Taxing credulity

Two pollsters have lowered their colours in recent days with poorly framed questions on the carbon tax. Last week, Roy Morgan conducted a phone poll which, among other many things, asked of respondents: “Australia is only responsible for about 1% of the world’s total carbon dioxide emissions. Are you aware of this or not?” This is essentially a political talking point framed as a question: understandable from a political party engaged in the desperate tactic of push-polling, but quite incomprehensible from a market research firm. Beyond that though, I don’t think the Morgan poll did much harm. As Peter Brent of Mumble rightly points out, results for the aforementioned question and those asked thereafter must be regarded as unreliable, but the nature of these questions was such that this is no great loss. The question on voting intention was presumably asked before the ones on climate change, and the first three climate change questions were usefully framed and produced results consistent with other polling. If the voting intention results from the poll do not seem plausible – and they don’t – this must be put down to sampling error and perhaps some systemic bias suffered by Morgan phone polls, although this hasn’t been evident in the past.

More troubling is today’s Galaxy poll, which targeted a small sample of 500 respondents on behalf of the Daily Telegraph. For the most part, its results are of genuine concern for the government. Only 28 per cent answered in favour of a carbon tax against 58 per cent opposed, corroborating the 30 per cent and 60 per cent from Newspoll when it last asked the question on April 29-May 1. Even worse for the government, fully 73 per cent said the tax would leave them worse off against only 7 per cent who opted for better off. Less remarkably, the poll found 20 per cent believe the tax would have a major impact on the environment, 46 per cent a minor impact and 29 per cent no impact.

The problem lies with the following: “Does the PM have a mandate to introduce the tax or should she call an early election?” This gives respondents no outlet for the obvious third alternative: that while the Prime Minister does not have a mandate for a carbon tax (and given her position during the election campaign, it could hardly be argued otherwise), the government should nonetheless govern as it sees fit and face the music at the end of its term. This happens to have been the default position for poll respondents since 1975, when 70 per cent opposed the blocking of supply despite the enormous unpopularity of the Whitlam government. There can be little doubt that many who wished to express a view that no mandate existed opted for the only available alternative. That a substantial proportion would have preferred the option Galaxy did not provide is illustrated by last week’s Essential Research poll, which asked the question the way it should be asked: “Do you think the Government should call an early election over the carbon tax?” Whereas Galaxy had 24 per cent choosing the “has mandate” option and 64 per cent “should call early election”, Essential had it at 42 per cent each way.

Considerably exacerbating the problem is that the poll was conducted for Australia’s most brazenly partisan metropolitan newspaper, the Daily Telegraph (UPDATE: The Herald-Sun is also selling it as its own work). And true to form, the Telegraph has today used the opportunity to run an editorial headlined “voters demand a carbon tax ballot”, in which it argues that “an election now is very necessary”. This is not the first time Galaxy has risked taking a hit from its association with the paper. During the election campaign the Telegraph tasked it with assembling an audience for a “people’s forum” involving the two leaders at Rooty Hill RSL in western Sydney, and there was little doubt that the room was pro-Abbott (sweet revenge, the Coalition might well think, for many a pro-Labor worm in leaders debates of elections past). On that occasion the culprit appeared to be the targeting of “undecided” voters concentrated in a part of the world which had been notably problematic for Labor. If the Telegraph itself had a hand in either the Rooty Hill methodology or the wording of the early election question, Galaxy might want to be a bit more firm with it in future, lest it jeopardise the reputation its polling record suggests it deserves.

For all that, there can be no denying that the carbon tax debate has so far been all pain and no gain for the government. The initial announcement in March saw the polling trend blow out from 51-49 in the Coalition’s favour to 54-46, and attitudinal questions have generally found the tax to be getting less popular rather than more. However, two caveats need to be added. Firstly, the phone polls conducted by Newspoll, Galaxy and Morgan have painted a more negative picture than the online methodology of Essential Research, which last week found 38 per cent support and 48 per cent opposition. Lest it be inferred that this represents a Labor bias from Essential, their two-party average since the carbon tax was announced has actually been worse for Labor than Newspoll’s (aided in no small measure by Newspoll’s rogue 51-49 to Labor result of March 18-20). Phone polling tends to get taken more seriously purely due to its long track record, but it could be that this disparity illustrates concerns that are increasingly raised about it: that in limiting its catchment to those with landline phones, it misses a more technologically fashionable and, perhaps, environmentally minded section of the electoral market.

