Tag: ABC The Drum

Insane Obsession: Australia’s Auto Industry Waste

In his foreword to the 2008 A New Car Plan for a Greener Future, Kevin Rudd observed that half a century had lapsed between the first demonstration of a horseless carriage in South Australia and the debut of the Holden FX in 1948 – the first truly Australian car.

Rudd was trying to say that the car industry is worth saving.

But anybody familiar with Australian protectionism in the 20th century would have recognised in Rudd’s observation less a story of triumph and more a long story of failure.

Ford is leaving Australian shores in 2016. It’s time to write the car industry’s obituary.

When we first started protecting the automotive industry against foreign competition, cars were a luxury item.

In August 1917, prime minister Billy Hughes announced an absolute prohibition on selected luxury imports. Car bodies were on the list, beside fur apparel, jewellery and (strangely enough) biscuits.

In part the government said this prohibition would keep currency from being sent overseas during the war, and would free up space on cargo ships that was being wasted on bulky and unnecessary imports.

But most of all Hughes wanted to encourage Australia’s existing horse-drawn carriage manufacturers (and their 7,000 or so employees) to make car bodies instead.

Cars were a luxury, but they were a high-tech sort of luxury. Founding a car industry in Australia was to politicians of the early 20th century as founding a “Silicon Valley” is to politicians of the 21st.

The Hughes prohibition on car body imports was immediately controversial. Now Australians wanting a car would have to order a chassis from overseas, and then, once it arrived, wait a few months for the body to be built domestically.

Industrial delegations filed into the office of the Minister for Trade and Customs. The importers and traders protested that cars would be more expensive. Furthermore, there was no way the domestic industry could fill orders already on the way. Their delegation was closely followed by an alliance of leatherworkers, sheet metal workers, glass bevellers, and parts makers who urged the government to stick to the embargo.

The importers and traders lost. After the war, the ban on car body imports was converted into a very high tariff.

For the next century, the car industry would be governed by ministers rather than markets. Even deep in the era of protection-all-round, cars were a special case. Both Labor and non-Labor parties fell over each other to support the car industry.

Protectionism distorted our automotive sector in all sorts of perverse ways.

The modern American car industry was really born in the 1930s. It abandoned its cottage manufacturing roots and became the large-scale, industrial enterprise that it is today.

But as the United States was taking advantage of economies of scale brought about by industry consolidations, the tariff kept Australian car companies sheltered and small. In the late 1930s, the average automotive parts company employed just 11 people.

And the tariff slowed the introduction of new technology. Closed-body and all-steel body cars were only available in Australia a decade after they were available in the United States.

In 1938 the Tariff Board – hardly a bastion of free market thought – concluded it was “unwise” to encourage Australian manufacturers to produce an all-Australian car.

This advice didn’t bother Ben Chifley. Chifley wanted a native Australian car to be the lynchpin of Australian manufacturing after World War II.

That car ended up being the Holden FX, launched in 1948. Henry Holden was one of those horse-drawn carriage makers who’d taken advantage of Billy Hughes’ ban on car body imports.

Australians tend to be pretty nostalgic about the early Holdens. But they couldn’t have been built without government assistance. They were never competitive in their own right. Holden still receives government subsidies. It wants even more.

We’ve been trying to spark a self-sustaining car industry for a century now. Every side of politics has tried their little hearts out. Low tariffs with high subsidies. High tariffs with low subsidies. Every side has failed. Every side tries again.

On Sunday the Coalition’s industry spokesperson, Sophie Mirabella, was talking up “strategic investments” on the Bolt Report, and calling for the Productivity Commission to provide a “clear path for a viable industry going forward”.

The next time you hear that it is markets which are irrational, recall the definition of insanity: doing the same thing over and over again and expecting a different result.

Not even Ford – the world’s most historically prestigious car company – closing down its Australian operation can apparently break this insane obsession.

But then again, Ford had to be enticed to come to Australia in the first place. Only after government negotiators promised the company assistance did Ford set up shop in Geelong in 1925. Since then it has been protected by a tariff that has gone as high as 57.5 per cent. Australian consumers have paid for that tariff in higher car prices. And the company has received around $1 billion in direct taxpayer subsidies over the last decade.

Yet after all that, the supposed party of free markets still can’t recognise automotive protectionism for the waste of money that it is.

When Does Mission Creep Become Censorship?

The Australian Securities and Investments Commission is completely out of control.

The corporate regulator is an independent government agency. It is not directly accountable to a minister. It is only partially accountable to parliament.

And over the past nine months ASIC has been ordering internet service providers to censor websites it suspected of hosting fraudulent investment material.

To do this, ASIC has been utilising an obscure section of the Telecommunications Act usually used to prohibit extreme cases of child pornography.

The outrage only came to light because 1,200 other websites were accidentally censored as well.

Renai LeMay at the technology website Delimiter has the full story. In the Drum last week,the convenors of Melbourne Free University – one of those innocent websites taken down by ASIC’s actions – explained what happened when
they were blocked.

It’s an almost perfect illustration of regulatory mission creep.

Legislative provisions designed to only deal with the most extreme crimes are eventually used to pursue lesser offences. Given that this involved full-blown censorship – and censorship without oversight or appeal – ASIC’s actions are incredibly reckless.

Censoring the internet is a gross abuse of its status as an independent regulator.

Perhaps we could forgive an abuse of power if it was a one-time thing. But it’s part of a pattern.

