Kevin Foster, Monash UniversityTwenty years ago, Australian forces followed the US into Afghanistan in the wake of the September 11 attacks with a simple mission: to hunt down Osama bin Laden and the al-Qaeda leadership and remove the Taliban government that had sheltered them. That mission has ended in abject failure.
Its costs have been significant: 41 combat-related deaths, 260 wounded, more than 500 veteran suicides, thousands afflicted by post-traumatic stress disorder (PTSD) and around A$10 billion expended with precious little to show for it.
Uruzgan Province, the centre of Australian operations from July 2006 until the main Australian Defence Force troops withdrew in December 2013, fell to the Taliban in early August with scarcely a shot fired. All those years spent equipping, training and mentoring the Afghan National Army to stand up and fight for the gains made since 2001 had clearly achieved nothing.
But the failures don’t end there.
Over the past weeks, there has been a great deal of hand-wringing about the potential loss of the gains made in Afghanistan in the 20 years between the Taliban rule. Those gains were many: a generation has profited from improved access to educational opportunities, key health indicators have markedly improved, a massive influx of foreign aid has stimulated the economy, the private sector has flourished, and a free media has reported on and critiqued the emerging society’s advances and shortcomings. Women especially benefited from new freedoms and took up prominent roles in politics, the public sector and the media.
All these gains are now in peril as the newly re-installed Islamic Emirate of Afghanistan looks set to return women to obscurity and chatteldom.
While this is true of life in Afghanistan’s capital and larger cities, improvements in Uruzgan were less marked and never so far-reaching. Despite the Australian government’s “perennial airbrushed optimism” about the benefits brought by the ADF and its security and reconstruction efforts, the lot of Uruzganis beyond the provincial capital, Tarin Kot, changed little.
In late 2012, little more than a year before the ADF’s withdrawal, Australian journalist Jeremy Kelly was struck by the disparity between the ADF’s “mission accomplished” rhetoric and what he saw when he travelled through the province. He wrote:
Australian military officials are quick to list achievements by its development arm: three times as many healthcare facilities since 2006 and a rise in the number of schools from 34 in 2006 to 205 now. They are impressive numbers, but they don’t tell the whole story. In Chora, only one of the 32 schools open actually has students attending […] The rest are “just for teachers taking a salary” […]
Meanwhile, in the western district of Deh Rawood, government and foreign officials were shocked last year when they found land surrounding three vacant schools, all built with foreign money, was being used to grow opium and cannabis.
In November 2020, an independent Afghan NGO, The Liaison Office, assessed the state of Uruzgan province ten years after the withdrawal of the ADF’s erstwhile security partners, the Dutch. Despite the doubling of health facilities and workers ensuring greater availability of antenatal and postpartum care for Afghan women, access to these facilities remains fraught.
Taliban control of all major roads in the province and ongoing clashes with security forces restricted access to healthcare and education and stunted economic activity. Insecurity and internal displacement compounded by drought and disease severely affected agriculture with a marked increase in fallow land. Fewer schools were open in 2020 than a decade earlier. Though the Taliban had permitted the re-opening of some, they enforced a strict prohibition on girls’ education.
If Uruzganis profited little from the Australian presence, the ADF has emerged from the campaign damaged and diminished. Australian forces were bit players in the Afghan venture. Faithful followers of their US masters, they brought limited resources, exercised no control over strategy and so cannot be held responsible for the failure of the larger mission.
In this regard, the nation’s political leaders and the ADF itself have persistently measured the military’s performance by its adherence to the mythical yardstick of ANZAC virtue. From this perspective, the success or failure of the ADF mission rested less on what they did than who they showed themselves to be.
There is no doubt many thousands of servicemen and women served honourably and did what they could to improve the lives of the Afghans they encountered. Sadly, their efforts have left few permanent marks and will be largely forgotten. Instead, Afghanistan will be remembered for the alleged atrocities detailed in the Brereton Report.
Afghanistan’s reputation as the graveyard of empires rests less on the prowess of its forces than the country’s capacity to expose the failings inherent in the armies that come to campaign there. This includes the dysfunctional leadership and supply of the Soviet military, and the hubris of the US’s faith in the force of arms.
Lazy platitudes about Australian moral and military exceptionalism were put to the test in Afghanistan, and found wanting. To retrieve something positive from this 20-year debacle it is vital the ADF owns up to its failures in Afghanistan. Only then can it hope to recover its ethical balance and rebuild its moral authority.
Kevin Foster’s book, Anti-Social Media: Conventional Militaries in the Digital Battlespace, will be released by Melbourne University Press on August 31.
As COVID-19 infection numbers in locked-down Sydney show little sign of abating and Victoria extends its fifth lockdown, the prospect of life resuming some level of normality appears distant.
In recent weeks, we have learned more about the flaws in the federal Coalition government’s vaccination program. There’s the failure to procure sufficient vaccine and an accompanying over-reliance on the AstraZeneca vaccine.
