If you consume any type of centre-right content, you could be forgiven for thinking the world is falling apart.
There is problem-after-problem to fix. The Left is relentless in taking us in the wrong direction. The overall direction of society seems lost on both economic and social fronts.
The tone is dark, the mood gloomy.
And you certainly don’t feel good having consumed this material.
Let me give you some hope and encouragement that, despite the pessimism, things are improving:
In 1950, Australia’s life expectancy was 68 years. In 2022, it’s 84;
The last case of smallpox in Australia was in 1938;
In 1950, Australia’s deaths per thousand live births was 25. In 2022, less than 3;
In 1950, there were approximately 2,300 polio cases in Australia. There have been no polio cases in Australia since 2000;
In 1950, 1% of Australians had a university degree. In 2022, it’s 36%;
In 1960, Australia’s GDP was US$18.85 billion. In 2020, it was US$1.331 trillion;
In 1953, there were 750 million rabbits in Australia! For agricultural productivity purposes, by 2022, this thankfully reduced to 200 million;
In 1960, Australia produced 7.45 million tonnes of wheat. In 2021, it produced 36 million;
In 2017, 55.5 million physical books were sold in Australia. In 2021, that figure grew to 65.0 million;
In 1950, Australia did not have a space industry. In 2022, there are 388 Australian companies operating in Australia’s space industry.
In some ways, the debate about productivity is like discussing the weather: everyone agrees it’s a problem, but nobody does anything about it.
In theory, productivity is simple: it is a measure of the rate at which goods and services are produced per unit of input (labour, capital, raw materials, etc.)
Growth in productivity is important; it’s what drives long-term improvement in living standards. As productivity improves, working hours fall, leisure time increases and goods become cheaper and better quality.
The Productivity Commission says the average Australian worker produces about as much in one hour today as it took a full day’s work to produce at Federation in 1901.
It gives the example of a bicycle which, in 1901, would have required several months of work to afford but now requires less than a day of work (for a basic model). Moreover, even the lowest quality new bicycles are much safer and easier to use than those produced then.
Early bicycle factory, derivative of agricultural works (left). Modern bicycle assembly line (right).
The problem is, productivity needs to constantly increase, yet growth in productivity in Australia has been low for at least two decades and may even have been zero in the last few years.
Both sides of politics know this and periodically declare they intend to do something about it. But when they discover what that means in practice, they find it a lot easier to just talk.
There are various factors that affect productivity growth: technological improvements, economies of scale and scope, workforce skills, management practices, changes in other inputs (such as capital), competitive pressures and the stage of the business cycle.
The two big ones are technology and labour. Personal computers, for example, gave productivity a boost because it transformed office work. The productivity of the wharves was raised when Patricks was able to implement labour reforms in 1998.
Changes like these are few and far between. Far more often, governments adopt policies that stifle productivity. There are many examples.
When the ACCC blocks the takeover of one firm by another on the grounds that it might lessen competition, this usually also prevents a productivity boost. If the takeover occurred, the firm would shed surplus staff and assets; those staff would be redeployed (ie hired by someone else), and the assets would have a new owner and be used more productively.
It is the same when the government props-up firms through tariffs, import restrictions, subsidies, soft loans, extended tax payment terms, and the like. Firms that would otherwise go out of business or change what they are doing are kept going, soaking-up capital and labour while blocking the growth of more innovative and nimble firms.
Governments also constantly raise the cost of doing business. A good example – the increasing cost of electricity. From dairy farms to tattoo parlours, prices must increase or profitability fall. Higher interest rates have the same effect. And reporting to the government on workplace gender pay, anti-slavery and emissions reductions does nothing for the business. Indeed, the whole ESG charade is a net cost.
Productivity would increase considerably if businesses could adjust their workforce to suit variations in conditions.
But with complex awards and enterprise agreements, unfair dismissal laws, bogus harassment claims and go away money, it is anything but efficient. Many use contractors and labour hire to meet variable needs, but the Government’s attack on contractors and ‘gig’ workers, the so-called “same job same pay” legislation, will severely restrict that. Then there are restrictions on workforce participation due to barriers to work, which also inhibit productivity.
The growth of credentialism, with qualifications required for almost everything, is yet another factor. A certificate is needed even for serving alcohol in a bar. All of this contributes to a decline in business dynamism (as evidenced by a decline in firm entry and exit rates), which slows the rate of innovation and technology adoption by firms and inhibits the reallocation of resources to the most productive firms.
When it comes to the public sector, productivity is rarely considered. The growth in public servant numbers diverts resources from the private sector, which has a negative impact. And although service delivery is increasingly online, which might slightly help, this is rarely accompanied by a reduction in public servant numbers or an overall reduction in red tape.
Once understood, it is easy to see why governments prefer to talk about productivity than act. It is not easy to fix within the constraints of existing policies, particularly on labour. That explains why they periodically decide the solution lies in technology and will throw taxpayers’ money at a new idea that takes their fancy. Of course, that rarely ends well.
But despite their similarities, the weather and productivity are quite different. So far, the Government has not found a way to make the weather worse.
It goes without saying that rules and sanctions should be clearly specified in advance so people know how they are supposed to behave and what will happen to them if they don’t. Also, importantly, rules must apply equally to everybody.
But the rules governing tax liabilities have become so tangled and complex that nobody can be sure any longer what they are or how they will apply in any given case. And behind the vast volume of laws – the actual legislation – looms an equally massive array of ATO public determinations, public rulings, bulletins, interpretative decisions, policy papers, circulars, administrative guidelines and practice statements. Some of these are supposed to be binding on ATO officers, and in general ATO staff rely on them rather than on the legislation. In practice that gives them something close to the force of law.