In September and October last year the federal government was pushing hard for a data retention scheme to govern the internet. Such a law would have compelled internet service providers to retain the browsing habits of their customers for two years, on the off-chance law enforcement agencies wanted to have a look at them later.

The data retention proposal was both vague and authoritarian. Senior ministers claimed the policy was to protect us against the worst of the worst: terrorists, paedophiles, the most terrifying cyber-criminals.

When an IPA colleague and I appeared in front of the Parliamentary Joint Committee on Intelligence and Security to oppose data retention, we were informed by one Labor backbencher, Michael Danby, that “extreme civil liberties” placed Australia at risk of another terror attack.

But as the hearings progressed it was revealed that one of the biggest advocates within Canberra for data retention wasn’t the security agencies or the Federal Police, but ASIC.

And not only did ASIC want the internet metadata to be retained – information like date and timestamps – but the corporate regulator even wanted our content to be retained too. That is, it wanted internet providers to store every single word in our emails, and every website we’ve ever visited.

Such an extreme breach of our privacy was not to protect us against terrorists, but insider trading. (The details, such as they are, are on pages 26 and 27 here.)

It’s not like ASIC doesn’t have any draconian powers already.

Judges have repeatedly slapped ASIC down for its approach to regulatory enforcement. In one case ASIC was condemned for being oppressive, for abusing process, and bringing the administration of justice into disrepute.

In another, the judge admonished ASIC’s lawyers for alleging dishonesty without any basis in evidence.

Judges often question ASIC’s motives.

One of the key insights of the public choice school of economics is that bureaucracies often act in their own interest. They want a bigger share of the government budget, more public profile, and greater powers.

ASIC is hardly the only example of a rogue agency. Under Allan Fels, the Australian Competition and Consumer Commission was similarly unchecked.

At Catallaxy Files, Sinclair Davidson has pointed out that ultimately the federal parliament is responsible for ASIC’s actions. Politicians write the laws under which the regulator operates. Politicians grant them their powers. But by deliberately setting them outside the political process – by giving them statutory independence – they’ve made them unaccountable, and allowed them to get out of control.

So politicians have to reign ASIC in. But there’s a more fundamental problem. The sort of abuse of power we are seeing out of ASIC is endemic to the regulatory state.

The logic is as follows.

The relationship between a regulator and a regulated organisation (let’s say a company operating in a marketplace) is like a continuous game of cat and mouse. A regulator makes a rule. A company changes its behaviour to comply with the rule. But, assuming the rule imposes some sort of cost on the company, the company will look for loop-holes to minimise the cost.

The frustrated regulator will write another rule to close off the loop-hole. The cycle continues.

The economist Edward Kane calls this relationship the regulatory dialectic. ASIC is a perfect case study.

Caught up in its never-ending battle with the companies it regulates, it has been lobbying for powers which no free society ought to grant even to its national security services. It has been trying its hand at censorship. And it’s launched legal crusades to raise its profile and its political and financial support.

Lawyers and economists like to talk about the content of regulation. What does a regulation permit? What does it prohibit? Nobody wants to legalise fraud or theft.

But ASIC’s extraordinary abuses of power reveal how regulation plays out in the real world – not on the clean page of legislation, or the tight confines of an economists’ model, but when self-interested bureaucrats are asked to enforce uncertain laws against an unwilling private sector.

Lavish Parental Leave Has Nothing To Do With Need

There’s an easy test to see if a politician is spouting nonsense: they use the word “productivity” a lot.

Productivity is an old standby. It sounds intelligent. Economists say it’s important. Yet productivity is the most abused word in the political dictionary.

The Coalition says its paid parental leave scheme is first and foremost about productivity. Mothers would receive a payment at their full salary for 26 weeks, up to the maximum annual salary of $150,000. The taxation office says the average income for an Australian woman in 2010-11 was $42,000. (You can see the tax tables here.)

How will this generosity boost productivity? It’s not clear.

The Coalition’s plan would completely upend the Australian welfare settlement.

It would be a wholehearted, full-throated embrace of the Scandinavian system of middle-class welfare. It would be a rejection of the bipartisan principle that social security should be a safety-net. And, as it would blur the distinction between earned income and government assistance, the Coalition’s scheme would entrench the entitlement culture that has been so harmful to so many economies around the world.

That’s the big picture. Let’s start with the productivity canard. The Coalition’s official parental leave document makes two claims about leave and productivity. Both are apparently drawn from a Productivity Commission study published in 2009.

First, their paid parental leave scheme will encourage mothers to stay at home to breastfeed their babies, which will result in health benefits for those babies, and “likely long-run productivity benefits” for the workers they grow up to be. Nobody disputes the value of breastfeeding. The Productivity Commission found enormous benefits accrue to both breastfeeding mother and child. But it only vaguely hypothesised – with no supporting documentation – that, perhaps, parental leave could “translate to … subsequent productivity improvements” down the track.

It’s dubious to pin Australia’s long-run economic growth on this unexamined chain of causation. Well, if we care about evidence-based policy.

The second argument is not much more convincing. The scheme “would keep some of the most productive people and potentially productive people more engaged in the workforce”. But if parental leave is designed to stop mothers dropping out of the workforce entirely once they’ve had a child, that seems to contradict the first claim: that lengthy maternal care is essential for future productivity.

The Productivity Commission recognised that the interactions between the changed incentives to work or take parental leave were highly complex. The Coalition’s proposal does no such thing.

