Author Archives: Alan MacKinnon

• Stop the rorting of taxpayer-funded advertising: new Grattan report

  Stop the rorting of taxpayer-funded advertising: new Grattan report

  09.10.2022

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  Abuse of taxpayer-funded advertising is rife in Australia, with governments routinely spending public money to spruik their own achievements, especially in the lead up to elections.

  A new Grattan Institute report, New politics: Depoliticising taxpayer-funded advertising, finds that of the nearly $200 million spent each year by the federal government on advertising, nearly $50 million is spent on politicised campaigns.

  Over the past 13 years about $630 million, or a quarter of all federal campaign advertising, was spent on campaigns that spruiked government achievements – and spending spiked on the eve of each federal election.

  This is a problem on both sides of politics, and at federal and state level. Of the 10 most expensive politicised federal campaigns in the past 13 years, half were approved by Labor governments and half by Coalition governments. Auditors-general often criticise state government advertising campaigns too.

  In the lead up to the 2019 federal election, the government spent about $85 million of taxpayers’ money on politicised advertising campaigns – on par with the combined spend by political parties on TV, print, and radio advertising.

  ‘Weaponising taxpayer-funded advertising for political advantage wastes public money, undermines trust in politicians and democracy, and creates an uneven playing field in elections,’ says lead author and Grattan Institute CEO Danielle Wood.

  The report recommends tougher rules and tighter processes at federal and state level to prevent governments from exploiting taxpayer-funded advertising.

  Government advertising campaigns should be allowed only where they are necessary to encourage specific actions or drive behaviour change. Campaigns that promote government policies or programs, without a strong call-to-action, should be prohibited.

  An independent expert panel should assess all government advertising campaigns before they are launched. If the panel deems a campaign to be politicised, or otherwise not value for money, it should not run.

  These rules and processes should carry real penalties. If an Auditor-General finds that an advertising campaign was approved by the minister without certification from the independent panel, or that the government changed the campaign after certification, the governing party should be liable to pay back the entire cost of the campaign.

  ‘Sadly, our report shows that Australians cannot rely on the goodwill of ministers to prevent misuse of public money on politicised advertising,’ Ms Wood says.

  ‘It’s time to ensure that taxpayer-funded advertising is solely for the benefit of the public, not politicians.’

  This report is the third and final in Grattan Institute’s New politics series on misuse of public office for political gain. The first, published in July, tackled politicisation of public appointments, and the second, published in August, focused on pork-barrelling of government grants.

  For further enquiries email media@grattan.edu.au

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• Institutional change needed to reignite policy reform in Australia: Grattan

  Australia’s governance is going backwards. Without change, there is little prospect for many substantial policy reforms that would increase Australian prosperity, according to a new Grattan Institute report.

  Gridlock: removing barriers to policy reform identifies the 1980s and 1990s as ‘golden years’ of policy reform, and documents how governance has deteriorated since then. Governments have failed to progress reforms that have been recommended for decades.

  The report analyses a large sample of proposed policy reforms over the past decade and shows that unpopularity is now an insuperable obstacle to reform. This is a big change from the past when political leaders implemented many unpopular reforms, doing their best to explain why they were in the public interest.

  Tribal beliefs that mark membership of political parties and factions have also become major obstacles to sensible reform, particularly in tax, superannuation, and energy policy.

  While powerful vested interests blocked some reforms, they had much less influence when countered by the published reports of high-quality inquiries.

  Unpopularity, tribal beliefs, and vested interests stand in the way of the public interest because of less effective media, a weakened public service, the power of ministerial advisers, a growing professional political class, and increasing political patronage.

  Australia could break the gridlock in policy reform by increasing the expertise and independence of the public service, reducing the number of ministerial advisers closely tied to political parties and making them more accountable, tightening controls over political donations, campaign finance, lobbying, and post-politics careers, and setting up a federal anti-corruption commission with teeth to ensure that the rules of the system are followed.

  Unfortunately, politicians from both major parties routinely block such institutional changes because they think they will reduce their prospects of re-election. The most politically realistic path to institutional change is for independent members of parliament to champion institutional changes, particularly when they hold the balance of power.

  ‘Problems with our systems of governance are cruelling the chances of policy reform,’ says the report’s author, former Grattan Institute CEO John Daley.

