Planet Australia

On Monday 12 September 2016, The Sydney Institute held a discussion on a challenging new collection of essays on Australia published by Oxford University Press titled Only in Australia. The discussion was led by contributors to the collection – Dr William Coleman, Reader at the Research School of Economics, ANU and contributing editor of Only in Australia: The History, Politics and Economics of Australian Exceptionalism and Professor Henry Ergas, Professor of Infrastructure Economics at the SMART Facility at University of Wollongong and columnist with The Australian.

PLANET AUSTRALIA

WILLIAM COLEMAN

What is Only in Australia about?[1] It is about what I will call “Planet Australia”.

This planet is not one of those “vagabond planets”, discovered a few years ago, that seem to wander the cosmos in an infinite solitude. Planet Australia has several planetary companions, and is, undeniably, propelled through space under the same forces that govern her fellow travellers. And yet, Planet Australia exhibits an eccentric orbit; an abnormal axial tilt; and even a reverse rotation.

Further, Planet Australia’s path is not normalising over time. While some of its appearances have radically altered, its substance is largely preserved. There is a lot of “changing same” in Australia; and its ruling elites, I put to you, are dedicated to a “preservation agenda”.

Australia then, is and remains, the funny country. The funny-peculiar country.

Let me articulate five salient features of Australian idiosyncrasy:

1. A labour market regulated with an intensity highly abnormal by international standards. One of many marks of this is that Australia minimum wage is the highest in the world.[2]

   This means-testing amounts to imposing steep effective marginal tax rates on the recipients of benefits

2. An unusually heavy reliance on income taxes. In Australia, marginal tax rates reach almost 50c in the dollar at not much more than twice average weekly earnings. In other countries, such a marginal tax rate is confronted only at multiples of 4, 6, or 8 times average earnings. Or never at all (eg New Zealand). This is complemented by a severity of “means-testing” of benefits not often found elsewhere. This means-testing amounts to imposing steep effective marginal tax rates on the recipients of benefits. Thus, it has been estimated that someone living in public housing, and who has found a job on the minimum wage after being on the unemployment benefit, will have their increment in income taxed at an effective rate of 70 per cent. And while benefits are highly conditional on income, they are oddly unconditional in other directions: thus eligibility for unemployment benefit requires no previous history of employment. Every other OECD country, apart from New Zealand, requires the recipient to have previously been in some paid employment.

3. An unusually ready resort compulsion. For example, no other OECD country ordains voting will be compulsory.

4. A proliferation of states within a state, presided over by bureaucratic potentates, who enjoy a profile, a power and a political significance that only central bank governors can hope for in other Western countries. These states within a state are known as “independent statutory authorities”, where independence means your money is spent as they please. (The ABC receives about $1 billion per annum in taxation; no other Anglophone country sustains its government broadcaster principally by taxation; advertising, sponsorship, licence fees perform that task elsewhere).

5. A façade federalism. To a degree, that is untrue of other federations Australia’s baroque constitutional frontage belies a unitary state; one in which the political centre takes upon itself to do everything, right down to bicycle tracks.

I put to you that the flavour of these idiosyncrasies results from the unusual strength, or the unusual weakness, in Australia of three dimensions of life.

The first dimension I would tag with the word “mateship”. The reality of this ethic can be debated, but its potential relevance for several of the items instanced above needs no explication.

The second dimension is bureaucracy. The unusual strength of bureaucracy in Australia does perhaps needs some underlining, as Australians are not so ready to acknowledge it. But Alan Fraser Davies captured the reality well with his apercu that “the characteristic talent of Australians is not for improvisation, it is for bureaucracy”, and that “the gift is exercised on a massive scale”.

The third dimension contributes on account of its weakness: I refer to the poverty of ideas in Australia. I am not concerned here to simply lament this poverty; I am contending it is relevant to the endurance of her idiosyncrasies. Weak in ideas, Australia is weak in the apprehension of consequence – the consequence of action – which is one key tool of criticism of the customary. More generally, weak in ideas, Australia is without that disturbing, agitating aspect of ideas that breaks moulds. Frail in its grasp of ideas, and therefore prone – if I may put it this way – to mistake numerals for numbers, Australia prefers to divert itself with the ceremonial, the ritual and the incantational.

But whence the strength and weakness of these three dimensions of life? In turning, then, to the underlying causes of Australia’s idiosyncrasies, we confront a division of opinion among students of the question.

