A Headless State Could be the Answer

I find both sides of the Republic debate equally unappealing, with their common resort to shabby arguments and specious warnings.  Once again, the politically active elites are patronising the electorate and showing that they do not trust Australians to make intelligent and informed decisions.

On the one hand, advocates of the "No" case are making the outlandish claim that a republic would be the first step on the road to a Stalinist tyranny or worse.  While I am not drawn to any of the favoured candidates for first President, none of them strike me as being likely to metamorphose into a Saddam Hussein or Idi Amin once they take office.

The "No" case is also indulging in the humbug of offering up politicians who warn that politicians cannot be trusted to choose a president.  Apart from the question of whether this really means that they cannot be trusted with anything, many of the same individuals want us to stick with the present system in which politicians have effectively been choosing the governor-general for nearly seventy years.

True, a few of the politician-picked governors-general turned out to be duds.  But there have also been some genuine successes, and no system of selection is ever going to be perfect.  Popular elections can throw up a Joe Bjelke-Petersen or a Gough Whitlam, and hereditary succession can produce a Prince Charles.

The people promoting the "Yes" case are no better, with their shameless attempts to invoke the cultural cringe by pretending that the rest of the world will laugh at us if we vote to remain a constitutional monarchy.  And Kim Beazley's vacuous declaration that "it is time to tell kids across the country they are good enough to become president of Australia" could not have come at a worst time, given that NSW members of his party have just told the kids' parents that they are not even good enough to be given an honest chance of getting tickets for the Olympic Games.

So I would like to suggest an alternative course of action.  Admittedly, some may dismiss it as fanciful.  But it would certainly blow an equally large raspberry at both the "yes" and the "no" sides of the Republic Referendum, as well as offering many other wonderful benefits.

My humble proposal is for a republic without a president, or indeed, without any head of state at all.  The whole point of a republic is supposed to be about symbolism, and the kind of image that we should be presenting to the world.  If we really think it is necessary to make a grand statement about the egalitarianism of our nation, then no-one should be occupying a symbolic position above the sovereign and equal Australian people.

Such a move could restore us to the status we held around the end of the last century, when people in Europe and America saw us as a great beacon of democratic hope.  The secret ballot was an Australian innovation, and we were one of the first countries in the world to give women the right to vote.  Australia was held up as an exciting social laboratory, where many radical ideas about equality, justice, and welfare were starting to bear fruit.

A headless republic would show the world that once again we are prepared to indulge in worthy social experiments of our own provenance, rather than slavishly following dubious nostrums imported from the United States and Canada.  It could even help our own chattering classes to abandon their deep sense of shame at being Australian.

A republic without a president would also provide a boost for reconciliation, for it could readily be presented as an adaptation of traditional Aboriginal beliefs that tribes or clans should not be led or represented by a single individual.  It would involve a more substantial acceptance of the idea that indigenous cultures could enrich the life of our country than fatuous New Age sounding claims about "their deep kinship with their lands", or exhortations for us to "taste the spirituality of our first peoples".

So how would the duties of a president or head of state be divided up under this alternative proposal?

Occasional political crises involving the appointment or dismissal of governments could be dealt with by the judges of the High Court.  This would do little more than regularise the situation which now exists, where many of the judges seem to believe that they should be able to make creative political determinations which usurp the law-making powers of popularly elected governments.

Ceremonial duties, such as opening Parliament, receiving visiting dignitaries, or hosting garden parties at Yarralumla would be handled differently.  They could be allocated in a way that truly expresses the Australian ethos, through a national lottery in which every citizen would have an equal chance of wearing the ceremonial plumes for a day.

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Fine-tuning GM labels

On Friday, Health Ministers will meet to determine the labelling requirements for Genetically Modified (GM) Food.  Their decisions will have a profound effect on Australian food development and agriculture generally.  There is a tapestry of changes that can be introduced into existing stock to allow them to use less water, more readily take up fertilizer, secrete their own "natural" pesticides and so on.

We are told that GM foods may:

• create hazards to human health;
• harm the environment;
• cross breed with other plant stock or cause organic foods to reduce their relative tolerance to pests.

Nobody contends the need to be address these issues with GM, as with traditional introductions of new genes into existing plant varieties.  But, the scientific community, overwhelmingly supports the new technology, seeing its outcome as identical to the traditional practices.

The best known genetically improved variety, Monsanto's Roundup Ready Soyabean, improves yields by 5%, and lowers production costs by 10-20%.  It also uses 22% less herbicide, with positive environmental spin-offs.  In future, GM products will also appear that improve taste or create more healthy food.

At their previous meeting in August, Health Ministers decided to require "reasonable steps be taken" to establish the origin of food ingredients if manufacturers were to make a "may contain" claim.  Where, as is normal, the GM product is identical to existing product, the issue is the tolerance levels which trigger manufacturers' need to patrol the chain of supply.  Organics in Europe are allowed to contain 5% of non-organic material.

The impact of mandatory GM labelling is on product segregation.  The cost increases range between 6 to 50% and higher.  Some of this brings offsetting gains:  voluntary labelling in response to consumer demand (as opposed to consumerists' regulatory demands) delivers benefits in excess of the costs.  If manufacturers are allowed to label as "GM free" food that may occasionally contain some 1-2% GM product, the costs are likely to be at the lower end of the scale.  If "GM free" requires a total segregation of GM from other ingredients, the costs will be at the top end.

Even at a 6% cost impost, labelling of Australian crop production, worth about $15 billion per annum, adds up to almost $1 billion.  That sum is based on the realistic view that genetic modifications will be developed for all crops.  In addition, there has been little debate to date of secondary GM produce -- animal produce from GM inputs.  This extends beyond grain fed beef and chicken.  Virtually all existing grasses have been introduced by farmers and GM techniques will be found to raise their protein levels, allow them to grow faster and so on.  Hence the next round of GM demonization will attach itself to the meat and dairy industries.  And this is even before we have GM for livestock itself.

Health Ministers are unaccustomed to taking decisions that impact upon the whole of primary industry and much of the manufacturing sector.  They will need to brief themselves comprehensively about the costs their decisions may unleash onto the community.

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Massacre of Truth at Forrest River

Horrific murders create two sets of surviving victims.  The most obvious are the grieving families of those who have been killed.  But the families of the perpetrators also suffer, carrying the burden of their loved one's villainy for as long as people remember the crime.

Their plight tends to attract expressions of sympathy, but little genuine concern, particularly if they attempt to deny their relative's guilt.  It usually requires courage to take up their cause.

Five years ago, Perth journalist Rod Moran wrote a lengthy article for The West Australian arguing that the 1926 Forrest River massacre of Aborigines in the Kimberley was simply a myth, despite its widespread portrayal as one Australia's worst crimes this century.

The family of the late Constable James St Jack, who was supposedly a major participant in the murders, felt vindicated.  They have long believed that St Jack was maliciously accused of an outrage that never actually occurred.

Understandably, Kimberley Aborigines, whose forebears died in the disputed massacre, were deeply offended, saying that Moran was "stealing their history".  Their sentiments were shared by many other people, both black and white.

Unfazed by this anger, Moran continued his researches, and he has just published a book, Massacre Myth.  Though not an engrossing read, this sets out his arguments in painstaking and seemingly compelling detail.  He dissects the testimony presented to the Royal Commission set up in 1927 to investigate the murders, focusing on the inconsistencies and other weaknesses in the evidence.

Moran maintains that the massacre stories involved a fantastic distortion of much less egregious events -- the slight wounding of a man during a raid on an Aboriginal camp, and Constable St Jack's shooting of the camp occupants' dogs.

More sensationally, Moran maintains that the rumours that grew out of these incidents were promoted and embellished by Reverend Ernest Gribble, the head of the Forrest River Mission, as part of a devious plan to protect himself by discrediting Constable St Jack.  Moran suggests that Gribble learnt the constable had obtained information that the reverend and his son were supposedly engaged in serious hanky-panky with Aboriginal women.

The purported evidence comes from St Jack and his family, and includes reference to a long-destroyed personal diary, combined with some fanciful interpretations of scraps of other material.  The slender grounds on which this allegation is based makes it hard to accept that Moran is the rigorous and sceptical researcher he would have us believe.

The most comprehensive account of the killings has been presented by the Western Australian historian Dr Neville Green, in his 1995 book The Forrest River Massacres.  Having worked with Green on another project, I have some confidence in his judgement and his respect for the facts.

The Forrest River Massacres makes no attempt to disguise the problems involved in uncovering the truth about the murders.  Nor does Green shy away from revealing the extent of Reverend Gribble's many personal faults, which eventually led to his removal from the mission.

But unlike Moran, Green describes the massacre in the full context of four decades of bitter race relations in the Kimberley.  Very few people felt impelled to seek justice for Aborigines who had suffered violence, particularly if the interests of respected local identities were threatened.

Green has no doubts that Aborigines were murdered by a police expedition led by Constable St Jack and Constable Dennis Regan.  The party of fourteen, comprising Aboriginal assistants as well as whites, were trying to capture an Aborigine named Lumbia for the killing of a station owner who had raped his wife.

Although Lumbia himself was eventually found and brought in for trial, many innocent Aboriginal men, women and children were killed along the way, and their bodies were incinerated in an attempt to hide the evidence.

No-one knows the precise number.  The Royal Commission concluded that at least eleven Aborigines were killed at three separate locations.  Police Inspector William Douglas, who had been sent to investigate Gribble's allegations before the Royal Commission was established, reported that sixteen Aborigines were killed.

Reverend Gribble thought that the number was at least thirty.  And in 1968 Charles Overheu, the brother of one of the participants in the massacre, told Neville Green that as many as three hundred Aborigines lost their lives, although Green believes this figure is far too high.

Commissioner Wood recommended that charges of murder be laid against Constable St Jack and Constable Regan.  In May 1927, the two were arrested for the murder of just a single Aborigine, a man named Boondung.  Fearing that public sympathy for the two constables in the Kimberley would preclude a fair trial, the committal hearing was held in Perth.

But, as the Royal Commissioner himself had been forced to admit, all the evidence for the massacre was circumstantial.  It had not been possible to identify a single body of those who had been killed;  and neither was it possible to state that any particular individual had been responsible for the deaths.

Worse, at the committal hearing even Gribble could not state for certain that Boondung was dead.  And the Government bacteriologist, who had examined the burnt and fractured skeletal remains collected at the massacre sites, testified that he did not think they were from humans.  Green suggests that the material had been tampered with, because others who had examined it beforehand were convinced that it contained human remains.

The presiding magistrate dismissed the case against the two constables, who were quickly reinstated into the police force.  Gribble, whose determination had been almost solely responsible for bringing the case to public attention, was largely discredited.

Gribble was clearly an extremely self-righteous, autocratic and intolerant man, which made it so easy for many to dismiss everything he said.  But sometimes it requires a real ratbag to point us down the path towards truth.  It would be most unfortunate if Rod Moran's writings lead people to believe that the Forrest River massacre is just another fabrication perpetuated by the Aboriginal industry.

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Risk Assessment and Decision Making for Genetically Modified Foods

Biotechnology Backgrounders

SUMMARY

The introduction of genetically modified foods has been accompanied by a level of concern in Europe which was not seen in the United States.  This is seen as reflecting both a different cultural appraisal of risk, sensitised by the "mad cow" experience in the United Kingdom, and a desire by European farmers to protect the advantages they enjoy under the Common Agriculture Policy.  The level of concern over GM foods is much greater than for GM medicines, where the benefits of the technology are more readily defended.

This Backgrounder, while arguing that risk management must build on the best possible science, draws attention to the social, economic and political aspects of the risk management process.  It draws attention to the use of exaggerated claims and the misuse of the precautionary principle by the opponents of GM foods, and argues that many of the concerns about the technology reflect such factors as a sense of unease about the power of the corporations which employ it.

It argues that, like any technology, GM food carries with it both advantages and risks, and that the costs of forgoing GM plants includes environmental costs such as the greater use of pesticides.  It argues for careful assessment of the risks, which (if it is to address the public concerns) must be conducted in a transparent and credible manner which builds public trust.  The acceptability of risks, it concludes, depends on this as much as science, since the prevailing "culture of fear" thrives on secrecy and attempts to manipulate public opinion.

INTRODUCTION

The recent experience in the UK with "mad cow disease" or bovine spongiform encephalopathy (BSE) has engendered a particular sensitivity among consumers over what they are eating.  BSE -- thought to be caused by a protein molecule called a prion -- produced the devastating "new variant" Creutzfeldt-Jacob disease (nvCJD) in humans who had consumed nerve tissue.

BSE was shocking not so much because of the scope of the problem in humans (relatively few people have contracted nvCJD), but because of the horror of the disease.  "Spontaneous" CJD was best known previously among those treated with growth hormone extracted from the pituitary glands of dead humans, or as kuru in Papua New Guinea, where ritual cannibalism involved the consumption of human brain tissue.  The BSE experience has fed concerns about foods which have been produced using the new technology of genetic engineering.  But the way in which concerns have developed into policy responses has been markedly different in Europe than in the United States, where concern exists but has not had a significant impact on policy development.  Why?

To answer that question we must delve into the process of risk assessment, whereby different political systems confronted with the same scientific evidence can reach fundamentally different positions on how to manage any particular risk.  In so doing, we can also shed some light on why what the alarmists have labelled "Frankenstein food" has evoked much more concern than the use of genetic engineering to produce pharmaceuticals.  In a wonderful irony, genetic engineering has, for a decade, allowed the production of a growth hormone which has avoided the risk of CJD without giving rise to any alarm.  Understanding risk assessment also allows us to understand why this is so, and points towards the ways in which we should assess the risk of genetically modified organisms (GMOs).

Concerns about beef in Europe are not new.  Hormone-treated beef has been in dispute between the European Union and the US since 1985, when the then European Community imposed a regulation prohibiting the sale or importation of beef raised with the assistance of artificial hormones.  At that time, problems had arisen in Italy among children who consumed (European) beef which had been injected intramuscularly with hormones, while the US argued that their production methods did not give rise to the same risks, since they used hormone patches behind the ear of cattle beasts.  Since the ear was not consumed, there was no chance that high concentrations of residues could find their way into meat sold for consumption. ⁽¹⁾

The more recent dispute has not involved artificial hormones at all, but naturally-occurring bovine somatotrophin (BST) produced by organisms which have been genetically modified.  Recombinant BST (produced by bacteria whose genetic material has been modified so they will produce it) has been available for commercial use in the US since February 1994, but was not approved for use in the European Union, Australia, Canada, New Zealand and Norway.  The product is produced using the identical BST synthesised by the cattle and is thus indistinguishable from "naturally-grown" beef -- itself the result of animal husbandry techniques and eons of selective breeding by humans to improve productivity.  So why the concern?