The extreme generosity of the Coalition’s plan suggests another productivity argument. Highly productive women are less likely to take time out to have children, due to the opportunity cost of their higher wages. Yet highly productive women might have highly productive children. That’s what Tony Abbott meant when he said “women of calibre”. It’s not a nice argument. But it appears to be one implicit goal of the Coalition’s policy – to encourage well-paid women to become mothers.

On this, Abbott has been more candid in the past. He wrote in his book Battlelines that “maternity-leave schemes are better thought of as a means of encouraging more women to keep the most traditional role of all: that of mother”.

The Coalition insists their plan isn’t welfare – it’s a “workplace entitlement”. Yet we usually think of workplace entitlements as part of an employment contract and included in a salary package. Sometimes workplace entitlements are required by law, like annual leave, but they are always provided by employers, and paid for by employers’ money.

Financial assistance provided by government, financed by taxation, and delivered by Centrelink certainly isn’t a workplace entitlement.

The Opposition’s doublespeak conflates private earnings with government transfer payments. Yet the distinction matters. It really matters to conservatives, for whom self-reliance and responsibility are moral virtues.

One of the most influential theories of welfare states was devised by the Danish sociologist Gøsta Esping-Andersen. In his
1990 book The Three Worlds of Welfare Capitalism, Esping-Andersen divided welfare states into three categories according to their philosophical foundations: liberal, corporatist and social democratic.

Liberal regimes are tightly means tested and focused on transition from welfare to work. Welfare is designed to be unappealing. Australia has a liberal welfare regime, as does the United States, Britain and Canada. Corporatist regimes – like France’s – are designed to preserve class and status. In social democratic regimes, access to welfare is universal, plentiful, and explicitly designed to buy off the middle class. (Esping-Andersen later added a fourth. In a Mediterranean regime, welfare distribution is embedded into traditional gender and family structures.)

Full-blown social democratic regimes are rare, and concentrated in Scandinavia. In the Drum yesterday, Emma Alberici emphasised just how lavish their parental leave entitlements are. Tony Abbott’s policy compares favourably to those of Finland, Norway, Sweden, Germany, and Iceland.

In other words, the Coalition’s policy is a Scandinavian scheme for a liberal country. Like a good Scandinavian scheme, it will co-opt the middle class, who benefit the most. Like a good Scandinavian scheme, it will blur the distinction between work and welfare. And like a good Scandinavian scheme, it has nothing to do with need, and everything to do with the privilege of citizenship.

If this paid parental leave scheme becomes law, we won’t be at the end of the Age of Entitlement. We’ll be at the beginning.

Aeroplane Mobile Switch-Off Ruled By Fear Of The Unknown

Last week we learned that Mark Dreyfus, Attorney General of the Commonwealth of Australia, was recently involved in “an incident” on an airplane.

Dreyfus was travelling from Sydney to Brisbane in late April. He refused to turn off his phone as the aircraft prepared for take-off. Given that this is a clear breach of airline policy and air safety regulations, the captain called the Federal Police, and the police met him at the gate.

The Daily Telegraph reported the story here. It’s pretty embarrassing. But let’s set aside what this sequence of events reveals about his character and his attitude to the law.

There’s a more interesting story here.

It’s pretty likely the Attorney-General wasn’t the only person on that Sydney to Brisbane flight trying to furtively check their emails. Mobile phones are used on airplanes remarkably often.

Data on this is hard to come by. But surveys of frequent flyers always show mobile phone use is common. The best evidence we have is one study of 37 American flights in 2003. The study found there were between one and four surreptitious phone calls made on each flight. And that was 10 years ago. Our personal electronic devices are much more capable and indispensable now.

Does this chronic law-breaking make flying more risky? Almost definitely not.

Electronic devices are strictly regulated on aircraft not for technical reasons, but sociological ones. Their control says more about how humans cope with uncertainty than it does anything about technology.

On the face of it, the technical argument for the mobile phone ban looks strong. Electronic devices give off radio frequency emissions. Sometimes that’s intentional – like when we make a call or use the internet. Sometimes it isn’t. As long as an electronic device is on, it is probably emitting something.

Those radio frequency emissions can affect an aircraft’s electronics in two ways. First, they might interfere with the plane’s external antennas. This is particularly a concern for accidental emissions. Aircraft systems that are designed to receive flight-related transmissions could pick up noise from all those laptops and mobiles and iPads cluttering the cabin. Second, deliberate transmissions – phone calls, text messages, going online – could interfere with the avionic systems or poorly shielded cables running through the aircraft.

Compound this with the unpredictability of faulty consumer electronics – that iPhone you dropped in the bath but still kinda works – and the fact that there could be hundreds of devices running at the same time, and that’s the argument that regulators have made since the 1960s.

Nice in theory. Damn hard to prove. There is no conclusive real-world evidence that phones or tablets interfere with avionics.

And thank goodness, considering how many people actually surreptitiously use their devices in the air. Or how many people accidentally leave their devices on, whether out of forgetfulness or ignorance.

NASA has a reporting system where pilots and others can confidentially disclose any incidents concerning flight safety. (Australia has a similar system, REPCON.) You can read a sample of the NASA reports that mention personal electronic devices here. What’s striking is how few of those reported incidents even imply that a device affected flight systems.

An investigation of the complete NASA data by USA Today found that, between 2001 and 2011, there were just 32 incidents where electronic devices were suspected to have interfered with the aircraft. This is a tiny number. There are 70,000 flights in the United States every single day.

