‘Policy made on the run does not have a good track record’, says the brain behind Grattan

By David Donaldson

Thursday November 15, 2018

Governments aren’t doing the research needed to underpin rigorous policy development, worries Grattan Institute CEO John Daley. He spoke to The Mandarin about selling reform, what’s driving populism and the big policy priorities for the next few years.

John Daley is a patient man.

As head of what is probably Australia’s most highly respected think tank, he needs to be.

“It is one of the things I’ve learned in this role over 10 years, that you have to be very, very patient,” says the Grattan Institute CEO.

“Indeed, the reason that substantial, high quality policy reform does not happen is usually not because the opposition is too powerful. The reason policy reform fails is that someone gives up.”

Not that he can blame the political process for often being slow to take up good policy ideas.

“People don’t change their minds about public policy in a hurry, and they shouldn’t,” he tells The Mandarin.

“Let’s face it: policy made on the run does not have a good track record. So I’m happy to be patient. Occasionally I could be happier if it was a little less slow.”

“People don’t change their minds about public policy in a hurry, and they shouldn’t.”

Big policy change usually only happens when a political opportunity arises — and the reformers are prepared.

“In politics the wheel turns pretty quickly, so the chances of the window being open on that issue at some stage in the next 10 years are pretty high. But unless the work’s already been done, you have no chance of going through that window,” he explains.

That’s where the Grattan Institute comes in — do the work, and when people are looking for answers, they won’t have to start from scratch.

“The current political circumstances that lead you to think A rather than B, they tend to be transient, whereas the facts don’t go away,” Daley says.

A clear example of this is negative gearing. Once the sacred cow of Australian politics, Grattan and others have spent years setting out the case for reform.

“We plugged away and three years ago the ALP picked it up with a pretty full-blooded policy for change to negative gearing and capital gains tax and it remains their policy, and I daresay if they win government, chances are it will change,” says Daley.

Publish more

“People often say a Grattan paper might be 80 pages long, but it’s actually an easy read.”

Daley wishes the public service did more basic, hard yards policy research — and, importantly, published it.

“Having a large bottom draw is important. I think one of the issues is it does have to be a large bottom drawer. Of course, you need a one-page brief on the top, but you also need the 40 or 50 pages behind it that’s really thought it through carefully,” he argues.

“I think the reality is that a lot of the time that work has simply not been done.”

And even where someone has made the effort, “if it’s not made public, then those facts don’t exist”.

“They’re easily forgotten. The person who did the work moves on from the department, and the next time that issue comes up many people will be blissfully unaware that the work has been done.”

But one of Grattan’s own strengths is that it doesn’t just do the work, it knows how to sell it too, whether to a public servant or an informed member of the public.

“Figuring out the right answer is the first half of the problem. Figuring out how to communicate it in a way that is clear and cogent and persuasive and easy to read actually takes a lot of work, and we put a lot of time into it,” he says.

“People often say a Grattan paper might be 80 pages long, but it’s actually an easy read. To which the answer is yes, and that reflects a lot of work. It is not easy to write in a way that is easy to read.”

Section 44 and sharp scalpels

Daley originally wanted to be a barrister.

After a short stint as a judge’s associate and clerk, an interest in constitutional law took him to intergovernmental relations at the Victorian Department of Premier and Cabinet, before working on the future Victorian Civil and Administrative Tribunal at the Department of Justice.

After that he went to Oxford, completing a doctorate in legal philosophy “which was, until this job, not very useful for anything, but it was immense fun”.

“Somewhat prophetically”, his thesis “started with a page talking about section 44 of the constitution and why it could possibly make sense for a High Court to essentially kick someone out of parliament just because they hadn’t followed the letter of the rule in section 44”.

This took him into questions about why we follow laws and the justifications for government. While much of philosophy is about abstract philosophical arguments that “most people don’t care very much about”, Daley has found the skills he developed at Oxford useful in his life as a thinktanker.

“You won’t find a Grattan report that is about precisely those topics, but it’s very hard to do work in policy without at least having an understanding of where some of those debates play out,” he says.

