budget changes fly in the face of overwhelming recognition that their <a href="http://acoss.org.au/images/uploads/Newstart%20Allowance%20brochure%20FINAL_March%20version.pdf">unemployment allowances</a> are at present grossly inadequate and inhibit young people from getting a job.</p>
<p>Second, drastic cuts to the minimum wage (Recommendation 28) would certainly have the detrimental effect of <a href="http://www.natsem.canberra.edu.au/storage/Poverty-Social-Exclusion-and-Disadvantage.pdf">plunging more young Australians further into poverty</a>. </p>
<p>Third, requiring university students to pay more and pay back their HELP debt sooner (Recommendation 30) ignores the <a href="http://www.abc.net.au/news/2013-07-15/majority-of-students-in-poverty2c-research-shows/4821230">high rates of deprivation and financial stress</a> among students. This proposal also does nothing to encourage young people from lower socio-economic status communities to pursue a higher education. If educational attainment is a key way to <a href="http://www.pc.gov.au/__data/assets/pdf_file/0007/124549/deep-persistent-disadvantage.pdf">overcome inequality and social exclusion</a>, which many neoliberal thinkers want us to believe, then it is difficult to understand why the Commission of Audit wants to introduce such disincentives.</p>
<h2>Withdrawal of supports on the cards</h2>
<p>The Commission of Audit’s report has taken shape at the same time as Commonwealth programs for supporting vulnerable young people face funding uncertainty. These include: <a href="http://www.probonoaustralia.com.au/news/2014/04/youth-employment-program-chopping-block#">Youth Connections</a>, <a href="http://www.smh.com.au/federal-politics/political-news/successful-youth-unemployment-service-facing-axe-as-government-stays-silent-on-funding-20140409-zqsbb.html">Partnership Brokers</a>, and the <a href="http://ayac.createsend.com/t/ViewEmailArchive/r/7E030C2D2A02E98B2540EF23F30FEDED/C67FD2F38AC4859C/">Australian Youth Affairs Coalition</a>. </p>
<p>In light of the potential cuts to such initiatives it hardly seems fair to threaten young people with additional blows, as delivered by the Commission of Audit. These impending changes for the worse come on top of the defunding of <a href="http://www.acys.info/ysa">Youth Studies Australia</a>. This was the country’s only research journal dedicated to young people and the youth sector.</p>
<p>These cuts are coupled with state-sponsored services for vulnerable young people losing funding in: <a href="http://www.theage.com.au/victoria/writing-on-wall-for-atrisk-youth-programs-20130615-2ob83.html">Victoria</a>, <a href="http://www.yanq.org.au/media-releases.html">Queensland</a> and the <a href="http://www.ntyan.com.au/new/ntyan/images/documents/ntyanfundinglost.pdf">Northern Territory</a>. </p>
<p>As a country we need to seriously ask ourselves whether now is the time to further withdraw support for young people, particularly those who are working class, in ways proposed by the Commission of Audit. Recent dramatic changes to the youth labour market, high rates of poverty and social exclusion among young people, and concerns about young Australians’ mental health and well-being clearly suggest that it is not.</p>
<h2>Making young people victims of prejudice</h2>
<p>Unfortunately, Australian governments <a href="http://www.ment2004.info/change_management_papers/risk%20and%20nostalia.pdf">have a history</a> of shifting the burden of responsibility onto young people facing struggles that are the result of changing labour markets and tough economic conditions.</p>
<p>Australia is not alone in treating young people as the fall guy. Ed Howker and Shiv Malik, authors of Jilted Generation: How Britain has bankrupted its youth, argued <a href="http://www.jiltedgeneration.net">young people were unfairly blamed</a> for and burdened with the social and economic problems facing the UK. Similarly Mike Males, author of The Scapegoat Generation: America’s war on adolescents, described how young Americans have been unduly <a href="http://www.youthrights.org/research/library/interview-with-mike-males/">held responsible for many of that country’s woes</a>.</p>
<p>The Commission of Audit “naturally” reproduces such failures towards young people. Such widespread contemptuous treatment aligns with <a href="http://thecannyoutlaw.com/features/original/2012/10/seen-but-not-heard-age-prejudice-and-young-people/">common deep-seated prejudices</a> about the younger members of our community as “lazy”, “reckless”, “selfish”, “undeserving”, “no good”, “trouble”. Is this how we want to treat young people? </p>
<p>Thanks to the Commission of Audit’s report many of our fellow young Australians face the prospect of being put through the wringer. Implementing the Commission of Audit’s recommendations will be a slap in the face to young people who are doing it tough as the result of events such as the global financial crisis that were not of their making.</p>
<p>In other words, grim times are on the cards for those least able to grin and bear it. For once and for all, let’s not use young people who are less fortunate as whipping boys.</p><img src="https://counter.theconversation.com/content/26287/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michael Emslie does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>In the English court during the 15th and 16th centuries boys were engaged to cop the punishments of young princes. These young people were referred to as “whipping boys”. When the young crown prince misbehaved…Michael Emslie, Lecturer in Youth Work, RMIT UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/262142014-05-06T04:15:04Z2014-05-06T04:15:04ZCommission of Audit’s poverty traps for low wage earners<figure><img src="https://images.theconversation.com/files/47836/original/wwtt4dqk-1399338543.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The Commission of Audit's minimum wage recommendation shows no understanding of issues facing the low paid.</span> <span class="attribution"><span class="source">'No understanding anytime': artist: Richard Tipping, from the Signed Signs series, Brisbane Powerhouse, 2001. </span></span></figcaption></figure><p>There was nothing in the Commission of Audit’s terms of reference inviting it to make recommendations on the minimum wage. The Commission was asked to produce a report on “government expenditure”.</p>
<p>Yet the commission has <a href="http://www.ncoa.gov.au/report/phase-one/part-b/7-11-unemployment-benefits-and-the-minimum-wage.html">recommended fundamental changes</a> to the fixing of the minimum wage including, over time, cuts averaging 21% across the workforce, and up to 31% for South Australian workers and 33% for Tasmanians. (Minimum wages should fall, it recommends, from 56% to 44% of average weekly earnings, and vary between states.)</p>
<p>It also recommends (but <a href="http://www.ncoa.gov.au/report/appendix-vol-1/9-11-unemployment-benefits-minimum-wage.html">in an Appendix</a>, not the main volume of recommendations on which journalists focus) that the responsibility for fixing minimum wages be removed from the independent tribunal, the Fair Work Commission, and be made “administrative”; that is, put in the hands of government.</p>
<p>With minimum wage fixing transformed in this way, the setting of award wages for all workers on classifications above the minimum wage would also be affected, as award wage relativities are integrally related to minimum wages.</p>
<p>Indeed, it is difficult to see an independent industrial relations tribunal surviving such change. Other aspects of pay, such as penalty rates, overtime and allowances – previously the <a href="http://www98.griffith.edu.au/dspace/bitstream/handle/10072/29660/59864_1.pdf?sequence=1">target of the WorkChoices legislation</a> – would eventually be in the hands of government wage setters. The tribunal might end up just handling unfair dismissals and other disputes, as permitted by statute.</p>
<p>The recommendation is all the more peculiar because, other things being equal, a cut in minimum wages will lead to an increase in Commonwealth expenditures. At any given level of benefits, spending on benefits or pensions is higher when minimum wages are lower. This is because people on a lower minimum hourly wage, especially those working only part-time hours, would likely be eligible for higher partial pensions or benefits.</p>
<p>This would increase, not reduce, the deficit - counter to the stated purpose of the Commission.</p>
<p>The Commission cites one reason for abandoning independent minimum wage fixing – that cutting minimum wages would reduce unemployment. It cites one piece of evidence in support of this claim – that minimum wages are higher in Australia than in most other countries. It demonstrates this with a chart (below) depicting 2012 minimum wages in US dollar purchasing power parities in six countries chosen by the Commission.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/47703/original/bt53j7s5-1399209849.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/47703/original/bt53j7s5-1399209849.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=385&fit=crop&dpr=1 600w, https://images.theconversation.com/files/47703/original/bt53j7s5-1399209849.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=385&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/47703/original/bt53j7s5-1399209849.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=385&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/47703/original/bt53j7s5-1399209849.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=484&fit=crop&dpr=1 754w, https://images.theconversation.com/files/47703/original/bt53j7s5-1399209849.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=484&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/47703/original/bt53j7s5-1399209849.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=484&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Commission of Audit report, page 147.</span>
</figcaption>
</figure>
<p>Yet Australia has one of the lowest unemployment rates amongst developed countries – and the lowest amongst the six countries in the Commission’s selected comparison group, as shown below. Australia’s <strong><em>youth</em></strong> unemployment rate is also the lowest of the six. </p>
<p>The USA, with the lowest minimum wage, had the second highest unemployment rate among the six. There, over 600 economists, including seven Nobel laureates, <a href="http://www.epi.org/minimum-wage-statement/">petitioned for an increase in minimum wages</a>. The chart suggests no significant relationship between unemployment and minimum wages in the countries chosen by the Commission.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/47704/original/kyrch8gd-1399210084.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/47704/original/kyrch8gd-1399210084.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=428&fit=crop&dpr=1 600w, https://images.theconversation.com/files/47704/original/kyrch8gd-1399210084.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=428&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/47704/original/kyrch8gd-1399210084.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=428&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/47704/original/kyrch8gd-1399210084.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=538&fit=crop&dpr=1 754w, https://images.theconversation.com/files/47704/original/kyrch8gd-1399210084.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=538&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/47704/original/kyrch8gd-1399210084.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=538&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
</figcaption>
</figure>
<p>So the Commission comes up with an idea that is outside its formal mandate, without supporting evidence and with deficit-increasing effects contrary to its stated objectives. How does it deal with the budgetary consequence?</p>
<p>By recommending a tightening of the withdrawal rate for pensions and benefits.</p>
<p>That is, if you are on a pension or benefit and working part-time, the Commission proposes that the government claw back 75% of each extra dollar you earn (rather than the present 50% or 60%). It would mean pensioners and beneficiaries pay <a href="http://www.theage.com.au/comment/hockeys-commission-of-audit-anything-but-responsible-20140505-zr4nz.html">much higher</a> “effective marginal tax rates” than even millionaires.</p>
<p>The situation where you lose most of the additional income you earn is often referred to as a “<a href="http://keithrankin.co.nz/kr_uws1991.pdf">poverty trap</a>” and seen as a <a href="http://www.civitas.org.uk/pdf/workDependencyBriefingApr05.pdf">barrier to labour force participation</a>.</p>
<p>After all, why would you work an extra five hours a week if, after the government clawed back its take, you only got to keep $3 per hour? It wouldn’t cover transport costs, let alone child care.</p>
<p>The Commission claims that these increased barriers to working will <a href="http://www.ncoa.gov.au/report/phase-one/part-b/7-11-unemployment-benefits-and-the-minimum-wage.html">“improve incentives to work”</a>. Yet earlier in its report it recognises that withdrawing family tax benefits as you earn more, along similar lines, <a href="http://www.ncoa.gov.au/report/phase-one/part-b/7-5-family-tax-benefits.html">“reduces the incentive to work”.</a> Such self-contradiction is breathtaking.</p>
<p>This is just one of several aspects of the Commission report which would tend to increase poverty, including amongst the low paid. Others include the Medicare co-payment, charging for access to public hospitals, increased co-payments for pharmaceuticals, raising the pension age, cutting wage subsidies for the long-term unemployed, cutting unemployment, sickness and widows benefits for those aged over 60, abolishing vocational education programs and reducing funding for affordable housing and homelessness.</p>
<p>When the Commission makes recommendations well outside its terms of reference, with outcomes contrary to its objectives, it tells you that the driving motivation is not really public finance. It is much more about ideology.</p>
<p>That should not surprise. The review was headed by the then president of the <a href="http://www.smh.com.au/federal-politics/political-news/commission-of-audit--who-what-why-and-where-20140501-zr2af.html">Business Council of Australia</a> (BCA). Its secretariat was also headed by a <a href="http://www.theguardian.com/world/2014/jan/15/australias-budget-deteriorating-audit-head">BCA secondee</a>.</p>
<p>The BCA has long railed against <a href="http://www.bca.com.au/docs/426B6865-33EA-462E-98F3-357D463EE2F2/workplace_relations_action_plan_for_future_prosperity_15-2-2005-pdf.pdf">minimum wages</a> and was an <a href="http://www.aph.gov.au/%7E/media/wopapub/senate/committee/eet_ctte/completed_inquiries/2004_07/wr_workchoices05/submissions/sub045_pdf.ashx">enthusiastic supporter</a> of WorkChoices.</p>