And the incidents are utterly speculative. Boeing tries to purchase the electronic devices that are suspected of interfering with aircraft systems. But they’ve never been able to replicate the effects.

In other words, neither regulators nor aircraft manufacturers have been able to demonstrate that mobile phones are dangerous.

Then again, nobody can prove they’re not.

Humans don’t like uncertainty. Regulators like uncertainty even less. This is understandable. With airplane safety the stakes are very high. But that uncertainty means they are stubbornly enforcing a law that has no evidentiary basis.

There are other reasons offered for mobile phone restrictions. Passengers might be annoyed by listening to other passengers’ phone calls. The requirement to turn devices off completely during take-off could act as crowd control, forcing passengers to watch the safety briefing. These arguments aren’t compelling. We could ban phone calls but allow text messaging. People ignore the safety briefing anyway.

The mobile phone restriction won’t last. All the theoretical problems with interference can be eliminated by improving aircraft systems. Cables can be shielded. Antenna sensitivities can be adjusted. Yes, doing so is expensive. But it would be extraordinarily reckless for an airline not to make their systems more resilient.

And if regulators are genuinely worried about the dangers of mobile phone interference, let’s hope they’re not relying on an ineffective ban. Ensuring aircraft resilience seems like the most prudent option.

Airlines are already rolling out services that satisfy our electronic addictions. Lots of carriers now offer in-flight wireless internet access. Others have even installed a full mobile network in the cabin. The industry has never been more competitive. Airlines are always looking for something extra to charge.

Eventually, very important people (Mark Dreyfus) and less important people (everybody else) will be able to check their emails whenever they want. We just have to wait for regulators to catch up.

A Hollow Victory For The Anti-Austerity Crowd

Prime Minister Julia Gillard informed us yesterday that the budget deficit will be much worse than predicted. Her speech has been greeted with the usual debate about whether it even matters if we go into deficit.

But this time is different. Thanks to a recent academic controversy, it seems like the anti-austerity, pro-deficit spending crowd has won a major victory.

Here’s the story. In January 2010, two prominent American economists, Carmen Reinhart and Kenneth Rogoff, released a working paper, ‘Growth in a Time of Debt’.

The paper took data spanning 200 years from 44 countries and analysed the relationship between public debt and economic growth.

The findings were striking. Once debt hits 90 per cent of GDP – that is, when a government owes almost as much money as the entire economy produces each year – then the rate of economic growth dramatically slows. (Obviously Australian debt is nowhere near this high.)

But fast forward to April 2013 and three economists at the University of Massachusetts Amherst published a critique after looking at the original data sources. They found that Reinhart and Rogoff a) made a coding error in Excel, b) excluded some data, and c) made some methodological choices which they describe as “unconventional”.

Then came the wall of commentary. It was hard to avoid. Here’s one interesting take on the controversy. Here’s another. And another here. Here’s one, another here, here, here, and here. My Institute of Public Affairs colleague Julie Novak weighs in here. Reinhart and Rogoff respond here, and here, and here.

And here, the Nobel-winning New York Times columnist Paul Krugman asks: “Did an Excel coding error destroy the economies of the Western world?”

Well, obviously not.

This whole spat has nothing to do with the economics of public debt. It has everything to do with the politics of austerity.

Strip away the rhetoric and the actual argument about the paper is actually pretty modest. Is the 90 per cent ratio a tipping point – a line countries must not cross? Or does economic growth just decline slowly while public debt rises? The tipping point argument was interesting, but not particularly compelling. It’s all well and good to crunch some numbers that throw up an interesting result. But you have to explain why it has done so. What’s so special about 90 per cent?

Yet after all this fire and brimstone, nobody seriously disputes that high debt and low growth are correlated.

More important is figuring out whether debt hurts growth. Or is it that low growth leads to increased debt? In other words, is debt to blame for economic problems or is it merely a symptom of those problems? Have a flick through the links above. The answer is probably a bit of both.

The problem with public debt is today as it always has been – politicians have few incentives to balance their budgets, and every incentive to grow debt unsustainably. Just look at the United States to see how this plays out in practice. But eventually bills have to be paid.

Reinhart and Rogoff did not invent the problems of unsustainable deficits. Ever since Adam Smith, economists have been talking about the need to balance budgets. And Smith didn’t rely on Excel to make his case. Two and half centuries later, there is a huge literature on public finance.

Nor did Reinhart and Rogoff invent the current austerity movement. The timeline doesn’t work. In the UK, David Cameron was talking about an austerity budget early in 2009. Spain had an “austerity plan” that December, a month before the Reinhart-Rogoff paper was released. As did Greece, Ireland, Romania, and Latvia.

Anyway, for all their rhetoric, it isn’t clear many countries have really pursued “austerity”, as I argued in the Drum last year.

So let’s not overestimate the political power of academic research.

In his most famous book, the General Theory of Employment, Interest and Money, John Maynard Keynes wrote, “Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.” Obviously economists love this little quote.

The irony was governments were following Keynesian-esque policies well before the General Theory was released in 1936. They were already trying to spend their way out of the Great Depression. Keynes’ theoretical arguments suited the times.

It’s the same story with austerity. No surprise that some politicians who had already committed to cutting spending embraced Reinhart and Rogoff’s paper. Paul Ryan cited their 90 per cent tipping in his Path to Prosperity budget plan. Surely nobody thinks these two academic economists gave Ryan the idea to cut government spending? Politicians will take any evidence they can find to support their existing views.