But the ATO no longer simply implements a known set of rules; it develops and amends the rules case by case. In effect, the ATO makes its own rules. As a consequence, we have tax laws which have lost their intelligibility, certainty and predictability. It is not real law as we’ve come to understand that term.
The resulting attitude of many taxpayers is to treat the law and the courts as irrelevant. “Forget legal advice, just give me an ATO ruling that will protect me from penalties or prosecution,” they say. Many taxpayers, of course, just surrender and pay up.
Systems which are complex in their application, debilitating in the sense that the more you earn the less of each dollar you keep, and unfair and unreasonable in the sense that people feel penalized for working, are destined to fail in the long term.
Take Australia’s cash economy, estimated at 15 percent of GDP, one of the largest in the developed world. An underground economy of that magnitude requires the involvement not only of a lot of businesses, but also of millions of consumers. As we know, laws only work when people believe in them; clearly a lot of Australians have no respect for our tax laws.
Despite what many advocating increases in tax would have us believe, the total tax take in Australia is quite high. Some say that compared with other developed economies, Australia is a ‘low tax’ country, and that workers and companies could comfortably pay more. This is ridiculous. When it comes to taxing incomes, Australia is right up there with the Europeans and way ahead of most of our neighbours in the Asia-Pacific region.
High tax rates undermine enterprise and destroy the will to work.
You don’t have to be a Laffer Curve true believer to accept that behavioural response is a reality. When you add to this the corrosive effect on the moral relationship between the state and its citizens, the case for fundamental tax reform becomes even more compelling.
There comes a point when the prospect of giving up half or more of any additional earnings leads people to decide that it is simply not worth it.
Taxation then starts to produce gross inefficiencies as people stop working as much or as hard as they used to, and governments find their taxes are not producing the revenue they expected. Politicians and bureaucrats who lack real world experience and an understanding of how an economy and markets work are drawn into a vicious spiral, jacking up tax rates to try to compensate for the falling revenues that their high tax demands have created.
Similarly, many on welfare reject opportunities to work because of the punitive effect that small earnings and high tax rates have on the security of their benefits and the value of extra work.
And people on very low incomes fare worst of all, for as they increase their earnings, higher rates of income tax combine with the loss of means-tested benefits deprive them of up to 80 cents of every extra dollar they earn.
If we are to extricate ourselves from this dysfunctional system, the goodwill of the public needs to be restored by getting tax levels back to something which most people would see as reasonable. To achieve this, we need to remove one of the most significant tax avoidance avenues and align personal tax rates with company tax rates.
There is certainly a pressing need to reduce the current company tax rate (25% for companies with turnover below $50m, 30% above that). I accept it can’t be done overnight, but the Government would do well to start cutting the rate by one percentage point in this Budget, and then announce its intention to make a similar reduction every year while in office. That would hold out the prospect of a 20 per cent company tax rate and, if it is really serious about an internationally competitive tax system, a 20% personal tax rate.
Nobody enjoys paying taxes but in the 1950s and 1960s, relatively low taxation and a comparatively simple set of tax rules meant that most people paid what was due without too much complaint. Today, however, the Government and the ATO find themselves locked into a destructive relationship of repression and resistance with ordinary taxpayers. Where people can avoid tax by exploiting loopholes, they will do so; where they can’t eg PAYG taxpayers, they become resentful at the unfairness of it all.
You could be forgiven for feeling despair at the state of Australian politics right now.
Ditto for the West as a whole.
Unfortunately, despair doesn’t take us where we need to go.
There are four forces pulling us in the wrong direction at the moment. The quick summary is that the Liberty-Authority war is raging but Liberty is losing too many battles, our politicians don’t know how ‘mixed’ our mixed-economy should be and so are preferencing Authority in that war, there’s a kind of matrix hanging over us which makes things hard to change, and we aren’t giving our parliamentarians the right incentives to stop.
What we urgently need is clear-thinking on these four forces, an action plan to counter them and a lot of good people like you to follow the plan.
This article will give you the clear-thinking and the action plan.
Read what follows then decide whether you’ll join the fight.
LIBERTY-AUTHORITY WAR
First, the Liberty-Authority war is raging but Liberty is losing too many battles.
There are two extremes in government: 100% Liberty and 100% Authority.
Total Liberty is a utopia, which can only fleetingly exist before Authority is needed to stabilise it. At 95% Liberty and 5% Authority, stability is possible. Imagine 1880s London or 1980s Hong Kong. In this light-touch government, the enterprising individual flourishes to produce a dynamic, Liberty-loving productive society. Individual independence, live and let live lifestyle, free-trade, creativity, flair, ambition, initiative, vision, self-reliance, energy, innovation and self-actualisation abound. The society throbs with entrepreneurial instinct.
Total Authority is a dystopia, which inevitably collapses from the murder, starvation or flight of millions. It is frequently reformed out of necessity. At 95% Authority and 5% Liberty, the Liberty manifests as a barely-tolerated, hardscrabble barter just to ward-off widespread starvation. Imagine 2020s North Korea or 2020s Eritrea. The economy is small and centrally controlled. Basic needs are unmet. In this despotic, heavy-handed government, enterprise is crushed, initiative regarded with suspicion and people cower in fear and repression, forced into a life of misery. There is no spark in its people, no verve, no passion, no striving, no vivacity.
Australia sits nowhere near these two ends of the spectrum, of course. It would be feeble-thinking however to surmise that we are exempt from the Liberty-Authority war. All societies are subject to it, Australia included, and Liberty is losing.
