Former blogger James Morrow is setting up a magazine called Investigate. As long-time residents of Ozplogistan will recall, Morrow is fairly firmly on the political right, but he was kind enough to invite me to contribute a dissenting column for the opening issue (and maybe a regular feature). Due to email foulups, the piece I sent him didn’t get through, and it will be thoroughly obsolete by the next issue, so I just thought I’d put it up on the blog for anyone interested – some of it has already appeared in blog post form, but I thought I wrapped it up into a pretty good rant.
Early in March, the Australian Bureau of Statistics published some alarming figures suggesting that Australiaâ€™s apparently strong economy might be less robust than it appears at first sight. In the December quarter of 2004, GDP growth was only 0.1 per cent for the quarter (and 1.5 per cent for the year) while the current account deficit exceeded 7 per cent of GDP. In recent experience, a deficit in excess of 5 per cent has generally been an indicator that painful adjustment is required. For Australia to run a 7 per cent deficit at a time of weak economic growth, and despite highly favorable terms of trade, suggests that the economy is seriously out of balance.
If the figures were alarming, the reaction of our political leaders was even more so. Both the Treasurer and the Prime Minister demonstrated that they lack basic knowledge of the economy they are supposed to manage. First, Costello sounded off on infrastructure bottlenecks, in a way that made it clear that he knew nothing about the issues involved in their ownership, regulation and pricing structures, or about the way in which the export chain for minerals is organised.
Then Howard joined in with the absurd suggestion that more young people should drop out of school at Year 10 in the hope of taking up a trade. Itâ€™s obvious from this remark that Howard hasnâ€™t updated his understanding of the way the education and training system works since he went to Canterbury Boys High, back in the 1950s.
Howardâ€™s advice is exactly that given by many working class parents to their sons in the 1950s and, at the time it worked pretty well. It is only since the 1980s that the problems have emerged for older workers with limited education and obsolete skills. Parents in the 1950s can scarcely be blamed for failing to foresee this, but Howard has no such excuse.
In todayâ€™s world, car mechanics are increasingly required to debug computer programs, and virtually everyone with a job has to deal with substantial volumes of (literal or digital) paperwork. This is one reason why the â€œsitting next to Sallyâ€? apprenticeships Howard is so fond of have increasingly been replaced by TAFE courses. For practical purposes, the skills of a Year 10 dropout are not adequate for these courses.
Indeed, the governmentâ€™s own programs encourage students to finish Year 12 before going on to TAFE and taking up a trade. Thereâ€™s been a big effort to make the school program in Years 11 and 12 more relevant to students who arenâ€™t going on to university. But none of this seems to have sunk in with leading ministers. When they arenâ€™t bagging the schools as academic and irrelevant, theyâ€™re complaining that they donâ€™t teach enough Shakespeare.
Thereâ€™s another way in which Howardâ€™s comments suggesting kids should drop out at Year 10 are out of touch with reality. The implied background is one in which parents (and social pressure in general) are increasingly pushing kids to finish year 12 and go on to University. In reality, Australiaâ€™s school completion rate1 peaked in 1992 and the number of new Australian undergraduate enrolments in universities has barely changed since the Howard government was elected. The suggestion that we need even more dropouts is simply bizarre. In most developed countries, including European countries that do a much better job on technical education than we do, universal high-school completion is either a central policy goal or an established reality.
Throughout its term in office, the government has made it clear that education is an over-rated luxury and infrastructure is something you throw at rural voters to keep them quiet. It has made no serious contribution on either issue. The governmentâ€™s infrastructure policy is symbolised by its decision, after 100 years of well-founded reluctance, to build the Alice Springs-Darwin railway, which has turned out to be even more of a white elephant than critics predicted.
As regards education and training, the government is great at dishing out feelgood policy statements that resonate well with focus groups (New Apprenticeships, Back to Basics and so on) but has been unwilling to finance the investment in human capital we desperately need.
Once Telstra is sold off, and industrial relations have been â€˜reformedâ€™, the 1980s policy agenda inherited from the last government will be exhausted. At that point it will become evident that the governmentâ€™s only economic policy is to promote speculative investment in housing, and the consumption demand driven by capital gains from such investments.
As short-term economic strategies go this isnâ€™t a bad one. It has certainly worked longer than I (and I suspect the Reserve Bank) believed possible. But, as the March figures showed, this kind of thing canâ€™t go on forever. When the boom ends, itâ€™s clear that there is no point looking to the government for answers. They have none.