<p>The Coalition had to offer a <a href="http://www.smh.com.au/federal-politics/federal-election-2013/liberals-ire-as-abetz-goes-freelancing-20130822-2seh8.html">minimalist target on industrial relations</a> before the election, but needed an <a href="https://theconversation.com/just-how-much-can-we-really-expect-from-the-national-commission-of-audit-22310">“independent”</a> justification for major action after it.</p>
<p>The mutual interest in having a BCA-led “Audit” Commission after the election deal with such issues was inescapable. But it was certainly not in the interests of low paid workers, for whom the Commission shows no understanding.</p><img src="https://counter.theconversation.com/content/26214/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David Peetz receives funding from the Australian Research Council and, as a university employee, has undertaken research over many years with occasional financial support from governments from both sides of politics, employers and unions.</span></em></p>There was nothing in the Commission of Audit’s terms of reference inviting it to make recommendations on the minimum wage. The Commission was asked to produce a report on “government expenditure”. Yet…David Peetz, Professor of Employment Relations, Griffith UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/262962014-05-05T20:34:57Z2014-05-05T20:34:57ZCommunity broadcasting? Where’s the value in that?<figure><img src="https://images.theconversation.com/files/47774/original/mxfrzx47-1399258213.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The public’s active participation in society is considered vital to a functioning democracy.</span> <span class="attribution"><span class="source">Patrick White</span></span></figcaption></figure><p>The <a href="http://www.ncoa.gov.au/report/index.html">National Commission of Audit</a> - released on May 1 – recommends slashing all community broadcasting funding in Australia. For some, this is a logical response to the nation’s need to collectively “<a href="http://www.theaustralian.com.au/national-affairs/policy/push-for-wealthy-to-shoulder-burden-puts-the-focus-on-private-care/story-fn59nokw-1226902631869#">shoulder the burden</a>” of our apparent economic woes. For others it appears both unexplained and unjustified. </p>
<p>Certainly it raises questions with regard to both the role of media in our society, and the “value” of community broadcasting.</p>
<p>There are more than <a href="http://www.cbf.com.au/sector/about-australian-community-broadcasting">360 community radio stations</a> around Australia, each of them, in theory, with an inclusive governance structure producing local media content by and for their local communities. The stations – ethnic, religious, youth, GLBTI, radio for the print handicapped, music, Indigenous, along with more than 80 TV stations – make up Australia’s third media sector, and are powered by more than 20,000 volunteers. </p>
<p>The sector often flies under the radar of the Australia psyche, yet internationally it is <a href="http://unesdoc.unesco.org/images/0021/002150/215097e.pdf">consistently held up</a> as one of the world’s most expansive and successful examples of community broadcasting.</p>
<p>In the last budget the sector received A$17.7 million in Federal Government funds – with just over $5 million of that dedicated to the transition to digital radio technology. Yet in three short sentences – in <a href="http://www.ncoa.gov.au/report/appendix-vol-2/10-17-att-2.html">Volume 2 of the Appendix</a> – the Commission of Audit has deemed community broadcasting unworthy of Federal Government funds:</p>
<blockquote>
<p>The Commonwealth Government already provides over $1 billion per annum to the operation of the public broadcasters. There is a limited rationale for the Commonwealth to also subsidise community radio services. Continued government funding of this area does not meet the Report’s principles of good governance.</p>
</blockquote>
<p>Since 1984 the <a href="http://www.cbf.com.au/">Community Broadcasting Foundation</a> (originally called the Public Broadcasting Foundation) has transparently distributed public funds to community broadcasters. As an independent non-profit funding body, it allocates grants through competitive rounds assessed by volunteer committees. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/47769/original/4mr5dv4g-1399257455.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/47769/original/4mr5dv4g-1399257455.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/47769/original/4mr5dv4g-1399257455.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=306&fit=crop&dpr=1 600w, https://images.theconversation.com/files/47769/original/4mr5dv4g-1399257455.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=306&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/47769/original/4mr5dv4g-1399257455.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=306&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/47769/original/4mr5dv4g-1399257455.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=384&fit=crop&dpr=1 754w, https://images.theconversation.com/files/47769/original/4mr5dv4g-1399257455.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=384&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/47769/original/4mr5dv4g-1399257455.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=384&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">David Jackmanson</span></span>
</figcaption>
</figure>
<p>The grants are small financial contributions that in many instances make the difference between a station covering its basic running and transmission costs, or not. Isn’t this public money well spent?</p>
<p>Community broadcasting began in Australia in the mid 1970s and is different to public broadcasting. It arose out of an identified need to provide an accessible space for ordinary Australians to have a voice. That need has not disappeared. </p>
<p>Despite more than four decades of radical change within media technology and content production, there remains a critical need to actively facilitate the voices, issues and opinions that are underrepresented in the mainstream media.</p>
<p>The <a href="http://www.ncoa.gov.au/report/appendix-vol-2/10-13-efficiency-of-the-public-broadcasters.html">Commission of Audit noted</a> that: </p>
<blockquote>
<p>Media convergence, especially the availability and access of text, audio and video media via the internet, is increasingly eliminating the traditional arguments for public broadcasting. The need for government intervention or support has now been largely superseded by technology and commercial imperatives.</p>
</blockquote>
<p>Where is the evidence to support such a claim? While the internet provides many opportunities, it does not have a democratic intent, or a big picture focus on the role of the media in striving for the betterment of society. </p>
<p>Online media platforms do not seek to address issues of inequality and injustice. Information and access online is not free, and in many parts of the country even getting online remains a challenge. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/47770/original/2pv8v2qj-1399257838.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/47770/original/2pv8v2qj-1399257838.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/47770/original/2pv8v2qj-1399257838.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=442&fit=crop&dpr=1 600w, https://images.theconversation.com/files/47770/original/2pv8v2qj-1399257838.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=442&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/47770/original/2pv8v2qj-1399257838.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=442&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/47770/original/2pv8v2qj-1399257838.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=556&fit=crop&dpr=1 754w, https://images.theconversation.com/files/47770/original/2pv8v2qj-1399257838.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=556&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/47770/original/2pv8v2qj-1399257838.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=556&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">Yannis</span></span>
</figcaption>
</figure>
<p>Neither online technologies, nor public broadcasters, actively facilitate marginalised people having a voice in the media. Community broadcasting does all of these things – which is why its democratic function remains essential.</p>
<p>The recommendation by the Commission of Audit to stop funding community broadcasting goes to the heart of what we value – and what “value” indeed means in our present-day society. It makes us contemplate what is deserving of our public funds. Among the many questions raised are the following:</p>
<ul>
<li><p>Do we consider independent, local community news and information, along with community language radio shows, and a significant space for local music and culture, to be of value? </p></li>
<li><p>Do we want to have community owned and operated media outlets? </p></li>
<li><p>Do we need a third media sector – separate from public and commercial – that prioritises the access and participation of everyday Australians? </p></li>
<li><p>Are we going to accept that public funding of community broadcasting activities doesn’t equate with “good governance”?</p></li>
</ul>
<figure class="align-left zoomable">
<a href="https://images.theconversation.com/files/47772/original/2kb9hhjf-1399258020.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/47772/original/2kb9hhjf-1399258020.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/47772/original/2kb9hhjf-1399258020.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=900&fit=crop&dpr=1 600w, https://images.theconversation.com/files/47772/original/2kb9hhjf-1399258020.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=900&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/47772/original/2kb9hhjf-1399258020.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=900&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/47772/original/2kb9hhjf-1399258020.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1131&fit=crop&dpr=1 754w, https://images.theconversation.com/files/47772/original/2kb9hhjf-1399258020.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1131&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/47772/original/2kb9hhjf-1399258020.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1131&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">Martin Djablik</span></span>
</figcaption>
</figure>
<p>The issue of value is deeply ingrained in an ideology that is ubiquitous throughout the Commission of Audit and the Abbott Government. It is a value system that clearly prioritises the economy above community. </p>
<p>There is absolutely no evidence to suggest this model presents increased opportunities for the poor and marginalised to participate in the media. Similarly, there is no evidence that a “free” market economy equates with an egalitarian distribution of freedom of speech.</p>
<p>Consistently the public’s active participation in society is considered vital to a functioning democracy. And the media plays a central role in the flow of information, along with the sharing of views and ideas. </p>
<p>Community broadcasting is in a unique position to contribute to communicative democracy. If there was ever a need to step up and voice your support for a non-commercial, independent community broadcasting sector in Australia it is now. Before the first nail is placed in the community broadcasting coffin.</p><img src="https://counter.theconversation.com/content/26296/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Juliet Fox is 3CR's Project Coordinator. From 2004-2010 she was a volunteer, elected representative on the grants committee of the Community Broadcasting Foundation and served as Board member and Treasurer (2008-2010). </span></em></p>The National Commission of Audit - released on May 1 – recommends slashing all community broadcasting funding in Australia. For some, this is a logical response to the nation’s need to collectively “shoulder…Juliet Fox, PhD Candidate, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/257632014-05-05T20:34:39Z2014-05-05T20:34:39ZTriple trouble: will the ABC avoid budget cuts in a month of threats?<figure><img src="https://images.theconversation.com/files/47711/original/g46j9jgh-1399248982.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">In commissioning a review of SBS/ABC efficiency, Malcolm Turnbull ruled out advertising on the ABC or changes to the broadcasters’ respective charters – but not budget cuts.</span> <span class="attribution"><span class="source">AAP/Daniel Munoz</span></span></figcaption></figure><p><em>Due to Australia’s small population and high concentration of few media voices, public broadcasters play a pivotal role in shaping the media ecosystem and cultural landscape. With the ABC and SBS under scrutiny ahead of the budget, The Future of Public Broadcasting series looks at the role of these taxpayer-funded broadcasters, how they shape our media and whether they provide value for money.</em></p>
<hr>
<p>The ABC faces three big threats in May. All of them are about funding and each one has the capacity to diminish the national broadcaster. The first has already come and gone in the form of the <a href="http://www.ncoa.gov.au/">Commission of Audit</a>, which recommended the closure of one of the ABC’s major international arms. </p>
<p>With two more threats yet to come – in the form of the <a href="http://www.theaustralian.com.au/media/coalition-announces-abc-sbs-efficiency-review/story-e6frg996-1226814210114">Lewis review</a> and the federal budget on May 13 – the ABC is understandably nervous. At stake is the question of how the Coalition government views the ABC and whether it is likely to embark on the kind of crusade of rationalisation and retribution <a href="https://theconversation.com/abc-efficiency-review-must-not-be-a-stealth-attack-on-effectiveness-25853">attempted by the Howard government</a>.</p>
<h2>Commission of Audit recommendations</h2>
<p>The Commission of Audit <a href="http://www.smh.com.au/federal-politics/political-news/axe-abc-australia-network-commission-of-audit-20140501-zr2n4.html">recommended</a> the closure of the Australia Network, which is funded by the Department of Foreign Affairs and Trade but run by the ABC. The Commission of Audit implied that the service, which has a budget of A$223 million over ten years, is not an effective agent for soft diplomacy. The decision is a nod to the ABC’s rivals, who did not accept the Gillard government’s decision to <a href="http://www.abc.net.au/news/2011-12-05/australia-network-given-to-abc/3713862">hand the Australia Network</a> to the ABC permanently in 2011.</p>
<p>While the Commission of Audit didn’t criticise the decision directly, it noted that the ABC was given the network in perpetuity:</p>
<blockquote>
<p>…irrespective of the cost effectiveness of offers by other media companies.</p>
</blockquote>