Secondly, Essential Research found the idea of a carbon tax to be a great deal more popular when it put it to voters that “the money paid by big polluting industries” would be used “to compensate low and middle income earners and small businesses for increased prices”. When the question was asked thus in mid-April, fully 54 per cent expressed support against 30 per cent opposed. However, I’m not inclined to think this offers the government more than limited comfort, unless and until it proves capable of framing the debate in such fortuitous terms.

Author: William Bowe

William Bowe is a Perth-based election analyst and occasional teacher of political science. His blog, The Poll Bludger, has existed in one form or another since 2004, and is one of the most heavily trafficked websites on Australian politics.

128 comments on “Taxing credulity”

  1. My avatar is probably a breach of commonwealth copyright, it’s drawn from the Australian coat of arms. My time in the services was during a nasty outbreak of peace and I do not have a service medal.

    There are many similarities between the constitutional design of the US and that of Australia, but separation of the Executive and the Legislature is not one of them. It is not some sort of imperfectly realized ambition that the founders aimed for and somehow missed. On the contrary, Australia’s founders sought to improve on the integration of the British Executive and Legislature by specifically enabling members of both Houses including the upper House to become ministers, a practice which is frowned upon by convention in the UK (but not quite excluded, see Lucinda Maer).

    There is a great deal of contemporary literature from the time of Australia’s constitutional conventions, weighing up the merits of a separate Executive or a responsible one. Baker (see above) is just one example. The debates came down decisively in favour of a variation on responsible Executive, and they explained their reasons in detail. Australian federation was not, as some modern journalists have suggested, just a patchwork of two models that they could not decide between.

  2. freecountry @ 101:

    It’s all right, I’m not a policeman, but the colours of your gravatar are those of the Defence Force Service Medal, and the National Medal.

    Yes, the major difference between the US and Australian systems of government is that with the former, the executive is not drawn from the legislature and is not therefore directly responsible to it. And, unlike our system, UK ministers are rarely drawn from the Lords, although this is, as you say, based on convention, not legislation.

    The drafters of our Constitution were fortunate in that they were able to draft the document over a number of years and compare and contrast other systems in the absence of the turmoil of a civil war, a revolution, or a war of independence.

    Be that as it may, if they had chosen the US model of an executive not drawn from or responsible to the legislature, I wonder if the Constitution Act would have passed the UK Parliament?

    The US system of executive government does have it advantages in that it can select talented people from both the public and private sector. McNamara,* for instance, Kennedy’s and Johnson’s Secretary of Defense, was formerly president of Ford. And although not members of the legislature, people of the likes of McNamara are accountable to the legislature in the form of a select committee hearing before appointment and presumably to some form of disciplinary proceeding – impeachment? – if they transgress whilst in office.

    On balance I think I prefer the US model.

    * Of course, the question as to whether McNamara was talented is moot.

  3. There are 3 areas where the writers of the Constitution gave the Commonwealth more overall power than they set out to.

    Firstly, the combination of the unfettered taxation (apart from requiring uniformity of Commonwealth taxes) and the unlimited conditional funding of states power with not requirement .

    Secondly, the appointment of puisine Justices by the Commonwealth instead of the states. The Federalist way to organise the High Court would have been to have each state appoint a puisine Justice and the Commonwealth appoint the Chief Justice and a puiscine Justice and or Deputy Chief Justice with a mechanism to insure that there are always an odd number of Justices who make any one decision.

    Thirdly, the inability of the states to initiate a referendum to change the constitution (this could have been used to change the first issue after the uniform tax case in 1942 and possibly the second at some point). Could a system of a majority(or unanimity) of states passing a bill by an absolute majority to initiate an amendment to the Constitution have worked.

  4. As others have noted, for better or worse, Australia’s legal and political arrangements have us in a kind of structural rut. Whether you think this is better or worse largely maps to being right or left. In practice, we aren’t about to do anything seriously worthwhile in constitutional reform any time soon.

    That said,

    1. It would be a very useful thing if if states and local governments could be replaced by properly regional government.

    2. It would be even more useful is we developed a system of representation based on deliberative sortition for candidates for office and direct democracy for ratification and amendment of strategic goals of state or seriously divisive issues.

