From Australian superstars such as Cate Blanchett, Russell Crowe, Chris Hemsworth and Nicole Kidman to Hollywood heavyweights including Ellen DeGeneres and Bette Midler, a lengthening list of celebrities are helping to shine a spotlight on Australia’s bushfires.
Some have donated large sums of money and used social media to publicise their donations, encouraging fans to follow suit. Some have used their profile and platforms such as the Golden Globes awards to draw attention to the fires. Others are donating items for auction or appearing in charity events.
For attracting attention and money to a cause, celebrity-driven attention is hard to beat. But there’s also a downside. If that interest is superficial and fleeting, it may actually hinder recovery efforts in disaster-ravaged regions.
It’s great that celebrities want to use their influence for good causes. Not all celebrity advocacy, though, should be applauded uncritically. One study has suggested it is less effective than sometimes supposed for development causes, and can simplify a complex issue to a single outcome – usually giving money. This fails to address how people can make an ongoing difference in other ways.
In terms of natural disasters, a very practical way to help communities recover is the resumption of tourism. Perceptions play a big part in this, and celebrities can play a big part in forming images. It’s why they have long featured in tourism campaigns, from Paul Hogan in the 1980s to Kylie Minogue and others in the humorously idealised imagery presented by Tourism Australia to Britons a few weeks ago.
Even if celebrities have the best of intentions, their emotional appeals and shared of images of red skies and smoke-filled cities along with heartbreaking images of devastation and loss can contribute to fans cancelling holidays plans, even while they’re donating to bushfire appeals.
It doesn’t help when misleading information is spread, as the American singer Rihanna inadvertently did when she shared an image on Twitter that exaggerated the size of the bushfires. This image suggested huge swathes of Australia were no-go zones.
Fires in the Blue Mountains area of New South Wales, for example, were called “the “Sydney fires” elsewhere in Australia. Overseas they were referred to as the “Australian bushfires”, confusing domestic and international tourists.
Where celebrities can really help
So while celebrities might have the very best of motivations, their contribution in generating donations in the short term might be offset by the longer-term effect of amplifying the misconception that Australia is not safe for tourists.
This is demonstrated by past experience. After Victoria’s 2009 Black Saturday fires, the the Gippsland region experienced a major tourism downturn, despite just 5% of the region being directly affected.
But celebrites can also use their mass-pull to aid tourism recovery.
Our research suggests their star power is unmatched as a means to encourage tourists back to regions recovering from disaster.
In the case of Gippsland, we surveyed 691 people with nine different advertising messages. Themes included solidarity, community readiness and even short-term discounts. We found celebrity endorsement made the greatest impression, with test subjects indicating it made them more likely to visit the region.
In the months after the Black Saturday bushfires, former Miss Universe Jennifer Hawkins and legendary cricketer Shane Warne visited affected towns. These highly publicised events sent the message these towns were ready to welcome visitors again.
So celebrities can definitely help in the coming weeks and months.
They can share positive stories about local communities’ resilience, and maybe even visit.
This is likely to do more for recovery efforts in the long term than helping to spruik for donations.
The leaders of our banks and financial institutions are seen as the most self-serving in the nation, according to a national survey undertaken by researchers at Swinburne University of Technology.
More than a third (35.4%) of respondents believe banking and financial institutions show “no leadership for the greater good”. This score is slightly worse than public perceptions of the Federal Government, substantially worse than religious institutions and significantly worse than trade unions.
The results, from a nationally representative sample of 1,000 Australians, also repudiate the Australian Banking Association’s claim a year ago that “Australians believe banks are heading in the right direction”.
And given this survey was done in December 2018, before the Banking Royal Commission had completed its work exposing misconduct in the financial services sector, it’s likely a future poll will show even greater community distrust of bankers.
Our findings come from the initial results of the Australian Leadership Index, a new quarterly survey from the Swinburne Business School that measures and tracks community perceptions and expectations of leadership for the greater good across 13 societal institutions.
The index won’t be officially published until later in the year. But given the important public discussion about corporate leadership in the wake of the final report of the banking royal commission, we think it’s useful to share a snapshot of our findings.
Consistent with other studies that highlight the importance of transparency and accountability to perceptions of trust, our research confirms the importance of these attributes to perceptions of leadership for the public good.