Consider Authority’s recent wins:
Border closures
Vaccine mandates
Emergency power legislation enshrined and ready for reactivation
Job terminations over mandates
QR codes to track your movements and bar entry
Elected politicians denied entry into parliament
Peaceful citizens shot in the back with rubber bullets
Home detention of the population
Laws requiring employers to gather private medical data
Secrecy over vaccine purchase terms
Door-to-door visits for covid vaccine rollout
Opaque health information about vaccine injuries
Construction of covid detention camps.
Think that’s the end of it?
First, none of these powers has been removed as covid wanes.
Second, at the time of writing, there were 122 bills before Capital Hill, Canberra. This figure obviously changes but you can review the list at anytime yourself here.
I want you to think of the Commonwealth Parliament as a school of ravenous piranha. Every time a new law is passed, your personal and financial Liberty is being thrown in the legislative pond for thirty seconds. You scramble out with razor cuts all over your bloodied body. Then you’re pushed back in by errant leaders and the populist mob for another gasping swim. Again and again, the body politic is attacked, your Liberty weakened with every new law passed.
During my frantic attempts to call MPs during the covid overreach, part of my epiphany that the Liberal Party – far from being an agent for small government – is complicit in this process was a question I posed to an MP. I asked this person to find out from the Parliamentary Library how many Commonwealth statutes are active. The experts couldn’t come up with a number. We are suffocated with so many laws, we don’t know how many there are!
We’ve fought 121 years in Australia over whether we need more economic and personal Liberty on the one side, and whether we need more Authority and protection on the other.
Authority is winning.
One of the issues is that our fellow citizens are increasingly expecting government to be an end-to-end solution to every risk we face in life. What we demand of our governments is that they increasingly manage the risks of life which we have handled privately in the past. Fear is a powerful motivator.
We have to make our politicians understand that we don’t expect them to carry all the risks in our lives.
As Lord Jonathan Sumption said in a recent trip to Australia:
“If we hold governments responsible for everything that goes wrong, they will take away our autonomy so that nothing can go wrong.”
I think he’s being optimistic about ‘nothing can go wrong’ but you see his point.
MIXED ECONOMY
Second, our politicians don’t know how ‘mixed’ our mixed-economy should be and so are preferencing Authority in that war.
Throughout time immemorial, we have sought to balance these competing but innate needs. On one side, creative, independent, self-actualising Liberty and, on the other side, risk-avoiding, dependent, protective Authority.
Democracy, coupled with its ‘mixed-economy’, tries to navigate between the two. That is, there is constant tension within a mixed-economy democracy to balance Liberty and Authority.
How are each enabled?
The general rule of thumb is that the bigger a government’s budget, the greater the means by which our leaders can impose Authority.
Big government budget means more Authority and less Liberty.
Small government budget means more Liberty and less Authority.
So, what’s the trendline in Australia.
If we use government expenditure as a percentage of GDP as the litmus test since Federation in 1901, we see an obvious trend. I’m going to use cut-offs at the end of each Liberal government (or its predecessor equivalents) since centre-right Liberals are reputationally supposed to be the small government, pro Liberty advocates.
Here’s what we discover:
Deakin (third government): 5%
Menzies (second government): 17%
Fraser: 26%
Howard: 37%
Morrison: 45%.
The trend is clearly from Liberty to Authority.
We need to jettison this old Keynesian term ‘mixed economy’. It’s an umbrella phrase which masks intent. An economy set at 90% Liberty and 10% Authority is a mixed-economy of a sort. So is 10% Liberty and 90% Authority. Even comparing Alfred Deakin’s 5% government economy versus Scott Morrison’s 45% government economy, the two look nothing like each other.
Using the term ‘mixed-economy’ gives licence to the Authority-lovers to execute socialism-creep.
During our lives, government is becoming ever larger and the piranha are being fed. Government has the growing means to intervene, coerce and limit our Liberty by a thousand imperceptible cuts over time.
And the truth is that the Liberal Party has been completely unsuccessful over 121 years in reversing the trend.
Why?
TOCQUEVILLE’S MATRIX
Well, third, there’s a kind of matrix hanging over us which makes things hard to change. I call it the Tocqueville Matrix.
The answer is that we’re in a system bigger than ourselves. We can laugh at analogies with the film The Matrix all we like. However, the reality of our predicament today was well uncovered, not by the hacker Neo in that movie but, 187 years ago by the classical liberal philosopher Alexis de Tocqueville in his celebrated essay “Democracy In America”, the result of a fact-finding mission for France.
Alexis de Tocqueville. 1805-1859. Classical liberal.
Though published in 1835 on the other side of the planet, it was highly relevant to Australia at the time. The free-settled Province of South Australia was just one year from proclamation. A mere fifty-four years later, Sir Henry Parkes delivered his famous Federation-rallying Tenterfield Oration in which he said “Surely what the Americans have done by war, Australians can bring about in peace.”
Here’s what Tocqueville witnessed of the new American republic, at this point only two generations old. As you read his words, pay attention to the creaking tension between Liberty and Authority, and the ongoing, overall impact of democracy on its people:
“The protecting power of the state extends its arm over the whole community. It covers the surface of society with complicated rules, minute and uniform, through which the most original minds and the most energetic characters cannot penetrate to rise above the crowd. The will of Man is not shattered but it is softened, bent and guided. Men are seldom forced to act but they are constantly restrained from acting. Such a power does not destroy but it prevents existence. It does not tyrannise but it compresses, enervates and extinguishes. It stupefies a people until each nation is reduced to nothing better than a flock of timid and industrious animals to which the government is the shepherd.”
Dare tell me this is not Australia in 2022.
I’ve shown you our legislative losses. I’ve revealed the legislative agenda in progress. I’ve shared that we don’t even know how many laws are on the books. This is Tocqueville’s ‘complicated rules, minute and uniform.’
