Growing the NSW Economy: Why Honesty is the Best Policy

Barry O’Farrell is the leader of the NSW Liberal Party and State Opposition leader. Elected to State Parliament in 1995, he has held numerous shadow portfolios including Leader of the House, Treasurer, Waterways, Transport and Health. On Wednesday 27 October 2010, Barry O’Farrell addressed The Sydney Institute to outline the Opposition’s five point action plan for NSW’s future – prioritising growth, improving services and infrastructure, restoring honesty and accountability to government and giving people a voice.

GROWING THE NSW ECONOMY: WHY HONESTY IS THE BEST POLICY

BARRY O’FARRELL

On his last day in office, Lachlan Macquarie delivered a simple message. NSW’s fifth governor exhorted his successor and the people of the colony of NSW to foster “the prosperity and improvement of the country, and the happiness and unanimity of its inhabitants”.[i] In other words, to get on and grow the NSW economy, with good opportunities for its people.

The vast potential of the NSW landscape, Macquarie’s recognition of its original inhabitants and the rich tensions and contradictions in the cohort of its new European settlers, had convinced him that the ingredients for great prosperity existed here.

One hundred and eighty nine years later, we enjoy many dividends of Macquarie’s invocation: the 19th century gold and wool booms and continuing resources wealth into the present; ambitious infrastructure projects like inland rail networks, irrigation and hydro schemes, and the Harbour Bridge; waves of optimistic, enterprising immigrants from Europe, Asia, and other parts of the world; the growth in importance of sophisticated service industries, tourism, and education to our economy; the maturing of our leadership credentials in trade and aid within our Asia Pacific region; our long standing dominance of Australia’s economic growth and share of GDP; and our confident and exemplary presentation of “the best Olympic Games ever” – with the world’s admiration of our culture, environment and infrastructure.

Yet this week we are reminded again of the failures of governance in our more recent past. Rather than deals involving rum monopolies and the NSW Corps. This time, it’s NSW Labor deals with union bosses. If Lachlan Macquarie were here today, he could give the same invocation, with no less frustration.

Macquarie’s parting words in 1821 lamented the state of “deterioration”. There had been, as he saw it, “public buildings in a state of decay”, “very few roads and bridges”, “commerce and public credit at the lowest ebb” that greeted his arrival in 1810 – the legacy of a period which also included one of NSW’s more colourful failures in what we would now call transparency – the abuse of public office by the NSW Rum Corps and its associates for private gain – and the ensuing conflict with citizen colonists.

I make no apology that our first priority, like Macquarie’s, is to rebuild the NSW economy

I hesitate to draw short-hand lessons from a history which deserves more than a cursory summary, but I think it is legitimate to say that corruption – either of process or individuals – obscures and subverts any hope of pursuing positive change and usurps the opportunities due to free men and women. Aspirations of choice, freedom and economic prosperity will falter or fail if they swim against a tidal surge of patronage, favouritism and back-room deals.

NSW Liberals & Nationals Five Point Action Plan

The NSW Liberals and Nationals Five Point Plan is backed by more than 45 policies, and encapsulates our resolve to:

1. Restore opportunity, by rebuilding the NSW economy through lower taxes and business growth, and fiscal discipline
2. Return quality services in areas such as health, transport, education and community safety
3. Improve our quality of life, by renovating our economic and social infrastructure
4. Value honesty in government, by restoring accountability and integrity to government and giving people a real say on issues that affect their lives; and
5. Give back to people the opportunity to shape their own homes and neighbourhoods, protect our local environment and return planning powers to the community.

I make no apology that our first priority, like Macquarie’s, is to rebuild the NSW economy. So tonight I will advance two contentions I believe are central to achieving our goals of making NSW Number One again, and restoring opportunities to the people.

The first is that to grow the NSW economy, honesty is the best policy. The second is that people, not governments, create civil society.

Growth and Honesty

Policy in thirty second grabs dictates a tendency to compartmentalise discussions into single issues. The NSW Liberals and Nationals have set out detailed policies on economic growth, including a rigorous economic framework; the establishment of Infrastructure NSW to prioritise, plan and deliver our infrastructure priorities; our commitments to build the NW and SW rail links and a long overdue convention centre; tax cuts and concessions to improve our competitiveness, decentralisation and promote whole-of-state development; initiatives to generate greater trade and investment within the Asia Pacific region; and a strong focus on strategic planning, performance management, devolving decision-making and customer service.

