Privilege in Australia, Part III

In the first two parts, the readers and I looked at the long list of sectors in Australia where there is a privileged minority who, with the help of the government, is in a position to extract more than their fair share of income out of the economy. Medical specialists, GPs, banana growers, pharmaceuticals, etc., have all managed to get political protection and favouritism to push their cause at the expense of the rest.

The question in this part is the role of the basic design of the political system in all this: how is privilege tackled in different political systems? Independent institutions with the power to oust privileges in their area would seem to me the way to go. Let me explain.

To get a handle on what the politics is, we have to get more precise on what the problem is and hence what is meant by privilege.

I envisage privilege quite similarly to how I would envisage political rent-seeking: a privilege is a preferential economic treatment by the powers-that-be. In the current era this would thus mainly include laws favourable to the economic activities of a particular group or preferential access to government contracts and recurrent favours.

At the lower end of the spectrum the privileged includes groups who manage time and again to convince the government to spend lots on money on things they consume or on things that needs them to produce it (such as unnecessary or overly expensive infrastructure), whilst at the higher end of the spectrum the privileged include groups whose status and income is fully legally protected (such as the medical specialists).

As detailed in part II, privilege that is maintained over time starts to have a face that includes a story of how it is not really a privilege at all, complete with bogus scientific stories on how useful it is for society that the privileged are there. Privilege thus gets entrenched in the story of this country.

Tackling privilege gets harder the more entrenched a group is: when they have managed to secure favourable laws and long-lasting ties with political connections to boot, exposing and ousting them needs a major effort by a concerned group willing to campaign and analyse the situation for years until, eventually, some politician runs with it and gives the privileged group the coup-the-grace via an overturning of legislation. John Howards’ assassination of the gun lobby in this country was a good example of something that had already been simmering for a long time and where dedicated groups were calling for years to have stricter gun controls. The role of those advocates get forgotten in history as we, the lazy onlookers, merely remember the crises at the end of the road of the ousting of an entrenched group, in the case of the gun lobby the shootings in Tasmania and the ensuing actions by John Howard.

Now, thinking of the basic politics of this, there are three key issues. The first is the arrival of new privileges, the second is the ability of civic society to recognise and campaign against privilege, and the third is the ability of the political system to then oust the privilege.

In terms of civic society recognising and campaigning against privilege, the advent of the internet, citizen journalists, and an increase in highly educated and well-paid professionals means that the ability of outsiders to spot and campaign against privilege is unprecedented. Indeed, that ability is now so great that the market is flooded with would-be privilege fighters. Yet, what this essentially means is that all privilege now needs to cloak itself in a ‘face’. What hence matters more is the ability of a political system to prevent or oust privilege.

In the arrival and ousting of privileges, the basic set-up of the political system matters: the more transparent and well debated each item of legislation and public expenditure is, the more difficult it is to slip in some favoured treatment. The more discretion there is on the side of the politicians, the greater their ability to do others favours and to receive payment in one way or another.

What systems are more accountable and open and widely debated? It will be the systems where openness is an entrenched habit and the involvement of large parts of the population in political decision making is routine. The usual poster-boys of this are Switserland and the Scandinavian countries (ably discussed by Alan at Troppo in the comment thread to the second part). Let us discuss their systems and see how they differ from the ones in the US, after which we can see what is relevant for Australia.

The Swiss system of continuous referenda on everything imaginable clearly will do a good job in making it very hard to get privileges on the books or to keep them there once the population gets wind of them. Similarly, the Scandinavian habits of extreme openness in their public administration makes it very hard for a group to gain privilege and means those privileges get taken down very quickly once the population has realised they are there.

Yet, Switserland and the Scandinavian countries have small populations and highly egalitarian cultures in which openness and a natural tendency to want to control and debate what those in power do is entrenched. They are not representative of either proportional representation democracy nor of the vast majority of the representative democratic systems in the world. So it is not realistic to think of them as models Australia can adopt fully.

How are Switserland and the Scandinavians different from, say, the US where states also have lots of referenda and there is more openness than Australia? For one, money matters a lot less in those countries as there would be deep distrust and aversion to anything seen to need a glib media campaign. Politicians simply have little use for massive campaign funds.

The kind of vitriolic negative advertising that money buys in the US would completely backfire in Scandinavia and Switserland precisely because it goes against their egalitarian and communal ethos: it would be seen as deliberately creating divisions for cheap economic gain. So instead, in those countries, advocacy has to work through bogus research reports and slowly convincing the population of a whole story. Similarly, politicians get elected on the basis of reputations for honesty and conviction and open support of big money would count against them.

So if you think about it, the Swiss and Scandinavian examples tell you that openness and involvement means privileges can only be obtained and maintained by convincing a whole population of their use. Getting rid of them is then like getting rid of an entrenched privilege in Australia: a long slog.

By contrast, in the US system privilege can get in via the back-door: via the need of politicians for campaign funds. How do they then get in when there is so much openness and scrutiny? Via compromise laws.

