Education is leading the two sides of politics to change sides

A strange thing is happening in politics. People who in earlier times could have been expected to vote for the right-wing party are now more likely to be supporting the party on the left, while those who would have voted for the left in times past are now more inclined vote for the right.

This is something the insiders – the political scientists, pollsters and party professionals – know all about, but the politicians prefer not to admit. So it’s news to the rest of us.

You could see it alluded to in all the learned explanations of why Donald Trump romped home in the presidential election that was too close to call. But you can also see it in our own elections. Indeed, it’s a “secular” (long-term) trend occurring in the politics of most rich countries.

Did you see some commentator saying the Republicans were now the party of the working class? What! It’s truer than it sounds. Our own Farrah Tomazin wrote that the election saw “the realignment of the Republicans as a party that appeals to the working class while the Democrats have increasingly become the party of college-educated, upper-income suburban voters, especially women”.

A distinguished American professor of anthropology added that “Trump voters trend older, white, rural, religious and less educated”. It seems most “voters of colour” still voted Democrat, but enough Latinos and others defected to Trump to give him an easy win.

And, as I say, you see a similar role reversal going on here in Oz. Professor Ian McAllister of the Australian National University, who oversees its Australian Election Study, a large sample survey of voters following every federal election, says we’ve been gradually moving the same way since the 1990s.

His study, following the federal election in May 2022, found it showed a continuation of “major sociodemographic shifts in voting patterns based on gender, generation and social class, with significant implications for the future of the major parties”.

Historically, the two big parties represented the rival interests of voters playing different roles in the economy. Labor looked after the workers supplying their labour, while the Liberals looked after those small and big businesspeople supplying their capital.

The standard division between the working, middle and upper classes was based on people’s occupational status: blue-collar, white-collar, owners and managers.

But that economy-based division is being replaced by more people voting according to their social values and identity. McAllister says this shift is being driven by rising levels of education. Whether someone has a university education is now the best single predictor of how they vote.

As a general rule, those people with a university degree end up with values and preferences that are quite different from those of people who don’t have a degree, or left school early.

So, just as college-educated Americans are more likely to vote Democrat, Australians with a degree are more likely to vote Labor. People without tertiary education are more likely to vote Republican, Liberal or National Party.

It follows – again as a broad generalisation – that the more highly educated are more likely to live nearer the centre of big cities, where the better-paid jobs tend to be, while the less highly educated are more likely to be found in the outer suburbs and the regions.

Over the 34 years to 2023, the proportion of adults with a university degree has risen from 8 per cent to almost one-third. Each year, more than half of students completing high school go on to uni.

So, as each year passes, people in the oldest generation, who are less likely to be graduates, die, while the youngsters taking their place in the electorate are more likely to be graduates.

In his report on the 2022 federal election, McAllister found that Labor still attracted more working-class votes, although its share of them had fallen to just 38 per cent. The Coalition lost votes from university-educated voters, high-income voters and home owners – groups that, in the previous election, were more likely to have supported it.

A much higher proportion of girls are going on to uni these days, which helps explain why more women vote Labor than for the Coalition. And higher education does much to explain why Labor’s support is much stronger among younger voters.

McAllister has found that, as the Millennials get older – some are now in their early 40s – they’re less likely to drift to the right the way earlier generations did as they aged.

You might see the Liberals’ loss of six heartland seats to the teals as a clear example of the secular trend we’re discussing: Liberal voters who cared about climate change, a federal anti-corruption commission and more women in parliament, switching their vote to the teals.

But McAllister found it was more complicated than that. Only about one-fifth of former Liberal voters changed their vote. What got the teals across the line was strategic voting by those seats’ minority Labor and Greens voters. Knowing their party was never going to win, they threw their weight behind the teals, who did have a chance of winning.

As voters around the rich world become less likely to vote according to their economic class and more likely to vote according to their social and cultural values, political scientists have developed a fancy new theory that characterises parties on the left as GAL and parties on the right as TAN.

GAL stands for green, alternative (relaxed about gender fluidity, for instance) and libertarian (“my body, my choice”). TAN stands for traditional (“I liked it the way it was” and “the world should be run by men”), authoritarian (“we need strong leadership”) and nationalist (“why are they letting in all those strange immigrants?”).

So when, in coming months, you see Peter Dutton banging on about inflation, all those terrible immigrants and all the crime on the streets, and campaigning hard in the outer suburbs and regions, the media will tell you he’s borrowing from the Trump playbook. But now you’ll know there’s a lot more to it.

Read more >>

The moribund political duopoly is rapidly self-destructing

Why do we have so many economic problems, and why do our governments make so little progress in fixing them? Because the two main parties just play politics and by now have boxed each other in. Neither side is game to make tough decisions for fear of what the other side will do to them.

Our tax system needs repair, but neither side dares to make changes somebody somewhere might not like. So we put up with poor government services, growing waiting lists, tax avoidance by the highly paid, bracket creep and phony tax cuts.

We have a system where people with mortgages get squeezed unmercifully whenever inflation gets too high. There are fairer and less painful ways to fix the problem, but neither side has the courage to change.

When occasionally the two sides agree on some policy, it’s often a bad one. Many defence experts quietly doubt the wisdom of AUKUS. By the time the nuclear subs arrive in many years’ time – if they ever do – they’ll probably have been superseded.

But the political duopoly’s most egregious failing is its inaction on climate change. For a while, it looked like the climate wars had ended, with the Albanese government making very cautious progress towards net-zero emissions.

Now, however, Peter Dutton has come up with a new reason for delay: let’s go nuclear instead. And we don’t have to do anything unpleasant for a decade or two. It will probably never happen, but what it has done is rob commercial investors of the certainty they need to keep investing in solar and wind farms at the rapid rate we need them to. With our ageing coal-fired power stations so close to the grave, our transition to renewable energy could be very bumpy.

So, what can we do to free ourselves from the clutches of a two-party political system that’s stopped working? Well, we’re already doing it. Voters are increasingly taking the law into their own hands by opting for the minor parties and independents. We saw this at the last federal election, in 2022, where the two big parties’ combined share of first-preference votes – which has been declining since World War II – fell to 68.3 per cent, its lowest level since the Great Depression.

So, the share of first-preference votes going to minor parties and independents is now just a little short of a third. In consequence, the number of crossbenchers in the House of Representatives rose to a record 16.

It’s not difficult to judge that the duopoly’s poor performance on climate change explains much of their decline. Labor loses votes to the Greens while, for the first time, teal independents took six previously safe seats from the Liberals.

Nor is it hard to believe that Labor’s caution and the Liberals’ nuclear red herring may add to the big parties’ loss of first preferences at next year’s election.

New research by Bill Browne and Dr Richard Denniss, of the Australia Institute, finds there are now no safe seats in House of Representatives. While some Labor seats are safe from being taken by the Liberals, and some Liberal seats are safe from Labor, such seats aren’t safe from the Greens or an attractive independent candidate.

In the supposedly safe Liberal seat of Mackellar on Sydney’s northern beaches, the teal independent Dr Sophie Scamps won the seat with a two-candidate preferred swing of more than 15 per cent. A strong independent candidate’s advantage is that they can pick up the preferences of the minor parties, plus those of the other big-party candidate who was never going to win.

It’s usual for the big parties to focus on the “marginal seats” that could be won or lost if a few “swinging voters” change their votes. And it’s mainly these marginals that one big party loses to the other.

But it’s not usual for the minor parties and independents to pick up such marginal seats. No, they’re much more likely to win supposedly safe seats.

So while the big guys focus on winning or retaining the marginals, they leave themselves open to the small guys when they neglect the concerns of voters in their heartland seats. Again, climate change would be the classic concern.

The standard way of predicting the results of elections using the psephologist Malcolm Mackerras’ famous pendulum has been overtaken not just by the lack of a uniform national swing between the two majors, but by the rise of the minors and independents.

I think it will be rare for governments to be elected with big majorities in future. Wafer-thin majorities will be the norm, with “hung” parliaments common. The big guys will warn us this will lead to chaos and inaction.

Don’t you believe it! It’s never been true at the state level where, at present, only five of the eight state and territory parliaments are dominated by a majority party.

I think a move to more power for crossbenchers at the federal level could be a good way to break the big-party logjam. It’s hard to see how it could be worse than what we’ve got.

Read more >>

When politicians talk of 'security', be on your guard

I doubt if you’re waiting with bated breath for next Tuesday night’s federal budget but, since it’s the big set-piece event of my year, I’ve started limbering up. I’ve set my bulldust detector to ping every time I see or hear the word “security”. May I suggest you do the same?

We’ve been hearing a lot of that word lately, particularly from Anthony Albanese and his treasurer, Jim Chalmers. It comes with many adjectives – energy security, food security and, of course, national security – and with many spooky euphemisms: risk, strategic, sensitive, critical and sovereign, not to mention the spookiest of them all, terrorism.

In Albanese’s landmark speech on A Future Made in Australia, he assured us that “strategic competition is a fact of life”. “Nations are drawing an explicit link between economic security and national security,” he told us.

“We must recognise there is a new and widespread willingness to make economic interventions on the basis of national interest and national sovereignty,” he said. His government would be guided by three principles, the second of which was that “we need to be more assertive in capitalising on our comparative advantages and building on sovereign capability in areas of national interest”.

His government would be “securing greater sovereignty over our resources and critical minerals”.

Indeed so. When Chalmers announced the government’s new foreign investment rules last week, they seemed to be all about security.

“By providing more clarity around sensitive sectors and assets,” Chalmers said, “our reforms will give businesses and investors greater certainty while safeguarding our national security.

“National security threats are increasing due to intensifying geopolitical competition and risks to Australia’s national interests from foreign investment have evolved at the same time as competition for global capital is becoming more intense.”