Part of the answer can be gauged from the way in which other EU nations exploited Britain's BSE tragedy, in which about a million cattle had to be slaughtered.  (The economic cost to the UK has been over £3 billion.)  This was a bonanza for Continental beef producers, since it allowed bans on trade in British beef within the European single market and restaurants were able to advertise their steak as being "non-British" or "French Charolais".  There is almost always a silver lining for someone in any such dark cloud -- but more on that later.

RISK AND NATURE

Increasingly, we care about how our food is grown and prepared.  We no longer eat restaurant dishes with classic names like "steak Diane", but "rump of grass-fed yearling King Island beef, pan-fried ..."  The sizzle has become at least as important as the sausage, and part of the sizzle has to do with our conceptions of nature, particularly with somewhat romantic notions of purity or the absence of contamination.  "Organic" is good, despite the fact that organic chemistry has given us all those pesticides about which we are so concerned.

"Chemical" is usually synonymous with synthetic chemical, and these notions of purity extend to the bottled water we buy.  It is possible to buy bottled water from the Snowy Mountains which is labelled "organic" -- somewhat absurd when the whole point of drinking bottled water is to be sure that it is absolutely free from organic substances.  Similarly, the label of water bottled at a spring in Tasmania boasts that it is free of chemicals -- right beside an analysis of the calcium and other minerals it contains.

And while we are told that we should be concerned about traces of chemicals in the environment which can mimic hormones, we are increasingly drinking soy milk.  This contains sufficiently high concentrations of phytoestrogens that it is recommended by some as both a natural alternative to hormone replacement therapy and as a means of preventing prostate cancer.

Our perceptions of risks and benefits, as these examples show, are almost inevitably affected by factors other than just the "objective" science describing toxicity, carcinogenicity and so on.  Many of our perceptions of risk are affected by questions such as:  whether the risks affect children or adults;  whether they are accepted voluntarily or imposed;  whether processes are secret or open;  whether risks are assessed by industry or by analysts seen as disinterested;  whether they involve the catastrophic death of large numbers of people or a succession of isolated deaths;  the kind of deaths involved;  whether the effects are immediate or delayed;  and whether the risks are natural or man-made.  Travelling 10 miles by bicycle in the US and living for 50 years within 5 miles of a nuclear reactor, for example, have both been estimated to yield an increased probability of death of one in a million, yet we respond to these risks quite differently. ⁽²⁾

One factor which affects our perceptions of risk associated with chemicals, GMOs and drugs is the fact that these products are manufactured by large, faceless corporations, usually transnational corporations which are seen as being beyond the control of governments.  As anthropologist Mary Douglas has pointed out, many of our fears about such risks reflect our sense of powerlessness in the face of such corporate giants in an increasingly globalised world. ⁽³⁾  But she also argues that risks are used to blame those already disliked.

This problem is exacerbated by the fact that the regulation of such hazardous substances poses problems which are tailor-made for those who would wish to amplify the risks.  All typically involve intellectual property, and patent law provides for a period of monopoly to recover development costs and profits, balancing the public good of having the lower prices which competition would bring against the public good of encouraging research and development by industry.  But this means that most of the research into the safety of such products is conducted either by the corporations themselves or by contract scientists or research laboratories who must be contractually bound to honour commercial confidentiality.  (Patents for pharmaceuticals might offer no protection if a competitor could add to the molecule an additional but meaningless chemical element or two which might simply be removed in reaction with stomach juices, for example.) ⁽⁴⁾

Regulators must use such science in making licensing decisions, but it is easy to construct a somewhat paranoid discourse around both the science and the scientists in such circumstances.  Products found to represent a low hazard can still be claimed to constitute an unacceptable risk when most of the science can be dismissed as the biased product of self-interested industry, or of corrupted scientists who have undertaken research consultancies -- if not now, then at some time in the past. ⁽⁵⁾

Science can be wrong.  Bias is a constant problem.  But science has developed means of minimising such pitfalls.  It can never eliminate them completely, but the canons of the scientific method -- if followed -- can improve the reliability of scientific knowledge.  The courts in the hyper-litigious US have had to rule on what constitutes acceptable scientific evidence in the face of a tendency for parties to each hire their own expert witnesses, and (not surprisingly) decided that the appropriate test was whether the information was generated by following key elements of the scientific method, such as replicability of results and publication after anonymous peer review. ⁽⁶⁾  Scientific knowledge always contains some residual uncertainty, but we have learned to place more faith in knowledge which emerges from such a process than that which appears from research which has not followed established scientific protocols.

While the source of funding might alert us to the direction in which a piece of scientific research might be biased, the appropriate test must be adherence to the scientific method.  Against such science, we are often asked to be alarmed about the implications of research which has not yet been replicated and, in some cases, not yet published in peer-reviewed journals.  Regardless of its source -- industry or environment group -- we should be extremely wary about acting upon such "science".

This is so even for those interest groups which profess to have the public good at heart.  It has been suggested that there is a "danger establishment", consisting of scientists (especially in "grant-rich" areas of research), journalists, politicians, bureaucrats and environment and other public interest groups, which has an interest in exaggerating dangers. ⁽⁷⁾  And because many researchers and journalists are often clamouring to build support or a readership, there is a tendency for them to shout in order to be heard.  We need to be aware, in other words, that bias can enter our social risk assessments from many directions, and recall examples such as the McBride case where research was found to have been falsified to exaggerate the dangers of a drug in order to secure continued funding for a research institute.

We should see Greenpeace -- even if we share its goals -- as not just an environmental group, but also as a transnational private company which licenses its trademark to thus-controlled foreign subsidiaries and which has among its informal goals that of system maintenance.  Like any organisation, it has salary and operating costs to cover and it must try to retain its annual revenue base of well over A$150 million worldwide.  It would be an exceptional organisation which managed to purge itself of the pursuit of goals of system-maintenance.  It can therefore be expected to focus its effort in areas and ways which will heighten concern and willingness to pay (especially since it rewards fund-raising success internally with decision-making influence).

Greenpeace specialises in politicised science, often committing the cardinal scientific sin of bringing the evidence to the theory, usually in the form of dramatic visual footage supplied to the media from some remote location.  Perhaps because of the remoteness and perhaps because of Greenpeace's perceived disinterestedness, news editors screen such footage when they would not do the same for footage supplied by more obviously interested sources.  (At a political science conference in Christchurch last year a TVNZ news executive stated that his corporation never screened footage from sources outside the company of established news services -- except for Greenpeace!) Footage of the retreating Bering Glacier provided on the eve of a climate change conference provides powerful support for action on climate change, but science is also interested in why, for example, glaciers in New Zealand are advancing.

We can illustrate this with the problems generated by Greenpeace's politicisation of science associated with GMOs.  In June 1999, France was leading the push within the EU to have the EU ban the importation of GM food.  France is not regarded as an environmental vanguard state in Europe, but it is one of the strongest supporters (and greatest beneficiaries) of the Common Agricultural Policy.  It was supported in this push by Greenpeace, whose members dressed as butterflies and carried a banner containing the slogan "Give butterflies a chance" to the meeting of EU Environment Ministers in Luxembourg on 24 June.  Citing a recent US study which indicated that pollen from genetically-engineered Bt maize could kill the larvae of monarch butterflies, Greenpeace invoked the precautionary principle in urging a ban.  The EU froze the approval process.

This piece of scientific knowledge, combined with the precautionary principle, gave considerable power to the coalition of Greenpeace and European agriculture, but it took what appears to have been sound but limited science further than it should have and ignored contextual factors completely in providing a convenient protectionist cloak.

The monarch butterfly research was published by John Losey at Cornell University in a (refereed) letter to the journal Nature. ⁽⁸⁾  Losey issued a careful press release which was totally ignored by the media (and Greenpeace), stating that the research was conducted in the laboratory and that it would therefore be inappropriate to draw any conclusions about the risk to monarch populations based solely on these initial results.  The reasons for this caution are obvious when the nature of the experiment is considered.  Hatchling monarch larvae were given a diet consisting solely of milkweed leaves (their sole food) dusted with corn pollen.  (Older larvae might be less susceptible.)  In the wild, larvae are known to avoid leaves with pollen on them and move to a clean leaf.  Further, milkweed is rarely found in cornfields, because farmers avoid them at all costs;  it is commonly found in pastures and old fields.  Maize pollen also does not travel far:  little can be found 30 feet from a cornfield and it is practically non-existent at 100 feet.  Finally, the period when maize pollinates and monarch larvae feed are both very short and might not even overlap in some seasons.

It is interesting to note that the toxin produced by the GM maize in this experiment was Bt toxin, so named because it is found in a common soil bacterium, Bacillus thuringiensis.  Bt toxin is used by organic farmers as essentially their only pesticide, and they fear that its use in GM crops might cause the insects it protects against to develop immunity.  This, rather than concerns over Bt toxicity, lies at the heart of opposition from organic farmers. ⁽⁹⁾

Reductionist risk assessment -- attempting to regulate solely on the basis of toxicity -- ignores these crucial exposure factors and relies solely upon the science of toxicity, which can be persuasive, especially to those who wish to invoke the risk-averse precautionary principle.  It not only advantages economic interests threatened by the advantages of Bt maize, however, but also carries an environmental opportunity cost (what has to be given up as a consequence), since non-modified maize is sprayed for insect pests 8–10 times, a practice which is likely to cause substantially more harm to monarch butterflies and other insects.

Social risk assessment requires a careful analysis of the best available science, an understanding of the social and psychological factors which will inevitably intrude into the process, and careful policy analysis. ⁽¹⁰⁾  Such policy analysis requires prioritisation of candidates for risk management, which is made all the more difficult because of the "shouting" of the "danger establishment", and a careful weighing of the costs and benefits involved.  No activity can ever be risk-free.  (American author Robert Benchley once remarked that the only way of avoiding accidents was to remain in bed, but even then there was a chance you might fall out.)  There is always a need to consider the costs of risk management -- including opportunity costs -- and to be careful of the social context within which the decision is made.  A cholera epidemic in Peru once killed 3,000 people because of a decision to follow a US EPA risk assessment and not chlorinate water supplies. ⁽¹¹⁾  Chlorinated water carries an elevated risk of bladder cancer of 0.8 per 100,000, ⁽¹²⁾ but we need to remember that the costs of avoiding this risk can be much higher.

RISK AND PRECAUTION

The cholera example is particularly apt, because the actions of a physician amid the squalor of the industrial revolution are often taken as reinforcement of the need to apply the "precautionary principle" in cases of environmental or health risk.  In 1849, before the discovery of the cause of cholera, a London doctor, Dr John Snow, suspected that the source of one outbreak might be the water from a particular well, and removed the pump handle.

Precaution is, of course, much better than cure, but such an anecdotal understanding of history glorifies post hoc those who happened to be right and ignores the multitude of cases where doctors acting on similar imperfect knowledge got it sadly wrong.  How we should exercise precaution is by no means self-evident, and the reasonable-sounding, commonsense precautionary principle is frequently misquoted and distorted to the point of nonsense.

The accepted version of the precautionary principle (in the Rio Declaration in 1992) reads:  "Where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation". ⁽¹³⁾  This is commonsense, but alone it cannot be operationalised:  we need to add meanings to "serious", "irreversible" and "damage" and decide what level of uncertainty we are prepared to accept as the basis for action.

Advocates often use the example of cigarette smoking.  It involves both business interests and uncertainty, and they like to point to the exploitation of that uncertainty by industry to forestall regulatory action.  We now know the precise mechanisms by which substances initiate cancer and aid progression by damaging two genes, but in fact we commenced regulatory action against tobacco long before we had identified precise mechanisms of causation.  We did so on the basis of good peer-reviewed science which indicated a problem over 30 years ago, and while the tobacco lobby has been particularly active and we have not banned tobacco, that reflects a number of factors, including the loss of regulatory control (and taxation revenue to pay the costs of damage) prohibition regimes carry with them (witness heroin).

But it is not prudent to take regulatory action on the basis of no evidence, or non-peer-reviewed science, or even a handful of scientific papers.  Sometimes we choose to accept risks:  a risk assessment of quartz almost resulted in a ban on children's sandpits in Sweden until reality prevailed. ⁽¹⁴⁾  Motor vehicles kill thousands, directly or indirectly, but we accept that their benefits outweigh these risks.  But some seek to invoke the precautionary principle as a justification for not just reversing the burden of proof, but to demand a logically-impossible proof of safety, or the absence of harm.  Demanding that a negative be proved is the logical equivalent of asking people to prove that they are not witches.

In addition, however, environment groups and official documents have stretched the meaning of the precautionary principle to the point where it legitimises the risk management strategy of Chicken Little and this has even found its way into international policies.  For example, Recommendation 89/1 of 22 June 1989 of the Paris Convention for the Prevention of Marine Pollution from Land-based Sources (PARCOM) stretched it to include action "even where there is no scientific evidence to prove a causal link between emissions and effects". ⁽¹⁵⁾  If this is accepted, all one needs is some indication of serious and irreversible effects and one can demand logically-impossible proof of an absence of harm or else regulatory action will be taken.

Everything is capable of causing harm under some circumstances:  as Paracelsus put it 500 years ago, everything is poisonous -- the dose makes the poison.  So we must insist that the precautionary principle is not misused and that risk assessment considers factors such as doses, exposure pathways, individual and species susceptibilities, costs and benefits and the consequences of regulatory actions.  Unless we do, we are to forgo the benefits that a product might bring, and produce either policy paralysis (as regulators freeze like rabbits in the glare of a multitude of precautionary spotlights), or a wasteful misplaced set of priorities (causing regulators to chase any number of hares which have been released).

RISK AND GMOs

How does this apply to GMOs?  In order to answer that question, it is necessary first to state that the discussion which follows does not seek to make a risk assessment of GMOs, nor engage in a detailed discussion of the science of genetic modification and the hazards it might pose.  The analysis accepts that genetic engineering is a hazardous activity which has been subjected to regulatory scrutiny from basic research through to its applications since its inception in 1970.  It accepts also that the products of this technology provide benefits.  It accepts that the risk management process will be difficult and complex, but unless it is performed we run the risk of either forgoing benefits or experiencing hazards.