The complications with rolling out the latter have exposed the shortage of supply of the Pfizer vaccine.
But are we ready to conclude that what we are seeing is a near-unprecedented instance of policy failure, especially when there are other pressing public policy issues on which the government has also been found wanting, most noticeably climate change?
There are three principal factors for measuring public policy success or failure.
The first is an assessment of how successfully the policy action ameliorates the problem it seeks to solve. This appraisal must take into account the consequences of that action. Consequences are often unintended and unanticipated. They might not become apparent for some time and can be difficult to quantify and link unequivocally to the policy in question. For example, the Coalition’s inclination to cease support for manufacturing in Australia has led, as is now evident, to our incapacity to meet the demand even for COVID vaccine production.
Second, an assessment of policy success or failure must consider the significance of the policy. That is, the failure of a minor government program has less negative impact than the failure of an economic, social, environmental or public health policy that affects the entire community.
Third, we must take account of the reputational enhancement or damage ensuing from a particular course of action. This may have decisive effects on a government’s electoral prospects.
Applying these measures, we can say that, to date, the Morrison government’s approach to the COVID vaccination rollout fares badly on all three criteria.
The vaccine rollout has failed the tests of public policy success
The problem is not that the proposal – a level of vaccination that will enable the community to “live with” endemic COVID – is misconceived. It is that incompetent planning, logistics and implementation have so far prevented it from sufficiently ameliorating the threat we face.
Second, the significance of success or failure in this domain – brought home by recurrent lockdowns – is manifest. There are negative flow-on effects for the entire community, not only in containing the virus, but also with clear impact on the economy, mental health, domestic violence and trust in government.
We are also confronted with counter examples: Seattle, for instance, in dire circumstances not so long ago, is now more or less back to normal because of the swift uptake of vaccination.
Third, the reputational damage to the federal government is evident in a string of public opinion polls that have found a substantial decline in confidence in the Coalition and the prime minister.
… but there is one that is worse
Some other examples help us flesh out the picture. One is a public policy from recent decades that did not achieve its intended purpose: the Rudd government’s Resource Super Profits Tax and its successor negotiated by the Gillard government, the Minerals Resource Rent Tax.
These policies failed on at least two levels. First, they did not reap anything like the revenue that was forecast. Second, the taxes were electorally damaging for the Labor governments, engendering a fierce backlash from the mining industry.
A more significant public policy failure, with consequences that took much longer to become apparent, was the Howard government’s Aged Care Act of 1997. This legislation established the framework for the funding and regulation of the aged care system. Partially privatising the aged care sector, that policy regime is widely recognised as being responsible for the underfunding of the system and associated chronic shortcomings, which the recent royal commission thoroughly documented.
This has been a product of the failure of the parties, but in particular of internecine battles within the Coalition and a brutal politics that, as Martin Parkinson argues, brought about “a fracture of the political centre”, rendering it incapable of the negotiation and consensus necessary for resolution.
Indeed, the intractability of climate change as a policy problem suggests that it, rather than the handling of vaccine rollout, is the biggest failure of modern times.
Despite the chaos that has been well documented, the required levels of vaccination can still be achieved, even if belatedly. The situation is potentially capable of resolution, and possibly in time for Seattle-like “normality” to be re-established. Adequate climate action, on the other hand, still appears to be incapable of resolution under this government.
But will the Morrison government’s mishandling of the vaccine rollout be politically fatal? Certainly, falling confidence in the rollout is translating into a decline in support for the Coalition. Yet we should be wary of jumping to conclusions.
The prime minister has until next May to hold an election. The government has ample time to play catch-up with the rollout. If further outbreaks are contained and the elusive herd immunity is achieved by then, lockdowns will have become a thing of the past. The relief at being able to move on may obliterate current disquiet.
Further, in normal circumstances, policy virtue is not necessarily synonymous with political success. The last federal election was an indicator of this. The Coalition triumphed despite a threadbare policy program. In other words, policy prowess is only ever one measure of a government’s success.
This week, we heard how conditions at a Sydney quarantine hotel were so bad almost 400 returned travellers had to be moved to another one.
Before that, we heard from Victoria’s inquiry into hotel quarantine. We learned the bulk of cases during the state’s second wave could be tracked down to a family of four returned travellers staying at a single quarantine hotel.
But Australia isn’t the only country to have quarantine issues. Some countries don’t use hotel quarantine at all. And others have turned to technology to keep track of returned travellers.
So what can we learn from other countries’ successes and failures?
A short trip around the world
The Mediterranean island of Cyprus also uses hotel quarantine for international arrivals. But rather than “hotel quarantine hell”, hotels in Cyprus are said to have a “holiday vibe”, despite not being able to leave your room.
Travellers praised Cyprus for its luxury and positive hotel quarantine experience. Some have even said they would return for a (real) holiday.
Cyprus recorded a peak in daily cases of only 58, in early April, and now has an average of new cases a day in the teens.
