InSight | May edition

Welcome to the first edition of InSight, the monthly online magazine of the CPD.

Towards a realistic climate change policy

‘Don’t blow it – good planets are hard to find’
TimeRecent reports on climate change have confirmed what has been intuitively and practically evident for many years, namely:

In response to community concerns over climate change, the Prime Minister set up a Task Group on Emissions Trading in December 2006, to report by end-May 2007. Its Terms of Reference state:

‘Australia enjoys major competitive advantages through the possession of large reserves of fossil fuels and uranium. In assessing Australia’s further contribution to reducing greenhouse gas emissions, these advantages must be preserved.
Against this background the Task Group will be asked to advise on the nature and design of a workable global emissions trading system in which Australia would be able to participate. The Task Group will advise and report on additional steps that might be taken, in Australia, consistent with the goal of establishing such a system.’

In the circumstances we now face, these requirements are dangerously anachronistic:


The Task Group Issues Paper released in early 2007 ignored the substantial body of knowledge on climate change and emissions trading built up over the last two decades in Australia. This paper might have been appropriate as a primer in the early-1990s, but to put it forward today as a serious contribution on this critical issue, suggests that the Federal Government either does not understand, or does not want to understand the seriousness of the challenge we face, and is intent on delaying effective action yet again.

Having crossed the threshold from denying to accepting that climate change is a serious issue, which the government now claims to have done, sensible policy becomes mandatory. Time is of the essence, for the longer it takes to implement solutions, the harder they become, particularly given growing evidence of non-linear climatic responses to increasing CO2 concentrations and rapidly accelerating emissions both here and overseas.

Current piecemeal initiatives are totally inadequate. Emissions trading is now, reluctantly, under discussion but it is only one component of the comprehensive policy required.

While the Federal Government has no coherent policy, I do not believe that the ALP really understand the extent, and urgency, of the challenge we face. Only the Greens are coming anywhere near it, as demonstrated by the Re-Energising Australia policy paper released by Christine Milne in April.

So what constitutes sensible climate change policy? It would look something like this:

Set targets to avoid dangerous climate change:

There must be rapid implementation of measures to stabilise atmospheric carbon concentrations by reducing emissions substantially. This requires clear, binding, deliverable targets to be agreed globally and nationally, best achieved by committing to a modified Kyoto Protocol in the immediate future:

About Tradeable Energy Quotas
Also known as ‘carbon rations’ or ‘personal carbon allowances’, TEQs are an electronic system for rationing energy, which includes every energy-user and energy-provider in a national economy in the task of reducing carbon dioxide released into the atmosphere from fossil-fuel energy.
TEQs are defined in terms of carbon units, that is one kilogram of carbon dioxide, representing the carbon emissions produced by use of the energy itself, plus the combustion of the other fuels that were used in its extraction, refining, generation and transport. All energy and fuel carry carbon rating in this way. Other greenhouse gases such as nitrous oxide and methane, are rated in CO2 equivalents – the number of kilograms of CO2 that produce the same global warming effect.
At the outset, a TEQ Registry is established. This is a computer database which holds individual carbon accounts for all participants in the scheme, similar to credit-card accounts. The number of TEQ units issued and credited to these accounts initially is set equal to emission levels from current energy use, derived from the national budget for that year. The number on issue will then be reduced year–by-year in line with the national budget.
To allocate the TEQ units, the proportion of energy consumed directly by households, for example fuel and electricity, is first assessed. TEQ units representing this share of all emissions are then issued free to all adults on an equal per capita basis. The remaining share would be issued through a tender process to all other users – companies, small businesses, government etc.
When energy-users make purchases of energy or fuel, they surrender units, drawing on their TEQ account. There is embodied energy in every good and service we buy, and all uses of energy are covered by TEQs. Thus no consumer purchase is excluded from the scheme.
When any purchaser no longer has TEQ units in their account, units have to be purchased on the market. If you use less than your quota of units, you can sell the surplus. If you need more, you buy them. Thus a market price for carbon is established which depends on the success of the community at large in reducing emissions.
Every week an additional number of units is issued and allocated, equivalent to one week’s supply, so that at any time there is full year’s supply in circulation. The scheme can be largely automated using existing financial services infrastructure.
The process is overseen by an Emissions Policy Committee, with a mandate to achieve the national carbon budget determined by the Contraction and Convergence process. It operates at arms length from government, much in the way the Reserve Bank sets interest rates.
The government is itself bound by the scheme. Its role is to live within it and assist the rest of the community to do likewise with appropriate directional policies. The scheme is thus insulated from the political process, and the government is relieved of the political need to defend the emissions reduction budget.
TEQs are quantity-driven, ensuring that emission reduction targets are met. The price of units, and thus carbon, is ultimately under the control of the community, since the faster we are able to reduce emissions, the lower the price. A common purpose is created as everyone has an incentive to reduce emissions and to encourage others to do likewise. Thus the process becomes a positive, collective experience for the community to restructure and rebuild the economy on sustainable principles

Directional incentives

Directional incentives are essential to speed the transition to a low-carbon economy and to capitalise on new business opportunities. For example we need to:

Fossil Fuel Exports

Fossil Fuel Exports are a substantial source of carbon leakage from the global carbon emission reduction effort unless the recipient country is part of the global reduction program.

There may well be justification for higher quality Australian coal, for example, to be used for power generation in preference to poorer quality coal in other countries. However, without carbon being fully priced, there will be substantial distortion of the future energy market if carbon-intensive projects become locked into the energy mix before global negotiations are completed.

The Australian coal industry has belatedly acknowledged that clean coal technology and carbon sequestration is essential if coal combustion is to continue. However, despite the industry having been on notice for more than 15 years, the R&D investment devoted to this task is miniscule compared with the challenge ahead. Further, whilst carbon sequestration may work in specific circumstances, it is by no means clear that it will be generally applicable or that timely solutions will be available.

Accordingly, no further fossil-fuel export projects should be approved until either all exported carbon can be securely sequestered on a long-term basis, or it is accounted for in the importing country by global carbon reduction agreements. This will ensure that investment decisions are not distorted, and spur technological and diplomatic innovation.

Domestic Carbon-Intensive Investment Projects

No further domestic carbon-intensive investment projects should be approved until the market structure outlined above is in place, with full carbon pricing. This would apply, for example, to any new coal-fired power generation, water desalination plants, industrial plant etc. Given Australia’s dependence on existing coal-fired power generation and its associated high emissions, all existing power plants should be phased out by 2020 unless retro-fitted with clean coal technology and carbon sequestration to acceptable standards.

Airlines and International Sea-Freight

At present airlines are not included in emissions trading systems. Airlines account for around 3% of global emissions, although this may be an underestimate as some types of emission may be particularly damaging, the total impact being perhaps 2-4 times as great. Airline emissions are growing rapidly, spurred by cheap air travel and increasing wealth, and will become a much more significant component of overall emissions. Accordingly aviation must be included in the global and national emission reduction programs. International sea-freight is also not included in current emission trading schemes and must be incorporated.