<p>The Commission of Audit concluded that the Australia Network is too expensive and that its audience is too small, despite the fact that it recently closed a deal to <a href="http://www.smh.com.au/national/abc-becomes-first-western-broadcaster-to-go-chinawide-20140416-36s9c.html">broadcast in China</a>. In a recommendation that looks awfully like political payback, the Commission of Audit argued:</p>
<blockquote>
<p>…funding directed toward the Australia Network would be better directed to other areas or returned to the budget.</p>
</blockquote>
<p>This was no great surprise. The Abbott government has been <a href="http://www.theaustralian.com.au/media/abcs-asia-tv-network-faces-axe/story-e6frg996-1226813457204#">busily hinting</a> for months that the Australia Network has an uncertain future.</p>
<p>Perhaps the most significant news from the Commission of Audit was that the ABC’s own budget should stay intact, at least for the moment. This was despite hints that the rationale for substantial funding for the ABC – and SBS – should be under review. The Commission of Audit’s report said: </p>
<blockquote>
<p>The case for reconsidering the level of support for the public broadcasters is underpinned by advances in technology, societal changes and an expectation of achieving efficiencies and value for money.</p>
</blockquote>
<p>Ominously, the Commission of Audit said:</p>
<blockquote>
<p>It could be argued that the need for government intervention or support has now been superseded by technology and commercial imperatives. </p>
</blockquote>
<p>While this is true, it could also be argued that these same technologies have busted the traditional media’s business models and fractured audiences, meaning the imperative has never been greater for a well-resourced national broadcaster that is committed to quality journalism.</p>
<p>The Commission of Audit said that there is:</p>
<blockquote>
<p>…no ‘right’ level of funding that should be provided to the ABC and SBS, or ‘right’ level of services that should be provided by the public broadcasters.</p>
</blockquote>
<p>Instead, the Commission of Audit argued that both broadcasters can and should become more efficient. It recommended the ABC and SBS benchmark their efficiency levels against each other, and against their rival commercial media organisations.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/47721/original/sdpv93km-1399251761.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/47721/original/sdpv93km-1399251761.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/47721/original/sdpv93km-1399251761.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/47721/original/sdpv93km-1399251761.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/47721/original/sdpv93km-1399251761.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/47721/original/sdpv93km-1399251761.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/47721/original/sdpv93km-1399251761.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The Commission of Audit recommended that the DFAT-funded, ABC-run Australia Network be scrapped.</span>
<span class="attribution"><span class="source">AAP/Lukas Coch</span></span>
</figcaption>
</figure>
<h2>The Lewis review</h2>
<p>This is where it gets interesting for the ABC. It appears that at least two arms of government are talking to each other. The next big threat the ABC faces is the Lewis efficiency review, which insiders believe will be released before the federal budget. </p>
<p>It is as if communications minister Malcolm Turnbull had anticipated the Commission of Audit’s findings because the person he asked to conduct the efficiency review in January was Peter Lewis – a former senior executive at Seven West Media who is well versed in commercial media modelling.</p>
<p>Lewis’ <a href="http://www.communications.gov.au/television/abc_and_sbs_television/abc_and_sbs_efficiency_study_terms_of_reference">brief</a> was far reaching, although Turnbull was astute enough to rule out several things, such as advertising on the ABC or changes to the broadcasters’ respective charters. Lewis was told to focus on efficiency, particularly the back-of-house and day-to-day operations, as well as financial matters and organisational structures.</p>
<p>Insiders say Lewis needed a crash course on public broadcasting, as well as some convincing that the ABC’s more in-depth current affairs programs require greater resources than, say, Seven’s Today Tonight. They say Lewis has managed to stick close to his brief and that his findings shouldn’t surprise either broadcaster. </p>
<p>Speculation has ranged from a merger, which is widely discredited, to the fusing of some of the networks’ channels to modest job cuts and the closure of some services. However, there is also optimism that the closer Lewis looked the more he would have discovered that the ABC is already efficiently run compared to commercial networks and comparable public broadcasters. </p>
<p>There is also a sense that Lewis will come to a similar conclusion to previous studies of the ABC, such as the Mansfield and KPMG reviews, which both found that the ABC was in fact under-resourced.</p>
<p>One fear is that the Lewis review represents a threat to the editorial independence of the national broadcasters because the recommendations will go directly to Turnbull and amount to a prescription about specific program funding. One ABC insider described the process as “political interference”.</p>
<p>Certainly, there has been <a href="http://www.smh.com.au/federal-politics/political-news/nationals-mps-warn-against-abc-budget-cuts-20140413-zqu8z.html">plenty of talk</a> within the Coalition about the need to protect the specific areas, such as the ABC’s rural and regional radio stations, from any cuts.</p>
<h2>The federal budget</h2>
<p>Then there’s the final threat – the federal budget – which may or may not require an efficiency dividend from the ABC and SBS, and may or may not implement any one of the changes recommended by Lewis or the Commission of Audit.</p>
<p>ABC managing director Mark Scott is carefully avoiding being drawn into the politics by <a href="http://www.abc.net.au/news/2014-02-25/no-part-of-abc-quarantined-from-funding-cuts-mark-scott-says/5284122">reminding</a> anyone who asks that prime minister Tony Abbott <a href="http://www.tvtonight.com.au/2013/09/abbott-promises-no-cuts-to-abc-sbs.html">did promise</a> before the election not to cut either SBS or the ABC’s budget, and therefore it is all business as usual at the ABC. </p>
<p>However, it is also clear that the ABC is doing some strategic planning to prepare for any eventuality, and that it won’t be able to relax until these three threats have been averted.</p>
<hr>
<p><em>Read more articles in <a href="https://theconversation.com/topics/the-future-of-public-broadcasting">The Future of Public Broadcasting</a>.</em></p><img src="https://counter.theconversation.com/content/25763/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Andrew Dodd does occasional freelance work for the ABC.</span></em></p>Due to Australia’s small population and high concentration of few media voices, public broadcasters play a pivotal role in shaping the media ecosystem and cultural landscape. With the ABC and SBS under…Andrew Dodd, Program Director - Journalism, Swinburne University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/262392014-05-05T20:34:32Z2014-05-05T20:34:32ZResearch and innovation in Australia need a long-term strategy<figure><img src="https://images.theconversation.com/files/47789/original/zcj46r7x-1399265101.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">There's no quick fix for the research industry in Australia, it needs a considered approach.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/rdecom/7336836234/in/photolist-cbkcNs-61RzAi-dZkZRR-c1fSuU-cbkhcJ-CNDr8-hTFdWJ-dkGUFg-5xWaQn-8LuaaJ-hGNQcX-54ejGE-cbksLQ-8gNyD8-8L8u1c-CNE98-61RzgT-mdKHUB-5dx5pW-cbkuyo-5ooCkt-de2VEt-7EJYMw-92Bik-jceKs8-9woJRQ-de2VcJ-efALsR-9WhgHt-7a7guo-c1fFGy-hTFJT6-c9ckbb-mdKJvg-64b2Ej-6UAEnd-6GzzsS-f3kCeU-5mg6xJ-9wkQuR-5WR98-eyhMFM-6scU4W-6scT1Q-hTFEt4-98XNSC-eykPHf-9qDRub-5EhqB8-7bHRv8">Flickr/US Army RDECOM</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>Most researchers would agree with the <a href="http://www.ncoa.gov.au/">Commission of Audit’s</a> finding that “given overall budget constraints, it is important to take a strategic, whole-of-government approach to where Australia’s research dollars are spent”. </p>
<p>Indeed, I think researchers would go further and say that this must be part of an ongoing conversation between the research sector, industry, government and the community. </p>
<p>For the Commission of Audit process to have a positive impact, the report must be seen as a first step in a broader long-term, strategic, whole-of-government plan for the entire research and innovation sector – something Australia has not had for many years.</p>
<p>The report’s recommendations fall into three groups: merging previously distinct funding bodies and cutting entire programs; reducing “red tape”; and structural reform of funding to create more certainty.</p>
<h2>Merging and cutting</h2>
<p>Merging smaller agencies that fund research into larger bodies makes some sense. Savings can potentially be made by reducing duplicated administration and the possibility of a single overarching research strategy, rather than fragmented goals, is alluring.</p>
<p>The risk in these proposals is that the culture of successful niche programs will be lost in monolithic super-agencies. As with so many of the commission’s recommendations, the devil will be in the detail.</p>
<p>For example, the recommendation to combine the National Health and Medical Research Council, Cancer Australia and the Australian National Preventative Health Agency into a National Health and Medical Research Institute appears sound, provided the crucial role preventative health research plays in the long-term sustainability of the health system is enhanced, not eroded.</p>
<p>Likewise, the Co-operative Research Centres program is rightly seen as one of the success stories of Australian research and innovation, bridging the gulf between academics and end users of research in industry and the community. The risk of rolling this funding into a Super-Australian Research Council (recommendation 34) is that the collaborative industry focus of Co-operative Research Centres will be lost.</p>
<p>International indicators show that Australia produces high-quality research, but is less good at developing research results to capture economic benefit. Over the last decade support for development has eroded. In 2008, the previous government scrapped the widely regarded <a href="http://www.australianinstituteforinnovation.org.au/Why-was-the-Commercial-Ready-Program-shut-down-A-story-of-a-damaging-Tyranny-of-Distance/">Commercial Ready program</a> without providing an alternative. As a result innovation has languished. </p>
<p>The Commission of Audit recommends abolishing the Industry Innovation Precincts Program, Industry Collaboration Fund and the Australian Research Council Linkage - Industrial Transformation Research Program, yet how it intends to better develop Australia’s smart ideas is not clear. </p>
<h2>Reducing red tape</h2>
<p>The time it takes Australian researchers to apply for funding and to review funding applications has grown substantially in the last 20 years. This is now a <a href="http://www.ncbi.nlm.nih.gov/pubmed/23793700">major barrier to productivity</a>. The Commission of Audit identifies a number of ways to cut, or streamline, the administrative red tape that binds researchers.</p>
<p>An obvious suggestion made by the commission is to increase the duration of grants so that researchers have to apply less often. This and other recommendations should be considered as part of a broader overhaul of the grant funding processes. This is something that is needed not just in Australia but is <a href="http://www.pnas.org/content/early/2014/04/09/1404402111">recognised as an international problem.</a></p>
<p>In ensuring an efficient and responsive grant allocation system, we should be mindful that both the National Health and Medical Research Council and the Australian Research Council operate with a core secretariat that is extremely lean. While there is no doubt that processes can be refined, there is also an argument that administration funding should be enhanced, rather than cut.</p>
<h2>Funding to create more certainty</h2>
<p>The commission makes two key suggestions which should be adopted quickly and fully.</p>
<p>The first is proper long-term funding of critical research infrastructure such as genome centres, the Synchrotron and Antarctic research vessels. The on-again, off-again funding of these facilities creates uncertainty and erodes the effectiveness of the Australian research endeavour. </p>
<p>The entire research sector would breathe a sigh of relief should long-term funding for essential infrastructure be supported in a bipartisan way that enabled both academic and industry groups to access these scientific facilities and services on affordable terms. To do this requires that highly qualified people be viewed by government as an essential part of our national infrastructure network, with funding provided not just for equipment but also for the highly specialised technologists.</p>
<p>The second involves looking at better alignment of funding for the direct and indirect costs of research. The current system of funding for the indirect costs of research (including costs to run research organisations, such as power, support staff and laboratory equipment) is inefficient, inequitable and burdened with red tape.</p>
<p>Funding for the indirect costs of research is arguably the number one issue affecting the productivity of the research sector. The current system has been recognised as being worse than ineffective by every government review of research and innovation in the last 20 years (<a href="http://www.health.gov.au/internet/main/publishing.nsf/Content/hmrsr.htm">The Wills Review</a>, <a href="https://www.health.gov.au/internet/main/publishing.nsf/Content/health-hsid-investreview/$FILE/Final_Report.pdf">Grant Review</a> and <a href="http://www.mckeonreview.org.au/downloads/Strategic_Review_of_Health_and_Medical_Research_Feb_2013-Summary_Report.pdf">McKeon Review</a>), yet little has changed. </p>
<p>If the Commission of Audit manages to bring about funding for the indirect costs of research, then many in the sector will view the exercise as a success, but it’s only the first step.</p><img src="https://counter.theconversation.com/content/26239/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Douglas Hilton works for the Walter And Eliza Hall Institute Of Medical Research and The University Of Melbourne, and is president-elect of the Association of Australian Medical Research Institutes. He advises a range of medical research institutes, collaborates with CSL and founded and owns shares in the privately owned company, Murigen Therapeutics. Doug was the director of CRC Growth Factors, and the Walter and Eliza Hall Institute receives funding from CRCs including the HEARing-CRC, and Cancer Therapeutics CRC.