The reforms to our foreign investment rules would “boost economic prosperity and productivity, while strengthening our ability to protect the national interest in an increasingly complex economic and geostrategic environment.

“We are dedicating more resources to screening foreign investment in critical infrastructure, critical minerals, critical technology, those that involve sensitive data sets, and investment in close proximity to defence sites, to ensure that all risks are identified, understood and can be managed – balancing economic benefits and security risks,” Chalmers said.

And a bolstered foreign investment compliance team will use the minister’s “call-in power” to review investments that come to pose a national security concern.

My goodness. If you were the excitable type (which I’m not), you could wonder whether the economy’s being put on a war footing. Or maybe it’s that Treasury’s been taken over by Defence and Foreign Affairs. Or ASIO.

Of course, it may be that the government and its spooks know something terrible they’re not telling us. Perhaps some foreign enemy is, as we speak, preparing to do us in.

But if you’ve spent years studying the behaviour of politicians (which I have), you wonder if it’s something less life-threatening and more self-serving. Is there an election coming up, for instance? Do voters have complaints about the economy that you’d like to draw attention away from?

The independent economist Saul Eslake says that, as the government seeks to use “national security” and “economic security” as a rationale for a major shift in economic policy, two things concern him deeply.

First, the tendency to use “security” as a justification for a policy initiative opens the door to interventions that are, in the infamous phrase of former Treasury secretary Dr Ken Henry, “frankly, bad”. Decisions that, without the “security” label, wouldn’t pass muster.

Second, grounding a policy decision in “security” gives politicians an excuse to shut down any questioning of the justification for that decision.

“When governments say something is a matter of ‘national security’, they usually refuse to say why it is; that it would be wrong to allow grubby considerations of ‘cost and benefit’ to interfere with their judgments about ‘security’, or even that it is borderline unpatriotic to question a decision made on ‘security’ grounds,” Eslake says.

It’s not the first time Eslake has expressed such concerns. Here’s a quote from an article he wrote in this august organ in late 2011.

“If you want a government to do something that entitles you to some form of protection from competition (especially overseas competition), some kind of subsidy or tax break, or some other privilege not enjoyed by ordinary folk, but you know that your proposal wouldn’t pass any kind of rigorous, independent, arms-length scrutiny ... then your best chance of getting what you want is to succeed in portraying it as being somehow essential in order to enhance some form of ‘security’,” he wrote.

Sometimes I even wonder how AUKUS – the wisdom of which many defence experts quietly doubt – came about. How much of it was the Americans’ idea, and how much was ours?

What we do know is that, without any prior debate, Scott Morrison suddenly unveiled it as a fait accompli and great coup. Had Labor opposed it, we’d have been straight into a khaki election.

But Labor accepted it without demur and the costs or benefits we’ll discover over the next decade or two.

Read more >>

Voters turn from the big parties, increasing political competition

John Howard is right to describe the NSW election result as a “conventional change of government”. An old and disfigured government was tossed out and the other side given a go. It’s common when a government’s been in power for a decade or more. But don’t let this convince you nothing’s changed about the way we vote.

What’s happening is that the longstanding two-party system of government is breaking down before our eyes. Years of bad behaviour by the Coalition and Labor are leading more people to vote for minor parties and independents.

This means it’s become rare for any government, state or federal, to be elected with a big majority. Majorities now tend to be narrow, and minority governments are common, particularly at state level.

The big two are always telling us a “hung parliament” would be a terrible thing, causing “chaos and confusion”. Not true. They say this because it would be a terrible thing for them, requiring them to do deals with people they hate, to get the numbers to govern.

The “crossbenchers” usually drive a hard bargain. NSW’s four-year, fixed-date elections were forced on Liberal premier Nick Greiner in 1991 by three independents. Julia Gillard’s short-lived carbon tax was forced on her by the Greens, when she fell short of a majority in 2010.

So weaker governments are bad for the major parties, but good for democracy and voters, who get more to choose from.

Why is any of this the business of an economics writer? Because the nature of competition between a few big players in a market – “oligopoly” – is a subject economists study. And two-party government has a lot in common with markets dominated by two huge companies – duopoly.

But first, a closer look at the latest election. The “landslide” to Labor is looking a fair bit less than it looked on Saturday night. Chris Minns hasn’t yet secured a majority, and if he does, it will be narrow. Why? Because so many people are voting for minor parties and independents. At this stage in the counting, 28 per cent of voters spurned the big two. This compares with almost 32 per cent at the federal election last May, where the big swing away from the Liberals gave Labor just a narrow majority.

In NSW, the Greens look to have retained their three seats in the lower house, with independents looking sure of eight seats, and probably more. One of the new independents was backed by teal money.

An American economist named Harold Hotelling is famous for talking about a beach with two ice-cream sellers. From the swimmers’ perspective, the best place for them would be one at the quarter-mark and the other at the three-quarter mark. This would minimise the distance anyone had to walk to get a cone.

But Hotelling figured that the two would end up back-to-back at the centre of the beach. Why? Because that was the way each could ensure the other got no more than half the “market share”.

The social psychologist Hugh Mackay says that the key to competition is to focus on the customer, not your competitor. That’s just what oligopolists and our political duopolists don’t do.

If there’s one thing most people don’t understand about politics it’s the way each big party obsesses about what the other side’s doing, and how it will react to what they do.

It was this that caused Anthony Albanese to go to last year’s election promising to do nothing that could offend anyone much. Promise to make needed but controversial changes and the other side launches a scare campaign. It’s only when politicians tell us how bad the other side’s policies would be that we’re tempted to believe them.

The two sides are always trying to “wedge” each other by announcing a bad but popular policy and hoping the other side will be silly enough to oppose it.

Trouble is, they rarely fall for it. They sidestep the wedge by supporting the policy. Which means both sides end up agreeing to do bad things. This is why Albanese agreed to the AUKUS pact sight unseen and, earlier, to stick with the stage three tax cut that’s biased against Labor voters.

This is where the minor parties come in, particularly those sharing the balance of power in the Senate. They can use their power to stop, or at least tone down, the bad policies the government of the day foolishly locked itself into.

Consider this. Last week Climate Change Minister Chris Bowen loudly vowed not to negotiate with the Greens over his “safeguard mechanism”. But by Monday, wiser heads had prevailed, and a deal was done, making the mechanism much more effective.

The big two each offer voters a policy package-deal not very different to the other one’s. Whichever package you pick will include policies you don’t like. But the minor party and independent “new entrants” to the political market give consumers a wider choice by forcing the big guys to “unbundle” their packages.

Sounds more like democracy’s supposed to be.

Read more >>

2022: The year our trust was abused to breaking point

As the summer break draws near, many will be glad to see the back of 2022. But there’s something important to be remembered about this year before we bid it good riddance. Much more than most years, it’s reminded us of something we know, but keep forgetting: the central importance of trust – and the consternation when we discover it’s been abused.

Every aspect of our lives depends on trust. Spouses must be able to trust each other. Children need parents they can trust and, when the children become teenagers, parents need to be able to trust them. Friendships rely on mutual trust.

Trust is just as important to the smooth functioning of the economy. Bosses need to be able to trust their workers; workers need bosses they can trust. The banking system runs on trust because the banks lend out the money we deposit with them; should all the depositors demand their money back at the same time, the bank risks collapse.

Just buying stuff in a shop involves trust that you won’t be taken down. Buying stuff on the internet requires much more trust. Tradies call on our trust when they demand payment before they start the job.

Our democracy runs on trust. We trust the leaders we elect to act in our best interests, not their own. Our country’s co-operation with other countries rests on trust. Of late, our relations with China, our major trading partner, have become mutually distrustful.

The trouble with trust, however, is that it can make us susceptible. And, as Melbourne University’s Tony Ward reminds us, it can be just too tempting to the less scrupulous to take advantage of our trusting nature.

They can get away with a lot before we wake up. But when we do, there are serious repercussions. Much worse, the loss of trust – some of it warranted; much of it not - makes our lives run a lot less smoothly.

The truth is that, as a nation, we’ve slowly become less trusting of those around us. But this year is notable for events where trust – or the lack of it – was central.

It’s widely agreed that the main reason the federal Coalition government was tossed out in May was the unpopularity of Scott Morrison. The Australian National University’s Australian Election Study has found that the two most important factors influencing political leaders’ popularity are perceived honesty and trustworthiness.

Its polling showed Morrison 29 percentage points behind Anthony Albanese on honesty, and 28 points behind on trustworthiness.

By contrast, many were expecting Daniel Andrews to be punished at the recent Victorian election for the harsh measures he insisted on during the pandemic. It didn’t happen. We don’t have fancy studies to prove it, but my guess is he retained the trust of the majority of voters.

The ANU study always asks questions about trust in government. This year it found 70 per cent of respondents agreeing that “people in government look after themselves” and only 30 per cent agreeing that “people in government can be trusted to do the right thing”.

This helps explain why the federal election was no triumph for Labor. The combined primary vote for the major parties fell to 68 per cent, the lowest since the 1930s. Labor’s own election report explains this as “part of a long-term trend driven by declining trust in government, politics and politicians”.

But don’t put all the blame on the pollies. This year opened our eyes to the risk we run of the businesses we deal with allowing our identification details and other private information to be stolen by hackers and made public.

Customers of Optus, Medibank and some other firms have learnt the hard way that the businesses who demand so much identification from us can’t be trusted to keep that information secure.

It’s been a wake-up call not only for those big businesses and others, but also for the new federal government. If businesses can’t be trusted to do the right thing, they must be required to do so by tighter regulation.