From a community perspective, leadership for the greater good occurs when leaders demonstrate high ethical standards, when they demonstrate transparency and accountability for their positive and negative impacts, and when they seek to balance the interests of multiple stakeholders, including the wider community in which their institutions are nested.
So, leadership for the greater good is reflected in what value leaders create, how they create value, and for whom they create value.
Unhappily, banking leaders are found wanting on all counts.
The importance of how value is created
But other institutions are also found wanting, with our results revealing a generalised pessimism about Australian leadership.
Our survey results shed light on where the public think leaders are failing and what the community expects of leaders and their institutions to serve the greater good.
Notably, creating economic value is not a highly regarded aspect of leadership for the greater good. This is not to say it is unimportant. But on its own it is insufficient.
What looms largest in the public mind when thinking about the greater good is the social value that institutions create, how ethically they create this value, and their transparency and accountability for positive and negative impacts.
Our research demonstrates that leadership for the greater good is as much about how leaders create value for their stakeholders — from their employees to their customers to society-at-large — as it is about what value they create and for whom they create value.
It’s not hugely complicated.
And yet, as revealed by the endless, unedifying parade of misconduct in government, business, religious, sporting and other civil society institutions, community standards and expectations are too often observed in the breach.
In the wake of the banking royal commission, the Australian community has a golden opportunity for a thoroughgoing discussion about the leadership we need to protect and enhance the public interest.
We hope the Australian Leadership Index will contribute to that discussion, by making all our data freely accessible through a new data visualisation platform. This will enable easy tracking of how institutions are performing according to public perceptions of their impact on the public good.
Wise leaders focus on the greater good. It behoves all leaders to create this new culture of public leadership.
The move sets back Commonwealth-state relations by decades – and it’s unclear exactly how much money will actually be provided.
Rather than being based on any coherent policy direction, it appears designed to shore up support in marginal electorates.
Bad for Commonwealth-state relations
One of the complicating factors in providing health care to Australians is the fact that the Commonwealth and states each have leadership roles in different parts of the system: the Commonwealth for primary care; and the states for public hospitals.
Health professionals yearn for the Holy Grail of a single level of government being responsible for all aspects of a patient’s care. That quest has proved illusory. But recent policy direction has at least sought to clarify the roles of the two levels of government.
For the past five years, the states have been acknowledged as the “system managers” of the public hospital system. A rational, formula-driven funding framework has been created.
Under this framework, the Commonwealth shares the cost of growth in public hospital activity with the states. This exposes the Commonwealth directly to growing costs of technology-driven needs and giving it an incentive to work with the states to meet needs in the most efficient way.
This framework means there is one level of government to whom all public hospitals are accountable: the state. And it means voters can hold their state government accountable for hospital planning and management.
The new Morrison proposal tramples all over this policy rationality in the interests of electoral expediency. It replaces state-based planning with submission-based funding, which will enable a politician with a whiteboard in Canberra to override state priorities in favour of projects which have the greatest electoral appeal in targeted marginal seats.
It makes accountability for the overall system more confusing, and it assumes Canberra knows best.
It is a federalism fail.
An opaque policy
Labor ran a devastating campaign in the July federal by-elections, especially in the Queensland seat of Longman, which involved calculating and publicising precisely how much worse off the local hospital was under the Liberal health policy – where the Commonwealth funds 45% of hospital growth – compared with Labor’s 50% sharing policy.
However, unlike Labor’s funding, which is ongoing, it’s unclear whether the extra largess the Coalition is offering will continue beyond the budget “forward estimates” (that is, the next four years). It’s unclear how much will be devoured from existing Commonwealth funding agreements, such as the dental agreement, which are coming to an end.
The Commonwealth has responsibility for most aspects of policy to address social determinants of health, particularly employment and income policies. Rational health policy would recognise the importance of considering these issues and balancing the health benefits of, for example, lifting the Newstart allowance, against funding for specific health initiatives. There is no hint this has happened with this announcement.
New handouts under the Morrison package will be portrayed as being for specific areas of “high political need”. But the reality is funding will eventually be swept into the Grants Commission allocation process and redirected according to the Grants Commission formula.