Let me explain: the legislative system in the US makes it so easy to oppose new legislation that only broad coalitions can get mayor new initiatives through. So anything new that comes up and needs new legislation, such as a new healthcare system or legislation on new phenomena like the internet or biological threats, inevitably will get held ransom by the legislative bodies who find they can block anything they want to.

And what do they demand? They demand not just perks for their electorate (which is not necessarily a bad thing) but also, more importantly, perks for those who fund their campaigns. And that is where the privileges can get into the system and where they manage to maintain themselves. One of the few ways to then get rid of existing privileges is to simultaneously create new ones where one can count on the backing of those pushing new privileges to support the ousting of the old ones.

How does the US system cope with this tendency to adopt and then maintain privilege? It basically seems to cope by creating extraordinarily powerful independent institutions specifically charged with ferreting out particular privileges. This includes the anti-trust bodies, the Federal Reserve, the Health and Safety Authorities, etc. Essentially American politics now and then gives rise to a large outcry against a perceived problem with entrenched privilege and this translates into new institutions that then independently fights those privileges.

Now, if we think of this from an Australian perspective, I would say we are in-between the Scandinavians and the US. Whilst we have regional representatives and two legislative chambers that can block legislation, like the US, the party discipline is much stronger as a result of a less diverse electorate and more political competition.

You see, our unique system of full preference voting makes it very simple for opinions, carried by a large part of the population but neglected by the major parties, to become visible in a new party, which in turn means the major parties need to be more flexible in their opinions. Enforcing the party line needs strong discipline. This goes for environmental issues, family issues, agricultural issues, etc. They all become visible and incorporated very quickly in our system.

It is thus easier in our system to get new legislation as well as to legally get rid of bad legislation. The lack of an extremely stipulated constitution furthermore means there are less constraints on what our legislative assemblies can do. In that sense, we are more like Scandinavia.

Yet, on the other hand, the federalist system does mean that there are areas like health and education and water where central legislation is much harder and we are much closer to a US-style system in terms of difficulties.

Where our system has US-like similarities is in the quite strong degree of apathy from the general population, which gives rise to the possibility for well-funded groups to manipulate the population and to defend privilege once obtained.

In turn, this apathy partially derives from the strong culture of secrecy that has taken over the workings of ministers in recent decades: for one reason or another, which historians are best placed to explain, real decision making has become very secretive and politicians have been forced to become two-faced, telling the population whatever story it demands to hear whilst on the other hand also having to make real decisions based on entirely different considerations. This creates apathy.

The apathy also aggravates the pressures to be secretive: in the 24-hour news cycle culture we now have, any real openness is quickly punished by the political opponents and journalists looking for a quick sensation. Anyone who does not tell the population what it wants to hear on any sensitive issue is simply very quickly put to the sword.

Within this bad equilibrium, there is a ‘grand way forward’ and there is a ‘muddling through’ way forward. The grand way forward is to become far more open and self-monitoring in our politics, ie to become more Scandinavian.

The grand way forward includes full openness of all the important meetings, reports, and deliberations going into policy. It includes federal integrity officers who ensure the openness of parliamentarians and, quite possibly, an extended use of referenda to involve the population in the political process. The Gov 2.0 initiative championed by Nicholas Gruen is very much in that mould. The hope is that this will eventually translate into better policies and hence a quicker public discovery and ousting of privilege.

The ‘muddling through’ way forward would be to expect secrecy to win out against the move towards greater openness, and hence Australian politics to remain riddled with discretion and hidden privilege seeking and granting.

Yet, Australian democracy does work in the longer run, so the muddling through option has its own logic as to how privilege gets dealt with, and this is to follow the American mould of increasingly outsourcing the job of tackling privilege to independent institutions. This includes strong budget offices that independently calculate the effects of policy changes and the current costs of privileges, again championed by Nicholas Gruen. It could include independent institutions to deal with medical education and pharmaceuticals (something I am keen on). It could include new budgetary institutions to vet and give initial approval to initiatives like the NBN or defence contracts. There is even talk of independent institutions via which to announce and thus pre-commit on policy evaluation (Deborah Cobb-Clark seems to be calling for this one).

At the moment, there are many initiatives in Australia to tug us into either the openness direction or the ‘trusted independent institutions’ direction. Some people seem to favour both and perhaps we will get a mix of both, but I personally think that secrecy is too strong at the moment in Australia to successfully tackle. Secrecy remains the managerial reflex of those at the top as it protects their interests, including their economic interests for politicians who grant privileges get rewarded by the infamous revolving door (just look at where former prime ministers end up!), but it is also the culture that fits the increasing economic inequality in this country.

So my more realistic hope is in strong independent institutions as the political vehicle for tackling privilege. What further institutions would the readers then advocate we should have?

