Australia no longer an apostle, or exemplar, of good government

Dec 2, 2020

The OECD is also an academy and apostle of good government and good public administration. Clean public administration, open and accountable and subject to checks and balances, including integrity commissions. These are all things that the Morrison government, with the particular support of the hard-right Western Australian faction that Mathias Cormann has led, is opposed to, in both principle and practice.

Credit – Unsplash

As minister for finance, Cormann was the chief steward of public spending, and not only in aggregates but in controls over process, propriety and legality. As the sports rorts affair showed, he has failed Australians in that job, and OECD members will be wanting to assure themselves that his supervision there would be of an altogether higher standard. For a long time, international organisations, from UNESCO up have suffered in reputation and effectiveness from poor, and sometimes corrupt leadership. At the OECD one cannot lie, prevaricate or stonewall questions as easily as with the government in Australia.

The pity of it all is that the OECD, as an institution, once thought that Australia was a leader and a champion of public sector reform, of better and more evidence-based policy formation, and of open and accountable systems of spending public money. In early 1996, in the gap between the Keating and Howard governments, I was a special rapporteur of an OECD ministerial meeting in Paris in which ministers of 17 countries, not including Australia, frankly discussed issues of efficiency, effectiveness, and regard for the public interest. There were many plaudits for what had been done in Australia with public sector reform over the previous decade.

There have been reforms since, not least with the GST. But other so-called second and third “waves of reform” by succeeding conservative governments did not substantially build on those accomplishments. In some areas, such as open government, transparency, and accountability, there has been a retreat.

The OECD was never a great champion per se of privatisation, and the contracting out of public services to private enterprise, let alone to cronies of government ministers. These, I saw in 1996 and subsequently were largely Anglophone enthusiasms, not greatly shared in Europe or Asia, certainly not by Germany and France, the economic heavyweights.  But if it were to be done, as Britain, Australia, and New Zealand were doing, then the OECD had guidelines based on evidence and experience, rather than ideology, mere desire to cut public services for the sake of it, or a desire to transfer money and jobs to selected friends in the private sector.

Cormann would glory in the idea that he is a fiscal conservative, responsible, a hard man unafraid of tough decisions, and one determined to rein in the size of government. In certain circumstances, one might say that the OECD stands for similar values.

But on closer inspection, the fit is not obvious. Most big OECD nations, if not the US,  have vibrant health, education, and welfare sectors and aged and child-care policies in which government takes an active role and has been reinvesting, not taking money out. There is careful administration, but schemes are not managed on the notion that pre-pandemic, most people receiving welfare payments were scroungers and cheats, needing to be coerced and punished rather than rewarded. Australian benefit levels are well below OECD averages.

Cruel and pitiless Australian ministers worked with robotic senior administrators to devise unfair, vindictive (and, as it turns out, illegal) schemes to gouge money back in the name of “welfare reform.” Foreign aid spending plummeted, and so did spending on indigenous affairs, with serious results. None of this was evidence-based. Nor was it in line with OECD advice. As comptroller of public spending, Cormann was the constant, even as other ministers, including Morrison, played big roles.

Meanwhile, government transfers of money to big business by way of virtually unaccountable grants have increased, as have tax cuts, particularly to the better off.  Cormann was particularly associated with reduced regulation of banks and financial institutions. Experience showed that this caused a drastic decline in standards of business honesty, a surge of consumer rip-offs and entirely unethical behaviour, even by some of Australia’s most respected businessmen.

Likewise, with the advent of coronavirus, blind ideological faith that the private sector could perform better than the public sector (including universities) saw enormous transfers of money to big business. The evidence now points to significant fraud, a lack of controls and big accountability gaps in the way in which it was managed.

As minister for finance and chief steward of public money, Cormann was a party to the argument of Morrison and the Attorney-General Christian Porter (a member of Cormann’s faction) that laws about spending laid down by parliament could be disregarded in favour of frankly political schemes of discretionary spending for partisan advantage.

As NSW Premier Gladys Berejiklian, caught in the same practices recently, said this week, pork barrelling is not necessarily illegal. Perhaps not even corrupt in the criminal law sense. But it shows corruption of the spirit and a systematic betrayal of government in the public interest. It is not an approach that the OECD has favoured. It is not an attitude of mind we want exported to the OECD.

The government, pre-pandemic, gave itself a big wrap for tight spending controls and movement towards a budget surplus. But even if cutting public spending were a good thing in itself, the record of recent governments is holding down spending is not particularly good, often running over Gillard or Rudd government levels. Yet the pretend-austerity, particularly manifested by serious cuts to culture and the ABC, was also running down the quality of the social infrastructure, including universities.

Labor seems paralysed in attempting to defend its record. I think it fears the electorate is predisposed to see conservatives as better economic managers. Labor wants the argument to be about social policy, not the economy.

If Labor and key former economic ministers such as Penny Wong and Chris Bowen will not defend their records on spending controls, it is not a task I will take upon its behalf. But one can still easily remark that Cormann’s achievements are not particularly impressive.

The Australian government has earned international awe and respect for the way in which it mobilised to deal with coronavirus. The health response has so far managed to keep both morbidity and mortality down to levels as low as one percent of those being faced in the  Americas and western Europe. Cormann, like Morrison and the Treasurer, Josh Frydenberg deserve some credit for the agility and speed with which they dumped their party’s ideology, as well as the budget surplus forecasts, in massive debt and spending binge to hold the economy together. But their share of the credit for disease control is not so clear.

Many of the hardest yards were gained through decisions made by premiers, against the concerted opposition of the Morrison government, big business, and significant sections of the media. These, including Cormann, placed more attention on reviving the economy than in cutting mortality. Had their advice been followed many more would be dead and Australia (and the economy) would still be writhing in a second wave far more serious than we encountered. As is Europe and the US.

Australia, and Cormann, are entitled to parlay their experience and their credit. But those who contemplate how the disease is now entirely out of control in the US, and Western Europe, including Britain, should realise that what is wanting right now is an effective social and preventative health response, not an economic one. For the OECD, improved world health is as important an outcome as an improved world economy. Managing that, or contributing to that debate, is not, as with climate change action, Cormann’s long suit.

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