Alex Wodak. The current imbalance between public and private interests.Mar 7, 2015
The public interest, meaning ‘the welfare or wellbeing of the general public’, has always competed with private interests. Furthermore, public and private interests will always be in competition. What is so unusual about the current tension is the extreme imbalance: these days, private interests almost always get what they want. The policy domination by huge companies and extremely wealthy individuals has severe adverse consequences for the community in areas such as health, social cohesion and the economy. The current extreme imbalance between private and public interests is now not merely an Australian phenomenon but is also international. Examples of this policy imbalance abound in Australia and include mining, alcohol, fast food, transport, taxation and gambling.
The increasing dominance of private over public interests coincides with an increasing inequality of income and wealth. Inequality in Australia waxed and waned over the years with low levels reached in the 1970s. Inequality then began increasing in Australia, growing under Labor and Coalition governments. Inequality increased to even higher levels in the United States where the imbalance of private and public interests is even more evident and has had striking political repercussions.
The health of Australians improved dramatically during the 20th century. For example, average life expectancy increased from about 45 years in 1900 to over 75 years in 2000. About 25 of the additional 30 years of life expectancy resulted from improvements in public health while advances in clinical medicine only added five additional years. Yet in Australia, 98 per cent of health expenditure funds clinical services with only 2 per cent allocated to prevention. In the first half of the 20th century, improved sewerage and drains substantially reduced deaths and disease. In the second half, the decline in smoking, improved diet and increased exercise were major factors improving health. Tobacco control has been a rare victory for a public interest David over a corporate Goliath. Yet in 2014, the federal government blocked the implementation of a national agreement to alert consumers to the potential health risks of some foods. Some powerful food producers were the only beneficiaries.
The fate of the proposed Resource Super Profits Tax (RSPT) is another example of the recent dominance of private over public interests. In 2010, the federal government proposed the RSPT, modelled on the well-regarded Petroleum Resource Rent Tax levied on the off shore petroleum extraction industry, after accepting a recommendation from a review of Australia’s tax system. A distinguished committee chaired by a highly regarded Secretary of Treasury had carried out this review. Vociferous criticism from the mining industry including an effective advertising campaign followed, and after the deposition of the Prime Minister by the Deputy Prime Minister a heavily watered down and ineffective Minerals Resource Rent Tax (MRRT) replaced the RSPT. The then government contributed to its own problems through its political incompetence. Once again, powerful private interests got their way and the community lost.
One of the common links in these examples is the development of monopoly, or near monopoly, arrangements used to generate vast wealth and thereby political power sufficient to extract huge economic rents.
Taxation arrangements in Australia in recent decades including the abolition or reduction of inheritance taxes, capital gains taxes, private income and company tax, and generous concessions for superannuation and negative gearing, have benefited the wealthier members of the community and large companies.
The coming to power of Thatcher in the UK and Reagan in the USA and the fall of communism in the USSR and its satellites increased support for the view that private economic interests are inherently more efficient than publicly owned enterprises.
The replacement in China of a central command economy by a free market system which lifted hundreds of millions of people from poverty over the following decades seemed to exemplify the benefits of a free market economy with minimal restrictions for large companies and wealthy individuals. In the United States, major economists including Paul Krugman, Joseph Stiglitz and Jeffrey Sachs have warned that the currently high levels of inequality have corrupted the political system and there is increasing concern that with a radically extreme Republican Party often prepared to disregard the national interest the United States may have become ungovernable — surely a warning for Australia.
What is to be done? The first step for those concerned by the increasing dominance of private and corporate interests over the public good is to articulate their views.
Could a Public Interest Commission maintain a better balance in the future? First some difficult questions would have to be answered. How will the public interest be defined and measured? Where will successful examples of a Public Interest Commission be drawn from? How will issues be selected and enquiries be conducted?
And finally, what sort of Australia do its citizens want — an individualist Australia with marked inequalities, poor public services, choked roads and shrinking taxation on the American model, or a more collective and more equal Australia with less poverty, better public services but more taxation similar to the Scandinavian countries and Japan?
A political correction to the current imbalance can only occur if Australians start to debate their values and visions. The political class can only do so much. Extensive polling shows that a majority of Australians want improved public services and are prepared to pay higher taxes to fund them. However, if large numbers of Australians want to see a different country emerge, they have to be prepared to work for these changes starting at the community level.
Dr Alex Wodak AM, a physician, was Director of the Alcohol and Drug Service at St Vincent’s Hospital, Sydney from 1982 until he retired in 2012. His major retirement project is drug law reform. Together with colleagues, Dr Wodak started Australia’s first needle syringe program and supervised injecting facility when both were pre-legal. He was also involved in establishing the National Drug and Alcohol Research Centre, the Australian Society of HIV Medicine and the NSW Users AIDS Association, an organisation for and by people who use drugs. He is a Director of Australia21.
This article is one of a series published by Australia 21 on the subject ‘Who speaks for and protects the public interest in Australia?’ For other articles published, see www.australia21.org.au.