All posts by Andrew McDonald

$10 a day: how congestion charging would work in Sydney and Melbourne

Drivers should be charged $5 to enter the Sydney and Melbourne CBDs in the morning peak and another $5 to exit in the afternoon peak, as part of a package of reforms to make our biggest cities work better, according to a new Grattan Institute report.

Right time, right place, right price: a practical plan for congestion charging in Sydney and Melbourne shows the scheme would reduce the number of cars entering the CBDs each morning by about 40 per cent.

It recommends that the money raised be spent on upgrading CBD streets to make them safer and less congested for pedestrians.

Last week’s Grattan report, Why it’s time for congestion charging, showed that congestion charging was the fairest and most effective way, with the least cost and hassle to travellers, to ease congestion in Australia’s capital cities. This new report details how charging should work in the two biggest cities.

The $5 charge should apply from 8am to 9.30am, and from 4pm to 6pm. A $3 charge should apply in the half-hour either side of the morning peak, and in the hour before and the half-hour after the afternoon peak. Trucks should pay a higher charge, because they cause more congestion.

Driving to and from the CBDs would remain free at all other times of the day, on weekends, and on public holidays.

The ‘cordon’ for the Sydney CBD should cover the area west of and including the Domain, north of Central Station, and east of Pyrmont.

The cordon for the Melbourne CBD should include the Hoddle Grid, the high-rise areas of Docklands and Southbank, and the wedge to the north of the city formed by Victoria, La Trobe, William, and Peel streets (encompassing the Queen Victoria Market).

Transport modelling by Veitch Lister Consulting for the report shows that in Sydney, average speeds on CBD roads would increase by 11 per cent in the morning peak – good news for tens of thousands of bus commuters. The cordon charge would materially speed up a number of routes toward the city from the eastern suburbs, the airport, the inner west, and the north shore, and could improve traffic flow as far from the CBD as Frenchs Forest in the north, Brighton-Le-Sands in the south, Burwood in the inner west, and Macquarie Park in the north-west.

In Melbourne, average speeds in the Hoddle Grid would increase by about 16 per cent during the peaks. Arterial roads to the city from all points of the compass would flow better, including major north-south tram corridors such as Sydney Road and Brunswick Street. Traffic speeds could increase as far from the CBD as Niddrie in the north-west, Mulgrave in the south-east, Hampton in the south, and Altona North in the west.

Within five years of the CBD cordon charges being introduced, a per-kilometre charge should be imposed in peak periods on the most congested arterial roads and urban freeways in both cites.

A 30-cents per kilometre change could increase speeds on the charged roads by more than 10 per cent in the morning peak.

In Sydney, the ‘corridor charge’ could apply to sections of the A3 and the A6, the Victoria Road – Western Distributor (A4) corridor, and the M5 East – M1 corridor past the airport.

In Melbourne, the corridor charge could apply on Hoddle Street – Punt Road, the Eastern Freeway – Alexandra Parade – Elliot Avenue corridor, the West Gate Freeway, and the Monash Freeway.

Eventually, drivers should be charged on a per-kilometre basis for driving across each city’s entire road network at the busiest times – but only as part of a package of measures including abolishing fuel excise and creating a safety net to ensure people on low incomes and with impaired mobility are not disadvantaged.

‘It’s true that politicians in Australia have been sceptical about congestion charging, but our designs show that it is feasible, effective, and can be done fairly,’ says Grattan Institute’s Transport and Cities Program Director Marion Terrill.

‘Ambitious reforms are always challenging for governments. But Australian governments have the advantage that they can learn from cities around the world that have already successfully implemented congestion charging,’ Ms Terrill says.‘It’s time for Sydney and Melbourne to join these cities in the fast lane.’

Read the report

For further enquiries:
Marion Terrill, Transport Program Director
T. 03 8344 3637 E. media@grattan.edu.au

Australia should move to congestion charging

Australia’s capital cities should join many of the great cities of the world by charging drivers who use the busiest roads at the busiest times, according to a new Grattan Institute report.

Why it’s time for congestion charging: better ways to manage busy urban roads recommends a three-stage reform: within the next five years, state governments should introduce cordon charging, where drivers pay to cross a boundary into the capital city CBDs in the morning peak and out in the afternoon peak; within the following five years, people should pay to drive along the busiest urban freeways and arterial roads at peak periods; and eventually people should be charged on a per-kilometre basis for driving across the city’s entire road network at the busiest times.