Hong Kong and South Korea have also introduced wristbands to track people’s movements upon arrival and to check people comply with quarantine regulations.
Travellers arriving in Poland have to install a home quarantine phone app developed by the Polish government.
For 14 days, the app uses facial recognition and geolocation algorithms to monitor people. It also prompts people to take selfies at random times during the day.
Individuals have 20 minutes to respond to these prompts, otherwise they risk police knocking on their door.
A major “quarantine failure” was the UK’s experience at the start of the pandemic, when 10,000 travellers spread the virus across the country.
Members of parliament accused the responsible ministers of making errors, such as having no border checks, no specific quarantine arrangements, and lifting self-isolation regulations.
This eventually led to the UK dealing with a total of 328,846 cases and 41,465 COVID-19-related deaths.
The UK has since tightened its quarantine arrangements.
These ideas are worth adopting in Australia…
More than 70,000 returned travellers have been quarantined in Australian hotels since it became mandatory in late March. We don’t know exactly how many of these people have gone on to test positive. But about one in five of Australia’s cases were acquired overseas.
As the headlines show, we can clearly do better in how we manage our quarantine system.
Adopting a “Cyprus-style” model of luxury hotel quarantine is simply beyond reach in Australia given the sheer number of people requiring quarantine facilities. However, improving the quality of facilities, ensuring a safe environment, and supervising staff is vital. This includes training both staff and travellers on infection control measures.
People in quarantine also need access to health care as well as to financial, social and psychosocial support, to ensure their safety and mental health.
…but we need to be careful about electronic tags
We would be particularly concerned about the human rights implications of returned travellers having to wear electronic monitoring devices.
Although we might be familiar with electronic monitoring devices in the criminal justice system, when used in the context of infection they could stigmatise people for simply being at higher risk of disease.
They go against the presumption that all persons will be law-abiding and perform their civic duty, with no evidence to the contrary.
There are also potential privacy concerns. There is no guarantee data collected through electronic monitoring — especially when using smartphone apps — will not be used for purposes other than monitoring pandemics.
This week an inquiry headed by former Family Court of Australia judge Jennifer Coates began into failures in Victoria’s hotel quarantine system, believed to be responsible for Melbourne’s second-wave viral outbreaks.
But what can economics tells us about why this happened?
Thanks to the literature on “incomplete contracts” that led to a Nobel Prize for Harvard University economist Oliver Hart, quite a bit.
Using private contractors for hotel quarantine was destined to fail. It all boils down to a trade-off between costs and quality.
Using private providers is a good option when keeping costs low is more important than high quality. This was not such a case.
Hart’s classic 1997 paper on “The Proper Scope of Government” (co-authored with Andrei Shleifer and Robert Vishny) mostly considers privatisation in theoretical terms, with some discussion of prisons, garbage collection, schools, health care, policing and a few other things.
The animating idea behind the “incomplete contracts” approach is that there are some contingencies that contracts, no matter how detailed, can’t cover.
This could be because parties can’t conceive of all future contingencies. Or perhaps they understand what’s at issue but it is hard to codify that in a way a non-specialist court could understand.
For instance, a famous legal case concerned the definition of a chicken, with the judge writing:
The issue is, what is chicken? Plaintiff says ‘chicken’ means a young chicken, suitable for broiling and frying. Defendant says ‘chicken’ means any bird of that genus that meets contract specifications on weight and quality …
To keep things simple, imagine there are two things someone running a prison can put effort into: reducing costs or improving quality.
Improvements in quality could involve increasing rehabilitation rates, reducing violent incidents and or minimising escape risks. Lower costs lead to lower quality. For example, employing fewer guards might result in more escape attempts or prisoner-on-prisoner violence.
When the government owns the prison and employs a warden to run it, it doesn’t have to rely just on an written contract to get what it wants in terms of investment in quality. It can tell the warden what to do, and replace them if they don’t produce the goods.
If it’s serious about quality, though, the government will likely have to provide more resources. Quality costs.
When a prison is privatised, the government’s control over how the operator acts is limited to its contract.
In a perfect contract, the government could stipulate how much the private contractor is allowed to reduce costs and how much it must improve quality.
But these things are difficult to write into contracts. Wherever there are gaps, any contractor providing a fixed-price service will look to cut costs instead of improving quality.
So that’s the trade-off. When low cost is very important, private contracting is best. But when quality is more important, government ownership is optimal.
The Victorian quarantine
What’s more important in hotel quarantine during a pandemic: cost or quality?
The Hart-Shelifer-Vishny rationale tells us the Melbourne hotels should not have been policed by private security contractors, because the highest possible standards were paramount.
Moreover, even if one could write a complete contract, it doesn’t really matter. There’s no real recourse in this case for a breach of contract. The cost is billions of dollars in damage to the economy already. What good is a contract with a bankrupt contractor?
Now that what they feared has come to pass, Prime Minister Scott Morrison and his team have handled matters poorly. They have been laggards in their response, reactive rather than proactive, more preoccupied with image management and partisan messaging than the job at hand. They have also responded inappropriately to criticism.