Further, who are our ‘most original minds and the most energetic characters’? We may not be shattered as a people. But who will deny we are ‘softened, bent and guided’?
The word ‘enervates’ means ‘to make a person drained of energy or vitality.’ If this is how you feel right now about politics, it’s the Tocqueville Matrix of democracy working you over! Resist it. Let your innate self-reliance and self-actualisation radiate.
I could have sworn Tocqueville was in Australia from 2020-2022 when writing that last sentence.
If you feel that your fellow citizens exhibit foggy thinking, if you believe they make terrible electoral choices, then take heart. We know why …
Australia, like all Western liberal democracies, has placed an apparatus over its citizens. This apparatus of uncountable statutes and a million regulatory miscellany soften, bend and guide us. Initiative, vigour and swashbuckling verve are all discouraged as is self-reliance. Our innate creativity, independence and self-actualising Liberty has been dampened. We are less Errol Flynn, Sir Charles Kingsford Smith and Sir Douglas Mawson, and now more a half-thwarted version of our true selves.
Sir Douglas Mawson OBE FRS. 1882-1958. First to climb Mount Erebus and reach South Magnetic Pole.
Authority has taken over Liberty as the primary force in Australia. We accommodate too much. We fund too much. We have power-hungry, entrenched legislators. Our fellow Australians are too prone to expect government to manage all the risks of the world.
PARLIAMENTARY INCENTIVES
Fourth, we aren’t giving our parliamentarians the right incentives to stop.
Our politicians, specifically the ones housed in the seat-holding incumbency parties of Labour, Greens, Liberals and Nationals, often spend ten to twenty years working towards preselection. They aren’t going to rock-the-boat once in power after that investment of time.
We need term limits. We also need the hard work within party preselection processes to turnover long-time incumbents.
Another issue is that we, as a people, are simply unpractised to tell a politician ‘no’! We advocate for spending on our pet projects and our politicians say ‘yes’ to everyone. It’s unsustainable. And when we argue for cuts, we are vulnerable to the ‘what government program are you going to end?’ We need a coherent, well-practised push-back to this. Citizens can’t keep acting like toddlers asking for more and politicians need to be disciplined in saying ‘no’.
We are terrible at applying constant pressure on our representatives between elections. They rarely hear from us after a poll. We need to visit them, form relationships with them, lobby them, guide them and, yes if necessary, threaten them with electoral backlash.
In fifty-four years, I’ve not seen one protest outside an electorate office by citizens angry about the MPs big spending tendencies. Not one.
We aren’t giving them the right incentives to correct.
AN URGENT ACTION PLAN
So, here’s what you need to do.
For Liberal and National members:
Action 1: Gather fellow members and advocate for a three-term limit. Make clear to an MP in his or her third term that this is it. Say it’s not personal, it’s a systemic position about renewal. Encourage challenges if the MP won’t budge.
Action 2: Make clear at State Council that you demand budget reductions in government. Educate MPs on the importance of reducing budgets. Ask for their game plan to achieve this. Embarrass elected officials who lack the courage to reduce the size of government. Normalise talk of smaller government. As a group or faction, make clear you will be targeting MPs who don’t work towards this.
Action 3: Gather fellow members and internally advocate for policy not tactical preferencing. Discourage tricky tactics which ultimately splinter the centre-right. Shame and seek the removal of any state director or parliamentary leader who supports tactical preferencing to Labor or the Greens ahead of the more Liberty-friendly emerging parties.
For members of the Liberal Democrats, the United Australia Party, One Nation, the Nationals outside coalition, the Shooters, Fishers and Farmers and the Democratic Labor Party:
Action 4: Write to the local MP. Meet and lobby the MP. Educate the MP. Make clear that you want the next budget to be less than the current one. Make clear you want government expenditure as a percentage of GDP to be 40%, then 35%, then 30% and so forth year by year
Action 5: Advocate for a formal coalition and joint tickets. Joint tickets are important. They plug the preference leaking so prevalent on the centre-right. Work towards agreement that each emerging party gets to lead one upper house race. This is a near-guaranteed strategy for a bloc of six senators.
Action 6: Organise in vulnerable Labor lower-house seats to perform what I call the Purple Flip. This is Teal but in reverse. Identify and draft well-known local leaders to run as independents, perhaps tradies or sports figures, who project their working-class background but, due to their success, lean centre-right for its aspirational, social mobility message. Publicly appeal to aspirational voters in these Labor electorates, say they’ve been forgotten by Labor, and privately convince the die-hard but never electorally successful Liberals and Nationals in the seat to vote tactically for the independent.
The simple truth is that, if you don’t take these actions in concert with like-minded centre-right people, that big government trendline will continue to 50%, 57%, 63% and so on.
In democracy, you have to fight for the right balance between Liberty and Authority. Liberty is losing the battle for dominance. We are fast heading to an Authoritarian Australia. Covid overreach surely taught us that. Looming issues of digital passports, facial recognition systems and digital currency are facing Liberty-lovers right now.
You must act. The alternative is that you live, as Tocqueville pointedly wrote, as a ‘timid and industrious animal’ or we just continue to scratch-around in the political wilderness.
We can do better. Let’s steel ourselves now for the battle ahead.
Libertarian principles support free labour markets, highlighting the benefits of voluntary transactions and flexible negotiations for driving economic growth. However, excessive government intervention can restrict labour market freedom and limit economic opportunities, leading businesses to resort to offshoring as a cost-saving measure.
This article does not criticise offshoring itself; instead, it explores the unintended consequences of government policies that result in a highly leveraged workforce. Similar to the risks and benefits of high levels of debt to a household, leveraging the domestic labour force with an offshore workforce can have parallel effects on an economy.
