Liberty drowns in a sea of bureaucracy

2013-04-24 04.50.02 amNICK CATER


Published in The Weekend Australian, March 8, 2014


IN its first election as a united political force, the Liberal Party ran a forceful campaign against the postwar Labor government’s fondness for form filling.

“We want less forms and more reforms,” declared Robert Menzies’ opposition in a full-page advertisement in The Bulletin in April 1946. “The Road back to Freedom is through the Liberal Party of Australia.”

Shortly before Christmas, Liberal Party director Brian Loughnane presented a faded copy of the advertisement to Josh Frydenberg. It now hangs on the parliamentary secretary’s wall — a reminder that, for the Liberals, eliminating red tape is more than a dispassionate exercise in economic efficiency.

It goes to the heart of the party’s founding ideology: excessive regulation is a burden on free enterprise and an offence to personal liberty. The advertisement carries a picture of one of Menzies’ forgotten people, a farmer buried deep in paperwork. He complains: “I’m fenced in with permits, licences, returns, regulations from every board and division and department under the sun!”

The grievance could apply equally to Frydenberg, who is still coming to terms with the scale of the deregulation challenge handed to him by Tony Abbott.

“We’re under no illusions about the size and importance of the task,” Frydenberg says. “We can make a good start, but this is not something we can fix in a year or even a term. It’s a 10-year project.”

The arguments about central planning, nationalisation and economic intervention that dominated the debate in the 1940s have been settled. Both sides of politics acknowledge the primacy of free markets, notwithstanding occasional backsliding.

Today it is not so much state intervention in industry that divides the parties but the nationalisation of everyday life.

The Coalition’s deregulation campaign represents a counter-attack on the regulatory zeal of the modern technocratic state, the tendency in Western democracies to extend the reach and proscription of legal codes to produce what political scientist Kenneth Minogue called “soft totalitarianism”.

The deregulation program will be a contest about the level of reasonable risk, moral hazard, personal responsibility and the proper limits of government.

The debate will be acrimonious; the battlelines will fall into territory to which the intelligentsia and the modern Labor Party are deeply attached: gender equity; food regulation; health and safety; the environment and climate change.

Deregulation goes to the heart of what American commentators such as Arthur Brooks are calling the new culture war. The old battles over guns, gays and abortion have been eclipsed, says Brooks.

Today’s arguments are about competing visions of civic society: free enterprise and limited government on one side; European-style statism and expanding bureaucracies on the other.

There is little on the Coalition’s program that is likely to gain bipartisan support. Many on the opposition frontbench have a personal investment in threatened legislation that includes some of Julia Gillard and Kevin Rudd’s proudest achievements.

Anthony Albanese claimed his coastal shipping legislation was “the most significant overhaul of our coastal trading arrangements since they were introduced early last century”.

Nicola Roxon described the Australian National Preventive Health Agency as “the single biggest investment ever by a commonwealth government into preventative health measures”.

Julie Collins boasted that workplace gender equality regulations would help break the glass ceiling and improve women’s economic security.

The ink is barely dry on their press releases, yet if the Coalition gets its way, this legislation and much more is about to be torn to shreds.

An early casualty is likely to be the Coastal Trading (Revitalising Australian Shipping) Act that requires foreign-registered ships carrying domestic freight to apply for temporary licences and deliver award wages and conditions. The result, as the Productivity Commission noted in January, has reduced competition and increased freight prices.

Bell Bay Aluminium told the commission its freight costs to Tasmania had risen from $18.20 a tonne to $29.70 since the legislation became law in 2012, a rise of 63 per cent.

Coastal shipping regulations are under review by Infrastructure Minister Warren Truss and the results have been promised soon. Tony Blair, in a landmark speech in 2005, spoke of the pressure on policymakers to respond to every tragedy by introducing measures to prevent it happening again.

“The result is a plethora of rules, guidelines, responses to ‘scandals’ of one nature or another that ends up having utterly perverse consequences,” Blair said. It was impossible to guarantee a risk-free life. It was also undesirable. “A risk-averse public sector will stifle creativity and deny to many the opportunities to be creative.”

Blair singled out financial regulation as an example of consumer protection taken to extremes. For the Abbott government, proposed amendments to Labor’s Future of Financial Advice legislation have been made a priority in the reform agenda.

The measures, introduced in the wake of the Storm Financial crash in early 2009, have been described by Assistant Treasurer Arthur Sinodinos as “unwieldy, burdensome and unnecessarily complex”.

“No amount of regulation can prevent another financial collapse,” Sinodinos says.

“You can never regulate away all risk. Neither our reforms nor Labor’s FoFA laws can prevent a possible future financial collapse.”

The Coalition is keen to abolish the Australian Charities and Not-for-profits Commission, established barely a year ago, which has loaded burdensome compliance regulations on the charitable sector while duplicating regulatory functions already in place.

The strongest and most enduring opposition to the government’s deregulation reforms is coming not from the Labor benches but from the public service and the quasi-autonomous instrumentalities that grew in number under Labor. Government ministers have taken to referring to this permanent, unelected opposition as “the blob”, stealing a line from British Education Secretary Michael Gove, who famously compared his own recalcitrant bureaucracy to a 1958 science fiction film in which unstoppable expanding red jelly smothers the US.