    3. Increasing resort to e-voting/polling would also be a huge step forward, even if it were non-binding.

  5. Tom the first and best @ 103:

    Interesting analysis.

    I’ve never come across any reference to your second point although I did read that it was proposed at one stage to appoint Supreme Court judges sitting on a rotational basis.

    And then there are the implied rights which the drafters didn’t appear to turn their minds to, or thought would be guaranteed by an independent judiciary, such as freedom of political discourse and qualified suffrage.

    I’ve always found it perplexing that so few rights are guaranteed by the Constitution. But I guess the rights established under Magna Carta and the Bill of Rights were seen at the time as sufficient, in that at least they guarantee fundamental rights such as habeas corpus.

  6. Fran Barlow @ 104:

    I think you’re correct in stating that constitutional reform is wanting but in practical terms, not an option given the innate distrust the constituency has in Constitutional amendment, not helped by the partisan approach usually adopted by the major parties. I mean, a record of 8 of 44 doesn’t engender optimism.

    As for your suggestion of regional governments to replace state and local governments, this would require a fundamental rewriting of the Constitution, as the whole federal system is based on the power relations between the Commonwealth and the States.

    And whilst sortition may have worked in Ancient Greece, I’m not sure of its applicability in todays’s polity, though ‘direct democracy’ by way of say online polling could be introduced without I think amendment to the Constitution and is a very sound idea, even if it’s not, as you say, binding.

  7. Fran Barlow,

    The only reason commonwealth politicians keep touting a regional model is because it would be a true hierarchy, not a federation, so almost all limits on commonwealth power would be removed. Totalitarians would be pleased but I’m not sure that the majority of regionalists would continue to support the model if they understood that that’s the main driver for it.

    Tom the first and best,

    The first problem, vertical fiscal imbalance, probably requires the states to jointly reclaim their income tax powers as Professor Ken Wiltshire suggests. We could re-jig the federal grants system to make it work better, but as Kevin Rudd and Wayne Swan have made clear, the Commonwealth giveth and the Commonwealth taketh away, on a whim. COAG agreements are not worth the paper they’re written on.

    The second and third problems you name could be partially alleviated by way of a republic referendum. (This is the only worthwhile reason I can think of to have a republic, and it’s the only major constitutional reform likely to pass referendum.) Every five or so years, each state would nominate one candidate to be the Australian head of state. State governments could select their nominations however they wish: they could use it to put ex-Premiers out to pasture, hold state primaries, whatever, it’s up to them.

    The Australian public would then vote to elect one of those candidates as Australian head of state — we could call the office Chancellor, for want of a better word. The Chancellor of the Federal Commonwealth of Australia would have an independent office of advisors which he/she could hire and fire, and would be completely independent of the Executive Council in certain matters including the appointment of High Court judges.

    Thus the Australian public would choose their own head of state, and would be one step removed from appointing High Court judges. The states would gain influence through the power to nominate candidates, and would have an incentive to nominate high quality candidates (not just shock-jock politicians). The High Court would in time cease to be such an anti-federalist, Canberra-centric institution that it is, and might even develop some competence at interpreting the Constitution.

  8. freecountry @ 107:

    You said: ‘The High Court would in time cease to be such an anti-federalist, Canberra-centric institution that it is, and might even develop some competence at interpreting the Constitution.

    I’ve always thought that by and large the High Court is federalist and very competent at interpreting the Constitution.’

    Apart from the Mason Court, which arguably went too far in some aspects, can you offer any evidence to support your assertion that the High Court has been incompetent at interpreting the Constitution.

  9. See for example James Allen and Nicholas Aroney, 2008.
    If you find that unconvincing, see pp 31-34 of Anne Twomey and Glen Withers, 2007.

    The High Court has never made much use of the Preamble which introduces an “indissoluble Federal Commonwealth” (to Kirby J’s chagrin, but in many ways he’s the exception that proves the rule) — see McKenna, Simpson and Williams, 2001. For example it would be a waste of time appealing to the High Court to take a broad view of s99 (non-discrimination between the states) in the light of that Preamble to preclude the withholding of grants against one state, for example to punish a state for removing a mining royalty discount without first getting “the tick” from Canberra.

  10. Charlton said:

    [And whilst sortition may have worked in Ancient Greece, I’m not sure of its applicability in todays’s polity, though ‘direct democracy’ by way of say online polling could be introduced without I think amendment to the Constitution and is a very sound idea, even if it’s not, as you say, binding.]