But it also holds that risk assessment must be sensitive to particular products and practices and specific exposures.  A bacterium modified to produce BST poses different risks than genetically modified cotton, and cottonseed oil so produced poses different risks from the consumption of a GM tomato, where live DNA might be ingested.  The dangers posed by the possible escape of genes to wild species depend crucially upon the GM species and the environment into which it might be placed.  For example, for the UK, there are no compatible wild relatives for maize or potatoes, so no gene transfer can occur.  Rice and soya are inbreeding species, so transfer is possible, but unlikely.  With oil rapeseed, on the other hand, this is an outbreeding species with many wild relatives, so greater caution is necessary.  The same holds for the dangers from consumption.  Sugar from GM sugar beet contains no genetic material whatsoever;  flour from GM soya may contain the new gene or its product, but many of the purification processes used in food production will destroy any DNA present in the raw material. ⁽¹⁶⁾

It is entirely possible that we might as a society decide that the risks of one GM product are worthwhile while rejecting others.  We might reject a GM blue rose as being a trivial use of the technology which poses an unacceptable risk, while accepting the gains of GM foods which taste better, keep better and thus result in less wastage.  Lumping all genetic engineering together, and certainly condemning all GM foods as "Frankenstein food", is neither accurate nor helpful.

Making such decisions requires the participation of a wide range of people other than just the relevant scientists, industry and environment groups.  Risk management is a process which requires the application of relevant science, as well as statistics, ethics, economics, sociology and even political science, and certainly must have regard to the views of the public.  Attempts by scientists to prevent what they might see as the intrusion of "non-experts" into the process are not only unhelpful, but are likely to heighten public suspicion and apprehension.  Transparency and trust are vital.

There is a legitimate role for both industry and environment groups in this process, but neither should be allowed to dominate the process.  Unfortunately, the alarms seem to have run ahead of a reasoned consideration of the issues in Australia.  Despite the fact that there are few GM plants yet licensed for use here, we have considerable apprehension as the result of tabloid reporting of the perils of "Frankenstein food", with local government authorities even banning GM food in kindergartens and day-care centres.

The fear of "Frankenstein food" has been markedly more in evidence in Europe than in the US, and it has had more impact on government policies and on the policies of corporations.  Some supermarkets have refused to stock GM foods as the result of the effectiveness of boycotts by Greenpeace's "Genetic Hazard Patrols".  The responses of European governments have varied.  The UK, France and Spain appeared initially to be more permissive than the Northern European nations where support for Greenpeace and green political parties is strongest, but the question arises as to why the alarms have had greater impact in the European Union than in the US.

A similar question arises as to why concern has been almost non-existent over the use of genetic engineering to produce pharmaceuticals.

The answer to the first question lies partly in the accepted fact that cultural dispositions to risk vary, ⁽¹⁷⁾ even within Europe, with much higher support for such causes evident in Northern Europe than in Southern Europe.  But consumers in the US, especially in the Western States, are well known for their propensity to be concerned about such risks.  The best explanations for these regional differences lie in a happy coincidence between such values and economic interests which has led to institutional innovations which privilege risk-averse responses.

The precautionary principle had its origins in Germany as the vorsorge prinzip (roughly "preventive action principle") and was used to justify the "Green Keynesianism" developed by Helmut Kohl, also known as "ecological modernisation". ⁽¹⁸⁾  The export of the precautionary principle has not only bolstered the approach domestically, but has helped create markets for the export of technology and services developed domestically.  This is known as a "first mover" strategy and runs counter to the widespread belief that environmental regulation hinders the competitiveness of nations -- though it does depend on the successful export of policies and standards which will create a market for the technologies and services in which the nation has new-found advantage. ⁽¹⁹⁾

As we saw before, misapplied, the precautionary principle has considerable potential to undermine the risk management process from the outset by giving credence to poor science, and this has happened with GM food.  In a notable case, research on rats at the Rowlett Research Institute in Aberdeen was reported on television in 1998 to suggest that potatoes modified by the addition of a snowdrop gene to produce a natural insecticidal chemical, lectin, interfered with the development of both the rats' internal organs and their immune systems.  The research was not on transgenic potatoes about to be marketed, but an early part of research aimed at finding whether a form of lectin which was (on the basis of previous testing) likely to be least toxic to humans could protect potatoes from nematodes.

The researcher, Dr Arpad Pusztai, has since been dismissed from his job for a serious breach of scientific protocol -- going public with his claims before his research had been peer-reviewed and published in a recognised scientific journal.  No paper has yet been submitted for publication, and a panel of six toxicologists appointed by the Royal Society has dismissed the research as irrelevant and inconclusive, being flawed in many aspects of design, execution and analysis. ⁽²⁰⁾

By the time this rebuttal appeared, the claims had already been a key catalyst in the GMO debate in Britain, and a group of 20 scientists had held a press conference to declare their support for Dr Pusztai.  Despite the conclusion by the Royal Society panel that any observed differences between GM-fed rats were uninterpretable because of the technical limitations of the experiment and the incorrect use of statistical tests, Friends of the Earth was unswerving in its views of the dangers of GM foods.  FOE spokesman Tony Juniper resorted to the "witchcraft" position:  "There's no concrete proof that they are safe".

According to Debora MacKenzie in the New Scientist (not known for its conservatism on such matters), the "technical limitations" of the experiment included the fact that Pusztai could not get the rats to eat enough potato (they were malnourished no matter what kind they were eating and had to be given protein supplements to meet Home Office guidelines for animal experiments).  Another was the presence of known toxins in potatoes.  The only obvious conclusion supported by his research, MacKenzie stated, was that rats hate potatoes. ⁽²¹⁾  In fact, it was worse than that, as the methodology did not involve "blind" testing under which researchers are unaware of which rats were in the control group, and which were being fed GM potato.  This introduced the possibility for the introduction of researcher bias, something of a concern when Dr Pusztai was prepared to go public before publication.

There are a number of technical issues which make the testing of GM foods difficult, but as the reference to toxins in potatoes suggests, this holds for unmodified food also, since dozens of people die each year from the cyanide in peach seeds, and under-cooked kidney beans are poisonous (they contain the very lectins for which Pusztai's research was trying to find an alternative).  Many foods also naturally contain chemicals which have exhibited carcinogenic properties in laboratory tests, ⁽²²⁾ but in such small amounts that test procedures are likely to require such large quantities to be fed to rats that the acute toxicity of other substances is likely to kill them first.

An attempt to test GM tomatoes in the Netherlands involved feeding rats the freeze-dried equivalent of 13 tomatoes a day each, but this dose was still not enough.  Monsanto's GM maize does not contain enough of the Bt toxin produced by the novel gene for it to be isolated for testing, so they have to produce it from bacteria and then test it, but this raises questions about whether the two toxins are identical.  Some transgenic foodstuffs (Flavr Savr tomatoes, Round-up Ready soybeans, and virus-resistant squash, for example) have undergone extensive testing without any suggestion of serious health effects, ⁽²³⁾ which should have suggested caution about the potato research.

This suggests there is a need for caution with how we evaluate the hazards of GMOs, but it also stresses the need for the best possible science underpinning our risk assessment processes.  Much of the difference between the approaches of the EU and the US reflects the different philosophies of risk which operate in each jurisdiction.  The institutionalisation of the precautionary principle in Europe encourages both calls for action and government action itself on the basis of such "scientific" evidence as the potato research of Dr Pusztai, while the US approach to risk (since the Reagan Administration required the conduct of Quantitative Risk Assessment) has been to examine the economic costs and benefits of any risk management action.

Ironically, the relative absence of the consideration of economic factors in the EU approach facilitates the use of fears of GMOs by economic interests.  The fight against US beef produced using recombinant BST has been led by British beef producers, themselves harmed by BSE, and the whole issue has allowed Europe to revisit the 1985 issues.  The US has advantages in the use of biotechnology, and its economic efficiency poses a considerable threat to the enormously costly and inefficient Common Agricultural Policy, already under pressure after the Uruguay Round liberalisations in agricultural trade.  The GMOs debate has provided less efficient European producers of beef, soybeans and so on with an opportunity to try to nobble their more efficient US competitors.

This partly explains why there has not been a similar outcry over genetic engineering in the pharmaceuticals sector:  Europe has an efficient, competitive pharmaceuticals sector which would oppose and contest campaigns on the issues, rather than support them (as with agriculture).  But even though the consumption-related risks from pharmaceuticals -- often directly injected into the body or packaged in such a way as to facilitate absorption even after attack by digestive juices -- would appear to be equivalent to those associated with foods, there has not really been a campaign mounted against them.  There are at least two other factors at work here:  one relating to pharmaceuticals and the other to agriculture.

The first is that the benefits side of the equation is much clearer with pharmaceuticals and would be much more difficult to counteract.  A soybean which can be produced more cheaply does not quite offer the same kind or size of benefits as a drug produced by a GM bacterium.  Focusing political campaigns on food promises better political returns than attacking possible cancer cures, especially when it coincides with agricultural interests in Europe.

The second is that the anti-GM food campaign resonates strongly with an earlier campaign in the early 1980s over the introduction of Plant Variety Rights (PVR) -- or intellectual property rights for plants.  Many of the concerns then, such as the fear that agricultural genetic material would be controlled by large transnational corporations, not only have been repeated with the GMO campaign, but the same fear of transnational dominance is (as we have seen) a key factor in amplifying risk perceptions of GMOs.

These fears have been heightened by the insertion of so-called "terminator genes" into seeds, which render the seeds of transgenic crops infertile, requiring growers to buy again from the multinationals rather than engaging in the traditional practice of saving seed for next year's crop.  This would appear to be something of a non-problem:  Third World farmers will be perfectly able to continue traditional farming practices with traditional seed;  transgenic crops will only be grown where the benefits outweigh the costs of doing so.  The situation is no different from that obtaining with the seeds of infertile hybrids, except that "terminator genes" could be seen to serve a useful risk management function by preventing the escape of GM stock into the wild.

CONCLUSION

The assessment of the risks of GMOs can be seen to reflect numerous social and institutional factors, and these help explain the differences between the approaches in the US and the EU, and between transgenic food and transgenic medicine.  These factors are giving rise to particular problems for the trade regime as they offer plenty of scope for non-tariff barriers to be erected in the name of the protection of health or the environment, but they also throw some light on the elements we need to bring together in order to assess properly the risks associated with GMOs.

First, there is a fundamental need for good science and insistence on sound, peer-reviewed science and rejection of evidence gathered to support theoretical predispositions -- either that GMOs are dangerous or that they are harmless.

Second, there is a need to consider the benefits as well as the dangers, and the costs (including opportunity costs) of any decision we take.  We should expect that any GMO might not be all that the owners of the technology might make it out to be, but neither are they without the promise of considerable benefits and cannot, therefore, be rejected lightly.

There is also a need to undertake specific risk assessments for different kinds of GMOs, taking care to distinguish production-related risks (of, say, GM canola cross-pollinating or out-breeding with other species) from consumption-related risks (such as, if Dr Pusztai turned out to be right, GM potatoes affecting our immune systems).

There is also a need to accept that the social evaluation of risks is likely to be more accepting of GMOs in medicine than in food, and that such evaluations must be a central part of any risk management process.  There are identifiable reasons why what society will accept in saving lives, it might not tolerate in producing food.  That might hinder the adoption of GM technology in agriculture, but attempting to impose outcomes on a reluctant public is likely only to heighten fears.  Openness and transparency -- together with good science and a consideration of costs -- are the keys, but this does not mean that the proponents of GM technology should abandon the field to their critics.  Society requires a full and open debate which will expose the exaggerated claims which might come from any side and allow it to make better decisions about which risks to accept and which to reject.

Issues such as genetic engineering are tailor-made for the development of what Frank Furedi has called a "culture of fear". ⁽²⁴⁾  Such a culture thrives on secrecy and attempts to manipulate public opinion to secure consent, which inevitably arouse suspicion and hostility.  If genetic engineering is to come to be regarded as involving socially-acceptable risks, the process by which the risks are assessed and managed will have to be one in which the public trusts.

Our assessment of the risks of GM foods must therefore be careful to take many factors into account.  Genes -- that is, DNA -- are a normal constituent of our diet.  It is 200 years this year since the first report of hybrid cereals was made, and we have been consuming the fruits of the deliberate human transfer of genetic material between species since 1876 (Triticale wheat x Rye cross).  GM techniques expand these possibilities enormously and rightly should be subjected to careful regulation.  But we would be wrong in supposing that all the risks we face are caused by human agency, or that we are completely incapable of regulating them.

Ironically, both these lessons can be drawn from the "mad cow disease" experience.  The former is suggested by the fact that the best hypothesis about the origins of BSE and nvCJD seems to be a chance occurrence of a rare spongiform encephalopathy (probably from scrapie in sheep) which found its way into cattle food and thence into the human diet. ⁽²⁵⁾  The route might just as readily gone straight from sheep to humans, but for a roll of the genetic dice.  The outbreak might have resulted from feeding rendered sheep carcasses to cattle, but the genetic chance occurrence appears to have been a completely natural occurrence.

The BSE/nvCJD outbreak, despite the alarms, also demonstrates that we are capable of regulating risks.  BSE in cattle was first positively diagnosed in cattle in 1986, and regulatory action was taken in 1988 and 1989 to remove infectious material from the animal and human food chains.  The risks of human exposure were highest at this time, when public concern was almost non-existent, and with a possible ten-year incubation period;  by 1997 there were only 19 established cases of nvCJD in Britain and one in France.  About a million cattle were slaughtered and Britain's beef trade was harmed, but (despite the high economic stakes) scientists and regulators minimised the impact of the tragedy.  It is most certainly a tragedy, but it has not quite been an apocalypse, yet the role of good science and risk management in limiting the scope of the tragedy has been submerged in a climate of dread, and the risk management success overlooked.

The BSE/nvCJD tragedy, as has been noted, had nothing to do with the GMO debate, except in its impact on public perceptions -- indeed, GM growth hormones have removed the major source of risk of transmission of spontaneous CJD (barring outbreaks of ritual cannibalism).  But the suspected origins of the BSE outbreak also contain an important lesson about how we should evaluate the risks of GMOs.

