How the Liberals can survive

As a supporter of political competition, I don’t like the idea that the Liberals/Nationals/Libationals* will remain as irrelevant as they are now. So my Fin column a couple of weeks ago gave them some (unsolicited) advice on how to appeal to a generally social democratic electorate. Feel free to offer your own suggestions.

* This appealing name for a merged party was suggested by commenter Basilisk, who is hereby announced as the winner of the contest I proposed on this topic.

The Liberal Party got a welcome boost a couple of weeks ago, when its most senior officeholder, Brisbane Lord Mayor Campbell Newman, was re-elected, and the party won a majority of wards in the City Council. The result was significant enough for Federal frontbencher Joe Hockey to describe it as an ‘emblematic moment’.

But a closer look at the Queensland local government election results suggests a less hopeful interpretation. Newman ran a presidential-style campaign, with little mention of his Liberal affiliation. And after an expensive campaign on the Gold Coast, the Liberal candidate for mayor got only 26 per cent of the vote, though a preference deal may still get him elected.

There is a more fundamental problem. Newman has marketed himself as “Can-do Campbell� with reference to his ambitious proposals to fix Brisbane’s transport problems with large-scale investment in roads, bridges and tunnels. It remains to be seen how well this program will work. However, a majority of Brisbane residents want these investments and Newman is clearly keen to provide them.

The problem for the Liberals is that at both state and national level voters want the government to provide services like health, education, environmental protection and income support. In his classic work Australia, published in the 1920s, Keith Hancock noted, rather caustically, that Australians view the state as ‘a vast public utility, devoted to the greatest good of the greatest number’. Labor obviously shares this view, and indeed Labor figures have quoted Hancock without any sense of irony.

By contrast, the Liberals are, at best, ambivalent. While they recognise the political imperative to support public services, they cannot bring themselves to like the idea. Ideological supporters of the free market dislike the idea of public provision and funding of services though they have proved unable to come up with workable alternatives.

Meanwhile, many in the party’s small business base view human services like health and education as a cost burden on the goods-producing sector of the economy, the only place they see real economic value being produced.

It has gradually been recognised that such views are politically untenable. In 2004, John Howard noted that ‘There is a desire on the part of the community for an investment in infrastructure and human resources and I think there has been a shift in attitude in the community on this, even among the most ardent economic rationalists.’, and responded with a wide range of expenditure proposals.

But Howard’s conversion was only skin deep. Having long held the view that expenditure projects waste taxpayers money to buy votes, he proceeded to act on it. Money was sprayed at every marginal seat and interest group, with projects designed far more on the basis of political calculation than cost-effectiveness. The billions of dollars spent in once-off discretionary grants were only the tip of the iceberg. The Mersey hospital takeover and the creation of a separate Federal TAFE system stand out as politically-driven boondoggles.

Labor is far from being invulnerable on the question of public services. A decade in which Labor has been dominant in every state and territory has produced plenty of examples of neglect and incompetence. But unless the Liberals can demonstrate genuine commitment to high-quality public services they will remain, at best, the B team, called in only when Labor needs a spell in opposition.

The first step towards a return to relevance would be to disown the culture warriors who provided most of the intellectual support for the failed policies of the Howard era. Their hostility to public sector workers, expressed in their typically vituperative language, undermines any attempt to present the Liberals as genuinely caring about human services.

But more than that, the Liberals need positive proposals that go beyond the point-scoring about policy failures that is an inevitable part of Opposition. Some indications of the way such an approach might be developed were evident in the last years of the Howard government, notably in the area of health policy.

After spending years in a futile attempt to undermine Medicare, Howard (and then health minister Tony Abbott) shifted to something that might be called “Universalism Plus Choice�. The new policy aimed at promoting universal access to bulk billing and public hospitals while also encouraging private health insurance.

Such an approach, adopted more generally could prove appealing to many voters, and allow the Liberals to present themselves as a credible alternative. But it will require more than the cosmetic adjustments in rhetoric we have seen so far.