    It could be a lot more deliberative and nuanced and low cost today, given

    a) the far higher proportion of literate people
    b) availability of web technologies
    c) the greater scope for modelling and analysis of policy proposals
    d) the far higher social surplus and the larger constituency base

    On the downside, it would reduce political parties to mere think tanks rather than vehicles for political careers, and we could scarcely allow that, could we?

    On the online polling, it would be possible to use fixed machines in public places such as shopping centres, public offices, TABs etc and make them reasonoably interactive, use a variety of languages and data formats etc … You could do a lot more qualitative as well as quantitative polling.

  11. freecountry said:

    [The only reason commonwealth politicians keep touting a regional model is because it would be a true hierarchy, not a federation, so almost all limits on commonwealth power would be removed. Totalitarians would be pleased …]

    Not the least crime of the right in recent years is the debauching of the word ‘totalitarian’. It’s really a second order Godwin. France has regional government and yet somehow escapes the label. Hmmmm

    Totalitarian regimes allow no space at all between the state power and civil society, dissolving the boundaries between the law and the culture. They reach deep into the private space of individuals, requiring compliance not merely with laws but to be culturally at one with the regime’s executive. No alternative expressions of the polity are permitted in public space, and for all practical purposes, private space is virtually non-existent. By this standard, China and Burma, though repressive and bonapartist, are not totalitarian. North Korea almost certainly is.

    One may argue that dropping one out of three tiers of government may not be a good idea, and that it may result in too strong a central government, yet it has nothing to do with usages comparable with those in North Korea.

  12. I did not say that a regionalist constitution would fully realize the aims of a totalitarian, but that totalitarians would approve of further centralization — i.e. voters with a totalitarian bent would consider it a step in the right direction. It’s not a typecasting offence if I choose the word with care based on expressed opinions like this one:
    [The Big Brother/Nanny State objections don’t wash with me. The main problem with governments is not that they pay too much attention to the minutiae of the lives of their citizens, but that they pay too little.]

  13. Fran Barlow @ 110:

    Thanks for your response and I generally agree with what you’ve written.

    In this technological age it seems ridiculous that at each election, the vast majority are expected to make the trip to the polling booth when it would be so easy to vote electronically; and extend same to general polling.

  14. [I did not say that a regionalist constitution would fully realize the aims of a totalitarian, but that totalitarians would approve of further centralization — i.e. voters with a totalitarian bent would consider it a step in the right direction.]

    Well there’s your problem. The phrase a totalitarian bent make a boolean scaleable. It’s a slippery slope and specious ad hominem attack all rolled into one. I’m not the least bit inclined to totalitarianism, as this very thread shows. Your quote from me doesn’t help your case:

    [The Big Brother/Nanny State objections don’t wash with me. The main problem with governments is not that they pay too much attention to the minutiae of the lives of their citizens, but that they pay too little.]

    That was an appeal for the state to make sure that the needs of the citizenry (rather than merely the wealthy and well-connected) were met — to ask the question — how does this serve the greater good? Should the state care that some child is being neglected, or some adult is not getting the health provision he or she needs? Should it care if pollution is poisoning the populace or a business is defrauding people? Should it aim to ensure that housing is of a high standard or that transport is efficient? Should it ensure that there are adequate opportunities for recreation and learning, or that the ecosystem is protected? Should it seek to reduce large differentials in wealth and power amongst citizens? I’d say so, though what that has to do with totalitarian inclination is not immediately obvious.

    I’ve never met anyone I could swear had ‘a totalitarian bent’, so I’m ill-placed to say whether they’d prefer my structure or not. I suspect there are very few of them so the question is moot — especially given the other measures I’d like to accompany governance which are about as pluralistic as one could imagine. What’s more salient is what those who see themselves as close to the interests of the elites in this country regard as best serving them — and the majority of them clearly prefer the existing arrangements. It’s not hard to see why.

  15. Here we go … “Should the state care that some child is being neglected …?” There’s always an image of a poor child to justify more state coercion across the boundaries of private responsibility. It’s only three years gone that Kevin Rudd apologized on behalf of all of us to the Stolen Generations for having done just that — for interfering in families where the state thought it knew best and the state was wrong. Nor is that the end of the matter, as one inquiry after another accuses government child protection regimes of interfering where they are not needed and doing more harm than good. Rescuing children from poverty is always top of the list when bigger government is being recommended as the solution to all problems. It took me a long time to understand that government protects children best by setting people free to build their own future, their own way.