This may restore some rationality into the health handout, albeit with a lag of a few years. But the actual level of funding to be allocated to specific areas will be shrouded in Grants Commission opacity. Insiders will be able to follow the money, but voters will be kept in dismal ignorance about how much they will benefit in the long-term – after the gloss of a local funding handout has worn off.
This policy is a transparency fail.
Politics versus policy
The Community Health and Hospitals Program lists four feel-good, worthy funding targets:
specialist hospital services such as cancer treatment, rural health and hospital infrastructure
drug and alcohol treatment
preventive health, primary care and chronic disease management, and
Everyone has a potential place in this funding Nirvana. Lobby your local MP, and your local hospital or community health program might be the lucky health policy lottery winner!
Provided voters don’t see this as a cynical political exercise – and that is a big risk in an electorate which already ranks politicians low on the trustworthiness scale – then the new policy could be smart politics. We won’t know until the votes in next year’s federal election are counted.
The net effect of all of these movements can change the recorded “net overseas migration” in ways that are inconsistent with what’s been happening to the migration program.
If, for instance, the Australian economy picked up and fewer Australians decided to leave for better prospects overseas, recorded “net overseas migration” would increase even if the migration program hadn’t.
The two have been moving increasingly independently since mid 2006 when the Australian Bureau of Statistics changed its definition of “resident”, making temporary residents more likely to be counted in the population and their movements counted in net overseas migration.
Over the past five years, the number of international students arriving has increased every year but there have been few international student departures.
Inevitably, the departures of students will increase in future years and recorded net overseas migration will fall sharply again.
So, forget the near-record official net overseas migration figure of 262,000 – the underlying level of net overseas migration is more likely to be around 200,000. The underlying level of population growth is about 1.4%, and falling.
We’ll need strong migration for at least a decade
A new study by Shah and Dixon finds there will be 4.1 million new job openings in Australia over the eight years between 2017 and 2024.
Over two million of these new openings will be due to “replacement demand”, effectively replacing the retirements from the labour force of baby boomers.
There will not be enough younger workers arriving to fill the gap.
In the absence of international migration and assuming constant age-specific employment rates, the number of workers under the age of 35 will fall by over half a million between 2016 and 2026, essentially because of the small number of births in the 1990s.
It means that without migration Australia would face a labour supply crunch unlike anything it has ever faced before.
Slowing or redirecting it won’t slow congestion
The mismatch of labour demand and supply makes this an extraordinarily bad time to cut migration.
The labour market is at its hottest in Sydney and Melbourne.
Investment contracts involving new employment are signed and the construction of the new transport infrastructure promised in these cities will only increase the demand.
Logic and economic theory tell us that workers move to where the jobs are, and jobs move to where the investors invest.
If, in some way, official migration into Sydney and Melbourne was restricted, the jobs in Sydney and Melbourne would still have to be filled and would go instead to workers moving from the rest of Australia or New Zealand or temporary skilled migrants.
As a result the restriction would do little to reduce population growth in these cities. It would however, strip other states and territories of the workers they need. It would make the flow of the best and brightest from Adelaide and Perth to Melbourne even bigger.
Diverting, say, 15,000 permanent skilled immigrants away from each of Sydney and Melbourne in 2019-20 would have no impact on transport congestion.
Indeed, it might make it harder to build the required infrastructure, making congestion worse.
We’ll need it to ease a painful transition
Migrants will be needed in order to smooth the looming dramatic and uncomfortable changes in the age structure of our population.
Migrants don’t only do this because they are young; they also do it because, before they themselves grow old, they have had children and grandchildren.
Net overseas migration of 200,000 per annum would give us 6.8 million more people of traditional working age by 2051 than would no net migration, but only 400,000 more people aged 65 years and over.
It would place Australia in a better position to support its aged population than any other country in the OECD.
Compared to other international organisations, the G20 would seem to be one of the weakest.
It has no formal mandate like the United Nations. It has no permanent staff or buildings like the World Bank. It certainly has no funds like the International Monetary Fund. It has no power to make formal rules that members must follow, nor to take action against states that fail to comply, like the World Trade Organisation.
So how does the G20 get anything done?
What has made it influential in tackling problems like the global financial crisis? Why is it tasked with addressing some of the most pressing global problems, such as climate change?