International Emissions Trading

International emissions trading will be essential to achieve the optimal, least cost emission reduction strategies. This should be provided for by nation-to-nation emissions trading under the auspices of the modified Kyoto Protocol. It would allow nations with quotas in excess of their needs, as determined under contraction and convergence, to sell to those requiring additional quotas, in the process easing global inequity by transferring wealth from the developed to the developing world. Technology transfers from the developed to the developing world, to achieve low-carbon outcomes, must also be part of the process.

There remains the possibility that the science is wrong and that climate change currently being experienced is primarily due to natural causes rather than being human-induced. The mounting evidence suggests that the probability of this is low, and declining. Nonetheless, in committing to the policy proposed, this scenario should be kept in mind. Prudent risk assessment, weighing the risks and their probabilities in the light of today’s knowledge, suggests that it clearly makes sense to proceed with these proposals, as the potential impact of dangerous climate change may be catastrophic, while the costs of carbon emission reduction are manageable. To continue with business-as-usual implies an irreversible increase in global atmospheric carbon concentrations, which would be foolhardy in the light of the evidence available. But the risk assessment must be kept under review as the scientific evidence evolves.

Whilst policy should endeavour to minimise costs and smooth the transition to a low-carbon economy equitably, there will undoubtedly be pain, but the pain of not taking action will be considerably greater.
In these circumstances, it is not possible to maintain industry competitiveness and economic growth as currently constituted. Conventional growth is a large part of the problem. We must move to a new paradigm of a sustainable economy, which requires major structural changes, as well as a shift in values.

But whilst some industries decline, greater opportunities open up. It is essential to take a proactive, forward looking view and seize these sustainable opportunities, rather than reactively defend an unsustainable status quo: the former represent the future of Australia, whereas the latter guarantees our decline and immeasurable community hardship. Rather than a problem, as currently presented, it is a unique opportunity to set humanity on a new course, built on sustainable principles.

The transition will only be achieved if there is strong leadership and a whole-hearted commitment to achieving these objectives. To build this commitment will require extensive community awareness programs.

Above all, visionary, principled, long-term leadership is needed from government, the community and business. Short-term political or corporate expediency is no longer acceptable. Bi-partisan cooperation is essential, for this will not be solved with conventional party politics. Many will argue that conventional politics is all we should expect. I suggest that after another natural disaster or two, the community will demand much, much more.

Current atmospheric carbon concentrations are 430ppm CO2e, increasing at 2ppm per annum. That leaves 10 years before we reach the danger point of 450ppm. As there is a considerable lag before any reduction in emissions has an impact, action is required in the next 6-12 months, not in the 3-5 years favoured in political debate.

Climate change is the most serious issue to confront humanity in centuries. It is of an entirely different dimension to the issues which typically dominate the political and corporate agenda. As such, it must be addressed with honesty and urgency, not with the denial and misrepresentation that continues to epitomise the debate.

Based on today’s criteria of economic success, defined by short-term myopia and profit performance, Australia is doing splendidly and may continue to do so a while. But on any sustainable basis, without rapid corrective action we are heading for a fall, the like of which we have never seen before. Particularly in an economy so dependent on unsustainable energy consumption and exports, on the driest continent on Earth.

We know what to do – it is hard, but we need to get on with it and not waste another 10 years. As Herman Daly said many years ago: ‘the economy is a wholly – owned subsidiary of the environment, not the reverse’. No environment, no economy.

Balancing the time budget

Do we really think that money is the most important thing in our lives? The treatment of most issues in the public sphere is based on that assumption: incomes, tax cuts, payments, rebates and interest rates dominate our political debates. However, polls find that we think our relationships with friends, family, workmates, neighbours and all our other connections with people are more important than our financial status. In other words, it's the time we put into relationships that makes us happy. Yet in policy terms, any use of time that isn't financially rewarded gets a rough deal.

This was clearly illustrated by the response to the ALP's new industrial relations policy. While there are few mentions of time in the policy, it does contain the provision that employed parents are entitled to one year's unpaid maternity/paternity leave, and have the right to request flexible working hours to care for young children. The response from the Coalition was that this minor change was unfair to employers and would make them reluctant to hire women. It works in the UK and Scandinavia and may even increase productivity, as was shown in a recent English study on flexibility in workplaces, but in Australia the needs of the workplace are prioritised over any other time requirements.

This is just the latest example of the failure of both major political parties to recognise that people need to be able to budget time as well as money. Increasing the time we spend in workplaces may create more income but it does not automatically lead to the satisfaction of a life well lived, nor is it necessarily compatible with increased productivity or good workplace practices. The organisation of our working time is too often shaped to fit the production cycles of an earlier era, when it was necessary to be present behind a desk or machine to complete one's tasks. With changing work technologies, jobs and environments, we need lose these rigid assumptions and reflect on effective time allocations rather than just assuming that the old ‘clocking on' habits still meet our needs.

Our control over how we spend our time is constrained by a range of institutional factors like paid work requirements, commuting time, school hours and the availability of other care services. This means that time is not just a personal issue, but a policy issue. In ‘Making time and taking time' I explored how current policies, particularly in industrial relations, have failed to find ways of more effectively reconciling the time demands of paid workplaces and of households. A plethora of reports on the question of ‘work life balance', have failed to shift the intransigent policies and practices of both governments and employers.

We need to start by talking about how we want to live our lives. Rather than dividing it into small parts that are dealt with in separate places such as paid work, volunteering, domestic work, exercise, care, pleasure etc, we need to look at a 24/7 life model and allocate time within it. What if we assumed that, as with money, we started with a time budget and decided how we would spend it on the basis of our preferences? This could open up new ways to discuss the role of paid workplaces in our lives and to compare industrial relations with personal relations. How do we trade time and money? What will give us the greatest capacity to either combine or separate the activities we do for love and for money? The separation of home from paid work may be another shibboleth that needs to be discarded - but we also need to ensure that by rubbing out the line between home and work we don't end up creating a universe of outworkers.

The following suggestions put the so-called ‘work-life balance' debate in another framework to see if it works better than the micro-economic or rights-based approaches that have been used so far. What if we were to treat our level of control over time as the core measure of people's well being? What if we were to treat the effective use of time for building civil relationships as our measure of ‘the good society'?

There are many ways of talking about time use: making time, taking time, spending time, saving time, buying time, wasting time, stretching time and shrinking time. We allocate or budget time to cover different parts of our lives: work time, travel time, family time (including quality time), leisure time, study time, exercise time, holiday time, rest and sleep as well as care for others, domestic chores, personal maintenance and other task based time. Time shrinks, passes, grows and disappears and drives much of our lives but we often fail to look at it as a separate and important factor.

If we start by recognising that time is the currency of relationships, and that healthy relationships are crucial to good societies, families, workgroups, etc, it becomes easier to see that we need to ‘invest' time in nurturing our relationships. The capacity to relate to friends, family, and even strangers, is central to being socially responsive and responsible. If we have enough time to be with people, through sharing experiences and knowledge, we can solve difficulties and make creative and exciting social systems. Time is necessary for so many aspects of the good life and its absence undermines social ties and feelings of good will.

