Hiding Behind The Budget
How the Australian government avoids accountability by hiding behind accounting and never measuring policies against public objectives
In October, Xi Jinping presented a 65 page report to the 20th National Congress of the Communist Party of China, providing a detailed account of national goals in the medium and longer term. It also provided an account of its past performance over the last five years, detailing failures and successes.
It’s not the easiest of reads, overflowing with the usual self-serving propaganda governments engage in when talking about themselves. However if you persevere you’ll find a few sections containing concise and fairly well designed national goals.
Here’s one listed under a section labelled “Missions and Tasks of the Communist Party of China”:
Ensure personal income grows basically in step with economic growth and pay rises in tandem with increases in productivity
This is a great goal. It is simple to understand, specific, measurable, achievable and the public benefit is unambiguous. In five years time, people can easily measure how well the governments policies have worked to achieve that goal, and in that way hold the Chinese government to account against its promises.
What stood out most to me was the stark contrast between this simple, clear message and the mind numbing accounting-as-policy that Australia employs.
We really don’t talk about national goals in Australia. Sure politicians go on TV and talk about what they want to do, but they almost never set concrete objectives that are specific, measurable and provide accountability.
Even when we do set goals, such as Closing The Gap, we don’t follow it up with a realistic strategy and plan. We seem to think goals, plans and policy are somehow mutually exclusive, like you can pick only one.
Who needs commitments and accountability when you have cost projections?
What we do instead is we release The Budget, a document so important it has earned its own capitalisation.
Look, the budget has its uses. There is a lot of detailed data on financial projections, national accounts and policy costings that provide some transparency on government activity.
However, as a medium for communicating policy and goals, the budget is beyond awful. It’s useless on a level that transcends merely vague and obtuse; it is completely unapproachable to any of the people it is meant to be for.
Despite its utter incomprehensibility, or perhaps because of it, it has become the primary platform Australian governments use to outline their future plans.
The problem is it doesn’t actually do that. There are no plans. There’s no problem statements, no goal setting, no measurable outcomes, no performance indicators.
All it does is list policies and predict how much they’ll cost. It doesn’t define what objectives those policies are trying to meet and it doesn’t set any measurable criteria against which to assess the success or failure of those policies. All we get is future projections based on politically chosen assumptions.
Governments have tried to address this with overviews and summaries, but it invariably lacks substance
Here’s the governments version of a policy goal in the recent budget:
Housing Accord: One million new homes over 5 years from 2024
The Government is bringing states and territories, the Australian Local Government Association, investors and representatives from the construction sector together under a new Housing Accord. The Accord sets an aspirational target of one million new, well-located homes over 5 years from mid-2024 as capacity constraints are expected to ease.
This looks like a goal, but it’s really not. It’s an action. What is the reason for the 1 million homes? What is the public objective that satisfies? Is this more or less than are usually built anyway? How many do we need? Who will buy them?
Worse, it’s not even a commitment, it’s an aspiration, and they won’t commit to start aspiring before 2024. Even this is apparently too firm, as they then immediately run even further, implying that the whole policy is targeted to the assumption that the problem will effectively self-resolve before the “aspiration” even comes into effect.
You call that a goal? This is a goal
What if we rephrased this in a way that explains what we are trying to achieve? We’d could start with just a problem statement, something high level like the following:
The problem: “Housing is unaffordable and many people who wish to purchase their own home are unable to, leading to declining ownership rates and people stuck in long term rentals”.
Then what are we going to do about this?
The objective: “Ensure home ownership rates are on a sustainable upwards trend within 5 years and long term rentals trending down, with a 20 year target of reaching 80% home ownership”
This defines the outcome we are looking for. More people owning their own home, less people renting. What should our strategy involve to meet this?
We are definitely going to need to increase supply and reduce the investor mix in new purchases, as well as reducing the income multiples in new lending.
The strategy:
Ensure sufficient well-located housing supply at affordable prices
Reduce investment incentives
Constrain credit availability
From this we can start to define terms. What is sufficient supply? It varies by location, but we can figure that out. What is an affordable price? This might be defined as an income multiple at the long run average, leaving us to think about pricing targets across multiple income bands.
“Increasing home ownership rates” gives us a high level success measure. If the rate of home ownership is increasing, we are in the right direction. Since ownership rates have been in a long downward trend, it is a reasonable short term goal just to reverse that trend. In the future we can revise the goal to hit and maintain what we determine to be a healthy balance.
Against these criteria we can start to compare policy options and decide which are the most cost effective. We can again measure these policies when they are enacted and ditch the ones that are underperforming
Without setting goals we are just “doing stuff”. The government commits to to building 10,000 homes over 5 years and tgey spend $350 million doing it. In the end what did it accomplish? Simply 10,000 homes were built? Did it achieve the public outcome we wanted? Was it enough homes, was it a cost effective solution? Who knows becuase we have absolutely no public outcomes to measure it against.
Why it matters: So we know what isn’t working
If we don’t measure whether policies are working or not against some criteria, then bad policies can just live on forever.
This happens all the time. Every time we cut taxes we have a set of fantasies about what it will achieve. Increasing growth, encouraging investment. It’s all make believe. These things don’t actually happen by cutting taxes, but hey it doesn’t matter because we aren’t going to check if it does anyway.
We have a rich history of housing policies that do nothing but raise prices, in direct opposition to their stated objective.
We give massive tax concessions in order to “encourage investment”. But in what? What is the public good in spending billions subsidising investment returns? Is it going anywhere good for Australians?
For some reason in our personal lives we scrutinise endlessly over whether we are “wasting money” on more expensive bread, is that extra avocado worth it, but in public life we spent billions upon billions on programs that have zero accountability for their success or failure. They just continue.
We need to change the way we think about public planning in Australia. We need to ask our government to set realistic and measurable goals that we can use to hold them to account. We need to review our policies against the metrics we set and ditch the ones that are underperforming.
We need to recognise that when policy moves from the political “idea” stage to the real world things can change, assumptions fail and we have to avoid getting stuck with bad ideas just because it is politically inconvenient.
Which is why they will not do it
Of course they will not.
More accountability? More transparency? Blowback when my policies fail? Unacceptable.
There is absolutely no incentive for either major party to commit to this. They would have to be forced, kicking and screaming, to accept that the public want more accountability.
Look how hard it was to get a federal corruption commission, and not a particularly strong one at that. It took continual, embarrassing proof of corruption for the public to become so sick of it that they could no longer escape doing something.
The question is when will we do the same about our policy making process? When will be sick enough of wasting billions here and there on failed policies, when will we be so angry about the lack of accountability that we force a change?
It’s not an easy problem. We’re so accustomed to expensive programs that fade into the noisy background of government spending, we don’t really feel a personal connection, despite having to pay for them.
I feel that a key issue here is the distance between people and government. We don’t feel personally involved, the collective is too large for us to be able to feel ownership in a meaningful way. Even if we were to set goals, we are reliant on the media to inform us and in a practical sense to tell us when things are important.
One option in the longer term would be to devolve power to local communities so that individuals can feel more empowered in a smaller group and have a greater ownership over what is done with the product of their labour.
Instead of needing comprehensive national housing policy we could then let local communities use local funding for local community housing, meeting local needs.
There are significant barriers to these solutions, to achieving accountability through goal setting and of devolving power to give greater individual ownership.
In the meantime, we need to get a bit more upset about governments wasting our money on insane programs in our name. Make them embarrassed, mock them, make them ashamed to go on TV and bloviate about how their dumpster fire policies are actually going great.
It’s time to stop letting governments get away with incompetence and politically driven bad policy.