A big part of the answer is the sheer power of its members. But also vital is the G20’s informal structure, which provides members with significant flexibility, and its close working relationship with other international organisations that also have a seat at the G20 table.
The members of G20 pack enormous punch.
The group comprises 18 of the 21 nations with the biggest economies by gross domestic product, plus South Africa and the European Union.
This means there are effectively 43 countries with a stake in the G20. Together they account for about 85% of global gross domestic product, and about 65% of the world’s people.
So when they agree to coordinate their national policies in a particular policy domain they can transform the global landscape.
In the wake of the global financial crisis in 2008, for example, G20 leaders agreed to coordinate their economic policies to ameliorate the worst impacts of the crash. Compared to previous crises of similar magnitude, the global economy recovered much more quickly than many anticipated. This is credited in large part to the G20’s role in expediting a coordinated response.
Seats at the table
Although the G20 does not have its own permanent staff and resources, it is adept at enlisting the commitment and resources of other international organisations when it needs to.
Bodies such the International Monetary Fund and the Organisation for Economic Cooperation and Development are well-integrated into the G20’s negotiation processes.
The board works to promote the stability of the global financial markets by coordinating the work of national and international financial authorities. The G20 has relied on the board to take the lead on making large financial institutions less vulnerable to collapse, such as by forcing them to hold more capital, implementing tougher transparency standards, and monitoring their progress.
Data science has boomed over the past decade, following advances in mathematics, computing capability, and data storage. Australia’s Industry 4.0 taskforce is busy exploring ways to improve the Australian economy with tools such as artificial intelligence, machine learning and big data analytics.
But while data science offers the potential to solve complex problems and drive innovation, it has often come under fire for unethical use of data or unintended negative consequences – particularly in commercial cases where people become data points in annual company reports.
We argue that the data science boom shouldn’t be limited to business insights and profit margins. When used ethically, big data can help solve some of society’s most difficult social and environmental problems.
Industry 4.0 should be underwritten by values that ensure these technologies are trained towards the social good (known as Society 4.0). That means using data ethically, involving citizens in the process, and building social values into the design.
Here are a five data science projects that are putting these principles into practice.
Social and environmental problems are rarely easy to solve. Take the hardship and distress in rural areas due to the long-term struggle with drought. Australia’s size and the sheer number of people and communities involved make it difficult to pair those in need with support and resources.
Our team joined forces with the Australian Red Cross to figure out where the humanitarian hot spots are in Victoria. We used social media data to map everyday humanitarian activity to specific locations and found that the hot spots of volunteering and charity activity are located in and around Melbourne CBD and the eastern suburbs. These kinds of insights can help local aid organisations channel volunteering activity in times of acute need.
2. Improving fire safety in homes
Accessing data – the right data, in the right form – is a constant challenge for data science. We know that house fires are a serious threat, and that fire and smoke alarms save lives. Targeting houses without fire alarms can help mitigate that risk. But there is no single reliable source of information to draw on.
In the United States, Enigma Labs built open data tools to model and map risk at the level of individual neighbourhoods. To do this effectively, their model combines national census data with a geocoder tool (TIGER), as well as analytics based on local fire incident data, to provide a risk score.
3. Mapping police violence in the US
Ordinary citizens can be involved in generating social data. There are many crowdsourced, open mapping projects, but often the value of data science lies in the work of joining the dots.
The Mapping Police Violence project in the US monitors, make sense of, and visualises police violence. It draws on three crowdsourced databases, but also fills in the gaps using a mix of social media, obituaries, criminal records databases, police reports and other sources of information. By drawing all this information together, the project quantifies the scale of the problem and makes it visible.
The Internet of Things is made up of a host of connected devices that collect data. When embedded in the ordinary objects all around us, and combined with cloud-based analysis and computing, these objects become smart – and can help solve problems or inefficiencies in the built environment.
If you live in Melbourne, you might have noticed BigBelly bins around the CBD. These smart bins have solar-powered trash compactors that regularly compress the garbage inside throughout the day. This eliminates waste overflow and reduces unnecessary carbon emissions, with an 80% reduction in waste collection.