It is thought that until the early 1980s, the process by which carcasses were rendered for stock food destroyed the infectious prion from the scrapie as they were subjected to high temperatures and organic solvents to remove the tallow.  The price of energy rose, the price of tallow fell, and concerns emerged over the exposure of workers to organic solvents, so a new process was adopted to avoid solvents and high temperatures.  The scrapie prion survived the new process and subsequently it is believed to have infected cattle. ⁽²⁶⁾

This serves to remind us that our actions have consequences that are difficult to imagine.  This holds not just for the introduction of new technologies, but both changes to old ones and decisions to withhold new technologies.  GMOs present risks, but they also present considerable opportunities.  The challenge is to manage the risks in order to maximise the benefits.  How we do this requires the best possible science, the right amount of precaution, and open and democratic processes, an admixture which will be difficult (but not impossible) to achieve.

ENDNOTES

1.  See John H. Jackson, "Dolphins and Hormones:  GATT and the Legal Environment for International Trade after the Uruguay Round", UALR Law Journal, 14, 1992, pages 435–36.

2.  See Paul Slovic, "Perception of Risk:  Reflections on the Psychometric Paradigm" in Sheldon Krimsky and Dominic Golding (eds), Social Theories of Risk, Westport, CT, Praeger, 1992;  or Joseph V. Rodricks, Calculated Risks:  Understanding the Toxicity and Human Health Risks of Chemicals in Our Environment, Cambridge, Cambridge University Press, 1992.  For an excellent introduction to the topic of risk, see John Adams, Risk, London, UCL Press, 1995.

3.  Mary Douglas, Risk and Blame, London, Routledge, 1992;  page 15.

4.  For a discussion of the importance of patents in regulation of chemical and pharmaceutical risk, see Aynsley Kellow, International Toxic Risk Management:  Ideals, Interests and Implementation, Cambridge, Cambridge University Press, 1999 (in press).

5.  For an example of this genre, see Sharon Beder, Global Spin:  The Corporate Assault on Environmentalism, Melbourne, Scribe, 1997.

6.  See James T. Rosenbaum, "Lessons from Litigation over Silicone Breast Implants:  A Call for Activism by Scientists", Science, 276, 6 June 1997, pages 1524–25.

7.  See Thomas M. Dietz and Robert W. Rycroft, The Risk Professionals, New York, Russell Sage Foundation, 1987.

8.  John E. Losey, Linda S. Rayor, Maureen E. Carter, "Transgenic pollen harms monarch butterfly", Nature, 399, 1999, page 214.

9.  See VitalSource, "GM:  What is known and/or in dispute?" at http://www.vitalsource.org/gm/science.html.

10.  See John D. Graham and Jennifer Kassalow Hartwell, "The Risk Management Approach" in John D. Graham and Jennifer Kassalow Hartwell (eds), The Greening of Industry:  A Risk Management Approach, Cambridge, Mass., Harvard University Press, 1997.

11.  Christopher Anderson, "Cholera epidemic traced to risk miscalculation", Nature, 354, 1991, page 255.

12.  Rodricks, op. cit., page 218.

13.  See Lawrence E. Susskind, Global Diplomacy:  Negotiating More Effective Global Agreements, New York, Oxford University Press, 1994;  page 79.

14.  See Robert Nillson, "Integrating Sweden into the European Union" in Roland Bal and Willem Halffman (eds), The Politics of Chemical Risk:  Scenarios for a Regulatory Future, Dordrecht, Kluwer, 1998.

15.  Nigel Haig, "The Introduction of the Precautionary Principle into the UK" in Timothy O'Riordan and James Cameron (eds), Interpreting the Precautionary Principle, London, Earthscan, 1994;  pages 243–246.  (Emphasis added.)

16.  For a discussion of these issues, see The Royal Society, Genetically Modified Plants for Food Use, London, The Royal Society, September 1998.

17.  Aaron Wildavsky and Mary Douglas, Risk and Culture, Berkeley, University of California Press, 1981.

18.  Sonja Boehmer-Christiansen, "The Precautionary Principle in Germany -- Enabling Government" in Timothy O'Riordan and James Cameron (eds), Interpreting the Precautionary Principle, London, Earthscan, 1994.

19.  David Vogel, Trading Up:  Consumer and Environmental Regulation in a Global Economy, Cambridge, Mass., Harvard University Press, 1995.

20.  See the report "GM food study was 'flawed' " by BBC News on 18 May 1999 at http://news.bbc.co.uk/hi/english/special_report/1999/02/food_under_the_microscope/newsid_289000/289002.stm

21.  Debora MacKenzie, "Unpalatable Truths", New Scientist, 10 June 1999 at http://gmworld.newscientist.com/

22.  See Bruce N. Ames, Renae Magaw, Lois Swirsky Gold, "Ranking Possible Carcinogenic Hazards", Science, 236, 17 April 1987, pages 271–80.

23.  See OECD, Food Safety Evaluation, Paris, OECD, 1996.

24.  Frank Furedi, Culture of Fear:  Risk-taking and the Morality of Low Expectation, London, Cassell, 1997.

25.  The Royal Society, Second Update on BSE, Statement by the Royal Society, London, 21 July 1997.

26.  The Royal Society, BSE -- A Statement by the Royal Society, London, 2 April 1996.  As John Adams has noted, however, the prion theory of causation is by no means universally accepted.  See John Adams, "Cars, cholera and cows:  virtual risk and the management of uncertainty" Science Progress, 80, 1997, pages 253–272.

Don't Forget Gas Rivals in Pipeline

The quest for the "just price".  This is how ACCC Chairman Allen Fels has described the mountain of paper and cacophony of voices that have contributed to the debate on the price for the carriage of Victorian gas.  He and Victorian regulator John Tamblyn have compiled 450 pages in their final reports alone.

The allowable price of transport is critical to the price the Victorian Government can expect from the proposed privatisation of the state owned gas system.

The regulators' decision requires the transport price for gas to be based on a 7.75 per cent real pre-tax return on capital.  Although this represents an increase from the draft decision of 7 per cent, it falls far short of the 10.2 per cent sought by the Victorian Government.  That price application itself discounted present returns and therefore represented a reduction on the price levels that Victorian industry and consumers had willingly entered into.

The Victorian regulator estimates that the average household will benefit by $40 per year in lower gas bills as a result of his reducing the price basis sought by the Kennett Government.  Of course, the $40 per year benefit on the gas bill has an equal offsetting $40 cost to the consumer-as-taxpayer because of the lower returns the verdict will bring.

The catastrophe at Esso's gas plant added a further dimension to the task of estimating the "just price".  From now on, neither customers' decisions nor investors' profit projections can be based on a near certainty of continuous supply.  This alone will require some adjustments to buyers' valuations of the assets.  It is also likely to result in the State Government spending money on storage as well as the link with the Cooper Basin system to improve the system's security.  All of this means the Government has already effectively reduced the 10.2 per cent return sought from the assets.

The regulators' gas decisions are based on a misplaced assumption that pipelines are natural monopolies that can charge any price they choose.  For a start, they are subject to competition from electricity and other fuels.  Moreover, although the pipes are difficult to duplicate in full, they can be partially by-passed, thereby limiting their owners' pricing latitude.  Curiously, the regulators saw "uneconomic by-pass" as a major reason to keep the price low.  Yet the price cap they imposed does not prevent gas pipeline owners from reducing prices to meet competition.  Regulators' suggestions that the avoidance of uneconomic by-pass is a reason for them to reduce prices implies a pompous self-deceit on their part.  They are saying that the owners would be too stupid to make the correct decision themselves.

The ability of rival firms to by-pass existing lines and of rival fuels to win market shares provides strong disciplines on price gouging.  Customers have willingly accepted existing price levels and these levels should be treated as having been contracted.  It should be left to the competitive process to drive down prices.  Where a regulator attempts to do so, we run the risk of prices being set too low with inadequate incentive to upgrade and maintain the facilities.

The quest for the "just price" boils down to two measures:  the price that can now be achieved under competitive conditions;  and the price that an entrepreneur would have required to build the system in the first place.  With respect to the latter, the present system was built 30 years ago, prior to which there were virtually gas supplies.  It is impossible to believe that anyone at that time would have risked their own money for a new venture to pipe gas around Victoria and been satisfied with a pre-tax return of 7.75%.  Commonly, such high risk ventures would seek twice that return.

All this said, the Victorian Government willingly agreed to have an independent regulatory authority determine its financial future.  The most pressing task is to return the gas transport and marketing to the private sector and thereby obtain greater efficiencies and lower costs for customers.  It is unlikely that the Regulators can be persuaded to shift ground on the issue and the Government should swallow and proceed with its privatisation reforms.

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Your ABC and a big case of bias

Lee Burton and June Factor (on this page on Wednesday) have enunciated a fascinating new theory of media analysis -- big is beautiful or, at least, unbiased.

They say my allegations of a common ABC culture (outlined on this page on 30 September) can't be true because the ABC is a large organisation.  They can't be serious, surely?  Of course an organisation of several thousand people will not have exactly the same opinion, but a culture of bias is entirely possible.

One of the more powerful pieces of evidence of ABC bias is from Queensland University professor John Henningham's survey of journalists, where journalists rated 7.30 Report, ABC News, Four Corners and SBS News (in that order) as the most pro-ALP media outlets.

And the suggestion that size protects the ABC from bias makes the concerns about media concentration seem somewhat inconsistent.

It was also a wonderful irony that Bettina Arndt's excellent piece on the narrowness of debate on social policy -- across many media organisation and universites -- was run on the same day.  Arndt has been largely banned from the ABC over the past five years or so because people in the ABC do not like what she has to say.

Burton and Factor themselves allude to another piece of evidence of ABC bias -- the common nature (they say "hackneyed") of allegations of ABC bias.  It is indeed a fact that the ABC is perennially accused of left-wing bias.  I wonder why?

Nor is the internal debate within the ABC that Burton and Factor cite evidence of a lack of bias.  Western Marxist parties and organisations are notorious for bitter internal struggles and debates:  this does not make them broad intellectual churches.  A key problem with the ABC is not that it lacks internal debates, but the range of opinions represented inside the ABC is so narrow.  As former 3LO broadcaster Doug Aiton pointed out in these pages (26 February 1997).

Burton and Factor point to the ABC being under a legislative charter to "present a diversity of views".  Yet, as former ABC acting managing director Keith Macriell has pointed out in Review, the ABC charter does not require the ABC to fairly reflect national opinion, which is the issue.  "A diversity of views" can still reflect a narrow spectrum.

In private conversation, ABC staff and supporters will admit the ABC is left-wing, but say that is OK, because it "balances" the commercial media.

This is nonsense at two levels.  First, left of centre opinions have no difficulty getting into major newspapers and media.  Second, the ABC is not full of raging right-wingers who, out of a sense of public-spiritedness, doggedly make sure left of centre views get a fair run.  On the contrary, the poor accountability which is so sadly common in the public sector allows them to indulge in satisfaction of their own prejudices at taxpayer expense.

Taxpayers' money should not be used to disproportionately support some opinions over others in national debate.  That is the issue.

If the ABC cannot be reformed so that it is genuinely open to the range of national opinion, then it should be privatised to take its chances in the market place like everyone else.

Studious Ignorance: How Ministers Can Really Not Know What They Are Talking About

Talk to Netizen seminar on the topic of the
Broadcasting Services (Internet Services) Amendment Act
Thursday, October 7th, 1999

The phrases which come most to mind in discussions I have had with members of the online community about the "Internet Censorship Act" -- as it is commonly known -- are phrases like "but it's so dumb", "how can they possibly think that?", "they clearly don't understand", "it's the wrong model" and so forth.

There seems to be this enormous gulf between what the online community understands to be the case and to be practicable and what the legislation and the Minister are committed to happening.

It is not for me to talk at this venue about why the broadcasting model is so inappropriate for regulation of ISPs ⁽¹⁾, given that there are people much more expert than me in the technicalities, present and speaking.  I will note, however, as I have in my forthcoming article in Agenda -- which has also been included in our Submission to the Productivity Commission Inquiry into Broadcasting Services -- that one is stuck with the broadcasting model if you are going to make imposing a censorship regime on ISPs have any plausibility at all.  Any use of a telecommunications model would put up in stark relief what was wrong -- in terms of practicality, reasonable liability and free speech -- with the proposal.

What I want to talk about is how come such an inappropriate model could be adopted at all.  After all, merely saying the broadcasting model was the only way to make a censorship regime on ISPs plausible is not enough.  The question is, why then go ahead?  Why not just either:

1. abandon the exercise;  or
2. look at more practicable alternatives to keeping dubious and nasty things away from children?

THE PROBLEM OF KNOWLEDGE

Let us take it as read that the Government did want to protect children and did want to conciliate Senator Harradine and the sentiment he represents.  Let us also take it as read that that then imposed on the Government a major time constraint, due to the change in the Senate numbers on the 30 June, hence the remarkable speed with which everything was done.

What does that major time constraint do?  It means that the Government has to make major decisions very quickly and using resources readily at hand, including the stock of knowledge it has quick access to.  This is an often greatly underrated virtue of lengthy policy development and inquiry processes:  they can provide a means of educating policy makers and turning up information or, more specifically, making it available to policy-makers.

Now, I happen to know that the Internet censorship proposal was not driven by the Department, but by the Minister's office.  So we are not even talking about the knowledge-stock on hand in the Department, but in the Minister's Office itself, though the expertise of Canberra Departments, especially in areas of rapid technological change, is not necessarily all that great either.

OK, so we are looking at the level of understanding of the Minister's Office and a few key bureaucrats.  Immediately, we see how lack of knowledge can be a serious problem.

Then we have to consider the enormous range of Government activity.  Even in the one portfolio of Communications, Information Technology and the Arts, we are dealing with media policy, telecommunications policy, information technology policy and arts policy.  That is everything from Telstra, Australia Post, the ABC, commercial media (both radio and TV) through to the Arts Council and the National Museum.

True, any major proposal has to go via Cabinet and get Cabinet approval, but it is precisely in areas of new technology and dramatic technological change that that process can be expected to be at its weakest.  Since other Ministers, their Staff and Departments are going to lack useful background knowledge, they are going to be in a very poor position to demur from anything the relevant Minister puts up -- every current member of Cabinet entered Parliament before the Internet entered general public consciousness.

If you want some idea of the scale of activity we are talking about, look at this.

Graph 1

Isn't it wonderful to live in an age of de-regulation?  [You can see the effects of] photocopiers in the 1970s, word processors in the 1980s and PCs on every desk in the 1990s.  Just to give you some idea of the ever-increasing scale of legislative activity, the Commonwealth Parliament passed in the first eight years of this decade more pages of legislation than it passed from 1901 to 1980 inclusive.  That is, an eight-year period of no great national emergency apparently required more pages of legislation that establishing the Commonwealth jurisdiction, WWI, the Great Depression, WWII, postwar prosperity, the Whitlam reforms and beyond combined.