The report shows that a modest cordon charge could mean 40 per cent fewer cars entering the CBDs in the morning peak, and speeds up to 16 per cent faster on roads in the CBD and up to 20 per cent faster on sections of major arterials leading into the CBD.

Modelling shows speeds across the entire Sydney and Melbourne road networks would increase by about 1 per cent. That might sound modest, but Sydney’s WestConnex and Melbourne’s North East Link are predicted to increase network speeds by 3 per cent and 1 per cent respectively – and those roads come with price tags of $16 billion and $17 billion respectively.

‘Everyone wants less congestion: it would make life easier for individual drivers and make our cities work better, too. Our plan tackles congestion without asking communities to pay billions of dollars for major new roads,’ says Grattan’s Transport and Cities Program Director, Marion Terrill.

‘New York, London, Beijing, Singapore, Stockholm, Milan, and Jakarta all have congestion charging or are heading that way. It’s time for Australian cities to embrace the idea.’

If getting public transport right is a pre-condition for congestion charging, there has never been a better time in Australia, with investment in public transport and roads running at more than $30 billion in 2018-19 – an all-time high.

The technology has improved too, with Automatic Number Plate Recognition now accurate enough to use as the primary detection technology for congestion charging.

And the experience from global cities is that initial public hostility quickly turns to support when people see how effective congestion charging can be.

Concerns that congestion charging would hurt those who can least afford it are overblown. In fact the charges would mainly be paid by higher-income drivers, because people who drive to the city each day for work are more than twice as likely to earn a six-figure salary as other workers.

It’s also a myth that lower-income workers drive further. In fact it is typically higher-income workers who drive long distances to work.

Nor is it true that people have no choice but to drive; CBDs are well-serviced by public transport, and most people already get to the city by train, tram, or bus.

‘In the end, if particular roads are in high demand, it’s fairer that people who use them a lot pay more than those who rarely or never use them,’ Ms Terrill says.

But congestion charging should come with a safety net: there should be discounts for low-income people with impaired mobility who need to get to the CBD in peak periods.Grattan’s next report, to be published this time next week, will explain in detail how congestion charging could work in Australia’s two biggest cities, Sydney and Melbourne.

Read the report

For further enquiries:
Marion Terrill, Transport Program Director
T. 03 8344 3637 E. media@grattan.edu.au

How to clean up Australia’s energy policy mess

Chaotic approaches to energy policy have pushed up electricity prices and scared off investors, according to a new Grattan Institute report.

Power play: how governments can better direct Australia’s electricity market says governments feel compelled to respond when electricity supply is lost and when prices are too high, but ad hoc and uncoordinated actions by federal and state governments have made things worse.

The report finds that the energy sector is likely to need in the order of $150 billion in new utility-scale generation assets over the next 30 years.

The Federal Government is making this investment harder by bashing big companies and intervening in the market with knee-jerk policies such as the taxpayer-funded $5 billion Snowy 2.0 pumped hydro project and the ‘Underwriting New Generation Investments’ program. After the 2016 statewide blackout, the South Australian government deployed expensive diesel generators at short notice, which ultimately were used for only four hours – at a cost of $111 million.

‘Significant investment is needed to transition from old and dirty to new and clean energy, while keeping the lights on. But we are currently doing this the hard way – and Australia’s governments, state and federal, are not helping,’ says the report’s lead author, Grattan Energy Program Director Tony Wood.

‘Governments have a bad track record at “picking winners”, and their interventions crowd out alternative, generally better, investments.’

The Federal Government’s fight to avoid the impending closure of the Liddell coal power station in NSW makes it harder for Australia to achieve its emissions reduction targets, and is likely to increase electricity prices and reduce the reliability of supplies.

The states should work together to fill the climate-change policy vacuum. Over the past decade or so, successive federal governments have proposed and rejected five emissions policies. The states’ responses have added to the mess, using different mechanisms to try to meet different emissions reduction targets. The upshot has been growing frustration for investors and higher prices for consumers.

‘The states should abandon their uncoordinated policies and instead implement a nationwide emissions reduction policy through state-based legislation,’ Mr Wood says.

