Labor outdoes Sir Humphrey
6 May 2023
What is it with ministers, particularly newly installed ones, commissioning external reviews on core policy topics? It’s a bit like getting your mother to do your homework. Instead of ministers using their own judgement with the assistance of the highly paid bureaucrats we are all forced to pay for, it’s become the norm to seek out some high-profile person, often a former senior bureaucrat, and establish a review.
There is the added advantage of using the review to dump on the previous government. You know the sort of thing: ten years of inaction, terrible mistakes were made, the need to get it right.
There have been a number of recent examples of reviews commissioned and finalised by this federal government. There was the Strategic Defence Review – we wouldn’t want it to be non-strategic – headed by former military boss, Angus Houston (sorry Sir Angus Houston) and former Labor defence minister, Stephen Smith. (Smithy has landed one of the cushiest jobs around, Australia’s High Commissioner to the UK.) This was commissioned by Defence Minister and Deputy Prime Minister, Richard Marles.
We then had the Review of the Reserve Bank of Australia commissioned by Jimbo and headed this time by a Canadian economist who also sits on the Financial Policy Committee of the Bank of England. Making up the review team was a local academic economist and a former senior (and trusted) public servant, Gordon de Brouwer.
And just in case you hadn’t spent enough time ploughing through the hundreds of pages of these reviews, we have had the Review of the Migration System, chaired by the very trusted former public servant, Martin Parkinson, a progressive legal academic and a partner of one of the big consulting firms.
I won’t cover the SDR – yep, I can use an acronym as deftly as the next person – because I don’t really know anything about defence apart from my strong desire to see our country defended. But I do know quite a lot about the other two.
Of course, the first lesson for any minister commissioning a review is to know the answers before the bloody thing even gets under way. There can be no surprises, no unexpected or unwelcome recommendations. The real aim is to have some sort of external imprimatur for the decisions you were going to take anyway. It’s why appointing a dependable panel is so important.
Take the RBA review. The final report is entitled ‘An RBA fit for the future’. I guess making it unfit for the future wouldn’t work, but it rather assumes that the arrangements we currently have in place are seriously defective. But here’s the rub: the report fails to demonstrate how the status quo has led to inferior outcomes compared with other central banks that operate on a different basis. In other words, the case for change is unproven yet there are many recommendations for quite radical change.
Instead of the current board, the core recommendation is that a committee of experts, the Monetary Policy Board, be established to determine movements in the cash rates as well as other settings such quantitative easing/tightening. We saw how putting experts – or should that be ‘experts’ – in charge during the pandemic worked out. But it was always likely to be the case that a panel of experts would recommend a panel of experts to run the show. Let’s be realistic: Jimbo must have known this.
The trouble is that monetary policy committees filled to the gills with economists, mainly academic ones, have been the model in a number of countries for quite some time. At the Bank of England, for instance, the Monetary Policy Committee meets eight times a year for three and a half days (I guess they stop for lunch on the last day) to determine the official interest rate. To be appointed to the MPC is a prestige gig and potential candidates jostle for a position.
But here’s the thing: has the Bank of England performed any better than the RBA? Did it overdo the quantitative easing and allow close to zero interest rates to persist for too long? Was the inflationary impact of its decision-making anticipated? Are the inflation results better in the UK than here?
In a snapshot, the performance of the Bank of England has actually been worse than the RBA. Inflation is considerably higher in the UK and the economy is much weaker. Both the governor and the chief economist (who obviously sits on the MPC) have had bad cases of ‘foot-in-mouth’ when it comes to making public comments. Recently, Huw Pill, the chief economist, simply declared that Britons should get used to being poorer. That went down well from this well-qualified ‘expert’. (Mind you, our RBA governor has form when it comes to poor commentary.)
Let me move to the Review of the Migration System. Thankfully, the final report doesn’t have an annoying catchy title. Blind Freddy (am I allowed to still say that?) could see that the current visa system is an almighty mess. There are too many visa categories, the conditions are badly spelled out and impossible to enforce and temporary migrants game the system to their advantage. Almost any suggestion to reform the visa arrangements would be a plus.
The core problem, as the panel sees it, is that we are allowing in too many temporary migrants with the wrong skills – or no skills – and yet we are missing out on the most valuable migrants who are attracted to other countries. But short of capping the various temporary migrant visa programs, it’s not clear how we can stop the inflow of temporary migrants, including the wrong sorts of migrants. Making sure that international students are genuine in their educational motivation sounds both subjective and compliance-intensive.
It is estimated that there are around 1.8 million temporary migrants living here, the vast majority who want to stay. But we only allow 195,000 new permanent migrants to be approved each year. Even though we are told that we have the wrong temporary migrants here, there is preference to grant them a guaranteed pathway to permanent residence. This sounds completely contradictory.
To be sure, there is some sensible stuff in the report like making it easier for highly paid professionals to secure entry to Australia to take up jobs. This should have happened a long time ago – we didn’t need a report for this to happen. But I won’t be holding my breath that the broad reconfiguration of the visa categories will actually happen any time soon and that there will be measures in place to hold back the flood of temporary migrants.
The truth is that most reviews don’t matter and the hard copies of the reports begin to gather dust very quickly. This won’t stop ministers from commissioning their dependable friends to undertake these reviews – for a fee, of course.