  16. [It took me a long time to understand that government protects children best by setting people free to build their own future, their own way.]

    That’s a statement of cultural claim rather than a rule borne out by actual experience. Particularly in the case of those in the bottom 25% of the income stream, it is persistently refuted.

    However that may be, the desire to have the state predispose individuals to do right by themselves and ensure people get what they need to be in control of their lives and not a burden on others is scarcely totalitarian.

  17. The idea of it being the state’s place to “predispose” people to be a certain way is the sort of thing I’m talking about, it makes my skin crawl. In any case, wanting a high level of welfare support for the unfortunate does not explain being anti-federalist. Even Norway has devolved a higher level of autonomy to its subordinate municipal governments than the central Australian government allows its co-sovereign states to wield in practice.

    Nor is that unusual; outside Australia the trend is towards devolution of authority, especially in liberal socialist regimes like the Nordic countries. Why? Mainly because the more active the state becomes, the more it can benefit from healthy competition between sub-national governments to achieve better social outcomes, more cost-effectively, and with more meaningful evaluation of comparative methods and side-effects. Actually that’s one of the reasons the Nordic countries achieve the intrusive state with so much success and so little dissent: devolution of authority to sub-national governments.

    That wouldn’t work in Australia, for the same reason that federation is barely working. Devolution of authority has gone out of fashion in Australia. Everything has to be done Canberra’s way, one-size-fits-all. It would be no different in a regionalist structure, except that the leash would be even shorter.

    There’s another reason too. A federation can cater for both your political preferences and mine at the same time: the intrusion of the state into private life is a lot less coercive for citizens who can always resort to moving interstate without giving up their nationality. You and I, Fran Barlow, will never agree on most things, but in a properly functioning federation we don’t have to; there’s room enough for us both without having to try to defeat each other at the polls every time we want things our own way.

  18. [wanting a high level of welfare support for the unfortunate does not explain being anti-federalist. Even Norway has devolved a higher level of autonomy to its subordinate municipal governments than the central Australian government allows its co-sovereign states to wield in practice. … outside Australia the trend is towards devolution of authority, especially in liberal socialist regimes like the Nordic countries]

    So (putting aside what municipal means here) what you’re saying is that the governing structure tells us little about the view of community purview people have. I don’t see that this helps your claim against me much.

    [the more active the state becomes, the more it can benefit from healthy competition between sub-national governments to achieve better social outcomes, more cost-effectively, and with more meaningful evaluation of comparative methods and side-effects.]

    Different arms of government competing over resources is efficient or effective? Hmmm … ideology and reason are poor bedfellows.

    [A federation can cater for both your political preferences and mine at the same time: the intrusion of the state into private life is a lot less coercive for citizens who can always resort to moving interstate without giving up their nationality. You and I, Fran Barlow, will never agree on most things, but in a properly functioning federation we don’t have to;]

    No it can’t. As things stand we have expensive policy gridlock. I’d sooner your lot have a clear win than that. At least then you can have your go and when it fails we can say “I told you so … now it’s our turn.” and explain why we have to clear up the mess.

    Of course, I think an informed and engaged public should underpin this — hence my desire to see deliberative sortition and direct democracy do what political parties have debauched. In practice, I’m favouring more pluralism than you. Under my system, winner doesn’t take all. We get to argue the toss regardless of our paradigm, and hope that we win the public policy issue.

  19. What claim against you? I made a passing remark about totalitarians approving of further centralization of power, and I’ll withdraw the word it means we can get back to a practical topic. We were talking about federalism, what had gone wrong with it, and I had suggested two measures which I believe could make a difference:

    (1) the commonwealth could make some space for the states to levy income tax, something which even municipal (i.e. delegated local) governments in the much-admired Nordic countries levy with more freedom than our sovereign states do;

    (2) a republic referendum could create a head of state with certain powers, who is popularly elected from candidates nominated by each state.

    Or we could, as you suggest, tear up the constitution and start again, creating a unitary government, with regional municipal authorities which would do what they’re told without all this answering back and constant complaining about lack of funds.

    There are several problems with that. First, Australia’s political maturity is at a low point right now and it will be a long time before it can match that of 1890s Australia ; we are simply not competent to draft a replacement constitution right now.