‘While a national policy led by the federal government would be ideal, a state-based policy would be far superior to no policy at all. It would resolve a key element of uncertainty that has held back investment in both renewable and dispatchable generation – and so it would ultimately led to lower bills and increased reliability.’

In the meantime, the Federal Government should abandon its current approach of ‘big stick’ threats to the major energy companies, ad hoc market interventions, and taxpayer-funded support for electricity generation. Instead it should help get the electricity market back on the right track by providing clear, rules-based policies to better manage investments in transmission and closures of coal plants.

Australia’s coal fleet is ageing and will progressively retire over coming decades. The abrupt closures of the Northern power station in South Australia in 2016 and the Hazelwood power station in Victoria in 2017 have heightened political concerns that future closures will push up electricity prices and reduce reliability.

To improve clarity on coal closures, the report proposes that generators be required to place hundreds of millions of dollars into escrow to ensure orderly retirement.

Under the Grattan coal closure model, coal plants would need to nominate closure dates. If they then closed earlier than promised, they would forfeit the money and it could be used to try to cover any reliability problems caused.‘Recent and current government actions imperil Australia’s great energy transition,’ Mr Wood says. ‘Yet the transition to a low-emissions future is inevitable and desirable. This report charts the path to success.’ 

Read the report

For further enquiries: Tony Wood, Energy Program Director
T. +61 (0)3 8344 3637 E. media@grattan.edu.au

A $1.6b blueprint to boost teacher quality and student performance

Australia’s top teachers should be able to earn $80,000 a year more, and top school-leavers should get $10,000-a-year scholarships if they take up teaching, according to a new Grattan Institute report on how to boost teacher quality and student performance.

Attracting high achievers to teaching proposes a $1.6 billion reform package to double the number of high achievers who choose to become teachers, and increase the average ATAR of teaching graduates to 85, within the next decade.

With this higher-achieving teacher workforce, the typical Australian student would gain an extra six to 12 months of learning by Year 9.

The report details an Australia-first survey of nearly 1,000 young high achievers (aged 18-25 and with an ATAR of 80 or higher) which found that more bright young Australians would take up teaching if it offered higher top-end pay and greater career challenge.

The report recommends a three-part reform package:

1. Offer $10,000 cash-in-hand scholarships to high achievers to study teaching. People who get the government-funded scholarships should be required to work in government schools for at least several years.

2. Create two new roles in schools – ‘Instructional Specialist’ and ‘Master Teacher’ – so the best teachers can get extra pay, time, and responsibility to improve teaching at their schools and in their regions. About 5-to-8 per cent of teachers would become Instructional Specialists, paid around $140,000 a year – $40,000 more than the highest standard pay rate for teachers. About 0.5 per cent of teachers would become Master Teachers, paid around $180,000 a year – $80,000 more than the highest standard pay rate for teachers. 

3. Launch a $20 million-a-year advertising campaign, similar to the Australian Defence Force recruitment campaigns, to promote the new package and re-position teaching as an attractive, challenging, and well-paid career option for high achievers.   

The report shows that bright young Australians are turning their backs on teaching.

Over the past decade, demand from high achievers for teaching fell by a third – more than for any other undergraduate field of study. Only 3 per cent of high achievers now choose teaching for their undergraduate studies, compared to 19 per cent for science, 14 per cent for health, and 9 per cent for engineering. 

‘Australia needs more high achievers in teaching, because great teachers are the key to better student performance,’ said the lead author of the report, Grattan Institute School Education Program Director Peter Goss.

‘The low status of teaching in Australia has become self-reinforcing, putting off high achievers who might otherwise want to teach. By contrast, high-performing countries such as Singapore and Finland get many high-achieving students to apply, and then select the most promising candidates.’

The report recommends all three schools sectors in Australia – government, private, and Catholic – implement the reform package. State and territory governments, some of which have failed to properly fund their schools, should pay for the reforms in government schools. Private and Catholic schools should fund the reforms themselves, without extra taxpayer money.

‘Our reform package would transform Australia’s teaching workforce,’ said Dr Goss. ‘In the long term it would pay for itself many times over, because a better-educated population would mean a more productive and prosperous Australia.’