The enormously increased "productivity", in some sense, is obvious.  Quality control, however, is clearly a bit of an issue.  And, in case you were wondering, the Acts are getting longer as well.

Graph 2

So, more law and more complex law and a problem of quality control, particularly in areas of new technology and rapid technological change.  It should becoming obvious how there is a serious issue about lack of knowledge and lack of time to access appropriate knowledge.

At this point we can see how the salient thing is not how much a person knows, but access to Ministerial attention, either directly or through the Minister's staff.  One of the classic Canberra games is for a bureaucrat or staffer to ring up to get "Industry's opinion" where by "Industry" we typically mean the Executive Director of the relevant industry association -- that is, lobby group -- or one or two larger players who, for whatever reason, have become known to the bureaucrat or staffer.  They themselves are generally fairly keen to retain their favoured position and/or gain advantage from it, so are perhaps not ideally placed to tell their inquirer that the Minister's pet project is a load of codswallop.  The less time you have, the more such apologies for genuine information-gathering are going to be relied upon.

A friend of mine tells a great story about the person in charge of developing industry policy for an industry whose stock of knowledge consisted of occasional lunches with the head of the "Australian" lobby group that represented only about 40 per cent of the industry -- and only the big ones at that -- and ONE walk-through of a facility.  Canberra Departments reward ability to play the policy game, more than genuine knowledge.

As an aside, I note that the Minister has informed the Senate that, when he visited Silicon Valley, nobody criticised him over his Internet censorship Act.  A couple of fairly obvious points.  First, Silicon Valley inhabitants must be pretty used to a never-ending parade of visiting foreign politicians all eager to touch the Silicon Valley magic and work out to replicate it back home.  It must have become standard background noise, so why would you pay much attention?

Second, if they do pay attention, they are probably hoping to sell something or otherwise get the Australian Government to be helpful.  What sort of strategy is it to start with, "oh, by the way Minister, your latest pet project is complete garbage?".  One suspects that, even in Silicon Valley, it ain't going to happen.  Which is why Ministers saying that no-one from the industry has complained to them to their face should never be taken terribly seriously:  Ministers are potential walking cheque books for sums that start with six figures and work up; of course people in industry are going to be nice to them and not want to make them feel bad about themselves and their pet projects.

Now, I hope we can see how a really bad idea can get all the way into law.  In fact, how it can happen quite frequently.  How, for example, a Minister's Office, under a great deal of time pressure, dealing with a subject it really doesn't understand can look around and say "well, the Internet is a bit like narrowcast broadcasting -- that is, cable TV -- so we will regulate it as a tack-on to the Broadcasting Services Act and get the ABA ⁽²⁾ to do it and treat ISPs like broadcasters".

And when they talk to get "Industry's opinion" it is entirely possible that they may merely be a couple big players who may be quite happy to raise entry costs to the industry and so cull their competitors.

WHY REGULATION OFTEN FAILS

At this point, it should also be clear that there is nothing particularly mysterious about why government regulation in markets is often counter-productive -- it has been well, if not exhaustively, analysed.  In practice, there is usually very little real quality control on regulatory provisions, either before or after the fact.  Determining effects is often quite difficult -- since the effects of any particular provision tend to be very hard to pick out from a mass of government action (though that is not likely to be the problem in this case).  The enormous increase in legislative activity militates further against effective quality control, few resources are put into systematically doing so and there is very limited feedback into the legislative process from such measurement as does occur.  Worse, such feedback and measurement as does occur is often left to the regulators, who have a vested interests in the regulations they administer -- not least, in preserving the "human capital" of intimate knowledge of the regulatory structure, with future earning potential.  This situation was much improved by the creation of the Industries Assistance Commission in 1975 (now the Productivity Commission) but, 29 years later, there is still far to go.  There are also obvious conflicts of interest in government funding evaluation, since governments are not likely to want to be publicly and authoritatively told that their policies are not working.

Furthermore, interest in public policy itself is a "public good", subject to considerable "free-riding", so therefore tends to be under-provided.  By contrast, those with concentrated special interests often have powerful incentives to be involved, leading to intrusive regulation tending to favour those with such interests (e.g. by raising market-entry costs in, say, law and medicine).

Unlike ordinary commercial exchanges -- where people only come together in expectation of benefit, where people have to know only their own situations and preferences -- regulatory action is the application of centralised coercion.  The regulator cannot learn of the diversity of ever-changing personal preferences, aptitudes and resources.  Even if they could, they must adopt a "one size fits all" approach, even though they know perfectly well that it does not.  Were they to adopt the "flexible" approach, so often advocated by business, they would very soon find themselves accused of favouritism, of corruption.  The provisions now in the Act which require action to be commercially feasible, and which the Minister has informed the Senate will indeed mean that different ISPs will have different legal obligations, create an enforcement minefield in this regard.

There is a place for judicious regulation (they can, for example, reduce what economists call "transactions costs; the expenses involved in making commercial exchanges) but there are also powerful reasons why there should be no presumption that extensive regulation is socially beneficial.

CURRENT CIRCUMSTANCES

The Minister's remarks on Silicon Valley were made during the Senate debate on a joint Democrat-Labor motion soundly criticising the Act which was passed by the Senate on the 30 September, confirming that the Act would not have passed if it had been voted on after 30 June.  The Minister's comments in that debate centred quite heavily on the propositions that:

1. something needed to be done;  and
2. there was a lot of community support for control of pornography and related material.

That is, he concentrated on the intention of the legislation.  This is pretty normal in political debate, which tends to be very much based on the proposition that intention + effort = outcomes.  So, for example, if someone claims that schools are not doing a good job of teaching literacy, the immediate cry is "more money!, more money!" rather than questioning whether there might be a quality control problem on the billions already spent on public education.  People are what economists call "rationally ignorant" about many issues of public policy -- it is not in their interests to spend time becoming informed on issues that don't directly concern them.  Intentions they can understand, crude measures of level of effort they can judge, so it just simplifies everything if outcomes are assumed to follow from them.

This is also very convenient for politicians and bureaucrats, because it makes life simpler for them.  If you want some idea of why government delivery often isn't a great way to go, one needs to look no further than the banal level much public debate is carried on at.

Which is a real problem in this case, as in so many, because the devil is in the details.  It is inside that glossed-over "black box" where, as is typical, the problems are.  It is difficult to get debate focussed on the problems of the means, but it is not impossible to do so.

There is, of course, a very real free speech issue, but that is a contestable value, particularly regarding concern over children.  If you want to restrict people's freedom, child-protection is one of the most powerful weapons for doing so, since it plays into parental fears.  Moreover, children are not adults:  there is not a presumption that they are able to look after themselves.  Which is why parental responsibility and authority, and general respect for the family, is also a very basic freedom issue.

The advocacy advantage of focusing on impracticality and unnecessary damage is that it puts things on less value-contested grounds and plays directly to the widespread presumption (based, lets face it, on much experience) that politicians and governments do have some tendency to cock things up.  The disadvantage of doing so is that you are working with poor background knowledge in the general public.

Clearly, the key thing is to convince people that, in the rush to conciliate Harradine and get it through the Senate, the Government chose the wrong model and that this will have serious consequences.  That ISPs are not like TV and radio stations, but like phone companies, the post office and courier services.  That the appropriate regulatory model is telecommunications, not broadcasting.  The analogy probably makes immediate sense for e-mail users, but is probably less intuitive for lay people looking at websites, when the monitor does look at bit like a TV does, pictures and all:  except, of course, the signal comes down a phone line, there tends to be a lot of text and not all that much movement.

To get people to look inside the "black box" of government activity, to look beyond intention and effort, is difficult, but not impossible.  The Productivity Commission Inquiry into broadcasting legislation provides an unusually good opportunity to do so, even though TV and radio regulation will get most attention.  The draft report comes out in mid-October, but the Commissioners are still accepting submissions and there will be a further round of comment and consultation before the final report comes out.  If the Commission is critical, it certainly will make it harder for the Minister to dismiss critics as "fringe".

The main thing is to keep plugging away.  In particular, to try and to develop ways of explaining to a lay audience -- which, after all, includes most journalists -- the fundamental impracticality of the legislation.  The point is not to deny there is a free speech issue, because clearly there is, but because the most powerful argument possible against any policy is that it doesn't work, and/or that it imposes such high costs it is not worth it whatever you think of the intent.

And it helps in that explanation if people understand that it is by no means surprising that Ministers may not actually know what they are talking about.

Thank you.

---

ENDNOTES

1. Internet Service Providers

2. Australian Broadcasting Authority

ABC Watcher

Letter to the Editor:

ABC Managing Director Brian Johns' response (Opinion, October 1) to my article (Opinion, September 30.) is at least proof that he watches the ABC -- it was worthy of Sir Humphrey Appleby of Yes, Minister and Yes, Prime Minister fame.

It was particularly disingenuous, given that he and the rest of the ABC Board all have copies of my Backgrounder "Whose ABC?", which considers at length whether the existing mechanisms of accountability are adequate and argues that formal appearances are deceiving.

To take one example, he refers to the ABC-appointed Independent Complaints Review Panel -- and how Yes, Minister-ish it is to have an "independent" complaints panel appointed by the body subject to potential complaints.

The latest ABC annual report informs us (page 64) that in 1997-98 it received precisely 13 complaints, many of which did not meet the Panel's criteria.  One was withdrawn, leaving three to be investigated, none of which investigations were completed in that year.  "Accountability" ABC-style.

Who's ABC? The ABC, Staff Capture and the Obstacles to Accountability

Backgrounder

As this Backgrounder shows, the ABC provides a case study of the problems of public ownership.  Despite the ABC's PR campaign that it is "Your ABC", the ABC is a staff-captured organisation.  This staff capture is reflected in its coverage of issues.  The ABC does not fulfil the role of being a national broadcaster reflecting the range of opinion among the citizens who fund it and, through their agent the Commonwealth Government, notionally own it.  Rather, the ABC is a sectional broadcaster with national reach:  at times, not much more than the propaganda arm for the public-sector middle class.  One funded by wealth transfers from non-users (most Australians) to users (a self-selected group with above-average incomes).

The staff capture of the ABC results from the processes of accountability applying to the ABC being, in practice, completely inadequate.

The standard way to deal with staff capture within the public sector is privatisation.  There is an issue of catering for specialty markets not likely to be fulfilled given the statutory restrictions on entry to the TV and radio industry.  This could be dealt with either by removing those restrictions or by putting out to periodic tender production for those markets:  either way, a public-sector broadcaster is not required.

If the ABC is retained in public hands, a range of measures is identified which should be undertaken to improve accountability and reduce the extent and ill-effects of staff capture.

INTRODUCTION

Any TV viewer of the Australian Broadcasting Corporation (ABC) is constantly assured that it is "Your ABC".  Is this true?  Is this apparent claim of general public ownership real, or a convenient rationalisation?

The ABC is a government-owned body -- a Commonwealth authority established by statute -- largely funded by the taxpayer (to the tune of $632 million in the latest Commonwealth budget). ⁽¹⁾  Bundled together in the one body are a metropolitan and regional TV network, Radio National, ABC Classic FM, ABC NewsRadio, local metropolitan and regional radio stations, a successful youth-music national radio network (Triple J), ABC Online, Radio Australia, ABC shops and Symphony Australia.  The ABC is Australia's leading producer of documentaries, drama, and children's and education programmes.  It has an annual average radio audience of 6.5 million, and transmits almost 800 hours of TV current affairs and over 500 hours of TV news a year.  The ABC employs over 4,000 staff, more than 50 per cent of whom work in New South Wales. ⁽²⁾

The ABC is formally accountable to the Commonwealth Parliament, and to the taxpayers who fund it, via a Board whose members are appointed by the government of the day for fixed terms.  (A long-serving government therefore gets to appoint a Board to its liking.)  The Board -- whose statutory duties are set out in Appendix I ⁽³⁾ -- reports to the Minister responsible for the ABC, and appoints the Managing Director.  The Corporation is also subject to parliamentary oversight, notably through Senate committees, particularly the Estimates process.

The Australian Broadcasting Authority (ABA) has some limited responsibilities regarding complaints about the ABC and there is also a complaints body appointed by the ABC itself.

While the formal mechanisms exist which theoretically make the ABC a fully accountable body, in practice the ABC is a prime example of the fundamental problems of government ownership, problems which are exacerbated by its role as a major media organisation.

GOVERNMENT OWNERSHIP:  THE
PROBLEM OF UNOWNED CAPITAL ⁽⁴⁾

It is normal to talk of government ownership as being "public" ownership.  In fact, government-owned bodies are "owned by the public" only in a notional sense -- government (the legal owner) is taken to be the agent of the public.  The problem with government ownership is that it is largely a façade of ownership without the substance.

Ownership of the ABC by its notional owners -- the general public through their agent the Commonwealth Government -- is highly attenuated.  Individual members of the public expended no personal wealth specifically to become "owners" via the agency of the Commonwealth.  They gain no direct personal benefit (such as increased personal wealth) from any increase in value of the organisation.  Conversely, they suffer no personal loss if the organisation loses value.  They therefore have no personal incentive to follow, either directly or through agents specifically responsible to them, the fortunes of the organisation.  It is "ownership" without any personal gain, risk or effort. ⁽⁵⁾

Further, even if they are motivated to follow the fortunes of the organisation, they cannot directly vote to appoint the Board of Directors.  They cannot choose to increase or decrease their personal holding in the organisation -- either as a vote of confidence or of a lack of confidence in its management.  They may or may not have voted for their agent, the elected government.  Even if they did, their vote represents a bundling together of a huge range of choices once every two or three years about promises which may or may not eventuate.  Any connection between the voting process and the management or performance of a specific organisation is tenuous in the extreme.

Nor is management of the ABC contestable as it is for private companies listed on the Stock Exchange.  There is no "market for managerial control" for the ABC.  The breadth of responsibilities of government is also enormous, further weakening its capacity to be effective agents for the notional owners.  Government ownership also provides an implicit guarantee against bankruptcy or catastrophic loss of income.  While the ABC is government-guaranteed and -subsidised, there are significant barriers to another media player seriously attempting to contest its particular market niche.  Far from increasing accountability, public ownership operates to insulate the ABC from the pressures to perform that operate on private companies.