John Quiggin is an ARC Federation Fellow in Economics and Political Science at the University of Queensland.

58 thoughts on “How the Liberals can survive

  1. The problem is that the policies that will get them elected will not attract people to become members of the Liberal party. Its hard to inspire people to commit themselves to a party if your idealogy is the same as what’s being done already. The first requirement of a political party is to attract committed members and funding. Then it can worry about getting elected.

  2. The problem as I see it is in the word that John Howard always used to describe the Liberal Party: “conservative”. The Liberal Party was never meant to be a conservative party. Menzies was very insistent that it not have a reactionary ideology. It has only been since John Howard has been around that the term “conservative side of politics” has been used by the media. I was once a member of the Liberal Party, but as it became more conservative, I turned away. Like Billy Hughes, a founding member of the Liberal Party, I certainly draw the line at joining the Country Party, or anything that springs from it.

    Any new force in politics that is a combination of agrarian socialists and hardline christian conservatives is not going to win votes. And chances are, a new smaller party will form in the centre of non-union-align little “l” liberals.

    Seriously, what we are seeing now has the potential to do to the non-Labor side of politics what the DLP split did to the ALP, with similar consequences for democracy.

  3. In his classic work Australia, published in the 1920s, Keith Hancock noted, rather caustically, that Australians view the state as ‘a vast public utility, devoted to the greatest good of the greatest number’.

    My missus says that voters view the state as a vast poker machine. They pay their taxes in the hope that they might one day hit the handout jackpot.

    Personally I think of it as a form of tragedy of the commons. We all know implicitly that grazing off our neighbours back is a bad thing overall, however it profits us personally in the short term.

    For my preferred Medicare reform you can check out the following:-

  4. Found this in the above article:

    Ideological supporters of the free market dislike the idea of public provision and funding of services though they have proved unable to come up with workable alternatives.

    Is this a mistake or a genuine knowledge gap on the part of JQ? We free-marketeers have been accused of a lot of untrue stuff, but nobody can accuse us of a lack of willingness to provide alternatives! Mainly because all the alternatives were there in the early 1900s (before government grew so big) so it’s not hard to look at history and figure these things out.

    On health, we have Friedman’s suggestion for medical savings accounts. On education, there’s the ongoing campaign for vouchers. On tax and welfare, there’s the negative income tax. It’s not a lack of alternatives, but a lack of awareness of these alternatives and how they work.

  5. I don’t normally offer advice to my enemies but since Rudd has so successfully occupied the conservative side of politics, maybe the Liberals should occupy the ‘liberal’ side of politics. A major reason for Rudd’s success is that he hasn’t been playing politics with policy as much as Howard did and hence is a better technocrat.

    If the Liberals became liberal, then where should they start? Perhaps a negative income tax would be a good idea.

  6. Sukrit, you are perfectly right that the so-called “free marketeers” have offered alternatives. Moreover, you are right in saying that their alternatives are moving forward by means of moving to the past (early 1900s). The trouble is you left out the word “workable” in your rejoinder.

  7. Any member of a political party will not be able to be shifted from their ideological base and will oppose any merger even when based on common sense.

    For all intention purposes, the Liberals and Nationals have been the one party since nearly time immemorial. The Liberal party has become a Conservative party whether the members like it or not and making the merge official makes perfect sense.

    The only people it doesn’t make sense to are the political ideologues who want their cake and want to eat it too.

    True Classical Liberals have either joined the actual major party that can provide a moderate dose of classical liberalism, the Labor party or the rather out there Liberal party, the LDP. Any that remain in the Liberal party are either kidding themselves or are hypocrites.

    As for the National party, they might not lose some of their seats if they thought about the townspeople instead of just the farmers, that and their constituents view the Libs/Nats as one party anyway. Hell even the McGauran that defected could see this. Nonetheless the country people are doomed to suffer no matter who is in power because there is not enough population to make political capital out of. Not to mention the economies of scale of economic rationalism enforce downsizing and loss of services.