In workplaces, taking time to cement relationships allows people to develop ideas, improve communications and work more effectively with others. If we wanted to draw a parallel with economics we could invoke the metaphor of time as a currency which we buy and spend, either with other people or on our own. Our use of time is often the best indicator of our capacity to create balance in our lives. It has a powerful impact on how we value ourselves and others, and how much they value us.

The way we use time has changed dramatically over the last few decades, yet we have not really reframed the institutional frameworks that govern how time is allocated. The combination of technological change and the increased number of people in paid work has altered many tasks and forms of communication. In the 24/7 world, there is no clear downtime. Night in one area is day elsewhere and communication blurs the time space differences. There is an explosion of information, often online and accessible on the run; mobile phones allow contact with others anywhere and anytime. Working from home can mean relief from travel and time with children, or it can mean a new series of impositions that prevent us from ever switching off. Face to face communication becomes only one way of interacting with others - albeit the most essential one in many cases. Personal contact may supplement or complement other forms of interactions. Our physical presence in workplaces may be useful in some cases, but in others it may be just an unnecessary drag based on outdated assumptions.

These and many other observations about time have formed the basis of countless books, articles, studies and bus-stop conversations, yet in Australia - a country with among the longest working hours in the OECD - time has been consistently neglected by our policy makers.

There are many important questions which have never been formally considered from a policy perspective, starting with why we feel so time poor when all these supposedly time saving devices are an increasing part of our lives. We need to start by looking at time as a crucial (and finite) asset and think more strategically about how it should be used.

Policy recommendation one

The federal government should establish a major inquiry in 2008 to examine the issues of time use and time poverty in workplaces, communities and households. Its terms of reference should also look at the potential for more effective use of technology to enhance productivity and well being.

Why we need this inquiry

Workplaces

In many workplaces the changes outlined above have not been considered seriously. Where adjustments have been made it has usually been by stretching the old models, rather than adopting new ones. Time in workplaces is subsumed and sometimes obscured by a misguided focus on people being physically present for many hours, including more time outside the old eight hour work day. This creates unnecessary rigidities in arranging tasks effectively as being seen ‘on the job' is often misused as the measure of commitment and competence. Too many people are expected to work in a set place, rather than being able to complete tasks and chores in varying time frames and different locations.

The use of new technologies has often added to the demands on our time rather than assisting us to manage it better. This problem needs to be examined, as changes in the technologies we use and the types of work (both paid and unpaid) which we undertake, should allow for more creative and flexible ways of organising our all our responsibilities and tasks.

Family and community time flows

Being time poor is a real problem for many of us: there never seems to be enough time to spend with family and friends; no time for doing things the way we'd like to; no time to think, to talk, create or play. For many of us the workplace takes up too much of our time and displaces other ways of using time. For others the lack of resources may mean that we spend too much time trying to complete daily tasks as we battle bureaucrats and public services which often use queuing and waiting times as a way of allocating resources.

Making time for own priorities can be difficult when we have limited control over the demands others put on us. If you care for others it may be hard to find time for other activities; if your employer expects you to be available on call you can't make arrangements that fit with other time demands and preferences. Lack of control over time use can get stressful and difficult. Those who retain a sense of control over allocating their own time tend to be more healthy than those who do not, suggesting this is an important indicator of broader wellbeing (see Michael Marmot's research on the social determinants of health).

In practice there are many unnecessary barriers to the sensible and reasonable use of time. Many of these arise from social, institutional and financial inequalities which inhibit our control over time, as well as other resources.

Time stress is unfairly allocated: some people have too much time on their hands because no one wants to make use of their time in jobs, paid or unpaid. In these cases time can slow, leading to a sense of inertia and making it hard to find meaning in each day. We need to be able to spend time in ways that make us feel connected and valued; having our time contributions appreciated is the core of productive relationships. Therefore truly civil societies need to allocate tasks in ways which allow us to balance the external demands on our time with our own needs and desires in ways that fit sustainably within our overall time budget.

Policy recommendation 2

Governments need to take an active role in labour market policy, regulation and funding. They also need provide services both for children and for those adults needing personal assistance to ensure that unfair pressures do not prevent them from making sensible time choices. While much of our time is spent on what are deemed private activities, governments still need to legislate to reduce the inequalities of power, information and resources that unfairly limit choices about how we spend our time.

  1. Given the inequalities of power in most workplaces, we need laws and regulations to ensure that employers and employees bargain as equals. While most may prefer to do this, the lack of regulatory frameworks legitimates bad behaviour and makes it more widespread.
  2. Given the costs and complexities of personal care services, governments need to both regulate and fund services that offer quality ‘time out' and ‘time in' for both recipients and their unpaid carers. These interventions are necessary to counter market failures, as capacity to pay does not match resources or supply.

Conclusion

The above policy recommendations are only a starting point in setting the agenda for more civilised use of time. Governments need to take an active role if this valuable resource is to be equitably and effectively allocated, rather than undermined by the lack of choice or negotiating power. If we want societies in which citizens can contribute socially, culturally and financially to wider wellbeing as well as their own, policies must enable us to fulfil our obligations as people: as employee, worker, citizen, parent, child, friend, neighbour, or stranger. Time poverty undermines the wellbeing of societies and extreme time use inequalities create unnecessary and destructive social dissonance. If time use is distorted by power plays, financial needs, age differences, language and knowledge limits it can have destructive consequences. For us all to have the time to live well we need a mindshift: policy-makers who are willing to explore whether time can be better used than it is now.

Paying for health care

Should we pay for health care through collective insurance or from our own pockets?

Like most questions in public policy, there is no simple answer. Those who argue for collective insurance generally do so on the basis of equity. Poor health is correlated with poor means and ageing, and health care needs usually strike unexpectedly; we cannot budget for our health care outlays. Furthermore, many people argue that health care is a ‘solidarity good’; it is one of the services citizens choose to share as part of our mutual obligation to one another.

Those who argue for out-of-pocket payments point to the efficiency of markets in controlling prices and allocating resources, and warn that ‘free’ services competing with charged services (such as allied health care services) and lifestyle choices (diet and exercise) lead to over-use of expensive health care resources. While acknowledging that there are ‘market failures’ in health care, they tend to urge more use of price signals anyway.

Both views are economically defensible, and most societies come to a compromise between these objectives, with some mixture of collective public insurance and uninsured out-of-pocket outlays.

What is not economically defensible, however, is to allow, or worse (as in Australia’s case) to support, private insurance as a means of funding health care. Private insurance is the worst-of-all-worlds solution, for it muzzles market signals, while it lacks the market power enjoyed by single national insurers. When services are free, or heavily subsidised at point of service, there is over-use; the idea that ‘Medicare will pay for it’ is no different from the idea that ‘MBF/HCF/Medibank Private will pay for it.’ And while a single national insurer can control price and utilization, private insurers are weak in the market because service providers play them off against one another. In addition, because they must market their services, their administrative overheads are high. Another emerging cost impost is the need to pay returns to shareholders, as the former mutual firms head down the path of de-mutualization.