Doug receives funding from the NHMRC, the Australian Research Council, CSL, National Collaborative Research Infrastructure Strategy (NCRIS), National Institute of Health (USA), CSIRO via the Science and Industry Endowment Fund, and various philanthropic trusts and foundations.</span></em></p>Most researchers would agree with the Commission of Audit’s finding that “given overall budget constraints, it is important to take a strategic, whole-of-government approach to where Australia’s research…Douglas Hilton, Director, Walter and Eliza Hall Institute & Professor of Medical Biology , Walter and Eliza Hall InstituteLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/260362014-05-04T20:38:49Z2014-05-04T20:38:49ZAustralia’s economy is healthy, so how can there be a budget crisis?<figure><img src="https://images.theconversation.com/files/47495/original/dw4nmnjv-1398908559.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Is Australia's budget really in crisis?</span> <span class="attribution"><span class="source">AAP</span></span></figcaption></figure><p><em>As the 2014-15 budget nears, Australians are hearing that the government must mount an urgent repair job to address the looming structural crisis that will see the budget in deficit for decades to come. The “budget crisis” is a convenient narrative - but how true is it?</em></p>
<p><em>In the first of our series, University of Canberra Professor Phil Lewis argues Australia’s economy is strong - and why it is wrong to draw a straight line between it and the budget.</em></p>
<hr>
<p>Prime Minister Tony Abbott has suggested that <a href="http://www.couriermail.com.au/news/opinion/opinion-any-budget-pain-will-be-australias-gain-in-the-longterm/story-fnihsr9v-1226898755245">“You can’t fix the economy unless you fix the budget</a>”. </p>
<p>If we are to believe the over-the-top Commission of Audit report it will take far more than this to bring the budget to surplus by 2023. But few seriously think many of the recommendations will be implemented.</p>
<p>While it is correct to say that lower debt would allow more government revenue to fund worthwhile projects to improve economic outcomes, it is not clear why lower (or zero) deficits or debt necessarily implies the economy will perform better. </p>
<p>A balanced budget may be a very valuable, but not essential, condition for good economic management. There are even fellow economists who argue (in my view wrongly) that increasing deficits and debt are necessary at the moment to increase current economic growth and reduce unemployment.</p>
<h2>How Australia’s economy is faring</h2>
<p>A good way to judge how Australia’s economy is faring is to compare key indicators such as inflation, unemployment rate and GDP growth with other industrialised countries, especially those who make up the <a href="http://www.oecd.org/about/membersandpartners/list-oecd-member-countries.htm">OECD</a>. I’ve chosen OECD countries comparable to Australia: the United States, United Kingdom, Germany and Japan, as well as the OECD average. </p>
<p><strong>Inflation:</strong> By almost all the standard economic indicators the Australian economy is doing better than most other industrialised countries – even though our inflation rate is somewhat higher, we have an enviably high rate of growth and low rate of unemployment compared to other OECD countries. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/47507/original/ynjv5tcr-1398912827.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/47507/original/ynjv5tcr-1398912827.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=418&fit=crop&dpr=1 600w, https://images.theconversation.com/files/47507/original/ynjv5tcr-1398912827.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=418&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/47507/original/ynjv5tcr-1398912827.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=418&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/47507/original/ynjv5tcr-1398912827.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=525&fit=crop&dpr=1 754w, https://images.theconversation.com/files/47507/original/ynjv5tcr-1398912827.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=525&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/47507/original/ynjv5tcr-1398912827.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=525&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Inflation: Australia compared to OECD.</span>
</figcaption>
</figure>
<p>Australia is a very rich country by world standards and the economy does a pretty good job of developing wealth and opportunities for most people. These comparatively glowing figures, however, mask the fact that there are those who do not fare so well in the market economy. </p>
<p><strong>Welfare and unemployment:</strong> Despite being one of the richest countries in the world, 20% of Australian households rely almost entirely on welfare payments. Those of working age receiving benefits, rather than being in work, make up over 16% of the labour force. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/47508/original/6dj3x44s-1398912828.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/47508/original/6dj3x44s-1398912828.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/47508/original/6dj3x44s-1398912828.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=418&fit=crop&dpr=1 600w, https://images.theconversation.com/files/47508/original/6dj3x44s-1398912828.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=418&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/47508/original/6dj3x44s-1398912828.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=418&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/47508/original/6dj3x44s-1398912828.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=525&fit=crop&dpr=1 754w, https://images.theconversation.com/files/47508/original/6dj3x44s-1398912828.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=525&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/47508/original/6dj3x44s-1398912828.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=525&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Unemployment: Australia compared to OECD countries.</span>
</figcaption>
</figure>
<p>In addition many are underemployed, working fewer hours than they want to. By changing the way we measure joblessness we could easily double the official estimates of unemployment. </p>
<p>As Ken Henry <a href="https://theconversation.com/why-rising-youth-unemployment-demands-our-urgent-attention-25990">pointed out recently in The Conversation</a>, youth unemployment is a particular concern. The rate among 15-19 year olds is currently over 16%, and is 9% among 20-24 year olds. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/47506/original/sdwncqpb-1398912827.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/47506/original/sdwncqpb-1398912827.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/47506/original/sdwncqpb-1398912827.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=418&fit=crop&dpr=1 600w, https://images.theconversation.com/files/47506/original/sdwncqpb-1398912827.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=418&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/47506/original/sdwncqpb-1398912827.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=418&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/47506/original/sdwncqpb-1398912827.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=525&fit=crop&dpr=1 754w, https://images.theconversation.com/files/47506/original/sdwncqpb-1398912827.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=525&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/47506/original/sdwncqpb-1398912827.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=525&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Youth Unemployment: Australia compared to OECD countries.</span>
</figcaption>
</figure>
<p><strong>Productivity:</strong> Also, recent concerns have been expressed about Australia’s <a href="https://theconversation.com/why-we-should-approach-claims-of-a-productivity-crisis-with-caution-26000">levels of productivity</a>. In other words, we need to make better use of the resources already employed as well as do better by putting unemployed resources to work. This becomes particularly important given the ageing of the population.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/47512/original/kqwqbg56-1398912836.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/47512/original/kqwqbg56-1398912836.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/47512/original/kqwqbg56-1398912836.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=418&fit=crop&dpr=1 600w, https://images.theconversation.com/files/47512/original/kqwqbg56-1398912836.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=418&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/47512/original/kqwqbg56-1398912836.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=418&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/47512/original/kqwqbg56-1398912836.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=525&fit=crop&dpr=1 754w, https://images.theconversation.com/files/47512/original/kqwqbg56-1398912836.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=525&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/47512/original/kqwqbg56-1398912836.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=525&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">OECD Labour Productivity.</span>
</figcaption>
</figure>
<p><strong>Debt:</strong> While there has been a lot of public concern expressed about reducing Australia’s debt levels, Australia’s debt-to-GDP ratio - a key indicator of how well a country can pay back its debt without incurring more debt - is significantly lower than the OECD average and also much lower than countries such as Japan. In fact, Australia’s position <a href="http://media.smh.com.au/news/federal-politics/joe-hockey-grilled-by-british-presenter-5373145.html">is the envy of other countries</a> in the OECD.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/47510/original/kyz8gwkp-1398912830.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/47510/original/kyz8gwkp-1398912830.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=418&fit=crop&dpr=1 600w, https://images.theconversation.com/files/47510/original/kyz8gwkp-1398912830.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=418&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/47510/original/kyz8gwkp-1398912830.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=418&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/47510/original/kyz8gwkp-1398912830.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=525&fit=crop&dpr=1 754w, https://images.theconversation.com/files/47510/original/kyz8gwkp-1398912830.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=525&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/47510/original/kyz8gwkp-1398912830.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=525&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">OECD Govt Debt.</span>
</figcaption>
</figure>
<h2>How the budget is faring</h2>
<p><strong>The structural deficit:</strong> So, it can be demonstrated that Australia’s economy is strong. However, there is concern that Australia, on its current trajectory, is heading for (or well on the way) to an unsustainable structural deficit. This is where the budget may most influence economic growth, as it impedes the ability of a government to plan future spending. </p>
<p>It is generally accepted that the actual government budget will (and should) fluctuate between deficit and surplus during, respectively, downswings and upswings in the economy. While there is a lot of public attention on whether the year-on-year budget balance is in deficit or surplus, and by how much, the structural balance is the more important concept. The structural balance is basically the budget deficit or surplus after accounting for cyclical movements in the economy - the balance when conditions are normal or average. </p>
<p>We have heard much in recent budgets about Australia’s structural deficit, backed by <a href="http://www.aph.gov.au/%7E/media/05%20About%20Parliament/54%20Parliamentary%20Depts/548%20Parliamentary%20Budget%20Office/Parliamentary%20Budget%20Office%20Stuctural%20Budget%20Balance.pdf">several reports</a> indicating the structural budget balance is in pretty poor shape.</p>
<p>As I have <a href="https://theconversation.com/pbo-and-treasury-reports-confirm-it-the-deficit-is-unsustainable-14559">pointed out previously</a> in The Conversation this structural imbalance is a result of irresponsible spending policies of successive governments, both Coalition and ALP but particularly by the Rudd/Gillard governments. New spending initiatives, such as the Gonsky funding changes and the NDIS, have been brought in without plans to raise the revenue to pay for them, and often, without due analysis. </p>
<p>And bad luck for Tony Abbott that he is left with unfunded big budget items in the future to deal with, as a legacy of the former government. The only way to reduce the deficit is through reduced expenditure and/or increased revenue. As each idea of how this can be done is <a href="https://theconversation.com/abbott-on-back-foot-over-tax-levy-parental-leave-26043">shot down</a> on a daily basis, the Coalition government is realising what a difficult thing this is to sell. The hostile reaction to the Commission of Audit report at least might mean some of the unpopular decisions in the May budget are, by comparison, greeted with relief </p>
<h2>How to “fix” the budget</h2>
<p>There is, however, more to government policy than balancing the budget. Policy should be made in the context of a long-term vision for the economy. This includes getting everyone who wants to into work, providing the public infrastructure needed to increase productivity, the right mix of private and government provision of health and education, and reform of the regulatory environment.</p>
<p>The continuous economic growth that the Australian economy has achieved, even during times when other countries’ economies experienced recessions, are largely due to the economic reform process carried out during the Hawke/Keating and Howard terms in government. Economists credit the increased productivity levels of the second half of the 1990s and early 2000s as resulting from microeconomic reform and the adoption of new technology.</p>