A disturbing by-product of the political culture of the NSW Labor Right over the last decade is the reputation that in NSW mates, not merit, make things happen.

We have also made honesty and accountability a strong platform for the character and standards of a future NSW Liberals and Nationals Government. The Sydney Institute provides an opportunity for me to argue these two policy priorities are symbiotic.

Dishonesty and Risk

A disturbing by-product of the political culture of the NSW Labor Right over the last decade is the reputation that in NSW mates, not merit, make things happen. So despite the fact that NSW is still home to some of the most enterprising and hardest working innovators in the nation – succeeding in spite of the dead hand of Sussex Street requires superhuman effort and great personal risk.

So let’s be honest about what’s going on in NSW right now. If the current NSW Labor Premier was really honest about extending freedom of information to citizens, she would adopt our plans to reverse the onus; remove costs for FOI applications; require mandatory deadlines; and enforce the disclosure of government contracts and grants. If she was really honest about her new-found interest in OH&S, she’d tell us that her contrived performance isn’t about employee safety – but about sealing a murky election deal with Labor union bosses. If she was really honest she would tell us about NSW workplace safety performance across all the indicators, and explain why she is trying to wreck an agreement that experts like Professor Ron McCallum AO say will improve employee safety.

If the Premier was really honest she would tell us that her eleventh hour conversion to campaign finance reform is not about restoring community confidence in politics and public administration, does nothing to reduce the amount of money washing around NSW politics or stop political parties contracting out their election spending to proxies, like unions, who would be free to spend $23 million over 12 weeks in support of Labor, and confirms my determination, if elected, to press for restrictions on taxpayer funded advertising, limits on donations and election spending set independently by the Auditor General and ensuring that donations can be made only by individuals – the only people allowed to vote in our electoral system.

It would be tempting to look at Australia’s standing in world corruption indexes, and think things are pretty good. Eighth out of 180, ahead of the United Kingdom, pipped by New Zealand, Denmark and Singapore.[ii] When we celebrated the success of the Sydney Olympics ten years ago I doubt anyone would have thought “sovereign risk” was a term we would hear about our own State. But now it’s heard regularly, an expression usually reserved for countries known for shady governance, not ethical standards.

According to the ABS, between 2007 and 2009, the number of businesses based in NSW fell by almost 18,000. More businesses shut down than started up, and a new business starting in NSW has less chance of surviving for 2 years than in any other state.

But NSW has become a “state of uncertainty”, with headline failures like the Rozelle Metro debacle; the cancelled NW sector rail link; and the collapse of public confidence in our planning system compounded by the churn of Labor Ministers – 217 appointments and changes since 2005 – as many fall under the findings of our criminal justice system, anti-corruption bodies, or the court of public opinion. Not only do public servants of goodwill lose heart in their own capacity to innovate for the people they serve, investors think twice about where to put shareholders’ money if they believe decisions are influenced by patronage by Labor’s puppet masters.

According to the ABS, between 2007 and 2009, the number of businesses based in NSW fell by almost 18,000. More businesses shut down than started up, and a new business starting in NSW has less chance of surviving for 2 years than in any other state. So it is very clear to me that if we are to get on and aggressively grow our NSW economy to equal and improve on our historical best, we must address the fundamentals to rebuild trust in our public officials and institutions. We must be honest about our economy and service quality, and be able to look taxpayers in the eye, by running the ruler over government’s performance, and treating results as an opportunity to get things right, faster. And we will establish the truth about the state of NSW’s finances, by conducting a Commission of Audit immediately upon coming to government.

Trust and Reform

People want change. They want change in the way our public institutions, and our public figures, conduct themselves.

Some might say that a call by an Opposition leader for trust and higher standards in government, so close to an election, is “courageous”. Perhaps it is. But we’re not going to fix NSW unless we stand up and draw a line under the last decade and say “It’s time to change the way we all do things in NSW.” I will stand by the consequences.

It will take tough decisions and strong hearts. It will take the support of public servants of good will, and citizens who value a free civil society. But people want change. They want change in the way our public institutions, and our public figures, conduct themselves. They want change for the better in the results they see. This is why I have set out a plan to reform public sector governance, to unite the public sector, individuals and communities, and elected representatives in a network of trust; between public servants and government (through clear plans and mandates), between people and elected representatives (through devolution and accountability), and between government and communities (through a strong customer service and accountability culture).