“It gave me a grounding in those theoretical arguments so you at least know when you’ve hit one. It also gives you very sharp scalpels, and really good training in what is a logical argument and what is not.”

The magic wand

As a man who lives and breathes reform, it must be hard to choose which problems Daley would address if given a magic wand.

“As always, it depends on why you care”, he noted.

If you want something that would have a really big impact on the economy, increasing age of access to the age pension and superannuation would be it — or fixing the way tax rates, family benefits and childcare arrangements discourage mothers working.

“If I had to go for a third, I’d wind down stamp duties and ramp up land taxes, or property taxes,” he adds.

“If I had to change something because I was nervy about the Commonwealth budget — and there are plenty of reasons to be nervy about the Commonwealth budget — interestingly I’d probably also look at age of access to the age pension and super because it’s such a big deal.

“If there’s not more development in your suburb, then your children will not be able to buy a home.”

“Probably the other big ticket that’s floating around is in the means test for the age pension. … The age pension is now effectively the largest single line item in the budget. If you’re looking on the expense side that’s the very, very, very obvious place to start.”

And on institutional reform, it’s reducing the influence of money in politics, stymying the potential for corruption or “soft corrosion” to sway decisions.

“The one that makes the most sense is to cap campaign expenditure. Rather than trying to limit donations, you limit expenditure,” he thinks.

Daley names improvements to health and education as very big priorities in the long term, but both require many incremental tweaks that will add up to major change.

Planning is the other issue he suggests is in need of reform.

“Probably the biggest thing we can do in terms of economy and people’s lives is around planning.

“… The root cause of our housing affordability woes, the root cause of essentially whether cities in today’s global economy succeed or not, is about how many people have access to jobs in a reasonable commute,” he explains.

“Nobody likes lots of development in their own backyard. The issue is, if there’s not more development in your suburb, then your children will not be able to buy a home.”

What’s driving populism?

Governments around the world are being reshaped by the populist wave — but there’s no consensus on what’s causing it.

There’s plenty of punditry around the issue but little evidence, observes Daley.

Earlier this year, Grattan published a report looking at the rise of protest politics in Australia.

“What it demonstrated very convincingly is that economic explanations for this rise of populism are very unconvincing,” he argues.

“Of course one of the reasons that you’ve got that belief, particularly internationally, is that it so happens that the rise of populism internationally coincided with essentially the aftermath of the global financial crisis.

“When you look at the concerns of people who are more likely to vote for independent parties, they’re a lot more worried about low trust in government…”

“We have drummed into us correlation is not causation — but on the other hand, non-correlation is a pretty good indicator of non-causation. Indeed, the precise point at which Australia’s minor party vote jumped up quite significantly, in 2013, was pretty much the peak of the mining boom. … that does lead you to be very suspicious of economic explanations.”

Australia’s minor parties also don’t devote much time to economic policy. “It’s just not a core part of what they are.”

They are, on the other hand, usually interested in “draining the swamp, to use the words of one of our time’s great rhetoricians”.

“When you look at the concerns of people who are more likely to vote for independent parties, they’re a lot more worried about low trust in government, believing government is not being run in their interests, believing it’s being run for a few big interests.”

Another driver, he thinks, is an unease among communities less connected to the globalised world, as our national culture is increasingly dominated by cities.

If you take the contestants on this season’s MasterChef, for example, they “very much reflect Australia’s ethnic makeup today — at least half of them very obviously do not have Anglo-Saxon parents,” he says.

“I think that’s a terrific thing, but it’s very different from Australia’s regions.”

Culture may be a more important job for government than we realise, he thinks — but public servants and even politicians have been so thoroughly trained in the language of economics it’s hard to imagine how government can work out a response.

“No amount of economics is going to solve that problem, because it’s fundamentally not an economic issue,” he says.

“I think that’s one of the reasons around the world people are slightly struggling with this.

“The world has changed, the dominant cleavages are now not economic as much as they are cultural, and so governments are struggling to figure out how to glue everything back together again.”

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