  ‘The slow corrosion of our institutions is gnawing away at Australian prosperity.

  ‘We hope this report galvanises people to change how Australian government works.’

  For further enquiries: John Daley, Senior Associate
  E. john.daley@grattan.edu.au

• Switch to electric cars to put Australia on the road to net zero

  Stop the rorting of taxpayer-funded advertising: new Grattan report

  09.10.2022

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  Sales of new petrol and diesel cars should be phased out in Australia by 2035 to help cut carbon emissions to net zero by 2050, according to a new Grattan Institute report.

  Towards net zero: practical policies to reduce transport emissions calls on governments to make zero-emissions vehicles cheaper and to make it easier for drivers to charge their electric cars at home, at work, and on the road.

  Zero-emissions vehicles should be exempt from stamp duty, import duty, and luxury car tax.

  Scrapping stamp duty would cut the cost of new electric vehicles in Australia by up to 6.5 per cent.

  Removing import duty would give Australians a greater range of zero-emissions vehicles and cut the upfront cost of some models by a further 5 per cent.

  Exempting zero-emissions vehicles from luxury car tax would cut the cost of many of the electric models available in Australia today.

  To phase-out petrol and diesel cars, the Federal Government should impose a mandatory emissions limit on Australia’s light vehicle fleet and reduce the limit to zero by 2035.

  To ensure drivers don’t have to worry about where they can recharge their electric car, governments should require all new buildings with off-street parking to include electrical cabling to allow for an appropriate number of future vehicle chargers; require all leased dwellings with off-street parking to have at least one electrical outlet near the car park by 2030; and ensure convenient, local vehicle charging is available by 2030 for all residents of homes without off-street parking.

  This is the first of a series of five reports Grattan will publish in the lead-up to the international climate conference in Glasgow in November, showing how Australia can build momentum towards net-zero carbon emissions by 2050.

  ‘The best policy would be an economy-wide emissions price,’ says the series lead author, Grattan Institute’s Energy and Climate Change Program Director Tony Wood. ‘But we need to accept the regrettable reality that neither side of Australian politics is going to introduce an emissions price any time soon.

  ‘The climate clock is ticking. We can’t wait around for an emissions price. So our series will identify sector-specific policies Australia should implement to set us on the path to net zero.’

  The transport sector is responsible for nearly 20 per cent of Australia’s emissions, and more than 60 per cent of transport emissions are from light vehicles (including the two most popular cars in Australia, the Toyota HiLux and Ford Ranger). So the best way to cut transport emissions is to supercharge the switch to electric cars.

  But the Government should also introduce policies to cut other transport emissions, including:

  • Increasing the truck width limit in Australia from 2.5m to 2.6m, so low-emissions models made for the EU or US (which allow wider trucks) can be used in Australia without expensive modifications.
  • Supporting targeted trials of zero-emissions trucks, particularly hydrogen trucks, to assess their performance under Australian conditions and practices.
  • Imposing a renewable hydrocarbon standard for diesel, aviation fuel, and shipping fuel.

  ‘Net zero by 2050 is a tough target,’ says Mr Wood. ‘It requires concerted government action, starting now. Our series shows the way, with practical proposals that could be adopted by both sides of politics.’

  Contact: Tony Wood, Energy and Climate Change Program Director

  E: tony.wood@grattan.edu.au

• The private health industry must reform or die: new Grattan report

  Australia’s multi-billion-dollar private health industry urgently needs a rescue plan to prevent it spiralling to its death, according to a new Grattan Institute report.

  Stopping the death spiral: creating a future for private health urges the Federal Government and industry leaders to get together and forge a plan to:

  • Rein-in greedy surgeons who charge patients exorbitant fees.
  • Stop private hospitals keeping patients in hospital too long and giving them care they don’t need.
  • End the rorts in the prosthesis and device supply chain so private patients and their insurers pay no more than public patients.
  • Ensure private health insurers that aren’t giving their members value for money are prevented from charging ever-higher premiums.

  ‘The COVID crisis hasn’t saved private health,’ says lead author and Grattan Health Program Director Stephen Duckett. ‘The industry was in a death spiral before the pandemic and it’s still in a death spiral today.