    Second, if the central government cannot bring itself to trust states with anything, why would it trust the proposed regional governments with anything? As I mentioned, a key factor in the success of the Nordic countries is that they are mature enough to delegate substantial responsibilities to their sub-national governments. All the evidence suggests that Australian federal governments would do the exact opposite.

    Third, the federal government is nowhere near as competent as it appears. Most of its showcase achievements such as financial regulation and the core industrial relations protections were developed in the states; the commonwealth simply adopted the most successful initiatives and discarded the failed ones. In its exclusive areas of responsibility, it has a far less illustrious resume.

    Defence is just one fiasco after another. A few thousand boat people a year are enough to tear Canberra apart politically, going on for more than a decade now with no end in sight. Tertiary education has gone into drastic decline since the federal government took it over from the states in the 1970s — it now treats university degrees as an export commodity, which it is no longer able to sell without back-door immigration bonuses thrown in.

    The most highly regarded commonwealth institution today is probably the Reserve Bank, mainly because it is a truly delegated authority which operates without interference of the Executive or the Legislature. The lesson of this is lost on today’s politicians; like overprotective parents they are unable to grasp the lesson about entrusting power to others.

    Federal government has some feathers in its cap, such as the world’s best superannuation system, but very few post-Keating’s politicians even understand it. The Coalition derides the system because they think it’s tainted by union involvement. Most Labor members despise it because they think pensions should be guaranteed by the state. It has completely escaped the attention of almost all of them that the $1.2 trillion superannuation pool can fulfil the role of a so-called “sovereign wealth fund”, potentially capable of financing all Australia’s infrastructure needs, and having the enormous advantage that politicians cannot just raid it and blow it for their own political gain as they have done with the Future Fund.

    There’s no evidence that the federal government would do better than the states in their areas of responsibility, and I think there’s a lot of evidence that it would do worse.

    As for competing over the same resources (and areas of legislation) that’s the very problem we were discussing. It’s a peculiarity of Australia, not an inherent problem of other federations. The division of responsibilities and resources needs to be renegotiated and clarified.

  20. I’d just like to add a thanks to William for the excellently written lead in piece to this topic, which clearly explains why these polls are biased and worthless. I can only hope it is widely read.

  21. While I agree with freecountry on the noble ideals of our super policy, I’d refer him to Stephen Long’s analysis last year which showed that the average return over 14 years was a lamentably bad 4% per annum, barely exceeding inflation. We may have a lot saved in super, but that does not mean it is being well used.

  22. With respect to Stephen Long, he measured results after a big two-year dip which dominates the annualized return figures of the preceding decade. Young people are often advised to put more of their super into volatile investment options, which can look bad in the short term, but the dollar-cost-averaging effect means they are getting more shares at a discount price and this will serve them well later. Older people are often advised to use safer, less volatile investment options, so they would not expect high returns.

    That said, I was disappointed by some decisions made in Canberra during the crisis. The government went to a great deal of trouble to prop up house prices and avoid residential owners going into “negative equity”. Share investors and superannuation investors were somewhat abandoned to their fate, and they suffered for it. Almost the entire Australian infrastructure equity sector went bust and vanished in 2009-10. The survivors like Challenger are invested in overseas infrastructure, not domestic infrastructure. A lot of investors therefore pulled their savings and their SMSFs out of the share and bond markets and into tax-favoured residential investments. This has depleted the capital markets, reduced superannuation returns, and perhaps slowed recovery in the real economy.

  23. Ok … so you withdraw your suggestion that centralised goverance derives from totalitarian impulses … let’s move on …

    FC said:

    [the commonwealth could make some space for the states to levy income tax, something which even municipal (i.e. delegated local) governments in the much-admired Nordic countries levy with more freedom than our sovereign states do;]

    All this can do is introduce new collection costs into the system. There’s a limit on how much the population can be levied before marginal utility starts to fall and obviously, the lower the collection costs the later you arrive there. What you really want is for decisions over disbursement of funds to be made by those best placed to make good use of the funds. Making good use of the funds implies consistency in program goals and implementation with the needs of those parts of the jurisdiction where the program has a footprint. It implies optimal NPV. It’s from these considerations that we need to derive decision-making. Imagine deciding what to do about coastal development in the face of rising sea levels. On the face of it, one might imagine the council should decide, but one council’s decision may simply shift the problem up or down the coast and so forth. Nor can State or Federal governments underwrite council liability without serious moral hazard issues arising. Clearly, rules on this must come from the Federal government and be universally applicable even if they pay verry close attention to local data.