Read the report

For further enquiries:
Pete Goss, School Education Program Director, Grattan Institute
T. 03 8344 3637 E. media@grattan.edu.au

How to ensure a fair go for young Australians

Today’s young Australians are in danger of being the first generation in memory to have lower living standards than their parents’ generation, according to a new Grattan Institute report.

Generation gap: ensuring a fair go for younger Australians shows that older Australians today spend more and have higher incomes and greater wealth than older Australians three decades ago.

But living standards have improved far less for younger Australians.

The wealth of households headed by someone under 35 has barely moved since 2004.

Poorer young Australians have less wealth than their predecessors and are far less likely to own a home. In contrast, older households’ wealth has grown by more than 50 per cent over the same period because of the housing boom and growth in superannuation assets.

It’s a myth that young people’s spending habits and lifestyles are to blame for their stagnating wealth. ‘This is not a problem caused by avocado brunches or too many lattes,’ says the report’s lead author, Grattan’s Budget Policy Program Director Danielle Wood.

In fact, younger people are spending less on non-essential items such as alcohol, clothing, and personal care, and more on necessities such as housing, than three decades ago.

Economic pressures on the young have been exacerbated by recent wage stagnation and rising under-employment. Older households are better cushioned from low wage growth because they are more likely to have other sources of income.

‘If low wage growth and fewer working hours is the new normal in Australia, then we could have a generation emerge from young adulthood with lower incomes than the one before it at the same age,’ Ms Wood says. ‘This has already happened in the US and the UK.’

Young Australians will also bear the brunt of growing pressures on government budgets.

Because the population is ageing, governments will have to spend more on health, aged care, and pensions. But there will be fewer working-age people for every retired person to pay for it. The number of 15-64 year-old Australians for every person aged 65 or older fell from 7.4 in the mid-1970s to 4.4 in 2014-15 and is projected to fall further to 3.2 in 2054-55.

Governments have supercharged these demographic pressures by introducing generous tax concessions for older people.

The share of households over 65 paying tax has halved over the past two decades. And older households pay substantially less tax on the same income as younger households.

‘Working-age Australians are underwriting the living standards of older Australians to a much greater extent than the Baby Boomers did for their forebears, straining the “generational bargain” to breaking point,’ Ms Wood says.

Inheritances are not a magic bullet for young people: they tend to come later in life and are much more likely to go to people who are already wealthy. 

Policy changes are required. Policies to boost economic growth – such as tax reform, better education and smarter infrastructure spending – are wins for all, but especially for the young. Changes to planning rules to encourage higher-density living in established city suburbs would make housing more affordable. And a fair go for younger people means winding back age-based tax breaks for ‘comfortably off’ older Australians.

‘Just as policy changes have contributed to pressures on young people, they can help redress them,’ Ms Wood says.‘The time for action is now: none of us wants the legacy of a generation left behind.’

Read the report

For further enquiries:
Danielle Wood, Budget Policy & Institutional Reform Program Director
T. +61 (0)3 8344 3637 E. media@grattan.edu.au

Matching young Australians to their best post-school education options

Some university students with low school results would be better off doing vocational education instead, according to a new Grattan Institute report on Australia’s post-school education system.

Risks and rewards: when is vocational education a good alternative to higher education?finds that vocational diplomas in construction, engineering and commerce typically lead to higher lifetime incomes than many low-ATAR university graduates are likely to earn, especially those with degrees in popular fields such as science and humanities.

“Especially for low-ATAR men, some vocational alternatives to university are worth considering,” says the lead author, Grattan’s Higher Education Program Director Andrew Norton. “Schools need to give them better career advice alerting them to these possibilities – and governments should end funding biases against vocational education.”

But the report shows that vocational education alternatives for women are less attractive. Few women enrol in vocational education engineering, and those who do often have poor career and earnings outcomes.

“Engineering occupations are male-dominated, often deny women employment, and are inflexible in providing part-time work,” Mr Norton says.

Teaching and nursing are popular university courses for low-ATAR women, and often lead to stable careers. These students are unlikely to do better in a vocational education course.

“For lower-ATAR men, a few vocational education courses would probably increase their employability and income. But for lower-ATAR women, higher education is almost always their best option.”

The report shows that higher education has expanded rapidly in Australia over the past 20 years, but vocational education has flat-lined.

This has led to concerns that students, especially lower-ATAR students, are being encouraged to enrol in higher education and to overlook potentially better-paid vocational education alternatives in fields with good job prospects.