When a family home carries a high mortgage, it brings prosperity when interest rates are low, employment is abundant, and house prices rise. In such conditions, debt can contribute to personal wealth. However, if one or both parents lose their jobs, they may be forced to sell their home in a depressed market, erasing their financial wealth.
Similarly, excessive financial leverage within businesses can be perilous during a recession. As economic conditions worsen, companies burdened with high debt may struggle to meet their financial obligations, leading to layoffs and business failures.
Could an economy’s reliance on offshoring be as dangerous during a recession as high financial leverage for households or businesses? Are there parallels? Before delving into these questions, it’s important to note that no study or discourse has compared offshoring as workforce leverage to financial leverage, nor quantified the extent of workforce leverage in Australia.
Offshoring often results in job losses within the domestic labour market as companies move operations abroad to reduce costs. This leads to higher unemployment rates, reduced consumer spending, and a contraction in the local economy. Moreover, heavy reliance on offshoring creates a dependency on foreign labour markets, making the domestic workforce more vulnerable during a recession.
Offshoring can contribute to economic imbalances within a country. When a significant portion of a nation’s industries or sectors are offshored, the domestic economy becomes overly reliant on a narrow range of activities. During a recession, a downturn in these offshored industries can have knock-on effects and cause an economic downturn that affects the broader population.
Drawing a parallel, when leverage against an asset is high, it is the equity that is most at risk. In the case of the family home, if parents have borrowed $800,000 against a $1,000,000 property and the market experiences a 20% decline, the asset loses only 10%, but the equity of the parents is halved (10%/20%).
In the event of a recession, the “equity” in the workforce equation is our domestic workforce. Cost-cutting measures are likely to begin with expensive Australian workers rather than cheaper offshore workers, especially when the offshore workers are not subject to the same regulations as the domestic workforce. As a result, a small percentage drop in the combined workforce (onshore and offshore) could lead to a much larger decline in the local workforce, similar to how a downturn in the property market disproportionately destroys a homeowner’s equity.
Libertarian Solution: Free Labour Markets:
Libertarians propose that free labour markets, unrestricted by excessive regulations, provide a more sustainable solution to reduce the need for offshoring. Here’s how free labour markets can positively impact the economy and reduce the risks inherent in a highly leveraged domestic workforce:
1. Optimised Operations and Increased Productivity:
A free labour market encourages domestic businesses to focus on optimising their operations and improving productivity. By reducing regulations and bureaucratic barriers, companies can compete more effectively, leading to increased domestic production, job creation, and economic growth.
2. Incentives for Investment and Innovation:
Free labour markets foster an environment that incentivises investment and innovation – domestically. When businesses can freely negotiate wages and working conditions with locally domiciled workers, they are more likely to invest in research and development, adopt new technologies, and enhance productivity. This promotes economic resilience and reduces the need to offshore operations to access lower-cost labour.
In a speech entitled, Rebuilding the Federation, Richard Court, then Premier of Western Australia, described the tide of centralism as follows:
“All the things that the States do best are under attack from the empire builders in Canberra. The bureaucracy running the Federal education system, as you know, is large but it doesn’t teach any students. There is an equally large health bureaucracy which doesn’t treat any patients.”
Court went on to make the point that the Constitution recognised that State governments were better placed to respond to local priorities.
Many of the most stable, productive and influential nations on earth are federations.
The States are left with constitutional responsibility for education, health, housing, law and order, commerce and industry, transport, and natural resources including land and essential services. But Court noted that, with the help of the High Court, the Commonwealth now has almost complete control in some of these areas.
Benefits of Federalism
Those who live in the major population centres on Australia’s eastern seaboard may not understand the importance of local decision making in the same way that those who live in the regions and smaller States do. In a country as large and diverse as Australia it is very difficult for a political administration and bureaucracy based in a distant national capital to take full account of, and understand, the interests and needs of local communities.
As a principle not only of government, but also of life, the best decisions are taken when all the parties to the decision know and understand the issues intimately. A federalist approach that seeks to allow States to exercise power in making decisions on local matters is infinitely better than centralised decisions at a distance. Those who framed the Constitution understood this and sought to embed it in both the spirit and letter of the document.
Economic Benefits
The Productivity Commission has outlined the competitive benefits of federalism in improving performance in the Australian economy, saying:
“The competitive dimension of federalism, which provides in-built incentives for governments to perform better across a variety of areas, is operating well.”
There is an inherent competitiveness between the States that should be encouraged. State governments have a vital role to play in creating the right environment to attract and retain capital. We live in a global market environment in which competition between States will only serve to make each of them more efficient.
Those who framed the Constitution understood this and sought to embed it in both the spirit and letter of the document.
By competitiveness, however, I mean real low cost, light regulation efficiency competitiveness, not taxpayer funded inducements to lure business from one State to another.
Perhaps the most valuable attribute of successful federations is the way in which they lead to a disbursement of power that fosters democracy and restrains corruption and abuse. While the division of powers among the stakeholders may cause frustration for those who desire an unfettered capacity to determine the course of events, it does introduce important checks and balances to the political process.
There is a creative tension that comes from the consensus building required to make a federation work, in the longer term serving both the individual and common interest.
Many of the most stable, productive and influential nations on earth are federations. The reason I am such a committed federalist is because it is by far the best way to govern a large and diverse country like Australia; far better than its alternative, centralism – power and law making centralised in one place.
Whilst it may seem counter-intuitive that six (or even eight), separate State service providers could be more efficient and cost effective than one big, centralized service provider, it is true nonetheless.
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When I started my business 35 years ago, very few investment funds were describing themselves as ethical investors.