And those who are certain austerity is the wrong path – that it has led the world into a deeper crisis than Keynesian spending might have – have embraced the Reinhart-Rogoff saga as a sort of intellectual triumph. But they’re being even more opportunistic.

One of the Massachusetts economists believes their critique demonstrates that “under particular circumstances, public debt can play a key role in overcoming a recession”. This is a huge overreach. As Greg Mankiw has written, “just because someone in Team A makes an inadvertent excel error does not mean that everything Team B believes is true.”

If nothing else, this saga should remind us that excessive government spending is first and foremost a political problem, not an economic one.

Power Is Not Meant For Bureaucratic Hands

Terry Moran wants senior public servants to be liberated to “talk sensibly” in public about “long-term and self-evident truths” without being seen as betraying their political masters.

That is, Moran wants to revive the public service mandarin, updated for the media-centric demands of the 21st century.

Moran was recently the head of the Prime Minister’s Department. You can read his argument in the Australian Journal of Public Administration here.

It’s an important piece. It reveals, subtly but distinctly, what Australia’s bureaucracy wants, and what it fears.

Our ideas of the public service waver uncomfortably between two largely incompatible doctrines.

The first is the strict Westminster doctrine of ministerial responsibility. According to this doctrine, the bureaucracy is accountable to the minister – it acts solely according to the wishes of its elected master. It is non-partisan and neutral. It provides advice, of course, but does so privately. It is nothing more than “an extension of the minister’s capacity”.

The second doctrine is more nebulous and romantic: that of an autonomous, technocratic and permanent bureaucracy, which has its own mandate to advocate and act in the best wishes of the nation. We could call this doctrine Hegelian – drawn from the 19th century philosopher Georg Hegel, who believed the bureaucracy had a moral mission to pursue what was in society’s general interest.

Taken far enough, the Hegelian bureaucracy is fundamentally anti-democratic.

Senior bureaucrats already can, and do, speak in public about their areas of responsibility. Here are recent speeches given by public servants at the Department of Climate Change, and those given by the Department of Health and Ageing.

This is a good thing. Information provision is a vital part of the bureaucracy’s job. When politicians come up with grand schemes it is necessary for bureaucrats to translate those schemes into reality and to clarify for a confused public what on earth they actually mean.

But on top of this, Moran would like public servants to be free to talk about “long-term strategy”. He is proud that many of the reforms of the 1980s were “conceived and championed by the public service”, and hopes the public service can lead again – but this time as much through high-profile speeches on “self-evident truths” as through internal advocacy.

Don’t let the fact that the liberalisations of the 1980s were an unambiguous success obscure how undemocratic this idea is. The bureaucracy has neither the authority nor the legitimacy to publicly call for what it thinks a government should do.

Moran also wants ministerial advisors – or, more crudely, political advisors – to be subject to the same rigid accountability structures as the public service. This would include being given bureaucratically defined roles and having to answer to parliamentary committees.

The biggest threat to the influence of the public service has been the rise of political advisors. These advisors are a competing source of counsel. Public servants no longer have the unencumbered access to the ministers they once had.

It’s common to read complaints (particularly from the Rudd era) about how arrogant and young advisors swan around Canberra apparently unchecked by any person or sense of propriety. You can understand why advisors get the public service so riled up.

But these advisors exist for a reason. Newly appointed ministers are easily brow-beaten by experienced public servants. The relationships depicted in Yes, Minister are not fictional. If you want to read how some agencies and departments used to treat their minister as just a rubber stamp, read Neil Brown’s great and amusing memoir On the other hand.

Faced with a self-interested, confident, and experienced bureaucracy, it helps to have an advisor or two who is unambiguously on the minister’s side.

So whenever you hear public servants complain about political advisors, think: power-play.

(And, contrary to Moran’s claim, the original spark for the 1980s reforms didn’t come from the public service, but from advisors: for instance, John Rose in Malcolm Fraser’s office and John Hewson in Treasurer John Howard’s office.)

I quoted a basic definition of the Westminster concept of the public service above. One of Australia’s greatest mandarins, Sir Henry Bland put the case more forcefully:

[T]he Minister is the department. Without a Minister there cannot be a department … The Permanent Head is the Minister’s adviser and the manager of the department’s staff … And remember, Parliaments do not provide funds for Permanent Heads.

It is ministers who have power and authority in our democratic system. Ministers are the ones elected. Ministers are the ones who are ultimately accountable.

Senior bureaucrats might like recognition and intellectual prominence – to be seen by the public as visionaries and “thought-leaders”. But that, simply, is not what they are there for.

Iraq Stands As A Warning Against Foreign Intervention

Ten years after the invasion of Iraq and you’d think the only issue was whether John Howard “lied”.

Howard, you might recall, happened to be prime minister of Australia (in Canberra) when the president of the United States (in Washington DC) decided to overthrow Saddam Hussein.

The idea that Howard had any control over George Bush’s decision is ludicrous – almost as ludicrous as the idea his government would decline to support Australia’s closest ally 18 months after September 11.

So this interminable debate – which intelligence officer said what to who about weapons of mass destruction – is an indulgent smokescreen. It’s being used to obscure the significance of the Iraq War.

Iraq was an intellectual crisis for both left and right. In 2002, the academic Samantha Power influentially described foreign genocide as a “problem from hell” – surely we are morally obliged to prevent it, but how? Her answer was liberal interventionism: a call from the left to use the US military to protect human rights around the globe.