Privately-owned companies, unlike government-owned ones, have real owners, people whose wealth is at stake and so have, either directly or through agents with specific legal responsibilities to them, the incentive and capacity to track the performance of the organisation.  They also have effective means of responding to performance -- by increasing their personal stake or exiting altogether, or by electing the Board of Directors.  Management of the organisation is contestable.  The market positions of private firms are (usually) not privileged by government action.

This is not to say there is not waste, fraud and failure in the private sector -- of course there is.  The mechanisms for weeding it out in the private sector are, however, stronger and more effective in their operation.  It is these differences between the mask of public ownership and the real title of private ownership, which generate most of the benefits of privatisation for efficiency of resource use. ⁽⁶⁾

There are also areas of the private sector where issues of staff capture are very real -- mutual bodies and co-operatives most notably.  One of the benefits of demutualisation is to enforce the disciplines of real ownership on bodies such as AMP, Colonial, National Mutual and so on.

Government ownership also generates a clear conflict of interest because the same body -- the government -- is responsible both for the general regulation of the industry and for the performance of a major player within it.  For the government to suggest that the performance of an organisation it controls is sub-standard is, implicitly or explicitly, to criticise its own performance as the agent of the notional owners.  The longer a particular government is in power, the more of an implicit or explicit criticism of its own managerial performance any criticism of the government-owned organisation is. ⁽⁷⁾

These conflict-of-interest problems are exacerbated in the case of a major media organisation.  Political parties and members of Parliament are major players in the media game.  It is very easy to accuse any government that seeks to impose more effective management and quality control on the ABC as interfering with the ABC's "independence".  But that same government is the only effective agent for the notional owners and is the legal owner itself.  "Independence" from government interference thus comes to mean effective independence from whatever tenuous public controls over the ABC exist in practice -- it amounts to independence from the direct legal owner.  (Any tendency within the wider media to be hesitant about outside scrutiny of fellow journalists further shields the ABC.)

Real ownership is having a title to something that cannot be defeated by any other claim.  "Public" ownership of the ABC is so notional, it is the least functional of the claims on the ABC.  It is only a pretence of ownership without the substance.

WHO BENEFITS?

If a publicly-owned body lacks effective owners, if the notional ownership of the general public is, in reality, a largely empty formality, who gains the benefits which normally accrue to genuine owners?  Who benefits from the attenuated level of accountability and oversight?

In government-owned bodies, it is usually the staff of the organisation.  That a typical consequence of privatisation is major labour shedding is a prime indicator of public-sector employee rent-seeking.  Not only does it indicate that having real owners means that the same or more output can be produced with fewer resources -- that is, that real ownership is more efficient than the façade-ownership of government ownership -- it also indicates where the "rents" from the lack of effective ownership were largely going to -- the staff of the organisation.

Other beneficiaries can be those who use the service or sell services to the organisation and, in certain circumstances, the consumers of the services.  With respect to the former, if the ABC systematically tends to favour particular viewpoints and interest groups, then those groups will have an interest in preserving the status quo and can be relied upon to leap publicly to the defence of the organisation.  The ABC dispenses considerable patronage -- particularly in access to the airwaves but also in employment and in potential book sales.  This provides further motives for public defence of the ABC and to blunt (public) criticism of it -- its central role in the media and the "cultural market" makes many regular participants very wary of publicly criticising it.  As in most things political, concentrated interests where individuals have much at stake tend to prevail over larger, dispersed interests where each individual has less at stake.

The ABC counts on an audience which is attracted to the ABC's role as purveyor of British productions (8 out of the ABC's top 10 rating TV shows are British, 60 per cent of its top 100 TV programmes are produced overseas) and to its more in-depth and comprehensive coverage of issues than is generally the case on commercial TV and radio.  That its advertisements, although of low quality, are few and congenially arranged between, rather than within, programmes is another attractive feature.  There are sufficient reasons for the ABC having a loyal audience but little evidence that real accountability to the average Australian taxpayer is one of them.

Spending taxpayers' funds on the ABC is also regressive.  According to survey findings from the Roy Morgan Research Centre, ABC viewers' incomes average 20-25 per cent more than those of the commercial channels.  Needless to say, this higher income audience would also be very attractive to any potential private owners of the ABC.  Conversely, it is not clear why lower-income families who generally prefer commercial TV should be taxed to provide preferred viewing for the high-income Australians who disproportionately watch the ABC.  High-income Australians, however, also tend to be articulate and well organised, with access to decision-makers, and so are particularly able to defend their taxpayer-funded benefits.  More generally, public funding of the ABC is a subsidy from non-users (most of Australia) to users (a group with above-average incomes) which is inequitable and unnecessary in a generally successful pluralistic democracy.

But the principal benefits of the façade-nature of the ABC's "public" ownership -- which, as indicated, is particularly attenuated precisely because the ABC is a major media voice -- accrue to the staff of the ABC.

This was memorably expressed by an acute practitioner and observer of power, Graham Richardson, when he wrote:

Neither political party has any hope whatsoever of correcting any perceived lack of objectivity at the ABC.  This is because the ABC is run basically as a workers' co-operative ... [ABC Managing Director] Brian Johns ... has Buckley's chance of influencing the content of ABC news and current affairs.  The troops at the ABC won't cop it and decades of the troops ruling the roost on these matters make it highly unlikely that there will ever be change. ⁽⁸⁾

The foregoing analysis of the problems inherent in the "indirect" method of public ownership indicates why this is so. ⁽⁹⁾

EXPRESSING STAFF CAPTURE

How is this staff capture expressed?  In the normal ways -- greater security of tenure than is normal elsewhere in the industry, higher staffing levels than is the case in private-sector alternatives, placement of major facilities to reflect overall preferences of staff, and so on.  In the words of former Finance Minister Peter Walsh, "despite self-serving claims to the contrary, the ABC has a long record of operational inefficiency". ⁽¹⁰⁾  That is, of economic "rents" (not merely in terms of dollars) accruing to ABC staff.

But the ABC is also a media organisation;  one deeply involved in the carriage of public policy debates.  This provides a further way in which staff capture can be expressed -- through its operations reflecting (and displaying) the values, prejudices and perspectives of ABC staff.  If the ABC is staffed by people with a wide range of views and backgrounds, this will be less of a problem.  The national broadcaster will then tend to reflect the diversity of national opinion, as is appropriate.

If, however, the staff have only a narrow range of values and perspectives, and recruit in their own image, then the ABC will reflect that narrowness.  It will not be a national broadcaster, but a sectional broadcaster with national reach.  Given its highly privileged role in public debate, that will mean that many people with a deep interest in public affairs will come to feel, to a greater or lesser extent, unrepresented by the alleged national broadcaster.  If that is the case, one can expect criticism of the ABC to build up over time, to express regret at that lack of representation.  As, of course, it has:  taking the forms, for instance, of accusations of narrowness, of bias and of being too Sydney-focused.  Criticism is inevitable wherever the reality of staff capture clashes with the expectations of members of the wider public about the performance of an organisation with pretensions to being the national broadcaster.

The perspectives of ABC staff have been memorably expressed by an ABC insider and long-term media player, Radio National broadcaster Phillip Adams:

let's concede that the ABC is leftwing and biased.  Let's be honest about this, Radio National's a seething hotbed of political correctness. ⁽¹¹⁾

When Professor Henningham asked a randomly-selected sample of 173 journalists to rate media outlets as pro-Labor or pro-Liberal, journalists on average rated as most pro-Labor the 7.30 Report, ABC News, Four Corners and SBS News in that order. ⁽¹²⁾  All the public-sector media outlets ranked were, on average, rated by journalists as more pro-Labor than any of the commercial media.

Former ABC broadcaster Doug Aiton has expressed this in more detail:

The ABC should take a few steps to the right

THERE seems to be some sort of argument going on at the moment as to whether the ABC might be a teensy weensy bit biased towards Labor.

I can never quite believe that people seriously pose this as a possibility.  Of course, the ABC is biased towards Labor.  In my 10 years at 3LO, it was always a special event to meet a politically conservative ABC employee.

This is possibly not quite as serious as it sounds, because if a broadcaster is professional, then objectivity will easily sweep aside "bias".  After all, we don't expect broadcasters to be political neuters;  they wouldn't be very good broadcasters if they were.  So given that all broadcasters have their own political views, the trick is to put them aside while on air and be objective.  That's not a problem.

The problem is perception.  If ABC radio is perceived to be full of left-wing broadcasters (which I believe it is), then left-wing bias on air will be perceived, too.  And, of course, there are those occasions when it is not only perceived but actually happens.

My solution is an injection of politically conservative broadcasters.  Not to push their barrow on air but to give the ABC a more balanced feel.

I have always counted myself as a simple small "l" liberal, perhaps left of centre on social issues.  But within that building at Southbank, I was often seen as an arch-conservative who somehow slipped in unnoticed through the back door.

There is a definite left-wing mentality in that building, which had been in the ABC long before my arrival.  Liberal governments, it is assumed, are the natural enemy.  I have never been able to work out why successive managements have not rectified this dangerous, vulnerable situation simply by putting some upfront conservatives on the airwaves. ⁽¹³⁾

A good question, which can be answered by exploring the full implications of staff capture. ⁽¹⁴⁾

THE SOCIAL ROLE OF "POLITICAL CORRECTNESS"

It is not the contention of this paper that the ABC is deliberately biased in its coverage (though the internal protections against such bias are likely to be weak).  Rather, it contends that ABC staff live in a very narrow, and self-reinforcing, intellectual universe and that the staff capture of the organisation allows this narrowness to be manifested at the taxpayers' expense, and to do significant harm to public debate. ⁽¹⁵⁾

The problem with staff capture of the ABC extends beyond simple narrowness of perspective and operational inefficiency.  The problem goes to the heart of the divide in Australian opinion between a tertiary-educated elite and the general public, as is profoundly analysed by Dr Katharine Betts (Betts, 1999).  In her analysis (see Appendix II), Dr Betts brings out how certain "marker opinions" are used by members of the tertiary-educated elite (including journalists) to signal their status -- that they are "kosher" -- to their social peers.

If journalists use ideas as ways of signalling their status to their social peers, great damage can be done to the proper functioning of democracy through a narrowing of national debate and by alienation of significant slabs of public opinion.  It is naïve to think that those from whom you are signalling your distance do not notice the subtle and not-so-subtle denigration of them, their beliefs and values.  Dr Betts titles her chapter on Pauline Hanson and One Nation "the revolt of the parochials".  As Nicholas Rothwell wrote, the "effect of Hansonism on a distraught intelligentsia is a key aspect of its appeal". ⁽¹⁶⁾

If we have a large media organisation, funded to the tune of $630 million annually by taxpayers, which is substantially captured by a staff who are members of a social elite, and if that staff use that capture to manifest their claims of social and moral superiority then:

• the situation is hardly conducive to open national debate;
• it may distort democracy (famously defined by Clement Attlee as "government by discussion");  and
• it is regressive public expenditure with a vengeance.

In short, hardly a use of taxpayers' funds best calculated to generate a net social benefit.

The use of marker opinions ("political correctness") to signal social status also has a natural affinity with "fear-and-control" agendas.  This is a process whereby advocacy groups embark on scare campaigns aimed at generating publicity, members and donations.  Such scare campaigns typically advocate increased government action -- raising fears does make protective action by government naturally more attractive -- which then has the capacity to generate increased career opportunities in the public sector.  And there is nothing like fighting an identified "great evil" to mark one's moral and intellectual superiority.  Career prospects and social status-seeking thus dovetail very nicely together.

The media have a natural vulnerability to scare campaigns because these sell newspapers and raise ratings.  If these scare campaigns then link into journalists' wishes to seem "kosher" to their social peers, too often they are further encouraged to an extent which overwhelms rational discussion.  One of the key arguments for a publicly-funded media organisation is the alleged ability to resist sensationalist pressures.  Unfortunately, this is not an argument that stands up for the contemporary ABC.  Far from promoting reasoned debate, the ABC tends to promote "fear-andcontrol" campaigns.  To take just one example -- environmentalism and global warming -- a simple study of the ABC Website made the following points:

Comments by Greenpeace featured in no fewer than five stories.  One news item was entirely devoted to comments by Greenpeace and the ACF.  Disturbingly, none of the comments from these conservation groups were subject to critical examination, and thus the ABC's airing of those comments was essentially free publicity for them. ...

Lay persons relying on the ABC for balanced commentary probably gained the impression that catastrophic climate change will be a reality unless we impose substantial curbs on our greenhouse gas emissions in the near future.

The selective interviewing of scientists supportive of global warming scenarios, the almost exclusive focus on the negative impacts of global warming, and the predominance of environmentalist commentary suggest that the ABC is significantly biased in its reporting of global warming issues.  It is fair to conclude that the ABC's reporting represents a pernicious mixture of science and environmentalism.  The absence of interviews of scientists critical of the "consensus" view on global warming, and the paucity of comments from persons and groups opposed to the Kyoto Protocol, are tantamount to censorship by omission. ⁽¹⁷⁾

Such tendencies are particularly powerful in a public broadcaster because such campaigns foster the position of the public-sector and tertiary-educated middle class.  There is no greater sign of moral worth than "saving the planet".  A comment by Dr Walter Starck, based on long personal experience, expresses this mentality nicely:

Curiously, while [environmentalists] express great concern over a problem, they also seem deeply committed to it, in and of itself.  Any suggestion that their avowed concerns may be unfounded are not greeted with hopeful interest but rather anger and outrage.  To disagree is not possibly to be mistaken but rather clear evidence of wilful evil. ⁽¹⁸⁾

Or, to put it another way, contrary argument undermines the moral crusader status of the true believers;  it undermines their moral assets.

Perhaps the most pernicious single effect of such fear-and-control campaigns is their destruction of hope among our children.  In his monograph Don't Panic, Panic:  the use and abuse of science to create fear, the late John Farrands -- whose distinguished career included holding the positions of Chief Defence Scientist (1971-77), head of the Commonwealth Department of Science (1977-82) and Chairman of the Australian Institute of Marine Science (1982-90) -- begins "In our time, we have created the most unnecessarily fearful generation of humankind ever to have populated the Earth".  But there are lot of noisy, vested interests in fear.