<p>For policy to facilitate reform in the economy it needs to address impediments to growth in the current tax system and in government programs – it is not only the quantity (size of the deficit) but the quality (of taxation and spending) which is important. </p>
<p>Among the obvious things that need to be addressed are – education participation, infrastructure spending, industrial relations, a greater role for markets, and reducing work and investment disincentives inherent in our benefits and taxes.</p>
<p>While short term measures such as expenditure cuts and debt levies may have an impact on the size of the deficit, they cannot “fix” the economy. The economy is not in disarray, and long-term budget deficit and debt issues require well thought-out policy on the structure of taxation and expenditure.</p><img src="https://counter.theconversation.com/content/26036/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Phil Lewis does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article. He also has no relevant affiliations. During his career he has received funding from many private and public sector organisations including most recently the ARC, NCVER, DEEWR and the AFPC.</span></em></p>As the 2014-15 budget nears, Australians are hearing that the government must mount an urgent repair job to address the looming structural crisis that will see the budget in deficit for decades to come…Phil Lewis, Professor of Economics, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/262232014-05-04T20:36:58Z2014-05-04T20:36:58ZDivided we fall: federal government pits universities against students<figure><img src="https://images.theconversation.com/files/47630/original/tkhw7ppy-1399008040.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C764%2C524&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">If the government won't pay, then students will have to. </span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/pabuk/5244273600">Flickr/Paul Wolfenden</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>The principle of <em>divide et impera</em> (divide and conquer) has been a political staple for centuries and the Commission of Audit’s recommendations regarding higher education are a salient example. Both universities and student bodies are concerned at the sector’s fiscal situation since cuts made by the previous government.</p>
<p>In response, the commission recommends further reducing the average government per-student contribution, increasing the student’s own contribution and opening the door to fee deregulation. The result is to divide the universities’ interests from those of their students. As Glyn Davis, the Vice-Chancellor of Melbourne University, <a href="https://theconversation.com/facing-the-hard-questions-on-university-funding-25915">observed</a> last week, “Do public universities walk away from all other options because students will not like the alternatives?”</p>
<p>On the face of it, universities can look to students to provide the funding the federal government says it cannot, or continue to suffer a death from a thousand cuts.</p>
<h2>The impact on students: rising costs and reduced returns</h2>
<p>The commission recommends decreasing the average proportion of higher education costs paid by the Commonwealth from 59% to 45%, commensurately increasing the average proportion of costs paid by students from 41% to 55%. </p>
<p>Figure 1 below shows the recommended average student contribution compared to current student contributions per funding cluster (or discipline). It is possible, therefore, that the cost to law and commerce students will fall. However it is more likely that the government will achieve the average student contribution proportionately, meaning most will see a rise and at best some will stay as they are. For example, socially-sensitive courses such as education and nursing might be (at least partly) protected.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/47625/original/pjvqffsw-1399002418.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/47625/original/pjvqffsw-1399002418.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/47625/original/pjvqffsw-1399002418.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=432&fit=crop&dpr=1 600w, https://images.theconversation.com/files/47625/original/pjvqffsw-1399002418.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=432&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/47625/original/pjvqffsw-1399002418.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=432&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/47625/original/pjvqffsw-1399002418.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=543&fit=crop&dpr=1 754w, https://images.theconversation.com/files/47625/original/pjvqffsw-1399002418.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=543&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/47625/original/pjvqffsw-1399002418.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=543&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Figure 1: Funding rates for Commonwealth-supported places.</span>
<span class="attribution"><span class="source">Source: Review of the Demand Driven Funding System Report (Appendix B)</span></span>
</figcaption>
</figure>
<p>The commission also recommends that students start paying back their HELP debt when earning the minimum wage of $32,454, compared to the current average wage of $51,309. This, coupled with the proposed changes to the HELP repayment threshold and interest rates, will have a significant effect on student lifetime earnings. This is shown representatively in Figure 2. Students first incur a cost (the area below $0) and then pay it off. </p>
<p>The first impact of the proposed change is to increase the initial cost of education, shifting it from the blue to red line. Furthermore, the student starts paying off the debt earlier while earning less. The rate of repayment also rises as the interest will now be linked to a rate that reflects the full cost to the Commonwealth of making the loan. Currently it is just linked to the Consumer Price Index (CPI).</p>
<p>The result for the student is they start paying off the debt when less able to, pay more and realise the economic benefit of their education (the “payoff”) later in their life.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/47626/original/mwb6twdq-1399002698.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/47626/original/mwb6twdq-1399002698.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/47626/original/mwb6twdq-1399002698.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=420&fit=crop&dpr=1 600w, https://images.theconversation.com/files/47626/original/mwb6twdq-1399002698.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=420&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/47626/original/mwb6twdq-1399002698.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=420&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/47626/original/mwb6twdq-1399002698.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=527&fit=crop&dpr=1 754w, https://images.theconversation.com/files/47626/original/mwb6twdq-1399002698.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=527&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/47626/original/mwb6twdq-1399002698.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=527&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Figure 2: Impact of the Proposed Changes to HECS-HELP on Lifetime Income.</span>
</figcaption>
</figure>
<h2>Future fee deregulation</h2>
<p>The changes outlined in the figures above only benefit the government’s bottom line, with the student worse off. For universities it is a zero-sum game as they still end up with the same overall funding per student. Consequently the commission recommends investigating options for further fee deregulation. This is where the divide-and-conquer maxim really hits. Education minister, Christopher Pyne, <a href="http://www.pyneonline.com.au/speeches/policy-exchange-speech-freeing-universities-to-compete-in-a-global-education-market">wants to</a> “set our universities free” by allowing universities to charge even higher fees for premium courses, However freedom for one means, potentially, chains for another, with the additional cost borne by the student and not being eligible for support through a HELP loan.</p>
<p>How high fees would rise is unknown, but current international student tuition fees provides an indication. Australia is already the <a href="http://www.hsbc.com.au/1/2/about/news/13/130813">most expensive country</a> for international study, with average annual fees above $27,000. </p>
<p>Of course not all universities will be able to follow this route, meaning that an elite sub-set of institutions (most likely the Group of Eight) will probably end up offering high-demand, high-value courses at a cost that would make them unobtainable for many students. Key players in the Group of Eight are already on the front foot in this regards, <a href="https://theconversation.com/universities-should-be-able-to-charge-students-what-they-want-25861">arguing</a> that “top universities should be free to charge domestic students whatever they deem appropriate”. If so, Australia’s relatively egalitarian, mass education system will become a more hierarchical and, in some cases, excluding one. </p>
<p>Pyne has already encouraged Australian universities to adopt the “competitive nature of American tertiary education”. He is silent, however, on whether the government would provide many more scholarships for low-income students, as is the <a href="https://www.scholarships.com/financial-aid/federal-aid/federal-pell-grants/">case</a> in the US, or whether Australian universities would be required to provide increased student financial aid where necessary.</p>
<h2>The first step to a voucher system?</h2>
<p>The commission also recommends “streamlining the five current HELP schemes”. The explicit aim is removing <a href="http://studyassist.gov.au/sites/studyassist/helppayingmyfees/sa-help/pages/sa-help">SA-HELP</a>, which assists students to pay for their student services and amenities fee.</p>
<p>However, this recommendation might also represent the initial attempt to move towards an eventual flat rate for Commonwealth contributions. This would create, essentially, an education voucher system, <a href="http://files.eric.ed.gov/fulltext/ED536402.pdf">championed</a> by free-market economists as a means of improving competition and efficiency, usually at the school level but in this case for higher education. </p>
<p>It would also make certain courses (e.g. law) more attractive to universities due to their low cost of delivery and others (e.g. agricultural sciences) less attractive. Coupled with fee deregulation, this would result in many students finding their higher education opportunities restricted to fewer courses and/or fewer universities.</p>
<h2>Is there another way?</h2>
<p>As some commentators have <a href="http://www.theguardian.com/commentisfree/2014/may/01/commission-of-audit-a-recipe-for-a-poorer-nastier-and-more-brutish-australia?CMP=ema_632">observed</a>, the Commission of Audit has simply produced the report demanded by the government. There <em>are</em> alternative funding models and mixes, some of which are outlined <a href="https://theconversation.com/should-we-follow-the-german-way-of-free-higher-education-23970">here</a>. Not all create conflict between universities and students.</p>
<p>It is hoped that, in the ensuing months, detailed options will be put forward that demonstrate it is possible to increase funding to higher education in real terms, without the impost being unfairly borne by those least able to shoulder the burden.</p><img src="https://counter.theconversation.com/content/26223/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tim Pitman is a Senior Research Fellow with the National Centre for Student Equity in Higher Education</span></em></p><p class="fine-print"><em><span>Paul Koshy is employed by the National Centre for Student Equity in Higher Education</span></em></p>The principle of divide et impera (divide and conquer) has been a political staple for centuries and the Commission of Audit’s recommendations regarding higher education are a salient example. Both universities…Tim Pitman, Senior Research Fellow, National Centre for Student Equity in Higher Education, Curtin UniversityPaul Koshy, Research Fellow at the Natiional Centre for Student Equity in Higher Education , Curtin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/261822014-05-04T20:36:32Z2014-05-04T20:36:32Z‘Digital by default’ – efficient eGovernment or costly flop?<figure><img src="https://images.theconversation.com/files/47700/original/ndbm6vz6-1399190366.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Setting up an opt-out digital eGovernment is an expensive process ... it would want to be worth it.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/ishinelike/3500417450">~lauren/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span></figcaption></figure><p>The Australian federal government’s recently published <a href="https://theconversation.com/commission-of-audit-lays-path-for-deep-cuts-26172">National Commission of Audit</a>’s <a href="http://www.ncoa.gov.au/report/phase-one/recommendations.html">recommendation 62: e-Government</a> suggests the government accelerate its transition to online service delivery that:</p>
<blockquote>
<p>makes <a href="https://my.gov.au">myGov</a> the default means of engaging with government, supported by “opt-out” provisions; sets concrete savings targets; removes legislative barriers; and strengthens the myGov online credential; consolidating the e-Government effort through a single team under the leadership of a Chief Digital Officer; and appointing a senior minister to champion the digital by default agenda.</p>
</blockquote>
<p>Given the <a href="http://www.smh.com.au/federal-politics/political-opinion/commission-of-audit-be-afraid-but-only-mildly-so-20140501-zr2qn.html">politically charged nature</a> of this report, one fact that cannot and should not be ignored by the policy makers is any aggressive and wholesale move to a comprehensive eGovernment platform for all services should be carefully considered. </p>