    Given that all major parties pretty much agree on an economic orthodoxy these days, there is no reason for the political alliances of the past to remain today.

  8. “all the alternatives were there in the early 1900s (before government grew so big)”

    …and populations and economies grew so big. And poor folks started getting all uppity about being payed and treated fairly for their contribution.

    “so it’s not hard to look at history and figure these things out.”

    …nor worthwhile, but thanks for the contribution.

  9. Don’t forget Professor Kim Swales of the University of Strathclyde (whom God preserve)’s method as well as Negative Income Tax and all those other measures.

    The object of the exercise is to promote people out of poverty and undo all the damage that FDB takes as given that would stop things being workable – engineer out the problem. That government is best that governs least, not by virtue of governing less as such but by virtue of having so arranged things as to work itself out of a job.

    That answers you too, EG, unless you were building in the result by asserting political unworkability; that comes out as a circular argument, we won’t do it because we won’t do it.

    Promoting people out of poverty only has inherent obstacles once you hit Malthusian constraints or if you are talking relative measures, but the former aren’t here now and the latter don’t count for this topic. What if anything makes the rest unworkable? Certainly Professor Swales went into his approach with great care and diligence and didn’t turn anything up.

    By the way, except to a bigoted worldview, conservative and reactionary are not synonyms, and learning from and applying the lessons of the past are not retreating to it. Anything that rejects conservative options sight unseen is a recipe for keeping on until you get it wrong enough for the game to stop regardless of your wishes. You would want to stop if you got it right, right? And you wouldn’t want to do harm that good might come? That’s what conservatism amounts to, per Viscount Falkland’s test of “when it is not necessary to change, it is necessary not to change”.

  10. “Ideological supporters of the free market dislike the idea of public provision and funding of services though they have proved unable to come up with workable alternatives.”

    Not that they are afraid to argue that if only the rules were relaxed just a little more, more sacrifices made, more people left behind, expectations lowered, etc, we’d reach free market nirvana. Barbarian capitalism.

  11. “Not that they are afraid to argue that if only the rules were relaxed just a little more, more sacrifices made, more people left behind, expectations lowered, etc, we’d reach free market nirvana. Barbarian capitalism.”

    Hear, hear. I was thinking the other day how such calls are always loudest immediately before a crash. Strangely, the previous experience is always forgotten in the strange Alzheimer’s world of right wing punditry.

  12. Snark, snark, snark. There are loads of free market solutions for all manner of current problems. The fact that social democrats vote for socialism (from either of the majors) is the only real factor making such solutions unworkable. Personally I’d prefer if they just pissed off to a commune somewhere but given that they are going to continue to meddle in other peoples affairs I suppose the snarks and counter snarks will be ongoing.

    JQ – before you head off for the big pow wow in Canberra will you be reviewing the ideas lists being compiled at the various blogs and wikis? You could be an advocate for the online equivalent of the big tent festival.

  13. “The trouble is you left out the word “workableâ€? in your rejoinder.”

    Come now Ernestine what’s wrong with begging bowls and dog food as an alternative to the invalid, veteran and aged pensions?

  14. Okay, less snark and more substance.

    Firstly, let us note that political competition is really only of merit when there is a genuine difference between the two parties.

    Otherwise we end up with what the Spanish referred to as the Alto Pacifico – two essentially identical parties taking turns at the political trough.

    Secondly, let’s note that Australian voters are overwhelmingly pragmatic and conservative (note the small “c”).

    They care less about ideological purity than whether policies work and they are generally well aware that we’re on a very good thing here.

    What the Liberals have just been reminded of via great electoral pain is that to be conservative in the literal sense of the word in Australia is to support public schools; public hospitals and collective bargaining.

    Thirdly, let us note that the greatest political success story in the history of this country is Bob Menzies – who happily shredded free market shibboleths in order of politically popular policies such as officially-regulated interest rates and tariff protection.

