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Government Policy and the Economic Environment at the turn of the Year, December 2016: Health, Education and Corporations

This essay addresses a number of issues which have been also touched on or treated in some detail – in the case of education and economics. These thoughts have emerged in the process of writing about the communication of science and the campaign for tax deductions for the corporate sector.

[This essay is under development]

Health policy

Whilst the government health policies in Australia are not as bad as in the US, the most costly and least ineffective in the world, they are nevertheless not very effective. To the extent that they are effective, it is due in part to the near universal coverage of Medicare which allows inexpensive access to local doctors. But universal coverage would mean little role for the private sector whose significant contribution is an article of faith for governments since the mid-1970s especially.

Private health insurance companies have been offering plans with varying complicated options as to what is covered, for how much and so on. The assertion is that this saves the government money and therefore avoids tax increases. So the goal is to limit what are claimed to be excessive use of consultations. The assumptions are wrong. It is costly, it is ineffective and it is as confusing for the public as mobile telephony plans.

Restricting access by requiring patients to pay some of the cost comes up against the common objection to paying for what was once free. Like requiring an entry fee for previously free to enter museums. When those less well-off limit their visits to the doctor their illnesses go untreated, become more serious and they end up as public patients somewhere in the system at a cost to the taxpayer.

A principal determinant of health generally is the socio-economic situation of the individual and the availability of general medical services including promotion of healthy living, ensuring safe environments, especially in the workplace, and so on. This has been demonstrated extensively by studies over decades, indeed centuries.

Sir Michael Marmot, currently President of the World Medical Association, and Professor of Epidemiology and Public Health at University College London, has been studying the social determinants of health for decades. He was the ABC’s Boyer lecturer for 2016: he is an outstanding communicator and his book “The Health Gap” is beautifully written with example after example for impeccably conducted studies all over the world. Many of his recommendations have been taken up in many cities and countries. Have his views been taken notice of by Australian health ministers and colleagues? No! Is this a problem of communication?

Implementing policies which Marmot recommends would require overturning the proposition that people are, or ought to be, responsible for their own health and governments should encourage personal responsibility. Instead it is asserted that education is what is needed. Thus Australia will not pursue a tax on sugary drinks but will not object to advertising about how high levels of sugar intake contribute to obesity and eventually to other illnesses such as diabetes. Treatment of diabetes usually ends up as a cost to the taxpayer. Manufacturers and retailers of the beverage oppose change using shonky statistics and ridiculous assertions such as increasing the price won’t make any difference. (If so why do they oppose it? A pack of cigarettes now costs $40: has that not had an impact?)

International studies have identified important pathways to treatment of communicable and non-communicable diseases. Admittedly, in respect of the latter, the campaign against tobacco smoking has been successful, albeit against great odds. Australia’s health agenda pays little attention to the internationally agreed programs on diseases. And the high costs of medicines attributable mainly to the excessive charges of the bloated pharmaceutical industry and the excessive promotional outlays and executive salaries continue. So do restrictions on funding of public hospitals. Not in Europe where hospital treatment is cheap or even free.

There are important lessons from the UK, as well as the US. Problems with the latter are well known.

The National Health Service in the UK is the most effective health policy of any country in terms of value for money. Under conservative governments it has been under continual attack. Gradual withdrawal of funding has left many hospitals unable to cope with demand.

School Education

Education has been extensively studied in many countries: indeed the research in the US is amongst the most detailed and high quality in the world. And it is ignored there to an extent almost without peer in the rest of the world, despite the oft quoted policies in Finland which are the direct opposite of the US approach but are very successful. Effective learning depends on cognitive development, greatest in the early years. That is influenced by the home environment and the relationships with the primary carer, generally the mother. Breastfeeding is an important factor (which also affects later health) and develops essential relationships.

Families who are disadvantaged have most difficulty in ensuring a positive home environment. Since reading to a child from an early age encourages literacy and vocabulary development a child from a disadvantaged home emerges into school with a very very substantially diminished vocabulary. In an advantaged home the child is given every encouragement to learn music, sports, may travel considerable distance outside the home and mix with a variety of playmates. Relationships and security are important but so are a variety of experiences.