<p>There are very real risks that an unduly aggressive approach to the implementation of an comprehensive eGovernment platform is likely to guarantee a high probability of project failure – not to mention the increased cost to the taxpayers.</p>
<h2>eGovernment is the objective: all agreed</h2>
<p>As an individual, the convenience of managing one’s interactions with a range of government agencies online, in your own time by using your PC or mobile device, as opposed to waiting in line at the various government agency offices between the hours of 9am-5pm weekdays with a fistful of paperwork cannot be understated.</p>
<p>As the penetration rate and uptake of smart mobile technologies reaches saturation rate for the Australian population in the coming years, it makes real sense to accelerate the move towards eGovernment.</p>
<p>Gone will be the days of a large cadre of government workers entering, checking and shepherding our tax, Medicare, social security and other transactions through the various organs of government. Without the automation and “hands free” backend processing capability, the near instantaneous, online customer experience would not be possible in our 24x7 world.</p>
<p>The numbers also stack up in favour of eGovernment. According to the 2013 Canadian <a href="http://www.oag-bvg.gc.ca/internet/English/parl_oag_201311_02_e_38796.html">auditor general’s report</a>, the per-transaction costs among 11 selected departments were CAN$28.80 in person, CAN$11.69 by telephone, and CAN$0.13 online. </p>
<p>The 2013 UK government’s <a href="https://www.gov.uk/government/collections/government-digital-strategy-reports-and-research">digital strategy report</a> has identified that: “by going digital by default, the government could save between £1.7 and £1.8 billion each year.”</p>
<p>Convenience at low cost – that’s enough to bring tears of joy to any government treasury official. Where’s the catch, then?</p>
<h2>Divide and conquer – or integrate and conquer?</h2>
<p>The <a href="http://unpan3.un.org/egovkb/">2012 UN E-Government Survey</a> should be mandatory bedtime reading for our politicians and policy makers – particularly section 3.2, which covers the challenges and opportunities of integrated e-service delivery.</p>
<p>First, the road to comprehensive, successful, secure and effective eGovernment is seeded with multiple <a href="http://en.wikipedia.org/wiki/Improvised_explosive_device">traps</a>, the most dangerous of which has little to do with technology, paradoxically.</p>
<p>Studying objectively and carefully the wash-up of previous failures is an effective antidote for policy delusion, but is unlikely to be the path taken by political ideologues of any persuasion.</p>
<p>The string of large, taxpayer-funded IT failures such as New Zealand’s <a href="http://www.justice.govt.nz/publications/global-publications/m/ministerial-inquiry-into-incis/historical-outline-of-incis">INCIS Police project</a>, <a href="http://delimiter.com.au/2013/06/20/future-it-project-fail-nsw-police-gets-cops-replacement-funding/">NSW COPS system</a>, Queensland Health’s A$1.2 billion <a href="http://www.healthpayrollinquiry.qld.gov.au">payroll disaster</a> and UK’s disastrous multi-billion pound <a href="https://www.gov.uk/government/news/dismantling-the-nhs-national-programme-for-it">National Health IT initiative</a> have been well reported, but oft repeated, unfortunately.</p>
<p>Second,the National Commission of Audit urges the government to follow a “digital by default” strategy with an “aggressive new approach”. It is this latter quote that should raise alarm bells.</p>
<p>While these, and similar high level statements of strategy and intent made by senior bureaucrats and our political elite are useful to set the pace, tone and direction of a move towards a comprehensive eGovernment platform, the reality is that the predominant challenge in achieving that goal is not technical. </p>
<p>Ultimate success of eGovernment (or any other <a href="http://rob-livingstone.com/2014/04/pssst-heard-one-successful-business-project/">enterprise-IT project</a>, for that matter) has a less to do with technology that may appear.</p>
<p>Anyone who has ever worked in an organisation of size – be that public, private or not for profit – knows all too well that the internal boundaries defining teams, departments, divisions and business units are the sheep’s pens that limit cross organisational collaboration and integration. </p>
<p>It is the continued reinforcing of these boundaries, glued together with policies, process and governance that inhibit the development of a government-wide culture of cooperative information and knowledge sharing, and it is this cross-functional and cross-agency collaboration that is a prerequisite for effective eGovernment.</p>
<h2>Data breach, privacy and short term thinking – the real risks</h2>
<p>Once operational, the obvious risks to eGovernment relate to data confidentiality and information security. Having a major data breach as a result of an human error, an <a href="https://theconversation.com/the-internet-after-snowden-what-now-20775">Edward Snowdon</a>-like event, or <a href="https://theconversation.com/when-data-privacy-goes-missing-will-the-regulators-hear-it-cry-23367">cyber crime</a> is a real and present danger for individual’s privacy and the potential integrity of the entire eGovernment.</p>
<p>The <a href="http://www.smh.com.au/national/former-hunter-valley-billionaire-nathan-tinkler-to-enlighten-nsw-corruption-inquiry-icac-20140503-zr3w7.html">ICAC uncovering</a> of systemic, undisclosed lobbying by vested (political or commercial) interests makes for great television and dinner conversation. The reality is that the coercive forces acting on governments at all levels from the cadre of local and globally dominant IT service providers and consulting firms on helping shape eGovernment policy should not be ignored. </p>
<p>It is important to acknowledge that the conventional approach to managing IT vendors may not be adequate in the delivery of new, emerging and disruptive technologies. A <a href="http://rob-livingstone.com/2013/07/smarter-it-vendor-management/">strategic rethink</a> of the vendor engagement and management processes should be considered.</p>
<p>It is imperative that governments internally retain the necessary levels of IT strategic expertise and process probity when engaging with external IT service providers. Taxpayers have a habit of helping strengthen the balance sheets of major IT and consulting organisations with no measurable benefit as a result of inappropriate decision making.</p>
<p>The eGovernment discussion is likely to be trumped by more hotly debated issues of social equity, tax, Medicare reform and other initiatives that affect all – but the importance of ensuring that the appropriate decisions are made with rigour and based in evidence when it comes to implementing a comprehensive eGovernment system on which our country will increasingly depend. And therein lies a real risk.</p><img src="https://counter.theconversation.com/content/26182/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Rob Livingstone has no financial interests in, or affiliations with any organisation mentioned in this article. Other than his role at UTS, he is also the owner and principal of an independent Sydney based strategic IT advisory practice.</span></em></p>The Australian federal government’s recently published National Commission of Audit’s recommendation 62: e-Government suggests the government accelerate its transition to online service delivery that…Rob Livingstone, Fellow of the Faculty of Engineering and Information Technology, University of Technology SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/261852014-05-02T03:35:32Z2014-05-02T03:35:32ZWe need a leaner, meaner public service: Commission of Audit<figure><img src="https://images.theconversation.com/files/47618/original/8yprrp7m-1398999293.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The Commission of Audit, led by Tony Shepherd, has recommended radical changes to the way we do government in Australia.</span> <span class="attribution"><span class="source">AAP/Lukas Coch</span></span></figcaption></figure><p>The Commission of Audit’s <a href="http://www.ncoa.gov.au/">report</a>, released yesterday, sets out a radical blueprint for the role of government, the scope of its activities and how it goes about getting things done. For the most part there are no surprises. But if the report’s recommendations are adopted, it would transform the way we do government in Australia.</p>
<h2>The ten commandments</h2>
<p>These values informing the Commission of Audit’s report are captured in the Principles of Good Government that open the report: ten commandments handed down from the commissioners that shaped their investigations and should, they argue, help ensure that the goals of government are achieved.</p>
<p>The underlying notions are simple. Cut spending, compete, give citizens choice, reduce complexity, increase transparency, value for money, target, cut red tape, markets are best, and government should get out of the way.</p>
<h2>What does it mean for the public service?</h2>
<p>What the Commission of Audit recommends for the public service is profound. There was never any question that the Commission of Audit would make sweeping – potentially transformational – recommendations that would change the shape, structure and operations of the Australian Public Service (APS) itself.</p>
<p><strong>Size</strong>
<br>
Australia’s public service is too big. The Commission of Audit recommends cutting the APS by 15,000 employees. However, Commission of Audit chairman Tony Shepherd has since told a Senate hearing that he doesn’t know where the number came from.</p>
<p>The scaling back in size would presumably come from the reduced scope of government, but also recommendations about how the APS should be structured and staffed.</p>
<p><strong>Scope</strong>
<br>
The Commission of Audit found that the public sector does too much. The report suggests that the scope of what the APS does should be scaled back. </p>
<p>More of the public sector’s activities should be sent out to the private and non-profit sector. Some of this would be achieved by privatising government assets such as Australia Post, Snowy Hydro Limited and COMCAR, but also through increasing outsourcing across the board. </p>
<p>Perhaps the most controversial recommendation is to outsource the Department of Human Services’ payments system, but the Commission of Audit also recommends outsourcing in areas such as visa processing. </p>
<p>Fixing the <a href="https://theconversation.com/will-the-commission-of-audit-lead-to-another-new-federalism-26176">broken federation</a> would clarify roles and responsibilities as the Commonwealth moved out of areas it had strayed into more and more over the years. Schools education and health are the obvious candidates. There are clear recommendations on scaling back the scope of activity – which will mean shrinking departments and job losses.</p>
<p>There is also a push for increased self-reliance: for government to let citizens do those things they can best do themselves. In other words, government needs to get out of the way – of individual citizens, the states and territories, and the private and non-profit sectors. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/47621/original/mddp7h4d-1399000258.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/47621/original/mddp7h4d-1399000258.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/47621/original/mddp7h4d-1399000258.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/47621/original/mddp7h4d-1399000258.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/47621/original/mddp7h4d-1399000258.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/47621/original/mddp7h4d-1399000258.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/47621/original/mddp7h4d-1399000258.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Any cuts to the public service on the scale recommended by the Commission of Audit are likely to encounter significant opposition.</span>
<span class="attribution"><span class="source">AAP/Tracey Nearmy</span></span>
</figcaption>
</figure>
<p><strong>Structure</strong>
<br>
The Commission of Audit argues that there are too many government bodies. The report points to the proliferation of organisations that populate the Commonwealth and the need to consolidate abolish, merge, privatise and review a range of these. </p>
<p>Few would probably argue with this principle. However, implementing these would have major repercussions in practice. Consolidating border protection and health bodies are just two of the suggestions. </p>
<p>The other big ticket item in this area is the Australian Public Service Commission. The report basically suggests the commission should be abolished, with its activities carved up and split between other departments. </p>
<p><strong>Staff</strong>
<br>
The APS needs to be more productive. There are too many public servants; there is too much rigidity in the APS employment model; there is an underperformance problem that is not being adequately addressed; and there is a potential skill mismatch between what we need for a new APS and what we have. </p>
<p>Much is made of the notion of the span of control – how many people supervisors have under their watch – and how increasing it will drive efficiency. There is detailed analysis of organisations against a “best practice span”. This is pure nonsense, but don’t rule this out as a way of driving structural changes within organisations and major re-designs. </p>
<p>Ideally, any reform would happen in a strategic framework around questions such as:</p>
<ul>
<li>What does the organisation do? </li>
<li>What are the goals? </li>
<li>What skills do we need? </li>
<li>How do we design jobs? </li>
</ul>
<p>Despite this, don’t be surprised to see this emerge as a new management principle and a hard target across the APS.</p>
<h2>Back to the future?</h2>
<p>Large parts of what the Commission of Audit has recommended in its vision for transforming the APS are not new. We have had the debate about size, scope, structure and staff for decades. </p>
