Soft power, hard decisions

The Howard Government has failed to tackle producer regulations restricting competition in sectors like aviation, agriculture, pharmacy, broadcasting and telecommunications.

It has used the power of exhortation to strengthen its chances of re-election rather than to improve social outcomes. It has increased state intervention in the finances of individuals and families to smooth life-cycle fluctuations, but very selectively. Assistance with the costs of ageing has soared, but financial help while studying has declined.

The Government’s cavalier approach to spending has kept the government share of Australia’s economy relatively unchanged. Once the figures are adjusted to take into account the abolition of Financial Assistance Grants to the states in 2000, spending is at significantly higher levels than in the late 1980s under Bob Hawke.

In 1989-90, under similar economic circumstances, federal government spending was 22.4 per cent of GDP. In 2004-05, it was 23.7 per cent. If the Howard Government were spending at the same rate as the Hawke Government in 1989-90, federal government spending would now be $11.6 billion a year lower.

The implications of the changing role of government for spending are mixed. While the Government has neglected its responsibilities in education, it has wasted enormous amounts on grants and entitlements that are hard to justify. Even in the 1950s, handing out grants to caravan parks and hotels couldn’t be justified. It’s totally indefensible now.

Future governments will control less and produce less. They will exhort more and educate more. They will protect producers from risk less, and protect families from financial pressures more. They will still build things, but mostly indirectly.

Learning will be at the heart of the new state’s mission. Building the capabilities of its people is now central to a government’s task. Our commitment to learning, as individuals, families, companies and governments, will determine our future as a nation.

My grandfather died in his 50s, like many of his generation, scarred by his service in the World War I. Born under the minimal state in the 1890s, he lived to see the arrival of the building state in the late 1940s. He would barely recognise the learning state that is now emerging, but as a lowly educated factory worker who nonetheless revered learning, I suspect he’d approve.