COMMENT
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Most of us should be burning incense and offering thanks because we find ourselves not occupying the positions held by a prime minister, premier or minister of government.
And do not have to carry the awful responsibilities of returning the nation to rude good health.
So far the challenge of COVID-19 has been hard but easy. Getting the balance right between protecting us from disease and closing down borders and economies has been hard. The junking by the Australian government of 20 years of dogma about deficits and debt has been astonishingly easy. When the need of the hour was to support individuals and companies, the government rightly opened the purse.
The tricky bit now is what to do next. What does the long game demand? The art of taxation, as a (French) finance minister once said, is to pluck the goose in a way that maximises the number of feathers and minimises the amount of hissing. The art of policy can be framed in a similar way: governments should maximise social benefits and minimise social costs. Underpinning this idea of policy is the notion that benefits to society are not the same as benefits to some members of society: public value does not equate to private value.
This simple principle - focus on projects and initiatives that maximise the social rate of return - generates specific decision rules.
The first is that, in a pandemic, identify and define the value that is being created. Initiatives and programs only exist because they create value or reduce harms.
The second rule follows from the first: just because you can fund something, doesn't mean you should. As we approach recession, needs are greater than funds, so every program must be a winner. Old time principles that ensure the proper expenditure of public monies should be carved into stone and displayed in prominent places in ministerial offices.
In particular, governments should only allocate funds after publishing clear assessment criteria that are calibrated against value; following proper process; being transparent and efficient in process; and separating decision makers from the evaluation team.
Support from government in a time of contagion should be granted according to need and circumstances rather than occupation or position.
We do not need to look too far to find a case study that serves as a warning about how government should not behave. This year, the Australian National Audit Office reviewed the awarding of funds under the Community Sport Infrastructure Program. Its conclusion that the success of applicants was not tethered to the merit of applications should give all taxpayers the shivers - and highlight the need for scrupulous process.
Rule number three is that we should beware of vanity projects. Just because governments, oppositions and vested interests support a particular project doesn't make it right or reasonable or rational. For example, in the ACT, the Australian government has committed $500 million to expand the Australian War Memorial. The result is more monument than memorial and the reasoning - that the expansion would prevent post-traumatic stress - is a peculiar instance of magical thinking.
In another example close to home, the ACT government is to spend between $1.3 billion and $1.6 billion on Stage 2 of Canberra's light rail project. The social benefit-cost ratio for this project is estimated to be one, which is akin to buying a watermelon for one dollar and then selling it for a dollar. Our hope should be that governments do better than move around $1.5 billion of taxpayer funds for no discernible gain.
Rule number four is to understand that sometimes to create value for society you have to take something off someone. This is why prime ministers and premiers and ministers are paid so handsomely and what politics and economics is about: the work of carefully allocating scarce resources. For example, through myriad devices our society transfers wealth from the young to the older. We know as well that the young will face the challenge of funding an ageing society and mitigating the potentially catastrophic effect of climate change. We also know that our system of superannuation disproportionately benefits those who have much, rather than advantage those that have little.
Number five is beware the rent seekers and carpet baggers and grifters who define their own interest as the nation's and who seek special exemptions and special advantages. Rent seekers diminish growth, shift scarce resources from productive to unproductive ends.
Rule number six is that, in a pandemic, don't leave people behind. It's a good principle to apply that each of us is innately worthy; that our value as persons is not defined by the colour of our skin, the cut of our coat or the work that we do. Accordingly, support from government in a time of contagion should be granted according to need and circumstances rather than occupation or position. Those who are working as casuals still eat; those who are stranded in Australia as students still pay rent; artists should not starve in garrets; universities are a jewel in the nation's crown.
Finally, if we are playing a long game, then governments must concern themselves about long term issues, which are complex and difficult to solve. To do this requires an expert public service that can analyse problems, advise on options and then implement solutions. Our leaders would therefore be wise to reject penny-wise, pound-foolish suggestions that we should bring budgets back to surplus by cutting back on our public service.
- Chas Savage is chief executive officer of Ethos CRS and has a passion for clear communication, good policy and effective regulation.