As a result, commentators have weighed in on Morrison’s lack of political authority, judgement and feel for public opinion – and whether the “miracle man” of the 2019 election can regain his footing.
How Morrison compares to other leaders
We can gain a surer sense of how this might play out by asking: how should effective national leadership operate in times like these?
Consider other examples of how leaders have reacted to similar situations. New Zealand Prime Minister Jacinda Adern’s ability to act immediately, reach out compassionately and connect inclusively in response to last year’s Christchurch massacre provides one measure against which Morrison fails to measure up.
Morrison, confronted by distressed representatives of the small towns and regions who delivered his slim election victory, could not summon the humility to listen to their concerns. He walked away from questions from victims in Cobargo, and the outrage of these no longer “quiet Australians” attracted national and international attention.
Morrison’s reiteration of carbon reduction policies that are manifestly inadequate and his unwillingness to deal with the climate change realities presented to him by fire chiefs – but disputed by some Coalition colleagues – have also shown a lack fortitude.
More significant, though, is Morrison’s inability to facilitate collective action.
A national crisis in a federal state demands strong and decisive leadership. But it also requires collective action. This means a willingness to seek and listen to the best sources of advice and an ability to generate bipartisan consensus to confront an unusual challenge. It also means the capacity to orchestrate different levels of government, a variety of agencies, relevant NGOs, relevant branches of the public service, and in this case, the Australian Defence Force.
We know the Coalition, and Morrison himself, have been advised about the likelihood of worsening bushfires – and their inextricable link with global heating – for a considerable time.
And, as noted, fire experts called for more federal resources two years ago and warned of what was to come last April.
Yet Morrison, far from the strong leader, has been too timorous to take the tough decisions needed, including confronting rancorous dissenters in his own ranks when the “miracle” win had given him the authority to do so.
This is the antithesis of what is needed to promote collective action. Morrison has struggled throughout the crisis to put the national interest above party interests. Too often, image management has prevailed over action – until the more resolute state leaders, Gladys Berejiklian and Daniel Andrews, showed him up.
Critics have been devalued as greenies who are said to have impeded necessary hazard reduction strategies. Fire authorities have debunked this canard, suggesting it to be a deflection from the real issue of the government’s failure to consult and its lack of preparedness.
It follows, then, that using the PM’s office to issue a social media post on the military mobilisation authorised by Morrison, with a Liberal Party header, was bound to be seen as a political act. The conventional route for such information has been via the national broadcaster, the ABC, to whom most turn for emergency alerts. But the ABC is seen as suspect by this government.
From the start of the crisis, the Morrison government disregarded the conventional means for crisis management: adequate consultation with state agencies, the expected channels for disseminating information, and drawing people together effectively to work jointly on what is a collective action problem.
Only at the end, after the significance of so many missteps had dawned, did Morrison open the cheque book for measures that might have been initiated well before the fire season.
One might hope the belated launch of a National Bushfire Recovery Agency will prove a learning experience, illuminating when troublesome colleagues within the Coalition should be firmly managed and partisanship must be put aside in the interests of collective action.
This was never a problem Morrison could expect to manage alone.
In the past five years, more than 95,000 people who arrived by plane have lodged a claim for asylum in Australia, new statistics show.
Labor’s Immigration Spokesperson, Senator Kristina Keneally, has labelled this a “crisis”, stating:
Peter Dutton’s incompetence and recklessness has allowed people smugglers to run riot and traffic record-breaking numbers of people by aeroplane to Australia.
But the “crisis” is not that visa-holding travellers are flying to Australia, then later lodging a claim for asylum. It’s not unprecedented for tourists or students to later lodge a claim for asylum due to circumstances beyond their control.
In 1989, for example, after events in Tiananmen Square, Australia provided refuge to thousands of Chinese students who had entered Australia with visas.
Instead, the “crisis” is the Australian government’s failure to properly manage the refugee-processing system. It gutted the ranks of experienced decision-makers and made organisational changes that undermine the quality of decisions, contributing to long processing delays and backlogs.
These organisational failures may have contributed to the increase in asylum applications over the last five years.
High staff turn-over
Protection visa decisions are highly complex. They must examine a variety of factors, including country-specific conditions and individual circumstances.
Yet, as the Australian National Audit Office noted in 2018, the Home Affairs department experienced a significant loss of “corporate memory” due to staff turn-over, “with almost half of SES officers present in July 2015 no longer in the department at July 2017”.
In a Senate Estimates hearing last year, Home Affairs officials said the average processing time for permanent protection visas, from lodgement to primary decision (not including appeals), was 257 days, or 8.5 months.
And the department’s training deficiencies are well-documented. The most recent Australian Public Service Employee Census put the department’s organisational management problems into stark relief: only 35% of employees said the department inspired them to do their best work, while two-thirds of respondents said they did not consider department senior executives to be of “high quality”.
These publicised problems raise important questions about the quality of decision-making at the primary level.
