Although I’ve been involved in economic policy debates for most of the last 40 years, it’s not often that I can point directly to a substantive outcome, in the sense that a policy proposal I’ve generated is implemented, or at least adopted by a major political party. There’s nothing surprising in that. There are lots of people involved in the policy process, and most successful policy proposals reflect the efforts of many people, combined in such a way that it’s hard to tell whether any one person mattered.
But I was happy to see this proposal from the Labor Party to allow state governments to collect criminal fines through the tax and welfare systems (as with HECS debts and child support), rather than jailing defaulters as at present. This was idea I put forward in a paper with Bruce Chapman, Arie Friedman and David Tait, back in 2004 (paywalled, unfortunately).
As is argued in Labor’s press release, there would be obvious improvements and cost savings, as well as the avoidance of unnecessary suffering for people who can’t afford to pay. But for me, the change in collection mechanism is of interest mainly because it makes possible more radical reforms.
First, with a more effective way of collecting fines, it would be possible to expand the use of fines to more serious offences that currently attract good behavior bonds or short prison sentences. As far as I can determine, good behavior bonds are fairly ineffectual and short prison sentences are positively harmful.
Second, the collection mechanism would make it possible to relate fines to capacity to pay, so that high income earners would be unable to shrug off a fine as a lifestyle expense. In the 2004 paper, we discussed the idea of “day fines”, equal to a day’s income. That’s probably too radical, but we could get close with a system where the fine was set to a fixed amount or the maximum that could be collected at a given rate of deductions over (say) a year, whichever was less. So, for example, if the fine was $1000 or 2 per cent, someone with an income greater than $50 000 would pay the full amount, while someone on a lower income would pay 2 per cent of that income.
Somewhat to my surprise, I note that the Institute of Public Affairs agrees with Labor’s proposal and (at least implicitly) with the first point above, the need to replace imprisonment with less costly alternatives. This has happened a few times lately. Perhaps some of the high-profile departures in recent years have increased the influence of genuine classical liberals like Chris Berg and, it seems, Andrew Bushnell who wrote the piece of linked.