Oh no, not more red tape? Yes, and that’s my point. There’s nothing that generates extra expense and slows things down more than not being able to trust the people you must deal with.

Ward reminds us of the benefits of a high level of trust. It reduces “transaction costs” – the cost of doing business. “Profits and investments are higher if you don’t have to spend lots of time and money checking whether other parties are honest or not,” he says.

“People invest more in their own education if they believe a fair system will reward their efforts. If you think the system is rigged, why bother?”

Comparing countries, economists have found strong links between more social trust and higher levels of income. Trust is one of the top determinants of long-term economic growth.

And high-trust societies, with less distrust of science, had better outcomes in tackling COVID. That’s one respect in which we didn’t do too badly this year.

Read more >>

What we weren't told before the election: taxes to rise, not fall

The rule for Treasury bosses is that, as public servants, any frank and fearless advice they have about the state of the federal budget must be given only to their political masters, and only in private.

But last week the present secretary to the Treasury, Dr Steven Kennedy, used a speech to economists to deliver a particularly frank assessment of the Labor government’s budgetary inheritance.

We can be sure his remarks came as no surprise to his boss, Dr Jim Chalmers, who would have been happy to have his help to disabuse us of any delusions lingering from an election campaign which, as always, was fought in a confected fantasy-land of increased spending on bigger and better government services and lower taxes.

Surprise, surprise, the post-election truth is very different. The budget released just before the campaign began foresaw a budget deficit of a huge $80 billion in the financial year just ending, with only a trivial decline in the coming year and continuing deficits for at least another decade.

Neither side admitted to any problem with this prospect during the campaign, but Kennedy’s first bit of frankness about such a leisurely approach was to observe that “a more prudent course” would be for the budget deficit to be eliminated and turned to a surplus. (By the standards of bureaucratic reticence, this was like saying, “You guys have got to be joking”.)

Eliminating the deficit would mean adding no more to our trillion-dollar debt. Running budget surpluses would actually reduce the debt, thus leaving us less exposed should there be a threatening turn in the economy’s fortunes.

The two obvious ways of improving the budget balance are to cut government spending or to increase taxes. Some people love making speeches about the need to absolutely slash government spending, but they usually mean spending that benefits other people, not themselves.

The sad truth is that “waste and extravagance” is in the eye of the beholder. There’s always some powerful interest group on the receiving end of government spending – medical specialists, say, or the nation’s chemists – and they don’t take kindly to any attempt to slash their incomes.

The last time a serious attempt was made to cut government spending – by Tony Abbott in his first budget, in 2014 – the public outcry was so great that the Coalition beat a hasty retreat, and never tried it again.

Instead, it limited its parsimony to quietly restraining money going to the politically weak – the jobless, the public service, overseas aid – but this didn’t make a huge difference to the more than $600 billion the government spends each year.

Kennedy’s next frank observation was that, even excluding the many billions in spending related to temporarily supporting the economy during the lockdowns, government spending as a proportion of the nation’s income is expected to average 26.4 per cent over the coming decade, compared with 24.8 per cent in the decades before the pandemic.

In other words, government spending is likely to grow much faster than the economy grows, to the tune of about $36 billion a year in today’s dollars.

The new government is undertaking a line-by-line audit of all the Coalition’s “rorts, waste and mismanagement”. But, to be realistic, it’s unlikely to find much more in savings than it needs to cover its own new spending promises.

Kennedy said that most of this additional spending is driven by money going to the National Disability Insurance Scheme (by far the biggest), aged care, defence, health and infrastructure. “Further pressures exist in all these areas,” he said.

To that you can add underfunding by the Coalition in tertiary education and healthcare, plus a massive capability gap over the next 20 years or more which can only be fixed by an immediate increase in spending on defence, diplomacy and foreign aid.

Which leaves us with taxes. Higher taxes. Scott Morrison’s promise to guarantee the delivery of essential services while reducing taxes was delusional – a delusion many of us were happy to swallow.

The simple, obvious truth is that if we want more services without loss of quality, we’ll have to pay higher taxes.

Kennedy warned that the expected (but, in his view, inadequate) improvement in the budget balance over the coming decade will rely largely on higher income tax collections. “Inflation and real wages growth will result in higher average personal tax rates.”

This is a Treasury secretary’s way of saying “the plan is to let bracket creep rip”. And unless other taxes are increased, there’s “little prospect” of giving wage earners any relief via tax cuts.

“This would see average personal tax rates increase towards record levels,” he said, meaning more of the total tax burden would fall on wage earners.

The election saw both sides promising not to introduce new taxes or increase the rates of existing taxes (apart from, in Labor’s case, promising to extract more tax from multinationals).

But neither side made any promise not to let inflation push people into higher tax brackets. One way or another, we’ll be paying higher taxes.

Read more >>

Maybe Left versus Right is turning into smart versus not-so

Here’s a funny thing to think about on a holiday Monday: what if all the well-educated people voted Labor and the lowly-educated voted Liberal or National? How would that change our politics? A preposterous notion? Not as much as you may think.

As I’ve mentioned once or twice before, the great political stereotype is that the Liberals are the party of the bosses, while Labor, with its link to the union movement, is the party of the workers. So the people who own and manage the country vote Liberal, whereas the people who do as they’re told vote Labor.

This is the basis for the Liberals' instinctive confidence that they’re the natural party of government. Such belief is reinforced by their having spent far more of the past 75 years in office than their opponent has.

The better-situated, better-off suburbs in any city tend to vote Liberal, while the inner and outer, less-desirable suburbs vote Labor. Most people living in country areas and voting for the Nationals tend to be on modest incomes, similar to the stereotypical Labor voter.

The owners and managers tend to be pretty happy with the world as it is, whereas those further down the pecking order, with less wealth and less income, can always think of things they’d like to see changed. The Liberals defend the status quo, while Labor is the party of “reform”.

This is the basis for the standard perception of politics as a conflict between the privileged Right and the discontented Left.

But what if this conventional setup was changing - being undermined – before our eyes? We all know that strange things happened in last month’s federal election. As usual, we’ve tried to understand these from the top down. How the parties’ share of the national vote changed, then looking by state and even at the 151 electorates.

But Luke Metcalfe, founder of the property and data analytics consultancy, Microburbs, (and, as it happens, a nephew of mine), has done a bottom-up, more “granular” analysis.

He’s taken the Australian Electoral Commission’s voting figures by polling booth and matched them with all the detailed demographic information for corresponding small statistical areas in the 2016 census. They’re not a perfect fit, but they’re a good guide.

Metcalfe finds that “we’re seeing a continuation of the trend in the [2019] federal election, where the Coalition’s support base is shifting towards poorer, less-skilled, less-educated people born in Australia”.

When Labor lost in 2019, many people noticed the swing against Labor in regional mining seats in the NSW Hunter Valley and Central Queensland. What few noticed was the swing to Labor in many safe Liberal seats.

This time, Metcalfe says, rich, educated professionals swung 11 to 12 per cent against the Coalition, while the country’s working poor - the fifth of polling booths paying the lowest rent, earning the lowest incomes and with the least skills - swung only 3 to 4 per cent against it.

As we know, much of this shift away from the Liberals came via the teal independents in Liberal heartland seats in Melbourne, Sydney and Perth. The teal seats’ most dominant characteristic was their high levels of “educational attainment”.

Unsurprisingly, income and education are highly correlated. But Metcalfe says it’s education, not income, that’s doing the driving.

Many people think they’ve detected in recent election results a growing divide between city and country in Australia, but also in Britain and America. But maybe it’s more about the better-educated concentrating in the big cities – where the best-paying jobs are – leaving the less well-educated in outer suburbs or back in country towns, feeling the world has changed in ways they don’t like and thinking of voting One Nation.

Some political scientists think voters in the rich economies are dividing between the globalists and the nationalists. In the same vein, David Goodhart famously explained Brexit as a battle between those who could live and work “anywhere” and those who had to live “somewhere”.

But it still gets down to education and the way ever-rising levels of educational attainment - particularly among women – are remodelling the party-political landscape.

Take climate change. The better educated you are, the more likely you are to accept the science, believe we should be acting, and not be worried about either losing your job in the mine or paying a bit more for power.

Wouldn’t it be funny if the party of the workers became the party of the well-educated, while the party of the bosses became the party of the battlers?

I can’t see that happening, it’s too incongruous. There’s no way the Coalition could get enough seats without the Liberals’ leafy heartland. But it will need radical policy change to get the well-educated back into the fold, or into bed with the Neanderthal Nationals.

Read more >>

Why Albanese will bring public servants in from the cold

The election was so much about getting rid of Scott Morrison that few but the party faithful turned to Anthony Albanese with great hope and enthusiasm. He’s not the most charismatic bloke you could meet. Yet almost everything we’ve heard from him so far has been encouraging.

From his victory speech on, he’s said everything you’d want him to say. He made a promise which, to be fair, his predecessor never made and so never broke: to govern for all Australians.

Morrison was in the divide-and-conquer mould. He was the most tribal prime minister I can remember. My tribe, your tribe; us and them; good guys, bad guys; lifters and leaners.

Kevin Rudd had to be strong-armed by his colleagues to give the job of ambassador to the US to his vanquished party predecessor, Kim Beazley, a job for which he was highly qualified.

Rudd wanted to prove his magnanimity by giving it to a Liberal worthy – a gesture that John Howard, nor his protege Morrison, would never have made. To them, the spoils of office went solely to the winners.

I remember when “jobs for the boys” was considered a strictly Labor vice. Morrison has filled the Administrative Appeals Tribunal with Liberal cronies. The Libs have pretty much appointed only people from the employer side to the Fair Work Commission. The convention used to be 50/50.