This was not an obscure doctrine. Liberal interventionism was intellectually prominent when the Clinton administration was trying to deal with Kosovo and Rwanda. Power has become an adviser to Barack Obama and urged him to act on Libya.

Bush’s plans for Iraq were a dilemma for liberal interventionists. Power opposed the war, but reluctantly: in her view the ideas were sound, but the Bush administration had squandered too much international political capital to make it work. Others on the left were supportive – Tony Blair, for one. This interesting 2008 piece by Blair’s former chief of staff tries to keep the liberal interventionist case alive.

Neoconservatism was liberal interventionism’s right-wing relative. It was more messianic and more ambitious. Rather than merely stopping genocide as it occurred, neoconservatives thought America could prevent such crimes; the US could actively create liberty abroad. Think of Christopher Hitchens as a crossover between these two camps.

Both these philosophies of foreign policy rejected the amoral calculations of national interest that had led America to tolerate, even support, dictatorships.

There was even an open debate among libertarians at the time about the justness of military intervention to expand individual liberty and human rights. In retrospect that seems bizarre. Government small enough to drown in a bathtub but big enough to invade, liberate and rebuild faraway countries? For what it’s worth, I supported the war at the time. This was a mistake, but we’ve forgotten how live those debates were.

The claim that Bush – or Howard – went to war in Iraq simply because of weapons of mass destruction is complete historical revision. Rightly or wrongly, they saw it as a moral cause. Ba’athist Iraq was one of the worst tyrannies on the planet, and the Iraqi people some of the least free. In 2003, it seemed like something could be done about that.

The great cause collapsed for two reasons. The first was money. American house prices peaked two years after the invasion of Iraq. It was all downhill from there. The richest country in the world discovered that moral causes were out of its price range.

The second was more critical. The United States simply does not have the intellectual or administrative capacity to construct free and prosperous democracies out of ruins of tyranny and war. Nobody does.

“The curious task of economics,” said Friedrich Hayek, “is to demonstrate to men how little they really know about what they imagine they can design.” Hayek was talking about how hard it is to regulate an economy. Rebuilding a free country from ruins is much, much harder again. There is no evidence to suggest that the Coalition of the Willing, or the Department of Defense, or the White House, had thought in any great detail about the institutions that make a free and stable country.

Confusion set in from the start. The Coalition Provisional Authority took over the government of Iraq one month after American tanks entered Baghdad. But what actually was the CPA? Who was it responsible to? It wasn’t a sovereign nation. Was it a federal agency of the United States? Or a body of the United Nations? Was the CPA part of the US military’s chain of command or a civilian agency reporting to the Department of Defence? This damning 2005paper by the Congressional Research Service could come up with no clear answer.

That confusion wasn’t academic. Administrative arrangements matter, even in a war-zone. The worst decision made in the wake of the invasion was the disbanding of the Iraqi army, which threw hundreds of thousands of frustrated armed men out of work. That decision was made unilaterally by CPA chief Paul Bremer. It was apparently contrary to the pre-war planning. Yet if there was an authority that could have overrode Bremer, nobody was clear who it was.

So blaming all problems after the invasion onto a failure to adequately plan for reconstruction doesn’t really capture the problem. Rehabilitating entire countries is not just a question of careful planning. There is no check-box list or OECD best-practice guidelines.

Supporters of the Iraq war said the successful reconstitution of Japan and Germany show this formidable task can be done. But Japan and Germany are just two data-points in a long history of failed and unfree states. Why the confidence those successes could be easily replicated?

It was easy for neoconservatives and liberal interventionists to imagine great moral causes for the American military power. To lots of people, government looks like a perfect tool for problem-solving.

But in 2013, Iraq has some of the most endemic corruption on the planet: the Corruption Perception Index ranks it 169 out of 174. It has one of the lowest levels of economic freedom; it is one of the least free Arab nations, which also makes it one of the least free in the world. It’s 150 out of 179 on Reporters without Borders’ index of Press Freedom.

And 50 Iraqis were killed overnight in dozens of bombings and attacks. Iraq goes to the polls on Saturday. Fourteen election candidates have already been murdered.

Freedom House’s omnibus Freedom in the World index categorises Iraq simply as Not Free.

Saddam Hussein is dead, and that’s great. But Iraqis were promised more.

Conservatives Have Got Gay Marriage All Wrong

There was a weird moment in one episode of the ABC’s Kitchen Cabinet last year.

The host, Annabel Crabb, was being treated to a barbecue by shadow treasurer Joe Hockey. The conversation turned to Hockey’s view on gay marriage. He restated that he was opposed. Okay, fine. But then he admitted that it was probably inevitable: Australia will allow two people of the same gender to marry eventually, regardless of what he thought about it.

This is not how conservatism is supposed to work. William F Buckley famously (and sympathetically) described a conservative as someone who stood athwart history yelling “Stop!”

On gay marriage, the conservative mainstream is now just standing to the side, watching the world rush by, with a sort of hapless resignation.

It must be strange to know you are on the wrong side of history. And Hockey’s position seems to be a common one. It’s not a position that says gay marriage is inevitable yet subsequent events will prove it to be a mistake. No, it seems to be more that gay marriage is both inevitable and inconsequential.

Perhaps, as the great conservative philosopher Michael Oakeshott once wrote, change simply has to be suffered.

On gay marriage at least, social conservatism has suddenly shifted from being a political asset to a liability. This was most illustratively shown during the Senate confirmation of Chuck Hagel as Barack Obama’s secretary of defence in January.

