Mathias Cormann is not the sort of leader, chief executive or economic thinker that the Organisation for Economic Cooperation and Development and the world needs as we seek a post-coronavirus economic recovery. The ideas that Cormann represents are not the sort of ideas that Australia wants or needs one of the chief engine rooms of economic recovery to have.
His social and economic ideas are likely, if followed, to retard world growth, urgent adaptation to the challenge of climate change or imagination in developing new policies in health, social welfare and education - destined to be the chief levers of future economic growth. And the idea that he has the credibility to promote action on climate change or a green economy is tosh.
One must assume that the Prime Minister, Scott Morrison, is 100 per cent committed to Cormann getting the job, and that he will lose in prestige if, as is likely, he doesn't. But it might not be the greatest personal blow Morrison has ever suffered. Cormann did not want Morrison, more or less a moderate, as prime minister. Indeed, had Cormann been able to count, Peter Dutton would probably have the job, gained on a different day.
It is not even true, as Dutton has suggested, that getting Cormann up as secretary general of the OECD would be a tremendous feather in the cap for Australia, or might somehow give Australia an additional friend at court at any time Australian interests needed a push along.
As secretary general he would not be a delegate for Australia, and if he was seen to be, it would be in clear breach of his terms of employment as a voice for all of the advanced liberal economies represented in the OECD.
And anyone who thinks that prestige and credit flow automatically to the country of his origin should remember the departing secretary general, Angel Gurria. Gurria is very well regarded and his third term is about to end. He comes from Mexico, whose economic reputation or performance has not markedly improved.
It may be a conceit to regard Cormann as a front-runner, even before his credentials are submitted to close scrutiny. He has a very large campaign budget, something I would not begrudge if we had a good candidate, or one with much chance. But Canada, Switzerland, Greece, the Czech Republic, Estonia, Denmark, Poland, the United States and Sweden have also nominated candidates, most of impressive backgrounds. No lobbying by Cormann, or Morrison, has seen any withdraw.
Selection is a process of several stages, usually without any formal election. It begins with a beauty contest among each of the heads of national delegations to the OECD. These discuss the choices with their governments back home. Most of the candidates will have lobbied these as well as the diplomats in Paris. Then, in a somewhat Vatican style, the British ambassador, as chair of the selection committee, will take confidential "soundings" among member countries to gauge broad support for individual candidates; he will be seeking to get a short-list of two or three.
Even then, it does not usually go to a formal vote. Cormann may never know whether any of the pledges, promises or arm-twisting worked. Instead, the chair now attempts to seek a "consensus candidate", around which most can agree, over which no great and powerful country, such as the US or Germany, will try to exercise a practical veto. That might not be the person with the most support if he also has significant enemies; the winner might be everyone's second-preferred candidate, with no real enemies.
The OECD does regular country reports, in which they compare economic and social performance with other member nations. But Cormann, if he wins, will have no influence over these. More significantly, the organisation monitors the economies of all of its members, and other nations such as China, to make informed predictions of economic growth, and trade growth, overall, as well as in individual countries. It also analyses factors that affect its predictions. Right now, these might include the COVID-19 pandemic, the slow and asynchronous movements to social and economic recovery, the increasing threat from climate change, uncertain signals from China, the balls-up that Boris Johnson is making (with our help) in a Britain that has exited the European Union, and uncertainties about post-Trump America.
OECD members hold lots of conferences on all aspects of OECD activities, some at ministerial level and some at officer level. The thinking and experiences of members helps inform economic, political and social assessments of social and economic indicators published by the organisation.
The collective of nations ultimately controls the organisation. But they do not act as a parliament settling OECD assessments. Were Cormann to be chosen, he would have a significant say in some OECD priority setting, and in representing and promoting the general views of the organisation. But not in preparing technical reports.
His economic background is not of a depth that it could challenge institutional views - unlike in Canberra, where his view as minister for finance prevailed over any views proffered by bureaucrats, simply because he was the minister. His political and organisational clout will depend rather more on his diplomatic, organisational and bureaucratic skills - as well as his adroitness in discerning the general will of member nations. He has shown some talent in negotiating with cross-bench senators available for rent, and in playing a masterful dead bat to any questioning. But his political and strategic skills are not so strong - and the "vision statement" he has produced in the OECD job is a first for him.
The OECD is about much more than making growth assessments, or promoting the idea of freedom of trade and the operation of market forces rather than close government controls on the economy.
It is also an academy of good policy in almost every area of government. In agriculture and in agricultural trade. In aid and development policies. In education. And energy and the environment. In health care, whether out in the community or in hospitals. In research, and taking advantage of innovation and using modern technology and communications.
And in energy and the environment, including dealing with climate change - suddenly the subject on which Cormann, with his eye to OECD members, has great zeal, though he has been generally regarded as an opponent of real action, or cohesive Commonwealth policy. In general terms, indeed, Cormann is not policy-oriented, nor has he a reputation for breadth, or depth, of his political achievements.
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 Cormann has led, is opposed to, in both principle and practice.
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, many international organisations 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 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 to 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 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. It is not corrupt in the criminal law sense. But it shows a 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 rap 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 in 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 up on their 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 1 per cent 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 a 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 the debate about that, is not, as with climate change action, Cormann's strong suit.
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