    Fourthly, anyone who thinks that the first half of the 20th century is a blue-print for a wealthier and healthier society needs to go read “Down and Out in Paris and London” and The Beveridge Report.

    Great Britain didn’t adopt social welfare policies out of a sudden case of the Stupids or because they were infiltrated by the dirty reds.

    They did so because in 1914 and again in 1939, huge numbers of young conscripts, especially from the inner cities, were medically unfit due to long-term malnutrition and medical neglect. (Going back slightly further, one of the main causes of death amongst British soldiers in the Boer War was starvation. Many conscripts teeth were so bad they were literally unable to eat the “biscuits” and salt beef that were the mainstay of their diet.)

    Since World WAr II, living standards, educational achievement and life expectancy in the west have been increasing at rates virtually inconceivable pre-war.

    The anti-government ideologue can only point to technological advancement and argue that growth would have been EVEN HIGHER if the Masters and Servants Act and the workhouses had been maintained.

    Fifth, saying you have a solution is a lot harder than proving you have a solution.

    Given that the Australian electorate is both pragmatic and conservative. you need to either come up with a credible gradualist solution to what people see as real problems (and believe it or not and however much it may disappoint you few people see the very existence of Medicare and trade unions as a problem) or you need to wait for a crisis which will lead people to embrace a radical change (such as the economic restructuring of the Hawke/Keating era.)

    Failing that, your only chance of winning government is for Billy McMahon to be elected PM.

  15. Good post, Ian.

    I heartily second your recommendation that the libertarians among us read “Down and out in London and Paris.” The full text is available free here, and lots of other places.

    The really odd thing about economic libertarians is that they assume that under the dog-eat-dog system they advocate, they’ll all be transformed from pissant whiny know nothing blog commenters into the biggest dogs, rather than dog food.

  16. IG, for what it’s worth, I’ve somewhere come across a comparison of average heights of recruits in each of those wars. It fell, despite what Lloyd George and his successors brought in. The lessons are not as easy to read as all that.

    And, of course, what is being recommended is not the hidebound caricature you are bringing out – see my earlier comment, for one.

  17. FWIW, I also think that Ian is wrong on the specifics of why Britain introduced welfare policies, and on the times when they were introduced. It’s a very complicated subject, going back to the twelfth century and earlier.

    Nevertheless, it’s not necessary to know the entire history of the world to make some pretty astute observations about the events of the past few years.

  18. Down and Out in London and Paris showed that poor people are prepared to jump through hoops to survive and will work to circumvent stupid rules. It was an expose of cruel, callous and capricious rules in a country where class divisions were well embedded.

    The Liberals have tried to embed class divisions in Australia too but couldn’t quite get over the Aussie belief in a fair go.

    If the Liberals want to win they have to come up with ideas which support the desires of the mainstream for a society based on fairness. Whilst they have appealed over years to the basest instincts, people when they were offered a decent alternative took it.

    Whilst Brendan Nelson has been ridiculed for his listening tour this is a first step as the Liberals stopped listening and made many enemies on the way. Those many enemies (be they gay, women, refugees, muslims etc) mobilised to get rid of them. They will have trouble winning them back even if the mobilisation has ended.

    The Libs and Libettes need to understand that the majority don’t want a dog eat dog world and that the hungry and homeless people created by the Howard years are not something that we are proud of.

    We know that if money goes to private education that the chances for poor people are lessened along with the opportunity cost to use the money elsewhere. If the private sector is left to look after housing then prices will rise and people will be left homeless or hungry. In a country with homeless and hungry people we are all a little less safe and a little more anxious. Mr Howard used to talk about the barbecue stopper. What he failed to appreciate was that Workchoices would indeed stop the barbecue as people working weekends just couldn’t go.

    How can the Liberals get back in the game? Dump those policies which were so harsh and look at solutions which are uncomfortable – protection for federal whistleblowers; high standards of probity; conservative economic policies which protect people from wolves; workplace policies which support women and men who want to become parents.