In 1998, Hagel was a senator for Nebraska and on the other side the confirmation process. He criticised one Clinton ambassadorial candidate for being “openly, aggressively gay”. This little episode was dug up during Hagel’s confirmation this year as evidence that he was a secret bigot.

That’s fair enough. But Hagel’s contemporary critics have tried to pretend that such showy political homophobia was rare, when it was distressingly common until very recently. Clearly, elected politicians of the time believed making anti-gay statements was of political benefit. This is no longer the case.

The gay-marriage-is-inevitable line has swept through American conservative circles. Even Rush Limbaugh – possibly the world’s most famous shock jock – says conservatives will have to get used to the fact they have lost the debate. Many conservatives have gone further and actively embraced marriage reform.

The Australian right has been slower than its American counterparts. But it’s happening. Malcolm Turnbull now backs gay marriage. You’d probably expect that. Turnbull is a small l-liberal who enjoys swimming slightly out of the pack. But he had been coy about the whole thing for a very long time.

More interesting was the declaration of support earlier this month by Kelly O’Dwyer – Liberal member for Higgins, former Peter Costello staffer, and one of those recent parliamentary entrants who everybody says is leadership material.

It is hard to imagine there being any serious political cost to O’Dwyer’s position. Over half of self-identified Coalition voters support gay marriage. The South Australian Liberal Senator Simon Birmingham, who announced his support all the way back in November 2010, looks less like an outlier and more like a forerunner.

In a famous speech in 2011, David Cameron said he supported gay marriage not despite the fact that he is a conservative but because he is a conservative. That wasn’t just the cheap rhetoric of a politician. The conservative argument for marriage is compelling and convincing. A happy couple in marriage is an absolute good, individually and socially and financially.

The evidence suggests marriage offers specific, concrete benefits to those who pursue it. Extending it to same-sex couples should be a no-brainer.

And we shouldn’t pretend that traditional marriage is some unchanging, unbroken institution now under existential threat. Rush Limbaugh is wrong to say that conservatives have lost the argument because they have allowed the word marriage to be “bastardized and redefined”. Marriage has always been bastardised and redefined.

This important paper by the Australian writer Helen Dale for the American free market think tank Reason Foundation shows that human history has had many different ideas about the purpose of marriage.

One particular point is well made. Modern opponents of gay marriage claim that marriage has historically been about procreation. This sounds plausible, at least until you recall the extreme levels of infant mortality in past eras. As Dale writes, “children were by no means guaranteed”.

Most attempts to divine a universal core in the idea of marriage are unhistorical. So allowing same-sex couples to enjoy the benefits of this institution is less radical than it first seems.

Proper conservatism understands that tradition reflects deeper truths; that the social institutions we have inherited have proved their merits by their own survival. Monogamous marriage is one of those institutions. Age is a virtue, not a flaw.

This makes conservatives reluctant to embrace radical change. But in the rush to defend marriage strictly as it is, conservatives have forgotten what makes marriage so beneficial. Those benefits have nothing to do with gender. To actively support gay marriage – not to powerlessly regret it – is unambiguously the most conservative approach.

Everyone Promises Less Red Tape, But Very Few Succeed

It pays to be sceptical about the promises of oppositions.

Kevin Rudd said he would take a “meat-axe” to the bloated public service, and that the reckless spending would stop. In his 1996 campaign, John Howard promised to halve the regulation that was “enveloping small business” during his first three years of government.

Now Tony Abbott says his government will reduce “red tape” too.

Labor partisans like to bang on about whether the Coalition’s policies are “fully costed”. This is a traditional election ploy. Oppositions can’t win that game. They don’t have the policy development resources enjoyed by the incumbents, and errors can be devastating.

So more interesting are the big, bold statements about chopping down the bloated public service and reducing red tape. They’re obviously appealing. Who could support bloated bureaucracies? Who likes red tape? But they’re always light on specifics. And, in government, they’re never achieved.

It is these sorts of promises that oppositions need to be questioned about.

This is Tony Abbott’s exact promise, which appears in the Coalition’s November 2012 Deregulation Reform Discussion Paper:

The Coalition will reduce the regulatory and red tape burden for individuals, businesses and society as a whole by at least $1 billion a year.

That one billion dollar number is nonsense. (But the “at least” is a nice touch.)

There’s a rich academic literature on estimating the costs of regulation. The upshot? It’s very, very hard. And, more importantly, any estimate will be very, very debatable.

Part of the reason is that regulation imposes two different “costs”.

There’s the paper-burden cost – that is, the time spent filling out government forms, or the money spent on lawyers to make sure you’re compliant with the regulations, or the direct cost of license and application fees. This is usually what people mean when they talk about red tape.

But more significant are the costs imposed on the regulations themselves – that is, what the regulations are actually designed to do. The firms that aren’t started. The projects which never happen. The business decisions for regulatory compliance reasons rather than the efficient production of goods and services.

Paper-burden costs aren’t easy to estimate, but we have some strategies. We can survey managers about how long they spend on regulatory compliance, for instance. The answer will be wishy-washy and inexact, but at least it’s something.

Calculating the second types of costs is much more problematic. Businesses have many reasons they delay or cancel projects. Tony Abbott discovered this when he tried to blame BHP’s decision to shelve its Olympic Dam project on the carbon tax. Regulations are often a factor in cancelled projects, but try putting a dollar figure on it.

