Reviewing the Commission of Audit’s opening night

I played my little part in the political theatre that was the Commission of Audit, with about 15 seconds on ABC Lateline. I’m pleased to see that other reviewers agreed with me in dismissing this tired remake of the 1988 and 1996 hits as stale and derivative. Attempts to gin up a bit of excitement by introducing the minimum wage as a new villain wnet nowhere, and reviving the golden oldie (last performed by Malcolm Fraser in the 1970s) of returning income tax powers to the states fell flat. And of course, a supposed audit of the public finances with tax expenditures cut out of the show is like Hamlet without the Prince. About the only thing to be thankful for is that they toned down the Hockey-Abbott melodrama of a debt crisis and budget emergency, preferring instead some dark murmurs about ominous long term trends.

I give it one star.

42 thoughts on “Reviewing the Commission of Audit’s opening night

  1. Hawke abolished the power of the states to vary the income tax because because Nick Greiner was going to offer a discount on the income tax in NSW.

    I did not know you were a fan of Joh Bjelke-Peterson’s theory of public finance:

    the only good tax is a federal tax

  2. But why are you being dismissive? It’s like your reaction is one of boredom. This is an ideological proposal, by an institution with little credibility, that uses numbers to disguise its violence – it will destroy and liquidate institutions that have taken generations to build. It will hurt the lives of millions of people, not to mention an already threadbare social fabric. This isn’t just an abstract debate among economists.

  3. But why are you being dismissive? It’s like your reaction is one of boredom. This is an ideological proposal, by an institution with little credibility, that uses numbers to disguise its violence – it will destroy and liquidate institutions that have taken generations to build – our common wealth. It will hurt the lives of millions of people, not to mention an already threadbare social fabric. This isn’t just an abstract debate among economists.

  4. I share your concern Anne and having seen JQ on Lateline he isn’t dismissive. Watching PBS Newshour the same day and a segment about the Congressional Republicans voting against Obama’s $10 minimum wage – leaving it at $7 an hour – is more than enough to ridicule the same exercise in this audit. Particularly as the inequality issue has pushed Thomas Pickety’s (sic) ‘Capitalism in the 21st Century’ to best seller status. We’re hitting momentous times I feel.

  5. I’m hearing the word “perspective” bandied around this morning on the radio. As in, anyone questioning the COA needs “perspective”. These are rich, privileged white people, by and large, assuming their own “perspective” is representative. What’s a few dollars here and there to these people? I like to shove their “perspective” up their nether regions. FFS!

  6. I am surprised -I did not think the Coalition would try for much sweeping long term structural reform -as they promised they wouldnt and the Howard govt didnt do it (much) either .Howard just handed out the benefits of the boom and focused on cultural engineering. Now its no longer raining gold bars so we are told simply that (certain kinds of) spending must be cut.

    It is said that Labor lacks a clear vision -well the Liberal party doesn’t ,but they revealed none of it before the election. Their vision is pushing hard up against one extreme of the spectrum. No wonder public trust in politicians is running at 10% (and they want to get rid of the ABC with trust levels at 80%). Is there anything in the Commission of Audit that is not a simple statement of US style free market extremist policy straight from the IPA wishlist ?

    They even want state government to be the strongest level of govt as they fear local govt Communists and big govt bureaucrats -A nation made of warring ,insular ,parochial states each beholden to a local oligarch or two. Maybe the states should have armed militias in order to protect their freedom from the central govt . I’d like to be able to walk down the street with a gun on my hip -imagine the freedom and choice open to me then .People could sort out differences quickly and with dignity the old fashioned way, in open competitive duels ,without having to rely on guidance from Big Brother.

  7. Richard Wolff nails it. His article bears full quoting.

    “Beyond Piketty’s Capital: Richard Wolff Warns us Not to Band-Aid Capitalism.

    by Richard Wolff and David Kerans

    WASHINGTON (VR)— Perhaps the biggest event in the intellectual history of the young twenty-first century is Thomas Piketty’s new treatise, Capital in the Twenty-First Century. Together with his collaborator Emmanuel Saez, Piketty has led the way in researching economic inequality over the last decade, and he has marshaled all of his expertise to produce a devastating indictment of the capitalist system.

    Piketty has challenged the legions of establishment economists and political spokesmen to defend the system, but, so far at any rate, the Right has no answer. The upshot may be a sharp shift leftward in the consciousness of civil society. And, as we discuss below, the shift leftward may go further even than Piketty himself has countenanced.