Albanese said he wanted to bring Australians together. “I want Australia to continue to be a country that, no matter where you live, who you worship, who you love or what your last name is, places no restrictions on your journey in life.”

Of course, grand election-night declarations are like New Year’s resolutions: a lot easier to make than to stick to, day after day, as old habits try to reassert themselves.

As we wonder what kind of PM Albanese will make, two things are worth remembering. First, unlike the Liberals, Labor sees itself as the unnatural party of government, the boys and girls from the wrong side of the tracks.

If the Libs have a superiority complex – if they act like they own the place and can make their own rules – Labor is the opposite. As outsiders to power, they tend to be on their best behaviour in the Big House, to worry about using the right fork.

Paradoxically, they’re more likely than the Libs to stick to the conventions rather than overturn them, more likely to consult widely – the unions come back into the tent, but business stays in – and more likely to seek, and take, advice from officials.

Second, as Julia Gillard demonstrated, prime ministers from Labor’s left faction try to prove they’re not really left-wing by being surprisingly right-wing in the policies they pursue. She was fawning towards the Americans, did too little to reverse the anti-union excesses of Howard’s WorkChoices – did someone say we had a chronic problem with weak wage growth? – and her effort to lift schools’ performance by using the publication of metrics to encourage greater competition between the public and private sectors was a faddish idea that didn’t work.

But, against those two positives, remember this. Whenever a government lowers standards, its opponents always promise to restore them. Nevertheless, the two major parties are obsessed with each other and determined the other side won’t gain an advantage.

So, the moment the new government is criticised for some behaviour and replies that it’s only what the last lot did, you’ll know the game is lost.

Recent Coalition governments have seen the public service as an enemy – the voting figures show Canberra is very much a Labor town – and have progressively cut back admin costs and public service numbers. Morrison went further, telling public servants he didn’t need their advice on policy matters. Much policy expertise has been lost in consequence – as witness, the administrative fumbling of the vaccine and RATs rollouts.

On coming to office, both Howard and Tony Abbott sacked many department heads they considered had been too close to the previous Labor government. There’s little doubt this was also intended “to encourage the others”, making them fearful of losing their own jobs should they be judged as less than fully co-operative.

Nothing could be better calculated to ensure ministers are surrounded by yes-persons. It takes a wise and strong manager to see the benefit of having around them people game to say, “Are you sure that’s a good idea, boss?” when considered necessary.

Albanese has promised not to sack any public servants, and he hasn’t so far. Replacing the head of his own department is, by modern convention, an entitlement of the new prime minister.

Politicians are prone to paranoia. Labor is right to trust the public servants. In my decades of speaking to them privately on policy issues, I can’t remember when they’ve expressed to me any criticism of government policy or lack of confidence in the government of the day. To do so would be unprofessional.

Public servants aren’t omniscient. But I’d rather have a government listening to their advice than trying to wing it.

Read more >>

Why the political duopoly is losing market-share

If you hadn’t noticed, economic policy and politics are closely entwined. And economic journalism is a just specialty within political journalism. But some parts of economics – agency theory and industrial organisation, for instance – are surprisingly useful in understanding how politics works.

The big surprises in this election weren’t the election of Labor, but the steep decline in the two major parties’ share of the primary vote, and the emergence of climate action as the big vote-shifting issue, even though it got little attention in the campaign, especially compared with the focus on the cost of living.

Some decades ago, the two big parties’ share of the primary vote was 90 per cent. By the last election, the non-mainstream vote had risen to a quarter. But this time it jumped to a third, leaving the big guys sharing roughly a third each.

Despite its win, Labor’s third was its lowest since the 1930s, and amazingly low for the winning party. Though the Coalition’s share was bigger than Labor’s, it fell far more this time.

Why are fewer and fewer people prepared to vote for either of the two majors? Why is the two-party system in decline? The economists’ basic neoclassical model of markets assumes intense price competition between a large number of small firms.

In real life, many markets are characterised by “oligopoly” – they’re dominated by a small number of large firms. Many decades of firms pursuing economies of scale do a lot to explain why we see so many oligopolistic markets.

In the sub-discipline of “industrial organisation”, economists seek to explain why oligopolistic markets differ from that basic model of “perfect competition”. They’ve found that the few big firms are not so much competitors as rivals. Their huge size gives each of them “market power” – more control over the prices they’re able to charge – but they watch each other like hawks, and never make a move without considering what the other big firms might do in reaction to their move.

They live in fear of losing market-share. With only two huge firms – a duopoly – the rivalry is that much more intense.

Few people realise that, though our political duopolists paint themselves as poles apart ideologically, the main thing that influences the choices they make is what the other side’s doing. Governments are constrained by oppositions; oppositions are constrained by governments.

See what this does? It makes the rival parties more alike. When I see you behaving badly but getting away with it, I decide I’ll do the same. And if you’re not sticking your neck out on climate action, I decide I’d better not risk it either.

That’s why so many people complain the parties are “all the same”. An economist called Harold Hotelling formulated a rule that two firms serving an area – ice cream sellers on a beach, for instance – will tend to gravitate to the same central location. Why? Because they want to reduce the chance of the other side getting a bigger share of the market than they do.

This, of course, reduces the choice available to customers. So, does it surprise you that, as the two sides of politics become more similar – as they crowd around the political centre – more people set up fringe parties, and more people vote for them?

For many years, the Liberals used climate change as a stick to beat Labor over the head, making Labor more cautious in what it proposed. For years that’s mean Labor’s lost many first-preference votes to the Greens. But this time the Libs lost votes to the teal independents in Sydney, Melbourne and Perth, and both sides lost votes to the Greens in Brisbane.

Yet, just as commercial firms have become bigger over the decades, so politicians and their parties have changed. Economies of scale are one reason for fewer, bigger firms, but another technique we’ve used to get richer is “specialisation and exchange”. The more we specialise, the more efficient we get at doing whatever it is we do.

By now, we have specialties within specialties. We have experts who know more and more about less and less. Politics used to be a game for amateurs. People who’d done well in their careers, switched to politics to “give something back”.

These days, politics has become more professionalised, more a lifetime career where, upon graduating, you start at the bottom as a research assistant for a union or a minister, and work your way up, becoming an MP, then a minister, then who knows?

The more professional politicians become, the more they focus on advancing in the political game, and less on the things they got into politics to fix. They used to have to guess at what the voters wanted; now the majors spend a fortune on polling and focus groups. They’re more inclined to give the voters what they now know they want, and tell them what they know they want to hear.

Voters have shown less loyalty to a particular party the more they suspect the pollies are advancing their own cause, not the public’s. The minor parties and independents are more like the amateur politicians of old: they turned to politics after a career elsewhere and they did so because they cared about a few particular issues. A growing number of voters find these issue-driven politicians more attractive.

The main political parties have changed, too. They used to be grassroots, bottom-up movements with many members. Now, they have few members and those they retain tend to be a lot more hard-line than the people who just vote for the party.

With the professionalisation of politics, the two majors have become more top-down. Just as the interests of executives don’t always align with those of their shareholders and supposed masters, so it is with political parties. Economists see this as a principal-and-agent problem.

The two majors have become more like franchise operations. All the big decisions are made at the centre by the professional managers, leaving the franchisees to just flog the product. These days, the party’s policies are made at the top, with party members getting little say.

In the old days, the branches’ main right and function was to preselect the candidates who would represent them in parliament. They tend to favour candidates who are well-known and well-liked in the district – maybe a former mayor – who’ll work hard attending school fetes and advancing the electorate’s interests.

As we’ve seen in this election, leaders and people at the centre increasingly insist on parachuting in someone with a higher profile and greater leadership potential. The party faithful increasing resent this.

The people at the top must wonder why they still need branches at all. Short answer: they still need enough volunteers to door-knock and man the booths on election day.

We saw that Labor’s attempt to foist Kristina Keneally on some electorate cost it the seat. In the Liberals’ leafy heartland, I suspect the locals’ thought that they might see a lot more of an independent member contributed significantly to the teals’ success.

It’s not at all clear the teals will be one-term wonders. And it maybe the days of either major party ruling with a comfortable parliamentary majority are gone.

Read more >>

Replacing the misbehaving ScoMo is an easy act for Albo to follow

It is a truth (almost) universally acknowledged by Labor politicians that it’s near impossible to reform from opposition. Be too ambitious, make yourself too big a target, and the government will happily use the many advantages of incumbency to shoot you down.

That’s because all reforms have opponents, and most create losers as well as winners. That’s why, after being reminded of this truth at the 2019 election, Labor made itself as small a target as possible. Part of this was for Anthony Albanese to neutralise most of Scott Morrison’s vote-buying promises by matching them.

Back then, Morrison convinced himself that – apart from having God on his side – his miraculous win was owed to his cunning strategy of painting Labor as the party of tax-and-spend, and the Liberals as the party of lower taxes. He tried repeating the strategy this time.

The first part of his mantra was true enough. The second was bulldust. As independent economist Saul Eslake has demonstrated, in the highest-taxing stakes, the just-departed government runs second only to the Howard government.

Find that hard to believe? You’re forgetting the invisible magic of bracket creep. The loophole in Morrison’s promise not to raise taxes – which Albanese matched – is that it doesn’t include bracket creep. And now that inflation’s back, bracket creep proceeds apace.

Many of the reforms we need – fixing aged care, reversing the squeeze on universities and TAFE, making homeownership affordable, exploiting our chance to become a renewables superpower – would cost big bucks and require greater and changed taxation.

But Albanese’s problem is not just that he’s promised not to increase taxes while making a huge and blatantly unfair cut in income tax in two years’ time, or even that he’s inherited a big budget deficit and huge debt overhang.