  ‘The Government and the key players need to make dramatic changes quickly, because more than 40 per cent of the population has private health insurance and it’s a big industry – most procedures are done in private hospitals.’

  The report shows that for the past 20 years, private health insurance premiums have been rising faster than wages and inflation. Australians are paying more but getting less.

  As the population ages and uses more expensive healthcare services, insurers have to pay out more in benefits to their members. As benefits paid increase, so do premiums. Rising premiums make health insurance less affordable and less attractive – particularly to younger and healthier people. As younger, healthier people drop their insurance, the insurance risk pool gets worse, premiums go up, more young people drop out, and the cycle continues.

  But the industry also needs to face up to the fact that it is responsible for at least some of its woes.

  A small number of surgeons charge patients way more than they should. About 6 per cent of specialists’ services in hospitals are billed at more than twice the Medicare fee, and these services account for 89 per cent of patients’ out-of-pocket costs. Patients who have been paying insurance all their lives are understandably angry to get these surprise bills.

  The industry should rein-in these ‘greedy’ doctors, and the Government should ensure patients know more before surgery about the costs they could face, so they get fewer nasty surprises after surgery.

  Over-servicing is much more prevalent in private hospitals than public hospitals. Ensuring private hospitals don’t keep patients in hospital longer than necessary and don’t give patients care of little or no clinical value could cut private health insurance premiums by about 5 per cent.

  Exposing the prostheses market to competition could reduce the cost of hip and knee replacements and further reduce premiums.

  And the Minister for Health should be more willing to reject premium-rise applications from insurers that can’t show they offer their customers good value for money.

  ‘Together, the Government and the industry can create a viable future for private health in Australia,’ Dr Duckett says. ‘This report charts the path.’

  For further enquiries: Stephen Duckett, Health and Aged Care Program Director
  M. 0447 837 741
  E. stephen.duckett@grattan.edu.au

• Governments need to drive a harder bargain on transport megaprojects

  Taxpayers end up paying too much for major road and rail projects in Australia because governments don’t drive a hard bargain on contracts with the big construction firms, according to a new Grattan Institute report.

  Megabang for megabucks: driving a harder bargain on megaprojects calls on governments to stop worrying about the profitability of the industry and start delivering quality services at the lowest long-term cost to the community.

  Australia’s transport infrastructure costs are above the global average, and there is a government culture of caving in to contractor demands after contracts are signed.

  About 25 per cent of projects end up costing taxpayers more than the government expected when construction started.

  To get quality infrastructure at a sharp price, competition is fundamental. But as the size of projects has grown, so has the size of contracts – and with larger contracts, competition inevitably thins.

  Few firms have the technical and financial capability to win contracts worth $1 billion or more. Yet Australian governments often give undue priority to domestic experience, making it hard for international firms to win contracts.

  State governments often rush projects to market, so they can announce and start them before the next election. But in the rush, governments don’t always identify or mitigate expensive problems such as contaminated soil, and they’re not systematic enough about dividing projects into bundles or choosing the contract type with the right incentives for the particular job.

  The report calls on governments to only sign contracts that they are prepared to enforce, and to award all infrastructure contracts through an open tender process.

  And it recommends Australian governments investigate how similar countries overseas manage to build high-quality transport infrastructure more cheaply.

  ‘Our governments are getting major projects wrong, and taxpayers are left to pick up the tab,’ says lead author and Grattan Institute Transport and Cities Program Director Marion Terrill.

  ‘Our report shows how Australia can build better.’

  For further enquiries: Marion Terrill, Transport and Cities Program Director
  M. 0428 123 323
  E. marion.terrill@grattan.edu.au

• Boost spending by $10b a year to help fix aged care: Grattan

  The Federal Government should boost funding by about $10 billion a year to help fix Australia’s broken aged care system, according to a new Grattan Institute report.

  The extra spending could be funded by some combination of a new Medicare-style levy on taxable income, changes to the pension assets test and/or the residential aged care means test, and/or reductions in excessively generous tax breaks on superannuation.

  Properly administered, the extra money could transform the aged care system: clearing the 100,000-long waiting list for adequate home care, providing higher-level care at home for longer, employing at least 70,000 more aged care workers, and lifting the amount of care per person and ensuring a qualified nurse is on site 24/7 in all residential care homes.