Some years later I joined an organisation of CEOs, business owners and senior executives that meets to share and discuss their challenges. I enjoyed our meetings right up until my group was required to listen to a speaker on ethics. When I asked for a definition of ethics and who decides what is ethical, I was told I was out of order. Not long after that I was asked to leave the group.
Some funds then began describing themselves as sustainable investors. I wrote a column about it, asking who defines sustainable, and has anyone ever knowingly invested in a company that was unsustainable? There were letters to the editor criticising me.
It then became ESG, or Environmental, Social, and Governance. Still seeking definitions, I found it supposedly incorporates sustainable investing, responsible investing, impact investing and socially responsible investing.
Australian agriculture often generates meagre returns on investment, but larger operations utilising modern technology do better.
I also found a claim that ESG criteria can “help investors avoid companies that might pose a greater financial risk due to their environmental or other practices.” That sounded like the focus was on financial performance, which is good, but in fact it was not the case. The more I looked, the more I found it was all just virtue signalling.
Then came DEI, or Diversity, Equity and Inclusion, which is all about how many women, black or disabled people are on the payroll. Not just virtue signalling, but bragging about it.
Funds that differentiate themselves like this are motivated by the desire to attract more investors and generate more fees for their managers. Furthermore, very few of those choosing to invest in these funds are using their own money; both the fund managers and their investors are deciding what is ethical or sustainable using other people’s money.
The problem is, most ESG funds deliver lower returns to investors. And, as I discovered, they don’t agree with each other about what it all means, and also don’t much like being questioned.
As it happens, I am an investor of my own money and regard myself as both ethical and sustainable. Moreover, I have no difficulty offering coherent definitions.
My favourite definition comes from former Norwegian Prime Minister Gro Harlem Brundtland, who said, “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs”. In my view that’s also ethical.
As to what it means in practice, here are a few thoughts.
I will never reject an investment in coal unless there are better nuclear or hydro options, delivering cheaper and more reliable power. It is not sustainable to subject the community to the vagaries of expensive and intermittent wind and solar power, and it is grossly unethical to compel families in India to continue burning cow manure for fuel or force children to do their homework in the dark.
I will absolutely invest in forestry. Not only is it renewable, in Australia it is also totally sustainable. When the alternatives are importing timber from other countries or building in steel and concrete, it’s no contest.
Australian agriculture often generates meagre returns on investment, but larger operations utilising modern technology do better. Genetically modified crops, modern herbicides, precision farming and minimum or zero tillage are not only sustainable but also boost yields, leaving more land for conservation. There is absolutely nothing ethical about staying rooted in the past, using out-dated technology to produce food that some people cannot afford to buy.
Help investors avoid companies that might pose a greater financial risk due to their environmental or other practices.
Some ethical funds say they refuse to invest in companies that harm animals, by which they mean those that use animals to determine whether pharmaceuticals or cosmetics adversely affect humans. By what ethical standard is it preferable to expose our loved ones to the risk of life-threatening or disfiguring harm?
As for things like tobacco, alcohol and cannabis, these are matters of personal choice. Whatever we might think of them, the ethical approach is to not interfere in the choices of others. I’d happily invest in them if the returns were adequate. And if it means protecting liberal democracy from authoritarianism, I’d certainly consider it ethical to invest in armament companies.
That leaves a fairly small unethical and unsustainable list. Anything that funds or apologises for terrorism, racism, anti-Semitism, Islamism or corruption is on it. I’m also wary of companies that foster a woke culture; not only are they hypocrites but ‘go woke, go broke’ is more than a slogan.
But that’s just me – I don’t expect others to necessarily share my views, although it’s clear that an increasing number of people seem to be doing just that. For those with control over their own money, my suggestion is to simply invest in businesses that offer the best returns, and ignore those that virtue signal. You can then use the dividends or capital gains to help make a difference based on your own values.
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To be clear, I don’t know who’s going to win the Victorian election later tonight, 26 November 2022.
How can I or any of us?
However, I’m going to make a prediction as I write this at 3:20pm ACDT 26 November 2022, and have the prediction published just minutes before the polls have closed so you know I’ve not had any input from the counting of the votes. There’s my accountability, dear reader, to you.
Labor will win!
If my prediction is wrong, take all future predictions from me with a grain of salt. Throw tomatoes and rotten eggs at me. I’ll deserve it.
Right now, I’m quietly confident in making this prediction, however ghastly it may be.
And here is my reasoning. Hear it through …
Heavens know, Dan Andrews and the Labor Government he leads in Victoria has been revolting.
Who can forget the litany of failures …
Rubber bullets in the back, pregnant woman arrested in her pyjamas for a Facebook post, the world’s longest lockdown, businesses crushed, women and children manhandled for not wearing masks, family nest-eggs shattered, MPs arrested and denied access to their democratically elected seat in Parliament House itself, elderly citizens having their pelvis fractured as they are slammed to the ground by overzealous police, churches ordered to close at the point of police intrusion into sacred spaces, and a once vibrant city – the envy of the world – hollowed of its sparkle.
There will be a long-tail to this shocking overreach. Early figures are indicating that the rates of men aged 18 to 44 presenting with myocarditis, a long-term heart condition, have doubled. Yes, 2X. Men in their prime, cut low.
Most devastating to the soul was the sight of a young man, hitherto mentally healthy, taking his own life on a Melbourne street by setting himself ablaze whilst in the grip of a lockdown-induced depression. The depravity of this Government’s policies is chilling.
Free people have a right to be free. Free people have a God-given right to practise their religion. It’s part of our Christian-informed civil libertarian culture. And our Faith gives us Grace. It’s who we are. It’s how we cope with a world of sin.
And Dan Andrews failed as a standard bearer of those freedoms.
Why then do I predict this tyrant will be returned to office?
