Own Goal: IPA report a ringing endorsement that Coalition policies have failed

by Michael Tanner | Jan 28, 2021 | Government

The Institute of Public Affairs has scored an epic “own-goal” by calling out the slide in Australian quality of life. A new report by the Liberal Party think tank identifies the drop in home ownership, high incarceration rates, the low level of skills training and debt as the main culprits but, as Michael Tanner reports, the declining standards are a direct result of Liberal Party policies.

It was to much fanfare (at least in some areas) that the Institute of Public Affairs announced the hiring of Tony Abbott to “lead a new movement to defend and revive traditional Australian values”. Such a movement was deemed necessary by the release of the IPA’s report titled “The Fair Go – Going, Gone: The Decline of the Australian Way of Life, 2000 to 2020”. The report and The Australian’s accompanying editorial lamented the “collapse of living standards over the past two decades”.

However, the “collapse of living standards” is the culmination of near two-decades of policy driven by the Coalition and the Institute of Public Affairs and with The Australian as cheer-leaders in chief.

The authors analysed 25 aspects of Australian life that they believe give a representative account of the quality of life of individual Australians, across five major categories: home, work, enterprise, governance and lifestyle. Each measure is tracked across the past two decades in comparison to 2000 standards.

According to the report, major contributors to the fall in living standards include housing affordability, household debt, government debt, underutilisation rate, vocational training, and the incarceration rate.

All part of the Coalition’s plan

But such falls in living standards are all part of the Coalition’s plan. The under-utilisation rate has been driven up, and the vocational training rate down by, in particular, the deregulation of Vocational Education and Training (VET) and TAFE: apprenticeships have fallen from 446,000 in 2012 to 259,000 today.

As the Financial Review noted back in 2014, in an article headlined “How deregulation opened the education floodgates“:

“Like bees to a honey pot, businesses have piled into the vocational education industry looking for a share of the massive government assistance which has been on offer.”

And in the Sydney Morning Herald: “Vocational education: how the shonks and shysters took control“:

“Billions of taxpayer dollars have pumped up the profits of private companies that often have little experience in education.”

Privatised VET, Coalition’s wage schemes no fix for Australia’s skills chasm

Housing is less affordable than ever, as the government steadfastly refuses to make key policy changes such as ending negative gearing, introducing the long-promised money-laundering reforms and increasing the capital gains tax. Labor’s policy at the last election was to phase out negative gearing. When John Howard turbo-charged the housing market by allowing self-managed superannuation funds to borrow for property, independent economist Saul Eslake described that decision as “the dumbest tax policy of the last two decades”:

Meanwhile, the increasingly punitive justice system of recent years drives the incarceration rate ever higher. In 2018 a Victorian Liberals backbencher even criticised his own party’s “law and order” campaign, warning about the dangers of populist tough-on-crime policies.

Not to mention reductions to penalty rates, and further attempts to strip rights from casual workers through the proposed industrial relations reform, which further contribute further to household debt.

Coalition’s war on casual workers a harbinger for assault on permanent workers

The report can in fact be summarised as a damning indictment of Coalition policy over the past two decades.

Methodological issues

First, the 25 measures aren’t representative. The report claims that “each measure constitutes a normative judgment about what a flourishing life in Australia entails”.

Some measures meet this criteria perfectly: “home-ownership”, “commute time”, “underutilisation”. Some don’t. Government debt is a prime example. Actual government debt has little to no bearing on the quality of life of individual Australians.

An increase in government debt per se does not affect Australians’ lives in the slightest. The only way it affects lives is through the fixation of some governments with a “balanced budget”, which usually leads to cuts in services and welfare payments.

Second, the IPA researchers have weighted every index equally. Each measure reported is given a score in comparison to the year 2000 based on the percentage between 2000 and 2020 levels. Levels in 2000 are indexed at 100. For example, a 6.2% drop in homeownership translates to a score of 93.8. A doubling of government debt translates to a score of -100 (a decrease by 200%). And so forth. The scores for each of the 25 outcomes are weighted equally and combined into an overall “index”.

While this methodology might sound reasonable to most people, it isn’t from a scientific perspective.

First, not all outcomes are equal. Underutilisation directly affects the lives of many more Australians than does government debt. Second, changes in these outcomes have vastly different effects on the life of Australians.

Imagine the effects of doubling the unemployment rate on the health, wellbeing and quality of life of Australians. This would be catastrophic for the hundreds of thousands of people that would go hungrier, have less access to medical care, be unable to afford vital medicines, and end up homeless. But a doubling of government debt? The effects are much smaller.

The authors acknowledge that any two changes are not “exactly equivalent” but this undersells the massive difference any two changes might have.

Irony lost on IPA authors

The report was co-authored by Research Fellows Cian Hussey, Kurt Wallace, and Andrew Bushnell, and Director of Research Daniel Wild.

In research, the title “Fellow” is typically bestowed on employees of university who 1) have a PhD and 2) have a job at the university. None of the four researchers meets the first criteria; the highest degree among them is a Masters, awarded to Bushnell. The highest degree conferred on the Director of Research Daniel Wild, according to the IPA website, is an honours.

Consider the career track for a researcher in academia. It would involve first completing an undergraduate degree, then an honours degree, often followed by a stretch as a research assistant, then applications to PhD programs –  which are ever more competitive as government funding falls ever lower. Then comes three years of formal research training completing said PhD, followed by a gruelling search for a job. When successful, only then might one term themselves a “Research Fellow”.

The irony is apparently lost on the Institute of Public Affairs that the Coalition has been the party in government for 14 of the past 20 years during which there has been this “collapse in living standards”.

On this report’s own measures, it makes the IPA’s decision to hire Tony Abbott a strange choice to herald a new movement for “saving the Australian way of life”.

Michael Tanner is completing a Doctor of Medicine/Doctor of Philosophy. His writing explores the intersection of economics, the media and public health. His writing has also been published in The Age.

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