Mark O'Connor (very far from a "right-wing" commentator) also notes patterns in ABC coverage:

Among its many acts of censorship, ABC TV News suppressed the fact that the Australian Conservation Foundation and the Australian Democrats had long been calling for zero net migration.  They also ignored the installation of Labor's "environmentally responsible" Population Policy -- a major innovation -- at its Hobart National Conference in 1998.  Yet as soon as the One Nation party announced a zero net migration policy, the ABC joined in citing it as evidence of "racism".  This soon became for some as unshakeable an assumption as that One Nation's (rather bloodyminded) stance on Aboriginal rights was proof of "racism".  Had the ABC properly reported the zero net immigration policy of other more left-wing parties, they could not have whipped up this hysteria about One Nation's following suit.

So far from acting as a watchdog on politically correct extremism by other ABC programs, Stuart Littlemore's "Media Watch" through much of the 1990s stood ready to attack them if they were less PC than himself. ⁽¹⁹⁾

A senior journalist, Alan Mitchell, Economics Editor of the Australian Financial Review, has also recognised the problem:

any serious review by the board and management of the ABC of the quality of the ABC's work would form an adverse opinion of the repetitive diet of undergraduate essays on the environment, women, aborigines and the evils of capitalism that passes for much of public broadcasting. ⁽²⁰⁾

As these quotations indicate, the staff capture of the ABC is expressed in its coverage of indicative issues.

Social analysis of the type presented above does not require any conspiracy theory.  All it rests on are the propositions that:

1. people in certain social positions find certain ideas and attitudes particularly attractive;  and
2. when ideas and attitudes attractive to that social position are generated, an evolutionary process of idea reinforcement and selection will tend to spread such ideas, and then consolidate them, amongst people sharing that social position.

And the more protected against outside criticism or accountability a particular social or institutional milieu is, the more strongly such processes of selection are likely to operate.  Indeed, people inclined to such views in the first place will be attracted to that organisational setting, further reinforcing the process.

Recent events in talk-back radio have focused attention on money as a potential corrupting influence in public debate.  There are many such influences besides money -- power-seeking, ideology, moral vanity.  The public sector is prone to particular corruptions and moral failings at least as much as the private sector.  Nor is the "third sector" without its unethical practices:  fraud and exaggeration are hardly unknown among advocacy groups, for example.  The real question is whether mechanisms of accountability exist to deal with corrupting influences of whatever nature and how well they work.  The ABC is so "independent" it is independent of effective accountability.  This is not a satisfactory situation and does not lead to satisfactory results.  Failings in commercial talk-back radio do not justify taxpayer-funding of regular displays of moral vanity by unaccountable ABC staff at considerable cost to the quality of public debate. ⁽²¹⁾

It is also interesting to note that people who often appear to display a not inconsiderable desire to tell other people what to do, and a high degree of willingness to comment on their behaviour, often in quite censorious terms, resent bitterly the same treatment directed at themselves. ⁽²²⁾  But the structures of the ABC encourage such a culture.

WORKERS' CO-OPERATIVE AS SNAKE-PIT

When economists talk of organisations as being significantly captured by staff interests, this does not imply that the staff therefore have happy working environments or are highly paid.  There is a trade-off (possibly a large one) between pay rates, security of tenure and higher staff numbers;  in the public sector this has been typically expressed in favour of greater security and higher staff numbers.

The lack of effective ownership may also contribute significantly to a poor internal working environment.  Without owner-interest as an organisational focus, the purposes of the organisation become much more contestable. ⁽²³⁾  There is, therefore, a tendency for such an organisation to become one of feuding "fiefdoms" fighting over resources without any central organising principle to provide adjudication.

Add to that the moral status-seeking inherent in the entire "political correctness" phenomenon, and one has a situation rife for interpersonal relations to tend towards the poisonous. ⁽²⁴⁾  Staff capture by no means implies happy staff. ⁽²⁵⁾

Countervailing forces may operate in certain circumstances or at certain times to reduce or reverse the effect, but the underlying tendency to staff capture will still be there.  This is particularly powerfully instanced in public education.  Public education has been subject to waves of change and reform, to the extent that "change-weariness" is a well-discussed phenomenon within the teaching profession.  Much of that change has been driven by the persistent failure of public education to match the expectations of the wider society -- public education has not matched the increased quality of output which is notable elsewhere in the economy:  from cars to computers to restaurants, despite a 65 per cent real increase in government expenditure per Australian on education since 1974-75, and a 25 per cent increase since 1982-83.  Since none of the reforms have addressed the government ownership (and consequent staff capture) which is the root of the problem ⁽²⁶⁾ -- though school-based management has gone closest to doing so ⁽²⁷⁾ -- the cycle of (at best) temporary success and fundamental failure to perform satisfactorily goes on and on.

WHAT IS TO BE DONE?

The most obvious solution is simply to privatise the ABC -- remove the problems of façade-ownership by giving the ABC real (private) owners.  (Indeed, one obvious possible set of private owners for the ABC is the staff of the ABC itself -- a set of owners the usual opponents of privatisation would have difficulty finding grounds to criticise.)  The proposition that the ABC "must" remain "publicly" owned is a sacred cow:  as is common with sacred cows, it defends privilege.

There may well be an argument for differentiating between parts of the current ABC.  The argument for public-good provision of radio and TV in urban areas is weak and is steadily weakening as communications technology develops.  Rural provision, however, may be a different case, particularly if were to be administered through local boards.

Given that the Government has severely restricted entry into the TV market, it may well be true, however, that a private owner would not seek to retain the ABC's current 13 per cent of the market -- despite the higher incomes of its audience -- but instead compete for the current 85 per cent commercial market audience (likely to be even larger in the absence of an ABC).  It would then be perfectly open to the Government to define specialty audiences and periodically put out to tender the (subsidised) task of catering to them.  A specific government-owned agency is, therefore, not required.

If the ABC is not to be completely privatised, then mechanisms need to be developed to ameliorate the pathologies of public ownership.  In particular, the ABC's institutional culture needs to be changed.

The ABC Charter does not actually commit the ABC to reflect or express, or even have regard to, the breadth of social experience and opinion of the nation -- to "reflect the cultural diversity of the Australian community" is not the same thing.  In the words of former acting Managing Director of the ABC Keith Mackriell, the ABC needs "a new Charter, including the statutory requirement to fairly reflect contesting views". ⁽²⁸⁾

The national broadcaster should fairly reflect the national debate, and be legally required to do so.  Taxpayers' funds should not be used to support regular displays of moral vanity and status-seeking, particularly displays fundamentally predicated on an implicit (sometimes, as in the reporting of the Hanson phenomenon, explicit) denigration of those same taxpayers, their values and beliefs.  The pluralism of opinion among the taxpayers and citizenry who are the ABC's funders and notional owners should be reflected in the national broadcaster.

Corporate sponsorship should be introduced to broaden the income base of the ABC, to alleviate what at times seems an almost Pavlovian "taxes good, markets bad" reflex.  Replacement of some taxpayer support from such sources would also make expenditure of taxpayers' funds on the ABC less regressive, less of a wealth transfer from non-users to users.  Corporate sponsorship would hardly threaten the independence of the ABC.  On the contrary, in Keith Mackriell's words again:

The more sources of funds there are, the less power has any single sponsor.  Broadening its funding base is more likely to strengthen than weaken the ABC's independence.

The ABC should not be, directly or indirectly, the judge in its own cause.  One of the central reasons for a free press is the value of outside scrutiny:  this applies equally to the press themselves.  For ordinary citizens, such scrutiny is more difficult of an electronic broadcaster such as the ABC, because its broadcasts, unlike newspapers, do not leave an easily accessible written record.  All ABC programmes should be, as a matter of statutory right, easily available at the marginal cost of an extra copy to all members of the public -- that is to say, to the funders and notional owners of the ABC.  Such availability should also be extensively advertised.  If anything said at any time on the ABC can be acquired with relative ease by members of the public who may be interested, or by other institutions engaged in more systematic studies, accountability will be markedly increased.

An ABC-appointed "independent" review panel must labour under a crushing conflict of interest -- its interaction with the ABC is likely to be more important to it than interaction with complainants.  The ABC clearly sees no problem with a complaints body -- its "Independent Complaints Review Panel" -- appointed by itself being called "Independent".  But, then the ABC is a body used to the pretence of accountability without the substance.  (One can just imagine the gales of ABC laughter if a major corporation -- such as a bank -- were to appoint its own complaints body and call it "independent".)  We are frequently dissatisfied with ABC coverage of issues.  It does not lodge formal complaints for a range of reasons:

• the issue of concern is rarely one of simple inaccuracy, rather one of systematic exclusion or unfair treatment of particular views and points;
• the complaints process is slow and potentially expensive in time and effort;
• the complaints body is appointed by the ABC;
• if the complaint is rejected -- even though there are clearly reasons to be sceptical about the process -- then the complaint is de-legitimised;  and
• even if the complaint is accepted, there are no obvious further consequences.

So the costs and risks of using the current complaints mechanism outweigh likely gains.  The relatively low level of usage of the mechanism (only 13 complaints were received in 1997-98), ⁽²⁹⁾ given the deep dissatisfaction with the ABC privately (and publicly) expressed by many people who enter public policy debates, suggests that this is a general view.

In a similar vein, the dispute over the ABC coverage of the 1998 waterfront dispute epitomises the problem of the ABC commissioning analysis into itself.  Alan Mitchell has written:

Like Chris Corrigan, I was sure that I could detect a certain lack of impartiality in the ABC's reporting -- although that could be my bias.  I see that an independent review of the ABC's performance has concluded that Mr Corrigan and I were both wrong and that the ABC's coverage was unbiased. ⁽³⁰⁾

The "independent review" to which Mitchell refers, the Bell Report, was commissioned by the ABC itself.  An analysis by us -- not commissioned by the ABC -- found that Mitchell's professional judgement was not amiss at all. ⁽³¹⁾  The Bell Report, on the other hand, had very significant flaws. ⁽³²⁾

The ABA should, therefore, be given whatever extra oversight powers are necessary to be the appropriate institutional arbiter for complaints against the ABC.  The ABA, not the ABC, should commission studies into the ABC's coverage.

The sudden shift in the balance of ABC TV News coverage during the 1998 Federal election indicates that editorial control can enforce balance if need be. ⁽³³⁾  It should be a normal part of practice, which it has not been.  Given these failings, and the organisational shambles exposed in John Lyons's 30 March 1999 Bulletin report, it is clear that a thorough change of the ABC's management is essential.  For such a change one also needs a tough-minded ABC Board willing to support what may be painful institutional changes.

A further step, quite independent of any of the foregoing options, would be to open up the media market so as to allow new entrants to contest the field more effectively.  There are certainly strong arguments to do this anyway. ⁽³⁴⁾  But it would have the further benefit of increasing the performance pressure on the ABC.  If the broadcast spectrum were liberalised, pay TV may well expand and offer more minority niche channels that compete directly with the ABC's offerings.  This would reduce the justification for taxpayer subsidisation of the ABC, forcing it into downsizing or raising more of its own revenue from sponsorship and advertising (as practised by SBS), more video and book sales, and even public subscription.  All this would tend to counteract staff capture.  This option may also involve the least political difficulties, and be more likely to be sustainable against inherent institutional pressures.

It is sometimes argued that a biased ABC is fine, because it counterbalances what occurs in the commercial media (talk-back radio being the normal villain cited).  This was the argument advanced by Phillip Adams in the article quoted above:

I had a public blue with [ABC Managing Director] David Hill about it once.  I said, "let's concede that the ABC is leftwing and biased.  Let's be honest about this, Radio National's a seething hotbed of political correctness."  Surely we can justify that by pointing out that it's a fart in a windstorm compared to the overwhelming bombast and bigotry that's pouring out of commercial radio.  Now, David, of course, can't accept that argument;  he can't even allow it to get on to the table.  And I can't see why he can't.

Any suggestion that left-of-centre views do not get a reasonable run in the commercial media is patent nonsense.  Our study of prime-time TV news coverage during the 1998 Federal election showed that none of the free-to-air commercial stations favoured the Coalition:  on a broad view of "balanced", Nine was balanced, Seven and Ten's coverage favoured the ALP, Ten very strongly so. ⁽³⁵⁾  The Age, for example, has no regular right-of-centre commentator on its Opinion page, ⁽³⁶⁾ nor do The Australian or the Sydney Morning Herald (or, for that matter, the Australian Financial Review) show any reluctance to publish left-of-centre comment and opinion.

Moreover, the oligopolistic nature of the commercial media is, to a significant degree, a result of government intervention in the media market.  The solution is to remove those interventions and to treat the media like any other industry.  Furthermore, it is ridiculous, indeed offensive, to tax lower-income people to allow better representation of elite views in the media -- regressive expenditure with a vengeance!  As Adams himself concedes, that the ABC cannot be officially seen to favour particular views indicates the fundamental problems with this justification for bias.  Indeed, the suggestion that those "in the know" can understand why it is "OK", in fact good public policy, for the ABC to be biased, but the ordinary folk who actually pay for this have to be kept in the dark for their own good, is precisely the sort of self-serving status-seeking whose subsidised indulgence is the most offensive single aspect of the current dispensation for the ABC.

CONCLUSION

The reality is, it is not "our" -- the general public's -- ABC;  it is the staff's ABC.  Far from making it "our" ABC, the realities of "public" ownership are a powerful protective against genuine accountability, and lead almost inevitably to staff capture.  Current performance -- the favouring of particular views, inadequate approach to accountability, operational inefficiency, the regressive nature of expenditure on the ABC -- does nothing to rebut this point.

At any given time, particular governments and ministers may be more or less willing to attempt to enforce accountability and quality control on the ABC, particular senators may be more or less willing to use their oversight opportunities to do the same, particular ABC Boards and Managing Directors may be more or less willing to tackle the problems.  But these are matters of personalities and political happenstance and individuals' capacity to act will generally be significantly constrained.  The problems of public ownership are institutional, endemic and continuing.  In the end, the pathologies of public ownership will tend to manifest themselves.

This is not an argument for inaction.  Indeed, it is the duty of ministers, senators, ABC Board members and the Managing Director to attempt to redress this situation, to seek to enforce accountability to the citizens and taxpayers to whom they themselves are responsible.  As indicated, short of cure by privatisation, the disadvantages of public ownership of the ABC could be ameliorated by:

• suitable appointments to ensure a tough-minded ABC Board;
• large-scale change in management;
• a new or amended Charter imposing a statutory commitment to be fair to contesting views and genuinely pluralistic in its broadcasting and commentary;
• increased corporate sponsorship to broaden the income base and make the current revenue structure less regressive;
• greater ease of outside scrutiny;  and
• not being, directly or indirectly, the judge in its own cause.