Real-time data analysis and reporting is provided by a cloud-based data management portal, known as CLEAN. The tool identifies trends in waste overflow, which helps with bin placement and planning of collection services.
5. Identifying hotbeds of street harassment
A group of four women – and many volunteer supporters – in Egypt developed HarassMap to engage with, and inform, the community in an effort to reduce sexual harassment. The platform they built uses anonymised, crowdsourced data to map harassment incidents that occur in the street in order to alert its users of potentially unsafe areas.
The challenge for the group was to provide a means for generating data for a problem that was itself widely dismissed. Mapping and informing are essential data science techniques for addressing social problems.
Turning the efforts of data science to social good isn’t easy. Those with the expertise have to be attuned to the social impact of data analytics. Meanwhile, access to data, or linking data across sources, is a major challenge – particularly as data privacy becomes an increasing concern.
While the mathematics and algorithms that drive data science appear objective, human factors often combine to embed biases, which can result in inaccurate modelling. Digital and data literacy, along with a lack of transparency in methodology, combine to raise mistrust in big data and analytics.
Nonetheless, when put to work for social good, data science can provide new sources of evidence to assist government and funding bodies with policy, budgeting and future planning. This can ultimately result in a better connected and more caring society.
The Senate inquiry into the future of public interest journalism began as a gleam in the media-trained eye of Labor senator Sam Dastyari. It ended on February 5, 11 days after he left parliament, his political reputation in tatters over his conduct in relation to Chinese donors to the Labor Party.
This suggests the inquiry’s recommendations are unlikely to get much traction, but the very real issues it was investigating remain unresolved. How did quality media get into such a pickle and what can be done about it?
The three main developments that fed into the inquiry were: proposed changes to media ownership restrictions; the collapse of the business model that has for years sustained print media’s profitability; and the rise of “fake news” and its influence in the 2016 Brexit vote and the election of Donald Trump.
The government had made two previous attempts to change the media ownership laws created in a pre-internet age. But the effect of the changes, which were finally passed in 2017, has largely been to protect existing mainstream media companies while failing to encourage new entrants into a highly concentrated market.
Meanwhile, according the journalists’ union, the Media Entertainment and Arts Alliance, the collapse of the business model has prompted mainstream media companies to lay off around 25% of journalists between 2012 and 2017.
Media companies have cut costs but have been powerless to stem the flood of
advertising revenue to global behemoths Google and Facebook. Google’s market capitalisation is about half Australia’s gross domestic product, the Senate report notes.
The business model problem remains. As a result, the loss of journalistic talent and experience has led to significant gaps in reporting, especially in courts, state parliaments and local and regional reporting, according to the Civic Impact of Journalism research project.
Lack of resources has also made news organisations increasingly vulnerable to “fake news”. Indeed, it was the growing alarm about “fake news”, coupled with yet another round of redundancies at Fairfax Media, that provided Dastyari with the public and political impetus to begin his inquiry.
In addition to Dastyari, the inquiry lost two of its most knowledgeable members – Greens senator Scott Ludlam, who resigned from parliament over his dual citizenship, and Nick Xenophon, who resigned to contest a seat in next month’s South Australian election.
The Coalition government was always unlikely to pay much heed to a Labor-chaired inquiry, but in its 149-page report the senators have grappled with important public policy issues. Their eight recommendations are:
Adequately fund public broadcasters, the ABC and SBS.
Guarantee future funding for community broadcasting.
Embed digital media literary in the Australian curriculum.
Extend deductible gift recipient status to not-for-profit news media organisations who engage in public interest journalism.
Ask Treasury to do modelling on extending tax deductibility to all
Australians who subscribe to news media outlets engaging in public interest
Ask the Australian Law Reform Commission to conduct an audit of current laws that hinder journalists’ ability to report on national security and border protection issues.
Review defamation laws.
Expand legal protections for whistleblowers and other confidential sources for journalists.
These ideas are all worthy of further debate. The final three recommendations all tackle crucial press freedom issues. The call for adequate funding for the ABC and SBS follows sharp cuts under the past two Coalition governments. The community broadcasting sector has also been treated with disdain.
Teaching children the value of public interest journalism, and how to distinguish it from what the public is interested in, would be a good first step to developing a generation of more savvy media consumers.