  ‘The aged care system is a stain on Australians’ conscience,’ says lead author and Grattan Health and Aged Care Program Director, Stephen Duckett.

  ‘None of us want to end up in the present shameful system. Many of us feel guilty if we decide to pack our elderly mum or dad off to care.

  ‘The Prime Minister and the Treasurer must get serious about fixing aged care. This is more than a political problem, it is a moral imperative.’

  The Grattan report, The next steps for aged care: forging a clear path after the Royal Commission, calls for a streamlined and integrated aged care system under a new, rights-based Aged Care Act that guarantees care and support to all who need it.

  It recommends universal funding of care costs, just as there is universal funding through Medicare of patients’ costs in public hospitals. This would provide universal insurance for people who have high care needs, and would mean people would not need to worry about how they are going to fund their possible care needs in older age.

  The cost of a reformed, universal aged care system will only grow as Australia’s population continues to age and there are fewer working-age people paying taxes to fund the care of retirees.

  The Government could consider a 1 per cent aged care levy on taxable income, and it should find more money for aged care by reducing the excessively generous tax breaks for wealthy older Australians.

  More of the value of the family home should be included in the Age Pension assets test. And superannuation earnings in retirement – currently untaxed for people with superannuation balances of less than $1.6 million – should be taxed at 15 per cent, the same as superannuation earnings before retirement.

  ‘Surveys consistently show that Australians are willing to pay more tax to fix aged care,’ Dr Duckett says.

  ‘The time to act is now. The Aged Care Royal Commission report leaves the Government with nowhere to hide. This Grattan report shows how a better funded and designed aged care system would protect the rights, uphold the dignity, and celebrate the contribution of older Australians.’

  For further enquiries: Stephen Duckett, Health and Aged Care Program Director
  M. 0447 837 741
  E. stephen.duckett@grattan.edu.au

• Australia can pull off the great electricity trifecta

  Australia can achieve a net-zero carbon emissions electricity system without threatening affordability or reliability of supply, according to a new Grattan Institute report.

  Go for net zero: a practical plan for reliable, affordable, low-emissions electricity debunks the myth that Australia needs to continue to rely on coal-fired power stations to keep electricity bills down.

  But it also warns against a rush to 100 per cent renewable energy, because ensuring reliability would be costly – especially in the depths of winter in the southern states when electricity demand is high, solar supply is low, and persistent wind droughts are possible.

  Grattan Institute developed an economic model of Australia’s National Electricity Market (NEM), finding that moving to a system with 70 per cent renewable energy – and closing about two-thirds of today’s coal-fired power plants – would not materially increase the cost of power but would dramatically reduce emissions.

  The economic modelling suggests that moving to a system with 90 per cent renewable energy – and no coal – could also be reliable. But some additional costs – such as more generation, transmission, and storage – would be necessary to ensure supply when the wind isn’t blowing and the sun isn’t shining. Nonetheless, this would be a low-cost way to nearly eliminate emissions in the NEM, and offsetting any remaining emissions each year could well be the cheapest way to reach net zero.

  ‘This report is good news for Australia – it shows that we can make the historic transition to a low-emissions electricity system without the lights going out and without power bills skyrocketing,’ says lead author and Energy and Climate Change Program Director Tony Wood.

  But getting to 100 per cent renewable energy over the next two decades would be expensive unless there are major technological advances to backup renewable supply through rare winter wind droughts. That’s why Australia should commit only to net zero emissions in the NEM by the 2040s, not absolute zero emissions or 100 per cent renewable energy.

  The report identifies gas generation with negative-emissions offsets as the lowest-cost ‘bridging’ technology until a zero-emissions alternative, such as hydrogen-fired generation, pumped hydro storage, or carbon capture and storage, becomes an economically competitive backstop.

  ‘Gas is likely to play the critical backup role, though not an expanded role,’ Mr Wood says. ‘Australia will make a gas-supported transition to a net-zero emissions electricity system – but not a “gas-led recovery” from the COVID recession.’

  Noting that most of Australia’s coal-fired power stations are scheduled to be retired by 2040, the report urges governments not to use taxpayers’ money to extend the life of existing coal-fired generators, or to subsidise the entry of new coal-fired generators.