It would be reasonable, therefore, to predict that private insurance contributes to high health care costs.

(Source data is available here)

That prediction is borne out by the evidence. Figure 1, drawn from OECD data for 2002 (the latest for which a reasonably complete set of international data is available), shows health care outlays as a percentage of GDP (on the vertical axis), against the percentage of health care funding passing through private insurance (on the horizontal axis).

The relationship is strong. Private insurance leads to high health care costs. It could be suggested that private insurance, while expensive, buys better health care, and that the upward slope is no more than an indicator of this relationship.

This explanation is fatuous on a national level. Individuals with private insurance may be able to jump the queue or buy privileged access to scarce resources, but on a national basis there is no net benefit. All OECD countries, particularly the ‘earlier’ members, have reasonably good health care outcomes. To the extent that there is variation in national health outcomes, it tends to reflect national income differences and, in particular, differences in poverty and inequality, which is why health outcomes in the USA are poorer than those of many other prosperous countries.

In this analysis the USA stands out, with health care costing 14.7 percent of GDP (it rose to 15.3 percent in 2004). Just as European countries pioneered universal national insurance, the USA led the way in private insurance (employer-funded insurance emerged during the 1941-45 war as a means of evading wage controls). The USA is now counting the cost, with at least 40 million unemployed, casually employed, and self-employed left uninsured. Furthermore, the burden of insurance premiums adds to employers’ labour costs, to the detriment of international competitiveness.

Even the USA has to have a safety net of government programs – Medicare for the aged, and Medicaid (a pared-down parsimonious program) for the ‘indigent’. Because these limited programs operate in a market where prices are elevated by private insurance, they are imposing a heavy burden on public budgets. These programs cost US governments 6.9 percent of GDP, which is more than the UK spends for its comprehensive National Health Service (budgetary outlays of 6.4 percent of GDP) and only a little less than is spent by the Scandinavians for their very high quality universal health care schemes.

The countries with universal government-provided health insurance, such as Britain and the Scandinavian countries, are all down the left hand side of the graph. They achieve good health care at a reasonable cost. In these countries not all services are free. In Sweden, Norway and Iceland, for example, there are reasonably high patient co-payments. But their common characteristic is an absence of private health insurance.

Some readers may notice that the Netherlands stands out on the graph, with a high level of private health insurance, but with expenditure below the trend line. But the Netherlands has only recently moved to extend the reach of private insurance; it’s highly probable that the Netherlands will catch up with those countries where private insurance is more entrenched.

Here, in Australia, we should learn from international experience. We need to remove private insurance from health care funding, and entrench Medicare as a truly universal insurer.

That is not to say we should remove the private sector. The private sector has a legitimate and valuable role in providing health care, but we do not need it in the funding mix. After all, private insurance is simply a poor substitute for the tax and Medicare systems for gathering and distributing funds, and it does so at much higher cost and with much less equity.

Nor is it to say that our universal system should be a ‘free’ system. The division between free and paid services at present is messy and inconsistent. It almost certainly distorts resource allocation away from some low-cost services to high-cost medical interventions.



To achieve better public policy we need two changes in government thinking. One is to remove the ideology of hostility to the public sector – an ideology that makes no more economic sense than the old Soviet hostility to the private sector. The other is to start thinking not just about budgetary outlays (as is done in documents such as the Intergenerational Report), but about the community’s total outlays on health care. In essence that means shifting from a narrow financial focus and towards a broader economic responsibility.

Is the present government capable of such a shift? Perhaps it has forgotten, if it ever knew, about the difference between financial management (attending to government budgets) and economic management (attending to community interests).

Source data

Health expenditure 2002

  Private health insurance as a percentage of health care expenditure
 Health expenditure, all sources, as a percentage of GDP
Australia
 7.4
 9.1
Austria
 8.8
 9.5
Belgium
 0.0
 8.9
Canada
 12.7
 9.7
CzechRepublic
 0.2
 7.2
Denmark
 1.2
 8.8
Finland
 2.4
 7.2
Germany
 8.5
 10.6
Hungary
 0.4
 7.7
Iceland
 0.0
 10.0
Ireland
 5.4
 7.2
Italy
 0.9
 8.3
Japan
 0.3
 7.9
Korea
 3.6
 5.3
Luxembourg
 0.8
 6.8
Mexico
 2.9
 6.2
Netherlands
 17.1
 8.9
NewZealand
 5.7
 8.2
Norway
 0.0
 9.9
Portugal
 3.7
 9.5
SlovakRepublic
 0.0
 5.6
Spain
 4.1
 7.3
Sweden
 0.0
 9.1
Switzerland
 9.6
 11.1
Turkey
 0.0
 7.4
UnitedKingdom
 0.0
 7.7
UnitedStates
 36.0
 14.7
     
Source OECD Health Data 2006
    

Democracy's opportunities

It's horribly unfashionable to admit this but I'm a democracy enthusiast. Not just in the Churchillian ‘least worst’ form of government sense, or the Machiavellian hack sense, or the invade & crusade sense, or even the ‘best form of government that money can buy’ sense. I just enthusiastically believe that the health of a society is proportionate to the ability of its people to influence the exercise of power and to affect the decisions that impact on them.

We undersell democracy. We readily mistake it for the ritual of writing numbers in a box in reverse order of alienation. We forget the underlying ideal that all people can make educated and informed decisions about the direction and leadership of their state or nation. I suspect we do this because as individuals we feel that those decisions rarely have the intended consequences.

Democracy is not so much a set of processes as an ecology. The ecology of democracy is a set of interdependent relationships – between the people and the powerful, between those that govern and the checks and balances that are meant to govern them, between dollars and diversity, between information and those that seek to control it. For as long as the concept has been around, these relationships have evolved and been in flux. But like most ecologies the democratic one is now struggling to adapt to the seismic shifts in the world around it.

Over the course of the last century, the slow separation of the people from those who govern them has accelerated. Political parties have moved from mass movements to logistics operations, power has shifted from parliaments to executives at all levels of government, the public service has become politicised, presidential politics of image and issues management has trumped community concerns, vital checks and balances have been eroded or eliminated, taxpayer funded political advertising has become the norm, an over-concentrated media has become disproportionately influential, and money has corroded politics to the point where there are parallel political systems for the rich and the poor.

On top of that, the political toolkit has become so empty that there is very little that governments even claim that they can do any more. They manage the economy by trying to stay out of it, and they protect us from threats both real and imagined. Most of the social levers that governments once pulled or pushed on our behalf are covered in dust or cobwebs. The functions of government are so often outsourced to the private sector that they increasingly fall outside the responsibility, scrutiny and control of our elected officials.

But if you’re reading this you probably know all that. What would probably surprise you would be my confession that I am an optimist.

As I said, I believe in democracy. Democracy is not a concept that has peaked, and given way to an inexorable decline. The lesson I take from history is that a cycle of excess, outrage and reform is the norm – provided that the reformers are ready for their opportunities. As the excesses play themselves out the sense of ordinary outrage in a wide section of the community gradually builds.