Why do I put my predictive reputation on the line and call the election for Labor even before the polls have closed?
The answer is that people don’t vote for “anyone would be better than” candidate X.
Our good citizens require an informed choice, a differentiation upon which they can decide.
And I’m afraid to say it but the Liberal Party’s leader, Matthew Guy, has failed to differentiate his Party.
How could he?
He’s limp, insipid, hardly the embodiment of inspiration and action!
Beyond the personal characteristics of the leader, the seeds of the Liberal Party’s failure in this election were planted in 2020. Throughout the entirety of the covid pandemic, if that’s what it was and is, the Liberal Party played a small target, Labor-lite game.
The Liberal Party could have weighed multiple harms to the community of Labor’s draconian covid measures, things like job loss, depression and endless racking-up the State debt for future generations to absorb, instead of robotically following bureaucratic health advice to the exclusion of all other considerations.
Liberal MPs didn’t. That would take differentiation, a knowledge of John Stuart Mill, the fortitude to use the minds our Lord gave them, and the courage to avoid groupthink.
The Liberal Party could have heeded the warnings of the worst civil liberty abuses in 100 years, passionately articulated in the Victorian Bar Association’s extraordinary and unprecedented open letter from sixty-four Queens Counsel.
Liberal MPs didn’t. That would take differentiation through a bedrock of principles.
The Liberal Party could have rallied the churches, giving cover and much needed support to pastors and priests throughout the State, stunned that worshipers were to have doors slammed in their faces.
Liberal MPs didn’t. They aren’t Christians, most of them. That would take differentiation through Faith.
At every opportunity, the Liberal Party Opposition Leader has looked politically anemic. You don’t win by hedging. You don’t win by staying small. You don’t win by cloning yourself using a tyrant as the mould.
You win by standing for something. You win by inspiring people for a better tomorrow. You win by giving people hope. You win by serving others in practical, helpful ways. You win by differentiating yourself from the tyrant.
None of this was done by Matthew Guy and his Liberal Party in Victoria.
I therefore don’t need to watch the election coverage tonight.
Labor will be returned.
Lack of differentiation and beliefs will be the reason.
Pray for the people of Victoria.
And if my prediction is wrong, pray for the people of Victoria anyway.
“Perhaps the nature of every bureaucracy is to make functionaries and mere cogs in the administrative machinery out of men, and thus to dehumanise them”.
Hannah Arendt.
The Royal Commission report into the Robodebt scandal has shone a spotlight on the leviathan that is now the Australian government. Not surprisingly, the Albanese government has distanced itself from the findings, portraying the ill-conceived scheme as a failure of their political opponents. Most of the media frame it as a failure of the Coalition government.
In neither case is the integrity and generosity of government as an institution ever questioned, nor its proper role in society. Bill Shorten made this clear when he said: “There is an ethos in Australia that the Government always has its people’s best interests at heart and, in legal matters, is a model litigant.”[1] From his perspective the Coalition betrayed this ethos.
It is a belief in which the Australian government represents the pinnacle of virtue. Not mere mortals pursuing their own self-interests, but a congregation of the anointed ones.
This ethos of government as inherently good is pervasive and has allowed it to become impervious to failure.
Yet we don’t have to look back too far to find a pattern of systemic government blunders, with substantial human and financial costs. Let us remember just a few within recent memory:
Green Loans Program (2009-2010). Thousands of assessors who invested their time and money were left with unfulfilled work promises.
Home Insulation Program (2009-2019). The death of 4 young installers sparked a Royal Commission which concluded it was a “serious failure of public administration”.
Building the Education Revolution (2009-2011). A $16.2 billion ‘stimulus package’ resulting in hugely inflated construction costs and waste.
Vocational Education and Training FEE-HELP Loans (2012-2016). Hundreds of vulnerable Australians were left with large debts for courses they never completed or started.
Jobactive Employment Services (2015-2022). Delivered high profits for job agencies and a bureaucratic nightmare for job seekers.
Much can also be said about the NBN rollout, the NDIS, Snowy 2.0 and the ongoing PwC tax leaks scandal. Time after time a series of scathing, damning, blistering reports, inquiries, audits, and Royal Commissions have analysed the reasons for each successive failure, the lessons learned, and the specific details that need to be corrected to ensure the good intentions of central planners are not botched by implementation mistakes.
In the wake of the Robodebt report there are calls for a change in the culture of the Australian Public Service: a renewed Code of Conduct and Values with an emphasis on stewardship and a primary focus on the people the APS is meant to serve.
Kathryn Campbell. The senior bureaucrat who implemented Robodebt, an algorithmic system which issued illegal social security debt notices.
Missing from the report and the discussion is the one recommendation that would ensure that Services Australia cannot continue to harm vulnerable Australians (especially in the age of AI): dismantle it.
Human tragedies, large and small, have been enabled by bloated centralised bureaucracies throughout history. The more concentrated the power structure, the bigger the tragedy. Hannah Arendt, reporting in 1961 on the trial of Adolf Eichmann, a major Holocaust perpetrator, observed: “the court naturally conceded that such a crime could be committed only by a giant bureaucracy using the resources of government.”
In the context of a more dispersed power structure, a giant Australian bureaucracy is still capable of causing severe harm as we have seen with Robodebt and numerous other cases. The response should be to reduce the source of this harm to its minimum expression, not to defend it or reform it.
The fundamental mistake is to endow government with high moral values, higher than those of private citizens. A fair and just society is not built by abdicating social responsibilities and delegating them to an external agent, one with coercive powers and a perverse incentive structure.
Governments are not benign. In reality, “the individual bureaucrat is not attempting to maximize the public interest very vigorously but is attempting to maximize his or her own utility just as vigorously as you and I.”[2]
Acknowledging the primacy of self-interest is not incompatible with a natural tendency to help others and engage in charitable activities or mutual aid.