    The 2020 conference of celebrities for celebrities (sorry Prof) is a great opportunity for the Libs to put forward ideas of their own. The shame is that most of us are cynical about whether they have any.

  19. Pr Q says:

    The first step towards a return to relevance would be to disown the culture warriors who provided most of the intellectual support for the failed policies of the Howard era. Their hostility to public sector workers, expressed in their typically vituperative language, undermines any attempt to present the Liberals as genuinely caring about human services.

    FOR THE UMPTEENTH TIME: The Culture War – a conflict between clans of various forms over cultural identity of civil association. It has little or nothing to do with the Class War – a conflict between classes over the fiscal progressivity of income distribution.

    Culture Warriors of the liberal Left (“Wets”) are typically libertarians who tend to have elitist concern with diversified minorities. Culture Warriors of the “corporal” Right (“Dries”) are typically authoritarian who have populist concern over the unified majority.

    Its perfectly obvious that one can be Left wing on the Class War and Right wing on the Culture War. I know at least one person, at least, who takes this position.

    Obviously, any debate over the status of “public
    sector workers…in the human [community] services” relates to the Class War, not the Culture War.

    No end of confusion is caused by conflating the two forms of social conflict. Unfortunately Pr Q is one of the most guilty when it comes to sowing this confusion.

  20. “I know at least one person, at least, who takes this position.”

    I know exactly one such person, Jack, and I’m sure you do too :-).

    Whatever the logical possibilities, my description of the actual position of pro-Howard culture warriors is correct. Their tribal hatreds encompass “bureaucrats”, just as much as “enviros” “elitists” and so on.

  21. Ian,

    A lot of libertarians such as myself rail against the perverse aspects of welfare but few invest any significant time advocating outright abolition of welfare. The negative income tax that the LDP campaigned on in 2007 made the first 30k of income, tax free (ie it was highly progressive) and it included a universal subsidy for all citizens (ie the negative tax bit). So you’re essentially stroking a straw man argument. And in case you hadn’t noticed we still have beggars doing in tough on the streets today even with all the apparatus of an extensive welfare state.

    In terms of education I hope you also note that small “c” conservatism rejected the symbolism of Mark Lathams position on private school funding.

    In terms of the dilemma of a two party duopoly I agree with your stated view. The way to combat this is to have a vibrant selection of viable minor parties on the ballot. However public political funding, electoral commission rules and other regulatory barriers contrive to ensure that micro parties mostly help to present an image of multi party elections without many of them ever being viable. An easy start to return politics to the grass roots of civil society would be to ban party funding via unions, corporations AND government. However the insiders have no interest in such a reform and the socialists will no doubt declare such an approach “unworkable”.

  22. Fortunately most Liberals haven’t read Orwells semi-autobiographical “Down and out in Paris and London” so any nuances, real or contrived, will be lost on them.

  23. Comb-overs.

    The Liberals will be saved by a return to comb-overs.

    Mr Howard denied his Liberal heritage when he eschewed the comb-over.

    (And the snaggle-teeth and the hedge-row eyebrows. Sir Robert Menzies had magnificent hedge-row eyebrows and he was loved, admired and repected by all.)

    No. The Libs must re-embrace the comb-over (and the hedge-row eyebrows).

    This gesture would signify a repudiation of the false and meritricious, which were the by-words of the Howard era.

  24. John McCain’s endorsement points to the pull of electoral pragmatism on conservative voters (if not conservative activists). Problem for the Libs perhaps is that the cultural changes likely to emerge in Australia (see here: may terrify conservative activists into pure wingnuttery with consequent negative impacts on conservative electability. Maybe the NSW Libs are an example of this?

  25. “In terms of education I hope you also note that small “câ€? conservatism rejected the symbolism of Mark Lathams position on private school funding.”

    I’m not sure this is supported by evidence, Terje. Such policies are inevitably politically damaging, but for quite different reasons than the ideological ones you suggest: primarily, the injured self-interest of the voters threatened by removal of a subsidy is far more potent than the mild approval of the many who would benefit in some small way by a more rational funding regime.