Democracy is a progressive and a conservative issue. The trends that disturb me are not the product of one side of politics – they are the product of a federal Liberal and state Labor governments and governments of all characteristics in comparable countries around the world. I genuinely believe we are only a major scandal, a hung parliament, some visionary leadership or a unique alignment of the planets away from another of those rare but beautiful moments when short term political interests align with the long term good.

The challenge is not to create these opportunities but to ensure the ground is fertile when they come. Those of us who believe in a more fair and equitable society must develop an agenda and be ready with the mechanisms that will deliver on that. We must articulate reforms across the whole democratic ecology – from campaign finance to checks and balances to access to media and the flow of information – and present them coherently and implement them as the opportunities arise. We must reinvent the old idea of the ‘separation of powers’ in the context of today’s power and insist that the responsibilities of democracy can not be outsourced even when the functions of government are.

When governments are laid to rest and floods of information emerge about the abuses of process that have taken place under them, we must call it for what it is – a structure that needs reforming – and not allow it to be passed off as proof of the unique untrustworthiness of a particular group of people. We must look past the scapegoats, scandals, and point scoring to the structural problems. We must not just complain but seize each opportunity to put forward the mechanisms and reforms that will prevent each outrage from repeating itself and separate accountability from self interest.

It is not a project that is achieved through opposition. It is achieved by accumulating unlikely alliances until the sheer breadth of them becomes overwhelming. Democracy’s greatest strength is that it inherently privileges the many over the few – members of alliances need not agree on the issues of the day to agree on the need to be able to influence them. I know it’s horribly unfashionable, but I believe there’s a potential democracy enthusiast in everyone.

The Porter Legacy

Governments should take a leaf out of corporate strategy books and remove barriers to competition instead of trying to mandate it.

Human beings are self interested, and instead of trying to re-engineer humanity, policy makers should recognise this fact and use it for the greater good. As Adam Smith says in one of his most-quoted passages, we do not rely on the baker’s, butcher’s or green grocer’s benevolence to get our bread, meat or fruit; rather, we rely on their self-interest to provide for themselves, and through that self-interest, us.

To followers of Adam Smith, a perfect market has an infinite number of buyers and sellers that can enter and leave the market freely. This ability to enter and exit a market with few or no barriers was critical to Smith’s analysis. Prices reach an equilibrium at which companies do not make ‘super’ profits, and buyers pay no more or less than a product is worth. Imagine buying an apple at the Flemington fruit market: sellers are plentiful, buyers find price discovery relatively easy; the market establishes an equilibrium price at which everyone buys and sells fruit.

This is an efficient, and not necessarily very profitable, market.

Of course in the real world this is not always possible. There are some products and services that people simply can’t live without. And there are some markets where the barriers to entry are, by necessity, high. Take electricity: buyers can choose not to use it, but not very effectively, and there are not many other substitutes besides candles.

On the other side a producer of electricity has a number of barriers that protect it from competition: the cost of building a power station, stringing up distribution wires, and securing raw material supplies. Each of these present massive upfront costs for a new entrant, protecting any incumbent company from competition. Producers of electricity are therefore able to charge a much higher price for their products then they would receive in a perfect market because these barriers to entry prevent potential competitors from entering the market to take advantage of higher than normal profits.

In short, the electricity market has captured consumers and significant barriers to entry – an imperfect market.



If you run a company, and want to make higher profits, find an imperfect market. If you are a consumer, stay away from such imperfect markets. Michael Porter recognised this and put together the five forces theory. This theory is a how-to guide for companies trying to create barriers to entry, thereby allowing them to charge higher prices, and get better returns for their shareholders – all at the consumers’ expense.

In Australia, in industry after industry, we have seen the outcome of Porter’s legacy. Where once twelve retail banks stood, there are five. In retail insurance, less than five years ago, there were twelve insurance companies, now, in effect, there are three. Supermarkets, toll roads, financial services, freighters, ship forwarders, nursing homes, private hospitals etc. In industry after industry where there were once a multitude of competitors there are now five or less.

The losers from this consolidation are consumers. Government’s reaction to this has been to exacerbate the situation by introducing a bewildering number of laws to ‘protect’ consumers. In doing so governments have made it more difficult for new competitors to enter markets and make them less imperfect. It is almost as though Porter’s analysis was only read by management, but no one in government.

The aim of government should be to bring down the barriers to entry, rather than trying to recreate competition through law and regulation.

In the end choice is the ultimate friend of consumers, not government regulation. And no matter how hard they try, governments cannot replicate through regulation the same sort of benefits that a free market can provide. They do however seem perfectly able to inflict a whole number of unintended costs and consequences.

If governments concentrate on removing barriers to entry, ensuring that any market is contestable, then companies and consumers, left to their own devices, will work things out for the best. Let that be Porter’s real legacy.

Porter M (1985) The Competitive Advantage of Nations

Australia's economy: lucky country, unlucky leadership

The great enemy of the truth is very often not the lie – deliberate, contrived and dishonest – but the myth – persistent, persuasive, and unrealistic.

John F. Kennedy

Perhaps our strongest political myth is the notion that our prosperity results from the Coalition Government’s sound economic management. In the Newspoll response to the question “which one of the [political parties] do you think would best handle the economy”, 54 percent of respondents nominate the Coalition, while only 22 percent nominate Labor.

Some basic economic indicators – inflation, unemployment and growth in GDP – have been very positive over the last eleven years. But is this due to sound policies, and do these indicators tell the whole story?

On the first question, there are three significant factors for which the present government can claim no credit:

In fact, the Howard Government has done little on economic reform. Its only real achievements have been to restructure the indirect tax system and to increase the Reserve Bank’s independence. It also cites its industrial relations changes as 'reform', but the most likely effect of the changes, in lowering real wages, will be to reduce labour productivity.

These modest reforms have been more than offset by some damaging economic policies, the worst of which was the change in capital gains taxation, which has encouraged speculation and short-term profit-taking at the expense of long-term productive investment, and which has contributed to high housing price inflation. Other shortcomings include a failure to use strong public revenues (which naturally rise during a positive business cycle) to invest in education, physical infrastructure and environmental restoration. Instead of being invested in our future prosperity these revenues have been frittered away on tax cuts, middle class welfare, and extraordinary generosity to wealthy retirees.

 

 

 

 

 

 

 

 

 

 

In short, much of our prosperity is an illusion – a result of spending down our inherited assets and borrowing against the future.

This leads us to the second question on the coverage of these key statistics. Unsurprisingly, governments only quote the indicators that stack up in their favour. Not-so-positive indicators include:

In many respects our economy today is similar to our economy of the 1960s and early 1970s, when we similarly enjoyed low inflation, high low unemployment and high economic growth. We were too busy enjoying our prosperity to listen to Donald Horne’s warning that the luck of the 'lucky country' may run out, or to the warnings of the Industries Assistance Commission, which pointed out that our economy was structurally weak. That is, our economy had not modernised, and lacked the resilience to cope with possible external shocks. Those external shocks came in the early seventies, as the Bretton Woods exchange-rate arrangements fell apart and as the first oil price rise occurred. We suffered a severe and long-lasting downturn.