Ultimately, the Coalition’s one billion dollar promise is an illusion. It’s just a big, magical round number. There will be no way for voters to see whether they have achieved the promise or not.

Still, if our political parties want to reduce the regulatory burden, then they’ll need to do something.

The Coalition’s discussion paper offers up a few ideas. It proposes a couple of new bureaucratic requirements – cabinet submissions for new policies will have to include regulatory impact statements, for instance – and a system of audits and reviews. (Hopefully they recall John Howard’s regulation taskforce, which did as much good for deregulation as a wet sock.) The most interesting idea is two dedicated parliamentary sitting days every year for repealing existing legislation.

These clever little ideas miss the broader issue.

The greatest success at reducing regulation in recent history occurred in the Netherlands last decade. In 2003, a new Dutch Coalition government set itself 25 per cent reduction target in the paper-burden costs of regulation. Using a model of regulatory costs that they developed specially for the task, the Netherlands achieved that goal in 2007. (Here’s an OECD overview of the Dutch program.)

They did this in a number of ways, including setting up two new bureaucratic institutions – one inside the Ministry of Economic Affairs, and an independent advisory watchdog.

But most of all, the success of the Dutch experiment was driven by overwhelming political and institutional support from the Prime Minister on down. Regulatory reduction wasn’t just a throwaway election promise. It was a sustained, aggressive, and universal program. It had to be: the political backbone needed to be stronger than government’s natural inclination for increased regulation.

It’s trivially easy for politicians, especially in opposition, to talk in big broad strokes. There is too much regulation, in general. We’re spending too much, in general. There are too many public servants, in general.

But when it comes to actually reducing those unwanted things, it gets complicated very quickly. Particularly when a minister is confronted with specific, individual regulations, whose effectiveness is usually unknown, whose cost is debatable, and upon whom layers of special interests have come to rely.

If Tony Abbott’s Coalition government isn’t single-mindedly, obsessively, neurotically dedicated to lighting a regulatory bonfire, it simply won’t happen.

Anything You Don’t Say May Be Used Against You

The first sentence of the press release announcing the New South Wales Government’s changes to the right to silence read: “The scales of justice will be tilted towards common sense.”

Yes, “common sense”.

We should be terrified when professional politicians start talking about common sense. Rights are always undermined by euphemism.

The O’Farrell Government’s right to silence changes passed the NSW Parliament last Thursday. From now on, NSW Police will qualify their standard police caution “you are not obliged to say or do anything unless you wish to do so” with this sentence: “But it may harm your defence if you do not mention when questioned something you later rely on in court.”

In other words, you’re welcome to stay silent, but you might regret it.

Juries will be allowed to “draw an unfavourable inference” from the fact that somebody decided to remain silent before a case got to court.

Courts have identified two parts of the right to silence. The first is your right to say nothing when being questioned by the police. The NSW reforms do not directly remove the right in this first sense.

The second part is the right not to have that silence used against you at trial. And it is this right that has been comprehensively trounced by the changes.

What good is a right if you are told you could well be punished for using it? The second part of the right to silence gives substance to the first part. It is disingenuous to suggest otherwise.

Most serious analyses of the right to silence are done by legal academics. Understandably, they focus on how judges and courts understand the right. So we get a lot of discussion about famous cases and High Court appeals and jury instructions.

But much of this misses the point. The Government has been transparent about what it believes the purpose of its reforms are – not to alter the way courts think about the right to silence, but how accused people think about it.

A police interrogation is presumably an uncomfortable occasion, whether you are guilty or innocent. When the facts of a case are unclear, the accusation is unclear, the accused may be confused, intimidated, and off-balance, the new standard police caution becomes little more than bullying. How are they supposed to know what they will later rely on in court? How specific will they have to be?

What was originally an unambiguous protection for people accused of a crime – if you are unsure of yourself or out of your depth, stay silent until you can fully consider your legal position – is now vague and imprecise and threatening. The fact that a lawyer must be present is no comfort.

This piece in the Conversation on Friday makes it clear how devilishly complex removing the right to silence can be. The NSW changes are based on a similar reform in the United Kingdom back in 1994. The new doctrine has become a “notorious minefield”, yet has had no effect on conviction rates.

The right to silence is one of the more unloved rights. It is being slowly written out of the legal canon.

The police don’t like it. One paper published in 2000 in the Australian Federal Police magazine argues that the development of the right to silence was simply “an over-reaction to tyranny”. That tyranny was the early modern English star chamber, which used torture to coerce suspects to talk.

But then again, there’s probably loads of evidentiary rules and accountability requirements that some police think get in the way of speedy convictions. That a legal protection is often used is no reason to get rid of it.

And politicians don’t like it. Obviously, elected officials adore a good law and order crackdown. The upside gains are huge. Nobody likes crime. The downside risks are tiny. Civil libertarianism doesn’t swing elections. Even federal politicians are desperate to get in on the action. Julia Gillard told Western Sydney she wants to fight gangs. Tony Abbott wants to roll out CCTV surveillance.

The push against the right to silence isn’t limited to criminal procedure. There were no less than eight pieces of legislation passed in the Commonwealth Parliament last year that limited this crucial right. (I wrote about one of those – an anti-illegal immigrant bill – on the Drum in September.)

Earlier this month, the NSW Attorney-General Greg Smith said that the changes would make trials “more efficient”.

What a horrible thought. The entire English criminal system is designed to make it hard to convict someone. What Greg Smith calls inefficiency is better called protection of the innocent.