Stacking the AAT with political allies
Poor decision-making at the primary level can lead to higher numbers of appeals. So it’s perhaps unsurprising that appeals to the Administrative Appeals Tribunal (AAT) from people who arrived by plane are also experiencing significant blowouts.
The number of active refugee cases to the AAT has ballooned from 8,370 two years ago, to 23,063 in 2019.
And with more errors come further appeals in the courts. This not only places a heavy burden on the resources of the Federal Circuit Court and Federal Court, but also leads to more delays and backlogs in the AAT, where the court sends matters which were unlawfully decided for re-determination.
Address organisational failures
The solution is in proper organisational management. Instead of blaming refugees for fleeing persecution by safe means, the government must address the failures of its refugee processing system.
To this end, an urgent review of the Department of Home Affairs policies and organisational failures is needed. A review could find out whether there’s a management culture stopping Home Affairs from attracting and retaining staff who can make reasoned and well-supported decisions in an environment they can be proud of.
Similarly, there must be a transparent and independent system for appointing AAT members that prioritises skills and experience over politics – exactly what was recommended by the Attorney-General’s recent review.
If people seeking asylum can have their claims assessed quickly and fairly, then those who are not refugees can be sent home, while those needing safety could receive it.
Without the chance to remain in Australia for years while their claims are assessed, there would be no loophole for traffickers and others to exploit.
In turn, the number of non-genuine claims will go down, allowing decision-makers to focus on those who are actually fearing persecution.
This piece is part of a series on race and racism in Australia. The series examines this complex and incendiary topic, and the role it plays in contemporary Australia. You can read the rest of the series here
When Indigenous Referendum Council member Megan Davis stood on the red sands close to Uluru and read the Uluru Statement from the Heart in May 2017, she was enacting a tradition steeped in Indigenous cultural and political significance.
It was not just a response to politicians’ requests to consult the Indigenous community on constitutional recognition, it was a powerful political act, enshrined in a message carried by elders and subsequently inscribed in art.
Following substantial months-long consultations, Davis, as envoy of the people, delivered a message to the nation concerning the resetting of “inter-tribal” relations between Indigenous and non-Indigenous peoples in Australia. The Uluru Statement from the Heart was an act of Indigenous diplomacy solemnised in song, dance and ceremony.
The history of Indigenous envoys
Historically, such ambassadorial moments were the glue of politics and negotiations between Indigenous peoples. They built cohesion and peace, facilitated inter-community exchanges and allowed for the settling of disputes.
As messengers, envoys were critical to this diplomatic mesh. Carefully selected, they were highly respected members of their tribes. They often possessed the ability to speak different dialects and were skilled negotiators. They were the bearers of important information, such as the deaths of leaders, appointments of successors and important gatherings and ceremonies like marriages, burials, corroborrees and initiations.
Given their significance, it is little wonder that many Indigenous peoples described former Prime Minister Tony Abbott’s recent appointment as special envoy in Indigenous affairs as deeply disrespectful.
On every level this was an act of egregious political misjudgement, as many Indigenous people have been quick to note.
Why Abbott’s appointment was controversial
Not only was Abbott’s appointment hasty, ill-planned and unsolicited, it lacked a key requirement for the role – the wider support of his own community.
Beyond lacking all merit, Abbott’s previous policies on Indigenous issues had been characterised by funding cuts, exclusions and silencing. His Indigenous Advancement Strategy was criticised for its destructive consequences to governance within Indigenous communities. Someone who had caused such injury and grief in the past, stripped communities of their capacity for self-determination and seemed so lacking of respect in their own community was largely unwelcome.
There were some, however, who were willing to give Abbott the benefit of the doubt and saw an opportunity in his role.
For them, his task was clear. In accordance with tradition, he needed to come with models and messages of agreement-making and considered responses to the Indigenous peoples’ own message, as conveyed by the Uluru Statement. He needed to bring news of progress on constitutional recognition and the Makaratta Commission – the Indigenous-inspired body to facilitate agreement-making and help reset relations.
He needed to engage in dialogue, be open to consultations, and most importantly, listen.
As Dennis Walker, the Ngarrindjeri Regional Authority chair, believed, Abbott would come to listen to Ngarrindjeri about their concerns: economic development, stable governance and developing better relationships with non-Indigenous political leaders. For Jeffrey Newchurch, the Kaurna Nation Cultural Heritage chair, Abbott’s visit presented an opportunity to discuss important issues affecting them, like burials, social cohesion and how to build good intergovernmental relationships.
Yet, this is not how Abbott saw his job. Disregarding cultural protocols, he arrived with dictates and outsider rules, and a specific agenda aimed at improving school attendance and performance in remote communities.
Even in this, his apparent lack of knowledge, a critical trait of the position, was apparent.
Over a decade’sworth of reportsinto remote schooling have overwhelmingly stressed the connection between education, language and culture, and the importance of family and community involvement for children. Education programs succeed when Aboriginal people are the architects of their own policies and services. Partnerships between the people and governments must be based on local priorities, and these must be mutually understood.