The failure of the government to address the weaknesses in our economic structure is leaving us vulnerable to external shocks, as we were in the 1960s. There is complacency and smugness in government ranks – they believe their own myth. Like Lord Angelo, the deputy to the Duke of Vienna in Measure for Measure, our Treasurer Peter Costello is 'most ignorant of what he’s most assured', even when the head of his own department is warning about the consequences of sloppy economic management. Another recent warning has come from The Economist (31 March 2007), in its article 'The Australian Economy: The Lucky Country may not be so for much longer', pointing out the weaknesses in our economic structure, which is more akin to that of an oil-rich sheikdom than a modern industrialized nation. And the IMF has recently warned that our supply constraints carry inflationary risks.

To his credit, Kevin Rudd is questioning the myth, mainly through asking us to reflect on where we will be after the mineral boom. In the 2004 campaign Labor deliberately avoided tackling the government on economic management; on economic matters it froze like a rabbit in a spotlight. Demolishing the myth is difficult while we are all out buying new flat screen televisions and foreign travel (on our credit cards), but Labor will have succeeded when the electorate understands that the present Government’s neglect of economic structure is the path to economic misery.

A new policy framework for Indigenous housing

Housing in remote Indigenous communities is in a state of crisis. Overcrowding has reached third world levels, the cost of building new houses is skyrocketing, asset lifespans are short, and organisational capacity within Indigenous Community Housing Organisations is weak, leading to poor maintenance, poor tenancy management and severely misdirected incentive structures for community residents. This state of affairs directly contributes to poor educational and health outcomes and the ongoing loss of social cohesion in many remote communities across the nation.

The importance of finding the right solutions is magnified by the fact that implementing them will take at least a decade, and it may take even longer for the changes to result in improved social well being. And of course, any policy mistakes will condemn remote community residents to many years of continued disadvantage and poverty, hinder the implementation of effective programs across other areas of interest to governments, and ultimately impact on Australia’s national reputation.

The March 2007 release by the Australian Government of the report Living in the Sunburnt Land – Indigenous Housing: Findings of the Review of the Community Housing and Infrastructure Programme (CHIP) is more significant that the minimal press coverage it received suggests.

The report’s overall conclusions are that:

The current framework for the delivery of housing and related infrastructure and services to Aboriginal and Torres Strait Islander people has not worked and cannot work.

The review also notes that:

CHIP in its current form contributes to the policy confusion, complex administration and poor outcomes and accountability of government funded housing, infrastructure and municipal services.
In high level policy terms, the review assesses comparative need levels across the nation and documents a longstanding underinvestment in remote housing by the Australian Government. It recommends a major shift in the allocation of existing resources with mainstream public housing to pick up the shortfall in urban and regional Australia. This latter assumption is problematic given the financial stress most major state public housing agencies are under.

The review also makes obvious points about the importance of co-ordination in the delivery of services, an issue that has persisted because of the complexity of the arrangements which have existed at national, state and local levels in relation to the provision of housing and essential services.

There is clearly scope, as the review suggests, to refocus resources on upgrading existing housing assets as a one-off measure to maximise bang for the buck; though the effectiveness of underlying governance arrangements will be crucial in sustaining any improvements.

It is increasingly clear that the reliance on Indigenous Community Housing Organisations to both deliver substantial proportions of the program, and importantly to own and manage the resultant assets has been a major cause of poor service delivery in remote communities. Most of them simply do not have the critical organisational mass and systemic capacity to deliver the complex array of services involved. The review recommends transfer of existing community housing to public housing agencies where possible, and that all new housing funded by the Australian Government be vested in those agencies. This makes a lot of sense.

Despite its strengths however, the review has not provided the policy blueprint required in Indigenous housing. There are at least four major flaws in the analysis and recommendations.

First, while the review acknowledges projected population growth in the Indigenous population, it grossly under-emphasises the implications and consequences of these trends. In particular, it fails to mention the extreme youthfulness of the Indigenous demographic profile, and the substantial implications of this for family formation particularly in remote communities in coming years. The bland conclusion that Indigenous population growth will place further pressure on community and public housing and private rental in some remote areas as well as other parts of Australia in the years to come (p.55) glosses over the reality that without major intervention these trends will inevitably lead to the continuation of the appalling overcrowding in remote communities for another two generations.

Second, the recommendation for a new Remote Indigenous Accommodation Service (RIAS) to replace CHIP and take over its funding allocations is misguided. It perpetuates the duplication which has bedevilled the sector, and would inevitably lead to a proliferation of sub-programs and would complicate attempts to streamline co-ordination.

If it is important that housing services be delivered through ‘co-ordinated service delivery linked to regional level planning based on access to education, health and law and order services’ as the review recommends, then why not pass the funds to the states and territories who are responsible for these services?

The Australian government already passes around $100m each year to the states and territories through the Aboriginal Rental Housing Program (ARHP) component of the Commonwealth State Housing Agreement. The states and Territories have mainstream responsibility for social housing delivery. The review recommends that they take over Indigenous housing in regional and urban areas; why not in remote areas? With the stroke of the pen, the $280m in CHIP could be similarly dealt with, slashing red tape, removing duplication, and improving transparency and accountability for outcomes.

Third, and perhaps most contentiously, the review’s recommendations to ‘continue the move away from building new housing in “on-country” outstations and homelands where there is no certainty of access to education, health, law and order and other basic support services’ and to consider the benefits of “mobility incentives” to assist families to move to new or existing housing in locations with better access to services requires much more consideration.

It needs to be remembered that it was the national government which encouraged the outstation movement in the late seventies and through the eighties and nineties. Indeed, following self government in the NT, the Australian Government refused to hand over responsibility for outstation support, a situation which persists to this day.

There will certainly be some locations where the full panoply of government services will never be able to be delivered effectively. Nevertheless the strength of cultural attachment to land, the shortage of housing and extent of overcrowding in communities, and the demographic realities of high population growth and youthful family formation in remote Australia are such that Indigenous people will continue to aspire to live on their country for the foreseeable future. Moreover, these aspirations lie at the heart of the Indigenous art industry, and provide valuable pressure valves for the inevitable conflicts which permeate large communities especially where there are substantial groups of non-traditional owners residing on the land. The policy challenge is to find innovative and economically cost effective ways to meet these aspirations rather than pursuing simplistic nostrums about moving people to jobs or services.

Finally, the review selectively advocates the use of mainstream resources (for urban and regional housing, for consumer protection regulation of tenancy arrangements), but says nothing about Rent Assistance – the major mainstream social housing program in Australia. There is strong evidence that remote Indigenous citizens are under-accessing rent assistance for a range of structural reasons. Nevertheless, it is allocated over $2bn each year nationally, and because it is demand driven, is growing in real terms. Meanwhile, Indigenous Australians are locked in to a complex array of housing programs which are effectively maintained at nominal levels and are declining in real terms. The policy challenge is to somehow make the $3bn plus spent each year on social housing in Australia accessible to the most needy segment of the population.