  ‘The scaremongers are wrong,’ Mr Wood says. ‘The analysis in our report shows that Australia can achieve the trifecta of reliable, affordable, low-emissions electricity — and we can do it without coal.

  Read the report

  For further enquiries: Tony Wood, Energy Program Director
  M. 0419 642 098
  E. tony.wood@unimelb.edu.au

• The COVID recession hit women hardest: new Grattan report

  The COVID recession hit women much harder than men, and will compound women’s lifetime economic disadvantage, according to a new Grattan Institute report.

  Women’s work: the impact of the COVID recession on Australian women shows that women copped a triple-whammy:

  • they lost more jobs than men – almost 8 per cent at the peak of the crisis, compared to 4 per cent for men;
  • they shouldered more of the increase in unpaid work – including supervising children learning remotely – taking on an extra hour each day more than men, on top of their existing heavier load; and
  • they were less likely to get government support – JobKeeper excluded short-term casuals, who in the hardest-hit industries are mostly women.

  The faster-than-expected economic recovery and school re-openings have helped improve the outlook for women, but unemployment and underemployment remain too high, especially for vulnerable groups such as single parents, who are mostly women.

  Women who became unemployed or left work in the recession face longer-term impacts on their wages and career progression because the COVID hit compounds the effects of other career breaks. Six months out of work can add another $100,000 to the average $2 million lifetime earnings gap between men and women with children in Australia.

  Released to coincide with International Women’s Day, the report urges governments to inject more money into services sectors, childcare, and aged care, and to rewrite the ‘rescue and recovery’ playbook before the next economic crisis.

  ‘Many Australians – particularly women – suffered more than they needed to in the COVID recession because elements of the government response were inadequate or ill-directed,’ Grattan CEO and lead author Danielle Wood says.

  ‘Policy makers seemed oblivious to the fact that this recession was different to previous crises – women now make up almost half the workforce, and they are overwhelmingly employed in the industries that were hit hardest by the government-imposed lockdowns, such as hospitality, tourism, and higher education.’

  Between February and May last year, the construction sector lost less than 5 per cent of its work hours but got more than $35 billion of government assistance, whereas the hospitality sector lost more than 47 per cent of its work hours but got only about $1.3 billion of direct government assistance.

  The report calls on governments to ensure that any further stimulus goes well beyond the construction sector and includes at least temporary expansions of social programs and services. The Federal Government should also make a longer-term investment in childcare to support women’s workforce participation and the economic recovery.

  ‘We can “build back better” after this crisis, but only if governments learn the lessons from the COVID recession,’ Ms Wood says. ‘Australia needs a new recession playbook, so women aren’t overlooked or forced to fall further behind.’

  For further enquiries: Danielle Wood, CEO
  M. 0405 510 763
  E. danielle.wood@grattan.edu.au

• Revamp aged care to stop the horror stories

  Australia’s aged care system is failing older Australians and their families and needs to be overhauled, according to a new Grattan Institute report.

  Rethinking aged care: emphasising the rights of older Australians says the care and support of older Australians must trump the profits of private providers.

  The report identifies ageism as part of the problem, and emphasising the rights of older Australians in need of care and support as the start of the solution.

  ‘The horror stories from the Royal Commission into aged care and from the COVID-19 aged care crisis have to stop,’ says lead author and Grattan Institute Health Program Director Stephen Duckett.

  ‘More money and different regulation are both necessary, but won’t be enough. Australia needs to fundamentally change the culture of its aged care system.’

  Over the past few decades the sector has become a ‘market’. As for-profit providers moved in, residential facilities got bigger. Regulation has not kept pace with the increasingly privatised market. Government focus has been on constraining costs rather than ensuring quality.

  The government’s poor commitment to the care and support of older Australians reflects society’s disdainful attitude to the aged.

  ‘Older Australians are often seen as a burden and no longer valuable or contributing members of society,’ Dr Duckett says.

  ‘They are pushed out of sight and out of mind.

  ‘The result is the shameful mess we have today: a top-down, provider-centric aged care system that is under-funded, poorly regulated, and failing older Australians.

  ‘Merely adding further Band-Aids to a broken system is not enough. We need to start again with a new Act that puts the rights of older Australians at the heart.’