Abbott’s ignorance was compounded by the impropriety of another white elder of his tribe. Earlier this month, news broke of Indigenous Affairs minister Nigel Scullion’s approval of grants to a fishing industry lobby group from a fund intended to address disadvantage in Indigenous communities.
Scullion transferred significant sums to the Northern Territory Amateur Fisherman’s Association to pay their legal fees in disputes over Aboriginal land claims.
As the former Indigenous affairs minister, Dr Jak Ah Kit, said, this was totally against the rules. Aboriginal elders are skilled negotiators of their resources, particularly their fisheries. There had been no consultations or efforts to negotiate with them.
Diplomatic blunder and policy failure
Prime Minister Scott Morrison’s appointment of Abbott as special envoy was more than a diplomatic faux pas. It was a diplomatic blunder and a policy failure.
In foreign policy parlance, a diplomatic blunder results from a judgement blinded by bias and ignorance, while a policy failure is caused by behaviour that is both costly and has undesirable and unanticipated consequences.
Abbott’s bias and ignorance are palpable and demonstrable. And the policies he pushed — more police in the communities and learning in English — would be costly in the human and economic sense. Investing in policies that aren’t wanted and don’t work will do nothing to reset intergovernmental relations.
Abbott and the federal government would do well to learn from the examples of deliberative and democratic governance demonstrated by the Indigenous political negotiations leading up to the Uluru Statement.
These negotiations demonstrated how politically astute Indigenous elders are. The network of regional dialogues were not about political platitudes of the sort Abbott said to the Anangu – “thanks for putting up with the invasion” — but a recipe for action.
Abbott could also learn from the likes of Megan Davis, whose diplomatic credentials, by contrast, are impeccable.
But for most Australians, the most visible impact of this crisis has been their ever-increasing electricity bills. Electricity prices have become a political hot potato, and the blame game has been running unchecked for more than a year.
Electricity retailers find fault with governments, and renewable energy advocates point the finger at the nasty old fossil-fuel generators. The right-wing commentariat blames renewables, while the federal government blames everyone but itself.
The truth is there is no silver bullet. No single factor or decision is responsible for the electricity prices we endure today. Rather, it is the confluence of many different policies and pressures at every step of the electricity supply chain.
Four components make up your electricity bill. Each has contributed to this increase.
The biggest culprit has been the network component – the cost of transporting the electricity. Next comes the retail component – the cost of billing and servicing the customer. Then there is the wholesale component – the cost of generating the electricity. And finally, the government policy component – the cost of environmental schemes that we pay for through our electricity bills.
Each component has a different tale, told differently in every state. But ultimately, this is a story about a decade of policy failure.
Network costs form the biggest part of your electricity bill. Australia is a big country, and moving electricity around it is expensive. As the graph above shows, network costs have contributed 40% of the total price increase over the past decade.
The reason we now pay so much for the network is simply that we have built an awful lot more stuff over the past decade. It’s also because it was agreed – through the industry regulator – that network businesses could build more network infrastructure and that we all have to pay for it, regardless of whether it is really needed.
Network businesses are heavily regulated. Their costs, charges and profits all have to be ticked off. This is supposed to keep costs down and prevent consumers being charged too much.
That’s the theory. But the fact is costs have spiralled. Between 2005 and 2016 the total value of the National Electricity Market (NEM) distribution network increased from A$42 billion to A$72 billion – a whopping 70%. During that time there has been little change in the number of customers using the network or the amount of electricity they used. The result: every unit of electricity we consume costs much more than it used to.
There are several reasons for this expensive overbuild. First, forecasts of electricity demand were wrong – badly wrong. Instead of ever-increasing consumption, the amount of electricity we used started to decline in 2009. A whole lot of network infrastructure was built to meet demand that never eventuated.
Second, governments in New South Wales and Queensland imposed strict reliability settings – designed to avoid blackouts – on the networks in the mid-2000s. To meet these reliability settings, the network businesses had to spend a lot more money reinforcing their networks than they otherwise would have.
Third, the way in which network businesses are regulated encourages extra spending on infrastructure. In an industry where you are guaranteed a 10% return on investment, virtually risk-free – as network businesses were between 2009 and 2014 – you are inclined to build, build, build.
The blame for this “gold-plating” of network assets is spread widely. Governments have been accused of panicking and setting reliability standards too high. The regulator has copped its share for allowing businesses too much capital spend and too high a return. Privatisation has also been criticised, which is slightly bizarre given that the worst offenders have been state-owned businesses.
The second biggest increase in your bill has been the amount we pay for the services provided to us by retailers. Across the NEM, 26% of the price increase over the past decade has been due to retail margins.
This increase in the retail component was never supposed to happen. To understand why, you must go back to the rationale for opening the retail sector to competition. Back in the 1990s, it was felt that retail energy was ripe for competition, which would deliver lower prices and more innovative products for consumers.