The report concludes that these fears are only partly justified. Low-ATAR university students are vulnerable, but only sometimes have clearly better vocational education alternatives.“Like higher education, vocational education has risks as well as potential rewards,” Mr Norton says. “A good tertiary education system steers prospective students towards courses that increase their opportunities and minimise their risks. Australia’s post-school system does not always achieve this goal.”

Read the report

For further enquiries:
Andrew Norton, Higher Education Program Director
T. 03 8344 3637 E. media@grattan.edu.au

Confronting the private health insurance death spiral

Australia’s private health insurance industry fears it is in a death spiral, and politicians need to rethink whether or to what extent taxpayers should continue to subsidise the industry, according to a new Grattan Institute working paper.

The history and purposes of private health insurance finds that Australians are increasingly dissatisfied with private health insurance, and policy reform is urgent.

Premiums are rising much faster than wages or inflation. People are dropping their cover, especially the young and the healthy. Those who are left are more likely to get sick and go to hospital, driving insurance costs up further.

Meanwhile, taxpayers subside the industry to the tune of about $9 billion every year: $6 billion for the private health insurance rebate, and $3 billion on private medical services for inpatients.

“It’s inevitable that government will have to make tough decisions about whether more subsidies are the answer to the impending crisis,” says lead author and Grattan Institute Health Program Director Stephen Duckett.

“Governments have failed to clearly define the role of private health insurance since Medicare was introduced in the 1980s. The upshot is we have a muddled health care system that is riddled with inconsistencies and perverse incentives.”

Australia needs to confront a fundamental question: what is the purpose of private hospital care?

If its purpose is to complement Medicare, offering people choice of specialists and a wider range of services, then the argument for taxpayer subsidies is weak.

But if its purpose is to substitute for public hospital care, then the argument for subsidies is stronger.

The paper urges policy makers to grapple with two further questions:

  • Do the current design features of the private health insurance system, including incentives, penalties and regulation, support its desired role (as a complement or substitute or both) in the overall health system? And if not, what other mechanisms or combination of arrangements are needed?
  • Does government support for private health insurance and private hospital care promote overall economic efficiency and the most effective and equitable use of government and community resources? And in the long run, are there better ways of providing support to the sector?

“The question then becomes whether government should support private health care directly, or via public health insurance – or not at all,” Professor Duckett says.

Future Grattan Institute work will tackle these questions and propose solutions to Australia’s private health insurance woes.

Read the working paper

Further enquiries: Stephen Duckett, Health Program Director
T. 03 8344 3637 E. media@grattan.edu.au

Pass the stage 1 tax cuts now, but defer stage 3

Federal Parliament should pass the Government’s Stage 1 tax cuts immediately but should defer consideration of the controversial Stage 3 cuts, according to a new Grattan Institute working paper.

Budget blues: why the Stage 3 income tax cuts should wait finds passage of the Stage 1 cuts would give the economy a much-needed boost at a time of low growth and stagnant wages.

The Stage 2 cuts would help most Australians by giving back bracket creep and are likely to be affordable.

But the Stage 3 cuts, scheduled to come into effect in 2024-25, would cost the budget $85 billion over the subsequent six years. We do not know now whether these cuts are affordable or the right size and shape for the economy so far into the future.

‘The economy is softening, the budget position is weakening, and calls for the Government to use fiscal policy to stimulate the economy are growing,’ says Grattan Institute’s Budget Policy Program Director Danielle Wood.

‘Tax cuts now could provide that stimulus but there are big risks from locking in major tax cuts on the never-never.’

Government would have to substantially reduce growth in spending to deliver both the Stage 3 tax cuts and promised surpluses, particularly if the economy worsens.

The Stage 3 tax cuts would reduce bracket creep and boost people’s incentives to work, but they are far from the best way to do so. Committing to Stage 3 now could also ‘crowd out’ the chance of meaningful tax reform over the next decade.

If the Stage 3 cuts pass, the top 15 per cent of income earners would pay a lower share of their income in tax, but middle-income earners would pay a higher share. The income tax system in 2024-25 would be less progressive than it has been at any point since the 1950s. Whether this is desirable is a value choice, but it is a choice that Australia should make with its eyes open.