Later, at school, support at home still makes a difference to gains in learning. So does the way the school is led, the extent to which the teachers are positively encouraged by the principal, the relationships with the parent and the community and the opportunities for informal visits to museums and the like. And flexibility and variety in the curriculum. Standardised tests don’t help, they cause stress and narrow the teaching.

The variety of backgrounds from which the child’s classmates come and the encouragement of effort and high standards contribute significantly. And that shows up at post-secondary level. Maintaining a high level of creativity is important and that requires support of the young person’s own development pathway, especially at the very risky period of adolescence where after school activities can be near essential. All of this is supported by outstanding research in neurophysiology and behaviour.

In Australia, as in the US and increasingly the UK, independent schools are supported as providing  a higher standard of instruction leading to higher levels of achievement. They don’t! The evidence shows they don’t. What makes the major difference is investment in early childhood, especially so for disadvantaged families. That applies from earliest times through the post-secondary.

The government completely ignores the findings, provides independent schools with funds irrespective of whether the school itself raises funding. The argument is that it also saves government funds. It doesn’t! Issues relating to early childhood such as parental leave are treated as a work life issue, important to the extent that it gets more women into the workforce. The declining levels of participation are ignored.

It surely does not take superior intelligence to comprehend that it is easier to achieve gains at the lower end of the performance continuum than at the top. Since the average achievement is affected by those at the bottom it would seem that is where one would put the effort. But in Australia and these other countries the resources are devoted to the top. The result is continuing decline in average achievement and increasing inequality, something not happening in other countries whose students are on average advancing.

What Evidence does inform Public Policy

Similar examples of the ignoring of the evidence from high quality research are to be found in public transport, energy supply (especially in respect of renewable energy generation), household waste disposal, public transport, even mining. And of course workplace relations, leadership and innovation which importantly is overrun by centralised control. At the same time as productivity is promoted as vital, workplace practices discourage it and leadership vital to it remains weak. Business advocates have little to say about those features or the fact that most of the gains in productivity have been appropriated by highly place executives.

And confronting Indigenous issues as the consequences of ignoring Royal Commissions and the wishes of people themselves roll on through youth suicides, incarceration. Yet four times as many Indigenous young people are graduating from post-secondary education as are put in gaol and successes elsewhere are wonderful. But they are ignored. A result of poor communication? What about Bill Stanner and hosts of books, articles, films, tv programs and the will of the populace, the 97% who voted in the 1967 referendum.

Economics and the Business Agenda

Every day we are bombarded with statistics purporting to show how the economy is performing, especially the statistics of the equity markets. We are told that economic growth is the key to greater prosperity. Most of the statistics are meaningless and most of the assertions are nonsense. The major elements of macroeconomics are of doubtful validity as Paul Romer, recently appointed Chief Economist of the World Bank, has pointed out.

Finance Ministers plough on regardless, favouring unfettered support of business philosophy, including minimal regulation which, we are told, harms confidence and investment. Governments provide subsidies of various kinds along the way whilst demanding the arts be more self-supporting, that community groups not demonstrate in such a way as to disrupt business practices that are within the law, that business and the taxpayers not be penalised with more taxes.

By way of example the levels of resource rent tax which Australian governments charge companies operating large gas-to-liquefied natural gas (LNG) projects is substantially less than many other countries charge. Australia is among the top five LNG exporters in the world but charges less than any of them; by 2021, when Australia becomes the leading exporter, Qatar’s royalties revenue at $27 billion will be 35 times Australia’s. In the case of new gas projects on the northwest shelf companies may pay no petroleum resources rent tax for 20 to 30 years.

We can recall the vigorous campaign by mining companies against the proposal to institute a new tax on resource extraction, a campaign driven and funded by some of the biggest and wealthiest individuals and companies in the country, some of whom actually pay little or no tax!