    [Or we could, as you suggest, tear up the constitution and start again, creating a unitary government, with regional municipal authorities which would do what they’re told without all this answering back and constant complaining about lack of funds. ]

    Let’s tone down the rhetoric. The Feds ought to set the big goals and challenge the regions to develop programs that are consistent with those goals, at seast where programs have a consequence outside the bailiwick. You can’t have 35 different school or hospital or law enforcement or housing or transport or water management or child services systems. You can’t have them all bidding to head hunt the people running the place up the road. That’s just stupid.

  24. Do you think it’s wasteful having several different mobile phone service providers? All offering basically the same thing, duplicating each others’ infrastructure, administration, etc. Not much in the way of synergies, except that they offer cross-service to each other’s customers for emergency calls, and sometimes they subcontract network services to each other. If your linear description of funds and utility in the public sector is also applicable to mobile communication, then competition should make mobile services more expensive than they would be in a monopoly. Similarly competition among banks, magazine publishers, bakeries, and supermarket chains, should be driving the cost of living up rather than down, because of all the expensive duplication. (And that’s before we get into questions of whether a monopoly offers customers what they want.) In the absence of a controlled experiment, you could argue that that’s the case. Do you think so?

  25. FC:

    [Do you think it’s wasteful having several different mobile phone service providers? All offering basically the same thing, duplicating each others’ infrastructure, administration, etc. Not much in the way of synergies … ]

    Of course it’s wasteful. Doubtless, in theory if there were but one provider, the costs of service per customer would be lower. In practice of course there’d be little pressure to lower prices. The principal imperative would be to maximise returns to equity holders — i.e. to charge as much as was consistent with ROI. They’d probably junk marginal service consistent with this policy.

    What this illustrates however, is the difference between the imperatives driving public provision of goods and private provision of goods. Public services are driven by the desire to maximse the quality and ubiquity of service provision, and to the extent that cost is a constraint this is an essentially political question about which services get funded in turn a question about the size of the funding pool. For the public service to compete against itself for resources and quality staff can only lead to a decline in their ability to use their funds to meet service provision.

    The private sector however isn’t bothered at all by whether its services are good value for money, except to the extent that it may wish to increase market share in some demographic. If it has to pay more for its staff or resources because it has competitors, this is an overhead worth paying up to but not beyond the point at which returns to equity holders begin to plateau. Companies aren’t worried by whether what they do may harm the community except to the extent that the harm may prove more costly to its private fortunes than the benefits from ignoring it.

    Whether a service should be publicly or privately provided very much depends on whether one wants to give priority to certainty, quality and ubiquity of service or lowest cost and minimal liability for service failure. One can ask whether it’s feasible to expect bureaucratic mechanisms to be able to deliver and maintain the service at acceptable cost and quality, or whether some private provider is better placed to provide it this cost, erring on the side of non-provision or service failure.

    From this one sees that competition, though subversive of cost efficiency, can be a lower overhead than the collective action problem created by monopoly. One sees also that the different drivers of public provision make the comparison specious, since public services have no need to provide returns to equity holders. Their reporting is to their political overseers.

  26. [For the public service to compete against itself for resources and quality staff can only lead to a decline in their ability to use their funds to meet service provision.]
    The public sector has always competed against itself and will always do so. Public servants who are committed to serving as best they can, inevitably come to believe that their particular function is more crucial for society than other functions which are funded from the same tax base. I challenge you to find one senior public servant who believes that his or her function is adequately funded, or that it is less deserving of a funding increase than that of his or her peers in other departments and functions.

    That means there are very few objective voices advising government to provide more resources to one service and less to another. But if government can look across the border at a neighboring state and see various indicators that it’s getting better value for money (eg more votes for the government at state election, cross-border migration, less overall complaints, etc) then it has an opportunity to study its neighbor closely and emulate its success.

    Of course we use international comparisons all the time for this sort of thing, but there are very few apples-to-apples comparisons available globally. States within the federation are comparable in many ways so you really can do apples-to-apples comparisons, isolating state policies and state services as a factor in social welfare.

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