<p>The Commission of Audit members maintain incredible faith in the power of the market to solve problems – more privatisation, more contestability, smaller government and fewer rules are easy prescriptions. But we also have plenty of experience of this in Australia and from abroad, albeit mostly missing from the report and its reference lists. </p>
<p>Getting the public service to be more productive, more effective and more efficient in an environment where politics rules is much harder.</p><img src="https://counter.theconversation.com/content/26185/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Janine O'Flynn receives has received funding from the Australian Research Council and the Australian Public Service Commission. </span></em></p>The Commission of Audit’s report, released yesterday, sets out a radical blueprint for the role of government, the scope of its activities and how it goes about getting things done. For the most part there…Janine O'Flynn, Professor of Public Management, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/261882014-05-02T02:22:08Z2014-05-02T02:22:08ZThe Commission of Audit wants to rip up Australia’s social contract<figure><img src="https://images.theconversation.com/files/47587/original/krm5rskx-1398986159.jpg?ixlib=rb-1.1.0&rect=0%2C117%2C2461%2C1694&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The Commission of Audit made much of the affordability of Australia’s core areas of social spending without any consideration of our social responsibilities.</span> <span class="attribution"><span class="source">AAP/Tom Compagnoni</span></span></figcaption></figure><p>The recommendations in the Commission of Audit’s <a href="http://www.ncoa.gov.au/">report</a>, which was released yesterday, would, if implemented, erode the fundamental building blocks of Australia’s social contract. </p>
<p>The social contract – the suite of policies, legislation, programs, health care and social services – has served to ensure that every Australian is able to have a basic but decent standard of living. It has been carefully crafted over the 20th century since Federation.</p>
<p>The social contract has also served to ensure that extremes of poverty and inequality have been largely avoided, with some important exceptions. </p>
<h2>Growth of the working poor</h2>
<p>The Commission of Audit believes that the minimum wage should be set at 44% of average weekly earnings (AWE), which is a measure of average earnings across both part-time and full-time employment. Using AWE as a benchmark, rather than <a href="http://www.abs.gov.au/ausstats/abs@.nsf/mf/6302.0">full-time average earnings</a>, significantly erodes the value of the minimum wage because it includes the wage of people who are either underemployed (around 7% of the Australian workforce) or who choose to work in part-time jobs. </p>
<p>If the Commission of Audit’s recommendation is implemented, the current minimum wage of A$622.20 per week would be reduced to A$488.90 per week.</p>
<p>Of great concern would be its effect on people in <a href="http://www.fairwork.gov.au/pay/national-minimum-wage/pages/default.aspx">part-time, casual jobs</a>. It would reduce the current hourly rate of $16.37 to $12.80 per hour (<a href="http://www.fairwork.gov.au/pay/pay-penalty-rates-overtime-and-allowances/pages/default.aspx">plus a casual loading</a>). For many people, including the 10% of the female workforce that is underemployed, this would be a large loss of income.</p>
<p>The recommendation on the minimum wage would shift the foundation of adequacy in wage setting as enshrined in the 1907 <a href="http://worksite.actu.org.au/the-harvester-judgement-and-australias-minimum-wage/">Harvester Judgment</a>. It would take us down the track of an American-style working poor with all the negative social and economic consequences for society.</p>
<h2>Big holes in the social safety net</h2>
<p>The recommendation for reducing the minimum wage also needs to be set in the context of recommendations across the income-support system. There was no attempt to address the low level of unemployment payments in the form of the <a href="http://www.humanservices.gov.au/customer/services/centrelink/newstart-allowance">Newstart Allowance</a>.</p>
<p>However, the Commission of Audit wants to make life harder for people forced to live on these low payments. Currently, <a href="http://www.humanservices.gov.au/customer/enablers/income-test-allowances">earned income between $100 and $250 per fortnight</a> reduces fortnightly payment by 50 cents in the dollar. The Commission of Audit recommendation means it would be reduced by 75 cents in the dollar. </p>
<p>This undermines efforts of people to sustain themselves while on low Newstart payments through a small amount of part-time work. This new taper rate would apply across the board to all benefits and pensions.</p>
<p>If implemented, the recommendation means that there will be a greater disincentive for people to take on any work as it will be more trouble than what it’s worth. It is exactly counter to the type of help a government would want to give people to get off income-support payments. It erodes people’s capacity to help themselves through paid work and will increase poverty. It could also extend participation in the <a href="http://www.economist.com/node/2766310">grey</a> or black economy.</p>
<p>The recommendation that young people on unemployment payments will eventually be required to move to areas with higher employment opportunities sounds like a bit of nasty social engineering. Historically, young people have moved to areas with greater opportunities and they don’t need a government regulation to do so. But they do need jobs with decent wages to go to.</p>
<h2>A squeeze on age pensions</h2>
<p>The change to indexing arrangements in the age pension, as recommended by the Commission of Audit, will erode the pension’s value if implemented. The current arrangements ensure a modest but adequate standard of living for Australia’s older population. The erosion of adequacy sets the ground for the pauperisation of some groups of older people, especially single women (a group highly reliant on the full age pension) and those in rental accommodation.</p>
<p>There is a case for high-value housing to be included in the assets test. However, there would need to be a very careful assessment of the level at which this is set. </p>
<p>The Commission of Audit also recommends raising the pension eligibility age to 70 to take effect by 2053, linking the pension eligibility age to life expectancy. This long lead time is better than a transition as early as 2030 as some reports suggested. However, other factors still need to be taken into account, particularly the health status of workers in occupational and industry sectors where working to 70 will be very difficult to achieve. </p>
<p>Altogether, the recommendations across social welfare would create big holes in the Australian social safety net – one that has been carefully crafted since Federation. The fact that Australia has a <a href="https://theconversation.com/robin-hood-and-piggy-bank-what-the-welfare-state-does-for-us-25790">well-targeted and efficient social welfare system</a> is entirely overlooked.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/47601/original/thw4hr42-1398994338.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/47601/original/thw4hr42-1398994338.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/47601/original/thw4hr42-1398994338.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/47601/original/thw4hr42-1398994338.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/47601/original/thw4hr42-1398994338.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/47601/original/thw4hr42-1398994338.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/47601/original/thw4hr42-1398994338.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The Commission of Audit, chaired by Tony Shepherd, ignored that Australia has a well-targeted and efficient social welfare system.</span>
<span class="attribution"><span class="source">AAP/Lukas Coch</span></span>
</figcaption>
</figure>
<h2>The end of universal health coverage</h2>
<p>The Commission of Audit recommendations on Medicare would fundamentally change the basis of our universal, publicly funded health system. The recommended GP co-payments are large at $15 and would be very hard on low-income earners. If implemented, this would undermine one of Medicare’s chief goals: to ensure everyone could see a doctor when they needed to.</p>
<p>However, it is also alarming that the Commission of Audit thinks that the well-off should be entirely out of Medicare for basic health services and should pay for them through the private system. </p>
<p>This recommendation would lead to Australia having a dual health-care system – one for the well-off and one for everyone else. This sets up the conditions for the higher-income groups to continually contest expenditures on a health system that they do not have access to themselves. </p>
<p>This is why a universal system works so well. It ensures social solidarity on the provision of health care. The Commission of Audit’s recommendation has the potential to set up the type of inequalities in health care combined with the exorbitant costs of the system that we see in the US.</p>
<h2>Conclusions</h2>
<p>The Commission of Audit has made much of the affordability of Australia’s core areas of social spending. But it might also have considered whether Australia can afford to rip up its long-standing social commitments on decent wages, an adequate social safety net and a universal health-care system. The costs of many of its recommendations may ultimately be too high. </p><img src="https://counter.theconversation.com/content/26188/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Veronica Sheen does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The recommendations in the Commission of Audit’s report, which was released yesterday, would, if implemented, erode the fundamental building blocks of Australia’s social contract. The social contract…Veronica Sheen, Research Associate, School of Social Sciences, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/262262014-05-02T02:11:11Z2014-05-02T02:11:11ZVIDEO: Michelle Grattan on the Commission of Audit<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/4ScWLoo4ogU?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
</figure>
<p>In this edition of The Week in Politics, University of Canberra Vice Chancellor Stephen Parker is in discussion with Michelle Grattan about the radical blueprint for Australia that has been put forward by the government’s commission of audit.</p><img src="https://counter.theconversation.com/content/26226/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>In this edition of The Week in Politics, University of Canberra Vice Chancellor Stephen Parker is in discussion with Michelle Grattan about the radical blueprint for Australia that has been put forward…Michelle Grattan, Professorial Fellow, University of CanberraStephen Parker, Vice-Chancellor, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/259962014-05-02T02:04:09Z2014-05-02T02:04:09ZCommission of Audit fails to consider costs and benefits<p>There are some good ideas in the Commission of Audit report. Unfortunately they’re buried in so much else that it’s hard to find them. For a report focused on the costs and benefits of government, it shows remarkably little interest in the costs and benefits of budgetary reform.</p>
<p>This approach means the audit is a missed opportunity to give Australians the information we need - information that would enable a genuine national conversation about how to best climb out of our budget hole.</p>
<p>The biggest problem is that the report does not say which proposals would save a lot of money, and which only a little. </p>
<p>Proposals such as increasing the age pension and superannuation access ages, which Grattan Institute <a href="https://theconversation.com/age-pension-reform-needed-for-a-fair-sustainable-welfare-system-22313">analysis</a> suggests is worth around A$12 billion a year to the budget, are mixed in with a Medicare co-payment for doctors’ visits, which is worth about $1 billion a year at most (and is a bad idea for other reasons).</p>
<p>Without an assessment of budgetary impact, the extensive discussion about duplication between state and Commonwealth governments glosses over the fact that there are no massive budget savings to be made in this area. Abolishing the entire Commonwealth health department would save less than half a billion dollars a year, which isn’t going to do much to fix a deficit that currently sits at $47 billion.</p>
<p>And without a bottom-up evaluation of proposals, the report’s budget projections outside the first three years are essentially driven by the assumption that annual spending growth will be 2.5% a year in perpetuity. There is no attempt to make future spending align with even ball-park forecasting of the financial impact of individual measures.</p>
<h2>Collateral damage</h2>
<p>Grattan Institute’s analysis of possible budget solutions in our 2013 <a href="http://grattan.edu.au/publications/reports/post/balancing-budgets-tough-choices-we-need/">Balancing Budgets report</a> sought to identify how much various proposals would save. Consistent with basic principles of public administration, it also looked at the costs. In particular, it considered the possible collateral damage of each individual proposal if it shrank the economy (by discouraging working or investment, for example), caused bad social consequences (such as making housing less affordable), or disproportionately hit the worst-off. Without this sort of information, it’s impossible to tell whether a budget proposal is worthwhile.</p>
<p>Without this assessment, the Commission kicks some appalling own goals. The worst of these is the failure to think about the impact of its proposals on participation. Good welfare policy design ensures that thresholds and taper rates do not create too many <a href="http://mattcowgill.wordpress.com/2013/01/16/welfare-reform-can-we-have-it-all/">disincentives</a> to work.</p>