There are clear indications emerging that the Government intends to allocate a substantial sum to Indigenous development issues, including housing, in tomorrow’s budget.

There is no doubt that Indigenous disadvantage remains a weeping sore on the body politic. The issues are urgent, and demand attention. Overcrowded housing is a key contributor to poor health, education, and law and justice outcomes in remote communities. Addressing these issues will require more than merely rebadging the existing programs for Indigenous housing. It will require political vision and leadership, a commitment to co-operation and the removal of debilitating duplication between the national and state governments, and ultimately will require the opening up of mainstream programs such as Rent Assistance.

Just as houses need effective architecture and design, so too do Indigenous housing policies. And as with houses, architectural and design failures at the policy level are costly, have huge social implications and are extremely difficult to rectify.

The key architectural and design parameters required for an effective Indigenous housing policy, particularly in remote areas, include:

Such a policy architecture stands in stark contrast to current federal government policies which seem intent on retaining duplication in service delivery between the national and state/territory governments, and which in their support for ‘one-step’ or ‘instant’ home ownership policies in remote communities, appear to be blithely ignoring the income constraints which pervade remote community populations.

It is worth remembering that cities like Darwin and even Canberra were built on a foundation of significant public housing provision with accessible and flexible eligibility criteria. It is a policy pathway which makes economic and social sense in under-developed market environments such as exist in remote communities today, and which has a track record of success in post-war Australia. It provides a pathway to ultimate home ownership for Indigenous citizens in remote communities while maintaining a social safety net for those who either do not have the financial capacity to make the transition, or need time to get there. Through innovative buy-back guarantees this arrangement can underpin the development of real markets in land in remote communities, which are needed to complement the federal government’s recent reform of tenure arrangements in remote Indigenous townships.

The time of our working lives

There is a lack of recognition in public policy of the extent of change that is taking place in Australians’ working lives, and the need to design creative policy responses. Time is central to life and work, and Australia, now facing an ageing population, and with fewer young people entering the workforce, needs to take the organisation of time over the life course seriously as a policy issue, and to examine the range of alternatives that have been trialled overseas.

Australia could do much better in helping people to manage time across the life course. If people had more flexibility over the life course about when they took time for study, or to care for children or older relatives, it could open up more opportunities for others to work, as well as giving individuals and families a more rational work–life balance.

People adopt a range of strategies to redistribute their work and non-work time so that it fits in better with their own and their family’s preferences and needs.

Strategies for organising working time include: part-time work; final or gradual early retirement (‘progressive early retirement’); extended leave or career breaks; parental leave and sabbaticals; educational leave/lifelong learning, perhaps involving an annual lifetime working hours entitlement to education to be taken up in a flexible manner; and temporary absences from work on sickness leave/maternity leave/holiday leave. Some of these options are not available to all employees– education leave, for example – and some focus on handling specific life course situations, rather than events that continue over the entire life course. And some are seen as more legitimate than others. Educational leave, for instance, is likely to have legitimacy for academics, because updating knowledge is necessary for successfully pursuing that occupation. On the other hand, extended absences from paid work to care for relatives do not have a similar validity.

In Australia, while there has been an increasing body of research on the way people use time, there has been little debate about the way people use or might use time across the life course. The European Foundation has been doing extensive work on the way time might be organised over the life course, and in the following section I discuss this work to illustrate the range of policy options that might be considered to enable people to make better use of time.

As the Foundation states: ‘working-time options are a strategic prerequisite for combining working time with personal time (for social, educational or leisure time activities) not only at specific points in time, but over the entire working life course’ (2003: 115). The options noted in the 2004 European Foundation study include:

Workers displayed a preference for adjustments to established working hours (such as flexible working time regimes and jobs requiring part-time working hours) and for arrangements for paid leave from work to handle non-work issues. Early exits from the workforce, while potentially accommodating life course stresses, may ultimately intensify them by curtailing the income-earning time. Long-term working time accounts allow for blocks of paid leave to be accrued; they are an important mechanism for giving workers more control over the time devoted to work over the life course. In some situations, leave models stipulate that the person taking leave be replaced by an unemployed person.

People taking up leave options are usually at their prime age (25–45), usually employed full-time and usually well integrated into the labour market, and require a career break due to some kind of ‘over-employment’. Younger people receive other kinds of labour market assistance, while those over 45 are offered various schemes for early or gradual retirement. These sorts of leave arrangements are part of active labour market policy.

The European leave schemes share the following general features. They:

Before considering what might be possible in the Australian context, it is important to recognise the very strong commitments made both by the European Community and individual governments to address issues of work–life balance. The European Community sees these issues as being founded on principles of human rights, often made concrete through directives to national governments to draw up appropriate legislation and through tripartite negotiations between governments, employers and trade unions. There is general recognition in Europe that the trend towards fragmentation and diversity in industry and employment needs to be balanced by a regulatory approach that emphasises the rights and entitlements of employees. There is a willingness to embrace diversity and flexibility, but there is also a recognition that work contracts still need to offer the security of defined rights – thus the popularity of the word ‘flexicurity’. The further we move towards devolving responsibility to individual employers, the more important it is to have clearly established norms/rights backed by legislation.

In Australia, governments have generally not taken advantage of the time use policy options developed in Europe. Despite the fact that many of the changes noted above have been in train for at least three decades, social policy responses in Australia have been spare.

The policy examples that I have outlined reflect a European debate concerning the rights of people at work and their responsibilities at home. This debate recognises that individuals today have more need to maintain their skills and commitment to jobs and need to share more equally in duties at home. The European Community has been outlining principles in these areas and requiring member states to express these principles in domestic legislation. The most important thing is that it not be left to individual employers to adjust people’s hours and conditions of work. Society has an interest that needs to be reflected through institutions concerned with fairness and justice. Thus policy responses in Europe are often framed in language that emphasises rights and responsibilities – in the Netherlands, for instance, there is a right to part-time work. An emphasis on the right or entitlement is important because of the fluid nature of the modern labour market. The demand for flexibility in working conditions needs to be balanced by some security based on an entitlement. The term ‘flexicurity’ reflects this search for balance. If there is no entitlement, for example, to vary hours because of family responsibility, each crisis at home becomes a crisis at work.

These matters cannot to be settled within a narrow industrial relations framework. In Australia, discussion on maternity and parental leave policies has been conducted within the broader context of human rights. HREOC, in two of its reports – Valuing Parenthood: Options for Paid Maternity Leave (2002a) and A Time to Value: Proposal for a National Paid Maternity Leave Scheme (2002b) – sees paid maternity leave as an employment equity issue and an issue of health and well-being of children and their mothers. The reports are especially critical of what they describe as the limited and haphazard nature of paid leave arrangements in Australia; we do not have a national system. Evidence assembled by HREOC demonstrates that only a minority of women are entitled to paid maternity leave, and those eligible tend to be concentrated in the government sector and higher status occupations, such as managerial, professional or administrator positions. HREOC (2002a) recommended that the federal government introduce a national mandated system of 14 weeks’ paid maternity leave for most women who have been in paid work before the birth or adoption of a child. Instead, the federal government introduced in 2004 a maternity payment within the income security system, which meant they avoided addressing the existing inequity between those women in the workforce who were entitled to paid maternity leave and the majority who were not. If women are to have the same opportunities as men in the workforce, paid maternity leave and parental leave need to become universal entitlements.