    Piketty’s mastery of the dynamics of economic inequality leads him to conclude that, barring a major wildcard or sustained, aggressive state interventions, the economic system of the developed world is primed to deliver ever greater returns to capital over the next few decades (at least), and relatively lower returns to labor. In consequence, the economic elite of the developed economies of the world stands to become an entrenched oligarchy, where the very few who possess great wealth will effortlessly accumulate ever more, while the rest of the population will be making do with ever less.

    In other words, we are entering a period of “patrimonial capitalism.” Apart from the egregious injury patrimonial capitalism will do to economic justice, it will also suck much of the dynamism out of developed economies.

    For insight into Piketty’s arguments and his policy proposals, Radio VR’s David Kerans spoke with University of Massachusetts Emeritus Professor of Economics Richard Wolff, who is also a co-founder of Democracy at Work, an organization dedicated to overcoming the worst features of modern day capitalism by building a social movement of economic renewal through workers’ self-directed enterprises.

    Wolff accepts Piketty’s theses regarding the acceleration of inequality in recent decades and the approach of patrimonial capitalism. On the plane of economic theory, however, he laments that Piketty did not take establishment postulates of micro-economics to task in his new book.

    Wolff contests the commonplace perception of the post-WWII decades as having delivered economic progress for all categories of the population, reminding us of Michael Harrington’s 1962 sensation The Other America: poverty in the United States, which spurred a variety of significant anti-poverty measures in the US. Wolff agrees with Piketty that the type of economic growth that produced a burgeoning middle class after WWII was an aberration in the history of capitalism. But in explaining this success he puts more stress than Piketty on the surge of activism from below in the wake of the Great Depression. Popular pressure–channeled in part through two socialist parties and a significant communist party–propelled the New Deal.

    In other words, as Wolff explains, the rise of the middle class was not an inevitable outcome that flowed from a harmonious economic cycle following the war and destruction of the period from 1914-1945. It was political action from below that made the economy serve the wider population.

    Wolff warns that we cannot band-aid capitalism. However laudable and even attainable may be suggestions from economists like Piketty or Dean Baker, to name just two, piecemeal policies designed to stop the system from funneling wealth upwards will not work for long. The elites are fully focused on preserving and expanding their fortunes, and the structure of the contemporary economy puts in the hands of a very few people in large corporate enterprises “both the incentive and the resources to roll back whatever adjustments a movement from below is able to make.”

    “Something wasn’t done in the 1930s that enabled the rollback in half century that we’ve just been through, and we have to learn what that was and not make that mistake again.” Otherwise, “the corporate structure will undo all of (the adjustments) the minute the dust settles—only they’ll do it quicker this time because they have the great experience of the last fifty years to know how to do it.” “

  8. Well if you assume that the economy is not going to get anywhere near trend Nominal GDP growth you will get deficits well into the future because you simply will not have the revenue.

    If that assumption is relaxed then hey presto we get surpluses. the Kouk shows why.
    go to his site or my Around the Traps and see why!

  9. Shepherd got far too easy a time. On payment for seeing general practitioners, it’s not just that he had no analysis to support the claim that we overuse GPs (where the medical opinion is that, for the poorest and for the chronically ill, we don’t see GPs often enough or early enough and this raises costs of the medical system). He said, loudly and repeatedly, that we have an average of 11 GP visits a head a year. Yet the figures, spoon fed and available on line, show clearly that the we have fewer than half that number of visits.

    In other words, it’s not just that the Commission did no real analysis of the facts. It seems the Commission didn’t check the facts, preferring to use figures it liked the sound of. Is there anything in the Commission reports that is any better than that?

  10. This is an interesting and important point. If a new form of left economic analysis is to develop out of Piketty’s significant intervention then it must be informed by a critical political analysis, and become a new form of “political economy”. @Ikonoclast

  11. Rather off-topic:

    “Treasurer Joe Hockey has attacked wind farms as “utterly offensive and “a blight on the landscape” – SMH.

    I don’t recall Joe criticising the brown coal plant and the mine that burned for weeks and smoked out Morwell. I guess he finds nothing wrong with that.

    I find Joe Hockey utterly offensive and a blight on the political landscape. He’s not a blight on the intellectual landscape because he is not even in the picture.

  12. Also – perhaps only slightly – off topic:

    Apparently there was a pro-fascist march/rally in Brisbane this afternoon in support of the Greek ‘Golden Dawn’ members who are in jail in Greece.

    According to the ABC radio report, there were several hundred ‘anti-fascists’, unionists and students following them and shouting insults & slogans at them – the riot police got between the two groups and there was no real trouble. (As a rule, I’m against stopping or interfering in other people’s rallies no matter how odious. I’d prefer to let them have theirs and we can have ours.)

    But I liked the final line of the report:

    “The pro-fascist rally managed to get away in a maxi-taxi”.