Australia has a proud history of friendly societies that provided vital financial and social support to many communities before they were crowded out by government welfare[3].
At the beginning of the twentieth century nearly half Australia’s population was connected to a friendly society[4]. How much good could civil society do today with a fraction of the resources removed by a confused bureaucracy mostly concerned with finding its own soul?
Despite being pushed aside and distorted by the expansion of government, Australia’s strong volunteer tradition never disappeared. We see it all around us, in the selfless actions of millions of people, each with their own unique talents, experiences, and circumstances.
First, New Zealand Prime Minister Jacinda Ardern announced her resignation effective, at the latest, early in February 2023. (Yes, New Zealanders need to endure her for a few weeks more!)
Second, I put out this short tweet yesterday together with a video of the Prime Minister, and it went viral. In a mere 180 minutes, it was seen by 67,400 people and was still swishing around the globe as I wrote this. After 8 hours, 165,000+!
Jacinda Ardern set a couple of records. She was the youngest female prime minister ever in 2017. Further, she gave birth whilst in office.
Of course, neither of these have anything to do with political achievement.
To be fair, we can probably agree that Jacinda Ardern is expressive.
Some went so far as to say she showed great empathy.
I think it more accurate to say any apparent empathy was self-consciously dispensed and exclusively to beneficiaries of her bias.
Any praise for expressiveness and empathy needs much closer scrutiny. It’s what she expresses that so confounds civil libertarians like you and me. And, if you don’t mind me expressing myself here dear reader, she showed a distinct lack of empathy for many during covid lockdowns, victims of which are generations not yet born as you’ll see. So read on.
Instead, what we observed was a smiling socialist, a Daughter of Davos, instinct over intellect, all feeling and no financial finesse. In short, she was a classical liberal’s nightmare.
Just look at the legacy she leaves after six reckless years in office:
Frequent meddling with the free market. The results: distortions in housing prices and a generation of first home buyers shut-out of their ownership aspirations;
A backlash against over-zealous covid restrictions and loss of personal freedoms, including creating a medical-apartheid defined by vaccination-status. See the video tweet above;
Conscientious objectors and the vaccine-hesitant were shunned socially, denied mobility, prevented from earning a living and targeted by government in ways the Stasi would have relished in Soviet-era East Germany;
Consequential increasing crime rates in the island nation;
Inflation sitting at 7.2%;
Food prices spiking 8.3% compared with the same time a year earlier;
Successive interest rate increases from New Zealand’s central bank;
A monstrous public debt! When she took office, the public debt was approximately $60 billion USD. Projections are that, based on all data currently available reflecting the decisions of her government, that the national debt will balloon to $151 billion USD by 2027. If the figure proves higher or lower than that, it will be the result of her successor’s policies, but you can see the economic vandalism on her watch. Put it this way, she led a government which racked-up triple the debt of all previous New Zealand governments combined. She went way over the credit card limit and left someone else to pick up the bill. Funny, right?;
For a country with a population the size of Boston, it will take three generations at least to bring that debt to heel. We are talking inter-generational theft which will crush Zoomer Kiwis’ standard of living, their children and their grandchildren. That is to say, on the day after you, I and Jacinda Ardern meet our Lord and Maker, New Zealanders will be dealing with the Ardern Economic Catastrophe for another two generations thereafter;
Many of them will flee New Zealand and hollow this beautiful jewel of the South Pacific. They have been emigrating anyway, mainly to Australia, the United Kingdom and the United States;
A strategic flirtation with the Chinese Communist Party. Her Labour Party has long shunned our liberal democratic ally, America. It was a natural progression from that to openly calling for greater integration with the communists, a weak-kneed strategy in favour of firebrand authoritarianism with a chequebook over the cleansing-balm of liberty;
Consistent with that predisposition towards authoritarianism, civil liberties in New Zealand were shattered under her Governments. Emergency powers poised to be invoked again at any time are left in place;
Chinese Communist Party infiltration of New Zealand consulates and banks;
She openly lied about the efficacy of covid vaccines. “If you take the vaccine, you’ll still get covid but you won’t get sick and you won’t die” was a claim she made during the height of an hysteria of her own making, and contradicted by the science and the manufacturer. Don’t believe me? Watch this …
More government restrictions on the access and use of water;
Crushing regulations on agricultural emissions;
Further shifting of the goal posts with hate speech laws without any safeguards as to who adjudicates what ‘hate speech’ actually is.
The adulation and applause had faded about a year ago. The shadowy World Economic Forum’s simping seemed impossibly distant now. Jacinda Ardern had to face the people of New Zealand imminently and the prospects weren’t promising.
With polling numbers in decline and the sparkle now tarnished, the Prime Minister did what all faithful authoritarians and central-planners do when their number is up. She spoke sweetly, smiled nervously, then scurried to the nearest exit hoping that the rule of law she undermined holds firm for her.
I was shocked my tweet went viral. I shouldn’t have been. Countless everyday people across the West, people like you and I, have had a gutful.
The Daughter of Davos was a symbol of all that has gone wrong over the last 3 years. So of course you cheered her departure.
I don’t think we’ll have to wait long before she re-emerges with an ostentatious job title and global brief somewhere in the world. “Poverty Ambassador-At-Large, World Economic Forum”, on $820,000 per annum, Davos chalet and chauffeur the obligatory perks on top sounds about right.
And when that happens, you and I can both smile knowingly that at least here she won’t have harmed anyone further. On her departure from the Land of the Long White Cloud, she will increase the average IQ of New Zealand, and not decrease that of the World Economic Forum.