Business seeks support of government in creating a stable environment and one conducive to economic growth. Sometimes that involves subsidies or arrangements which amount to subsidies. Internationally it can extend to trade arrangements allowing companies to sue governments should they take action which they believe will be in the interests of its own citizens but hinder the activities of business: an example is restrictions of various kinds on sale of tobacco products such as the placing of warnings on packaging.

Business also seeks tax reductions, asserting that the result will be economic stimulation and growth in employment. Similarly it seeks removal of penalty rates and other provisions which increase wages. Unsurprisingly, at wage hearings before the Fair Work Commission it opposes any but the most minimal of increases in the minimum wage. Many franchises such as 711 stores employ people at less than the minimum wage.

At the same time significant employment is “offshored”, transferred to countries with lower wages and often much poorer conditions. Young people and people on temporary visas of various kinds including 457 visas which are intended to provide for employment of skilled workers from overseas where Australian citizens are not available. But this can include minimum skills such as office cleaning and fruit picking. The persons employed are sponsored but may have to surrender their passports, be required to repay cost of travel to Australia and accommodation. It is by no means clear that the requirements could not be met by training Australian citizens rather than bringing in people from overseas. There is of course a cost to the country of origin in the case of persons with substantial skill levels

Financial institutions from banks to money lenders have been exposed, in many cases, as employing less than honest and informed schemes in lending to clients or providing life or accident insurance. Banks have specially been exposed in these practices. The behaviour is encouraged by the payment of bonuses on the basis of the gross value of the product without regard to the likelihood of the bank being repaid the money lent or a claim being made on the insurance. In that respect the practices resemble those which eventually caused the Global Financial Crisis.

Over the last 40 or so years, outsourcing of tasks by governments and large corporations has been favoured in the expectation that greater expertise would be available at a cost less than would be incurred were the government or company to employ persons with the same skills. Similarly, a large number of consultants have developed links with government and with companies in the expectation that superior knowledge will accrue to the client organisation. Almost always the result has been advice which meets the solution desired by the company or department, whether or not it is the best option.

In all these cases government has been actively encouraging and legislating where necessary to allow the practices. That can involve restricting the activities of unions where they might interfere with the wishes of business.

Crime and its control

An interesting example is the way some of the media function as an unapologetic mouthpiece for the far right, ever ready to terrify the public with claims about criminals, unions, environmentalists and others, including bad teachers, self-interested academics and corrupt scientists. The Victorian Government of Daniel Andrews, responding to a vigorous campaign by local media, announced early December $2 billion in extra funding and a substantial increase in the size of the police force and increased penalties for certain acts. Victoria is in the “grip of a crime wave”. He said every citizen had the right to feel safe and unfortunately some citizens did not feel safe.

The fact that serious crime has decrease by 45% over the last five years is of course beside the point. The Herald Sun reported, “THREE shocking cases of serial offending and soft justice can be revealed, as Victoria’s youth crime crisis spirals out of control”. The influential police union of course supports these decisions and civil liberties people do not. Similar situations have been seen in New South Wales, again despite statistical evidence from Don Weatherburn, Director of the NSW Bureau of Crime Statistics and Research in Sydney since 1988.

Similar hyperbole is behind legislation like “three strikes and you’re out”, mandatory sentences and paperless arrests which have crowded prisons with youth, indigenous people and the disadvantaged.

Politicians, especially those with wider responsibilities beyond their own constituency, have an additional responsibility: the decisions they make affect very large numbers of people, an entire community, state or province, even their entire country. Responsible governance requires ensuring they do the best they can to understand what is being said, even search out further information, determine its relative importance and test whether the views advocated are supported by evidence. Will the proposed actions have the consequences asserted? Is it in the best interests of those whom they are there to serve? Individual opinions are inadequate! The imperative to respond to manufactured crises that appeal to the general public gets in the way of sensible policy. Political upheavals like BREXIT, Donald Trump and the defeat of legislation in Italy to reform a dysfunctional parliamentary system are another manifestation.