That much you see from the budget papers. What you can’t see is the extent to which the Morrison government has been holding back the tide of higher spending by cutting public service jobs, increasing waiting times, cutting NDIS packages and finding excuses to suspend people’s dole payments.

This dam had to burst after the election. And it will do so at just the time when the econocrats are telling Labor the budget deficit must go down, not up.

What was it Paul Keating used to say about excrement sandwiches? Come on down, Albo.

But all is not lost. For a start, on expensive and controversial reforms, Albanese should follow the aforementioned Eslake’s advice and copy John Howard. He got elected in 1996 with a promise to “never, ever” introduce a goods and services tax. So he made an honourable escape by having such a tax fully developed for presentation at the next election.

It was approved – by a whisker. As Eslake reminds us, not since 1931 has any first-term federal government failed to secure a second term.

“Labor needs in its first term to lay the groundwork for a more expansive mandate for its second term,” Eslake recommends.

Next, Labor does have a mandate – both direct and indirect, via the higher votes for the Greens and teal independents – to proceed with climate action, an anti-corruption commission “with teeth”, gender equality, and commitment to the Uluru Statement from the Heart “in full”.

Except for climate action, none of these historic reforms will greatly trouble the budget accountants.

However, as Professor Mark Kenny, of the Australian National University (but formerly of this parish), has helped us see, this election was about something deeper: “The urgent need to rescue longstanding governing norms around transparency, accountability, ministerial standards, trust and honesty and, of course, the viability of the public service.”

Morrison’s approach, he says, was “divide and dither”. “Accountable government, national unity, evidence-based policy, and democratic accountability [whether voters give his performance a tick or a cross] are all on the ballot at this election.”

Let’s get personal. The biggest reason Albanese is now PM is that he’s not Scott Morrison. The biggest policy question in this election, the one almost everyone in the great majority who didn’t vote for the Coalition wholeheartedly endorsed, was: “would you like to see no more of Scotty from marketing?”

It’s simple. The surest way for Albanese to ensure his re-election is to be a better, more likeable PM than that other one.

Just be more truthful, more respectful, more humble, more answerable, more willing to admit your mistakes, more inclusive, more even-handed, more charitable towards the needy, more willing to answer the question, and more protective of Australia’s reputation abroad.

Be less prevaricating, less divisive, less bulldozer-like, less willing to help mates and punish enemies, and less unable to let that five-letter S-word pass your lips unqualified.

I think Albanese’s already got that message. “I want to bring people together and I want to change the way that politics is conducted in this country,” he’s said. Australians have “conflict fatigue”.

Being a saintly prime minister won’t be easy. But think of it this way: conduct-wise, being ScoMo’s successor won’t be a hard act to follow.

Read more >>

Election: a win for the punters against the party professionals

Listening to Anthony Albanese’s victory speech on Saturday night – promising to be a better, more inclusive leader than his predecessor, to help the needy as well as the party heartland, to work hard fixing as many of our problems as humanly possible – my inner accountant came out. Yes, but how will you pay for it all?

If ever there was a case of oppositions not winning elections but governments losing them, this is it. Much more than usually, this election result was voters rejecting not so much the Liberal Party and its policies, but the party’s leader and his divisive, often disrespectful way of conducting himself and his preoccupation with clinging to a fossil-mining past rather than striving for a future as a renewable energy super-power.

What motivated all those people – particularly women – in the most prosperous parts of Sydney and Melbourne to break the habit of a lifetime and vote for a teal independent rather than the Liberal member they had no special gripe against?

It was their overwhelming desire to see and hear no more from the most un-Christlike Christian they could imagine. A bulldozer, indeed. It’s significant that the people they voted for were well-educated, successful businesswomen. Female equality was also a big motivation for the Liberal revolt.

So too, Scott Morrison’s puzzling resistance to the obvious need for a federal anti-corruption commission “with teeth”. If he had nothing to fear, what was his problem?

But it wasn’t just the teals. What about the resurgence in the Greens’ vote, and all the Liberal and Labor voters in Brisbane who switched to the Greens? It’s obvious from the two separate revolts against both major parties that the need for more urgent action against climate change was the election’s single biggest issue.

This despite the majors’ desire to avoid talking about climate change – which the media meekly accepted. It’s significant that both the Greens and the teals were promising much earlier and bigger reductions in emissions. Albanese ignores this message at his peril.

The one issue the majors were happy to debate was the cost of living. So, with the media’s willing acceptance, this became the central issue of the campaign. The great cost-of-living election, with the Reserve Bank making a guest appearance.

Really? Where’s the evidence of that being a key influence on the result? Well, I guess it’s the main reason Labor – the party promising to increase wages – did take a number of seats away from the Libs, in the way the two-party textbook says elections should work.

But we’ve yet to see whether Labor won enough of those seats to form a majority government.

The notion that minority government is a recipe for instability bordering on chaos is a self-serving lie spread by the two majors.

Look at the record – federal and state – and you find that the deals the majors have done to guarantee “confidence and supply” not only achieve stability, they allow the crossbenchers to achieve valuable reforms – often to do with transparency and accountability – that neither of the majors fancies.

With the Gillard minority government, the main gain was a tax on carbon – which, had it survived the depredations of Tony Abbott, would have left us much better-placed today.

We seem to have moved to a non-praying prime minister, but if I were Albanese I’d be praying to be left in a position where I had to let the Greens or the teals impose on me a much more adequate policy on climate change – consistent with the electorate’s now-revealed preference.

This election is no ringing endorsement of Labor, Albo and his small-target policies. The new government has won with an amazingly low primary vote. Timid Labor was not the nation’s first preference.

The election is a step-change in the public’s long-running move away from the two-party system. It was the voters’ message to the Lib-Lab duopoly: “Stuff you and your how-to-vote cards, I’m doing it my way.” If Labor thinks it’s just the Libs with a problem, it’s not thinking.

Albanese’s other problem is that his small-target strategy involved tying one hand behind his back. What he thought he had to do to win government is the opposite to what he now must do to prove himself worth re-electing.

He has inherited a big budget deficit and massive public debt, and will be under great pressure to get that deficit down.

How? He’s promised to deliver the Liberals’ hugely expensive and unfair tax cut in 2024, while promising no tax increases. By cutting spending on health, education, welfare and the NDIS? They’re the things he’s promised to spend more on.

You want to do something about unaffordable homeownership? That requires increasing the tax on home-owners and investors. Where’s Harry Houdini when you need him?

Read more >>

Infrastructure spending has degenerated into wasteful vote buying

The capacity of our politicians to take a good economic policy idea and pervert it into a partisan waste of taxpayers’ money never ceases to appal.

Once I was a big supporter of greater spending on infrastructure projects, even when most of the cost had to be borrowed. That’s because well-chosen projects will add to the economy’s productivity – say, by reducing the time taken to get from A to B – and thus more than pay for themselves over time.

But for that, you have to be sure to pick only those projects that offer economic and social benefits well exceeding their costs. When a politician doesn’t bother with that, but picks projects just on winning votes, you can’t even be sure people in the chosen electorate will gain much benefit.

In this election campaign, the Morrison government’s promise to add transport infrastructure spending of $18 billion to our already high public debt in the hope of buying votes in key electorates, would not only involve wasting much money. It would also “crowd out” spending on more valuable things, such as education, aged care or research.

Of course, Labor plays the same game. In this election, however, it’s proposing to waste no more than $5 billion. (This is a big improvement on the 2019 election, when Labor wanted to spend $49 billion, against the Coalition’s $42 billion.)

It would be good to have some knowledgeable person keeping tabs on these huge sums. And fortunately, there is: Marion Terrill, of the Grattan Institute.

In her assessment of the two parties’ promises this time, she notes that the emphasis on winning votes in key marginal seats is quite unfair. Those of us not in marginal seats get little of the moolah. And some states get a lot more than others. The Coalition is offering nearly $900 per Queenslander, compared with about $500 a person in NSW and Victoria.

As for Labor, it’s offering close to $400 a person in Victoria, with Queenslanders next on about $200 each.

Total bribes are well down this time because billion-dollar projects are less prevalent, with the Coalition offering just five (in ascending cost, the Sydney-Newcastle rail upgrade, the Brisbane-Gold Coast rail upgrade, the Beveridge intermodal terminal in Victoria, the Beerwah-Maroochydore rail extension and the North-South Corridor in South Australia) and Labor offering just one (the Melbourne suburban rail loop).

Note, however, that none of these six projects has been assessed by Infrastructure Australia as nationally significant and worth building. Only one of them has actually failed the assessment (the cost of the Maroochydore rail extension was found to exceed its benefits), with the other five being proposed without completed assessments.

Terrill says it’s prudent to be stepping back from last election’s megaproject binge. For some years, the engineering construction industry has been warning about its limited capacity to deliver the existing pipeline of projects, let alone add to it. Even before the pandemic, employment in the sector had surged by half, and supply-chain disruptions had made it slower, more difficult and more expensive to find materials.

With the recent slowing in population growth, maintaining and upgrading existing assets should take priority over big new projects. But both parties have promised to spend more on new projects than upgrades. Pollies always prefer the flashier projects.

But while big projects are down, tiny projects are way up. Two-thirds of the Coalition’s promised spending is on projects costing $30 million or less, and nearly half of Labor’s. We’re talking commuter station car parks and roundabouts.

My guess is this is about spending less money overall on projects targeted towards many more key electorates. That is, it’s about greater vote-buying efficiency. Presumably, the voters in these seats find the projects attractive.

But that doesn’t make the money well-spent. Terrill reminds us these tiny, hyper-local projects violate a longstanding principle that the Feds stick to infrastructure of national significance, leaving the small stuff to state and local governments.