The “boards, divisions and departments” that were the subject of the Menzies-era advertisement look relatively tame compared with the authorities, commissions and agencies that have mushroomed in the past decade. Armed with extraordinary powers, and only loosely accountable to parliament, many have assumed a life of their own.

The Australian National Preventive Health Agency began as a thought bubble in early 2008 at the 2020 Summit. It was embraced by then health minister Roxon with a brief to focus on tobacco, alcohol and obesity. Its chief executive Louise Sylvan has broad statutory powers to campaign against tobacco, alcohol and unhealthy food. The agency can make grants to other organisations without reference to the minister of the day.

It can form partnerships with non-governmental organisations and the community sector to develop national standards and codes of practice. Under the 2010 act the chief executive is authorised to “do all things necessary or convenient to be done for or in connection with the performance of his or her functions”.

With a $5.4 million budget and 42 staff ANPHA can exercise considerable influence in the contentious debate over food and drink labelling without reference to business costs or the wishes of the government of the day.

When ANPHA states its policy objective is to “provide leadership on effective prevention and health promotion policies”, it anticipates a proactive role for government-funded advisory bodies that would once have been anathema to the Australian Public Service.

As Assistant Health Minister Fiona Nash recently discovered, any attempt to thwart ANPHA’s plans will be fiercely resisted. The conflict of interest claims that led to the resignation of the minister’s chief of staff Alastair Furnival last month surfaced when Nash resisted one of ANPHA’s pet projects: the introduction of health star ratings on the front of food packets.

Furnival and other members of Nash’s staff were carrying out her instructions when they ordered the Department of Health to take down a website detailing the scheme that had yet to be approved. The action of the department, its reluctance to take down the site and apparent leaking of information to sympathetic journalists suggests a pattern of blatant defiance by bureaucrats that require a tough-minded ministerial response.

British Conservative Euro MP Daniel Hannan, who visited Australia last week, offers a dismal assessment of the limits of ministerial authority.

“I sometimes think you have to have been in politics to see how powerless the elected representative is,” Hannan says.

“Your ability, even as a national leader, to take on this powerful, permanent apparat, this standing leftist bureaucracy, is remarkably limited.

“They’re up against impossible odds … in your department you have five or six hundred people working Monday to Friday on their agenda. There is no way you’re going to impose your will on them. That’s the iron law of politics.”

Qangos (quasi-autonomous non-governmental authorities) were the nemesis of British Conservatives under Margaret Thatcher, falling outside the traditional structure of executive government and operating at arm’s length from the minister.

Under the Rudd and Gillard governments they became favoured instruments to push agendas on environmental and social reforms. Many have been established as body corporates with perpetual succession; they enjoy an immunity to outside interference second only to the judiciary.

Their powers, with a few notable exceptions, are purely to advise or exercise prudential oversight but the strength of their voice in the public square as officials operating apparently with government endorsement can turn them into formidable agencies for activism.

The Climate Change Authority, established by the Gillard government to advise on renewable energy targets and carbon pricing, is a case in point.

Legislation to scrap the $6.3m authority and abolish the sinecure of its $350,000-a-year chief executive sits idly on the Senate notice paper.

Meanwhile the authority’s members, who include Bernie Fraser, David Karoly, Heather Ridout, John Quiggin, Ian Chubb and Clive Hamilton, make merry on the public purse advocating an extension of the Renewable Energy Target and a near quadrupling of Australia’s Kyoto target in clear opposition the government’s agenda.

Like ANPHA, the Workplace Gender Equality Agency finds itself towards the top of Gillard-era quasi-autonomous government agencies under threat of extinction by the Abbott government. From May this year, large companies will be obliged to lodge a report with the agency signed by its chief executive stating how the company is performing against government-mandated equality indicators.

From May next year, should WGEA survive that long, it will be empowered to instruct employers to meet a minimum standard, giving them two years to comply.

The Product Stewardship Act, passed by the Gillard government in 2011, allows regulations to be imposed on businesses with the apparently laudatory aim of reducing the amount of potentially hazardous waste deposited in landfill.

Yet industry groups remain concerned about its wide powers to mandate the recovery of recyclable materials without reference to their economic value, thus adding costs to consumers without clearly measured gains.

“Legislation should only apply if there are significant potential benefits to be gained,” the Australian Industry Group wrote in a submission.

“Policy cannot add value by mandating a level of resource recovery above that which is justified … necessarily high costs will flow through to the wider economy and diminish overall welfare.”

One of Labor’s few remaining boasts towards the end of its term was that a minority government had somehow managed to pass 567 bills during the term of the 43rd parliament. Starting on March 26, the government’s first nominated parliamentary repeal day, the 44th parliament will be asked to undo much of that work. Taking bills off the statute book is likely to prove a considerably more difficult task.

Frydenberg, however, remains optimistic.

“We are seeking to achieve a paradigm shift in how governments approach regulation,” he says. “We want to introduce processes that will become the norm under future governments whatever their political persuasion.”