For me, governance is a delicate contract of trust, between free people and elected representatives in which the primary interest is with individuals, families and communities, who delegate, in limited ways, to government the responsibility to conduct certain functions on their behalf. We intend to honour this democratic contract and re-build trust with initiatives to rebuild honesty, accountability and transparency in our public institutions, through the following reforms:

We will free public servants from a decade of political scapegoating …

First, by restoring true Westminster-style government. We will free public servants from a decade of political scapegoating, and restore a working environment with unambiguous strategic goals, clear policy directions, transparent processes and consistent accountability.

Public servants must have the confidence to give frank and fearless advice, and offer innovative evidence-based policy and delivery solutions.

We will establish a NSW Public Service Commission to protect and improve the integrity, performance, appeal and accountability of the State’s public sector workforce. The new Commissioner will, amongst other responsibilities, provide independent and expert advice and reports to government and the community, and ensure NSW has a qualified, independent, expert and professional public service; with recruitment based on individuals’ merit and qualifications; advise on appropriate professional development and retention requirements; and help develop performance management tools to recognise outstanding performance and identify areas that require more attention.

We will remove the politics from planning decisions, and ensure our planning system centres on merit and the public interest, and re-empowers local communities on local planning issues.

We will strengthen the powers of ICAC and extend to State Ministers the obligation to report matters that reasonably may concern corrupt conduct. We will introduce effective regulation of lobbyists – by banning ‘success’ fees, and establishing a more comprehensive Lobbyists’ Register. We will respond to citizen interest in ‘recall elections’, and establish an independent panel of constitutional experts to advise on international practices, and other matters relating to the criteria, process, and potential ways for constitutional reform to take place. And we have long standing commitments to strengthen whistleblower protection, eliminate taxpayer funded ‘political’ advertising (by requiring the Auditor General’s approval), and appoint a fully independent Open Government Commissioner to strengthen public access to information.

And the NSW Liberals and Nationals will re-write the State’s 30-year old planning laws. We will remove the politics from planning decisions, and ensure our planning system centres on merit and the public interest, and re-empowers local communities on local planning issues. We will create a system that enjoys community support, and delivers certainty about planning rules, and transparent and timely decision-making processes. And I’ve already outlined our strong plans on genuine campaign finance reform, and freedom of information.

Raising the Bar

When the NSW Liberals and Nationals were last in office, we established the Independent Commission Against Corruption. Since then, a great deal has changed. Other state jurisdictions have established similar bodies. The great democratising power of the Internet has increased expectations of access to government information, and diversified ways citizens can spread ideas, discoveries and commentary. Over the same period, the people of NSW have endured serial scandals at the highest political levels.

The NSW Ombudsman Bruce Barbour[iii] said last month “more than any other time in my memory the people of NSW are concerned and worried about government accountability, decision making, openness and transparency – and of course integrity and standards”. Citizens want to dramatically raise the bar on public accountability, for good reason. I think it’s a good thing that the NSW community is now demanding higher standards of public behaviour. Already, people in Penrith and Ryde have emphatically chosen change over the prospect of more of the same style of government. So our commitment to introduce a public sector ethics act in NSW will open a new horizon in public accountability.

Let’s all be clear about what we think is right, and wrong. I want a NSW public sector ethics act to legislate (not just encode) a set of ethics and values for the public service and their Ministers. It will be developed in consultation with the ICAC, the public sector, and the community, and will require the ethics and values established by the legislation to be reflected in the codes of conduct of each government department and agency.

Government alone can’t make it happen.

A new public sector ethics horizon will be difficult to navigate. And the settings on peoples’ individual moral compasses will probably vary. It will be challenging for the men and women of the next NSW Parliament who will be asked, if we are elected, to debate the longitude and latitude of ethics settings in this new legislation. In 1992, Mike Steketee wondered if political courage for tough accountability would evaporate, saying, “The temptation will be for politicians to decide that the standards they are setting for themselves are too high and that the solution is to lower them.”[iv] I disagree. There may well be anxiety about whether or not such new standards are excessive. But if elected, my team knows that the burden of demanding higher standards from the comfort of Opposition, must be met in government, especially after the experience of the last fifteen years.

People, not governments, create civil society

I said my second contention is that people, not governments, create civil society. So it follows that if we are to enable each other to strengthen our freedoms and choices in a civil society, those of us of a classical liberal inclination will seek to consciously limit the power of government and devolve power and responsibility to local institutions, groups and individuals.

