Regulating From A Distance: Finkelstein, Politics, Power

The structure of the News Media Council proposed by Ray Finkelstein is complicated.

The council would consist of a chair and 20 other members. Half of those members are to be drawn from the public. The other half would come from the industry, but they cannot be managers or shareholders. The chair should (of course) be a judge or an “eminent” lawyer.

The council would be appointed, not by parliament, but by a separate, independent body comprised of three senior academics, the Commonwealth Ombudsman, and the Commonwealth Solicitor-General. The three academics would be chosen by a board of university vice-chancellors from across the country.

So that’s one independent body, appointed by another independent body, most of whom will be appointed by a third independent body.

This elaborate composition is supposed to demonstrate maximum impartiality and objectivity.

After all, it would not do to have any whiff of politics near something as sensitive media regulation. The risk of impropriety – or just the impression of impropriety – would be too great.

This allows Finkelstein to write in his report that, beyond its funding and powers, “government should have no role”. It’s a curious claim.

Do not imagine, as his language implies and some have since suggested, that his proposals are just industry self-regulation with a little bite. Finkelstein describes his scheme “enforced self-regulation” – a term drawn from the regulatory theory literature but one which is virtually meaningless.

An independent regulatory agency is the Government. Sure, the News Media Council wouldn’t directly answer to Julia Gillard. It wouldn’t be democratic. But it would have coercive powers, would be funded by compulsory taxation, and its journalistic codes of conduct would be mandatory. This is the very definition of ‘government’. Any limit on free speech it imposed would be a limit on free speech imposed by the state.

The idea behind independent regulatory agencies is simple, and superficially attractive: to get the politics out of policy and compliance. Rather than having politicians oversee the decisions made by regulators – with all the risks of corruption and political manipulation that would create – the agencies are separated from the rest of the government. They are delegated their powers by parliament, but they are not responsible to parliament.

Independent regulatory agencies are relatively new to Australia and Europe. There were virtually no such bodies in the 1960s. Governments of the early and mid-20th century were vast public utilities, owning industries and enforcing cartels.

The untold story of the “neo-liberal” reforms of the last few decades is how privatisation and trade deregulation was matched by an extraordinary explosion of new regulation. And to enforce this huge corpus of new law and regulation, state power was spun off into dozens of independent bodies. The responsibility for regulation was moved out of ministries and into agencies.

Along every measure government has grown. Government has expanded its reach and ambition and brought more activities into its web.

At the same time government has become less democratic. That is a feature, not a bug. Those who call for regulatory independence worry parliamentary representatives could interfere in technocratic decision-making.

It’s a reasonable concern. Politicians are driven by politics. They have political motives, political aims, and use political tactics. They are the last people you’d want in charge of regulation.

Yet we seem reluctant to over think the implications of this change. Certainly, there are other undemocratic parts of government – the courts and the police are the most obvious. But regulatory agencies are one of the fastest growing areas of government power.

And these agencies make government policy. Parliament provides the general legislative framework within which those agencies operate, but leaves them to refine their goals. The regulators are free to pursue their own agendas and set their own direction. In a very real sense, they shape (within the limits of parliament’s legislation) the law of the land.

Outside the democratic spotlight, the independent agencies are highly susceptible to regulatory capture – that phenomenon where special interests manipulate the regulatory process to favour their own interests, rather than the interests of the public.

In Finkelstein’s proposal, the News Media Council itself would write the code by which the media is governed. This would avoid the taint of partisan politics, which is good, but would at the same time have the limits of democratic debate circumscribed by a committee appointed by university vice-chancellors.

It is well to imagine regulations which might, if perfectly and uniformly enforced, change things for the better.

But the choice which modern advocates of greater regulation offer is unappealing: give power to politicians, and risk the corruption and politicisation of public policy, or give power to independent regulators, and allow unelected and unaccountable bureaucrats to govern economy and society.

The Greeks have been rightly upset that their government has been replaced, virtually wholesale, with European technocrats.

As independent regulatory agencies blossom, we might start thinking about what it means for democratic control to be eroded as government expands.