  13. If you are dealing with sheeple you need a shepherd. Not very constructive, but I couldn’t resist.

  14. @Patrickb

    Although the story itself is hilarious, have a look at the pictures on (the increasingly fascist) ‘Brisbane Times’ website:

    The intended impression is that the “Left” were the problem – see how the Constabulary are itching for trouble with the ‘Anti-Fascists’ but are actually protecting the fascists?

    And of course the establishment media is pretending to be in ‘the middle’ of all this.

    As I said: ‘Let them have their rally, and we’ll have ours’. You have to wonder why a group of ten nutters were able to get most of the Brisbane establishment media & several hundred “lefties” out for a rally everyone would have otherwise ignored.

    If it looks like it’s rigged, it works like it’s rigged and it smells like it’s rigged….

  15. @Patrickb

    Although the story itself is hilarious, have a look at the pictures on (the increasingly fascist) ‘Brisbane Times’ website:

    (WWW then:)

    The intended impression is that the “Left” were the problem – see how the Constabulary are itching for trouble with the ‘Anti-Fascists’ but are actually protecting the fascists?

    And of course the establishment media is pretending to be in ‘the middle’ of all this.

    As I said: ‘Let them have their rally, and we’ll have ours’. You have to wonder why a group of ten nutters were able to get most of the Brisbane establishment media & several hundred “lefties” out for a rally everyone would have otherwise ignored.

    If it looks like it’s rigged, it works like it’s rigged and it smells like it’s rigged….

  16. Is it correct that this exercise in political corruption cost the taxpayers $750,000, and there is no institutional arrangement, such as an ICAC-like body, to investigate?

  17. Tony Shepherd’s layman’s opinion is that 11 visits to the Doctor is too much. I am a casual employee so this doesn’t affect me but don’t permanent employees have to go to the Doctor for a certificate if they have something as simple as severe 24 hour diarrhoea. An ailment that you would generally ride out.

  18. To elaborate a little, it seems to me that such “Commissions of Audit” are corrupting on a number of grounds. The corrupting influence exists, aside from the cost which can be seen as a pay off for political allies, is institutional. Surely, it is the job of the Public Service to provide impartial expert advice. If a wider investigation is believed to be necessary, then that is the task of parliamentary committees, which among other things would reduce the cost. It is hard to see how this commission, its recommendations and expense, can be justified. If it is purely an ideological and political exercise, and one that will be “forgotten” in the pre-election budget, why should the taxpayers have to foot the bill? At the very least, it is an example of duplication and waste.

  19. @Wendy

    And in any event, those with chronic conditions, whose GP visits push up the averages, are supposedly to be shielded from being forced to bear the brunt of the copayment. Unless the plan is to discourage them from visiting GPs it is hard to see the salience of Shepherd’s remark about how ‘crook’ ‘we’ are.

    One might note too, that given that many therapeutic goods are subsidised on the PBS it’s little wonder that the recommendation of a professional is required. Again, because he is an arrogant and ignorant fool, Shepherd misses that.

    Maybe he’s hoping that people won’t merely stop visiting GPs but stopping ordering heavily subsidised therapeutic goods, and perhaps die earlier and save the regime of the day on pension payments, senior health services and nursing homes.

    It’s hard, even for me, to put into words the revulsion I bear towards this political exercise.

  20. Tony Shepherd of course has made a career out of exploiting public sector spending. He has been one of the most influential champions of public/private partnership arrangements to the benefit of the Transfield group of companies where he was employed. Presumably having seen how easy it is to extract taxpayer money for private profit in various defence and infrastructure contracts, he assumes everyone else is doing it too and it needs to stop. Being a long-term Transfield employee, he’s probably convinced that people should depend on family support and private patronage, not government welfare (read up on the Belgiorno Nettis dynasty if you don’t know what I mean).

    The idea that Shepherd was any kind of independent auditor is ridiculous. Sadly, Labor’s latest bunch of leaders seem committed to the same tired “whatever you do don’t upset business” mentality that Hawke pioneered and refuse to call this stuff for the revolutionary economic power grab that it represents. All we get from Shorten and company is tedious nitpicking about whether Abbott is going to break some election promise or other (as if everyone’s forgotten Labor’s recent track record in that regard).

  21. There is so much wrong with what the CoA said. Two things OTOH:

    1) The figure for average medical visits per annum is skewed upwards by young children, the elderly and the chronically ill. The problem with having some kind of levy on doctor’s visits (as with all social services) is that those who need it the most have the least ability to pay.

    2) Retirement age. Again, those that need it the most (the ill and those in manual labour) are the most effected while those with white-collar careers would have greater opportunity to work through or have early retirement anyway. People from lower socioeconomic groups (those more likely to need the pension) suffer from greater rates of all kinds of disease as compared to upper SES groups. Also, this has got to affect the labour market and the prospects for young people entering the labour force.