    The recent nonsense about the lump sum for carers and pensioners is a similar case in point. Intended as a one-off electoral bribe by Howard, it’s now been inscribed in stone. Other examples of permanent bad policy abound – the private health insurance subsidy for starters.

    It will be interesting to watch how the Libs handle Rudd’s natural, bureaucratic tendency to jettison these arbitrary public rents and replace them with means tests. The clamour of the jilted rentiers may prove a Siren’s song for desperate Libs sitting on sub-40 percent polling figures. If they succumb to this temptation by championing arbitrary handouts they’ll sink what little credibility they have in the ‘good government’ stakes.

  26. Hal9000 – was the idea that people rejected Howard because they love public schools supported by evidence? I suspect Howard got ditched for reasons unrelated to voter conservatism about public schools. It was a non-issue at the last election. If anything the Labor party returned to the conservative concensus that total per student public funding (state + federal contribution) should be much the same for each student irrespective of the parents choice regarding public or private and irrespective of whether the parent puts some extra cash towards the cause (ie Australias long standing voucher scheme for education that dare not speak its name).

  27. In a global & historical context – is there really any meaningful difference between Rudd’s ALP and Howard’s Coalition. Symbolism of signing Kyoto and saying sorry to indigineous folk aside, would any international observers or a hypothetical observer from say 1960 or 2050 see any meaningful difference?

    In that context – JQ is right, the Libs are in for a long period in opposition. In about 10 years we’ll probably get a mood for change ‘just to give the other mob a go’.

  28. Terje – you keep stating as fact that the Howard school funding regime was a long-standing consensus. The reality was that Howard shifted radically from the longstanding consensus so as to privilege private schools. Latham’s attempt to make this into an electoral issue was ham-fisted and was effectively turned into a weapon by Howard. Your point about a de facto voucher system correctly identifies the Howard end point, but is wrong chronologically. This was not a longstanding part of any Australian consensus.

    My point was that, all other things being equal, the political damage from removal of a subsidy (new or longstanding) to a small group is always greater than the electoral benefits to be derived from offering to reallocate those resources for the general benefit. Ideology has nothing to do with it.

  29. Jill Rush

    Ah, actually Down and Out in London in Paris showed what a sterling education boys from Eton receive. Not only can they adapt to any situation they might themselves, but they can write about in sterling prose for their Eton school chums to publish. 😉

  30. John, I like your latest AFR piece.

    Politically, “universalism plus choice” looks a winner. It captures well three distinct but highly regarded Australian values – equality of treatment and opportunity, freedom of choice and self-help (individual responsibility). That’s why it will probably appeal to Labor as well.

    But from my personal social viewpoint, I fear that “choice” has the potential to seriously erode “universalism” of quality and access – and with it some dimesnions of equality of opportunity. This is surely what is happening already in education, training, housing as well as health.

    That said, my values are not typical and politicians are interested in mainstream views.

  31. Terje: “A lot of libertarians such as myself rail against the perverse aspects of welfare but few invest any significant time advocating outright abolition of welfare. The negative income tax that the LDP campaigned on in 2007 made the first 30k of income, tax free (ie it was highly progressive) and it included a universal subsidy for all citizens (ie the negative tax bit). So you’re essentially stroking a straw man argument.”

    I wasn’t addressing “a lot” of libertarians Terje I was responding specifically to Sukrit’s “all the answers were there in the early 20h century”.

  32. Hal9000 – the allocation of public funding (state + federal) on a roughly equivalent basis for private students as well as public students precedes John Howard. I have recollections of much the same issue being discussed in the late 1980s. My recollection could be faulty but without anything else to go on (other than your contrary view) I’ll stick with my recollection for now. I would agree that John Howard played up the symbolism of it all so he could watch the left give themselves a wedgie about it.

  33. Another thought for libertarians: Negative Income Tax; school vouchers and medical savings accounts are not “new ideas”.