Australia’s idiosyncrasies could be deemed either adaptational or “legacical”, that is, pertaining to a legacy.

Adaptational.  Australia’s idiosyncrasies might be rational adaptations to her unusual circumstances. One example of the adaptational thesis can be found in W.K. Hancock’s Australia, where he contends that distance, sparse population etc, meant that Australia’s infrastructural development necessitated a high degree of central organisation and control (thus independent statutory authorities, etc).

Alternatively, Australia’s idiosyncrasies could be legacical, the bequest of chance events of the past; or perhaps the fugue of something which was once adaptive, but is no longer. This legacical hypothesis happens favoured by myself, and I am in good company. I would say that from the beginning Australia was just too deeply soaked with government.

But there is a problem for those who, like myself, reject the adaptational thesis. For all its funny-peculiar side, Australia has been a successful society. This serves well those who defend its funny-peculiarity. Thus the whoops of self-congratulation from some quarters when the national accounts for June quarter 2016 indicated Australia has now recorded a longer sequence of increases in GDP than any other country save the Netherlands. “Another medal, thanks” stated one newspaper on its front page.

In the face of this economic success those who deny that Australia’s idiosyncrasies are adaptational are required to assert that Australia has succeeded in spite of her idiosyncrasies; they are required to assert that some good fortune effaced the unfortunate impacts of her idiosyncrasy. Australia, then, to these critics of the adaptational thesis, must be the lucky country. And yet, the plausibility of any claim that Australia has succeeded by good fortune is strained by the persistence of Australia’s success: if it is a matter of luck, then it is a luck never seems to run out.

But I want to suggest that perhaps Australia may be finally exhausting her apparently inexhaustible lode of luck. I would suggest that over the past year or so there have been several “moments of truth” – or penny droppers – that have exposed the meretriciousness of Australia’s vigour.

Stagnant productivity. Remarkably, the best measure of productivity – multifactor productivity in the market sector – stood no higher on 2014/15 than ten years before. For all the babble of “disruption” and “change”, Australia has been remarkably successful in “preserving” productivity.

Net Immigration to New Zealand. For many decades the net flow of emigration was west across the Tasman. Now it is in the other direction. In the 12 months to July 2016, 1200 more Australians settled in New Zealand than visa versa.

Sinking PISA scores. Despite ever more intensive applications of Australia’s unalterable formula for education – more centralization, more “funding” – the performance of Australian children in standardised tests has been sinking relative their peers in other countries.

Fair Work Australia’s rejection of the Coles Store Team Agreement. This decision – in the face of the agreements overwhelming approval by Coles workers – puts the lie to the comforting myth that Australia “reformed” its industrial relations in the 1990s.

The South Australia power crisis.  On 12 July 2016, a MWh of electricity cost SA wholesalers $14,000, compared to less than $100 per MWh in the eastern states. This exposed the vanity of so much “policy play” in Australia. Policy for renewable energy, evidently, hasn’t much to do with providing energy. Or, indeed, with the prevention of climate change. (Australia could cease to consume any coal tomorrow and it would barely make a dent on global carbon emissions)[3] The point of so much policy is not to do something but to provide a setting – dare I say, a set – for politicians to sign pledges, give speeches, set targets, make announcements …

The Census of August 16 2016. This costly fiasco lays bare the arrogance and ineptitude of once seemingly masterly Australian public service

The Lindt café siege. Several disorders of Australian life contributed to this disaster; but let me focus solely on the fell hand bureaucratisation. Newspaper reports state Katrina Dawson still had a pulse when pulled out of the rubble by police. But, “acting on preordained protocols”, the ambulances were sent not to the Emergency Department of Sydney Hospital – 140 metres away – but to the Royal Prince Alfred Hospital in Camperdown,  20 minutes away via heavy traffic. (SMH November 18 2015).

Perhaps the metallic screech of truth will finally cut through the sound track of propaganda. But having raised that hopeful possibility, I have to concede that the power of truth is sociologically determined: it is elites which decide to respond or not respond to revelation. And so I close, more pessimistically, by registering the profound crisis in elites in current day Australia – in their conduct, quality and recruitment – the evidence of which we see every day, in every course of life.

[1] Only in Australia. The History, Politics and Economics of Australian Exceptionalism, edited by William Coieman, Oxford University Press. 2016

[2] Over an average of recent years, at market exchange rates.

[3] In 2012 Australia’s coal consumption amounted to 137m tonnes. In 2013 China’s coal consumption amounted to 4200 m tonnes.