09 August 2010

Ross Garnaut’s Hamer Oration

On Thursday 5 August Professor Ross Garnaut delivered the David Hamer Oration at the University of Melbourne. The address was entitled Climate Change, China Booms and Australia’s Governance Struggle in a Changing World.

Professor Garnaut’s address is recommended reading for anyone with a serious interest in the process of public policy formation in Australia, and while it is foundering. The theme is set by the following paragraph:

For the outcome of the political process to be conducive to broadly based prosperity and to the preservation of democratic institutions, there must be knowledge of the effects of various policies; education of the democratic polity in that knowledge; restraint in the use of political power to achieve sectional economic objectives; and restraint in the use of economic power in the political process. A successful democratic polity is built around analysis, public education, tolerance and restraint. The presence of these qualities in the polity allows leaders who are concerned to follow some conception of the public interest to appeal to the democratic electorate over the heads of vested interests, which otherwise have a privileged influential place in the policymaking process.

 One of the key points in his speech is the abandonment of productivity enhancing reform, and with it the practice of basing policy on rational analysis:

There has been no successful major step in productivity-raising reform since the tax changes associated with the introduction of the GST in 2001...

Economic policy since the GST has been characterised by change rather than productivity-raising reform. The use of independent analysis and transparent discussion of policy reform has become rare; when independent studies have been commissioned by Government, they have tended to be sidelined at the decision-making end of policy-making; and the capture of major economic policy decisions by short-term political processes and operatives has become endemic.

Since 2002, there have been some major policy changes with ambiguous or negative effects on Australian productivity and incomes. Australian leadership of an historic Asia Pacific shift from multilateral to preferential trade, led by the US-Australia free trade agreement, is an example. The serious damage to the terms of Australian access to regional agricultural markets is a predictable consequence of the corrosion of multilateral trade. These and other costs of change were obscured from public view by flawed analysis and process at the time when critical decisions were made.

He concludes:

It is time now to lay the foundations for staying afloat as we move forward into new and more turbulent seas.

Meeting the two large challenges ahead of us [climate change and refocusing economic policy] requires the restoration of the political culture of the reform period. It requires the rehabilitation of the independent centre of the Australian polity. It requires restoration of the role of transparent, independent authoritative analysis of policy issues, and public education on the results of sound analysis.

The laws of economics cannot be repealed by ignoring them—any more than the laws of gravity, or of climate science.

Independent analysis may discover truly awful choices; better to face them in knowledge, than to choose blindly under pressure from interests that know their sectoral implications.

Good outcomes in the difficult years ahead above all require firm leadership built around clear articulation of the public interest.

Leadership, transparent independent analysis and public education are the means through which sectional interests will be confined appropriately to legitimate supporting roles, rather than being given central roles in formulation of public policy in the national interest.

Leadership is an essential missing ingredient in contemporary public policy.

Omitted, all the voyage of our lives is bound in shallows and in miseries.

The full text of Professor Garnaut’s oration may be accessed here.

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