The middle two recommendations tackle the vital question of how to pay for quality journalism. One recommendation supports not-for-profit outlets while the other would potentially benefit media outlets that rely on subscriptions. The latest in a long line of industry hopes for finding a sustainable business model is to build subscription numbers.
The senators rejected submissions from numerous people and organisations recommending some form of direct subsidy from government, either for existing media companies or to encourage new entrants.
There are clearly issues here of potential government interference in editorial independence, but the senators overlooked three points. First, many other countries around the world already provide direct subsidies, as is detailed in chapter five of their report. Second, there is evidence that editorial independence can be safeguarded. Finally, there is a long history in Australia of directly subsidising the news media industry, as outlined in both this report and the Finkelstein media inquiry in 2012.
Whatever happens to these recommendations, the clock is ticking. If public interest journalism continues to be starved of resources, journalists’ ability to unearth maladministration or corruption will be winnowed even further. Of course we won’t see it, because journalists won’t have been able to tell us.
As Bob Woodward of The Washington Post observed:
The central dilemma in journalism is that you don’t know what you don’t know.
Imagine a world where we didn’t know about the Watergate scandal that Woodward was first to uncover.
In distinguishing between “good” and “bad” debt, federal Treasurer Scott Morrison equates good debt with infrastructure investment. However, not all infrastructure investment announced in the budget is necessarily “good”.
We are now in the Anthropocene – a new geological age defined by the global scale of humanity’s impact on the Earth – which places new requirements on our infrastructures. We need to move beyond the AAA ratings mindset, and instead aim for net-positive outcomes in social, economic and ecological terms from the outset.
Infrastructure (such as transport, water, energy, communications) underpins our ability to live in cities and our quality of life. And most infrastructure is very, very long-lived. Therefore, our infrastructure investment decisions matter enormously, especially for tomorrow.
More than half of the world’s people live in cities, and have just one planet’s worth of material resources to share around. This means we must define a new set of expectations and performance criteria for infrastructure.
Rather than settling for doing less bad, such as less environmental destruction or social disruption, we must aim from the outset to do more good. This net-positive approach requires us to restore, regenerate and increase social, cultural, natural and economic capital.
What sort of change is needed?
Examples of this kind of thinking are, as yet, rare or small.
Bishan Park on the Kallang River in Singapore gets close. Formerly a channelled stormwater drain, this collaboration between the national parks and public utility agencies has recreated significant habitat while providing flood protection and an exceptional recreational space. All this has been done in an extremely dense city.
Looking further into the future, in transport, a net-positive motorway might prioritise active transport and make public transport central by design. It might send price signals based on the number of passengers, vehicle type (such as autonomous) and vehicle ownership (shared, for instance).
Net-positive thinking aligns with a groundbreaking speech by Geoff Summerhayes, executive board member of Australia’s Prudential Regulation Authority (APRA), earlier this year. He identified climate change risk as a core fiduciary concern, and therefore central to directors’ duties.
This shift raises significant questions for the financial and operational validity of major infrastructure projects.
A core part of the switch to net-positive infrastructure is the realisation that resilience and robustness are different things. Historically, robustness has been central to infrastructure planning. However, robustness relies on assuming that the future is more or less predictable. In the Anthropocene, that assumption no longer holds.
This could include, for example, phasing infrastructure investment and development over time. Current analysis is biased toward building big projects because we assume our projected demand is correct. Therefore, we expect to reduce the overall cost by building the big project now.
However, in a more uncertain future, investing incrementally reduces risk and builds resilience, while spreading the cost and impact over time. This approach allows us to monitor and amend our planning as appropriate. It has been shown to save water utilities in Melbourne as much as A$2 billion.
Maybe the fact that we can be criticised for not having enough capacity ready in time has influenced our decision-making. We should really be challenged over investing too much, too soon, thereby eliminating the opportunity to adapt our thinking.
Or maybe we are so concerned about the need to build certainty into our planning that we are missing the opportunity to build learning through feedback loops into our strategies.
Surely there is a balance to be struck between providing enough certainty for investment without pretending we know with absolute certainty what we need to invest for the next 30 years.
major unregulated growth in interdependencies between infrastructures;
lack of systems thinking in planning and design;
radical shifts in the structure of cities and how we live and work;
increasingly fragmented provision;
no central governance of infrastructure as a system; and
much existing infrastructure approaching or past its end of life.