By contrast, the temporary and targeted Stage 1 tax cuts are well timed to boost consumer spending and economic activity at a time when inflation is virtually non-existent, the labour market is weakening, new building approvals are drying up, and per person living standards have gone backwards for three consecutive quarters.

‘Given the softening economy, passing the Stage 1 tax cuts should be a priority,’ Danielle Wood says.

‘But there is absolutely no need for the Government to tie its hands by committing to the Stage 3 tax cuts now.’

Read the working paper

For further enquiries:
Danielle Wood, Budget Policy & Institutional Reform Program Director
T. +61 (0)3 8344 3637 E. media@grattan.edu.au

Commonwealth Orange Book 2019: a policy manifesto for a better Australia

The winner of the May 18 federal election should defy the national mood of reform fatigue and stare down special interests to pursue a targeted policy agenda to improve the lives of Australians, according to a new book from the Grattan Institute.

Commonwealth Orange Book 2019: priorities for the next government rates Australia’s performance against similar countries and proposes policy reforms to schools and universities, hospitals and housing, roads and railways, cities and regions, budgets and taxes, retirement incomes and climate change.

It includes Grattan Institute’s new ‘International Scorecard’, which shows Australians live longer than most other people, and public debt is relatively low. But our electricity supply is more polluting, less reliable and more expensive than in comparable countries; we lag behind other developed economies on school results; and housing costs and homelessness are relatively high.

Lead author and Grattan CEO John Daley says the challenge for the next government, of whatever political colour, is to revive Australia’s proud tradition of enlightened public policy.

“The next government needs to choose to do less, but deliver more,” he says. “We can continue to be the lucky country, but we must make our own luck.”

Drawing on 10 years of Grattan research and reports, the Orange Book finds Australians’ living standards have stagnated, the pace of economic reform has slowed, people are increasingly anxious about their financial prospects – and our political system is not dealing well with these challenges.

On health, the Orange Book calls for a universal dental care scheme, so all Australians can go to the dentist when they need to; a boost to primary care, with new reforms to Primary Health Networks and GP payments; and a comprehensive review of the private health sector, including private health insurance.

On housing, the book recommends that the Commonwealth provide incentives to states to loosen planning laws so that higher density is permitted in the established middle suburbs of our capital cities; a 40 per cent increase in the maximum rate of Commonwealth Rent Assistance; and funding for additional social housing tightly targeted towards Australians at high risk of homelessness.

On retirement incomes, it urges the next government to abandon the current plan to increase compulsory superannuation payments from 9.5 per cent to 12 per cent, which would force workers to accept lower living standards today even though they are already likely to enjoy living standards in retirement comparable to living standards while working. It advocates changes to the Age Pension assets test that would loosen the assets test taper but include more of the value of owner-occupied housing. And it backs proposals to select “best in show” funds for default superannuation, to drive down costs and improve returns.

Major tax reform is needed to support economic development. The book recommends reducing income tax and modifying welfare tapers and childcare benefits to remove barriers and increase incentives for second income earners (usually women) to participate in the workforce. It also advocates an accelerated depreciation scheme for new investment by companies. To pay for these changes (and avoid other tax increases), the next government should cut the capital gains tax discount from 50 per cent to 25 per cent; wind back negative gearing; tighten superannuation tax concessions; and broaden or increase the GST. To increase workforce participation of older Australians, the government should ask the Productivity Commission to investigate the costs and benefits of raising the pension age to 70.

On energy, the book urges the incoming government to develop a clear, credible policy to tackle climate change. Our political leaders must be honest with voters: Australia needs to move to a low-emissions economy, and that transition will cost money. A raft of reforms to electricity generation, distribution and retailing are also required to push down energy costs.

On transport, the book calls for a more disciplined approach to assessing, selecting and reviewing major projects, to put brakes on spending billions of dollars in the wrong places for the wrong (often politically motivated) reasons.

On school education, it suggests that the government needs to finish off school funding reforms, and set up a national evidence institute, while strengthening incentives for universities to improve initial teacher education.

On higher education, it recommends a return to demand-driven funding of universities. Reforms to the HELP loan scheme are needed to help fund this change, and potential increases in funding for vocational education. The government should encourage more students into vocational education, although better funding arrangements for vocational education need careful thought and negotiations with the states.