In theory, where competition exists, firms seek to reduce their costs to maximise their profits, in turn allowing them to reduce prices so as to grab as many customers as possible. The more they cut their costs, the more they can cut prices. Theoretically, costs are minimised and profits are squeezed. If competition works as it’s supposed to, the retail component should go down, not up.
But the exact opposite has happened in the electricity sector. In Victoria, the state that in 2009 became the first to completely deregulate its retail electricity market, the retail component of the bill has contributed to 36% of the price increase over the past decade.
On average, Victorians pay almost A$400 a year to retailers, more than any other mainland state in the NEM. This is consistent with the Grattan Institute’s Price Shock report, which showed that rising profits are causing pain for Victorian electricity consumers. Many customers remain on expensive deals, and do not switch to cheaper offers because the market is so complicated. These “sticky” customers have been cited as the cause of “excessive” profits to retailers.
But the new figures provided by the ACCC, which come directly from retailers, paint a different picture. The ACCC finds that the increase in margins in Victoria is wholly down to the increasing costs of retailers doing business.
There are reasons why competition might drive prices up, not down. Retailers now spend money on marketing to recruit and retain customers. And the existence of multiple retailers leads to duplications in costs that would not exist if a single retailer ran the market.
But these increases should be offset by retailers finding savings elsewhere, and this doesn’t seem to have happened. History may judge the introduction of competition to the retail electricity market as an expensive mistake.
So far, we have accounted for 65% of the bill increase of the past decade, and neither renewables nor coal have been mentioned once. Nor were they ever likely to be. The actual generation of electricity has only ever formed a minor portion of your electricity bill – the ACCC report shows that in 2015-16 the wholesale component constituted only 22% of the typical bill.
In the past year, however, wholesale prices have really increased. In 2015-16, households paid on average A$341 a year for the generation of electricity – far less than they were paying in 2006-07. But in the past year, that is estimated to have increased to A$530 a year.
Generators, particularly in Queensland, have been engaging in questionable behaviour, but it is the fundamental change in the supply and demand balance that means higher prices are here to stay for at least the next few years.
The truth is the cost of generating electricity has been exceptionally low in most parts of Australia for most of the past two decades. When the NEM was created in 1998, there was arguably more generation capacity in the system than was needed to meet demand. And in economics, more supply than demand equals low prices.
Over the years our politicians have been particularly good at ensuring overcapacity in the system. Most of the investment in generation in the NEM since its creation has been driven by either taxpayers’ money, or government schemes and incentives – not by market forces. The result has been oversupply.
Up until the late 2000s the market kept chugging along. Then two things happened. First, consumers started using less electricity. And second, the Renewable Energy Target (RET) was ramped up, pushing more supply into the market.
Demand down and supply up meant even more oversupply, and continued low prices. But the combination of low prices and low demand put pressure on the finances of existing fossil fuel generators. Old generators were being asked to produce less electricity than before, for lower prices. Smaller power stations began to be mothballed or retired.
Something had to give, and it did when both Alinta and Engie decided it was no longer financially viable to keep their power stations running. Far from being oversupplied, the market is now struggling to meet demand on hot days when people use the most electricity. The result is very high prices.
A tight demand and supply balance with less coal-fired generation has meant that Australia increasingly relies on gas-fired generation, at a time when gas prices are astronomical, leading to accusations of price-gouging.
Put simply, Australia has failed to build enough new generation over recent years to reliably replace ageing coal plants when they leave the market.
Is it renewable energy’s fault that coal-fired power stations have closed? Yes, but this is what needs to happen if we are to reduce greenhouse emissions. Is it renewables’ fault that replacement generation has not been built? No. It’s the government’s fault for failing to provide the right environment for new investment.
The current predicament could have been avoided if we had a credible and comprehensive emissions reduction policy to drive investment in the sector. Such a policy would give investors the confidence to build generation with the knowledge about what carbon liabilities they may face in the future. But the carbon price was repealed in 2014 and replaced with nothing.
We’re still waiting for an alternative policy. We’re still waiting for enough generation capacity to be built. And we’re still paying sky-high wholesale prices for electricity.
Green and gold
Finally, we have the direct cost of government green schemes over the past decade: the RET; the household solar panel subsidies; and the energy-efficiency incentives for homes and businesses.
They represent 16% of the price increase over the past 10 years – but they are still only 6% of the average bill.
If the aim of these schemes has been to reduce emissions, they have not done a very good job. Rooftop solar panel subsidies have been expensive and inequitable. The RET is more effective as an industry subsidy than an emissions reduction or energy transition policy. And energy efficiency schemes have produced questionable results.
It hasn’t been a total waste of money, but far deeper emissions cuts could have been delivered if those funds had been channelled into a coherent policy.
The story of Australia’s high electricity prices is not really one of private companies ripping off consumers. Nor is it a tale about the privatisation of an essential service. Rather, this is the story of a decade of policy drift and political failure.