Regulatory reform is part of what’s required to enable public and private investment in better outcomes. Here too we need to learn our way forward.
Sydney’s emerging, world-leading market in recycled water is an example of a successful niche development that delivers more liveable and productive pockets in our cities through innovative integrated infrastructure.
Ultimately, doing infrastructure differently will also require investment in research on infrastructure. The UK is investing £280 million in this through the Collaboratium for Research on Infrastructure and Cities. But in Australia’s recent draft roadmap for major research investment, infrastructure is largely absent. We overlook infrastructure research at our peril.
The government is committing to more than A$70 billion in new infrastructure spending to 2020-21. This includes up to A$5.3 billion for the Western Sydney Airport, and A$8.4 billion towards the Melbourne to Brisbane inland rail link. Another A$500 million will be put towards passenger rail in regional Victoria, A$844 million for upgrades to the Bruce Highway in Queensland, and A$1.6 billion for road and rail in Western Australia.
A A$1.5 billion Skilling Australians Fund will be created to fund apprenticeships and traineeships. The fund will be supported by a levy on businesses with turnover greater than A$10 million that employ foreign workers.
The $20,000 instant asset write-off for small businesses has been extended to June 30, 2018.
The government has also committed to provide $101.5 million over five years to create an Advanced Manufacturing Fund, to promoted high-technology manufacturing.
To alleviate increasing energy costs, a one-off Energy Assistance payment will be will be given to pensioners and disability support recipients over two years. Single recipients will receive A$75 and couples A$125, at a cost of A$286.9 million. The government will also remove the capital gains tax exemption for foreign and temporary tax residents, and allow prospective first home buyers to make voluntary contributions to superannuation that can be withdrawn for a first home deposit.
The budget won’t fix the cost of living
Phil Lewis, Professor of Economics, University of Canberra
The budget contained several measures supposedly intended to “ease the cost of living”. Notably a one-off “energy assistance” payment to pensioners and those on disability support, and measures to address housing supply and affordability. But these will do little, if anything, to ease the cost of living of most Australians. On other aspects of the cost of living, such as health and education, the budget measures will make the cost of living worse for some groups.
A rise in the cost of living is usually represented by an increase in the Consumer Price Index (CPI) over a quarter, year or decade depending on the issue of interest. The CPI is designed to measure changes in the cost of a “basket of goods and services” that a “typical” Australian household might buy.
Almost half of the current basket is made up of housing, transport and food costs. So movements in these prices have a relatively big impact on the cost of living. But the ability of the federal government to control house prices or the other major component of housing costs – electricity and gas – is very limited. And petrol and food prices are determined by national and international market forces.
The above figure shows how the prices of components of the CPI changed over the year to March. The greatest price increases have been for alcohol and tobacco, which are largely due to government “sin taxes”. One of the easiest ways to ease cost-of-living pressure on the poorest households would be to reverse these tax rises, but this is not on the agenda.
The government also has great potential to influence costs in areas for which it is a major funder such as in health and education. These are also areas where prices have been rising faster than the CPI.
In education, the additional A$18.6 billion over the next decade for schools funding, which is needs-based, should reduce cost of living for more disadvantaged households, although some middle-income households might be worse off.
But the cost of living will rise for university students, as fees rise by 1.82% per year over the next four years. Those with HELP debt on lower incomes will also come under pressure, as the threshold to pay off their loans is reduced to A$42,000 per year.
In health, the re-indexation of the Medicare rebates from this July for regular GP visits, the further reduction in the price of prescription drugs, and scrapping of the 2014 proposal to raise prescription charges by A$5 will all help with the cost of living for those on lower incomes.
Although really a tax increase, the increase in the Medicare levy, by 0.5% from 2019, will nevertheless reduce the standard of living of households on middle to high income.
Big dollars for infrastructure, little transparency
Phillip O’Neill, Director, Centre for Western Sydney, Western Sydney University
Decision-making about infrastructure in Australia reached a new level of incompetence on budget night. Much public money has been committed, and the list of projects is long. Yet the planning and evaluation process for identifying what assets should be built and how their roll-out should be staged remains dreadfully inadequate.