On budgets, it suggests enshrining fiscal targets in legislation, giving the Parliamentary Budget Office responsibility for macroeconomic forecasts that underpin the budget and publishing an Intergenerational Report that includes long-term projections of both Commonwealth and state government revenues and spending.

The Orange Book identifies a crisis of trust in politics in Australia, with a growing sense that people in government look after their own interests and can’t be ‘trusted to do the right thing’. It calls for institutional changes to help restore faith in our democracy, including introducing a strong integrity commission, capping expenditure on political advertising during election campaigns, and new rules to ensure voters know who is donating to the political parties and who is lobbying our political leaders.

The book urges a reversal of the recent trend toward government intervention in electricity generation; an end to government programs designed to artificially divert population from the cities to the regions; and an end to government giveaways which supposedly help first homebuyers but which actually mostly benefit property investors and real estate agents.

“These are evidence-based policy recommendations designed to serve the interests of all Australians rather than sectional interests,” Mr Daley says.

“Our next government should seize the opportunity to forge a happier, healthier and more prosperous Australia. We can do better. The Orange Book shows how.”

Read the report

For further inquires:

On the Orange Book in general and priorities for
the next Commonwealth Government: John Daley
On Economic Development: John Daley
On Regional Development: John Daley
On Housing: Brendan Coates
On Retirement Incomes: Brendan Coates
On Budget: Danielle Wood
On Integrity Reforms: Danielle Wood
On Transport: Marion Terrill
On Energy: Tony Wood
On Health: Stephen Duckett
On School Education: Peter Goss
On Higher Education: Andrew Norton

T. +61 (0)3 8344 3637 E. media@grattan.edu.au

A universal dental care scheme for Australia

Australia should introduce a Medicare-style universal insurance scheme for primary dental care, to ensure all Australians can go to the dentist when they need to, according to a new Grattan Institute report.

Filling the gap: A universal dental care scheme for Australia calculates the scheme would cost an extra $5.6 billion a year, suggests it could be paid for in part by a rise in the Medicare levy, and recommends it be phased in over 10 years.

It’s needed because about 2 million Australians who required dental care in the past year either didn’t get it or delayed getting it because of the cost – and the poor and disadvantaged are most likely to miss out on care.

This is because most spending on dental care comes straight out of patients’ pockets.

“When Australians need to see a GP, Medicare picks up all or most of the bill. But when they need to see a dentist, Australians are on their own,” says the Grattan Institute’s Health Program Director, Stephen Duckett.

The consequence is widespread poor oral health. About a quarter of Australian adults say they avoid some foods because of the condition of their teeth; for low-income people, it’s about a third. Low-income people are more likely to have periodontal disease, untreated tooth decay, or missing teeth.

Bad oral health has painful and costly consequences. Oral health conditions can contribute to other health problems, including diabetes and heart disease. Most oral health conditions are preventable, yet people often end up going to a GP or hospital emergency department to be treated for conditions that could have been arrested with earlier care.

Existing public dental schemes are inadequate, uncoordinated, and inequitable across states and territories. Most states have waiting lists of well over a year for public dental care – and if people need to wait a year for care, their conditions are only going to get worse.

The Commonwealth Government should announce that it will take responsibility for funding primary dental care – just as it takes responsibility for primary medical care.

“There’s no compelling medical, economic, legal or logical reason to treat the mouth so differently from the rest of the body,” Dr Duckett says.

But it would be impractical to move to a universal scheme overnight. It would cost a lot of money – about $5.6 billion in extra spending each year – and more dentists and oral health professionals would need to be trained locally or recruited from overseas.

So, the Commonwealth should announce a roadmap to a universal scheme, including plans to expand the dental health workforce, followed by incremental steps towards a universal scheme.

First, the Commonwealth should take over funding of services for people eligible for existing public dental schemes, fund them properly, and enable private-sector providers to deliver publicly-funded care. Then the scheme should be expanded – first to people on Centrelink payments, then all children. Within a decade, the Commonwealth should take the final step to a universal scheme.

“Universal dental care is a big idea whose time has come,” Dr Duckett says. “All Australians should be able to get the care they need, when they need it, without financial barriers.”

Read the report

Further enquiries: Stephen Duckett, Health Program Director
T. 03 8344 3637 E. media@grattan.edu.au