    They’re ideas that have been bandied about for twenty, thirty or more years and have consistently failed to gain political support virtually anywhere in the developed world.

    Maybe, just maybe, if you really believe that radical changes in the areas of welfare, education and health insurance are needed, you need to go back and rethink the alternatives you’re offering.

  34. IG, are you addressing the soundness of Terje’s ideas or the political process? If the former, it’s not a substantive argument; and if the latter, while it is very relevant to what comes next, i.e. making it happen, it has nothing to do with what Terje was offering just there – counterexamples that rebut assertions that his lot don’t have ideas.

  35. John Greenfield,
    You need to read “Down and Out in Paris and London” again as it shows no benefit of attending Eton although the divergence of class experiences are discussed. All of the tramps had the same rules of hunger, poverty, cold, sleeplessness and the Spike to deal with. That George Orwell died at the age of 47 of TB rules out that attending Eton led to a long and happy life.

    Your remarks do show that it is important for Liberals to understand issues and portray them fairly rather than misrepresent situations – if they are to be taken seriously.

    Having watched “The Oasis” on ABC 1 it is clear that Australia has a modern Down and Out problem of its own. The Liberals should address this problem, but, as the Salvation Army representative stated in the post program discussion, the problem worsened dramatically during the Howard years. Tanya Plibersek was credible, in the same program, so it will be hard for the Liberals to gain traction on this issue; but to regain credibility requires a more honest approach.

  36. The word ‘workable’ has been lost again. Nobody said that other people haven’t got ideas. The adjective ‘workable’ is crucial in this thread.

    One example of ‘unworkable ideas’: I recall a newspaper article where someone from the higher education sector wrote in favour of school vouchers. The article started off with a strong sentence to the effect that parents must have choice (note the words must have) and finished saying that this doesn’t work in country areas because there isn’t the choice of alternative schools. I call this an ‘unworkable idea’.

    As for negative income tax,in the first instance the term ‘negative income tax’ is just another phrase for income subsidies or transfer payments. I am sympathetic to the adoption of the term negative income tax instead of income subsidies to the same extent as I am sympathetic to accountants adopting the terminology ‘negative profit’ instead of loss. Thus, I concur with Ian Gold.

    Medical savings accounts: This is but a version of an application of Milton Friedman’s permanent income hypothesis. To the extent that there is a grain of truth in saying that a lot of people try to acquire assets (real or financial) during times when they don’t use all their income, assuming they have earnings in the first place, on current expenditure (ie they save), for the purpose of cashing in the assets when they have no current income, I would agree that Milton Friedman’s hypothesis is a formalisation of such observations. I can also accept that this hypothesis is sometimes useful in rough modelling techniques. However, to go beyond that – in the sense of basing a welfare policy on it – is, IMO, entering the area of wishful thinking because Milton Friedman’s hypothesis holds if and only if future (as distinct from futures) markets are complete, which is empirically not the case. I classify wishful thinking as belonging to the category of ‘unworkable ideas’.

    There is another gem of an example of an ‘unworkable idea’ in this thread. But I have said enough.

  37. PML. I was addressing not just Terje but all libertarians here.

    Back in the 50’s, 60’s and 70’s, Labor was convinced they had the answers to all of Australia’s woes.

    In some cases they really did have the answers – but it hardly mattered because they’re adherence to socialist dogma made them unelectable except for Whitlam’s brief, vauntingly ambitious and not very successful term.

    Bob Hawke sacrificed much of the ideological baggage of the Labor Party – and not only was he electorally highly successful he did as much or more than Whitlam to advance Labor’s core social democratic values.

    The Liberals, to return to the initial topic of the discussion, have recognised that under Howard there policies on indigenous reconciliation, climate change and industrial relations amongst other issues had become widely divergent from the views of the majority of the Australian electorate.

    Similarly, if the Libertarians want to ever become even a credible minor party in Australia they need to develop policies that at least a significant minority of the electorate support.