They know a lot more about what’s most needed where, meaning that when the feds blunder in with their vote-buyers, things often go amiss. Many commuter car parks promised at the last election had to be cancelled, Terrill says, because there were no feasible design options, feasible sites or because the rail station was being merged with another.

How were the young political staffers with their whiteboards in Canberra supposed to know that?

Terrill notes two further objections. First, “the quality of the projects promised in the heat of election campaigns is poor,” she says. The tiny projects are too small to be assessed by Infrastructure Australia and, as we’ve seen, the big ones get promised without completing proper assessment.

Second, she says, “government decisions should be made in the public interest, and those making the decisions should not have a private interest – including seeking political advantage with public funds”.

“A better deal for taxpayers would be for whichever party wins government on Saturday to halt this spending on small local infrastructure, and focus instead on nationally significant projects that have been properly assessed by Infrastructure Australia,” Terrill says.

In an earlier report, Terrill argued that the next government should strengthen the transport spending guardrails. It should “require a minister, before approving funding, to consider and publish Infrastructure Australia’s assessment of a project, including the business case, cost-benefit analysis, and ranking on national significance grounds”.

This would go a long way towards increasing the social and economic benefit from projects, while reducing their use to buy votes with taxpayers’ money.

And all that’s before you get to cost-overruns. Back in 2020, Terrill reported that the Inland Railway was originally costed at $4 billion, whereas the latest estimate was $10 billion. Melbourne’s North-East Link had gone from $6 billion to $16 billion. The Sydney Metro City & Southwest underground had gone from $11 billion to $16 billion. Incompetence or deliberate understatement?

Read more >>

In this election, one critical issue stands above all others

In this campaign we face a bewildering array of problems needing attention: the punishing cost of homes, the appalling treatment of people in aged care, the high cost of childcare, the neglect of every level of our education system, the continuing destruction of our natural environment and the pressure on our hospitals, not to mention the cost of living.

But there’s one problem that’s the most threatening to life, livelihood and lifestyle, the most certain to get a lot worse, the most imminent and the most urgent.

It’s not the cost of living, nor the risk of war with the Solomons (I joke), nor even the dubious behaviour of Scott Morrison and his ministers and their refusal to establish a genuine anti-corruption commission.

I’ll give you a clue: as I write, my fifth grandchild is on the way. I find it hard to believe anyone could be so self-centred and short-sighted as to think any problem could be more important or more pressing than action to limit climate change.

But the pressing need to discover whether the contending pollies have memorised a list of facts and figures has left little time for debating such minor matters as which side has the better policy on global warming.

And, whatever I may think, it’s clear most voters don’t rate climate change that highly. Recent polling by the Australian National University’s Centre for Social Research and Method shows voters rank reducing the cost of living most highly (65 per cent), followed by fixing the aged care system (60 per cent), strengthening the economy (54 per cent), reducing health care costs (53.5 per cent) and – at last – “dealing with global climate change” (just under 53 per cent).

But I’m pleased to say – and you may be surprised to hear – that the nation’s economists are in no doubt on what matters most. Three-quarters of the 50 top economists surveyed by the Economic Society of Australia nominated “climate and the environment” as the most important issue for the election.

Professor John Quiggin, of the University of Queensland, says the key message from the latest report of the Intergovernmental Panel on Climate Change is that “if the world acts now, we can avoid the worst outcomes of climate change without any significant effect on standards of living”.

But the report said it’s “now or never” to keep global warming to 1.5 degrees. Action means cutting emissions from the use of fossil fuels rapidly and hard. “Global emissions must peak within three years to have any chance of keeping warming below 1.5 degrees,” he says.

If you wanted to pick the worst continent to live on as the climate changes, it would be Australia, according to Quiggin. We are a “poster child” for what the rest of the world will be dealing with. Not that we care.

The economic costs of the transition to renewable energy would be marginal, he says. “The required investment in clean energy would be around 2.5 per cent of gross domestic product. That’s far less than the cost of allowing global heating to continue, with costs further offset by clean energy’s zero fuel costs and lower operating costs.”

Voters complain there’s no real difference between the parties, but on climate change we’re being offered the full menu of varying strengths. Climate Analytics, a non-profit research group founded by Bill Hare, has assessed three parties’ policies, plus Zali Steggall’s climate bill, which the teal independents are supporting.

The Liberals have supported zero net emissions by 2050, but refused to increase their commitment to reduce emissions 26 or 28 per cent by 2030. This is judged to be consistent with global warming of 3 degrees, bordering on 4 degrees.

Labor’s target is emission reduction of 43 per cent by 2030. Its plan is supported by the Business Council of Australia. This is judged to be consistent with global warming of 2 degrees, which would be “very likely to destroy the Great Barrier Reef”.

Steggall’s climate bill has a target of 60 per cent reduction in emissions by 2030, which is close to, but within, the upper boundary of modelled 1.5 degrees pathways for Australia. A higher target would give a higher probability of meeting the 1.5 limit.

The Greens’ target of a 74 per cent reduction by 2030 is judged consistent with limiting warming to 1.5 degrees. Some parts of the Barrier Reef would survive. Globally, the most extreme heat events could be nearly twice as frequent as in recent decades. In Australia, an intense heat event that might have occurred once a decade in recent times could occur every five years and would be noticeably hotter. Phew.

If you’ll forgive a little colourful characterisation, the choice ranges from the Liberals’ “let’s just say we’ll do something, so we don’t offend Barnaby and his generous donors” to Labor’s “let’s do a lot more than the Libs, but go easy on coal and coalminers” to the Greens’ “let’s not muck about”.

And the many Liberal voters in the party’s leafy heartland who really do care about climate change now have a way to make their views felt.

Read more >>

Banking royal commission: much misconduct, not much follow-up

Can you remember as far back as three years ago? Scott Morrison and Josh Frydenberg are hoping you can’t. And fortunately for them, the media’s memory is notoriously short.

The media mostly live in the now. What’s being promised in this election campaign? Not much as yet on what promises were made last time and what became of them.

A big issue in the years before the election in May 2019 was the many complaints about people’s mistreatment by the banks, much of it brought to light by this masthead’s Adele Ferguson. There was growing pressure for a royal commission.

But the banks denied there was a problem, and then-treasurer Morrison repeatedly dismissed the need for an inquiry. Finally, when some government backbenchers signalled their support for a motion to establish a commission, the banks begged the government to take over and ensure the inquiry had appropriate terms of reference.

Former High Court judge Kenneth Hayne was appointed to inquire into misconduct in the banking, superannuation and financial services industry. For months, the public was shocked by the misbehaviour his hearings revealed.

People – even dead people – being charged for services they didn’t receive, signatures being forged, banks finding many ways to put their profits ahead of the fair treatment of their customers.

The government, too, professed its shock and utter disapproval of the banks’ behaviour. When the commission’s final report was submitted just a few months before the election was due, the government took three days to announce it was acting on all 76 recommendations and going further in “a number of important areas”.

“My message to the financial sector is that misconduct must end and the interest of consumers must now come first. From today the sector must change, and change forever,” Treasurer Frydenberg declared.

But the backdown began just five weeks later, even before the election. Frydenberg announced that “following consultation with the mortgage broking industry and smaller lenders, the Coalition government has decided to not prohibit trail commissions on new loans, but rather review their operation in three years’ time”.

As Professor Richard Holden of the University of NSW observed at the time, Frydenberg offered nothing in its place.

Back in 2009, in the aftermath of global financial crisis, the Rudd government imposed “responsible lending obligations” making it illegal to offer credit that was unsuitable for a consumer based on their needs and capacity to make payments.

These have always irked the banks, and soon after the Coalition came to power in 2013 it attempted to wind them back, but was blocked in the Senate. The Hayne commission said they were fine.

But in September 2020, under cover of the “coronacession”, Frydenberg announced plans to dismantle the obligations because they’d become “overly prescriptive, complex and unnecessarily onerous on consumers”.

Professor Kevin Davis, of the University of Melbourne, a respected expert in this field, has argued that these justifications don’t make much sense.

By January last year, Davis found that the government was yet to implement 44 of the 76 recommendations it had accepted, and had “turned its back on five key reforms – including curbing irresponsible lending practices”.

“Instead, it appears to be banking on market forces and voluntary codes of conduct to protect financially unsophisticated borrowers. This is the triumph of ideology and vested interests over logic and evidence,” Davis said.

The Hayne commission was highly critical of the Australian Securities and Investments Commission, saying it was too accommodating towards the bodies it was regulating, being too ready to negotiate and not keen enough to litigate.

In August last year, Frydenberg significantly changed his “statement of expectations” of ASIC from the one issued in 2018. The new directions start by saying the government expects the body to “identify and pursue opportunities to contribute to the government’s goals, including supporting Australia’s economic recovery from the COVID pandemic”. Hmmm.

Hayne recommended setting up a “compensation scheme of last resort”, funded by the industry, to ensure that victims of financial misconduct actually receive compensation that had been awarded where the firm was unable to pay because it had collapsed.

Hayne also recommended a “financial accountability regime” to hold finance leaders accountable for misconduct that occurs on their watch.

The two measures were finally recommended for passage by the relevant Senate committee in mid-February. But neither was passed before parliament was prorogued for the election.

It’s remarkable what miraculously winning an election can do to your determination to make the bankers behave.

Read more >>

Let's use this election to raise the quality of the politics we get

This may be my 18th election as a journalist, but I confess I find the thought of a six-week campaign a bit daunting. Six weeks of unrelenting political argy-bargy?

Still, it does afford the luxury of one column discussing how we approach elections, before we get down to the many economic challenges the new government will face: climate change, wage stagnation, unaffordable home ownership and wasteful spending on infrastructure, not to mention integrity in government.