  Five key rights-based principles should shape the system:

  • Independence, self-fulfilment, and participation in community
  • Informed and supported choice and control
  • Universal access to reasonable and necessary supports
  • Equity and non-discrimination
  • Dignity, including dignity in death

  This first Grattan report on aged care sets the overarching framework for reform. A second Grattan report to follow will detail how Australia can build a rights-based aged care system so that older Australians can live dignified and meaningful lives.

  Read the report

  Contact

  Stephen Duckett, Health Program Director
  ‬ T. ‭03 9035 9881 M. ‭0447 837 741 E. stephen.duckett@grattan.edu.au

• New Grattan Institute book lays out Australia’s road to COVID-19 recovery

  To help Australia recover from the COVID-19 recession, the Federal Government should inject $70 billion to $90 billion in extra economic stimulus, including revamping and extending JobKeeper, according to a new Grattan Institute book.

  The Recovery Book: what Australian governments should do now is a policy and strategy blueprint for federal, state, and territory governments, including for hospitals and health care, schools and universities, roads and trains, budgets and energy.

  The book urges governments to prioritise ruthlessly. Long term reforms – assuming they’re desirable – such as tax, industrial relations, and skills policy changes should be put on hold while governments tackle a huge agenda of urgent policies over the next six months.

  The Federal Government should announce extra economic stimulus – including spending on social housing and shovel-ready maintenance and infrastructure projects – in or before the October Budget, with the goal of getting hundreds of thousands of Australians back to work and dragging unemployment back down to about 5 per cent by the middle of 2022.

  JobKeeper should be expanded to include university staff, casual workers, and temporary migrants, and extended beyond September for businesses that are still in strife.

  The permanent rate of JobSeeker should be increased by at least $100 a week, and Commonwealth Rent Assistance should be increased by 40 per cent.

  The Child Care Subsidy should be raised to 95 per cent of costs for low-income households, to cushion the shock to family budgets as parents start paying for childcare again, and to reduce financial barriers for parents taking on more paid work.

  The Recovery Book recommends transport policy reforms to reflect likely changes to patterns of work and commuting in a ‘with-COVID’ world. These include congestion charging to help prevent roads in our capital cities clogging up, higher registration fees for larger cars than for smaller cars, more cycle lanes and paths, and a rethink of major project priorities.

  On health, the book calls for governments to refine policies put in place over the past few months: expanding telehealth – telephone and video consultations with GPs and specialists – and using private hospitals better, especially to help clear the elective surgery backlog.

  On schools, the book urges the Federal Government to fund a $1 billion, six-month tutoring blitz to help a million disadvantaged students recover learning lost during lockdowns.

  The Recovery Book calls for a rapid return of rigorous scrutiny and oversight of government spending and decisions, after parliaments were suspended at the height of the COVID crisis. The Federal Government should establish the promised national integrity commission.

  ‘This is a massive agenda, almost all needed in the next six months,’ Grattan Institute CEO and lead author Dr John Daley said. ‘Our book maps Australia’s road to recovery from the biggest economic and social shock since World War II. After the recovery has been established, Australian governments will have the resources to focus properly on structural reforms to the economy and the budget.’

  For further inquiries on:

  • • The Recovery Book overall
      John Daley : 0407 004 231, john.daley@grattaninstitute.edu.au
    • The shape of the economic downturn, the rephasing and reshaping of JobKeeper, JobSeeker, and childcare, and competition policy consequences
      Danielle Wood : 0405 510 763, Danielle.wood@grattaninstitute.edu.au
    • The size of the budgetary and RBA response required, and the implications for unemployment, including the long term future of JobSeeker
      Brendan Coates : 0412 798 229, Brendan.coates@grattaninstitute.edu.au
    • Health strategy
      Stephen Duckett : 0447 837 741, stephen.duckett@grattaninstitute.edu.au
    • Transport implications
      Marion Terrill : 0428 123 323, Marion.terrill@grattaninstitute.edu.au
    • Energy and industry implications
      Tony Wood : 0419 642 098, tony.wood@grattaninstitute.edu.au
    • School education implications
      Julie Sonnemann : 0401 854 371, Julie.sonnemann@grattaninstitute.ed.au