The issue is more one of squarely facing the institutional nature of the problem.  It also puts into sharp relief the fundamental question:  why should over $630 million of taxpayers' funds be spent each year on an organisation which is not properly accountable and which is largely subservient to the interests of its staff?  One, moreover, whose role in public debates has come to be that of a participant rather than a facilitator.  The ABC fosters and represents elite status and interests.  Often, it seems more interested in closing down debate than in promoting it -- an utterly inappropriate role for the "national" broadcaster.

APPENDIX I:
AUSTRALIAN BROADCASTING CORPORATION ACT 1983

Section 8:  Duties of the Board

1. It is the duty of the Board:
1. to ensure that the functions of the Corporation are performed efficiently and with the maximum benefit to the people of Australia;
2. to maintain the independence and integrity of the Corporation;
3. to ensure that the gathering and presentation by the Corporation of news and information is accurate and impartial according to the recognised standards of objective journalism;  and
4. to ensure that the Corporation does not contravene, or fail to comply with:
1. any of the provisions of this Act or any other Act that are applicable to the Corporation;  or
2. any directions given to, or requirements made in relation to, the Corporation under any of those provisions;  and
5. to develop codes of practice relating to programming matters and to notify those codes to the Australian Broadcasting Authority.
2. If the Minister at any time furnishes to the Board a statement of the policy of the Commonwealth Government on any matter relating to broadcasting, or any matter of administration, that is relevant to the performance of the functions of the Corporation and requests the Board to consider that policy in the performance of its functions, the Board shall ensure that consideration is given to that policy.
3. Nothing in subsection (1) or (2) is to be taken to impose on the Board a duty that is enforceable by proceedings in a court.

APPENDIX II:  OPINION AS STATUS MARKER

Although, in her book The Great Divide, Dr Betts concentrates on the issue of immigration, her analysis of the divide between attitudes held by the majority of Australians -- those she labels "the parochials" -- and opinions held by a new tertiary-educated elite -- who she labels "the cosmopolitans" or the "new class" -- who use a particular type of language, the culture of "critical discourse", has wider significance.

In her words (page 78):

The culture of careful and critical discourse provides a focus for the process of social closure, a basis for drawing distinctions between insiders and outsiders.

In particular (page 81):

Class may not be the most appropriate term to use in analysing the social position of intellectuals but material interests can reinforce social closure based on the status markers of language, ideology and style of life.  I am using the term "new class" as a label for the category of people who have learnt to use the culture of careful and critical discourse.  I am doing this because it is a useful shorthand term, but the group it describes are more of a status group than a class.

The tertiary-educated group possessing what has been called "cultural capital" has grown rapidly -- the proportion of the population aged 15 and over with university degrees grew from 1.5 per cent in 1966 to just over 10 per cent in 1996.  As Dr Betts notes, such rapid social mobility creates insecurities that can be alleviated by status-markers -- such social devices as using language in certain ways, accepting certain ideas.  Such status-markers establish you as an acceptable member of the group while simultaneously marking your distance from the rest of the population.

Dr Betts is particularly concerned with the use of a "shifting and indeterminate definition of racism" (page 300) to close down debate.  As she says in her discussion of John Howard and the "Asian immigration" controversy of 1988, (page 300):

The danger of discussing immigration was demonstrated once again;  potential critics could never be sure when offended new-class sensibilities might cause the racist trap to be sprung.

Similar points apply to discussions of gender and (to a lesser degree) sexuality.  They apply most emphatically to Aboriginal issues.  While environmental and welfare issues do not lend themselves to quite the same easy hue-and-cry and pariah-labelling, there is certainly a similar dynamic of approved ("good person") and unapproved ("bad person") opinions operating.

An interview with Dr Betts is on our blog here

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REFERENCES

Wood, R.J., Media Regulation in Australia and the Public Interest, 1998.

Betts, Katharine, The Great Divide:  The Politics of Immigration, Duffy & Snellgrove, 1999.

Eggers, William D. & O'Leary, John, Revolution at the Roots:  Making Our Government Smaller, Better and Closer to Home, The Free Press, 1995.

Fama, E.F., "Agency problems and the theory of the firm", Journal of Political Economy, 88, 1980, pages 228-307.

Gannicott, Ken, Taking Education Seriously:  A Reform Program for Australia's Schools, Centre for Independent Studies, Policy Monograph No 38, Sydney, 1997.

Hartley, Peter & Trengove, Chris, "Who Benefits from Public Utilities?" The Economic Record, 1986, pages 163-179.

Hartley, Peter;  Warby, Michael, et al., Public or Private?:  Setting the Boundaries, a paper for The Infrastructure Forum, Tasman Asia Pacific, August 1998.

Hayward, Don and Caldwell, Brian, The Future of Schools:  Lessons from the Reform of Public Education, Falmer Press, London, 1998.

Henningham, J., "Journalists' perception of bias", Australian Journalism Review, Vol. 17, No. 2, (1995).

Jensen, M.C. & Meckling, W.H., "Theory of the firm:  managerial behaviour, agency costs and ownership structure", Journal of Financial Economics, 3, 1976, pages 305-360.

Jensen, M.C. & Fama, E.F., Separation of ownership and control, University of Rochester, Managerial Economics Research Center, Working Paper No. 82-14, Rochester, 1982.

Lieberman, Myron, Public Education:  An Autopsy, Harvard University Press, 1993.

Mitchell, Alan, The Waterfront -- a View from the Press, paper delivered at the XIXth Conference of the H.R. Nicholls Society, August 1998.

Wood, R.J., Election 98:  TV News in the Spotlight, Backgrounder, November 1998.

O'Connor, Mark, This Tired Brown Land, Duffy & Snellgrove, 1998.

Parham, D., The New Economy?  A New Look at Australia's Productivity Performance, Staff Research Paper, Productivity Commission, 1999.

Trengove, Chris, Improving the Performance of State Enterprises, paper prepared for EPAC, Research Paper B10, Centre of Policy Studies, November 1984.

Wood, R.J., ABC-TV News and the 1998 Waterfront Dispute:  Reporting or Barracking?, Backgrounder, April 1999.

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ENDNOTES

1.  Australian Broadcasting Corporation Budget Statement, available at www.dcita.gov.au.  This does not include those superannuation liabilities for ABC employees which will ultimately be borne by the taxpayer.

2.  All figures taken from the 1997-98 ABC Annual Report.

3.  Those statutory duties cannot, however, be enforced by court proceedings (see Section 8(3)).

4.  This analysis is based on the extension of Jensen, Fama and Mecklin's analysis of agency problems in firms (see Jensen, M.C. & Meckling, W.H., [1976];  Fama, E.F. [1980];  Jensen M.C. & Fama E.F. [1982]) to publicly-owned enterprises by Peter Hartley and Chris Trengove while they were at the Centre of Policy Studies, Monash University (see Trengove, Chris, [1984], Hartley, Peter & Trengove, Chris [1986]).  The argument is further developed in Hartley, Peter & Warby, Michael, et al.  [1998].

5.  That "public" ownership is "ownership" without personal effort or risk, coupled with private ownership being very much ownership by "someone else", does much to account for the general unpopularity (before the event) of privatisation.

6.  The much improved productivity performance of the Australian economy (see Parham, D. [1999]) has followed a programme of economic reform since the mid-1980s which has included very considerable levels of privatisation.  Of course, simple comparison of North and South Korea, East and West Germany, Taiwan and mainland China makes the same point.  Western societies certainly have their share of spectacularly inefficient government enterprises (such as the loss-making betting shops of New York City, where staff capture was so bad even a "licence to print money" became a loss-maker -- see Eggers & O'Leary [1995], pages 23-24).  Their government enterprises are, however, embedded in functioning market systems and rule of law, which reduces the ill-effects of public ownership.  In command economies, those pathologies are the normal state of affairs, lacking any significant countervailing factors.

7.  An excellent example of this phenomenon was displayed during the student literacy controversy early in the term of the Howard Government.  When the then Commonwealth Schools Minister, Dr David Kemp MP, released survey evidence suggesting unsatisfactory levels of literacy achievements by students, State and Territory Ministers denied that there was a problem and/or claimed that more money was needed.  Defence of the State and Territory Ministers' managerial competence as the major providers of schooling services obviously trumped the public interest requirement to examine seriously the actual level of performance of schools and the reasons for any sub-standard performance.

8.  The Bulletin, 17 February 1998.  Defenders of the ABC have often used the fact that both sides of politics have complained about bias as proof of the ABC's objectivity.  It is not the contention of this paper that the ABC is captured by the ALP.  Rather, that the ABC encapsulates a very narrow range of views which either side of politics can fall foul of, though the Coalition is more likely to (see study cited in footnote 12).

9.  Similarly, teacher union capture of government school systems has also been a recurring problem -- see Lieberman (1993), Gannicott (1997) and Hayward & Caldwell (1998).

10.  Australian Financial Review, 6 August 1996.  For example, ABC crews attending news events have had a long tradition of including more members than their commercial equivalents.

11.  Australian Left Review, Dec./Jan. 1993.  As one can see from the full quotation cited later, this is not meant ironically.

12.  Henningham (1995).

13.  The Age, 26 February 1997.

14.  A simple explanation would be the belief that the Coalition, even in government, would not prove willing or able to do anything about it.  This view is expressed in Mitchell [1998].

15.  We are aware of at least one major public relations consultant whose advice to clients is simple:  if an organisation and its industry are, or can be positioned as, "PC-positive" they will be treated well by the ABC largely regardless of behaviour;  if, however, they are "PC-negative", then they will be treated hostilely, largely regardless of behaviour.  To put it another way, the output of the staff-captured ABC will tend to have content which provides "moral vanity points" to ABC staff.  A former senior commercial journalist and media executive observed that the "tone" of ABC coverage is quite similar to that of other public-sector broadcasters -- such as the former Radio Moscow, Xinhua, French, Singaporean or Malaysian state broadcasting -- including news bulletins often sounding like a series of media releases from favoured groups and hostile commentary about unfavoured ones.  The use of adjectives, in particular, is quite revealing, with "progressive" and left-of-centre groups getting neutral labelling (that is, being treated as "mainstream") while non-left groups get ideological labelling ("free market", "right wing", "conservative", "ultra-conservative") to indicate their "dubious" status.

16.  Two Nations, Bookman Press, 1998, page 168.

17.  Dr Aaron Oakley, Review, June 1999.

18.  Review, June 1999.

19.  O'Connor, [1998], page 212.

20.  Mitchell [1998] available at http://www.hrnicholls.com.au/nicholls/nichvo19/Mitchell.htm.

21.  If the "stolen children" are not a case of genocide, if labour market regulation helps entrench unemployment, if welfare expenditure can be counter-productive, if opposition to high migration is not racist, if there are genuine issues of social coherence that multiculturalism has to deal with, etc. then adherence to the standard set of "politically correct" attitudes is not a sign of superior moral understanding.  Debate on such issues undermines the "moral assets" that political correctness otherwise provides.  To protect the moral assets of the "politically correct", dissidents on such issues have to be shown (sic) to be wicked and opposing views illegitimate.  Debate is therefore moved away from logic and evidence to pariah-labelling and heresy-hunts;  a move which is about closing down debate, not prosecuting it.  It is a frame of mind which is not only inimical to the functioning of democracy, of "government by discussion", but one with an inherent tendency to intellectual sterility, since it is deeply hostile to genuine inquiry.

22.  It was notable that the line of criticism that John Laws ran against the ABC and the Fairfax press -- that they were just biased elites attacking a popular figure -- was replicated by the ABC against us when we examined the ABC's performance.  The ABC, like Laws, also put on supporters to speak in its favour, also denied any wrongdoing and also showed clear resentment of any outside scrutiny of its performance.

23.  The standard response to the lack of owner-focus and internal result-feedback mechanisms (such as profit motive) is for public-sector organisations to become process-oriented.  Enforcement of rules and procedure becomes an indirect way of attempting to ensure accountability and direction of effort to public purposes.

24.  The back-biting bitterness within and between many "progressive" organisations and networks, and their penchant for personal denigration and abuse, is notorious.  The moral vanity hypothesis (that a major aspect of the personal return to "progressive" politics is a sense of superior moral insight and worth tied to holding particular opinions, criticism of which undermines said moral assets and so is a sign of "evil") provides a simple explanation for this widely observed behaviour.

25.  These points also apply to academia.  Universities -- including private universities -- also lack owners, also have contestable purposes, also have status-seeking behaviour of the moral vanity variety, have very strong opinion-selection processes and weak external accountability.  In Australia, the combination of public ownership and public funding has maximised the opportunities for capture by the administrative staff.  (Soviet-style production leading to Soviet-style outcomes:  the nomenklatura, now at a university near you!)

26.  Lieberman, (1993), Gannicott (1997) and Hayward & Caldwell (1998) analyse the problems of what Lieberman calls "producer capture" and Gannicott "provider capture" in public education.

27.  Changes to Commonwealth policy via the abolition of the new schools policy (allowing more market entry) and new funding arrangements are likely to improve competitive pressures in the industry.

28.  Review, Vol. 49, No. 2, 1996.

29.  ABC Annual Report 1997-98, page 64.  Of these 13 "many ... did not meet the Panel's criteria" which left the ICRP accepting three for review and one further request was abandoned by the complainant.  Of the three accepted "none of these were completed during the reporting period".  Not an inspiring record.

30.  Mitchell, op. cit., 1998.

31.  See Wood, R.J., [1999] ABC TV News and the 1998 Waterfront Dispute:  Reporting or Barracking?.

32.  For example, citing statistics of pro-MUA as against pro-Patrick/Government sound bites but not including in its count comments by ordinary wharfies who were, as was a notorious public fact, all members of the MUA.  ABC Chairman Donald McDonald and Managing Director Brian Johns both circulated a further paper by Professor Bell criticising our study.  A point-by-point rebuttal of Professor Bell's points can be found here.

33.  See Wood, R.J., [1998] Election '98:  TV News in the Spotlight.

34.  See Wood, R.J., [1998] Media Regulation in Australia and the Public Interest.  This study outlines some of the problems of regulation which are particularly rife in the area of media regulation precisely because politicians and political parties are important media players.

35.  Wood, R.J., (1998) Election '98:  TV News in the Spotlight.

36.  Hence nicknames like "the Spencer Street Soviet".  Ross Gittins and Gerard Henderson are very partial exceptions and are imports from Sydney shared with the Sydney Morning Herald.