In elections, it’s always tempting to vote for the devil you know – a line pushed by all governments. But when you think about it, you see this notion is biased completely in favour of the incumbent. It seeks to shift the voter’s attention away from the government’s performance and play on our timidity.

What do you know about the other lot? Not much. How do you know they won’t be worse? You don’t. But, then again, they could be better.

If we always stuck to the devil-you-know rule, one side of politics would stay in power for ever. The other side would never get a go, and so would become more unknown – more unelectable – as each election passed.

Does that sound like the path to better government? Not to me, it doesn’t. In my experience, the longer governments stay in power, the worse they get. They get lazy and complacent. They worry more about helping their friends and less about keeping the rest of us happy.

They develop a sense of entitlement. They think they own the place and it’s their own money they’re spending. They get more and more reluctant to be held accountable by nosy outsiders and more inclined to keep their failures buried deep.

And that’s just the deterioration in government. The side kept out of power for year after year also goes off. Fewer and fewer of their leading lights have ever been a minister. They lose their corporate knowledge of how to run the country.

I’m old enough to remember the election of the Whitlam government in 1972, after 23 years in opposition. Wow, didn’t it show. And it wasn’t just their inexperience. They wanted to cram 23 years of “reform” into their first three years. Which, of course, is all they were given.

It wouldn’t be good for our governance if government changed hands every three or four years. But I long ago formed the view that no government – Labor or Liberal, federal or state, whether you voted for ’em or whether you didn’t – should be left in office for more than about 10 years.

With their ever-declining standards of behaviour, it’s tempting to give up on our politicians. “They’re all liars.” Actually, they rarely tell outright lies, though some do seem to have very bad memories.

What’s true is that they’re always saying things that are true from some limited perspective, but are calculated to mislead. “Record spending on health”, for instance, means provided you ignore inflation.

But when we give up on our politicians, it means they’ve won. They still get to run the place, but we’ve forfeited our right to a say in how it’s run. We’re happy for other people – including the pollies – to decide our fate. You want to make decisions that benefit your mates at my expense? Be my guest.

The trickier our politicians are, the more closely we should watch them. Whenever I speak to young people about politics, I warn them that the groups the politicians are most likely to screw are the ones that aren’t watching.

Another dangerous attitude is that there’s little difference between the two main parties. It’s true that both sides can be badly behaved, and that many policies are bipartisan. But there are differences between the parties’ approaches and, though the casual observer may find them hard to see, over time they do make a difference.

Paul Keating’s claim that when you change the government, you change the country, is right. Who we vote for in this election will change where we end up in 10 years’ time.

But the more the two major parties seem the same, the more people chose to vote for minor parties or independents – a trend likely to grow in this election. I regard this as a healthy development that will force the duopolists to lift their game.

As the number of independents grows, the possibility of a “hung” parliament increases. Both sides want us to believe this would be a bad thing, leading to instability. That’s the reverse of the truth. Minority governments are so common at state level that their presence goes unremarked.

And independents have a record of using their bargaining power to achieve reforms neither of the big parties fancy – fixed four-year terms in NSW, for instance – and moves towards greater transparency and accountability, such as freedom of information laws, and more resources for ombudsmen and auditors-general.

The way we vote in this election will make a difference. We should be using our votes to impose better quality governance on our wayward and self-serving political servants.

Read more >>

Going ahead with the stage 3 tax cuts would be irresponsible

Whichever side wins the election will inherit a serious budget problem, one caused to a large extent by a single, irresponsible decision: to legislate years ahead of time for hugely expensive tax cuts in July 2024. Turns out they will be “unfunded”.

No one who professes to be terribly worried about the federal government’s huge and still-growing debt is genuine in their concern unless they’re prepared to pay a price for it: forgoing the tax cut that can no longer be afforded. Allowing the cut to happen will add significantly to the budget deficit and the further growth in our debt.

People who own a business that’s running at a loss, so to speak, shouldn’t be awarding themselves a pay rise that adds to the annual loss.

Putting it more formally, it was fully justified for the Rudd government to borrow heavily to cover the temporary measures that kept us out of the global financial crisis, just as it was fully justified for the Morrison government to borrow heavily to cover the temporary measures that saved life and limb during the worst of the pandemic.

But there is no justification for allowing the lasting spending increases and tax cuts made at the same time as the temporary measures to continue unfunded year after year, long after the crisis has passed and the economy has recovered.

A government that, having incurred so much debt through no fault of its own, continues to run a residual, “structural” deficit every year simply because it lacks the political courage either to make sweeping cuts in government spending or to ask the electorate to cover the full cost of services it doesn’t want cut by paying for them with higher taxes, simply cannot claim to be economically responsible.

It’s following a lax and unnecessarily risky practice should, say, a heavy fall in our export prices, cause the (nominal) economy to grow more slowly than interest rates, leaving us exposed when the next global crisis comes along.

That’s hardly fiscal conservatism. But the coming big tax cuts take us to a whole new level of irresponsibility.

Not only is the government afraid to ask voters to pay for the government services they demand, it’s trying to bribe its way to election by offering to make an unfunded cut in the tax they do pay, thus adding to the structural deficit and continuing growth in the debt, in both dollar terms and relative to the size of the economy that services the debt.

And the worst of it is that voting one irresponsible government out of office won’t avert the problem, just exchange that one for another. Both sides committed stage 3 to law in 2019, five years ahead of time, and Anthony Albanese has further promised to go through with it.

Here we see the worst of the games of chicken our politicians play in their unceasing attempts to “wedge” each other. Because both sides understand the game, their attempts rarely succeed. But the inevitable consequence is both sides agreeing to policies contrary to the public’s best interests.

Before the budget, Chris Richardson, Deloitte Access Economics’ great budget expert, estimated the ongoing structural deficit to be as high as about $40 billion – 2 per cent of national income. Because they’re legislated, this estimate includes the cost of the July 2024 tax cuts, whose cost he updates to be more than $21 billion a year.

See how central stage 3 is to the ongoing structural problem? Richardson notes that, because wages grew by far less that projected at the time stage 3 was announced, the cuts “now overachieve in handing back bracket creep”. That is, they’ll be “real” tax cuts, not just ones that restore the status quo.

Richardson could have added that stage 3 was never capable of achieving Scott Morrison’s advertised claim for it, that it would end bracket creep for almost all taxpayers. (You don’t have to literally change tax brackets to be a victim of inflation causing you to pay a higher average rate of tax on all your income.)

Richardson proposes that stage 3 be amended in one respect: keeping the marginal tax rate for those earning above $120,000 at 37¢ in the dollar – rather than reducing it to 30¢ – would cut the cost of the measure by (an amazing) $9 billion a year.

But why stop there when there’s so much more to be done? And when deciding not to do something you haven’t yet done is always easier politically than reversing something already done. And when not cutting taxes is infinitely easier politically than cutting existing entitlements to government spending.

Stage 3, first announced in the 2018 budget, was based on mere budget projections seven years into an unknown future - which included a pandemic. It’s a monument to the folly of counting your budgetary chickens long before they fail to hatch.

Read more >>

Sleight of hand: Frydenberg's disappearing cash trick

If you think this is a going-for-broke, pre-election vote-buying budget aimed squarely at the hip pocket of people worried about the rising cost of living, let me pass on Treasurer Josh Frydenberg’s grateful thanks. That’s just the impression he’s hoping you get.

But it isn’t true. When you read the fine print, you discover that, for most people, most of the cost of the extra help they will soon be getting will later be recouped by an increase in the income tax they pay.

True, low- and middle-income earners will get a one-off increase of $420 in their annual tax offset when they submit their tax return for this financial year (costing the budget more than $4 billion) and pensioners and other welfare recipients will benefit from the one-off $250 payment (costing $1.4 billion) that Mr Frydenberg will ensure hits their bank account before election day.

And every driver will save, thanks to the 22 cents a litre cut in the excise on petrol during the six months to the end of September. Coming at a net cost to the budget of $2.9 billion, it’s not to be sneezed at, even if the usual ups and downs of petrol prices will make it hard for many people to see the saving they’re making.

All this follows the old rule for politicians who put their political survival ahead of the public interest: make sure you look like you’re doing something about whatever is exercising voters’ minds at the minute, even if what you do makes little real difference to the problem.

But Mr Frydenberg has been trickier than that. Without needing to announce it – and hoping no one would notice – he has omitted to continue the low- and middle-income tax offset in the coming financial year.

This is his way of avoiding saying that the 10 million-plus taxpayers earning up to $126,000 a year will have their income tax increased by up to $1080 a year, from July 1. But they won’t feel it for at least a further 12 months, when they discover their tax refund is much smaller than they are used to.

Discontinuing this tax offset will increase tax collections by about $8 billion a year, thereby covering almost all the cost of the three temporary cost-of-living measures announced in the budget.

It’s a point worth remembering when next you hear Scott Morrison repeating his line that the Liberals are the party of lower taxes, whereas his opponents are the party of “tax and spend”.

So this budget is more about moving the budgetary deckchairs between years than significantly changing the government’s finances.

When you go beyond temporary handouts, the budget’s greatest weakness is Mr Frydenberg’s assurance that wage growth in the coming financial year will more than keep up with rising living costs. It is based on nothing more than optimistic forecasts.

The rise in consumer prices will slow from 4.25 per cent in the present financial year to 3 per cent in the coming year. Wages, on the other hand, will grow faster, from 2.75 per cent this year to 3.25 per cent next year.

Should this come to pass – and this government’s record on forecasting wage growth is woeful – it would mean that “real” wages grow by 0.25 per cent in the coming year, which would hardly make up for their expected fall of 1.5 per cent in the present year to the end of June.