Universal provision of affordable, quality caring services (especially for younger children, the disabled and older people) also needs to be addressed. Inadequacies in these services, together with a culture which still sees women as much more responsible for caring than men, plays an important role in making it difficult for women in Australia to blend paid work and care responsibilities.

The other group of issues and policy ideas – career breaks, sabbaticals, job rotation, educational leave, and time banking – are useful because they help people focus on ways to plan their working life, and because they recognise how hard it is for people to build sustainable working lives today. In Australia, long service leave was traditionally the principal measure that enabled workers to have a longer break from their regular employment. The more diverse character of modern employment places much greater pressure on the individual to maintain their skills and enthusiasm over their working life. The pace of technological change suggests a need to periodically update old skills and learn new ones. There will be times in one’s life when there will be greater pressures arising from caring or community responsibilities.

Long-term ‘working time accounts’ or ‘leave banks’ let individuals save up time during their working life. The entitlement might be sourced from various forms of recognised leave, for later use in periods of paid absence from employment. Alternatively, or in addition, workers might earn credits as a result of working overtime or at times that are unpopular with many employees. There may be periods in a worker’s life where it suits them – and their employer – to be intensively engaged in the workforce. A working time account or a leave bank allows employers and employees to redistribute time, hopefully in the interests of both parties. The leave bank could be derived from existing leave schemes, but new leave entitlements might need to be added to that list – extended parental leave, for instance, because basing leave banks on time accrued would unreasonably exclude young families.

Time banking might also be important for older workers wanting a phased retirement. Individuals might be willing to remain in the workforce beyond formal/official retirement age if they were allowed to take longer holidays. Time banking by itself does not produce a better transition from paid work to retirement, but it might be an important contribution to the mix of policies required.

Greater take-up of various leave options might create employment for others. The compression of the working life gained currency at a time of very high unemployment, when the youth labour market had collapsed and structural change, together with the demand for higher productivity, tended to work against the retention of older workers. Working time accounts help to distribute work more rationally across the life course, arguably making room to employ additional workers.

Those working in non-traditional forms of employment of a non-continuing nature often do not attract the leave entitlements that can be used to establish long-term working accounts. For these people, more innovative changes will be needed. People working non full-time hours in non-ongoing jobs face significant difficulties in accessing a broader range of time management options, difficulties that are further compounded if these workers also suffer the disadvantages of lack of training and of career paths, and a general situation of being confined to ‘bad jobs’. For part-time and (especially) temporary workers, the most important step may be to create, legislatively, an entitlement to move from casual to permanent work conditions after a defined period of time. The focus then for casual workers might be more on building an entitlement for improving skills, perhaps through a ‘skills bank’. Employers often pay higher rates for casual workers, to compensate them for lack of sick leave and holiday pay, which might allow for contributions from employers and government to finance additional education or training for those in fixed-term employment. This would recognise that many part-time and most casual workers suffer disadvantage in that they are not included in training schemes.

Time banking is one example of policy that takes account of modern circumstances; it represents one way of rethinking policies on leave and absences from the workforce. Time banking, together with lifelong learning accounts, is the foundation for a substantial and well-integrated reform that would, over time, make a major contribution to reducing Australia’s obvious skill deficit.

Good policy means helping workers gain access to paid work – making use of such things as training, labour market programs, and opportunities for good quality part-time work. Good policy also means trying to weaken the pressures that thrust people towards complete withdrawal from the labour market. The goal of good policy is to humanise work and give workers more flexibility and choice.

This kind of challenge would not appear so difficult to meet if we were clear about our values and had appropriate policies, backed up by legislation, in place. I have shown that such policies do exist, though they are not being tried in Australia.

This is an edited extract from 'Weighing up Australian Values', UNSW Press 2007, $29.95

5 ideas in 5 minutes

The idea: Feed-in Tariffs

It's interesting because it’s a particularly effective policy tool for speeding up the development of renewable energy industries. A feed-in tariff is a renewable energy law which obliges energy suppliers to buy electricity produced from renewable resources at a fixed price, usually over a fixed period. It was recommended in the Stern Report as the fastest, lowest-cost way to increase deployment of renewables.
They tried it in Germany, where the law has ‘made them a world leader in renewable energy, generated billions of dollars a year in exports, created a quarter of a million jobs, saved nearly 100m tons of CO2 annually, and set records for installed capacity across many technologies - all at the cost of around $1.80 per household, per month’.
Read more at http://www.renewableenergyaccess.com/rea/news/rein...

The idea: Time Banks

It's interesting because the scheme involves the participation of community members of all ages, genders and occupations and everyone’s time is considered equal. One hour given is one hour banked, and one hour received at a later date. It can help to establish support networks for the needy, whilst also strengthening social networks in communities with poor social cohesion. It values the contribution of those whose time is often treated as worthless. A more empowering form of ‘mutual obligation’.
They tried it in the UK and USA
Read more at http://www.neweconomics.org/gen/z_sys_publicationd...

The idea: banning junk food ads that target kids.

It's interesting because Australia has the most junk food advertising per hour of television in the world. Most of this is for foods that are high in salt and sugars, i.e. burgers, chips, soft drinks and sweets. Two thirds of Australian children are overweight and a third obese. Is there a connection between the poor health of our kids and junk food advertising during children’s viewing times?
They tried it in the UK. Ofcom have recently put forward restrictions on advertising to limit the exposure of junk food ads to kids, and a Bill has been introduced to parliament that will bring in a 9pm watershed for junk food TV ads.
Read more at http://www.epha.org/a/767.

The idea: the Alaska Permanent Fund

It's interesting because it’s an unusual model for governments to distribute resource rents to their citizens. The rationale that underlies the fund is that every Alaskan has a right to the wealth that their natural resources produces, therefore a proportion of the State Oil Revenues is paid to every citizen. This has amounted to nearly US$25,000 since its inception in 1982.
They tried it in Alaska in an attempt to convert non-renewable oil wealth into a renewable source of wealth for future generations. A similar model has been tried in Norway.
Read more at: http://www.policylibrary.com/alaska/

The idea: Circles of Care

It's interesting because ‘Circles of Care’ aims to create a supportive community within schools that ‘is there’ for a single child throughout his or her primary school career, and which can provide ongoing support, encouragement and advocacy. The child’s ‘Circle of Care’ supports positive development and helps to reduce friction between the child and the school that could cause problems with education and poor attendance rates. Effectively, the program acknowledges the child's achievements, celebrates successes and provides a small community - including but ‘extending’ the family. The network acts to look out for the interests of the child and heads off difficulties before they occur.
They tried it in disadvantaged areas of Brisbane
Read more at http://www.griffith.edu.au/centre/kceljag/pathways...