Government alone can’t make it happen. Policies that encourage devolution of power and decision making, diverse public sector economies, better public sector performance, transparency and corruption-prevention systems will not, in themselves, deliver a strong civil society. It requires equal and opposite tension from individuals in our polity to deliver the private side of an ethical and civil society. Liberty and accountability is in the hands of each and every individual, and will only ever be as strong as the day to day scrutiny of our public institutions by the private individuals who trust and rely upon them.

In the USA, it is said that democracy preceded bureaucracy in the values and shared objectives that led people in 13 American colonies to declareIndependence in 1776.It did not arise because public governance structures engineered it. Independence was an ambition shared by people who sought to pursue personal and market freedom,reject taxation without representation, and make their own decisions without interference –but who nevertheless recognised the merit of granting limited powers to an elected entity tohandle those select issues they shared across borders.

In Penrith, the local Council recognised that the best people to make decisions about business development were – not surprisingly – local business operators.

George Washington, on leaving the Presidency in 1796, reminded Americans not only of the virtues of the national union, but that, “the necessity of reciprocal checks in the exercise of political power, by dividing and distributing it into different depositories …… to preserve them must be as necessary as to institute them”.[v] The founders of our Australian Federation similarly established checks and balances to limit the concentration of power and guarantee freedom, at the urging of classical liberal philosophers like Bruce Smith, who were wary of “The growing tendency toward undue interference by the state, with individual liberty, private enterprise and the rights of property”.[vi]

With my team, I have met groups and individuals across NSW who prove every day that people make great decisions and achieve great things for themselves and their families when they have the power to make decisions about their own lives and futures. In Menai, I met a community group who on their own initiative, and backed by council, have taken on the scourge of graffiti in their neighbourhood. Vandals are now giving up because the group cleans it up and reclaims control of their local environment. In Penrith, the local Council recognised that the best people to make decisions about business development were – not surprisingly – local business operators. So Council convened a local Business Alliance that is using their expertise and motivation to help develop local employment and investment strategies.

In 150 days, NSW faces the most important choice in a generation. A chance to change the future for the better – or endorse the culture of the recent past.

So for a NSW Liberals and Nationals Government what matters will be the shape, not the size of government, and the results that can be achieved for people. Our five point plan, setting out our priorities and goals, commits us to improving opportunities, services, quality of life, honesty and openness in government, and a greater say by people over their lives and neighbourhoods. We have committed to maintaining strong strategic focus on these priorities, along with a strong customer service culture, that is more interested in results than process. So I have asked for a new discipline of my team – to be open-minded in our own thinking, and on every decision ask, is there a way this thing can be better delivered and owned by people closer to the place where it has its impact? We know that government alone can’t solve the problems – and we are determined to give back to institutions, groups and individuals as much power, decision-making – and accountability – as possible.

Conclusion

In 150 days, NSW faces the most important choice in a generation. A chance to change the future for the better – or endorse the culture of the recent past. The challenges we face in our economy, to our reputation, and in our opportunities are now beyond euphemism. Honesty is the right answer. Honesty is the best policy.

I want to thank The Sydney Institute for the opportunity to set out our plans for a significant shift in the accountability of government. I am an optimist, and have great faith that the people of NSW are realistic but undaunted by what lies ahead. They know it’s time to tackle the future honestly – and the NSW Liberals and Nationals will give people the respect they deserve in honestly identifying the challenges, and the solutions.

I said at the outset that to grow the NSW economy, honesty is the best policy. Delivering sound fiscal management and restoring integrity, accountability and honesty in public life in NSW are inextricably linked. Honesty is the pre-requisite to a strong economy, and to freeing people to shape their own futures. And essential to maintaining that honesty is that all of us, as private individuals, recognise that the strength of our civil society is within the hands of people, not governments. And if we are to maximise the great potential of NSW, we must not only believe, but act on the belief, that honesty is the best policy in making NSW number one again.

[i] Parker, D. ‘Governor Macquarie’ 2010 Woodslane Press, pg 215.

[ii] Transparency International Corruption Perceptions Index 2009 www.transparency.org/policy_research/surveys_indices/cpi/2009

[iii] Living Up To The Standards – Address to Corruption Prevention Network Conference 9 September 2010.

[iv] Mike Steketee ‘Hoist with his own petard’ SMH 23 June 1992.

[v] George Washington’s farewell address, September 17, 1796.

[vi] Bruce Smith Liberty and Liberalism first published 1887, republished January 2005 by Centre for Independent studies, pg 148.