If I were deciding my vote based on which side was promising to do more about the cost of living, I wouldn’t be greatly impressed. Whereas Labor is full of plans to speed up wage growth, the budget says nothing about changing wage-fixing arrangements.

The people most disapproving of the temporary cost-of-living relief are those sticking with the Coalition’s now-abandoned fatwa against debt and deficit. To them, reducing the debt must override all other objectives.

This was always based on the misconception that a national government’s finances work the same way a family’s do.

Mr Frydenberg is right in telling us that the best way to get on top of the government’s debt is to outgrow it.

Even so, he should be doing more to reduce the budget deficit in coming years – not because the government’s debt is dangerously high, but to give us greater safety should another global setback come along that yet again requires the government to buy our way out of trouble.

If Liberals were the great economic managers they claim to be, this budget would have included a plan to get started on largely eliminating the budget deficit. That means reducing the deficit by about $40 billion a year.

It didn’t. Which leaves us to wonder whether, should the Coalition be re-elected, its plans to cut government spending and increase taxes will be announced in its next budget, or whether it will continue avoiding unpopular measures and kicking our economic problems down the road.

Labor, on the other hand, is warning that, should it win the election, it will use a second budget to make improvements to this one. Of course, what counts as an improvement changes with the eye of the beholder.

The budget’s increased spending on the training and skills of apprentices and other young workers earns a big tick in my book.

One reason some may see the budget as profligate is its long list of $18 billion-worth of new infrastructure projects – big and small – being added to its much-mentioned record $120 billion infrastructure pipeline.

Many of these projects seem chosen to improve the Coalition’s vote in marginal electorates and few have been checked out and approved by the public service infrastructure experts.

Maybe this is an area where Labor would want to “improve” the list of lucky marginal seats.

But worriers should remember that, after the electioneering  is over, not every project that goes into the massive “pipeline” emerges from the other end. And many take much longer to emerge than the campaigning politician suggested they would.

This budget is not as fiscally responsible as the government would like you to believe when it’s claiming to be the party of good economic management. But nor is it as fiscally irresponsible as it would like you to believe when it is claiming to have fixed your problem with the cost of living.

Read more >>

Blaming the states for national policy failures won't wash

It seems everywhere you look you see governments failing to lead, failing to take charge, failing to be prepared for problems they should have seen coming.

Last week it was the flooding, before that, the distribution of rapid COVID testing kits and vaccines, before that, the Black Summer bushfires, and before that, soaring prices in the National Electricity Market along with the federal Coalition’s inability to agree on action to reduce greenhouse gas emissions.

The items on this seemingly disparate list have a few things in common. Most arise from the effects of climate change. All of them involve shared responsibility by the federal and state governments, with the all too familiar squabbling, duck-shoving and cost-shifting.

We’re learning hard lessons about what’s needed to get a better-functioning federation. One is that when ordinary Australians are facing dire emergencies of flood or fire or cyclone, they demand that both levels of government be on-the-job doing what needs doing.

Another lesson is that when you’ve got one federal, two territory and six state governments, one of them has to take the lead, and the one that should do so is obvious: the feds.

On climate change, it’s not just that the Morrison government has failed to do anything much to “mitigate” (reduce) our greenhouse gas emissions beyond belatedly accepting the target of somehow achieving net zero emissions by 2050.

It’s also that it has failed to lead the states in adapting to the climate change we already have and, even if we do make it to net zero on time, will get more of: worse and more frequent extreme weather events.

Why does Scott Morrison seem so bad at working on problems we can see coming, until they’ve actually arrived, and we’re in crisis? Then, when we are in crisis, he makes the excuse that it’s a “state responsibility”, which so infuriates the people left stranded by fire or flood.

I think part of the reason is his deliberate downgrading of public service advice on policy. Until recent years, it’s been a prime responsibility of department heads and their senior people to advise the minister of looming problems in their area of responsibility and to develop detailed options on how the feds – often in partnership with the states – could go about fixing the problem.

But when you tell the public servants that you want their diligent obedience, not their advice – as Morrison did – all you’re left with is advice from the growing number of ambitious young Liberal apparatchiks that populate ministers’ offices.

Plus, of course, the occasional expensive report from one of the big four accounting-turned-consulting firms, whose business model is to produce lovely reports with lots of glossy pictures, that tell the paying customer what you think they want to hear.

What they don’t want to be told is that they should get started on a response to this potential problem or that one, just in case they come to a head some time in the future. “That’s the boring stuff public servants are always banging on about, and it’s a real pain.”

“Do you know they’ve been harping on for years about being prepared for some possible pandemic? Yeah, sure. What other long-shot bet do you want me to waste money on? Talk about useless.”

The beauty of getting your advice from the young would-be-pollies in your office is that, like their masters, they’re always focused on the politics of the now. “How can we draw attention away from the latest stuff-up? How can we look like we’re responding decisively? Why don’t we rush through a law making illegal something that already is? The punters would love it.”

As soon as the election is called officially, the public service goes into “caretaker mode” and begins preparing extensive policy recommendations for the incoming government. They prepare a Blue Book to give the Coalition should it win, and a Red Book should Labor win.

The Grattan Institute, our leading independent think tank, has a tradition of preparing its own Orange Book, proposing policy priorities for whichever side wins. It includes a section on energy and climate change, one of the most important areas of shared, federal and state responsibility.

Grattan’s Tony Wood says that, one of the three things that should be done to ensure electricity plays its major role in achieving “net zero” is to “better co-ordinate state and federal government objectives in the National Electricity Market.

“Frustrated at a decade of federal ‘climate wars’, state governments are increasingly going their own way on electricity and gas [and electric vehicles],” Wood says.

That’s another lesson we need to learn: whenever the feds leave a policy vacuum, the states fill it – badly. Only leadership by the Federal government can make our ramshackle federation work.

Read more >>

Sense about improving education, before the political bulldust flies

In the looming election campaign we’ll be hearing a lot of silly, scary and self-serving stuff. Who’s better on the ukulele, ScoMo or Albo? Who’s the more “human”? Which side “won the week”?

We’ll see the content of carefully compiled “dirt files”. Each side accusing the other of hypocrisy. The other side’s policies have been/would be absolutely frightening.

Great. I can’t wait. But last week I ran across the thoughts of someone who’s had much experience in governance, but isn’t running for office. He was on about education – a topic of direct or indirect relevance to us all – but one that won’t be heard once all the shouting starts.

He’s Professor Peter Shergold, former head of the Prime Minister’s Department under John Howard, but these days chancellor of the University of Western Sydney and writer of government reports.

At every level of education – early childhood education and care, schools, universities and vocational education and training – the polite judgement on our performance is: could do better.

Shergold had many sensible things to say in a report to federal and state education ministers that lobbed only after the plague had begun.

He starts by putting education in a broader, more balanced context. “Education must prepare young people both for active citizenship in a democratic society and for purposeful engagement with the labour force,” he writes.

“This is vital at a time when trust in democratic governance and institutions is at a low level and cognitive technologies are transforming the future of work.”

School leavers don’t just need to be employable. They need to be adaptable, flexible and confident. Education must provide students with the essential attributes they require for lifelong learning in whatever fields of endeavour they may choose, he says.

The professional and applied skills they need will change significantly over their lives. The jobs they do will be transformed. Most will switch careers.

Academic achievement is important but not the sole reason for schooling. We need to focus more on preparing the whole person, no matter what career path they choose. Many senior secondary students enjoy school. Some, for a variety of reasons, just want to leave as soon as possible. Both groups need to be supported by more flexible learning.

Education will remain the foundation of a “fair go” Australia, Shergold says. Senior secondary students from disadvantaged backgrounds should be supported to ensure they can follow the same pathways available to others.

Literacy, numeracy and digital literacy should be recognised as essential skills for every student. At a time of technological transformation, when the future of work is uncertain, these attributes are more important than ever, he says.

Students must be supported to attain capabilities in these areas before they finish school. “Every young person who leaves school without them is having their economic and social future short-changed.”

All pathways through school should be delivered to the same high standard. While university will remain an aspiration for many young people, academic pathways should no longer enjoy more privileged access to school resources than apprenticeships, traineeships or other vocational education and training.

Shergold gets more specific in a report he wrote for the NSW Education Department with someone whose name seems familiar, a David Gonski. They find that vocational education and training – VET – is plagued by problems across the nation.

Skills development hasn’t received the level of government investment required, which has helped reinforce the public perception that VET is less valuable than university education. This misconception is too often instilled in students while they’re still at school.

When they move on from high school, they enter a world bifurcated between university and vocational education. Forced to choose, many opt for a uni degree, for which there are no upfront costs, rather than paying fees for certificate-level vocational education.

Partly because career advice is so poor, many parents and students believe the demand for vocationally qualified workers is in decline. This is utterly mistaken, Shergold and Gonski say.

Federal figures on skilled occupations show shortages in many trades, including mechanics, panel beaters, plumbers, electricians, bricklayers, plasterers, carpenters and cabinet-makers. A rapid rise in demand is forecast for certificate-trained workers in child care, aged care and disability care.

Get this: a “significant proportion” of uni graduates then move to VET to enhance their employability. It’s clear to me that a lot of kids who struggle through uni (with many failing to make it) would have been better going to VET.

Little wonder Shergold and Gonski want to bring universities and VET into a single system. They want much better career advice, which should be available to people throughout their working lives, including those obliged to make mid-career changes.

They want senior secondary schooling to be less obsessed with having kids direct all their efforts to maximising a single number, the Australian Tertiary Admission Rank. There are better ways for unis to select good recruits. And high schools could do more to get students started on a vocational “pathway”.

All this is worth debating in the coming weeks – but ain’t likely to be.

Read more >>