25/02/2010 - 00:00

Limits of federal power exposed

25/02/2010 - 00:00

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Recent events in Canberra provide a telling reminder about the limits on what governments can realistically achieve.

WHEN Prime Minister Kevin Rudd appeared on the television program Q&A recently, he was asked whether the government had lived up to its election promises.

Mr Rudd responded with the extraordinary comment that his government went to the polls with “about 600 or so undertakings ... to the Australian people”.

“I think you’ll find the vast bulk of those have either been implemented or are being implemented,” Mr Rudd told a bemused audience.

If Mr Rudd’s boasts were correct, he would have had an election undertaking for just about every issue and interest group in the country.

But who, apart from Mr Rudd, would keep count?

And more significantly, it begs the question of whether political parties should try to deal with every possible issue that may arise.

In practice, most politicians can’t help themselves when they are confronted with an issue of community concern. They feel compelled to devise a policy position.

Typically, this is treated as a part of the game of politics. Make lots of promises during the campaign to put pressure on your opponents; if you lose, there is no downside, and if you win, you start talking about non-core promises or assume voters will forget as new issues emerge.

But in Mr Rudd’s case, there appeared to be a belief that the government really could, and should, tackle the whole gamut of policy issues.

This assumption covered everything from small, localised issues through to global warming and the global financial crisis.

The debacle over the $2.4 billion housing insulation scheme highlights the unravelling of this policy approach.

This was an extraordinary amount of money to throw at a small industry sector in a short space of time.

It had the ridiculously ambitious target of getting new insulation into 2 million homes.

The scheme attracted a horde of untrained, unregulated fly-by-night operators. It has been estimated that, of the 7,500 installers who had been operating, only 2,500 would have met the new training requirements the government has belatedly established.

The heat has been directed, quite rightly, at Environment Minister Peter Garrett.

In addition to his poor judgement, there is a more fundamental issue – federal government agencies such as the environment department are simply not resourced to deliver new spending programs of that scale and complexity.

Federal departments typically focus on policy development; state departments are more likely to be involved in program delivery but even they have limited capabilities.

The housing insulation scheme was part of the $42 billion of new spending the federal government put together, to counter the impact of the global financial crisis.

From a macro perspective, it worked. Australia avoided the worst of the global recession.

But the efficiency and effectiveness of each aspect of the spending program can be questioned, particularly the ‘building the education revolution’.

This has led to endless reports of builders charging exorbitant rates for school projects that are of marginal value.

Meanwhile, public servants running ongoing programs still need to get three quotes for minor contracts.

Planning for a $43 billion national broadband network is another example of the Rudd government’s rash policy making.

This is a massive undertaking, yet by all reports the government has taken the plunge without any sort of detailed cost-benefit analysis.

Unfortunately, there are plenty of other examples, such as the proposed federal takeover of the public hospital system.

This was a highly political promise but also stemmed from a misguided belief in the ability of bureaucrats in Canberra to devise a system that would improve health outcomes across the country.

The federal government is heading for an even bigger letdown over its tax review, run by Treasury secretary Ken Henry.

The review appears to have canvassed nearly every aspect of the current tax system and there have been numerous leaks out of Canberra, floating possible changes.

But what will actually come of this? Nothing, unless the prime minister and his senior ministers define their own beliefs and resolve to pursue realistic change. So far there is no sign of that happening.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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