Infrastructure is expensive and imposing. Governments need to select projects well, because when we select a project to build we also decide not to build a competing project. Construction then needs to proceed efficiently and with minimal impact.
Good infrastructure delivers benefits over many decades. Some infrastructure assets – like those for the delivery of water, energy and telecommunications – deliver direct benefits to consumers so they can be funded by user charging, which in turn means some degree of commercialisation of the asset is possible.
Infrastructure also makes our cities more productive and better, safer places to live. These positive externalities are not easily commercialised; but when a project is a good one because there is widespread benefit we are happy for governments to borrow and our taxes to be used to pay down the debt. The presence of good public infrastructure, like good public health and education, marks us as a civilised people.
Getting the right balance of commercial benefits and positive externalities isn’t easy. Infrastructure roll-out needs informed choice and, therefore, engaged public debate. But infrastructure decision-making in Australia lacks both information and debate. The secrecy in Australia surrounding infrastructure – be it for new construction or the sale of brownfields assets – is appalling. Business cases are rarely made public. The claimed benefit-cost ratios are not able to be scrutinised. Project financing and construction schedules are never revealed. Construction contracts are deemed “commercial-in-confidence”, as are the complex sale contracts of existing public assets.
Sadly, the budget gives little hope that any of this will change.
Marion Terrill, Transport Program Director, Grattan Institute
There’s more than a touch of back to the future about this budget: we’ve got so-called nation-building projects and the usual cries of “What about me?” from various state premiers. But in the current world of “good debt” and “bad debt”, the infrastructure choices of Budget 2017 look more defensible than usual.
For a start, there’s plenty to like about the $5.3 billion commitment to Western Sydney airport: the project has bipartisan support; it’s been assessed as having benefits of $1.90 for every dollar it costs; Infrastructure Australia thinks it’s a high priority; and, after 30 years on the drawing board, nobody could say it’s a thought bubble.
Inland Rail may squeak over the line. Despite an equity investment of $8.4 billion, the project has a marginal business case at best, with benefits of just $1.10 for every dollar spent and all the risks on the downside. Indeed, plenty of experts are dubious about the merits of this project.
Don’t listen too much to the political theatre about which states have been dudded in the carve-up of infrastructure dollars. In the end, more than half of what the Commonwealth grants for transport infrastructure is effectively neutralised when the winning states end up with a lower GST share. WA has been singled out for a particularly large $1.6 billion package in this budget, but that will only matter if the Grants Commission is asked to quarantine it from affecting WA’s GST share. New South Wales and Queensland – as usual – get a bigger share of the infrastructure pie than the commission says they need, but their lower GST share in subsequent years unravels more than half of their ostensible advantage.
So, on infrastructure spending, Scott “Good Debt” Morrison’s 2017 budget probably rates a pass.
The lost innovation agenda for industry
Beth Webster, Director, Centre for Transformative Innovation, Swinburne University of Technology
Wealth has to be created before it can be distributed. Unfortunately, this message has not been heeded but the current government.
The budget is high on rhetoric about deficits and the importance of runways, roads and rail but still low on supporting the innovation ecosystem that is needed to transform Australian industry. The government should be playing a role to stimulate the transition to new technologies. It should provide industry with the confidence to launch new products and technologies.
Overall, there has been a reduction in spending on programs dubbed in the budget “Growing Business Investment and Improving Business Capability” by A$93 million. The government has missed the most important form of investment – the networks of people and institutions that drive innovation.
There is funding for Industry Growth Centres (from A$37 million to A$61 million) and the Entrepreneurs’ Programme (A$79 million to A$106 million) but these measures have been matched by cuts. Two measures stand out in these cuts. First is assistance to pivot businesses out of car and clothing to other manufacturing sectors (down by A$84 million) into other sectors. And once again, the budget for Australia’s premier research and development organisation, CSIRO, is down by 4%.
On the plus side, spending on business research, development and commercialisation has increased by 4%. Not large, but it is a win. However all this has come at the expense of programs to inspire Australians to study science and engineering.
Overall, it’s fair to say industry programs have been savaged with programs to support business investment and improving business capability falling by 15%.