Governments have been repeatedly warned about the need to tackle these problems, but have done very little.
Instead they have focused their energy on squabbling over climate policy. State governments have introduced inefficient schemes, scrapped them, and then introduced them again, while the federal government has discardedpolicies without even trying them.
There is a huge void where our sensible energy policy should be. Network overbuild and ballooning retailer margins both dwarf the impact of the carbon price, yet if you listen only to our politicians you’d be forgiven for thinking the opposite.
And still it goes on. The underlying causes of Australia’s electricity price headaches – the regulation of networks, ineffective retail market competition, and our barely coping generators – need immediate attention. But still the petty politicking prevails.
The Coalition has rejected the Clean Energy Target recommended by Chief Scientist Alan Finkel. Labor will give no guarantee of support for the government’s alternative policy, the National Energy Guarantee. Some politicians doubt the very idea that we need to act on climate change. Some states have given up on Canberra and are going it alone.
We’ve been here before and we know how this story ends. Crisis wasted.
The federal opposition is continuing to call for Employment Minister Michaelia Cash’s resignation, claiming she misled parliament this week after repeatedly telling a Senate estimates committee that neither she nor her office had any involvement in tipping off the media about a police raid.
Cash’s senior media adviser, David De Garis, later confessed he had leaked information about the raid on the Australian Workers Union’s offices to the press. Cash retracted her statements and De Garis resigned.
Labor frontbencher Tony Burke argued that “the wrong person has resigned”. But Cash has refused to resign, claiming she was unaware of her staffer’s actions. Prime Minister Malcolm Turnbull has defended Cash, saying she acted properly.
Who are these advisers?
Ministerial advisers are partisan staff who are personally appointed by ministers and work out of the ministers’ private offices.
The number of Commonwealth ministerial staff has increased over the years from 155 in 1972 to 423 in 2015.
Ministerial advisers undertake a wide range of functions. Tony Nutt, a long-time former adviser, has said:
… a ministerial adviser deals with the press. A ministerial adviser handles the politics. A ministerial adviser talks to the union. All of that happens every day of the week, everywhere in Australia all the time. Including frankly, the odd bit of, you know, ancient Spanish practices and a bit of bastardry on the way through. That’s all the nature of politics.
The question is what happens if advisers overstep their roles?
Ministerial responsibility and political advisers
According to the doctrine of ministerial responsibility, ministers are responsible to parliament for the acts of their departments.
British academic Sir Ivor Jennings wrote that the “act of every civil servant is by convention regarded as the act of the minister”. And British MP Lord Morrison proclaimed that the “minister is responsible for every stamp stuck on an envelope”.
But it is doubtful that this principle has ever reflected reality. It is rare for ministers to resign or even accept responsibility for the actions of their department, where they were not personally involved.
Ministers should also technically take responsibility for the actions of advisers in their own offices, who are at an even higher level of direct ministerial control than departments.
Even more than public servants, advisers are seen to be acting as alter egos of their ministers. This means ministers should be accountable to parliament for the actions of their advisers – even those they did not authorise.
But what happens in reality is that ministers tend to use their advisers as scapegoats and blame them for controversial events. This is consistent with “public choice” theory, which predicts that politicians have the incentive to deflect all the blame that comes in their direction while accepting the credit for anything that goes right.
Sanctions under the standards are handled internally within the executive through the Prime Minister’s Office. This means any breaches of the standards by ministerial advisers would be handled behind closed doors, without the scrutiny of parliament or any external bodies.
Ministerial advisers have also refused to appear before parliamentary committees on their minister’s instruction. This has impeded the investigations of significant parliamentary committees, including the Children Overboard affair.
Australia thus has minimal legal and political regulation of ministerial advisers. This has led to an accountability deficit, where ministers have been able to utilise their advisers to escape responsibility for public controversies and scandals.
There are a few forms of regulation of advisers. The first is restrictions on the employment of advisers, either through a cap on the numbers of advisers, as in the UK, or a cap on the total budget for advisers, as in Canada.
Second, regulations can restrict the actions of advisers themselves. For example, in the UK, there is a prohibition on advisers leaking confidential or sensitive information, which would have been applicable in this scandal.
Canada has post-employment restrictions banning advisers from becoming lobbyists for five years after ceasing their employment.
Third, transparency measures also exist, such as requirements that departments disclose all meetings that advisers have with the media (as in the UK) and what hospitality these advisers receive (in the UK and Canada).
Ideally, the Australian regulatory framework should be reformed so it is policed externally from the core executive. In Canada, the conflict of interest and lobbying provisions are policed by the Conflict of Interest and Ethics Commissioner, who has been independent and ready to criticise the government.
And, in the UK, the rules provide for political advisers to appear before parliamentary committees. Similar guidelines could be drafted to facilitate the appearance of advisers before Australian parliamentary committees.
In the last 40 years, ministerial advisers have become an integral part of Australia’s system of government. But the law and rules have lagged behind, and our system should be reformed to ensure greater accountability.