    Clearly, the old favorites which include, for example, vaguely defined concepts of property rights as a panacea for environmental degradation and tax cuts as the entirety of economic policy aren’t doing it.

  38. EG, we already addressed the point about workability. Asking again doesn’t reinstate your objections, it only shows you aren’t taking the answers on board. But to go into the specifics of what you give this time:-

    – Vouchers (or, better still, making parents better off) would work in country areas, if in no other way than allowing boarding schools or the bringing in of teachers outside presently existing schools. It only “doesn’t work” on the back of schools and education not responding, i.e. building in the assumption of no change.

    – Negative Income Tax is not just another phrase for income subsidies or transfer payments, and Negative Payroll Tax (Professor Kim Swales’s method) even less so, because income subsidies and transfer payments are 100% funds outflows channelled through state mediation, whereas NIT and NPT work more by leaving resources with people and only making transfers in marginal cases (never, with NPT), which is much smaller in aggregate. Not only is there less churning, there is more personal connection, which makes a lot of difference in how people react.

    – Medical accounts are clearly workable (more precisely, as workable as systems that spread costs) because in degenerate cases they function as current systems do. People who can’t pay in advance or after the fact end up deferring payment indefinitely, then having amounts due written off when they die, just as though they had been spreading costs all along. And, of course, such cases would be that much rarer from the other elements, working to promote people out of poverty.

    So, apart from throwing “unworkable” around without backing it, which itself seems like wishful thinking to me, what else is there to your objections?

  39. PM Lawrence
    Ernestine used the term unworkable whereas I would use the term inequitable.

    Vouchers are inequitable as they assume that everyone starts at the same place and that it is equitable to have the same input.

    However vouchers will entrench disadvantage as children do not play on a level playing field.

    To take the example of a country school vouchers will advantage those who are able to consider boarding schools (and this is more than a monetary decision). Those who can’t will still be left without choice and the local school will have lost the funds associated with those who have gone to the boarding school.

    To run a school on the hard market model you suggest would entrench poverty and disadvantage in some areas whilst entrenching privilege in others. More resources are needed in poorer schools because the parents cannot contribute in the same way as wealthy parents and there are often more social problems as well.

    Instead of looking at the input look at the outcomes and your proposed model looks sick indeed.

    Ernestine is right it is unworkable if you are looking at the educational outcomes for all children and not just those who are lucky in their choice of parents and schools.

  40. There is really only one was for the Coalition to resurrect itself, and that is to cut all ties to the previous government. Anyone who was in the Howard cabinet – including Malcolm Turnbull – is forever stained by a whole swathe of immoral policies.

    It’s time to pass the baton to a whole new generation of over-ambitious assholes.

  41. Jill, vouchers have actually been used quite successfully in Sweden, among other places, so I wouldn’t write them off. My biggest concern is that will privilege religious bodies, who tend to run a large number of private schools.
    So I’d only support them if the tax breaks that religious institutions currently get are revoked.

  42. I am not sure why there are calls for the Coalition to resurrect itself now particularly as Easter has come and gone. The ALP govt appears to have accepted most of the Coalition reforms (albeit with some symbolic changes) so policy lives on. It is how the current govt (specifically Rudd) meets the challenges of the next term or two and how the opposition responds to the govt that will dictate the Coalitions chances of re-election.

  43. Coalition “reforms”?

    1. GST. Here for good.

    2. WorkChoices. GAWN.

    3. Destruction of Medibank. FAILED

    4. Higher Education. Disastrous accentuation of Dawkins’ “reforms”.

    What other “referms” can Ratty point proudly to to justify his decade of residence in Kirribilli?

    The rest was just furious fanning of the flames of the culture wars. And guess who got burned?

    A pretty poor return on investment for the Right if you ask me.

  44. Whatever Katz, point me to any 2008 ALP reforms of significance.

    Banning WC has helped “Tracy” and thats all. Individual law contracts are still lawful for those who are better skilled.

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