Author: paulfrijters

Professor of Wellbeing and Economics at the London School of Economics, Centre for Economic Performance

2 thoughts on “Privilege in Australia, Part III”

  1. great post, Paul, articulate and interesting. You raise many good points and I reluctantly agree with you about the direction Australia will head in the short run. That is, toward more secrecy and perhaps a higher level of apathy. For the moment, there are plenty of extractive institutions in Australia. You are right to point out the problems with the medical profession. Because doctors enjoy a great deal of public trust, or ‘face’ as you might call it, they are free to extract more from society. This makes it an especially difficult problem for public debate. Particularly when public scrutiny on this profession fails to even be given consideration by the public. We could certainly use a dose of transparency in this area and there are plenty of examples to look to. One is the Hospital Compare database in the US ( This is a very useful tool that shows hospital mortality rates *by name*. The educated citizen can easily check up on the quality of hospitals. I cannot imagine such a database here, for the obvious reasons you discuss. The University sector is another extractive group here that enjoys a great deal of public trust despite being grossly inefficient and corrupt.

    But what civic organisations do we have with the aim of fostering transparency or fighting extractive institutions? Again let’s compare to the US, take the website ‘’ or or the Chronicle of higher education — all of these publications provide hard data and evidence about University quality. If you want to know how much the VC et al. are making, you simply look at the Chronicle’s database. And what about organisations like the ACLU? I cannot imagine such organisations ever existing here.

    Of course, you might say, we have the Myschool and the MyUniversity to provide us with summary statistics (note that someone used a scraper to obtain the data in a useful format and the website was quickly changed to prohibit this). True, but herein lies the problem. These are government initiatives that rely on the goodwill of statesmen. These are not products of civic society or any visible form of political activism. While I agree with your comparisons w/ Scandinavia (it hasn’t always been that way there though, Sweden was once very corrupt and bureaucratic — see for example the novel The Red Room) and Switzerland I don’t think it’s fair to make comparisons between Australia and the United States and call civil society there equally apathetic.

    Indeed, I think the first thing one notices about Australia, no matter where you come from, is the lack of passion for civic engagement, and the aversion to feeling passionate about anything, except maybe the footy. There is an immediate cultural stigma attached to individuals who care to express an opinion contrary to the status quo in this country. Consequently, politics here is a little boys game played inside a sandbox.

    There is a reason we are known across the world for the phrase “she’ll be right, mate”. Politics is seen as inevitably doomed and bad outcomes are a foregone conclusion. There is no commitment to civic virtue here, unless you consider shirking a virtue. We loathe exerting ourselves a scintilla more than the bare minimum required by the nine to five. We are soft, spoiled and complacent, probably because we have been so fortunate with our export markets over the last decade. I agree that the problems with privilege in Australia are profound and unjust but they are the result of cultural habits and we have nobody to blame but ourselves. Creating additional institutions to ‘root out’ unjust privilege and secrecy will not work. It will require an invigorated civic society. We simply cannot expect this from the generation currently in power. We can only hope that younger generations of Australian leaders will be inspired to create change.


    1. Thanks for the thumbs up.

      Whilst I agree that civic engagement here is notably less aggressive and accepted than in the US or much of Europe, I think it is a mistake to see Australians as lazy and doomed to failure. Australia is really doing too well to be able to say that. It took me a while to work out why things go so well in Australia despite the lack of overt interest in debate and despite the cow-towing to anyone in power, which is, I agree, unusual in the Western world.

      The flip-side of Australian complacency is a great willingness to judge by results and to applaud the taking down of tall poppies: Australians love to see a change in power and are very supportive of insiders who make a bid to challenge power (though completely dismissive of anything they see as a failure or outside attempts at changing things). Hence a lot of the disciplining in our country comes from the ruthless competition for power at the top, which involves a quite willing swing to support any new leader emerging from the internal power struggle. It gives would-be leaders the incentive to undermine the current leadership any way they can, preferably via scandal and accusations of incompetence. The persons keeping Julia Gillard best in line are her own colleagues in her own party who would stick the knife in the moment she conspicuously steps out of line. You see this in all these large organisations.

      Take universities for instance, where i agree completely with you that the waste and private privileges had by the top are staggering, and the apathy of the academics and the general public towards this grandstanding is mind-boggling from a US or Dutch perspective.
      Inside those universities, the top echelons are snakes-pits full of ambitious people trying to undermine those at the top and trying to get at the resources that come with the top posts. The VC all have to fear their DVCs who in turn have to fear the Deans who have to fear the heads of schools, etc. How does this help? It means the university hierarchy really has to worry about student numbers, student satisfactions, grants, ERA ratings, etc. They have to ‘perform well’ in anything easily measurable. And that means that whilst the top indeed extracts more than they should from the system, it is not the case that universities ‘fail’. They are clean, run their lectures on time, are technically advanced, employ some top academics, attract huge numbers of foreign students, run slick advertising, etc. They are thus not corrupt and incompetent in the way you will find universities in much of the developed world are corrupt and incompetent. They overcharge, yes, but they do deliver what is asked of them.
      As a top student, you are probably disappointed that society does not ask what you want of your university, but the way it works in our country is that if you want to change it, you first have to worm your way to the top inside the system, get to the top, find or create a constituency for change, and only then make the changes you wish to see. Before then, complaints will be dismissed as those of a whining loser, ignored until an entrepreneurial politician finds you in his quest for a constituency.


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