<p>However, abolishing Family Tax Benefit B – currently received by 60% of families – and tightening eligibility for Family Tax Benefit A would make women in middle-income families less likely to do paid work, because they would lose most of their wages in lost benefits. Previous Grattan Institute <a href="http://grattan.edu.au/publications/reports/post/game-changers-economic-reform-priorities-for-australia/">work</a> shows that if one partner in a family works full time earning $70,000 a year, it makes no financial sense for the second income earner to work for more than three days a week.</p>
<p>The changes the Commission proposes would see women with children in childcare going backwards financially if they work more than two days a week. Not only is that bad for Joe Hockey’s stated aim of increasing women’s workforce participation, it would hurt the budget by reducing income tax collected from women discouraged from working.</p>
<p>Similarly, the Commission proposes that Newstart benefits be reduced by 75 cents for every dollar earned. Imagine the screaming about disincentives to work if anyone proposes a top marginal rate of tax for high-income earners of 75%.</p>
<h2>Limited savings</h2>
<p>In the absence of calculations of the budgetary impact of its proposals, one could be forgiven for missing the key finding of the Commission. For all of its laundry list of ideas, its specific measures only make a difference of about $5 billion a year three years from now. Its “reform scenario” makes only limited changes to the spending growth planned under “business as usual”. This is manifestly too little too late. </p>
<p>The Commission itself found the current budget deficit of 3% of GDP is far too high five years after the end of the GFC. If the government is going to take its structural deficit problems seriously, it will either have to cut more things, phase cuts in earlier, or raise taxes.</p>
<p>The Commission’s failure to identify medium-term savings is due to its insistence that many of the largest proposals should be phased in very slowly. Its proposals suggest that no-one born before 1960 should contribute much to repairing the budgets. Changes to the pension access age and the pension assets test – both big budget reforms – do not even start until 2027 and then only applied to new recipients. It’s not clear why protecting baby boomers but making everyone else pay is a principle of good government.</p>
<h2>Some good ideas</h2>
<p>So what are the good ideas in the report - the changes that will make a real difference to the budget balance, without really awful side-effects? </p>
<p>The proposals to lift the pension and superannuation preservation ages, include owner-occupied housing in the pension assets test, reform <a href="http://grattan.edu.au/publications/reports/post/poor-pricing-progress-price-disclosure-isnt-the-answer-to-high-drug-prices/">pharmaceutical pricing</a>, better match defence spending to strategic goals, and <a href="http://grattan.edu.au/publications/reports/post/graduate-winners-assessing-the-public-and-private-benefits-of-higher-education/">increase the contribution</a> that students make to the cost of their university degrees were all recommendations of Grattan Institute’s <a href="http://grattan.edu.au/publications/reports/post/balancing-budgets-tough-choices-we-need/">Balancing Budgets: tough choices we need</a> report.</p>
<p>Cutting spending on paid parental leave and redirecting it into childcare is also a good idea, and is supported by international <a href="http://grattan.edu.au/publications/reports/post/game-changers-economic-reform-priorities-for-australia/">evidence</a> on what really enables women to participate in paid work.</p>
<p>Balancing budgets is important, because it helps us ensure that we have enough money available in the future to pay for the benefits and services that we will need, rather than making future generations pay for what we’re doing now. But by not being clear about the costs and benefits of their recommendations, the Commission has missed a big opportunity to help us all make difficult decisions about what we most value and our country’s future. </p><img src="https://counter.theconversation.com/content/25996/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Grattan Institute began with a $15 million endowment from each of the Federal and Victorian Governments. In order to safeguard its independence, Grattan Institute’s board controls this endowment. The funds are invested and Grattan uses the income to pursue its activities.</span></em></p><p class="fine-print"><em><span>Cassie McGannon does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>There are some good ideas in the Commission of Audit report. Unfortunately they’re buried in so much else that it’s hard to find them. For a report focused on the costs and benefits of government, it shows…Cassie McGannon, Fellow, Australian Perspectives, Grattan InstituteJohn Daley, Chief Executive Officer , Grattan InstituteLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/262112014-05-01T23:50:06Z2014-05-01T23:50:06ZCommission of Audit and the arts – cuts are not galore<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/47589/original/wsqjjtgj-1398987287.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/47589/original/wsqjjtgj-1398987287.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/47589/original/wsqjjtgj-1398987287.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=487&fit=crop&dpr=1 600w, https://images.theconversation.com/files/47589/original/wsqjjtgj-1398987287.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=487&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/47589/original/wsqjjtgj-1398987287.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=487&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/47589/original/wsqjjtgj-1398987287.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=612&fit=crop&dpr=1 754w, https://images.theconversation.com/files/47589/original/wsqjjtgj-1398987287.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=612&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/47589/original/wsqjjtgj-1398987287.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=612&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">Matthijs</span></span>
</figcaption>
</figure>
<p>Over the past 20 years the size of government spending has grown, both absolutely and as a percentage of GDP. Public sector debt has also increased substantially. The cautionary tale of Greece indicates the dangers of this path.</p>
<p>In Australia, either taxes have to rise, which will lower the standard of living, or spending has to be cut. The <a href="http://www.ncoa.gov.au/">National Commission of Audit report</a> focuses entirely on the latter.</p>
<p>The report broadly does two things. First, as in the terms of reference, it provides “a thorough review of the scope, efficiency and functions of the Commonwealth government”. Second, it sets out a series of 86 recommendations covering the full range of commonwealth spending.</p>
<p>The government is not bound to follow these recommendations, but they provide a useful menu of options.</p>
<p>There seem to be two main findings. The first is directed at what is called “<a href="http://en.wikipedia.org/wiki/Fiscal_imbalance_in_Australia">vertical fiscal imbalance</a>” but really is a boost for genuine federalism: state spending needs to be balanced by the power to raise revenue. This reversal of the increasing tendency toward centralisation is a very welcome development (provided that it is matched by a reduction in federal income tax).</p>
<p>The second is recognition that the biggest components of Commonwealth spending (aged pensions, defence, health) are also those that are growing the fastest, and therefore that nothing is solved unless these “<a href="http://en.wikipedia.org/wiki/Third_rail_of_politics">third rails of politics</a>” (a euphemism for controversial and/or untouchable issues) are firmly grasped.</p>
<p>Across many recommendations, the overarching approach is to increase the criteria for eligibility, or simply abolish the source of funding. This signals recognition of the manifest unsustainability of decades of vote-buying growth in corporate and middle-class welfare.</p>
<p>Arts and culture doesn’t feature prominently in the report. This is simply because even the most swingeing of cuts to arts or cultural funding – say, cutting everything completely – would barely touch the levels of savings required to restore Australia’s public finances. When you need to feed an entire village, hunting a few mice isn’t going to do it.</p>
<p>Nevertheless, not missing an opportunity, two clear warning shots have been fired into the haystack, possibly injuring a mouse or two. The largest is recommendation 45 (see below), which focuses on <a href="https://theconversation.com/topics/the-future-of-public-broadcasting">the role of public broadcasting</a> – specifically, the ABC and the SBS.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/47590/original/hg8sf8kt-1398987625.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/47590/original/hg8sf8kt-1398987625.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/47590/original/hg8sf8kt-1398987625.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=185&fit=crop&dpr=1 600w, https://images.theconversation.com/files/47590/original/hg8sf8kt-1398987625.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=185&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/47590/original/hg8sf8kt-1398987625.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=185&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/47590/original/hg8sf8kt-1398987625.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=232&fit=crop&dpr=1 754w, https://images.theconversation.com/files/47590/original/hg8sf8kt-1398987625.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=232&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/47590/original/hg8sf8kt-1398987625.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=232&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">National Commission of Audit Report.</span></span>
</figcaption>
</figure>
<p>They make a familiar argument “that both organisations have the ability to improve their efficiency and better target expenditure than may currently be the case.” They suggest that this case is “underpinned by advances in technology, societal changes and an expectation of achieving efficiencies and value for money”. Furthermore, these developments “increasingly eliminate the traditional arguments for public broadcasting”.</p>
<p>But the commission doesn’t then go where this argument is seemingly headed. They do not then recommend a noble retreat from public funding of national broadcasting.</p>
<p>Instead, they ask why these benefits from new technologies and increased competition have not translated into lower prices or reduced demand on the public purse. They charge instead that the public broadcasters have captured these benefits for themselves, rather than handing them back to the public.</p>
<p>This is the language of the <a href="http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/BN/2012-2013/EfficiencyDividend">efficiency dividend</a>. The commission has put them on notice by proposing a benchmarking exercise that would attempt to estimate the size of this captured resource, which will then enter into future funding equations.</p>
<p>The other named arts and cultural funding consideration comes in relation to industry assistance – also known as corporate welfare – a most egregious form of public spending and always and everywhere well ripe for cutting.</p>
<p>Screen Australia <a href="https://theconversation.com/proposed-merger-of-screen-australia-and-australia-council-spells-incoherence-26178">is targeted here</a> for “reduced levels of Commonwealth funding”, specifically recommending that it “be halved and focused on areas of Australian content, including those with an historical perspective that might not otherwise be funded”.</p>
<p>And that’s it. All things considered, it is utterly remarkable how soft the Commission has been on proposing cuts to arts and cultural funding. And remember, these are just recommendations, which if history is our guide have only a small chance of becoming reality. Things really could have been a lot worse.</p><img src="https://counter.theconversation.com/content/26211/count.gif" alt="The Conversation" width="1" height="1" />
Over the past 20 years the size of government spending has grown, both absolutely and as a percentage of GDP. Public sector debt has also increased substantially. The cautionary tale of Greece indicates…Jason Potts, Professor of Economics, RMIT UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/261902014-05-01T20:45:58Z2014-05-01T20:45:58ZCommission of Audit at a glance<p>Some of the <a href="http://www.ncoa.gov.au/">Commission of Audit’s 86 recommendations</a> could potentially re-shape Australia. How do they stack up against the Coalition’s promises?</p>
<hr>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/47559/original/ysjv99z9-1398947246.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/47559/original/ysjv99z9-1398947246.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=2677&fit=crop&dpr=1 600w, https://images.theconversation.com/files/47559/original/ysjv99z9-1398947246.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=2677&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/47559/original/ysjv99z9-1398947246.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=2677&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/47559/original/ysjv99z9-1398947246.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=3364&fit=crop&dpr=1 754w, https://images.theconversation.com/files/47559/original/ysjv99z9-1398947246.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=3364&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/47559/original/ysjv99z9-1398947246.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=3364&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
</figcaption>
</figure><img src="https://counter.theconversation.com/content/26190/count.gif" alt="The Conversation" width="1" height="1" />
Some of the Commission of Audit’s 86 recommendations could potentially re-shape Australia. How do they stack up against the Coalition’s promises?Emil Jeyaratnam, Data + Interactives Editor, The ConversationLicensed as Creative Commons – attribution, no derivatives.