  22. Paul Krugman in Thursday’s NYT: “people whose real goal is dismantling the social safety net have found promoting deficit panic an effective way to push their agenda”.

    And never let it be said the Australian right is slow to ape its ideological inspirations across the Pacific.

  23. Transfield under Shepherd was (and still is) woeful.

    Guys like Shepherd do well when things are good, they live in their own bubble of success and believe their own rhetoric. This has been Abbotts problem too, he believed his own nonsense about the carbon tax, about telling the truth, about economic issues and now when it’s time to deliver he can’t. I am surprised at just how light weight he is, watching last nights Kitchen Cabinet rerun I saw a man desirous of power and a big boy who likes his crumble.

  24. David Allen at 20 above

    Life expectancy has improved across the board in Australia across socieconomic groups and the rural urban divide. Not much difference in the percentage decline in mortality rates. (In measuring changes in life expectancy one looks at changes in age-standaridised mortality rates not changes in LE per se).

  25. There were many aspects of the COA that deserved criticism. One that has been insufficiently pilloried is intergenerational equity. The proposed changes really were massively to the benefit of baby boomers, and against later generations. Why pick 1965 as a cutoff date for pensions at 65? I was born before that date yet got a free tertiary education thanks to Whitlam.

    Those born later have paid more and received much less. They have also not been in a position to take advantage of lucrative tax breaks for super top-ups.

    I wonder how many in Cabinet were born after 1965, and what they think of it. Silly me, Chris Pyne has been in parliament long enough to still get an over generous defined benefit super fund. He does not need to care.

    This COA is not so much “screw the poor” as “screw the young”. It is symptomatic of the aged and obsolete political culture that produces members on both sides.

  26. I always got the impression* people like Tony Shepherd sincerely believed the magic pudding narrative that PPPs and BOOTs and all the rest would let governments build infrastructure for the masses, produce nice risk-free income streams for the contractors, and still save taxpayers money because competition! Self-interest is a powerful shaper of ideology. It never seemed to occur to them that a market in which there were only 2 or 3 possible contractors (sometimes only 1), in an industry notorious for price-fixing, wasn’t exactly the perfectly competitive arrangement envisaged by old Adam Smith. So it’s no surprise that he would enthusiastically apply the efficient markets hypothesis as a political cure-all.

    *I worked for years for an employer association comprising the Transfields, Leightons, Abigroups etc of this world.

  27. Socrates

    Apparently Joe Hockey makes the cut off date for shielding by little ,ore than a temporal whisker.

  28. @Fran Barlow

    Teacher in today’s Melbourne Hun said: “It’s very tough on people who’ve spent a long time working…Even from my perspective, I love what I do – but I really don’t think I would want to be in the classroom at 70. We have other places we want to go, other places we want to see, other experiences we want to get out of life.”

    Peter Whiteford gives academic backup to this point of view at Inside Story “Work till you drop” including this:

    It has been argued that if Australia lifts the pension age to seventy, Australians will have some of the oldest workers in the world. According to the most recent edition of the OECD’s Pensions at a Glance, seventeen out of the thirty-four OECD countries have legislated for increases in pension ages above sixty-five. Only Iceland and Norway are currently at sixty-seven, but Australia, Denmark, Germany and the United States have plans to match them, and Britain has announced an increase to sixty-eight.

    If retirement age moves from 65 to 70, and life expectancy is 80 years, then 1/3 of the post retirement time to do what you want is lost; sounds significant to me.

  29. @John Goss
    Yes LE has increased across the board – but that’s not what David Allan was asking. He wants to know if LE at mature ages has increased as much for lower SES as for higher SES.

    It’s an interesting question, and an important one of you’re thinking about pension ages. Right up until the late 1980s increases in LE in Australia were mostly driven by falling mortality rates in the young (with two big components – infant mortality and accidents for young men). Since then it’s been mostly driven by the old living longer. How that affects the SES divide in adult LE (always large) I don’t know.

    Of course pension age would be better linked to DALY, not LE, as I’ve often argued before, and even DALY doesn’t fully capture what you need to know. The CoA got that one very wrong but then so have lots of people, even supposed experts.

  30. This theme of reviewing the CoA (my previous comment, in moderation, included a link to a ‘review’ of the CoA on Croakey), raises the question of whether we can think of the Abbott government in general as a form of performance art.

    There was a discussion recently on Crooked Timber about the role of patrons in art – it is possible to think of the Abbott government (and certainly of Tony Abbott) as enacting a performance, sponsored by Rupert Murdoch et al

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